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Tryg Interim / Quarterly Report 2016
3389_rns_2016-04-12_e8c45c78-220f-40df-97af-24fee1d2c2df.pdf
Interim / Quarterly Report
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Interim report Q1 2016
Contents – Management’s review
| MANAGEMENT'S REVIEW | 9 Commercial | FINANCIAL STATEMENTS | Financial calendar 2016 |
|---|---|---|---|
| 3 Highlights | 10 Corporate | 16 Financial statements | 12 July 2016 Interim report for Q2 and H1 2016 |
| 4 Income overview | 11 Sweden | 13 July 2016 Tryg shares trade ex-dividend | |
| 5 Tryg’s results | 12 Investment activities | 15 July 2016 Payment of dividend based on H1 2016 results | |
| 7 Business initiatives | 14 Capital | 11 October 2016 Interim report for Q1-Q3 2016 | |
| 8 Private | 15 Outlook |
Teleconference
Tryg is hosting a teleconference on 12 April 2016 at 10:00 CET. View the audio webcast at tryg.com. Financial analysts and investors may participate on tel. +44 (0) 203 194 0545 or +45 35 44 55 83, where questions can be asked. The teleconference will be held in English and can subsequently be viewed at tryg.com.
Contact details
| Visit tryg.com
and follow us at
twitter.com/TrygIR | Tryg A/S
Klausdalsbrovej 601
2750 Ballerup, Denmark
+45 70 11 20 20
CVR no. 26460212 | Gianandrea Roberti
Investor Relations Officer
+45 20 18 82 67
[email protected] | Peter Brondt
Investor Relations Manager
+45 22 75 89 04
[email protected] | Kasper Riis
Head of Communications
+45 41 77 68 34
[email protected] |
| --- | --- | --- | --- | --- |
This report constitutes Tryg A/S's consolidated financial statements and has not been audited. Unless otherwise indicated, all comparisons are made to Q1 2015. Comparative figures for Q1 2015 are generally given in brackets.
Editor Investor Relations | Publication 12 April 2016 | Layout amo design
Interim report Q1 2016 | Tryg A/S | 2
Highlights
Higher technical result, improved expense ratio and slightly higher underlying claims level. Volatile equity markets resulted in significantly lower investment return.
Financial highlights Q1 2016
- Profit before tax of DKK 563m (DKK 665m) and after tax DKK 445m (DKK 525m)
- Technical result of DKK 562m (DKK 429m)
- Combined ratio of 87.1 (90.7) mainly due to lower level of weather claims and large claims
- Lower expense ratio of 15.1 (15.6) as a result of efficiency programme
- Premiums fell by 0.5% (-0.4%) in local currencies mainly due to loss of a few large corporate customers
- Investment return of DKK 17m (DKK 261m) influenced by loss on equities
- Solvency ratio (partial internal model) of 212, or 199 adjusted for the Skandia child insurance portfolio
Customer highlights Q1 2016
- NPS of 21 (16)
- Retention rate of 88.1 (88.1)
- Share of customers with three or more products of 56.8% (56.5%)
- TryghedsGruppen's Board of Representatives decided to pay out a bonus of 8% to its members. The bonus will be paid to Danish customers on 1 June 2016
New initiatives in Q1 2016
- New workers' compensation and motorcycle insurance products launched in Norway
- 35,000 customers upgraded to new house product in Denmark
- Many new digital self-service and claims solutions launched
- New organisation with strong national focus
TryghedsGruppen's Board of Representatives decided to pay out a bonus to its members (Tryg's Danish customers), corresponding to 8% of the premium paid in 2015.
Financial targets 2017
- Return on equity of ≥21% after tax
- Combined ratio ≤87
- Expense ratio ≤14
Customer targets 2017
- NPS +100% ~ 22
- Retention rate +1 pp ~ 88.9
- Customers ≥3 products +5 pp ~ 61.3%
Contents - Management's review
September 2016 | Page 4/5
Income overview
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 4,310 | 4,451 | 17,977 |
| Gross claims | -2,858 | -3,204 | -13,562 |
| Total insurance operating costs | -642 | -685 | -2,720 |
| Profit/loss on gross business | 810 | 562 | 1,695 |
| Profit/loss on ceded business | -246 | -136 | 710 |
| Insurance technical interest, net of reinsurance | -2 | 3 | 18 |
| Technical result | 562 | 429 | 2,423 |
| Investment return after insurance technical interest | 17 | 261 | -22 |
| Other income and costs | -16 | -25 | -91 |
| Profit/loss before tax | 563 | 665 | 2,310 |
| Tax | -118 | -150 | -390 |
| Profit/loss on continuing business | 445 | 515 | 1,920 |
| Profit/loss on discontinued and divested business after tax | 0 | 10 | 49 |
| Profit/loss a) | 445 | 525 | 1,969 |
| Run-off gains/losses, net of reinsurance | 369 | 346 | 1,212 |
| Key figures | |||
| Total equity | 9,111 | 9,396 | 9,644 |
| Return on equity after tax (%) a) | 18.2 | 19.1 | 20.0 |
| Number of shares, end of period (1,000) | 282,388 | 287,265 | 282,316 |
| Earnings per share | 1.58 | 1.82 | 6.91 |
| Premium growth in local currencies | -0.5 | -0.4 | -0.8 |
| Gross claims ratio | 66.3 | 72.0 | 75.4 |
| Net reinsurance ratio | 5.7 | 3.1 | -3.9 |
| Claims ratio, net of reinsurance | 72.0 | 75.1 | 71.5 |
| Gross expense ratio | 15.1 | 15.6 | 15.3 |
| Combined ratio | 87.1 | 90.7 | 86.8 |
| Run-off, net of reinsurance (%) | -8.6 | -7.8 | -6.7 |
| Large claims, net of reinsurance (%) | 1.0 | 3.5 | 3.4 |
| Weather claims, net of reinsurance (%) | 3.3 | 5.4 | 3.4 |
| Combined ratio on business areas | |||
| Private | 90.7 | 91.8 | 85.4 |
| Commercial | 77.8 | 84.6 | 83.6 |
| Corporate | 84.8 | 92.9 | 90.7 |
| Sweden | 96.2 | 92.1 | 83.5 |
a) From 1 January 2016, Tryg has implemented Executive Order on Financial Reports of Insurance Companies and Lateral Pension Funds issued by the Danish FSA, which prescribes applying a new yield curve and a new way of calculating return on equity after tax (%). Comparative figures have been restated accordingly. See details of the new yield curve in note 8 Accounting policies on page 31.
Combined ratio
Expense ratio
Return on equity
Contents - Management's review
Interim report Q1 2016 | Tryg A/S | 4
Tryg's results
Tryg's profit before tax was DKK 563m (DKK 665m). The result was affected by a lower level of large claims and weather claims and by the internal efficiency programme delivering DKK 45m. The investment return dropped to DKK 17m (DKK 261m), influenced by a lower return on equities compared to Q1 2015.
A combined ratio of 87.1 (90.7) was posted, which was, as mentioned, impacted by a lower level of large claims and weather claims. The run-off level was high, generally reflecting Tryg's solid reserving position, but for the quarter also the DKK 187m after tax impact of the new reserving curve on the capital position, which to some extent was offset by a higher run-off level. The underlying combined ratio, adjusted for weather claims and large claims, run-off and interest rate levels was somewhat higher than in Q1 2015. This development was expected, following some deterioration in travel and property insurance in the last quarters of 2015, which was not fully offset by initiatives in Q1 2016 as it will take some time for the price adjustments to have full effect.
The Net Promoter Score (NPS) improved from 16 in Q1 2015 to 21 on 31 March 2016. This positive development is ascribable, in particular, to the Danish claims organisation, which achieved a substantial improvement in NPS. The retention rate was unchanged at 88.1 with an increase in Private and a drop in Commercial Denmark, mainly due to price adjustments. The share of private customers with three or more products increased from 56.5% to 56.8%.
TryghedsGruppen's Board of Representatives decided to pay out a bonus to its members, Tryg's Danish customers, corresponding to 8% of the premium paid in 2015. Going forward, Tryg expects the bonus to have a positive impact on, especially, retention rates.
The new organisational structure, with its stronger focus on national decision-making, in combination with a flatter organisational structure and greater empowerment of frontline functions is also expected to positively impact NPS.
Premiums
Gross premium income amounted to DKK 4,310m, corresponding to a fall of 0.5% (-0.4%), when measured in local currencies. The development is due, especially, to developments in the Corporate segment, where premium income declined by 2.1% against growth of 1.0% in Q1 2015. Corporate's key focus is on profitability, which will lead to some volatility in premium income. The development in premium income for Private was 0.8% (0.3%) for both Denmark and Norway. For Commercial, premiums decreased by 1.5% (-2.4%), which represented an improvement, but which is still not satisfactory. In Sweden, premiums decreased by 1.4% (-3.4%); in light of the loss of some affinity agreements in 2015, this was acceptable.
Claims
The gross claims ratio was 66.3 (72.0). The claims ratio, net of ceded business, was 72.0 (75.1). The lower claims ratio level was due to a lower level of large claims and weather claims totalling 4.3% (8.9%) and a high run-off level of 8.6 (7.8). The higher run-off level was partly offset by the impact from the transition to Solvency II, which had a negative effect on the capital position by DK 187m after tax.
The weather was benign in Q1 in both Denmark, Norway and Sweden, but there will always be some impact from the weather in Q1, which is usually the quarter with the highest claims level. The higher claims level for travel and property insurance continued in Q1; this was in line with expectations as the initiatives which are being implemented will have only limited impact at the beginning of the period.
Solvency II issues
As part of Solvency II, a new discounting curve has been implemented. In Q1 2016, the impact was:
- A reduction in the capital position of DKK 187m after tax due to the impact of the lower discounting curve on the claims provisions. This hits the shareholders' equity and not the profit and loss.
- A lower discounting rate of approximately 0.7 for the whole portfolio compared to 1.0 in Q4 2015, leading to an approximately 0.3 percentage point increase in the claims ratio.
For travel insurance, price initiatives were introduced in H2 2015, and for house insurance – as part of property – Tryg has introduced both minor price adjustments and new claims initiatives to reduce claims levels. Furthermore, the conversion of old products to new products will have a positive impact. In Q1, 35,000 house insurance policies in Denmark were converted to new products which reflect the underlying risk much better.
