Sales force presentation 8 November 2016 Follow us on Twitter: @TrygIR
Our investment case in a nutshell ”Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” John D. Rockefeller 2
Scandinavia vs the rest of the world Corruption Index Cost 1. Denmark High insurance penetration in the Nordics 2. Finland Premiums per capita (USD), 2015 3. Sweden 4. New Zealand 5. Netherlands 2,000 5. Norway Norway 1,401 1,380 7. Switzerland 1,330 8. Singapore 1,129 1,067 GDP Per Capita, PPP: USD 61,255 9. Canada 1,000 10. Germany, UK and Luxembourg 612 Average Salary: USD 3,502 … Government Debt: 38.8 % of GDP 0 16. United States Unemployment Rate of Labour Force: 4.3 % 23. France 61. Italy Source: Transparency International Euro Area Sweden GDP Per Capita, PPP: USD 39,961.8 GDP Per Capita, PPP: USD 46,702 Motor Insurance prices Average salary: USD 1,508 Average salary: USD 2,702 DK: DKK 4,200 Government Debt: 90.7 % of GDP UK: GBP 440 (DKK3,652 but 4,268 beg of June!) Government Debt: 61,7 % of GDP Unemployment Rate of Labour Force: 10.9 % Source: ABI (Association of British Insurers) Unemployment Rate of Labour Force: 7.4 % Top 10 empathetic countries in the world Denmark 1. Ecuador GDP Per Capita, PPP: USD 46,574 2. Saudi Arabia 3. Peru Average salary: USD 3,435 4. Denmark 5. United Arab Emirates (UAE) Government Debt: 54.2 % of GDP 6. Korea 7. United States Unemployment Rate of Labour Force: 6.2 % 8. Taiwan 9. Costa Rica 10. Kuwait Source: Michigan State University, Journal of Cross-Cultural Psychology 3 17 November 2016
Insurers’ perception DKK vs UK (IBM study 2007) Danish customers completely and strongly agree • Overall I am very satisfied with the 43% 33% services of my insurance company 50% 72% • My insurance agent only sold me 43% 20% insurance coverage that I really needed 49% 67% • My present insurance coverage offers 42% 39% me enough flexibility 62% 64% • Claims: my insurance company in 45% 37% uncomplicated and helpful way 53% 63% • I have full confidence in my personal 46% 36% insurance agent 62% 57% • My insurance is more cost effective than 53% 40% most other insurances 62% 52% 0% 20% 40% 60% 80% F UK DE DK 4
Today’s IR insurance experiences Some 58% of the entire UK households often Denmark and Norway have Non-life market is Motor described as savvy when some of the highest insurance with a 10 years avg COR it comes to financial penetration in Europe. High of 99%. Motor tariff services. Very low brand brand loyalty, very high increases attract much loyalty, high focus on retention levels, low price negative press every year. prices, high whiplash sensitivity compared to other Insurers have a very bad claims characterize a markets . Motor ” only ” 30% of image, self-insurance highly competitive total market and a very widely spread and frauds market profitable business. High are high. barriers to entry also driven by very efficient players, expense ratio between 14% and 17% not uncommon 5
Tryg – at a glance I Gross premium split by products 2015 • Tryg goes back to 18th century. 10 Motor • Very strong brand position especially in Denmark. 31 14 Workers' comp • Non-life insurance in Denmark, Norway and Sweden. Health & accident Percentage Liability • Approx. 80% retail business. Fire & property - private Norway Retention rate - Private Market position: #3 5 Fire & property - comm. Market share: 13.4% 24 11 CR in 2015: 87.9 Other 92% 5 DK 90% 88% 86% Sweden NO Market position: #5 84% Market share: 2.9% 82% CR in 2015: 82.7 Retention rate - Commercial Denmark Market position: #1 Market share: 18.1% 92% CR in 2015: 85.2 Business split 2015 90% NO 88% 22 86% DK Private 84% 82% Percentage Commercial 56 22 Corporate 6
Tryg – at a glance II Shareholder performance since IPO Shareholder remuneration since IPO DKK New dividend 10 policy 9 8 3.5 3.4 7 3.2 2.6 6 4.2 5 2.6 4 6.6 3 6.0 5.8 5.4 5.2 4.2 2 3.4 3.1 2.6 2.5 1 1.3 1.3 0.8 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 H1 H1 2015 2016 Cash dividend Ordinary buy back Extraordinary buy back Shareholder breakdown 2015 16 Strengthening of Danish brand value institutional 12 Percentage Non-Danish institutional 60 Smaller 11 shareholders 7
