Statement by the Supervisory Board and the Executive Management 68 Independent auditor’s report 69 Independent auditor’s report on TRYG A/S’ CSR data for 2011 70 Financial highlights and key ratios 71 Income statement 72 Statement of comprehensive income 73 Statement of financial position 74 Statement of changes in equity 76 Statement of cash flows 77 Notes – Tryg Group 78
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Mikael Olufsen 2011 was a good year for Tryg improved in the insurance results in all business areas. This was extremely positive in a year which, in many ways, was characterised by uncertainty. The debt situation in Southern Europe, in particular, had a negative impact on the national economy and led to severe turbulence on the financial markets, adversely affecting economic conditions in the Nordic region and Tryg’s investment results. At the same time, it was a year when the climate once again proved very significant. In 2010, the winter in particular had a negative impact on Tryg’s business, while 2011 was characterised by cloudbursts and storms.
In spite of these external challenges, in 2011, Tryg achieved a profit after tax of DKK 1,140m. This result is a satisfactory improvement of DKK 547m compared with 2010 and must be seen in the light of the systematic efforts made to improve profitability.
CEO after Stine Bosse resigned. Morten Hübbe assumed the leadership of Tryg following a 2010 that had been characterised by extraordinary events and declining profitability. A major part of
At the beginning of 2011, the Supervisory Board and the Executive Management set a target of achieving a medium-term return on equity of 20%, corresponding to a combined ratio of 90. The target underlines the Supervisory Board’s focus on profitability, ahead of growth, as the fundamental strategy for the coming years. The Supervisory Board is pleased to announce that, in 2011, Tryg made a significant step towards achieving this target.
Executive Management, and this forms part of Tryg’s structure for good corporate governance. This is an important area for the
Supervisory Board and helps ensure Tryg’s continued development and profitable operations.
Overall, 2011 marked a significant step forward for Tryg, and with the initiatives that have been implemented, Tryg is well equipped to continue this good progress over the coming years.
February 2011, it did, however, become clear that there was a need to create more of a culture where the focus was on profitability and which had a clearly defined allocation of responsibilities as to how the objectives should be achieved.
During 2011, work was intensified on implementing the initiatives designed to ensure realisation of Tryg’s target of a return on equity of 20%. These involve the adjustment of premiums on a range of insurance types, claims reduction and a number of other initiatives, such as better procurement of repairs, rationalisation of work processes and general restraint in terms of costs.
The combined ratio for 2011 was 93.5, as against 98.8 in 2010, representing a major step towards a combined ratio of 90 in the medium term. The technical result rose from DKK 375m in 2010 to DKK 1,534m in 2011, but, although the technical result evolved along positive lines, the investment result was only DKK
An insurance result at this level is positive in a year when the
Copenhagen area was hit by one of the greatest cloudbursts in history. As the largest company in Denmark, Tryg received the majority of the claims, and more than 20,000 claims in total were filed. Before reinsurance, claims expenses were DKK 1.2bn, but due to reinsurance, Tryg’s total expenses were DKK 196m. A claim event of this kind puts Tryg’s claims handling under a great deal of pressure, hence it was very gratifying to see the large amount of positive feedback from our customers about their satisfaction with the way in which claims were handled. With regard to Tryg’s customers, it was particularly pleasing to observe that the retention rate remained high in 2011, a year of premium increases, and that, during the course of the year, Tryg came out well in a number of areas, including the European customer satisfaction index EPSI.
The evident improvement in the financial result of 2011 over 2010 is in no small degree due to Tryg’s employees, who made very great efforts in 2011. The implementation of premium increases, changes to processes and organisational change has made many everyday tasks more challenging. When we add to this the great work put in by Tryg’s claims department in connection with the handling of the many cloudburst claims over the summer, it is clear that 2011 was a demanding year for all Tryg employees. In light of this, it was very pleasing for me that the annual employee index survey, conducted in the autumn of 2011, generally indicated clear improvements on what was already a high level of employee satisfaction. It also showed that Tryg was retaining a high level of satisfaction in comparison to the financial sector as a whole.
Return on investments after technical interest 266 163 570 66 Other income and expenses -15 13 -4 -31
Profit/loss for the year, continuing business 368 318 676 1,114 Profit/loss on discontinued and divested business after tax a) 1 26 -83 26
Key ratios Gross claims ratio 77.2 79.0 80.2 79.2 Business ceded as a percentage of gross premiums 1.1 -0.9 1.6 -2.5 Claims ratio, net of ceded business 78.3 78.1 81.8 76.7
The new organisation As of 1 June 2011, Tryg was organised in four business areas, each with a clear, unambiguous responsibility for profitability, including product development, sales and administration. These four areas are: Private | sells insurance products to private individuals in
Along with Morten Hübbe, the Group Executive Vice Presidents of the six areas (Private, Commercial, Corporate, Sweden/Finland,
The annual report 2011 is divided according to the previous division of Tryg’s business into Private Nordic, Commercial
On 11 January, Stine Bosse announces that she will stand down as CEO after 24 years at Tryg, eight of them as CEO.
until the end of 2015. The partnership with CSC now covers
Tryg wins the Customer Service Prize ’Best in Test’ 2011 in
As an extension of the Help 24/7 customer promise, Tryg launches a new travel app: Tryg on the go. This app provides answers to a number of the most frequently asked questions when bad luck strikes on travels. The app is available to all.
On 1 June, Tryg implements an organisational change that aims to guarantee a greater focus on profitability in the individual business areas. The new organisation has a simpler structure, with clear allocation of roles and responsibilities and short decision-making processes.
Tryg enters a new agreement extending the reinsurance cover for weather claims by ac quiring lateral cover that limits Tryg’s expenses in the event of a large number of minor insurance events. While traditional reinsurance cover applies to each event, this cover will take effect if Tryg has incurred claims costs of more than DKK 400m for weather claims distributed across a number of insurance events. The agreement will be affective 1 July 2011.
In anticipation of more climate-related claims and increased payment of claims, Tryg is a part of a Nordic insurance partnership with If, Gjensidige, Trygg Hansa/Codan, and the Nord-Star insurance centre. Through this Nordic climate partnership, the companies want to work actively on claims reduction – both individually and together. Furthermore, the companies want to support climate research with a view to developing a webbased tool that customers can use to investigate the climate risks in the area where they live.
In the annual EPSI image survey, Tryg sees the biggest increase in customer satisfaction. Tryg improves from an index of 75.3 to 76.4. By comparison, the industry average falls by 0.3 index points.
Tryg launches a new environmental insurance policy for commercial and corporate customers, covering the liability which a company assumes in connection with an environmental claim.
Tryg creates a new unit that has as its objective to increase focus on claims reduction and to develop claims handling, and to assume ultimate responsibility for preventive activities to reduce claims.
On 2 July, a violent cloudburst hits Denmark. This cloudburst leads to claims of DKK 1.2bn, as a result of reinsurance,
Tryg’s profit after tax for the year was DKK 1,140m, as against DKK 593m in 2010. The improvement consisted of an increase of DKK 1,159m in the technical result and a reduction in the investment result of DKK 504m. The result was achieved in spite of the developments on the financial markets and a higher level of storm and cloudburst claims, particularly in Denmark.
The result was achieved in a year impacted by major events resulting in claims and difficult economic conditions, which both affected the insurance business and resulted in volatile financial markets. The improvement is due mainly to the effect of the profitability-enhancing initiatives of DKK 1bn implemented in recent years. In 2011, profitability initiatives had an impact on combined ratio of 5 percentage points, whereas inflation in claims expenses had an inverse effect of approximately 3 percentage points, resulting in a net improvement of about 2 percentage points. The level of winter claims was closer to normal in 2011 than in 2010, but on the other hand, storms and cloudbursts costs were considerably higher, primarily due to the cloudburst in the Copenhagen area. As can be seen from the graph on page 13, the total weather claims costs, including winter claims, were somewhat higher in 2011 than in 2010 before reinsurance, but are lower when the effects of reinsurance are included in the calculation. Altogether, the effect of weather claims on the combined ratio was 2.3 percentage points in 2011 compared to 1.0 percentage point in 2010. Furthermore, large claims were at a slightly higher level than in 2010 and amounted to DKK 858m gross, as against DKK 813 in 2010. 2011 also had a slightly higher level of run-off gains, amounting to DKK 944m, as against DKK 824m in 2010.
measured in local currency). The development is due in particular to the effect of the premium increases implemented in all business areas. Gross earned premiums increased the most in Private Nordic, by 6.8% measured in local currency. Growth in the commercial and corporate market was 0.2% and 0.8%, respectively, measured in local currency, and was affected on the one hand by the premium increases implemented, and, on the other, by the negative economic conditions prevailing on the Danish market in particular.
Tryg continously monitors developments in claims costs levels, and, accordingly, in 2011 decided to introduce premium increases in sec-
• Technical result of DKK 1,534m, compared to DKK 375m in 2010.
• The cloudburst in the Copenhagen area on 2 July resulted in expenses before reinsurance of DKK 1.2bn and affected the result by DKK 196m.
• Higher level of large claims than in 2010: DKK 858m, as against DKK 813m.
• Return on equity after tax of 13.1%, as against 6.6% in 2010.
DKK 400m in 2012 and, when added to the impact of previous measures of DKK 600m, the total impact will therefore be DKK 1bn, corresponding to approximately 5% of Tryg’s total portfolio.
Denmark also experienced a series of small cloudbursts during the summer. This was mirrored in June by flooding in Norway as the result of heavy rain. In addition to claims due to rain, Tryg was affected by storms in both Denmark and Norway, as well as the storm Dagmar, which hit Norway, Sweden and Finland in
DKK 1.6bn before reinsurance and DKK 556m after reinsurance, having an impact of 2.7 percentage points on the combined ratio.
The development in terms of more weather claims, particularly as a result of storm and cloudburst, is expected to continue in the future. Especially, the development in terms of cloudbursts has been significant in Denmark, and meteorologists anticipate in future an increase in the number of extremely heavy cloudbursts in particular. This development will increase the claims costs and therefore also the expenses relating to reinsurance to cover this type of risk. To counteract this development, Tryg will continue to work on adapting products and pricing, and actively work on claims reduction for the benefit of both customers and Tryg alike.
Tryg’s Danish business within both Private and Commercial implemented a series of initiatives to reduce future expenses a) Claims costs before reinsurance b) Claims costs after reinsurance
for this type of claim. These include, among other things, advice in connection with reconstruction after the claim, but also requirements governing the installation of claims-reducing measures, such as perimeter drainage and high water sealing drains, as well as changes in terms of the cover provided. Tryg has also introduced additional rules for underwriting new business.
As additional security against weather claims, Tryg extended its reinsurance cover in July 2011 by acquiring lateral cover that limits Tryg’s expenses in the event of a large number of minor events resulting in claims. While traditional reinsurance cover applies for each event, this cover comes into force if Tryg has incurred claims expenses of more than DKK 400m for weather claims distributed across a number of events. As a result of the many storm and cloudburst events in the second half of 2011, the cover is close to coming into force and will therefore limit the risk of weather claims costs in the first half of 2012.
DKK 813m. As can be seen from the graph on page 13, 2010 and 2011 both had high levels of large claims. Tryg believes that there is an underlying trend behind this and has increased the expected level of large claims. As a result of reinsurance cover, the impact of large claims on the total result for 2011 was
The expense ratio was 16.8 as against 17.0 in 2010. The improvement has come about in spite of increased expenses relating to payroll tax in Denmark and redundancy costs in connection with organisational changes. The expense ratio was also affected by expenses for the Tryg Transition project, the aim of which is to design and implement new processes for Tryg’s sales, customer services and claims handling. Tryg Transition focuses on a number of issues, including developing use of the Internet as a platform for serving customers and enabling customers to serve themselves to a greater extent than is currently the case. On the one hand, this will streamline processes to the benefit of the customers, and, on the other, give Tryg the opportunity of focusing even more on areas that create value for customers.
The project includes claims expenses through Tryg’s procurement of claims handling at, for example, car workshops and craftsmen, as well as Tryg’s own costs. In addition, work is continuing on optimising internal processes in both administration and claims handling, as well as on optimising the use of a variety of sales channels.
The return on the match portfolio was DKK 1,706m before transfer to technical interest and DKK 94m after transfer in 2011.
The return on the free investment portfolio was DKK 304m. The result was affected by the negative developments on the financial markets in 2011 due to the economic situation, particularly in the Eurozone, and, more specifically, the debt crisis in Southern
were affected by interest rate trends in Europe and generated a return of 4.1%. On the whole, the make-up of the free portfolio remained unchanged in 2011, and the portfolio continues to be a diversified portfolio of property assets, equities and bonds.
Tax on profit for the year was DKK 455m, corresponding to 29%.
