Our 3,600 employees provide peace of mind for 2.7 million customers and handle more than 850,000 claims on a yearly basis.
This is a translation of the Danish annual report 2014. In case of any discrepancy between the Danish and the English versions of the annual report 2014, the Danish version shall apply.
Investment return after insurance technical interest 13 154 360 588 585 61 550
Profit/loss on continuing business 633 564 2,547 2,373 2,180 1,148 741
Run-off gains/losses, net of reinsurance 338 247 1,131 970 1,015 944 824
Return on equity after tax (%) 23.0 20.5 23.0 21.5 22.1 13.1 6.6
Premium growth in local currencies -0.1 -2.4 -1.1 -2.7 -0.1 3.6 3.9
Combined ratio on business areas Private 82.4 87.7 82.5 86.0 87.7 92.7 97.5 a) Proposed dividend
World-class insurance price, the Supervisory Board will propose to the upcoming annual general meeting that the share be split in the ratio 1:5.
In recent years, Tryg has seen many major changes, and we appreciate the positive effect they have had on our results. It is also important to emphasise that this journey has only been possible because of the hard work that our employees put in every day. We are well on the way to creating the success culture that is necessary to ensure that everyone in our organisation contributes to realising our ambitious targets – and we have positive expectations for the work to be undertaken in the coming year. We will focus fully on the many initiatives that are to ensure that we will be able to offer a positive customer experience and achieve world-class financial results
– and thereby create peace of mind and value for customers, employees and shareholders.
In 2014, we managed to realise considerable savings, which means that we are now close to achieving our targets for 2015. We have raised the bar for 2017, and will strive for further efficiency improvements of DKK 750m (see page 8). In addition, we will optimise our customer service business procedures.
We will step up our efforts to become even better at guiding and servicing our customers. The aim is for our customers to be so satisfied with our services that they will stay with Tryg, buy more – and recommend us to others. This is the ambition behind the many strategic customer initiatives we are currently working on, and we have set up concrete and ambitious targets for this work.
Risk management is an essential part of running an insurance business in relation to both customers and shareholders. For this reason, risk management constitutes a central element of our strategy, and in our day-to-day operations we focus on streamlining and continuously optimising it. The Supervisory
Board defines the overall framework for our risk exposure – both in terms of our core business, the
It must be attractive to be a shareholder in Tryg – and we strive to ensure that our increasing returns will also benefit our shareholders. The improved result combined with Tryg’s low investment risk allows us to offer our shareholders an attractive distribution while still maintaining a solid capital base. For this reason, the Supervisory Board proposes a dividend of
Insurance Complaints Board published its annual statement of com plaints, showing that Tryg once again had the fewest complaints relative to market share within motor, house and contents insurance.
Tryg acquired Securator, thereby further consolidating its position in the Nordic countries as a market-leading provider of additional cover for electronic equipment.
Tryg launched a new motorcycle insurance product in Denmark, where customers are now able to take out separate cover in addition to third-party liability insurance. Another extension option requested by customers is Roadside Assistance. Customers now have the opportunity to tailor this new insurance far better to their needs.
Capital Markets Day Tryg held its Capital Markets Day in London, where the Executive Mana gement presented, among other things, new financial targets and customer targets up to 2017. The aim is a return on equity for 2017 of 21% or more, a combined ratio of 87 or less and an expense ratio of 14 or less. The customer targets aim for an increase in the retention rate of 1 percentage point, an increase in the share of customers with three or more products of 5 percentage points and a doubling of the Net Promoter Score (NPS).
On 2 January, Tryg initiated an extraordinary share buy back, which was completed on 19 December 2014. Tryg acquired own shares for an amount totalling DKK 1bn.
Moderna, insurance broker of the year For the second year running, Tryg’s branch in Sweden, Moderna, was named insurance broker of the year within the Corporate brokerage business.
Extended annual travel insurance On 1 August, the new blue EU health insurance card was introduced in Denmark, replacing the old yellow public health card. The blue card does not provide the same cover when travelling in the EU as the yellow card. Tryg extended its annual travel insurance to ‘all inclusive’, offering our customers the same cover as before. Read more about annual travel insurance at tryg.dk.
Cloudburst in Copenhagen On 30 August, central Copenhagen was hit by a heavy cloudburst. Approx. 2,300 claims were reported, primarily by business owners. As a result of claims prevention measures, the extent of damage was much less than after the cloudburst in 2011.
Four new price-differentiated products in Private As part of its price differentiation project, Tryg launched new house, short-term travel, dog and cat insurance policies. Prices are adjusted according to the customer’s risk. Read more about Tryg’s products at tryg.dk.
Tryg acquired the renewal right to Codan’s agricultural portfolio of approximately 1,600 smaller agricultural customers. More than 80%
Our values are highly integrated in our culture and consistent with our purpose.
Tryg’s ambition is to create peace of mind and value for customers, employees and shareholders, and this must be at the core of everything we do.
Tryg’s ambition is to become the world’s best insurance company. This ambition lies at the heart of all the strategic measures implemented in Tryg.
This must be evaluated from the customer’s perspective, and for Tryg this means that we will have to introduce far-reaching changes in our internal business procedures so that the first-line employee will be able to resolve and close the vast majority of cases.
Our employees are our most important resource and will ensure that our vision to become the world’s best insurance company becomes a reality.
An important part of achieving this is that all employees feel that they have an opportunity to be successful. Clear and ambitious targets must be set for each individual employee, and regular feedback must be provided.
Tryg wants a higher level of employee satisfaction compared to the financial sector in the Nordic region. Tryg’s employee satisfaction survey 2014 showed that employee satisfaction had increased markedly since 2013 and was now on a level with the Nordic financial sector. The target is for employee satisfaction to surpass that of the Nordic financial sector in 2015.
In 2012, Tryg presented a number of ambitious financial targets for the period up until 2015. Tryg is well on its way to achieving these targets, which meant that it was natural to set out a range of new and equally ambitious targets, which were presented in connection with the Capital Markets
Tryg strives for a shareholder-friendly dividend policy, and has in recent years paid out a steadily increasing dividend combined with share buy back.
The Nordic insurance market is characterised by consumers and businesses who have largely covered their insurance needs, combined with relatively low economic growth. Profitability in the insurance industry is generally high due to the fact that the vast majority of the companies focus on earnings instead of growth. However, competition is fierce and intensified in 2014, especially in the
Total car sales in 2014 were 3.8% higher than in 2013, and characterised in particular by increased sales of small cars. Norway’s economy was also
• Expense ratio <15 erable focus on customers through, among other things, the strategic initiative Customer journey
Tryg is looking to offer a customer experience that makes our customers feel they can recommend us to others. For this reason, we have set a target of doubling the Net Promoter Score (NPS) up to the end of 2017. The NPS shows the likelihood of customers recommending Tryg in general. The
Price differentiation was an important initiative in both 2013 and 2014. Up to the end of 2014, more than 20 new price-differentiated products were developed, which also shows that the time it takes to develop new products has been significantly reduced, down by almost 50% since 2012.
More differentiated pricing will also strengthen the business areas’ scope for performing segmentation and subsequent selection. This will be based on a comparison of own data with external data and then selecting the customers that we believe to be the most profitable. This selection will reduce the claims level and ensure more efficient use of our distribution channels, which will also have a positive impact on the cost level. Tariffs must be improved further, and the objective is that, from 2017, Tryg will have tariffs which for 25% of the portfolio are more advanced than those of our major competitors.
SMS text messages were sent to request feedback from customers, and we then followed up on the customers’ reactions. The results were generally very satisfactory. To gain a common understanding, the Group Executive Management also took their turn at calling both satisfied and dissatisfied customers as part of following up on the SMS messages.
All dissatisfied customers are contacted in order to obtain valuable input to improve customer service.
DKK 750m by 2017, namely DKK 500m related to the procurement of claims services and administration and DKK 250m related to expenses. With only
DKK 50m remaining for the 2015 expense targets, the additional savings to be achieved by 2017 will be DKK 700m, bringing the total target for the two efficiency programmes to DKK 1,700m.
more than 4,500 days of teaching, where the focus is on improving our customers’ experience of Tryg.
NPS. Experience from customer interviews and surveys shows that quickly processing a customer enquiry is the most important factor in terms of giving customers a positive experience. This requires that the employees engaged in servicing
It is important for customers that we are able to offer a digital service. To accommodate this, Tryg is continuously developing new solutions to meet customer needs. The target for 2017 is that 80%
of claim notifications are handled digitally, and that 50% of all other transactions with customers are effected digitally. This will require the development of an improved digital platform and integrating the work on digital solutions in Tryg’s culture.
DKK 250m related to expenses, in the period up to and including 2017.
Tryg's assessment of its reserve position, and it is therefore deemed likely that the run-off level in the coming years will be higher than that realised in previous years.
The return on bonds in the free portfolio will vary, but considering the current interest rate level, a low current return is expected. For shares and property, the expectations are a return of 7% and
Investment activities include other types of investment income and expenses, especially the costs of managing the investments, gains and losses on foreign currency hedges and interest paid on loans.
With the results for 2014, we are close to having delivered on the 2015 financial targets announced in 2012. We have raised the bar for the period up to 2017, and have presented new and ambitious financial targets and customer targets.
With a return on equity of 23.0% and a combined ratio of 84.2, Tryg once again delivered a satisfactory result in line with the defined targets of a return on equity of 20% and a combined ratio below 90. This result was achieved despite a slightly higher total level of weather claims and large claims in 2014 than in 2013. The improvement of the technical result was mainly the result of Tryg’s efficiency programme, but is also attributable to the effect of the many new pricedifferentiated products launched in recent years.
2014 saw intensive work on increasing customer loyalty in the different business areas. Together with the improved products and the targeted selection, this had a positive impact on results.
of the Group’s premium income. Both the development in the number of customers and the development in sales for the new pricedifferentiated products, in particular, improved in 2014 relative to 2013. The improvements in both 2013 and 2014 were primarily due to efficiency improvements and a strengthened customer focus, which had a significant positive effect on the development in premium income. Commercial’s retention rate was improved in 2014, particularly in the Danish part, but there is a general need to boost sales to achieve a positive development of the portfolio. The Swedish business also required significant structural measures within both pricing and distribution, which, in combination with the termination of the distribution agreement with
Liv & Pension customers. In Sweden, Tryg has a distribution agreement with Danske Bank, which has distributed insurance for Tryg on the Swedish market since the spring of 2014.
