Premium growth in local currency** 4.7 3-4% Combined ratio before run-off 96.2 93-95 Technical result DKK 1.2-1.6bn Profit before tax DKK 1.4-1.8bn * Run-off 2010 is assumed to be zero ** Excluding Moderna
Return on equity before tax (%) 39 41 31 15 29 Return on equity after tax (%)** 28 35 23 9 22 Earnings per share, continuing business (DKK) 31.3 45.5 33.5 12.8 31.2 Diluted earnings per share (DKK)*** 31.7
Theme packages about climate and environment Theme packages have been a cornerstone in the Group’s work with corporate values since the autumn of 2005. The climate and environment theme package included, among other things, an electronic climate school and a climate quiz which was held in all departments. By focusing on this theme, TrygVesta intended to enable all employees to make better and more sustainable decisions.
PrI letter of intent TrygVesta was among the first Nordic insurance company to sign a letter of intent on socially responsible investment issued by the UN.
Inauguration of The Living House The first floors of the refurbishment project, The Living House, which is to transform the head offices at Ballerup and Bergen into workplaces of the future, were completed in the autumn of 2009. This was celebrated with a moving-in event in the new offices.
Nordic corporate party X-party – TrygVesta held a joint corporate party for all employees in the four Nordic countries.
In Finland and Sweden, our focus in 2009 was on striking a better balance between sales and profitability. In Sweden, the acquisition of Moderna contributed greater breadth and strength to the sales distribution, thereby creating a better basis for profitable growth going forward. In Finland, Nordea, call centres and our own sales force continued to generate high sales volumes, although lower than in 2008 due to our focus on profitability-
needs are met in the best possible way before, during and after they have a claim. Our insurance products and concepts build on advice intended to help prevent claims events from arising. Should an event nevertheless occur, the customer has a sudden need for coverage and service such as repairs or a replacement purchase.
= Established = Partially established = To be launched in 2010/2011
areas, innovation, meeting and quiet rooms, all employees will have two screens, laptops and wireless internet access as part of a mobile, paperless office. The total project is expected to be completed in 2011. As part of the refurbishment project, we also aim to become a paperless workplace, handling all documents electronically. In the first half of 2010, around 1,400 employees in Claims and Sales in
At the start of 2009, the Group expected the economic slowdown to have an adverse impact on premium growth.
In step with the incorporation of Lean as a natural part of work routines and the improvement of the Group’s processes, productivity will increase. This is important in order to make room for the expansion in Sweden and Finland, which requires high costs and ongoing investments.
Claims ratio, net of ceded business 67.8 74.2 73.7 Gross expense ratio 20.8 21.7 21.2 122m in 2008 to DKK 32m in 2009 was the main reason for the lower result. Furthermore, the claims expenses were higher, primarily due to heavy snowfalls in eastern
The average house claim fell by around 2 percentage points, supported by the economic downturn causing lower repair expenses.
In Finland, TrygVesta sells insurances to private individuals and small enterprises under the brand names of TrygVesta
Large claims, gross Large claims, net with the combined ratio as low as 83.4. The combined ratio was 84.2 in 2009, which is considered a very satisfactory level. The performance was impacted by lower technical interest, which reduced the result by DKK 139m.
(DKK 255m net) in 2008. After contributions from reinsurers, net expenses for large claims were lower in 2009 than in 2008.
Any excess capital after distribution of ordinary dividends and taking into consideration the minimum capital requirement, strategy and growth, will be returned to shareholders in the form of a share buy back programme.
The dividend policy reflects TrygVesta’s long-term earnings and cash flow potential, while maintaining an appropriate level of capitalisation.
TrygVesta intends to pursue a risk-based transparent policy for capital management, and thus also for dividend distribution. At 31 December, a capital requirement is determined based on the Standard & Poor’s model corresponding to the level of an ‘A-’ rating plus a buffer of 5%. Any capital in excess thereof will be distributed as dividend. Dividend is determined once a year while profit is generated on an ongoing basis, and this means that the buffer will grow over the year in excess of the 5%
TrygVesta has also set up a security committee focusing specifically on managing credit risk in connection with reinsurance receivables.