The slightly higher effective tax rate was affected by the loss on equitiy investments, which is not tax-deductible.
Tryg’s equity stood at DKK 9,007m at the end of 2011, and, once subordinated loan capital of DKK 1,589m was added, Tryg’s total capital base was DKK 10,596m. The capital base must be viewed from a number of angles, including in the light of Tryg’s goal of achieving a capital level corresponding to a rating of ‘A-’
December 2011 was determined at DKK 6,320m. The individual solvency requirement must be seen in comparison to the capital base, which is DKK 8,190m, and so, compared to that, Tryg has solvency of DKK 1,870m.
In light of Tryg’s capital level target, it is proposed that
In the opinion of management, from the balance sheet date to the present date, no other matters of major significance have arisen that are likely to materially influence the assessment of the company’s financial position.
In the course of the fourth quarter 2011, expenses relating to the July cloudburst in the Copenhagen area also increased, making total expenses before reinsurance of DKK 1.2bn, and expenses after reinsurance, including reinstatement of cover,
• The quarter was effected by claims costs arising from storms Berit and Dagmar, with weather claims totalling DKK 305m.
Profit/loss on ceded business -26 -8 38 253 Technical interest, net of reinsurance 22 19 77 106
In recent years, significant premium increases have been implemented in order to improve profitability. The need for any further measures is assessed on an ongoing basis; the rising expenses relating to weather claims and repair cost trends are closely monitored. Since this affects the entire insurance market, the premium levels in the markets have experienced an across the board rise. Along with the clear increase in expenses relating to weather claims, Tryg’s premium increases have been met with relatively high acceptance among customers, which is reflected in a high and stable retention rate. In 2011, customer satisfaction surveys were conducted by EPSI, an independent organisation. The survey showed that customer satisfaction had risen in both Denmark and Norway. This is a good starting point, which testifies to a strong customer relationship in a year where the premiums have increased.
The development of Tryg’s new websites, launched in Denmark and Norway in 2011, has also focused on the relationship the company has with customers. A large proportion of Tryg’s
customers use the websites to search for information about their insurance policies and insurance needs. Similarly, many use the websites to report smaller claims. Another initiative was the launch of Tryg’s travel app, which has a number of features, including allowing travellers to securely store copies of travel documents, passport and credit cards, etc., on their mobile phones.
Danish private business was a major contributor, with a growth of 8.3%, driven by the premium increases that had been implemented. This was further augmented by growth in the Norwegian private business of 4.4% and continued growth in Sweden and
Finland, but at a lower level than in previous years. The Danish private business implemented premium increases chiefly for house and contents insurance, whereas the increases in the
The effect of premium increases was clearly manifested in the average premium for Danish private customers, which rose by 5.7% during 2011, whereas the equivalent for Norwegian private customers rose by 2.9%.
This gives Tryg the possibility of offering a better product in a number of ways, including via the Tryg Family concept. This type of customer also has a higher retention rate and is therefore more profitable.
In Norway, the retention rate remained relatively steady at 86 throughout the year. Overall, these high levels testify to a high degree of acceptance and customer satisfaction, which is an important and enduring cornerstone of Tryg’s business model.
& MC, Product Insurance and Atlantica Yacht delivered good results, with the combined ratio being below 90. Overall,
For a number of customers, however, it was not the first time they had reported claims as a result of a cloudburst. Tryg and
Tryg’s customers share a common interest in reducing future cloudburst claims, and Tryg has therefore approached these customers with views to reduce and limit future claims. The measures include installing preventive measures such as high water sealing drains and perimeter drainage, as well as changes such as increases in policy excesses and limitations on contents cover in basement areas. Tryg has set up a dedicated department responsible for claims reduction, whose role is to ensure existing claims-reducing measures are clearly defined and that new ones be developed.
Denmark lower than this. An assessment of claims inflation is essential when determining the size of premium increases.
Overall, the claims ratio for Private Nordic was 76.9, compared to 80.4 in 2010.
Costs continued to be in focus in Private Nordic during 2011.
Work is currently underway to optimise the use of various different sales channels and thereby bring down the costs associated with sales. One example of this is the systematic work undertaken to increase the sales and delivery of service via the
Internet. Existing customers, in particular, who want additional cover or make simple changes to their policy will be able to serve themselves via the Internet to an even greater extent.
Higher payroll tax on Danish employees, as well as redundancy costs, had a negative impact on costs, but if these effects are disregarded, the development d in the expense ratio from 16.0 to 16.1 in 2011 was satisfactory.
• Weather claims accounted for DKK 106m, as against DKK 138m for the same period in 2010.
The implemented profitability initiatives had a positive impact, which manifested in an improved underlying development in the result. In 2010, Commercial Nordic was particularly hard hit by winter claims, and the significant improvement was due mainly to the absence of extraordinary winter claims in 2011. However, the Danish part of Commercial Nordic was affected by the cloudburst that hit in the Copenhagen area in July. The expense ratio improved from 24.2 in 2010 to 23.6 in 2011. Cost levels are still too high, and focus is on reducing these via process improvements, optimising the use of different distribution channels and, in the long term, increasing customer retention. The Danish part of the commercial area continues to be most adversely affected by the recession. This was manifested in a number of ways, including the fact that the number of bankruptcies in Denmark once again rose in the second half of 2011. The fluctuations in the economy result in difficult conditions for commercial customers, which influence the companies’ insurance needs.
The result improvements indicate that the measures initiated are having a beneficial effect on the result. However, the combination of measures and an economic situation that remains difficult for many medium-sized and smaller business, in Denmark in particular, resulted in difficult conditions for insurance policy sales in 2011, why growth was relatively limited.
Gross premiums rose to DKK 4,237m in 2011, corresponding to a growth of 0.2% in local currency. The low growth was adversely affected by the recession, particularly in Denmark, and boosted by the premium measures implemented, which passed off with the anticipated minor impact on retention rate. The retention rate only fell by around one percentage point to 85.5 in the Danish part of Commercial
Nordic and, on the whole, remained unchanged in Norway at 88.4.
In Commercial Nordic too, claims-reducing measures were implemented as a result of increasing cloudburst claims. The measures include instructions to customers to locate stocks and inventories in basements at least 40 cm above floor level and requirements on reconstruction using materials capable of withstanding water.
This also has a negative knock-on effect on the insurance business. In 2011, as mentioned, a number of measures to improve profitability were initiated, but further measures may prove necessary, as the claims ratio for agriculture continues to be too high.
The expense ratio was improved from 24.2 in 2010 to 23.6 in 2011. The improvement is due partly to cost restraint and partly to lower sales, resulting in a reduction in sales costs. However, the cost level remains too high and is to be reduced through a series of measures. In order to reduce the cost level, a number of process improvements are being carried out, and use of the various distribution channels will also be optimised. In spring 2011, Tryg entered into a new agreement with the company’s tied agents in
Denmark. The agreement resulted in a reduction in total salary payments of almost 5% during 2011 and with no increase during the next two years. The agreement will therefore reduce the cost level.
• Weather claims amounted to DKK 51m, compared to DKK 39m during the same quarter of 2010.
• The expense ratio rose from 23.5 to 24.0 and was under pressure from the lower premium level.
Key ratios Gross claims ratio 78.4 91.2 71.5 80.6 Business ceded as percentage of gross premiums 2.3 -4.6 8.2 -2.1 Claims ratio, net of ceded business 80.7 86.6 79.7 78.5
Premium income amounted to DKK 5,275m, equivalent to growth of 0.8%. In Denmark and Norway, growth was negative at 0.8%
The Swedish business is continuing to grow. The Swedish part of
• Technical result improved from DKK 403m in 2010 to DKK 531m.
The claims ratio for 2011 amounted to 80.6, and was affected by cloudbursts, large claims and a high level of run-off gains.
The corporate area is not normally affected by weather claims to such an extent, but many large businesses were affected by the cloudburst in the Copenhagen area. In addition, 2011 was a year with a relatively high level of large claims compared to an average year. Large claims amounted to DKK 636m gross, compared to
The variation in expenses for weather claims and large claims does not in itself give cause to implement premium measures. Given the actual course of events in 2011, the assessment is however that for both weather claims and large claims, there is a negative underlying trend which must be matched in the pricing within buildings and contents insurance in particular. For this reason,
Corporate Nordic is implementing premium increases for products and segments with an unsatisfactory trend. This applies for example to buildings insurance in the Norwegian part and within power plant insurance, as this area has experienced particularly unsatisfactory levels of profitability. In both the Danish and the Norwegian part of the portfolio, measures are also being implemented on the basis of the customers’ individual claims development over time. In the Swedish part of the corporate portfolio, the selective development of the business is continuing alongside the implementation of profitability measures within motor in surance in the agent-served part of the portfolio in particular.
The result for the fourth quarter amounted to DKK 21m and was particularly affected by a high level of large claims and run-off gains, which can especially be attributed to the personal injury business. Large claims affected the combined ratio by 17.2%, compared to 8.7% in 2010. The higher level of weather claims during the quarter was influenced by the two storms Berit and
Copenhagen area in July 2011. Premium growth was negative at approximately 3%, primarily as a result of profit sharing between a number of schemes due to a good claims ratio and a reduction in the net loss of customers following the premium measures.
• Combined ratio of 99.2 compared to 93.7 during the fourth quarter of 2010.
The principles for subdivision are described in more detail in the
In 2011, Tryg’s collective investment portfolio of DKK 43.0bn generated a gross return of DKK 2,010m, corresponding to a return of 4.8% on average invested capital during the period, compared to 4.3% during 2010.
a) DKK -44m sold on futures contracts is included in the equity portfolio.
The overwhelming majority of the combined bond portfolio, 80%, has been invested in bonds with an AAA rating, 10% in AA-rated and 9% in A-rated. Norwegian money market instruments without any rating, but with good credit quality, amount to 1%.
In 2011, the match portfolio, which consists exclusively of bonds and deposits, generated a return of DKK 1,706m. This return must be compared to the DKK 1,612m that concerns transferred technical interest and price adjustments resulting from a change in the discount rate. The total mismatch during 2011 was DKK 94m, or 0.3% of the total match holding.
Supervisory Authority made it possible for the insurance sector to use an alternative discount rate. Tryg declined this option in order to reduce complexity, despite the possibility of a short-term gain.
The property portfolio, which consists of Danish and Norwegian properties, generated a return of DKK 239m, or 6.3%, which was slightly better than anticipated and a little below the result for 2010.
c) The item comprises interest on operating assets and bank debt, exchange rate adjustment of insurance items, costs of investment activities and offsetting of return on owner-occupied property.
Result of investment activities Investment Return Return Q4 2011 assets DKKm Q4 2010 Total Match Free 31.12.2011
Net income from investment activity before other financial income and expenses amounted to DKK 215m, compared to DKK 306m during the fourth quarter of 2010. The match portfolio had a mismatch of DKK 6m and thus closely corresponded to the targets for this part of the portfolio.
Tryg expects premium growth at a lower level than in 2011
– growth which will be particularly driven by premium measures and influenced by the economic developments in the commercial and corporate market in particular.
Given recent experiences, the level of both weather and large claims is expected to be higher in 2012 compared to what Tryg has previously assumed for a normal year. More frequent and violent cloudbursts in particular are the reason for the higher anticipated level of weather claims.
The expense ratio is expected to fall in 2012. This is partly expected to be achieved through the optimisation of processes in the commercial market, distribution and within staff areas.
As in previous years, Tryg’s capital is once again in 2012 expected to be considerably in excess of the capital requirements that will be imposed on the insurance sector under the impending Solvency
‘A-‘ rating, in connection with which Tryg has established a safety margin of 5%.
the correct customer deliveries, securing an efficient organisation and achieving ambitious financial objectives.
Delivery of the right products is a prerequisite for Tryg to achieve the targets. Tryg must satisfy the needs of customers to feel peace of mind from the very first day, and must do so in such a way that they continue to prefer Tryg as a peaceof -mind provider. The joint Nordic brand platform that was introduced in 2010 provides Tryg with a basis on which to develop its position in the Nordic insurance markets.
Tryg aims to achieve a high level of customer satisfaction. Customer experience is key, and focus will continue to be on claims handling, claims reduction and high-quality products and services. Customers must be informed about claims reducing measures and experience short response times when a claim occurs. The customer must also be guaranteed the correct premium, and there will be an increased focus on price differentiation and faster premium adjustments when the level of risk changes.
activities at Tryg are an integral part of both the insurance business and investment activities.
Tryg focuses on efficiency improvements and on reducing the expense level. Over the next few years, the Tryg Transition programme
• Improve profitability in Sweden and Finland. • Improve Time to Market – act more quickly in response to developments in the risk profile. • Reduce costs by streamlining processes, IT operations and procurement.
