Q2 2020 results Investor presentation
Q2 2020 results
Investor presentation
Contents
2
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.
• Highlights Q2 2020 3
• Premiums and portfolio 10
• Claims and expenses 14
• Investment, capital and targets 19
• Roadshows & Conferences 28
• Background material 29
• Appendix 47
•Technical result of DKK 1,063m driven by strong top-line development and improved core business
•Investment income of DKK 541m as a result of sharp capital markets rebound following the Q1 shock
•Solvency ratio of 193 at the end of Q2, improved PIM and strong organic capital generation
Pre-tax profit of DKK 1,539m (DKK 979m) driven by:
•Weather claims at 0.9%, large claims at 1.3%, run-off result at 3.6%
•Private underlying claims ratio 20bps better than Q2 19, Group underlying claims ratio 60bps better than Q2 19
•Expense ratio of 14.3 (14.2) - guidance for 2020 unchanged
•“FY 2020 underlying claims ratio expected to be better than 2019”
Technical result of DKK 1,063m (DKK 979m)
• Positive investment result characterised by a rebound in equity and credit markets
•Free portfolio and Match portfolio both reported a good performance
Investment income of DKK 541m (DKK 57m)
•TryghedsGruppen’s Board of Representatives recently approved the member bonus for the fifth consecutive year. The bonus
corresponds to 8% of premiums paid for 2019 as per previous years.
TryghedsGruppen approved members’ bonus for 2020
Financial highlights Q2 2020
3
- Higher technical result of DKK 1,063m, strong top line development and improved core business- Investment income of DKK 541m following a strong rebound in capital markets after Q1 shock- Solvency ratio of 193, as mentioned on March 27 FY dividend decision as opposed to quarterly in 2020
Pre-tax profit (DKKm)
Combined ratio
Expense ratio
1,539
Q2 2020 Q2 2019
Q2 2020
80.9
Q2 2019
82.1
Q2 2019Q2 2020
14.3 14.2
4
• Transactional Net Promoter Score (TNPS) of 70 (67)
• Retention remained at very high levels – Private Denmark as
expected impacted by a drop in Nordea portfolio (more than offset
by new customers from Danske Bank)
• Number of products per customer increased
• TryghedsGruppen has approved the payment of an 8% member
bonus for the fifth year in a row
• Awareness of member bonus improved, especially for non-
customers, it was 29% against 25% in Q2 2019
Number of products per customer
TNPS
Customer highlights Q2 2020
3.9
Q2 2020 Q2 2019 Target 2020
3.8
4.0
Target 2020Q2 2019Q2 2020
Group (DKKm)
Technical result higher than Q2 2019
5
Q2 2020 Q2 2019
1,063
Private, DK & NO (DKKm) Commercial, DK & NO (DKKm)
Corporate (DKKm) Sweden (DKKm)
• Private – Run-off Q2 2020: DKK 45m or 1.4% (DKK 84m or 2.8%)
• Commercial – Run-off Q2 2020: DKK 36m or 3.4% (DKK 86m or 8.1%)
• Corporate – Run-off Q2 2020: DKK 73m or 7.8% (DKK 63m or 6.4%)
• Sweden – Run-off Q2 2020: DKK 57m or 13.6% (DKK 54m or 13.8%)
Q2 2019Q2 2020 Q2 2020 Q2 2019
Q2 2019Q2 2020 Q2 2020 Q2 2019
* The sum of the four segments is DKK 18m higher than the Group as COVID-19 expenses are booked under the ”Other” segment’
ContentTravel Motor
+80.0%
-0.1%
-7.5%
2019
2020
Number of claims DK (‘000) Financial impact H1 2020
FY2019 2020 H1
+51.5%
Customer contacts Travel insurance DK (‘000)
COVID-19, helicopter view
• Total negative COVID-19 H1 impact including high investments losses and large impact from travel expenses in Q1
• Very high level of customer contacts with high customer satisfaction
• High level of travel claims to some degree offset by lower frequencies for other business lines
• During the last few weeks and following the re-opening of societies, claims frequencies are back to normal levels
Tra
vel in
sura
nce
Moto
r, C
onte
nt,
accid
ent
etc
To
tal C
OV
ID
-19
im
pact
Gro
ss i
mp
act
Rein
sura
nce
Net
technic
al re
sult im
pact
Expenses
Investm
ent
6
Targeted benefits 2019-2021
• Full run rate synergies impact in 2021 of DKK 300m
• 50% impact expected in 2020
• DKK 43m achieved in Q2 2020
• DKK 18m from “lower” claims using Tryg procurement for Alka
• DKK 15m from cost benefits especially related to staff functions
• DKK 10m revenue synergies through cross selling to Alka customers using Tryg agent model
7
Claims Revenue optimisation
and commercial best
practice
Cost optimisation Total
Realised benefits and targeted benefits 2021 (DKKm)Alka merger benefits by category 2021 (DKKm)
2019 2020 2021
Alka synergies status update
Claims Total synergies
41
Cost
7757
Revenue
175
Realised synergies H1 2020
Realised synergies FY2019
Targeted synergies 2021
Strategic initiatives
• STP: 37% (target of 50% in 2020)
Primary driver for STP from optimizing existing robots
to handle more claims, and from the new claims
handling system starting to handle simple claim
requests.
