Arranged by: Tryg Forsikring A/S Tier 2 subordinated bond issue Company presentation October 2015
Important information Disclaimer Certain statements in today s presentations 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 the presentations 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 financial reports 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 presented 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
Strong value propositions Proven distribution platform High profitability Low balance sheet risk Stable inflow of cash I Leading Scandinavian non-life insurance player DKKbn 30 Return on Equity (%) 35% 25 30% 20 25% II Solid and stable earnings and profitability 15 10 20% 15% 5 10% III Strong capitalization A- rating from S&P 0 5% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15* Acc. share buy-back Acc. dividends Equity Return on Equity IV V Low risk balance sheet with stable return on investment Strong customer relationships with high customer retention Favorable combined ratio development 110% 105% 100% 95% 90% 85% VI Attractive market fundamentals 80% 75% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15* Denmark Norway Sweden** Note(*): 2015 year-to-date Note(**): Moderna Försäkringar is included from 2 April 2009 3
Tryg Forsikring A/S at a glance (I) Leading Nordic non-life insurance company Tryg s history dates back to the 18th century Focuses on non-life insurance in Denmark, Norway and Sweden Tryg s operating fundamentals Customer Satisfaction 2014 premiums split by COUNTRY 12% Primarily provides insurance to private individuals but are also active towards the commercial and corporate sector Attractive Products Brand Strength 47% Denmark Norway Motor, retail & commercial property and health & accident are Tryg s main product lines 41% Sweden TryghedsGruppen, a mutual foundation rooted in Denmark, has a 60% stake in the company The foundation recently implemented a members bonus scheme Employee Satisfaction Distribution Network 2014 premiums split by BUSINESS MIX 2014 premiums split by PRODUCT LINE Unrivaled brand strength and recognition with significant local goodwill due to TryghedsGruppen Employees: 3,425 Customers: 2.7 million Premiums earned 2014: DKK 18,652m Current market cap.: DKK 35,963m 23% 21% 56% Private Commercial Corporate 11% 20% 14% 24% 31% Motor Private property Commercial property Health & Accident Other Total equity as of Q3-15: DKK 9,235m 4
Market share SWEDEN Market share NORWAY Market share DENMARK Tryg Forsikring A/S at a glance (II) Operating in attractive market fundamentals Tryg figures Market combined ratio development 31% 18% Tryg Topdanmark 100% TOP5 Sweden 6% EUR 6.9bn 6% 10% 12% 18% Codan Alm Brand. Gjensidige If Other 95% 90% 85% Norway TOP3 #1 Denmark 29% 10% EUR 6.4bn 14% 25% 22% Gjensidige If Tryg Sparebank1 Other 80% '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 Norway Denmark Sweden Key market characteristics 1. Solid macroeconomic environment Market position: Market share: Employees: Premiums earned: Technical result: Combined ratio: #1 18.0% 1,903 DKK 9,361m DKK 1,510m 81.2 TOP3 13.5% 1,131 DKK 7,337m DKK 1,478m 84.8 TOP5 3.0% 391 DKK 1,975m DKK 44m 89.0 2% 3% 16% 16% 17% EUR 7.7bn 30% 18% Ländsforsikringar If Folksam Trygg-Hansa (Codan) Moderna (Tryg) Gjensidige Other 2. High degree of customer loyalty and acceptance for product bundling 3. Consolidated and mature markets 4. Structurally high operational and underwriting efficiency among key players in the industry 5. Established and rational key players 6. Considerable barriers to entry Source: Forsikringogpension (DK), FNO (NO), Svenskforsakring (SE) 5
Tryg Forsikring A/S at a glance (III) Attractive equity story Leading Scandinavian insurer with strong track record Low risk and high returns Financial targets 2017 ROE: 21% Customer targets 2017 NPS +100% Customer care worth recommending Matching assets and liabilities Low risk investment portfolio Combined ratio: 87% Expense ratio: 14% Dividend policy Retention rate +1 pp 3 products +5 pp 90% first contact resolution Annual coverage check 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 Reducing expense level 25% of tariffs above peers in 2017 Differentiated product offering Tryg will consecutively deliver long term profitable growth resulting in attractive shareholder value creation 6
