Our 4,000 employees provide peace of mind for almost 3 million customers.
Chairman of the Supervisory Board: A satisfactory year 2012 was a satisfactory year with good results. Important strategic initiatives were implemented in the course of the year, including a new dividend policy, renewal of the partnership agreement with
Lifebuoy’s 60th anniversary The lifebuoy is a symbol of peace of mind in the Nordic countries, and in Norway 33,000 lifebuoys are dispersed along the coastline. Its 60th anniversary was celebrated with events all over Norway, where lifebuoys were handed out to local communities, organisations and private individuals.
New contents insurance A new contents insurance product, offering a tariff that better reflects the risk, was introduced in Denmark. The new contents insurance product has no maximum sum insured, since it is Tryg’s responsibility to ensure that the sum insured is correct. Thus, the customers are no longer requested to state the total value of their belongings.
In the past five years, Tryg has had a stable expense ratio during a period of high premium income growth. During the same period, several of Tryg’s competitors have improved their expense ratios.
Tryg’s targets include a 20% return on equity and a similar target for the insurance business of a combined ratio of 90 or less, to be
In line with the strategic work aimed at improving Tryg’s profitability and competitiveness, a decision was made in November 2012 to divest the company’s Finnish business activities to its competitor,
for 2012 which show that Tryg, in both Denmark and Norway, still has the highest level of customer satisfaction among the larger insurance companies.
The low growth in Denmark resulted from an enduringly high retention rate and a decline in sales relative to last year. In addition, the premium income is impacted by a higher level of premium discounts based on developments for a number of group agreements which reduced growth in the Danish business by 0.5 percentage points. The retention rate was approximately 90, which was positive given the price increases intro duced in recent years. The lower sales can be attributed to a declining average price for motor insurance, among other things because of high sales of cars with a higher level of safety and thereby a lower insurance risk. The higher pricing of many insurance products and the economic situation in Denmark characterised by, among other things, low consumer spending and a low turnover of owneroccupied homes, also contributed to the lower growth in the Private customer segment.
Combined ratio exclusive of run-off 95.9 85.8 96.1 89.4 Run-off, net of reinsurance (%) -10.2 -3.2 -4.0 -5.7 Large claims, net of reinsurance (%) 4.4 5.0 2.4 1.5 Weather claims, net of reinsurance (%) 5.0 4.0 3.9 1.9
For the Sweden business area, which at the beginning of the year also included Finland, focus has been on improving profitability.
Leif and Tove Rasmussen from Dyssegård accepted the offer of the Tryg House Check. The family was hit twice by cloudbursts in 2011 and had to undergo extensive renovation work, which was expensive for
This corresponds to the chosen capital level being insufficient once in a 200-year period on a statistical basis. The model calculates the capital requirement while taking account of the actual business mix, profitability, provisions profile, reinsurance protection, investment mix and scenarios for the additional risk which you may experience in particularly stressed situations. The calculation takes account of the geographical spread and the effect of the chosen investment policy; the interest rate risk attaching to the bond portfolio corresponds to the interest rate risk for the discounted provisions, which means that
rules will make stricter demands on the way in which insurance companies work with and control risks, including the Supervisory Board’s involvement in risk and capital management. Tryg has for a number of years been working to tailor the company to meeting these requirements. This means that the Supervisory Board actively determines the company’s risk appetite and the risk management framework, while regularly assessing the aggregate risk and the derived capital need.
Executive Management and Investor Relations go on a roadshow every quarter following publication of the financial statements to meet with investors and equity analysts.
Nasdaq OMX Copenhagen continues to be the primary exchange for trading in the Tryg share. This is the venue of approximately 80% of the trading that generates liquidity in the share and determines the price of the Tryg share. However, the share continues to be increasingly traded on alternative exchanges (MTF trades through, among others,
The process of selecting new board members is thorough and transparent for the board members. The Nomination Committee selects new candidates for the four board positions, which are not selected from among the members of TryghedsGruppen’s Supervisory Board, and presents its recommendation for the selection of candidates to the Supervisory Board.