• Self Service: 60% (target of 70% in 2020)
Digital self service solutions are continuously
developed with good traction in usage. However, in H1
2020, there has been a significant increase in phone
calls due to Covid-19 which makes it challenging to
reach the target of 70% self service.
• Financial benefits: DKK 20m
Digital initiatives across the Nordics have realized
benefits for appr. DKK 80m in the strategy period.
Accumulated improvement at DKK 120m. Hereof DKK
~30m in H1 2020
Private business: ~DKK 20m
• Continued focus on optimal channel mix. Purpose is
to ensure better customer experience and efficient
distribution.
• Independent sales agents continues to show good
results.
• Due to pandemic the number of virtual customer
meetings have increased. Experience with this to be
used going forward.
Commercial business: ~DKK 10m
• In Norway, there has been a focus on adjusting the
distribution mix and improving hit rates.
• Continued focus on new sales agent profiles and
independent agents in Denmark shows good results.
Digital Empowerment of CustomersFinancial Target DKK 100m –improvement DKK 20m in H1 2020
Distribution EfficiencyFinancial Target DKK 150m in 2020 –improvement DKK ~DKK 30m in H1 2020
Claims ExcellenceFinancial Target DKK 600m in 2020 –improvement DKK 125m in H1 2020
Product & Service InnovationPremium target of DKK 1bn in 2020+ - DKK 200m in H1 2020
Accumulated total saving from Claims Excellence at DKK
475m. Hereof DKK 125m in H1 2020.
• ~DKK 55m: Savings from leverage of Trygs procurement
power. In 2020, Tryg has made a push to improve
sustainability by e.g. focusing on windshield repair over
replacement, and by selling residuals parts from
damaged vehicles to the professional market.
• ~DKK 50m: Improvement of the claims handling
process. E.g. increased focus on using Tryg partners for
auto repairs, higher quality in claim assessments and
better recourse management.
• ~DKK 20m: Benefits from implementing the fraud
detection methodology from Alka across the Nordics.
New market demands addressed through a balanced mix
between new products, bundling and prevention.
• ~DKK 90m: New products (e.g. Cyber, Undo:, Pet,
GoMore)
• ~DKK 65m: Bundling (e.g. Health, Child, Group
accident)
• ~DKK 45m: Prevention (e.g. Tryg Drive, Alarm, Rat
blocker)
• Tryg Garanti now has offices in Germany, Austria and
the Netherlands to promote the credit and surety
business.Achieved Target
475
2018 2019 2020
Achieved Target
850
2018 2019 2020
TargetAchieved
80
20192018 2020
120
Achieved Target
2018 20202019
8
Value of Tryg since IPO
Strong focus on shareholders’ remuneration
9
Aim for a nominal stable increasing ordinary dividend (annual)
High profitability and low growth implies limited increase in capital requirement
Shareholders’ remuneration
Shareholder remuneration since 2012
Share price performance since IPO
October 2005 (IPO) Value of Tryg today Dividend and buy
back since IPO
Tryg moves to FY dividend decision
for 20206.80
2013
3.30
5.405.20
8.45
2017
2.60
2012
3.203.40
5.80
2014
3.50
6.00
2015
3.50
6.20
2016
6.40
2018
1.65
2019
6.60
Extraordinary dividend
Extraordinary buy back
Ordinary dividend
Premiums and portfolio
• Group premiums were up 7.0% in local
currencies
• Private lines reported a 10.0% growth,
impacted by much higher portfolio start 2020
than start 2019, cross selling, strong partner
agreements and independent agents
• Commercial growth was 4.4% impacted by
strong organic growth in Denmark and price
initiatives for larger Commercial clients in
Norway
• Corporate growth 0.0% - high acceptance of
price hikes (avg. 10%) in Denmark while top-
line fall in Norway due to price hikes (avg.
