2016 Annual results Follow us on Twitter: @TrygIR Investor - - PowerPoint PPT Presentation

2016 Annual results

Investor presentation

Follow us on Twitter: @TrygIR

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Contents

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 Highlights Q4 2016 3  Premiums and portfolio 7  Claims and expenses 12  Investment, capital and targets 19  Background material 29  Appendix 46

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.

Financial highlights 2016

• DPS of 6.2 for the FY and extraordinary dividend of DKK

1bn in 2017 (3.5/share)

• DPS growth in line with our aim
• Extraordinary dividend of DKK 1bn in 2017
• Quarterly dividend introduction from Q1 2017 (no change

to overall dividend policy)

• Total yield in excess of 7.5% on share price end of 2016
• Solvency II ratio (PIM) of 194 after deducting H2 and

extraordinary dividend to be paid in 2017

• Technical result adj. for one-offs of DKK 2,640m

(DKK 2,543m)

• Intangibles write-downs weigh negatively for DKK 250m
• FY COR 85.3 (adjusting for Q4 write-downs) vs 86.1 in

2015 (adjusting for one-off charge)

• Premiums growth of 0.1% in local currency
• Claims inflation to be offset by 3% price adjustments in

2017

• Adjusted expense ratio of 14.8 vs 14.9 in 2015
• ROE after tax of 26.2% vs 20.0% in 2015
• Underlying claims ratio expected to improve in 2017

while all financial targets are maintained

3 5.2 5.4 5.8 6.0 6.2 2.6 3.2 3.4 3.5 3.5 0% 2% 4% 6% 8% 10% 3 6 9 12 15 2012 2013 2014 2015 2016

Cash dividend Extraordinary buy back Extraordinary dividend Total yield (RHS)

Dividend, buy back & total yield 2,390 2,423 2,640 120 2016 2015 250 2,543

Technical result (DKKm)

26.2 20.0 2016 2015

ROE after tax

One-off related to intangibles write-down in 2016 and One-off charge for the savings plan in 2015

800 745 Q4 2016 Q4 2015

Pre-tax profit (DKKm)

• Pre-tax profit of DKK 800m (DKK 745m) driven by:
• Lower technical result of DKK 314m (DKK 522m) weighed

down by a DKK 250m intangibles write-down and a very high level of large claims

• Substantially higher investment result of DKK 598m

(DKK 242m) boosted by an extraordinary capital gain of DKK 500m on the sale of a property portfolio

• Other income/costs including a DKK 100m write-down on

Securator

• Technical result adj. for one-offs of DKK 564m

(DKK 522m)

• Intangibles write-down (one-off) of DKK 250m
• High level of large claims, DKK 197m, weather claims of

DKK 115m, run-off gain of DKK 301m

• Underlying claims ratio (Private) on track showing a 30bps

deterioration vs Q4 2016 (90bps in Q1 2016, 70bps in Q2 2016, 60bps in Q3 2016)

• Underlying claims ratio (Group) on track showing a 70bps

deterioration vs Q4 2016 (210bps in Q1, 190bps in Q2, 210bps in Q3)

• Investment income of DKK 598m (DKK 242m)
• Extraordinary DKK 500m capital gain from the sale of

properties, positive equity markets

4 87.6 88.4 5.5 Q4 2016 Q4 2015 93.1

Combined ratio

One-off related to intangibles write-down 14.4 14.2 3.6 Q4 2016 Q4 2015 18.0

Expense ratio

Financial highlights Q4 2016

• Improved technical result adj. for write-downs and substantially higher investment return

driven by capital gain on the sale of properties

Customer highlights 2016

• Number of customers with three or more products increased from 56.7 to 57.2

5 22 22 22 2016 2015 Target 2017

NPS

57.2 56.7 61.3 2016 2015 Target 2017

Customers with ≥3 products (%)

88.0 88.1 88.9 2016 2015 Target 2017

Retention rate

• NPS of 22 and Transactional Net Promoter Score (TNPS) of 49
• Tryg acquired child insurance portfolio in Sweden and a new child

insurance was launched in Denmark.

• Cyber insurance launched in Corporate and Commercial in

Denmark, Norway and Sweden.