Board members elected by the annual general meeting are up for election each year at the annual general meeting. See pages 54-55 for information on when the individual members joined the Supervisory
The remuneration policy also covers Tryg employees whose activities have a significant influence on the Group’s risk profile, known as risktakers, as well as employees in control functions such as compliance and internal audit. See the remuneration policy at tryg.com > Governance > Remuneration.
Education: Economist and engineer. Chairman: Sverige Bryggerier AB, East Capital Explorer AB, HTC Group AB, Pieno Zvaigzdes AB, Svenska Returpack AB, Norrköpings Segel Sällskap and Östkinds Häradsallmänning. Board member: Tryg A/S, Tryg Forsikring A/S and Björk Eklund Group AB. Committee memberships: Remuneration Committee in Tryg A/S. Number of shares held: 100 Change in portfolio in 2012: 0
Vigdis Fossehagen Employee representative Born 1955. Joined: 2012. Nationality: Norwegian. Chairman of Finansforbundet (Finance Sector Union of Norway) in Tryg, Norway. Employed in 1996.
Born 1963. Joined: 2010. Nationality: Danish. CEO of SEAS-NVE amba. Former CFO and CEO of NVE and Budget Manager and Chief Accountant of Rockwool A/S.
Experience from positions with SEAS-NVE and the Royal Danish Air Force, within the fields of M&A, strategy, organisational and management development, communication and business development.
Born 1964. Employed in 1998. Joined the Group Executive Management in 2009.
Per Fornander Group Executive Vice President and Country Manager in Sweden
In 2012, responsible sourcing was introduced as a new provision in
Debt relating to direct insurance 410 415 Debt relating to reinsurance 191 256 25 Amounts owed to credit institutions 11 14 26 Debt relating to unsettled funds transactions and repos 4,161 1,470 16 Derivative financial instruments 35 66 18 Current tax liabilities 260 652 19 Liabilities associated with assets held for sale 0 742 Other debt 740 1,030
Total equity and liabilities 53,184 54,313 1 Risk management 2 Capital management 28 Contractual obligations, collateral and contingent liabilities 29 Related parties 30 Financial highlights 31 Accounting policies
Provisioning risk We make technical provisions at the end of a financial period to cover expected future payments in respect of claims already incurred. The provisioning risk is the risk that future payments deviate significantly from our assumptions when making the provisions. Handled by the Provisions Committee
Other comprises Tryg Garantiforsikring A/S and in 2011 the Finnish branch of Tryg Forsikring A/S. In 2012, the Finnish branch is included under liabilities associated with assets held for sale.
Credit risks from reinsurance counterparties are managed according to framework conditions, such as minimum rating requirements and through the Credit Committee, which monitors the quality of reinsurance counterparties on an ongoing basis. The minimum requirements include a BBB rating from Standard & Poor’s for short-tailed business and an A rating from Standard & Poor’s for long-tailed business.
Profit/loss on ceded business 273 132 107 -9 4 507 Insurance technical interest, net of reinsurance 80 19 41 31 0 171
Reinsurance cover received 1,591 363 Run-off previous years, reinsurers’ share -95 732
Outstanding options from 2007-2010 allocation at 31 Dec. 2012 84,533 293,125 40,014 417,672 - 32 - 41
Technical result 8 -117 Total investment return after insurance technical interest -7 32 Other income and costs -1 113
Other line of business include accident and health, workers’ compensation, marine insurance, fire and contents (commercial), liability insurance and tourist assistance insurance, which are the line of business in which premium income does not exceed DKK 70m.
