Mr Morten Hübbe, Group CEO, phone +45 44 20 30 20
Mr Henrik Hougaard, Head of Corporate Communications +45 44 20 30 70
The Tryg Vesta Group 18 March 2004 page 2 of 98
The external environment 9 Outlook 60 Strategic focus areas ........................................... 60 Financial perspectives 12 Targets ................................................................ 61 Profitability ........................................................... 12
Supervisory Board ............................................... 93 Inclusiveness ....................................................... 23 Executive Management ....................................... 95 Management and organisational changes........... 23 Glossary of technical terms 98 Risk management 25
Norway of 11.2 per cent and 6.3 per cent, respectively, reflecting a high degree of loyalty among our customers.
• The combined ratio improved from 111.7 in 2002 to 102.8 in 2003 The year in summary • The combined ratio for the Group’s Danish general insurance operations improved from
• The Group’s return on shareholders’ equity before tax amounted to 16.4 per cent against a negative return of 52.9 per cent in 2002.
• Shareholders’ equity increased by DKK 1,092m to DKK 5,360m. • The large general insurance portfolios in
Denmark and Norway saw premium growth of 11.2 per cent and 6.3 per cent, respectively. • The reserves for losses relating to personal injuries have been strengthened by DKK 699m, corresponding to an impact on the combined ratio of 4.8 percentage points
The Tryg Vesta Group 18 March 2004 page 5 of 98
The Tryg Vesta Group is the second-largest general insurer in the Nordic region. The Group comprises Tryg,
Group has a partnership with CSC, which will handle the Group’s IT operations starting 1 June 2004.
Gross premiums 2003 distributed on products Gross premiums 2003 according to business area
Denmark Norw ay TBi Finland, Poland and Estonia Business in run-off
The Group’s future platform consists of two dedicated local business areas for personal and commercial customers in Norway and Denmark, respectively, and one dedicated Nordic business area for the corporate market.
profitable portfolio in the Nordic region within the next three years. Profitability takes priority to growth if required to ensure stable earnings. At the same time, the Group aims to balance the composition of its personal, commercial and corporate customers in order to maximise the spread of the Group’s risks.
Nordic characteristics, the Tryg Vesta Group companies share strong competencies and values.
Efforts to make the Tryg Vesta Group identity a household name began in earnest in early 2003 when the new Group Executive Management decided to be transformed from a conglomerate of companies to be perceived as one single Group.
The word stable signals that the Group pursues a longterm strategy, and the word qualitative shows that the
Our vision reflects the Tryg Vesta Group’s commitment to its Nordic strategy and shows the goal and direction of the Group’s development. The term provider of peace of mind means that the Group offers a complete package comprising insurance, advice and supplementary services aimed at preventing instability and at restoring the customer’s peace of mind should this happen. Furthermore, it is the Group’s ambition to participate actively in and to influence the public debate when it deals with subjects related to the Group’s existing or potential business areas. The Tryg Vesta Group’s operations are carried out decentrally, but the Group defines common strategies, goals and policies and has clear ambitions with respect to financial perspectives, customers, processes and employees: Annual Report 2003
The Tryg Vesta Group 18 March 2004 page 8 of 98
The Nordic general insurance market is driven by few, large companies. It is becoming increasingly transparent and competitive, and the whole Nordic region is characterised by having a saturated general insurance market.
Consequently, the companies are focusing more strongly on correct technical underwriting methods, that is, on optimising the correlation between premiums and risk.
The performance of direct insurers has been driven by such factors as recent years’ earnings pressure due, in particular, to declining interest rates, capital losses on shares and increasing reinsurance prices, the latter primarily resulting from the European windstorms in late 1999 and the World Trade Center disaster in
The insurance companies’ increased focus on profitability and the resulting premium increases caused a few large companies to consider setting up their own captive insurance companies in 2003. Setting up a captive means that the company carries a higher proportion of its own insurance risk. However, it requires the company to have a very strong equity and good supporting reinsurance contracts.
The role of insurance companies in relation to such customers changes from being risk bearers to being managers and service providers primarily.
The number of claims due to exceptional weather conditions, such as windstorms and flood, was below average in 2003. However, the prices of reinsurance continue to be high since the reinsurers have changed their assessment of weather-related risks in the Nordic region as a consequence of previous years’ windstorms and cloudbursts.
Changes to the division of labour between the public and the private sector are welcome, but it is disturbing
The Tryg Vesta Group 18 March 2004 page 9 of 98
of Industrial Injury changes its practice with retroactive effect. It is a problem when changed legal practice lets privatisation in the back door, so to speak, without enabling the insurance companies to adjust their prices.
February 2004 that the scope of cover provided for occupational diseases shall be extended as several kinds of diseases may trigger compensation.
capital base. The companies are required to generate significantly higher and stable returns if the industry is to retain and attract investors to contribute share capital.
(MSCI), 31.2 per cent in Denmark (KBX) and 48.4 per cent in Norway (OSEBX) relative to the start of the year.
Early 2003 was marked by the war in Iraq, the outbreak of SARS and a number of negative key economic indicators. This caused investors to flee from equity investments to the safe haven of bonds. At the same time, industrial and consumer confidence was low and unemployment on the rise, all of which contributed to both the USA and Europe pursuing expansive monetary and fiscal policies.
DKK/NOK exchange rate 2003 A large part of the Group’s activities are based in
The Tryg Vesta Group 18 March 2004 page 11 of 98
Group throughout 2003. There was extensive focus on the correlation between customer price and risk, and on the Group’s own efficiency and expense ratio. Distribution of gross premiums 2003
Like the rest of the insurance industry, the Group was keenly aware of the stricter terms in connection with reinsurance and of the need to strengthen its overall capital base and optimise capital employed.
Vesta Group made targeted efforts in 2003 to reassess the correlation between price and risk for each commercial customer.
It proved necessary to introduce substantial premium increases for some commercial customers. In Denmark, increases for commercial customers averaged 48 per cent, in connection with contents and buildings policies.
Profitability is a matter of pricing as well as deductibles and security requirements, and in addition to raising premiums, the Group therefore required many customers to strengthen security and accept higher deductibles.
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The newly acquired portfolios and former Zurich employees were finally integrated in 2003, creating the anticipated cost synergies.
Further to the decision to discontinue the London market business and based on an anticipated improved performance of TBi, A.M. Best confirmed in October 2003 its A- rating of Tryg-Baltica international originally awarded in the spring.
In September 2003, the Tryg Vesta Group decided to discontinue the Group’s business in the London market.
The decision reflected the Group’s wish to focus mainly on Nordic insurance business and international reinsurance. The run-off is expected to last for ten years, although most of the reserves are expected to be run-off over three years.