Tryg’s focused work on claims prevention bore fruit when we received several cloudburst claims in
Moreover, the limit of cover for basement rooms was reduced, and a higher excess was introduced.
Tryg has concluded a lateral reinsurance agreement running from 1 July 2014 to 30 June 2015. When the total storm and cloudburst claims expenses exceed DKK 300m, the agreement will cover the next DKK 600m. To be covered by the agreement, a claims event must exceed DKK 20m. Storm and cloudburst claims amounted to approximately
development was outsourced to Accenture. Sourcing will continue to contribute to reducing the expense level in the years to come. In 2014, the number of employees was reduced from 3,703 to 3,599.
The profit on discontinued business was DKK 10m in 2014, and comprised gains on provisions, primarily relating to the marine run-off business.
The return on the free investment portfolio was DKK 548m (DKK 891m). The return was impacted by price increases for equities, in particular. The return on the equity portfolio was positive at 10.0%. Bonds produced a return of 2.1% and, for high-yield and emerging market bonds in particular, there was a high return in 2014.
Other financial income and expenses were negative (net) by DKK 369m, partly due to the usual interest expenses relating to subordinate loans, foreign currency hedging and expenses for investment activities, and partly due to a writedown of owner-occupied property of DKK 106m.
Tax on profit for the year totalled DKK 755m, or 23% of the profit before tax. In 2014, Tryg paid DKK 512m in income tax as well as various payroll taxes totalling DKK 332m, making the total payment DKK 844m in 2014.
November, Tryg announced that from 2 January 2015 and throughout the year, an additional share buy back of DKK 1bn will be initiated.
• Weather claims impacted the combined ratio by 2.6 percentage points (8.8).
(DKK 546m), an improvement of 42%. The investment return was DKK 13m (DKK 154m), and this was affected by a write-down of DKK 106m relating to the domicile in Ballerup. The combined ratio was 83.7
(89.1), and was only slightly impacted by weather claims, which stood at 2.6 (8.8). The large claims level was 4.3 (1.1) and was affected by a higher large claims level in both Commercial and Corporate. At 7.3 (5.2), the run-off level was considerably higher, which reflects Tryg’s solid level of provisions.
Key ratios Premium growth in local currencies -0.2 -1.7 0.0 -2.2
• Technical result improved by DKK 277m to DKK 1,612m (DKK 1,335m).
Emphasis was on customer focus, and this will be intensified further in the coming years.
(86.0). The improvement was achieved mainly through Tryg’s efficiency programme, but there was also a positive impact from the many new price-differentiated products in combination with improved selection. The improved profitability, which resulted from better pricing and selection, meant that only limited extraordinary price increases were implemented in 2014. Also, the claims level was positively affected by a lower level of weather claims and a considerably higher run-off level than in 2013. The expense ratio was reduced considerably from 15.1 to 14.5, which was achieved concurrently with a largely unchanged premium income.
The improved price-differentiated products in combination with improved selection have made
Without his travel insurance, Jan Koch’s father would have had to be treated in a public hospital in Spain and pay for his treatment. “My advice is that everyone should take out travel insurance. It provides peace of mind now that the yellow health card no longer covers,” says Jan Koch. Read more about Tryg’s annual travel insurance at tryg.dk.
Peace of mind on holiday In 2014, public health insurance cover was reduced for travel in Europe. With Tryg’s annual travel insurance, our customers can still feel safe while on holiday.
in particular was more intense, which resulted in a reduction of the premium level for the market as a whole. In that connection, Tryg has been able to capitalise on the enhanced competitiveness achieved through the efficiency programme.
The expense ratio was 14.5 (15.1). The expense level was affected by the one-off effects of the
15.3. The nominal expenses were considerably reduced as a result of a reduction in staff costs as part of the efficiency programme and continued optimisation of the distribution costs, in particular.
and was positively affected by a low level of weather claims. In addition, the run-off gains were at a lower level at 2.1 (3.1), and, all in all, the results were positively affected by the efficiency programme. The combined ratio was 82.4 (87.7)
Profit/loss on gross business 306 90 853 613 Profit/loss on ceded business -39 64 8 29 Insurance technical interest, net of reinsurance 3 3 14 12
In 2014, Commercial continued its positive development and improved the results significantly relative to 2013. The technical result was improved to DKK 875m (DKK 654m), with a combined ratio
This shows that the efforts to improve the results in Commercial have borne fruit, and that the area contributes positively to achieving the Group’s objectives. The improvement in results was achieved through both the efficiency programme and the impact of previous profitability measures.
In addition, new price-differentiated products were introduced in Commercial. These increased the rate of sales and reduced the need for discounts to adjust the price based on the risk.
It has been very important to reduce the expense level to improve the competitive situation. Against this background, it is very satisfactory that the expense ratio has been reduced to 15.8 (18.6), which was achieved concurrently with a reduction of the premium level. Adjusted for one-off effects related to the Norwegian pension scheme and the change of IT suppliers, the expense ratio was 16.9.
(86.1) in 2014 in the Danish part of Commercial, while the Norwegian part saw a small improve-
The gross claims ratio amounted to 63.8 (67.5), and the claims ratio, net of ceded business, was 63.6 (66.8). The low level is attributable to both the historic profitability measures, the implementation of price-differentiated products and the efficiency programme. The level of weather claims was 1.9
(4.5), and was positively affected by mild winter weather in Q4 in both Denmark and Norway.
At 4.3 (4.5), the level of large claims was largely unchanged relative to 2013, while the run-off level was somewhat higher at 7.4 (6.0).
Corporate. Reducing the expense level will continue to be an important focus area for Commercial in the coming years, which will contribute to improving competitiveness and supporting the Group’s expense ratio reduction target.
A technical result of DKK 270m (DKK 157m) was posted, and this was primarily affected by milder weather in Q4, a high level of large claims and a high level of run-off gains.
The combined ratio was 74.5 (85.8), and was affected by the lower level of weather claims, a higher level of large claims and a high run-off level.
Profit/loss on gross business 225 132 715 7 Profit/loss on ceded business -128 -78 -304 338 Insurance technical interest, net of reinsurance 1 5 16 13
The Corporate portfolio comprises a higher share of long-tailed business than the other areas, for which reason the capital requirement is higher.
As a matter of course, the Corporate market comprises large single customers. As the market is also highly competitive, focus in Corporate will be on maintaining profitability, which means that the premium income will fluctuate more than for the other business areas.
The gross claims ratio amounted to 71.2 (88.0), and the claims ratio, net of ceded business, was 78.7 (79.9). Adjusted for run-off level, weather
Sales are effected both via Tryg’s own sales force and via insurance brokers. Moreover, customers with international insurance needs are served by Corporate through its cooperation with the AXA Group. The business area accounts for 21% of the Group’s total premium income.
During the cloudburst in August 2014, twice as much rain fell on Copenhagen as in the cloudburst in July 2011. Nevertheless, Tivoli’s loss was only one third of that suffered in 2011, which was the result of preventive measures initiated by Tivoli and Tryg that year.
claims and large claims, the claims ratio, net of ceded business, was significantly better than in 2013, which underlines the profitability focus in Corporate. However, at the same time, it must be concluded that the claims level for the
Swedish part was less satisfactory towards the end of the year.
The development in the expense level is satisfactory viewed in the context of the efforts to improve competitiveness and the financial results. The coming years will see a focus on streamlining the handling of large customers even more and reducing the expense level further.
The number of employees was reduced from 365 at the end of 2013 to 279 at the end of 2014. Of this, approximately 60 positions were moved in connection with the new division of Corporate and Commercial.
Key ratios Premium growth in local currencies 1.6 -10.6 -7.4 -4.9
Combined ratio exclusive of run-off 99.2 94.5 95.1 92.5 Run-off, net of reinsurance (%) -0.9 -6.3 -3.1 -1.3 Weather claims, net of reinsurance (%) 1.5 2.3 1.5 1.4
This development was countered through the continued development of the cooperation with
Towards the end of the year, it could be concluded that the level of sales was now generally higher than before the agreement with Nordea was terminated. This was achieved through the establishment of one call centre in Malmö.
It was expected that the expense ratio would increase, as it was not possible to adapt to a considerably lower premium level in the short term.
Accordingly, in the coming years, initiatives will be implemented to ensure a reduction in expenses.
Gross premiums increased by 1.6% in Q4 and were positively affected by the inclusion of the premium income from Securator. Securator accounted for
The claims ratio was 74.6 (71.8), and the claims ratio, net of ceded business, was 76.1 (68.9). The higher claims ratio compared to the same period in 2013 is attributable to a lower level of run-off gains and the run-off gains achieved in Q4 2013 on the provisions made during the year.
Free portfolio, gross return 154 283 548 891 Match portfolio, regulatory deviation and performance 39 38 181 40 Other financial income and expenses -180 -167 -369 -343
The purpose of the investment activities is primarily to support the insurance business by minimising the impact of interest and exchange rate fluctuations and by managing the investments in the best possible way while taking account of market risk and capital use.
This is done by means of hedging, which in terms of expenses is included under other financial income and expenses.
Without this hedging, which relates to Tryg's equity and intercompany balances, equity in 2014 would be approximately DKK 260m lower.
Activity in the global economy gradually gained momentum in the course of 2014, especially in the USA and the UK. However, growth in Europe was a little more restrained, while the Chinese and Japanese economies also slowed down. The central banks also had a bearing on the agenda in 2014. While the American central bank cut back its monetary easing by reducing its monthly acquisition of bonds, the European central bank eased its monetary policy on several occasions to boost the economy. In the Nordic countries, the Norwegian central bank’s interest rate cut was particularly noteworthy, and was primarily driven by the marked fall in oil prices. The general impression of 2014 is a global economy with historically low inflation, interest rates and commodity prices plus growth which is still low and which is primarily being driven by America.
