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Tryg Investor Presentation 2021
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Investor Presentation
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Tryg
Tryg A/S
Growing a successful core, while shaping the future
Capital Markets Day
London, November 16th 2021
Welcome
Tryg |
Tryg Executive Board
Tryg
Morten Hübbe
Group CEO
Barbara Plucnar Jensen
Group CFO
Lars Bonde
Group COO
Johan Kirstein Brammer
Group CCO
Agenda
Tryg
- Follow-up on CMD targets and initiatives 2018 - 2020
- Introducing the 2021 - 2024 strategy and targets
Q&A session
2.1 Full speed ahead in a successful core
2.2 Change the way to win in B2B
Q&A session followed by coffee break
2.3 Shape the future
2.4 Trygg-Hansa / Codan NO integration and synergies
- Customer experience
- Corporate responsibility
Q&A session
5. Financials and capital management
6. Concluding remarks
Q&A session
Tryg | C
Tryg 2024 at a glance: Growing a successful core, while shaping the future
Target highest ever technical result
Continue growing the successful, existing business
Acquisition process and synergies on track, strong Trygg-Hansa momentum
Strong shareholders' remuneration focus intact
> DKK 7.0-7.4bn
DKK ~1.6bn technical result improvement in existing business
DKK 900m synergies realised in 2024
DKK ~17-19bn in ordinary dividends and extraordinary buybacks
Follow-up on CMD targets and initiatives 2018 - 2020
1 Status CMD 2020 targets
Tryg
As the world changes, we make it easier to be 'tryg'
Note: Tryg is the Danish word for feeling safe
1
Status CMD 2020 targets
Tryg
Tryg delivered on the 2020 targets presented at last CMD in 2017
| Category | Key Performance Indicators | Targets 2020 | Realised 2020 |
|---|---|---|---|
| FINANCIAL | Technical result | DKK 3.3bn | DKK 3.5bn |
| Combined ratio | ≤ 86% | 84.5% | |
| Expense ratio | ~14% reaffirmed | 14.1% | |
| Return on equity | ≥ 21% | 22.5% | |
| CUSTOMERS | TNPS | 70 | 72 |
| Number of products per customer | 4.0 | 3.9 |
1
Status CMD 2020 targets
Tryg
Tryg delivered on all four key priorities from 2020 strategy
| Claims excellence | Digital empowerment of customers | Product and service innovation | Distribution efficiency | |
|---|---|---|---|---|
| Priorities presented at CMD 2017 | ||||
| DKK 600m in claims cost reduction | DKK 100m improvement in technical result 50% STP¹ on claims 70% self-service rate | DKK 1bn in premiums from new products by 2020+ | DKK 150m in technical result impact | |
| DELIVERED | DELIVERED | DELIVERED | DELIVERED |
Long-term profitable growth and attractive shareholder value creation
1) Straight-through processing
1
Status CMD 2020 targets
The Alka acquisition has been executed successfully
Tryg
Tryg has delivered on all Alka synergies
Alka is performing at a historic high
Targeted and realised benefits, DKKm
Targeted benefits
Realised benefits
Alka learnings to be used in relation to the acquisition of Trygg-Hansa and Codan NO
Portfolio, DKKm
alka
1
Status CMD 2020 targets
Tryg
Tryg performs well when benchmarked against competitors
The Nordic insurance market is attractive with unique characteristics:
Large, listed players (DK+NO)
High retention rates
Tryg is the only pure non-life insurance player
Combined ratio 5y average ('16-'20), %