The Tryg Vesta Group’s capital base was strengthened significantly in 2003 when the Group’s owner, Tryg i
In 2003, the Tryg Vesta Group refocused sharply from selling individual products to providing concepts that offer peace of mind. In order to retain customer satisfaction and loyalty, the Group considers it important that customers buy more than one policy, thereby becoming part of a concept offering favourable prices and service programmes. Concept customers get more from the Group than just a request for payment, also when they do not have any claims.
Like in previous years, the Tryg Vesta Group surveyed how customers perceived their insurance company in 2003. The results of the customer surveys are used to ensure that the Group’s services match customer requirements. The more satisfied and loyal customers are, the longer they maintain their policies with the
Norsk Kundebarometer (Norwegian Customer Barometer) is prepared by the Department of Marketing of the BI Norwegian School of Management
The Tryg Vesta Group 18 March 2004 page 14 of 98
The 2003 survey placed Tryg in the top four in terms of customer satisfaction and loyalty. Tryg advanced in terms of loyalty, and satisfaction seemed to be on the increase. As for banks, the small companies have the most satisfied and loyal customers.
The Tryg Vesta Group not only has many satisfied and loyal customers in Denmark. Regular surveys of Danes’
EPSI (European Performance Satisfaction Index). The model’s standardised questions can be used by all types of businesses, and the results are therefore comparable with those of other insurance companies and companies in other industries
In Norway, one of Vesta’s ads in the daily Aftenposten was selected as the best ad in July. Regional paper
Adresseavisen selected another Vesta ad as the best ad in August.
Norway and Finland, while Tryg and Vesta sell the bank’s life insurance and pension products.
In Denmark, where Nordea offers the same range of products and concepts as Tryg provides through its own sales channels, bancassurance accounted for 11 per cent, and the portfolio amounts to more than DKK
New sales to personal customers in Denmark 2003 During the summer, Tryg launched two new commercials involving a fox and a hen, and a hedgehog crossing a busy road, respectively. Subsequent surveys showed that the two new TV commercials also got high impact ratings.
Tryg’s sponsorship of the Åh Abe children’s concerts in 2003 won the company the business-to-consumersponsorship prize for 2003.
In Finland, sales of insurance policies through Nordea continued to rise steeply. The branch’s portfolio increased from DKK 42m in 2002 to DKK 80m in 2003, distributed on 32,000 customers. Tryg set up the
Pension schemes and life insurance policies form a natural and important part of the Tryg Vesta Group’s overall product portfolio. Being a provider of peace of mind, the Group meets the customers’ expectations of covering all their requirements, also when it comes to personal safety such as personal accident insurance, health insurance, life and pension insurance and critical illness cover.
Nordea’s aggregate sales of new business in this area, among other things because the Group uses its good relations to general insurance customers to offer the life and pension insurance products as well.
The tax exemption has renewed interest in health insurance, and this also benefits Vesta.
February 2004, the Tryg Vesta Group announced a partnership between the unemployment insurance fund,
The Tryg Vesta Group 18 March 2004 page 18 of 98
The Tryg Vesta Group began working towards a common purchasing policy and a common purchasing process in the spring of 2003.
The Tryg Vesta Group considers procurement an organisational process and a strategic tool to reduce costs. Good procurement is basically a question of managing requirements and, thereby, managing costs.
The Tryg Vesta Group’s claims expenses amounted to more than DKK 11bn in 2003, and the Group has in recent years focused particularly on procurement in connection with claims, thereby generating substantial savings. In 2001, Vesta entered into a partnership with the Norwegian car industry, providing benefits and savings for both customers and the company in connection with claims resulting from damage to cars.
Tryg Reparation, includes that customers are offered a replacement car while their own car is being repaired.
The Group expects to reduce its IT-related costs in the years ahead by simplifying, harmonising, standardising and pruning measures. In the years ahead, the Group intends to strongly expand the common platforms it already uses across national borders in several respects.
The partnership with CSC is expected to improve the quality, accessibility, reliability and speed of the Tryg
Finland and Poland effective 1 December 2003 for an initial period of five years. In January 2004, the parties agreed to extend the partnership to comprise Vesta effective 1 June 2004, thereby putting CSC in charge of all the Group’s IT operations.
The Tryg Vesta Group 18 March 2004 page 19 of 98
Vesta launched the second stage of implementation of the system in 2003, using, among other things, the experience Tryg had already gained with the system. A
E-service In the past two years, Tryg’s web site has offered the
Group’s Danish customers a similar option. Customers may seek information, report claims and generally use the self-service facilities almost 24 hours a day. At 31
Accessibility is a key word for the Tryg Vesta Group as reflected, for example, in the Group’s strong focus on providing service to customers in the form of e-services.
The Tryg Vesta Group’s Norwegian customers were invited to view their policies and insurance terms and conditions via Vesta’s web site in May 2003. The option also includes such facilities as amending policies. Vesta received a total of 40,000 e-mails from customers in 2003, and the number of claims reported by e-mails increased by almost 80 per cent from 2002 to 2003.
Tryg received almost 97,000 e-mails in 2003. Subjects included claims reporting, requests for quotations etc.
This was a steep increase of 255 per cent over 2002, when Tryg received just under 38,000 e-mails.
The Tryg Vesta Group 18 March 2004 page 20 of 98
The Tryg Vesta Group 18 March 2004 page 21 of 98
The first stage of a common management development programme in the Tryg Vesta Group was launched in
February 2004. The programme is intended to help embed the Group’s corporate values in the day-to-day work and in joint projects, while also focusing on teams and collaboration in order to develop the Group’s combined knowledge and promote the exchange of ideas and experience.
The Tryg Vesta Group made a great effort in 2003 to establish competency development for managers and employees. The Group also made its vision of being an inclusive workplace very visible and tangible by setting up dedicated integration training for persons with an ethnic background.
Danish managers attended such management development courses in 2003. To ensure future executive talent, Tryg has developed a talent promotion process. Around ten potential managers completed this course in 2003.
Almost 1,000 of Tryg’s 2,250 employees attended team building courses in 2003. Tryg has been focusing on teams for many years, but relaunched the concept in 2003 with more distinctive definitions of the characteristics of a good team, including the characteristics of a good team player and a good team manager.
In 2003, Vesta developed its training strategy further by putting even greater emphasis on e-learning courses.
Tryg and Vesta makes room for working closely together on training in using the system. Experience gained in using e-learning will be shared across national borders.
In 2003, 7.4 per cent of new employees taken on by
Tryg had an ethnic background, and the total proportion of employees with an ethnic background increased from 1.9 per cent at 31 December 2002 to 2.9 per cent at 31
In the light of overall labour market trends with an upcoming shortage of young people to recruit from, the
The Executive Management of the Tryg Vesta Group comprises Ms Stine Bosse, Group CEO of the Tryg
The Tryg Vesta Group 18 March 2004 page 24 of 98
The Group manages such risks through its underwriting policy (acceptance rules, price, terms and conditions), by taking out reinsurance, in its current management of investment activities, and through business procedures and policies. The Tryg Vesta Group is in the process of further developing and implementing as its risk management basis a so-called ALM (Asset Liability
The Tryg Vesta Group makes systematic efforts to chart the insurance risk to which different insurance lines and customer groups are exposed in order to define requirements in respect of customer mix and earnings.
