Strategy and focus areas 4 Customers 4 Earnings 4 Synergies, employees and knowledge sharing 5 Investment policy 5
Shareholder information 9 Allocation of loss and shareholders’ equity 9 Tryg i Danmark smba 10
Tryg including Dansk Kaution and Tryg Rejse og Sundhed 13 Vesta 14 Tryg-Baltica international 15 Other activities 16 Investment activities 16 Post balance sheet events 18
Address Information Department Annual general meeting Tryg Vesta Group A/S Tel. +45 44 20 30 71 will be held on 21 March 2003 at 11 a.m. Klausdalsbrovej 601 Fax +45 44 20 66 33 at the company’s address: DK-2750 Ballerup Klausdalsbrovej 601, Ballerup, Denmark www.trygvesta.com
Tryg Vesta Group A/S is a financial holding company with subsidiary undertakings operating in the general insurance area. The Tryg Vesta Group was established on 28 June 2002 through a spin-off of all general insurance activities of the Nordea AB Group. The Group’s legal structure is illustrated below (simplified outline). Tryg Vesta Group A/S is owned by Tryg i Danmark smba, and Group Management is anchored in Tryg Vesta Group A/S.
In June 2002, Tryg and Vesta acquired the majority of Zurich’s general insurance activities in Denmark and Norway.
Partnership with Nordea In connection with the spin-off from Nordea, Nordea and the Tryg Vesta Group entered into a strategic partnership agreement, among other things, with a view to continuing and expanding the already existing bank assurance collaboration between Nordea’s companies and the Tryg Vesta Group to the effect that Nordea’s banking companies are a sales channel for the Tryg Vesta Group’s general insurance products and the Tryg Vesta Group sells Nordea’s life insurance and pension products.
The partnership is exclusive and covers Denmark, Norway, Finland, Sweden and Poland.
The agreement between Nordea and the Tryg Vesta Group furthermore covers asset management, property management and IT production agreements.
External environment General insurance The general insurance markets in the Nordic and Baltic countries have undergone a process of restructuring and consolidation in recent years. Major transnational Nordic insurance groups have been created, including the Tryg Vesta Group.
Prices in the reinsurance market have shown a falling trend for many years, but developments in the capital markets and recent years’ natural disasters have resulted in substantial losses. Combined with the fear of terrorist attacks in the wake of the 11 September 2001 catastrophe in New York this led to significantly higher prices of reinsurance which, in turn, is reflected in insurance premiums. Furthermore, the underlying risk inherent in industrial and large-scale commercial insurance developed adversely during the period of low reinsurance prices merely as a consequence of globalisation and risk concentration. Adding these events to the existing scenario caused premiums to increase to levels unseen in the market for many years.
Indexed movements in share indices in Denmark, Europe and the USA
Interest rate movements for 5-year government bonds in 2002 - - - - - - - - - - - - -
Based on a mission of offering a stable and qualitative supply of services that provide peace of mind to private individuals and companies, the Tryg Vesta Group offers attractive insurance products and related services.
The Tryg Vesta Group is aware of its social responsibility as a provider of products to the Nordic communities and as a major employer.
Based on the new ownership structure, capital base and organisational structure, the Tryg Vesta Group has defined a number of overall strategic focus areas. The Tryg Vesta Group intends to be strongly focused on the direct mass market and the business areas in which profitability is considered satisfactory within an acceptable time horizon. The market segments and business areas which are not considered to hold profit potential will be divested, or underwriting will cease. Similarly, new business areas will be required to generate profit within predefined periods of time.
Customers The Tryg Vesta Group reaches its customers through a wide variety of distribution channels ranging from personal service at the customer’s home to service in connection with banking transactions at Nordea. Always in accordance with the customer’s choice – also if it includes a mix of different channels. The Group will be focused mainly on its existing customers, who will be served through concepts tailored to each specific customer group.
Earnings The Tryg Vesta Group needs to demonstrate strong growth in earnings and consolidation on its own merits. The Group aims to further expand its expertise within underwriting, risk assessment and claims handling.
With a view to creating better solutions for the customers and generating savings in the administrative areas, web-based self-service facilities will be key to future work process developments. Schemes to ensure good customer service and low claims expenses in connection with repair and redelivery will be introduced.
Investment policy The investment policy aims to maximise the return, taking into account the composition and duration of liabilities and the company’s solvency. Overall, the Tryg Vesta Group’s insurance obligations have a duration of less than three years, which dictates an asset mix focused on a high degree of security, that is, limited fluctuations and strong liquidity. Therefore, bonds will continue to constitute the majority of total investments with special focus on short-term bonds and low credit risk. Investments in shares, bonds and property consist of well-diversified portfolios offering considerable risk diversification.
