Q3 2020 results - tryg.com · customers with 29% in Q3 2020. Tryg expects to see a positive...

Q3 2020 results

Investor presentation

Contents

2

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 Q3 2020 3

• Premiums and portfolio 9

• Claims and expenses 13

• Investment, capital and targets 19

• Roadshows & Conferences 28

• Background material 29

• Appendix 47

•Technical result of DKK 980m driven by good top-line development and improved core business

•Investment income of DKK 237m characterized by highly positive equity markets and narrowing credit spreads

•Solvency ratio of 214 at the end of Q3, strong organic capital generation drives the move from 193 in Q2

Pre-tax profit of DKK 1,150m (DKK 779m) driven by:

•Weather claims at 1.1%, large claims at 1.6%, run-off result at 4.7%

•Private underlying claims ratio 20bps better than Q3 19, Group underlying claims ratio 60bps better than Q3 19

•Expense ratio of 14.1 (13.9) - guidance for 2020 unchanged

•“FY 2020 underlying claims ratio expected to be better than 2019”

Technical result of DKK 980m (DKK 870m)

• Positive investment result as a result of highly positive equity markets and narrowing credit spreads

•Free portfolio and Match portfolio both reported a good performance

Investment income of DKK 237m (DKK -29m)

•In September 2020, TryghedsGruppen paid out a member bonus for the fifth consecutive year. The bonus corresponds to 8%

of premiums paid for 2019 as per previous years.

TryghedsGruppen approved members’ bonus for 2020

Financial highlights Q3 2020

3

- Higher technical result of DKK 980m, good top line development and improved core business- Investment income of DKK 237m driven by positive equity markets and narrowing credit spreads- Solvency ratio of 214, as mentioned on March 27 FY dividend decision as opposed to quarterly in 2020

Pre-tax profit (DKKm)

Combined ratio

Expense ratio

1,150

Q3 2020 Q3 2019

Q3 2020 Q3 2019

84.482.7

13.914.1

Q3 2020 Q3 2019

4

• Transactional Net Promoter Score (TNPS) of 71 (67)

• Number of products per customer increased

• In September, TryghedsGruppen paid out the member

bonus for the fifth year in a row

• Awareness of the member bonus was unchanged for non-

customers with 29% in Q3 2020. Tryg expects to see a

positive awareness of the member bonus in Q4 following the

payment of the member bonus in the Autumn

Number of products per customer

TNPS

Customer highlights Q3 2020

4.0

Q3 2020 Q3 2019 Target 2020

3.9

3.8

Q3 2019Q3 2020 Target 2020

Group (DKKm)

Technical result higher than Q3 2019

5

Q3 2020 Q3 2019

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

Corporate (DKKm) Sweden (DKKm)

• Private – Run-off Q3 2020: DKK 31m or 1.0% (DKK 14m or 0.5%)

• Commercial – Run-off Q3 2020: DKK 69m or 6.2% (DKK 93m or 8.6%)

• Corporate – Run-off Q3 2020: DKK 114m or 11.6% (DKK 123m or 11.9%)

• Sweden – Run-off Q3 2020: DKK 56m or 12.5% (DKK 49m or 11.5%)

Q3 2020 Q3 2019 Q3 2020 Q3 2019

Q3 2019Q3 2020 Q3 2019Q3 2020

MotorTravel Property

+23.9%

+1.5%

-8.5%

Number of claims NO (‘000) Financial impact Q1-Q3 2020 Number of claims DK (‘000)

COVID-19, helicopter viewTra

vel in

sura

nce

Moto

r, C

onte

nt,

accid

ent

etc

Gro

ss i

mp

act

Rein

sura

nce

Expenses

Investm

ent

Net

technic

al re

sult im

pact

To

tal C

OV

ID

-19

im

pact

6

1 2 43

Total negative COVID-19 YTD impact including investments losses and large impact from travel expenses especially in Q1

Very high level of customer contacts with high customer satisfaction

High level of travel claims to some degree offset by lower frequencies for other business lines

After summer holidays, COVID-19 cases increased both in Denmark and Norway

PropertyTravel Motor

+92.7%

+3.3%

+10.9%

2019

2020

2019

2020

Targeted benefits 2019-2021

• Full run rate synergies impact in 2021 of DKK 300m

• 50% impact expected in 2020

• DKK 45m achieved in Q3 2020

• DKK 19m from “lower” claims using Tryg procurement for Alka

• DKK 16m from cost benefits especially related to staff functions

• DKK 10m revenue synergies through cross selling to Alka customers using Tryg agent model

7

Claims Revenue optimisation

and commercial best

practice

Cost optimisation Total

Realised benefits and targeted benefits 2021 (DKKm)Alka merger benefits by category 2021 (DKKm)

