Annual Report 2003
Contact persons:
Ms Stine Bosse, Group CEO, phone +45 44 20 30 40
Mr Erik Gjellestad, Member of the Group Executive Management, phone +47 55 17 25 25
Mr Morten Hübbe, Group CEO, phone +45 44 20 30 20
Mr Henrik Hougaard, Head of Corporate Communications +45 44 20 30 70
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 2 of 98
Estonian general insurance
Business in run-off
Investment activities
51
53
55
Targets reached in 2003
59
Focus areas ......................................................... 59
Targets reached................................................... 59
60
Outlook
Strategic focus areas ........................................... 60
Targets ................................................................ 61
Management’s signatures
Internal auditors’ report
Auditors’ report
Accounting policies
63
64
65
66
Income statement, balance sheet and cash flow
73
statement, the Tryg Vesta Group
Income statement and balance sheet for Tryg
Vesta Group A/S (parent company)
87
Group overview
92
Supervisory Board and Executive Management
93
Supervisory Board ............................................... 93
Executive Management ....................................... 95
Glossary of technical terms
98
Contents
Contents
Well poised for satisfactory performance
The year in summary
Facts about the Tryg Vesta Group
Strategic platform
The external environment
3
4
5
6
8
9
Financial perspectives
12
Profitability ........................................................... 12
Capital structure and ratings................................ 13
14
Customers
Customer satisfaction .......................................... 14
Brands ................................................................. 16
Bancassurance and pension sales ...................... 16
Health insurance.................................................. 17
Unemployment insurance .................................... 17
Processes
19
Procurement ........................................................ 19
Customer service and IT ..................................... 19
Common alarm centre ......................................... 21
Employees
22
Employee satisfaction.......................................... 22
Competency development ................................... 22
Inclusiveness ....................................................... 23
Management and organisational changes........... 23
Risk management
25
Insurance risk ...................................................... 25
Market risk ........................................................... 26
Investment policy................................................. 27
Operational risk ................................................... 28
Shareholder information
29
Distribution of profit.............................................. 29
Shareholders’ equity............................................ 29
The Tryg Vesta Group history
Organisation
30
31
Financial highlights and key ratios, Tryg Vesta
Group
33
Review of the Tryg Vesta Group’s financial
statements
34
Financial highlights and key ratios per business
37
area
Danish general insurance
Norwegian general insurance
Tryg-Baltica international (TBi)
Finnish general insurance
Polish general insurance
39
42
45
47
49
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 3 of 98
Well poised for
satisfactory performance
responsible organisation. Our integration project has
paved the way for several employees with an ethnic
background.
After our first full year under the ownership of Tryg i
Danmark smba, the Tryg Vesta Group reports quite
substantial improvements of the financial results. We
achieved most of the targets we had set for 2003, and we
have come a long way towards generating satisfactory
overall results. We have also made a thorough strategic
effort to define the framework for further enhancement in
the years ahead.
Understanding other cultures and ways of working is also
the platform for the process improvements and synergies
across national borders which will help us achieve our
ambition of further improving our performance in the
years ahead. The Tryg Vesta Group believes that the
current round of general price adjustments is coming to
an end, except in the area of personal accident
insurance, where we anticipate that even more tasks will
be transferred from public funding to private insurance
over the next few years. We will introduce stricter terms
Tryg i Danmark smba contributed fresh capital to the Tryg
and conditions for a few commercial customers, while at
Vesta Group in the summer of 2003. While reflecting the
support of our owners, the capital contribution also made
the same time offering them advice on how to manage
and minimise risk.
additional demands on the Group’s ability to generate a
higher return on capital employed.
As will appear from this annual report for 2003, the Tryg
Vesta Group has a good platform for growth within the
The Group reported premium growth in Denmark and
segments and markets that are profitable. We will stay
Norway of 11.2 per cent and 6.3 per cent, respectively,
focused on providing high-quality services to our
reflecting a high degree of loyalty among our customers.
customers, both in connection with regular service and
They confirmed their choice of the Tryg Vesta Group by
advice and in connection with claims handling.
maintaining their policies with the Group despite major
premium increases that had resulted from a necessary
review of the price/risk correlation. Part of the reason may
be that the industry in general raised premiums, but also
that our customers are very satisfied with our services –
and surveys indicate that customer satisfaction continues
to grow.
The Tryg Vesta Group uses the Balanced Scorecard as a
general management tool. This contributes very much to
everybody in the Group making a targeted and focused
effort to meeting our ambitions in relation to our
stakeholders. We have arranged the description in this
annual report of our performance in 2003 along the lines
of the Balanced Scorecard’s four perspectives: Financial
More than half a million out of our more than 2 million
perspectives, Customers, Processes and Employees.
customers were served by the Group’s claims handlers in
2003. Perceived quality and savings may go hand in
hand as witnessed by the way we consolidated all the
Group’s emergency calls into one alarm centre and the
introduction of Tryg Reparation, which involves that we
refer car repairs to selected garages and offer the
customers a replacement car while their own car is being
repaired.
An inclusive workplace and understanding of other
cultures and customs are natural features of a socially
I hope you will enjoy reading our annual report.
Stine Bosse
Group CEO
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 4 of 98
The year in summary
•
The combined ratio improved from 111.7 in 2002
to 102.8 in 2003
• Profit before tax and extraordinary items
•
The combined ratio for the Group’s Danish
general insurance operations improved from
amounted to DKK 789m, an improvement of DKK
105.6 in 2002 to 96.6 in 2003.
1,867m compared with 2002.
•
The Group’s return on shareholders’ equity
before tax amounted to 16.4 per cent against a
negative return of 52.9 per cent in 2002.
•
The combined ratio for the Group’s Norwegian
general insurance operations improved from
110.6 in 2002 to 103.9 in 2003.
• Shareholders’ equity increased by DKK 1,092m
•
The large general insurance portfolios in
to DKK 5,360m.
Denmark and Norway saw premium growth of
11.2 per cent and 6.3 per cent, respectively.
•
The reserves for losses relating to personal
•
The technical result amounted to a profit of DKK
injuries have been strengthened by DKK 699m,
corresponding to an impact on the combined ratio
136m in 2003 compared with a loss of DKK 851m
of 4.8 percentage points
in 2002.
Earned premiums, net of reinsurance
Combined ratio
.
14.6
13.3
11.2
10.0
16
12
n
b
K
K
D
8
4
0
.
r
.
o
.
n
,
t
n
e
c
r
e
P
120
110
100
90
80
111.7
110.5
105.5
102.8
2000* 2001* 2002*
2003
2000* 2001* 2002*
2003
* Pro forma figures
* Pro forma figures
Profit/loss on ordinary activities before tax
Shareholders’ equity
5.4
4.3
4.6
4.3
1,000
600
411
789
m
K
K
D
200
-200
-600
-1,000
-1,400
89
-1,078
6.0
n
b
K
K
D
4.0
2.0
0.0
2000* 2001* 2002* 2003
2000* 2001* 2002*
2003
* Pro forma figures
* Pro forma figures
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 5 of 98
Facts about the Tryg
Vesta Group
same product, price and quality through all sales
channels. The Group applies a multi-channel
distribution strategy with large customer centres and
service centres or franchises, the Group’s own
insurance agents and sales through real estate agents,
The Tryg Vesta Group is the second-largest general
car dealers and Nordea’s branches as the most
insurer in the Nordic region. The Group comprises Tryg,
important channels. In addition, the Group has signed
Denmark’s largest general insurer with a market share
agreements with a number of trade unions and
of just over 22 per cent, Vesta, Norway’s third largest
professional groups to offer their members personal
insurer with a market share of around 20 per cent, the
insurance. Likewise, industry agreements and
reinsurer Tryg-Baltica international, Dansk Kaution and
agreements with insurance brokers exist on the
Tryg Polska in Poland. The Group also operates in
commercial market.
Estonia and has a fast-growing branch in Finland.
The Tryg Vesta Group has a strong strategic
quality, advice and service – both to the individual
partnership with Nordea. The bank sells the Tryg Vesta
personal customer and to the large industrial enterprise
Group’s general insurance products, while the Tryg
with several thousand employees.
The Tryg Vesta Group’s 4,400 employees represent
Vesta Group sells Nordea’s life and pension products.
Moreover, Nordea Asset Management is the Tryg Vesta
Group’s portfolio manager. Furthermore, the Tryg Vesta
Group has a partnership with CSC, which will handle
the Group’s IT operations starting 1 June 2004.
The Tryg Vesta Group’s distribution strategy is based
on marketing one brand in each country, offering the
The Tryg Vesta Group has some two million personal
customers and 250,000 commercial customers. The
Group generates an annual premium income of DKK
17.3bn. Its employees processed 650,000 claims and
paid claims expenses of more than DKK 11bn in 2003.