ROE 5y average ('16-'20), %
TR growth 5y CAGR ('16-'20), %
Alka Premium growth 5y CAGR ('16-'20), %
Introducing the 2021 - 2024 strategy and CMD targets
2024 CMD targets
The acquisition has created the largest Scandinavian P&C player
Tryg
Gross premiums earned, DKKbn
Technical result, DKKbn
Market shares¹, %
Tryg 2020
Trygg-Hansa and Codan NO 2020
Tryg Group Pro-forma 2020
TRYGG HANSA
Moderna
1) Sweden market shares based on Q3 2020 premiums (Svensk Försäkring) Norway market shares based on Q4 2020 premiums (FinansNorge) Denmark market shares based on Q2 2020 premiums (Forsikring og Pension)
2024 CMD targets
Trygg-Hansa: Strong and stable profitability, growth to improve
Trygg-Hansa has high profitability
CODAN
Profitability driven by strong retention
Trygg-Hansa premiums mix, 2020
Next step is to increase growth
2024 CMD targets
Trygg-Hansa: Pioneer and market leader of personal accident
Large PA share in Trygg-Hansa premiums
PA¹ share of total premiums, 2020
Avg. retention, years
PA market size, 2017-2020, SEKm
PA combined ratio, 2017-2020
2024 CMD targets
2024 targets: Highest technical result ever
Tryg
| Targets 2020 | Realised FY 2020 | Targets 2024 | ||
|---|---|---|---|---|
| Technical result | DKK 3.3bn | DKK 3.5bn | ☑ | DKK 7.0-7.4bn |
| DKK ~17-19bn in | ||||
| pay-out in 2022-2024 from | ||||
| ordinary | ||||
| dividends and | ||||
| extraordinary | ||||
| buy-backs | ||||
| Combined ratio | ≤86% | 84.5% | ☑ | ≤82% |
| Expense ratio | ~14% reaffirmed | 14.1% | ☑ | ~14% reaffirmed |
| Return on Own Funds¹ | New KPI | N/A | ≥25% | |
| Trygg-Hansa and Codan NO | ||||
| synergy realisation | New KPI | N/A | 900m | |
| Digitalisation | ||||
| (% growth in value creating | ||||
| actions upon login) | New KPI | ~14m | ≥40% | |
| Customer satisfaction | ||||
| (Customer journey satisfaction) | New KPI | 84 | 88 | |
| Corporate responsibility | ||||
| (CO2e reduction from claims) | New KPI | NA | 20-25k tonnes per year |
1) Return on Own Funds introduced as new target for 2024 as an improved, and more appropriate, profitability measure in a Solvency II world. Tryg will also disclose ROE and ROTE in financial reports
2024 CMD targets
Tryg
Retail focus drives value creation
Premiums mix, DKKbn
2024 CMD targets
Tryg
Strong track record of growing technical result
Technical result, DKKbn
- Trygg-Hansa, Codan NO, and Synergies
- Alka adjustment
- Tryg technical result
2024 CMD targets
Tryg
Tryg will deliver on ambitions by focusing on four key pillars
TRYG 2024
| 1 Full speed ahead in a successful core | 2 Change the way to win in B2B | 3 Shape the future | 4 Trygg-Hansa and Codan NO synergies |
|---|---|---|---|
| DKK ~1050m increase in TR | DKK ~600m increase in TR | DKK ~1.5bn premiums in 2024+ across product types | DKK ~900m in synergies |
| Advanced approach to claims | Grow among smaller SMEs in Commercial | Prevention | |
| Expand the market of today | Leverage scale to realise cost synergies | ||
| Sales and customer excellence | Improve profitability in Corporate | Build the market of tomorrow | Share best practices to realise commercial synergies |
Key enablers
- Data and analytics
- IT capabilities
- HR – people, organisation and culture
2024 CMD targets
Tryg
Drivers of doubling technical result
Breakdown of 2024 technical result target
Questions?