2019 2020 2021

Alka synergies status update

35 30 20

85

Claims Total synergiesRevenueCost

4654

30

130

Realised synergies Q3 2020

Realised synergies Q1-Q2 2020

Targeted synergies 2020

Targeted synergies 2021

Value of Tryg since IPO

Strong focus on shareholders’ remuneration

8

Aim for a nominal stable increasing ordinary dividend (annual)

High profitability and low growth implies limited increase in capital requirement

Shareholders’ remuneration

Shareholder remuneration since 2012

Share price performance since IPO

Dividend and buy

back since IPO

October 2005 (IPO) Value of Tryg today

Tryg moves to FY dividend decision

for 2020

8.45

2.60

20132012

6.205.20

3.20

5.40 5.80

3.503.40

2014

3.50

6.00

2015 2016

3.30

2017

6.40

2018

1.65

6.80

2019

6.60

Extraordinary dividend

Extraordinary buy back

Ordinary dividend

-100,00

0,00

100,00

200,00

300,00

400,00

500,00

600,00

700,00

800,00

900,00

Tryg Euro insurance index

Premiums and portfolio

10

DKKm Q3 2020 Q3 2019Local currencies

Q3 2020Local currencies

Q3 2019

Private 3,167 3,055 6.7% 8.6%*

Commercial 1,118 1,083 5.6% 4.8%*

Corporate 990 1,032 -0.9% 4.5%

Sweden 443 422 2.1% 5.1%

Group 5,719 5,583 4.9% 6.8%

Group premiums up 4.9% in Q3

4.9

Q3 2020

6.8

Q3 2019 ex Alka

Gross earned premums development (local currencies)

Group premiums reported a 4.9% growth in local currencies

Private lines reported a 6.7% growth, impacted by strong partner agreements and independent agents

Commercial lines

reported a 5.6%

impacted by strong

organic growth in

Denmark and price

initiatives for larger

Commercial clients in

Norway

Corporate growth -0.9% - high acceptance of price hikes (avg. 10%) in Denmark while top-line fall in Norway due to price hikes (avg. 12%)

Sweden increased by 2.1% partly driven by price adjustments for motor insurance

* Excluding Alka

11

• DK: 2.7% (Q2 2.6%) positive development reflects price adjustments and some change in vehicle mix towards larger cars

• NO: 2.5% (Q2 1.9%) positive development reflects underlying price adjustments. Avg Motor price is higher in Norway primarily reflecting different type of cars

• DK: 2.8% (Q2 2.6%) positive development reflects price adjustments

• NO: 0.8% (Q2 0.5%) partly reflected in large partner agreements negotiation

Private - average prices

Q3

19

Q3

15

Q3

14

Q2

11

Q4

11

Q1

20

Q1

13

Q2

12

Q1

15

Q3

13

Q3

16

Q1

14

Q1

16

Q1

17

Q3

17

Q1

18

Q3

18

Q1

19

Q3

20

Average price Denmark Norway

House insurance 5,300 6,100

Q3

12

Q3

14

Q1

11

Q1

15

Q1

14

Q3

11

Q1

12

Q1

13

Q3

13

Q1

16

Q3

15

Q3

16

Q1

17

Q3

17

Q1

18

Q3

18

Q3

20

Q1

19

Q3

19

Q1

20

DK NO

NODK

Mo

tor i

nsu

ran

ce

Ho

use i

nsu

ran

ce

Average price (index 2011 = 100)

Average price Denmark Norway

Motor insurance 4,700 6,200

Average price (index 2011 = 100)

Tryg calculate the increases as the average price last four quarters divided by average prices previous four quarters

Customer retention remains at very high levels

12

• DK: customer retention stable at 88.4% (88.6%)

• NO: customer retention at 89.3% (88.7%) showing a significant improved trend

• DK: Retention fell to 90.5% (91.7%) driven by outflow of customers from the Nordea agreement - retention was 91.5% excluding Nordea

• Nordea churn more than offset by new sales to Danske Bank customers

• NO: customer retention up to 88.0% (87.1%) highest level in 10 years

Q3

17

Q1

16

Q1

13

Q3

15

Q3

13

Q3

16

Q1

14

Q3

14

Q1

15

Q1

17

Q1

18

Q3

18

Q1

19

Q3

19

Q1

20

Q3

20

DK NO

Q3

18

Q1

13

Q3

17

Q1

14

Q3

13

Q3

14

Q1

15

Q3

15

Q1

16

Q3

16

Q1

17

Q1

18

Q1

19

Q3

19

Q1

20

Q3

20

DK NO

Priv

ate

Com

mercia

l

Claims and expenses

Claims ratio, net (Sweden)

Claims ratio, net (Corporate)

Claims ratio, net (Commercial DK & NO)

Group underlying claims ratio at 72.1, 60bps better than Q3 2019

Private underlying claims ratio at 68.9, 20bps better than Q3 2019

“Expected FY 2020 underlying claims ratio better than FY 2019”