Combined ratio Selected financial results Solid track record Proven operations ensure stable inflow of cash 4,000 3,500 3,000 2,500 2,000 I Established premium portfolio with high retention rate 1,500 1,000 500 0-500 -1,000 II Attractive underlying underwriting profitability -1,500 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 110 Premium hikes Investment result Technical result Pre-tax profit Smaller adjustments Premium hikes Efficiency program Customer and efficiency focus III Conservative asset allocation with favorable return 105 100 IV Stable pre-tax profit and lucrative return on equity 95 90 85 80 '00 '01 '02 '03 '04 '04* '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15E '16E '17E V Hands-on management and lean organization - well suited to efficiently cope with change Note(*): *IFRS from 2004 - previous years are Danish GAAP Note(general): data before 2009 is not corrected for the sale of Marine Hull business, and Finland before 2008 7
Sustainable efficiency program 2015-17E Expense and claims reduction of more than DKK 750m within 3 years Overview of efficiency program 2015-17E Annual cost savings 2012-17E OLD program NEW program DKK 250m Expense reduction DKK 500m Claims reduction DKK 750m 175 388 395 150 118 45 Q3 225 375 73 H1 2012 2013 2014 2015 Q1-Q3 2015 2016 2017 Achieved Target Development in FTEs New initiatives towards 2017 4,077 3,914 Utilization of Nordic procurement volume 3,703 3,599 3,425 Sourcing Simplification First contact resolutions Improved retention rates 2011 2012 2013 2014 Q3 2015 Enhanced fraud detection 8
DLG Aviva Allianz Talanx Tryg Mapfrre RSA Zürich Gjensidige Sampo Vienna Generali Topdanmark PZU AXA Sound investment approach and related return Conservative asset allocation and low return volatility provides consistency Portfolio Q3 2015 (DKK 39.7bn) Standard deviation of Return on Investment 2011-13 Bonds/deposits 13.0% Inv. Property 5.1% 60% 50% 40% EM 1.0% HY 2.2% Equities 5.8% Bonds/deposits 4.2% Free 10.6bn 27% Match 29.0bn 73% Cov. Bonds 68.6% 30% 20% 10% 0% Key comments Tryg aims to be world class in insurance Aim of investment is to support insurance Less risk on investments requires discipline on the insurance result MAX and MIN deviation in quarterly return 2007-15YTD 5.0% 2.5% 0.0% Allows focus on core business Matching of assets and liabilities implies lower net capital requirement in Solvency II - High Return on Risk-Adjusted Capital (RORAC) -2.5% -5.0% Topdk If Gjensidige Alm.Br. Tryg Min Max Average 9
Disciplined capitalization Sizable capital buffer already in place ensuring comfortable headroom Key comments Tryg s individual solvency capital buffer was 59% at the end of Q3 2015 The individual capital buffer has increased over 30 percentage points from approx. 30% in the start of 2012 Increasing capital buffer 90% 70% 50% Tryg s underlying capitalization shows a stable individual capital buffer of ~50% Based on the Solvency II standard model the capital buffer was ~26% in Q3-15 30% 10% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2012 2013 2014 2015 Reinsurance protects capital position against large claims Supports a solid A- rating from S&P Leverage in low / mid compared to peers Individual solvecy solvency buffer Stable underlying capitalization 90% Standard formula buffer Solvency II unsolved issues: Internal model expected to be approved by 31 December 2015 70% 50% 5% 7% 3% 2% 9% Inclusion of notional deferred tax and expected future surplus Eligibility of Norwegian Natural Perils Pool 30% 10% 51% 48% 49% 50% Q4 2014 Q1 2015 Q2 2015 Q3 2015 Underlying buffer Retained cash dividend Underlying share buy-back 10
Rationale Rating Solid rating from Standard & Poor s* Low business & financial risk together with stable outlook yields an A- rating Rating and underlying rationale Key comments Financial Strength Rating A (stable) Junior Subordinated Counterparty Credit Rating A (stable) Subordinated Standard & Poor s expects that Tryg will: - defend its strong competitive position - maintain moderately strong capital adequacy - continue generating strong earnings - focus on profitable growth through selected premium rate increases and efficiency initiatives Given the current level of the financial risk profile and the competitive strengths underlying the business risk profile, S&P view a negative rating action as remote over the next 24 months BBB BBB Business risk profile Financial risk profile Outlook STRONG MODERATELY STRONG STABLE Source: Standard & Poor s Rating Services (21.07.2015) Note(*) for more details see appendix 11
