Q3 2015 results - Trygtryg.com/.../q3_2015_investor_presentation_12-37355.pdfQ3 2015 results Investor presentation Follow us on Twitter: @TrygIR Contents 2 Highlights Q3 2015 3 Premiums

Q3 2015 resultsInvestor presentation Follow us on Twitter: @TrygIR

Contents

2

Highlights Q3 2015 3

Premiums and portfolio 9

Claims 14

Investment, capital and targets 17

For new investors 22

Appendix 30

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.

Financial highlights Q3 2015- Satisfactory technical result, planned one-off costs and a drop of 9% in equityindex (MSCI) result in 6.1% return on equity. Improved development in premium income.

3

244

782

Q3 2015 Q3 2014

Pre-tax profit (DKKm)

83.5

83.72.6

Q3 2015 Q3 2014

86.1

Combined ratio

14.6

15.11.7

Q3 2015 Q3 2014

16.3

Expense ratio

One-off costs

• Pre-tax profit of DKK 244m (DKK 782m) impacted by:

• Planned and communicated one-off costs of DKK 120m related to efficiency programme of DKK 750m

• Negative investment result of DKK 383m (DKK -1m) impacted by MSCI equity index down 9%

• Technical result of DKK 647m (DKK 793m)

• An improvement before one-off costs, lower interest rate and currency effects

• Improved premium development with a growth of 0.6% in local currencies (-0.8%)

• Strengthened market position with acquisition of Swedish child insurance portfolio. This acquisition implies a DKK 400m capital loading

• ROE of 6.1% (21.7%) p.a. after tax

• Fulfilment of 2015 ROE target of 20% - depends on Q4

investment return.

Customer highlights Q3 2015- General positive development i customer key figures

4

• New car insurance product launched in Sweden.

• Tryg’s DNA marking initiative showed a preventive effect. Burglaries in Sønderborg declined by 50% for the 90 properties using the DNA marking and 26% in general in the area. A similar experiment was launched in Norway in Q3.

• Tryg required agricultural customers to fit their combine harvester with a fire trace. The fire trace saves the customers unnecessary material and consequential losses and Tryg reduces the number of farm machinery fire claims.

• TryghedsGruppen’s members’ bonus scheme was approved by the Danish Business Authority.

11

2022

CMD 2014 Q3 2015 Target 2017

NPS

56.3 56.761.3

CMD 2014 Q3 2015 Target 2017

Customers with ≥3 products (%)

87.9 88.1 88.9

CMD 2014 Q3 2015 Target 2017

Retention rate

Key figures Q3/Q1-Q3 2014/2015

5

DKKm Q3 2015 Q3 2014Q1-Q3

2015Q1-Q3

20142014

Gross premium income 4,583 4,712 13,584 14,006 18,652

Claims, net of reinsurance -2,923 -2,956 -8,784 -8,998 -11,977

Gross expenses -739 -704 -2,105 -2,005 -2,689

Technical result 647 793 1,901 2,257 3,032

Return on investment aftertechnical interest

-383 -1 -206 347 360

Profit/loss before tax 244 782 1,623 2,534 3,302

Profit/loss 155 593 1,260 1,917 2,557

Claims ratio, net of reinsurance

69.8 68.6 70.6 70.0 69.6

Gross expense ratio 16.3 15.1 15.7 14.5 14.6

Combined ratio 86.1 83.7 86.3 84.5 84.2

80.4

87.5

Q3 2015 Q3 2014

83,5

83.72.6

Q3 2015 Q3 2014

86.1

Combined ratio with underlying improvement

6

Commercial, DK & NO

82.1 80.8

Q3 2015 Q3 2014

Group

86.9

82.3

Q3 2015 Q3 2014

Corporate

Private, DK & NO

89.592.5

Q3 2015 Q3 2014

Sweden

One-off costs

Efficiency programme, DKK 45m achieved in Q3

7

• Programme deliver as planned with target to

achieve savings of DKK 750m over the next

3 years.

• Planned and communicated one-off costs of

DKK 120m in Q3

• Lower expected 2015 savings than in 2014.

• Claims initiatives:

• Tryg Building network Norway

• Competence team in Health care reduces disability to work

• Expense initiatives:

• IT sourcing

• Restructuring Commercial

• Digital communication

Efficiency programme up until 2017 (DKKm)

150

73

225

375

175

388 395

45

2012 2013 2014 2015 Q1-Q32015

2016 2017

Achieved Target

Old programme New programme

Q3

H1

118

Expense ratio improved before one-off

8

• Expense ratio improved 0.5 pp. to 14.6 before one-off costs.

