3 Income overview 4 Introduction: World-class insurance 5 Events in 2014 6 Targets and strategy 10 Financial targets and outlook 11 Tryg’s results 14 Private
Earnings per share of DKK 25 43.7 39.4 36.5 18.9 9.5 Net asset value per share (DKK) 192.3 187.1 180.9 149.2 139.5
We also see share buy back as an effective way of increasing value creation for our shareholders. In 2014, we completed a share buy back programme of DKK 1bn, and in 2015 we have initiated another
Our customers are our most important asset. Tryg strives to continuously strengthen our customer relationship through advice, products, concepts, claims handling and claims prevention. In 2014, we focused on customer-oriented initiatives and will intensify this focus further in the coming years. Tryg’s target is to offer world-class service in all dealings with our customers. A very important part of achieving this objective is that our customers’ issues are resolved quickly at all times.
The market situation in Denmark and Norway has been stable for most of 2014. Consumer optimism in Denmark increased slightly, reflected in increasing real estate prices, especially for flats. Unemployment was stable at a level of around 5%.
Up to 2017, we will continue to focus on initiatives to improve our customers’ perception of Tryg with the aim of achieving a significant increase in the
IT platform. The change of IT providers in 2014 has been completed, and it was a demanding but successful process. Also in 2014, an IT development outsourcing agreement was concluded with Accenture, which will give Tryg a more flexible development model and access to new competencies.
In Tryg, Corporate Social Responsibility is an integrated part of our core business which is to create peace of mind and value for our customers, employees and shareholders. This means that Corporate Social Responsibility is always taken into account in our business decisions, when we improve and develop products and services, optimise our operations and otherwise contribute positively to society at large through our activities.
Nordea, caused the premium income to fall in 2014. For Corporate, growth was positive at 1.1%
These acquisitions have shown that Tryg is capable of successfully integrating portfolios and achieving synergies that support Tryg’s objectives and create value for its shareholders. This is also something that Tryg will focus on in the coming years.
Gains on foreign currency hedges relating to equity and intercompany balances stood at approximately DKK 260m due to a fall in the price of the Norwegian and Swedish currencies. Foreign currency hedging is aligned with Tryg’s objective of having a generally low risk profile.
(DKK 1,656m), which amounts to 68% of the profit for the year.
The development in gross premium income was significantly improved in 2014. Premium income was maintained, while 2013 saw a reduction of 2.2% in local currencies. The improved development was expected, and is the result of many years of focusing on improving profitability. In 2014, significant efforts were directed at improving customers’ perception of Tryg, and combined with the fact that the prices were only increased in line with inflation, this meant that the retention rate was high. The increased customer focus in combination with improved price-differentiated products and selection had a positive impact on the development in sales in both Denmark and Norway.
Spain last August, Tryg’s annual travel insurance covered the expenses for his stay in a private hospital and home transport, and the Danish emergency call centre provided extra peace of mind. “I felt safe knowing that my father was in good hands, and I received regular updates on the situation from a dedicated contact at Tryg,” says Jan Koch.
Denmark and Norway. Sales are effected by Tryg’s own sales force, brokers, franchisees (Norway), customer centres as well as through group agreements. The business area accounts for 23% of the Group’s total premium income.
For Commercial, improving sales is thus the most important factor for improving premium development.
Swedish part of Corporate, which is still being built up with a focus on profitability. In Sweden, growth amounted to 8.6%, and growth was positive at 0.8% for the Danish part and negative at 0.8% for the Norwegian part. The development in Denmark and Norway is attributable to normal fluctuations when large customers are added to or removed from the portfolio.
Another purpose of the investment activities is to reduce the impact of exchange rate fluctuations.
Hedging covers the currency risk in the Norwegian and Swedish branches, and especially towards the end of 2014, it protected against fluctuations due to a significant drop in the Norwegian krone.
DKK 75m. The return on the real estate portfolio was DKK 50m.
At the end of 2014, Tryg’s total subordinate loan capital amounted to 16% of equity, with total interest expenses of DKK 90m. Read more about
• Norwegian warranty provision, which may have a negative effect of DKK -0.2 to 0bn. Tryg expects that the warranty provision will still be available as a tier 1 or tier 2 capital element under Solvency II.
Tryg is a listed company, and it is important that decisions to invest in the Tryg share can be made on an informed basis. A high priority is therefore given to having an open and ongoing dialogue with shareholders, analysts and other stakeholders.
The Tryg share is followed closely by 21 analysts, who continuously update their expectations for and views on the share. See a list of analysts and their recommendations of Tryg at tryg.com > Investor.
The Tryg share is listed on NASDAQ Copenhagen and is covered by the C20 index (OMX C20 CAP), comprising the 20 most traded shares on the exchange. In accordance with the recommendations issued by NASDAQ Copenhagen, Tryg does not comment on financial results or outlook two weeks before the publication of interim reports and four weeks before the publication of the annual report. All financial information is published on tryg.com in both Danish and English. It is possible to subscribe to interim and annual reports, news and RSS feeds on the website. It is also possible to follow @Tryg IR on Twitter.