(5 minutes)
Tryg |
Full speed ahead in a successful core
2.1 Full speed ahead
Tryg
Tryg will continue to improve core business
Advanced approach to claims
Sales and customer excellence
Strategic focus areas
Target 2024
Technical result impact, 2024, DKK
Technical result impact, 2024, DKK
DKK ~1050m
Total TR contribution in 2024
2.1 Full speed ahead
Three-fold structure used to present the strategy
Tryg
| Relevance | Evidence | Potential |
|---|---|---|
| Why is this topic relevant for Tryg to address in the strategy? | Which results has Tryg delivered historically on this topic? | What is the ambition to be achieved in 2024? |
Tryg | C
FULL SPEED AHEAD IN A SUCCESSFUL CORE
Advanced approach to claims
Sales and customer excellence
2.1 Full speed ahead
Claims
Relevance: Claims is Tryg's largest cost driver
Tryg
Claims costs account for 83% of total costs
Three levers to address claims costs
Total costs, 2020, DKKbn
Claims costs
Expenses
Process excellence
Procurement excellence
Fraud detection
2.1 Full speed ahead
Claims
Tryg
Process excellence and automation expected to reduce claims costs
Evidence: Automation journey leads to higher number of claims per FTE and reduces the payout per claim
Costs (estimated index=100)
Manual
Semi-automated
Fully automated / STP
Time: More claims per FTE
Avg. time per claim pre vs. post Guidewire
Quality: Payout reduction per claim
% of claims leakage pre vs. post Guidewire
Potential: DKK ~200m in 2024
DKK ~200m
Technical result from process excellence in 2024
From reduced payout per claim as result of improved process quality
From More claims per FTE with ~155 FTE reductions expected as direct result of Guidewire
Savings from new Guidewire system also expected beyond 2024
2.1 Full speed ahead
Claims
Tryg
Further potential from procurement savings, building on strong past
Evidence: Tryg has strong track record
Evidence: Key driver has been renegotiating
Potential: DKK ~300m in 2024
Procurement savings from previous programmes, DKKm
Renegotiating and establishing supplier network
Renegotiating supplier network, outsourcing and E-auction
Increased referrals, outsourcing and Health products
Degree of compliance, Motor
Technical result from procurement in 2024
From improving compliance, renegotiation of contracts and network building
From new innovative solutions
2.1 Full speed ahead
Claims
Tryg
Tryg will continue to reduce fraud with data tools and nudging
Relevance: Savings opportunity in fraud
Evidence: Further use of data and nudging
Potential: DKK ~150m in 2024
Fraud detection rate out of eligible claims costs (DKK ~10bn in Tryg), 2020
Tryg already started next generation of fraud reduction with nudging in NO
-3.2% decrease in avg. claims spend from pilot in 2021
DKK ~150m
Technical result from fraud detection in 2024
From more data-driven fraud detection
From nudging initiatives in claims flow
Advanced fraud modelling and operational capabilities will be investigated beyond 2024
Tryg | C
FULL SPEED AHEAD IN A SUCCESSFUL CORE
Advanced approach to claims
Sales and customer excellence
2.1 Full speed ahead
Sales and customer excellence
Relevance: Partnerships are efficient lead generators
Tryg
Partnerships provide leads into attractive customer segments
Large partnerships, Tryg
- Danske Bank
- T2M
- NITO
- Akademikerförsäkring
Tryg has proven ability to convert these leads
Lead conversion rate, Private, 2020, index=100
2.1 Full speed ahead
Sales and customer excellence
Partnership metrics attractive, and expected to yield DKK ~150m
Tryg
Evidence: Tryg's partnership portfolio is performing well across key metrics
Potential: DKK ~150m in 2024
Average partner figures, Private DK+NO, 2020
~12% Expense ratio
~85% Combined ratio
New partnerships have on average ~20-30pp lower penetration rate than established
DKK ~150m
Technical result from partnerships and distribution in 2024
From partnerships incl. new profitable partners, penetration of existing partnerships and focus on reducing costs of sale
From other distribution initiatives incl. improved agents setup and digital sales
2.1 Full speed ahead
Sales and customer excellence
Relevance: More products per customer is key to profitability
Tryg|Q
Customers with more products have higher customer lifetime
Loyal customers have much better profitability
2.1 Full speed ahead
Sales and customer excellence
Tryg will leverage strong track record within cross- and upselling
Tryg
Evidence: Tryg is cross-selling to single-product Enter customers
Evidence: Alka is upselling additional coverages to existing customers
Potential: DKK ~150m in 2024
Enter cross-selling
Share of Enter portfolio with 2+ products
Alka upselling
Average premiums per Alka customer, DKK
DKK ~150m
Technical result from cross/upselling in 2024
Expand cross- and upselling of existing products, e.g. by bundling
Develop new products to cross- and upsell
2.1 Full speed ahead
Sales and customer excellence
Tryg
Data and analytics are key to matching price and risk
Relevance: Gap identified in Tryg vs. Alka practices
Share of portfolio identified for pruning, Private, %
Evidence: Alka's advanced pruning methods result in TR uplift
Technical result impact of pruning, Alka, DKKm
Potential: DKK ~100m in 2024
DKK ~100m
Technical result from better pricing and analytics in 2024
Improved repricing models, including pruning
Improved quality of sales, ensuring correct data registration