We are available to our customers around the clock online and in our emergency call centre, where we offer our customers urgent assistance if the worst happens.
will be developing a new Nordic business platform, which aims to improve efficiency and reduce product complexity. This will take place by such means as significantly improving self-service facilities for customers, both in a claim situation and when servicing their policies. At the same time, the new platform aims to contribute to improve customer experience and to increase customer retention.
Qualified employees with a high level of commitment are an essential part of ensuring high customer satisfaction, and Tryg wants its employees to enjoy a very high level of job satisfaction. The ability to attract the best employees and new talent is an important factor in terms of achieving ambitious targets.
qualifications are developed in line with the changing necessary skill requirements. Tryg also considers diversity in the workforce to be a competitive advantage.
Tryg focuses on employees’ well-being and development, and strives to continuously develop as an attractive workplace.
2009: 100 2010: 102 2011: 104 2007: 100 2008: 100 2009: 103 2010: 102 2011: 103 2007: 22.8 2008: 9.3 2009: 22.5 2010: 6.6 2011: 13.1
The Nordic market continued to have a pronounced focus on profitability in the underlying business. This behaviour will presumably continue for the next few years.
In Denmark, a number of proposed changes to legislation might affect the conditions for insurance companies. A couple of these relate to the latest Danish Finance Act. In the area of workers’ compensation, the proposal for an increase in the retirement age means that insurance companies will have to strengthen their reserves, as the duration of ongoing services will be extended. At the same time, workers’ compensation is being levied a duty of 13.5%. This duty will presumably mean that insurance companies will have to increase premiums and at the same time strengthen their reserves for future claims payments. Finally, the proposal to remove the right to deduct health insurance premiums will make it more difficult for companies to sell health insurance policies in the future.
As the second largest general insurance company in the Nordic region, Tryg is obviously affected by developments in the Nordic insurance market, but at the same time also contributes to impact these developments.
Thus, Tryg did not suffer to any great extent from the economic trend in 2011.
In addition to the work in pricing compared to risk, there was also a focus on efficiency improvements of internal processes, especially in connection with claims handling. In this context, it is expected that the Tryg Transition and Next Level Sourcing projects will contribute to efficiency and process improvements, which will in turn contribute to improved earnings in the underlying business and ensure that Tryg can continue to run an efficient insurance business in a changing market.
Tryg enjoys a strong position in the Nordic market and will continue to improve and develop existing sales channels so that a high level of service and effective access to Tryg’s products are guaranteed. Despite increased competition in certain markets, it is therefore expected that Tryg will be able to retain its market share in the four Nordic countries.
Percent a) Estimated market share of the private market is above 5%.Source: The official market statistics from the countries concerned.
Being one of the largest insurance companies in the Nordic region,
Tryg offers a broad range of insurance products to both private individuals and businesses. Tryg develops new products on a regular basis and continuously adapts existing peace-of-mind solutions to customer requirements and developments in society.
Tryg sells insurance products through its own sales channels and through partners such as Nordea. It is an important element of Tryg’s distribution strategy to be available in places where customers want it and that most distribution takes place via the company’s own sales channels.
As a peace-of-mind provider, Tryg also aims to deliver total solutions to customers. The need for insurance policies changes throughout life, which is why private customers, for example, are treated differently according to the phase of life they happen to be in.
The phases of life are characterised by differences in the level of activity, form of cohabitation, work, finances and need for peace of mind. Segmentation enables Tryg to the greatest extent to offer advice and solutions that match customers’ actual needs, tailored to the various phases and situations in life. At the same time, this targeted advice and individual service creates even more satisfied customers and improves sales opportunities. It must also be clear to the customer that it can be worthwhile to have all their insurance policies with us.
In recent years, Tryg has been working to highlight the peaceof -mind deliveries with a view to clearly positioning Tryg as a provider of peace of mind. In 2011, Tryg launched the Help 24/7 customer promise, under which customers can phone Tryg’s emergency centre and receive assistance 24 hours a day. Initially, urgent claims will be processed by the emergency centre, but it is the customer who performs the judgement, and customers now have the opportunity to contact Tryg whenever they want, which is an important parameter in good customer service.
EPSI, an independent non-profit organisation. Customer loyalty is measured on a scale of 1-100, and both customer loyalty and customer satisfaction in the area of insurance are generally high in the Nordic countries compared with other countries in Europe.
In Denmark, Tryg had the highest level of customer satisfaction among the four largest companies, seeing customer satisfaction rise from 75.3 in 2010 to 76.4 in 2011. By comparison, the industry average fell by 0.3 percentage points to 75. In terms of image, Tryg also recorded a significant score increase from 70.7 to 74.8, compared with the industry average of 73.4. In Norway, customer satisfaction rose from 68.0 in 2010 to 72.0 in 2011, which is above the industry average of 71.0, which rose 3 percentage points compared with the 2010 survey.
Impairment insurance was another initiative launched for commercial and corporate customers in 2011 that covers any liability that a company incurs in connection with environmental Impairment claims. Companies can be held liable for emissions of pollutants, regardless of whether the company is guilty. This Impairment insurance provides the customer with extra peace of mind and covers, among others, the costs of restoring the natural environment.
base and financial strength for the Group to assume risks from customers.
Tryg’s ability to take over and spread risks from its customers.
Tryg’s risk profile taking into account natural growth. Tryg aims to have the necessary capital, but no more. This fundamental view therefore also determines the dividend policy.
Through capital and risk management, Tryg aims to secure financial strength and flexibility. The capital management is based on: • Tryg’s internal capital model
Tryg’s current risk profile. The capital requirement is determined with a 99.5% level of certainty, which corresponds to the chosen capital level statistically being insufficient once in a 200-year period.
In addition to the requirements imposed by the credit rating agencies, the Danish authorities impose requirements concerning active capital management through the determination of an individual Solvency requirement. These requirements are a precursor to the future Solvency II rules. Tryg’s determination of the individual Solvency requirement is based on Tryg’s internal capital model, which calculates the required capital, taking into consideration the actual composition of the business, profitability, provision profile, reinsurance protection, investment composition and scenarios for the additional risk that could be experienced in particularly stressful situations. The determination takes into account the geographic diversification effect and the effect of the chosen investment policy, where interest rate risk on the bond holdings matches the corresponding interest rate risk on the discounted provisions, so that Tryg’s net interest rate risk is for practical purposes insignificant. The individual solvency requirement is determined quarterly and reported to the
Danish Financial Supervisory Authority. The individual solvency requirement was DKK 6,320m at the end of 2011, compared to DKK 6,077m at the end of 2010. With a capital base of DKK
8,190m, Tryg has excess cover compared to this of DKK 1,870m.
The introduction of Solvency II will impose stricter requirements 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 been working for many years to adapt the company to these requirements. This means that the
(Own Risk and Solvency Assessment), which is a systematic and comprehensive self-assessment of Tryg’s risk and solvency. Such an assessment will be a requirement under Solvency II.
Standard & Poor’s uses the term ‘Total Adjusted Capital’ (TAC), where intangible assets are also deducted from the capital base, and where the subordinated loan capital must generally not exceed 25% of the total capital.
EUR 150m listed on the London Stock Exchange. In 2009, in connection with the acquisition of Moderna, Tryg took out a subordinated loan with expiry in 2032 of EUR 65m from
TryghedsGruppen, which owns 60% of Tryg. Tryg’s total holding of subordinated debt subsequently amounted to approx. EUR
215m. In total, debt amounted to 18% of equity at the end of 2011, and interest expenses during 2011 amounted to DKK 83m.
The requirement for reinsurance is assessed on an ongoing basis based on Tryg’s internal capital model, where the reinsurance premium is compared to the reduction in the capital requirement that could be achieved, and the price of capital.
Nature disasters, large claims and, for example, terrorist incidents represent the primary threat to the capital base as a result of insurance events. As a result of this, catastrophe reinsurance has been taken out with a capacity of DKK 5.5bn. In the event of claims in the range DKK 100-175m, retention increases from
DKK 100m to DKK 141m. In the event of claims in excess of
The capacity is determined through modelling so that it statistically would prove insufficient in less than one occasion every 250 years. In addition, catastrophe hedging has been purchased for personal injury claims originating from the same event, including terrorism. The capacity amounts DKK 1.5bn with retention of DKK 50m. Terrorist incidents are also covered by a national guarantee scheme on the Danish market.
During 2011, uncertainty has arisen concerning the implementation date for Solvency II, which determines the future solvency rules within the insurance area. In many quarters, there is now a belief that early 2014 is the most likely implementation date for the Solvency II Directive, which imposes both quantitative and qualitative requirements on insurance companies and will require extensive revision of existing legislation.
Since 2005, Tryg has been participating in the trial calculations for a standard model under Solvency II. Compared to the current specification of the capital requirement in the standard model, Tryg had excess cover of DKK 1,865m as of 31
In addition to the way in which capital is determined, the impending Solvency II rules will alter the authorities’ requirements concerning capital structure. Under Solvency II, the capital will be subdivided into Tiers (1-3), which indicate the quality of the company’s capital. It is Tryg’s belief that 73% of the capital will be approved as Tier 1, 22% as Tier 2, while the remainder will be classified as Tier 3. Tryg is closely monitoring developments and will include this factor in its deliberations when the dividend for the year is determined.
Read more about Tryg’s dividend policy in the section The Tryg share on page 65.
Ejendomsselskabet Vognmagersgade 11 ApS, Malaplast Co. Ltd and the Danish Rheumatism Association.
Mr Olufsen has experience from managing international companies, including strategic development, and experience as a board member of Danish and international companies.
Senior Advisor at HitecVision and professional board member. Former President and CEO of Helicopter
Educational background: M.Sc. (Business Economics ), IMD Executive Development Programme and Strategy in Action Programme, Leadership
Mr Bergqvist has international management and board experience in M&A, strategic development, marketing, branding and financial management.
Board member: Tryg A/S, Tryg Forsikring A/S, TryghedsGruppen smba, VKR Holding A/S and Aida A/S
Mr Sørensen has experience of international management and skills in the fields of strategic development, finance, M&A and branding.
Ms Skole has experience from international corporations, including her work with Coloplast and The
The Group Executive Management handles the day- to-day management of Tryg and in addition to the CEO consists of the VPs of the business areas, Claims and Group Finance. Morten Hübbe, Tor Magne Lønnum and Lars Bonde form the Executive Management.
At Tryg, we consider it important that all employees have a development plan to continuously develop qualifications and set professional and personal targets. In 2011, 84% had an updated development plan compared with 81% in 2010. The results are satisfactory, not least in the light of the fact that 2011 was characterised by a wide-ranging organisational change at Tryg.
Since 2007, Tryg has worked with Lean, the key elements of which are optimisation of processes, increased customer value and quality. Work with Lean involves keeping a close eye on defined targets and guaranteeing continuous improvements with the aid of numerous good suggestions received from employees. A new feature developed by Tryg in 2011 is an electronic notice board to help the high number of employees who drive out every day on customer visits.
Tryg values diversity in the workforce. Tryg sees the benefits of having a workforce that stretches beyond the established limits of ethnicity, gender, age, disability, sexual orientation, faith and religion, but at the same time one that is in line with the usual requirements of high quality when employing people.
Tryg’s Nordic Graduate Programme is designed for recent graduates from a university or a business school. The programme was launched in 2006, with new graduates being recruited every other year.
The Graduate Programme runs over 19 months and consists of an introductory course and three practical placement periods, each lasting six months. The placements take place in various departments throughout the company, with one period being spent in administration and one in another Nordic country. This gives graduates a broad experience and insight into the workings of Tryg, and provides a solid foundation for a subsequent career in the company. During the process, there is an opportunity to take part in various courses in areas such as insurance studies, negotiation and presentation techniques, and project management.
The Corporate Governance Committee published new recommendations for corporate governance in 2010. In 2011, the Committee added another recommendation on diversity.
The Supervisory Board ensures that Tryg’s capital structure is in line with the needs of Tryg and its shareholders, and that the capital structure is compliant with the requirements applicable to Tryg as a financial undertaking. Tryg has adopted a capital plan and a contingency capital plan that are reviewed each year by the Supervisory Board.
April. The Supervisory Board convenes the annual general meeting in accordance with the Danish Companies Act and the company’s
• Presentation of the annual report for approval, including determination of the Supervisory Board’s remuneration and discharge from liability of the Supervisory Board and the Executive Management
The Supervisory Board has resolved that annual general meetings will be held by physical attendance, as the Supervisory Board
The Supervisory Board intends to consider any public takeover bid as prescribed by legislation and, depending on the nature of such bid, to convene an extraordinary general meeting of shareholders in accordance with applicable rules.
