RSA SCANDINAVIA 12 November 2013

Transcription

1 RSA SCANDINAVIA 12 November 2013

2 This presentation may contain forward-looking statements with respect to certain of the Group s plans and its current goals and expectations relating to its future financial condition, performance, results, strategic initiatives and objectives. Generally, words such as may, could, will, expect, intend, estimate, anticipate, aim, outlook, believe, plan, seek, continue or similar expressions identify forward-looking statements. These forward-looking statements are not guarantees of future performance. By their nature, all forward-looking statements involve risk and uncertainty because they relate to future events and circumstances which are beyond the Group s control, including amongst other things, UK and Scandinavian domestic and global economic business conditions, marketrelated risks such as fluctuations in interest rates and exchange rates, the policies and actions of regulatory authorities (including changes related to capital and solvency requirements), the impact of competition, currency changes, inflation, deflation, the timing impact and other uncertainties of future acquisitions or combinations within relevant industries, as well as the impact of tax and other legislation or regulations in the jurisdictions in which the Group and its affiliates operate. As a result, the Group s actual future financial condition, performance and results may differ materially from the plans, goals and expectations set forth in the Group s forward-looking statements. Forward-looking statements in this presentation are current only as of the date on which such statements are made. The Group undertakes no obligation to update any forward-looking statements, save in respect of any requirement under applicable law or regulation. Nothing in this presentation should be construed as a profit forecast. 2

3 AGENDA Opening remarks Scandinavian market and RSA s position RSA Scandinavia Performance RSA Scandinavia Key Priorities Summary Q&A Richard Houghton Mike Holliday-Williams Patrick Bergander Mike Holliday-Williams Mike Holliday-Williams Management Team 3

4 RSA SCANDINAVIA: SIGNIFICANT CONTRIBUTOR TO THE GROUP Group H NWP: 4.7bn 15% UK: 33% Western Europe: 9% 19% 24% Scandinavia: 1.1bn Group H insurance result: 394m 9% 40% 2% 13% 36% Canada Scandinavia UK & Western Europe Emerging Markets Central functions Scandinavia: 140m Outlook: Continue to expect growth in line with local GDP and CORs in the mid-high 80s Targeting an improving balance of profitability across the region Consistent profitability with CORs in the mid 80s for the last 5 years Consistently strong return on capital Strong capital flows back to Group Well regarded management team 4

5 AGENDA Opening remarks Scandinavian market and RSA s position RSA Scandinavia Performance RSA Scandinavia Key Priorities Summary Q&A Richard Houghton Mike Holliday-Williams Patrick Bergander Mike Holliday-Williams Mike Holliday-Williams Management Team 5

6 SCANDINAVIA: PROMISING ECOMONIC OUTLOOK Real GDP Growth at market prices Denmark Sweden Norway 8% 6% 4% Insurance GDP CAGR Market CAGR +0.1% +2.8% 2% 0% -2% -4% -6% +1.7% +1.2% +2.3% +4.6% -8% COMBINED GDP OF 0.8 TRILLION STABLE POLITICAL ENVIRONMENT MARKET GROWTH DRIVEN BY GDP Source: Eurostat, Forsikring og Pension, Svensk Försäkring, Finans Norge 6

7 SCANDINAVIA P&C LANDSCAPE: GEOGRAPHY AND MIX Top 4 players share of market Commercial Market* 32% 6.9bn 32% 25% Gjensidige 25% If 15% Tryg 10% SpareBank 1 3% Codan (RSA) 75% 80% 30% Länsförsäkringar 19% If 16% Trygg-Hansa (RSA) 15% Folksam 36% Personal Market* 30% 34% 9.8bn 20% Tryg 17% Topdanmark 13% Codan (RSA) 10% Alm. Brand 60% Source: Forsikring og Pension, Svensk Försäkring, Finans Norge, RSA Estimates 36% Denmark, based on GEP Sweden, based on GWP Norway, based on portfolio premium * Estimated 7 HIGHLY CONSOLIDATED MARKETS