Customer targets
| Q1 2015 | Q1 2016 | Target 2017 | |
|---|---|---|---|
| Net Promoter Score (NPS) | 16 | 21 | 22 |
| Retention rate | 88.1 | 88.1 | 88.9 |
| Customers with ≥3 products (%) | 56.5 | 56.8 | 61.3 |
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 5
In Q1 2016, Moderna, Tryg's Swedish branch launched the Moderna Smart Health app. The app rewards customers walking more than 7,500 steps a day by giving them a lower price on their illness and accident insurance.
The claims-related part of the efficiency programme is progressing according to plan, and in Q1, DKK 30m of the target figure of DKK 150m for 2016 was realised. In Q1 2016, Tryg launched a new initiative involving the rebuild of damaged cars using alternative spare parts, thereby making it possible to sell such cars as cars for rebuild rather than to the breakers.
Expenses
The expense ratio totalled 15.1 (15.6), an improvement which is in line with the ambition to realise an expense ratio at or below 14 in 2017. The efficiency programme is progressing according to plan and delivered efficiency increases in the amount of DKK 15m, the target for 2016 being DKK 75m.
A continued reduction in the number of employees and the outsourcing of parts of Finance and IT were the main drivers for the quarter. On 31 March 2016, the number of employees was 3,333, corresponding to a reduction of 26 since Q4 2015.
Investment return
In Q1 2016, the return of Tryg's investment activities totalled DKK 17m (DKK 261m). The result is decomposed into a return of DKK 65m on the free portfolio (DKK 282m), a net return of DKK 2m on the match portfolio (DKK 56m) and other financial income and expenses of DKK -50m (DKK -77m).
Profit before and after tax
The profit before tax was DKK 563 (DKK 665m). Profit for the period after tax and discontinued business was DKK 445m (DKK 525m). Tax on continuing business constituted an expense of DKK 118 (DKK 150m), corresponding to a tax rate of 21. The tax rate for Q1 2016 was 21 due to the reduced tax in Norway; this is also the expected level going forward.
Capital
Tryg calculates its solvency capital requirement based on a partial internal model in accordance with Solvency II. The model is based on the structure of the standard formula, and Tryg uses an internal model to evaluate insurance risks, while the other risks are calculated using the standard formula components. The supervisory authorities approved the partial internal model in November 2015. The solvency capital requirement calculated using the partial internal model is DKK 5,098m, while own funds are DKK 10,794m, hence the solvency ratio is 212; adjusted for the Skandia child insurance portfolio, the solvency ratio falls to 199.
Events after balance sheet date
On 5 April 2016, the Danish FSA approved Tryg's share buy back programme of DKK 1bn. On 6 April 2016, Tryg initiated the programme which will run until the end of 2016. Due to Solvency II, the buy backs will be fully deducted up-front in the capital position. All else being equal, the Q2 solvency ratio will drop (as the full amount of DKK 1bn is deducted from own funds) only to recover in Q3 and Q4.
Interim report Q1 2016 | Tryg A/S
Business initiatives
The development of price-differentiated products continues, and in Q1 Tryg launched a new workers' compensation product and a new motorcycle product in Norway. In 2016, there will be a strong focus on converting the majority of customers to the new and improved products. In Q1 2016, 35,000 house insurance policies were converted.
In Private Sweden, we were first movers with our innovative insurance app solution, which has been launched successfully and with good sales results.
It is Tryg's ambition that 90% of our customers should be digital by 2017. In Denmark, 80% of our customers have accepted that all future communication will be digital, and in Norway, 63% of customers are digital. For 2017, Tryg wants to see a total of 1,000,000 log-ins on the customers' digital insurance overview 'My Page'. From 2014 to 2015, the number of log-ins increased by 40%.
The most relevant customer communication is now available online, and Tryg is strongly focused on developing digital solutions which facilitate the submission of claims and self-service. In 2015, self-service solutions were developed for travel and car insurance in Norway. In Denmark, self-service solutions for car insurance were developed in 2015, while solutions for travel, contents and motorcycle insurance were developed in Q1. In Denmark, contents, travel and house insurance claims can now be submitted digitally.
Tryg was the first insurance company to start actively using DNA marking to prevent break-ins. From the results, it is evident that DNA marking has a preventive effect. The trialling of DNA marking in selected areas has previously shown a 50% decline in break-ins. In Q1, Tryg distributed DNA marking kits in Storetveit, a Norwegian neighbourhood plagued by burglaries. In Norway, Tryg is the only insurance company using DNA marking for private and commercial customers.
In 2016, more commercial customers also discovered DNA marking. It is an excellent tool for preventing theft from construction sites, for example. Having located stolen copper cables, for example, it is often impossible for the police to find the owner. However, with DNA marking the owner is easily identified, which saves the contractor having to order new custom-made cables for the job.
DNA marking is an excellent tool for commercial customers to prevent theft from construction sites, for example. With DNA marking, the owner of stolen copper cables, for example, is easily identified, which saves the contractor having to order new custom-made cables for the job.
Digitalisation of Tryg
Contents - Management's review
Insider report Q1 2016 | Tryg A/S | 7
Private
Financial highlights Q1 2016
- Technical result of DKK 198m (DKK 181m)
- Combined ratio of 90.7 (91.8)
- Premium growth of 0.8 (0.3)
Results
Private posted a technical result of DKK 198m (DKK 181m) and a combined ratio of 90.7 (91.8). The results are positively affected by Tryq's efficiency programme and a low level of weather claims. The quarter saw an underlying increase in the claims ratio of 0.9, after taking account of a negative impact from interest rates of 0.2 percentage points.
Premiums
Gross premium income rose by 0.8% (0.3%) when measured in local currencies. The positive development continued in the Danish part of Private with premium growth of 0.8% due to a combination of a continued high sales level and high retention levels. In the Norwegian part of Private, premiums were up 0.8%, due to higher sales offsetting a slightly lower retention rate. In Denmark, the development in premium income is still affected by the high sales of small cars. The retention rate was 90.0 (89.7) for the Danish part of the business. In Norway, the retention rate was 86.5 (86.6). In Norway, the largest single affinity agreement with Union of Education Norway was renewed.
Claims
The gross claims ratio was 74.2 (76.5). The claims ratio, net of ceded business, constituted 76.4 (76.5) and was influenced by a lower level of weather claims, but also a lower level of run-off gains of 3.4 (5.0). The underlying claims level was 1.1 percentage points higher in Q1 2016 compared to Q1 2015. The primary reason is the higher level of claims related to travel insurance and house insurance, especially in the Danish part of Private. A combination of minor price adjustments and claims-related initiatives has been introduced, but the conversion of customers to the newest house insurance product will also improve profitability due to a more accurately risk-adjusted premium. In Q1, 35,000 customers had their old house insurance product converted to the new and improved house insurance product.
Expenses
The expense ratio for Private was 14.3 (15.3), which represents a satisfactory development and one that supports Tryq's target of an expense ratio at or below 14 in 2017.
The number of employees totalled 949 at the end of the quarter against 933 at the end of 2015. The increase in employees was due to the transfer of employees from central staff and claims functions to the business areas as part of the changed organisational structure in Tryq.
Private encompasses the sale of insurance products to private customers in Denmark and Norway. Sales are effected via call centres, the Internet, Tryq's own agents, franchisees (Norway), interest organisations, car dealers, estate agents and Nordea branches. The business area accounts for 49% of the Group's total premium income.
Key figures – Private
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 2,137 | 2,194 | 8,803 |
| Gross claims | -1,586 | -1,679 | -6,074 |
| Gross expenses | -305 | -335 | -1,291 |
| Profit/loss on gross business | 246 | 180 | 1,438 |
| Profit/loss on ceded business | -47 | 0 | -148 |
| Insurance technical interest, net of reinsurance | -1 | 1 | 8 |
| Technical result | 198 | 181 | 1,298 |
| Run-off gains/losses, net of reinsurance | 73 | 110 | 324 |
| Key ratios | |||
| Premium growth in local currency (%) | 0.8 | 0.3 | 0.3 |
| Gross claims ratio | 74.2 | 76.5 | 69.0 |
| Net reinsurance ratio | 2.2 | 0.0 | 1.7 |
| Claims ratio, net of reinsurance | 76.4 | 76.5 | 70.7 |
| Gross expense ratio | 14.3 | 15.3 | 14.7 |
| Combined ratio | 90.7 | 91.8 | 85.4 |
| Combined ratio exclusive of run-off | 94.1 | 96.8 | 89.1 |
| Run-off, net of reinsurance (%) | -3.4 | -5.0 | -3.7 |
| Large claims, net of reinsurance (%) | 0.0 | 0.0 | 0.3 |
| Weather claims, net of reinsurance (%) | 4.5 | 7.3 | 4.5 |
Contents – Management's review
Interim report Q1 2016 | Tryq A/S | 8
Commercial
Financial highlights Q1 2016
- Technical result of DKK 215m (DKK 155m)
- Combined ratio of 77.8 (84.6)
- Premium growth of -1.5 (-2.4)
Results
Commercial posted a technical result of DKK 215m (DKK 155m) and a combined ratio of 77.8 (84.6). The results are positively impacted by a much reduced level of large claims and weather claims.
Premiums
Gross premium income totalled DKK 967m (DKK 1,003m), which represents a 1.5% decline when measured in local currencies. The reduction in premium income represented a slightly improved trend compared with the same quarter last year, which saw a 2.4% decline in premium income. There was a drop in the retention ratio for Denmark and an unchanged level for Norway.
The restructuring of Commercial involving the introduction of national management teams and generally a new and flatter structure with greater empowerment of frontline staff is expected to have a positive impact on NPS for Commercial and also on retention levels. In both Denmark and Norway, Tryg is strongly focused on improving retention levels and realising a better balance between sales and loss of business.
Claims
The gross claims ratio was 56.6 (66.3), and the claims ratio, net of ceded business, was 60.3 (67.2). The development in the claims ratio, net of ceded business, is attributable to a significantly lower level of large claims and weather claims. The underlying claims level was somewhat higher in Q1 2016 compared to same period in 2015, due to the higher claims level for property and a higher number of medium-sized claims.
The higher level of property claims has been mitigated through a combination of price adjustments and pruning of the portfolio.
Expenses
The expense ratio was 17.5 (17.4), reflecting too high a level. Going forward, the new and flatter organisational structure with a reduced number of business support staff will contribute to a lowering of the expense ratio.
At the end of Q1 2016, Commercial had 501 employees, down from 527 at the end of Q4 2015. A significant part of the reduction was due to restructuring in connection with the new organisational structure.