DKK 181m. After financial income and expenses of DKK -369m, the total investment return amounted to DKK 360m.
The result of the match portfolio comprises performance of DKK 104m and a regulatory deviation of DKK 77m. The positive performance was primarily due to the selected local bonds doing well relative to the local market.
Interest rate and credit exposure 29 0.4 168 2.1 7,872 8,370 a) Bank deposits and derivative financial instruments hedging interest rate risk and credit risk.
In addition, the development in the financial markets resulted in positive returns on equities, credit exposure and the bond position in the free portfolio. The return was DKK 548m, corresponding to 4.4% on the average invested capital for the period. The return on Tryg’s equity portfolio was DKK 250m, or 10.0%. The reduction of the interest rate level in 2014 combined with the positive return on high-yield bonds and emerging market bonds resulted in a return of DKK 168m, or 2.1%. Real estate investments contributed positively with DKK 130m. The value of the properties in Norway increased slightly, while the situation is largely unchanged in Denmark.
The match portfolio yielded a positive regulatory deviation of DKK 31m in Q4 2014 after transfer to insurance, while the result of match performance was DKK 8m.
DKK 180m, the total return on Tryg’s investment activities was DKK 13m in Q4.
The main concept of insurance is that of spreading risk. By pooling risks from a large number of customers, an insurance company’s risks are spread more evenly and are also more predictable, thereby reducing the capital required to cover negative fluctuations. The assessment and management of
Tryg’s aggregate risk and the associated capital requirements therefore constitute a central element in the management of an insurance company.
Tryg’s Supervisory Board defines the framework for the company’s target risk appetite and thereby also the capital which must be available to cover any losses. The risk appetite is described in Tryg’s policies via exposure limits for different types of risk.
The fundamental insurance risk is managed via limits for the size of single large commitments and via the use of reinsurance, thereby limiting the maximum cost of large claims, expenses due to a storm, cloudburst or other event which affects a number of insurance customers simultaneously.
9,938m after dividend, corresponding to a surplus cover of DKK 3,378m or 51%.
The Supervisory Board regularly assesses the need for capital adjustments. In practice, extraordinary adjustments are made through share buy backs.
The assessments are made in the company’s capital plan, in which the Individual Solvency Requirement is projected on the basis of Tryg’s budgets. The projection is partly based on whether it will accommodate the initiatives addressed in the company’s strategy for the coming three years, and also on the most significant risks from the company’s risk identification. Adequacy is measured in relation to Tryg’s strategic targets (including in respect of return on equity and capital buffer) and its dividend policy.
Against the background of the expected satisfactory results for 2014 and the solid capital position, a decision was made in November 2014 to implement an extraordinary share buy back totalling DKK 1bn.
The share buy back takes place between 2 January 2015 and the end of the year. Moreover, at the annual general meeting to be held on 25 March 2015, the Board will propose that dividend of DKK 29 per share be paid, corresponding to the distribution of
DKK 1,731m. Looking ahead, Tryg has decided to start paying dividend twice a year, the first time being in connection with the half-year report 2015.
Tryg’s capital base consists of equity and subordinate loan capital. The relative sizes of these two categories are subject to ongoing assessment with a view to maintaining an optimum structure which takes account of the target return on equity, the capital costs and the desired financial flexibility. In 2015, this will be reassessed in connection with the refinancing of
The coming European solvency rules, Solvency II, will enter into force on 1 January 2016.
Under Solvency II, a company is allowed to calculate its capital requirement using an internal model approved by the Financial Supervisory Authority.
When Solvency II enters into force, the concept of ‘adequate capital base’ will be replaced by the
Solvency II concept of ‘own funds’. There are still some unresolved issues as to the interpretation of this capital calculation method, which may have a significant impact on Tryg’s capital situation. The capital elements still to be clarified are: a) Tryg’s expectations as regards the future Solvency II standard model are based on the Danish Financial Supervisory Authority’s revised Executive Order on Solvency and Operating Plans for Insurance Companies which came into force on 1 January 2014.
The Solvency II provisions also introduce a requirement for an Own Risk and Solvency Assessment
In 2014, Tryg achieved an ‘A-’ rating from the credit rating agency Standard & Poor’s, and aims to maintain this rating.
BATS Chi-X as the largest alternative exchange. This means that NASDAQ and the alternative exchanges account for two-thirds of the trading that impacts the liquidity of the share, and thereby determines the price of the Tryg share. Other trading platforms such as OTC (over-the-counter) and dark pools represent a large share of the remaining trade, but it takes place outside of the established exchanges and MTFs and thus does not have a direct impact on the price of and the liquidity in the share.
In 2014, shares totalling DKK 1bn, corresponding to approximately 1.8 million shares, were repurchased. This had a positive impact on the turnover of the Tryg share. The total turnover (including
At Tryg’s annual general meeting on 25 March 2015, it will be proposed to split each share of
600, which makes it the second-most expensive share in the C20 index. In addition, the share split is expected to increase the liquidity of the share.
At the end of 2014, and after the share buy back programme, Tryg held 1,871,579 own shares, corresponding to 3.1% of the share capital. At the coming annual general meeting, the Supervisory
The Supervisory Board encourages all shareholders to participate at the annual general meeting, where they have the opportunity to ask questions to the Chairman of the Supervisory Board and the Group CEO.
November 2014, it was announced that the Supervisory Board has decided to pay out semi-annual dividend from the second half of 2015. This means that the next payout in March 2015 will be based on the profit for 2014, after which time all future payouts will be based on the half-year results.
Based on Tryg’s dividend policy and the satisfactory 2014 results, the Supervisory Board will propose a dividend of DKK 29 per share, corresponding to
This corresponds to payment of 68% of the profit after tax.
Tryg’s annual general meeting will be held on 25 March 2015 at 14:00 at Falkoner Centret,
Investor Relations organises investor meetings and conference calls and participates in conferences in
Shareholders may also opt to receive the notice by post or email. The notice contains information about time and venue as well as an agenda for the meeting.
Shareholders may vote in person at the annual general meeting, by post or appoint the Board or a third party as their proxy. Shareholders may consider each item on the agenda. The proxy form and form for voting by post are available at tryg.com prior to the annual general meeting.
Tryg’s share capital comprises a single share class, and all shares rank pari passu. The majority shareholder, TryghedsGruppen smba, owns 60%
The Board ensures that Tryg’s capital structure is in line with the needs of the Group and the interests of its shareholders and that it complies with the requirements applicable to Tryg as a financial undertaking. Tryg has adopted a capital plan and a contingency capital plan, which are reviewed annually by the Board.
Depending on the development in results, each year the Board proposes a dividend and possibly an extraordinary share buy back, if further adjustment of the capital structure is required. At the annual general meeting on 25 March 2015, the Board will propose a half-year dividend from the second half of 2015. In 2014, the annual general meeting authorised the Board to allow Tryg to acquire own shares amounting to up to 10% of the share capital until 3 April 2019. On 2 January 2014, Tryg initiated a share buy back programme which ran until 19 December 2014. Tryg acquired own shares for an amount of DKK 1bn. On 2 January 2015, Tryg initiated a new share buy back programme totalling DKK 1bn, which runs until the end of 2015.
The Board is responsible for the central strategic management and financial control of Tryg and for ensuring that the business is organised in a sound way. This is achieved by monitoring targets and framework on the basis of regular and systematic reviews of the strategy and risks. The Executive
Total remuneration of the Supervisory Board in 2014 Audit Risk Remuneration DKK Fee Committee Committee Committee Total
Sweden and Norway. Women are thus not underrepresented on Tryg’s Supervisory Board.
Eight members of the Board are elected by the annual general meeting for a term of one year. Of the eight members elected at the annual general meeting, four are independent persons as stated in recommendation 3.2.1 in Recommendations on
In 2014, external assistance was brought in to contribute to this, which resulted in the recruitment of a new member for the Board in 2015. The
Board focuses on the following qualifications and skills: management experience, financial insights, knowledge of insurance, including the organisation of insurance companies, product development of financial services, reinsurance, capital requirements and special accounting principles in insurance law, accounting insights, financial knowledge and experience, M&A experience, market insights and international experience. See CVs and descriptions of the skills in the section Supervisory Board on pages 32-33 and at tryg.com> Governance > Management > Supervisory Board.
Each year, the Board reviews and adopts the rules of procedure of the Board and the Executive
Management with relevant policies, guidelines and instructions describing reporting requirements and requirements for communication with the Executive Management. Financial legislation also requires the Executive Management to disclose all relevant information to the Board and report on compliance with limits defined by the Board and in legislation.
The board committees’ terms of reference can be found at tryg.com > Governance > Management > Super visory Board > Board committees, including descriptions of members, meeting frequency, responsibilities and activities during the year.
Three out of four members of the Audit Committee and the Risk Committee, including the chairman of the committees, are independent persons. Of the four members of the Remuneration Committee, one member is an independent person, while one out of two members of the
Nomination Committee is independent. Board committee members are elected primarily based on special skills that are considered important by the Board. Involvement of the employee representatives in the committees is also considered important. The committees exclusively prepare matters for decision by the entire Board. The special skills of all members are also described at tryg.com.
The Chairman of the Board reports on Tryg’s remuneration policy each year in connection with the consideration of the annual report at the annual general meeting. The Board’s proposal for the remuneration of the Board for the current financial year is also submitted for approval by the shareholders at the annual general meeting. See the remuneration policy at tryg.com > Governance > Remuneration.
Members of Tryg’s Board receive a fixed fee and are not comprised by any form of incentive or severance programme or pension scheme. Their remuneration is based on trends in peer companies, taking into account board members’
required skills, efforts and the scope of the Board’s work, including the number of meetings. The remuneration received by the Chairman of the Board is triple that received by ordinary members, while the Deputy Chairman’s remuneration is double that received by ordinary members of the Board.
Some members of the Executive Management still have unexercised share options, which were allocated under a previous programme. See
CEO is entitled to 12 months’ notice of termination and 18 months’ severance pay.