Knowledge sharing between Tryg and Trygg-Hansa will drive further potential
2.1 Full speed ahead
Tryg
Concluding thoughts on Full speed ahead in a successful core
TRYG 2024
| 1 Full speed ahead in a successful core
DKK ~1050m increase in TR
Advanced approach to claims
Sales and customer excellence | 2 Change the way to win in B2B
DKK ~600m increase in TR
Improve profitability in Corporate | 3 Shape the future
DKK ~1.5bn premiums in 2024+ across product types
Prevention
Build the market of tomorrow | 4 Trygg-Hansa and Codan NO synergies
DKK ~900m in synergies
Leverage scale to realise cost synergies
Share best practices to realise commercial synergies |
| --- | --- | --- | --- |
Change the way to win in B2B
2.2 Win in B2B
Tryg
Focus on growth in Commercial and profitability in Corporate
Target 2024
Commercial
Corporate
(revenue DKK >100m and/or >100 FTEs)
30%
portfolio increase in smallest and most profitable Commercial segment (0-9 FTEs)
~90%
combined ratio with run-off level at ~5-7% (vs. 10%-average last five years)
Technical result improvement by 2024, DKK
2.2 Win in B2B
Commercial
Tryg
Change the way to win in B2B
Commercial
Corporate
2.2 Win in B2B
Commercial
Relevance: Small customers make up a large and profitable segment
Tryg | Q
Small customers is the largest Commercial segment
Small customers make up the most profitable segment
Tryg COR² per segment (# FTEs), 2021YTD
1) Estimated based on average premiums per customer segment extrapolated to total number of businesses per segment. 2) Average combined ratio for Commercial DK, Commercial NO, Trygg-Hansa
2.2 Win in B2B
Commercial
Tryg
Evidence: Tailored packages and focused distribution drive growth
Increased premiums and improved distribution
Several specific initiatives launched
Learn from Trygg-Hansa
Average small customer premiums, Commercial DK
Bundle
35% of new Commercial sales from packages in 2021
Tryg Business
Tailor
900 packages tailored to craftsmen sold since September 2021
Tailor options based on customers' line of business
Focused distribution
Direct sales, Commercial DK
Add and expand
Grow and improve
☐ Call centre
☐ Sales agents
Expand
7.300 new customers from partnerships and independent agents
Danske Bank
Improve
>50% increased sales per employee with Call Centre 2.0
> 10% of Trygg-Hansa sales to small Commercial customers take place online
2.2 Win in B2B
Commercial
Potential: Tryg well underway to 30%-growth target
Tryg
Early success in profitably growing the small customer portfolio
Small customer portfolio, Commercial DK+NO, DKKm
More, better insured customers
30%
portfolio increase in small Commercial segment by 2024
- Grow number of small customers by 15% to ~115,000
- Increase average premium by >10% to DKK ~24,000
- Continue maintaining high profitability of small customers
Tryg | C
Change the way to win in B2B
Commercial
Corporate
2.2
Win in B2B
Corporate
Corporate business is structurally more challenging than retail
Tryg
High competition, use of brokers, volatility and high capital requirements are key features
Large clients with greater bargaining power
Highly brokered business leading to more competition
Presence of global insurers increases competition
High exposure to large claims increases volatility
High capital requirements
Profitability gap
Average COR (excl. run-off), 2016-2020
Tryg Private
86%
Tryg Commercial
91%
Tryg Corporate
100%
2.2 Win in B2B
Corporate
Relevance: Underlying profitability improved while COR is volatile
Tryg
Underlying claims ratio improved
Combined ratio (exclusive run-off)
Large claims are volatile by nature
Large claims as share of premiums
Specific customers, products drive volatility
2.2 Win in B2B
Corporate
Evidence: From price increases to structural changes
Tryg
From price increases to structural changes
Rate increases, Corporate Nordic
Improved competencies and underwriting
Customer segmentation
Exposure to unattractive customer segments reduced
# large liability policies, index=100
Large customer property exposure, index
2.2 Win in B2B
Corporate
Potential: 90% COR target and focus on smaller customers
Tryg | C
Tryg will shift portfolio towards smaller customers and reduce least attractive exposure
2024 ambition
2024 ambition in US liability exposure
2024
~90% combined ratio with run-off level at ~5-7% (vs. 10%-average last five years) in 2024
1) All customers are based in the Nordic market but vary in global and European exposure. "Larger global" here refers to large, global customers with complex products (e.g. property and liability), while large, global customers with more simple products (e.g. auto and workers' comp) are included in the "Larger European" segment
Focus on profitability rather than growth
2.2 Win in B2B
Tryg
Concluding thoughts on Change the way to win in B2B
TRYG 2024
- Full speed ahead in a successful core
- DKK ~1050m increase in TR
- Advanced approach to claims
-
Sales and customer excellence
-
Change the way to win in B2B
- DKK ~600m increase in TR
- Grow among smaller SMEs in Commercial
-
Improve profitability in Corporate
-
Shape the future
- DKK ~1.5bn premiums in 2024+ across product types
- Prevention
- Build the market of tomorrow
- Expand the market of today
-
Build the market of tomorrow
-
Trygg-Hansa and Codan NO synergies
- DKK ~900m in synergies
- Leverage scale to realise cost synergies
- Share best practices to realise commercial synergies
Questions?
