Q2 and H1 2015 results Webcast presentation Follow us on Twitter: - - PowerPoint PPT Presentation

Q2 and H1 2015 results

Webcast presentation 10 July 2015

Follow us on Twitter: @TrygIR

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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

• ur 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.

H1 2015 highlights

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Key focus areas

 Efficiency programme proceeds as

• planned. Expected lower run-rate in 2015
• f DKK 150m compared to DKK 396m in

2014.  Increased customer focus  Price-differentiation and customer life time value  Topline development challenging

Current initiatives

• Building initiatives ensuring a greater effect from

efficiency programme of DKK 225m in 2016 and DKK 375m in 2017

• Balance price adjustments and inflation
• M&A focus
• Initiatives to improve customer experience

Long term profitable growth and attractive shareholder value creation

Financial highlights Q2 2015

• Tryg delivered a robust ROE of 21.9% despite a negative investment market,

and pays out a semi-annual dividend of DKK 2.50. Satisfactory technical result with an underlying improvement in a competitive market.

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• Pre-tax result of DKK 714m (DKK 1,150m)

impacted by:

• negative financial markets and DKK 343m lower

investment return due to losses on bonds and lower equity return

• Q2 2014 impacted by one-off effects of DKK 135m
• Technical result of DKK 825m (DKK 941m)
• slightly better than Q2 2014 before one-off

effects of DKK 135m.

• ROE of 21.9% (32.1%) p.a. after tax underpins

Tryg’s robust business model

• Drop in premium growth of 1.4% in local

currencies (-1.2%) affected by competition and loss of large Corporate accounts

• Semi-annual dividend of DKK 2.50 per share
• Equivalent to some 40% of the total dividend

based on 2015 results

714 1,015 135 Q2 2015 Q2 2014

Pre-tax profit (DKKm)

82.2 80.7 2.8 Q2 2015 Q2 2014

Combined ratio

15.2 12.6 2.8 Q2 2015 Q2 2014

Expense ratio

83.5 One-off effects 15.4 1,150

Customer highlights Q2 2015

• Continued improvement in Net Promoter Score (NPS)

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• 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
• The new car insurance launched in Q1 was recommended ‘best in

test’ by the Danish Consumer Council.

• Conditional approval of TryghedsGruppen’s members’ bonus

scheme by the Danish Business Authority, subject to final approval at the representative meeting in August 2015

• Launch of Tryg Home Hotline – service hotline for customers to

ask questions regarding issues related to their house, apartment

• r holiday home, such as damp issues.
• Tryg’s Swedish Corporate business voted the best company by

insurance brokers for the third year running.

11 20 22 CMD 2014 Q2 2015 Target 2017

NPS

56.3 56.6 61.3 CMD 2014 Q2 2015 Target 2017

Customers with ≥3 products (%)

87.9 88.0 88.9 CMD 2014 Q2 2015 Target 2017

Retention rate

Premiums and portfolio

4,550 4,711 Q2 2015 Q2 2014

• 1.4%

Gross earned premiums reduced by 1.4%

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Gross earned premiums (DKKm) DKKm Q2 2015 Q2 2014 Local currencies Q2 2015 Local currencies Q2 2014 Private 2,226 2,275

• 0.3%

0.1% Commercial 997 1,053

• 4.3%
• 3.9%

Corporate 993 1,030

• 1.4%

1.8% Sweden 342 358

• 1.8%
• 9.3%

Group 4,550 4,711

• 1.4%
• 1.2%

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

Customer retention

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82% 84% 86% 88% 90% 92%

DK NO

Commercial 82% 84% 86% 88% 90% 92%

DK NO

Private

• High and stable customer

retention in Denmark

• Slight decrease in Norway
• Customer retention stable

in Denmark

• Retention decreased in Norway

impacted by changed distribution set-up and competition

90 95 100 105 110 115

DK NO

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Motor insurance – average premium (index 2011 = 100)