8 SCANDINAVIA P&C LANDSCAPE: MARKET SHARE HISTORY Denmark Other 37% 37% 36% 37% 38% 39% 40% 40% Alm. Brand Topdanmark Tryg 10% 10% 10% 10% 10% 10% 10% 10% 13% 13% 14% 14% 14% 13% 13% 13% 19% 19% 19% 19% 18% 18% 17% 17% 21% 21% 21% 20% 20% 20% 20% 20% Sweden Other Folksam 16% 18% 18% 20% 19% 21% 21% 20% 15% 15% 15% 14% 15% 15% 15% 15% 18% 18% 18% 17% 17% 16% 16% 16% If 20% 20% 20% 19% 19% 19% 19% 19% LF 31% 29% 29% 30% 30% 29% 29% 30% Source: Denmark: (Q3) Forsikring og Pension available statistics, from same source however slightly different definition, Sweden: Svensk Försäkring 8 STABLE MARKET POSITIONS

9 SCANDINAVIA P&C LANDSCAPE: DISTRIBUTION Personal Lines Channel Mix Commercial Lines Channel Mix Denmark 50% 20% 30% 30% 70% Sweden 70% 10% 20% 35% 65% Norway 50% 20% 30% 30% 70% UK 30% 40% 30% 95% 5% 0% 50% 100% Brokers Direct Sales Agents Affinity 0% 50% 100% Brokers Direct Low dependency on broker/aggregator distribution in Personal Lines Bancassurance and online distribution is becoming more important In Commercial Direct sales including agents and call centres are larger channels than brokers Note: The Scandinavian numbers are RSA internal estimates on the markets. UK numbers are RSA s UK distribution mix which we believe are broadly indicative of the market 9 ACCESS TO OWN DISTRIBUTION IS KEY

10 SCANDINAVIAN PROFITABILITY BY COUNTRY Denmark % Sweden Norway 88% 90% 93% 94% 99% 95% 90% % 95% 91% 90% 90% 95% 97% 95% % 91% 93% 94% 96% 92% 92% 87% Stable consolidated industry 5yr average Danish gross COR: 94.1% 5yr average Swedish net COR: 93.4% 5yr average Norwegian net COR: 92.1% 2012 Top 10 by premiums ( m) 1 If 3,749 Tryg 2,213 Gjensidige 1,944 RSA Scandinavia 1,849 Länsförsäkringar 1,762 TopDanmark 954 Folksam 923 Sparebank Alm. Brand 527 Sygeforsikringen DK 294 Top 10 14,747 Source: Forsikring & Pension (DK), Svensk Försäkring (SE), Finans Norge (NW) 1 Numbers include consolidated Group financials for each Nordic parent company. GEP for RSA, Tryg, TopDanmark, Alm. Brand and Sygeforsikringen Danmark. GWP for If, Gensidige, Länsförsäkringar and Folksam. Portfolio Premium for Sparebank1 Note: Danish COR are on gross basis and Swedish and Norwegian on net basis. Norway premiums exclude off-shore business however this included in COR 10 CONSISTENT PROFITABILITY ACROSS SCANDINAVIA

11 MARKET STRUCTURE AND PROFITABILITY IS SUSTAINABLE HISTORICAL STABILITY IS EXPECTED TO CONTINUE WITH GOOD PROSPECTS FOR FURTHER GROWTH Highly consolidated markets Market history drives strong underwriting discipline Access to own distribution is key Strong brands with high loyalty and trust Continued growth in Sickness & Accident from demographic and social change Growing Global Renewable Energy market at around 30% to 2020 More small business starting to trading direct Bancassurance and online becoming increasingly important Continued growth in Norway due to increasing insurance penetration 11

12 AGENDA Opening remarks Scandinavian market and RSA s position RSA Scandinavia Performance RSA Scandinavia Key Priorities Summary Q&A Richard Houghton Mike Holliday-Williams Patrick Bergander Mike Holliday-Williams Mike Holliday-Williams Management Team 12