• 500,000 insurance agreements updated, hence the majority of

customers have the most recent products.

• Corporate Sweden was nominated as the best non-life insurance

company for the fourth year running.

• TryghedsGruppen paid its members’ bonus to Danish customers

– 8% of the premium paid for 2015.

Key figures Q4/FY

6

DKKm Q4 2016 adjusted Q4 2015 FY 2016 adjusted FY 2015 adjusted

Technical result 564* 522 2.640* 2.543* Investment income, net 98** 242 487**

• 22

Other income/costs

• 12***
• 19
• 57***
• 91

Pre-tax result 650 745 3.070 2.430 Claims ratio 73.2% 74.2% 70.5% 71.2% Expense ratio 14.4% 14.2% 14.8% 14.9% Combined ratio 87.6% 88.4% 85.3% 86.1% * Q4 & FY 2016 adjusted for DKK250m write-down on intangible assets, 2015 adjusted for one-off costs of DKK 120m related to the savings plan ** Q4 & FY 2016 adjusted for DKK500m capital gain from the sale of investment properties *** Q4 & FY 2016 adjusted for DKK100 goodwill write-down related to the acquisition of Securator

Premiums and portfolio

7

Gross earned premiums development

(Local currencies)

1.7 % Q4 2016 Q4 2015

• 1.6 %

Positive topline development in Private

8

DKKm Q4 2016 Q4 2015 Local currencies Q4 2016 Local currencies Q4 2015 Private 2,235 2,172 1.3% 1.1% Commercial 972 970

• 0.8%
• 5.0%

Corporate 966 949 0.9%

• 2.1%

Sweden 337 313 12.2%

• 6.1%

Group 4,504 4,393 1.7%

• 1.6%

Group premiums were up 1.7% in local currencies, Private lines and full inclusion of Skandia child book key drivers

Private lines increased 1.3% driven primarily by a positive development in Private Denmark Commercial lines declined 0.8% primarily driven by competitive markets and weak Norwegian macro Corporate lines increased 0.9% driven primarily by a positive development in Denmark and eased competition from smaller players Sweden increased 12.2% primarily driven by the full inclusion of the Skandia’s child insurance portfolio.

564* 522 Q4 2016 Q4 2015

Improved technical result adjusted for intangibles write-down

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Commercial, DK & NO (DKKm) Sweden (DKKm)

366 285 Q4 2016 Q4 2015

Group (DKKm) Corporate (DKKm) Private, DK & NO (DKKm)

23 85 Q4 2016 Q4 2015 166 147 Q4 2016 Q4 2015 *Adjusted for intangibles write-down of DKK 250m 9 5 Q4 2016 Q4 2015

90 95 100 105 110 115 120 125

DK NO

90 95 100 105 110 115

DK NO

10

Private - average prices

Average price 4,200 5,700

• DK: –0.6% but some stabilisation

in sight. Smaller and safer cars still dominate new sales but product add-ons and conversion are helping

• NO: 0.7% positive development

reflects underlying price

• increases. Avg Motor price in

Norway higher reflecting primarily a different type of cars

Average price: 4,800 5,500

Motor insurance – average price (index 2011 = 100) House insurance – average price (index 2011 = 100)

Average price development Y/Y

• 0.6%

0.7% (Q3 -1.3 %) (Q3 0.8 %) Average price development Y/Y 0.4% 0.7% (Q3 -0.2%) (Q3 0.2%)

• DK: 0.4% positive development

reflects both price increases and conversion

• NO: 0.7% positive development

reflects primarily price increases

Customer retention remaining stable

11

82% 84% 86% 88% 90% 92%

DK NO

Commercial 82% 84% 86% 88% 90% 92%

DK NO

Private

• Customer retention slightly

down at 89.7 (89.9 at Q3) in Denmark

• Stable development in Norway
• Customer retention slightly up

at 87.1 (86.8 at Q3) in Denmark

• Retention slightly down in

Norway at 87.5 (88.0 at Q3)

Claims and expenses

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84.8 86.6 Q4 2016 Q4 2015 74.0* 73.3 Q4 2016 Q4 2015

Underlying claims ratio showing an improved trend

13 72.7 69.8 Q4 2016 Q4 2015

Commercial (DK & NO)