• One-off provisioning of DKK 80m in Q3 related to efficiency programme

• Efficiency programme delivered savings of DKK 15m related to:

• Outsourcing within Finance and IT• Commercial reorganisation

• Reduction in FTE by 174 since Q4 2014.

FTE - Development

15.1

16.316.6 16.4

15.6

15.3

14.6 14.6

2011 2012 2013 2014 Q3 2014 Q3 2015

Expense ratio

Adjusted for one-off effects

Nominal costs in business areas

326

170

10459

346

183

11560

Private Commercial Corporate Sweden

Q3 2015 Q3 2014

4,077

3,914

3,703

3,599

3,425

2011 2012 2013 2014 Q3 2015

Premiums and portfolio

0.6

-0.8

Q3 2015 Q3 2014

Positive topline development

10

Gross earned premiums development

(Local currencies) DKKm Q3 2015 Q3 2014Local currencies

Q3 2015Local currencies

Q3 2014

Private 2,211 2,289 0.3% 0.5%

Commercial 1,022 1,045 0.2% -1.6%

Corporate 984 999 2.6% 0.5%

Sweden 373 386 -1.4% -8.4%

Group 4,583 4,712 0.6% -0.8%

Gross earned premiums increased by 0.6% (-0.8%) driven by:

• Private impacted by the competitive situation. Retention was unchanged in Denmark but decreased slightly in

Norway

• Commercial helped by one-off regulations on a large account and improved retention level in Denmark.

• Corporate impacted by positive development in Denmark and Sweden, but slightly negative in Norway.

3830

Q3 2015 Q3 2014

195

130

Q3 2015 Q3 2014

647

793

120

Q3 2015 Q3 2014

767

Satisfactory technical result before one-off.

11

136

188

Q3 2015 Q3 2014

Commercial, DK & NO (DKKm)

Sweden (DKKm)

398 445

Q3 2015 Q3 2014

Group (DKKm)

Corporate (DKKm)

Private, DK & NO (DKKm)

One-off costs

90

95

100

105

110

115

DK

NO

12

Motor insurance – average premium (index 2011 = 100)

Private - average premiums- DK profitability strong but competition increasing

90

95

100

105

110

115

DK

NO

House insurance – average premium (index 2011 = 100)

Average premiums increase Y/Y

-2.6% 0.5%

(Q2-2.4%) (Q2 0.4%)

Average premiums increase Y/Y

-1.0% 0.9%

(Q2 -0.8%) (Q2 1.2%)

• NO: price increases from July

• DK: changed selection reducesaverage price

• DK –2.6% decrease y/y driven by:• smaller cars• competitive situation

• Higher price on new motor tariffDK will somewhat mitigatenegative development

• Profitability very strong on motor

Customer retention

13

82%

84%

86%

88%

90%

92%

DK

NO

Commercial

82%

84%

86%

88%

90%

92%DK

NO

Private

• Slightly increasing customerretention in Denmark

• Slight decrease in Norway

• Customer retention increasedin Denmark

• Retention decreased in Norwayimpacted by changed distribution set-up and competition

Front page slide

Claims

71.9 71.3

Q3 2015 Q3 2014

Slight increase in underlying claims ratio, net

15

72.7

69.3

Q3 2015 Q3 2014

Commercial (DK & NO)

76.7

80.2

Q3 2015 Q3 2014

Sweden

68.8 68.2

Q3 2015 Q3 2014

Group

76.8 77.1

Q3 2015 Q3 2014

Corporate

Private (DK & NO)

Underlying development is adjusted for large claims, weather claims, run-off and interest.

