4 Highlights of the year 8 Strategy and Key Performance Indicators 10 Customers 12 Insurance market 16 Tryg’s results 20 Private 24 Commercial 29 Sweden 32 Investment activities 35 Financial targets and outlook 38 Capital and risk management 41 Tryg share and dividend policy 46 Corporate governance 54 Supervisory Board 57 Group Executive Management 58 Corporate Social Responsibility 65 Financial statements 148 Glossary 151 Group chart
At the beginning of 2012, the Supervisory Board and the Executive
claims, we want to intensify our claims prevention efforts and improve the procurement of claims services.
Profitable insurance products depend on the right balance being struck between price and risk. Tryg’s tariffs and segmentation models are continuously being improved and updated. In 2012, Tryg focused in particular on risks and on our ability to respond quickly to changes in risk scenarios. This focus will be maintained in the coming years. This resulted in the launch in 2012 of a new contents insurance product with several additional tariff criteria, thus offering prices which more accurately reflect the risks involved. In terms of price differentiation, the aim is to match or exceed the level of our competitors by 2015 for most of our products. The correlation between price and risk is also impacted by claims prevention. Claims prevention serves the dual purpose of shielding customers from the inconvenience caused by damage or injury and at the same time reducing Tryg’s claims costs by preventing damage or injury from happening as well as minimising the effects of such events.
Denmark, but with the addition of franchisees who are independent sellers of Tryg’s products. The Private customer segment is Tryg’s largest business area with revenue in 2012 of DKK 9,733m being generated in Denmark and Norway.
• Proposed dividend of DKK 26 per share and proposed share buyback of DKK 800m.
The result was made up of a technical result of DKK 648m and an investment return of DKK 5m (DKK 144m) based on an exceptionally high return on bonds and the write-down of owner-occupied property by DKK 200m. The technical result was impacted by weather claims below the expected level, a high level of large claims totalling DKK 317m
As mentioned, in Private there was considerable focus in 2012 on price differentiation. In November 2012, Tryg launched a new contents insurance product in the Danish market which better reflects variations in risk. The new product makes it easier for the customer to be adequately covered. With the new contents insurance, the customer does not have to calculate the total sum insured, but simply list any assets in the home worth more than DKK 50,000. Initially, the insurance is being sold to new customers, but in 2013 existing customers will also be covered by the new insurance. Within the Private segment, Tryg will continue to work with price differentiation, and in the coming years gradually implement several new products with a higher degree of price differentiation.
The expense ratio was 15.7 (16.4) in 2012, which was a significant reduction, and achieved through the continued optimisation of distribution costs, in particular. The number of employees was reduced from an average of 955 in 2011 to 918 in 2012, primarily through natural wastage. The Private area has centralised functions that were previously scattered, which has positively impacted the expense ratio.
• Combined ratio improved by 3.5 percentage points to 87.7 (91.2).
Europe. Danish businesses benefited from the positive economic development in Germany, Denmark’s largest export market. However, towards the end of the year, the German economy fared less well, which is expected to have a negative impact on Danish industry in 2013.
The profitability measures have had the intended effect, which can, among other things, be seen from the official statistics for the Swedish market. They show that Moderna’s market share for contents, house and motor insurance has been reduced in terms of the number of policies, whereas it is virtually unchanged within both boat insurance and other motor insurance. Measured in terms of premium income, market share is slightly up, which illustrates the improved profitability.
(DKK 41.3bn) generated a gross return of DKK 2,243m (DKK 1,890m), corresponding to a return of 5.1% (4.8%) on the average invested capital. The result was positively impacted by gains on equities and credit bonds like, for example, global high-yield bonds, government and corporate bonds from emerging markets and primarily financial senior credit bonds. Bonds generally benefited from strongly falling interest rates, especially in the first half year. The return on investment property also made a positive contribution, thanks to a slight upturn in the Norwegian property market.
Norwegian properties, yielded a return of DKK 204m (DKK 119m), cor-
The Omnibus II Directive, which was to introduce the Solvency II
At the end of 2012, Tryg had a capital buffer of 27% (after expected dividend) based on the standard model under Solvency II, and the approval of the internal model is expected to further increase the capital buffer.
Tryg issues press releases and company announcements, and publishes annual and interim reports, which are available at tryg.com.
Tryg’s share capital comprises a single share class, and all shares rank pari passu. The principal shareholder, TryghedsGruppen smba,
The annual general meeting is webcast, allowing stakeholders to watch the annual general meeting at tryg.com both during and after the meeting.
