Analyst Day Follow us on Twitter: @TrygIR 19 June 2017
Agenda Introduction: Morten Hübbe, CEO Recent financial development: Christian Baltzer, CFO Cyber insurance: Ulrik Andersson, Special Risk Director Innovation/The Camp: Lars Bonde, COO and Christian Visti Larsen, CEO of NewBanking Tryg Garanti: Mads Løgstrup, Managing Director Tryg Garanti Concluding remarks: Morten Hübbe, CEO 2
Recent financial development Christian Baltzer, CFO
Underlying claims ratio at same level as Q1 2016 Claims ratio, net (Commercial DK & NO) Group underlying Claims ratio at 77.0% in line with Q1 2016 75 Private underlying Claims ratio at 75.5% also in line with Q1 2016 70 65 Corporate & Sweden underlying claims ratio developed favourably 60 “Expected FY 2017 underlying claims ratio better than FY 2016” 55 50 Group Claims ratio, net (Corporate) 80 77.0 77.0 75 100 70 90 65 80 60 70 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 60 Underlying Claims ratio, net 50 Underlying development is adjusted for run-off, large claims, weather claims and interest. Q1-16: 72.0+8.6-1.0-3.3+0.7=77.0 Q1-17 72.9+6.4-1.1-2.3+1.1=77.0 Private (DK & NO) Claims ratio, net (Sweden) 80 75.5 75.5 75 100 70 90 65 60 80 55 70 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 60 Underlying Claims ratio, net 50 Underlying development is adjusted for large claims, weather claims, run-off and interest. Q1-16: 76.4+3.4-0.0-4.5+0.2=75.5 Q1-17: 73.7+4.5-0.0-3.0+0.3=75.5 4
On track to meet the 2017 expense ratio target Efficiency programme up until 2017 (DKKm) Expense ratio 395 388 15.7 15.6 15.3 15.3 15.1 125 14.8 14.4 14.9 14.6 175 75 65 60 50 250 2013 2014 2015 2016 Q1 2016 Q1 2017 150 145 25 105 100 Adjusted for one-offs As reported 45 2012 2013 2014 Target 2015 Target 2016 Target 2017 2015 2016 2017 Expense Claims FTE - Development Nominal costs in business areas 4,076 3,913 3,703 3,599 313 305 3,359 3,281 3,264 171 169 107 98 61 61 Private Commercial Corporate Sweden 2011 2012 2013 2014 2015 2016 Q1 2017 Q1 2017 Q1 2016 5
Solvency position Q1 2017 Solvency capital requirement walk • Solvency ratio based on the Partial Internal Model is 202 (Q4 2016: 194). 5,200 • Own Funds (OF) is primarily impacted by 5,150 -120 5,100 • Result Q1 2017 of DKK 605m 5,050 46 0 -14 -1 -12 -26 • 26 Dividends of DKK 452m (Q1 2017) 5,000 4,950 5,077 • 4,900 SCR impacted by a lower market risk (down 4,975 DKK 120m) as current properties exposure is 4,850 still below targeted level following the 4,800 Q4 '16 Marked Health Life Default Non-Life Opera- Adjust- Diversi- Q1 '17 fication tional properties transaction announced in ment SCR SCR December Own funds walk • Based on Solvency II Standard Formula the solvency ratio is 162 (Q4 2016: 157). 11,800 605 -452 10,800 -2 -49 86 9,800 8,800 10,037 7,800 9,850 6,800 5,800 Cash dividend Intangible Subordinated Miscellaneous Own Funds Results Own Funds Q1 '17 assets Q4 '16 Q1 '17 debt 6
Tryg is an income stock Shareholder remuneration since 2012 Shareholder breakdown 2016 DKK 10 9 13 8 3.5 3.5 3.4 7 3.2 Danish 2.6 15 6 institutional Percentage 5 Non-Danish institutional 60 4 6.2 3 6.0 Smaller 5.8 12 5.4 5.2 shareholders 2 1 1.6 0 2012 2013 2014 2015 2016 Q1 2017 Ordinary dividend Extraordinary buy back Extraordinary dividend Share price performance since IPO 500 450 400 350 300 250 200 150 100 50 0 7
It is important to know your investment case ”Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” John D. Rockefeller 8
Cyber insurance Ulrik Andersson, Special Risk Director
Agenda 1. Cyber risk – sign of the times 2. The criminals are going digital 3. Data breaches – regulatory development 4. Cyber Insurance and Tryg’s approach 5. Where will it go?