Tryg, which describe Tryg’s relationships with various stakeholders. Tryg places an emphasis on social responsibility, and Tryg’s
The Supervisory Board performs overall strategic management and makes sure that there is a sound organisation of the company, and also performs financial control of Tryg. In this work, the Supervisory Board uses targets and limit management based on regular and systematic consideration of strategies and risks.
The Executive Management reports to the Supervisory Board on strategies and action plans, market developments and Tryg’s performance, funding issues, capital resources and special risks.
The Supervisory Board holds an annual strategy seminar to define and/or adjust the Group’s strategy. The Supervisory Board cooperates with the Executive Management to ensure follow-up on and development of Tryg’s strategy. The Supervisory Board ensures that the required skills and financial resources are available for Tryg to achieve the strategic targets. The framework is discussed at the Supervisory Board’s annual strategy seminar and budget meeting. The Supervisory Board specifies its activities in the company’s rules of procedure and annual cycle.
Chairman and the Deputy Chairman also plan the future composition of the Supervisory Board.
The Supervisory Board performs an annual assessment of the skills required for the Supervisory Board to perform its duties in the best possible way. Tryg focuses on skills in the fields of financial operations, IT, marketing and management. The description of skills is available at tryg.com and is included in the notice of the annual general meeting.
Chairman of the Supervisory Board of Tryg A/S. Furthermore, the Supervisory Board of TryghedsGruppen smba elects three members to the Supervisory Board of Tryg A/S from among the members of TryghedsGruppen smba’s Supervisory Board. The
The process of selecting new Supervisory Board members is formal, comprehensive and transparent for the Board members.
Prior to the election of new members, the Supervisory Board prepares a description of the candidates’ background, directorships, professional qualifications and experience. A balanced distribution with respect to, among other things, age, gender and nationality is sought in the composition of the Supervisory
When taking up office, new Supervisory Board members are given an introduction to Tryg.
The Supervisory Board performs an annual self-assessment of the Supervisory Board’s work and its members’ skills to assess whether the Supervisory Board has the required skills, or whether the skills and expertise of its members need to be updated in any respects.
Under the Danish Companies Act, employees are entitled to elect a number of representatives to the Supervisory Board, equal to half the number of other members at the time employee elections are held. Tryg has agreed with the Tryg’s staff organisations that two Supervisory Board members are elected from employees in Denmark, one member from employees in
The next regular election of the four employee representatives will be held in 2012. Pursuant to legislation, employee representatives have the same rights, obligations and responsibilities as the other Supervisory Board members.
The Supervisory Board and the individual Board members deem that each member has adequate time and resources to perform their office as a Supervisory Board member of Tryg in a satisfactory manner. The Board members’ position, directorships and holding of Tryg shares and changes in portfolios can be found in the Board members’ CVs.
The ages of the individual Supervisory Board members are described in the section Supervisory Board and at tryg.com > Governance >
Tryg’s Supervisory Board has set up an Audit Committee, a Remuneration Committee, a Risk committee and a Nomination Committee.
Tryg publishes the terms of reference for the Board committees at tryg.com. Information about the Board committees includes descriptions of members, meeting frequency, responsibilities and the activities of the committee during the year. Furthermore, the special qualifications of each Supervisory Board member are described separately at tryg.com.
Board committee members are elected primarily on the basis of their special skills that are considered by the Supervisory Board to be most important. It is also considered important to involve the employee representatives in the committees. The committees work exclusively on the preparation of matters for decisions by the full Supervisory Board.
Chairman of the Audit Committee of Tryg A/S in 2011. The members of the Audit Committee have knowledge and experience of financial conditions as well as accounting and audit experience in publicly listed companies. In addition to Torben Nielsen, the Audit
The Audit Committee’s work in 2011 is described in the terms of reference, which can be downloaded at tryg.com > Governance > Management >
The committee’s work is described in the terms of reference at tryg.com > Governance > Management > Supervisory board > Board committees
Tryg has set up a Nomination Committee. The purpose of the
The Nomination Committee’s work is described in the terms of reference at tryg.com > Governance > Management > Supervisory board > Board committees
Chairman of the Supervisory Board is Chairman of the Remuneration Committee. Furthermore, the committee must be represented by at least one member of TryghedsGruppen’s Supervisory Board and at least one independent Board member. The committee has one independent member at the present time. Board committee members are elected primarily on the basis of their special skills that are considered by the Supervisory Board to be most important. It is also considered important that an employee representative is included in the Remuneration Committee.
Olufsen (Chairman), Jesper Hjulmand, Paul Bergqvist (independent ) and Berit Torm (employee representative).
The Supervisory Board also reviews and approves the rules of procedure of the Supervisory Board and the Executive
Tryg for the current financial year is also submitted for approval by the shareholders at the annual general meeting of each year.
The fixed salary must be competitive and appropriate for the market in order to provide correct, sufficient motivation for the
Jørn Wendel Andersen 300,000 150,000 450,000 Christian Brinch 300,000 300,000 Jens Bjerg Sørensen a) 213,308 213,308
Director is retained, and partly to secure a joint financial interest between the Director and the company’s shareholders.
Each member of the Executive Management is entitled to 12 months’ notice of termination and to 12 months’ severance pay.
Supervisory Board uses policies to define the framework for risk management in Tryg in the areas of insurance risk, investment risk and operational risk, as well as IT security. These frameworks then result in guidelines for Tryg’s risk management. A Risk Management Committee comprising the Group CEO, Group CFO and
Tryg’s strategy or which may have a potential substantial impact on Tryg’s financial position. In this process, identified risks are recorded and quantified. Risk identification is included in the annual risk report to the Supervisory Board. Quantification of the risks identified is included in the statement of the individual solvency requirement that the Supervisory Board considers every quarter.
In 2011, Tryg performed an assessment of the company’s risk and solvency (Own Risk and Solvency Assessment, also known as
Total remuneration of the Executive Management in 2011 Matching shares DKK Basic salary Pension Car Total salary value Total
The Executive Management reports to the Supervisory Board on the Group’s risk management work. The overall responsibility for the Group’s internal controls and risk management systems rests with the Supervisory Board and the Executive Management. The
Supervisory Board and the Executive Management approve and monitor Tryg’s general policies and guidelines, procedures and controls of significant risk areas, and receive reports on trends in these areas as well as on application of the defined frameworks.
In connection with major acquisitions, a general risk analysis is performed, and the significant business procedures and internal controls are reviewed. The Executive Management has established a formal Group reporting process, which comprises monthly reporting, including budget reporting and deviation reporting.
Read more about Tryg’s Ethical Hotline at tryg.com > Governance > Ethical Hotline
The Supervisory Board considers that Tryg is following the recommendations for corporate governance apart from point 5.10.2, as most members of the Board committees cannot be considered to be independent. Board committee members are elected primarily on the basis of their special skills that are considered by the Supervisory Board to be most important.
At Tryg, CSR is integrated into the business. This means that in all of our activities, we strive to unite sound business activities with the role of a good coporate citizen. It is quite natural for us to assume responsibility for our stakeholders. Through our CSR
initiatives, we focus on socially responsible solutions for customers, suppliers, employees, investors and society in general.
A new initiative involves our measuring the volume of our waste as well as the CO2 emissions associated with disposal, including incineration and recycling of our sorted waste.
Claims reduction has a positive effect, not only for our customers and investors, but also for society as a whole. Prevention must simultaneously enhance customers’ perceived peace of mind and reduce costs by means of avoiding and limiting claims. Prevention must not only enhance customer loyalty, but also contribute to making Tryg a more attractive peace-of-mind provider for potential customers.
As a peace-of-mind provider, we therefore offer advice on effective claims reduction in connection with: climate-related challenges such as snow, rain and storms, and also the prevention of claims after fires, in association with building projects and in traffic, and in cases involving personal injury we also work actively to limit the course of illness by means of treating injuries quickly and effec-
Tryg saved DKK 11m in air transport in 2011 and achieved a 20% CO2 reduction from 2007 to 2011.
As of 31 December 2011, there were 373 active groups of ’Night
In 2012, Tryg will extend its preventive initiative at both the strategic and the practical level. Tryg aims to maintain a closer
dialogue with customers on prevention, including such means as a number of seminars and more advice in 2012, and Tryg also wants to work more on the implementation of a conceptualisation of peace of mind.
In 2012, Tryg’s new action plan for women in management was implemented, including mentoring programmes for female managerial talents and a target of 2% more women in management. Tryg wants to continue to maintain a focus on the recruitment of employees with a non-western background, and is making special efforts to make Tryg accessible for employees with disabilities.
Read more about our measures to promote well-being at tryg.com > CSR
In 2012, we will continue to focus on our employees’ health and access to sporting activities. In 2011, Tryg extended the partnership with the Youth Town in Rødovre. This means that in 2011 we held 75 ‘Get to Grips with Finances’ courses, 30 more than in 2010. The target is that 82 classes will complete the course before the end of 2012.
At Tryg, we make demands of ourselves and our business partners when it comes to responsible, sustainable solutions for our customers. Through CSR in procurement, Tryg contributes to the development of healthy, robust companies that benefit society in financial, social and environmental terms. By engaging in dialogue
This requirement includes targets and reporting on CO2 reductions, protection of human rights and employees’ rights, as well as anticorruption and supplier management.
• having in-depth insight into and knowledge of Tryg as well as relevant external trends,
Information that may influence the pricing of Tryg shares is published in accordance with the rules applicable to the distribution of news in the EU. As the Tryg share is listed at Nasdaq OMX
Europe, the STOXX Euro Insurance Index, fell by 14% in 2011. The
Tryg share’s performance in 2011 was characterised by the turbulence in the financial markets, which generated increased demand for insurance shares, which are regarded as stable investments.
Nasdaq OMX Copenhagen fell from 44 million in 2010 to 33 million in 2011. But at the same time there was an increase in trading of the Tryg share on the alternative trading platforms, which now accounts for a notable proportion of trading in the Tryg share.
Financial calendar 2012 19 April 2012 at 14:00 CET Annual general meeting 2012 20 April 2012 Tryg shares trade ex-dividend 25 April 2012 Payment of dividend 14 Maj 2012 after 17:00 CET Interim report for Q1 2012 14 August 2012 after 17:00 CET Interim report for H1 2012 7 November 2012 after 17:00 CET Interim report for Q1-Q3 2012
Tryg has a total share capital of DKK 1,532,902,575, comprising a single class of share (61,316,103 shares of DKK 25 nominal value each), and all shares rank pari passu. The principal shareholder,
TryghedsGruppen smba, Kgs. Lyngby, Denmark, holds 60% of the issued shares. TryghedsGruppen is the only shareholder with ownership of more than 5%. TryghedsGruppen invests in Nordic companies in the field of peace of mind and healthcare, and provides support to charitable activities. As of 31 December 2011, there was a free float of 40% of the shares, divided among 27,194 registered shareholders. The 200 largest shareholders held 71% of the free float. At 31 December 2011, Tryg held 942,834 of its own shares, corresponding to 1.54% of the share capital.
b) The share buy back programme was based on the profit for 2009, amounted to DKK 799m and was initiated on 16 April 2010 with completion on 7 February 2011.
At 31 December 2011 a) Shareholders with more than 10,000 shares.
16.05.2011 19 Tryg employs new CFO and changes the organisation 14.06.2011 20 Tryg capital reduction a) After implementing the share buy back programme on 16 April 2010, Tryg issued a company announcement on the weekly share buy backs each week
The company’s website is available in Danish and English, and is continuously updated and developed, making it an important means of keeping interested investors informed about Tryg’s performance. In 2011, Tryg’s Investor Relations department issued an IR newsletter about the Norwegian pool scheme for natural claims. The newsletter was issued when deemed appropriate and deals with topical issues in order to create a better understanding of factors of importance to
Tryg holds the annual general meeting on 19 April 2012 at 14:00 at Falkoner Centret, Falkoner Allé 9, 2000 Frederiksberg,
March 2012 and will be sent to shareholders who so request.
In accordance with Standard & Poor’s capital model, the capital requirement is DKK 10,097m, while TAC (before dividend) is DKK
The Executive Management and Investor Relations meet with institutional investors and equity analysts each quarter after the publication of financial statements. In 2011, Tryg held around 250 investor meetings and participated in nine investor conferences.
Tryg also participated in events for private shareholders in Denmark. The Group’s performance is followed by 24 equity analysts, nine of whom are based in London. At tryg.com it is possible to monitor the equity analysts’ recommendations of the Tryg share.
Tryg A/S (Parent company) Income statement (parent company) 136 Statement of financial position (parent company) 137 Statement of changes in equity (parent company) 138 Notes (parent company) 139
Group for the financial year 1 January – 31 December 2011.