Most of the Tryg Vesta Group’s business is gathered in Tryg (Denmark) and Vesta (Norway), together accounting for almost 86% of the Group’s total earned premiums.
Tryg including Dansk Kaution and Tryg Rejse og Sundhed Tryg is Denmark’s largest general insurers with a market share in excess of 22%. At year-end 2002, Tryg had a total of 2,317 employees. In recent years, the Danish market has been characterised by consolidation and by the withdrawal of international groups from the market. The total market share of the seven largest general insurers has increased from 66% in 1997 to 73% in 2001 with a further consolidation in 2002. Effective 1 June 2002, Tryg acquired Zurich’s general insurance activities in Denmark.
Tryg’s Personal lines insurance area comprises individual insurance, group schemes and travel and health insurance in the company Tryg Rejse og Sundhed. This business area writes all types of ordinary insurance for private individuals and customers at the low end of the commercial market.
Commercial provides insurance to the agricultural and marine segments and medium-sized and large commercial and industrial businesses. The business area, which also comprises Dansk Kaution (guarantee insurance), offers commercial insurance to some 125,000 customers through Tryg’s customer centres and key account managers or brokers.
Tryg-Baltica international Tryg-Baltica international (DK) and Tryg-Baltica international (UK) are responsible for the Group’s reinsurance underwriting activities and selected niche areas in the London market. In addition, TBi manages the run-off of discontinued lines.
As a consequence of the very large losses in the London market and the future capital allocation model, an analysis of the portfolio has resulted in a consolidation focusing on the continuing lines of business.
The Group’s Estonian company is the country’s fifth largest general insurer with a market share of 5%. Acquired in 2002, the company has branch offices in all major cities and collaborates with Nordea Bank in Estonia.
The branch office in Finland services Nordea Bank’s customers through the bank’s branches. The bank assurance concept is expected to expand considerably in the years ahead. Nordea Bank Finland plc serves 40% of all Finnish bank customers, thereby offering the Finnish branch significant position in the Finnish market.
Established on 28 January 2002, Tryg Vesta Group A/S (formerly Tryg General Insurance Holding A/S) was dormant from the date of formation until 28 June 2002 when an Extraordinary General Meeting resolved to provide the company, by way of a non-cash contribution, with all the shares in the following companies: • Tryg Forsikring A/S, Denmark • Vesta Forsikring AS, Norway • Nordea Kindlustuse Eesti AS, Estonia
In 2002, Tryg Vesta Group A/S signed a loan agreement in principle with a banking consortium consisting of Nordea Bank Danmark A/S, Danske Bank A/S and Nykredit Bank A/S concerning further capitalisation of the subsidiary undertakings.
Earned premiums, net of reinsurance 7,069 Technical interest, net of reinsurance 449 Claims incurred, net of reinsurance -5,862 Insurance operating expenses, net of reinsurance -52 -1,811 Change in equalisation provisions -181 Technical result -52 -336 Proift/loss on investment activities after transfer to insurance activities -445 93 Loss on ordinary activities before extraordinary expenses and tax -497 -243 Extraordinary expenses -1,182 -1,482 Tax 45 Loss for the year -1,679 -1,679
Key ratios Claims ratio, net of reinsurance 82.9 Expense ratio, net of reinsurance 25.6 Combined ratio, net of reinsurance 108.5
Return on equity -38.4 Return on equity before extraordinary expenses -11.4 Solvency ratio 61 *) Subsidiary undertakings are consolidated as from 28 June 2002.
The Group posted a loss of DKK 243m before extraordinary expenses, goodwill amortisation and tax for the period 28 January to 31 December 2002. Extraordinary expenses amounted to DKK 1,482m, of which DKK 1,182m related to goodwill on the parent company’s acquisition of the subsidiary undertakings Tryg Forsikring A/S, Vesta Forsikring AS and Nordea Kindlustuse AS, partly DKK 300m in connection with the phase-out of parts of the Group’s activities. The total loss for the year amounted to DKK 1,679m.
For the Group as a whole, premiums performed very satisfactorily in 2002 with good customer retention, a good inflow of new customers and significant premium increases. Total gross premiums of DKK 9,231m written in the second half of 2002 correspond to premium growth in the acquired subsidiary undertakings of 30% relative to the second half of 2001. Vesta was the main contributor with premium growth of 41%. (adjusted for exchange rate fluctuations, the growth was 31%), while Tryg recorded 21% growth. Premium growth was also affected favourably by portfolio acquisition.