Random risk results from fluctuations in the number and size of claims. In the case of a large company such as the Tryg Vesta Group, which has many different types of customers and insurance products, normally only large claims from one-off events and many claims occurring at the same time after windstorms, cloudbursts, freezing rain and similar events have a significant impact on the Group’s financial results.
Due to changes in legislation and practice, systematic risk has historically affected, in particular, personal accident lines, which are characterised by claims being settled over several years. This is reflected in the Tryg
The Tryg Vesta Group 18 March 2004 page 25 of 98
The Tryg Vesta Group regularly reviews the Group’s overall reinsurance cover. The review in 2002 caused the Group to change its reinsurance of commercial customers’ buildings and contents insurance – the socalled property area - in Denmark from proportional to non-proportional cover. The change means that only large claims of more than DKK 50m are covered, making it even more necessary for the Group to set its prices correctly. In 2003, the Tryg Vesta Group likewise switched from proportional to non-proportional cover of the entire marine area. Combined with other adjustments, these changes generated total savings of around DKK 500m in the Group’s annual reinsurance expenses.
The reinsurance cover is intended to limit the financial impact of claims related to one-off events or events that may have a significant impact on the financial results, and such claims typically result from a large fire or a very severe windstorm. The biggest, single large claim for the Tryg Vesta Group in the past ten years was just under DKK 300m.
Credit risk is also managed through the Group’s security guidelines, which specify that the Group only cooperates on short-tail business with reinsurers having at least a BBB rating from Standard & Poor’s. In the case of long-tail business, characterised by claims being settled over several years, reinsurers are required to be rated least A by Standard & Poor’s.
Besides reinsurance, the Tryg Vesta Group uses acceptance rules, tariffs and individual risk assessment to manage insurance risk in order to achieve the required balance between various types of risks.
December 2003. Life insurance companies and pension funds have used the traffic light system since 2001. The object of the system is to calculate core capital performance in various hypothetical scenarios such as declining equity prices, changes in interest rates etc.
Red indicates that a negative, but realistic market development would materially threaten the company’s core capital. Amber indicates that a more unrealistic, but not improbable market development would threaten the company’s core capital. Green indicates that a very adverse market development would not cause problems. The Tryg Vesta Group was rated green at 31
December 2003 with an excess of DKK 1.8bn relative to an amber rating.
The Tryg Vesta Group is exposed to credit risk on bonds and money market placements. The bond portfolio primarily comprises mortgage bonds and government bonds with a small proportion of corporate bonds.
Tryg Vesta Group – market risk exposure as at 31 December 2003
The Tryg Vesta Group has a common organisation that manages investments on behalf of all the Group’s companies. Investment policies are defined for each company in the Group based on an overall investment policy, taking into account the characteristics of each company and the legislative framework of each country.
The Tryg Vesta Group’s investment policy aims to maximise return, taking into account the composition
Overall, the Group’s liabilities have a duration of around two 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 real property consist of well-diversified portfolios offering considerable risk diversification.
The Tryg Vesta Group’s investment policy has aimed to reduce the proportion of investments in real property, which has been high up till now. In order to optimise its capital structure, the Tryg Vesta Group sold around half of its portfolio of investment properties in Denmark in
November 2003, the Group appointed a chief security officer, who reports to the Group’s CFO. The chief security officer will primarily be focused on the Group’s
IT security in 2004, but future areas will include security in relation to environmental policies, working environment and physical security
At 31 December 2003, the shareholders’ equity amounted to DKK 5,360m and was increased by 1,092m in 2003. The increase is composed of the profit for the year of DKK 742m, dividend distribution of DKK
The Tryg Vesta Group 18 March 2004 page 29 of 98
In 2002, Unibank and Tryg are part of the formation of
The Tryg Vesta Group history is a result of a number of mergers and acquisitions. The Danish insurance company, Kjøbenhavns Brand dates farthest back. It was established by Royal decree of 1731 after the fire of Copenhagen in 1728. The first time for the name
Later, the same year, Tryg i Danmark smba acquires all the general insurance activities of Nordea, and the Tryg
Vesta Group is a reality. At the same time, The Group acquires the Danish and Norwegian parts of Zurich’s general insurance activities.
Dansk Kaution, which was established in 1895, becomes part of Tryg in 1998. In the same year, Tryg enters the Polish general insurance market and acquires the controlling interest in the company Energo-
In 1999, Tryg merges with Denmark’s second largest bank group, Unidanmark, and the general insurance activities of Unibank are integrated into Tryg.
At the end of 1999, Vesta, which has been part of
The Tryg Vesta Group’s branch in Finland only sells insurance policies to personal customers, and this is done through Nordea’s Finnish branches.
The Group’s company in Poland sells insurance policies to households and businesses through a countrywide network of branch offices, agents and brokers.
The Group’s Estonian company focuses first and foremost on insurance products to the commercial sector, but it also sells insurance products to personal
London market business, which has been in run-off since September 2003.
Loss on business in run-off, net of reinsurance -699 -628 -316 -478 -375
Balance sheet Technical provisions, net of reinsurance 22.475 21.606 17.673 15.826 21.606
Key ratios Claims ratio, net of reinsurance 77,9 84,8 79,8 83,4 82,9 Expense ratio, net of reinsurance 24,9 26,9 25,7 27,1 24,9 Combined ratio, net of reinsurance 102,8 111,7 105,5 110,5 107,8
Key ratios, continued business (excl. business in run-off) Claims ratio, net of reinsurance 76,6 83,4 80,1 83,7 Expense ratio, net of reinsurance 24,2 25,7 25,3 26,9 Combined ratio, net of reinsurance 100,8 109,1 105,4 110,6
Number of full-time employees at the end of the period 4.420 4.408 4.317 4.264 *) The figures are pro forma figures as the Tryg Vesta Group was established on 28 June 2002. The basis of calculating these figures has been defined in the accounting policies on pp. 66-67. **) The Tryg Vesta Group was established on 28 June 2002. The subsidiaries have been included as from 28 June 2002.
The positive development of the technical result is a consequence of the many profitability measures taken.
Compared with 2002, the combined ratio, net of reinsurance, improved by 8.9 percentage points. Of the 8.9 percentage points, 6.9 percentage points were attributable to claims and 2.0 percentage points to expenses.
Both in Norway and in Denmark, the effect of last year’s premium increases on personal and commercial policies materialised in 2003. Most of our customers chose to remain insured by the Group, at the same time, the inflow of new customers was satisfactory.
17,333m, composed primarily of a growth of 11.2 per cent in Denmark and 6.3 per cent in Norway, both stated in local currency. The relatively lower growth in
Norway is due to deliberate deselection, primarily of the municipality segment. In addition, the development in earned premiums was affected by the run-off procedures of Chevanstell Ltd. in London initiated in
Additional fall in the premium earnings in 2004 is expected for Chevanstell Ltd.