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015YTD 2015E 2016E 2017E Achievable long-term business plan Well defined strategic targets reveal ambitious plans for the company Financial targets Customer targets I Return on Equity (ROE) after tax 2015: = 20% 2017: 21% I Net Promoter Score (NPS) 2017: + 100 II Combined ratio 2015: 90 2017: 87 II Retention rate 2017: + 1pp III Expense ratio* 2015: < 15 2017: 14 III Customers 3 products** 2017: + 5pp ROE development 2005-15YTD-2017 Shareholder remuneration target 35% I Payout ratio 60% 90% 25% 15% II Aiming for a nominal stable increasing dividend 5% III Share buy-back May occur as extraordinary events Note(*): excluding one-off effects Note(**): private (DK & NO) 12
Transaction summary Key terms Issuer: Instrument: S&P Ratings: Volume: Tryg Forsikring A/S Solvency 2 Compliant Subordinated bond issue (Tier 2 Capital) A- (Issuer Rating) / BBB (Expected Instrument Rating) NOK [Benchmark] Maturity: [ ] 2045 Issuer s Call option: Coupon rate: Margin: Deferral of Interest Payments: Ordinary calls on [ ] [2025], and any interest payment date thereafter. Conditional calls on either a Capital Disqualification Event, or a Rating Agency Event; or a Taxation Event 3 months NIBOR + [Margin] [ ]% p.a. until [ ] 2025 and thereafter [ ]% p.a. + 1.00% p.a. At the Issuer s option, subject to 6 months dividend pusher. Mandatory in the event of breach of Solvency requirements. Arrears of Interest will be cumulative Loss Absorption: Applicable until 1 January 2016 Listing: An application will be made for the Bonds to be listed on [Oslo Børs] Bond Trustee: Nordic Trustee ASA Governing law / Denominations: Danish law / NOK 1,000,000 Arranger: Danske Bank & Pareto Securities Source: Tryg, Pareto Securities, Danske Bank Markets 13
Key investment considerations Nordic footprint Lean operations High profitability Strong capitalization 1 Dedicated Nordic non-life insurance company, with proven operations and favourable outlook, diversified across both countries and products 2 Operates in mature markets, with high entry barriers and customer retention rates, dominated by established key players focusing on lowering cost 3 Profitability has been high and improving in recent years due to efficiency programmes and benign market for raising premiums 4 Aiming to achieve a combined ratio of 87 and expense ratio of 14 from 2017 and onwards 5 ROE after tax has been 18.1% on average the last six years and Tryg aims to achieve 21.0% within 2017 6 Only one quarterly pre-tax loss since 2006 due to heavy winter. Re-insurance protects Tryg from large claims and single events 7 Low risk through strong capitalization, conservative investment policy and stable profitability resulting in a solid A- rating from Standard & Poor s 14
Appendix
Distribution of new sales 2014 Broad distribution power through diverse sales channels is key Denmark Norway 13% Own sales 8% Own sales 24% Affinity 32% 45% Car dealers 63% Affinity Nordea 15% Nordea Sweden Corporate 14% Own sales Own sales External partners 43% 26% 56% Online & others 57% Brokers 4% Atlantica / Bilsport MC Source: Tryg, Pareto Securities, Danske Bank Markets 16
Key financial figures and consensus 2011-17E Overview CONSENSUS ** DKKm 2011 2012 2013 2014 2015E 2016E 2017E Gross premium income 19,948 20,314 19,504 18,652 18,028 18,014 18,284 Technical result 1,572 2,492 2,496 3,032 2,623 2,748 2,887 Investment income, net 61 585 588 360 116 248 249 Pre-tax profit 1,603 3,017 2,993 3,302 2,644 2,930 3,070 Net income 1,140 2,208 2,369 2,557 2,044 2,260 2,367 Combined ratio 93.2 88.2 87.7 84.2 85.9 85.0 84.4 Expense ratio 16.6 16.4 15.6 14.6 * 15.2 14.5 14.2 Total insurance provision 34,220 34,355 32,939 31,692 n.a. n.a. n.a. Shareholders equity 9,007 10,979 11,107 11,119 n.a. n.a. n.a. Earnings per share 3.8 7.3 7.9 8.7 7.2 8.1 8.7 Dividend per share 1.3 5.2 5.4 5.8 6.1 6.4 6.8 Share buy back - 800 1,000 1,000 1,060 785 556 Note(*): DKK 15.3m excluding one-offs Note(**): based on 13 standalone estimates 17
