Hordaland på Børs Bergen - 13. august 2015 Tor Magne Lønnum, CFO Follow us on Twitter: @TrygIR
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. 2
Hvem er vi? Tryg Forsikring Vårt formål: Det handler om å være trygg Vi skaper trygghet og verdi for kunder, medarbeidere og aksjonærer Organisering Segmentsinndeling + Sverige Tryg Hva skal til: Vi skal være best i bransjen på: forsikring, mennesker og inntjening Privat Næringsliv Industri Sverige Antall medarbeidere Q2 2015: 3.495 Historie 1.164 392 1.940 Denmark Norway Sweden 1728 Den store brannen i København. 30% av byens bygningsmasse brant ned. 1731 Forsikringsselskapet Københavns Brand blir etablert 1880 - Det norske forsikringsselskap Vesta blir etablert 1911 Tryg benyttes som selskapets navn i Danmark 1999 Tryg fusjonerer med Danmarks nest største bankgruppe, Unidanmark. I slutningen av 1999 bliver det norske forsikringsselskap Vesta en del av Tryg-konsernet 2000 Unidanmark fusjoneres inn i Nordea 2002 - Tryg i Danmark smba kjøper Nordeas skadeforsikringsaktiviteter og danner TrygVesta Tryg blir notert på København Fondsbørs den 14. oktober 2005. Åpningskursen er 230 DKK. 3
Tryg Norge - Fakta Geografisk lokalisering Bodø Tromsø Harstad Markedsandel NOK 55.4bn/EUR 6.3bn (as at Q1-2015) 13.6 28.6 Tryg If Ålesund Førde Bergen Haugesund Stavanger Kristiansand Trondheim Gol Hamar Hønefoss Oslo Tønsberg Drammen Porsgrunn Fredrikstad 10.1 Procent 25.1 22.6 Gjensidige Sparebank1 Other Historie Vi er en solid aktør, med store faglige ambisjoner. Vi er en stor og attraktiv arbeidsplass. Bergen er hovedkontor for den norske satsningen. 1880 Vesta stiftes 1952 Vesta starter utplassering av livbøyer 1989 Skandia kjøper Vesta, Hygea danner Vital 1990 Vesta stifter Dial Forsikring, i dag Enter 1995 Vesta blir sekretariat for natteravnene 1999 Tryg kjøper Vesta 2002 Stiftelsen Tryg smba i Danmark kjøper Nordeas skadeforsikringsaktiviteteter, dvs. Tryg som også eier Vesta. TrygVesta børsnoteres til kurs DKK 230 2007 Vesta endrer navn til TrygVesta og blir en filial av Tryg 2010 TrygVesta endrer navn til Tryg 4
Tryg at a glance I 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. Private 92% 90% 88% 86% 84% 82% Norway Market position: #3 Market share: 13.6% CR in 2014: 80.4 DK NO Sweden Market position: #5 Market share: 3.0% CR in 2014: 98.2 Gross premium split by products 2014 14 24 10 Percentage 5 11 31 5 Motor Workers' comp Health & accident Liability Fire & property - private Fire & property - comm. Other 92% 90% 88% 86% 84% Commercial NO DK Denmark Market position: #1 Market share: 18.2% CR in 2014: 84.1 Business split 2014 21 Private 82% Percentage 56 Commercial 23 Corporate 5
Tryg at a glance II 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. 60% 50% 40% 30% 20% 10% 0% Low risk investment portfolio Standard deviation 2011-2013 Shareholder performance since IPO DKK Shareholder remuneration since IPO 475 450 425 400 375 350 325 300 275 250 225 200 175 150 125 100 75 50 25 0 Tryg incl. dividend Euro Insurance index 10 9 8 7 6 5 4 3 2 1 0 4.2 6.6 4.2 3.4 1.3 2.6 3.1 0.8 1.3 New dividend policy 2.6 3.2 5.2 5.4 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1 2015 Cash dividend Ordinary buy back Extraordinary buy back 3.4 5.8 2.5 Shareholder breakdown 2014 17 Danish institutional Non-Danish institutional 14 Percentage 60 Strengthening of brand value Smaller shareholders 9 6