Private - average premiums

• DK profitability strong but competition increasing

90 95 100 105 110 115

DK NO

House insurance – average premium (index 2011 = 100)

Average premiums increase Y/Y

• 2.3%

0.5% (Q1-1.9%) (Q1 0.8%) Average premiums increase Y/Y

• 0.8%

1.1% (Q1 -0.8%) (Q1 1.4%)

• NO: price increases from July
• DK: changed selection reduces

average price

• DK –2.3% decrease y/y driven by:
• improved frequency
• competitive situation
• Profitability very strong on motor

825 806 135 Q2 2015 Q2 2014

Slight increase in technical result

10 220 178 46 Q2 2015 Q2 2014

Commercial, DK & NO (DKKm) Sweden (DKKm)

434 419 75 Q2 2015 Q2 2014

Group (DKKm) Corporate (DKKm) Private, DK & NO (DKKm)

One-off effects 941 494 224 180 43 99 161 19 Q2 2015 Q2 2014 72 50

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Q2 2015 Q2 2014

90.3 82.9 1.8 Q2 2015 Q2 2014 78.9 88.6 Q2 2015 Q2 2014 82.2 80.7 2.8 Q2 2015 Q2 2014 83.5

Combined ratio improved by 1.3 pp.

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Commercial, DK & NO Sweden

80.7 78.8 3.3 Q2 2015 Q2 2014

Group

78.1 79.1 4.4 Q2 2015 Q2 2014

Corporate Private, DK & NO

82.1 83.5 One-off effects 84.7 87.0

• 1.6

Efficiency programme, DKK 38m achieved in Q2

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• Programme delivering as planned with

target to achieve savings of DKK 750m in the next 3 years.

• Lower expected 2015 savings than in 2014.
• Claims initiatives:
• In4mo with improved claims control
• New road assistance agreement
• Expense initiatives:
• IT sourcing
• New commercial structure with

mandate in frontline

Efficiency programme up until 2017 (DKKm)

150 225 375 175 388 395 73 2012 2013 2014 2015 H1 2015 2016 2017 Achieved Target Old programme New programme

Expense ratio improved from 15.4 to 15.2

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• Expense ratio improved from 15.4 in Q2 2014 to

15.2 in Q2 2015 – (adjusted for one-off effects in Q2 2014).

• 2015 will be impacted by one-off costs related

to new efficiency programme.

• Efficiency programme delivered savings of

DKK 15m related to:

• Outsourcing within financial area
• IT sourcing
• Reduction in FTE by 104 since Q4 2014.

4,077 3,914 3,703 3,599 3,495 2011 2012 2013 2014 Q2 2015

FTE - Development

15.4 * 15.2 16.6 16.4 15.6 14.6 2011 2012 2013 2014 Q2 2014 Q2 2015

Expense ratio

* Adjusted for one-off effects

Nominal costs in business areas

340 171 109 61 281 133 98 70 76 46 19

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Private Commercial Corporate Sweden Q2 2015 Q2 2014 One-off effects

Claims

69.5 70.0 Q2 2015 Q2 2014

Improved underlying claims ratio

15 63.6 62.8 Q2 2015 Q2 2014

Commercial (DK & NO)

75.6 72.8 Q2 2015 Q2 2014

Sweden

68.3 68.8 Q2 2015 Q2 2014

Group

76.5 79.3 Q2 2015 Q2 2014

Corporate Private (DK & NO)

Underlying development is adjusted for large claims, weather claims, run-off and interest.

