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Tryg Forsikring A/S
Tier 2 subordinated bond issue
Company presentation
May 2016
Important information
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
Strong value propositions
High profitability | Strong customer retention | Low balance sheet risk
Stable inflow of cash
I
II
Leading Scandinavian non-life insurer
Strong earnings and high profitability
III
Robust capitalization and low leverage – assigned “A2” rating
with positive outlook by Moody’s
IV
Low risk balance sheet with conservative investments allocation
DKK bn
Return on Equity (%)
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
Equity
Acc share buy-back
Acc dividends
ROE
Tryg’s combined ratio development
110
105
100
V
Strong customer relationships with very high retention
95
90
85
80
VI
Highly attractive market fundamentals
75
Sweden
Note(*): Moderna Försäkringar is included from 2 April 2009 ||
Source: Company reporting
*
Norway
Denmark
3
Tryg Forsikring A/S at a glance (I)
Leading Nordic non-life insurance company
Tryg’s operating fundamentals
• Tryg’s history dates back to the
18th century
2015 premiums split by COUNTRY
Customer
Satisfaction
11%
• Pure non-life insurer active in Denmark,
Norway and Sweden
• Retail is approx. 80% of total premiums
Attractive
Products
Brand
Strength
• Bonus scheme recently introduced
expected to boost retention long term
Employee
Satisfaction
2015 premiums split by BUSINESS MIX
Sweden
2015 premiums split by PRODUCT LINE
Motor
Private
22%
5%
10%
31%
5%
Commercial
• Customers: 2.8 million
56%
• Premiums earned 2015: DKK 17,977m
• Combined ratio 2015: 86.7
52%
Distribution
Network
• Unrivaled brand strength and recognition
with significant local goodwill due to
TryghedsGruppen
• Employees: 3,359
Norway
38%
• Motor, Property and Accident & Health
are Tryg’s main product lines
• TryghedsGruppen, a mutual foundation
rooted in Denmark, has
a 60% stake in the company
Denmark
22%
11%
Worker' comp
Corporate
14%
Fire & property private
Fire & property comm.
Health & accident
Liability
24%
Other
• Total equity Q1- 2016: DKK 9,111m
Source: Company reporting
4
Tryg Forsikring A/S at a glance (II)
Operating in attractive market fundamentals
Market share
Nordics Q4’14
9%
42%
5%
EUR
25.7bn
17%
9%
9%
Tryg
Topdanmark
If
Codan
Gjensidige
Länsforsikringar
Other
Denmark
Acquisition of Skandia’s
child insurance portfolio
during 2015:
#1
Market share
DENMARK Q1’15
TOP3
Market share
NORWAY Q4’15
TOP5
Norway
Employees:
TOP3
TOP5
18.0%
13.4%
2.9%
1,859
1,113
387
Premiums earned:
DKK 9,346m
DKK 6,766m
DKK 1,894m
Technical result:
DKK 1,371m
DKK 844m
DKK 328m
Combined ratio:
85.2
87.9
82.7
Market share
SWEDEN Q4’15
Market share:
#1
31%
EUR
7.0bn
17%
10%
11%
6%
Tryg
Topdanmark
If
Codan
Gjensidige
Alm. Brand
Other
Tryg
If
22%
Gjensidige
Sparebank1
Other
10%
16%
80
75
Norway
Denmark
Key market characteristics
29%
EUR
6.2bn
85
Sweden *
14%
16%
100
90
25%
Market position:
105
95
18%
7%
110
9%
Sweden
Tryg is operating in Sweden
through the following
brands:
Tryg’s combined ratio development
1. Solid macroeconomic environment
2. Consolidated and mature markets
3. High degree of customer loyalty
4. Rational key players and most of them listed
Moderna (Tryg)
3%
18%
EUR
7.9bn
15%
If
5. High efficiency level with some of the lowest
expense ratios in the world
Trygg-Hansa
(Codan)
Gjensidige
6. High profitability and stable business
Länsforsikringar
7. Considerable barriers to entry
2%
30%
Note(*): Moderna Försäkringar is included from 2 April 2009 Source: Forsikringogpension (DK), FNO (NO), Svenskforsäkring (SE), Company reporting
5
Tryg Forsikring A/S at a glance (III)
Long term profitable growth
Leading Scandinavian insurer
with strong track record
Low risk and
high returns
•
•
Financial targets 2017
Matching assets and liabilities
Low risk investment portfolio
Customer care
worth recommending
Customer targets 2017
•
ROE: ≥21%
•
NPS +100%
•
Combined ratio: ≤87%
•
Retention rate +1 pp
•
Expense ratio: ≤14%
•
≥ 3 products +5 pp
•
90% first contact resolution
•
Annual coverage check
Dividend policy
•
Payout ratio of 60-90%
•
Aiming for a nominal stable increasing dividend
Leading in
efficiency
•
Efficiency programme of DKK 750m
•
Claims procurement
•
Reducing expense level