Going forward a slightly lower improvement in Private is expected because of strong

growth offset by more improvements in particular in the Corporate segment

14 * Underlying development is adjusted for large claims, weather claims, run-off, interest and COVID-19 impacts.Due to some rounding there may be slight differences in the reported underlying claims ratio

Underlying claims ratio improving

Group underlying claims ratio

Private underlying claims ratio

Q2

18

Q1

18

Q3

17

Q3

16

Q4

16

Q1

17

Q4

17

Q2

17

Q3

18

Q4

18

Q1

19

Q2

19

Q3

19

Q4

19

Q1

20

Q2

20

Q3

20

Q3

18

Q3

16

Q2

18

Q3

17

Q4

16

Q1

18

Q2

17

Q1

17

Q4

17

Q4

18

Q1

19

Q2

19

Q3

19

Q4

19

Q1

20

Q2

20

Q3

20

72.7

Q3 19 Q4 19

72.1

Q1 20 Q2 20 Q3 20

Q4 19Q3 19 Q1 20 Q3 20Q2 20

68.969.1

Q1

17

Q3

16

Q2

19

Q4

16

Q2

18

Q2

17

Q1

18

Q4

17

Q3

17

Q3

18

Q4

18

Q1

19

Q3

19

Q4

19

Q1

20

Q2

20

Q3

20

COVID-19 cases and recent development in DK and NO

• Ban on gatherings of > 50 people

• Restaurants and bars must close by 22:00

• Wear face masks on public transportation

• Working from home is encouraged

On 15th September, Denmark tightened its restrictions

to limit the spread of COVID-19 in 17 municipalities in

the Copenhagen area. Few days later, it was decided to

apply the restrictions nationwide.

COVID-19 restrictions in DK

• Ban on events of > 200 people

• Ban on private gatherings of > 20 people

• Ban on serving alcohol after midnight

• Working from home is encouraged

Norway tightened its restrictions to limit the spread

of COVID-19 on 7th August

* Local restrictions in Bergen and Oslo: Private gatherings of max

10 people, restaurants and bars are encouraged to register guests

and wearing face mask on public transportation is advised

COVID-19 restrictions in NO

COVID-19 restrictions due to fear of ‘second wave’ in DK and NO

Sources: Danish Ministry of Health (ssi.dk), Norwegian Institute of Public health (fhi.no) and the Norwegian Directorate of Health (helsedirektoratet.no)15

COVID-19 cases per day in Norway

COVID-19 cases per day in Denmark

COVID-19 financial impact

Gross Q1 Q2 Q3 YTD

Group

Travel -255 10 64 -181

Motor 35 33 10 78

Property 15 11 14 40

Accident 15 19 7 41

Other 10 21 -23 8

Gross Insurance impact -180 95 72 -13

Reinsurance

Travel 140 140

Technical result impact beforeexpenses

-40 95 72 127

COVID-19 related expenses* -20 -18 0 -38

Investment result -980 541 237 -202

Total impact from COVID- 19 -1.040 618 309 -113

• The impact is calculated by comparing to a normalised level of frequency

and average claims level for specific lines of business

• The Q3 net impact was a positive DKK 72m primarily driven by lower

claims frequencies in different lines of businesses.

• After summer holidays, the number of COVID-19 cases increased both in

Denmark and Norway. In order to avoid this development, Public

authorities took a number of measures to reduce social contact in the

public domain

• Financial markets have been severely affected by the breakout of COVID-

19 in 2020. Q1 was characterized by severe losses while financial

markets rebounded in Q2 and Q3.