Each member of the Executive Management has 25% of the basic salary paid into a pension scheme. Up until 31 July 2014, the Group CFO
On 1 August 2014, Tor Magne Lønnum changed to a Danish employment contract with a pension scheme of 25% of his basic salary.
Being an insurance business, Tryg is subject to the risk management requirements of the Danish
Other risks associated with the financial reporting are described in the section Capital and risk management on pages 24-25 and in Note 1 Risk management on page 47.
Assessment (ORSA). The purpose of the ORSA is to link strategy, risk management and solvency, as the aim of the ORSA is to ensure a sensible correlation between the strategy for assuming risks and the available capital over a period of three to five years.
Tryg has published the statutory corporate governance report based on the ‘comply or explain’ principle for each individual recommendation. Download the report at tryg.com > Investor > Download.
The Executive Management has established a formal process for the Group comprising monthly reporting, including for example budget and deviation reports.
Tryg has set up an Ethical Hotline (whistleblowing scheme), which allows employees, customers or business partners to report any serious wrongdoing or suspected irregularities. Reporting takes place in confidence to the Chairman of the Audit
The Board ensures monitoring by competent and independent auditors. The Group’s internal auditor attends all board meetings. The independent auditor attends the annual board meeting at which the annual report is presented.
Paul Bergqvist has international management and board experience within M&A, strategic development, marketing, branding and financial management. Being a Swedish citizen, Paul Bergqvist has special knowledge of Swedish market conditions.
Education: Savings bank educated, Graduate Diplomas in Organisation and Work Sociology, Credit and Financing. Chairman: Investeringsforeningen Sparinvest, Investeringsforeningen Sparinvest Sicav, Luxembourg, EIK banki p/f, Færøerne, Capital Market Partners and Museum Sydøstdanmark. Deputy Chairman: Tryg A/S, Tryg Forsikring A/S and Sydbank A/S. Board member: Sampension KP Livsforsikring A/S, Dansk Landbrugs Realkredit and Executive Board of Bombebøssen.
Committee memberships: Audit Committee (Chairman), Risk Committee (Chairman), Nomination Committee in Tryg A/S. Number of shares held: 3,500 Change in portfolio in 2014: 0
Educational background: Graduate Diploma in Organisation, Graduate Engineer and Lic.techn. Chairman: Tryg A/S, Tryg Forsik - ring A/S, TryghedsGruppen smba, the Lundbeck Foundation and LundbeckFond Invest A/S. Board member: Rambøll Group A/S, Bladt Industries A/S, Terma A/S, Haldor Topsøe A/S, Otto Mønsted A/S and Thomas B. Thriges Fond. Committee memberships: Remuneration Committee (Chairman), Nomination Committee (Chairman) in Tryg A/S.
Born 1968. Joined: 2013. Nationality: Danish. President of Niels Brock Copenhagen Business College.
Committee memberships: Remuneration Committee in Tryg A/S. Member of the Danish Growth Council, Nykredits Regionsråd, Danish Chinese Business Forum, minister- appointed GS coordinator, VL 21, Copen hagen Rotary and NOCA. Number of shares held: 0
Education: Certified commercial insurance agent. Various insurance and sales courses and negotiation training. Board member: Tryg A/S and Tryg Forsikring A/S. Other duties: Member of the Insurance Agent Committee of the Financial Services Union Denmark. Number of shares held:106 Change in portfolio in 2014: +20
Born 1962. Joined: 2012. Nationality: Norwegian. Professional board member and independent advisor.
Mari Thjømøe has experience from international management, strategy, finance, capital management, investor relations, branding and special knowledge of the insurance market, and special insights into Norwegian market as a Norwegian citizen.
Born 1958. Joined: 2013. Nationality: Danish. Director General of Lif (Danish Association of the Pharmaceutical Industry). Director General of the subsidiary DLI (Dansk Lægemiddel Information A/S).
Education: MSc in Political Science, European Health Leadership Programme INSEAD, Executive Management Programme INSEAD, Executive Program Columbia Business School. Board member: Tryg A/S and Tryg Forsikring A/S, TryghedsGruppen smba, Plougmann & Vingtoft A/S and Den Erhvervsdrivende Fond Hans Knudsen Instituttet.
Number of shares held: 173 Change in portfolio in 2014: +79
Ida Sofie Jensen has experience from business operations and the health sector as well as management, strategy, politics and finance.
Education: MSc in Economics and Business Administration and Lieutenant-Colonel of the Danish Air Force Reserve. Chairman: Association of Danish Energy and Distribution Companies (DEA), Energi Danmark A/S, Fibia P/S, SEAS-NVE Vind AB, SEAS-NVE Strømmen A/S. Deputy Chairman: TryghedsGruppen smba.
Board member: Tryg A/S, Tryg Forsikring A/S, DI General Council, Dansk Energi and Danish Intelligent Energy Alliance. Committee memberships: Audit Committee and Risk Committee in Tryg A/S, Executive Director Committee of Dansk Energi (Chairman) and Green Committee, Region Zealand (Chairman). Number of shares held: 1,750 Change in portfolio in 2014: 0
From his positions with SEAS-NVE, Jesper Hjulmand has experience within M&A, strategy, organisa tional and management development, communication and business development.
Employee representative Born 1962. Joined: 2010. Nationality: Danish. Head of Section in Tryg’s staff association. Employed in 1987.
Education: Insurance training. Board member: Tryg A/S and Tryg Forsikring A/S. Committee memberships: Risk Committee in Tryg A/S and DFL’s General Council. Number of shares held: 106 Change in portfolio in 2014: +20
Born 1959. Joined: 2010. Nationality: Danish. CEO of the Lundbeck Foundation.
Board member: Tryg A/S, Tryg Forsikring A/S and ALK. Committee memberships: Audit Committee and Risk Committee in Tryg A/S and Audit Committee in ALK. Number of shares held: 745 Change in portfolio in 2014: 0
Group Executive Management Standing from left: Trond Bøe Svestad, Tor Magne Lønnum, Jesper Joensen, Morten Hübbe, Per Fornander, Lars Bonde and Truls Holm Olsen.
34Annual report 2014 | Tryg A/S | | Menu – Management’s review
Number of shares held: 1,673 Change in portfolio in 2014: +587
Tryg’s ambition is to create peace of mind and value for customers, employees and shareholders. Corporate Social Responsibility therefore constitutes an integral part of our core business and plays a key role in connection with the development and improvement of our products and services as well as the optimisation of our operations and our activities. In Tryg,
For Tryg, it is crucial to consistently promote sustainable initiatives which can prevent and address the issue of climate-related damage which we experience in our daily work with customers and suppliers. To provide the best possible solutions, we engage in cooperation and partnerships with public authorities and researchers, and together we develop contingency plans and solutions which can ensure that local areas, buildings and processes are geared to withstanding climate change.
Read more at tryg.com > CSR > Thematic areas > Climate.
Our aim is to reduce Tryg’s environmental impact, and each year we measure our carbon emissions and waste volumes. Most of the daily carbon emissions are associated with the lighting and heating of our offices, as well as car and plane travel.
Tryg has defined carbon emission targets since 2007, and initiatives have been implemented to reduce carbon emissions at our offices in Ballerup and in
Also, we focus on the well-being of our employees and their right to a healthy and safe workplace. Tryg wants to respect and promote the human rights and labour rights that are relevant to our business and activity areas. This applies both internally and in relations with our customers, suppliers, investors and partners. Our efforts focus primarily on inclusion, equality and labour rights as well as data protection. Read more at tryg.com > CSR
Tryg welcomes diversity, and we ensure non-discrimination through equal treatment of all our employees, regardless of gender, age, disabilities, ethnic origin, sexual orientation and religion. As a workplace characterised by diversity and the representation of different perspectives, we increase the quality of our services by having a better understanding of our customers and their requirements. In 2014, 4% of Tryg’s
we did not meet our target of 4.2%. We will consistently focus on increasing the share of employees of non-Western origin even though this is not a specific KPI in 2015. To make the most of our employees’ linguistic and cultural expertise, in 2014 we launched a new insurance advisory service for our private customers called 6 languages. The new initiative was welcomed both by our employees and by our customers, of whom 280 made use of the service. Read more about inclusion in Tryg at tryg.com > CSR > Thematic areas > Inclusion.
Financial Statements Act on equal gender representation at management level, Tryg is devoting targeted efforts to ensuring gender equality with regard to pay as well as equal career opportunities. We have an action plan aimed at ensuring the representation of more women in management, and in 2014 the target of a 2% increase was almost met with 36.5%
In 2014, Tryg was the first Danish insurance company to roll out a hotline ‘Tryg i Livet’ counselling service. The purpose is to ensure peace of mind for our Tryg Plus customers in their daily lives by offering free counselling by psychologists who can help them tackle crises or even prevent a problem from developing into a crisis. Customers have unlimited access to the service, which is anonymous to guarantee confidentiality between counsellor and customer. ‘Tryg i Livet’ has been welcomed by our customers, and the initiative will continue in 2015.
In the past, Tryg used to send all information containing sensitive personal data to our customers by ordinary mail. However, in 2014, Tryg implemented an email solution which makes it possible to send encrypted emails. Hence, Tryg has further improved our data protection standards, while at the same time ensuring that customers receive our communications as quickly as possible.
Read more about data protection in Tryg at tryg.com > CSR > Thematic areas > Prevention > Data protection.
To create the best possible conditions for providing peace of mind, it is important that we encourage our employees to maintain high moral standards, to conduct themselves in an ethically correct fashion and in compliance with applicable legislation. To make it easier for our employees to observe all relevant rules and instructions, Tryg is continuously updating the internal code of conduct which all employees must know and adhere to. Through Tryg's
Nordea Invest and Skagen Fondene, both of which have signed UN Principles for Responsible Investment (UN PRI). Read more about responsible investments at tryg.com > CSR.
