Management’s review 1 Income overview 2 Introduction by the Chairman 3 Introduction by the Group CEO
At the end of 2012, we adopted a new dividend policy, the overall objective being to ensure a stable dividend for our shareholders, while at the same time maintaining a solid capital base, which is deemed key to customer and shareholder confidence. Based on the satisfactory results for 2013, the Supervisory Board proposes a dividend of DKK
In 2011 and 2012, Tryg’s results were improved in particular through higher insurance prices. The improvements seen in 2013 were attributable especially to efficiency improvements, cost cuts and better procurement. At the end of 2013, we were hit by two severe storms, resulting in 45,000 claims. The claims handling organisation had an extremely busy time providing swift and efficient assistance to customers. Importantly, we made a decision to help customers before the events had officially been recognised as floods. This left our customers in no doubt that Tryg, can make a difference and provide instant peace of mind.
Tryg launched the New Annual Travel Insurance for Private customers which is much more tailored to the individual customer’s actual needs and risks. Read about the new annual travel insurance at tryg.dk.
Supervisory Board. Jørgen Huno Rasmussen has been a member of the Supervisory
Tryg launched the new Tryg Pluss benefits programme for private customers in Norway.
Tryg terminated the IT operating contract with CSC from 1 August 2014 and entered a new agreement with TCS (Tata Consultancy
In Denmark, the Tryg Plus programme was launched in Q2 2013. In addition to multiple-policy discounts, the programme comprises
Tax rate adjustments have been adopted both in Denmark and in
• The profit after tax for the year was DKK 2,369m (DKK 2,208m), and the return on equity after tax was 21.5% (22.1%).
In light of the lower premium income, it has also been necessary to continuously streamline cost levels in addition to the abovementioned efficiency programme.
With an intensified customer focus in the coming years, it is also important that the efficiency programme allows investments that support this focus, with regard to both internal employee development and technological development.
October and December storms, which in combination with the winter effect impacted the combined ratio by 8.8 (2.2), a low large claims level corresponding to 1.1 (4.3) and a higher run-off level by 5.2 (4.7).
Private encompasses the sale of insurance products to private individuals in Denmark and Norway. Sales are effected via call centres, the
(86.8). The gross claims ratio was 75.6 (70.1) and the claims ratio, net of ceded business, was 73.1 (71.2). The expense ratio was 14.6 (15.6). The considerable fall is due to the ongoing efficiency programme, but was also affected by the usual fluctuations in costs between the quarters.
With yet another strong year, Commercial has built a solid foundation for continued customer focus.
The expense ratio was 19.3 (20.3), which was a satisfactory development achieved despite the reduction in premium income. The lower cost level is attributable to the efficiency programme and the abovementioned structural measures in relation to distribution. Commercial will continue to focus on cost reduction in the coming years, as this is important to strengthen competitiveness and results.
• Combined ratio improved by 4.1 percentage points to 91.2 (95.3).
After transfer of insurance technical interest to insurance and other financial expenses and income, the total investment return totalled
Tryg’s aim of reducing deviations as much as possible yielded an overall positive mismatch of DKK 40m, although the year was characterised by major interest rate fluctuations.
IR is also responsible for contact to rating agencies and bond investors.
(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.
Gruppen, smba, Denmark, owns 60% of the issued shares and is the only shareholder owning more than 5% of the company’s shares.
• A competitive dividend policy in comparison with those of our Nordic insurance competitors.
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 frameworks based on regular and systematic review of the strategy and risks.
The Board performs an annual evaluation of its work and skills to ensure that it possesses the expertise required to perform its duties in the best possible way. The Board focuses, in particular, on expertise within management experience, financial insight, kowledge on insurance matters, accounting insight, financial knowledge and experience,
The Board holds at least seven meetings a year and an annual strategy seminar to discuss and define the strategy and targets for the years ahead. In 2013, the Board held seven meetings and the annual seminar.
The Board has adopted an evaluation procedure involving an annual evaluation of the composition, skills, contributions and results of the
Tryg has adopted a remuneration policy for the Board and the Executive Management, including general guidelines for incentive pay. The remuneration policy for 2013 was adopted by the Board in December 2012 and by the annual general meeting on 18 April 2013.