76.9 77.3 Q4 2016 Q4 2015

Sweden

68.9 68.6 Q4 2016 Q4 2015

Group Corporate Private (DK & NO)

Underlying development is adjusted for large claims, weather claims, run-off and interest. *Q4 2016 is adjusted for a DKK 88m impact from the intangibles write-down on the claims line

Motor insurance, not all claims are coming down

14 Number of accidents per year

Bumpers, price increases in % from 2011-2016 90 95 100 105 110 115 2014 2015 2016 Motor, comprehensive Frequency Average claims

Top 10 sold cars in DK, Jan. - dec. 2016 Model sold cars 1 PEUGEOT 208 9,381 2 VOLKSWAGEN UP! 7,361 3 PEUGEOT 308 6,135 4 VOLKSWAGEN POLO 5,857 5 TOYOTA YARIS 5,483 6 TOYOTA AYGO 5,375 7 OPEL ASTRA 5,041 8 RENAULT NY CLIO 4,718 9 FORD FIESTA 4,471 10 VOLKSWAGEN GOLF 4,449 294,458 304,308 301,550 316,429 335,578 2012 2013 2014 2015 2016

Claims inflation differs from core CPI

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Source: Danish FSA and Danmarks statistik

6% 6% 9%

• 11%

7% 7% 3% 1% 2% 3% 2% 1% 1% 1% 2009 2010 2011 2012 2013 2014 2015

Total claims cost gross CPI, all items

Annual Danish insurance gross claims increase vs CPI Construction index cost – YoY % change, Denmark Construction index cost – YoY % change, Norway

• Danish non-life insurance gross

claims development 2009-2015

• Cloudburst hitting Copenhagen

in 2011 explains jump and fall

• f figures in 2011-2012
• Figures not adjusted for

changes in number of insured

• bjects

0% 1% 2% 3% 4% 5% 6% Total Material Labour cost 0,0% 1,0% 2,0% 3,0% 4,0% 5,0% Total Material Labour cost

Large claims, weather claims and run-off

16 5.5 6.7 5.0 6.1 6.7 7.0 2013 2014 2015 2016 Q4 2015 Q4 2016

Run-off net, effect on combined ratio (%)

237 115 620 447 614 351 2013 2014 2015 2016 Q4 2015 Q4 2016

Weather claims, net DKKm

134 197 407 574 613 391 2013 2014 2015 2016 Q4 2015 Q4 2016

Large claims, net DKKm Expected annual level 2017: DKK 500m Expected annual level 2017: DKK 550m Claims reserves discounting rate (%)

2.0 1.5 1.2 Q4 2015 1.0 Q4 2016 0.9 2012 2013 2014 2015 2016

Efficiency programme, DKK 59m achieved in Q4

17

• Programme proceeds as planned, target to

achieve savings of DKK 750m over 3 years.

• Savings achieved in 2015 and 2016 equal to

DKK 375m in line with targeted level

• Claims initiatives of DKK 41m in Q4:
• Focus on helping injured policyholders

to get back to work quickly

• Cash settlements through In4mo

system

• Building claims inspection in Sweden

through improved SLA and processes

• Expense initiatives of DKK 18m in Q4:
• Outsourcing Accounting
• Reorganisation of Agriculture & Small

Commercial division

• Digital communication

Efficiency programme up until 2017 (DKKm)

100 105 150 145 250 175 388 395 50 60 75 65 125 2012 2013 2014 Target 2015 2015 Target 2016 2016 Target 2017 Expense Claims Old programme New programme

Strong costs focus to meet 2017 target

18

• Expense ratio at 14.4 (14.2) adjusting for DKK162m of

intangibles write down hitting the expense line

• Efficiency programme lowered costs by

DKK 18m for Q4 mainly related to:

• Outsourcing within Finance and IT
• Commercial reorganisation
• Digital communication
• Numbers of employees reduced further
• Initiatives in Norway support expense ratio target for