Governance, while the other four members are not independent persons as they are appointed by the principal shareholder Trygheds-
Committee’s work is defined in its terms of reference. The committee has four members with knowledge and experience of financial matters as well as accounting and auditing in publicly listed companies. The
Management and the Supervisory Board. The committee consists of the Chairman and Deputy Chairman and meets as needed, although at least twice a year. See the tasks of the Nomination Committee at tryg.com > Governance > Management > Supervisory Board >
The Remuneration Committee carries out preparatory work on behalf of the Supervisory Board relating to remuneration for the Supervisory
Group CEO is entitled to 12 months’ notice and 18 months’ severance pay plus pension contributions during the same period.
Board checks that the company’s risk management and internal controls are effective. Any non-compliance with frameworks and guidelines is reported to the Supervisory Board.
Born 1952. Joined: 2012. Nationality: Danish. CEO of FLSmidth & Co. A/S.
Born 1973. Employed in 2011. Joined the Group Executive Management in 2012.
At Tryg, we are devoted to creating an attractive workplace characterised by equal opportunities for men and women. We have signed the ‘Charter for Women in Management’ and submitted our first report in 2012. In spring 2012, Tryg’s action plan was turned into an activity plan for the year, comprising specific initiatives such as a course for employees who are planning a management career, a new programme for ‘successor planning’ to promote equal access to management positions for men and women, a new internal mentor scheme for managers and employees and introductory courses on diversity and inclusion for new managers and new employees.
Claims prevention in Norway In 2012, Tryg focused on claims prevention and implemented a range of different measures to prevent and limit the claims that may occur. This benefits customers and provides peace of mind, while also serving the interests of the company and our investors.
Total receivables in connection with direct insurance contracts 1,158 1,149 Receivables from insurance enterprises 317 227 Receivables from Group undertakings 1 1 Other receivables 189 612 18 Current tax assets 93 0 16 Cash at bank and in hand 402 504 19 Assets held for sale 0 742
Financing, continuing business -351 -287 Financing, discontinued and divested business 0 58
For accident and workers’ compensation policies, Tryg has bought catastrophe reinsurance with retention of DKK 50m and with coverage of up to DKK 1.5bn for claims originating from the same event, including terrorism.
Nordic countries 395 458 United Kingdom 82 102 Rest of Europe 331 483 United States 565 632 Asia etc. 242 429
Insurance operating costs, gross -3,271 -3,295 Commission from reinsurers 89 103
Foreign currency translation adjustments concerning financial assets or liabilities which cannot be stated at fair value total DKK 37m (DKK 31m in 2011).
Amortisation and write-downs Balance at 1 January 0 -32 -446 0 -478
Business property 7.3 7.0 Office property 6.3 6.4 Residential property 4.8 5.9
Komplementarselskabet af 1. marts 2006 ApS, Denmark 0 0 0 0 0 50
Financial liabilities measured at amortised cost Subordinate loan capital 1,589 1,597 Debt relating to direct insurance 410 415 Debt relating to reinsurance 191 256 Amounts owed to credit institutions 11 14 Debt relating to unsettled funds transactions and repos 4,161 1,470 Current tax liabilities 260 652 Liabilities associated with assets held for sale 0 742 Other debt 740 1,030
Investment assets according to statement of financial position 38,862 199 2,081 41,142 Unit trust units 3,261 Deposits with credit institutions 949 Derivative financial instruments 547 Associated shares 21
Bought during the year -316,792 -7,920 0 0 Sold during the year 56,360 1,409 200,000 5,000 Used in connection with exercise of share options 0 0 121,532 3,038
Pension obligation, gross 1,990 2,151 Fair value of plan assets 1,013 1,109
Profit/loss – Danish FSA executive order 852 288 1,140 2,162 46 2,208
• Amendments to IAS 32 ‘Offsetting Financial Assets and Financial Liabilities’ d)
Premiums Premium income represents gross premiums written during the year, net of reinsurance premiums and adjusted for changes in premium provisions, corresponding to an accrual of premiums to the risk period of the policies, and in the reinsurers’ share of the premium provisions.
The share options are exercisable exclusively during a 15-day period following the publication of full-year, interim and quarterly reports and in accordance with Tryg’s internal rules on trading in the Group’s shares. The options are settled in shares. A part of the Group’s holding of treasury shares is reserved for settlement of the options allocated.
The shares are provided free of charge, four years after the time of purchase. The holder must acquire the shares in the open window following publication of the annual report for the previous year. In 2011, however, the shares were traded in the first open window after the Tryg A/S annual general meeting. The holder may not sell the shares until six months after the matching time.
Investment property Rental properties that are not occupied by the Group are classified as investment property.
Total changes in equity in 2011 -65 646 -176 144 549
Other income and costs 13 -15 -30 -60 Profit/loss before tax 467 638 1,603 3,017 Run-off gains/losses, net of reinsurance 331 237 944 1,015