A wide range of initiatives has helped us fulfil our commitment. In Norway, for example, we introduced major changes to our private customer price and benefit programme by “refocusing on the customer”. We have abolished the practice which in many cases enabled new customers to buy insurance at a lower price than our loyal and faithful customers could. We have also created a more logical and transparent price structure, and our Norwegian customers have so far welcomed this concept.
We also further developed the Tryg Bygning and Tryg Reparation concepts in Denmark, providing new and enhanced deliveries in the claims situation. We are changing from covering only the financial consequences of a loss into a player that takes responsibility for solving our customers’
Relative run-off gains/losses 0.9 -1.0 - - - other data 1) Return on equity before tax and discontinued and divested business 39 33 34 22 -46 3 Return on equity after tax and discontinued and divested business 28 23 25 15 -47 1 Earnings per share (continuing business) 31 22 22 14 -27 1 Net asset value per share 121 100 90 79 63 67
The results of the turnaround we initiated in 2003 have materialised faster than expected, and our performance in 2005 confirms the new level of earnings.
Our target is to achieve a claims ratio at the low end of the market through high underwriting quality, current efforts to secure a high-quality portfolio and focus on claims expenses, including claims handling expenses.
Moody’s each year, and the aim is to meet the rating agency requirements to maintain certain levels of capital. We seek to maintain minimum ratings of A- and
The number of large claims corresponded to a normal year and was slightly below 2004, while claims, net of reinsurance, were slightly higher because most of the large claims were below DKK 50m and therefore not covered by our reinsurers.
TrygVesta’s total assets increased from DKK 37,824m in 2004 to DKK 40,811m in 2005. Liabilities comprised mainly shareholders’ equity of DKK 8,215m and total provisions for insurance contracts, of DKK 26,757m.
5,176m in 2004. An amount of DKK 1.2bn regarding sales of property is included in 2004. Investments increased by DKK 4,051m in 2005, and there was a cash outflow from financing activities of DKK 197m.
This business area generated a very satisfactory technical result thanks to a good claims performance, despite the storm in January, and a favourable premium performance.
The renewal rate was 85.0 in 2005, up from 84.4 in 2004. Renewal rates improved, in particular, among commercial customers, while renewal rates in the private lines remained at a satisfactory level.
The pie chart presents the composition of the bond portfolio by rating category. As shown, 79% of the portfolio is rated AAA/Aaa or AA/Aa. The unrated 20% of the portfolio comprises mainly short-term Norwegian money market certificates issued by banks.
We are committed to enhancing processes on an ongoing basis. We do this by systematically sharing knowledge and implementing new technology. The development of our overall processes and support processes builds on self-service and straight-through processing.
TrygVesta expects to reduce its expense ratio relative to the expense ratio of 16.9 achieved in 2005. These expectations include the investment made in Sweden to start up bancassurance and the continued expansion of the investment made in the Finnish market. Excluding the investment in Sweden, the expected expense ratio for 2006 would be 0.2-0.3 percentage points lower.
2. the role of the stakeholders and their importance to the company
TrygVesta’s Group Executive Management comprises five members. The remuneration paid to the Executive
A/S that an audit committee be established comprising members elected by and among our future Supervisory
• The Danish FSA’s executive order does not allow provisions for deferred tax of contingency reserves allocated from untaxed funds. Deferred tax and the opening equity of the parent company have been adjusted accordingly.
The parent company’s share of the enterprises’ profits or losses after elimination of unrealised intra-group profits and losses is recognised in the income statement. In the balance sheet, investments are measured at the pro rata share of the enterprises’ equity.
The effective portion of changes in the fair value of derivatives that are designated and qualify as net investment hedges are recognised directly in equity. Changes in the fair value relating to the ineffective portion are recognised in the income statement. Exchange differences arising from changes in exchange rates regarding hedging of foreign subsidiaries are classified as equity and transferred to the Group’s translation reserve. Gains and losses accumulated in equity are included in the income statement on disposal of the foreign operation.
The benefits to which the Group is entitled under its reinsurance contracts held are recognised as assets and reported as reinsurers’ share of provisions for insurance contracts.