Cyber Risk - sign of the times 11
Cyber Risk - sign of the times • Globalisation fueled by technology Dramatic increases in flows of • goods and capital • Fully automated and digitalised Telegeography.com production processes • Connected devices • Generation and hoarding of data Opportunities and vulnerabilities 12
Cyber Risk - sign of the times Threat from cyber crime against Danish authorities and businesses is Very High . In 2016 victims of cyber related crime reported to the Police incurred losses of more than DKK 180m 13
From security to Risk management 14
Connected world DATACENTER 1 Outsourced DATACENTER 2 develpoment 15
Cyber threats 2017 Advanced Crimeware persistent Cyber CaaS Data breaches threats terrorism Knowingly /unknowingly EU-GDPR Ransomware Drive by Phishing CEO Fraud attacks Virus Denial of Spear Internet Trojans Service Phishing of Malware (Ddos) Things 16
Criminals are going digital…. 17
Phishing 18
Physical phishing 19
CEO fraud 20
Threats are real 21
Satan – a new business model 22
Data breaches An emerging regulatory environment • Increased focus on data protection over last decade • Industry standards for payment cards including fines in case of breaches • Data Security Breach Notification Legislation in California 2003 – now in place in 48 US states • General Data Protection Regulation in EU 2018 - all information related to individuals • Notification within 72h to authorities and all PCI DSS ~ Payment Card Industry Data Security Standards affected by breach PHI ~ Protected Health Information PII ~ Personally Identifiable Information • Introduce role of Data Protection Officer • Fines for non-compliance up to 4% of global revenue or € 20m • PII includes names, usernames, license plates…. 23
Cyber insurance market Source AON Tryg estimates US market frontrunner in development of cyber • A similar development in Europe and Scandinavia • is expected following both the GDPR and insurance development in criminal activity • Increase in market closely connected with Data • Assuming similar growths rates as seen in the US Breach Protection Legislation a European market in the range $0.3bn to $0.5bn • European Market estimated at $0.1-0.2bn in 2020 • Scandinavian market estimated at around $10- 20m in 2015. This would grow in turn to approx. $50m-$75m 24
Cyber vs traditional insurance Cyber insurance First party Third party Property damage Notification Business interruption Privacy liability Forensics Data restoration Media liability Credit monitoring Fraud Regulatory costs Extortion 25
Tryg Cyber insurance Nordic product Forensics Restoration of systems and data Network damage Costs associated with extortion • Targets larger companies Legal assistance • Launched in Sweden, Denmark and Loss of Data Third party liability Norway in 2017 Regulatory and notification costs • Claims handling by global loss PR-assistance Media liability adjuster Charles Taylor ID- og credit monitoring Business interruption (up to 3 months) Media liability ( ) Local product • Targets smaller companies (turnover < DKK 100mio) Forensics Network damage Restoration of IT systems • Launched in Denmark in 2017 Restoration of data possible transfer to Norway in 2017 Loss of Data • Focus on restoration costs 26
Tryg Cyber insurance Nordic Product • Coverage is provided from DKK 1m and up to DKK 20m • Tryg is providing cover in cooperation with international reinsurer and keeps 10% on a proportional basis • Standard pricing up to a turnover of DKK 500m otherwise referral on a case by case basis Local Product Coverage is up to DKK 5m (typically 1m) • • Tryg keeps risk in own books and cooperates with local provider for claims adjusting • Excludes a number of sectors • Possible to buy DNS service as add on 27
Where will it go ? Risk or Peril ? Wannacry outbreak map 28
Where will it go ? Stand alone or integration? Cyber insurance Third party First party Property Liability 29
Where will it go ? Risk Management never goes out of style..! Identify Evaluate Monitor Mitigate 30
Innovation Tryg Lars Bonde, COO
Do we have a choice? 32
The world is changing around us – our strategy needs to reflect this change The emergence of InsurTech has been a key driver for innovation within the insurance industry Analysts predict that every third job in the industry will disappear and that the decisions that we take now will determine our future and will also impact the rest of our society Morten Hübbe 33
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