(5 minutes)
Tryg |
Coffee Break
(10 minutes)
Tryg |
Tryg
Shape the future
2.3
Shape the future
Tryg will continue track record of launching products profitably
Tryg has grown DKK 1bn by expanding market
Premiums from NP&S¹, 2018-2020, DKKm
New products are profitable and improve with scale
Example from Private DK+NO, NP&S portfolio, 2020
1) New Products and Services
2.3 Shape the future
Two focus areas to drive DKK ~1.5bn in premiums
Tryg
DKK ~1.5bn in premiums from new products and services by 2024+
2.3 Shape the future
Mobility
Tryg
Tryg develops to meet changing needs for mobility insurances
| Relevance: Changing market
Auto accounts for ~30% of Tryg’s total premiums
of new cars sold in Denmark, '000s
☐ Direct
☐ Leasing
~10%
~205
38%
62%
2015
2019 | Vision: Adapt offerings to new trends
Vision
① Sustain strong market position in mobility insurance
Example
~35% market share in new electric vehicles in DK and NO
② Become central player in mobility ecosystems
Example
GoMore imo | Plan: Meet customers’ needs
Polestar embedded insurance
Launched October 6^{th} 2021
Traditional flow: Insurance purchase separate from car sale
→ ③
Embedded insurance flow: Insurance embedded in sales flow
Tryg 2
→ → |
| --- | --- | --- |
Sources: Statistics Denmark, Tryg 2020 Annual Report
2.3 Shape the future
4 Health
Tryg will expand market by complementing public welfare
Tryg
Relevance: Growing market
Scandinavian healthcare expenditure, DKKbn
~65% of Danes fear that they will not get sufficient health care as elderly
Evidence: Products launched successfully
Portfolio, DKKm
Dental
Child
Vision: Expand market
Towards private customers
Offer products that complement public welfare systems
Example
Tryg Senior Care
Towards commercial customers
Be a risk advisor
Example
LINAK PRECURE
Sources: Statistics Denmark, Sweden and Norway; TryghedsFonden's "Tryghedsmåling" 2020
2.3
Shape the future
Tryg
Concluding thoughts on Shape the future
TRYG 2024
- Full speed ahead in a successful core
- DKK ~1050m increase in TR
- Advanced approach to claims
-
Sales and customer excellence
-
Change the way to win in B2B
- DKK ~600m increase in TR
- Grow among smaller SMEs in Commercial
-
Improve profitability in Corporate
-
Shape the future
- DKK ~1.5bn premiums in 2024+ across product types
- Build the market of tomorrow
- Prevention
- Expand the market of today
- Leverage scale to realise cost synergies
-
Share best practices to realise commercial synergies
-
Trygg-Hansa and Codan NO synergies
- DKK ~900m in synergies
Trygg-Hansa / Codan NO integration and synergies
2.4
Synergies and integration
Tryg
Process and timeline for RSA acquisition are as expected and on track
Closing-Demerger period
Est. 9-10 months
Operationally separate RSA Scandinavia into DK, NO, SE
2.4
Synergies and integration
Dryg | a
DKK 900m in synergies targeted, driven by ~80% cost synergies
Geographic split of synergies
Estimated pre-tax synergies split by country, DKKm
59
1) Includes Trygg-Hansa/Codan NO as well as existing Moderna/Tryg NO businesses
Synergy target over time and across categories
Estimated pre-tax synergies split by function and year, DKKm
2.4
Synergies and integration
Tryg | C
Alka experience will facilitate the full realisation of synergies
Program structure with joint ownership
Transfer of synergy levers
People retention & culture
alka
2.4
Synergies and integration
Tryg
Synergy catalogue is broken down into ~150 specific initiatives
TR impact in 2024
Examples of large synergy initiatives
Crash repair supplier network
DKK $\sim 30\mathrm{m}$
Data-driven fraud detection
DKK $\sim 30\mathrm{m}$
Cost initiatives
Cross- and upselling (SE)
Commercial initiatives
DKK $\sim 20\mathrm{m}$
Repricing of Moderna
DKK $\sim 30\mathrm{m}$
2.4
Synergies and integration
Tryg
Three aspects will ensure retention and motivation of key employees
Tryg is an attractive place to work at
-
1 most attractive financial services company for young professionals¹
-
1 insurance company on job satisfaction²
- Ability to attract strong competencies beyond insurance e.g., within data and commercial
- Tryg employee engagement index
- 74: Peer³ average
- 2016 2017 2018 2019 2020 2021
- 74: Peer³ average
