Annual results 2010 Webcast presentation 10 February 2011
Events in 2010 2 0 1 0 • Premium income of DKK 19.5bn and pre-tax income of DKK 941m • Solid growth, tight cost control and improving underlying performance • High claims expenses - including one-off events of DKK 1.4bn above a normal year • Strong investment return supported by higher equity markets. Q4 2 0 1 0 • Best Q in 2010 – pre-tax result of DKK 512m • Premium initiatives contributed DKK 275m i.e ~ 5% of premiums. • Underlying claims ratio improved due to premium and claim prevention initiatives. Premium growth Combined ratio In local currency and excl. Moderna impact % % 120.0 6.0 110.0 5.0 100.0 4.0 90.0 80.0 3.0 70.0 2.0 60.0 Q108 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 08 08 08 09 09 09 09 10 10 10* 10 08 08 08 08 09 09 09 09 10 10 10 10 * Q3 2010 before adjustment for change of ownership 2
Key performance indicators Gross prem ium Com bined ratio DKKm 110 5,000 100 4,500 90 80 4,000 70 3,500 60 3,000 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 08 08 08 08 09 09 09 09 10 10 10 10 08 08 08 08 09 09 09 09 10 10 10 10 Including extraordinary winter impact Expense ratio Claim s ratio 17.1 17.2 16.0 19.1 17.3 17.7 15.9 18.0 17.2 17.3 16.3 17.2 3.0 90 1.3 80 1.8 3.3 1.6 2.0 2.8 2.9 3.1 1.4 3.0 2.4 70 17.8 17.7 15.5 15.5 60 15.2 14.7 14.6 14.5 14.3 14.1 13.5 13.3 50 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 08 08 08 08 09 09 09 09 10 10 10 10 08 08 08 08 09 09 09 09 10 10 10 10 Including extraordinary winter impact Denmark & Norway Finland & Sweden Data before 2009 is not corrected for the sale of Marine Hull business. 3
One-off and extraordinary events 2010 One-off and extraordinary events ( DKKm ) 2,500 2,000 1,500 One-off events DKK 2.2bn. 1,000 Extraordinary events DKK 1.4bn. 500 0 Large claims Winter Q4 Ruling workers' compensation Cloudburst Winter Q1 4
Performance in 2010 Private Nordic - CR Com m ercial Nordic - CR Corporate Nordic - CR Weather impact 10 0 11 0 1 20 Workers’ comp. ruling Weather impact Weather impact 1 1 1 .6 9 2 .7 10 0 1 10 Workers comp. ruling 2 .7 7 .1 Large claims 9 6 .4 9 0 9 2 .8 2 .4 1 0 1 .2 1 .5 5 .6 2 .5 1.0 1 00 5 .9 9 0 0 .9 9 3 .2 8 0 8 7 .6 9 1 .8 9 1.3 5 .8 9 0.8 90 8 0 83 .5 9 7.8 9 7.1 8 1.1 8 7.4 7 0 80 7 0 20 0 8 2 00 9 20 1 0 20 08 200 9 201 0 20 08 2 00 9 2 0 10 • 8.3% premium growth – price • 5.9% decline in premiums (1% • 9.6% premium growth (3.0 driven (5.8 excl. Moderna effect ) excl. portfolio shift) decline excl. portfolio shift) • DK hit by heavy cloudburst of • Workers’ comp. hit by high • Workers’ comp. hit by high court gross DKK 200m and extraordinary court ruling in Q3. ruling in Q3. winter of DKK 450m. • Increased use of workers’ • Increased use of workers’ comp. • NO hit by extraordinary winter comp. of DKK 260m, but improvement in • Competition in DK and especially underlying combined ratio • Premium hikes of 10-15% + workers’ comp. affected volume. claim prevention actions in • Change of ownership insurance several products - to bring • Prudent underwriting and cost called for extra reserves. profitability to target levels. control – to sustain profitability. • 17% premium growth in FI and combined ratio reduced by 5% • Premium hikes will help profitability going forward. 5
Premium increases and tighter risk management improve underlying performance 95 90 85 81.6 81.3 80 77.9 75 71.3 70 65 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Private Nordic Commercial Nordic Underlying developm ent adjusted for extraordinary w inter claim s. 6
Premium increases visible in Private Nordic • Private house in Denmark increased by 11.9% and Norway by 10% y-o-y 2010 • Average price development within private cars in Denmark turned positive by 2.4% y-o-y • Private motor in Norway continued upwards with 5.2% y-o-y Average prices - Private houses Average prices - Private cars ( I ndex 2 0 0 5 = 1 0 0 ) ( I ndex 2 0 0 5 = 1 0 0 ) 140 120 130 110 120 100 110 90 100 80 90 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 1 1 1 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 7