12%)
• Sweden increased by 7.4% partly driven by
price adjustments for motor insurance
11
DKKm Q2 2020 Q2 2019Local currencies
Q2 2020Local currencies
Q2 2019
Private 3,169 3,010 10.0% 33.6%
Commercial 1,068 1,062 4.4% 8.6%
Corporate 945 994 0.0% 1.9%
Sweden 415 392 7.4% 6.4%
Group 5,595 5,451 7.0% 19.7%
Group premiums up 7.0% in Q2
Q2 2020 Q2 2019 ex Alka
7.0
5.9
Gross earned premums development (local currencies)
12
• DK: 2.6% (Q1 2.4%) positive development reflects price adjustments and some change in vehicle mix towards larger cars
• NO: 1.9% (Q1 1.5%) positive development reflects underlying price adjustments. Avg Motor price is higher in Norway primarily reflecting different type of cars
• DK: 2.6% (Q1 2.1%) positive development reflects price adjustments
• NO: 0.7% (Q1 2.0%) slightly lower level than previous quarter partly reflected in large partner agreements negotiation
Private - average prices
Q4
17
Q2
12
Q2
20
Q2
11
Q4
11
Q4
12
Q2
13
Q4
13
Q4
16
Q2
14
Q4
14
Q2
15
Q2
19
Q4
15
Q2
16
Q2
17
Q2
18
Q4
18
Q4
19
Average price Denmark Norway
House insurance 5,300 6,000
Q2
18
Q2
14
Q4
13
Q2
20
Q2
11
Q4
11
Q2
12
Q4
14
Q2
15
Q4
12
Q2
13
Q4
15
Q2
16
Q4
16
Q2
17
Q4
17
Q4
18
Q2
19
Q4
19
DK NO
DK NO
Mo
tor i
nsu
ran
ce
Ho
use i
nsu
ran
ce
Average price (index 2011 = 100)
Average price Denmark Norway
Motor insurance 4,700 6,100
Average price (index 2011 = 100)
Tryg calculate the increases as the average price last four quarters divided by average prices previous four quarters
Customer retention remains at very high levels
13
• DK: customer retention stable at 88.5% (88.5%)
• NO: customer retention at 89.3% (88.4%) – highest level in 10 year
• DK: Retention fell to 90.9% (91.6%) driven by outflow of customers from the Nordea agreement, retention would have been 91.8% excludingthis
• Nordea churn more than offset by new sales to Danske Bank customers
• NO: customer retention up to 87.8% (87.2%) showing an improved trend
Q2
13
Q4
13
Q4
15
Q4
14
Q2
14
Q2
15
Q2
16
Q4
16
Q2
17
Q4
17
Q2
18
Q4
18
Q2
19
Q4
19
Q2
20
DK NO
Q2
13
Q2
15
Q2
14
Q4
15
Q4
18
Q4
13
Q4
14
Q2
16
Q4
16
Q2
17
Q4
17
Q2
18
Q2
19
Q4
19
Q2
20
DK NO
Priv
ate
Com
mercia
l
Claims and expenses
Claims ratio, net (Sweden)
Claims ratio, net (Corporate)
Claims ratio, net (Commercial DK & NO)
Group underlying claims ratio at 69.9, 60bps better than Q2 2019
Private underlying claims ratio at 68.1, 20bps better than Q2 2019
“Expected FY 2020 underlying claims ratio better than FY 2019”
Going forward a slightly lower improvement in Private is expected because of strong
growth offset by more improvements in particular in the Corporate segment
15 * Underlying development is adjusted for large claims, weather claims, run-off, interest and COVID-19 impacts.Due to some rounding there may be slight differences in the reported underlying claims ratio
Underlying claims ratio improving
Group underlying claims ratio
Private underlying claims ratio
Q2
17
Q4
16
Q1
18
Q2
16
Q3
16
Q1
17
Q3
17
Q4
17
Q2
18
Q3
18
Q1
20
Q4
18
Q1
19
Q2
20
Q2
19
Q3
19
Q4
19
Q4
16
Q2
20
Q3
16
Q2
16
Q1
18
Q1
17
Q2
17
Q4
17
Q3
17
Q2
18
Q3
18
Q4
18
Q1
19
Q2
19
Q3
19
Q4
19
Q1
20
Q1 20Q2 19
70.5
Q2 20Q3 19 Q4 19
69.9
Q3 19 Q2 20Q4 19Q2 19
68.1
Q1 20
68.3
Q1
17
Q2
16
Q3
16
Q2
17
Q4
17
Q3
17
Q2
19
Q4
16
Q1
18
Q1
19
Q2
18
Q3
18
Q4
18
Q3
19
Q4
19
Q1
20
Q2
20
COVID-19 financial impact
Gross Q1 Q2 H1
Group
Travel -255 10 -245
Motor 35 33 68
Property 15 11 26
Accident 15 19 34
Other 10 21 31
Gross Insurance impact -180 95 -85
Reinsurance
Travel 140 140
Technical result impact before expenses -40 95 55
COVID-19 related expenses* -20 -18 -38
Investment result -980 541 -439
Total impact from COVID- 19 -1.040 618 -422
• The impact is calculated by comparing to a normalised level of frequency and average claims level for specific lines of business
• The Q2 net impact was a positive DKK 95m primarily driven by lower claims frequencies in different lines of businesses.