Gross premiums 2003 according to business area
Gross premiums 2003 distributed on products
3%
4%
4%
48%
41%
Denmark
Norw ay
TBi
Finland, Poland and Estonia
Business in run-off
14%
15%
11%
5%
16%
18%
5%
16%
Motor TPL
Marine, transport etc.
Fire etc. (commercial)
Accident
Motor comprehensive
Fire etc. (personal)
Workers compensation
Other
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 6 of 98
The Tryg Vesta Group optimised its internal
The Group’s future platform consists of two dedicated
organisation in January 2004 in order to form a better
local business areas for personal and commercial
basis for further efficiency and profitable growth.
customers in Norway and Denmark, respectively, and
one dedicated Nordic business area for the corporate
market.
Organisation chart – new operational structure
Group CEO
Stine Bosse
Personal &
Commercial (P&C)
Denmark
Personal &
Commercial (P&C)
Norway
Corporate
Denmark & Norway
Group Finance
Stig Ellkier-Pedersen
Erik Gjellestad
Peter Falkenham
Morten Hübbe
Process responsibility
Sales
Jesper Joensen
Sales Manager
Jesper Joensen
Sales Manager
Bente Kirkenær
Sales Managers
Truls Holm Olsen, Martin
Nielsen & Martin Hay Schmidt
Group Management
Secretariat
Jakob Grane
Group Control
P&C, DK
Lars Bentsen Møller
Customer Services
Karsten Kristiansen
Customer Services
Manager
Jesper Joensen
Customer Services
Manager
Karsten Kristiansen
Customer Services Managers
Truls Holm Olsen, Martin
Nielsen & Martin Hay Schmidt
Underwriting Adm.
Birgitte Kartman
Underwriting Manager
Birgitte Kartman
Underwriting Manager
Karsten Kristiansen
Communications
Henrik Hougaard
Group Legal Dept.
Bjarne Lau Pedersen
Underwriting
Ole Kristian Bakken
Underwriting Managers
Kevin Carlson
& Trond Thorsen
Claims Handling
Ane Jægersborg
Claims Manager
Lars Bonde
Claims Manager
Egil Rollheim
Claims Manager
Ane Jægersborg
Product Development Manager
Keld Holm
Product Developm. Manager
Trond Tepstad
Product Developm.Managers
Kevin Carlson
& Trond Thorsen
Group Control
P&C, N
Espen Strømme
Group Control
Corporate
Peter Brondt
Group Accounting
and Administration
Fatiha Benali
Group Risks
Ole Hesselager
Group Investments
Torben Jørgensen
Travel, Health & Welfare
Per Guldbrandsen
Enter
Roger Slinning
Dansk Kaution
Mads Løgstrup
TBi
Flemming Christiansen
Bancassurance
Flemming S. Pedersen
Tryg Polska
Otto Groegler
Nordea Vahinkovakuutus
Flemming S. Pedersen
Nordicum Kindlustus
Mikko Saario
HR & Personnel,
IT, Process
Development and
Purchasing
Bjørn Thømt
HR & Personnel
Bjørn Thømt
IT
Martin Bøge Mikkelsen
Process Development
Geir Berge Hansen
Purchasing
Ole Hope
Business responsibility
Process responsibility
Tryg Vesta Staff
Tryg Vesta
Competence Centre
Subsidiary / branch
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 7 of 98
Strategic platform
In addition to their relatively new common history and
Nordic characteristics, the Tryg Vesta Group companies
share strong competencies and values.
Efforts to make the Tryg Vesta Group identity a
household name began in earnest in early 2003 when
the new Group Executive Management decided to be
transformed from a conglomerate of companies to be
perceived as one single Group.
Tryg Vesta Group - mission
Our mission is to secure a stable, qualitative
supply of products offering peace of mind to
Financial perspectives
The Tryg Vesta Group’s ambition is to build the most
profitable portfolio in the Nordic region within the next
three years. Profitability takes priority to growth if
required to ensure stable earnings. At the same time,
the Group aims to balance the composition of its
personal, commercial and corporate customers in order
to maximise the spread of the Group’s risks.
Customers
The Group’s ambition is to have the highest level of
customer loyalty in the Nordic region. Based on the
expectations and requirements of each individual
customer, the Group aims to continuously add
perceived value, thereby confirming customers in their
choice of the Tryg Vesta Group as their provider of
personal customers and businesses.
peace of mind.
Our mission statement reflects the Tryg Vesta Group’s
raison d’être and the activities the Group is engaged in.
The word stable signals that the Group pursues a long-
term strategy, and the word qualitative shows that the
Group is committed to doing things properly.
Tryg Vesta Group - vision
We want to be perceived as the Nordic
Processes
The Group’s ambition is to improve productivity and
enhance quality by automating and centralising
processes as much as possible. In organising
processes, focus will be on simplicity, reuse of data and
the potential of self-service facilities.
region’s most profitable provider of peace of
Employees
mind on the markets and within the business
The Group’s ambition is to offer managers and
areas chosen by us.
Our vision reflects the Tryg Vesta Group’s commitment
to its Nordic strategy and shows the goal and direction
of the Group’s development. The term provider of
peace of mind means that the Group offers a complete
package comprising insurance, advice and
supplementary services aimed at preventing instability
employees free scope and responsibilities and to create
the framework for commitment, drive and development
of competencies. The Group will continuously develop
its combined knowledge by focusing on learning and
knowledge sharing. The Group emphasises being a
Nordic workplace with Nordic values as bridgebuilders
and drivers.
and at restoring the customer’s peace of mind should
Furthermore, it is the Group’s ambition to participate
this happen.
The Tryg Vesta Group’s operations are carried out
decentrally, but the Group defines common strategies,
goals and policies and has clear ambitions with respect
to financial perspectives, customers, processes and
actively in and to influence the public debate when it
deals with subjects related to the Group’s existing or
potential business areas.
employees:
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 8 of 98
The external environment
The Nordic general insurance market is driven by few,
large companies. It is becoming increasingly
transparent and competitive, and the whole Nordic
region is characterised by having a saturated general
insurance market.
The market was characterised by premium increases
both in 2002 and 2003, and most large companies
raised premiums for personal as well as commercial
customers.
In order to operate a profitable business, the insurance
industry looked even more carefully at its ability to
attract capital than it did in previous years.
1999 and the World Trade Center disaster in
September 2001.
Captives
The insurance companies’ increased focus on
profitability and the resulting premium increases caused
a few large companies to consider setting up their own
captive insurance companies in 2003. Setting up a
captive means that the company carries a higher
proportion of its own insurance risk. However, it
requires the company to have a very strong equity and
good supporting reinsurance contracts.
The role of insurance companies in relation to such
customers changes from being risk bearers to being
managers and service providers primarily.
Consequently, the companies are focusing more
Mild weather
strongly on correct technical underwriting methods, that
The number of claims due to exceptional weather
is, on optimising the correlation between premiums and
conditions, such as windstorms and flood, was below
risk.
Market shares, Nordic general insurance
Denmark
Norway
Finland
Sweden
Tryg
22%
If
31%
If
36%
Gjensidige
Pohjola
30%
Vesta
20%
22%
Tapiola
16%
LF Forsikring
29%
If
23%
Folksam
16%
# 1
# 2
# 3
# 4
# 5
Topdanmark
17%
Codan
13%
Alm. Brand
12%
If
5%
10%
9%
18%
The local
Insurance Group 8%
Other
31%
8%
Tryg Vesta
Group
13%
Source: Danish, Norwegian, Finnish and Swedish
insurance associations, Gross premiums 2002 (Norway
2003)
The performance of direct insurers has been driven by
average in 2003. However, the prices of reinsurance
continue to be high since the reinsurers have changed
their assessment of weather-related risks in the Nordic
region as a consequence of previous years’ windstorms
and cloudbursts.
From public to private
The current welfare debate in the Nordic countries and
other European countries makes demands on the
transferred from public funding to private insurance.
The Tryg Vesta Group welcomes this trend as it
provides opportunities for a healthy and exciting
development of the insurance companies. One example
is unemployment insurance, which emerged as a
business area to be reckoned with for Danish insurance
companies in 2003, spurred by increasing
unemployment rates and the perceived gap between
the pay received in employment and unemployment
SpareBank 1
Fennia
Trygg-Hansa
insurance industry. Responsibilities are being
such factors as recent years’ earnings pressure due, in
benefit rates.
particular, to declining interest rates, capital losses on
shares and increasing reinsurance prices, the latter
Changes to the division of labour between the public
primarily resulting from the European windstorms in late
and the private sector are welcome, but it is disturbing
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 9 of 98
when an institution such as the Danish National Board
several of them include the rating in their policies for
of Industrial Injury changes its practice with retroactive
permitted collaboration partners.
effect. It is a problem when changed legal practice lets
privatisation in the back door, so to speak, without
Securities markets
enabling the insurance companies to adjust their prices.