Commercial encompasses the sale of insurance products to small and medium-sized businesses in Denmark and Norway. Sales are effected by Tryg's own sales force, brokers, franchisees (Norway) and customer centres, and under group agreements. The business area accounts for 23% of the Group's total premium income.
Key figures – Commercial
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 967 | 1,003 | 3,992 |
| Gross claims | -547 | -665 | -2,612 |
| Gross expenses | -169 | -175 | -683 |
| Profit/loss on gross business | 251 | 163 | 697 |
| Profit/loss on ceded business | -36 | -9 | -44 |
| Insurance technical interest, net of reinsurance | 0 | 1 | 5 |
| Technical result | 215 | 155 | 658 |
| Run-off gains/losses, net of reinsurance | 120 | 143 | 388 |
| Key ratios | |||
| Premium growth in local currency (%) | -1.5 | -2.4 | -2.9 |
| Gross claims ratio | 56.6 | 66.3 | 65.4 |
| Net reinsurance ratio | 3.7 | 0.9 | 1.1 |
| Claims ratio, net of reinsurance | 60.3 | 67.2 | 66.5 |
| Gross expense ratio | 17.5 | 17.4 | 17.1 |
| Combined ratio | 77.8 | 84.6 | 83.6 |
| Combined ratio exclusive of run-off | 90.2 | 98.9 | 93.3 |
| Run-off, net of reinsurance (%) | -12.4 | -14.3 | -9.7 |
| Large claims, net of reinsurance (%) | 1.8 | 11.6 | 6.7 |
| Weather claims, net of reinsurance (%) | 2.0 | 3.9 | 2.8 |
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 9
Corporate
Financial highlights Q1 2016
- Technical result of DKK 139m (DKK 70m)
- Combined ratio of 84.8 (92.9)
- Premium growth of -2.1 (1.0)
Results
The technical result amounted to DKK 139m (DKK 70m), and the combined ratio stood at 84.8 (92.9). The higher technical result is due to a higher level of run-off. The higher run-off level should be seen in the context of the new discounting curve under Solvency II, resulting in less effect from discounting.
Premiums
Gross premium income totalled DKK 920m (DKK 968m), down 2.1% when measured in local currencies. The development is attributable to the loss of a number of large customers in both Denmark and Norway in connection with the renewals on 1 January 2016, but also the bankruptcy of one large customer in the seismic industry in Norway in Q4 2015. In Sweden, the development in premium income was also slightly negative due to the pruning of the portfolio. Consisting of large customers, the corporate portfolio is noticeably impacted by the gain and loss of individual customers.
Corporate's key focus is on profitability, which will lead to some volatility in premium income.
Claims
The gross claims ratio stood at 55.2 (67.6), while the claims ratio, net of ceded business, was 73.2 (81.0). The level of large claims and weather claims was somewhat lower than last year. In connection with the many renewals on 1 January, all customers up for renewal are assessed, and initiatives necessary in relation to individual customers are effectuated.
Expenses
The expense ratio was 11.6 (11.9), which represents a satisfactory improvement. Like other areas in Tryg, Corporate is also working on initiatives aimed at improving efficiency.
The number of employees in Corporate stood at 270, up from 265 at the end of 2015. The increase was due to the transfer of employees from central staff functions to Corporate.
Corporate sells insurance products to corporate customers under the brands 'Tryg' in Denmark and Norway, 'Moderna' in Sweden and 'Tryg Garanti'. Sales are effected both via Tryg's own sales force and via insurance brokers. Moreover, customers with international insurance needs are served by Corporate through its cooperation with the AXA Group. The business area accounts for 21% of the Group's total premium income.
Key figures – Corporate
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 920 | 968 | 3,894 |
| Gross claims | -508 | -654 | -3,987 |
| Gross expenses | -107 | -115 | -420 |
| Profit/loss on gross business | 305 | 199 | -513 |
| Profit/loss on ceded business | -166 | -130 | 877 |
| Insurance technical interest, net of reinsurance | 0 | 1 | 5 |
| Technical result | 139 | 70 | 369 |
| Run-off gains/losses, net of reinsurance | 148 | 70 | 351 |
| Key ratios | |||
| Premium growth in local currency (%) | -2.1 | 1.0 | 0.0 |
| Gross claims ratio | 55.2 | 67.6 | 102.4 |
| Net reinsurance ratio | 18.0 | 13.4 | -22.5 |
| Claims ratio, net of reinsurance | 73.2 | 81.0 | 79.9 |
| Gross expense ratio | 11.6 | 11.9 | 10.8 |
| Combined ratio | 84.8 | 92.9 | 90.7 |
| Combined ratio exclusive of run-off | 100.9 | 100.1 | 99.7 |
| Run-off, net of reinsurance (%) | -16.1 | -7.2 | -9.0 |
| Large claims, net of reinsurance (%) | 2.7 | 3.9 | 8.2 |
| Weather claims, net of reinsurance (%) | 2.3 | 2.8 | 2.2 |
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 10
Sweden
Financial highlights Q1 2016
- Technical result of DKK 10m (DKK 23m)
- Combined ratio of 96.2 (92.1)
- Premium growth of -1.4 (-3.4)
Results
Sweden posted a technical result of DKK 10m (DKK 23m) and a combined ratio of 96.2 (92.1). The weaker result can partly be ascribed to a somewhat higher claims level due to the extended warranty insurance for electronics.
The acquisition of Skandia's child insurance portfolio is expected to be approved by the Danish FSA in Q2 and implemented from Q3 2016. The portfolio has a premium volume of approximately DKK 200m, and should therefore generate premium income of approximately DKK 100m in 2016.
Premiums
Premium income totalled DKK 289m (DKK 289m), equating to a fall of 1.4% when measured in local currencies. This represents an improvement compared to Q1 2015, which saw a fall of 3.4%.
The development in premium income is influenced by the cancellation of the affinity agreement with ICA. Taking into account that there was an underlying growth, when adjusted for the cancellation of the ICA agreement, the development was acceptable.
Claims
The gross claims ratio totalled 75.1 (72.0), which – despite a lower level of weather claims and higher run-off – can be ascribed to a higher level of extended warranty insurance claims. Initiatives aimed at mitigating this development have been decided and will be implemented from Q2 2016.
Expenses
The expense ratio was 21.1 (20.8), which is an acceptable development, taking into account that the higher level in Q1 2016 was due to fluctuations and not a higher underlying expense level.
The number of employees was 335 at the end of the quarter, down three from 338 at the end of 2015.
Sweden comprises the sale of insurance products to private customers under the 'Moderna' brand. Moreover, insurance is sold under the brands 'Atlantica', 'Bilsport & MC', 'Securator' and 'Moderna Djurförsäkringar'. Sales take place through its own sales force, call centres, intermediaries and the Internet. The business area accounts for 7% of the Group's total premium income.
Key figures – Sweden
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 289 | 289 | 1,317 |
| Gross claims | -217 | -208 | -852 |
| Gross expenses | -61 | -60 | -246 |
| Profit/loss on gross business | 11 | 21 | 219 |
| Profit/loss on ceded business | 0 | 2 | -1 |
| Insurance technical interest, net of reinsurance | -1 | 0 | 0 |
| Technical result | 10 | 23 | 218 |
| Run-off gains/losses, net of reinsurance | 28 | 23 | 149 |
| Key ratios | |||
| Premium growth in local currency (%) | -1.4 | -3.4 | -3.1 |
| Gross claims ratio | 75.1 | 72.0 | 64.7 |
| Net reinsurance ratio | 0.0 | -0.7 | 0.1 |
| Claims ratio, net of reinsurance | 75.1 | 71.3 | 64.8 |
| Gross expense ratio | 21.1 | 20.8 | 18.7 |
| Combined ratio | 96.2 | 92.1 | 83.5 |
| Combined ratio exclusive of run-off | 105.9 | 100.1 | 94.8 |
| Run-off, net of reinsurance (%) | -9.7 | -8.0 | -11.3 |
| Large claims, net of reinsurance (%) | 0.0 | 0.0 | 0.0 |
| Weather claims, net of reinsurance (%) | 2.4 | 5.2 | 1.7 |
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 11
Investment activities
Financial highlights Q1 2016
- Investment return of DKK 17m (DKK 261m)
- Gross return on free portfolio of DKK 65m (DKK 282m)
- Net return on match portfolio of DKK 2m (DKK 56m)
The purpose of the investment activities is primarily to support the insurance business by creating an optimal and robust return on the capital in the long run. Through a relative conservative and diversified approach to risk, the overall strategy is to minimise and match the impact from interest and exchange rate fluctuations on the balance sheet.
In Q1 2016, the return on Tryg's investment activities totalled DKK 17m (DKK 261m). The result is decomposed into a return of DKK 65m on the free portfolio (DKK 282m), a net return of DKK 2m on the match portfolio (DKK 56m) and other financial income and expenses of DKK -50m (DKK -77m).
The total market value of Tryg's investment portfolio was DKK 40.0bn at 31 March 2016. The investment portfolio consists of a match portfolio of DKK 28.7bn and a free portfolio of DKK 11.3bn. The match portfolio is composed of fixed-income assets that match the insurance liabilities, so that fluctuations resulting from interest rate changes are offset to the greatest possible extent. The free portfolio is primarily the shareholders' equity of the Group, which is invested in properties, equities, fixed-income securities with a short duration, inflation-linked bonds and some high-yield bonds.
Financial markets in Q1 2016
A lot of turmoil hit the financial markets in Q1 2016. It led to the lowest oil prices since 2004 and the yield on the two-year German government bond fell to -0.6% during the quarter – the lowest level ever. This was accompanied by a sell-off in equity markets and risk assets in general. The volatility was also influenced by uncertainty about Britain's possible withdrawal from the EU (the so-called Brexit). After stabilisation of the oil price and indications from central banks about future support – risk appetite returned to the market.
Return – investments
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Free portfolio, gross return | 65 | 282 | 232 |
| Match portfolio, regulatory deviation and performance | 2 | 56 | -16 |
| Other financial income and expenses | -50 | -77 | -238 |
| Total investment return | 17 | 261 | -22 |
Return – match portfolio
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Return, match portfolio | 427 | 338 | 140 |
| Value adjustments, changed discount rate | -383 | -221 | 103 |
| Transferred to insurance technical interest | -42 | -61 | -259 |
| Match, regulatory deviation and performance | 2 | 56 | -16 |
| Hereof: | |||
| Match, regulatory deviation | -39 | 30 | 12 |
| Match, performance | 41 | 26 | -28 |
Investment return in Q1 2016
This trend in the financial markets resulted in a return on the MSCI All Countries World Index of -2.0% and the one-year Mortgage Bond Index by Nordea of 0.1%. By comparison, equities in the free portfolio returned DKK -22m (-0.9%), while interest and credit exposures returned DKK 57m (0.8%). Investment properties provided a net return of DKK 30m (1.5%). All in all, a return of DKK 65m (0.4%).