• As disclosed in Tryg's newsletter (August 2019), the annual investment

return is expected to be between DKK 0-200m annually

16

* COVID-19 expenses are related to IT, admin and facility costs

Large claims, net DKKm Weather claims, net DKKm

Claims reserves discounting rate

17

Expected annual

level 2020: DKK 600m

Expected annual

level 2020: DKK 550m

2014 20162015 2017 2018 2019 Q3 2020Q3 2019

550

2014 Q3 2020Q3 20192015 2016 2017 2018 2019

600

2.5

1.0

0.0

0.5

2.0

1.5

3.0

Q3 2019

1.0

2015

0.9

Q3 20202016

1.0

2017

1.1

2018

0.7

2019

0.5

0.2

6.55.4

Q3 202020182016

6.7 7.0

2015 2017

5.5

2019 Q3 2019

5.0 4.7

Large claims, weather claims and run-off

Run-off net, effect on combined ratio

18

• Efficiency initiatives in 2017 brought down overall costs

• Investments in digitalisation will partly be financed through efficiency gains

• Expense ratio target for 2020 around 14%

• Alka synergies of DKK 16m helped overall costs level

• Number of employees increased

• Increase in business volume

• Increase in distribution power in general

• Guarantee expansion in Europe

Expense ratio of 14.1 in line with 2020 target

16.517.3

CommercialPrivate

13.9

Corporate Sweden

14.1

8.910.3

16.5 16.6

Q3 2019

Q3 2020

2011 20162014 20152012 2013 201920182017 Q3 2020

4,0763,913

3,703 3,5993,359 3,264 3,373

4,0274,151

4,309

15.314.4

2015 2018

15.7

20172016

14.0 14.2

2019 Q3 2019 Q3 2020

13.9 14.1

Expense ratio by business areas FTE development

Expense ratio

Investment, capital and targets

Free portfolio split

Total investments

DKK 41.2bn

Match portfolio

DKK 30.1bn

Free portfolio

DKK 11.1bn

Splitting up the portfolio ‘risk-wise’DKKm

Denmark Norway

Investments – split in match & free portfolio

20

Match portfolio split

Inflation linked bonds

Bonds

Equities

Inv. Property

Emerging markets

High yield

Investment grade

Equity portfolio split by sectorsCorporate bonds portfolio (DKK 3.0 bn) rating split*

Investment return – low risk remains key

21

Key figures investments (DKKm) Q3 2020 Q3 2019 2019

Free portfolio 266 97 857

Match portfolio 40 -69 -42

Other financial income and expenses -69 -57 -236

Total investment return 237 -29 579

2%

2%

1%2%3%

OTHER

HEALTH CARE

INFORMATION TECHNOLOGY

ENERGY

FINANCIALS

CONSUMER DISCRETIONARY

INDUSTRIALS

CONSUMER STAPLES

COMMUNICATION SERVICES

MATERIALS

REAL ESTATE

UTILITIES

AAA

A

AA

BB

BBB

B

CCC

Other

Group fixed income portfolio rating split

2%2%

2%

1%

A

AAA

BB

BBB

AA

B or lower

* Credit bonds in the quarterly report are shown as DKK 2.2bn but there is anapproximately additional DKK 800m split between bonds and diversified alternatives

• Total net investment result of DKK 237m in Q3, driven by a strong free

portfolio return

• Free portfolio returned approximately 2.4% with equities returning 6.6%

and high-yield bonds returning 4.1%

• Match portfolio benefitted primarily by narrowing Nordic covered bonds

spreads

• Other financial income and expenses at DKK -69m

Solvency position Q3 2020

22

• Solvency ratio based on the Partial Internal Model is 214 (Q2 2020: 193).

• Own Funds (OF) is primarily impacted by

• Strong Q3 organic capital generation of DKK 930m

• “Other” primarily pertains to small decrease in intangibles

Solvency capital requirement (SCR) is primarily impacted by

• Very small increase in insurance risk

• Increased equities exposure neutralized by using options.

• Solvency II Standard Formula SCR is DKK 6,353m at the end of Q3 while the solvency ratio is 156 (Q2 2020: 143)

• As mentioned on March 27 Tryg has decided to move to a full-year dividend decision for 2020. There is no accruals of dividends in the own funds on a quarterly basis

• The Danish FSA has explained that a ratio lower than 125 (partial internal model) would result in increased surveillance

• Tryg’s solvency ratio is mostly a function of net profits (+) and dividends (-). Underlying development should remain pretty stable

Own funds walk

Solvency capital requirement walk

8,800

Profit

2,277

1,044

9,774

5,479

2,282

Own Funds

Q2´20

Other Own Funds

Q3´20

1,030

6,462

44

Tier 2

Additional Tier 1

Core Equity Tier 1

-3

SCR Q2´20 Market Other

14

SCR Q3´20

4.5534.565

• The maximum capacity of additional Tier 1 instruments is a

function of the Core Equity Tier 1, which can be up to 25% of the

Core Equity Tier 1. Tryg has DKK 1,030m of Tier 1 funds so

currently the company has a “capacity” of DKK 586m for Tier 1

instruments.

• Tryg has DKK 2,444m (including DKK 800m of Norwegian Natural

perils Pool) of Tier 2 funds so currently some DKK 161m can not

be counted in the company’s own funds as it exceeds the limit of

50% of the SCR.

• The postponement of the dividend decision means that “all else

being equal” the Core Equity Tier 1 increases as it includes the

profit without the dividend payment.