• During the last few weeks frequencies have come back to normal, and as most customers are expected to spend their summer in Denmark and Norway, frequencies may increase to higher than normal
• The investment results in Q1 and Q2 were primarily impacted by financial markets reactions to COVID-19.
• As disclosed in Tryg's newsletter (August 2019), the annual investment return is expected to be between DKK 0-200m annually
16
* COVID-19 expenses are related to IT, admin and facility costs
Large claims, net DKKm Weather claims, net DKKm
Claims reserves discounting rate
17
Expected annual
level 2020: DKK 600m
Expected annual
level 2020: DKK 550m
2015 20162014 20192017 Q2 20202018 Q2 2019
550
2014 Q2 201920172015 2016 20192018 Q2 2020
600
0.5
0.0
1.0
2.5
1.5
2.0
3.0
0.7
Q2 2020
1.0
2015
0.9
2016
1.0
0.1
2017 2018
1.1
0.7
2019 Q2 2019 2016
6.55.4
6.7
2015
7.0
2017 2018
5.5
2019 Q2 2019 Q2 2020
5.3
3.6
Large claims, weather claims and run-off
Run-off net, effect on combined ratio
18
• Efficiency initiatives in 2017 brought down overall costs
• Investments in digitalisation will partly be financed through efficiency gains
• Expense ratio target for 2020 around 14%
• Alka synergies of DKK 15m helped overall costs level
• Number of employees increased
• Increase in business volume
• Increase in distribution power in general
• Guarantee expansion in Europe
Expense ratio of 14.3 in line with 2020 target
13.8
Private CorporateCommercial
17.518.6
Sweden
13.7
11.0
16.5
11.0
16.6
Q2 2020
Q2 2019
3,373
20152013
4,232
2011 20142012 20182016
4,076
2017 2019 Q2 2020
3,9133,703
3,3593,599
3,264
4,0274,151
2017 20192015
15.3 15.7
2016
14.0
Q2 2020
14.4
2018
14.2
Q2 2019
14.2 14.3
Expense ratio by business areas FTE development
Expense ratio
Investment, capital and targets
Total investments
DKK 40.2bn
Match portfolio
DKK 29.3bn
Freeportfolio
DKK 10.9bn
Splitting up the portfolio ‘risk-wise’DKKm
Denmark Norway Sweden
Match portfolio split Free portfolio split
Emerging markets
Investment grade
Inv. Property
Equities
Inflation linked bonds
Bonds
High yield
Investments – split in match & free portfolio
20
Equity portfolio split by sectorsCorporate bonds portfolio (DKK 3.0 bn) rating split*
Investment return – low risk remains key
21
Key figures investments (DKKm) Q2 2020 Q2 2019 2019
Free portfolio 519 161 857
Match portfolio 127 -43 -42
Other financial income and expenses -105 -61 -236
Total investment return 541 57 579
2%2%
2%
INFORMATION TECHNOLOGY
FINANCIALS
HEALTH CARE
CONSUMER DISCRETIONARY
INDUSTRIALS
CONSUMER STAPLES
UTILITIES
COMMUNICATION SERVICES
MATERIALS
ENERGY
REAL ESTATE
OTHER
AAA
BB
AA
BBB
A
B
CCC
Other
Group fixed income portfolio rating split
2%2%
2%
1%
2%AAA
BB
AA
BBB
A
B or lower
* Credit bonds in the quarterly report are shown as DKK 2.2bn but there is anapproximately additional DKK 800m split between bonds and diversified alternatives
• Total net investment result of DKK 541m in Q2, strong returns from all
asset classes following an abysmal Q1
• Free portfolio returned approximately 4.9% with especially equities (12%)
and corporate bonds (almost 10%) driving very robust returns.