For example, the Supreme Court of Denmark ruled in
December 2003 that amounts received from a flex job
should not be taken into account when determining
occupational disability for a person who as a result of a
work-related injury performs a flex job. If the National
Board of Industrial Injury introduces the practice of
reopening and reassessing claims, insurers will incur
additional costs without having been able to include this
risk when setting their prices.
Likewise, the Supreme Court of Norway ruled in
February 2004 that the scope of cover provided for
occupational diseases shall be extended as several
kinds of diseases may trigger compensation.
Global focus on risks
After several years of plummeting equity prices and
interest rates, equity markets were up in 2003 by 16.5
per cent in Europe (MSCI), 26.8 per cent in the USA
(MSCI), 31.2 per cent in Denmark (KBX) and 48.4 per
cent in Norway (OSEBX) relative to the start of the year.
Early 2003 was marked by the war in Iraq, the outbreak
of SARS and a number of negative key economic
indicators. This caused investors to flee from equity
investments to the safe haven of bonds. At the same
time, industrial and consumer confidence was low and
unemployment on the rise, all of which contributed to
both the USA and Europe pursuing expansive monetary
and fiscal policies.
Around mid-2003, the global economy rebounded. A
global recovery is now materialising, primarily driven by
one of the most expansive economic policies ever seen
Businesses and insurance companies globally have
in the USA with very low interest rates, tax cuts and
refocused on risks in recent years against the backdrop
high public spending in the form of defence
of fear of terrorist attacks, management scandals,
expenditure. The recovery was supported by continued
widespread bad weather in recent years and the
high consumer spending in the USA, partly backed by
demand for targeted employment of the capital
the biggest remortgaging wave ever.
The war in Iraq impacted the financial markets. The
anticipation that the war could quickly be brought to an
end caused equity markets to surge in the early months
of the conflict, while interest rates continued to fall due
to deflationary fears. After positive key economic
indicators had been issued in June, the rates started to
move upwards and have stabilised.
available.
Capital base
Earnings in the general insurance industry have only
begun to pick up during the past year, and recent years’
low earnings have generally eroded the companies’
capital base. The companies are required to generate
significantly higher and stable returns if the industry is
to retain and attract investors to contribute share
capital.
Ratings
International rating agencies rate companies’ expected
ability to honour their commitments towards insurance
customers and other creditors. Industrial customers, in
particular, increasingly require insurers to be rated, and
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 10 of 98
Selected share indices, 2003
Selected two-year government bond yield, 2003
3
0
0
2
f
i
i
o
g
n
n
g
e
b
e
h
t
m
o
r
f
e
s
a
e
r
c
n
i
%
60
50
40
30
20
10
0
-10
-20
-30
/
3
0
1
0
1
0
/
/
3
0
3
0
1
0
/
/
3
0
5
0
1
0
/
/
3
0
7
0
1
0
/
/
3
0
9
0
1
0
/
/
3
0
1
1
1
0
/
)
%
(
e
a
r
t
t
s
e
r
e
n
t
I
6
5
4
3
2
1
0
/
3
0
1
0
1
0
/
/
3
0
3
0
1
0
/
/
3
0
5
0
1
0
/
/
3
0
7
0
1
0
/
/
3
0
9
0
1
0
/
/
3
0
1
1
1
0
/
KBX
OSEBX
MSCI Europa
MSCI USA
Denmark
Norw ay
EU
USA
DKK/NOK exchange rate 2003
A large part of the Group’s activities are based in
Norway, and its financial results are therefore impacted
by the NOK/DKK exchange rate. As can be seen in the
chart, the NOK/DKK exchange rate fell by 14 per cent
during 2003. Accordingly, all other things being equal,
earnings in Norway will show a falling trend when
translated to Danish kroner due to the depreciating
exchange rate. Most investments in shares in
Norwegian subsidiaries were hedged in 2003.
K
O
N
K
K
D
/
1.050
1.025
1.000
0.975
0.950
0.925
0.900
0.875
2
0
/
2
1
/
1
3
3
0
/
2
0
/
8
2
3
0
/
4
0
/
0
3
3
0
/
6
0
/
0
3
3
0
/
8
0
/
1
3
3
0
/
0
1
/
1
3
3
0
/
2
1
/
1
3
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 11 of 98
Financial perspectives
Profitability was the core focus area of the Tryg Vesta
Group throughout 2003. There was extensive focus on
the correlation between customer price and risk, and on
the Group’s own efficiency and expense ratio.
Like the rest of the insurance industry, the Group was
keenly aware of the stricter terms in connection with
reinsurance and of the need to strengthen its overall
capital base and optimise capital employed.
Profitability
Scrutinising commercial customers
Focusing on personal customers
Although the most massive profitability efforts in 2003
were targeted at the Tryg Vesta Group’s commercial
customers, premiums were also raised for personal
customers. Personal customers’ premiums were
increased by up to 15 per cent on some policies.
Distribution of gross premiums 2003
14%
44%
42%
As part of the work to restore profitability, the Tryg
Personal customers in Denmark & Norw ay
Vesta Group made targeted efforts in 2003 to reassess
Commercial customers in Denmark & Norw ay
the correlation between price and risk for each
Other customers
commercial customer.
It proved necessary to introduce substantial premium
increases for some commercial customers. In Denmark,
increases for commercial customers averaged 48 per
cent, in connection with contents and buildings policies.
Most customers maintained their policies with the
Group despite the increases.
Net pricing to commercial customers served by
brokers
The long-standing tradition of paying insurance brokers,
who make a living from advising businesses on
purchasing insurance, on a commission basis was
abolished both in Denmark and Norway in 2003.
As part of the Group’s efforts, greatly enhanced security
requirements and requirements for higher premiums
were made to high-risk industries such as the wood
industry in 2003.
Previously, insurance brokers were paid a commission
by the insurance companies, but in 2003 most of the
large insurers in Denmark and Norway switched to so-
called net pricing to commercial customers served by
brokers. This system implies that commercial
At the same time, the Group completely withdrew from
customers will in future pay the brokers directly for their
insuring Norwegian municipalities, a business that had
advice and intermediary services, while the insurance
been unprofitable for several years.
company is paid for the actual insurance supply.
Profitability is a matter of pricing as well as deductibles
The Tryg Vesta Group was one of the first insurers to
and security requirements, and in addition to raising
introduce net pricing because the system promotes
premiums, the Group therefore required many
transparency and consistent terms for all commercial
customers to strengthen security and accept higher
customers whether served directly or through a broker.
deductibles.
Annual Report 2003
The Tryg Vesta Group
The new model emphases the broker’s independence,
making it clear to commercial customers in future that
brokers are advisers and intermediaries, while the Tryg
18 March 2004
page 12 of 98
Vesta Group is the insurance provider. At the same
Finally, the Tryg Vesta Group’s capital was
time, the prices of each of the two services are shown
supplemented by a loan of DKK 600m in order to give
clearly.
Costs
the Group further financial flexibility and enhance its
liquidity.
The Tryg Vesta Group focused on costs in 2003, tightly
Rating of Tryg Forsikring A/S
controlling the number of employees and the use of
In June 2003, Moody’s Investors Service and Standard
consultants.
The organisation spent substantial resources on paying
attention to existing customers by way of service and
profitability initiatives.
In May 2002, the Tryg Vesta Group took over Zurich’s
Danish and Norwegian general insurance operations.
The newly acquired portfolios and former Zurich
employees were finally integrated in 2003, creating the
anticipated cost synergies.
The profitability measures taken resulted in the
& Poor’s confirmed their ratings of Tryg Forsikring A/S
of A3 and BBB(pi), respectively. When making their
decisions, the rating agencies emphasised the
strengthened capital base and commercial and
organisational improvements.
Rating of Vesta Forsikring A/S
In October 2003, Standard & Poor’s awarded a BBB(pi)
rating to Vesta Forsikring A/S, bringing Vesta’s rating
into line with that of the parent company, Tryg
Forsikring A/S.
administrative expenses falling by DKK 206m relative to
Rating of Tryg-Baltica international
2002.
Discontinuing London market business
In September 2003, the Tryg Vesta Group decided to
discontinue the Group’s business in the London market.
The decision reflected the Group’s wish to focus mainly
on Nordic insurance business and international
Further to the decision to discontinue the London
market business and based on an anticipated improved
performance of TBi, A.M. Best confirmed in October
2003 its A- rating of Tryg-Baltica international originally
awarded in the spring.
reinsurance. The run-off is expected to last for ten
Ratings of Tryg Vesta Group
years, although most of the reserves are expected to be
run-off over three years.