2017 at or below 14 but no impact in 2016

FTE - Development

14.2 14.4 15.6 15.3 14.9 14.8 14.6 15.3 15.7

2013 2014 2015 2016 Q4 2015 Q4 2016

Expense ratio Nominal costs in business areas

310 160 102 68 290 167 92 66 Private Commercial Corporate Sweden Q4 2016 Q4 2015 4,076 3,913 3,703 3,599 3,359 3,264 2011 2012 2013 2014 2015 2016

As reported Adjusted for one-offs

Investment, capital and targets

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5.3 1.8

• 4.1
• 4.2
• 3.5

22.2 0.1 4.7

Equities 18 %

• Cov. Bonds 37%
• Inv. Property 21%

High Yield 6% Investment grade 5% Emerging Markets 4% Inflation linked bonds 4% Govenment bonds 3% Other 1%

Investment return – low risk remains key (1)

20

Free portfolio return Q4 2016 (%) Free Portfolio (DKK 12 bn) Q4 2016

• Cov. Bonds 98%

Bonds/deposits 2%

Match Portfolio (DKK 29.1 bn) Q4 2016

DKKm Q4 2016 Q4 2015 2016 2015

Free portfolio 541 201 939 232 Match portfolio 8 85 210

• 16

Other financial income and expenses 49

• 44
• 162
• 238

Total investment return 598 242 987

• 22

Key figures - Investments

Investment return – low risk remains key (2)

21 98 5 100 2 18 62 62 15 38 Bonds Equity HY & EM

• Inv. Property

Nordics EU ex Nordics North America EM/Other

Different asset classes Geographical exposure (%)

95 5 71 4 25 90 5 5 AAA AA-A BBB-B Lower Match Free Total

Fixed income portfolio credit rating (%)

730 546

200 400 600 800 1000 1200 1400

High-Yield bonds Investment Grade Credit 1,276

Corporate bonds (3% of total investments)

Solvency position Q4 2016

22

• Solvency ratio based on the Partial Internal Model

is 194 (Q3 2016: 217).

• Own Funds (OF) is primarily impacted by
• Result Q4 2016 of DKK 560m
• Dividends of DKK 1,017m (H2 2016)
• Extraordinary dividends of DKK 1,000m

in Q1 2017

• Based on Solvency II Standard Formula the

solvency ratio is 157 (Q3 2016: 173).

Own funds walk Solvency capital requirement walk

5,077 5,092 40

• 70
• 29

21

• 19

15 27 4.800 4.850 4.900 4.950 5.000 5.050 5.100 5.150 5.200 SCR Q3 '16 Marked Health Life Default Non-Life Opera- tional Adjust- ment Diversi- fication SCR Q4 '16 9,850 11,053 560

• 2,017

246

• 19

28 5.800 6.800 7.800 8.800 9.800 10.800 11.800 Own Funds Q3 '16 Results Q4 '16 Proposed cash dividend Intangible assets Subordinated debt Miscellaneous Own Funds Q4 '16

Capital and solvency ratio development

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• Tier 2 capacity fully utilised after issue of SEK 1bn

subordinated debt 19 May 2016.

• As per Q4 some DKK207m of Tier 2 instruments are

not included in the Own Funds as they exceed the 50% SCR cap.

• As per Q4, Tryg has an additional Atier 1 capacity of

approximately DKK 1bn, this is down from DKK 1.3bn at Q3.

Atier 1 capacity calculated as 25% of the Core Equity minus existing Tier 1 instruments. Core Equity at Q4 is down vs Q3 as H2 dividend and extraordinary 2017 dividend are deducted already

• Solvency ratio development mostly a function of net

profits (+) and dividends and buy backs (-) underlying development should remain pretty stable

• The Danish FSA has explained that a ratio lower than

125 would result in increased surveillance.

