Document 6561901

Q3 2014 results
Webcast presentation
10 October 2014
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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.
2
Highlights Q3 2014
- Strong result despite cloudbursts. Topline trend improving.
Pre-tax profit
D KKm
• Pre-tax profit of DKK 782m (DKK 907m) impacted
by lower investment return.
1,200
1,000
800
782
907
600
• Technical result of DKK 793m (DKK 766m).
400
200
0
Q3 2014
Q3 2013
• Combined ratio improved to 83.7 (84.8) despite
cloudburst claims of approx. DKK 150m.
Combined ratio
95
• Premium dropped 0.8% (-3.4%) - however, an
improved trend in development.
90
83.7
84.8
Q3 2014
Q3 2013
85
80
75
• Efficiency programme helped expense ratio down
70
to 15.1 (15.5).
20
• Investment result of DKK
-1m15.1(DKK 152m) driven
by lower equity and bond
return.
16
20
15.1
15.5
Q3 2014
Q3 2013
15
12
10
• 75% of the share buy 8back programme of
5
4
DKK 1,000m completed.
0
0
Q3 2014
3
Expense ratio
Q3 2013
Important news in Q3 2014
•
Heavy cloudbursts – however, implemented
claims initiatives reduced claims costs.
•
Tryg acquires Securator and strengthens its
position in the Nordic Market for product and
extended warranty insurance for electronics.
•
Continued development of new price
differentiated products. New launches in Q4.
•
Efficiency programme progresses as planned.
DKK 95m reached in Q3.
•
Launch of health care portal – advice on physical
and mental health.
•
Tryg hosts Capital Markets Day on 5 November
in London.
4
Combined ratio development in business areas
Combined ratio – Private (DK & NO)
Combined ratio – Commercial (DK & NO)
100
100
95
95
90
85
90
85.5
80.8
81.5
85
82.4
80
81.1
75
Q3 2014
Q3 2013
9M 2014
9M 2013
Combined ratio – Corporate
100
Q3 2014
Group CR
Q3 2014: 83.7
Q3 2013: 84.8
Q3 2013
9M 2014
9M 2013
Combined ratio – Private Sweden
110
96.3
105
95
89.6
87.5
90.7
100
95
92.5
87.8
90
85
90.0
92.2
85
80
Q3 2014
5
79.0
80
75
90
85.4
82.3
Q3 2013
9M 2014
9M 2013
80
Q3 2014
Q3 2013
9M 2014
9M 2013
Follow up on efficiency programme
• Savings of DKK 835m achieved so far.
• DKK 95m achieved in Q3 2014.
•
DKK 30m reduction in expenses
•
DKK 65m reduction in claims
• Claims initiatives – Craft Network, Scalepoint
and E-auction.
• Expense initiatives – New customer split
between Commercial/Corporate, let of part of
Bergen HQ, IT outsourcing and digital
communication.
DKKm
Targeted and achieved savings on claims
1,200
1,000
1,000
800
615
600
400
200
0
220
300
Expenses
Target 2015
835
700
Claims
Achieved 2012-2013
Total
Achieved Q1-Q3 2014
Efficiency programme up until 2015
6
Premiums and portfolio
Topline and technical result
Gross earned premiums reduced 0.8% (-3.4%) 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.