Earned premiums, net of reinsurance, were 9.4 per cent higher than in 2002. The relatively higher growth in earned premiums, net of reinsurance, compared with the growth in gross earned premiums, was due to the transition to a changed reinsurance programme according to which the Group shall pay a lower premium to the reinsurers.
The improved claims ratio included a strengthening of the reserves for earlier years. This applied primarily to the personal accident area and secondarily to the business in run-off.
The combined ratio, net of reinsurance, included a strengthening of the reserves – so-called run-off losses
Consequently, there are still run-off losses on personal accident business written in earlier years in Denmark,
Tryg Vesta Group pursues a conservative reserve policy in general within these areas.
Simultaneous with the improvement of the financial results, the Group has increased its provisions considerably to strengthen its readiness for future expenses for personal injuries, including Workers’
Compensation and accidents. For the Group as a whole, the strengthening within these areas amounted to more than DKK 450m.
The Group’s expense ratio, net of reinsurance, was 24.9 for 2003, which was an improvement of 2.0 percentage points relative to 2002.
1,885m. The fall was attributable to general cost constraints and utilisation of synergies within the Group.
The expense ratio for Danish general insurance fell by 1.1 percentage point, and for Norwegian general insurance, it fell by 0.1 percentage point.
The Tryg Vesta Group’s total profit on investments before transfer to insurance activities was DKK 1,448m equivalent to a return of 6.2 per cent for 2003.
Transfer to insurance activities was DKK 773m in 2003 against DKK 1,017m in 2002.
The Tryg Vesta Group 18 March 2004 page 35 of 98
3,182m, which primarily was used to increase investments in bonds. Cash flows from funding amounted to DKK 383m and was made up of capital increase in Tryg Vesta Group A/S of DKK 400m and subordinate loan of DKK 700m and debt repaid to credit institutions of DKK 717m.
Profit/loss on investments 393 -128 49 607 Profit/loss on ordinary activities before tax 832 -192 0 374
Profit/loss on investments 10 2 -1 0 Profit/loss on ordinary activities before tax 0 -110 -13 -55
Loss on ordinary activities before tax -59 -72 - - *) The figures are pro forma figures as the Tryg Vesta Group was established on 28 June 2002.
The Tryg Vesta Group 18 March 2004 page 38 of 98
Ceded business in percentage rel. to gross premiums 6.2 1.7 2.6 -6.2 Gross claims ratio, net of ceded business 76.8 83.9 81.6 84.5
Gross combined ratio, net of expenses to reinsurance 97.1 105.0 105.5 110.4
Key ratios Financial results Combined ratio, net of reinsurance, Personal The profit on ordinary activities before tax of the Danish general insurance operations for 2003 amounted to
DKK 832m against a loss of DKK 192m for 2002. The profit was composed of a technical result of DKK 439m and a profit on investments of DKK 393m. 108.7 2000* 2001* 2002* 2003
Further, weather-related losses and large losses have been below average. Moreover, the technical result includes build-up of equalisation provisions by DKK
* Pro forma figures In addition, the financial results were affected by a very low technical interest, net of reinsurance, of DKK 221m for 2003 against DKK 326m recorded in 2002. The technical interest rate for 2003 was 2.62 per cent against 3.90 per cent in 2002.
The Tryg Vesta Group 18 March 2004 page 40 of 98
remained unsatisfactory, which is why this business area will be subject to considerations as to further price adjustments in 2004.
8,242m against DKK 7,411 recorded in 2002, equivalent to an increase of 11.2 per cent, which is higher than the general level in the market. Since the new Danish Damages Liability Act came into force in the middle of 2002, targeted work concerning active claims handling has been performed within the personal business area. To be specific, this has resulted in the establishment of a differentiated and targeted administration for handling personal accident claims. Experience so far has been positive, and active claims handling is, other things being equal, expected to reduce the claims expenses within this business area.
This considerable increase was in particular attributable to recent years’ premium increases having materialised.
The premium increases should be viewed as part of the initiatives to enhance profitability, among other things in connection with the statutory changes concerning The
January 2004, a new Act on industrial injuries came into force. The Act extends the insurance cover considerably. This will among other things lead to compensation being payable for back injuries which were not covered previously under the Workers’
The development of expenses in 2003 was satisfactory, expressed by an expense ratio, net of reinsurance, of 21.1, which compared with 2002, was an improvement of 1.1 percentage point. The improvement of the expense ratio can partly be ascribed to the premium increases referred to and partly to the continued focus on streamlining internal processes. In addition to this, the expense ratio was affected favourably by the Zurich business acquired and integrated into Tryg, and by the achievement of anticipated synergies in this connection.
Exchange rate DKK/NOK, average of the year 93.68 98.46 92.16 91.71
Earned premiums, net of reinsurance 5,612 5,163 3,818 3,290 Technical interest, net of reinsurance 339 469 343 327 Claims incurred, net of reinsurance -4,419 -4,404 -2,999 -2,752 Insurance operating expenses, net of reinsurance -1,414 -1,304 -881 -825 Change in equalisation provisions -76 -200 -79 -37
Key ratios Claims ratio, net of reinsurance 78.7 85.3 78.5 83.6 Expense ratio, net of reinsurance 25.2 25.3 23.1 25.1 Combined ratio, net of reinsurance 103.9 110.6 101.6 108.7
Gross combined ratio, net of expenses to reinsurance 103.1 107.6 101.2 106.9
The technical result for 2003 was DKK 42m against a loss of DKK 276m reported in 2002. The development of the financial results was in general satisfactory and was primarily attributable to the profitability measures taken and to the fact that 2003 did not see any large losses. The equalisation provisions were increased by
DKK 76m in 2003, which in particular related to transfers to the Norwegian Pool of Natural Perils. The
Further, the technical result was affected by the falling interest rates in Norway, expressed in a technical interest of DKK 339m, which was DKK 130m less than in 2002. Like in the Danish market, a continued very low interest level will, other thing being equal, necessitate profitability initiatives in the Norwegian market.
Combined ratio, net of reinsurance, Commercial The positive development of the technical result was expressed in a combined ratio, net of reinsurance, of 103.9, which was a significant improvement relative to the combined ratio, net of reinsurance, recorded in 2002, which was 110.6. The combined ratio, exclusive of run-off losses, was 100.8 per cent in 2003.
Danish kroner, will show a falling trend due to the falling exchange rate.
In local currency, this corresponds to an increase of 6.3 per cent.
Further, it was attributable to Vesta’s customers having chosen to remain customers in Vesta, and to a satisfactory inflow of new customers.
Throughout the entire period, the personal insurance business developed at a satisfactory level, which was further improved in 2003.