Tier 1 & Tier 2 instruments

23

Tier 2 funds can be maximum 50% of the SCR

Tier 1 funds can be maximum 25% of Core Equity Tier 1

SCR Q3´20 DifferenceTier 2 max

capacity

2,444

Tier 2 funds

4,565

2,282

-161

Additional Tier

1 max capacity

586

Difference

6,462

1,6151,030

Core Equity

Tier 1 Q3´20

Tier 1 funds

24

Q2

2017

Q1

2016

Q2

2016

Q1

2017

Q3

2016

Q4

2017

Q4

2016

Q1

2020

Q3

2017

Q1

2018

Q2

2018

Q3

2018

Q4

2018

Q1

2019

281

Q2

2019

Q3

2019

Q4

2019

Q2

2020

Q3

2020

283292 291

Solvency ratio adjusted for the DKK 4bn to fund the Alka acquisition

Final approval of the Alka acquisition from the Danish authorities implying booking of goodwill

Solvency ratio historical development

196 197207 206

DKK 4bn raised for the Alka acquisition

Approval of new partial internal model, very strong Q2 result and dividend decision for 2020 moved to year-end as opposed to quarterly

Positive development driven by strong organic capital generation and roughly flat solvency capital requirement

Equity

Solvency ratio sensitivities

25

• The Solvency II ratio shows the highest sensitivity to spread risk for covered bonds

• Assumption is for a 100bps widening/narrowing of our entire fixed income book (Danish government bonds, Danish mortgage bonds, Norwegian government bonds, high yield etc.)

• Biggest spreads sensitivity (by far) in the fixed income area is towards covered bonds. Corporate and Government bonds sensitivities are low as exposure to these assets classes is low

• Interest rate risk is very low as function of our matching strategy

-20% +100 bps-20%Q3 +20%+20% -30%+30% -100 bps +100 bps -100 bps +100 bps -100 bps 100 bps -100 bps -20%+20% +20% -20%

2020 Equity Property Interest Spread(Covered)

Spread(Corporate)

Spread(Government)

NOK/DKK SEK/DKK

Targets and outlook

26

✓ New financial targets announced at 2017 CMD

✓ Members’ bonus of 8% in September 2020.

✓ Price increases to offset claims inflation

Customer targets, 2020

TNPS 70

No. of products per customer +10 %

ROE after tax (%)

✓ 2020 topline growth above GDP level

✓ 2020 normalised tax rate 22-23%

✓ Alka acquisition will result in annual depreciation of customer relations

of DKK127m within a 5 to 7 years period. Solvency position (hence

dividend capacity) not impacted by the P&L charge

ROE as reported

Technical resultDKK 3.3bn

Combined ratio≤ 86

Expense ratio

~ 14

ROE after tax

≥ 21%

Financial targets, 2020

Target post Alka acquisition

* ROE target ≥ 21% suspended for the FY2020 due to extremely negative capital markets development in Q1

27

”Do you know the only thing that gives me pleasure?

It’s to see my dividends coming in.”

John D. Rockefeller

It is important to know your investment case

Date Place Participants from Tryg Arranged by

09/10/2020 Copenhagen roadshow

Morten Hübbe, CEO

Barbara Plucnar Jensen, CFO

Investor Relations

SEB

20/10/2020 London virtual roadshowMorten Hübbe, CEO

Gianandrea Roberti, Head of Investor RelationsNordea

27/10/2020 Brussels virtual roadshow Gianandrea Roberti, Head of Investor Relations DNB

23/11/2020Credit Suisse Insurtech

conference

Barbara Plucnar Jensen, CFO

Peter Brondt, IR ManagerCredit Suisse

23/11/2020Carnegie Cyber Security

seminar

Hans Arnum, Head of Commercial DK

Investor RelationsCarnegie

02/12/2020 Copenhagen winter seminarMorten Hübbe, CEO

Peter Brondt, IR ManagerDanske Bank

28

Q3 roadshows & conferences

Background material

Claims Excellence

DKK 600m in claims cost reduction

Digital Empowerment

of Customers

DKK 100mSTP on claims: 50%Self-service: 70%

Tryg 2018 – 2020:

Strengthening the core, while embracing the future Product & Service

Innovation

+DKK 1bn in new products by 2020+

Distribution Efficiency

DKK 150m in technical result impact

Financial targets 2020

• Technical result: DKK 3.3bn

• Combined ratio: ≤86

• Expense ratio: ~14

• ROE: ≥21%

Customer targets 2020

• TNPS: 70

• Number of products per customer: +10%

Dividend policy

• Targeting a nominal, stable and increasing dividend

• Extraordinary dividend to further adjust the capital structure

Long term profitable growth and attractive shareholder value creation

30

Alka acquisition

DKK 300m in synergies with full run-rate impact in 2021

Tryg’s equity story – a leading Nordic non-life insurer

Why invest in Tryg?