Structure of the Nordic insurance market Nordic EUR 25.1bn (as at Q4-2013) Denmark DKK 51.0bn/EUR 6.8bn (as at Q2-2014) 41.0 9.9 Percentage 4.7 17.6 Tryg Topdanmark If Codan Gjensidige 30.0 Percentage 18.2 17.7 Tryg Topdanmark If Codan Gjensidige Länsforsikringar Alm. Brand 9.2 8.6 9.0 Other 9.8 6.4 11.8 6.1 Other Norway NOK 55.4bn/EUR 6.3bn (as at Q1-2015) Sweden SEK 70.9bn/EUR 7.5bn (as at Q1-2015) 13.6 28.6 Tryg If Percentage 22.6 Gjensidige Sparebank1 10.1 Other 16.4 3.0 14.8 Percentage 18.3 1.6 15.6 Moderna (Tryg) If Trygg-Hansa (Codan) Gjensidige Länsforsikringar Folksam Other 25.1 30.3 7
Tryg s equity story Leading Scandinavian insurer with strong track record Financial targets 2017 Customer targets 2017 Low risk and high returns ROE: 21% Combined ratio: 87% NPS +100% Retention rate +1 pp Customer care worth recommending Expense ratio: 14% 3 products +5 pp Matching assets and liabilities 90% first contact resolution Low risk investment portfolio Annual coverage check Dividend policy Payout ratio of 60-90% Aiming for a nominal stable increasing dividend Leading in efficiency Next level pricing Efficiency programme of DKK 750m Claims procurement 25% of tariffs better than peers in 2017 Differentiated product offering Reducing expense level Long term profitable growth and attractive shareholder value creation 8
We aim to improve NPS to drive retention and engagement Correlation between retention and NPS Correlation between loyalty and NPS Correlation between engagement and NPS Source: Company data 1 pp change in retention rate = DKK 50-150m change in expenses depending on BU and timing. The average premium of customers with 3 products is ~50% higher than the portfolio average. Customers with 3 products have a life time value ~120% higher than the portfolio average. 9
Customer highlights Q2 2015 - Continued improvement in Net Promoter Score (NPS) New price-differentiated products launched: Personal accident insurance in both Denmark and Norway Holiday home insurance in Norway Change of car ownership insurance in Denmark NPS The new car insurance launched in Q1 was recommended best in test by the Danish Consumer Council. 11 20 22 Conditional approval of TryghedsGruppen s members bonus scheme by the Danish Business Authority, subject to final approval at the representative meeting in August 2015. CMD 2014 Q2 2015 Target 2017 Customers with 3 products (%) Launch of Tryg Home Hotline service hotline for customers to ask questions regarding issues related to their house, apartment or holiday home, such as damp issues. 56.3 56.6 61.3 Tryg s Swedish Corporate business voted the best company by insurance brokers for the third year running. CMD 2014 Q2 2015 Target 2017 Retention rate 87.9 88.0 88.9 CMD 2014 Q2 2015 Target 2017 10
Building pricing power Number of pricing criteria per product old vs. new Avg. new product: 49 criteria Avg. old product: 16 criteria Pricing competetivness 2013 2014 2017 11
Reductions in expenses and claims costs Efficiency programme 2012-2015 Efficiency programme 2015-2017 Expense reduction Expense reduction Claims reduction DKK 1,000m Claims reduction DKK 750m Expense reduction 2015-2017 Claims reduction 2015-2017 DKKm DKKm 12
Expense reductions towards 2017 Sourcing Staff functions Business areas DKK 250m Simplification First contact resolution Reduced lead time at customer contacts Continuous improvement Improved retention rates Sourcing criteria Sourcing in Tryg 1. Customer experience 2. Cost efficiency 3. Standardisation and automation 4. Scalability and flexibility 5. Transition and risk 2013: IT 2014: Finance Accounting (50 FTE) 2015-: Remaning staff and BUs Startup fase 13