Moreover, the development within the commercial insurance area has been characterised by targeted
commercial insurance policies, and within selected areas premiums have been increased considerably. As early as in 2002, considerable premium increases were introduced in relation to Workers’ Compensation insurance policies in order to enhance profitability. The effects of the measures initiated are expected to further materialise in 2004.
In 2002, Vesta decided to completely withdraw from insuring municipalities, a business area that had been unprofitable for several years. Viewed separately, this has led to a reduction in the market share of Norwegian
Workers’ Compensation insurance from 26 per cent at the end of 2002 to 19 per cent at the end of 2003.
In 2003, the claims ratio, net of reinsurance, was 78.7, which was an improvement relative to the claims ratio of
Most of the increased claims reserves related to losses on business written in earlier years, which resulted in substantial run-off losses. In the financial results for 2003, the run-off losses on the personal insurance business were approximately DKK 265m.
In 2003, the expense ratio was 25.2, which was a small reduction relative to the level of 25.3 in 2002. The expense ratio was affected, like in 2002, by provisions for pension commitments as a result of the low interest level. In 2003, provisions of just over DKK 94m were made in respect of pension commitments to the employees, corresponding to an increase in the expense ratio of 1.7 percentage point. The employees of Vesta are guaranteed a fixed monthly retirement benefit, and accordingly the company’s pension contributions to employees vary in line with interest rates.
The expenses were affected in the opposite direction by a procurement project, which reduced the administrative expenses.
The Tryg Vesta Group 18 March 2004 page 44 of 98
Profit/loss on business in run-off, net of reinsurance -64 -20 16 18 Technical provisions, net of reinsurance 735 667 621 393
Key ratios Claims ratio, net of reinsurance 75.6 78.3 72.2 81.0 Expense ratio, net of reinsurance 30.2 42.0 38.0 34.5 Combined ratio, net of reinsurance 105.8 120.3 110.2 115.5
Number of full-time employees at the end of the period 30 32 28 28
The combined ratio, net of reinsurance, was 105.8, which was an improvement of 14.5 percentage points relative to the combined ratio of 120.3 recorded in 2002.
The combined ratio was affected negatively by considerable run-off losses for 2001 and earlier, and positively by enhanced profitability for 2002 and 2003.
The Tryg Vesta Group 18 March 2004 page 45 of 98
The Tryg Vesta Group 18 March 2004 page 46 of 98
Earned premiums, net of reinsurance 60 17 2 Technical interest, net of reinsurance 1 1 0 Claims incurred, net of reinsurance -47 -18 -2 Insurance operating expenses, net of reinsurance -62 -66 -29 Change in equalisation provisions 0 0 0 -
Number of full-time employees at the end of the period 42 35 14 -
The loss on ordinary activities before tax of the Finnish general insurance operations for 2003 was DKK 49m, which was an improvement relative to the loss of DKK
The Finnish operations continued their positive development, which among other things was expressed by the growth in the premium volume in spite of an unchanged level of expenses.
Therefore, there is a significant potential for a further sizeable increase in premium earnings.
The expenses are among other things affected by substantial depreciation of investments in an insurance technical system. In this way, investments were made in an advanced insurance system, which will be able to keep up with the continued development in the composition of customers and products. These expenses influenced the expense ratio, net of reinsurance, by 29.3 percentage points.
The Tryg Vesta Group 18 March 2004 page 48 of 98
Exchange rate DKK/PLN, average of the year 169.49 194.16 204.69 185.59
Number of full-time employees at the end of the period 523 495 489 494
The claims ratio, net of reinsurance, for 2003 was 69.7 which was an increase of 5.7 percentage points. This was in particular attributable to a poorer performance in the motor portfolio, represented by a poorer
For the rest of the portfolio, the claims level corresponded by and large to the levels of earlier years.
In 2003, focus was on the implementation and distribution of a new IT system for policy and claims administration in Tryg Polska, just as electronic communications have been established between the head office in Radom and the 28 branch offices.
The Tryg Vesta Group 18 March 2004 page 50 of 98
Estonian general insurance operations for 2003 amounted to DKK 1m, which was a significant improvement on the loss for 2002, which was DKK
13m. In spite of the improvement, the financial results were not satisfactory.
The gross earned premiums were DKK 39m, which was a relatively small decrease of DKK 2m relative to 2002.
The premium development was characterised by the considerable tariff rises implemented in relation to the portfolio and by an improved selection procedure in relation to customers. A natural consequence of this is a net loss of customers, however it has also enhanced the profitability of the remaining portfolio.
The claims ratio was 67.2 per cent, which was a sharp reduction on the level of 81.4 for 2002. The improved level was characterised by the mentioned profitability enhancement initiatives in relation to the portfolio.
The expense ratio was 38.9 relative to the expense ratio of 55.1 for 2002. This was primarily due to a change of Estonian legislation, which reduced the fixed administrative expenses on motor policies significantly.
The Tryg Vesta Group 18 March 2004 page 51 of 98
Number of full-time employees at the end of the period 41 63 55 49
Chevanstell Ltd., which has carried on insurance business in the London market, a stop-loss agreement between Chevanstell Ltd. and Tryg Forsikring to cover run-off from 1999 and earlier in Chevanstell Ltd., a relatively small reinsurance portfolio originally written by
In September 2003, after a number of years with losses, the Tryg Vesta Group chose to put the activities of the company which is now called Chevanstell Ltd.
DKK 115m relative to a loss of DKK 199m recorded in
The earned premiums, net of reinsurance, were as planned reduced by more than 50 per cent. After the company was put into run-off, no new reinsurance treaties have been made.
The English based actuarial firm, Tillinghast, has evaluated that the total reserves and provisions for claims reflect the recommendations of Tillinghast.
The expense ratio, net of reinsurance was 9.1 percentage points higher than in 2002. The reason for this was the lower earned premiums as it has been impossible to adjust expenses to the small premium earnings.
The Tryg Vesta Group 18 March 2004 page 54 of 98
The Tryg Vesta Group’s total profit on investment activities before transfer to technical interest was DKK
1,448m equivalent to a return of 6.2 per cent for the financial year 2003. The investment return was affected by a positive return on bonds, shares and real property.
The total return and the return on bonds are calculated inclusive of debt in the parent company and all returns are calculated inclusive of currency hedges.
As shown in the subsequent table, the proportion of shares in the Group was 9.2 per cent as at 31
As at 31 December 2003, the total investment portfolio of the Tryg Vesta Group was allocated with approximately DKK 13.9bn in the Danish companies, approximately DKK 10.7bn in the Norwegian
The proportion of money market placements increased during the financial year as a result of Vesta having had a large inflow of new funds. The Norwegian money market was very attractive in the beginning of the year with an interest rate of just over 6 per cent. But as a
from 6.50 per cent at the end of 2002 to 2.25 per cent at the end of 2003, the money market rate is now close to the level in Denmark and the Euro area.