• Match portfolio benefitted primarily by narrowing Nordic covered bonds
spreads
• Other financial income and expenses at DKK -105m
Solvency position Q2 2020
22
• Solvency ratio based on the Partial Internal Model is 193 (Q1 2020: 159).
• Own Funds (OF) is primarily impacted by
• Strong Q2 organic capital generation of DKK 1,246m
• “Other” primarily pertains to small increase in intangibles offset by other items
Solvency capital requirement (SCR) is primarily impacted by
• Approval of new partial internal model in April 2020
• Increased equities “exposure” and currencies moves
• Based on Solvency II Standard Formula the solvency ratio is 143 (Q1 2020: 125) as the SCR is DKK 6,291m
• As mentioned on March 27 Tryg has decided to move to a full-year dividend decision for 2020. There is no accruals of dividends in the own funds on a quarterly basis
• The Danish FSA has explained that a ratio lower than 125 (partial internal model) would result in increased surveillance
• Tryg’s solvency ratio is mostly a function of net profits (+) and dividends (-). Underlying development should remain pretty stable
Own funds walk
Solvency capital requirement walk
Q2 profits
2,335
1,246
Own funds
Q1 20
4,1795,479
48
Other Own funds
Q2 20
7,506
8,800
2,277
1,044Core Equity Tier 1
Tier 2
Additional Tier 1
New partial
internal
model
SCR
Q1 ’20
-403
SCR
Q1 ’20
adjusted
187
OtherMarket
51
4.719
Solvency
capital
requirement
Q2 ’20
4.316
4.553
• The maximum capacity of additional Tier 1 instruments is a
function of the Core Equity Tier 1, which can be up to 25% of the
Core Equity Tier 1. Tryg has DKK 1,044m of Tier 1 funds so
currently the company has a “capacity” of DKK 326m for Tier 1
instruments.
• Tryg has DKK 2,468m (including DKK 801m of Norwegian Natural
perils Pool) of Tier 2 funds so currently some DKK 192m can not
be counted in the company’s own funds as it exceeds the limit of
50% of the SCR.
• The postponement of the dividend decision means that “all else
being equal” the Core Equity Tier 1 increases as it includes the
profit without the dividend payment.
Tier 1 & Tier 2 instruments
23
Tier 2 funds can be maximum 50% of the SCR
Tier 1 funds can be maximum 25% of Core Equity Tier 1
DifferenceSCR Q2 ’20 Tier 2 max
capacity
2,277
Tier 2 funds
4,553
2,468
DifferenceCore Equity
Tier 1 Q2 ’20
Additional Tier
1 max capacity
Tier 1 funds
1,044
5,479
1,370
24
Q2
2016
Q4
2018
Q1
2016
Q3
2016
Q4
2016
Q1
2017
Q2
2017
Q2
2018
Q3
2017
Q4
2017
Q1
2018
Q3
2018
292
Q1
2019
283
Q2
2019
Q3
2019
Q4
2019
Q1
2020
Q2
2020
281291
Solvency ratio adjusted for the DKK 4bn to fund the Alka acquisition
Final approval of the Alka acquisition from the Danish
authorities implying booking of goodwill
Solvency ratio historical development
196 197207 206
Approval of new partial internal model, very strong Q2 result and dividend decision for 2020 moved
to year-end as opposed to quarterly
DKK 4bn raised for the Alka acquisition
Equity
Solvency ratio sensitivities
25
• The Solvency II ratio shows the highest sensitivity to spread risk for covered bonds
• 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.)
• Biggest spreads sensitivity (by far) in the fixed income area is towards covered bonds. Corporate and Government bonds sensitivities are low as exposure to these assets classes is low
• Interest rate risk is very low as function of our matching strategy
189%
-30%Q2 +20%
201%
-20% -20%+30% +20% +100 bps -100 bps +100 bps -100 bps-100 bps +100 bps +100 bps
192%
-100 bps +20% -20% +20%
192%
-20%
193% 194% 194%
186% 185%190%
196%
179%
195%
208%
194%192%194%191%
195%
2020 Equity Property Interest Spread(Covered)
Spread(Corporate)
Spread(Government)
NOK/DKK SEK/DKK
Targets and outlook
26
✓ New financial targets announced at 2017 CMD
✓ Members’ bonus of 8% in September 2020.