Cash flow statement 46 1 Risk and capital management 47 2 Operating segments 58 2 Geographical segments 60 2 Technical result, net of reinsurance, by line of business 62 3 Premium income, net of reinsurance 64 4 Insurance technical interest, net of reinsurance 64 5 Claims, net of reinsurance 64 6 Insurance operating costs, net of reinsurance 64 7 Interest income and dividends etc. 69 8 Value adjustments 69 10 Profit/loss on discontinued and divested business 69 11 Intangible assets 70 12 Property, plant and equipment 72 13 Investment property 73 14 Equity investments in associates 73 15 Financial assets 75 16 Reinsurers’ share 77 17 Current tax 77 19 Premium provisions 78 19 Claims provisions 78 20 Pensions and similar liabilities 79 21 Deferred tax 81 22 Other provisions 81 23 Amounts owed to credit institutions 81 24 Debt relating to unsettled funds transactions and repos 81 25 Earnings per share 81 26 Contractual obligations, collateral and contingent liabilities 82 27 Acquisition of subsidiaries 84 28 Related parties 84 29 Financial highlights 85 30 Accounting policies 86
Jørgen Huno Rasmussen Torben Nielsen Paul Bergqvist Anya Eskildsen Vigdis Fossehagen Lone Hansen Chairman Deputy Chairman
Jesper Hjulmand Ida Sofie Jensen Bill-Owe Johansson Lene Skole Tina Snejbjerg Mari Thjømøe
EU, and the financial statements of the parent company have been prepared in accordance with the Danish Financial Business Act. In addition, the annual report has been presented in accordance with additional Danish disclosure requirements for the annual reports of listed financial enterprises.
Our responsibility is to express an opinion on the consolidated and parent financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the con solidated and parent financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated and parent financial statements.
We have audited the consolidated and parent financial statements of Tryg A/S for the financial year which comprise the income statement, statement of comprehensive income, statement of financial position, statement of changes in equity and notes, including the accounting policies, for the Group as well as for the parent company, and the consolidated cash flow statement. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and the parent financial statements are prepared in accordance with the Danish Financial
We believe that the audit evidence is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements give a true and fair view of the Group’s financial position at 31 December 2014, and of the results of its operations and cash flows for the financial year 1 January to 31 December 2014 in accordance with International Financial Reporting
Pursuant to the Danish Financial Business Act, we have read the mangement’s review. We have not performed any further procedures in addition to the audit of the consolidated and parent financial statements. On this basis, it is our opinion that the information provided in the mangement’s review is consistent with the consolidated and parent financial statements.
The gross expense ratio without adjustment is calculated as the ratio of actual gross insurance operating costs to gross premium income.
The adjustment, which is made pursuant to the Danish Financial Supervisory Authority’s and the Danish Society of Financial Analysts’ definitions of expense ratio and combined ratio, involves the addition of a calculated expense (rent) in respect of owner-occupied property based on a calculated market rent and the deduction of actual depreciation and operating costs on owneroccupied property.
Investment return after insurance technical interest 360 588 585 61 550
Profit/loss on continuing business 2,547 2,373 2,180 1,148 741 Profit/loss on discontinued and divested business after tax a) 10 -4 28 -8 -148
Relative run-off gains/losses 4.8 3.9 4.1 4.0 3.9 Return on equity after tax (%) 23.0 21.5 22.1 13.1 6.6
Profit/loss on continuing business 2,547 2,373 10 Profit/loss on discontinued and divested business 10 -4
Profit/loss for the year 2,557 2,369 25 Earnings per share of DKK 25 – continuing business 43.5 39.4 Diluted earnings per share of DKK 25 – continuing business 43.5 39.3 Earnings per share of DKK 25 43.7 39.4 Diluted earnings per share of DKK 25 43.7 39.3
Acquisition costs and administration expenses -2,689 -3,008 Reinsurance commissions and profit participation from reinsurers 102 105 6 Insurance operating costs, net of reinsurance -2,587 -2,903
Total other financial investment assets 43,172 42,855 15 Total investment assets 45,225 44,901
Interest and rent receivable 337 406 Other prepayments and accrued income 312 148
Total provisions for insurance contracts 31,692 32,939 20 Pensions and similar obligations 342 791 21 Deferred tax liability 1,022 1,057
Reserve for Share Revaluation- exchange rate Equalisation- Other Retained Proposed DKKm capital reserves adjustment reserve reservesa) earnings dividend Total 2014 Profit/loss for the year 60 -81 847 1,731 2,557
Note Financing Exercise of share options/purchase of own shares (net) -956 -700 Subordinate loan capital 0 316 Dividend paid -1,656 -1,594 Change in amounts owed to credit institutions 110 -8
Investments Purchase and refurbishment of real property -14 -18 Sale of real property 7 2 Purchase/sale of equity investments and unit trust units (net) 291 -128 Purchase/sale of bonds (net) -386 657 Deposits with credit institutions 630 -420 Purchase/sale of operating equipment (net) -17 -6 Acquisition of intangble assets -228 0 Hedging of currency risk 191 305
• Risk management • Compliance • Aktuarial function 2. Line of defence
Tryg’s risk management is organised into three levels of control. The first level of control is handled in the business where the company’s policies are implemented, and day-to-day compliance is verified on a regular basis. Risk management at the first level of control is supported by decentralised risk managers affiliated with the individual areas.
Capital management Tryg’s capital management is based on the key business objectives: • A solid capital base, supporting both the statutory requirements and a continued ‘ A-’ rating from Standard & Poor’s.
The capital base is continuously measured against the individual solvency requirement calculated on the basis of Tryg’s partial internal model, where insurance risks are modelled using a internal model, while other risks are described using the Solvency II standard model. The model calculates Tryg’s capital requirement with 99.5% certainty with a 1-year horizon, which means that Tryg will be able to fulfil its obligations in 199 out of 200 years. The partial internal model has been used for a number of years, and Tryg expects that the model will be approved by the Danish Financial Supervisory Authority at the end of 2015 so that the present solvency requirement can be maintained when Solvency II comes into force on 1 January 2016.
The individual solvency requirement should be kept within the adequate capital base consisting of the company’s equity minus intangible assets plus subordinate loan capital. The balance between equity and subordinate loan capital will be assessed in the course of 2015 in connection with the refinancing of the subordinate loan of EUR 150m. This assessment takes into account the future Solvency II term ‘own funds’ as well as the temporarily increased access to including subordinate loan capital implemented by the Danish Financial Supervisory Authority from 1 January 2015.
Tryg’s total subordinate debt amounts to DKK 1,768m, corresponding to 16% of equity at the end of 2014.
Given Tryg’s strong results, Tryg decided to announce extraordinary dividend in November 2014 in the form of a share buyback programme of DKK 1,000m. The share buyback programme was launched on 2 January 2015.
Company’s own risk assessment ‘ORSA’ (Own Risk and Solvency Assessment) ORSA is the company’s own risk assessment based on the Solvency II principles, which implies that Tryg must assess all material risks that the company is or may be exposed to. The ORSA report also contains an assessment of whether the individual solvency requirement is sensibly calculated in relation to Tryg’s actual risk profile. Moreover, the capital requirement is also assessed over the company’s strategic planning period, and Tryg’s provisions and reinsurance are also subject to assessment.
Underwriting risk Underwriting risk is the risk of the premium charged in connection with the conclusion of insurance contracts not being sufficient to cover the compensation that the company is obliged to pay once a claim is made.
In the event of major events involving damage to buildings and contents, Tryg’s reinsurance programme provides cover for up to DKK 5.75bn, which statistically is sufficient to cover a 250-year event. Retention for such events is DKK 150m. In the event of a frequency of natural disasters, Tryg is covered for up to DKK 600m for all claims above DKK 20m, after total annual retention of DKK 300m.
Provisioning risk Provisioning risk relates to the risk of Tryg’s insurance provisions proving to be inadequate. The Supervisory Board lays down the overall framework for the handling of provisioning risk in the insurance policy, while the overall risk is measured in the capital model. The uncertainty associated with the calculation of claims provisions affects Tryg’s results through the run-off on provisions.
The match portfolio corresponds to the value of the discounted claims provisions and is designed to hedge
Provisioning risk 1% change in inflation in person-related lines of business +/- 715 +/- 684 10% error in the assessment of long-tail lines of business (workers’ compensation, motor liability, liability, accident) +/- 1,752 +/- 1,753
Investment risk Interest rate market Effect of 1% increase in interest curve: Impact on interest-bearing securities -880 -849 Higher discounting of claims provisions 793 755 Net impact of interest rate increase -87 -94 Impact of Norwegian pension obligation a) 87 282
the interest rate sensitivity of these to the widest possible extent. Tryg carries out daily monitoring, follow -up and risk management of the Group’s interest rate risk. The swap and bond portfolio is thus adjusted continuously to minimise the net interest rate risk.
In addition, the free portfolio is subject to the framework defined by the Supervisory Board through the investment policy. The purpose of the free portfolio is to achieve the highest possible return relative to risk. Tryg’s shareholdings constitute the company’s largest investment risk. At the end of 2014, the equity portfolio accounted for 5.7% of the total investment assets. This share is expected to be at a similar level in 2015.
Tryg’s does not wish to speculate in foreign currency, but since Tryg invests and operates its insurance business in other currencies than Danish kroner, Tryg is exposed to currency risk. Tryg is primarily exposed to
In addition to the above-mentioned risks, Tryg is exposed to credit, counterparty and concentration risk. These risks primarily relate to exposures in high-yield bonds, emerging market debt exposures as well as Tryg’s investments in AAA-rated Nordic and European government and mortgage bonds. These risks are also managed through the investment policy and the framework for reinsurance defined in the insurance policy. For an insurance company like Tryg, liquidity risk is practically non-existent, as premium payments fall due before claims payments.
This comprises a Crisis Management Team at Group level, national contingency teams at country level and finally business contingency in the individual areas. Tryg has prepared contingency plans to address the most important areas. In addition, comprehensive IT contingency plans have been established, primarily focusing on the business-critical systems.
Before determining the strategic position, the strategic decisions are subjected to a risk assessment, explaining the risk of the chosen strategy to Tryg’s Supervisory Board and Group Executive Management.
Compliance risk Compliance risk is the risk of loss as a result of lack of compliance with rules and regulations.