93 per cent of the Tryg Vesta Group’s bond portfolio –
equivalent to DKK19.5bn – comprises Danish mortgage bonds, placements in the Norwegian money market and government bonds. The remaining part is invested in other corporate bonds with credit quality corresponding to investment grade. In the first six months, Tryg’s portfolio with Eastern European government bonds was sold, both as a consequence of the potential for further spread narrowing being limited and of the currency exposure. At the end of 2002, the portfolio was DKK
282m. Furthermore, Tryg’s portfolio of mortgage deeds of about DKK 207m was sold in 2003.
The option-adjusted duration, including cash and cash equivalents, of the entire Group’s bond portfolio was 1.83 years at 31 December 2003, relative to 1.85 years at 31 December 2002, due to, among other things,
At the end of 2003, the proportion of real property in
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 57 of 98
Moreover, the calculation of the return was affected by considerable changes in the equity portfolio during the year.
267m at the end of 2002, and in Vesta particularly, the unlisted equity portfolio carries great weight.
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 58 of 98
Group expected that the combined ratio, net of reinsurance, for the Danish general insurance operations would be improved by 2 percentage points relative to the originally expected 102 for the full year 2003. In connection with the presentation of the financial results for the nine months ended 30
September 2003, the expectations were that the combined ratio would be under 100 at the end of 2003.
In the Tryg Vesta Group’s financial statements for 2002, the Group presented the below-mentioned areas targeted for special initiatives in 2003: Outsourcing of IT production
Norway Procurement in relation to claims In the financial statements for 2002, the Tryg Vesta
Norwegian general insurance operations. In connection with the presentation of the financial results for the six months ended 30 June 2003, this expectation was downrated to a level a little below the originally expected 106. The combined ratio for Norwegian general insurance operations was 103.9, which is better than expected.
The establishment of a new Nordic partnership outside banking and finance is still the Tryg Vesta Group’s target. This may both include partnership models in relation to product combinations and in relation to distribution like the collaboration with Nordea. Further, it may be in relation to procurement. During 2003, the
The Group’s profit on ordinary activities of DKK 789m meets the expectations of a satisfactory profit on ordinary activities before tax for the full year 2003.
136m, which lives up to the expectations of a positive technical result.
In addition, one of the focus areas from 2003 will remain in focus: • A new Nordic partnership outside banking and finance
This means that the Tryg Vesta Group shall continue to be a customer-oriented company founded on close relations to its customers. The company determines and measures on current basis customer retention, satisfaction and loyalty at all levels of the company, and service programmes must exist which ensure a good dialogue with the customers. Minimum 90 per cent of the customers must renew their insurance policies in 2004 and function as ambassadors for the companies of the Group.
The Tryg Vesta Group will improve the coherence between price, risk and return on shareholders’ equity within its industrial portfolio, and will continue its efforts to create a portfolio, which from an overall perspective is even more balanced. Based on a sound risk analysis, the Group will examine its industrial business area and improve its underwriting guidelines so that they reflect the actual capital expenditure and create an even better coherence between price and risk.
By this strategic focus area, the Tryg Vesta Group means that focus must be on establishing one common identity and a set of shared values, which will serve as guidance for all of the Group’s activities in relation to customers, partners and employees. The Tryg Vesta
On the basis of the falling rates and other measures taken, the Group intensified its target for combined ratio in connection with the presentation of the financial results for the nine months ended 30 September 2003.
DKK 95m. While a storm in Denmark resulting in claims between DKK 600m and DKK 3bn, would affect the
Group’s combined ratio, net of reinsurance, by 1.3 percentage point to 1.7 percentage point, corresponding to a negative effect on the result of DKK
The Tryg Vesta Group 18 March 2004 page 61 of 98
Combined ratio: Actual, targets and scenarios The return on investments for 2004 is expected to be
DKK 300-400m after transfer of technical interest, corresponding to a return on investment assets of 3.8 per cent. The expectations to the return on investments are based on the assumption that shares will produce a yield of 7.2 per cent, bonds a yield of 3.5 per cent and real property investments 6.8 per cent for the full year
The expectations to the profit/loss on ordinary activities before tax correspond to a return on the shareholders’
150m in case of anticipated earned premiums, net of reinsurance, of DKK 15bn in 2004. During the year, the
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 62 of 98
Supervisory Board and the Executive Management and approved by the Supervisory Board.
The annual report has been prepared in accordance with the Danish Consolidated Insurance Business Act and the Danish Financial Supervisory Authority’s executive orders. We consider the accounting policies adopted appropriate to the effect that the annual report gives a true and fair view of the assets and liabilities, financial position and results as wells as cash flows of the Group.
The Tryg Vesta Group 18 March 2004 page 63 of 98
Vesta Group A/S. Therefore, the pro forma figures represent accounting figures for a period of time during which the Group did not exist as a legal entity.
Supplementary information Basis of opinion As appears from the applied accounting policies on page 66-67, the annual report contains pro forma comparative figures for the financial years 2000, 2001 and 2002 for the Group. The Tryg Vesta Group was established on 28 June 2002 via payment in kind of the
Auditing Standards. These standards require that we plan and perform the audit to obtain reasonable assurance that the annual report is free of material misstatement. An audit included examining, on a test basis, evidence supporting the amounts and disclosures in the annual report. An audit also included assessing the accounting policies used and significant estimates made by the Management, as well as evaluating the overall annual report representation. We believe that our audit provides a reasonable basis for our opinion. We agree with the Executive Management on its comments on pro forma comparative figures and support the view that the pro forma comparative figures add increased informative value to the technical operations.
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 65 of 98
The Group has set up a working group to analyse the impact on the Group’s financial reporting of implementing the international accounting standards. Apart from the changes described below, the accounting policies are unchanged from last year.
The rules for accounting for goodwill, development costs and software were changed effective 1 January 2003. Goodwill, development costs and software acquired after 1 January 2003 are recognised and measured as follows: Pro forma comparative figures
The management’s review, the financial highlights and key ratios, the income statement and the notes to the financial statements present pro forma comparative figures for 2000, 2001 and 2002 prior to the formation of
Any difference (goodwill) at the time of acquisition between the cost and the proportionate share of the acquired undertakings’ shareholders’ equity made up in accordance with the accounting policies applied by Tryg
Vesta Group A/S is recognised in the item ‘Intangible assets’. Goodwill is amortised on a straight-line basis over the expected useful life.
These sections of the annual report specify where pro forma comparative figures are included. Pro forma comparative figures are included in the annual report in order to make the annual report more informative with respect to the technical operations of the general insurance companies forming part of the Tryg Vesta
Tryg Polska SA and Nordicum Kindlustuse Eesti AS are included from the date when the companies were acquired by Tryg Forsikring A/S and the Nordea Group, respectively.
December 2003, is included in the pro forma figures for the full period.
Where the accounting policies have been changed during the period, the comparative figures of each company have to the extent possible been adjusted on consolidation to comply with the current accounting policies. Such adjustments have only a minor impact on the amounts of the pro forma figures.
