Annual results 2010 Webcast...
Transcript of Annual results 2010 Webcast...
Annual results 2010
Webcast presentation
10 February 2011
2
Events in 2010
2010• Premium income of DKK 19.5bn and pre-tax income of DKK 941m• Solid growth, tight cost control and improving underlying performance• High claims expenses - including one-off events of DKK 1.4bn above a normal year• Strong investment return supported by higher equity markets.
Q4 2010• Best Q in 2010 – pre-tax result of DKK 512m • Premium initiatives contributed DKK 275m i.e ~5% of premiums.• Underlying claims ratio improved due to premium and claim prevention initiatives.
*Q3 2010 before adjustment for change of ownership
Combined ratio
60.0
70.0
80.0
90.0
100.0
110.0
120.0
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
%
Premium growthIn local currency and excl. Moderna impact
2.0
3.0
4.0
5.0
6.0
Q108 Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310*
Q410
%
3
Claims ratio
50
60
70
80
90
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Key performance indicators
Gross premiumDKKm
3,000
3,500
4,000
4,500
5,000
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
Expense ratio
15.2 14.6
17.815.5
17.7
13.514.7 14.1 14.5
13.3 14.3
3.02.9
15.5
1.6 2.01.4
1.33.0
2.4
3.3 2.81.8
3.1
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
17.1 17.2 16.0 19.1 17.3 17.7 15.9 18.0 17.2 17.3 16.3 17.2
Denmark & Norway Finland & Sweden
Including extraordinary winter impact
Data before 2009 is not corrected for the sale of Marine Hull business.
Including extraordinary winter impact
Combined ratio
50
60
70
80
90
100
110
Q108
Q208
Q308
Q408
Q109
Q209
Q309
Q409
Q110
Q210
Q310
Q410
4
One-off and extraordinary events 2010
One-off and extraordinary events (DKKm)
0
500
1,000
1,500
2,000
2,500
Large claimsWinter Q4Ruling workers' compensationCloudburstWinter Q1
ExtraordinaryeventsDKK 1.4bn.
One-offevents
DKK 2.2bn.
5
Performance in 2010
91.8 90.891.3
1.05.6
70
80
90
100
110
2008 2009 2010
87.4
97.8 97.1
5.91.5
5.8
7.1
0.92.5
80
90
100
110
120
2008 2009 2010
Private Nordic - CR Commercial Nordic - CR Corporate Nordic - CR
• 8.3% premium growth – price driven (5.8 excl. Moderna effect )
• DK hit by heavy cloudburst of gross DKK 200m and extraordinary winter of DKK 450m.
• NO hit by extraordinary winter of DKK 260m, but improvement in underlying combined ratio
• Change of ownership insurancecalled for extra reserves.
• 17% premium growth in FI andcombined ratio reduced by 5%
• Premium hikes will help profitability going forward.
• 9.6% premium growth (3.0 excl. portfolio shift)
• Workers’ comp. hit by high court ruling in Q3.
• Increased use of workers’comp.
• Premium hikes of 10-15% +claim prevention actions in several products - to bring profitability to target levels.
• 5.9% decline in premiums (1% decline excl. portfolio shift)
• Workers’ comp. hit by high court ruling in Q3.
• Increased use of workers’ comp.
• Competition in DK and especially workers’ comp. affected volume.
• Prudent underwriting and cost control – to sustain profitability.
Weather impact
Weather impact
Workers’ comp. ruling
92.8 96.4
111.6
101.2 Large claims
93.2
81.1 83.587.6
2.42.7
70
80
90
100
2008 2009 2010
Weather impact
Workers comp. ruling92.7
6
77.9
81.6
81.3
71.3
65
70
75
80
85
90
95
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10
Private Nordic Commercial Nordic
Premium increases and tighter risk management improve underlying performance
Underlying development adjusted for extraordinary winter claims.
7
Average prices - Private cars (Index 2005 =100)
80
90
100
110
120
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10
Premium increases visible in Private Nordic
Average prices - Private houses(Index 2005 = 100)
90
100
110
120
130
140
Q1 05
Q2 05
Q3 05
Q4 05
Q1 06
Q2 06
Q3 06
Q4 06
Q1 07
Q2 07
Q3 07
Q4 07
Q1 08
Q2 08
Q3 08
Q4 08
Q1 09
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Q4 10
• Private house in Denmark increased by 11.9% and Norway by 10% y-o-y 2010• Average price development within private cars in Denmark turned positive by 2.4% y-o-y• Private motor in Norway continued upwards with 5.2% y-o-y
8
50
60
70
80
90
100
110
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
Improved development in claims ratio – House insurance and Finland
70
75
80
85
90
95
100
Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
70
80
90
100
110
120
130
140
150
160
Q1-08 Q2-08 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10
House DK*
Finland
House NO*
*) Excluding winter and cloudburst effect
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Major claims initiatives
SurveyingSurveying
Home conditionreport
Home conditionreport
PruningPruning
Craftsman controllingCraftsman controllingNew contents
coverage
New contentscoverage
DocumentationDocumentation
Large claimsproces
Large claimsproces
Windscreen car claimsWindscreen car claims
10
Managing cloudburst risk
• Cloudburst is basicly a local phenomenon and often coincidental where it hits
• Some places are more vulnerable to damagewhen it rains
• Model to identify water risk of heavy rainestablished
• Frequency for customers with basementsapp. 10 times higher
• Analytical results will form the basis forfuture:
- riskassessment- conditions- pricing
Illustration of water flow Geomatic waterisk
Visualisation of cloudburst
11
Expense ratio
Breakdown of Group expense ratio
16.5 16.0 15.5 15.614.5 14.1
0.4 0.8 1.3 1.52.7 2.9
2005 2006 2007 2008 2009 2010
17.0 16.9 16.8 17.1 17.2 17.0
Denmark & Norway Finland & Sweden
Expense ratio
16.616.2
15.5
16.4
15.616
50
60.464.5
45.8
24.130.1
2005 2006 2007 2008 2009 2010
Denmark & Norway Finland & Sweden
Data before 2009 is not corrected for the sale of Marine Hull business.