Financial highlights Q3 2016 - Higher technical result and substantially higher investment return • Pre-tax profit of DKK 923m (DKK 186m) driven by: Pre-tax profit (DKKm) • Higher technical result of DKK 744m (DKK 647m), underlying performance almost in line as a restructuring 923 charge of DKK 120m was booked in Q3 2015 Substantially higher investment result of DKK 191m (DKK • 186 -441m), equity markets posted a good performance in Q3 2016 while fell heavily in Q3 2015 Q3 2016 Q3 2015 • Combined ratio Technical result of DKK 744m (DKK 647m) • Lower level of large & weather claims but also significantly lower run-offs 86.1 83.7 • Underlying claims ratio (Private) shows a 60bps deterioration vs Q3 2015 (90bps in Q1 2016, 70bps in Q2 2016) • Price adjustments continued as planned, impact expected Q3 2016 Q3 2015 primarily in 2017 Expense ratio • Expense ratio of 14.5 (16.3) and combined ratio of 83.7 (86.1) 16.3 14.5 • Investment income of DKK 191m (DKK -441m) • Good equities performance in the quarter (large drop in Q3 2015) but also solid returns across all asset classes Q3 2016 Q3 2015 • Solvency ratio of 217 including Skandia child portfolio 8
Premiums and portfolio
Positive topline development in Private Group premiums flat in local currencies, Private lines up, Commercial down & Corporate flat In Commercial Q3 2015 top-line growth boosted by a one-off regulation of DKK20m, adjusting for this the development is broadly flat. Private lines up 0.7% with Denmark up 2.2% while Norway posting a slight negative development Sweden development impacted primarily by the inclusion of the Skandia child insurance portfolio Gross earned premiums development Local currencies Local currencies (Local currencies) DKKm Q3 2016 Q3 2015 Q3 2016 Q3 2015 Private 2,190 2,211 0.7% 0.3% 0.6 Commercial 977 1,022 -3.4% 0.2% Corporate 968 984 0.0% 2.6% 0.0 Sweden 384 373 4.5% -1.4% Group 4,514 4,583 0.0% 0.6% Q3 2016 Q3 2015 10
Private - average prices DK: price adjustments help in • House insurance – average price (index 2011 = 100) softening negative development Average price development Y/Y NO in average price 115 -0.2% 0.2% (Q2 -0.7%) (Q2 0.1%) 110 • DK: Y-o-Y development still DK 105 slightly negative but R12 turning Average price: 4,800 5,500 100 positive thanks to price adjustments 95 90 • NO: small positive development reflect underlying price increases Motor insurance – average price (index 2011 = 100) • DK – 1.3% decrease y/y driven by Average price development Y/Y smaller & safer cars partly offset NO 115 by sale of additional coverages -1.3% 0.8% (Q2 -2.1%) (Q2 0.9%) 110 • Competition remains strong in Average price 105 4,200 5,700 Motor DK but profitability very 100 DK high 95 90 NO: small positive development • reflects underlying price increases 11
Customer retention Private 92% DK Customer retention at 89.9 in • 90% Denmark, stable development 88% • Stable development in Norway 86% NO 84% 82% Commercial • Modest fall in Denmark mostly 92% driven by price increases 90% NO • Retention moving slightly 88% upwards in Norway 86% DK 84% 82% 12
Claims and expenses
Increase in underlying claims ratio, net Group Private (DK & NO) Commercial (DK & NO) 72.7 72.3 69.4 68.8 74.1 71.9* Q3 2016 Q3 2015 Q3 2016 Q3 2015 Corporate Sweden 85.1** 76.8 77.0 76.7 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Q3 2016 Q3 2015 Underlying development is adjusted for large claims, weather claims, run-off and interest. *Q3 2015 figure is adjusted for a DKK 40m one-off related to the DKK 120m restructuring charge booked in that quarter 14 ** Mainly driven by a higher level of medium-sized claims
Motor insurance, not all claims are coming down Motor insurance accidents Bumpers, price increases in % from 2011-2016 Monthly average based on Jan-Sept 27,978 26,505 25,491 25,402 24,710 2012 2013 2014 2015 2016 Source: Forsikring & Pension (Danish Insurance Association) LV H1 results ( London-Victoria, UK third largest Motor insurer with 11% market share) “In 2016 Six times higher we are seeing motor claims inflation at the top end of our expectations driven by increases in risk of an accident technology in cars which makes repair costs more while texting* expensive” Mobile phones data traffic (in ‘000 GB) * Source: Transport DTU, September 2016 123,907 89,569 67,449 48,377 Source: Rådet for Sikker Trafik (The Danish Council for H1 2014 H2 2014 H1 2015 H2 2015 Traffic Safety) ” Drive a car when you drive a car ” Source: Energistyrelsen (Danish Energy Agency) 15
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