The Group’s claims performance in the second half of the year was not yet at a satisfactory level with a claims ratio, net of reinsurance, of 82.9%. The premium increases, stricter terms and higher deductibles that have been introduced will, however, enable the Tryg Vesta Group to improve its overall gross claims ratio significantly.
Vesta’s financial statements for 2002 are impacted by high reinsurance costs, including non-recurring costs in connection with parts of the company’s reinsurance programme. The underlying insurance operations are, however, showing signs of improvement for most lines. A few lines require additional premium increases for operations to become sufficiently profitable.
H2 2002 Loss on ordinary activities before tax -243 Extraordinary expenses • Goodwill DKK 1,182m • Phase out DKK 300m
In the second half of the year, the Group increased its equalisation provisions in respect of windstorm and large losses by DKK 180m, which naturally had a significant impact on the overall result.
The performance of the Group’s primary business areas is reviewed below.
For the second half of 2002, the technical result of Tryg amounted to a loss of DKK 101m against a loss of DKK 194m in the same period last year.
Premiums in the personal market were generally increased by from 5% to 18%. In the high end of the commercial market, general premium increases of from 16% to 25% were effected, and premiums for certain industrial customers were increased by up to 125%. Customers in industrial lines with a particularly low profitability were in certain cases notified of even more significant premium increases in order to ensure consistency between premium and risk.
H2 2002 H2 2001* Gross earned premiums 3,976 3,296 Technical result -101 -194 Loss on ordinary activities before tax -137 -253
Claims ratio, net of reinsurance 83.2 90.8 Expense ratio, net of reinsurance 21.5 22.9 Combined ratio 104.7 113.7 *Unaudited pro forma figures
For the second half of 2002, the technical result of Vesta amounted to a loss of DKK 58m against a profit of DKK 129m in the same period last year.
Gross premiums increased by DKK 1,152m. Adjusted for fluctuations in the DKK/NOK exchange rate, growth was 31%.
Vesta recorded growth in the personal segment of 2.9 percentage points in 2002, increasing its market share from 16.3% to 19.2%. The share of the commercial market increased from 22.5% to 25.5%. A significant part of the increase was attributable to the acquisition of Zurich.
As a consequence of recent years’ weak profitability, Vesta introduces premium increases to enhance profitability again in 2002. In the personal segment, premiums rose by 9.9% on average within motor insurance and by 21.7% on average within house insurance. In the commercial segment, premiums rose by 13.3% on average distributed on 13.8% on property insurance, 10.3% on motor insurance, 17.2% on personal insurance and 9.0% on marine insurance. The premium increases implemented are expected to lay the groundwork for improved profitability in 2003.
The Personal business area performed satisfactorily in 2002, and the combined ratio fell to 99.2%. Commercial recorded an increase in the combined ratio of 20.3 percentage points to 125.4%. A poor runoff performance in the personal accident lines generally and health insurance, in particular, in the second half of 2002 caused a run-off loss affecting the claims ratio, net of reinsurance, equal to 7.3 percentage points.
A number of measures have been implemented to restore profitability in the commercial segment, including
These measures are expected to reduce the commercial portfolio to some extent, while the personal segment is still believed to present a potential for profitable growth.
Vesta has refocused on the small and medium-sized company segment, while also introducing measures to follow up regularly on profitability.
Equalisation provisions for windstorm and large losses were increased by DKK 141m in the second half of the year, standing at DKK 907m at year-end 2002.
In the second half of 2002, the technical result of Tryg-Baltica international amounted to a loss of DKK 73m. The loss was mainly attributable to run-off losses and strengthened provisions for expenses relating to the lines of business in run-off.
Furthermore, amounts were set aside to cover the closing down of the Singapore office as the plans to set up a branch there were abandoned.
Gross premiums for the second half of the year amounted to DKK 1,015m, of which some 60% related to TBi UK and 40% to TBi DK.
The claims ratio, net of reinsurance, was 78.1% for the second half of 2002. The claims ratio was impacted by the floodings that affected Europe in the second half of the year.
The expense ratio, net of reinsurance, of 44.3% was affected by the provisions for expenses referred to above.
Considerable IT investments were initiated in Poland in 2002 to improve business and enhance customer service.
Interest etc. 615 Investment gains/losses etc. -4 Return before transfer of technical interest 611 Technical interest transferred -518
Asset allocation At 31 December 2002, equities accounted for 8% of the Group’s investments compared with 13% at 30 June 2002. The equity portfolio was reduced both due to falling equity prices and to equity sales. The proportion of bonds increased from around 70% to around 77% during the same period. The duration of the bond portfolio, including money market placements, was 1.85 years at year-end 2002. The property portfolio accounted for DKK 3.4bn or around 15%.