31

Pre-tax result by division (YE 2018 data)

Tryg is a dividend stock (DKK)Motor combined ratios Nordics vs international

Total yield (dividend and buy backs / market cap) at year end

High insurance penetration in the Nordics

Premiums per capita (USD), 2017

1.519

Denmark Norway UKGermany France Italy

1.296

1.557

1.224

Alm. BrandTryg GjensidigeTopdanmark Sampo Storebrand

Other

Non-life

Life

Banking

20122010 20152011 20142013

Norway

UK

Germany

Denmark

Italy

20192012 2016

4.5%

6.6

2013 2018

6.2%

2014 2015 2017

9.2%

5.2

8.3%

5.4

6.6%

5.8

6.9%

6.0

7.6%

6.2 6.4

4.0%

6.8

DPS (right axis)

Total yield

Gross premium split by products 2019

Gross premium split by products 2019

Tryg at a glance

32

• 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.Norway

Market position: #4Market share: 13.1%

CR in Q3 2020: 85.7 %

SwedenMarket position: #5Market share: 3.5%

CR in Q3 2020: 79.1 %

DenmarkMarket position: #1

Market share: 22.5%CR in Q3 2020: 81.9 %

Retention rate - Private

Retention rate - Commercial

31.0%

5.0%

4.0%

8.0%

13.0%

25.0%

14.0%

Workers’ comp

Motor

Health & accident

Liability

Fire & property - private

Fire & property - comm.

Other

Private

Sweden

Corporate

Commercial

Q3

16

Q1

16

Q3

15

Q1

13

Q3

13

Q1

14

Q3

14

Q1

15

Q1

19

Q1

17

Q3

17

Q1

18

Q3

18

Q3

19

Q1

20

Q3

20

Q1

14

Q1

13

Q3

16

Q1

17

Q1

16

Q3

15

Q1

15

Q3

13

Q3

14

Q3

17

Q1

18

Q3

18

Q1

19

Q3

19

Q1

20

Q3

20

DK NO

Run-off net by products Q3 2020

Gross claims reserve by products 2019Gross premium by products 2019

Premiums and reserves by lines of business

33

31.0%

4.0%

5.0%

14.0%

25.0%

8.0%

13.0%

Liability

Motor


Workers’ comp

Health & accident


Other

36.0%

14.0%

22.0%

7.0%

7.0%

9.0%

5.0%Motor

Workers’ comp

Health & accident

Liability



Other

5.0%

16.0%

18.0%

31.0%

24.0%

-7.0%

13.0%Motor

Workers’ comp

Liability

Health & accident

Other



Run-off net by products Q3 2020

16.0%

32.0%

4.0%

15.0%6.0%

19.0%

8.0%

Motor

Workers’ comp

Liability

Health & accident



Other

DK: Gross premium by products 2019

Gross premium split by geography

34

Motor

Liability

Workers comp


Health and accident

Fire and property comm

Tourist assistance

Other

SE: Gross premium by products 2019

Motor


Health and accident


Liability

Other

NO: Gross premium by products 2019 Run-off net by products 2019

3%

Motor

Liability

Health and accident

Workers comp


Tourist assistance


Other

1%


Motor

Liability

Workers comp


Health and accident

Other

The run-off cycle

35

• Initial assessment of the claims was DKK 18,000 but

Tryg reserved for DKK 20,000 adding some

conservatism to best estimate.

• At the time of setting up the claims reserves and

booking the claims in the P&L the Loss ratio (hence the

combined ratio) is worse than what should be if our

initial assessment is correct.

• After three years (approx. and using average for Tryg

Group) the DKK 2,000 added for conservatism comes

back in the P&L as a positive run-off gain or reserves

releases. All the above assumes that initial assessment

was correct and nothing has changed in the three years

period.

• Figures in the example above are purely illustrative.

18.000

2.000

-20.000

3 years

Claims estimate: -18,000

Run-off: +2,000

Claims buffer: -2,000

Run-off development

We assessed the claimat DKK 18,000 but

reserve for DKK 20,000

36

2005 2008

86.8

20122006

88.2

20092007 2011 Since

IPO

2013

98.8

20162014 2015 2017 20182010 2019

92.2

85.9

10Y

avg.

89.0

5Y avg.

84.4

93.2

88.2 87.784.2

86.784.4 85.1

88.0 88.085.685.1

Combined ratio development

37

Percentage

Nordic (EUR 26.3bn as at Q4 2018)

4.7%

10.2%

15.8%43.0%

8.1%

9.5%8.7%

If

Topdanmark

Tryg

Gjensidige

Codan

Länsforsikringar

Other

Denmark (DKK 57.8bn/EUR 7.8bn as at Q3 2019)

22.5%

16.2%

3.7%

5.5%

9.2%

9.7%

21.5%

5.0%

6.7%

Tryg

Topdanmark

If

Codan

Gjensidige

Alm. Brand

LB Forsikring

GF forsikring

Other

Sweden (SEK 90.4bn/EUR 8.5bn as at Q2 2020)

3.5%

30.1%

18.1%

16.2%

13.8%

1.9%

16.4%

Moderna (Tryg)

If

Länsforsikringar

Codan

Gjensidige

Folksam

Other

Norway (NOK 65.6bn/EUR 6.2bn as at Q2 2020)