Foreign currency translation adjustments 3 27 2 32 Transferred to assets held for sale -8 0 0 -8 Transferred from assets under construction 0 10 -10 0 Additions for the year 55 8 11 74 Disposals for the year -9 -19 0 -28
Other financial investment assets Fair value hierarchy for financial instruments measured at fair value in the statement of financial position
18 Current tax Current tax, beginning of year 90 -167 Foreign currency translation adjustments 0 -16 Current tax for the year -500 -949 Current tax on equity entries 7 46 Adjustment of current tax in respect of previous years 26 9 Tax paid for the year 210 425
Premium provisions, beginning of year 6,659 6,770 Price adjustment of provisions, beginning of year 22 185 Paid in the financial year 20,016 20,139 Change in premiums in the financial year -19,924 -20,434 Foreign currency translation adjustments -3 -2
Unaccrued timing differences of statement of financial position items 30 118
Deposits with credit institutions 1,637 949 Receivables relating to reinsurance 1,563 1,614 Bonds and cash and cash equivalents included in the item ‘Assets held for sale’ 0 587 Interest and rent receivable 522 365 Equity investments in and receivables from Group undertakings which have been eliminated in the consolidated financial statements 1,672 2,128
Notes 31 Accounting policies This table concerns a change in accounting policies for 2012 – page 125 (opposite page).
The calculation of the claims provisions is therefore inherently uncertain and, by necessity, relies upon the making of certain assumptions as regards factors such as court decisions, amendments to legislation, social inflation and other economic trends, including inflation. The Group’s actual liability for losses may therefore be subject to material positive or negative deviations relative to the initially estimated claims provisions. Claims provisions are discounted. As a result, initial changes in discount rates or changes in the duration of the claims provisions could have positive or negative effects on earnings. Discounting affects the motor third-party liability, general third-party liability, workers’ compensation classes, including sickness and personal accident, in particular.
Recognition and measurement The annual report has been prepared under the historical cost convention, as modified by the revaluation of owner-occupied property, where increases are recognised in other comprehensive income, and revaluation of investment property, financial assets held for trading and financial assets and financial liabilities (including derivative instruments) at fair value in the income statement.
Costs for Group-developed software that are directly connected with the production of identifiable and unique software products, where there is sufficient certainty that future earnings will exceed the costs in more than one year, are reported as intangible assets. Direct costs include staff costs for software development and directly attributable relevant fixed costs. All other costs connected with the development or maintenance of software are expensed on an ongoing basis.
Calculation of value is generally performed on the basis of rates supplied by Nordea with relevant information providers and is checked by the Group’s valuation technicians. Discounting on the basis of market interest rates is applied in the case of derivative financial instruments involving an expected future cash flow.
Treasury shares The purchase and sale sums of treasury shares and dividends thereon are taken directly to retained earnings under equity. Treasury shares include shares acquired for incentive programmes and for a share buyback programme.
Own insurance is included under other provisions. The provisions apply to the Group’s own insurance claims and are reported when the damage occurs according to the same principle as the Group’s other claims provisions.
Equity – Danish FSA executive order 9,024 10,996 11 Accounting policies Please refer to the Tryg Group’s accounting policies.
Combined ratio exclusive of run-off 99.1 99.1 87.6 102.0 95.9 95.7 90.4 86.3 85.8
Share performance Earnings per share (DKK) 12.8 31.7 9.5 18.9 36.5 Diluted earnings per share (DKK) a) 31.7 9.5 18.9 36.4 Earnings per share (DKK) of continuing business 14.0 33.3 11.9 19.0 36.0 Number of shares, end of period (1,000) 64,378 63,228 60,634 60,373 60,695
Gross expense ratio Calculated as the ratio of gross insurance operating costs, including adjustment and gross premium income. The adjustment involves the deduction of depreciation and operating costs on the owner-occupied property and the addition of a calculated cost (rent) concerning the owner-occupied property based on a calculated market rent.
Unwinding Unwinding of discounting takes place with the passage of time as the expected time to payment is reduced. The closer the time of payment, the smaller the discount. This gradual increase of the provision is not recognised under claims, but under technical interest in the income statement.