Reporting Standards as adopted by the EU and the parent financial statements are prepared in accordance with the Danish Financial
Our responsibility is to express an opinion on the consolidated and parent financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and parent financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and parent financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatements of the consolidated and parent financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of consolidated and parent financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as the overall presentation of the consolidated and parent financial statements. We believe that the audit evidence is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification.
We have reviewed TRYG A/S’ CSR data for 2011 which are evident from the annual report, pages 60-62. The CSR data for 2011 are the responsibility of and have been approved by
Management. Our responsibility is to draw a conclusion based on our review.
We have based our review on best practice and applicable standards for issuing an independent auditor’s report on CSR
Audits or Reviews of Historical Financial Information”, issued by the International Auditing and Assurance Standards Board.
We believe that our work provides an appropriate basis for us to conclude with a limited level of assurance on the subject matter. Such an assurance engagement provides less assurance than an audit.
Profit/loss on ceded business -553 -598 -520 -313 507 Technical interest, net of reinsurance 494 491 158 134 184
Return on investments after technical interest 340 -988 1,086 570 66
Share performance Earnings per share – continuing business of DKK 25 35.8 13.3 31.3 10.8 18.4 Net asset value per share (DKK) 147.5 127.5 152.3 139.5 149.2
Number of shares, end of period (1,000) 67,638 64,378 63,228 60,634 60,373
Notes General insurance Gross premiums written 19,939 20,822 Ceded insurance premiums -1,054 -1,124 Change in provisions for unearned premiums -382 -102 Change in reinsurers’ share of provisions for unearned premiums 47 45 3 Earned premiums, net of reinsurance 18,550 19,641 4 Technical interest, net of reinsurance 134 184
Acquisition costs and administrative expenses -3,304 -3,430 Commission and profit commission from the reinsurers 92 89 6 Insurance operating expenses, net of reinsurance -3,212 -3,341
Investment activities 14 Income from associates -5 1 Income from investment properties 128 117 7 Interest income and dividends 1,133 1,260
Total return on investment activities 1,322 918 4 Interest on insurance provisions -752 -852
Profit/loss for the year 593 1,140 27 Earnings per share – continuing business of DKK 25 10.8 18.4 Earnings per share of DKK 25 9.5 18.9 Diluted earnings per share of DKK 25 9.5 18.9
Other comprehensive income Change in equalisation provision 1 0 Revaluation of owner-occupied properties for the year 19 20 Tax on owner-occupied properties for the year -5 -6 Exchange rate adjustment of foreign entities for the year 330 29 Hedging of currency exposure in foreign entities for the year -328 -27 Tax on hedging of currency exposure in foreign entities for the year 82 7 Deferred tax on provision for contingency funds 68 -22 Actuarial gains/losses on defined benefit pension plans -228 -399 Tax on actuarial gains/losses on defined benefit pension plans 63 111
Accrued interest and rent earned 609 497 Other prepayments and accrued income 194 224
Debt related to direct insurance 419 410 Debt related to reinsurance 187 191 25 Debt to credit institutions 30 11 26 Debt relating to unsettled fund trading and repos 3,947 4,161 15 Derivative financial instruments 376 35 17 Current tax liabilities 106 260 Other debt 1,030 740
Total liabilities and equity 50,591 53,221 1 Risk management 19 Capital adequacy 27 Earnings per share 28 Contractual obligations, contingent liabilities and collateral 29 Related parties 30 Financial highlights 31 Accounting policies
Revaluation of owner-occupied properties 20 20 Exchange rate adjustment of foreign entities 30 -1 29 Hedge of foreign currency risk in foreign entities -27 -27 Actuarial gains and losses on pension obligation -399 -399 Tax on equity entries -6 7 89 90
Proposed dividend per share DKK 6.52 (in 2010 DKK 4.00). Dividend per share is calculated as the total dividend proposed by the Supervisory Board after the end of the financial year divided by the number of shares, year end 61,316,103. The dividend is not paid until approved by the shareholders at the annual general meeting. Tryg Forsikring A/S’ Norwegian branch, has in its branch financial statements included provisions for contingency funds in the amount of DKK 2,430m (in 2010 DKK 2,887m). Tryg Forsikring A/S’ Swedish branch, has in its branch financial statements included provisions for contingency funds in the amount of DKK 144m (in 2010 DKK 143m) . In Tryg Forsikring A/S, these provisions, due to their nature as additional provisions, are included in shareholders’ equity (retained earnings), net of deferred tax. Tryg Forsikring A/S’ option to pay dividend to Tryg A/S is influenced by this amount. The dividend payment is also affected by a contingency fund provision of DKK 670m, which is included in shareholders’ equity in Tryg Forsikring A/S. Tryg Garantiforsikring A/S has a similar contingency amounting to DKK 139m, which is also included in the company’s shareholders’ equity.
Cash generated from operations Premiums 19,911 20,619 Claims paid -14,801 -15,565 Ceded business -552 -26
Interest income 1,132 1,386 Interest expenses -96 -109 Dividend received 10 10
Investments Acquisition and refurbishment of real property -210 -50 Sale of real property 339 2 Acquisition of equity investments and unit trust units (net) 441 -191 Purchase/Sale of bonds (net) 593 -3,523 Deposits in Credit institutions 265 1,125 Purchase/sale of operating equipment (net) -31 -18 Foreign currency hedging -328 -27
Change in cash and cash equivalents, net 301 -456 Exchangerate adjustment of cash and cash equivalents, beginning of year 44 1
The Supervisory Board defines the acceptable level of risk. Tryg wishes to take risks associated with business activities on the condition that they can be managed and can contribute an acceptable return on equity. Risk management at Tryg is organised on the basis of three lines of defence: 1. Business managers are responsible for the management and control of all risks associated with their own activities.
3. Internal audit performs an independent assessment of the risk environment, etc. for the Supervisory Board.
Risk management environment For several years, Tryg has worked with risk management and modelling of the company’s risks by means of a risk management environment. The introduction of Solvency II 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 asset management.
The Supervisory Board has overall responsibility for the company’s risk management and proactively defines risk inclination and the limits for risk management, assessing the total risk and capital requirement within Tryg on an ongoing basis. This is achieved by means of policies and guidelines drawn up in accordance with Section 71 of the Danish Financial Business Act and by continuously taking a view on the calculation of the company’s capital requirement. In order to be able to monitor the organisation’s risk management work closely, the Supervisory Board has appointed a Risk Committee with representatives from the Supervisory Board, which reviews Tryg’s capital and risk status on a quarterly basis.
Tryg’s risk management is administered through a risk management environment, in which the Risk Management Committee, with representatives from the Executive Management, monitors the whole risk and asset management process. The areas of underwriting and reinsurance, provisioning, investment risk as well as operational risk and security are administered by corresponding sub-committees. Risk management is underpinned by Tryg’s internal capital model.
Risk management Every year, Tryg carries out a risk mapping process, which aims to identify new risks that cannot be assessed using statistical analyses. These assessments are compiled in Tryg’s risk database and form the basis of ongoing risk reporting. Selected risk scenarios based on this work are incorporated directly into Tryg’s calculation of the necessary capital requirement (Individual Solvency Require-
Underwriting risk Underwriting risk is the risk relating to entering into insurance contracts and thus the risk that premiums charged do not adequately cover the claims that Tryg is obliged to pay when a claim has occurred. This risk can be assessed and managed based on statistical analyses of historical experience within various business sectors.
The insurance premium must be adequate to cover expected claims, but must also comprise a risk premium equal to the return on the part of Tryg’s capital that is used to protect against random fluctuations. All other things being equal, this means that insurance sectors or areas which, from experience, are subject to major fluctuations, must comprise a larger risk premium.
For accident and workers’ compensation policies, Tryg has bought reinsurance with retention of DKK 50m and with coverage of up to DKK 1.5bn for claims that originate from the same event, including terrorism.
Operational risk The risk of errors, fraud or failures in internal procedures, systems and processes.
Strategic risk The risk of changes to the conditions under which we operate, including changed legislation, competition, partnerships or market conditions.
Effect of 1% change in: Combined ratio (1 percentage point) +/- 191 +/- 202 Claim frequency (1 percentage point) +/- 1,761 +/- 1,706 Average claim +/- 151 +/- 158 Premium rates +/- 189 +/- 200
Effect of 1% change in: Social inflation -614 +/- 706 Annual provision for long-tailed sectors (workers’ compensation, motor liability, liability, accident) +/- 36 +/- 35
Currency market 15% decline in exposed currency relative to DKK -655 -659 Impact of derivatives 647 629
A national guarantee scheme was established in Denmark in 2010 to cover NBCR (Nuclear Biological Chemical Radioactive) terrorist attacks. This scheme involves the State providing a guarantee of up to DKK 15bn for the entire Danish market to cover the total claim expense over DKK 5bn with reinsurance cover of DKK 4.5bn after retention of DKK 500m. Tryg’s share of this will be approximately DKK 100m, which will be the maximum claim as a consequence of NBCR events.
The size of the provisions for claims is determined both through individual assessments and statistical calculations. As of 31 December 2011, provisions for claims totalled DKK 26.9bn. The duration of these provisions, i.e. the average time until these amounts are paid out to customers, was 3.5 years as of 31 December 2011. Most of the provisions for claims relate to personal injury claims. These provisions are exposed to changes in wage developments, the discount rate, disbursement patterns, economic trends, legislation and court decisions.
The calculation of provisions for claims will always be subject to uncertainty. Historically, many insurers have experienced substantial positive as well as negative impacts on profit (run-off) resulting from provisioning risk, and this may also be expected to happen in future. Tryg manages the provisioning risk by pursuing a provisioning policy that guarantees an updated, uniform process for determining provisions at all times. This implies that it is based on an underlying model analysis, and that internal control calculations and evaluations are performed.
Provisions for claims relating to annuities in Danish workers’ compensation insurance are discounted using the current market rate and simultaneously revalued by the wage inflation rate each year. This exposes Tryg to an explicit inflation risk. To hedge this, Tryg uses a number of zero coupon inflation swaps in Danish kroner, in which Tryg receives a fixed amount in return for payment of an amount based on the trend in Danish consumer prices.
Provisions before discounting, end of year 441 561 680 774 949 1,391 1,944 2,748 3,382 4,751 8,977 26,599
Estimated acc. claims End of year 7,804 9,299 9,828 10,240 10,907 11,358 12,085 13,099 14,428 16,367 15,892 1 year later 8,030 9,552 9,974 10,230 10,913 11,615 12,747 14,417 15,027 16,388 2 years later 8,222 9,671 9,638 10,043 10,733 11,136 13,310 14,324 15,079 3 years later 8,319 9,733 9,574 9,931 10,343 11,331 13,286 14,343 4 years later 8,275 9,726 9,684 9,679 10,459 11,263 13,255 5 years later 8,278 9,620 9,660 9,748 10,399 11,255 6 years later 8,484 9,600 9,574 9,528 10,315 7 years later 8,479 9,538 9,446 9,427 8 years later 8,505 9,527 9,299 9 years later 8,341 9,461 10 years later 8,226 8,226 9,461 9,299 9,427 10,315 11,255 13,255 14,343 15,079 16,388 15,892 132,940 Cumulative pay-
Provisions before discounting, end of year 368 486 580 701 916 1,379 1,906 2,720 3,283 4,368 8,229 24,935
Reserves 2000 and prior years 1,711 Other reserves 625 Provisions for claims, net of reinsurance, end of the year 25,066
The acquisition of Moderna in April 2009 affects the diagonals with its share of the claims, net of reinsurance. As a consequence of the merger of Moderna and Tryg’s Swedish branch in Malmö in 2010 the diagonal is changed corresponding to its share of the claims, net of reinsurance.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2011 to prevent the impact of exchange rate fluctuation.
Expected cash flow Carrying amount DKK m 0-1 year 1-2 years 2-3 years > 3 years Other Total
Other comprises Tryg Garantiforsikring A/S, the Finnish branch of Tryg Forsikring A/S.
Cash in hand and at bank 369 0 0 369 0.9
Bond portfolio Duration 1 year or less 15,143 19,132 Duration 1 year through 5 years 16,645 10,187 Duration 5 years through 10 years 1,904 4,213 Duration more than 10 years 625 3,700
Investment assets comprise not only assets corresponding to the technical provisions, but also Tryg’s equity. Tryg has divided investment activities into two investment portfolios, the free investment portfolio and a match portfolio. The element that corresponds to technical provisions is invested exclusively in interest-related assets and serves solely to cover interest rate sensitivity in the discounted provisions. The remaining element, which corresponds to equity, is a free investment portfolio, the purpose of which is to generate the best possible return compared to the risk.