At 31 December 2002, the investment portfolio of the Tryg Vesta Group was distributed on approximately DKK 10.4bn in the Danish companies, approximately DKK 10.6bn in the Norwegian companies, and small amounts in the other companies of the Tryg Vesta Group. Net investments amounted to DKK 2.7bn, of which assets added on the acquisition of Zurich accounted for DKK 1.1bn.
H2 2002 H2 2001* Gross premiums 248 238 Technical result -14 -9 Profit/loss on ordinary activities before tax 7 -21
In the financial year, all companies in the Group had bond portfolios with a shorterthan -benchmark duration, and the total bond portfolio, including cash at bank and in hand, generated a return of 5.8% for the six months. The return on the bond portfolio in Tryg was 5.7%, and 5.8% in Vesta. By way of comparison, a Danish government bond index with a term to maturity of 1-5 years yielded 5.3% in the same period.
87% of the Tryg Vesta Group’s bond portfolio, equivalent to DKK 15.5bn, comprises Danish mortgage bonds, placements in the Norwegian money market, and government bonds, excluding eastern Europe. The remainder is invested in other corporate bonds and eastern European bonds, primarily government bonds.
The option-adjusted duration, including cash at bank and in hand, of the entire Group’s bond portfolio was 1.85 years at 31 December 2002, due to, among other things, Vesta’s strong focus on the money market.
The portfolio is well-diversified and consists of high-quality buildings, typically in prime locations in major cities in Denmark and Norway. The portfolio mainly comprises office premises, but also a small proportion of other commercial property and residential property.
Shares Most of the equities are in the Danish and Norwegian portfolios, while the Polish, Estonian and TBi portfolios contain almost no shares.
The financial year was characterised by plunging prices in the international equity markets. For the financial year, the return on investments was a negative DKK 489m, equivalent to minus 20.1%.
The return on Danish shares was minus 20.0%, while Norwegian shares generated a return of minus 23.7% compared with minus 19.7% for the Danish KBX index and minus 22.4% for the Norwegian OSEBX index in the same period. The return on international shares was minus 19.5% compared with minus 20.0% and minus 10.9% for MSCI Europe and MSCI USA, respectively.
Post balance sheet events The meeting of the Supervisory Board of Tryg Vesta Group A/S on 11 March 2003 resolved to transfer Vesta Forsikring AS in Norway to Tryg Forsikring A/S. The transfer will take the form of a non-cash contribution against a capital increase in Tryg Forsikring A/S.
Apart from the events mentioned above, Management believes that no material events have occurred in the period from the balance sheet date until the date of these financial statements which affect the assessment of the company’s financial position.
Furthermore, in managing insurance operations, the Group uses acceptance rules that define limits for the risks the Group is prepared to assume and in connection with reinsurance.
Such analyses for 2003 have caused a change of the previous proportional cover of property damage insurance in Denmark to a non-proportional cover with a retention of DKK 50m (DKK 100m in respect of the first event). However, risks with an EML (Estimated Maximum Loss) exceeding DKK 800m are primarily covered on a proportional facultative basis.
Natural disasters The reinsurance contract for natural disasters covers accumulated losses up to DKK 3.5bn with a retention in Denmark of DKK 100m, in Norway of NOK 60m and in Poland of DKK 75m per event. In addition, the 2003 catastrophe programme covers Vesta’s commitment with Norsk Naturskadepool in an amount of some NOK 1.0bn with a DKK 100m retention for the Group.
Terrorism Prior to 2002, terrorism cover was included in the reinsurance cover. However, the terrorist attacks in the USA on 11 September 2001 changed market conditions, and terrorism cover is now to a higher degree subject to negotiation.
Generally, terrorism as a single event is covered by the Tryg Vesta Group’s reinsurance contracts for 2003. However, the retention for personal lines (personal accident and workers’ compensation) is DKK 43m in respect of biological and chemical losses resulting from a terrorist attack. Motor losses resulting from terrorist attacks are only covered if insurance cover is provided within the compulsory liability sums for personal injury and property damage.
Tryg has equalisation provisions of DKK 245m to equalise the retention on windstorm, workers’ compensation and other large losses. The DKK 907m equalisation provisions in Vesta comprise accumulated funds to cover the commitment in relation to Norsk Naturskadepool and to equalise large losses. Furthermore, Dansk Kaution has equalisation provisions of DKK 270m in accordance with the guidelines issued by the Danish Financial Supervisory Authority for credit and guarantee insurance, while Tryg-Baltica international DK and UK have equalisation provisions totalling DKK 15m.