The consolidated financial statements comprise the financial statements of Tryg Vesta Group A/S (the parent company) and undertakings (subsidiary undertakings) controlled by the parent company. See the Group overview on page 92. Control is achieved where the parent company directly or indirectly holds more than 50 per cent of the voting rights or is otherwise able to exercise or actually exercises a controlling influence.
The financial statements of undertakings that present financial statements under other legislative rules are restated to the accounting policies applied by the Group unless the result of such restatement is immaterial to the true and fair view.
Shares in subsidiary undertakings are set off against the parent company’s proportionate share of the shareholders’ equity of the undertakings at 31
Bonus and premium rebates All currency translation gains and losses are included in the income statement under the item ‘Exchange rate adjustments’.
Intragroup services are settled on a cost-covering basis or on market terms. Insurance operating expenses
Depreciation is charged on a straight-line basis over three to five years. Minor acquisitions costing less than
Earned premiums represent gross premiums during the year, net of outward reinsurance premiums and changes in unearned premium provisions, corresponding to an accrual of premiums to the risk period of the policies. Costs are based on estimated time consumed or the estimated cost charge and are distributed in the
Commissions relating to unearned premium provisions are included under ‘Prepayments and accrued income’.
The item ‘Tax’ represents estimated Danish and foreign corporation taxes for the year and movements in deferred tax or tax asset. Tax on the profit for the year is calculated based on the pre-tax profit for the year adjusted for non-taxable income and expenses.
Profit from group undertakings includes the parent company’s share of the profit on ordinary activities of the subsidiary undertakings. Exchange differences arising on the translation of the net asset value of foreign subsidiary undertakings at the beginning of the year are included under the item ‘Exchange rate adjustments’.
Goodwill acquired after 1 January 2003 is measured as the difference at the time of acquisition between the cost and the proportionate share of the acquired undertaking’s shareholders’ equity made up in accordance with the accounting policies applied by Tryg
Vesta Group A/S. Goodwill is amortised on a straightline basis over the expected useful life.
Operating equipment is measured at cost less accumulated depreciation. Operating equipment is depreciated on a straight-line basis over the estimated useful economic lives of the assets, which are three to five years. New developments and property under construction are measured at cost.
Computer equipment held under finance leases is treated as if purchased by the company. The lease debt is included in ‘Other debt’.
Capital participation in subsidiary undertakings is measured at the parent company’s proportionate share of the subsidiary undertakings’ shareholders’ equity at 31 December made up in accordance with the Group’s accounting policies.
The tax asset comprises deferred net tax assets calculated as 30 per cent of the present value of net positive timing differences between accounting and taxable values, plus tax losses to the extent they are expected to be offset against future taxable income.
Derivative financial instruments Other accruals and deferred income comprise prepaid expenses and claims expenses paid in respect of future settlements with cedants.
Derivative financial instruments are measured at the market value at the end of the year. Derivative financial instruments are used to the extent they enable the
Proposed dividends are recognised as a liability when adopted by the shareholders at the general meeting.
Provisions for other risks and charges 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.
Perils in Vesta, Norway. The rules governing the setting up and application of equalisation provisions are laid down by the regulatory authorities of the relevant countries.
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 71 of 98
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 72 of 98
Income statement, balance sheet and cash flow statement, the Tryg Vesta Group
Earned Premiums Gross premiums written 17,053 17,073 7,230 Ceded reinsurance premiums -2,552 -3,730 -1,771 Change in the gross provisions for unearned premiums 336 -11 2,001 Change in the reinsurers' share of the provisions for unearned premiums -215 39 -357 1 Earned premiums, net of reinsurance 14,622 13,371 7,103 2 Technical interest, net of reinsurance 641 899 449
Change in the gross provisions for claims -1,808 -1,255 -1,030 Change in the reinsurers' share of the provisions for claims -256 -583 -269 3 Claims incurred, net of reinsurance -11,359 -11,302 -5,874
Acquisition costs and administrative expenses -3,965 -4,129 -2,081 Commission and profit commission from the reinsurers 339 552 321 4 Total insurance operating expenses, net of reinsurance -3,626 -3,577 -1,760
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 73 of 98
Charges relating to investment assets Investment management charges -55 -49 -18
Total charges relating to investment assets -132 -83 -37 7 Unrealised losses on investment assets 0 -450 -3 Exchange rate adjustments -137 -136 -62
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 74 of 98
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 75 of 98
Provisions for other risks and charges Provisions for pensions and similar obligations 141 185 185
23 Capital adequacy 24 Forward transactions, etc. 25 Contingent liabilities 26 Intra-group transactions
The Tryg Vesta Group 18 March 2004 page 77 of 98
Cash generated from operations Premiums 17,479 Claims paid -11,076 Ceded business -562 Expenses -3,542 Change in other payables and other amounts receivable -254 Cash flow from insurance activities 2,045 Interest and dividends 1,393 Taxes -256 Total cash generated from operations 3,182
Funding Capital increase 400 Subordinate loan capital 700 Change in debt to credit institutions -717 Total funding 383
The Tryg Vesta Group 18 March 2004 page 78 of 98
Insurance operating expenses, gross includes the following staff expenditure: Salaries and wages -1,657 -1,775 -940
Remuneration for the Executive Management 7 - Remuneration for the Supervisory Board 2 - -
DKKm 5 Technical result, net of reinsurance, distributed on business lines
Technical interest, net of reinsurance 111 147 12 66 152 190 62 85 28 53
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 80 of 98
Dividend tax foreign equities -3 -1 -1 Change in deferred tax assets -68 49 -21 *) Subsidiaries included from 28 June 2002
Book value 31 December 39 11 Land and Buildings Acquisition sum
Additions by the acquisition of subsidiaries 0 314 314 Write-ups during the year 77 50 50 Reversal of revaluation -19 -7 -7 Revaluation, real property disposed of -223 0 0
In establishing the market value of the properties, the following return percentages were used for each property category
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 83 of 98
Share capital when founded 0 1 1 Capital contribution by way of non-cash contributions 0 1,000 1,000 Capital increase during the year 400 300 300
Balance 1 January before change of accounting policies 692 -1,679 #REFERENCE! Transferred from share premium account 0 1,679 1,679 Balance 31 December 692 0 #REFERENCE!
In Vesta Forsikring AS and Dansk Kautionsforsikrings-Aktieselskab untaxed provisions for contingency fonds form part of the shareholders' equity with NOK 2.026m and DKK 139m respectively 17 Gross provisions (provisions for claims) 18,212 17,836 17,836 Of which provisions calculated by discounting Workers' Compensation (Denmark) 793 575 575 Reduction from discounting 54 46 #REFERENCE!