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 12
The return of the match portfolio consists of a regulatory deviation of DKK -39m as well as a performance of DKK 41m. The negative regulatory deviation was caused by the increased yield difference between the two-year euro swap rates (and therefore FSA rates) and the two-year Danish swap rates caused by the interest rate cut by the European Central Bank in Q1. The positive performance was due to the positive covered bond market in Norway and Denmark during the quarter.
Other financial income and expenses
Other financial income and expenses totalled DKK -50m in Q1 2016. This item consists of a number of elements, the largest being the expenses from hedging the foreign currency exposure on Tryg's equity, consisting of DKK -12m, as well as expenses regarding Tryg's subordinated loans of DKK -21m.
Return – free portfolio
| DKKm | Q1 2016 | Q1 2016 (%) | Q1 2015 | Q1 2015 (%) | Investment assets | |
|---|---|---|---|---|---|---|
| 31.03.2016 | 31.12.2015 | |||||
| Government bonds | 2 | 0.8 | 4 | 1.6 | 292 | 265 |
| Covered bonds | 17 | 0.5 | 27 | 0.6 | 3,600 | 3,602 |
| Inflation linked bonds | 20 | 3.9 | 0 | 0.0 | 518 | 484 |
| Emerging market bonds | 17 | 4.1 | 9 | 2.3 | 429 | 412 |
| High-yield bonds | 12 | 1.4 | 21 | 2.1 | 859 | 837 |
| Other a) | -11 | - | -19 | - | 1,059 | 712 |
| Interest rate and credit exposure | 57 | 0.8 | 42 | 0.5 | 6,757 | 6,312 |
| Equity exposure | -22 | -0.9 | 210 | 7.7 | 2,450 | 2,374 |
| Investment property | 30 | 1.5 | 30 | 1.4 | 2,071 | 2,052 |
| Total gross return | 65 | 0.4 | 282 | 2.2 | 11,278 | 10,738 |
a) Bank deposits and derivative financial instruments hedging interest rate risk and credit risk.
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 13
Capital
Shareholder information
On 20 January 2016, Tryg's Supervisory Board decided to initiate a buy back of own shares for an amount of DKK 1bn subject to approval by the Danish FSA. The approval was given on 5 April 2016, and the execution of the buy back was initiated on 6 April 2016. Due to Solvency II, the buy back will be fully deducted up-front in the capital position. All else being equal, the Q2 solvency ratio will drop (as the full amount of DKK 1bn is deducted from own funds) only to recover in Q3 and Q4. Tryg still plans to issue additional subordinated debt of approximately SEK 1bn, most likely in Q2 2016 if market conditions are favourable.
Solvency capital requirement
Tryg calculates its solvency capital requirement based on a partial internal model in accordance with Solvency II. The model is based on the structure of the standard formula, and Tryg uses an internal model to evaluate insurance risks, while the other risks are calculated using the standard formula components. The supervisory authorities approved the partial internal model in November
- The solvency capital requirement calculated using the partial internal model is DKK 5,098m in Q1 2016, compared to DKK 6,193m in Q4 2015. Based on the standard formula, the solvency capital requirement is DKK 6,232m in Q1 2016, compared to DKK 7,806m in Q4 2015.
The decrease in the solvency capital requirement calculated using both the partial internal model and the standard formula is mainly explained by the transition from Solvency I to Solvency II
See further details in the newsletter, Transition to Solvency II, published in January 2016 and available on Tryg.com. The inclusion of the loss absorbency effect from deferred tax accounts for DKK 1.2bn using the partial internal model and DKK 1.5bn using the standard formula.
The acquisition of the Skandia child insurance portfolio awaits approval by the Danish FSA and is therefore not included in the solvency capital requirement in Q1 2016. The inclusion of the portfolio is expected to increase the solvency capital requirement by DKK 200m-250m.
Own funds
The transition to Solvency II on 1 January 2016 has triggered a number of changes with regard to the capital eligible to cover the solvency capital requirement ('Own funds'). The most significant changes are the inclusion of expected future profits and the potential for increased utilisation of subordinated debt.
In Q1 2016, own funds totalled DKK 10,794m, which means that Tryg has a solvency ratio of 212 and 173 relative to the solvency capital requirement calculated using the partial internal model and the standard formula, respectively. The acquisition of the Skandia child insurance portfolio is expected to reduce own funds by approximately DKK 300m. The overall impact from the Skandia acquisition, taking in consideration both own funds and the solvency capital requirement, will therefore be around DKK 500-550m.
The solvency ratio based on the partial internal model was 212 at the end of Q1, or 199 adjusted for Skandia child insurance portfolio, while according to the standard model it was 173, or 164 adjusted for the Skandia child insurance portfolio.
Solvency II
Based on an amendment to the legislation regarding the Norwegian Natural Perils Pool (NNP) published by the Norwegian Ministry of Justice and Public Security, the Norwegian FSA recognises the NNP funds as Tier 2 capital.
Solvency ratio development
The classification of the NNP funds as Tier 2 capital leaves a potential for issuing future Tier 2 subordinated debt of approximately DKK 900m. This is consistent with the plan of issuing additional subordinated debt of approximately SEK 1bn.
Tryg has an interactive 'A-' rating from Standard & Poor's, and the capital is sufficient to support this rating.
Contents - Management's review
Interim report Q1 2016 | Tryg A/S | 14
Outlook
The market situation in Denmark is more or less unchanged compared to the end of 2015. Unemployment in Denmark is expected to fall slightly in 2016 from 4.8% in 2015 to 4.6% in 2016, and car sales continue to be dominated by small cars. In Denmark, total car sales for Q1 2016 were 5.3% higher than in the prior-year period. The Norwegian economy is still impacted by very low oil prices and a weakened Norwegian currency. Tryg is only to a very limited extent exposed – both directly and indirectly – to the oil sector, but of course Tryg has also seen some impact from companies related to the oil industry, for example in the seismic industry. Unemployment in Norway is expected to increase further from 4.1% in 2015 to 4.4% in 2016. Car sales in Norway were 4.9% higher in Q1 2016 than in the prior-year period.
For 2016, Tryg has communicated an expected growth in premium income of 0-2%. This includes the acquisition of Skandia's child insurance portfolio, which is expected to be approved in Q2 2016 and included from Q3 2016 and to have a positive impact of approximately 0.5%. The approval of a customer bonus scheme in Denmark by the Board of Representatives of TryghedsGruppen is also expected to support the long-term development in premium income. Based on the development in Q1 and especially the renewals in Corporate, the premium growth for 2016 will probably be at the low end of the previously announced premium income growth expectations.
Tryg has a solid reserve position, and at the Capital Markets Day in November 2014, Tryg therefore announced that the run-off level was likely to be higher than the run-off level during the pre-2015 period. Tryg expects this to be the case until the end of 2017, after which we expect a long-term run-off level of 2.5-3%.
In 2016, weather claims, net of reinsurance, and large claims are expected to be DKK 500m and DKK 550m, respectively, which is unchanged relative to 2015.
The interest rate used to discount Tryg's technical provisions is historically low. An interest rate increase will have a positive effect on Tryg's results. Generally speaking, an interest rate increase of 1 percentage point will increase the pre-tax result by around DKK 300m and vice versa.
For the purpose of realising the financial targets, Tryg has launched an efficiency programme aimed at realising savings of DKK 750m, with DKK 500m relating to the procurement of claims services and administration and DKK 250m relating to expenses. The target for savings is DKK 225m for 2016 and DKK 375m for 2017.
The investment portfolio is divided into a match portfolio corresponding to the technical provisions and a free portfolio. The objective is for the return on the match portfolio and changes in the technical provisions due to interest rate changes to be neutral when taken together.
The curve used to discount technical provisions has changed due to the implementation of the Solvency II directive, and this might result in slightly more volatile net match portfolio results. The new curve increases the interest rate risk of the technical provisions, thereby introducing a larger difference between the match return and the changes in the technical provisions. Moreover, the curve introduces a component, 'Credit Risk Adjustment (CRA)', which cannot be hedged, and the impact from this component can only be negative.
The return on bonds in the free portfolio will vary, but given current interest rate levels, a low return is expected. For shares, the expected return is around 7% with the MSCI All Countries World Index as the benchmark, while the expected return for property is around 6%. Investment activities also include other types of investment income and expenses, especially the cost of managing investments, the cost of currency hedges and interest paid on loans.
There has been a gradual lowering of tax rates in Denmark, Norway and Sweden in recent years. In Denmark, the tax rate was 23.5% in 2015 and will be reduced to 22% in 2016. The Norwegian tax rate was 27% in 2015 and will be reduced to 25% in 2016, while the Swedish rate was 22%. When calculating the total tax payable, account should also be taken of the fact that gains and losses on shareholdings are not taxed in Norway. All in all, this causes the expected tax payable for an average year to be reduced from around 22-23% to around 21% in 2016.
The value of NOK fell in 2015, which had a negative impact on Tryg's operating profit. The share of equity held in NOK and SEK is continuously hedged in the financial markets.
Financial targets 2017
- Return on equity of ≥21% after tax
- Combined ratio ≤87
- Expense ratio ≤14
Contents – Management's review
Interim report Q1 2016 | Tryg A/S | 15
Contents – Financial statements Q1 2016
| FINANCIAL STATEMENTS | 19 Income statement | 24 Cash flow statement |
|---|---|---|
| 17 Statement by the Supervisory Board and the Executive Management | 20 Statement of comprehensive income | 25 Notes |
| 18 Financial highlights | 21 Statement of financial position | 32 Quarterly outline |
| 22 Statement of changes in equity |
Tryg's Group consolidated financial statements are prepared in accordance with IFRS.
Contents – Financial statements Q1 2016
Interim report Q1 2016 | Tryg A/S | 16
Statement by the Supervisory Board and the Executive Board
The Supervisory Board and the Executive Board have today considered and adopted the interim report for Q1 2016 for Tryq A/S.
The report, which is unaudited and has not been reviewed by the company's auditors, is presented in accordance with IAS 34 Interim Financial Reporting and the requirements of the NASDAQ Copenhagen for the presentation of financial statements of listed companies.