The table shows the total market risk exposure of the Tryg Vesta Group as at 31 December 2002.
Property Price fall 8% 270 Shares Price fall 12% 221 Bonds Int. rate increase 0.7% 242 Currency, euro Exch. rate fall 1% 1 Currency, non-euro Exch. rate fall 3% 97 Credit risk, mortgage bonds, cash Average loss 0.7% 76 Credit risk, other Average loss 3% 58
As developments in the financial markets are beyond the control of the Tryg Vesta Group, such risks are managed for each company in the Group and for the entire Group in accordance with an investment policy, which defines the risk limits the companies and the Group have to comply with. The investment policies define, among other things, limits for duration, asset mix, including the proportion of shares, currency exposure, single risk limits and limits for net investments.
Currency risk Basically, the Group hedges all currency risks relating to investments in shares and bonds denominated in foreign currency. However, Tryg’s investments in eastern European bonds are unhedged in order to gain the full benefit on convergence to the euro economy. Investments in foreign subsidiary undertakings have been partly hedged. The currency exposure relating to Vesta’s shareholders’ equity was unhedged at 31 December 2002, but has been hedged early in 2003.
The Tryg Vesta Group pursues a policy of seeking to limit operational risk by such means as internal controlling and efficient IT security systems, and by continuing to develop employee know-how, for example, by using the intranet as a knowledge data base for processes, routines and techniques. Furthermore, the Group seeks to strengthen its operational risk management through experience sharing between the Tryg Vesta Group companies.
The future Group Executive Management of the Tryg Vesta Group will comprise: Group CEO: Stine Bosse Member of the Group Executive Management Erik Gjellestad Group CFO
The future Group Executive Management of Tryg Forsikring will comprise: Group CEO Stine Bosse Member of the Group Executive Management Erik Gjellestad Group CFO Member of the Group Executive Management Peter Falkenham Member of the Group Executive Management Stig Ellkier-Petersen Member of the Group Executive Management Bjørn Thømt
The term procurement in relation to claims covers claims payment systems that provide savings for customers as well as the Group. For example, Tryg has developed a new service offering customers a replacement car and an additional repair guarantee if they have their car repaired at one of a number of selected garages.
The Group expects to implement the planned cost savings without massive layoffs and quality impairments.
The enhanced quality of the portfolio underlies the switch to non-proportional reinsurance, which is expected to make a positive contribution to earnings.
Vesta For 2003, Vesta projects an improvement of its net combined ratio to 105. The projected improvement is based on the substantial increase in the company’s share of both the personal and the commercial market. In the years ahead, the company expects to consolidate its market share while focusing strongly on profitability. This implies, among other things, premium increases, measures to improve the portfolio, and a reduced commercial portfolio. Furthermore, the introduction of bank assurance through Nordea’s branch network in Norway is expected to make a positive contribution.
Other activities The Group’s other activities (Poland, Estonia and Finland) are projected to post results that are impacted by large IT investments. The Group expects positive technical results within a two-year horizon.
In addition to the above, results for 2003 are dependent on developments in the financial markets. As the Group has a low proportion of equities, a bond portfolio with a short duration, and a high degree of currency hedging, its exposure to developments in the financial markets is, however, relatively low. Exposure describes the Group’s sensitivity to various scenarios in the financial markets.
• We want to make money: • Combined ratio of 102 for the Group • Return on shareholders’ equity of 17% for the Group
• We want to be an attractive place to work • HR development costs to increase by 5% per employee • In-house recruitment for management positions possible for 70% of specific vacancies • All managers to be assessed and remunerated based on BSC
In terms of combined ratio, which expresses the sum of claims and expenses relative to premiums, the Group’s target is a combined ratio, net of reinsurance, of just under 100. The Group expects to meet this target within the next three years.
The consolidated and parent company financial statements have been prepared in accordance with the accounting provisions in force. We consider the accounting policies adopted appropriate to the effect that the consolidated and parent company financial statements give a true and fair view.
Internal Audit We have audited the consolidated annual report and the annual report of Tryg Vesta Group for 2002.
The consolidated annual report and the annual report is the responsibility of the Company's Board of Directors and Board of Executives. Our responsibility is to express an opinion on the consolidated annual report and the annual report based on our audit.