Next level
pricing
•
25% of tariffs above peers in 2017
•
Differentiated product offering
Tryg strives to deliver long term profitable growth resulting in attractive value creation for all stakeholders
Source: Company reporting
6
Resilient business model through cycles
Proven operations ensure stable inflow of cash
Pre-tax profit
Technical result
Investment result
Selected financial results
4,000
3,000
I
High quality portfolio
with high retention rate
II
Highly attractive
underlying profitability
III
Conservative asset
allocation
IV
Stable operating result
and proven track
record of a solid cash
flow generation
V
Only one quarterly loss
in the last ten years
due to extreme winter
weather
2,000
1,000
0
-1,000
-2,000
2006
2007
Premium
hikes
2008
2009
Smaller
adjustments
Combined ratio
110
2010
2011
Premium
hikes
2012
2013
Efficiency
program
2014
2015
Customer
and
efficiency
focus
105
100
95
Combined
ratio target :
<87
90
85
80
2000 2001 2002 2003 2004* 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Note(*): IFRS from 2004 - previous years are Danish GAAP
||
Note(general): data before 2009 is not corrected for the sale of Marine Hull business, and Finland before 2008 ||
Source: Company reporting
7
Sustainable efficiency program 2015-2017E
Expense and claims reduction of more than DKK 750m within 3 years
Overview of efficiency program 2015 - 2017E
Annual cost savings 2012 - 2017E
Old program
New program
Expense
DKK
250m
Expense
reduction
Claims
400
350
82
113
125
300
DKK
750m
250
200
Claims
reduction
DKK
500m
150
75
55
300
282
100
50
120
50
60
100
105
250
150
15
30
0
2012
Development in FTEs
4,000
2014
Target
2015
2015
New initiatives towards 2017
Target
2016
Q1'16
Target
2017
• Utilization of Nordic
procurement volume
3,914
3,800
2013
3,703
• Sourcing
3,599
3,600
• Simplification
3,359
3,400
3,333
3,200
• First contact resolutions
• Improved retention rates
3,000
2012
Source: Company reporting
2013
2014
2015
Q1'16
• Enhanced fraud detection
8
Tryg’s strategic business initiatives
Focus on customer retention while increasing prices and product mix
Private – Customer retention
92%
DK
I
High customer retention level at 85-90%
II
Price increases of 3% to offset claims
inflation and improve profitability
III
Product portfolio diversification
focused on recent acquisition of
Skandia’s child insurance portfolio,
Nordic extended warranty and pet
insurance
IV
Continued development of
digitalization – a key strategic
initiative from Tryg
V
Danish members’ bonus to be paid on
the 1st of June 2016 and equal to
approximately 8% of average
premium paid
90%
88%
86%
NO
84%
82%
Commercial – Customer retention
92%
90%
DK
88%
86%
NO
84%
82%
Source: Company reporting
9
Sound investment approach and related return
Conservative asset allocation and low return volatility provides consistency
Portfolio Q1’16 (DKK 40bn)
Equities, 6.2%
Annual gross return* 2007 - 2015
Bonds/deposits,
5.7% (match)
6.8%
7%
HY, 2.1%
6%
EM, 1.1%
4.4%
4.1%
4%
Free
11.3bn
29%
Bonds/deposits,
13.7% (free)
4.8%
5%
Inv. Property,
5.2%
4.6%
3.5%
2.8%
3%
Match
4.3%
28.7bn
2%
71%
Covered bonds,
67.5%
1.1%
1%
0%
2007
Key comments
• Aim of investment is to support insurance world class
ambition
• Low interest rates requires more focus on the insurance
business
• Above average return despite lower risk
• Matching of assets and liabilities implies lower net capital
requirement in Solvency II
2008
2009
2010
2011
2012
2013
2014
2015
MAX and MIN deviation in quarterly return 2007 - 2016 YTD
Return
Min
Max
Average
5.0%
4.6%
2.5%
3.3%
2.9%
2.1%
0.0%
2.4%
-0.7%
-1.7%
-1.5%
Peer 2
Peer 3
-1.9%
-2.5%
-4.1%
-5.0%
Peer 1
Source: Company reporting
* calculated as gross return before discounting / average investment assets
Peer 4
Tryg
10
Solvency II and Capital (I/IV)
Solvency II finally went alive on January 1, 2016
Solvency Capital Requirement and Own Funds Q1’16, DKKm
12,000
10,000
898
8,000
-1,173
-2,663
3,531
6,000
10,794
256
4,000
2,209
5,098
2,000
2,041
0
Market
Health
Default
Non-Life
Operational
Deferred tax
Diversification
SCR
Q1'16
Own funds Q1'16
Key comments
• Tryg’s partial internal model was approved in November 2015 by the Danish FSA
• Tryg models internally “only” the non-life risk, the rest is calculated using standard formulas.
