Building a world class insurer

Transcription

1 Building a world class insurer CEO Morten Hübbe Berenberg European Conference 3 December 2014 Download presentation on tryg.com

2 Disclaimer Certain statements in today s presentations 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 the presentations 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 financial reports 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 presented as anticipated, believed, estimated or expected. We are not under any duty to update any of the forward-looking statements or to conform such statements to actual results, except as may be required by law. 2

3 Tryg Forsikring A/S Delivering peace of mind Who we are Nordic market shares (Top 4) Second largest Nordic insurer 2.7m customers and ~3,600 employees Turnover of DKK 19.5bn (2013) Solvency ratio of 90 (S&P rating: A-/stable) Market cap of DKK 40.7bn Tryg s ownership structure 1. If: 18.2% 2. Tryg: 10.5% Norway # employees: ~1,150 Turnover: DKK 7.8bn Market position: 3 3. Codan: 9.1% 4. Gjensidige: 8.5% Sweden # employees: ~460 Turnover: DKK 2.2bn Market position: 5 Denmark # employees: 2,000 Turnover: DKK 9.5bn Market position: 1 3

4 Delivering accelerated improvement Combined ratio 2010 H Expense ratio 2010 H % one-off Combined ratio vs. European peers Expense ratio vs. European peers 4

5 Strengthening the core business Technical result Expense ratio 18% 17% 16% 16.7% 16.6% 16.4% 15.6% 15.6% 15% 1.4% 14% 13% 14.2% 12% 11% 10% H 2014 One-off Combined ratio Return on equity (ROE) 5

6 New targets for Announced at Tryg s Capital Market Day, 5. November 2014 Targets 2015: Strong and necessary earnings and clean up focus Earnings ROE > 20% Customers - - Combined ratio < 90% Expense ratio < 15% Efficiency programme DKK 1,000m Targets 2017: Enhanced earnings capability and improved customer focus Earnings ROE 21% Customers NPS +100% Combined ratio 87% Expense ratio 14% Retention rate 3 products +1 pp +5 pp Efficiency programme DKK 750m 6

7 Tryg aimingfor worldclass Earnings Target drivers Customers Customer care worth recommending Next level pricing Leading in efficiency Low risk and high returns 7

8 What does world class look like? Financial world class Customer world class Brand promise Delivering peace of mind and value to our customers, employees and investors Customer experience Always available FCR ( 90%) End2End > peers Fair coverage Making insurance human 10/10 experiences Recommendation You should really consider moving your insurances to Tryg. I highly recommend them. 8

9 Customer promoters drive real growth Correlation between Net promoter score (NPS), retention and engagement NPS / Retention NPS / Loyalty NPS / Engagement 1 pp change in retention rate = DKK m change in expenses depending on BU and timing. The average premium of customers with 3 products is ~50% higher than the portfolio average. Customers with 3 products have a life time value ~120% higher than the portfolio average. 9

10 Examples of customer initiatives 1. call resolution Follow up text Instant follow up on Rejections only by (target: 90%) message (1-10) low scores (1-3) phone Development in Tryg s NPS Development in Tryg s retention rate 10

11 Building pricing power Pricing competitiveness Time to market Sales hit rate (index) Claims ratio -2% (-5%) 11

12 Utilising UW and operational excellence to create value via M&A Growth through successful M&A Moderna our latest success story Continuous platform development 1999 Acquisition of Vesta 2002 Acquisition of Zurich s Danish and Norwegian nonlife activities 2009 Acquisition of Moderna Leading position in SE niche markets Strengthened distribution platform Platform for expansion and profitable growth Realizing synergies of DKK 50m (6.2% of purchase price) EPS enhancing Acquisitions 2014: Securator 2014: Renewal rights to Codan s agriculture portfolio Divestitures 2012: FI P&C business to If 2010: Renewal rights to marine hull insurance portfolio to RSA Strict criteria for value enhancing M&A Leading Scandinavian platform Strategically supportive EPS accretive Critical Critical Value creation Critical Product / distribution enhancing Desirable 12

13 Continious improvement of operational efficiency Efficiency programme DKKm Distribution of savings DKKm Expense reduction Claims reduction DKK 750m Where will this take us? Target 2017: 14.0% 13

14 Expense and claims reductions towards 2017 Sourcing Staff functions Business areas Expenses DKK 250m Simplification First contact resolution Reduced lead time Continuous improvement Improved retention rates Utilising spend data and transparency from In4mo system. Claims DKK DKK 500m 500m Dedicated competence team for a quick recovery. Further consolidation and utilization of procurement volume. Enhanced fraud detection. 14

15 Strict capital discipline and robust low-risk balance sheet Conservative reserves Low risk investment Bank Deposits / Bonds 5% Match Portfolio 71% Free Portfolio 29% Cov. Bonds 95% Stable underlying capitalisation Deviation in quarterly returns since 2007 Min Max Average 5.0% 5.0% 2.5% 2.5% 0.0% 0.0% -2.5% -2.5% -5.0% Topdk If Gjensidige Sp.Bank 1 Alm.Br. Tryg -5.0% 15

16 Attractive and stable payout Tryg s dividend policy Capital base H Payout ratio target of 60-90% Steadily increasing nominal payout Buffer Return on equity after tax of 21% Capital adjustment via share buy back Overview of total shareholder distribution New dividend policy 16

17 Subordinated capital Solvency II will increase the potential for SCR = 6.7 mdkk Potential subordinated capital in the range DKK Max. under Solvens II Outcome I Outcome II 1.5bn to DKK 2.5bn. Tier 1 : 10 % of SCR o During 2015 the future desired leverage in 2.5 o view of Solvency II will be determined. This process will be aligned with the Tier 2 : 50 % of SCR 3.3 NNP 1.0 refinancing of the EUR hybrid by end Existing 1.5 o DKK 300m of the potential will be realised by start 2015 due to Danish pre-implementation. o The increased availability is consistent with S&P capital model. 17

18 New extraordinary share buy back programme and share split in 2015 New extraordinary share buy back Share split Background for extraordinary share buy back of DKK 1,000m in 2015: Strong results in combination with low growth. Supports stable development in underlying capitalisation. Supports financial targets. At the annual general meeting in March 2015, Tryg will propose to split each share of DKK 25 into five shares of DKK 5. The rationale for doing so is: Tryg s share has reached a price of DKK 600. Tryg s share is the second highest priced in the C20 index. A split is expected to increase liquidity. 18

19 Take aways about Tryg Leading Scandinavian insurer with strong track record Low risk and high returns Financial targets 2017 ROE: 21% Expense ratio: 14% Combined ratio: 87% Efficiency programme: DKK 750m Customer care worth recommending Leading in efficiency Next level pricing Long term profitable growth and attractive shareholder value creation 19