Basis of Opinion We conducted our audit on the basis of the Statutory Order from the Danish Financial Supervisory Authority on Auditing Financial Enterprises and Financial Groups and in accordance with Danish Auditing Standards. Based on materiality and risk we have evaluated the business procedures, the accounting policies used and the significant estimates made and verified the basis for amounts and disclosures in the consolidated annual report and the annual report. We believe that our audit provides a reasonable basis for our opinion.
Bent Hansen Lone Møller Olsen Finn L. Meyer Mona Blønd State-Authorised State-Authorised State-Authorised State-Authorised Public Accountant Public Accountant Public Accountant Public Accountant
Basis of preparation The consolidated financial statements and financial statements of Tryg Vesta Group A/S have been prepared in accordance with the Danish Consolidated Insurance Business Act and the Danish Financial Supervisory Authority’s executive orders on the presentation of consolidated financial statements by insurance companies.
Consolidation principles The consolidated financial statements comprise the financial statements of Tryg Vesta Group A/S (the parent company) and undertakings (group undertakings) controlled by the parent company. See the Group overview on page 51. Control is achieved where the parent company directly or indirectly holds more than 50% of the voting rights or is otherwise able to exercise or actually exercises a controlling influence.
Currency translation The results of foreign subsidiary undertakings are based on translation of the items in the income statement at average exchange rates. For domestic undertakings, income and expenses denominated in foreign currency are translated at the exchange rate ruling on the date of the transaction as are other income and expenses denominated in foreign currency. Assets and liabilities are translated at the exchange rate ruling at year-end.
Intragroup transactions in securities and other investment assets are settled at market value.
Technical interest, net of reinsurance Technical interest, net of reinsurance, represents a calculated return on the average technical provisions, net of reinsurance. The interest rate applied is the year’s average yield to maturity on bonds with a term to maturity of less than three years.
Claims incurred Claims incurred, net of reinsurance, represent claims paid during the year adjusted for changes in outstanding claims provisions and provisions for annuities less reinsurers’ share. Amounts to cover expenses incurred to combat and contain losses and to survey and assess claims are included in the item. In addition, the item includes run-off results regarding previous years. The part of the increase in technical provisions which can be ascribed to discounting is transferred to technical interest, net of reinsurance.
Insurance operating expenses Insurance operating expenses, net of reinsurance, represent acquisition costs and administrative expenses less reinsurance commissions received. Expenses relating to acquiring and renewing the insurance portfolio are charged to the income statement at the time of writing the business. Administrative expenses, including salaries, wages, taxes etc. are accounted for on an accruals basis to match the financial year. Group undertakings pay shares of joint expenses according to their consumption of resources, which are settled on cost-covering terms.
Depreciation is charged on a straight-line basis over four to five years. Furniture and equipment etc. costing less than DKK 100,000 are written off fully in the year of acquisition, except for assets acquired as part of a specific project. Computer equipment held under finance leases is capitalised and depreciated as if purchased by the company.
Reinsurance accepted Premiums, claims and commissions relating to reinsurance accepted are generally included in the income statement on an estimated and assessed basis. Commissions relating to unearned premium provisions are included under “Prepayments and accrued income”.
Income from land and buildings before value adjustment represents the profit from property operations less property management expenses.
Realised investment gains/losses represent realised net gains/losses on the sale of investments, including financial instruments, calculated in proportion to the value at the beginning of the financial year or the cost of acquisition during the year.
Unrealised investment gains/losses represent unrealised net gains/losses on investments when marked to market at the end of the financial year, calculated in proportion to the value at the beginning of the financial year or the acquisition value during the year.
Extraordinary items Extraordinary items include amounts which by their nature are unusual for the company and which are clearly different from the ordinary operations.
Shares in group undertakings Shares in group undertakings are stated at the proportionate interest in the shareholders’ equity of the undertakings.
Listed shares and bonds etc. Listed shares and bonds are stated at officially quoted year-end prices. Unlisted shares and fixed-interest loans etc. are stated at a conservatively estimated market value based on the net asset value of the companies as stated in the most recent financial statements available.
Computer equipment held under finance leases is treated as if purchased by the company.
Prepayments and accrued income Prepaid acquisition costs comprise the part of commission expenses to other insurance companies etc. relating to unearned premiums provisions.
Other prepayments and accrued income comprise prepaid expenses and claims expenses paid in respect of future settlements with cedants.
Technical provisions Unearned premiums provisions, net of reinsurance, represent the proportion of premiums and reinsurance premiums collected which relates to subsequent financial years.