Improved development in claims ratio – House insurance and Finland 1 6 0 1 5 0 House DK* 1 4 0 1 3 0 1 2 0 1 1 0 1 0 0 9 0 8 0 7 0 Q1- 08 Q2- 08 Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10 1 1 0 1 0 0 House NO* 9 0 8 0 7 0 6 0 5 0 Q1- 08 Q2- 08 Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10 1 0 0 9 5 Finland 9 0 8 5 8 0 7 5 7 0 Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10 * ) Excluding winter and cloudburst effect 8
Major claims initiatives Surveying Surveying Pruning Pruning Large claim s Hom e condition Large claim s Hom e condition proces report proces report New contents New contents coverage coverage Craftsm an controlling Craftsm an controlling Docum entation Docum entation W indscreen car claim s W indscreen car claim s 9
Managing cloudburst risk Visualisation of cloudburst • Cloudburst is basicly a local phenomenon and often coincidental where it hits • Some places are more vulnerable to damage when it rains • Model to identify water risk of heavy rain established • Frequency for customers with basements app. 10 times higher • Analytical results will form the basis for future: I llustration of w ater flow Geom atic w aterisk - riskassessment - conditions - pricing 10
Expense ratio Continued focus on expenses drives expense ratio downwards by • streamlining the distribution platform • digital and paperless process handling • in-house rotation reduces need for external hiring • investments in branding impacted expense ratio by 0.4 % -point in 2010 Breakdow n of Group expense ratio Expense ratio 17.0 16.9 16.8 17.1 17.2 17.0 64.5 60.4 0.4 0.8 1.5 1.3 2.7 50 2.9 45.8 30.1 16.6 24.1 16.5 16.4 16.0 16.2 15.6 15.5 14.5 14.1 16 15.5 15.6 2005 2006 2007 2008 2009 2010 2005 2006 2007 2008 2009 2010 Denmark & Norway Finland & Sweden Denmark & Norway Finland & Sweden Data before 2009 is not corrected for the sale of Marine Hull business. 11
and the future vision for 10 in 20 2 0 2 5 2 0 2 0 2 0 1 0 2 0 1 5 Cost reductions Low er distribution and adm in cost 1 7 % 1 0 % Head count reduction and increased m arket position Drivers to achieve the vision Tryg Transition Efficiency Markets Other cost reductions • Self-service • New products • Meet profitability • Only @ customer targets communication • Automation • Organisational structure • Increase market share • Lower/ reduced commission • Reduce admin and in Sweden and Finland rates distribution cost • Outsourcing non-core processes • Fewer local offices 12
Division of the investment return Gross investm ent return Match Risk minimisation – create a return close to tech inter- Bonds DKK 1 ,1 8 5 m est rate and discounting Result DKK -5 m + / - DKK 50m per quarter Mism atch 0 .0 2 % Equities DKK 2 6 1 m Absolute return – creates the Real estate DKK 3 0 0 m Free investm ent best return after risk, capital load and investment cost Total DKK 1 ,7 4 6 m Result DKK 7 7 2 m Return of 7 .4 % I nvestm ent expenses etc. Stable items not directly I nterest expenses related to the return on Reversed dom icile expenses investment Stable Result DKK + 2 3 9 m I nflation m ism atch Unstable items not directly Exchange rate adjustm ents related to the return on Unstable Other loans and debt etc investment Result DKK -4 2 m . 13
Capitalisation DKKm 12,000 11,000 10,000 9,000 8,000 7,000 6,000 8 8 8 9 9 9 0 0 0 t t t t t t 0 0 0 0 0 0 1 1 1 u u u u u u o o o o o 0 0 0 o 1 2 3 1 2 3 y y y y y 2 2 2 y Q Q Q Q Q Q a a a a a a 1 2 3 p p p p p p Q Q Q e r e r e r e e e r r r o t o t o t f f f f a f a f a e e e b b b 8 9 0 0 0 1 8 9 0 0 0 0 0 0 1 2 2 2 0 0 0 2 2 2 Capital requirement Buffer (5%) Surplus capital 14
Suggested dividend for 2010 Dividend policy: • 5 0 % of net earnings 40 • share buy backs in addition 35 30 21 DKK per share 25 12.5 20 33 15 21 10 17 15.5 5 6.5 4.0 0 2005 2006 2007 2008 2009 E2010 Cash dividend Share buy back 15
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