Estimated accumulated claims End of year 775 924 278 503 163 287 674 1,465 240 556 262 1 year later 790 819 278 469 227 357 751 2,171 271 969 2 years later 828 824 265 482 193 335 745 2,292 311 3 years later 827 819 296 488 183 290 721 2,334 4 years later 813 844 297 507 183 293 731 5 years later 823 840 292 478 170 298 6 years later 823 825 290 507 176 7 years later 812 825 292 498 8 years later 810 817 290 9 years later 814 829 10 years later 814 814 829 290 498 176 298 731 2,334 311 969 262 7,512
Provisions before discounting, end of year 56 32 8 14 14 10 169 163 42 399 170 1,078
Reserves from 2003 and prior years 212 Other 447 Reinsurers' share of claims provisions, end of year 1,719
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2014 to prevent the impact of exchange rate fluctuations.
Other comprises Tryg Garantiforsikring A/S and from 2014 premium provisions in Securator A/S.
Bond portfolio including interest derivatives Duration 1 year or less 16,622 18,748 Duration 1 year-5 years 13,925 14,000
Nordic countries 413 393 United Kingdom 207 141 Rest of Europe 674 793 United States 1,096 892 Asia etc. 563 591
The share portfolio includes exposure from share derivaties of DKK 477m (DKK 325m in 2013) Unlisted equity investments are based on an estimated market price.
Profit/loss on gross business 3,313 2,085 1,228 -119 1,347 Profit/loss on ceded business -341 349 -690 10 -700 Insurance technical interest, net of reinsurance 60 62 -2 -3 1
Profit/loss on gross business 2,085 2,344 -259 -54 -205 Profit/loss on ceded business 349 86 263 11 252 Insurance technical interest, net of reinsurance 62 62 0 -1 1
Credit risk 2014 2013 Bond portfolio by ratings DKKm % DKKm %
Amounts owed to credit institutions 116 0 0 116 Debt relating to unsettled funds transactions and repos 2,902 0 0 2,902
Subordinate loan capital Bond loan Bond loan EUR 150m NOK 800m
The fair value of the loan at the statement of financial position date 1,106 1,127 714 741 The fair value of the loan at the statment of financial position date is based on a price of 99 101 108 105 Total capital losses and costs at the statement of the financial position date 3 5 4 5 Interest expenses for the year 50 50 40 33
Description of segments Please refer to the accounting principles for a description of operating segments. Amounts relating to eliminations, restructuring expenses and discontinued and divested business are included under 'Other'. Other assets and liabilities are managed at Group level and are therefore not allocated to the individual segments but are included under 'Other'.
Provisions for bonuses and premium discounts 507 29 94 10 0 640 Other liabilities 9,325 9,325
Number of full-time employees 31 December 1,167 1,199 1,282 1,338 1,338 a) Includes Danish general insurance and Finnish guarantee insurance.
Number of full-time employees 31 December 425 458 444 423 414
Gross claims ratio 72.9 73.7 71.0 64.1 16.0 39.1 72.9 75.2 61.8 65.2 80.0 48.5 Combined ratio 86.8 86.4 83.1 73.0 27.9 55.4 91.1 94.3 76.3 80.7 85.6 86.3
Average claims DKK b) 33,560 36,905 4,334 4,918 79,102 89,638 22,248 24,059 10,376 10,644 111,361 68,910 Total claims 37,228 36,480 50,173 45,694 9,463 9,209 72,195 73,973 224,791 238,955 2,470 2,621
Profit/loss on ceded business 22 - 21 - 113 - 126 0 0 - 10 50 - 188 629 - 2 - 1 Insurance technical interest, net of reinsurance 12 18 7 10 0 0 3 3 1 2 2 2
Other Total exclusive of Norwegian Group Life DKKm insurance Norwegian Group Life one-year policies Total
Profit/loss on ceded business - 20 - 12 - 341 351 0 - 2 - 341 349 Insurance technical interest, net of reinsurance 1 0 54 56 6 6 60 62
Gross claims ratio 16.7 23.5 67.3 73.2 88.3 100.0 67.8 73.9 Combined ratio 58.3 107.8 83.7 87.2 97.1 106.3 84.2 87.7
Administative expenses include fee to the auditors appointed by the annual general meeting: Deloitte -11 -13
Total lease expenses amount to DKK 26m (DKK 30m in 2013)
In 2014, the fair value of share options recognised in the consolidated income statement amounted to DKK 0m (DKK 2m in 2013). At 31 December 2014, a total amount of DKK 78m was recognised for share option programmes issued in 2006-2011. Fair values at the time of allocation are based on the Black & Scholes option pricing formula.
There are no resigned Group Executive Managers with outstanding options at 31 December 2014. Risktakers are included under ‘Other senior employees’.
66Annual report 2014 | Tryg A/S | | Menu – Financial statements
DKKm 6 Share option programmes Spec. of outstanding options: TOTAL NUMBERS FAIR VALUE
Per option Total value Total Other at time of at time of Per option value at Group Executive senior Other allocation allocation at 31 Dec. 31 Dec. 2014 Management employees employees Total DKK DKKm DKK DKKm
DKKm 6 Share option programmes (continued) Spec. of outstanding options: Year of allocation Years of exercise 1 Jan. 2014 Allocation Exercised Cancelled Expired 31 Dec. 2014
Matching shares allocated in 2011-2013 at 31.12.14 14,855 9,724 24,579 339 9 689 17
In 2011-2014, Tryg entered into an agreement on matching shares for the Executive Management and selected other senior employees as a consequence of the Group’s remuneration policy. The Executive Management and selected risk-takers are allocated one share in Tryg A/S for each share that the Executive Management member or risk-taker acquires in Tryg A/S at market rate for liquid cash at a contractually agreed sum. The shares are reported at market value and are accrued over the 4-year maturation period. In 2014, the reported fair value of matching shares for the Group amounted to DKK 3m (DKK 2m in 2013). At 31 December 2014, a total amount of DKK 7m was recognised for matching shares.
Bonus programmme In 2014 Tryg has adopted a bonus program based on share-based compensation and awards made in cash. The plan is designed to reward employees for their contribution to the performance of the Group and has conditions related to the financial performance. Each employee has the opportunity to decide on one of the two compensation elements. The recognition of the bonus program in 2014 constituting DKK 71 m.
Exchange rate adjustments concerning financial assets or liabilities which cannot be stated at fair value total DKK -179m (DKK -146m in 2013)
Effective tax rate % % Tax on accounting profit/loss 24.5 25.0 Difference between Danish and foreign tax rates 1.5 2.0 Tax adjustment, previous years 0.5 0.0 Adjustment of non-taxable income and costs -4.0 -5.0 Change in valuation of tax assets 1.0 1.0 Change in tax rate -0.5 -2.0 10 Profit/loss on discontinued and divested business Gross premium income -3 202 Gross claims 31 -149 Total insurance operating costs -14 -55
Amortisation and write-downs at 31 December -4 -104 -880 -92 -1,080
Amortisation and write-downs at 31 December 0 -89 -819 -92 -1,000 a) Hereof developed in-house DKK 245m (DKK 245m at 31 December 2013)
Annual report 2014 | Tryg A/S | | Menu – Financial statements 11 Intangible assets (continued)
Impairment test In 2014, Tryg acquired Securator A/S, Optimal Djurförsäkring i Norr AB and Codan's agricultural portfolio. The insurance activities were incorporated into the Tryg Group's business structure.
The impairment test shows a calculated value in use of approximately DKK 1.4bn relative to a recognised equity of DKK 0.5bn and does not indicate any impairment.
The cash flows appearing from the latest budgets approved by management for the next 3 financial years are used when calculating the value in use of Securator. The cash flows in the latest budget period have been extrapolated for financial years after the budget periods (terminal period) and adjusted for expected growth rates determined on the basis of expectations for the general economic growth. The required return is based on an assessment of the risk profile of the tested business activities compared with the market’s expectations for the Group.
The impairment test shows a calculated value in use of approximately DKK 238m relative to a recognised equity of DKK 174m and does not indicate any impairment.
Assumed annual Assumed annual Required return 2013 groeth 0-10 years growth > 10 years before tax
Trademarks and customer relations As at 31 December 2014, management performed a test of the carrying amounts of trademarks and customer relations as an integral part of the goodwill test.
Depreciation for the year -31 -15 0 -46 Value adjustments for the year at revalued amount in income statement 0 -106 0 -106 Value adjustments for the year at revalued amount in other comprehensive income 0 2 0 2
Transferred from assets under construction 0 10 -10 0 Additions for the year 18 2 0 20 Disposals for the year -1 0 0 -1
Depreciation for the year -28 -15 0 -43 Value adjustments for the year at revalued amount in income statement 0 -76 0 -76 Value adjustments for the year at revalued amount in other comprehensive income 0 9 0 9
Impairment test Property, plant and equipment A valuation of the owner-occupied property has been carried out, including the improvements made, and a revaluation of DKK 2m relating to the domicile in Bergen was subsequently included in other comprehensive income (DKK 9m in 2013) and impairment of DKK 106m relating to the domicile in Ballerup in the income statement (DKK 76m in 2013). The impairment test performed for operating equipment did not indicate any impairment.