Capital Tiers as % of SCR Solvency ratio development

6,657 131% 655 13% 2,539 50% Q4 '16 DKKm Q4 '16 % of SCR CETier 1 ATier 1 Tier 2 * H2 dividend and extraordinary DKK 1bn dividend deducted 212 206 217 194 * Q1 '16 Q2 '16 Q3 '16 Q4 '16

Tier 2 instruments, Solvency II vs Balance sheet

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• 500
• 500

1.000 1.500 2.000 2.500 3.000 Subordinated debt, NOK 1,400m Subordinated debt, SEK 1,000m Natural Perils Pool Tier 2 before cap Cap Tier 2 after cap

Solvency 2

• 500

1.000 1.500 2.000 2.500 3.000 Subordinated debt, NOK 1,400m Subordinated debt, SEK 1,000m Subordinated debt, NOK800m Balance sheet

Balance sheet

• Tryg’s Tier 2 instruments under Solvency II are displayed above, Tier 2 instruments can be up to 50% of the

SCR, currently Tryg has some DKK 207m of ‘excess’ Tier instruments. Total Tier 2 instruments are DKK 2,539m after cap (DKK 2,746m before the cap)

• An ‘old’ subordinated debt tranche of NOK 800m has been ‘grandfathered’ hence it is included as Tier 1

instrument and not Tier 2.

• Natural perils pool is DKK 822 as per Q4 2016 and is included as Tier 2 instrument.
• All three subordinated debt issuance are shown in the balance sheet

DKKm DKKm

Solvency ratio sensitivities

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• The Solvency II ratio shows the highest sensitivity to spread risk
• 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.)

• The Solvency II ratio is not highly sensitive to equity markets movements as most of the ‘Own

funds’ hit from a sharp fall in equity markets would be offset by a lower capital requirement (lower market values combined with the effect of a reduced charge due to equity-dampener)

• Interest rate risk is very low as function of our matching strategy
• Currencies exposure is low and it is a function of movements in the value of issued Tier 2

instruments (in NOK and SEK), which almost offset premiums/reserves exposure to Norway/Sweden

• A change in the UFR (Ultimate Forward Rate) from 4.2% to 3.2% would reduce the solvency ratio

from 194 to 193

170% 180% 190% 200% 210% 220% Q4 '16 +20% -20% +20% -20% +100 bps

• 100

bps +100 bps

• 100

bps +20% -20% +20% -20%

• 100

bps 2016 Equity Property Interest Spread NOK/DKK SEK/DKK UFR

Targets and outlook

26

 Efficiency programme proceeds as planned.  Members’ bonus of 8% paid in June 2016.  Price increases to offset claims inflation.  2017 topline growth between 0-2%  2017 expected tax rate 22-23%  Markets remain very competitive  High focus on capital repatriation

Customer targets Financial targets Net Promoter Score (NPS) + 100% Retention rate + 1 pp Customers ≥ 3 products** + 5 pp

** Private (DK & NO)

2017 ROE after tax ≥ 21% Combined ratio ≤ 87 Expense ratio ≤ 14

* Excl. One-off effects

10 20 30 40

ROE after tax (%)

It is important to know your investment case

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”Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” John D. Rockefeller

Date Place Participants from Tryg Arranged by 20/01/2017 Copenhagen Morten Hübbe, CEO Christian Baltzer, CFO Lars Bonde, COO Investor Relations SEB 24/01/2017 Oslo Christian Baltzer, CFO Peter Brondt, IR Manager DnBNOR 25/01/2017 London Morten Hübbe, CEO Christian Baltzer, CFO Investor Relations Barclays 06/02/2017 Zurich Lars Bonde, COO Gianandea Roberti, IR Officer Berenberg 07/02/2017 Frankfurt Lars Bonde, COO Gianandrea Roberti, IR Officer SEB 07/02/2017 Munich Peter Brondt, IR Manager Carnegie 09/02/2017 Stockholm Christian Baltzer, CFO Peter Brondt, IR Manager Nordea Markets 15/03/2017 Brussels Gianandrea Roberti, IR Officer Danske Markets 21/03/2017 Helsinki Gianandrea Roberti, IR Officer Handelsbanken 23/03/2017 London Gianandrea Roberti, IR Officer Morgan Stanley European Financials Conference

Upcoming roadshows

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Background material

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1,401 1,330 1,380 1,129 1,067 612 1.000 2.000 60% 70% 80% 90% 100% 110% 120% 2010 2011 2012 2013 2014 2015 UK Germany Italy Denmark Norway

• 100%
• 50%

0% 50% 100% 150% 200% Non-life Life Banking Other

Why invest in Tryg?