0.9 pp impact fromone-off costs

Large claims, weather claims and run-off

16

6.3

8.8

4.75.0

5.0

6.1

2011 2012 2013 2014 Q3 2014 Q3 2015

Run-off net, effect on combined ratio (%)

147 111

721

356

620

447

2011 2012 2013 2014 Q3 2014 Q3 2015

Weather claims, net DKKm

80

198

546471

407

574

2011 2012 2013 2014 Q3 2014 Q3 2015

Large claims, net DKKm Expected annual

level 2015: DKK 500m

Expected annual

level 2015: DKK 550m

Claims reserves discounting rate (%)

3.2

2.0

1.5

Q3 20141.2 Q3 2015

1.0

2011 2012 2013 2014 2015

Front page slide

Investment, capital and targets

Investment return – loss on equities

18

Cov. Bonds 68,6%

Bonds/deposits 4.2%

Equities 5.8%

HY 2.2%

EM 1.0%

Inv. Property 5.1%

Bonds/deposits 13.0%

-10.3

-2.8 -1.9

1.3

-0.9-2.6

Free portfolio return (%)

Portfolio (DKK 39.7bn)

100

8

100

21

4

5365

1731

Bonds Equity HY & EM Inv. Property

Nordics EU ex Nordics North America EM/Other

Geographical exposure (%)

93

5 2

66

1420

88

6 5

AAA AA-A BBB-B

Match Free Total

Rating (%)Free10.6bn 27%

Match29.0bn 73%

Investment return

DKKm Q3 2015 Q3 2014

Free portfolio -292 21

Match regulatorydeviation

8 0

Match performance -52 16

Other financials -47 -38

Total return -383 1

Capital structure

19

6,275

3,721

Q3 2015

Capital – Q3 2015, DKKm

9,23510,036

1,741

1,793

Q3 2015 Q2 2015

Equity Subordinated loan capital

Equity and subordinated loan, DKKm

Capitalrequirement

Excess capital

Buffer

• Capital buffer based on Individual Solvency increased to 59% (Q2 2015: 51%) and was impacted by:

• Result Q3 2015

• Executed share buy back of Q3 2015

• Decline in stock market

• Depreciation in the NOK / DKK rate of exchange.

• Based on Solvency II standard model the capital buffer was 26% (Q2 2015: 21%)

• Acquisition of Swedish child insurance portfolio implies a DKK 400m capital loading, but is not included in Q3.

Solvency II unsolved issues:

• Internal model expected to be approved by 31 December 2015 at the latest. Application has been submitted

• Inclusion of notional deferred tax and expected future surplus

Workers' Comp Liability Building Private Cars

20

Value creation through M&A

2015 – Skandia’s child insurance in Sweden

2014 - Securator

2014 – Tryg acquires pet insurance in Sweden

2014 – Renewal right for Codan’sagricultural portfolio

New business consumes capital (capital to premium)

Latest acquisitions• M/A to support marketdevelopment

• Strategically supportive

• Acquisitions should support financial targets over a 3 yearhorizon to reach 21% ROE

• Product / distribution enhancing

120-140%

90-110%

50-70%

25-35%

Financial and customer targets

21

Customer targets

Financial targets

Net Promoter Score (NPS) + 100%

Retention rate + 1 pp

Customers ≥ 3 products** + 5 pp

** Private (DK & NO)

2015 2017

ROE after tax = 20% ≥ 21%

Combined ratio ≤ 90 ≤ 87

Expense ratio < 15* ≤ 14

* Excl. One-off effects

0

10

20

30

40

ROE after (%)

For new investors

Tryg – at a glance I

23

• Tryg goes back to 18th century.

• Very strong brand position especially in Denmark.

• Non-life insurance in Denmark, Norway and Sweden.

• Approx. 80% retail business.

82%

84%

86%

88%

90%

92%

Retention rate - Private

DK

NO

82%

84%

86%

88%

90%

92%

Retention rate - Commercial

DK

NO

NorwayMarket position: #3

Market share: 13.6%CR in 2014: 80.4

SwedenMarket position: #5Market share: 3.0%CR in 2014: 98.2

DenmarkMarket position: #1

Market share: 18.2%CR in 2014: 84.1

56

23

21

Private

Commercial

Corporate

Business split 2014

31

5

115

24

14

10

Motor

Workers' comp

Health & accident

Liability

Fire & property - private

Fire & property - comm.

Other

Gross premium split by products 2014

Percentage

Percentage

4.2

6.6

3.4

1.3

3.1

0.8 1.3

5.2 5.4 5.8

2.5

4.2

2.6

2.63.2

3.4

0

1

2

3

4

5

6

7

8

9

10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 H1

2015

Cash dividend Ordinary buy back Extraordinary buy back

0%

10%

20%

30%

40%

50%

60%

60

9

14

17

Danishinstitutional

Non-Danishinstitutional

Smallershareholders

Tryg – at a glance II

24

Shareholder breakdown 2014

Strengthening of brand value

Shareholder performance since IPO

Low risk investment portfolio

New dividend policy

Shareholder remuneration since IPO

Standard deviation 2011-2013

DKK

Percentage

Latest acquisitions:

2015 – Skandia’s child insurance in Sweden

2014 - Securator

2014 – Tryg acquires pet insurance in Sweden

2014 – Renewal right for Codan’s agricultural portfolio

0

25

50

75

100

125

150

175

200

225

250

275

300

325

350

375

400

425

450

475

nove

mbe

r 05

mar

ts 0

6

augu

st 0

6

janu

ar 0

7

juni 07

nove

mbe

r 07

april 0

8

sept

embe

r 08

febr

uar 09

juli 09

dece

mbe

r 09

maj 1

0

okto

ber 10

mar

ts 1

1

augu

st 1

1

dece

mbe

r 11

maj 1

2

okto

ber 12

mar

ts 1

3

augu

st 1

3

janu

ar 1

4

juni 14

nove

mbe

r 14

april 1

5

sept

embe

r 15

Tryg incl. dividend Euro Insurance index

Tryg’s equity story

25

Long term profitable growth and attractive shareholder value creation

Financial targets 2017

• ROE: ≥21%

• Combined ratio: ≤87%

• Expense ratio: ≤14%

Customer targets 2017

• NPS +100%

• Retention rate +1 pp

• ≥ 3 products +5 pp

Dividend policy

• Payout ratio of 60-90%

• Aiming for a nominal stable increasing dividend

• 90% first contact resolution

• Annual coverage check

• 25% of tariffs better than peers in 2017

• Differentiated product offering

• Efficiency programme of DKK 750m

• Claims procurement

• Reducing expense level

• Matching assets and liabilities

• Low risk investment portfolio

Low risk and high returns

Leading in efficiency

Leading Scandinavian insurer with strong

track record

Customer care worth recommending

Next level pricing

Structure of the Nordic insurance market

9 October 201526

Denmark

DKK 51.3bn/EUR 6.9bn (as at Q3-2014)

Sweden

SEK 72.4bn/EUR 7.7bn (as at Q2-2015)

Norway

NOK 55.7bn/EUR 6.4bn (as at Q2-2015)

Nordic

EUR 25.1bn (as at Q4-2013)

13.5

22.3

25.1

10.0

29.1 Tryg

If

Gjensidige

Sparebank1

Other

9.9

4.7

17.6

9.0

8.69.2

41.0

Tryg

Topdanmark

If

Codan

Gjensidige

Länsforsikringar

Other

18.0

17.6

6.0

11.76.3

9.7

30.7Tryg

Topdanmark

If

Codan

Gjensidige

Alm. Brand

Other

3.0

18.1

15.5

1.5

29.9

16.5

15.5

Moderna (Tryg)

If

Trygg-Hansa (Codan)

Gjensidige

Länsforsikringar

Folksam

Other

Percentage

PercentagePercentage

Percentage

56

4

26

14

Own sales

External partners

Online & others

Atlantica/Bilsport MC

63

24

13

Own sales

Affinity

Nordea

45

15

32

8

Own sales

Car dealers

Affinity

Nordea

4357

Own sales

Brokers

Distribution of new sales 2014

27

Norway

Corporate Sweden

Denmark

Percentage

PercentagePercentage

Percentage

80

85

90

95

100

105

110

Combined ratio performance

28

Premium hikes

Premium hikes

Smaller adjustments

Efficiencyprogramme

Customer andefficiency focus

2002-2004 price increases of DKK 2.1bn implemented. Reduced combined ratio from 107 to 94.

2011-2012 price increases will improve underlying combined ratio.

2012-2015 operational focus with target to cut expenses and claims costs by DKK 1bn in total.

2015-2017 New efficiency programme of DKK 750m launched.

*IFRS from 2004. Previous years are Danish GAAP.

Data before 2009 is not corrected for the sale of Marine Hull business, and Finland before 2008.

