Morgan Stanley Conference Morten Hübbe Group CEO 31 March 2011 Presentation can be downloaded at www.tryg.com
Disclaimer Certain statements in this presentation are based on the beliefs of our management as well as assumptions made by and information currently available to the management. Forward-looking statements (other than statements of historical fact) regarding our future results of operations, financial condition, cash flows, business strategy, plans and future objectives can generally be identified by terminology such as targets, believes, expects, aims, intends, plans, seeks, will, may, anticipates, continues or similar expressions. A number of different factors may cause the actual performance to deviate significantly from the forward-looking statements in this presentation including but not limited to general economic developments, changes in the competitive environment, developments in the financial markets, extraordinary events such as natural disasters or terrorist attacks, changes in legislation or case law and reinsurance. We urge you to read our annual report available on tryg.com for a discussion of some of the factors that could affect our future performance and the industry in which we operate. Should one or more of these risks or uncertainties materialise or should any underlying assumptions prove to be incorrect, our actual financial condition or results of operations could materially differ from that described herein as anticipated, believed, estimated or expected. We are not under any duty to update any of the forward-looking statements or to conform such statements to actual results, except as may be required by law. 2
Facts about Tryg Gross premium split 2010 Shareholder breakdown 38.5 9.1 2.9 Percentage 49.5 Denmark Norway Sweden Finland 60 Percentage 13 10 17 Danish institutional Non-Danish institutional Smaller shareholders TryghedsGruppen Index 250 225 200 175 150 125 100 75 50 Share performance since IPO (incl. dividends) A true Nordic platform Prudent underwriting and risk selection Exceed customer expectation Vision to be perceived as the leading peace-of-mind provider in the Nordic region 25 0 2005 2006 2007 2008 2009 2010 3
Structure of the Nordic insurance markets Denmark Norway DKK 46.6bn/EUR 6.3bn (per Q4-09) NOK 42.5bn/EUR 5.3bn (per Q3-10) 18.6 13.9 5.8 Percentage 20.8 10.1 5.0 Tryg Alm. Brand If Other Alka Codan Topdanmark Gjensdige 26.2 18.0 Percentage 10.7 17.0 28.1 Tryg Gjensidige Sparebank1 Other If 3.5 22.3 Private: 5.1% Sweden Finland SEK 60.3bn/EUR 6.3bn (per Q3-10) 3.3 15.7 15.2 Percentage 18.6 28.9 Moderna Folksam Länsforsäkringar Other If Codan EUR 3.3bn (per Q4-09) 2.2 28.1 18.9 Percentage 10.2 Tryg Tapiola Fennia Other If Pohjola 18.3 25.0 17.8 4
Basis for value creation Mid-term targets Leading peace-of-mind provider RoE: 20% Profitability and efficiency Growth Sweden and Finland Solid capital base Combined ratio: 90 5
Key focus areas Price Price hikes hikes Claims Claims initiatives initiatives Cost Cost reduction reduction Tryg Tryg Transition Transition 6
Long term view 110 Combined ratio Annual impact from price increases 105 Premium hikes Premium hikes 2010 DKK ~0.9bn 2011 100 DKK ~1.0bn 95 Smaller adjustments New ruling workers comp. Extraordinary winter 2012 DKK ~0.6bn 90 85 80 2000 2001 2002 2003 2004 2004* 2005 2006 2007 2008 2009 2010 2010 2011 2012 2002-2004 premium increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94 (DK GAAP) 2009-2012 premium increases will improve combined ratio going forward 7 *IFRS from 2004. Previous years are Danish GAAP Data before 2009 is not corrected for the sale of Marine Hull business
Premium increases visible in Private Nordic Average price has declined for a number of years Increase in 2010 : 120 110 Motor insurance - average premium (Index 2005 =100) 2.4% 100 5.2% 90 80 2005 2006 2007 2008 2009 2010 Pricing in House lagging claims development Increase in 2010: 140 130 House insurance - average premium (Index 2005 = 100) 11.9% 10.0% 120 110 100 90 2005 2006 2007 2008 2009 2010 8