Equalisation provisions represent amounts provided to equalise future claims in areas where experience has shown that claims vary from year to year. Equalisation provisions in credit and guarantee insurance are calculated in accordance with rules laid down by the Danish Financial Supervisory Authority. For workers’ compensation insurance in Denmark, equalisation provisions are calculated as the difference between the technical provisions made up at basic interest rates of 2.00% and 2.75%, respectively. In addition, equalisation provisions comprise the compulsory natural disaster fund in Vesta, Norway, which is calculated and adjusted in accordance with rules laid down by Norwegian law.
Other technical provisions, net of reinsurance, represent provisions for risk not yet run off. The provisions represent the amounts deemed necessary, in addition to unearned premiums provisions and future premium rates, to cover claims and expenses in later accounting periods for policies in force on the balance sheet date.
Provisions for other risks and expenses Provisions for other risks and expenses comprise amounts intended to cover liabilities or expenses attributable to the past financial year or prior financial years, and which on the balance sheet date are likely or certain, but uncertain in respect of size or time of payment.
Deferred tax is not provided on the untaxed part of the Danish contingency reserve. It is not expected that future movements in technical provisions will result in a crystallisation of tax on the contingency reserve. The untaxed contingency reserves are disclosed in the notes to the financial statements under shareholders’ equity.
Claims incurred Gross claims paid 0 -5,769 Reinsurers' share 0 1,194 Change in gross outstanding claims provisions 0 -1,029 Change in outstanding claims provisions, reinsurers' share 0 -269 3 Claims incurred, net of reinsurance 0 -5,874
Change in equalisation provisions 0 -181 *) Subsidiary undertakings are consolidated as from 28 June 2002.
Prepayments and accrued income Accrued interest and rent 0 282 Prepaid acquisition costs 0 86 Other prepayments and accrued income 0 355
Note Liabilities 16 Shareholders' equity Share capital 1,300 1,300 Share premium account 2,968 2,968 Retained earnings 0 0
Provisions for other risks and expenses Provisions for pensions and similar obligations 0 185
Creditors Creditors arising out of direct insurance operations 0 495 Creditors arising out of reinsurance operations 0 580 Amounts owed to credit institutions 1,100 1,249 Amounts owed to group undertakings 0 3 Corporation tax 0 3 Other creditors 25 950
Parent company Group 1 Earned premiums, net of reinsurance Direct insurance 0 8,671
Run-off result regarding previous years, net of reinsurance Gross run-off result regarding previous years 0 -270 Run-off result regarding previous years, reinsurers' share 0 -105 *) Subsidiary undertakings are consolidated as from 28 June 2002.
Administrative expenses include fees to the auditors appointed by the General Meeting: Deloitte & Touche -1.2 -3.6
DKKm 5 Technical result, net of reinsurance, by line of insurance
Personal accident Workers' Marine, and health compensation Motor, third- Motor, aviation and insurance insurance party liability comprehensive cargo
Parent company Group 6 Profit from group undertakings Tryg Forsikring A/S -524 Vesta Forsikring AS 101 Nordea Kindlustuse Eesti AS -2 7 Interest, dividends etc. Dividend on shares 0 9 Interest on securities etc. 4 542 Capital gains on drawing of and repayments on securities etc. 0 -10 8 Realised and unrealised investment gains and losses Land and buildings 0 51 Other shares 0 -447 Listed bonds, excluding index-linked bonds 0 455 Other loans 0 -2
Book value by type of property Retail property 0 314 Office property 0 2,798 Production and warehouse property 0 44 Residential property 0 215
Of which properties held for the companies' own use 0 409
Most recent property value (property valuation) 0 2,276 Property not subject to public valuation 0 94
Mortgage debt amounts to DKK 67m on land and buildings with a book value of DKK 206m
In the determination of the market value of properties the following rates of return have been used: Lowest Average Highest
Tryg Forsikring A/S, Ballerup 100 -1,059 2,037 Vesta Forsikring AS, Bergen 100 -202 2,539 Nordea Kindlustuse Eesti AS, Tallinn 100 -30 8
The company has extended subordinated loan capital of DKK 600m to Tryg Forsikring A/S and of NOK 100m to Vesta Forsikring A/S
Units in unit trusts 0 14 Ordinary bonds 0 6,935 International bonds 0 10,849 Loans secured by mortgages 0 200 Other loans 0 73 Deposits with credit institutions 0 291
Parent company Group 19 Equalisation provisions Guarantee insurance 0 270 Workers' compensation insurance 0 79 Windstorm and large risks 0 166 Equalisation provisions concerning Norwegian general insurance 0 907 Other insurance 0 16 20 Other technical provisions, net of reinsurance Life insurance provisions concerning reinsurance 0 1 Provisions for open financial year 0 7 Provisions for risk not yet run off 0 41 21 Other provisions Restructuring and phase-out costs 0 352
Solvency ratio 61 24 Forward transactions etc. Forward transactions Market values Purchase of interest rate derivatives 0 3,307 Sale of interest rate derivatives 0 715 Forward currency purchased 0 110 Forward currency sold 0 3,455 Unsettled transactions 0 130
Cost of acquisition Purchase of interest rate derivatives 0 3,309 Sale of interest rate derivatives 0 713 Forward currency purchased 0 109 Forward currency sold 0 3,400 Unsettled transactions 0 130 25 Contingent liabilities Non-insurance guarantee and lease commitments etc. do not exceed 0 375
The majority of the companies of the Tryg Vesta Group are jointly taxed and jointly and severally liable for payment of corporation tax.