- As a consequence, the Solvency Capital Requirement before diversification is much in line with the standard charges
specified in Solvency II regulations
• The Solvency ratio with the approved internal model and the standard formula was 212% (199% adjusting for the Skandia’s
child insurance acquisition) and 173% respectively as of Q1’16
• The Danish FSA has stated that a solvency ratio of 125% or below would result in additional supervision.
- Tryg has significant buffers before any potential intervention by the FSA
Source: Company reporting
11
Solvency II and Capital (II/IV)
A strong Solvency II position and a solid capitalization
Solvency ratio development Q1’15 – Q1’16
Solvency ratio in a peer context Q1’16*
250%
250%
200%
150%
200%
212%
155%
151%
159%
199%
**
100%
50%
50%
0%
Q2'15
Q3'15
Q4'15
Q1'16
Q1'16 (adjusted
for Skandia's
child insurance
portfolio)
Own Funds composition (% of Solvency Capital Requirement)
Tier 2
Tier 1
Core equity
212%
with Q1 numbers
177%
173%
and remove adj. PIM after
company reportings of Q1
181%
175%
0%
SF
PIM
Gjensidige Group
(under
(under
transitional rules)
transationl
rules)
SF
PIM
IF P&C
SF
PIM
Tryg
SF
PIM
Alm. Brand
Forsikring
SF
PIM
Storebrand
Group (under
transtional rules)
SF
PIM
Topdanmark **
Key comments
• Tryg holds a very strong Solvency II position following the
adjustments to the new regulations
250%
212%, DKK 10,749bn
200%
154%
139%
100%
Q1'15
181%
150%
154%
198%
Update
• The overall impact following an inclusion of Skandia’s child
insurance portfolio, awaiting regulatory approval, will lower the
Solvency 2 ratio from 212% to 199%
37%
12%
150%
• The classification of the Norwegian Natural Perils funds as Tier
2 capital was approved during Q1 2015
100%
163%
• The Solvency Capital Requirement can be met by 50% tier 2
capital resulting in a potential room to issue additional Tier 2
capital of approximately DKK 900m corresponding to SEK 1bn
50%
0%
Q1'16 own funds composition
Note(*) Solvency Capital requirement based on SF = Standard Formula, PIM = Partial Internal model
Source: Company reporting
|
Note(**) Before adjustments for the acquisition of Skandia’s child insurance portfolio
|
12
Solvency II and capital (III/IV)
Solvency II ratio displays low sensitivities to market movements
Solvency ratio sensitivity
250%
212%
215%
209%
Q1
+20%
-20%
220%
203%
210%
213%
+100 bps
-100 bps
200%
223%
207%
200%
150%
100%
50%
0%
2016
Equity
+20%
-20%
Property
Interest
+100 bps
-100 bps
-100 bps
Spread
UFR
Key comments
• Tryg is using the standard model from Solvency II to calculate the capital requirement on the Market risk module
• The Solvency II ratio is not highly sensitive to equity markets movements as most of the ‘Own funds’ hit from a sharp fall in
equity markets would be offset by a lower equity capital charge
• The Solvency II ratio shows the highest sensitivity to spread risk*
• Interest rate risk is very low due to matching strategy
• A change in the UFR (Ultimate Forward Curve) from 4.2% to 3.2% would reduce the Solvency ratio from 212% to 207%
*Assumption is for a 100bps widening/narrowing of our entire fixed income book (Danish government bonds, Danish mortgage bonds, Norwegian government bonds, high yield etc.)
