2014.07.10 Webcast presentation Q2 2014 -...
Transcript of 2014.07.10 Webcast presentation Q2 2014 -...
Q2 and H1 2014 results
Webcast presentation 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
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 2014 - Improved results and positive trend in premium income.
688
1,150
0
200
400
600
800
1,000
1,200
Q2 2013 Q2 2014
D KKm
80.786.7
6065
707580
8590
95100
Q2 2013 Q2 2014
Pre-tax profit
Combined ratio
2.8
15.6
12.6
0
4
8
12
16
20
Q2 2013 Q2 2014
Expense ratio
3
• Pre-tax profit of DKK 1,150m (DKK 688m).
• Technical result of DKK 941m (DKK 684m).
• Combined ratio improved by 6.0 pp. to 80.7 (86.7).
• Premium dropped 1.2% (-2.6%) - however, an improved trend in development.
• Expense ratio of 12.6 (15.6) impacted by Norwegian pension scheme and IT costs.
• Investment return of DKK 259m (DKK 13m) impacted by positive financial markets.
• 40% of the share buy back programme of DKK 1,000m completed.
15.4 One-off
Important news in Q2 2014
• Many customer focused initiatives initiated.• Customer SMS measuring with strong results
• Extended opening hours
• 3 new price differentiated products in Norway.
• Regular inspection by Danish FSA confirmed satisfactory view on risk control, reserve and capital position.
• Efficiency programme progress as planned. DKK 93m reached in Q2.
• Successful integration of agriculture portfolio acquired from Codan.
• Tryg received fewer complaints than other insurance companies relative to market share.
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5
Combined ratio development in business areas
Group CRQ2 2014: 80.7Q2 2013: 86.7
Combined ratio – Commercial (DK & NO)Combined ratio – Private (DK & NO)
Combined ratio – Private Sweden Combined ratio – Corporate
86.7
79.1
88.4
80.4
75
80
85
90
95
100
Q2 2013 Q2 2014 H1 2013 H1 2014
94.3
88.6
94.7
88.6
80
85
90
95
100
105
110
Q2 2013 Q2 2014 H1 2013 H1 2014
87.2
82.9
88.090.6
80
85
90
95
100
Q2 2013 Q2 2014 H1 2013 H1 2014
84.9
78.8
87.4
83.3
75
80
85
90
95
100
Q2 2013 Q2 2014 H1 2013 H1 2014
1,000
700
300
740
550
190
0
200
400
600
800
1,000
1,200
Target 2015 Achieved 2012-2013 Achieved H1 2014
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DKKm
Efficiency programme up until 2015
Targeted and achieved savings on claims
• Savings of DKK 740m achieved so far.
• DKK 93m achieved in Q2 2014.
• DKK 28m reduction in expenses
• DKK 65m reduction in claims
• Increased benefit from Buildings and Content initiatives.
• Craft network (carpenter, plumber etc.)
• E-auction
• ScalepointExpenses Claims Total
Follow up on efficiency programme
Premiums and portfolio
Gross earned premiums, DKKm
2,363 2,275
1,124
1,062 1,030
420 358
1,053
0
1,000
2,000
3,000
4,000
5,000
6,000
Q2 13 Q2 14
Private Commercial Corporate Sweden
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Topline and technical result
Gross earned premiums reduced 1.2% (-2.6%) related to:
• Continued high retention level in Private and even improved retention level in Commercial.
• Higher sales level in general in Private compared to last year.
• Commercial – improved retention but sales lower than expected.
• Corporate – growth in Sweden, slightly positive development in DK and NO.
• Sweden affected by cancellation of Nordea agreement.
4,962 4,711
Technical result, DKKm
364494
153
224139
180
43
28
0100200300400500600700800900
1,0001,100
Q2 13 Q2 14
Private Commercial Corporate Sweden
941
684
Local currency
Group: -1.2 (-2.6)
-9.3 (-4.3)
1.8 (-2.6)
-3.9 (-3.1)
0.1 (-2.0)
90
100
110
120
130
140
150
2008
2009
2010
2011
2012
2013
2014
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Private - average premiums
House insurance – average premium (index 2008 = 100)
Motor insurance – average premium (index 2008 = 100)
90
100
110
120
130
140
2008
2009
2010
2011
2012
2013
2014
Average premiums increase Y/Y
Average premiums increase Y/Y
2.6%
(Q1 2.9%)
0.5%
(Q1 0.6%)
-0.6%
(Q1 -0.9%)
1.8%
(Q1 2.3%)
82%
84%
86%
88%
90%
92%
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2 14
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Customer retention
Private
Commercial
82%
84%
86%
88%
90%
92%
Q1 10
Q2 10
Q3 10
Q4 10
Q1 11
Q2 11
Q3 11
Q4 11
Q1 12
Q2 12
Q3 12
Q4 12
Q1 13
Q2 13
Q3 13
Q4 13
Q1 14
Q2-14
60%
69%
78%
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
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Private Sweden – CR and customer retention
125
103
99102 103
9997
114
110
95
91
88
95 94
88 88 89 89
80
85
90
95
100
105
110
115
120
125
130
Q1-10
Q2-10
Q3-10
Q4-10
Q1-11
Q2-11
Q3-11
Q4-11