In our opinion, the report gives a true and fair view of the Group's assets, liabilities and financial position at 31 March 2016 and of the results of the Group's activities and cash flows for the period for the Group.
We are furthermore of the opinion that the management's report includes a fair review of the developments in the activities and financial position of the Group, the results for the period and of the Group's financial position in general and describes the principal risks and uncertainties that the Group face.
Ballerup, 12 April 2016
Executive Board
Morten Hübbe
Group CEO
Tor Magne Lønnum
Group CFO
Lars Bonde
Group Executive Vice President and COO
Supervisory Board
Jørgen Huno Rasmussen
Chairman
Torben Nielsen
Deputy Chairman
Tom Eileng
Lone Hansen
Anders Hjulmand
Jesper Hjulmand
Ida Sofie Jensen
Bill-Owe Johansson
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
Contents – Financial statements
Interim report Q1 2016 | Tryq A/S | 17
Financial highlights
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Gross premium income | 4,310 | 4,451 | 17,977 |
| Gross claims | -2,858 | -3,204 | -13,562 |
| Total insurance operating costs | -642 | -685 | -2,720 |
| Profit/loss on gross business | 810 | 562 | 1,695 |
| Profit/loss on ceded business | -246 | -136 | 710 |
| Insurance technical interest, net of reinsurance | -2 | 3 | 18 |
| Technical result | 562 | 429 | 2,423 |
| Investment return after insurance technical interest | 17 | 261 | -22 |
| Other income and costs | -16 | -25 | -91 |
| Profit/loss before tax | 563 | 665 | 2,310 |
| Tax | -118 | -150 | -390 |
| Profit/loss, continuing business | 445 | 515 | 1,920 |
| Profit/loss on discontinued and divested business after tax | 0 | 10 | 49 |
| Profit/loss for the period | 445 | 525 | 1,969 |
| Other comprehensive income | |||
| Other comprehensive income which cannot subsequently be reclassified as profit or loss | 1 | -201 | -16 |
| Other comprehensive income which can subsequently be reclassified as profit or loss | 7 | 17 | -24 |
| Other comprehensive income | 8 | -184 | -40 |
| Comprehensive income | 453 | 341 | 1,929 |
| Run-off gains/losses, net of reinsurance | 369 | 346 | 1,212 |
| Statement of financial position | |||
| Total provisions for insurance contracts | 34,094 | 34,598 | 31,814 |
| Total reinsurers' share of provisions for insurance contracts | 3,115 | 2,206 | 3,176 |
| Total equity | 9,111 | 9,396 | 9,644 |
| Total assets | 54,092 | 53,394 | 51,281 |
| Key ratios | |||
| Gross claims ratio | 66.3 | 72.0 | 75.4 |
| Net reinsurance ratio | 5.7 | 3.1 | -3.9 |
| Claims ratio, net of reinsurance | 72.0 | 75.1 | 71.5 |
| Gross expense ratio | 15.1 | 15.6 | 15.3 |
| Combined ratio | 87.1 | 90.7 | 86.8 |
| Gross expense ratio without adjustment* | 14.9 | 15.4 | 15.1 |
| Operating ratio | 87.0 | 90.4 | 86.5 |
*) The gross expense ratio without adjustment is calculated as the ratio of actual gross insurance operating costs to gross premium income. The adjustment, which is made pursuant to the Danish Financial Supervisory Authority's and the Danish Society of Financial Analysts' definitions of expense ratio and combined ratio, involves the addition of a calculated expense (rent) in respect of owner-occupied property based on a calculated market rent and the deduction of actual depreciation and operating costs on owner-occupied property.
Other key ratios are calculated in accordance with 'Recommendations & Financial Ratios 2015' issued by the Danish Society of Financial Analysts.
Contents - Financial statements
Interim report Q1 2016 | Tryg A/S
Income statement
| DKKm | Q1 | Q1 | ||
|---|---|---|---|---|
| 2016 | 2015 | 2015 | ||
| Notes | General insurance | |||
| Gross premiums written | 6,461 | 6,658 | 18,150 | |
| Ceded insurance premiums | -552 | -579 | -1,165 | |
| Change in premium provisions | -2,065 | -2,142 | 61 | |
| Change in reinsurers' share of premium provisions | 286 | 290 | 1 | |
| 2 | Premium income, net of reinsurance | 4,130 | 4,227 | 17,047 |
| 3 | Insurance technical interest, net of reinsurance | -2 | 3 | 18 |
| Claims paid | -3,309 | -3,463 | -13,095 | |
| Reinsurance cover received | 358 | 170 | 471 | |
| Change in claims provisions | 451 | 259 | -467 | |
| Change in the reinsurers' share of claims provisions | -363 | -41 | 1,301 | |
| 4 | Claims, net of reinsurance | -2,863 | -3,075 | -11,790 |
| Bonus and premium discounts | -86 | -65 | -234 | |
| Acquisition costs | -486 | -524 | -2,042 | |
| Administration expenses | -156 | -161 | -678 | |
| Acquisition costs and administration expenses | -642 | -685 | -2,720 | |
| Reinsurance commissions and profit participation from reinsurers | 25 | 24 | 102 | |
| Insurance operating costs, net of reinsurance | -617 | -661 | -2,618 | |
| 1 | Technical result | 562 | 429 | 2,423 |
| DKKm | Q1 | Q1 | ||
| --- | --- | --- | --- | --- |
| 2016 | 2015 | 2015 | ||
| Notes | Investment activities | |||
| Income from associates | 3 | 3 | 42 | |
| Income from investment property | 27 | 26 | 94 | |
| Interest income and dividends | 176 | 241 | 794 | |
| 5 | Value adjustments | -105 | 96 | -510 |
| Interest expenses | -25 | -24 | -95 | |
| Administration expenses in connection with investment activities | -17 | -20 | -88 | |
| Total investment return | 59 | 322 | 237 | |
| 3 | Return on insurance provisions | -42 | -61 | -259 |
| Total Investment return after insurance technical interest | 17 | 261 | -22 | |
| Other income | 30 | 21 | 81 | |
| Other costs | -46 | -46 | -172 | |
| Profit/loss before tax | 563 | 665 | 2,310 | |
| Tax | -118 | -150 | -390 | |
| Profit/loss on continuing business | 445 | 515 | 1,920 | |
| Profit/loss on discontinued and divested business | 0 | 10 | 49 | |
| Profit/loss for the period | 445 | 525 | 1,969 | |
| Earnings per share - continuing business | 1.58 | 1.79 | 6.74 | |
| Diluted earnings per share - continuing business | 1.58 | 1.79 | 6.73 | |
| Earnings per share | 1.58 | 1.82 | 6.91 | |
| Diluted earnings per share | 1.58 | 1.82 | 6.91 |
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 19
Statement of comprehensive income
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| Profit/loss for the period | 445 | 525 | 1,969 |
| Other comprehensive income | |||
| Other comprehensive income which cannot subsequently be reclassified as profit or loss | |||
| Adjustment to equity 1.1.2015 * | 0 | -175 | -175 |
| Change in equalisation reserve | 0 | 0 | 21 |
| Change in taxrates on security provisions | 0 | 0 | 141 |
| Revaluation of owner-occupied property | 1 | 0 | 4 |
| Tax on revaluation of owner-occupied property | 0 | 0 | 2 |
| Actuarial gains/losses on defined-benefit pension plans | 0 | -35 | -12 |
| Tax on actuarial gains/losses on defined-benefit pension plans | 0 | 9 | 3 |
| 1 | -201 | -16 | |
| Other comprehensive income which can subsequently be reclassified as profit or loss | |||
| Exchange rate adjustments of foreign entities | 33 | 87 | -89 |
| Hedging of currency risk in foreign entities | -33 | -92 | 86 |
| Tax on hedging of currency risk in foreign entities | 7 | 22 | -21 |
| 7 | 17 | -24 | |
| Total other comprehensive income | 8 | -184 | -40 |
| Comprehensive income | 453 | 341 | 1,929 |
*) New executive order from the Danish FSA on yield curves. See note 8 Accounting policies.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 20
Statement of financial position
| DKKm | 31.03.2016 | 31.03.2015 | 31.12.2015 |
|---|---|---|---|
| Notes | |||
| Assets | |||
| Intangible assets | 1,026 | 993 | 1,038 |
| Operating equipment | 59 | 89 | 62 |
| Owner-occupied property | 1,150 | 1,171 | 1,144 |
| Assets under construction | 3 | 12 | 2 |
| Total property, plant and equipment | 1,212 | 1,272 | 1,208 |
| Investment property | 1,854 | 1,844 | 1,838 |
| Equity investments in associates | 232 | 228 | 229 |
| Total investments in associates | 232 | 228 | 229 |
| Equity investments | 123 | 112 | 138 |
| Unit trust units | 3,513 | 4,218 | 3,589 |
| Bonds | 36,920 | 37,295 | 35,705 |
| Deposits with credit institutions | 500 | 150 | 0 |
| Derivative financial instruments | 1,383 | 1,240 | 843 |
| Total other financial investment assets | 42,439 | 43,015 | 40,275 |
| Total investment assets | 44,525 | 45,087 | 42,342 |
| Reinsurers' share of premium provisions | 459 | 476 | 173 |
| Reinsurers' share of claims provisions | 2,656 | 1,730 | 3,003 |
| Total reinsurers' share of provisions for insurance contracts | 3,115 | 2,206 | 3,176 |
| Receivables from policyholders | 2,096 | 1,917 | 1,261 |
| Total receivables in connection with direct insurance contracts | 2,096 | 1,917 | 1,261 |
| Receivables from insurance enterprises | 397 | 319 | 199 |
| Other receivables | 508 | 239 | 871 |
| Total receivables | 3,001 | 2,475 | 2,331 |
| Current tax assets | 119 | 0 | 118 |
| Cash at bank and in hand | 431 | 758 | 471 |
| Total other assets | 550 | 758 | 589 |
| Interest and rent receivable | 268 | 322 | 281 |