Settlement period 4,3 year 4,3 year 4,3 år Discounting interest rate 3.2% 3.5% 3.5%
Settlement period 4,2 year 4,8 year 4,8 år Discounting interest rate 3.5% 3.5% 3.5%
20 Other insurance provisions, net of reinsurance Provisions for life insurance, indirect insurance 1 1 1 Provisions for open financial years 0 7 7 Provision for unexpired risk 81 42 42 21 Other provisions Costs of restructuring and run-off 179 352 352
Of which debt falling due after more than 5 years 0 67 67 23 Capital adequacy Shareholders' equity according to the annual report 5,360 4,268 Capitalised tax assets -6 0 Solvency requirements to subsidiary undertakings -2,610 -2,561 Supplementary capital 700 0 Capital base 3,444 1,707
Solvency pursuant to s. 21, subs.1 of the Commercial Banks and Savings Banks, etc. Consolidated Act 86% 61%
Acquisition value Purchase of interest derivatives 1,026 3,309 3,309 Sale of interest derivatives 1,212 713 713 Forward purchase of foreign currency 122 109 109 Forward sale of foreign exchange 5,795 3,400 3,400 25 Contingent liabilities Surety, guaranty and lease agreements, etc. beyond insurance obligations do not exceed 425 375 375
Tryg Forsikring A/S has an annual obligation towards Danica regarding lease of head office in Ballerup. The annual rent and tax, etc. currently amount to DKK 74m. Remaining contract period is 22 years.
Most of the Danish companies within the Tryg Vesta Group are commonly registered for VAT and payroll tax, and are jointly and severally liable for payment of all such direct and indirect taxes.
Under the item " Gross claims paid", DKK 50m has been recognised as revenue, which can be related to the fact that Tryg i Danmark smba (Owner of Tryg Vesta Group A/S, which is the parent company of Tryg Forsikring A/S) has quaranteed and consequently will pay Tryg Forsikring A/S an amount corresponding to the loss which Tryg Forsikring may incur in connection with the case: AON 77.
Charges relating to investment assets Investment management charges -10 -3 Interest expenses -57 -5
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 87 of 98
Investments in subsidiary undertakings 6 Capital participation in subsidiary undertakings 5,929 4,584 6 Loans to subsidiary undertakings 600 702
Liabilities 8 Shareholders' equity Share capital 1,700 1,300 Share premium account 2,968 2,968 Retained profits 692 0
Debt Debt to credit institutions 601 1,100 Other debt 21 25 Dividend for the financial year 50 0
Total liabilities 6,732 5,393 9 Capital adequacy 10 Contingent liabilities 11 Intra-group transactions
Remuneration for the Executive Management is paid by Tryg Forsikring AS and Vesta Group A/S and is charged to Tryg Vesta Group A/S via the cost allocation.
6 Capital participation in subsidiary undertakings Acquisition sum Balance at 1 January 6,190 0 Exchange rate adjustment during the period 0 43 Additions by non-cash contributions 2,546 5,647 Divestments during the year -2,527 0 Capital increase during the period 600 500 Balance at 31 December 6,809 6,190
7 Tax asset Operating equipment and provision etc. 6 0 8 Shareholders' equity Share capital
Premium on non-cash contribution 0 4,647 Transferred to Retained profits 0 -1,679
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 90 of 98
The Tryg Vesta Group 18 March 2004 page 91 of 98
The company is jointly taxed together with most companies of the Tryg Vesta Group, and together they are jointly and severally liable for payment of imposed tax.
The company is commonly registered for VAT and pay roll tax together with most of the Danish companies within the Tryg Vesta Group, and together they are jointly and severally liable for payment of all such direct and indirect taxes.
Tryg Vesta Group A/S Tryg Forsikring A/S Ballerup Denmark 795 100 1.100 5.929
Vesta Forsikring AS Bergen Norway 381 100 0 2.573 Enter Forsikring Bergen Norway 64 100 44 149
Dansk Kautionsforsikrings-Aktieselskab Ballerup Denmark 87 100 193 491 ApS SMBK nr. 98 Ballerup Denmark 0 100 0
Tryg Forsikring II A/S *) Ballerup Denmark 41 100 160 278 Tryg Forsikring, Rejse og Sundhed A/S *) Ballerup Denmark 10 100 3 69 Tryg Polska Towarzystwo Ubezpieczen S.A. Radom Poland -41 98 190 139 Chevanstell Ltd. London United Kingdom -257 100 624 158 Nordicum Kindlustuse Eesti AS Tallinn Estonia -1 100 0 9 ApS KBIL 9 nr. 2032 Ballerup Denmark 0 100 0 Tryg Ejendomme II / DKE A/S Ballerup Denmar *) Expected to have merged into Tryg Forsikring A/S as at 1 January 2004.
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 92 of 98
This overview shows the executive positions of the members of the Supervisory Board in Danish companies which are not fully owned by the Tryg Vesta
Board of Ejendomsselskabet Norden A/S, Chairman of the Supervisory Board of Ejendomsselskabet Storken
The Tryg Vesta Group 18 March 2004 page 93 of 98
2001: LinKS, Insead, France 1997: Knowledge Management, ICBI, London 1990: The Danish Employers’ Association’s Executive
Board of Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S, Chairman of the Supervisory
Previous positions 1999-2001: Director, Tryg 1995-1999: Human Resource Director, Tryg 1993-1995: Personnel Manager, Tryg 1991-1993: Deputy Functional Manager responsible for product and concept development, Claims and
Underwriting Department, Tryg 1990-1991: Head of Underwriting Department, Tryg 1988-1990: Head of Claims Department, Tryg
Supervisory Board of Tryg Forsikring II A/S, Member of the Supervisory Board of Fjord Line AS, Member of the
Annual Report 2003 The Tryg Vesta Group 18 March 2004 page 95 of 98
Supervisory Board of Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S, Member of the
Previous positions 2002-2003: CFO, Tryg 2001-2002: Nordic CFO, Zurich Nordic 2000-2001: Deputy CFO, Zurich Nordic 1999-2000: Operations Manager – Nordic Investment
Supervisory Board of ApS KBIL 9 NR. 2032, Member of the Supervisory Board of Vesta Forsikring AS, Member of the Supervisory Board of Solar Holding A/S.
The Tryg Vesta Group 18 March 2004 page 96 of 98
Forsikring A/S, Member of the Executive Management of Tryg Forsikring II A/S, Member of the Supervisory
Insurance Academy), Member of the Supervisory Board of FA, Finanssektorens Arbejdsgiverforening (Danish
Personal, Service Centres and Bank Distribution, Tryg 1999-2000: Executive Vice President, Business Area
Danish Financial Supervisory Authority’s executive order on the presentation of consolidated financial statements by general insurance companies. Under
Gross earned premiums include gross premiums adjusted for reserves (earned premiums) with the deduction of bonus and premium rebates.
Expense ratio, net of reinsurance Norwegian general insurance expresses the relation between insurance operating expenses, net of reinsurance, and earned premiums, net of reinsurance.
Combined ratio, net of reinsurance is the sum of the expense ratio, net of reinsurance, and the expense ratio, net of reinsurance.