13.1%

4.2%21.4%

25.9%

15.0%

3.3%2.1%

3.4%

2.2%

9.5%Tryg

If

Gjensidige

Fremtind

Eika

Protector

Storebrand

Frende

Codan

Other

Structure of the Nordic insurance market

38

DK

DK

NO

NO

SE

SE

4%

Sales agents

Customer services

Outbound

Affinity

Nordea

Online DK

Danske Bank9%

Web

Franchise

Enter

Customer service

Outbound

Nordea

7%

7%

Own sales

Atlantica/Bil sport/MC

Other

Web and external sales

NODK

Sales agents

Customer centre

Partner

Brokers

Customer centre

Sales agents

Franchises

Brokers

Own sales

Brokers Brokers

Own sales

100%

Brokers

Priv

ate

Com

mercia

lC

orp

orate

Distribution of new sales 2019

Things that you may not know

39

• Motor insurance prices relatively similar in DK and the UK but cost of the insured good (the

car) substantially higher in DK driven by the registration tax for passenger cars (100%-150%

of taxable value on new vehicles approx.).

• Motor insurance remains a highly attractive business in Scandinavia unlike many European

countries.

• In Oslo, it costs approx. NOK 5,000 per month to hire a dog walker for 5 weekly walks, each

walk is minimum 60 minutes.

• In Sweden it is illegal to leave a dog home alone more than six hours, the dog has to be out

at least every six hours during the day.

• Pet insurance premiums totalled SEK 3.3bn at the end of September 2015 in Sweden but that

includes horses as well.

• Tryg believes that Pet insurance remains an attractive growth segment.

• Child insurance is an important product in Sweden with total market premiums above SEK

2.5bn, the same product is virtually non-existent in Denmark and Norway. We believe this

will gradually change and plan to leverage on our Skandia child insurance acquisition.

• In 2014, Tryg bought Securator reinforcing its leading position in the Nordic market for

product and extended warranty insurance, a market which is estimated at more than DKK

2bn.

Things that you may not remember

40

• Our maximum annual net exposure to a single large Property claim is DKK 100m which

falls to DKK 75m in case of a second event and

DKK 50m in case of a third/fourth event, maximum exposure is DKK 25m thereafter.

This is based on our general reinsurance programme.

• Our maximum net exposure for weather claims is DKK 150m per event. The upper

limit of the programme is DKK 7.25bn, which is statistically sufficient to cover at least

a 250-year event.

• We have bought an additional ‘horizontal’ reinsurance programme which will cover any

weather claims in excess of DKK 300m up to DKK 600m. Weather claims have to be at

least DKK 20m to end in the ‘horizontal’ agreement.

• Local accounting rules driven by Danish FSA means that all assets are marked to

market. This is different from Nordic/International peers where many fixed income

portfolios are hold to maturity and/or the marked to market hits the NAV and not the

P&L. The unrealised gains and losses item does not show up in the P&L of some of our

Nordic peers (as most bonds are hold to maturity) or hits the NAV as opposed to the

P&L.

41

• Overall I am very satisfied with the

services of my insurance company

• My insurance agent only sold me

insurance coverage that I really needed

• My present insurance coverage offers

me enough flexibility

• Claims: my insurance company in

uncomplicated and helpful way

• I have full confidence in my personal

insurance agent

• My insurance is more cost effective than

most other insurances

Danish customers completely and strongly agree

Source: IBM Institute for Business Value and I.VW University of St. Gallen 2007 Insurance Study

IBM study from 2007, probably little has changed

Population development in Norway in ‘1,000

Population development in Denmark in ‘1,000

DK 9%

NO 19%

42

Population growth (2000-2019)

Organisational and remuneration structure

43

Organisation chart

Remuneration structure

The Executive Board are remunerated according to Tryg’s remuneration policy:

• Base salary

• Pensiono 25% of the base salary

• Variable pay

o Up to 50% of the base salary including pension

o The variable pay element is a Matching Shares

Programme:

The Executive Board may buy Tryg shares (so-called

investment shares) at market price for a predefined

amount. Four years after the purchase, Tryg will grant

one matching share per investment share free of charge.

Download Tryg’s statutory corporate governance report and remuneration policy on tryg.com

CEOMorten Hübbe

CFOBarbara Plucnar

Jensen

COOLars Bonde

CCOJohan Kirstein

Brammer

Private DK

Commercial DK

Corporate DK & Tryg Garanti

Claims DK

Private NO

Commercial NO

Corporate NO

Claims NO

Private SE & Affinity

Corporate SE

Corporate Responsibility in Tryg

44

Corporate Responsibility contributes to long-term value creation

Corporate Responsibility BoardChair: CFO, Barbara Plucnar Jensen

Procurement/ Sourcing HR Facilities Investments

Claims Private Commercial Corporate

Legal/ Compliance

Corporate Responsibility team

CommunicationsInvestor Relations

Tryg’s Corporate Responsibility 2020 strategy is aligned with our corporate strategy and purpose: As the world changes, we make it easier to be tryg*.