Customer retention Retention rate relatively stable in Denmark during 2010 despite uppricing Retention rate in Norway increased during 2010 92% 90% 88% 86% 84% 82% Private 2005 2006 2007 2008 2009 2010 Retention rate stable and strong Danish retention rate remains high despite influence from premium increases High retention support competitive strength and cost ratio 92% 90% 88% 86% 84% Commercial 2008 2009 2010 9
Improvement in claims ratio 160 150 140 130 House DK* 120 110 100 90 80 70 110 100 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 House NO* 80 70 60 50 100 95 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 Finland 85 80 75 70 Q3-08 Q4-08 Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 10 *) Excluding winter and cloudburst effect
Major claims initiatives Surveying Surveying Pruning Pruning House House condition condition report report Large Large claims claims process process Craftsman Craftsman controlling controlling New New contents contents coverage coverage Windscreen Windscreen car car claims claims Documentation Documentation 11
Previous claims Previous customers Stricter customer screening Red/Green Customer 12 Examination rules
Managing cloudburst risk Cloudburst in Copenhagen Cloudburst hits locally and damage is influenced by local conditions such as pavement, sewer system etc. Model to identify water risk of heavy rain established Frequency for customers with basements approx 10 times larger Analytical results will form the basis for future: - Risk assessment - Conditions - Pricing Illustration of water flow Geomatic water risk 13
Expense ratio Expense ratio 17.0 16.9 16.8 17.1 17.2 17.0 Growth in Sweden and Finland affects cost development 0.4 0.8 1.3 1.5 2.7 2.9 Focus on reducing costs through 16.5 16.0 15.5 15.6 14.5 14.1 Optimising distribution Papirless processes 2005 2006 2007 2008 2009 2010 Denmark & Norway Finland & Sweden Internal recruitment Old markets vs new Markets 60.4 64.5 50 45.8 16.6 16.2 16.4 30.1 24.1 15.5 15.6 16 2005 2006 2007 2008 2009 2010 Denmark & Norway Finland & Sweden 14
Efficiency improvement Sales Direct Better customer service by more availability in call centres Closure of sales offices in DK and NO Internet / self-service focus 1,300 1,250 1,200 1,150 1,100 1,050 Employees, Sales Direct 2008 2009 2010 Claims 1,020 Employees, Claims Focus on paperless processes Process improvements Increase in claims = higher productivity 990 960 930 900 2008 2009 2010 15
and the future vision for 10 in 20 2010 2015 2020 2025 Cost reductions Lower distribution and admin cost 17% Head count reduction and increased 10% market position Tryg Transition Drivers to achieve the vision Tryg Transition Efficiency Markets Other cost reductions Self-service Automation Reduce admin and distribution cost New products Organisational structure Outsourcing non-core processes Meet profitability targets Increase market share in Sweden and Finalnd Only @ customer communication Lower/reduced commission rates Fewer local offices 16
17 Capitalisation DKKm 12,000 11,000 10,000 9,000 8,000 7,000 Q1 08 Q2 08 Q3 08 2008 before payout 2008 after payout Q1 09 Q2 09 Q3 09 2009 before payout 2009 after payout Q1 2010 Q2 2010 Q3 2010 2010 before payout 2010 after payout 6,000 Capital requirement Buffer (5%) Surplus capital
Summary Basis for value creation Initiatives Targets Leading peace-of-mind provider Premium increases Focus on retention RoE 40% Profitability and efficiency Growth Sweden/Finland Solid capital base Claims initiatives Customer screening Improved risk selection Efficiency improvements Lower distribution costs Tryg Transition 10 in 20 30% 20% 10% 0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 x 18
Questions? Investor Relations contacts Ulrik Andersson Investor Relations Director +45 21 71 30 18 ulrik.andersson@tryg.dk Lars Møller Investor Relations Manager +45 22 66 66 05 lars.moeller@tryg.dk 19 Presentation can be downloaded at www.tryg.com