Technical result, DKKm
Gross earned premiums, DKKm
Local currency
6,000
5,000
4,712
4,867
386
442
4,000
999
1,025
3,000
1,045
1,075
-8.4 (-4.7)
0.5 (-2.6)
-1.6 (-4.7)
2,000
1,000
2,289
2,329
Q3 14
Q3 13
0.5 (-2.9)
0
Private
8
Group: -0.8 (-3.4)
C ommercial
C orporate
Sweden
1,100
1,000
900
800
700
600
500
400
300
200
100
0
Private
793
766
30
130
54
42
188
230
445
440
Q3 14
Q3 13
C ommercial
C orporate
Sweden
Private - average premiums
House insurance – average premium (index 2008 = 100)
150
Average premiums increase Y/Y
140
130
0.0%
2.2%
(Q2 0.5%)
(Q2 2.6%)
120
110
100
90
08
20
09
20
10
20
11
20
12
20
13
20
14
20
Motor insurance – average premium (index 2008 = 100)
140
130
Average premiums increase Y/Y
1.4%
-0.9%
(Q2 -0.6%)
(Q2 1.9%)
120
110
100
9
20
14
20
13
20
12
20
11
20
10
20
09
20
08
90
10
Q
Q
1
4
3
2
1
4
3
2
1
4
3
2
1
4
3
2
1
3-
2-
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
14
14
14
13
13
13
13
12
12
12
12
11
11
11
11
10
10
10
10
Q
1
1
Q 0
2
1
Q 0
3
1
Q 0
4
1
Q 0
1
1
Q 1
2
1
Q 1
3
1
Q 1
4
1
Q 1
1
1
Q 2
2
1
Q 2
3
1
Q 2
4
1
Q 2
1
1
Q 3
2
1
Q 3
3
1
Q 3
4
1
Q 3
1
1
Q 4
2
1
Q 4
3
14
Customer retention
Private
92%
90%
88%
86%
84%
82%
Commercial
92%
90%
88%
86%
84%
82%
11
212
Q
312
Q
412
Q
113
Q
213
Q
313
Q
413
Q
114
Q
214
Q
314
112
110
Q
411
115
Q
311
102 103
Q
211
99
Q
Q
111
103
Q
410
100
Q
310
210
110
105
Q
Q
Q
95
97
90
95
91
88
Q
Q
Q
Q
Q
31
21
11
41
31
21
11
41
31
21
11
41
31
21
11
4
4
4
3
3
3
3
2
2
2
2
1
1
1
1
60%
Q
Q
Q
Q
Q
Q
Q
Q
Q
Q
Private Sweden – CR and customer retention
Customer retention
80%
70%
Nordea portfolio
50%
130
125
125
120
114
110
99
95 94
88 88 89 89
93
85
80
Claims and expenses
CR and claims ratios Q3 2013-14
•
Underlying development is adjusted for:
•
Large claims
•
Weather claims
•
•
Underlying claims, net Q3 2013/2014
87.3
79.4
75.0
70.1 67.8
Run-off and interest
72.6
75.1
68.5 66.9
67.2
Improved underlying development on Group
level driven by:
•
one-off effects
•
efficiency improvements
Q3 2014
Group
Private
Q3 2013
C ommercial
C orporate
Claims ratio development - Group
95
90
85
80
75
70
65
60
Q
1
09
Q
3
09
Q
1
10
Q
3
10
Q
1
11
Q
3
11
Gross claims ratio
13
Q
1
12
Q
3
12
Q
1
13
Claims ratio, net of reinsurance
Q
3
13
Q
1
14
Q
14
3-
Sweden
Large claims, weather claims and run-off
Large claims, net DKKm
Expected annual
Weather claims, net DKKm Expected annual
level 2014: DKK 550m
400
350
300
250
200
150
100
50
0
350
300
250
200
373
80
83
Q3 2014
Q3 2013
356
14
328
150
100
50
9M 2014
2
Q3 2014
9M 2013
202
147
0
Run-off, net DKKm
900
800
700
600
500
400
300
200
100
0
level 2014: DKK 500m
Q3 2013
9M 2014
9M 2013
Run-off net, effect on combined ratio
7.0%
6.3% 5.7%
6.0%
793
298
243
Q3 2014
Q3 2013
723
5.0%
4.0%
3.0%
2007 2008 2009 2010 2011 2012 2013
9M 2014
9M 2013
Q3
9M
2014 2014
Tivoli cloudburst claims 2011 vs. 2014
’Flood Barrier’
• Volume of water twice as massive in 2014 as in 2011.
• Claims costs in 2014 were only 1/3 of the costs in 2011.
Changes since 2011
• Tivoli now has a contingency plan for cloudburst.
• Investments in protection initiatives (pumps,
tubes, flood barriers).
Before: Wooden floor (600,000 DKK)
Now: Quarry tile (0 DKK)
• Reconstruction in ’water-proof’ material in consultation
with Tryg.
• Storage of contents in basements above floor level based
on Tryg’s instructions.
Future
• The contingency plan to be refined by new knowledge.
• Flood barriers are established in several places.
(extremely effective)
• Last vital breaker panel will be moved/ secured.
• Upgrade of back-up power system.
• Tivoli seeks exchange of experience with other
business groups.
15
Tivoli note archive
Expense ratio development
Expense ratio
• Expense improved from 15.5 in Q3 2013 to
15.1 in Q3 2014 - an improvement of 0.4 point.
16.6
• Nominal expenses on Group level reduced
significantly in Q3 2014.