Source: Company reporting
13
Solvency II and Capital (IV/IV)
Subordinated debt in SEK will improve Tryg’s risk management
Own funds impact from a 10% increase in local currencies
Own Funds
NOK/DKK
• Tryg’s presence in the three Nordic countries means exposure
to fluctuations in the local currencies NOK and SEK in regards
to both financial results and solvency ratio
SEK/DKK
+ Equity
No sensitivity due to hedge strategy
- Intangible assets
Negative
Negative
+ Expected future profits
Positive
Positive
+ Subordinted debt
Positive
Positive
= Own Funds Q1’16
DKK 190m
DKK -30m
Key comments
• Tryg has chosen a currency hedge strategy that is focusing on
mitigating the currency impact on financial results. However
this introduces increased volatility with regards to the solvency
ratio
• The overall impact (net move of Own Funds and Solvency
Capital Requirement) of a 10% move in NOK/DKK is limited
due to Tryg’s current outstanding subordinated debt in NOK
• The overall impact of a 10% move in SEK/DKK is higher, but
would be reduced sharply through the issuance of subordinated
debt in SEK
Sensitivity from 10% increase in currencies Q1’ 16*, DKKm
250
200
190
130
150
100
70
70
50
50
0
-50
-30
Own Funds
SCR
NOK/DKK
Own Funds
SEK/DKK
SCR
Own Funds
SCR
SEK/DKK (post SEK 1bn
subordinated)
Note(*) Before adjustments for the acquisition of Skandia’s child insurance portfolio
|
Source: Company reporting
14
Tryg in a peer group context
Better capitalized and more profitable than most financial peers
Equity to total assets 2015
Return on average equity 2015
30%
30%
25%
25%
20%
20%
15%
15%
10%
10%
5%
5%
0%
*
*
Combined ratio 2015
0%
*
*
*
*
Key comments
• The equity base in relation to total assets is in line with
other strong Nordic P&C peers and more robust than both
Nordic life insurers and banks
100
90
80
70
60
50
40
30
20
10
0
Note(*) Group
*
• Same goes for profitability and combined ratio where Tryg
is in a leading position versus peers
• Risk of default in a P&C insurance company due to liquidity
issues is very remote as the nature of the cash flow is such
that premiums are received first and claims are paid in the
future
*
|
Source: Company reporting
15
Strong A2 rating with positive outlook from Moody’s
…reflecting our leading position, strong profitability, strong asset quality & low leverage
Rating and underlying rationale
Key comments
Insurance Financial Strength Rating (IFSR)
• Moody’s assigned an “A2” rating with a positive outlook
reflecting Tryg’s:
- Leadership position in P&C insurance in the Nordic region
A2
(positive outlook)
- Strong profitability both from a return on capital and
underwriting (combined ratio) perspective
- Very good asset quality
Rating
- Relatively low financial leverage
Outstanding subordinated
rating
Expected subordinated
rating
Baa1 (hyb)
Baa1 (hyb)
Source: Moody’s
- The positive outlook reflects Moody’s expectation that
Tryg’s strengths are likely to continue, and that
capitalisation will remain robust
16
Achievable long-term business plan
Well defined strategic targets reveal ambitious plans for the company
Financial targets
Customer targets
I
Return on
Equity (ROE)
after tax
2017: ≥ 21%
I
Net
Promoter
Score (NPS)
2017: + 100
II
Combined
ratio
2017: ≤ 87
II
Retention
rate
2017: + 1pp
III
Expense
ratio*
2017: ≤ 14
III
Customers
≥3
products**
2017: + 5pp
ROE 2005 to 2015 (target 2017)
Shareholder remuneration target
40
I
Payout
ratio
60% – 90%
30
20
II
Aiming for a nominal
stable increasing dividend
10
0
III
Note(*): excluding one-off effects
||
Note(**): private (DK & NO)
||
Share
buy-back
Source: Company reporting
May occur as
extraordinary
events
17
Transaction summary
Indicative key terms
Issuer:
Tryg Forsikring A/S
Instrument:
Solvency 2 Compliant Subordinated bond issue (Tier 2 Capital)
Moody’s Ratings:
A2 (Issuer Rating) / [Baa1] (Expected Instrument Rating)
Volume:
SEK [Benchmark]
Maturity Date:
[] 2046
Issuer’s Call option:
Ordinary calls on [] [2021], and any interest payment date thereafter.