TrygVestas managers must create strong results by communicating clearly, sharing knowledge and having a passion for positive changes
Chief executive of his own business. Professional board member. Former President and CEO of
Mr Christiansen has experience with international businesses, including from his work at Danfoss and GN Store Nord A/S. He has competencies within management, strategy, IT, processes, distribution, innovation, production, finance and private and listed companies.
notice, by a company announcement, at the company’s website and in at least one national newspaper. Shareholders may elect to receive the notice by mail or as an electronic notice of the general meeting, or they may download the notice at trygvesta.com. The notice includes relevant information about the time and place of the meeting and sets out the agenda, which as a minimum comprises the following items: > Report of the Supervisory Board on the activities of the company during the past financial year > Presentation of the annual report for approval and discharge of the Supervisory Board and the Executive
The remuneration committee has four members elected by the Supervisory Board. The remuneration committee is chaired by the Chairman of the Supervisory Board. In addition, the committee must include at least one member of the Supervisory Board of TryghedsGruppen and at least one non-affiliated member of the Supervisory Board. The committee held four meetings in 2009. The work of the remuneration committee is based on TrygVesta’s remuneration policy and guidelines for incentive pay adopted by the shareholders at the annual general meeting held on 3 April 2008.
remuneration remuneration policy for the Supervisory Board and the Executive Management
including dividends. By way of comparison, the OMX C20 fell by 25% and the DJ Euro Insurance Index by 34%.
TrygVesta implemented and completed a share buy back programme of DKK 352m out of a total programme of
TrygVesta has a total share capital of DKK 1,598,289,325 comprised of a single class of shares (63.2m shares of DKK
The Supervisory Board and the Executive Management have today considered and adopted the annual report for 2009 of TrygVesta A/S and the TrygVesta Group.
Reinsurers’ share of provisions for unearned premiums 176 195 21 Reinsurers’ share of provisions for claims 860 1,125 16 Total reinsurers’ share of provisions for insurance contracts 1,036 1,320
The implementation of the new standards and interpretations has not affected recognition and measurement in 2009, but solely affected the disclosures to be included in the annual report.
The TrygVesta Group establishes claims provisions covering both known case reserves and estimated claims that have been incurred by its policyholders but not yet reported to the company (known as “IBNR” reserves) and future developments on claims which are known to the TrygVesta Group but have not been finally settled. The Group also includes in its claims reserves direct and indirect claims settlement costs or loss adjustment expenses that arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the TrygVesta Group.
Consolidation The consolidated financial statements comprise the financial statements of TrygVesta A/S (the parent company) and subsidiaries controlled by the parent company. Control is achieved where the parent company directly or indirectly holds more than 50% of the voting rights or is otherwise able to exercise or actually exercises a controlling influence.
ratios Earnings per share (EPS) are calculated according to IAS 33. Other key ratios are calculated in accordance with “Recommendations and Ratios 2005” issued by the Danish Society of Financial Analysts and the executive order on financial reports presented by insurance companies and lateral pension funds issued by the Danish FSA.
TrygVesta hedges the risk of changes in future wage and price figures for provisions for workers’ compensation. For 90-100% of this risk, TrygVesta uses swaps specifically acquired with a view to hedging the inflation risk. Value adjustment of these swaps is included in claims incurred, thereby reducing the effect of changes to inflation expectations under claims incurred.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, when it is probable that future economic benefits associated with the item will flow to the Group, and the cost of the item can be reliably measured. Ordinary repair and maintenance costs are charged to the income statement when incurred.
The valuation is performed in securities systems with data usually provided by Nordea, and the valuation is verified using own valuation methods. Derivatives which include expected future cash flows are discounted on the basis of market interest rates.
Claims and claims handling costs are charged to income as incurred based on the estimated liability for compensation owed to contract holders or third parties damaged by the contract holders. They include direct and indirect claims handling costs that arise from events that have occurred up to the balance sheet date even if they have not yet been reported to the Group. Provisions for claims are estimated using the input of assessments for individual cases reported to the Group and statistical analyses for the claims incurred but not reported and the expected ultimate cost of more complex claims that may be affected by external factors (such as court decisions). The provisions include claims handling costs.