The introduction of Solvency II would mean that all European companies would have to discount provisions in relation to a solvency calculation, and would thus control the interest rate risk for both assets and liabilities. Tryg adjusts the bond portfolio on an ongoing basis, in order to minimise the net interest rate risk (price changes caused by interest rate changes) as far as possible. The Danish Financial Supervisory Authority’s interest curve for the relevant Nordic countries is designed in such a way that it is not possible in practice to invest precisely in accordance with it. Tryg has therefore designed a model portfolio that matches the individual countries’ regulatory interest curve as closely as possible. In the model portfolio, future interest payments match the disbursement profile of the insurance provisions as perfectly as possible in both economic and cost terms. This structure removes most of the market risks that impact the match portfolio, but the difference between the regulatory curve’s return and Tryg’s model portfolio’s return may still vary. There may also be deviations due to restructuring and investment costs, as well as ongoing changes in the size, time and hedging of provisions.
A perfect match means that the match portfolio’s return (coupon and market value adjustment) is identical to the return on provisions (market value adjustment of provisions originating from interest rate changes plus technical interest). In practice, the perfect match cannot be achieved. The above illustrations show the differences in fluctuations in the deviation between the value of an interest rate portfolio and the value of a discounted provision portfolio: 1) A scenario in which no attempt is made to match the interst sensitivity of the provisions; 2) A scenario in which the durations of assets and liabilities are matched, providing protection against parallel changes in the interest curve; 3) A scenario in which the sensitivity of assets and liabilities to changes in specific interestpoints is matched; 4) Finally, a scenario in which all payments from the asset portfolio are matched with payments made from the provisions and are ‘invested’ in the regulatory interest curve. Tryg’s matching corresponds to scenario number 3.
Listed shares Scandinavia 350 395 United Kingdom 83 82 Rest of Europe 579 331 United States 647 565 Asia etc. 336 242
Unlisted equity investments are measured at estimated fair value, see ‘Accounting policies’
Bonds incl. Share incl. Exposure to exchange rate risk Properties derivatives derivatives Insurance Hedge Exposure
To manage currency risk, Tryg uses currency spots as well as forward exchanges and currency swaps (a spot and opposite term transaction) with a typical duration of one to three months.
Liquidity risk A general insurance company such as Tryg naturally has extremely good liquidity, as premium payments fall due before claims are paid. Payments received are largely invested in securities that can easily be realised and/or mortgaged (repos). Tryg also has access to funding and liquidity from cash accounts and the bond market. Tryg continuously monitors the liquidity requirement and adapts its contingency plans so that it can at all times obtain the necessary liquidity.
Strategic risk Strategic risk relates to Tryg’s choice of strategic position, including IT strategy, flexibility relative to the market, business partners and reputation, as well as changed market conditions. The Supervisory Board is closely involved in the management of strategic risk
b) Tryg Forsikring A/S has subscribed the subordinated loan capital in connection with acquisitions made in April 2009,
Risk-based capital management Through capital and risk management, Tryg aims to secure financial strength and flexibility. The capital management is based on: • Tryg’s internal capital model • The impending Solvency II standard model • Standard & Poor’s standard model (‘A-’ level)
All three models determine the capital requirement based on Tryg’s current risk profile. The capital requirement is determined with a 99.5% level of certainty, which corresponds to the chosen capital level being insufficient once in a 200-year period on a statistical basis.
Capital structure Tryg’s capital base consists of equity and subordinated loan capital. The relationship between these is evaluated on an on going basis in order to maintain an optimal structure which takes into account the return on equity, the capital cost and flexibility. The actual capital is assessed differently by authorities and credit rating agencies. The authorities impose a requirement that companies must determine the base capital, which primarily consists of equity minus intangible assets, discount effect and other statutory corrections plus subordinated loan capital in the amount of up to 25% of the Solvency I requirement. Standard & Poor’s uses the term ‘Total Adjusted Capital’ (TAC), where intangible assets are also deducted from the capital base, and where the subordinated loan capital must generally not exceed 25% of the total capital.
Total return on investment activities after technical interest 66 Other income and expenses -31
Profit on continuing business 1,114 Profit/loss on discontinued and divested business 26
Run-off gains/losses, net of reinsurance 159 155 630 0 944 Investments in associates 14 14 Reinsurers’ share of provision for unearned premiums 1 2 189 0 192 Reinsurers’ share of provision for claims 319 374 1,182 0 1,875 Other assets 51,140 51,140
Provisions for bonuses and premium rebates 238 23 123 0 384 Other liabilities 9,957 9,957
Profit/loss on business ceded 38 59 -419 9 -313 Technical interest, net of reinsurance 77 30 27 0 134
Description of segments Please refer to accounting principles for a description of operating segments Amounts relating to eliminations are included in
‘Other’. Other assets and liabilities are managed at Group level and are therefore not allocated to the individual segments. These amounts are thus included under ‘Other’. Costs are allocated according to specific keys, which are believed to provide the best estimate of assessed resource consumption. A presentation of segments broken down by geography is provided in ‘Notes 2 Geographical segments.’
Key ratios Gross claims ratio 64.6 64.5 71.6 82.0 83.5 Business ceded as % of gross premiums 2.4 3.7 2.5 0.7 -8.1 Claims ratio, net of ceded business 67.0 68.2 74.1 82.7 75.4
Key ratios Gross claims ratio 63.0 70.6 70.8 76.7 73.2 Business ceded as % of gross premiums 4.9 3.6 3.7 3.1 3.2 Claims ratio, net of ceded business 67.9 74.2 74.5 79.8 76.4
Key ratios Gross claims ratio 74.9 72.9 84.2 80.9 79.8 Business ceded as % of gross premiums 0.4 0.3 0.6 0.8 0.8 Claims ratio, net of ceded business 75.3 73.2 84.8 81.7 80.6
Number of full-time employees, end of period 127 154 194 197 249
Number of full-time employees, end of period 3,788 4,065 4,310 4,291 4,318 a) Moderna Försäkringar is included in ‘Swedish general insurance’ from 2 april 2009.
c) Adjustment to Gross expense ratio included only in the calculation of ‘Tryg’. Explanation of adjustment as a footnote to Financial Highlights.
DKKm 2 Technical result, net of reinsurance, by line of business
Profit/loss on ceded business 65 308 -114 506 0 0 -56 -4 -31 -21 -1 -1 Techn. interest net of reinsurance 33 39 18 28 3 4 3 7 2 2 4 5
Accident Worker’s Motor Marine, aviation and health Health care compensation Motor TPL comprehensive and cargo
Profit/loss on ceded business -20 -16 0 0 -23 -89 -27 -35 -11 -6 -47 -75 Techn. interest net of reinsurance 11 12 2 4 1 1 16 35 24 32 2 3
Average claims DKK b) 43,342 34,325 7,567 5,765 83,801 84,602 25,374 24,871 11,554 10,892 83,551 60,838 Total claims 31,833 39,929 32,987 51,597 14,395 12,630 80,073 78,499 264,675 277,035 3,122 3,320
Average claims DKK b) 13,150 12,391 62,951 70,694 22,919 26,050 55,335 55,074 1,567,033 3,387,982 8,059 8,379 Total claims 310,832 352,479 40,462 44,923 6,141 6,236 9,252 10,545 58 50 49,862 55,938
Gross claims ratio 27.5 7.6 80.0 78.9 86.4 90.8 Combined ratio 191.3 138.0 98.8 93.2 96.6 102.7
Reinsurance recoveries 661 1,592 Run-off previous years, reinsurers’ share -59 -95
Insurance operating expenses, gross -3,304 -3,430 Commission from reinsurers 92 89
6 Insurance operating expenses, net of reinsurance (continued) Administative expenses include fee to the auditors appointed by the annual general meeting: The fee is divided into: Statutory audit -7 -6 Other audit assignments 0 0 Tax advice -1 -1 Other services -1 0
In the calculation of the expense ratio costs are stated exclusive of depreciation and operating costs on the owner-occupied property but including a calculated rent concerning the owner-occupied property based on a calculated market rent of DKK 33m. (in 2010 DKK 11m)
Staff expenses -1,827 -1,974 Other staff expenses -269 -218 Office expenses and fees, headquarter expenses -682 -562 Operating and maintenance costs IT, software expenses -255 -246 Depreciation, amortisation and impairment writedowns -163 -151 Other income 384 181
Total expenses for leases amounts to DKK 39m (2010 DKK 37m)
Insurance operating expenses and claims include the following staff expenditure: Salaries and wages -2,211 -2,335
Remuneration for the Supervisory Board and Executive Management is disclosed in note 29 ‘Related parties’.
Total fair value Per Total fair Group Other Per option per option option at value at Executive senior Other at grant at grant 31 Dec. 31 Dec. Management employees employees Total date DKK date DKKm DKK DKKm 6 Share option programmes Spec. of outstanding options: Allocation 2006-2009 Allocated in 2006-2009, beginning of year 144,866 434,852 52,427 632,145 64/99/69/94 52 0/12/43 10
Allocation 2010 Allocated in 2010, beginning of year 48,050 153,503 25,346 226,899 75 17 53 12
Outstanding options from 2011 allocation 31 Dec 2011 8,285 101,169 26,220 135,674 - 10 - 10
Number of options exercisable end of 2011 53,417 236,068 28,666 318,151
Share option programmes In 2011, Tryg awarded share options to the Executive Management (1 person), senior employees (86 persons) and other employees
(40 persons). At 31 December 2011, the share option plan comprised 800,834 share options (at 31 December 2010 859,044 share options). Each share option entitles the holder to acquire one existing share of DKK 25 nominal value in the company. The share option plan entitles the holders to buy 1.3 % of the share capital in Tryg A/S if all share options are exercised.
Allocation 2009 Allocated in 2009, beginning of year 38,258 123,016 20,670 181,944 94 17 17 3
Outstanding options from 2010 allocation 31 Dec 2010 48,050 153,503 25,346 226,899 - 17 - 4
Notes 6 Share option programmes Years Allocated Year of allocation of exercise 1. jan. 2011 in 2011 Exercised Cancelled Expired 31 Dec. 2011
Average share Average Average price (DKK) term to exercise Years at time of Expected Expected Risk-free maturity Share price Year of allocation of exercise allocation volatility maturity interest rate 31 dec. 2011 31 dec. 2011
The dividend payout ratio is not included in the calculation as the strike price is reduced by dividends paid in order to prevent option holders from being placed at a disadvantage in connection with the company’s dividend payments. The assumptions for calculating the market value at the end of the period are based on the same principles as for the market value at the time of allocation.
Average per Total fair Average per matching value per matching Total fair Group share at option at share at Value at Excecutive Risk- grant date grant date 31 Dec. 31 Dec. Management takers Total DKK DKKm DKK DKKm
In 2011 Tryg entered into an agreement on matching shares for the executive management and selected risk takers as a consequence of the Group’s wage policy. The executive management and selected risk takers are allocated one share in Tryg A/S for each share that the executive management member or risk taker acquires in Tryg A/S at market rate for liquid cash at a contractually agreed sum. The shares are reported at market value and are accrued over the four year maturation period. In 2011, the reported fair value of matching shares for the Group amounted to DKK 1m.
7 Interest and dividends Interest income and dividends Dividends 10 10 Interest income cash in hand and at bank 43 59 Interest income bonds 1,054 1,173 Interest income other 26 18
Interest expenses Interest expenses subordinated loan capital and credit institutions -88 -83 Interest expenses others -8 -30 8 Value adjustment Value adjustments concerning financial assets or liabilities at fair value with value adjustment in the income statement: Equity investments 61 13 Unit trust units 233 -100 Share derivatives 5 16
Value adjustments concerning assets or liabilities that cannot be attributed to IAS 39: Investment property 74 15 Owner-occupied property 0 -10
Under value adjustment the adjustment of inflation swaps totals DKK 12m (in 2010 DKK 27m).
Notes 9 Tax Tax on profit for the year -235 -392 Difference between Danish and foreign tax rate -28 -22 Prior-year tax adjustment 9 32 Adjustment non-taxable income and expenses 18 -64 Change in valuation of tax assets -26 -7 Other taxes -3 -2
Trademarks and customer Assets under DKKm Goodwill relations Software construction Total 11 Intangible assets
Amortisation and writedowns Balance 1 January 0 -12 -335 0 -347
Moderna Försäkringar 2.0% 12.7% MF Bilsport & MC Specialförsäkringar 2.0% 12.7%
Insurance activities in Sweden In 2009, Tryg acquired Moderna Försäkringar Sak AB, Modern Re S.A., Netviq AB and MF Bilsport & MC specialfösäkringar. The insurance activities were incorporated into the Tryg Group’s business structure in 2009 and are reported under Sweden. In 2010, the companies, excluding Modern Re S.A., were merged into Tryg Forsikring A/S as a branch of Moderna Försäkringar, branch of Tryg Forsikring A/S. Modern Re S.A. was discontinued in 2011. The activities in Modern Re have not affected the statement of the original goodwill, which is why the discontinuation of the company does not affect remaining goodwill.