Key figures 2011-14 and consensus 2015-17

29

Consensus

DKKm 2011 2012 2013 2014 2015 2016 2017

Gross premium income 19,948 20,314 19,504 18,652 18,028 18,014 18,284

Technical result 1,572 2,492 2,496 3,032 2,623 2,748 2,887

Investment income, net 61 585 588 360 116 248 249

Pre-tax profit 1,603 3,017 2,993 3,302 2,644 2,930 3,070

Net income 1,140 2,208 2,369 2,557 2,044 2,260 2,367

Combined ratio 93.2 88.2 87.7 84.2 85.9 85.0 84.4

Expense ratio 16.6 16.4 15.6 14.6(*) 15.2 14.5 14.2

Total insurance provision 34,220 34,355 32,939 31,692

Shareholders’ equity 9,007 10,979 11,107 11,119

Earnings per share 3.8 7.3 7.9 8.7 7.2 8.1 8.7

Dividend per share 1.3 5.2 5.4 5.8 6.1 6.4 6.8

Share buy back 0 800 1,000 1,000 1,060 785 556

Based on 13 estimates * 15.3 excluding one-off

Appendix

Follow us on Twitter: @TrygIR

Group

31

12

13

14

15

16

17

18

Expense ratio

75

80

85

90

95

100

Combined ratio

60

65

70

75

80

85

90

95


-4

-2

0

2

4

6

8

4,400

4,600

4,800

5,000

5,200

5,400

Gross premiums

%DKKm

GEP (LHS)

Local currency (RHS)

Private

32

12

13

14

15

16

17

18

Expense ratio

75

80

85

90

95

100

Combined ratio

60

65

70

75

80

85

90

95


-4

0

4

8

1,900

2,100

2,300

2,500

Gross premiums

%DKKm

GEP (LHS)


Commercial

33

Expense ratio

70

75

80

85

90

95

100

Combined ratio

50

55

60

65

70

75

80

85

90


-8

-4

0

4

8

950

1,000

1,050

1,100

1,150

1,200

Gross premiums

%DKKm

GEP (LHS)


12

13

14

15

16

17

18

19

20

21

Corporate

34

9

10

11

12

13

14

Expense ratio

75

80

85

90

95

100

105

Combined ratio

65

70

75

80

85

90

95


-8

-4

0

4

8

900

1,000

1,100

1,200

Gross premiums

%DKKm

GEP (LHS)


Sweden

35

5

10

15

20

25

30

Expense ratio

75

90

105

120

Combined ratio

60

65

70

75

80

85

90

95


-15-10-50510152025

250

300

350

400

450

500

Gross premiums

%DKKm

GEP (LHS)


Geographical segments

Norway

DKKmQ3 2015 Q3 2014

Q1-Q3 2015

Q1-Q3 2014 FY 2014

Gross premiums earned 1,687 1,845 5,155 5,498 7,337

Technical result262 444 720 1,288 1,478

Key ratios:

Gross claims ratio69.9 57.3 69.8 64.4 66.5

Result of ceded business 0.1 3.8 1.4 1.6 1.4

Gross expense ratio14.8 15.4 15.2 11.3 12.5

Combined ratio84.8 76.5 86.4 77.3 80.4

Sweden

DKKmQ3 2015 Q3 2014

Q1-Q3 2015

Q1-Q3 2014 FY 2014

Gross premiums earned 517 534 1,431 1,508 1,975

Technical result56 14 219 110 44

Key ratios:


Result of ceded business 1.5 2.2 1.3 1.7 2.2


Combined ratio89.0 97.7 84.7 93.1 98.2

Denmark

DKKmQ3 2015 Q3 2014

Q1-Q3 2015

Q1-Q3 2014 FY 2014

Gross premiums earned 2,386 2,340 7,016 7,015 9,361

Technical result449 335 1,082 859 1,510

Key ratios:


Result of ceded business -13.6 3.6 -15.3 0.1 2.1


Combined ratio81.2 85.7 84.5 87.9 84.1

36

Norway

% 2015 2016

GDP Growth (mainland) 1.2 1.3

Inflation 2.1 2.2

Unemployment 4.4 4.8

Current account balance in % of GDP

5.7 5.9

Budget balance in % of GDP 6.1 6.3

Public debt in % of GDP 0.0 0.0

Sweden

% 2015 2016

GDP Growth 2.8 2.8

Inflation 0.0 1.1



7.0 7.5

Budget balance in % of GDP -1.6 -1.1


Economic key figures

37

Source: Economic Outlook, Nordea Markets, September 2015

Denmark

% 2015 2016

GDP Growth 1.5 2.0

Inflation 0.6 1.5



6.3 5.6

Budget balance in % of GDP -2.3 -1.9


Documents

Q3 2015 results - Trygtryg.com/.../q3_2015_investor_presentation_12-37355.pdfQ3 2015 results Investor presentation Follow us on Twitter: @TrygIR Contents 2 Highlights Q3 2015 3 Premiums