Members of the Executive Management are employed on a contractual basis, and all terms of their remuneration are established by the Board.
The fixed pay element must be competitive and appropriate for the market and provide sufficient motivation for all members of the Executive
Tryg engages in ongoing risk identification, mapping insurance risks and other risks related to realising the Group’s strategy or which may have a potentially substantial impact on the Group’s financial position. The process involves registering and quantifying the risks identified. In 2013, Tryg undertook an Own Risk and Solvency Assessment (ORSA) in preparation of the statutory requirements soon to be introduced for insurance companies. The purpose of the ORSA is to link strategy, risk management and solvency with the aim of ensuring that the fixed pay be supplemented with a variable pay element of up to 10% of the fixed basic pay including pension at the time of allocation.
Tina Snejbjerg Employee representative Born 1962. Joined: 2010. Nationality: Danish. Head of Section in Tryg’s HR Department. Employed since 1987.
Corporate Social Responsibility in Tryg | Annual report 2013 | Tryg A/S |
‘Tryg Code of Conduct’, which all employees must know and observe.
Forsikring, which was sold in 2012, with authority approval in May 2013.
Total changes in equity in 2012 0 30 54 2 -45 737 1,194 1,972
The company’s own risk assessment ‘ORSA’ (Own Risk and Solvency Assessment) ORSA is the company’s own risk assessment that is summarised in an annual report, which is subject to Tryg’s Supervisory Board’s approval. The risk assessment was incorporated in Danish law on 1 January 2014 through the revised Executive Order on Solvency and Operating Plans for Insurance Companies (Bekendtgørelse om solvens og driftsplaner for forsikringsselskaber). This risk assessment is based on the Solvency II principles, which implies that Tryg must assess all material risks that the company is or may be exposed to. In addition, the risk assessment must include a review of whether the solvency requirement calculated is sufficiently in line with Tryg’s risk profile. Finally, the risk assessment must comprise an estimate of the capital adequacy over the strategic planning period based on budgets and business plans taking into account the identified risks.
Profit/loss on ceded business -43 19 348 9 16 349 Insurance technical interest, net of reinsurance 26 10 15 11 0 62
Number of full-time employees, continuing business at 31 December 4,119 4,101 4,076 3,913 3,703 Number of full-time employees, discontinued and divested business at 31 December 217 191 242 189 0 a) Includes Danish general insurance and Finnish guarantee insurance. b) Amounts relating to eliminations, restructuring expenses and discontinued and divested business are included under ‘Other’. c) Adjustment of gross expense ratio included only in ‘Tryg ‘. The adjustment is explained in a footer to Financial highlights.
Profit/loss on ceded business - 12 - 3 0 0 - 14 - 36 - 12 - 36 - 4 - 2 - 25 - 91 Insurance technical interest, net of reinsurance 4 4 1 1 - 21 - 6 14 7 16 14 0 1
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 2012 2013
Other provisions relate to provisions for the Group’s own insurance claims and restructuring costs. The provision for restructuring costs has been reassessed and amounts to DKK 23m at 31 December 2013.
Changes to accounting estimates The calculation of insurance technical interest was changed with effect from Q2 2013. Insurance technical interest is subsequently calculated based on the monthly average provision plus interest under the present yield curve for each individual group of risks taking into account the provisions ’ expected run-off pattern. A co-weighted interest from the present yield curve was previously used for each individual group of risks.
The reduction of the estimated tax rate from 25% to 23% in Q3 2013 is due to a change in the expected tax-free share gains in Norway as well as recognition of the reduction in the tax rate in Denmark in the coming years.
Consolidation The consolidated financial statements comprise the financial statements of Tryg 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.
Changes in claims provisions due to changes in yield curve and exchange rates are recognised as a price adjustment.
Provisions for insurance contracts Premiums written are recognised in the income statement (premium income ) proportionally over the period of coverage and, where necessary, adjusted to reflect any time variation of the risk. The portion of premiums
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.
Tax on accounting profit 25 25 Charge in respect of previous years -1 0 4 Equity investments in Group undertakings Cost Cost at 1 January 6,987 6,987
TryghedsGruppen 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 29 in the consolidated financial statements.
Claims ratio, net of ceded business 77.6 77.2 67.7 71.3 71.1 74.3 71.1 69.3 73.7