Established ownership structure 60% owned by TryghedsGruppen (foundation) and 40% free float TOP10 shareholders* Geographical distribution of free float (40%) year-end 2014 TryghedsGruppen 60.00 % 14% Denmark Tryg A/S 1.89 % 6% UK Danske Capital 1.65 % 14% 52% US Norges Bank Investment Management 1.22 % Nordics 14% Other Industriens Pensionsforsikring 0.97 % BlackRock Fund Advisors 0.85 % Shareholder overview year-end 2014** ATP Investment Management 0.83 % 17% TryghedsGruppen The Vanguard Group Skandinaviska Enskilda Banken Sampension Administrationsselskab 0.70 % 0.63 % 0.62 % 9% 14% 60% Large international shareholders Large Danish shareholders Small shareholders TOTAL TOP10 69.35% Note(*): from Ipreo s Big Dough database Note(**): large shareholders = more than 10,000 shares (~0.017%) 18
Rationale Rating Solid rating from Standard & Poor s Low business & financial risk together with stable outlook yields an A- rating Rating and underlying rationale Base-case scenario assumptions and methodology Junior Subordinated Subordinated Counterparty Credit Rating Financial Strength Rating Macroeconomic assumptions Expect the Danish economy to further recover BBB BBB A (stable) A (stable) Real GDP will increase by 1.5% in 2015 and by 2.2% in 2016 Danish 10-y gov. bond yield will remain low over the next 2 years Business risk profile: STRONG One of the largest non-life insurers in the Nordic region Market leader within Danish non-life Strong operating performance Diverse product and distribution strategies Financial risk profile: MODERATELY STRONG Strong underwriting profitability supports capital & earnings Capital adequacy is moderately strong Tryg benefits from a conservative investment strategy Moderate financial leverage = strong ability to service debt Outlook: STABLE Stable outlook for Tryg in the Nordic markets Will defend its strong competitive position and maintain moderately strong capital adequacy Continued strong earnings through profitable growth by utilizing premium rate increases & efficiency initiatives Given current financial risk and competitive strengths S&P views a negative rating action as remote over next 2 years Company-specific assumptions Premiums will decline less in 2015 with volumes contracting by up to 1% and then slightly increase in 2016-17 by 0%-2% p.a. Net combined (loss and expense) ratio of 87% or less by 2017 ROE will be above 20% in 2015-17 and above 21% after 2017 We expect Tryg's financial leverage will remain stable. Tryg will most likely refinance its maturing subordinated debt in 2015, and potentially add subordinated debt in 2016-2017 Key Metrics 2012 2013 2014 2015E 2016E Gro ss premiums written (D KKm) 20,128 19,820 18,672 ~18,500 ~18,500 N et inco me (D KKm) 2,180 2,373 2,547 >2,300 >2,300 R eturn o n equity (%) 21.9 21.6 23.1 >20 >20 P / C net co mbined ratio (%) 87.5 87.0 83.3 <90 <90 N et investment yield (%) 2.6 2.3 2.1 ~1.9 ~1.9 S&P capital adequacy M oderately strong M oderately strong M oderately strong M oderately strong M oderately strong F ixed-charge co verage 26.7 23.6 30.8 >30 >25 F inancial leverage (%) 23.0 23.4 22.0 <30 <35 Source: Standard & Poor s Rating Services (21.07.2015) 19
Sweden Norway Denmark Key economic figures in the Nordic region Stable outlook Tryg exposure % 2015E 2016E GDP Growth 1.5 2.0 Inflation 0.6 1.5 Unemployment 4.7 4.3 Current account balance in % of GDP 6.3 5.6 Budget balance in % of GDP -2.3-1.9 Public debt in % of GDP 39.1 41.0 TOP5 Sweden % 2015E 2016E GDP Growth 1.2 1.3 Inflation 2.1 2.2 Unemployment 4.4 4.8 TOP3 Norway Current account balance in % of GDP 5.7 5.9 Budget balance in % of GDP 6.1 6.3 Public debt in % of GDP 0.0 0.0 % 2015E 2016E GDP Growth 2.8 2.8 Inflation 0.0 1.1 #1 Denmark Unemployment 7.6 7.3 Current account balance in % of GDP 7.0 7.5 Budget balance in % of GDP -1.6-1.1 Public debt in % of GDP 43.8 43.1 Source: Economic Outlook, Nordea Markets 20
Arranged by: Tryg Forsikring A/S Klausdalsbrovej 601 2750 Ballerup Denmark Tel: +4570112020