Q1-12
Q2-12
Q3-12
Q4-12
Q1-13
Q2-13
Q3-13
Q4-13
Q1-14
Q2-14
Customer retention
Nordea portfolio
Claims and expenses
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Underlying claims, net Q2 2013/2014
CR and claims ratios Q2 2013-14
Claims ratio development - Group
72.168.8
65.662.8
78.7 79.3
72.3 70 72.876.7
Q2 2013 Q2 2014
Group Private Commercial Corporate Sweden
65707580
859095
Q1 09
Q4 09
Q3 10
Q2 11
Q1 12
Q4 12
Q3 13
Q2-14
Gross claims rat io Claims rat io, net of reinsurance
• Underlying development is adjusted for:
• Large claims
• Weather claims
• Run-off and interest
• Improved underlying development on Group level driven by:
• one-off effects
• efficiency improvements
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Run-off, net DKKm
Large claims, weather claims and run-off
Large claims, net DKKm Weather claims, net DKKm
207
78
0
50
100
150
200
Q2 2013 Q2 2014
65 60
0
50
100
150
200
Q2 2013 Q2 2014
Expected annual
level 2014: DKK 500m
Expected annual
level 2014: DKK 550m
Run-off net, effect on combined ratio
260
162
0
50
100
150
200
250
300
Q2 2013 Q2 2014
3.4%3.0%
4.0%
5.0%
6.0%
7.0%
2007 2008 2009 2010 2011 2012 2013 Q22014
Expense ratio development
Expense ratio
15
4,076
3,913
3,7033,655 3,639
4,101
2010 2011 2012 2013 Q1 2014 Q2 2014
FTE development
15.6
12.6
15.6
16.416.616.716.6
2009 2010 2011 2012 2013 Q22013
Q22014
• Expense improved from 15.6 in Q2 2013 to 12.6 in Q2 2014.
• Excluding one-off effects, expense ratio was15.4 - an improvement of 0.2 pp.
• Nominal expenses on Group level reducedsignificantly in Q2 2014.
• One-off effects of DKK 135m• Efficiency programme
• Reduction in FTE by 64 since Q4 2013.
DKKm
Nominal costs in business areas
11674
13398
368
206
70
281
Private Commercial Corporate Sweden
Q2 2013 Q2 2014
Q2: One-off effectsof 2.8%-point
Investment, capital and financial targets
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Investment result Q2 2014
Free investment
Match regulatory deviation
Match performance
Other financials
Total return
0.7% 0.6%
3.3%4.0%
1.0%
1.9%
5.1%
Govt. B
onds
Cov. B
onds
Hig
h-yie
ldEm
ergi
ng m
arke
ts
Equi
ties
Inve
stm
ent p
rope
rty
Tota
l
Free portfolio – Q2 2014 (DKK 12.7bn)
3
7
24
37
1710
2
Equities (22)
Investment property (15)
Bank deposits/bonds (15)
Govt. Bonds (3)
High yield (6)
Cov. Bonds (36)
Em. market bonds(3)
Percentage
Match portfolio – Q2 2014 (DKK 30.7bn)
5
95
Cov. Bonds (94)
Bank deposits/bonds (6)
Percentage
Percentage return – free portfolio
Investment return
DKKm
244
49
50
-84
259
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Capital structure and status on share buy back
• Capital buffer based on Individual Solvency increased to 63% (2013 Q4: 50%) and was impacted by:
• H1 result 2014• H1 share buy back deducted
in buffer.
• Based on Solvency II model the capital buffer was 29% (2013 Q4: 25%).
• 40% of 2014 share buy back of DKK 1bn completed.
Unsolved Solvency II issues:
Negatives: • Recommendation from FSA Norway• Future eligibility in Norway of Natural
Perils Pool and the Guarantee scheme provision in Solvency II.
Positives: • Expected future profits • Full inclusion of subordinated capital
11,107 10,525
1,8181,820
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
2013 Q4 2014 Q2
Subordinated loancapitalEquity
Equity and subordinated loan
Capital – Q2 2014
6,734
0
4,000
8,000
12,000
Individual Solvency
Capital requirement
Buffer
Excess capital
4,218
DKKm
DKKm
0%
10%
20%
30%
40%
2005
2006
2007
2008
2009
2010
2011
2012
2013
H1 2
014
2014
2015
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Financial targets
ROE target
ROE after tax
ROE after tax of 20% to be achieved by delivering a full year combined ratio
of 90 or lower.
Expense ratio <15 in 2015
Q/A
Follow us on Twitter: @TrygIR
BerenbergLars Bonde, Group EVP and COO Peter Brondt, IR Manager
Frankfurt/ Munich15/09/2014
CarnegieLars Møller, IR DirectorVienna09/09/2014
CarnegieLars Møller, IR DirectorMilan08/09/2014
Danske MarketsMorten Hübbe, CEOPeter Brondt, IR ManagerParis03/09/2014
SEBTor Magne Lønnum, CFOPeter Brondt, IR Manager
Oslo29/08/2014
KBW European Financials Conference
Tor Magne Lønnum, CFO Peter Brondt, IR Manager
London17/09/2014
Date Place Participants from Tryg Arranged by
10/07/2014 Copenhagen
Morten Hübbe, CEOTor Magne Lønnum, CFOLars Bonde, Group EVP and COOInvestor Relations
Danske Markets
11/07/2014 LondonMorten Hübbe, CEOTor Magne Lønnum, CFOInvestor Relations
ABG
19-22/08/2014 Canada/ USA Lars Møller, IR Director Danske Markets
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