Vis-à-vis our private and commercial customers, proximity means that we listen to our customers.
• The Tryg Bygning arrangement in Denmark extended to include carpenters in addition to plumbers, which strengthens our ability to provide total solutions to our customers
Number of shares, year end (1,000) 68,000 68,000 68,000 68,000 68,000 68,000
Recent years have seen many devastating hurricanes, floodings and similar events. If the greater frequency of such events is related to sustained climatic changes and not merely coincidences, it will greatly affect insurance pricing. Reinsurance helps to equalise risk on a global scale, and disasters far away from the Nordic region may affect pricing and will certainly do so.
Defined in 2003, TrygVesta’s overall strategy remains unchanged. Accordingly, we continue to focus on general insurance as such, on the Nordic region as our geographic business area and on our existing customers as the basis for profitable growth of our core business.
Norway added new elements which will be introduced in Denmark over time. Based partly on the Norwegian experience, we have developed a new motor tariff in
Targeted and efficient sales efforts in the Danish private and commercial markets have been rewarded, generating premium growth of 5.6%. In the Norwegian market, the new concept which abolished the introductory discounts that were more favourable to new customers than to our loyal customers, improved customer retention. Finland continued to see strong growth with 75,000 new policies sold in 2005 and gross earned premiums up 44%. Growth was generated through our partnership with Nordea, which sold 67,000 policies in the Finnish market, and through new sales channels of our own.
value-oriented themes relevant to the individual employee. Our value coaches play a pro-active role, and examples and experience are available to all employees on the “value net”, offering inspiration on how to use the values in their daily encounters with customers.
We had run-off gains of DKK 263m in 2005 against runoff losses of DKK 17m in 2004 which had a favourable impact on profits relative to a normal year. The run-off results for 2005 include increased provisions for claims handling costs.
The return on investment activities before other financial income and expenses and transfer to insurance business totalled DKK 1,681m, which was DKK 478m more than in 2004.
The pension obligation towards Norwegian TrygVesta employees totalled DKK 635m after set-off of the scheme assets. The full amount has been recognised in the balance sheet.
DKK/NOK, rate, quarterly, annual average 94.61 90.71 92.85 88.79 88.79 93.68 98.46 92.16 profit/loss on gross business 177 189 843 817 700 155 43 -172 profit/loss on ceded business -12 -6 -62 -73 -86 -93 -228 240
The positive technical performance was reflected in the combined ratio, which at 83.1 was 0.1 percentage point lower than in 2004 and lower than in a normal year.
compared with 46.5% for the Danish OMXCB index and 40.5% for the Norwegian OSEBX index. The return on other international shares was 17.4% compared with 24.9% and 5.1% for MSCI Europe and MSCI USA, respectively. We hedged currency risks relating to international bonds during the year. Unlisted shares accounted for DKK 225m at 31 December 2005.
Denmark and Norway. The portfolio mainly comprises office premises, but also includes a small proportion of other commercial property and residential property.
We made two important changes to our capitalisation in 2005: 1. Tryg Forsikring A/S issued a listed bond loan in
Finland place TrygVesta as the undisputed Number One in the Nordic market.
dk and vesta.no) had 2.1m visitors who viewed 13.4m pages. Our Danish website had 1.5m visitors accounting for 10.4m page views, and our Norwegian website had 560,000 visitors and 3m page views.
Our strategy of leveraging shared Nordic synergies has proved viable and efficient. By continuing to integrate
The Danish part of our business implemented the Norwegian call centre system in 2005, which enabled us to offer faster service to customers and to improve our quality assurance follow-up.
TrygVesta’s partnership with Nordea to sell general insurance products through the bank’s branches contributed to our strong market position. A total of 117,627 policies were sold through Nordea’s branches in Denmark, Norway and Finland in 2005.
Expectations regarding the gross earned premiums are based on the portfolio at 31 December 2005 and assumptions with respect to sales and loss of policies and price adjustments of policies in force. Assumptions for sales and loss of policies are based on historical levels, planned initiatives and the market situation.
storM and weather DKKm run-oFF gains and losses, gross DKKm large losses exCeeding dkk 10M DKKm
The Supervisory Board has resolved to offer an annual grant of stock options to members of the Executive
Beginning in 2007 after announcement of the 2006 annual results, members of the Executive Management and senior management employees will be offered to use part of any bonus payment up to three months’
We are an insurance group subject to public supervision and continuous monitoring, and TrygVesta’s risk management is organised professionally and monitored in all relevant aspects by the Executive Management and the Supervisory Board. Risk related to investment, reinsurance, underwriting and acceptance policies, IT
Insurance risk is the risk relating to the insurance operations. It is the most important risk TrygVesta is exposed to.