Subordinate loan capital is recognised initially at fair value, net of transaction costs incurred. Subordinate loan capital is subsequently stated at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings using the effective interest method.
compensation insurance is calculated on the basis of a mortality corresponding to the G82 calculation basis (government-estimated mortality table), with a net discount rate of 1%. The calculation is based on the current benefit, implying that the discounting applied corresponds to a real interest rate of 1%.
The Group recognises this liability as soon as the employment begins.
ences arising on investments in subsidiaries and associates, except where the Group controls the timing of the reversal of the temporary difference, and it is probable that the temporary difference will not reverse in the foreseeable future.
Commission and profit commission from the reinsurers 71 216 4 total insurance operating expenses, net of reinsurance -2,591 -2,395 investment activities 14 Income from associates 2 0
Share Share tion exchange tion other retained proposed capital premium reserves rate adj. reserve reserves earnings dividends total
Cash and cash equivalents, beginning of year -70 10 cash and cash equivalents, year-end -81 -70
In December 2005, Tryg Forsikring A/S raised a subordinate bond loan for EUR 150m at the price of 99.017. The loan bears interest at 4.5% p.a. until 2015, at which time it is repayable. After that time, it will bear interest at URIBOR plus 2.1% until it falls due in 2025. The loan is measured at amortised cost, and from the EUR 150m loan DKK 11m has been deducted in capital losses and DKK
In the table, amounts in Norwegian kroner are translated into Danish kroner using the exchange rate as of 31 December 2005 in order to avoid any impact from currency fluctuations.
Other benefits 34 30 recognised obligation, end of year 34 30
The total current and deferred tax relating to items recognised in equity is recognised in the balance sheet in the amount of DKK 64m.
Tryg Forsikring A/S has an annual obligation to Danica Pension with respect to the lease of the head office in Ballerup. The annual rent and taxes currently amount to
The following discussion describes certain of TrygVestas income statement items and balance sheet line items under both Danish GAAP and
IFRS. The following discussion will also describe the principle differences between Danish GAAP and IFRS, and provides a set of comparative
E) The change in tax is due to the adoption of IAS 12 “Income Taxes” (“IAS 12”) regarding the recognition of deferred tax provisions for contingency funds, the tax effect of all IFRS adjustments and the tax effect of including in shareholders’ equity actuarial gains and losses on the defined benefit pension plan.
Danish GAAP and IFRS as of and for the year ended 31 December 2004.
Gross premiums written during one reporting period do not necessarily represent the risks actually carried during that period. In a typical reporting period, TrygVesta earn a portion of the gross premiums written during that period together with premiums that were written during earlier periods. Likewise, some part of gross premiums written are not earned until future periods. Under Danish
In addition to the reclassification of claims handling costs discussed in the preceding paragraph, claims incurred, net of reinsurance are also impacted by a change under IFRS of TrygVestas discounting of provisions for claims.
Under Danish GAAP, insurance operating expenses, net of reinsurance represented acquisition costs and administrative expenses less reinsurance commissions received. Policy acquisition costs were expensed when incurred. Under Danish GAAP, direct and indirect claims handling costs are included within total insurance operating expenses, net. Under Danish GAAP, a calculated
TrygVesta has applied IAS 19 retrospective from January 1, 2004 regarding the pension liability towards its Norwegian employees.
As a result of the implementation of IFRS, other assets have been reduced as of December 31, 2004 by DKK 59m related to the effects of the following reclassifications: dKKm
Under IFRS, equalisation provisions are not permitted and thus have been adjusted to shareholders' equity.
Under Danish GAAP, the defined benefit pension plan in Vesta was measured at an estimated market value using Norwegian assumptions relating to long-term economic developments.
eriK gJelleStad, member of the group executive management, born 1953 ceo of
The geological investigations concluded that a number of buildings in the most severely affected area would either have to be demolished or undergo extensive and costly protective works. The local authority decided to demolish the houses.
159 millimeters of rain in only 24 hours affected the entire area.
Damage to the building estimated to total DKK 50m. The actual cost depends on the extent to which it would be possible to save floor partitions, wooden floors and walls on the fifth floor and elsewhere in the building.