Annual report 2014 | Tryg A/S | | Menu – Financial statements 13 Investment property Fair value at 1 January 1,831 1,886 Exchange rate adjustments -30 -52 Additions for the year 12 16 Disposals for the year -7 -2 Value adjustments for the year 23 -17 Reversed on sale -1 0
In determining the fair value of the properties, not only publicly available market data are included, corresponding to the ‘non-observable input’ in the fair value hierarchy.No reclassifications have been made between this category and other categories in the fair value hierarchy during the year. The following return percentages were used for each property category: Return percentages, weighted average 2014 2013
Business property 7.0 7.0 Office property 6.5 6.5 Residential property 6.0 6.0 14 Equity investments in associates Cost Cost at 1 January 201 201
Revaluations at net asset value Revaluations at 1 January 14 19 Exchange rate adjustments -1 -3 Dividend received, this year 0 -8 Reversed on sale -1 0 Value adjustments for the year 12 6
2014 Komplementarselskabet af 1. marts 2006 ApS, Denmark 0 0 0 0 0 50 2013 Komplementarselskabet af 1. marts 2006 ApS, Denmark 0 0 0 0 0 50
Financial instruments measured at fair value in the statement of financial position on the basis of non-observable input: 2014 2013
Gains and losses at 31 December 2,152 -2,162 -10 2013 Gains Losses Net
Gains and losses at 1 January 1,447 -1,953 -506 Value adjustments for the year 340 -35 305
Value adjustments at 31 December 23 201 15 Financial assets (continued) Sensitivity information Impact on equity from the following changes: Interest rate increase of 0.7-1.0 percentage point 34 -18 Interest rate fall of 0.7-1.0 percentage point -95 -41 Equity price fall of 12 % -371 -349 Fall in property prices of 8 % -239 -266 Exchange rate risk (VaR 99) -11 -25 Loss on counterparties of 8 % -399 -396
Derivatives according to statement of financial position 34,149 519 35,692 178 Inflation derivatives, recognised in claims provisions 3,221 -438 3,311 -166
Current tax is recognised in the statement of finansiel position as follows: Under assets, current tax 0 145 Under liabilities, current tax -429 -409
Shares outstanding Own shares Number of shares of 25 DKK (1,000) 2014 2013 2014 2013
Number of shares as a percentage of issued shares at 31 December 96.86 96.83 3.14 3.17 Nominal value at 31 december (DKKm) 1,446 1,484 47 49
Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to 10.0% of the share capital in the period up until 3 April 2019. Own shares are acquired for use in the Group's incentive programme and as part of the share buyback programme.
Receivables in connection with insurance contracts include overdue receivables totalling: Falling due: Within 90 days 164 194
Impairment test As at 31 December 2014, management performed a test of the carrying amount of total reinsurers'
share of provisions for insurance contracts. The impairment test resulted in impairment charges totalling DKK 20m (DKK 27m in 2013). Write-downs for the year include reversed write-downs totalling DKK 0m (DKK 0m in 2013). There is no overdue reinsurers' share other than the share alredy provided for.
Paid in the financial year in respect of the current year -6,215 90 -6,125 Paid in the financial year in respect of prior years -6,917 1,143 -5,774
Change in claims in the financial year in respect of the current year 13,902 -562 13,340 Change in claims in the financial year in respect of prior years -854 -103 -957
Claims provisions at 31 December 25,271 -1,780 23,491 a) Comprises claims provisions for Tryg Garantiforsikring A/S.
18 Equity (continued) Capital adequacy Equity according to annual report 11,119 11,107 Proposed dividend -1,731 -1,656 Solvency requirements of subsidiaries – 50% -2,353 -2,307
19 Premium provisions Premium provision at 1 January 6,176 6,658 Value adjustments of provisions, beginning of year -202 -335 Paid in the financial year 17,692 18,740 Change in premiums in the financial year -17,951 -18,881 Exchange rate adjustments 9 -6
Premium provisions at 31 December 5,724 6,176 a) Comprises premium provisions for Tryg Garantiforsikring A/S and Securator A/S.
Average return on plan assets 2.7 3.3 Weighted average duration of the defined benefit obligation 18 18
Assumptions used: Discount rate 2.1 3.3 Estimated return on pension funds 2.1 3.3 Salary adjustments 3.3 3.8 Pension adjustments 0.1 3.5
Defined-benefit pension plans: Present value of pension obligations funded through operations 63 86 Present value of pension obligations funded through establishment of funds 1,227 1,671
Pension obligation, gross 1,290 1,757 Fair value of plan assets 1,010 1,034
DKKm 20 Pensions and similar obligations (continued) Description of the Swedish plan Moderna Försäkringar, a branch of Tryg Forsikring A/S, complies with the Swedish industry pension agreement, the FTP plan, which is insured with Försäkringsbranschens Pensionskassa – FPK. Under the terms of the agreement, the Group’s Swedish branch has undertaken, along with the other businesses in the collaboration, to pay the pensions of the individual employees in accordance with the applicable rules.
This years premium paid to FPK amounted to DKK 16m, which is about 2 % of the annual premium in FPK (2013). FPK writes in its interim report for 2014 that it had a collective consolidation ratio of 110 at 30 June 2014 (consolidation ratio of 114 at 30 June 2013). The collective consolidation ratio is defined as the fair value of the plan assets relative to the total collective pension obligations.
Description of the Norwegian plan In the Norwegian part of the group, about half of the employees have a defined-benefit pension plan.
Annual report 2014 | Tryg A/S | | Menu – Financial statements 22 Other provisions Other provisions at 1 January 73 98 Change in provisions 10 -25
23 Amounts owed to credit institutions Overdraft facilities 116 6 24 Debt relating to unsettled funds transactions and repos Unsettled fund transactions 885 148 Repo debt 2,017 2,673
Unsettled fund transactions include debt for bonds purchased in 2013 and 2014; however, with settlement in 2014 and 2015, respectively.
25 Earnings per share Profit/loss from continuing business 2,547 2,373 Profit/loss on discontinued and divested business 10 -4
Tax liability Intangible rights 77 75 Land and buildings 229 227 Bonds and loans secured by mortgages 3 45 Contingency funds 785 835
Annual report 2014 | Tryg A/S | | Menu – Financial statements 26 Contractual obligations, collateral and contingent liabilities (continued) Collateral Tryg Forsikring A/S and Tryg Garantiforsikring A/S have registered the following assets as having been held as security for the insurance provisions: Equity investments in associates 15 18 Equity investments 128 150 Unit trust units 3,884 3,741
Collateral The Danish companies in the Tryg Group are jointly taxed with TryghedsGruppen smba. The companies and the other jointly taxed companies are liable for any obligations to withhold taxes at source on interest, royalties, dividends and income taxes etc. in respect of the jointly taxed companies.
Contingent liabilities Companies in the Tryg Group are party to a number of disputes in Denmark, Norway and Sweden.
Management believes that the outcome of disputes will not affect the Group's financial position significantly beyond the obligations recognized in the statement of financial position at 31 December 2014.
Premium income - Parent company (TryghedsGruppen smba) 0.3 0.3 - Other related parties 2.5 1.9
DKKm 2014 27 Acquisition of subsidiaries In June 2014 the Tryg Group has taken control of Securator A/S and in September 2014 of Optimal
The Group has not incurred any significant acquisition costs in connection with the acquisition. In connection with the acquisitions, a sum was paid which exceeds the fair value of the identifiable acquired assets, liabilities and contingent liabilities. This positive balance is mainly attributable to expected synergies between the activities in the acquired enterprises and the Group’s existing activities, future growth opportunities as well as the staff of the acquired enterprises. These synergies have not been recognised separately from goodwill as they are not separately identifiable. Goodwill is not expected to be deductible for tax purposes.
DKKm 28 Related parties (continued) The members of the Supervisory Board in Tryg A/S are paid with a fixed remunaration and are not covered by the incentive schemes.
Each member of the Executive Management is entitled to 12 months' notice and severance pay equal to 12 months’ salary plus pension contribution (Group CEO is entitled to severance pay equal to 18 months' salary). Members of the Executive Management can assert no further claims in this respect, for example claims for compensation pursuant to Sections 2a and/or 2b of the Dansih Salaried Employees Act, as such claims are regarded as being included in the severance pay.
There has not been paid any severance pay of more than DKK 1m.
Number of Basis Variable 2013 persons salary salary Pension Total a)
Fees are charges incurred during the financial year. Variable salary includes the charges for matching shares, which are recognised over 4 years and share options, which are recognised over 3 years. Reference is made to section 'Corporate governance' of the management's review on the corresponding disbursements. The Executive Management and risk-takers are included in incentive programmes. Please refer to note 6 for information concerning this.
Annual report 2014 | Tryg A/S | | Menu – Financial statements 30 Accounting policies
The consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) as per adopted by the EU on 31 December 2014 and in accordance with the Danish Statutory Order on Adoption of IFRS.
The distribution on segments between Commercial an Corporate as to medium sized enterprise has been altered during H1 2014.
New or amended standards and interpretations that have been implemented but have not significantly affected the group: • Amendments to IAS 39 ‘novations of derivaties’ • IFRS 10 ‘ Consolidated Financial Statements’ • IFRS 11 ‘Joint Arrangements’ • IFRS 12 ‘Disclosure of interests in Other Entities’ • Amendments to IFRS 10, 11 and 12 ‘transitional guidedance’ • IAS 27 (as revised in 2011) ‘Separate Financial
• Amendments to IFRS 13 ‘scope of the portfolio exception in paragraph 52’ a)
• Amendments to IAS 16 and IAS 38 ‘proportionate restatement of accumulated depreciation on revaluation’ a)
• Amendments to IAS 40 ‘interrelationship between IFRS 3 and IAS 40’ a)
• Amendments to IAS 16 ‘Clarification of acceptable methods of depreciatioon and amotisation’ c)
• Amendments to IAS 27 ‘reinstating the equity method as an accounting option for investments in subsidiaries, joint ventures and associates in an entity’s separate financial statements’ c)
• Amendments to IAS 38 ‘Clarification of acceptable methods of depreciatioon and amotisation’ c)
As for now the changes will not significantly affect the Group
The Financial Supervisory Authority’s adjusted discount curve, which is based on euro swap rates, national spreads and Danish swap rates, and also an option -adjusted mortgage interest rate spread, is used to discount Danish claims provisions.
The Norwegian and Swedish provisions are discounted based on euro swap rates, to which a country -specific interest rate spread is added that reflects the difference between Norwegian and Swedish government bonds and the interest rate on German government bonds. Finnish provisions are discounted using the Danish discount curve.
On initial recognition, assets and liabilities are measured at cost, with the exception of financial assets, which are recognised at fair value. Measurement subsequent to initial recognition is effected as described below for each item. Anticipated risks and losses that arise before the time of presentation of the annual report and that confirm or invalidate affairs and conditions existing at the statement of financial position date are considered at recognition and measurement.
The purchase method is applied for new acquisitions if the Group gains control of the acquired enterprise. Subsequently, identifiable assets, liabilities and contingent liabilities in the acquired enterprises are measured at fair value at the date of acquisition. Non-current assets which are acquired with the intention of selling them are, however, measured at fair value less expected selling costs.