30

Pre-tax result by division (YE 2015 data) High insurance penetration in the Nordics Tryg is a dividend stock Motor combined ratios Nordics vs international

Premiums per capita (USD), 2015 Total yield (dividend and buy backs / market cap) at year end DKK 9.2% 8.3% 6.6% 6.9% 7.6% 5.2 5.4 5.8 6.0 6.2 3 4 5 6 7 8 0% 2% 4% 6% 8% 10% 2012 2013 2014 2015 2016 Total yield DPS (right axis)

IBM study from 2007, probably little has changed

31 52% 57% 63% 64% 67% 72% 62% 62% 53% 62% 49% 50% 40% 36% 37% 39% 20% 33% 53% 46% 45% 42% 43% 43%

0% 10% 20% 30% 40% 50% 60% 70% 80% F UK DE DK

• 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

Tryg – at a glance I

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.

82% 84% 86% 88% 90% 92%

Retention rate - Private

DK NO

82% 84% 86% 88% 90% 92%

Retention rate - Commercial

DK NO

Norway Market position: #3 Market share: 13.3% CR in 2016: 84.2% Sweden Market position: #5 Market share: 2.9% CR in 2016: 97.5% Denmark Market position: #1 Market share: 18.0% CR in 2016: 83.1% 56 22 22 Private Commercial Corporate

Business split 2016

30 5 12 6 24 14 9 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Gross premium split by products 2016 Percentage Percentage

60 12 15 13 Danish institutional Non-Danish institutional Smaller shareholders

Tryg – at a glance II

33

Shareholder breakdown 2016

Strengthening of brand value

Shareholder remuneration since 2012

DKK

Percentage

5.2 5.4 5.8 6.0 6.2 2.6 3.2 3.4 3.5 1 2 3 4 5 6 7 8 9 10 2012 2013 2014 2015 2016

Ordinary dividend Extraordinary buy back Extraordinary dividend

3.5 50 100 150 200 250 300 350 400 450 500 Tryg Euro Insurance index

Share price performance since IPO

Tryg – at a glance III

34 31 11 21 18 9

• 3

13 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Run-off net by products Q4 2015 Percentage

15 20 14 11 9 30 1 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Run-off net by products Q4 2016 Percentage

16 33 19 8 8 9 8 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Gross claims reserve by products 2016 Percentage

30 5 9 6 24 14 12 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Gross premium by products 2016 Percentage

Gross premium split by geography

35 14 21 7 7 35 14 2 Motor TPL Motor Casco Health & accident Liability Fire & property - private Fire & property - comm. Other

SE: Gross premium by products 2016 Percentage

22 49 19 5 2

• 2

6 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other

Run-off net by products 2016 Percentage

7 19 6 12 7 24 15 4 6 Motor TPL Motor Casco Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Tourist assistance Other

DK: Gross premium by products 2016 Percentage

16 23 4 8 4 21 13 5 6 Motor TPL Motor Casco Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Tourist assistance Other

NO: Gross premium by products 2016 Percentage

Tryg’s equity story

36

Long term profitable growth and attractive shareholder value creation

Financial targets 2017

• ROE: ≥21%
• Combined ratio: ≤87%
• Expense ratio: ≤14%

Customer targets 2017

• NPS +100%
• Retention rate +1 pp
• ≥ 3 products +5 pp

Dividend policy

• Aiming for a nominal stable increasing dividend
• Pay-out ratio of 60% to 90% (secondary)
• Extraordinary dividend to further adjust the capital structure
• 90% first contact resolution
• Annual coverage check
• 25% of tariffs better than peers in 2017
• Differentiated product offering
• Efficiency programme of DKK 750m
• Claims procurement
• Reducing expense level
• Matching assets and liabilities
• Low risk investment portfolio

Low risk and high returns Leading in efficiency Leading Scandinavian insurer with strong track record Customer care worth recommending Next level pricing

Things that you may not know

37

• 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
• ut 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 recent 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 and expected to continue the growth in coming years.

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 reinsurance programme.

• Our maximum net exposure for weather claims is DKK 150m per
• event. The upper limit of the programme is DKK 5.75bn, 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

• pposed to the P&L.