13 RSA SCANDINAVIA: HISTORY OF SUSTAINABLE PROFIT CAGR: 2.1% 1,696 1,733 1,701 1,719 1,745 1,791 1,548 1, % 94.3% 91.3% Avg: 88.7% 87.6% 85.4% 84.9% 85.2% 86.6% NWP ( m Constant FX) COR Note: Results presented under UK IFRS at constant FX 13 LOW AND STABLE COMBINED RATIO

14 COMMERCIAL FINANCIALS m HY13 NWP % 555 Underwriting result (25) COR 93.5% 98.2% 94.6% 95.4% 102.3% Key drivers of historical performance Rate driven growth Growth in Norway, Renewable energy and Risk Managed Disciplined risk selection Recent large losses experience not a trend 2012 Net Written Premiums m Denmark Sweden Norway Total Motor Property Liability Care Marine Total Based on UK IFRS at constant FX Large Losses (% of NEP) 25% 20% 15% 10% 5% 0% 12% 13% Long term average 11% 9% 9% 11% 22% HY13 14 STABLE COR AND GROWTH

15 PERSONAL FINANCIALS m HY13 NWP % 563 Underwriting result COR 77.7% 74.6% 80.0% 77.4% 75.2% Key drivers of historical performance Rates ahead of claims inflation Strong and improving retention Balancing our portfolios Danish turnaround progressing well 2012 Net Written Premiums m Denmark Sweden Norway Total Motor House & Content Sickness & Accident Total Based on UK IFRS at constant FX Rates minus claims inflation 7% 6% 5% 4% 3% 2% 1% 0% Denmark Sweden Norway 15 FOCUSED ON BALANCING OUR PORTFOLIO

16 EXPENSE DEVELOPMENT UW Expense Ratio excluding depreciation (%) Sweden Denmark RSA Scandinavia 18% 17% 16% 15% 14% 13% 12% RSA expense levels in line with market Focus on expense reduction in Denmark We are currently investing in the business to maintain our strong market position Programme to improve cost efficiency and competitive edge 16 EXPENSES FLAT WHILE MAKING INVESTMENTS

17 PRIOR YEAR PROFITS STARTING TO NORMALISE Scandinavia prior year profits ( m) % Material reserve strengthening in % 7.5% Significant releases from: - Swedish Motor and PA in in response to improving claims environment and experience % 2.5% and 2012 benefited from strong releases in Danish Workers Compensation HY13 Reserve strength 0.0% -2.5% Stable reserving methodology significantly to the right side of best estimate Right side of best estimate with solid margin 6 years of consecutive positive run-offs -5.0% -7.5% Expect to continue to be a material contributor to the Group s prior year result PY PY as % NEP 17 SIGNIFICANT CONTRIBUTION FROM PRIOR YEARS

18 HISTORY OF STRONG CURRENT YEAR RESULTS Adverse winter weather 1,696 1,733 1,701 1,719 1,745 1,791 1,548 1, % 94.4% 94.3% 91.8% 90.9% 91.9% 91.9% 87.7% Based on UK IFRS at constant FX NWP ( m Constant FX) COR CY COR 18 QUALITY OF RESULTS IMPROVING

19 RSA SCANDINAVIA GENERATES STRONG RETURNS Scandinavia return on allocated equity Allocation of total IFRS capital 1,200m Allocation of shareholders funds 800m H Operating Result 137m Allocated profit after tax 94m Strong and consistent returns on equity Positive contribution to Group We are investing in the Scandinavian business Better balancing of the portfolio to safeguard future profitability Annualised H ROE 23% Positive value creation since minority buy-out in 2007 FY 2012 ROE 26% 19 Total Group IFRS capital represents 3.8bn shareholders equity and non-controlling interests, 1.4bn debt and prefs, plus 0.2bn IAS19 pension deficit. Based on allocation of central debt costs, pension costs and Group effective tax rate Based on 2x allocated H profit after tax on closing allocated shareholders equity

20 AGENDA Opening remarks Scandinavian market and RSA s position RSA Scandinavia Performance RSA Scandinavia Key Priorities Summary Q&A Richard Houghton Mike Holliday-Williams Patrick Bergander Mike Holliday-Williams Mike Holliday-Williams Management Team 20