Denmark, owns 60% of the shares and is the only shareholder owning more than 5% of the share capital. TryghedsGruppen invests in peace-of-mind and healthcare providers in the Nordic region, and supports non-profit-making activities.
DKK 25 into five shares of DKK 5. The reason for this is that the Tryg share has seen a positive development, bringing the price up to more than DKK
received a defined-benefit pension, disbursed from the retirement date. The benefit is determined by the final salary and how long the Group CFO has been covered by the defined-benefit pension.
Committee monitors the risk management on an ongoing basis and reports quarterly to the Board.
Education: Master of Economics and Business Administration, Financial Analyst (CFA). Management programme, London and Harvard Business School. Chairman: Seilsport Maritimt Forlag AS. Board member: Tryg A/S, Tryg Forsikring A/S, Argentum Fondsinvesteringer as, Nordic Mining ASA, Forskningskonsernet Sintef, E-CO Energi, Scatec Solar ASA, Avinor, Sevan Marine ASA. Committee memberships: Audit Committee and Risk Committee, Tryg A/S. Audit Committee, Sevan Marine ASA and E-CO (Chairman), Audit Committee, Scatec Solar ASA and Remuneration Committee, Argentum. Number of shares held: 300 Change in portfolio in 2014: 0
Number of shares held: 13,453 Change in portfolio in 2014: +1,693
Number of shares held: 3,372 Change in portfolio in 2014: +582
Board member: The Danish Employers’ Association for the Financial Sector, Tjenestemændenes Forsikring, Forsikringsakademiet, the Danish Insurance Association and Cphbusiness.
Ethical Hotline (whistleblowing scheme) employees and external stakeholders are able to report, in confidentiality, any suspected instances of non-compliance with the guidelines or breaches of the law.
Customers who feel discriminated against in their relations with Tryg can complain.
Claims ratio, net of ceded business 69.6 72.1 71.8 76.6 81.6
• Operational control • Business controls 1. Line of defence • Risk appetite • Capital • Strategy • Crisis management
Annual report 2014 | Tryg A/S | | Menu – Financial statements 6 Insurance operating costs, gross, classified by type Commissions -395 -379 Staff expenses -1,463 -1,802 Other staff expenses -213 -224 Office expenses, fees and headquarter expenses -459 -411 IT operating and maintenance costs, software expenses -272 -237 Depreciation, amortisation and impairment losses and write-downs -108 -110 Other income 221 155
Average share price at time Average term Average exercise of allocation Expected Expected Risk-free to maturity share price Year of allocation Years of exercise DKK Volatility maturity interest rate 31 Dec. 2014 31 Dec. 2014
Annual report 2014 | Tryg A/S | | Menu – Financial statements 7 Interest and dividends Interest income and dividends Dividends 39 19 Interest income, cash at bank and in hand 8 18 Interest income, bonds 893 984 Interest income, other 9 8
Derivative financial instruments Derivatives with value adjustments in the income statement at fair value: Fair value Fair value in statement in statement of finacial of finacial Nominal position Nominal position
Average number of shares (1,000) 58,504 60,155 Diluted number of shares (1,000) 54 104
Deposits with credit institutions 667 1,301 Receivables relating to reinsurance 439 585 Interest and rent receivable 337 403 Equity investments in and receivables from Group undertakings which have been eliminated in the consolidated financial statements 1,730 1,944
Annual report 2014 | Tryg A/S | | Menu – Financial statements 27 Acquisition of subsidiaries (continued) The determination of the pro forma amounts for premium income and profit for the period is based on the following significant assumptions: • Premiums and claims have been calculated on the basis of the fair values determined in the pre-acquisition balance sheets for premium and claims provisions, rather than the original carrying amounts.
Transactions between TryghedsGruppen smba and Tryg A/S are conducted on an arm's length basis.
• Amendments to IAS 36 ‘Recoverable Amount Disclosures for Non-financial Assets’
a) enters into force for the accounting year commencing 1 July 2014 or later.
c) enters into force for the accounting year commencing 1 January 2016 or later.
Realised and unrealised investment gains and losses, including gains and losses on derivative financial instruments, value adjustment of investment property, foreign currency translation adjustments and the effect of movements in the yield curve used for discounting, are recognised as price adjustments.
The fair value is calculated on the basis of marketspecific 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. The value is subsequently adjusted with the value in use of the return on prepayments and deposits and adjustments for specific property issues such as vacant premises or special tenant terms and conditions.
Reconciliation of profit/loss Profit/loss – IFRS 2,557 2,369 Change during the year of deferred tax provisions for contingency funds 0 -2