| Other prepayments and accrued income | 395 | 281 | 316 |
| Total prepayments and accrued income | 663 | 603 | 597 |
| Total assets | 54,092 | 53,394 | 51,281 |
| DKKm | 31.03.2016 | 31.03.2015 | 31.12.2015 |
| --- | --- | --- | --- |
| Notes | |||
| Equity and liabilities | |||
| Equity | 9,111 | 9,396 | 9,644 |
| Subordinated loan capital | 1,733 | 1,801 | 1,698 |
| Premium provisions | 7,676 | 7,958 | 5,571 |
| Claims provisions | 25,832 | 26,096 | 25,670 |
| Provisions for bonuses and premium discounts | 586 | 544 | 573 |
| Total provisions for insurance contracts | 34,094 | 34,598 | 31,814 |
| Pensions and similar liabilities | 231 | 351 | 264 |
| Deferred tax liability | 649 | 1,030 | 645 |
| Other provisions | 124 | 81 | 132 |
| Total provisions | 1,004 | 1,462 | 1,041 |
| Debt relating to direct insurance | 354 | 436 | 603 |
| Debt relating to reinsurance | 452 | 436 | 330 |
| Amounts owed to credit institutions | 315 | 304 | 64 |
| Debt relating to unsettled funds transactions and repos | 4,737 | 2,627 | 4,074 |
| Derivative financial instruments | 723 | 653 | 612 |
| Current tax liabilities | 228 | 311 | 357 |
| Other debt | 1,315 | 1,347 | 1,001 |
| Total debt | 8,124 | 6,114 | 7,041 |
| Accruals and deferred income | 26 | 23 | 43 |
| Total equity and liabilities | 54,092 | 53,394 | 51,281 |
6 Acquisition of activities
7 Related parties
8 Accounting policies
Contents - Financial statements
Interim report Q1 2016 | Tryg A/S | 21
Statement of changes in equity
| DKKm | Share capital | Revaluation reserves | Reserve for exchange rate adjustment | Equalisation reserve | Other reserves | Retained earnings | Proposed dividend | Total |
|---|---|---|---|---|---|---|---|---|
| Equity at 31 December 2015 | 1,448 | 86 | -9 | 127 | 766 | 6,213 | 1,013 | 9,644 |
| Q1 2016 | ||||||||
| Adjustment 1.1.2016 * | -127 | 127 | 0 | |||||
| Profit/loss for the period | -9 | 454 | 0 | 445 | ||||
| Other comprehensive income | 1 | 7 | 0 | 8 | ||||
| Total comprehensive income | 0 | 1 | 7 | -127 | -9 | 581 | 0 | 453 |
| Dividend paid | -1,013 | -1,013 | ||||||
| Dividend, treasury shares | 25 | 25 | ||||||
| Exercise of share options | 1 | 1 | ||||||
| Issue of share options and matching shares | 1 | 1 | ||||||
| Total changes in equity in Q1 2016 | 0 | 1 | 7 | -127 | -9 | 608 | -1,013 | -533 |
| Equity at 31 March 2016 | 1,448 | 87 | -2 | 0 | 757 | 6,821 | 0 | 9,111 |
| *) A new executive order from the Danish FSA from 1 January 2016 has abolished the requirements of equalisation reserves in credit and guarantee insurance. The possible payment of dividend from Tryg Forsikring A/S to Tryg A/S is influenced by contingency fund provisions of DKK 1,714m (DKK 2,516m as at 31 December 2015). The contingency fund provisions can be used to cover losses in connection with the settlement of insurance provisions or otherwise for the benefit of the insured. | ||||||||
| Equity at 31 December 2014 | 1,492 | 80 | 15 | 106 | 848 | 6,847 | 1,731 | 11,119 |
| Q1 2015 | ||||||||
| Adjustment 1.1.2015 ** | -175 | -175 | ||||||
| Profit/loss for the period | -37 | 562 | 525 | |||||
| Other comprehensive income | 17 | -26 | -9 | |||||
| Total comprehensive income | 0 | 0 | 17 | 0 | -37 | 361 | 0 | 341 |
| Dividend paid | -1,731 | -1,731 | ||||||
| Dividend, treasury shares | 65 | 65 | ||||||
| Purchase and sale of treasury shares | -415 | -415 | ||||||
| Exercise of share options | 14 | 14 | ||||||
| Issue of employee shares | 2 | 2 | ||||||
| Issue of share options and matching shares | 1 | 1 | ||||||
| Total changes in equity in Q1 2015 | 0 | 0 | 17 | 0 | -37 | 28 | -1,731 | -1,723 |
| Equity at 31 March 2015 | 1,492 | 80 | 32 | 106 | 811 | 6,875 | 0 | 9,396 |
**) New executive order from the Danish FSA on yield curves. See note 8 Accounting policies.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 22
Statement of changes in equity
| DKKm | Share capital | Revaluation reserves | Reserve for exchange rate adjustment | Equalisation reserve | Other reserves | Retained earnings | Proposed dividend | Total |
|---|---|---|---|---|---|---|---|---|
| Equity at 31 December 2014 | 1,492 | 80 | 15 | 106 | 848 | 1,731 | 11,119 | |
| 2015 | ||||||||
| Adjustment 1.1.2015 ** | -175 | -175 | ||||||
| Profit/loss for the year | 22 | -104 | 292 | 1,759 | 1,969 | |||
| Other comprehensive income | 6 | -24 | -1 | 22 | 132 | 135 | ||
| Total comprehensive income | 0 | 6 | -24 | 21 | -82 | 249 | 1,759 | 1,929 |
| Nullification of treasury shares | -44 | 44 | 0 | |||||
| Dividend paid | -2,477 | -2,477 | ||||||
| Dividend, treasury shares | 97 | 97 | ||||||
| Purchase and sale of treasury shares | -1,044 | -1,044 | ||||||
| Exercise of share options | 13 | 13 | ||||||
| Issue of employee shares | 2 | 2 | ||||||
| Issue of share options and matching shares | 5 | 5 | ||||||
| Total changes in equity in 2015 | -44 | 6 | -24 | 21 | -82 | -634 | -718 | -1,475 |
| Equity at 31 December 2015 | 1,448 | 86 | -9 | 127 | 766 | 6,213 | 1,013 | 9,644 |
**) New executive order from the Danish FSA on yield curves. See note 8 Accounting policies.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 23
Cash flow statement
| Q1 | Q1 | ||
|---|---|---|---|
| DKKm | 2016 | 2015 | 2015 |
| Cash from operating activities | |||
| Premiums | 5,555 | 5,757 | 17,721 |
| Claims | -3,354 | -3,482 | -13,040 |
| Ceded business | -244 | -233 | -412 |
| Costs | -640 | -682 | -2,771 |
| Change in other debt and other amounts receivable | 207 | 77 | -158 |
| Cash flow from insurance activities | 1,524 | 1,437 | 1,340 |
| Interest income | 196 | 231 | 807 |
| Interest expenses | -25 | -24 | -95 |
| Dividend received | 4 | 34 | 47 |
| Taxes | -249 | -232 | -765 |
| Other income and costs | -17 | -25 | -91 |
| Cash from operating activities, continuing business | 1,433 | 1,421 | 1,243 |
| Cash from operating activities, discontinued and divested business | 0 | -20 | -32 |
| Total cash flow from operating activities | 1,433 | 1,401 | 1,211 |
| Investments | |||
| Acquisition and refurbishment of real property | -10 | -1 | -46 |
| Sale of real property | 0 | 0 | 10 |
| Acquisition and sale of equity investments and unit trust units (net) | 40 | 151 | 480 |
| Purchase/sale of bonds (net) | -234 | 198 | 1,070 |
| Deposits with credit institutions | -500 | 499 | 641 |
| Purchase/sale of operating equipment (net) | -1 | 5 | 0 |
| Hedging of currency risk | -33 | -92 | 86 |
| Investments, continuing business | -738 | 760 | 2,241 |
| Investments, discontinued and divested business | 0 | -37 | -37 |
| Total investments | -738 | 723 | 2,204 |
| Q1 | Q1 | ||
| --- | --- | --- | --- |
| DKKm | 2016 | 2015 | 2015 |
| Financing | |||
| Exercise of share options/purchase of treasury shares (net) | 1 | -401 | -1,031 |
| Subordinated loan capital | 0 | 0 | 12 |
| Dividend paid | -988 | -1,666 | -2,380 |
| Change in amounts owed to credit institutions | 251 | 188 | -53 |
| Financing, continuing business | -736 | -1,879 | -3,452 |
| Total financing | -736 | -1,879 | -3,452 |
| Change in cash and cash equivalents, net | -41 | 245 | -37 |
| Exchange rate adjustment of cash and cash equivalents beginning of year | 1 | 8 | 3 |
| Change in cash and cash equivalents, gross | -40 | 253 | -34 |
| Cash and cash equivalents, beginning of year | 471 | 505 | 505 |
| Cash and cash equivalents, end of period | 431 | 758 | 471 |
Contents - Financial statements
Interim report Q1 2016 | Tryg A/S | 24
Notes
| DKKm | Private | Commercial | Corporate | Sweden | Other | Group |
|---|---|---|---|---|---|---|
| 1 Operating segments | ||||||
| Q1 2016 | ||||||
| Gross premium income | 2,137 | 967 | 920 | 289 | -3 | 4,310 |
| Gross claims | -1,586 | -547 | -508 | -217 | -2,858 | |
| Gross operating expenses | -305 | -169 | -107 | -61 | -642 | |
| Profit/loss on ceded business | -47 | -36 | -166 | 0 | 3 | -246 |
| Insurance technical interest, net of reinsurance | -1 | 0 | 0 | -1 | -2 | |
| Technical result | 198 | 215 | 139 | 10 | 0 | 562 |
| Other items | -117 | |||||
| Profit | 445 | |||||
| Run-off gains/losses, net of reinsurance | 73 | 120 | 148 | 28 | 369 | |
| Intangible assets | 32 | 590 | 404 | 1,026 | ||
| Equity investments in associates | 232 | 232 | ||||
| Reinsurers' share of premium provisions | 86 | 85 | 286 | 2 | 459 | |
| Reinsurers' share of claims provisions | 64 | 334 | 2,227 | 31 | 2,656 | |
| Other assets | 49,719 | 49,719 | ||||
| Total assets | 54,092 | |||||
| Premium provisions | 2,902 | 2,038 | 1,907 | 829 | 7,676 | |
| Claims provisions | 5,902 | 6,784 | 11,468 | 1,678 | 25,832 | |
| Provisions for bonuses and premium discounts | 465 | 51 | 52 | 18 | 586 | |
| Other liabilities | 10,887 | 10,887 | ||||
| Total liabilities | 44,981 |
Amounts relating to eliminations are included under 'Other'. Other assets and liabilities are managed at Group level and are therefore not allocated to the individual segments but are included under 'Other'.