Continued focus on expenses drives expense ratio downwards by
• streamlining the distribution platform
• digital and paperless process handling
• in-house rotation reduces need for external hiring
• investments in branding impacted expense ratio by 0.4 %-point in 2010
12
and the future vision for 10 in 20
2010 2015 2020 2025
Cost reductions
Drivers to achieve the vision
Tryg Transition
• Self-service
• Automation
• Reduce admin and distribution cost
Efficiency
• New products
• Organisational structure
• Outsourcing non-core processes
Other cost reductions
• Only @ customer communication
• Lower/reduced commission rates
• Fewer local offices
Markets
• Meet profitability targets
• Increase market share in Sweden and Finland
17% 10%
Lower distribution and admin cost
Head count reduction and increasedmarket position
13
Division of the investment return
Gross investment return
Bonds DKK 1,185m
Equities DKK 261m
Real estate DKK 300m
Total DKK 1,746m
Match
Result DKK -5mMismatch 0.02%
Risk minimisation – createa return close to tech inter-est rate and discounting+/- DKK 50m per quarter
Free investment
Result DKK 772mReturn of 7.4%
Absolute return – creates thebest return after risk, capitalload and investment cost
Stable items not directly related to the return on investment
Investment expenses etc.Interest expensesReversed domicile expenses
Result DKK +239m
Inflation mismatchExchange rate adjustmentsOther loans and debt etc
Result DKK -42m
.
Unstable
Stable
Unstable items not directly related to the return on investment
14
Capitalisation
6,000
7,000
8,000
9,000
10,000
11,000
12,000
Q1 08
Q2 08
Q3 08
2008
bef
ore
payo
ut
2008
afte
r pay
out
Q1 09
Q2 09
Q3 09
2009
bef
ore
payo
ut
2009
afte
r pay
out
Q1 20
10Q2
2010
Q3 20
10
2010
bef
ore
payo
ut
2010
afte
r pay
out
Capital requirement Buffer (5%) Surplus capital
DKKm
15
21
33
17
6.54.0
15.5
21
12.5
0
5
10
15
20
25
30
35
40
2005 2006 2007 2008 2009 E2010
DK
K p
er
sh
are
Cash dividend Share buy back
Suggested dividend for 2010
Dividend policy:
• 50% of net earnings
• share buy backs in addition
16
Outlook mid-term
Mid-term
Medium term target is return on equity of more than 20% after tax
This implies a combined ratio level of 90% including potential run-off and
at current interest rate level
Annual impact fromprice increases
2011 2012
DKK ~1.0bn DKK ~0.6bn
ROE after tax
0%
10%
20%
30%
40%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Mid term target
17
Summary
• 2010 results significantly impacted by one-off events of approximately DKK 1.4bn more than in a normal year
• Premium increases and tighter risk management starting to improve result. Premium
initiatives contributed DKK 0.9bn
• Q4 best quarter of the year
• Clear earnings improvements Norway/Finland – trends improving in Denmark
• Cost ratio down to 17.0% despite additional cost for branding a.o.
• Good investment return and supported by positive performance in equity markets
• Medium term ROE target of minimum 20%, which implies an combined ratio of around 90
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Q&A session
19
Q&A session
Date Place Participants from Tryg Arranged by
10 February 2011 Copenhagen Morten Hübbe, CEO Investor Relations
SEB Enskilda
22 February 2011 Zürich Investor Relations Nordea
28 February 2011- 2 March 2011
USA Lars Møller, IR Manager Handelsbanken
3 March 2011 Toronto, Canada Lars Møller, IR Manager Handelsbanken
7 March 2011 Edinburgh Morten Hübbe, CEO Lars Bonde, Group Executive Investor Relations
KBW
8-9 March 2011London Morten Hübbe, CEO
Lars Bonde, Group Executive Investor Relations
UBS
30-31 March 2011 London Morten Hübbe, CEO Lars Møller, IR Manager
Morgan Stanley European Conference
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