S&P
Moody’s
A.M. Best
Capital structure and ratings
Tryg
BBB(pi)
A3
Vesta
BBB(pi)
TBi
A-
Capital structure
The Tryg Vesta Group’s capital base was strengthened
significantly in 2003 when the Group’s owner, Tryg i
Danmark smba, decided to contribute share capital and
subordinate loan capital totalling DKK 1.1bn. The
increased liquidity was used to repay a bank loan of a
similar amount. At the same time, the Group’s corporate
structure was changed to enable it to better utilise its
total capital base.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 13 of 98
Customers
requirements. The more satisfied and loyal customers
are, the longer they maintain their policies with the
Group, which in the final analysis benefits profitability.
In 2003, the Tryg Vesta Group refocused sharply from
Danish surveys indicate that customers in large
selling individual products to providing concepts that
insurance companies become more loyal the longer
offer peace of mind. In order to retain customer
satisfaction and loyalty, the Group considers it
they have been with the company. Around 18 per cent
of customers who have been with their insurance
important that customers buy more than one policy,
company for less than a year leave the company again
thereby becoming part of a concept offering favourable
within a year, while 82 per cent stay with the company
prices and service programmes. Concept customers get
for at least one more year. This figure rises to 86 per
more from the Group than just a request for payment,
cent for customers who have been with the company for
also when they do not have any claims.
The portfolios of health and general insurance policies
six to ten years, and to 89 per cent for customers who
have been with the company for 11 to 20 years.
sold through Nordea’s branches grew rapidly in 2003,
This is the reason why the Tryg Vesta Group focuses
not least thanks to the Group’s strong brands – Tryg
strongly on existing customers.
and Vesta – in Denmark and Norway.
Customer satisfaction
Like in previous years, the Tryg Vesta Group surveyed
how customers perceived their insurance company in
2003. The results of the customer surveys are used to
ensure that the Group’s services match customer
In Norway, Norsk Kundebarometer measures customer
satisfaction in various lines of industry. The survey
showed that Vesta improved in terms of satisfaction but
declined in terms of loyalty relative to 2002.
Norwegian Customer Barometer 2002-2003
Danish Customer Index 2002-2003
2003
2002
y
t
l
a
y
o
l
r
e
m
o
t
s
u
C
84
82
80
78
76
74
72
70
68
66
64
62
SpareBank 1
Gjensidige
Vesta
If
2003
2002
ALKA
Other
Topdanmark
Alm. Brand
Tryg
Codan
y
t
l
a
y
o
l
r
e
m
o
t
s
u
C
84
82
80
78
76
74
72
70
68
66
64
62
62 64 66
68
70
72
74
76
78
80 82 84
62 64 66
68
70
72
74
76
78
80 82 84
Custom er satisfaction
Custom er satisfaction
Norsk Kundebarometer (Norwegian Customer Barometer) is
prepared by the Department of Marketing of the BI Norwegian
School of Management
Dansk KundeIndex (Danish Customer Index) is prepared by the
Aarhus School of Business and the Danish Centre for
Management.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 14 of 98
In Denmark, Dansk KundeIndex measures customer
satisfaction with Danish general insurance companies.
The 2003 survey placed Tryg in the top four in terms of
customer satisfaction and loyalty. Tryg advanced in
terms of loyalty, and satisfaction seemed to be on the
increase. As for banks, the small companies have the
most satisfied and loyal customers.
The Tryg Vesta Group not only has many satisfied and
loyal customers in Denmark. Regular surveys of Danes’
preferred insurance company indicate that Tryg
generally has a good image among the population.
The Danes’ preferred insurance companies in 2003
Throughout 2003, Tryg ranked a clear number one on
the list of Danes’ preferred insurance company.
The Tryg Vesta Group’s surveys are based on the pan-
European model for measuring customer satisfaction
EPSI (European Performance Satisfaction Index). The
model’s standardised questions can be used by all
types of businesses, and the results are therefore
comparable with those of other insurance companies
and companies in other industries
%
25
20
15
10
5
0
Tryg
Peer 1
Peer 2
Peer 3
Peer 4
Peer 5
Peer 6
Peer 7
y
r
a
u
n
a
J
y
r
a
u
r
b
e
F
h
c
r
a
M
l
i
r
p
A
y
a
M
e
n
u
J
l
y
u
J
t
s
u
g
u
A
r
e
b
m
e
t
p
e
S
r
e
b
o
t
c
O
r
e
b
m
e
v
o
N
r
e
b
m
e
c
e
D
Source: The media agency OMD regularly surveys Danes for their preferred insurance company. Throughout 2003, Tryg was the
preferred company
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 15 of 98
Brands
In Norway, one of Vesta’s ads in the daily Aftenposten
was selected as the best ad in July. Regional paper
Tryg and Vesta represent two very established and
Adresseavisen selected another Vesta ad as the best
strong brands within general insurance for the Tryg
ad in August.
Vesta Group.
In the summer of 2003, Vesta ran a major campaign to
profile the company, focusing on the company’s
lifebuoy trademark. Vesta’s red-and-white tradition-rich
lifebuoy is one of Norway’s best-known and most
respected trademarks. Ever since 1952, the company
has distributed lifebuoys, which in an appropriate
manner reflect the philosophy of insurance. The
lifebuoys have helped save more than 1,000 people
from drowning. Today, there are some 23,000 Vesta
lifebuoys all over Norway, and the lifebuoy has become
a national symbol.
Bancassurance and pension sales
The partnership between the Tryg Vesta Group and
Nordea continued its positive sales performance. The
partnership involves Nordea selling the Group’s general
insurance products through its branches in Denmark,
Norway and Finland, while Tryg and Vesta sell the
bank’s life insurance and pension products.
Bancassurance
Generating 17 per cent growth relative to 2002,
Nordea’s sales of the Tryg Vesta Group’s general
insurance products continued to surge. In 2003,
In the spring of 2003, Tryg relaunched its six-year-old,
bancassurance accounted for 5 per cent of the Group’s
but still well-known TV commercial showing a chicken
total sales of insurance policies to personal customers.
sitting in front of a car tyre. The commercial was hugely
successful, scoring among the top seven per cent
among more than 1,000 campaigns rated by the media
agency OMD. The TV commercial came in first among
campaigns from insurance companies, banks and
mortgage credit institutions.
During the summer, Tryg launched two new
commercials involving a fox and a hen, and a hedgehog
crossing a busy road, respectively. Subsequent surveys
showed that the two new TV commercials also got high
impact ratings.
Prizes won by the Tryg Vesta Group
Tryg’s sponsorship of the Åh Abe children’s concerts in
2003 won the company the business-to-consumer-
sponsorship prize for 2003.
Tryg Polska won two prizes in Poland. Four products
were nominated market leaders, and the company’s car
owners’ assistance policy was rated as the best new
product.
In Denmark, where Nordea offers the same range of
products and concepts as Tryg provides through its own
sales channels, bancassurance accounted for 11 per
cent, and the portfolio amounts to more than DKK
550m, with a highly satisfactory profitability.
New sales to personal customers in Denmark 2003
5%
19%
34%
11%
31%
Insurance agents
Bancassurance
Other partners
Service centres
Group insurance
Nordea’s Norwegian branches began selling Vesta’s
policies in 2003, initially as a pilot project in selected
branches, but in the second half of the year, the
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 16 of 98
bancassurance concept was being implemented on a
role as a provider of peace of mind to customers in the
nation-wide scale.
life insurance and pension areas.
In Finland, sales of insurance policies through Nordea
The Group continued to generate a substantial part of
continued to rise steeply. The branch’s portfolio
Nordea’s aggregate sales of new business in this area,
increased from DKK 42m in 2002 to DKK 80m in 2003,
among other things because the Group uses its good
distributed on 32,000 customers. Tryg set up the
relations to general insurance customers to offer the life
Finnish branch in 2001 for the purpose of selling
and pension insurance products as well.
insurance through Nordea, which has a share of 40 per
cent of the Finnish market. At the end of March 2003,
Health insurance
the potential customer base was extended to include all
of the bank’s approximately three million customers in
Finland. When the branch was set up in 2001, it only
had access to Nordea Bank Finland’s 800,000 so-called
core customers.
New sales to personal customers in Finland
)
0
0
0
'
(
s
e
c
i
i
l
o
p
f
o
r
e
b
m
u
N
60
40
20
0
49.5
36.8
0.7
2001
2002
2003
Pension sales
Pension schemes and life insurance policies form a
natural and important part of the Tryg Vesta Group’s
overall product portfolio. Being a provider of peace of
mind, the Group meets the customers’ expectations of
covering all their requirements, also when it comes to
personal safety such as personal accident insurance,
health insurance, life and pension insurance and critical
illness cover.
The Group intends to continue to focus on employee
training and sales tools, thereby further enhancing its
The health insurance area continues to grow, and the
Tryg Vesta Group is constantly developing
competencies in this area. The Group launched
development efforts in 2003 aiming to set up a common
Nordic health concept for Tryg and Vesta.
In 2003, the Tryg Vesta Group in Denmark launched
three options to the health policies already written. At
the end of 2003, 15,200 people were covered by the
Group’s health insurance.
