Annual results 2010 Webcast presentation 10 February 2011 Events - - PowerPoint PPT Presentation

Annual results 2010 Webcast presentation

10 February 2011

2

Events in 2010

2 0 1 0

• Premium income of DKK 19.5bn and pre-tax income of DKK 941m
• Solid growth, tight cost control and improving underlying performance
• High claims expenses - including one-off events of DKK 1.4bn above a normal year
• Strong investment return supported by higher equity markets.

Q4 2 0 1 0

• Best Q in 2010 – pre-tax result of DKK 512m
• Premium initiatives contributed DKK 275m i.e ~ 5% of premiums.
• Underlying claims ratio improved due to premium and claim prevention initiatives.

* Q3 2010 before adjustment for change of ownership

Combined ratio

60.0 70.0 80.0 90.0 100.0 110.0 120.0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

%

Premium growth

In local currency and excl. Moderna impact

2.0 3.0 4.0 5.0 6.0 Q108 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10* Q4 10

%

3

Claim s ratio

50 60 70 80 90 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Key performance indicators

Gross prem ium

DKKm 3,000 3,500 4,000 4,500 5,000 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Expense ratio

15.2 14.6 17.8 15.5 17.7 13.5 14.7 14.1 14.5 13.3 14.3 3.0 2.9 15.5 1.6 2.0 1.4 1.3 3.0 2.4 3.3 2.8 1.8 3.1 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

17.1 17.2 16.0 19.1 17.3 17.7 15.9 18.0 17.2 17.3 16.3 17.2 Denmark & Norway Finland & Sweden Including extraordinary winter impact

Data before 2009 is not corrected for the sale of Marine Hull business.

Including extraordinary winter impact

Com bined ratio

50 60 70 80 90 100 110 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

4

One-off and extraordinary events 2010

One-off and extraordinary events ( DKKm )

500 1,000 1,500 2,000 2,500

Large claims Winter Q4 Ruling workers' compensation Cloudburst Winter Q1

Extraordinary events DKK 1.4bn. One-off events DKK 2.2bn.

5

Performance in 2010

9 1 .8 9 0.8 9 1.3 1.0 5 .6 7 0 8 0 9 0 10 0 11 0 20 08 2 00 9 2 0 10 8 7.4 9 7.8 9 7.1

5 .9 1 .5 5 .8 7 .1 0 .9 2 .5

80 90 1 00 1 10 1 20 20 08 200 9 201 0

Private Nordic - CR Com m ercial Nordic - CR Corporate Nordic - CR

• 8.3% premium growth – price

driven (5.8 excl. Moderna effect )

• DK hit by heavy cloudburst of

gross DKK 200m and extraordinary winter of DKK 450m.

• NO hit by extraordinary winter
• f DKK 260m, but improvement in

underlying combined ratio

• Change of ownership insurance

called for extra reserves.

• 17% premium growth in FI and

combined ratio reduced by 5%

• Premium hikes will help

profitability going forward.

• 9.6% premium growth (3.0
• excl. portfolio shift)
• Workers’ comp. hit by high

court ruling in Q3.

• Increased use of workers’

comp.

• Premium hikes of 10-15% +

claim prevention actions in several products - to bring profitability to target levels.

• 5.9% decline in premiums (1%

decline excl. portfolio shift)

• Workers’ comp. hit by high court

ruling in Q3.

• Increased use of workers’ comp.
• Competition in DK and especially

workers’ comp. affected volume.

• Prudent underwriting and cost

control – to sustain profitability.

Weather impact Weather impact Workers’ comp. ruling

9 2 .8 9 6 .4 1 1 1 .6 1 0 1 .2

Large claims

9 3 .2 8 1.1 83 .5 8 7 .6 2 .4 2 .7 7 0 8 0 9 0 10 0 20 0 8 2 00 9 20 1 0

Weather impact Workers comp. ruling

9 2 .7

6

77.9 81.6 81.3 71.3 65 70 75 80 85 90 95 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Private Nordic Commercial Nordic

Premium increases and tighter risk management improve underlying performance

Underlying developm ent adjusted for extraordinary w inter claim s.

7

Average prices - Private cars ( I ndex 2 0 0 5 = 1 0 0 )

80 90 100 110 120 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10

Premium increases visible in Private Nordic

Average prices - Private houses

( I ndex 2 0 0 5 = 1 0 0 )

90 100 110 120 130 140 Q 1 5 Q 2 5 Q 3 5 Q 4 5 Q 1 6 Q 2 6 Q 3 6 Q 4 6 Q 1 7 Q 2 7 Q 3 7 Q 4 7 Q 1 8 Q 2 8 Q 3 8 Q 4 8 Q 1 9 Q 2 9 Q 3 9 Q 4 9 Q 1 1 Q 2 1 Q 3 1 Q 4 1

• Private house in Denmark increased by 11.9% and Norway by 10% y-o-y 2010
• Average price development within private cars in Denmark turned positive by 2.4% y-o-y
• Private motor in Norway continued upwards with 5.2% y-o-y

8

5 0 6 0 7 0 8 0 9 0 1 0 0 1 1 0

Q1- 08 Q2- 08 Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10

Improved development in claims ratio – House insurance and Finland

7 0 7 5 8 0 8 5 9 0 9 5 1 0 0

Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10

7 0 8 0 9 0 1 0 0 1 1 0 1 2 0 1 3 0 1 4 0 1 5 0 1 6 0

Q1- 08 Q2- 08 Q3- 08 Q4- 08 Q1- 09 Q2- 09 Q3- 09 Q4- 09 Q1- 10 Q2- 10 Q3- 10 Q4- 10

House DK* Finland House NO*

* ) Excluding winter and cloudburst effect

9

Major claims initiatives

Surveying Surveying Hom e condition report Hom e condition report Pruning Pruning Craftsm an controlling Craftsm an controlling New contents coverage New contents coverage Docum entation Docum entation Large claim s proces Large claim s proces W indscreen car claim s W indscreen car claim s