•
16.7
16.6
16.4
15.1
15.5
15.6
Efficiency programme
• Reduction in FTE by 127 (excl. Securator) since
Q4 2013.
2009
FTE development
4,101
2010
2011
2012
2013
Q3 2013 Q3 2014
Nominal costs in business areas
4,076
351 346
3,913
210
DKKm
183
119 115
3,703
3,639
16
2011
2012
2013
Q2 2014
60
3,633
Private
2010
65
Q3 2014
Commercial
Q3 2013
Corporate
Q3 2014
Sweden
Investment, capital and financial targets
Investment result Q3 2014
Free portfolio – Q3 2014 (DKK 12.8bn)
Investment return
DKKm
Free investment
38
21
Equities (22)
2
Investment property (15)
0
Match regulatory deviation
Bank deposits/bonds (15)
23
Percentage
16
Match performance
High yield (6)
-38
Other financials
C ov. Bonds (36)
7
-1
Total return
Govt. Bonds (3)
3
Percentage return – Free portfolio
17
10
Em. market bonds(3)
Match portfolio – Q3 2014 (DKK 31.2bn)
7
C ov. Bonds (94)
Percentage
1.3%
0.3%
0.2%
Bank deposits/bonds (6)
0.2%
0.0%
93
ta
l
To
ty
t
en
ve
st
m
In
18
pr
op
er
ar
m
Em
er
gi
n
g
Eq
ke
ts
el
d
-y
i
ig
h
H
ov
.
C
G
o
vt
.
B
on
B
on
d
ds
s
-1.6%
ui
ti
es
-1.2%
Capital structure and status on share buy back
DKKm
Capital – Q3 2014
12,000
4,297
•
Capital buffer based on Individual Solvency
increased to 64% (2013 Q4: 50%) and was
impacted by:
• 9M result 2014
• Share buy back deducted in buffer
•
Based on Solvency II model the capital buffer
was 29% (2013 Q4: 25%).
•
75% of 2014 share buy back of DKK 1bn.
completed.
Excess capital
8,000
Buffer
Capital requirement
4,000
6,723
0
Individual Solvency
Equity and subordinated loan
DKKm
Further planned implementation of Solvency II in
Denmark postponed until January 2016 by
Danish FSA.
14,000
12,000
1,818
1,842
10,000
8,000
6,000
11,107
10,716
2013 Q4
2014 Q3
4,000
2,000
0
19
Solvency II issues:
Subordinated loan
capital
Equity
Unsolved issues:
• Future eligibility in Norway of Natural Perils Pool
and the Guarantee scheme provision
• Expected future profits
• Full inclusion of subordinated capital
Financial targets
ROE after tax of 20% to
be achieved by delivering
a full year combined ratio
of 90 or lower.
Expense ratio <15 in
2015
ROE after tax
40%
30%
ROE target
20%
10%
20
14
15
20
20
20
14
13
H
1
20
12
20
10
11
20
20
08
09
20
20
06
07
20
20
20
05
0%
Q/A
Follow us on Twitter: @TrygIR
Upcoming roadshows
Date
22
Place
Participants from Tryg
Arranged by
10/10/2014
Copenhagen
Morten Hübbe, CEO
Tor Magne Lønnum, CFO
Lars Bonde, Group EVP and COO
Investor Relations
Nordea Markets
20/10/2014
London
Tor Magne Lønnum, CFO
Lars Møller, IR Director
Goldman Sachs
22/10/2014
London
Morten Hübbe, CEO
Peter Brondt, IR Manager
Goldman Sachs
23/10/2014
Edinburgh
Tor Magne Lønnum, CFO
Peter Brondt, IR Manager
Handelsbanken
28-29/10/2014
Tokyo
Morten Hübbe, CEO
Lars Møller, IR Director
Goldman Sachs
12/11/2014
Amsterdam
Lars Møller, IR Director
JP Morgan
13/11/2014
Brussels
Lars Møller, IR Director
JP Morgan
27/11/2014
Zurich
Tor Magne Lønnum, CFO
Peter Brondt, IR Manager
Nordea Markets
28/11/2014
Geneva
Tor Magne Lønnum, CFO
Peter Brondt, IR Manager
Nordea Markets
05/11/2014
London
Tryg’s Capital Markets Day
Tryg
03/12/2014
London
Morten Hübbe, CEO
Lars Møller, IR Director
Berenberg European
Conference
More details on tryg.com