Tryg’s Finnish branch began selling health insurance in
2003. Health insurance has been part of the Finnish
insurance market for 10-15 years. The expansion of the
product range to cover largely any insurance
requirement further strengthened the Finnish
operation’s position as an alternative to other insurance
providers.
On 1 January 2003, Norway introduced tax exemption
for employer-paid health insurance for employees.
Because of the exemption, employees are no longer
subject to tax on such health insurance, and employers
are not liable to a charge on the insurance premium.
The tax exemption has renewed interest in health
insurance, and this also benefits Vesta.
Unemployment insurance
In the final months of 2003, private unemployment
insurance really became an issue in Denmark. In
February 2004, the Tryg Vesta Group announced a
partnership between the unemployment insurance fund,
STA and Tryg, involving that Tryg offers supplementary
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 17 of 98
voluntary insurance to members of STA. In case of
involuntary unemployment, members of STA will be
eligible for a supplement of up to 80 per cent of their
salary so far in addition to their benefits. At the same
time, Tryg offers the members of STA the possibility of
choosing whether they want to supplement the
unemployment insurance with for instance psychologist
assistance.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 18 of 98
Processes
2003 showed several examples of the Tryg Vesta
Group capitalising on synergies across national
borders, particularly in relation to IT and the creation of
the Group’s common alarm centre, which was launched
in earnest in early 2003. Improving the efficiency of
work processes is a constant challenge, as illustrated
by last year’s initiatives in relation to procurement and
electronic customer servicing.
Procurement
The Tryg Vesta Group began working towards a
common purchasing policy and a common purchasing
process in the spring of 2003.
The new agreement benefits all three parties:
customers, garages and Tryg.
Customer service and IT
IT synergies
The Tryg Vesta Group focuses strongly on capitalising
on IT synergies. This is to be achieved through a
common IT organisation set up in April 2003 and
covering all the Group’s companies.
The Group expects to reduce its IT-related costs in the
years ahead by simplifying, harmonising, standardising
and pruning measures. In the years ahead, the Group
intends to strongly expand the common platforms it
already uses across national borders in several
respects.
The Tryg Vesta Group considers procurement an
Partnership with CSC
organisational process and a strategic tool to reduce
In 2003, the Tryg Vesta Group entered into a
costs. Good procurement is basically a question of
partnership with the IT company CSC to outsource the
managing requirements and, thereby, managing costs.
Group’s IT operations, the principal reason for switching
IT operations provider being to reduce costs and
Procurement in an insurance company is more than
making administrative purchases in the form of office
enhance quality.
supplies and new PCs. It is also very much a matter of
The partnership with CSC is expected to improve the
purchasing in connection with claims, such as making
quality, accessibility, reliability and speed of the Tryg
agreements with craftsmen and garages to make
Vesta Group’s IT systems and to provide operational
repairs or with cleaning companies to clean up after
savings.
fires or flooding.
The Group outsourced its IT operations in Denmark,
The Tryg Vesta Group’s claims expenses amounted to
Finland and Poland effective 1 December 2003 for an
more than DKK 11bn in 2003, and the Group has in
initial period of five years. In January 2004, the parties
recent years focused particularly on procurement in
agreed to extend the partnership to comprise Vesta
connection with claims, thereby generating substantial
effective 1 June 2004, thereby putting CSC in charge of
savings. In 2001, Vesta entered into a partnership with
all the Group’s IT operations.
the Norwegian car industry, providing benefits and
savings for both customers and the company in
connection with claims resulting from damage to cars.
In March 2003, Tryg launched a new agreement with a
number of garages in Denmark. The agreement, called
Tryg Reparation, includes that customers are offered a
replacement car while their own car is being repaired.
Customer service via Siebel
The Tryg Vesta Group uses the US Siebel system, the
market’s most advanced customer service system, as a
common platform both in Denmark and in Norway. The
system collects customer data and customer contact
information, thereby making it easier for different
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 19 of 98
organisational units to collaborate in relation to
Vesta – claims reported by e-mail
customers and, ultimately, improving the quality of
communications with customers.
Vesta launched the second stage of implementation of
the system in 2003, using, among other things, the
experience Tryg had already gained with the system. A
portable solution will be added in early 2004, providing
access to the customer service system from laptops
when visiting customers. Tryg has successfully used
the solution for a couple of years.
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2002
2003
E-service
In the past two years, Tryg’s web site has offered the
Accessibility is a key word for the Tryg Vesta Group as
Group’s Danish customers a similar option. Customers
reflected, for example, in the Group’s strong focus on
may seek information, report claims and generally use
providing service to customers in the form of e-services.
the self-service facilities almost 24 hours a day. At 31
In Finland, e-mail correspondence already accounts for
a large part of the Group’s total communication with
customers, and the intention is to increase the volume
of e-services both in Finland and in the rest of the
Group.
In Norway, the Tryg Vesta Group participated from the
start when the Norwegian banks launched eFaktura,
December 2003, almost 60,000 customers had
subscribed to the log in service, almost twice as many
as the year before. Around 120 customers log in every
day to view their policy overview, order a red or green
international motor insurance card before going on
holiday etc. Furthermore, some 50,000 price
calculations are made on the web site each month, and
around 900 users ask for a quotation.
electronic invoice processing, in early 2003. Customers
Tryg – e-mails received
who join eFaktura receive invoices in their on-line
banking system instead of in their physical mailbox.
100
('000)
The Tryg Vesta Group’s Norwegian customers were
invited to view their policies and insurance terms and
conditions via Vesta’s web site in May 2003. The option
also includes such facilities as amending policies. Vesta
received a total of 40,000 e-mails from customers in
2003, and the number of claims reported by e-mails
increased by almost 80 per cent from 2002 to 2003.
80
60
40
20
0
2001
2002
2003
Tryg received almost 97,000 e-mails in 2003. Subjects
included claims reporting, requests for quotations etc.
This was a steep increase of 255 per cent over 2002,
when Tryg received just under 38,000 e-mails.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 20 of 98
Common marine and aviation department
The customers of the Tryg Vesta Group’s marine and
aviation make up a very diverse group, and it takes a
broad range of competencies to handle this diversified
and specialised portfolio. The Group therefore decided
to set up a common marine and aviation department at
the end of 2003, uniting competencies across the two
biggest companies, Tryg and Vesta. Marine customers
alone account for an annual premium volume of DKK
230m, ranging from small fishing boats to very large
ferries both in Denmark and Norway. The marine and
aviation department has a total of 22 employees.
Common alarm centre
In 2003, the Tryg Vesta Group continued developing
the common alarm centre, Tryg Alarm, in Denmark. The
centre is staffed by employees and doctors round the
clock ready to assist the Group’s travel and health
insurance customers in an emergency. In addition to
being able to provide care services, the employees’
core competencies include speaking at least two foreign
languages.
Network is a key word for Tryg Alarm. The alarm centre
has a number of external partners around the world
within such areas as transport, payment transfers and
hospitals. Tryg Alarm’s regular staff includes a doctor,
and seven medical consultants specialising in different
fields are attached to the centre.
Not only customers who hold travel and health
insurance policies may call Tryg Alarm to get help.
Tryg’s 24-hour claims service is a part of Tryg Alarm,
which thus also handles calls from Danish insurance
customers in connection with a claims situation.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 21 of 98
Employees
The Tryg Vesta Group applied the Balanced Scorecard
methodology in 2003 to strengthen efforts in relation to
targets and initiatives. The aim is to enable all units to
break down the Group’s overall targets in order for each
employee to know his or her expected contribution and
Future surveys of employee satisfaction in the Tryg
Vesta Group will apply a common method.
Competency development
The Tryg Vesta Group spent DKK 40m on employee
training in 2003 and began collaborating on common
competency and management development initiatives.
in order to maintain transparency and openness about
Management development
the organisation’s target and initiative efforts.
The first stage of a common management development
The Tryg Vesta Group made a great effort in 2003 to
establish competency development for managers and
employees. The Group also made its vision of being an
inclusive workplace very visible and tangible by setting
up dedicated integration training for persons with an
ethnic background.
Employee satisfaction
Believing that satisfied employees are key to creating
results, the Tryg Vesta Group measures employee
satisfaction each year.
The overall results of the survey are collected in
Norway and Denmark to provide an overview of any
potential concerted action that could be taken to
heighten satisfaction in one or more areas. However,
programme in the Tryg Vesta Group was launched in
February 2004. The programme is intended to help
embed the Group’s corporate values in the day-to-day
work and in joint projects, while also focusing on teams
and collaboration in order to develop the Group’s
combined knowledge and promote the exchange of
ideas and experience.