In terms of payroll tax and VAT, the Company is jointly registered with the majority of the companies of the Tryg Vesta Group, and is jointly and severally liable with these companies for the payment of such taxes.
Per Skov Member of the Supervisory Board of Tryg i Danmark smba, member of the Board of Representatives of Tryg i Danmark smba, deputy chairman of the Supervisory Board of Tryg Vesta Group A/S, chairman of the Supervisory Board of Tryg Forsikring A/S, member of the Supervisory Board of Vesta Forsikring AS, chairman of the Supervisory Board of VT-Holding A/S, member of the Supervisory Board of A/S De Smithske, member of the Supervisory Board of DAC Smba, member of the Supervisory Board of Dagrofa A/S, member of the Supervisory Board of Denerco Oil A/S, member of the Supervisory Board of DSV, De Sammensluttede Vognmænd af 13.7.1976 A/S, member of the Supervisory Board of Kemp & Lauritzen A/S, member of the Supervisory Board of Privathospitalet Hamlet A/S, member of the Supervisory Board of Superfos A/S, member of the Supervisory Board of Norlex A/S.
Jørn Wendel Andersen Member of the Supervisory Board of Tryg i Danmark smba, member of the Board of Representatives of Tryg i Danmark smba, member of the Supervisory Board of Tryg Vesta Group A/S, managing director of Arla Foods amba, member of the Supervisory Board of Arla Foods AB, member of the Supervisory Board of Neoplex A/S.
Niels Erik Schultz-Petersen Member of the Supervisory Board of Tryg i Danmark smba, member of the Board of Representatives of Tryg i Danmark smba, member of the Supervisory Board of Tryg Vesta Group A/S, deputy chairman of the Supervisory Board of H.A.G. A/S.
Stine Bosse Group CEO of Tryg Vesta Group A/S, CEO of Tryg Forsikring A/S, CEO of Tryg Forsikring II A/S, member of the Supervisory Board of Vesta Forsikring AS, chairman of the Supervisory Board of Tryg Forsikring, Rejse og Forsikring A/S, member of the Supervisory Board of ApS KBIL 9 NR. 2032, chairman of the Supervisory Board of Dansk Kautionsforsikrings-Aktieselskab, member of the Supervisory Board of Tryg Ejendomme I A/S, chairman of the Supervisory Board of Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S, member of the Supervisory Board of Aktiv 24 Forsikring AS, member of the Supervisory Board of Enter Forsikring AS, member of the Supervisory Board of Forsikring og Pension, member of the Supervisory Board of Flügger A/S, member of the Supervisory Board of Dansk Management Forum.
Erik Gjellestad Member of the Group Executive Management of Tryg Vesta Group A/S, CEO of Vesta Forsikring AS, member of the Supervisory Board of Tryg Forsikring A/S, alternate member of the Supervisory Board of Bergen Nordhordaland Rutelag ASA.
(with Tryg Forsikring II A/S Filial Finland, Suomen sivuliike, Branch name; Nordea Vahinkovakuutus)
- Tryg-Baltica International (UK) Ltd (100%) - Tryg Forsikring, Rejse og Sundhed A/S, CVR-No. 19998916 (100%) - Tryg Ejendomme I A/S, CVR-No. 12601840 (100%) - Aps KBIL 9 nr. 2032, CVR-No. 18251728
- ANS Grensen 3, 848 383 082 (99%, 1% owned by AS Slettebakksvei nr. 80) - ANS Nesøyveien 4, 951 130 532 (99%, 1% owned by AS Slettebakksvei nr. 80) - ANS Nesøyveien 6, 957 929 532 (99%, 1% owned by AS Slettebakksvei nr. 80) - ANS Nye Vakåsvei 80, 948 011 220 (99%, 1% owned by AS Slettebakksvei nr. 80)