Strong cultural fit between companies
Joint focus on retaining employees
-
Long history in respective markets
Strong fit between values and societal roles -
Dedicated personal efforts made to identify and retain key employees
Key employees included in designing future organisational structure and synergy harvesting
Proactive culture focused work to support strategy and ensure a unified new Tryg
1) Academic Work for Young Professionals 2021 (for Denmark)
2) Jobindex Rank 2021 (for Denmark)
3) Nordic Financial Market average, 2020
2.4
Synergies and integration
Tryg
Concluding thoughts on Trygg-Hansa and Codan NO synergies
TRYG 2024
- Full speed ahead in a successful core
- DKK ~1050m increase in TR
- Advanced approach to claims
-
Sales and customer excellence
-
Change the way to win in B2B
- DKK ~600m increase in TR
- Grow among smaller SMEs in Commercial
-
Improve profitability in Corporate
-
Shape the future
- DKK ~1.5bn premiums in 2024+ across product types
- Prevention
- Expand the market of today
-
Build the market of tomorrow
-
Trygg-Hansa and Codan NO synergies
- DKK ~900m in synergies
- Leverage scale to realise cost synergies
- Share best practices to realise commercial synergies
2.4
Synergies and integration
Tryg
Conclusion of presentation of the four 2024 strategic pillars
TRYG 2024
Customer experience
3
Customer experience
Tryg
Customer experience is linked to financial performance
Relevance: Satisfied customers are better customers financially
Private DK+NO customers
- I will consider leaving Tryg
- I will not leave Tryg
High retention means lower distribution costs
Evidence: Improve ability to act on customer experience
2018-2020
2015-2017
Establish KPI externally with specific customer satisfaction (NPS²) target
2018-2020
Enable actions targeted issues by more and instant customer feedback
2021-2024
Expand understanding of customer satisfaction to include more journeys
Sample customer journey
- Touchpoint
- Process
- New KPI component
- Onboarding
- Buy
- Claim
- Claims handling
- Relation
1) 8% are "neutral" and 7% are "not satisfied" 2) Net Promoter Score
3
Customer experience
Tryg|Q
Ambitious targets set for customer satisfaction and digitalisation
Evidence: Initiatives across the customer journey
Potential: Ambitious targets on customer experience
Onboarding
Improvement in retention rate from 'Hooked' onboarding program
Claims handling
Customer satisfaction on closed claims, 2020 (1-5, 5 is best)
38
(0-100 scale)
Customer journey satisfaction (vs 84 in 2020)
$\geq 40\%$
% growth in value creating actions upon login (vs $\sim$14m in 2020)
Member bonus has positive effect on retention (DK customers only)
Digitalisation of claims reporting, chatbot support and speech analytics
Corporate responsibility
Corporate responsibility
Tryg
Corporate responsibility is part of Tryg's identity and operating model
Responsibility is rooted in Tryg values
Tryg's customer offerings and operating model will contribute to a sustainable future
Tryg's three Corporate Responsibility focus areas:
Selected ambitions
50%
... reduction in CO2 intensity of equity portfolio by 2030
55%
... reduction in CO2 emissions from operations by 2030
20-25,000 t
... CO2e reduction from sustainable claims handling by 2024
Detailed on next page
Corporate responsibility
Tryg
Sustainable claims handling main driver of sustainability impact
| Relevance: Motor accounts for half of supplier spend | Evidence: Tryg is handling motor claims sustainably | Potential: Sustainable claims handling to drive reductions |
|---|---|---|
| Share of supplier claims spend | Share of damages repaired instead of replaced | 20-25,000 tonnes |
| CO2e reduction from sustainable claims handling in 2024 | ||
| Content, health & other | Windshields | ~3k tonnes |
| CO2e savings, 2021E | ||
| Property | 30% | Bumpers |
| Motor | 46% | 2017 |
| 2021E | ||
| Share of repairs using recycled parts instead of new | 3% | ~3.5k tonnes |
| CO2e savings, 2021E |
Corporate responsibility
Tryg
Strong visibility in Denmark
Largest shareholder has strong brand and contributes to society
Tryg brand is visible throughout Denmark
1) Customers in Tryg DK are automatically members of TryghedsGruppen
Questions?