2013 2014 2015 Other Unrealised gains and losses Realised gains and losses Interest income and dividends

Gross investment return

774 237 1.071 38

39

TryghedsGruppen members’ bonus

Denmark's ‘biggest’ family

Every 5th Dane receives a bonus!

8% in 2016

> DKK 400m to Private costumers > DKK 200m commercial customers > DKK 95m for corporate costumers

Customers are already promised bonus for 2017 ‘I expect to be in Tryg next year’

93% 81%

Positive effect on retention

Have heard about Customer bonus Have not heard about Customer Bonus

Retention rate increase by 1 pct. gives approx. DKK 50-150m reduction in expenses on group level

The run-off cycle

40

• 18,000
• 2,000

+2,000 Run-off development 3 years Claims buffer: Run-off: Claims estimate: We assessed the claim at DKK 18,000 but reserve for DKK 20,000

• 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.

5.000 5.200 5.400 5.600 5.800 6.000

Population growth (2000-2016)

4.000 4.400 4.800 5.200 5.600

DK 7% NO 16%

Growth 2000-2016: 0-17 years 7.1% 18+ years 19.3% Total 16.4% Growth 2000-2016: 0-17 years 1.9% 18+ years 8.5% Total 7.1% Population development in Norway in ‘1,000 Population development in Denmark in ‘1,000

41

Structure of the Nordic insurance market

42

Denmark DKK 52.0bn/EUR 7.0bn (as at Q4 2015) Sweden SEK 77.0bn/EUR 8.1bn (as at Q3 2016) Norway NOK 56.0bn/EUR 6.2bn (as at Q3 2016) Nordic EUR 25.7bn (as at Q4 2014)

13.3 21.2 25.4 10.0 30.1 Tryg If Gjensidige Sparebank1 Other 9.3 4.8 17.2 8.7 8.7 9.1 42.2 Tryg Topdanmark If Codan Gjensidige Länsforsikringar Other 18.0 17.2 5.7 11.2 6.6 9.7 31.6 Tryg Topdanmark If Codan Gjensidige

• Alm. Brand

Other 2.8 18.2 15.0 1.5 30.0 16.3 16.2 Moderna (Tryg) If Trygg-Hansa (Codan) Gjensidige Länsforsikringar Folksam Other

Percentage Percentage Percentage Percentage

51 3 31 15 Own sales External partners Online & others Atlantica/Bilsport MC 57 29 14 Own sales Affinity Nordea 44 12 38 6 Own sales Car dealers Affinity Nordea 45 55 Own sales Brokers

Distribution of new sales 2016

43

Norway Corporate Sweden Denmark

Percentage Percentage Percentage Percentage

80 85 90 95 100 105 110

Combined ratio development

44

Premium hikes

Premium hikes Smaller adjustments Efficiency programme Customer and efficiency focus

2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94. 2011-2012 price increases will improve underlying combined ratio. 2012-2015 operational focus with target to cut expenses and claims costs by DKK 1bn in total. 2015-2017 New efficiency programme of DKK 750m launched.

*IFRS from 2004. Previous years are Danish GAAP. Data before 2009 is not corrected for the sale of Marine Hull business, and Finland before 2008.

Key figures 2011-15 and consensus 2016-18

45 DKKm 2011 2012 2013 2014 2015 2016 2017 2018 Gross premium income 19,948 20,314 19,504 18,652 17,977 17,660 17,941 18,151 Technical result 1,572 2,492 2,496 3,032 2,423 2,404 2,702 2,724 Investment income, net 61 585 588 360

• 22

989 173 171 Pre-tax profit 1,603 3,017 2,993 3,302 2,310 3,230 2,817 2,837 Net income 1,140 2,208 2,369 2,557 1,969 2,568 2,208 2,223 Combined ratio 93.2 88.2 87.7 84.2 86.8 86.5% 85.1% 85.1% Expense ratio 16.6 16.4 15.6 14.6(*) 15.3(**) 15.6% 14.2% 14.0% Dividend per share 1.3 5.2 5.4 5.8 6.0 6.3 6.5 6.7 Share buy back 800 1,000 1,000 1,000 1,015 916 650 Based on 19 estimates ahead of Q4 2016 * 15.3 excluding one-off, ** 14.9 excluding one-off