Conditional calls on either a Capital Disqualification Event; or a Rating Agency Event; or a Taxation
Event
Coupon rate:
Tranche A) 3 months STIBOR + [Margin], payable quarterly in arrears
Tranche B) Mid swap + [Margin] up to and including the first optional redemption date, thereafter 3
months Stibor + [Margin]
Margin:
[]% until [] 2026, thereafter [1.00]% increase to []%
Deferral of Interest Payments:
At the Issuer’s option, subject to 6 months dividend pusher. Mandatory in the event of breach of
solvency requirements. Arrears of Interest will be cumulative
Listing:
An application will be made for the Bonds to be listed on [Oslo Børs]
Bond Trustee:
Nordic Trustee ASA
Governing law / Denominations:
Danish law / SEK 1,000,000
Arrangers:
Nordea & SEB
Source: Tryg, Nordea, SEB
18
Key investment considerations
Nordic footprint | Lean operations | High profitability | Strong capitalization
Dedicated Nordic non-life insurance company, with proven
operations and favourable outlook, diversified across both
countries and products
1
Operates in mature markets, with high entry barriers and
customer retention rates, dominated by established key players
focusing on lowering cost
2
Profitability has been high and improving in recent years due to
efficiency programmes and low customer price sensitivity
3
4
5
6
7
8
9
Source: Company reporting
Aiming to achieve a combined ratio of ≤ 87 and expense ratio
of ≤ 14 from 2017 and onwards
ROE after tax has been 19% on average the last 10 years and
Tryg aims to achieve ≥ 21.0% within 2017
Only one quarterly pre-tax loss since 2006 due to heavy
winter. Re-insurance protects Tryg from large claims and single
events
Assigned A2 rating with a positive outlook by Moody’s following
Tryg’s leading position in P&C insurance in the Nordic region, its
strong profitability both from return on capital and underwriting,
very good asset quality and a relatively low financial leverage
Strong solvency capital position of 212%, which implies a
considerable buffer to any potential intervention by the FSA
The classification of the NNP funds as Tier 2 capital leaves a
potential room for issuing approximately DKK 900m Tier 2
subordinated debt
19
Appendix
Distribution of new sales 2015
Broad distribution power through diverse sales channels is key
Denmark
Norway
6%
14%
Own sales
Own sales
57%
29%
Affinity
44%
38%
Nordea
Affinity
12%
Sweden
Car dealers
Nordea
Corporate
Own sales
15%
External partners
Own sales
51%
31%
Online & others
55%
45%
Brokers
Atlantica/Bilsport MC
3%
Source: Company reporting
21
Key financial figures and consensus 2011-2018E
Overview
Consensus(***)
DKKm
2011
2012
2013
2014
2015
Gross premium income
19,948
20,314
19,504
18,652
17,977
17,789
18,004
18,240
1,572
2,492
2,496
3,032
2,423
2,623
2,789
2,768
61
585
588
360
-22
96
192
204
Profit/loss before tax
1,603
3,017
2,993
3,302
2,327
2,666
2,932
2,904
Profit/loss
1,140
2,208
2,369
2,557
1,981
2,085
2,293
2,269
Combined ratio
93.2
88.2
87.7
84.2
86.8
85.4
84.6
85.0
Gross expense ratio
16.6
16.4
15.6
14.6(*)
15.3(**)
14.4
14.1
14.0
Total insurance provision
34,220
34,355
32,939
31,692
31,571
n.a
n.A
n.a
Shareholder's equity
11,107
11,119
9,831
9,396
9,111
n.a
n.A
n.a
Earnings per share
3.77
7.30
7.88
8.74
6.95
7.5
8.4
8.5
Dividend per share
1.30
5.20
5.40
5.80
6.00
6.2
6.5
6.7
-
800
1,000
1,000
1,000
823
681
555
Technical result
Investment income, net
Share buy back
Note(*): DKK 15.3m excluding one-offs
||
2016 E 2017 E 2018 E
Note(**): 14.9 excluding one-off || Note (***): Based on 16 standalone estimates ahead of Q1 2016 ||
Source: Company reporting
22
Established ownership structure
60% owned by TryghedsGruppen (foundation) and 40% free float
TOP 10 shareholders Q1 2016 (*)
Geographical distribution of free float (40%) 2015(**)
60.00 %
TryghedsGruppen
1.78 %
Tryg A/S
3%
Denmark
12%
UK
12%
US
1.42%
Black Rock Fund Advisors
14%