✓ Price increases to offset claims inflation
Customer targets, 2020
TNPS 70
No. of products per customer +10 %
ROE after tax (%)
✓ 2020 topline growth above GDP level
✓ 2020 normalised tax rate 22-23%
✓ Alka acquisition will result in annual depreciation of customer relations
of DKK127m within a 5 to 7 years period. Solvency position (hence
dividend capacity) not impacted by the P&L charge
ROE as reported
Technical resultDKK 3.3bn
Combined ratio≤ 86
Expense ratio
~ 14
ROE after tax
≥ 21%
Financial targets, 2020
Target post Alka acquisition
* ROE target ≥ 21% suspended for the FY2020 due to extremely negative capital markets development in Q1
*
27
”Do you know the only thing that gives me pleasure?
It’s to see my dividends coming in.”
John D. Rockefeller
It is important to know your investment case
Date Place Participants from Tryg Arranged by
09/07/2020 Copenhagen roadshow
Morten Hübbe, CEO
Barbara Plucnar Jensen, CFO
IR
Carnegie
10/07/2020 London virtual roadshowBarbara Plucnar Jensen, CFO
Peter Brondt, IR ManagerBarclays
01/09/2020Zurich/Geneva virtual
roadshow
Peter Brondt, IR Manager
Nikolaj Thalbitzer, IR AssociateHandelsbanken
15/09/2020Barclays NYC virtual
conference
Barbara Plucnar Jensen, CFO
Gianandrea Roberti, Head of IRBarclays
23/09/2020 BOFAML conferenceJohan Kirstein Brammer, CCO
Gianandrea Roberti, Head of IRBOFAML
TBC Analyst’s Day Executive Board & Investor Relations Tryg
28
Q2 roadshows & conferences
Background material
Claims Excellence
DKK 600m in claims cost reduction
Digital Empowerment
of Customers
DKK 100mSTP on claims: 50%Self-service: 70%
Tryg 2018 – 2020:
Strengthening the core, while embracing the future Product & Service
Innovation
+DKK 1bn in new products by 2020+
Distribution Efficiency
DKK 150m in technical result impact
Financial targets 2020
• Technical result: DKK 3.3bn
• Combined ratio: ≤86
• Expense ratio: ~14
• ROE: ≥21%
Customer targets 2020
• TNPS: 70
• Number of products per customer: +10%
Dividend policy
• Targeting a nominal, stable and increasing dividend
• Extraordinary dividend to further adjust the capital structure
Long term profitable growth and attractive shareholder value creation
30
Alka acquisition
DKK 300m in synergies with full run-rate impact in 2021
Tryg’s equity story – a leading Nordic non-life insurer
Why invest in Tryg?
31
Pre-tax result by division (YE 2018 data)
Tryg is a dividend stock (DKK)Motor combined ratios Nordics vs international
Total yield (dividend and buy backs / market cap) at year end
High insurance penetration in the Nordics
Premiums per capita (USD), 2017
1.519
Denmark Norway UKGermany France Italy
1.296
1.557
1.224
Alm. BrandTryg GjensidigeTopdanmark Sampo Storebrand
Other
Non-life
Life
Banking
2010 2011 20142012 20152013
Norway
UK
Germany
Italy
Denmark 6.0
2012
9.2%
2013 2015 201920172014 2016 2018
8.3%
6.6%6.9%
7.6%
6.2%
4.0%4.5%
6.4
5.2 5.45.8
6.26.6 6.8
Total yield
DPS (right axis)
Gross premium split by products 2019
Gross premium split by products 2019
Tryg at a glance
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.Norway
Market position: #3Market share: 13.0%
CR in Q2 2020: 85.5 %
SwedenMarket position: #5Market share: 3.5%
CR in Q2 2020: 82.4 %
DenmarkMarket position: #1
Market share: 22.5%CR in Q2 2020: 78.3 %
Retention rate - Private
Retention rate - Commercial
25.0%
14.0%
4.0%
31.0%
5.0%
8.0%
13.0%
Motor
Liability
Health & accident
Workers’ comp
Fire & property - private
Fire & property - comm.
Other
Sweden
Private
Corporate
Commercial
Q2
16
Q4
16
Q2
13
Q4
18
Q4
13
Q2
15
Q4
15
Q2
20
Q2
14
Q4
14
Q2
19
Q2
17
Q4
17
Q2
18
Q4
19
DK NO
Q4
16
Q4
14
Q2
13
Q4
13
Q2
14
Q4
18
Q4
15
Q2
15
Q2
16
Q2
17
Q4
17
Q2
18
Q2
19
Q4
19
Q2
20
DK NO
Run-off net by products Q2 2020
Gross claims reserve by products 2019Gross premium by products 2019
Premiums and reserves by lines of business
33
14.0%
31.0%
25.0% 4.0%
8.0%
5.0%
13.0%
Liability
Motor
Fire & property - comm.