The Tryg Vesta Group developed a management
course for its 210 Norwegian managers and key
professionals in 2003. The objectives of the courses
included helping managers to become even better at
forming strategies into practice and generally to
enhance managers’ competency, focusing on higher
employee satisfaction, improved business
understanding, development of cross-cutting
collaboration, and a common culture with shared
the results are primarily followed up in the local
values.
departments, whose managers and employees together
are responsible for cultivating and maintaining results
and prepare the ground for improvement.
The survey scored high in general on satisfaction in
Denmark with an overall score of 4.03 on a scale from 1
to 5.
The Group also developed management courses for all
management levels in Denmark in 2003. Development
courses for middle management employees and more
experienced managers focused on collaboration,
coaching and process improvement. Relatively new
managers attended courses matching Tryg’s business
and employees. More than 115 of a total of some 200
When measuring employee satisfaction, Vesta employs
Danish managers attended such management
a method which does not involve the use of a total
development courses in 2003. To ensure future
result as does the one employed in Denmark. Grouped
executive talent, Tryg has developed a talent promotion
into main categories, however, Vesta’s scores for 2003
process. Around ten potential managers completed this
are on a level with other Norwegian companies.
course in 2003.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 22 of 98
Teams and collaboration
insurance as well as Danish culture and the Danish
Almost 1,000 of Tryg’s 2,250 employees attended team
language to the participants.
building courses in 2003. Tryg has been focusing on
teams for many years, but relaunched the concept in
2003 with more distinctive definitions of the
characteristics of a good team, including the
characteristics of a good team player and a good team
manager.
During the year, 63 per cent of Tryg’s employees spent
two days in another department to gain knowledge and
understanding of the work processes of other
departments. Another objective of the arrangement was
In 2003, 7.4 per cent of new employees taken on by
Tryg had an ethnic background, and the total proportion
of employees with an ethnic background increased from
1.9 per cent at 31 December 2002 to 2.9 per cent at 31
December 2003.
Tryg also aims to include persons with an ethnic
background among the trainees taken on each year. In
2003, two out of 32 trainees had an ethnic background.
to promote in-house job rotation.
Stages of life
E-learning
In 2003, Vesta developed its training strategy further by
putting even greater emphasis on e-learning courses.
The principal aim is to make training more uniform, but
substantial savings are also generated because more
employees are able to complete training from their own
workplaces rather than attending courses in
conventional classrooms.
The Siebel customer service system applied by both
Tryg and Vesta makes room for working closely
together on training in using the system. Experience
gained in using e-learning will be shared across
national borders.
Inclusiveness
Inclusiveness is also about making room for employees
of either sex and in different age groups.
Human resources policies in both Denmark and Norway
take into account that an employee’s working life has
various stages with varying requirements. The Group
needs employees at all stages of life. Committed to
social responsibility, the Group aims to create a
framework that provides development opportunities and
support to all employees.
In the light of overall labour market trends with an
upcoming shortage of young people to recruit from, the
Tryg Vesta Group is focused on recruitment and on
retaining employees. Over the next five years alone,
around 400 employees will be leaving the Group due to
retirement or early retirement.
The Tryg Vesta Group wishes to be an inclusive
Management and organisational
workplace with room for everyone. The Group believes
in appreciating and benefiting from differences such as
age, sex, ethnic background, nationality, religion and
personality.
Immigrants in Tryg
changes
Executive Management
The Executive Management of the Tryg Vesta Group
comprises Ms Stine Bosse, Group CEO of the Tryg
Vesta Group, Mr Erik Gjellestad, CEO of Vesta, Mr
Twelve immigrants started on a new two-year
Morten Hübbe, Group CFO, Mr Peter Falkenham, Mr
integration training programme with Tryg in March
Stig Ellkier-Pedersen and Mr Bjørn Thømt, Members of
2003. Backed by EU grants and in collaboration with
the Group Executive Management.
municipalities all over Denmark, Tryg set up a special
training programme for immigrants designed to teach
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 23 of 98
Ms Stine Bosse was appointed in January 2003, and Mr
Morten Hübbe was appointed in June 2003.
Internal organisation
The Tryg Vesta Group set up transverse reinsurance
and investment organisations as early as in 2002. The
two organisations were adjusted in 2003 and
implemented in additional parts of the Group.
The Tryg Vesta Group set up a common IT organisation
in April 2003 with the purposes of reducing costs and
achieving further synergies within in the Group.
Throughout 2003, the Group worked on changing its
overall structure, and in January 2004, the Tryg Vesta
Group announced that its future base would be two
dedicated local business areas for personal and
commercial customers, one in Norway and one in
Denmark. Together and individually, they are
responsible for generating targeted growth of the
profitable part of the Group’s personal and commercial
portfolios. Furthermore, the Group will be based on a
single dedicated Nordic business area for the industrial
market which across Tryg and Vesta will ensure
targeted optimisation of the corporate portfolio by
improving the correlation between price, risk and
profitability, thereby creating a more balanced portfolio.
Finally, the Group will set up shared staff functions.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 24 of 98
Risk management
Risk management and ALM (Asset Liability
Management)
The Tryg Vesta Group’s overall financial risk can be
divided into
Vesta in Norway has, for example, scaled back its
business of providing insurance to pilots against the
eventuality that they lose their pilot’s certificate for
health reasons. Vesta has also completely withdrawn
from insuring municipalities. In Denmark, Tryg
introduced stricter security requirements for some
commercial customers in 2003, and raised premiums
for fire insurance of companies in the wood industry.
- insurance risk, involved in the current insurance
Random risk
operations
- market risk, involved in investment activities and
financing
- operational risk, involved in operating a business.
The Group manages such risks through its underwriting
policy (acceptance rules, price, terms and conditions),
by taking out reinsurance, in its current management of
Random risk results from fluctuations in the number and
size of claims. In the case of a large company such as
the Tryg Vesta Group, which has many different types
of customers and insurance products, normally only
large claims from one-off events and many claims
occurring at the same time after windstorms,
cloudbursts, freezing rain and similar events have a
significant impact on the Group’s financial results.
investment activities, and through business procedures
Systematic risk
and policies. The Tryg Vesta Group is in the process of
Systematic risk relates to changes in legislation, case
further developing and implementing as its risk
law, macroeconomic and technological developments
management basis a so-called ALM (Asset Liability
and general changes in policyholder behaviour. Such
Management), a framework for measuring the Group’s
fluctuations will impact several or all policies at one and
total exposure, which explicitly takes into account the
the same time, resulting in systematic fluctuations in the
interaction of assets and liabilities. This framework for
Group’s financial results.
describing the Group’s exposure will be used for
evaluating alternative strategies, primarily related to
future portfolio composition, reinsurance strategies and
the overall investment strategy.
Due to changes in legislation and practice, systematic
risk has historically affected, in particular, personal
accident lines, which are characterised by claims being
settled over several years. This is reflected in the Tryg
The Group’s ongoing measurement of risk-based
Vesta Group’s financial statements as run-off losses
capital for the individual business areas and the
and gains.
resulting profitability requirements will also take place
within the ALM framework.
Reinsurance
Insurance risk
The Tryg Vesta Group makes systematic efforts to chart
the insurance risk to which different insurance lines and
customer groups are exposed in order to define
requirements in respect of customer mix and earnings.
In some cases, this results in activities being adjusted.
The Tryg Vesta Group uses reinsurance as a key
instrument to manage random risk. The Group’s
reinsurance programme covers natural disasters up to a
total of DKK 3.5bn with a retention per event of DKK
100m in Denmark, NOK 60m in Norway and DKK 75m
in Poland. The maximum cover of DKK 3.5bn has been
determined based on analyses of portfolio risk exposure
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 25 of 98
and on the assumption that a loss of this size occurs
A natural disaster in Norway would be covered by the
less often than once every one hundred years.
Norwegian Pool of Natural Perils. Therefore, it would
The Tryg Vesta Group regularly reviews the Group’s
overall reinsurance cover. The review in 2002 caused
the Group to change its reinsurance of commercial
customers’ buildings and contents insurance – the so-
called property area - in Denmark from proportional to
non-proportional cover. The change means that only
large claims of more than DKK 50m are covered,
making it even more necessary for the Group to set its
prices correctly. In 2003, the Tryg Vesta Group likewise
switched from proportional to non-proportional cover of
the entire marine area. Combined with other
adjustments, these changes generated total savings of
around DKK 500m in the Group’s annual reinsurance
expenses.
The reinsurance cover is intended to limit the financial
impact of claims related to one-off events or events that
may have a significant impact on the financial results,
and such claims typically result from a large fire or a
very severe windstorm. The biggest, single large claim
for the Tryg Vesta Group in the past ten years was just
under DKK 300m.