Nordea Bank AB
0.99%
Norges Bank Investment Management
0.82 %
The Vanguard Group
0.79 %
Danske Bank A/S
0.78 %
59%
Nordic region
Shareholders overview year-end 2015(**) (***)
TryghedsGruppen
16%
0.53 %
Handelsbanken Fonder
Large Danish
shareholders
12%
0.50 %
Skandinaviska Enskilda Banken
11%
Massachusettes Mutual Life INS
0.49 %
TOTAL TOP10
68.1%
Note(*): from Bloomberg || Note(**): from Ipreo’s Big Dough database
||
Other
Note(***): large shareholders = more than 10,000 shares (~0.017%)
61%
Large international
sharegholders
Small shareholders
23
Strong A2 rating with positive outlook from Moody’s
…reflecting our leading position, strong profitability, strong asset quality & low leverage
Rating
Rating and underlying rationale
Base-case scenario assumptions and methodology
Insurance Financial
Strength Rating
Current
Subordinated debt
Expected new
Subordinated debt
A2
(positive)
Baa1
Baa1
The positive outlook could translate into a rating upgrade from:
• Maintenance of the reported combined ratio below 90% and/or
Insurance Financial Strength Rating
Market position, Brand and Distributions: A
• Strong market position in the Nordic region albeit less diversified
than larger continental peers
• Sustaining Solvency II coverage above 180% and gross underwriting
leverage below 4x and/or
• Adjust financial leverage above 20%
Factors that can lead to an downgrade
Although currently seen as unlikely given the positive outlook, negative
pressure could arise from:
Product risk and Diversification: A
• A material weakening of market position and/or
• Good product risk albeit concentration in property and motor and
in the Nordics
• Meaningful reduced capital adequacy with gross underwriting leverage of
above 6x on sustained basis and/or Solvency II coverage below 130%
and/or
Asset Quality: A
Rationale
Factors that can lead to an upgrade
• Relatively conservative investment philosophy compared to direct
Nordic peers, supported by low level of reinsurance and intangible
assets
• Meaningful deterioration in profitability with combined ratio consistently
above 95% and/or
• Adjust financial leverage consistently above 30%
Capital Adequacy: A
Select Key Metrics
• Robust capitalisation albeit constrained by the relatively high
dividend policy and share buy-back program
Select Key metrics
Profitability: A
• Profitability expected to remain strong, notwithstanding some
headwinds
Reserve Adequacy: A
Return on average capital (ROC)
• Consistent reserve releases over the last few years
Gross underwriting leverage
Financial Flexibility: A
• Relatively low financial leverage although access to capital
markets not comparable to the largest European players
2011
2012
2013
2014
2015
Gross premium written (DKKm)
20,192
20,128
19,820
28,672
28,150
Net Income (DKKm)
19,069
18,981
18,600
17,613
16,985
9.8%
16.9%
17.0%
16.3%
15.5%
5.5x
4.6x
4.3x
4.1x
4.5x
Financial leverage
24.8%
21.5%
19.1%
16.6%
15.0%
Total leverage
24.8%
21.5%
20.4%
17.9%
18.6%
13.1x
23.9x
23.8x
27.8x
23.2x
Earnings coverage
Source: Moody’s
24
Key economic figures in the Nordic region
Stable outlook
%
Denmark
Tryg exposure
TOP5
2016E
2017E
GDP Growth
1.3
1.8
Inflation
0.6
1.2
Unemployment
4.2
3.9
Current account balance in % of GDP
7.3
6.8
Budget balance in % of GDP
-2.7
-2.2
Public debt in % of GDP
40.9
42.6
2016E
2017E
GDP Growth
1.0
1.6
Inflation
2.6
1.5
Unemployment
4.8
4.9
Current account balance in % of GDP
7.0
7.6
Budget balance in % of GDP
5.7
6.3
Public debt in % of GDP
0.0
0.0
2016E
2017E
GDP Growth
3.8
2.2
Inflation
1.3
1.6
Unemployment
6.8
6.9
Current account balance in % of GDP
6.4
5.9
Budget balance in % of GDP
-0.9
-1.1
Public debt in % of GDP
43.1
43.2
%
Norway
Sweden
TOP3
Norway
#1
Denmark
Source: Economic Outlook, Nordea Markets 2016
Sweden
%
25
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Denmark
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