Operating Owner-occup- Assets under DKKm equipment ied property construction Total 12 Property, plant and equipment
Transferred from assets under construction 0 340 0 340 Additions during the year 18 21 -3 36 Disposals during the year -59 0 -340 -399
Additions during the year 62 0 176 238 Disposals during the year -66 0 0 -66
Value adjustment for the year at revalued amount in other comprehensive income 0 19 0 19
A valuation of owner-occupied property has been performed, including the improvements carried out, after which DKK 20m has been recognised in revaluation in other comprehensive income af DKK 10m in depreciation in the income statement.
The impairment charges on assets under construction are recognised in the income statement in total insurance operating expenses. The impairment test performed for operating equipment and assets under construction did not indicate any impairment. In establishing the market value of the owner-occupied properties, the following return percentages were used: Return percentages 2010 2011
Total expenses for 2011 are DKK 39m (DKK 38m in 2010). Of this amount, not-hired property is DKK 2m. (DKK 1m in 2010) why the total expenses at the income leading investment property are DKK 37m (DKK 37m in 2010).
In establishing the market value of the properties, the following return percentages were used for each property category: Return percentages 2010 2011
Financial assets at fair value with value adjustment in the income statement 2010 2011 Equity investments 184 187 Unit trust units 2,268 2,378
Information on valuation of subordinated loan capital at fair value is stated in note 20. Other financial liabilities at amortized cost price only deviate to a minor extent from fair value.
Quoted market Observable Unobservable DKKm prices input input Total 15 Total financial assets (continued)
Cash in hand and deposits in credit institutions 1,635 0 0 1,635
Financial instruments measured at fair value in the balance sheet on the basis of non-observable input: Carrying amount 1 January 338 198 Exchange rate adjustment 4 0 Gains/losses in the income statement -47 77
Gains/losses in the income statement for assets held at the balance sheet date recognised in value adjustments -54 77
Bonds measured on the basis of observable inputs mainly consist of Norwegian bonds issued by banks and to some extent
Danish semi liquid bonds, where no quoted prices based on actual trades are available.
Reconciliation between investment assets as per ’Investment Activity’ in the Management’s report and the Statement of financial position
Sensitivity information Impact on shareholders’ equity from the following changes: Interest rate increase of 0.7-1.0 pct. point -75 -24 Interest rate fall of 0.7-1.0 pct. point 13 87 Equity price fall of 12% -262 -223 Fall in property prices of 8% -334 -330 Exchange rate risk (VaR 99.5) -12 -23 Loss on counterparties of 8% -315 -500
Fair value in Fair value in the balance the balance Nominal sheet Nominal sheet
Receivables Receivables from insurance enterprises 1,321 1,475 Receivables from subsidiaries 0 1 Other receivables 601 189
Reversed impairment losses are estimated at DKK 52m (2010 DKK 45m) annually, but may vary due to major cases/disputes.
17 Current tax Current tax, beginning of year -303 90 Exchange rate adjustment -15 0 Current tax for the year -170 -500 Current tax on equity entries 82 7 Adjustment of prior-year current tax 14 26 Tax paid during the year 482 210
Net current tax, end of year 90 -167 18 Shareholders’ equity
Nominal Nominal No. of value No. of value Numbers of shares shares (DKK’000) shares (DKK’000)
Bought during the year -2,625,786 -65,645 -316,792 -7,920 Sold during the year 31,837 796 56,360 1,409
Cancellation in connection with buyback programme. 0 0 0 -2,615,470 -65,387 -4.03 Used in connection with issue of employee shares -17 0 0.00 0 0 0.00 Used in connection with exercise of stock options -31,820 -796 -0.05 -56,360 -1,409 -0.09
The fair value of the loan at the balance sheet date 950 962 499 464 The fair value of the loan at the balance sheet date is based on a price of 85 86 103 96 Total capital losses and costs the balance sheet date 12 10 0 0 Interest expenses of the year 50 50 33 33
The share of subordinated capital included in the calculation of the capital base total DKK 848 (in 2010 DKK 804m ) The loans are initially recognised at fair value on the date on which a loan is entered and subsequently measured at amortised cost. Please refer to note 1 Risk management, which include the terms of the loans.
Change in claims in the financial year in respect of the current year 16,660 1,483 15,177 Change in claims in the financial year in respect of prior years -1,005 -34 -971
Provisions for claims, end of year 24,255 1,333 22,922 a) Comprises provisions for claims for Tryg Garantiforsikring A/S, the Finnish branch of Tryg Forsikring A/S.
Gross pension obligation 1,572 1,990 Fair value of plan assets 951 1,013
Specification of pension cost for the year: Present value of amounts accumulated during the year 44 40 Interest expense on accrued pensions obligation 58 57 Expected return on plan assets -53 -41 Accrued employers’ nat.insurance contribution 6 10
22 Pensions and similar obligations (continued) % % Assumptions used Discount rate 3.8 2.7 Estimated return on pension funds 4.5 4.0 Salary adjustment 4.0 4.0 Pension adjustment 3.8 3.8
Actuarial gains/losses associated with the pension obligation 104 -23 70 -181 -367 Actuarial gains/losses associated with pension assets -10 -173 -42 -47 -32 Actuarial gains/losses in other comprehensive income end of year 94 -196 28 -228 -399
Moderna Försäkringar, branch of Tryg Forsikring A/S complies with the Swedish industry pension agreement, the FTP plan, which is insured with Försäkringsbranschens Pensionskassa – FPK. Under the terms of the agreement, the Group’s Swedish branch has undertaken, along with the other businesses in the collaboration, to pay the pensions of the individual employees in accordance with the applicable rules.
The FTP plan is primarily a defined benefit plan in terms of the future pension benefits. FPK is unable to provide sufficient information for the Group to use defined benefit accounting. For this reason, the Group has accounted for the plan as if it were a defined contribution plan in accordance with IAS 19.30.
This years premium paid to FPK amounted to DKK xm, which is about 2 % of the annual premium in FPK (2010). FPK writes in its half-year report for 2011 that it had a collective consolidation ratio of 134 at 30 June 2011 (consolidation ration 112 at 30 June 2010). The collective consolidation ratio is defined as the market value of the plan assets relative to the total collective pension obligations.
Reconcillation of deferred tax Deferred tax, beginning of year 1,244 1,282 Exchange rate adjustment 70 9 Change in deferred tax previous years 0 -10 Change in capitalised tax loss 34 0 Change in deferred tax taken to the income statement 53 -6 Change in deferred tax taken to equity -119 -84
The total current and deferred tax relating to items recognised in equity is recognised in thebalance sheet in the amount of DKK 90m. (2010 DKK 208m).
Tryg A/S has established committed credit facilities totalling DKK 800m with af number of Danish banks. These credit facilities expire on 31 December 2012. In addition, Tryg Forsikring A/S has established committed repo facilities DKK 1 mia. with at number of Danish banks. These repo facilities expire on 31 December 2012.
26 Debt relating to unsettled fund trading and repos Unsettled fund trading 2,051 779 Repo debt 1,896 3,382
Earnings per share – continuing business 10.8 18.4 Earnings per share – discontinuing business -1.3 0.4 Diluted earnings per share – discontinuing business (DKK) -1.3 0.4 Basic earnings per share 9.5 18.9 Diluted basic earnings per share 9.5 18.9
Collateral The Danish companies in Tryg Group are jointly taxed with TryghedsGruppen smba.
DKK 66m (2010: DKK 51m) of the Group’s cash in hand and at bank is placed as collateral for futures contracts.
Contingent liabilities Companies of the Tryg Group are part of some disputes. Management believes that the outcome of these legal proceedings will not affect the Group’s financial position beyond those receivables and obligations recognised in the statement of financial position at 31 December 2011.
29 Related parties The Group has no other closely related parties with a decisive influence other than the parent company, TryghedsGruppen Smba. Closely related parties with significant influence include the Supervisory Board, the Executive Management, and these persons’ related family.
Premium income - Parent company (TryghedsGruppen smba) 0.3 0.3 - Other related parties 1.3 2.9
DKKm 29 Related parties Fees are charges incurred during the financial year. Variable salary includes the charges for matching shares, which are recognised over three years. The Board and Risk Takers are included in incentive programmes. Please refer to note 6 for information concerning this
The Supervisory Board in Tryg A/S are paid with a fixed fee and are not included in the benefit schemes. The Management is paid with a fixed wage and pension. The variable wage is awarded in the form of a matching share programme; see the reference under ‘Management’. The Management’s compensation includes wages and pension to retired managers for a total of DKK 14m.
Each member of the Executive Management is entitled to 12 months notice and cash severance pay equal to 12 months’.
The companies in Tryg Group have entered into reinsurance contracts on market terms. Transactions with subsidiaries have been eliminated in the consolidated financial statements in accordance with the accounting policies.
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as per adopted by the EU on 31 December 2011 and in accordance with the Danish Statutory Order on Adoption of IFRS.
• Unlike IAS 19, the Danish FSA’s executive order does not allow for actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions to be taken to other comprehensive income. Actuarial gains and losses will therefore be recognised in the parent company’s income statement.
• The Danish FSA’s executive order does not allow provisions for deferred tax of contingency reserves allocated from untaxed funds. Deferred tax and the other comprehensive income of the parent company have been adjusted accordingly on the transition to IFRS.
Implementation of changes to accounting standards and interpretation in 2011 The International Accounting Standards Board (ISAB) has issued a number of changes to the international accounting standards, and the International Financial Reporting Interpretations Committee (IFRIC) has also issued a number of interpretations.
a) Effective for annual periods beginning on or after 1 July 2011.
b) Effective for annual periods beginning on or after 1 January 2013.
c) Effective for annual periods beginning on or after 1 July 2012.
Significant accounting estimates and assessments The preparation of financial statements under IFRS requires the use of certain critical accounting estimates and requires management to exercise its judgment in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are: • Liabilities under insurance contracts • Valuation of defined benefit plans • Fair value of financial assets and liabilities • Valuation of property • Measurement of goodwill
The Group establishes claims provisions covering both known case reserves and estimated claims that have been incurred by its policyholders but not yet reported to the company (known as ’IBNR reserves) and future developments on claims which are known to the Tryg Group but have not been finally settled. The Group also includes in its claims reserves direct and indirect claims settlement costs or loss adjustment expenses that arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the Tryg Group.
The projection for claims provisions is therefore inherently uncertain and, by necessity, relies upon the making of certain assumptions as to factors such as court decisions, changes in law, 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 provisions for claims.
The Norwegian and Swedish provisions are discounted with euro swap rates, to which a country specific interest differential is added that reflects the difference between Norwegian and Swedish government bonds and the German government bond interest rate respectively. Finnish provisions are discounted using the Danish discount curve.
The net obligation with respect to the defined benefit plan is based on actuarial calculations involving a number of assumptions. The preconditions are discounting interest rate, expected future wage and pension adjustment, turnover, mortality and expected future yield on pension funds.
Valuation of property Property is divided into owner-occupied property and investment property. Owner-occupied property is assessed at the reassessed value that is equivalent to the fair value at the time of reassessment, with a deduction for depreciations and write-downs. The fair value is calculated based on a market-determined rental income, as well as operating expenses in proportion to the property’s required rate of return percent. Investment property is calculated at fair value. The calculation of fair value is based on market prices, taking into consideration the property’s type, location and maintenance standards, and calculated based on a market determined rental income as well as operating expenses in proportion to the property’s required rate of return.
Measurement of goodwill Goodwill was acquired in connection with acquisition of businesses. Goodwill is allocated to the cash-generating units under which management manages the investment. The carrying amount is tested for impairment at least annually. Impairment testing involves estimates of future cash flows and is affected by a number of factors, including discount rates and other circumstances dependent on economic trends, such as customer behaviour and competition.
Recognition and measurement The annual report has been prepared under the historical cost convention, as modified by the revaluation of owner-occupied properties, where increases are credited to 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 through the income statement.
On consolidation, intra-group income and expenses, shareholdings, intra-group accounts and dividends, and gains and losses arising on transactions between the consolidated enterprises are eliminated.
The purchase method is applied on acquisitions if the Tryg Group gains control of the company acquired. Identifiable assets, liabilities and contingent liabilities in companies acquired are measured at the fair value at the date of acquisition. The tax effect of revaluations is taken into account.
The operational business segments in the Tryg Group are Private Nordic, Commercial Nordic and Corporate Nordic. Private Nordic encompasses the sale of insurances to private individuals in Denmark, Norway, Sweden and Finland. Commercial Nordic encompasses the sale of insurances to small and medium sized businesses, primarily in Denmark and Norway. Corporate Nordic sells insurances to industrial clients primarily in Denmark, Norway and Sweden. In addition, Industri handles all business involving brokers.