10

Managing cloudburst risk

• Cloudburst is basicly a local phenomenon and
• ften coincidental where it hits
• Some places are more vulnerable to damage

when it rains

• Model to identify water risk of heavy rain

established

• Frequency for customers with basements
• app. 10 times higher
• Analytical results will form the basis for

future:

• riskassessment
• conditions
• pricing

I llustration of w ater flow Geom atic w aterisk Visualisation of cloudburst

11

Expense ratio

Breakdow n of Group expense ratio

16.5 16.0 15.5 15.6 14.5 14.1 0.4 0.8 1.3 1.5 2.7 2.9 2005 2006 2007 2008 2009 2010

17.0 16.9 16.8 17.1 17.2 17.0 Denmark & Norway Finland & Sweden

Expense ratio

16.6 16.2 15.5 16.4 15.6 16 50 60.4 64.5 45.8 24.1 30.1

2005 2006 2007 2008 2009 2010 Denmark & Norway Finland & Sweden

Data before 2009 is not corrected for the sale of Marine Hull business.

Continued focus on expenses drives expense ratio downwards by

• streamlining the distribution platform
• digital and paperless process handling
• in-house rotation reduces need for external hiring
• investments in branding impacted expense ratio by 0.4 % -point in 2010

12

and the future vision for 10 in 20

2 0 1 0 2 0 1 5 2 0 2 0 2 0 2 5

Cost reductions

Drivers to achieve the vision

Tryg Transition

• Self-service
• Automation
• Reduce admin and

distribution cost

Efficiency

• New products
• Organisational

structure

• Outsourcing non-core

processes

Other cost reductions

• Only @ customer

communication

• Lower/ reduced commission

rates

• Fewer local offices

Markets

• Meet profitability

targets

• Increase market share

in Sweden and Finland

1 7 % 1 0 %

Low er distribution and adm in cost Head count reduction and increased m arket position

13

Division of the investment return

Gross investm ent return

Bonds DKK 1 ,1 8 5 m Equities DKK 2 6 1 m Real estate DKK 3 0 0 m Total DKK 1 ,7 4 6 m

Match

Result DKK -5 m Mism atch 0 .0 2 % Risk minimisation – create a return close to tech inter- est rate and discounting + / - DKK 50m per quarter

Free investm ent

Result DKK 7 7 2 m Return of 7 .4 % Absolute return – creates the best return after risk, capital load and investment cost Stable items not directly related to the return on investment I nvestm ent expenses etc. I nterest expenses Reversed dom icile expenses Result DKK + 2 3 9 m I nflation m ism atch Exchange rate adjustm ents Other loans and debt etc Result DKK -4 2 m . Unstable Stable Unstable items not directly related to the return on investment

14

Capitalisation

6,000 7,000 8,000 9,000 10,000 11,000 12,000

Q 1 8 Q 2 8 Q 3 8 2 8 b e f

• r

e p a y

• u

t 2 8 a f t e r p a y

• u

t Q 1 9 Q 2 9 Q 3 9 2 9 b e f

• r

e p a y

• u

t 2 9 a f t e r p a y

• u

t Q 1 2 1 Q 2 2 1 Q 3 2 1 2 1 b e f

• r

e p a y

• u

t 2 1 a f t e r p a y

• u

t

Capital requirement Buffer (5%) Surplus capital

DKKm

15

21 33 17 6.5 4.0 15.5 21 12.5

5 10 15 20 25 30 35 40 2005 2006 2007 2008 2009 E2010 DKK per share

Cash dividend Share buy back

Suggested dividend for 2010

Dividend policy:

• 5 0 % of net earnings
• share buy backs in addition

16

Outlook mid-term

Mid-term Medium term target is return on equity

• f more than 20% after tax

This implies a combined ratio level

• f 90% including potential run-off and

at current interest rate level

Annual im pact from price increases

2 0 1 1 2 0 1 2 DKK ~ 1.0bn DKK ~ 0.6bn

ROE after tax

0% 10% 20% 30% 40% 2 3 2 4 2 5 2 6 2 7 2 8 2 9 2 1 2 1 1 2 1 2 2 1 3 2 1 4

Mid term target

17

Summary

• 2010 results significantly impacted by one-off events of approximately DKK 1.4bn more

than in a normal year

• Premium increases and tighter risk management starting to improve result. Premium

initiatives contributed DKK 0.9bn

• Q4 best quarter of the year
• Clear earnings improvements Norway/ Finland – trends improving in Denmark
• Cost ratio down to 17.0% despite additional cost for branding a.o.
• Good investment return and supported by positive performance in equity markets
• Medium term ROE target of minimum 20% , which implies an combined ratio of around 90

18

Q&A session

19

Q&A session

Date Place Participants from Tryg Arranged by

10 February 2011 Copenhagen Morten Hübbe, CEO Investor Relations SEB Enskilda 22 February 2011 Zürich Investor Relations Nordea 28 February 2011- 2 March 2011 USA Lars Møller, IR Manager Handelsbanken 3 March 2011 Toronto, Canada Lars Møller, IR Manager Handelsbanken 7 March 2011 Edinburgh Morten Hübbe, CEO Lars Bonde, Group Executive Investor Relations KBW 8-9 March 2011 London Morten Hübbe, CEO Lars Bonde, Group Executive Investor Relations UBS 30-31 March 2011 London Morten Hübbe, CEO Lars Møller, IR Manager Morgan Stanley European Conference

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