Consensus

Appendix

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46

Group

47 12 13 14 15 16 17 18

Expense ratio

75 80 85 90 95 100

Combined ratio

60 65 70 75 80

Claims ratio, net of reinsurance

• 4
• 3
• 2
• 1

1 2 3 4 15.000 16.000 17.000 18.000 19.000 20.000 21.000

Gross premiums

% DKKm

GEP (LHS) Local currency (RHS)

Private

48 12 13 14 15 16 17 18

Expense ratio

75 80 85 90 95 100

Combined ratio

60 65 70 75 80

Claims ratio, net of reinsurance

• 4
• 3
• 2
• 1

1 2 3 4 7.000 7.500 8.000 8.500 9.000 9.500 10.000 10.500

Gross premiums

% DKKm

GEP (LHS) Local currency (RHS)

Commercial*

49 14 15 16 17 18 19 20

Expense ratio

75 80 85 90 95 100

Combined ratio

55 60 65 70 75

Claims ratio, net of reinsurance

• 4
• 3
• 2
• 1

1 2 3 4 2.500 3.000 3.500 4.000 4.500 5.000

Gross premiums

% DKKm

GEP (LHS) Local currency (RHS)

* Less than 100 employees or less than DKK 100m turnover

Corporate*

50 10 11 12 13 14 15

Expense ratio

75 80 85 90 95 100

Combined ratio

65 70 75 80 85

Claims ratio, net of reinsurance

• 4
• 3
• 2
• 1

1 2 3 4 2.500 3.000 3.500 4.000 4.500 5.000

Gross premiums

% DKKm

GEP (LHS) Local currency (RHS)

* More than 100 employees and more than DKK 100m turnover

Sweden

51 15 16 17 18 19 20

Expense ratio

75 80 85 90 95 100 105

Combined ratio

60 65 70 75 80 85

Claims ratio, net of reinsurance

• 8
• 6
• 4
• 2

2 4 6 8 10 500 1.000 1.500 2.000 2.500

Gross premiums

% DKKm

GEP (LHS) Local currency (RHS)

Geographical segments

Norway DKKm Q4 2016 Q4 2015 FY 2016 Gross premiums earned 1,640 1,611 6,371 Technical result 149 124 1,013 Key ratios: Gross claims ratio 70.0 74.4 63.9 Result of ceded business 5.6 4.3 5.1 Gross expense ratio 15.5 13.8 15.2 Combined ratio 91.1 92.5 84.2 Sweden DKKm Q4 2016 Q4 2015 FY 2016 Gross premiums earned 463 463 1,888 Technical result

• 26

109 40 Key ratios: Gross claims ratio 85.7 54.6 76.4 Result of ceded business 0.9 3.0 3.3 Gross expense ratio 18.6 19.0 17.8 Combined ratio 105.2 76.6 97.5 Denmark DKKm Q4 2016 Q4 2015 FY 2016 Gross premiums earned 2,407 2,330 9,467 Technical result 441 289 1,587 Key ratios: Gross claims ratio 66.4 65.2 63.7 Result of ceded business 2.6 9.3 6.0 Gross expense ratio 12.5 13.1 13.4 Combined ratio 81.5 87.6 83.1 52

Corporate history

53

• 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%
• wnership
• 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….

Norway % 2016 2017 GDP Growth (mainland) 0.8 1.7 Inflation 3.2 2.1 Unemployment 4.8 4.8 Current account balance in % of GDP 5.4 8.0 Budget balance in % of GDP 3.2 3.6 Public debt in % of GDP 0.0 0.0 Sweden % 2016 2017 GDP Growth 3.2 2.3 Inflation 1.4 1.7 Unemployment 6.9 6.6 Current account balance in % of GDP 5.1 5.7 Budget balance in % of GDP 0.2 0.0 Public debt in % of GDP 40.8 39.1

Economic key figures

54

Source: Economic Outlook, Nordea Markets, January 2017

Denmark % 2016 2017 GDP Growth 1.0 1.5 Inflation 0.3 1.4 Unemployment 4.2 3.9 Current account balance in % of GDP 8.0 8.2 Budget balance in % of GDP

• 1.0
• 1.6

Public debt in % of GDP 39.1 38.2