Ratios Earnings per share (EPS) are calculated according to IAS 33. This and other key ratios are calculated in accordance with ’Recommendations and Ratios 2010’ issued by the Danish Society of Financial Analysts and the executive order on financial reports presented by insurance companies and lateral pension funds issued by the Danish FSA.
Claims are shown inclusive of direct and indirect claims handling costs, including costs of inspecting and assessing claims, costs to combat and contain claims incurred and other direct and indirect costs associated with the handling of claims incurred.
Changes in claims provisions due to changes in the yield curve and exchange rates are recognised as a market value adjustment.
Tryg hedges the risk of changes in future wage and price figures for provisions for workers’ compensation. Tryg uses zero coupon inflation swaps acquired with a view to hedging the inflation risk. Value adjustment of these swaps is included in claims incurred, thereby reducing the effect of changes to inflation expectations under claims incurred.
Assets held under operating leases are not recognised in the statement of financial position, but the lease payments are recognised in the income statement over the term of the lease, corresponding to the economic life of the asset. The Group has no assets held under finance leases.
Discontinued and divested business Discontinued and divested business is consolidated in one line item in the income statement and supplemented with disclosure of the discontinued and divested business in a note to the financial statements.
Intangible assets Goodwill Goodwill was acquired in connection with acquisition of business. Goodwill is calculated as the difference between the cost of the undertaking and the fair value of acquired identifiable assets, liabilities and contingent liabilities at the time of acquisition. Goodwill is allocated to the cash-generating units under which management manages the investment and is recognised under intangible assets. Goodwill is not amortised but is tested for depreciation at least once per year.
Software Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. These costs are amortised on the basis of the expected economic lifetime of up to four years. However, if these are included as a part of group developed software relating to the Group’s transition programme, they are amortised over eight years. The Group’s transition programme is an internal IT project that will create a common infrastructure across the Nordic countries and thereby create significant efficiency savings. The project is expected to run for the next six to eight years.
After completion of the development work, the asset is amortized linearly over the assessed economic lifetime, though over a maximum of eight years if the costs concern the Group’s transition programme. Other development projects are amortized over a maximum of four years. The amortization basis is reduced by any write downs.
Leasehold improvements are depreciated over the expected economic lifetime, however with a maximum of the term of the lease.
Land and buildings Land and buildings are divided into owner-occupied property and investment property. The Tryg Group’s owner-occupied properties
Owner-occupied property Owner-occupied property is property that is used in the Group’s operations. Owner-occupied properties are measured in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated de- preciation and subsequent accumulated impairment writedowns. Revaluations are performed regularly to avoid the carrying amount differing materially from the owner-occupied property’s fair value at the balance sheet date. The fair value is calculated on the basis of market-specific rental income per property and typical operating expenses for the upcoming year. The resulting operating income is divided by the percentage return requirement of the property, which has been adjusted to reflect market interest rates and property characteristics, corresponding to the present value of a perpetual annuity.
Assets under construction In connection with the refurbishment of the owner-occupied properties, costs to be capitalised are recognised at cost under owner-occupied property. On completion of the project it is reclassified to owner-occupied property and depreciation will be made on a straight-line basis over the expected economic lifetime, up to the number of years stated under the individual categories.
Goodwill is tested annually for depreciation, or more often if there are indications of depreciation, and is performed for each cashgenerating unit to which the asset belongs. The present value is normally established using budgeted cash flow based on business plans. The business plans are based on previous experiences and expected market development.
Net revaluation of investments in subsidiaries is taken to reserve for net revaluation under the equity method if the carrying amount exceeds cost.
Investments Investments include financial assets at fair value through the income statement. The classification depends on the purpose for which the investments were acquired. Management determines the classification of its investments on initial recognition and reevaluates this at every reporting date.
Realised and unrealised gains and losses arising from changes in the fair value of the financial assets at fair value through income are included in the income statement in the period in which they arise.
Reinsurers’ share of provisions for insurance contracts Contracts entered into by the Group with reinsurers under which the Group is compensated for losses on one or more contracts is-
sued by the Group and that meet the classification requirements for insurance contracts are classified as reinsurers’ share of provisions for insurance contracts. Contracts that do not meet these classification requirements are classified as financial assets.
The Group assesses continuously its reinsurance assets for impairment. If there is objective evidence that the reinsurance asset is impaired, the Group reduces the carrying amount of the reinsurance asset to its recoverable amount. Impairment writedowns are recognised in the income statement.
Dividends Proposed dividend is recognised as a liability at the time of adoption by the shareholders at the annual general meeting the date of declaration.
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 share buyback programme.
Proceeds from the sale of treasury shares in connection with the exercise of share options or employee shares are taken directly to equity.
Provisions for claims are determined for each line of business based on actuarial methods. Where such business lines encompass more than one business area, short-tail provisions for claims are distributed based on number of claims reported while long-tail provisions for claims are distributed based on premiums earned. The models currently used are Chain-Ladder, Bornhuetter-Ferguson, the Loss Ratio method and De Vylder’s credibility method. Chain-Ladder techniques are used for business lines with a stable run-off pattern. The Bornhuetter-Ferguson method, and sometimes the Loss Ratio method, are used for claims years in which the previous run-off provides insufficient information about the future run-off performance. De Vylder’s credibility method is used for areas that are somewhere in between the Chain-Ladder and Bornhuetter-Ferguson/Loss Ratio methods, and may also be used in situations that call for the use of exposure targets other than premium volume, for example the number of insured.
In some instances, the historic data used in the actuarial models is not necessarily predictive of the expected future development of claims. For example, this is the case with legislative changes where an a priori estimate is used for premium increases related to the expected increase in claims. For legislative changes this estimate is used also in determining the level of claims. Subsequently, this estimate is maintained until new loss history materialises for re-estimation.
Workers’ compensation is an area in which explicit inflation assumptions are used, with annuities for the insured being indexed with the workers’ compensation index. An inflation curve that reflects the market’s inflation expectations plus a real wage spread is used as an approximation to the workers’ compensation index.
agreement, FTP-Planen. The FTP plan is primarily a defined benefit plan in terms of the future pension benefits. Försäkringsbranschens Pensionskassa (FPK) is unable to provide sufficient information for the Group to use defined benefit accounting. The plan is therefore accounted for as a defined contribution plan.
Expectations of returns on plan assets are based on the return within each asset class and the current allocation thereof. Market expectations of future returns are taken into consideration.
The actuarial gains and losses arising from experience adjustments and changes in actuarial estimates is recognised in other comprehensive income. The plan is closed for new business.
Income tax and deferred tax The Group provides current tax expense according to the tax law of each jurisdiction in which it operates. Current tax liabilities and current tax receivables are recognised in the statement of financial position as estimated tax on the taxable income for the year, adjusted for change in tax on prior years’ taxable income and for tax paid under the on-account tax scheme.
Cash flow statement The statement of cashflows of the Group is presented using the direct method and shows cash flows from operating, investing and financing activities as well as the Group’s cash and cash equivalents at the beginning and the end of the financial year. No separate statement of cashflows has been prepared for the parent company because it is included in the consolidated statement of cashflows.
Cash flows from financing activities comprise changes in the size or composition of Tryg’s share capital and related costs as well as the raising of loans, instalments on interest-bearing debt, and payment of dividends.
Total receivables 63 23 5 Current tax assets 17 17 6 Deferred tax assets 1 0
Profit for the year 623 -171 400 852 Change in equalisation provision 0 Change in revaluation reserves previous years 0 Revaluation of owner-occupied properties 20 20 Exchange rate adjustment of foreign entities 29 29 Hedge of foreign currency risk in foreign entities -27 -27 Tax on equity entries 1 -22 -21
1 Income from subsidiaries Tryg Forsikring A/S 475 901 2 Other expenses Administrative expenses -58 -57
Average number of full-time employees during the year 0 0 3 Tax Reconciliation of tax expenses Tax on financial loss before profit/loss in subsidiaries and tax 17 15
8 Capital adequacy Shareholders’ equity according to annual report 8,475 9,024 Proposed dividend -256 -400 Solvency requirements to subsidiary undertakings – 50% -2,516 -2,508
Solvency pct. 121 112 9 Contractual obligations, contingent liabilities and collateral The Danish companies in Tryg Group are jointly taxed with TryghedsGruppen smba.
Related parties are the same as in Tryg Group, please refer to note 29 (in the Group)
Intra-group trading involved 2010 2011 - Providing and receiving services -61 -61 - Intra-group account 76 23
11 Reconciliation of differences in the profit and the shareholders’ equity The executive order on application of international financial reporting standards for companies subject to the Danish Financial Business Act issued by the Danish FSA requires disclosure of differences between the format of the annual report under international financial reporting standards and the rules issued by the Danish FSA. The following is a reconciliation of differences in the profit and equity.
Profit reconciliation Profit – IFRS 593 1,140 Current years effect of actuarial gains and losses on pension obligation after tax -164 -288 Change in the year in deferred tax provisions for contingency funds -4 0
Equity reconciliation Shareholders’ equity – IFRS 8,458 9,007 Deferred tax provisions for contingency funds 21 17 Change in the year in deferred tax provisions for contingency funds -4 0
Equity – Danish FSA executive order 8,475 9,024 12 Accounting policies Please refer to Tryg Groups’ Accounting policy.
Key ratios Gross claims ratio 70.3 59.4 62.6 85.3 78.4 67.8 77.6 85.3 91.2 Business ceded as percentage of gross premiums 1.9 12.7 7.9 10.1 2.3 9.3 -2.9 -9.6 -4.6 Claims ratio, net of ceded business 72.2 72.1 70.5 95.4 80.7 77.1 74.7 75.7 86.6
Key ratios Gross claims ratio 74.5 88.9 73.1 82.1 77.2 75.7 72.9 88.9 79.0 Business ceded as percentage of gross premiums 1.6 2.5 2.1 0.8 1.1 3.6 1.6 -13.7 -0.9 Claims ratio, net of ceded business 76.1 91.4 75.2 82.9 78.3 79.3 74.5 75.2 78.1 a) Amounts relating to eliminations are included in ‘Other’
Technical result 112 257 166 1,023 Run-off gains/losses, net of reinsurance 196 266 615 770
Key ratios Gross claims ratio 77.4 82.7 82.0 83.5 Business ceded as % of gross premiums 2.1 -6.1 0.7 -8.1 Claims ratio, net of ceded business 79.5 76.6 82.7 75.4
Return on investment activities 266 163 570 66 Other income and expenses -15 13 -4 -31
Profit/loss before tax 512 447 941 1.569 Run-off gains/losses, net of reinsurance 286 331 824 944
Number of full-time employees, end of period 4,291 4,318 a) Moderna Försäkringar is included in ‘Swedish general insurance’ from 2 april 2009.
c) Adjustment to Gross expense ratio included only in the calculation of ‘Tryg’. Explanation of adjustment as a footnote to Financial Highlights
Number of full-time employess, end of period, discontinued and divested business 26 26 26 1 0
Share performance Earnings per share (DKK) 33.5 12.8 31.7 9.5 18.9 Diluted earnings per share (DKK) a) 31.7 9.5 18.9
Quoted price/net asset value 2.6 2.6 2.3 1.8 2.1 a) There has been no dilution of earnings or equity in the period 2006-2008
The expense ratio, net without adjustment is calculated as the ratio of actual insurance operating expenses, net of reinsurance to earned premiums, net of reinsurance.
Other key ratios are calculated in accordance with ‘’Recommendations & Financial Ratios 2010’’ issued by the Danish Society of Financial Analysts.
Danish general insurance Comprises the legal entities Tryg Forsikring A/S (excluding the Norwegian, Finnish and Swedish branches) and Tryg Garantiforsikring A/S.
Gross earned premiums Calculated as gross premiums written adjusted for change in gross provisions for unearned premiums, less bonuses and premium rebates.
Gross expense ratio Calculated as the ratio of gross insurance operating expenses with adjustment to gross earned premiums. 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.
Norwegian general insurance Comprises Tryg Forsikring A/S, Norwegian branch and the Norwegian branch of Tryg Garantiforsikring A/S.
Group chart at 1 January 2012. Companies and branches are wholly-owned by Danish owners and placed in Denmark unless otherwise stated.
Strategy and the insurance market 28 Strategy 30 KPI – (Key Performance Indicators) 32 The insurance market 34 Customers and products 36
Management 44 Supervisory Board 46 Group Executive Management 48 Employees 50 Corporate governance 52 Corporate Social Responsibility – CSR 60 The Tryg share 63
Income statement (parent company) 136 Statement of financial position (parent company) 137 Statement of changes in equity (parent company) 138 Notes (parent company) 139