Under claims incurred, the value adjustment of inflation swaps to hedge the inflation risk concerning annuities on workers’ compensation insurance totals DKK -62m (in 2008 DKK 8m.)
DKKm 5 Share option programmes year of allocation years of exercise 1 Jan. 2009 Exercised Cancelled Expired 31 Dec. 2009
The assumptions by calculating the marketvalue at time of allocation average average term exercise year of Expected Expected Expected risk-free to maturity share price allocation year of exercise Volatility Volatility maturity interest rate 31 Dec. 2009 31 Dec. 2009
The following assumptions were applied in calculating the market value of outstanding share options at the time of allocation: The expected volatility is based on the average volatility of TrygVesta shares. The expected maturity is 4 years, corresponding to the average of the exercise period of 3 to 5 years. The risk-free interest rate is based on a bullet loan with the same term as the expected term of the options at the time of allocation. The calculation is based on the strike price as set out in the option agreement and the average share price at the time of allocation. The dividend payout ratio is not included in the calculation as the strike price is reduced by dividends paid in order to prevent option holders from being placed at a disadvantage in connection with the company’s dividend payments. The assumptions for calculating the market value at the end of the period are based on the same principles as for the market value at the time of allocation.
Reinsurers’ share of provision for unearned premiums 0 0 0 48 147 0 195 Reinsurers’ share of provision for claims 44 83 0 84 914 0 1,125 Other assets 43,403 43,403
The insurance activities were incorporated into the TrygVesta Group’s business structure in 2009 and are reported under Sweden.
Transferred from intangible assets 1 0 0 1 Additions during the year 3 1,085 54 1,142 Disposals during the year -39 -13 0 -52 accumulated value adjustments Balance 1 January 0 -8 0 -8 Value adjustment for the year at revalued amount in profit and loss 0 -1 -54 -55 Value adjustment for the year at revalued amount in equity 0 0 0 0
Amortisation is recognised in the income statement under insurance operating expenses and claims incurred. External experts were involved in valuing part of the owner-occupied properties.
l Noter l TrygVesta Årsrapport 2009118 af 152 l Notes – TrygVesta Group l Annual report 2009118 of 148
DKKm 15 Maturity of the Group’s interest-bearing financial assets and debt Effective adjusted 2009 0-1 year 1-5 years > 5 years Total interest rate duration
Pursuant to the authorisation granted by the shareholders, TrygVesta may acquire up to 10.0% of the share capital until the next annual general meeting in 2010. Treasury shares are acquired for use in the Group’s incentive programme and as part of the share buy back programme.
Lender Listed bonds TryghedsGruppen Principal EUR 150m EUR 65m Issue price 99.017 100 Issue date December 2005 April 2009 Maturity year 2025 2032 Loan may be called by lender as from 2015 30 June 2012 Repayment profile Interest-only Interest-only Interest structure 4.5% (until 2015) 5.13% above EURIBOR 3M (interest until 30 June 2012) 2.1% above EURIBOR 3M (from 2015) 7.63%–6.63% (max. and min. until 30 June 2012) 5% above EURIBOR 3M (interest from 1 July 2012 to 30 June 6% above EURIBOR (interest from 1 July 2019)
DKKm 21 Provisions for claims The table consists of figures for TrygVesta Forsikring A/S, TrygVesta Forsikring, Norwegian branch of TrygVesta Forsikring A/S, Enter Forsikring AS and Moderna Försäkringar. Other group units are included in the item “Other reserves”, which comprises the provisions for claims for TrygVesta Garantiforsikring A/S and the Finnish and Swedish business units.
The premium for the following financial year is estimated at: 53 55
No deferred tax is associated with investments in subsidiaries (in 2008 DKK 0m).
through a cash payment of DKK 1,085.5m to Danica Pension. The sole activity of Ejendomsselskabet af 8. maj 2008 A/S is the ownership of TrygVesta’s Ballerup headquarters.
31 Financial highlights and key ratios of TrygVesta cf ‘Introduction to TrygVesta’
Administrative expenses include fee to the auditors appointed by the Annual General meeting: Deloitte -0.9 -0.7