(5 minutes)
Tryg |
Financials and capital management
5
Financials and capital management
Tryg
Financial section will highlight five key areas
| Investments overview | Solvency II ratio development | Solvency II ratio sensitivities | Return on Own Funds | Dividends and buybacks |
|---|---|---|---|---|
Tryg will continue creating attractive shareholder value
Financials and capital management
Tryg|
Invested assets up ~50%
Match portfolio, DKKbn
Low-risk fixed-income assets that mirror the Group's insurance liabilities to offset interest rate changes
Portfolio split by country, DKKbn
Free portfolio, DKKbn
Global multi-asset low-risk portfolio, predominantly short duration fixed-income securities but also equities and properties
Portfolio split by country, DKKbn
Financials and capital management
Solvency II ratio is expected at ~195-205 in H1 2022
Tryg|C
Solvency II Ratio development Q4 2020 to Q2 2022E (%)
1) As per stock exchange announcement as of June 11th 2021, "Following closing of the Codan DK sale, Tryg has the intention to carry out a buyback program of approximately DKK 5bn, the precise buyback amount will be communicated when all aspects of the transaction are settled. As previously communicated, TryghedsGruppen does not expect to participate in the buyback
Financials and capital management
Tryg|C
Solvency II ratio continues to display low sensitivity to market risk
Solvency II Ratio sensitivities to key asset classes
- Biggest spread sensitivity is towards covered bonds, driven by high exposures
- Corporate and Government spread sensitivities are lower due to low exposures
- Interest rate risk is very low, since matching strategy keeps capital charges low
Financials and capital management
Introducing Return on Own Funds (ROOF) as an improved profitability measure in a Solvency II world
Expelled Return on Own Funds development 2021 to 2024 target (%)
Following the acquisition of Trygg-Hansa and Codan NO, the RoE does not fully reflect profitability of the business
Own funds better represent the capital position of insurance companies in a Solvency II world as opposed to shareholders' equity
Tryg's own funds movements primarily driven by profits and dividends
Improved ROOF level primarily driven by increased net profits following Trygg-Hansa and Codan Norway acquisition
Financials and capital management
Tryg iS
Tryg aims to pay DKK ~17-19bn to shareholders in 2022 - 2024
Shareholders remuneration, DKKbn
Tryg aims to pay DKK ~12-14bn in ordinary dividends between 2022 and 2024
Tryg intends to carry out a buyback program of DKK ~5bn, starting H1 2022 (subject to FSA approval) following closing of Codan DK sale
Tryg aims to offer a nominally stable and increasing ordinary dividend on an annual basis – the targeted pay-out ratio of 60-90% (based on operating earnings) is secondary to the aim of increasing annual dividend
Potential for extraordinary dividends evaluated yearly based on earnings forecast, solvency position and return on own funds target
Concluding remarks
Concluding remarks
Tryg
2024 strategy and targets will ensure highly attractive shareholders' returns
Technical result DKK 7.0-7.4bn
Combined ratio ≤82%
Expense ratio ~14% reaffirmed
Return on Own Funds ≥25%
Synergy realisation DKK 900m
Ordinary dividends and extraordinary buybacks DKK ~17-19bn in 2022 - 2024
Do you know the only thing that gives me pleasure?
It's to see my dividends coming in
John D. Rockefeller
Q&A Session ?
THANK YOU
Tryg |
Disclaimer
Tryg | C
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.