Health & accident
Workers’ comp
Other
Fire & property - private
14.0%
36.0%
7.0%
22.0%
7.0%
9.0%
5.0%Motor
Fire & property - private
Fire & property - comm.
Workers’ comp
Liability
Health & accident
Other
33.7%
29.3%
16.9%
4.8% -12.7%
13.0%
15.1%
Liability
Other
Health & accident
Motor
Fire & property - private
Workers’ comp
Fire & property - comm.
Run-off net by products Q2 2019
13.0%
22.0%
26.0%
29.0%
12.0%
-3.0%
1.0%Motor
Fire & property - comm.
Workers’ comp
Health & accident
Liability
Fire & property - private
Other
DK: Gross premium by products 2019
Gross premium split by geography
34
Motor
Liability
Workers comp
Fire & property - private
Health and accident
Fire and property comm
Tourist assistance
Other
SE: Gross premium by products 2019
Motor
Fire & property - private
Health and accident
Fire and property comm
Liability
Other
NO: Gross premium by products 2019 Run-off net by products 2019
3%
Motor
Liability
Health and accident
Workers comp
Fire & property - private
Tourist assistance
Fire and property comm
Other
1%
Fire and property comm
Motor
Liability
Workers comp
Fire & property - private
Health and accident
Other
The run-off cycle
35
• 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.
18.000
2.000
-20.000
3 years
Claims estimate: -18,000
Run-off: +2,000
Claims buffer: -2,000
Run-off development
We assessed the claimat DKK 18,000 but
reserve for DKK 20,000
36
2005 2008
86.8
20122006
88.2
20092007 2011 Since
IPO
2013
98.8
20162014 2015 2017 20182010 2019
92.2
85.9
10Y
avg.
89.0
5Y avg.
84.4
93.2
88.2 87.784.2
86.784.4 85.1
88.0 88.085.685.1
Combined ratio development
37
Percentage
Nordic (EUR 26.3bn as at Q4 2018)
10.2%
4.7%
43.0%15.8%
9.5%8.7%
8.1%
Länsforsikringar
Tryg
Codan
Topdanmark
Gjensidige
If
Other
Denmark (DKK 57.2bn/EUR 7.7bn as at Q2 2019)
22.5%
6.7%
16.3%
21.4%
5.4%
9.2%
9.8%
5.1%
3.7%
Tryg
Codan
Gjensidige
Topdanmark
If
Alm. Brand
LB Forsikring
GF Forsikring
Other
Sweden (SEK 89.6bn/EUR 8.5bn as at Q1 2020)
16.2%
3.5%
16.3%
18.3%
1.9%
13.9%
30.1%
Moderna (Tryg)
Länsforsikringar
Codan
If
Gjensidige
Folksam
Other
Norway (NOK 64.2bn/EUR 6.3bn as at Q1 2020)
15.0%
13.0%
3.4%
2.3%
21.1%4.2%
26.0%
3.2%2.2%
9.5%
Eika
Tryg
IF
Gjensidige
Fremtind
Storebrand
Frende
Codan
Protector
Other
Fremtind excluding DnB Liv and Sparebank1 Liv = 14.1
Structure of the Nordic insurance market
38
DK
DK
NO
NO
SE
SE
4%
Sales agents
Customer services
Outbound
Affinity
Nordea
Online DK
Danske Bank9%
Web
Franchise
Enter
Customer service
Outbound
Nordea
7%
7%
Own sales
Atlantica/Bil sport/MC
Other
Web and external sales
NODK
Sales agents
Customer centre
Partner
Brokers
Customer centre
Sales agents
Franchises
Brokers
Own sales
Brokers Brokers
Own sales
100%
Brokers
Priv
ate
Com
mercia
lC
orp
orate
Distribution of new sales 2019
Things that you may not know
39
• 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 out
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 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.
Things that you may not remember
40
• 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 opposed to the
P&L.