Expense ratio improved from 15.4 to 15.2 Expense ratio improved from 15.4 in Q2 2014 to 15.2 in Q2 2015 (adjusted for one-off effects in Q2 2014). Expense ratio 2015 will be impacted by one-off costs related to new efficiency programme. Efficiency programme delivered savings of DKK 15m related to: 16.6 16.4 15.6 14.6 15.4 * 15.2 Outsourcing within financial area IT sourcing Reduction in FTE by 104 since Q4 2014. 2011 2012 2013 2014 Q2 2014 Q2 2015 * Adjusted for one-off effects FTE - Development Nominal costs in business areas 4,077 3,914 3,703 3,599 3,495 2011 2012 2013 2014 Q2 2015 76 340 46 281 19 171 133 109 98 61 70-6 Private Commercial Corporate Sweden Q2 2015 Q2 2014 One-off effects 14
New claims initiatives towards 2017 Utilising spend data and transparency from In4mo system. DKK DKK 500m 500m Dedicated competence team to help customers quickly back to normal life. Further consolidation and utilisation of Nordic procurement volume. Enhanced fraud detection. Reduction in suppliers Distribution of savings 2015 Distribution of savings 2017 46,000 26,000 15
Improved underlying claims ratio Group Private (DK & NO) Commercial (DK & NO) 68.3 68.8 63.6 62.8 69.5 70.0 Q2 2015 Q2 2014 Q2 2015 Q2 2014 Corporate Sweden 76.5 79.3 75.6 72.8 Q2 2015 Q2 2014 Q2 2015 Q2 2014 Q2 2015 Q2 2014 Underlying development is adjusted for large claims, weather claims, run-off and interest. 16
Gross earned premiums reduced by 1.4% Gross earned premiums reduced 1.4% (-1.2%) related to: Private impacted by the competitive situation. Retention was stable in Denmark but decreased slightly in Norway Commercial Norway impacted by a weaker economic situation and the competitive situation Corporate development impacted by loss of large accounts and one-off impact in same quarter last year Gross earned premiums (DKKm) DKKm Q2 2015 Q2 2014 Local currencies Q2 2015 Local currencies Q2 2014-1.4% Private 2,226 2,275-0.3% 0.1% Commercial 997 1,053-4.3% -3.9% 4,550 4,711 Corporate 993 1,030-1.4% 1.8% Sweden 342 358-1.8% -9.3% Group 4,550 4,711-1.4% -1.2% Q2 2015 Q2 2014 17
Private - average premiums - DK profitability strong but competition increasing House insurance average premium (index 2011 = 100) 115 110 105 Average premiums increase Y/Y -0.8% 1.1% (Q1-0.8%) (Q1 1.4%) NO DK NO: price increases from July DK: changed selection reduces average price 100 95 90 Motor insurance average premium (index 2011 = 100) 115 110 Average premiums increase Y/Y -2.3% 0.5% (Q1-1.9%) (Q1 0.8%) NO DK 2.3% decrease y/y driven by: improved frequency Competitive situation 105 100 DK Profitability very strong on motor 95 90 18
Customer retention Private 92% 90% 88% 86% 84% 82% DK NO High and stable customer retention in Denmark Slight decrease in Norway 92% 90% 88% 86% 84% 82% Commercial NO DK Customer retention stable in Denmark Retention decreased in Norway impacted by changed distribution set-up and competition 19
Tryg s equity story Leading Scandinavian insurer with strong track record Financial targets 2017 Customer targets 2017 Low risk and high returns ROE: 21% Combined ratio: 87% NPS +100% Retention rate +1 pp Customer care worth recommending Expense ratio: 14% 3 products +5 pp Matching assets and liabilities 90% first contact resolution Low risk investment portfolio Annual coverage check Dividend policy Payout ratio of 60-90% Aiming for a nominal stable increasing dividend Leading in efficiency Next level pricing Efficiency programme of DKK 750m Claims procurement 25% of tariffs better than peers in 2017 Differentiated product offering Reducing expense level Long term profitable growth and attractive shareholder value creation 20
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