A claim of between DKK 100m and DKK 300m would
affect the Group’s combined ratio, net of reinsurance, in
2004 by between 0.5 and 0.7 percentage point,
corresponding to negative financial results of between
DKK 65m and DKK 95m.
not impact the Tryg Vesta Group’s results and
combined ratio because the Norwegian insurance
companies settle the final bill for natural disasters
caused by windstorms, landslides, flooding and similar
events with the natural disaster pool, to which all
policyholders in Norway make a contribution over their
fire policy. In principle, it is similar to the Danish storm
surge pool, which covers losses resulting from sea
surges that cause flood. All fire insurance policyholders
pay a contribution to this pool every year.
Reinsurance companies
The Tryg Vesta Group pursues a policy of cooperating
with a broad range of international reinsurers in order to
control and diversify the credit risk involved in the
reinsurance programme and to avoid becoming
dependent on individual reinsurers. This is ensured
through regular monitoring of and follow-up on
developments in the international reinsurance market.
Credit risk is also managed through the Group’s
security guidelines, which specify that the Group only
cooperates on short-tail business with reinsurers having
at least a BBB rating from Standard & Poor’s. In the
case of long-tail business, characterised by claims
being settled over several years, reinsurers are required
to be rated least A by Standard & Poor’s.
Acceptance rules
The biggest natural disaster affecting the Tryg Vesta
Besides reinsurance, the Tryg Vesta Group uses
Group in the past ten years was the storm that hit
acceptance rules, tariffs and individual risk assessment
Denmark in December 1999 and resulted in losses to
to manage insurance risk in order to achieve the
the Group’s customers of just over DKK 2bn. A storm in
required balance between various types of risks.
Denmark causing losses of between DKK 600m and
DKK 3bn would in 2004 impact the Group’s combined
Market risk
ratio, net of reinsurance, by between 1.3 percentage
points and 1.7 percentage points, equal to an adverse
impact on the financial results of between DKK 185m
and DKK 240m.
The results and shareholders’ equity of the Tryg Vesta
Group are impacted by developments in the financial
markets as assets and liabilities are marked-to-market
on an ongoing basis. Market risk includes changes in
interest rates, equity prices, exchange rates and real
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 26 of 98
property prices and the credit risk on bonds, money
adverse market development would not cause
market investments and similar instruments. The
problems. The Tryg Vesta Group was rated green at 31
interest rate risk affecting the financial statements is
December 2003 with an excess of DKK 1.8bn relative to
limited as discounted provisions are only used for
an amber rating.
Workers’ Compensation. The insurance liabilities have
a duration of around two years.
Credit risk
The Danish Financial Supervisory Authority introduced
the so-called traffic light scenarios for general insurance
companies and reinsurance companies effective 31
December 2003. Life insurance companies and pension
funds have used the traffic light system since 2001. The
object of the system is to calculate core capital
performance in various hypothetical scenarios such as
declining equity prices, changes in interest rates etc.
Red indicates that a negative, but realistic market
development would materially threaten the company’s
core capital. Amber indicates that a more unrealistic,
but not improbable market development would threaten
the company’s core capital. Green indicates that a very
The Tryg Vesta Group is exposed to credit risk on
bonds and money market placements. The bond
portfolio primarily comprises mortgage bonds and
government bonds with a small proportion of corporate
bonds.
Currency risk
Basically, the Group hedges risk relating to investments
in shares and bonds denominated in foreign currency.
Most investments in shares in foreign subsidiaries were
hedged in 2003.
Tryg Vesta Group – market risk exposure as at 31 December 2003
Type of asset
Change
Earnings impact before tax
DKKm
Assets
Bonds
Shares
0.85% point rate increase
12% fall in prices
Real property
8% fall in prices
Currency
Credit risk
1%/3% fall in euro/non-euro exch. rates
Weighted averagte loss
Liabilities
Provisions
0.85% point rate increase
-327
-281
-161
-15
-52
70
Investment policy
management agreements with Nordea concerning
bonds, shares, cash funds and to some extent real
The Tryg Vesta Group has a common organisation that
property. Based on the investment policies, the Group
manages investments on behalf of all the Group’s
handles the management of asset mixes, benchmark
companies. Investment policies are defined for each
determination, duration limits, limits on the geographic
company in the Group based on an overall investment
distribution of assets, types and risk profile of bonds,
policy, taking into account the characteristics of each
shares and real property, respectively. The Group
company and the legislative framework of each country.
handles all investments in unlisted securities.
The investment strategies defined in the Group are
The Tryg Vesta Group’s investment policy aims to
primarily carried out by way of external portfolio
maximise return, taking into account the composition
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 27 of 98
and duration of liabilities and the company’s solvency.
December 2003. The portfolio, worth DKK 1.2bn
Overall, the Group’s liabilities have a duration of around
comprising mainly office property, was sold to Nordea
two years, which dictates an asset mix focused on a
Liv & Pension.
high degree of security, that is, limited fluctuations and
strong liquidity. Therefore, bonds will continue to
Operational risk
constitute the majority of total investments with special
focus on short-term bonds and low credit risk.
Investments in shares, bonds and real property consist
of well-diversified portfolios offering considerable risk
diversification.
Sale of real property
The Tryg Vesta Group’s investment policy has aimed to
reduce the proportion of investments in real property,
which has been high up till now. In order to optimise its
capital structure, the Tryg Vesta Group sold around half
of its portfolio of investment properties in Denmark in
In 2003, the Tryg Vesta Group set up a safety and
security organisation, whose objects include to ensure
that the required security policies and related business
procedures are implemented and maintained. In
November 2003, the Group appointed a chief security
officer, who reports to the Group’s CFO. The chief
security officer will primarily be focused on the Group’s
IT security in 2004, but future areas will include security
in relation to environmental policies, working
environment and physical security
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 28 of 98
Shareholder information
Tryg i Danmark smba is sole shareholder in the Tryg
Vesta Group A/S.
Distribution of profit
Profit for the year amounted to DKK 742m. The
Supervisory Board proposes a dividend of DKK 50m
and that the remaining profit of DKK 692m be carried
forward to next year.
Shareholders’ equity
At 31 December 2003, the shareholders’ equity
amounted to DKK 5,360m and was increased by
1,092m in 2003. The increase is composed of the profit
for the year of DKK 742m, dividend distribution of DKK
50m and a capital increase of DKK 400m.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 29 of 98
In 2002, Unibank and Tryg are part of the formation of
Nordea. A year after this, Tryg establishes a branch in
Finland from where insurance products and related
services are sold to the Finnish bank customers of
Nordea.
In 2002, Tryg acquires the general insurance
undertaking of Estonian Nordika Kindlustus, which was
established in 1990.
Later, the same year, Tryg i Danmark smba acquires all
the general insurance activities of Nordea, and the Tryg
Vesta Group is a reality. At the same time, The Group
acquires the Danish and Norwegian parts of Zurich’s
general insurance activities.
The Tryg Vesta Group
history
The Tryg Vesta Group history is a result of a number of
mergers and acquisitions. The Danish insurance
company, Kjøbenhavns Brand dates farthest back. It
was established by Royal decree of 1731 after the fire
of Copenhagen in 1728. The first time for the name
Tryg to appear was in 1911.
Vesta was established in 1880, and the name Vesta is
derived from the Roman mythology. Vesta is the
goddess of hearth fire and thereby also of the home
and family.
In 1994, Tryg acquires the Danish insurance operations
of Winterthur.
In 1995, Tryg and Baltica merges and become Tryg-
Baltica. In 2001, the name is simplified and becomes
Tryg.
Dansk Kaution, which was established in 1895,
becomes part of Tryg in 1998. In the same year, Tryg
enters the Polish general insurance market and
acquires the controlling interest in the company Energo-
Asekuracja, which was established in 1994. In 2002,
the company changes name to Tryg Polska.
In 1999, Tryg merges with Denmark’s second largest
bank group, Unidanmark, and the general insurance
activities of Unibank are integrated into Tryg.
In the same year, Tryg acquires the English Colonia
Baltica. The company is integrated into Tryg’s
reinsurance company Tryg-Baltica international.
Together they form TBi.
At the end of 1999, Vesta, which has been part of
Skandia since 1989, becomes part of the family. A
merger with Æolus and Bergens Brand in 1962 is part
of the Vesta history.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 30 of 98
Organisation
Tryg Vesta Group A/S
Tryg Forsikring A/S
Vesta
Forsikring AS
Tryg-Baltica
Forsikring,
internationalt
forsikringsselskab A/S
Nordea
Vahinkovakuutus
Tryg Polska
Towarzystwo
Ubezpieczen S.A.
Nordicum
Kindlustuse
Eesti AS
Dansk
Kautionsforsikrings-
Aktieselskab
Chevanstell Ltd.
(Business
in run-off)
Simplified legal structure
Tryg
Tryg is Denmark’s largest general insurer, serving more
than one million households and businesses. Tryg has
2,250 employees and sells insurance policies through
its own distribution channels, insurance brokers in the
industrial market and the upper part of the commercial
market as well as through Nordea’s branches, just as
Tryg sells Nordea’s pension products.