41
• 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
IBM study from 2007, probably little has changed
Population development in Norway in ‘1,000
Population development in Denmark in ‘1,000
DK 9%
NO 19%
42
Population growth (2000-2019)
Organisational and remuneration structure
43
Organisation chart
Remuneration structure
The Executive Board are remunerated according to Tryg’s remuneration policy:
• Base salary
• Pensiono 25% of the base salary
• Variable pay
o Up to 50% of the base salary including pension
o The variable pay element is a Matching Shares
Programme:
The Executive Board may buy Tryg shares (so-called
investment shares) at market price for a predefined
amount. Four years after the purchase, Tryg will grant
one matching share per investment share free of charge.
Download Tryg’s statutory corporate governance report and remuneration policy on tryg.com
CEOMorten Hübbe
CFOBarbara Plucnar
Jensen
COOLars Bonde
CCOJohan Kirstein
Brammer
Private DK
Commercial DK
Corporate DK & Tryg Garanti
Claims DK
Private NO
Commercial NO
Corporate NO
Claims NO
Private SE & Affinity
Corporate SE
Corporate Responsibility in Tryg
44
Corporate Responsibility contributes to long-term value creation
Corporate Responsibility BoardChair: CFO, Barbara Plucnar Jensen
Procurement/ Sourcing HR Facilities Investments
Claims Private Commercial Corporate
Legal/ Compliance
Corporate Responsibility team
CommunicationsInvestor Relations
Tryg’s Corporate Responsibility 2020 strategy is aligned with our corporate strategy and purpose: As the world changes, we make it easier to be tryg*.
• Tryg has published an independent Corporate Responsibility report 2019 on tryg.com
• Our four strategic focus areas are: Actively creating peace of mind, Climate & environment, Responsible workplace and Business etchics.
• Tryg has established a Corporate Responsibility Board to ensure governance throughout the organisation.
45
Corporate Responsibility in TrygUN Sustainable Development Goals
Tryg has a direct and indirect impact on the 17 SDGs.
However, we have focused on SDGs where we have a direct impact and pinpointed two specific goals for which we have defined Key Performance Indicators (KPIs).
Strong opportunity
Low opportunity
Indirect impact
Direct impact
41% women in management positions in 2020
2%reduction in carbon emissions in 2020
Key figures 2019 and Consensus 2019-2021
DKKm 2019A 2020 2021 2022
Gross premium income 21,741 22,471 22,980 23,542
Technical result 3,237 3,369 3,468 3,588
Investment income, net 579 -421 137 141
Pre-tax profit 3,628 2,746 3,415 3,540
Net income 2,843 2,033 2,659 2,759
Combined ratio 85.1 85.0% 84.9% 84.8%
Expense ratio 14.2 14.1% 14.0% 14.0%
Ordinary dividend per share 6.8 7.0 7.1 7.3
Extraordinary dividend per share 1.65 0.2 1.5 1.7
46
Based on 17 estimates ahead of Q2 2020
Consensus
AppendixFollow us on Twitter: @TrygIR
Claims ratio, net of reinsurance
Combined ratio
Group
48
Gross premiums
%DKKm %
%
%
Gross premiums
Expense ratio
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Private
49
%DKKm
* Including two months Alka
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Commercial*
50
%DKKm
* Less than 100 employees or less than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Corporate*
51
%DKKm
* More than 100 employees or more than DKK 100m turnover
Claims ratio, net of reinsurance
Combined ratioGross premiums
Expense ratio
Sweden
52
%DKKm
Norway
SwedenDenmark
53
Geographical combined ratio
Corporate history
54
• 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% ownership
• 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….
• 2015, Tryg split its share 1:5, meaning each share with a nominal value of DKK 25 was replaced by 5 shares with a nominal value of DKK 5
• 2018, Tryg received the final approval of the Alka acquisition from the Danish authorities
Sweden
% 2020E 2021E
GDP Growth (mainland) -6.0 4.0
Inflation 0.2 1.3
Unemployment 9.1 9.6
Current account balance in % of GDP
4.1 5.3
Budget balance in % of GDP -8.0 -4.0
Public debt in % of GDP 46.5 46.8
Norway
% 2020E 2021E
GDP Growth -6.0 4.0
Inflation 2.6 2.7
Unemployment 5.5 4.0
Current account balance in % of GDP
4.1 5.2
Budget balance in % of GDP -3.9 0.0
Public debt in % of GDP 0.0 0.0
Economic key figures
55
Source: Economic Outlook, Nordea Markets, May 2020
Denmark
% 2020E 2021E
GDP Growth -5.0 4.0
Inflation 0.5 1.1
Unemployment 5.2 5.3
Current account balance in % of GDP
5.7 6.4
Budget balance in % of GDP -7.7 -3.5
Public debt in % of GDP 42.8 44.6