Interest rate risk is often measured based on duration, being the sensitivity to a 1% parallel shift of the yield curve, that is, a 1% rise or fall in interest rates for all maturities. However, changes in interest rates are rarely in the form of parallel shifts, and the impact of changes may vary. This is indicated by duration.
In our opinion, the annual report gives a true and fair view of the Group’s financial position at 31 December 2005 and of the results of its operations and cash flows for the financial year 2005 in accordance with International Financial Reporting Standards as adopted by the EU and additional Danish disclosure requirements for the annual reports of listed financial enterprises.
Therefore, the pro forma financial figures represent accounting figures for a period during which the Group did not exist as a legal entity. Reference is made to
valuation is made at cost or fair value. Furthermore the requirements regarding presentation and disclosure are less comprehensive than under IFRS.
IAS 32 and IAS 39 on the presentation of comparative figures for 2004.
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 interest rate applied is based on the duration of the provisions for claims. Previously, technical interest was calculated applying an interest rate equal to the pre-tax yield to maturity on all bonds with a term to maturity of less than three years.
Bonus and premium rebates represent anticipated and reimbursed premiums where the amount reimbursed depends on the claims record, and for which the criteria for payment have been defined prior to the financial year or when the business was written.
Pro forma comparative figures have been included in order to provide more information in the annual report with respect to the technical operations of the general insurance companies forming part of TrygVest irrespective of the former ownership of these companies.
Provisions for unearned premiums 5,183 5,037 18 Provisions for claims 21,261 19,914
In addition, expenses have been incurred for the Group's Internal Audit Department.
Profit/loss on discontinued and divested business -28 -75 profit for the year 2,097 1,421
Technical interest, net of reinsurance 113 116 93 87 114 130 3 2 0 0 323 335
Technical interest, net of reinsurance 2 2 -15 35 323 335 0 0 1) Personal accident and health insurance includes one-year group life policies of Vesta Forsikring AS, see above.
Tax relating to discontinued and divested business is included in the net profit of such activities.
Gains and losses on hedges charged to equity in the period 0 -119 -119
Provisions for claims, end of year 1) 19,788 18,157 ceded business
• The requirement for a test for the adequacy of recognised insurance liabilities
The table below presents the effect on profit for the year ended 31 December 2004 as a result of implementation of IFRS. In the section
Under IFRS, TrygVesta have the option to continue to use the interest rate determined by the Danish FSA or a yield curve. The yield curve provides interest rates matching the estimated cash flows of the provisions recorded. TrygVesta have elected to use an interest rate based on a yield curve. Technical interest, net of reinsurance, under IFRS is still calculated as the return on the relevant period’s average technical provisions, net of reinsurance, offset by the accretion over the period of discounted technical provisions, net of reinsurance.
Under Danish GAAP, TrygVesta were allowed to net the reinsurers' share of technical provisions in technical provisions, net of reinsurance.
Under IFRS, the pension plan is treated as a defined benefit plan and the assets and liabilities are measured based on an actuarial calculation of the value in use of future benefits payable under the plan which has been made up in accordance with the economic market assumptions on the balance sheet date instead of assumptions relating to long-term economic developments.
Charges relating to investment income 6 Interest expenses -74 -74 Interest expenses 7 Investment management charges -54 -54 Investment manage ment charges total changes relating to investment income -128 -128 return on investment activities total return on investment before transfer to insurance activities 1,016 1,016 activities 1 “Income from investment property” under Danish GAAP is included in “Income from investment assets”, whereas under IFRS it is shown separately.
Notes investment activities 1 Income from subsidiaries 2,086 1,480 2 Interest income, etc. 34 37
Other debt 8 12 total debt 748 646 total liabilities and equity 8,990 8,177 11 capital adequacy, etc.
Administrative expenses include fee to the auditors appointed by the Annual General Meeting: Grant Thornton -0.4 -0.2
DKK 715m had been utilised at 31 December 2005. In 2005, the loan carried interest at CIBOR plus a margin, totalling approximately 2.5% p.a. The unutilised part of the loan facility is measured at amortised cost, and an amount of DKK 5m was deducted from the loan proceeds upon signing the loan agreement. The costs are amortised until the loan facility expires in July 2010. The fair value of the loan is considered to be the utilised part of the facility of DKK 715m.
Claims ratio, net of ceded business 74.5 86.8 74.1 77.1 75.1 76.5 83.6 82.1
Claims ratio. net of ceded business 84.7 67.8 81.1 75.5 68.7 78.5 103.5 91.1
gross earned premiums is calculated as gross premiums written adjusted for change in gross provisions for unearned premiums, less bonuses and premium rebates.
Norwegian claims assessors were called in to assist their Danish colleagues. This meant quick help to many customers, and most claims were settled within a short period of time.