21 RSA SCANDINAVIA: KEY PRIORITIES 7% 6% 5% 4% 1 3% 2% 1% 0% 105% Scandinavian Peers Average Performance* Folksam Länsförsäkringar 100% 95% 90% Net COR (%) Industry Average COR: 94% If Tryg Gjensidige Alm. Brand TopDanmark 85% Premium Growth (%) Industry Average Growth: 3.4% Protect Swedish Profitability Improve PL Danish Performance Invest in CL Denmark Grow in Norway Exploit unique position in GSL Leverage Group Capabilities * Numbers include consolidated Group financials for each Nordic parent company. Local GAAP (official local accounts). Slightly different approach to calculate net COR between countries and entities. Growth based on NWP for RSA, Tryg, TopDanmark and Folksam. GWP for If, Gensidige and Alm. Brand. NEP for Länsförsäkringar 21

22 PROTECTING PROFITABILITY IN PERSONAL LINES SWEDEN NWP ( m) H&C Motor S&A Current Year UW result and CY underlying COR % CY UL UW* ( m) CY UL COR* % 73% 70% 70% * Excludes large losses, weather and claims handling expenses Note: at constant FX Attractive business mix with strong position in Sickness & Accident and Motor Growth driven by Sickness & Accident and Household, improving retention and rates Efficient call centre with strong x-sell and outbound operation High level of customer service Historical actions taken on long tail business have generated strong prior year profits Improving current year performance driven by better risk selection and turn around in Home & Content Well placed to push rate when necessary given strong brand and reputation % GROWTH IN 2012 WITH IMPROVING PROFITABILITY

23 SWEDISH PERSONAL LINES PERFORMANCE IS SUSTAINABLE Millions Total no. T-H households Retention, % 86% % Brand awareness 75% Customer satisfaction Market leading consideration Brand refresh 85% 84% 83% 82% Growing number of customers Home & Content growing Sickness & Accident loyalty strong with 95% retention Customer motor renewal rate at 86% Multi product holding also increasing Strong brand equity High Trygg-Hansa brand reputation Strong relations built over life time, 30% of children (0-17 years) in Sweden insured by Trygg-Hansa Strong customer focus Distribution mix 100% 75% 50% 25% 0% Affinity Tied Agents Direct Efficient and customer focused distribution Efficient call centre Online growing at steady pace 16% sold by tied agents (58% in Sickness & Accident) No dependency on or immediate threat from aggregators 23 STRONG BRAND AND DISTRIBUTION

24 STRONG POSITION IN SWEDISH SICKNESS & ACCIDENT S&A NWP ( m) and Market share (%) development Child S&A +6% %* 59%* Adult S&A +9% %* 52%* * Market share Individual Sickness & Accident Insurance S&A products retention rate Child S&A Adult S&A 95.8% 95.6% 95.3% 95.9% Trygg Hansa is synonymous with Child insurance Premium product with strong brand reputation Unique proactive distribution model 70% conversion from Child to Adult S&A products Large scale has allowed to build best in class Risk understanding Claims history Claims handling High customer loyalty c.95% retention S&A product: Medical and disability Expenses for travel and hospitalisation Tooth and scar accidents Living expenses in critical illness Economic coverage for long term disability 24 STRONG PROPOSITION AND CUSTOMER LOYALTY

25 IMPROVING PERFORMANCE IN PERSONAL LINES DENMARK NWP ( m) CY UL COR* COR % 105% 97% 99% 94% 88% 87% 87% 90% 90% Attractive profitable market Overall COR impacted by weather in 2010/11 Stable underlying COR Lower level of growth with focus on improving profitability Rates vs. Claims inflation heading Claims Inflation Market indexation Codan Rates 10% 8% 6% 4% 2% 0% * Excludes large losses, weather and claims handling expenses Note: at constant FX c.40% rate increase across 10% of the portfolio Minimum premium for single policy S&A customers Improve risk selection reducing non-standard risks 25 ACTION TAKEN TO IMPROVE FUTURE PROFITABILITY

