2016 Annual results Follow us on Twitter: @TrygIR Investor presentation 1
Contents 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. 2
Financial highlights 2016 • DPS of 6.2 for the FY and extraordinary dividend of DKK Dividend, buy back & total yield 1bn in 2017 (3.5/share) 10% 15 8% • DPS growth in line with our aim 12 6% Extraordinary dividend of DKK 1bn in 2017 9 • 3.5 3.5 3.4 3.2 2.6 4% 6 • Quarterly dividend introduction from Q1 2017 (no change 2% 3 6.0 6.2 5.8 5.2 5.4 to overall dividend policy) 0 0% • Total yield in excess of 7.5% on share price end of 2016 2012 2013 2014 2015 2016 • Solvency II ratio (PIM) of 194 after deducting H2 and Cash dividend Extraordinary buy back extraordinary dividend to be paid in 2017 Extraordinary dividend Total yield (RHS) Technical result (DKKm) • Technical result adj. for one-offs of DKK 2,640m (DKK 2,543m) 2,640 2,543 250 120 • Intangibles write-downs weigh negatively for DKK 250m 2,423 2,390 • FY COR 85.3 (adjusting for Q4 write-downs) vs 86.1 in 2015 (adjusting for one-off charge) 2016 2015 Premiums growth of 0.1% in local currency • ROE after tax • Claims inflation to be offset by 3% price adjustments in 26.2 2017 20.0 • 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 2016 2015 while all financial targets are maintained One-off related to intangibles write-down in 2016 and One-off charge for the savings plan in 2015 3
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 • Pre-tax profit of DKK 800m (DKK 745m) driven by: Pre-tax profit (DKKm) • Lower technical result of DKK 314m (DKK 522m) weighed down by a DKK 250m intangibles write-down and a very 800 745 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 Q4 2016 Q4 2015 • Other income/costs including a DKK 100m write-down on Securator Combined ratio • Technical result adj. for one-offs of DKK 564m 93.1 88.4 (DKK 522m) 5.5 • Intangibles write-down (one-off) of DKK 250m 87.6 • High level of large claims, DKK 197m, weather claims of DKK 115m, run-off gain of DKK 301m Q4 2016 Q4 2015 • Underlying claims ratio (Private) on track showing a 30bps deterioration vs Q4 2016 (90bps in Q1 2016, 70bps in Q2 Expense ratio 2016, 60bps in Q3 2016) 18.0 • Underlying claims ratio (Group) on track showing a 70bps 3.6 deterioration vs Q4 2016 (210bps in Q1, 190bps in Q2, 14.2 210bps in Q3) • 14.4 Investment income of DKK 598m (DKK 242m) • Extraordinary DKK 500m capital gain from the sale of properties, positive equity markets Q4 2016 Q4 2015 One-off related to intangibles write-down 4
Customer highlights 2016 - Number of customers with three or more products increased from 56.7 to 57.2 NPS • NPS of 22 and Transactional Net Promoter Score (TNPS) of 49 22 22 22 • 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. 2016 2015 Target 2017 Customers with ≥3 products (%) • 500,000 insurance agreements updated, hence the majority of customers have the most recent products. 61.3 57.2 56.7 • Corporate Sweden was nominated as the best non-life insurance company for the fourth year running. • TryghedsGruppen paid its members’ bonus to Danish customers 2016 2015 Target 2017 – 8% of the premium paid for 2015. Retention rate 88.9 88.0 88.1 2016 2015 Target 2017 5
Key figures Q4/FY Q4 2016 FY 2016 FY 2015 DKKm Q4 2015 adjusted adjusted 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 6
Premiums and portfolio 7
Positive topline development in Private 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. Gross earned premiums development Local currencies Local currencies (Local currencies) DKKm Q4 2016 Q4 2015 Q4 2016 Q4 2015 Private 2,235 2,172 1.3% 1.1% 1.7 % Commercial 972 970 -0.8% -5.0% Corporate 966 949 0.9% -2.1% -1.6 % Sweden 337 313 12.2% -6.1% Group 4,504 4,393 1.7% -1.6% Q4 2016 Q4 2015 8
Improved technical result adjusted for intangibles write-down Group (DKKm) Private, DK & NO (DKKm) Commercial, DK & NO (DKKm) 366 166 285 147 Q4 2016 Q4 2015 Q4 2016 Q4 2015 564* 522 Corporate (DKKm) Sweden (DKKm) 85 23 9 5 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 *Adjusted for intangibles write-down of DKK 250m 9
Private - average prices DK: 0.4% positive development • House insurance – average price (index 2011 = 100) reflects both price increases and Average price development Y/Y conversion 125 0.4% 0.7% NO 120 (Q3 -0.2%) (Q3 0.2%) 115 • NO: 0.7% positive development 110 reflects primarily price increases DK Average price: 105 4,800 5,500 100 95 90 Motor insurance – average price (index 2011 = 100) • DK: – 0.6% but some stabilisation Average price development Y/Y in sight. Smaller and safer cars NO 115 still dominate new sales but -0.6% 0.7% (Q3 -1.3 %) (Q3 0.8 %) product add-ons and conversion 110 are helping Average price 105 4,200 5,700 100 DK • NO: 0.7% positive development 95 reflects underlying price 90 increases. Avg Motor price in Norway higher reflecting primarily a different type of cars 10
Customer retention remaining stable Private 92% DK Customer retention slightly • 90% down at 89.7 (89.9 at Q3) in 88% Denmark 86% NO • Stable development in Norway 84% 82% Commercial • Customer retention slightly up 92% at 87.1 (86.8 at Q3) in Denmark 90% NO 88% • Retention slightly down in 86% DK Norway at 87.5 (88.0 at Q3) 84% 82% 11
Claims and expenses 12
Underlying claims ratio showing an improved trend Group Private (DK & NO) Commercial (DK & NO) 72.7 69.8 68.9 68.6 74.0* 73.3 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Corporate Sweden 86.6 84.8 77.3 76.9 Q4 2016 Q4 2015 Q4 2016 Q4 2015 Q4 2016 Q4 2015 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 13
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