Costs are allocated according to specific keys, which are believed to provide the best estimate of assessed resource consumption.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 25
Notes
| DKKm | Private | Commercial | Corporate | Sweden | Other | Group |
|---|---|---|---|---|---|---|
| 1 Operating segments | ||||||
| Q1 2015 | ||||||
| Gross premium income | 2,194 | 1,003 | 968 | 289 | -3 | 4,451 |
| Gross claims | -1,679 | -665 | -654 | -208 | 2 | -3,204 |
| Gross operating expenses | -335 | -175 | -115 | -60 | -685 | |
| Profit/loss on ceded business | 0 | -9 | -130 | 2 | 1 | -136 |
| Insurance technical interest, net of reinsurance | 1 | 1 | 1 | 0 | 3 | |
| Technical result | 181 | 155 | 70 | 23 | 429 | |
| Other items | 96 | |||||
| Profit | 525 | |||||
| Run-off gains/losses, net of reinsurance | 110 | 143 | 70 | 23 | 346 | |
| Intangible assets | 36 | 606 | 351 | 993 | ||
| Equity investments in associates | 228 | 228 | ||||
| Reinsurers' share of premium provisions | 93 | 99 | 283 | 1 | 476 | |
| Reinsurers' share of claims provisions | 203 | 357 | 1,127 | 43 | 1,730 | |
| Other assets | 49,967 | 49,967 | ||||
| Total assets | 53,394 | |||||
| Premium provisions | 3,046 | 2,069 | 2,045 | 798 | 7,958 | |
| Claims provisions | 6,243 | 6,982 | 11,102 | 1,769 | 26,096 | |
| Provisions for bonuses and premium discounts | 444 | 27 | 63 | 10 | 544 | |
| Other liabilities | 9,400 | 9,400 | ||||
| Total liabilities | 43,998 |
Contents - Financial statements
Interim report Q1 2016 | Tryg A/S
Notes
| DKKm | Private | Commercial | Corporate | Sweden | Other * | Group |
|---|---|---|---|---|---|---|
| 1 Operating segments | ||||||
| 2015 | ||||||
| Gross premium income | 8,803 | 3,992 | 3,894 | 1,317 | -29 | 17,977 |
| Gross claims | -6,074 | -2,612 | -3,987 | -852 | -37 | -13,562 |
| Gross operating expenses | -1,291 | -683 | -420 | -246 | -80 | -2,720 |
| Profit/loss on ceded business | -148 | -44 | 877 | -1 | 26 | 710 |
| Insurance technical interest, net of reinsurance | 8 | 5 | 5 | 0 | 18 | |
| Technical result | 1,298 | 658 | 369 | 218 | -120 | 2,423 |
| Other items | -454 | |||||
| Profit | 1,969 | |||||
| Run-off gains/losses, net of reinsurance | 324 | 388 | 351 | 149 | 1,212 | |
| Intangible assets | 33 | 597 | 408 | 1,038 | ||
| Equity investments in associates | 229 | 229 | ||||
| Reinsurers' share of premium provisions | 17 | 16 | 140 | 0 | 173 | |
| Reinsurers' share of claims provisions | 141 | 408 | 2,422 | 32 | 3,003 | |
| Other assets | 46,838 | 46,838 | ||||
| Total assets | 51,281 | |||||
| Premium provisions | 2,342 | 1,318 | 1,062 | 849 | 5,571 | |
| Claims provisions | 5,827 | 6,688 | 11,505 | 1,650 | 25,670 | |
| Provisions for bonuses and premium discounts | 457 | 54 | 50 | 12 | 573 | |
| Other liabilities | 9,823 | 9,823 | ||||
| Total liabilities | 41,637 |
*) In 2015 costs and claims were negatively effected by DKK 80m and DKK 40m respectively due to provisioning for the efficiency programme.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 27
Notes
| DKKm | Q1 2016 | Q1 2015 | 2015 | |
|---|---|---|---|---|
| 1 | Geographical segments | |||
| Danish general insurance * | ||||
| Gross premium income | 2,334 | 2,331 | 9,346 | |
| Technical result | 387 | 304 | 1,371 | |
| Run-off gains/losses, net of reinsurance | 205 | 231 | 512 | |
| Key ratios | ||||
| Gross claims ratio | 64.3 | 69.2 | 80.5 | |
| Net reinsurance ratio | 5.6 | 3.1 | -9.2 | |
| Claims ratio, net of reinsurance | 69.9 | 72.3 | 71.3 | |
| Gross expense ratio | 13.4 | 14.4 | 13.9 | |
| Combined ratio | 83.3 | 86.7 | 85.2 | |
| Number of full-time employees, end of period | 1,847 | 1,974 | 1,859 | |
| Norwegian general insurance | ||||
| Gross premium income | 1,550 | 1,691 | 6,766 | |
| Technical result | 151 | 55 | 844 | |
| Run-off gains/losses, net of reinsurance | 134 | 58 | 492 | |
| Key ratios | ||||
| Gross claims ratio | 68.1 | 77.5 | 70.9 | |
| Net reinsurance ratio | 6.5 | 3.8 | 2.1 | |
| Claims ratio, net of reinsurance | 74.6 | 81.3 | 73.0 | |
| Gross expense ratio | 15.9 | 15.9 | 14.9 | |
| Combined ratio | 90.5 | 97.2 | 87.9 | |
| Number of full-time employees, end of period | 1,107 | 1,184 | 1,113 |
- Comprises Danish general insurance and Finnish guarantee insurance.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 28
Notes
| DKKm | Q1 2016 | Q1 2015 | 2015 | |
|---|---|---|---|---|
| 1 | Geographical segments | |||
| Swedish general insurance | ||||
| Gross premium income | 429 | 432 | 1,894 | |
| Technical result | 24 | 70 | 328 | |
| Run-off gains/losses, net of reinsurance | 30 | 57 | 208 | |
| Key ratios | ||||
| Gross claims ratio | 70.4 | 65.3 | 63.5 | |
| Net reinsurance ratio | 4.2 | 0.0 | 1.7 | |
| Claims ratio, net of reinsurance | 74.6 | 65.3 | 65.2 | |
| Gross expense ratio | 19.6 | 18.5 | 17.5 | |
| Combined ratio | 94.2 | 83.8 | 82.7 | |
| Number of full-time employees, end of period | 379 | 390 | 387 | |
| Other** | ||||
| Gross premium income | -3 | -3 | -29 | |
| Technical result | 0 | 0 | -120 | |
| Tryg | ||||
| Gross premium income | 4,310 | 4,451 | 17,977 | |
| Technical result | 562 | 429 | 2,423 | |
| Investment return activities | 17 | 261 | -22 | |
| Other income and costs | -16 | -25 | -91 | |
| Profit/loss before tax | 563 | 665 | 2,310 | |
| Run-off gains/losses, net of reinsurance | 369 | 346 | 1,212 | |
| Key ratios | ||||
| Gross claims ratio | 66.3 | 72.0 | 75.4 | |
| Net reinsurance ratio | 5.7 | 3.1 | -3.9 | |
| Claims ratio, net of reinsurance | 72.0 | 75.1 | 71.5 | |
| Gross expense ratio*** | 15.1 | 15.6 | 15.3 | |
| Combined ratio | 87.1 | 90.7 | 86.8 | |
| Number of full-time employees, end of period | 3,333 | 3,548 | 3,359 |
** Amounts relating to eliminations are included under 'Other'.
*** Adjustment of gross expense ratio included only in 'Tryg'.
*** In Q3 2015 costs and claims were negatively effected by DKK 80m and DKK 40m respectively due to provisioning for the efficiency programme.
Contents - Financial statements
Interim report Q1 2016 | Tryg A/S
Notes
| DKKm | Q1 2016 | Q1 2015 | 2015 |
|---|---|---|---|
| 2 Premium income, net of reinsurance | |||
| Direct insurance | 4,380 | 4,505 | 18,166 |
| Indirect insurance | 14 | 11 | 44 |
| 4,394 | 4,516 | 18,210 | |
| Unexpired risk provision | 2 | 0 | 1 |
| 4,396 | 4,516 | 18,211 | |
| Ceded direct insurance | -275 | -270 | -1,103 |
| Ceded indirect insurance | 9 | -19 | -61 |
| 4,130 | 4,227 | 17,047 | |
| 3 Insurance technical interest, net of reinsurance | |||
| Return on insurance provisions | 42 | 61 | 259 |
| Discounting transferred from claims provisions | -44 | -58 | -241 |
| -2 | 3 | 18 | |
| 4 Claims, net of reinsurance | |||
| Claims | -3,249 | -3,522 | -15,063 |
| Run-off gains/losses, gross | 391 | 318 | 1,500 |
| -2,858 | -3,204 | -13,563 | |
| Reinsurance cover received | 17 | 101 | 2,061 |
| Run-off gains/losses, reinsurers' share | -22 | 28 | -288 |
| -2,863 | -3,075 | -11,790 | |
| DKKm | Q1 2016 | Q1 2015 | 2015 |
| --- | --- | --- | --- |
| 5 Value adjustments | |||
| Value adjustments concerning financial assets or liabilities at fair value with value adjustment in the income statement: | |||
| Equity investments | 25 | -17 | 13 |
| Unit trust units | 0 | 266 | 57 |
| Share derivatives | -23 | 50 | 14 |
| Bonds | 27 | -82 | -608 |
| Interest derivatives | 258 | 133 | -42 |
| 287 | 350 | -566 | |
| Value adjustments concerning assets or liabilities that cannot be attributed to IAS 39: | |||
| Investment property | 0 | 1 | 17 |
| Owner-occupied property | 0 | 0 | 0 |
| Discounting | -383 | -221 | 103 |
| Other statement of financial position items | -9 | -34 | -64 |
| -392 | -254 | 56 | |
| -105 | 96 | -510 | |
| 6 Acquisition of activities | |||
| In august 2015 Tryg and Skandia signed an agreement whereby Tryg acquires Skandia's activities within child and adult accident insurance and integrates them into its Swedish business, Moderna Forsäkringar. The transaction is expected to be approved by the Danish FSA in Q2 and implemented in Q3 2016. The acquisition has no effect on the Financial statement for Q1 2016. | |||
| 7 Related parties | |||
| In Q1 2016 Tryg Forsikring A/S paid Tryg A/S DKK 1,450m and Tryg A/S paid TryghedsGruppen smba DKK593m in dividends (in Q1 2015 Tryg Forsikring A/S paid Tryg A/S DKK 2,400m and Tryg A/S paid TryghedsGruppen smba DKK 1,001m in dividends). | |||
| There have been no other material transactions with related parties. |
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 30
Notes
8 Accounting policies
Tryg's interim report for Q1 2016 report is presented in accordance with IAS 34 Interim Financial Reporting and the requirements of the NASDAQ Copenhagen for the presentation of financial statements of listed companies.