26 IMPROVING PERFORMANCE IN PERSONAL LINES DENMARK Distribution mix 100% 80% 60% 40% 20% 0% Affinity Field Agents Direct Established distribution channels Improved agent targeting Strong Bancassurance platform Best in class online process Improved market pricing for new business and renewals Product development: - Building the Sickness & Accident portfolio based on Swedish model - Simplified contents proposition Customer service improvements to increase cross-selling and retention Brand refresh to improve appeal 26 RETURNING TO PROFITABLE GROWTH

27 INVESTING IN COMMERCIAL LINES DENMARK NWP ( m) CY UL COR* COR % 99% 97% 94% 85% 79% 84% 82% 79% 79% Commercial Denmark by Segment Market leading position in Renewable Energy, Transportation, Profin and Marine Financial downturn has had strong impact on market growth Lower volumes also a consequence of active risk selection Attractive historical market underwriting performance Investments in new policy and administration platform (TIA) 14% 17% 8% 401m 19% 42% * Excludes large losses, weather and claims handling expenses Note: at constant FX Property Liability Motor Marine Care Key priority areas Migrate portfolio to new TIA platform Achieve benefits around agility, transparency and pricing sophistication Grow in targeted industry segments Grow in Small Business segment 27 INVESTING IN FUTURE PROFITABILITY

28 GROWING IN NORWAY CL NWP, m CY UL COR* COR PL NWP, m % 115% 116% 112% 96% 102% 104% 95% 97% 90% Norway by Segment 18% 1% 28% 159m 7% 46% Property/H&C Liability Motor Marine Care/S&A Good footprint in profitable growing market Growth driven by Commercial and partnership Distribution capacity built on agents, brokers, Care partner and direct capabilities Focused on building scale but also profitability Key priority areas Improve system capability Develop our Care business Build on strong relationship with local and Global brokers Grow small segment via direct channels Take advantage of online growth and expand our agent network Take advantage of our strength in Specialty * Excludes large losses, weather and claims handling expenses Note: at constant FX 28 WELL POSITIONED TO INCREASE SHARE IN NORWAY

29 EXPLOIT UNIQUE POSITION IN GSL % NWP, m Global Specialty Lines by Segment 3% 12% 11% % 10% 32% 74% 23% CY UL COR* 9% % 67% m * Excludes large losses, weather and claims handling expenses Note: at constant FX Hull Cargo Renewable Energy C&E Property Liability Other Global leading position in Offshore wind, 55% share of Onshore wind in Denmark Market leading in Denmark Marine with strong reputation for loss prevention and claims handling Strong growth within Risk Managed, Marine and Renewable Energy Key priority areas Maintain leadership in Renewable Energy c.50 future projects, Europe and Asia expansion Codan is RSA Global Offshore wind Centre of Excellence Build capabilities in Risk Managed to support further growth in Sweden and Norway Growth in Marine Hull targeting brown water and construction 29 LOCAL PRESENCE AND GLOBAL EXPERTISE

30 LEVERAGING THE RSA GLOBAL GROUP Capital Management Reinsurance Underwriting, Pricing and Claims Expertise Global Specialty Lines On-line capabilities Centers of Excellence / Best Practice Sharing Risk Management Talent Development and Performance Management 30

31 AGENDA Opening remarks Scandinavian market and RSA s position RSA Scandinavia Performance RSA Scandinavia Key Priorities Summary Q&A Richard Houghton Mike Holliday-Williams Patrick Bergander Mike Holliday-Williams Mike Holliday-Williams Management Team 31

32 SUMMARY Scandinavian market Mature, highly profitable markets with well established and stable structure Our Scandinavian businesses Sweden: strong and leading market positions Denmark: expect to benefit from improving performance Norway: growth opportunities in an attractive market Strategic priorities Protect Swedish profitability Improve Denmark Personal performance Invest in Denmark Commercial Grow in Norway Exploit unique position in GSL Leverage Group capabilities Stronger as part of the RSA Group Ability to import expertise from around the wider Group drives opportunities to outperform local competitors 32

33 QUESTIONS