• Tryg has published an independent Corporate Responsibility report 2019 on tryg.com

• Our four strategic focus areas are: Actively creating peace of mind, Climate & environment, Responsible workplace and Business etchics.

• Tryg has established a Corporate Responsibility Board to ensure governance throughout the organisation.

https://www.tryg.com/en/CR

45

Corporate Responsibility in TrygUN Sustainable Development Goals

Tryg has a direct and indirect impact on the 17 SDGs.

However, we have focused on SDGs where we have a direct impact and pinpointed two specific goals for which we have defined Key Performance Indicators (KPIs).

Strong opportunity

Low opportunity

Indirect impact

Direct impact

41% women in management positions in 2020

2%reduction in carbon emissions in 2020

Key figures 2019 and Consensus 2019-2021

DKKm 2019A 2020 2021 2022

Gross premium income 21,741 22,548 23,143 23,668

Technical result 3,237 3,456 3,489 3,604

Investment income, net 579 -171 150 150

Pre-tax profit 3,628 3,056 3,432 3,547

Net income 2,843 2,287 2,671 2,764

Combined ratio 85.1 84.6% 84.9% 84.7%

Expense ratio 14.2 14.1% 14.0% 14.0%

Ordinary dividend per share 6.8 7.0 7.2 7.4

Extraordinary dividend per share 1.65 0.2 1.6 1.7

46

Based on 17 estimates ahead of Q3 2020

Consensus

AppendixFollow us on Twitter: @TrygIR

Claims ratio, net of reinsurance

Combined ratio

Group

48

Gross premiums

%DKKm %

%

%

Gross premiums

Expense ratio


Combined ratioGross premiums

Expense ratio

Private

49

%DKKm

* Including two months Alka



Expense ratio

Commercial*

50

%DKKm

* Less than 100 employees or less than DKK 100m turnover



Expense ratio

Corporate*

51

%DKKm

* More than 100 employees or more than DKK 100m turnover



Expense ratio

Sweden

52

%DKKm

Norway

SwedenDenmark

53

Geographical combined ratio

Corporate history

54

• 1728, Copenhagen experienced what was later to be known as the Copenhagen Fire of 1728. The fire heightened public awareness of the need for insurance

• 1731, The oldest component of Tryg’s history was the Danish insurance company Kjøbenhavns Brand was established by Royal Decree as a result of the

Copenhagen Fire of 1728

• 1880, The Norwegian insurance company Vesta was established. The name Vesta derives from Roman mythology, Vesta is the goddess of hearth, home and

family

• 1911, The name Tryg emerged (Tryg means peace of mind in Danish)

• 1990, The mutual company Tryg demutualised and the ownership of the new limited company was placed in Tryg I Danmark

• 1994, Tryg acquired the Danish insurance operations of Winterthur

• 1995, Tryg acquired Baltica and continued operations under the name Tryg-Baltica

• 1996, Tryg-Baltica was listed on Copenhagen Stock Exchange. Tryg I Danmark retained a 60% ownership

• 1999, Tryg-Baltica merged with Denmark’s second largest banking group, Unidanmark whose general insurance activities were integrated with Tryg. Tryg-

Baltica de-listed

• At the end of 1999 the Norwegian insurance company Vesta was acquired from Skandia

• 2000, Tryg, Vesta and Unibank contributed to the formation of Nordea. Tryg I Danmark holds at this point a 6% stake in the Nordic banking group

• 2001, Tryg established a branch in Finland

• 2002, Tryg I Danmark acquired Nordea’s non life activities and forms TrygVesta

• 2005, TrygVesta was listed on the OMX Nordic Stock Exchange in Copenhagen on October 14

• 2006, TrygVesta launched a Swedish branch in June

• 2009, The acquisition of the Swedish insurance company, Moderna, was completed in April

• 2012, Tryg sells its Finnish business to Sampo/If….

• 2015, Tryg split its share 1:5, meaning each share with a nominal value of DKK 25 was replaced by 5 shares with a nominal value of DKK 5

• 2018, Tryg received the final approval of the Alka acquisition from the Danish authorities

Sweden

% 2020E 2021E

GDP Growth (mainland) -3.5 4.0

Inflation 0.5 1.1

Unemployment 8.5 8.5

Current account balance in % of GDP

4.5 3.5

Budget balance in % of GDP -4.3 -3.3

Public debt in % of GDP 42.0 43.8

Norway

% 2020E 2021E

GDP Growth -3.5 4.0

Inflation 3.1 2.5



4.1 5.2

Budget balance in % of GDP 2.0 4.0


Economic key figures

55

Source: Economic Outlook, Nordea Markets, September 2020

Denmark

% 2020E 2021E

GDP Growth -4.5 3.0

Inflation 0.6 0.9



8.3 7.0

Budget balance in % of GDP -4.5 -2.6


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