The application of IAS 34 means that the report is limited relative to the presentation of a full annual report and that the valuation principles are in accordance with International Financial Reporting Standards (IFRS).
Change in accounting policies
Tryg has implemented the amendments which prescribes applying a new yield curve from the Executive Order on Financial Reports by Insurance Companies and Lateral Pension Funds issued by the Danish FSA from 1 January 2016. The executive order prescribes a change from applying a yield curve issued by the Danish Financial Supervisory Authority to applying a new yield curve published by EIOPA.
For Tryg, this means applying a yield curve at a lower level. The comparative figures for 2015 are restated accordingly. Figures for previous years have not been restated as this is impracticable due to the non existence of the new yield curve published by EIOPA before 01.01.2015. Q1 2015 and Q2 2015 are only affected with the changes as of 01.01.2015 regarding equity and insurance provisions due to insignificant changes to the income statement.
The comparative figures in the income statement have been restated for Q3 2015 and Q4 2015 with the following amounts:
| 1.1.2015 | Q3 2015 | Q4 2015 | 2015 | |
|---|---|---|---|---|
| Total Investment return after insurance technical interest | -58 | 41 | -17 | |
| Tax | 13 | -8 | 5 | |
| Profit and loss for the period | -45 | 33 | -12 | |
| Equity | -175 | -219 | -187 | -187 |
| Insurance provisions | 226 | 283 | 243 | 243 |
| Deferred tax liabilities | -51 | -64 | -56 | -56 |
It is Tryg's assessment that the amendments to the Executive Order from 2016 can be accommodated within IFRS.
Except as noted above, the accounting policies have been applied consistently with last year.
For a full description of the accounting policies, please refer to the annual accounts of the Tryg Group 2015.
Changes in accounting estimates
There have been no changes to the accounting estimates in Q1 2016.
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 31
Quarterly outline
| DKKm | Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 |
|---|---|---|---|---|---|---|---|---|---|
| Private | |||||||||
| Gross premium income | 2,137 | 2,172 | 2,211 | 2,226 | 2,194 | 2,249 | 2,289 | 2,275 | 2,238 |
| Technical result | 198 | 285 | 398 | 434 | 181 | 400 | 445 | 494 | 273 |
| Key ratios | |||||||||
| Gross claims ratio | 74.2 | 71.3 | 65.1 | 63.3 | 76.5 | 65.3 | 64.6 | 69.0 | 72.1 |
| Net reinsurance ratio | 2.2 | 2.3 | 2.3 | 2.1 | 0.0 | 2.1 | 1.1 | -2.6 | 0.4 |
| Claims ratio, net of reinsurance | 76.4 | 73.6 | 67.4 | 65.4 | 76.5 | 67.4 | 65.7 | 66.4 | 72.5 |
| Gross expense ratio | 14.3 | 13.4 | 14.7 | 15.3 | 15.3 | 15.0 | 15.1 | 12.4 | 15.5 |
| Combined ratio | 90.7 | 87.0 | 82.1 | 80.7 | 91.8 | 82.4 | 80.8 | 78.8 | 88.0 |
| Combined ratio exclusive of run-off | 94.1 | 89.3 | 86.5 | 83.7 | 96.8 | 84.5 | 85.3 | 82.4 | 93.7 |
| Commercial | |||||||||
| Gross premium income | 967 | 970 | 1,022 | 997 | 1,003 | 1,050 | 1,045 | 1,053 | 1,042 |
| Technical result | 215 | 147 | 136 | 220 | 155 | 270 | 188 | 224 | 193 |
| Key ratios | |||||||||
| Gross claims ratio | 56.6 | 62.3 | 77.1 | 55.7 | 66.3 | 55.2 | 63.9 | 72.1 | 63.9 |
| Net reinsurance ratio | 3.7 | 5.5 | -6.8 | 5.2 | 0.9 | 3.7 | 0.9 | -5.6 | 0.3 |
| Claims ratio, net of reinsurance | 60.3 | 67.8 | 70.3 | 60.9 | 67.2 | 58.9 | 64.8 | 66.5 | 64.2 |
| Gross expense ratio | 17.5 | 17.2 | 16.6 | 17.2 | 17.4 | 15.6 | 17.5 | 12.6 | 17.7 |
| Combined ratio | 77.8 | 85.0 | 86.9 | 78.1 | 84.6 | 82.3 | 79.1 | 81.9 | |
| Combined ratio exclusive of run-off | 90.2 | 91.3 | 98.6 | 84.5 | 98.9 | 86.5 | 92.1 | 81.9 | 86.9 |
| Corporate | |||||||||
| Gross premium income | 920 | 949 | 984 | 993 | 968 | 1,015 | 999 | 1,030 | 989 |
| Technical result | 139 | 5 | 195 | 99 | 70 | 98 | 130 | 180 | 19 |
| Key ratios | |||||||||
| Gross claims ratio | 55.2 | 69.2 | 99.9 | 170.5 | 67.6 | 67.2 | 63.0 | 73.3 | 81.5 |
| Net reinsurance ratio | 18.0 | 20.5 | -30.1 | -91.2 | 13.4 | 12.6 | 13.0 | 0.1 | 4.6 |
| Claims ratio, net of reinsurance | 73.2 | 89.7 | 69.8 | 79.3 | 81.0 | 79.8 | 76.0 | 73.4 | 86.1 |
| Gross expense ratio | 11.6 | 9.7 | 10.6 | 11.0 | 11.9 | 10.6 | 11.5 | 9.5 | 12.6 |
| Combined ratio | 84.8 | 99.4 | 80.4 | 90.3 | 92.9 | 90.4 | 87.5 | 82.9 | 98.7 |
| Combined ratio exclusive of run-off | 100.9 | 106.2 | 98.1 | 94.5 | 100.1 | 106.4 | 94.9 | 86.8 | 113.4 |
A further detailed version of the presentation can be downloaded from tryq.com/uk>investor>Downloads>tables
Contents – Financial statements
Interim report Q1 2016 | Tryq A/S | 32
Quarterly outline
| DKKm | Q1 2016 | Q4 2015 | Q3 2015 | Q2 2015 | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 |
|---|---|---|---|---|---|---|---|---|---|
| Sweden | |||||||||
| Gross premium income | 289 | 313 | 373 | 342 | 289 | 338 | 386 | 358 | 317 |
| Technical result | 10 | 85 | 38 | 72 | 23 | 7 | 30 | 43 | 38 |
| Key ratios | |||||||||
| Gross claims ratio | 75.1 | 51.8 | 73.2 | 61.1 | 72.0 | 74.6 | 76.2 | 69.3 | 64.4 |
| Net reinsurance ratio | 0.0 | 0.3 | 0.5 | 0.0 | -0.7 | 1.5 | 0.8 | -0.3 | 4.4 |
| Claims ratio, net of reinsurance | 75.1 | 52.1 | 73.7 | 61.1 | 71.3 | 76.1 | 77.0 | 69.0 | 68.8 |
| Gross expense ratio | 21.1 | 21.1 | 15.8 | 17.8 | 20.8 | 22.2 | 15.5 | 19.6 | 19.9 |
| Combined ratio | 96.2 | 73.2 | 89.5 | 78.9 | 92.1 | 98.3 | 92.5 | 88.6 | 88.7 |
| Combined ratio exclusive of run-off | 105.9 | 94.3 | 92.4 | 93.2 | 100.1 | 99.2 | 97.7 | 91.7 | 91.5 |
| Other* | |||||||||
| Gross premium income | -3 | -11 | -7 | -8 | -3 | -6 | -7 | -5 | -3 |
| Technical result | 0 | 0 | -120 | 0 | 0 | 0 | 0 | 0 | 0 |
| Tryg | |||||||||
| Gross premium income | 4,310 | 4,393 | 4,583 | 4,550 | 4,451 | 4,646 | 4,712 | 4,711 | 4,583 |
| Technical result | 562 | 522 | 647 | 825 | 429 | 775 | 793 | 941 | 523 |
| Investment return | 17 | 242 | -441 | -84 | 261 | 13 | -1 | 259 | 89 |
| Profit/loss before tax | 563 | 745 | 186 | 714 | 665 | 768 | 782 | 1,150 | 602 |
| Profit/loss | 445 | 754 | 110 | 580 | 525 | 640 | 593 | 869 | 455 |
| Key ratios | |||||||||
| Gross claims ratio | 66.3 | 68.0 | 76.6 | 84.8 | 72.0 | 64.1 | 64.9 | 70.7 | 71.7 |
| Net reinsurance ratio | 5.7 | 6.2 | -6.8 | -17.8 | 3.1 | 4.7 | 3.7 | -2.6 | 1.6 |
| Claims ratio, net of reinsurance | 72.0 | 74.2 | 69.8 | 67.0 | 75.1 | 68.8 | 68.6 | 68.1 | 73.3 |
| Gross expense ratio | 15.1 | 14.2 | 16.3 | 15.2 | 15.6 | 14.9 | 15.1 | 12.6 | 15.9 |
| Combined ratio | 87.1 | 88.4 | 86.1 | 82.2 | 90.7 | 83.7 | 83.7 | 80.7 | 89.2 |
| Combined ratio exclusive of run-off | 95.7 | 93.9 | 94.9 | 87.1 | 98.5 | 91.0 | 90.0 | 84.1 | 96.5 |
Contents – Financial statements
Interim report Q1 2016 | Tryg A/S | 33
Disclaimer
Certain statements in this report are based on the beliefs of our management as well as assumptions made by and information currently available to management. Statements regarding Tryg's future operating results, financial position, cash flows, business strategy, plans and future objectives other than statements of historical fact can generally be identified by the use of words such as 'targets', 'believes', 'expects', 'aims', 'intends', 'plans', 'seeks', 'will', 'may', 'anticipates', 'would', 'could', 'continues' or similar expressions.
A number of different factors may cause the actual performance to deviate significantly from the forward-looking statements in this report, 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. Should one or more of these risks or uncertainties materialise, or should any underlying assumptions prove to be incorrect, Tryg's actual financial condition or results of operations could materially differ from that described herein as anticipated, believed, estimated or expected. Tryg is 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. Read more in the chapter Capital and risk management in the annual report on page 24-25, and in Note 1 on page 46, for a description of some of the factors which may affect the Group's performance or the insurance industry.
Contents - Management's review
Interim report Q1 2016 | Tryg A