Restructuring costs are recognised in the pre-acquisition balance sheet only if they constitute an obligation for the acquired enterprise.
Currency translation A functional currency is determined for each of the reporting entities in the Group. The functional currency is the currency used in the primary economic environment in which the reporting entity operates. Transactions in currencies other than the functional currency are transactions in foreign currencies.
Technical interest According to the Danish FSA’s executive order, technical interest is presented as a calculated return on the year's average insurance liability provisions, net of reinsurance. The calculated interest return for grouped classes of risks is calculated as the monthly average provision plus an actual interest from the present yield curve for each individual group of risks. The interest is applied according to the expected run-off pattern of the provisions.
Assets held under operating leases are not recognised in the statement of financial position, but the lease payments are recognised in the income statement over the term of the lease, corresponding to the economic lifetime of the asset. The Group has no assets held under finance leases.
On initial recognition of the share options, the number of options expected to vest for employees and members of the Executive Management is estimated. Subsequently, adjustment is made for changes in the estimated number of vested options to the effect that the total amount recognised is based on the actual number of vested options. The value for retired employees who retain their right to options is reported for the remaining period of the financial year in which the employee retires.
Matching shares Members of Executive Management and risk takers have been allocated shares in accordance with the “Matching shares” scheme. Under Matching shares,
Annual report 2014 | Tryg A/S | | Menu – Financial statements the individual management member or risk takers is allocated one share in Tryg A/S for each share the Executive management member or risk taker acquires in Tryg A/S at the market rate for certain liquid cash at a contractually agreed sum in connection with the Matching share programme. The holder acquires the shares in the open window following publication of the annual report for the previous year. The shares (matching shares) are provided free of charge, four years after the time of purchase. The holder may not sell the shares until six months after the matching time.
Trademarks and customer relations Trademarks and customer relations have been identified as intangible assets on acquisition. The intangible assets are recognised at fair value at the time of acquisition and amortised on a straight-line basis over the expected economic lifetime of 5–12 years.
Annual report 2014 | Tryg A/S | | Menu – Financial statements performed regularly to avoid material differences between the carrying amounts and fair values of owneroccupied property at the statement of financial position date. The fair value is calculated on the basis of market-specific rental income per property and typical operating expenses for the coming year. The resulting operating income is divided by the required return on the property in per cent, which is adjusted to reflect market interest rates and property characteristics, corresponding to the present value of a perpetual annuity.
Equity investments in Group undertakings The parent company’s equity investments in subsidiaries are recognised and measured using the equity method. The parent company’s share of the enterprises ’ profits or losses after elimination of unrealised intra-group profits and losses is recognised in the income statement. In the statement of financial position, equity investments are measured at the pro rata share of the enterprises’ equity.
Subsidiaries with a negative net asset value are recognised at zero value. Any receivables from these enterprises are written down by the parent company’s share of such negative net asset value where the receivables are deemed irrecoverable. If the negative net asset value exceeds the amount receivable, the remaining amount is recognised under provisions if the parent company has a legal or constructive obligation to cover the liabilities of the relevant enterprise.
Receivablesare recognised initially at fair value and are subsequently assessed at amortised cost. The income statement includes an estimated reservation for expected unobtainable sums when there is a clear indication of asset impairment. The reservation entered is assessed as the difference between the carrying amount of an asset and the present value of expected future cash flows.
Claims provisions are determined for each line of business based on actuarial methods. Where such business lines encompass more than one business area, short-tailed claims provisions are distributed based on number of claims reported while long-tailed claims provisions are distributed based on premiums earned. The models currently used are Chain-Ladder, Bornhuetter-Ferguson, the Loss Ratio method and De Vylder’s credibility method. Chain-Ladder techniques are used for lines of business with a stable run-off pattern. The Bornhuetter-Ferguson method, and sometimes the Loss Ratio method, are used for claims years in which the previous run-off provides insufficient information about the future run-off performance.
Workers’ compensation is an area in which explicit inflation assumptions are used, with annuities for the insured being indexed based on the workers’ compensation index. An inflation curve that reflects the market ’s inflation expectations plus a real wage spread is used as an approximation to the workers’ compensation index.
Employee benefits Pension obligations The Group operates various pension schemes. The schemes are funded through contributions to insurance companies or trustee-administered funds. In Norway, the Group operates a defined-benefit plan. In Denmark, the Group operates a defined-contribution plan. A defined-contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions. In Sweden, the Group complies with the industry pension agreement, FTP-Planen. FTP-Planen is primarily a defined -benefit plan as regards the future pension benefits.
In case of changes to the benefits stemming from the employees' employment with the group so far, a change is seen in the actuarially calculated capital value which is considered as pension costs for previous financial years. The change is recognised in the results immediately. Net finance costs for the year are recognised in the investment return. All other costs are recognised under insurance operating costs.The plan is closed for new business.
Note Statement of comprehensive income Profit/loss for the year 2,557 2,367
Proposed distribution for the year: Transferred to reserve for net revaluation according to the equity method 143 817 Transferred to retained profit 683 -106
Total investment assets 11,843 11,740 5 Current tax assets 14 14 Cash at bank and in hand 0 1
Total equity and liabilities 11,857 11,755 6 Deferred tax assets 7 Capital adequacy 8 Contractual obligations, contingent liabilities and collateral 9 Related parties 10 Reconciliation of profit/loss and equity 11 Accounting policies
Total changes in equity in 2013 0 851 -787 62 126
Proposed dividend per share DKK 29 (DKK 27 in 2013 ) Dividend per share is calculated as the total dividend proposed by the Supervisory Board after the end of the financial year divided by the total number of shares at the end of the year (59,695,516 shares). The dividend is not paid until approved by the shareholders at the annual general meeting.
The possible payment of dividend from Tryg Forsikring A/S to Tryg A/S is influenced by contingency fund provisions of DKK 2,622m (DKK 3,020m in 2013). The contingency fund provisions can be used to cover losses in connection with the settlement of insurance provisions or otherwise for the benefit of the insured.
Average number of full-time employees for the year 13 11 3 Tax Reconciliation of tax costs Tax on profit/loss for the year 14 14 Tax adjustments, previous years 1 0
Tax on profit/loss for the year 24.5 25.0 Tax adjustment, previous years 0.5 0.0 4 Equity investments in Group undertakings Cost Cost at 1 January 6,987 6,987
Subordinate loan capital 1,496 1,551 Solvency requirements of subsidiaries – 50% -2,353 -2,307
Companies in the Tryg Group are party to a number of disputesin Denmark, Norway and Sweden. Management believes that the outcome of these legal proceedings will not affect the Group's financial position over and above the receivables and liabilities recognised in the statement of financial position at 31 December 2014.
Gruppen smba. Related parties with a significant influence include the Supervisory Board, the Executive Management and their members’ related family. Related parties are the same as for the Tryg Group; please see Note 28 in the consolidated financial statements.
Transactions with Group undertakings and associates Tryg A/S exercises full control over Tryg Forsikring A/S.
Intra-group trading involved - Providing and receiving services -15 -23 - Intra-group accounts' -718 -629
Equity – Danish FSA executive order 11,134 11,122 11 Accounting policies Please refer to Tryg Group's accounting policies.
Key ratios Gross claims ratio 65.3 64.6 69.0 72.1 75.6 64.7 68.5 72.9 70.1
Claims ratio, net of reinsurance 67.4 65.7 66.4 72.5 73.1 66.4 69.3 74.7 71.2
Key ratios Gross claims ratio 55.2 63.9 72.1 63.9 73.8 56.0 69.5 70.5 65.9
Combined ratio exclusive of run-off 86.5 92.1 81.9 86.9 92.8 87.3 94.5 91.0 92.8
Combined ratio exclusive of run-off 106.4 94.9 86.8 113.4 102.2 104.8 94.4 101.7 99.7
Claims ratio, net of reinsurance 76.1 77.0 69.0 68.8 68.9 73.1 76.7 75.3 66.4
Combined ratio exclusive of run-off 91.0 90.0 84.1 96.5 94.3 89.8 91.9 94.8 92.1
Number of full-time employees, continuing business at 31 Dec. 3,599 3,703 Number of full-time employees, discontinued and divested business at 31 Dec. 0 0 a) Includes Danish general insurance and Finnish guarantee insurance. b) Amounts relating to eliminations are included under 'Other'. c) Adjustment of gross expense ratio included only in 'Tryg '.
Average reinsurers' share of provisions for insurance contracts 2,279 2,469 2,192 1,828 1,454
Number of full-time employess, continued business, at 31 December 3,599 3,703 3,913 4,076 4,101 Number of full-time employess, discontinued and divested business, at 31 December 0 0 189 242 191
Share performance Earnings per share (DKK) 43.7 39.4 36.5 18.9 9.5 Diluted earnings per share (DKK) 43.7 39.3 36.4 18.9 9.5 Earnings per share of continuing business (DKK) 43.5 39.4 36.0 19.0 11.9 Number of shares (1,000) end of period 57,824 59,374 60,695 60,373 60,634
Net asset value per share (DKK) 192.3 187.1 180.9 149.2 139.5 Market price/net asset value 3.6 2.8 2.4 2.1 1.8
Group chart at 1 January 2015. Companies and branches are wholly owned by Danish owners and domiciled in Denmark, unless otherwise stated.
Run-off gains/losses The difference between the claims provisions at the beginning of the financial year (adjusted for foreign currency translation adjustments and discounting effects ) and the sum of the claims paid during the financial year and that part of the claims provisions at the end of the financial year pertaining to injuries and damage occurring in earlier financial years.
Glossary The financial highlights and key ratios of Tryg have been prepared in accordance with the Executive Order issued by the Danish Financial Supervisory Authority on the Financial Reports for Insurance Companies and Multi-Employer Occupational Pension Funds and also comply with ‘Recommendations & Financial Ratios 2010’ issued by the Danish Society of Financial Analysts.
Tryg is not under any duty to update any of the forward-looking statements or to conform such statements to actual results, except as may be required by law. Read more in the chapter