Large claims, weather claims and run-off

16 3.4 4.9 4.7 5.0 5.0 6.1 2011 2012 2013 2014 Q2 2014 Q2 2015

Run-off net, effect on combined ratio (%) Claims reserves discounting rate (%)

60 23 721 356 620 447 2011 2012 2013 2014 Q2 2014 Q2 2015

Weather claims, net DKKm

78 127 546 471 407 574 2011 2012 2013 2014 Q2 2014 Q2 2015

Large claims, net DKKm Expected annual level 2015: DKK 500m Expected annual level 2015: DKK 550m

3.2 2.0 1.5 Q2 2014 1.4 Q2 2015 0.9 2011 2012 2013 2014 2015

Investment, capital and targets

Investment return – loss on bonds

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• Cov. Bonds

67.5% Bonds/deposits 3.1% Equities 6.3% HY 2.5% EM 1.0%

• Inv. Property 5.1%

Bonds/deposits 14.5% 1.1 0.0

• 1.2

1.1

• 0.1

0.3

Free portfolio return (%) Portfolio (DKK 41.5bn)

99 8 100 1 19 3 52 68 21 29 Bonds Equity HY & EM

• Inv. Property

Nordics EU ex Nordics North America EM/Other

Geographical exposure (%)

93 5 2 69 12 20 88 6 5 AAA AA-A BBB-B Match Free Total

Rating (%)

Free 12.2bn 29% Match 29.3bn 71%

Investment return DKKm Q2 2015 Q2 2014 Free portfolio 41 244 Match regulatory deviation

• 44

49 Match performance

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50 Other financials

• 70
• 84

Total return

• 84

259

Capital structure

19 6,694 3,400 Q2 2015

Capital – Q2 2015, DKKm

10,036 9,571 1,793 1,801 Q2 2015 Q1 2015 Equity Subordinated loan capital

Equity and subordinated loan, DKKm

Capital requirement Excess capital Buffer

• Capital buffer based on Individual Solvency decreased

to 51% (Q1 2015: 55%) and was impacted by:

• Result Q2 2015
• Executed share buy back of 2015 and H1 cash

dividend 2015

• Based on Solvency II standard model the capital

buffer was 21% (Q1 2015: 23%)

• H1 2015 cash dividend of DKK 2.5 per share (DKK

746m) Solvency II unsolved issues:

• Future eligibility in Norway of Natural Perils Pool and

the Guarantee scheme provision in own funds

• Internal model expected to be approved by 31

December 2015 at the latest. Application has been submitted

Concluding remarks

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 Efficiency programme proceeds as

• planned. Expected lower run-rate in 2015
• f DKK 150m compared to DKK 396m in

2014.  Increased customer focus  Price-differentiation and customer life time value  Topline development challenging

Financial targets 2017

• ROE: ≥21%
• Combined ratio: ≤87%
• Expense ratio: ≤14%

Customer targets 2017

• NPS +100%
• Retention rate +1 pp
• ≥ 3 products +5 pp

Dividend policy

• Payout ratio of 60-90%
• Aiming for a nominal stable increasing dividend

Low risk and high returns Leading in efficiency Leading Scandinavian insurer with strong track record Customer care worth recommending Next level pricing

Q&A

Follow us on Twitter: @TrygIR

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Date Place Participants from Tryg Arranged by 10/07/2015 Copenhagen Morten Hübbe, CEO Tor Magne Lønnum, CFO Lars Bonde, Group EVP and COO Investor Relations Jyske Markets 13/07/2015 London Morten Hübbe, CEO Tor Magne Lønnum, CFO Investor Relations Danske Markets 27/08/2015 Oslo Tor Magne Lønnum, CFO Peter Brondt, IR Manager DnBNOR 22/09/2015 Paris Lars Bonde, Group EVP and COO Peter Brondt, IR Manager Exane BNP 13/08/2015 Bergen, Norway Tor Magne Lønnum, CFO Peter Brondt, IR Manager Hordaland Børs 07/09/2015 Silkeborg, Denmark Peter Brondt, IR Manager Jyske Markets Selskabsdagen 15/09/2015 London Morten Hübbe, CEO Peter Brondt, IR Manager KBW European Financials Conference 16-17/09/2015 New York Lars Møller, IR Director Barclays Global Financial Conference 22/09/2015 Copenhagen Morten Hübbe, CEO Lars Møller, IR Director InvestorDagen, Danish Shareholders Association

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