Read more at www.tryg.dk
Vesta
Vesta is Norway’s third-largest general insurer, serving
some 600,000 households and businesses. Vesta has
1,460 employees and sells insurance policies through
its own distribution channels, a well organised franchise
network, insurance brokers in the industrial market and
the upper part of the commercial market as well as
through Nordea’s branches, just as Vesta sells
Nordea’s pension products.
Read more at www.vesta.no
Tryg-Baltica international (TBi)
TBi is the Tryg Vesta Group’s specialist in international
reinsurance based in Copenhagen and Amsterdam.
Read more at www.tbi.dk
Nordea Vahinkovakuutus
The Tryg Vesta Group’s branch in Finland only sells
insurance policies to personal customers, and this is
done through Nordea’s Finnish branches.
Read more at www.nordea.fi
Tryg Polska
The Group’s company in Poland sells insurance policies
to households and businesses through a countrywide
network of branch offices, agents and brokers.
Read more at www.tryg.pl
Nordicum Kindlustus
The Group’s Estonian company focuses first and
foremost on insurance products to the commercial
sector, but it also sells insurance products to personal
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 31 of 98
customers through its branch offices in all major towns
in Estonia.
Read more at www.nordicum.ee
Dansk Kaution
Dansk Kaution specialises in bonds and guarantees for
Danish enterprises which conclude major contracts,
especially within the building and construction sector
and contract manufacturing business.
Read more at www.danskkaution.dk
Chevanstell Ltd.
Chevanstell Ltd. consists of the Tryg Vesta Group’s
London market business, which has been in run-off
since September 2003.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 32 of 98
9.197
7.069
449
-5.862
-1.760
-181
-285
93
-52
-244
-1.482
47
-1.679
-375
21.606
4.268
29.833
82,9
24,9
107,8
Financial highlights and key ratios, Tryg Vesta Group
DKKm
Income statement
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments after
transfer to insurance activities
Other ordinary expenses
Profit/loss on ordinary activities before tax
Extraordinary items and minority interests
Tax
Profit/loss for the year
2003
2002 *)
2001 *)
2000 *)
28.01-31.12.
2002 **)
17.333
17.002
13.536
11.700
14.566
641
-11.344
-3.626
-101
136
675
-22
789
1
-48
742
13.311
899
-11.285
-3.577
-199
-851
-175
-52
-1.078
-1.256
243
-2.091
11.153
783
-8.902
-2.869
-77
88
1
0
89
7
-45
51
10.031
825
-8.366
-2.719
-86
-315
726
0
411
0
-78
333
Loss on business in run-off, net of reinsurance
-699
-628
-316
-478
Balance sheet
Technical provisions, net of reinsurance
Total shareholders' equity
Total assets
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Key ratios, continued business (excl. business in run-off)
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Key ratios accounted for according to other method
Gross claims ratio
Ceded business in percentage relative to gross premiums
Gross claims ratio, net of ceded business
Gross expense ratio
Gross combined ratio, net of expenses to reinsurance
Return on equity
Return on equity before tax
Return on equity after tax
22.475
5.360
31.359
21.606
4.268
29.833
17.673
4.564
24.032
15.826
4.305
23.575
77,9
24,9
102,8
76,6
24,2
100,8
73,7
5,8
79,5
22,9
102,4
16,4
15,4
84,8
26,9
111,7
83,4
25,7
109,1
77,9
6,9
84,8
24,3
109,1
-52,9
-47,4
79,8
25,7
105,5
80,1
25,3
105,4
78,3
1,5
79,8
24,5
104,3
2,2
1,2
83,4
27,1
110,5
83,7
26,9
110,6
88,8
-5,8
83,0
26,1
109,1
8,7
7,0
Number of full-time employees at the end of the period
4.420
4.408
4.317
4.264
*) The figures are pro forma figures as the Tryg Vesta Group was established on 28 June 2002. The basis of calculating
these figures has been defined in the accounting policies on pp. 66-67.
**) The Tryg Vesta Group was established on 28 June 2002. The subsidiaries have been included as from 28 June 2002.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 33 of 98
Review of the Tryg Vesta
Group’s financial
statements
been below average. The development was impacted
negatively by the falling technical interest.
Key ratios
Combined ratio, net of reinsurance
Financial results
The profit for the year before extraordinary items and
tax amounted to DKK 789m against a loss of DKK
1,078m in 2002. The technical result improved by DKK
987m and the results of investment activities improved
by DKK 850m.
The accounting figures for 2000-2002 are pro forma
figures.
Technical result
120
100
80
60
40
20
0
110.5
105.5
111.7
102.8
83.4
79.8
84.8
77.9
27.1
25.7
26.9
24.9
2000*
2001*
2002*
2003
Expense ratio, n.o.r. Claims ratio, n.o.r.
The technical result of DKK 136m is a significant
improvement relative to 2002. The improvement of DKK
*Pro forma figures
987m was achieved in spite of the falling interest rates
in both Denmark and Norway, resulting in a reduction in
the technical interest of DKK 258m.
Technical result
Compared with 2002, the combined ratio, net of
reinsurance, improved by 8.9 percentage points. Of the
8.9 percentage points, 6.9 percentage points were
attributable to claims and 2.0 percentage points to
expenses.
In Denmark and Norway, which together have 89 per
cent of the premiums, the combined ratios were
reduced by 9.0 and 6.7 percentage points, respectively.
42
For both business areas, it was primarily the claims
ratios, which were improved.
-64
-108
-219
-237
-292
-276
Denmark Norw ay
Other
Run-off
2002*
2003
In 2003, return on shareholders’ equity was provided by
16.4 per cent, while the return in 2002 was negative by
52.9 per cent.
Premiums
*Pro forma figures
Both in Norway and in Denmark, the effect of last year’s
premium increases on personal and commercial
The positive development of the technical result is a
policies materialised in 2003. Most of our customers
consequence of the many profitability measures taken.
chose to remain insured by the Group, at the same
Further, weather-related losses and large losses have
time, the inflow of new customers was satisfactory.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 34 of 98
439
m
K
K
D
600
400
200
0
-200
-400
Total gross earned premiums of the Group were DKK
“social inflation”, i.e. the ongoing displacement of tasks
17,333m, composed primarily of a growth of 11.2 per
from public funding to private insurance. Therefore, the
cent in Denmark and 6.3 per cent in Norway, both
Tryg Vesta Group pursues a conservative reserve
stated in local currency. The relatively lower growth in
policy in general within these areas.
Norway is due to deliberate deselection, primarily of the
municipality segment. In addition, the development in
earned premiums was affected by the run-off
procedures of Chevanstell Ltd. in London initiated in
September 200, and as a natural consequence thereof,
fall in premium earnings was approximately DKK 600m.
Additional fall in the premium earnings in 2004 is
expected for Chevanstell Ltd.
Simultaneous with the improvement of the financial
results, the Group has increased its provisions
considerably to strengthen its readiness for future
expenses for personal injuries, including Workers’
Compensation and accidents. For the Group as a
whole, the strengthening within these areas amounted
to more than DKK 450m.
Earned premiums, net of reinsurance, were 9.4 per cent
Costs
higher than in 2002. The relatively higher growth in
earned premiums, net of reinsurance, compared with
the growth in gross earned premiums, was due to the
transition to a changed reinsurance programme
The Group’s expense ratio, net of reinsurance, was
24.9 for 2003, which was an improvement of 2.0
percentage points relative to 2002.
according to which the Group shall pay a lower
The administrative expenses fell by DKK 206m to DKK
premium to the reinsurers.
1,885m. The fall was attributable to general cost
Claims
The Group’s claims ratio, net of reinsurance, was 77.9
and has fallen by 6.9 percentage points since 2002.
This was very satisfactory and was in particular due to
constraints and utilisation of synergies within the Group.
The expense ratio for Danish general insurance fell by
1.1 percentage point, and for Norwegian general
insurance, it fell by 0.1 percentage point.
the claims ratio for Danish general insurance operations
Other ordinary expenses
having fallen by 7.9 percentage points and that for the
Other ordinary expenses are holding expenses in Tryg
Norwegian insurance operations having fallen by 6.6
Vesta Group A/S.
percentage points.
The improved claims ratio included a strengthening of
the reserves for earlier years. This applied primarily to
the personal accident area and secondarily to the
business in run-off.
The combined ratio, net of reinsurance, included a
strengthening of the reserves – so-called run-off losses
– of DKK 699m in 2003, which impacted the combined
ratio by 4.8 percentage points.
Consequently, there are still run-off losses on personal
accident business written in earlier years in Denmark,
Norway and Poland. From experience, we know that
the development within these areas is characterised by
Profit on investments
The Tryg Vesta Group’s total profit on investments
before transfer to insurance activities was DKK 1,448m
equivalent to a return of 6.2 per cent for 2003.
The investment return was affected by a positive return
on bonds, shares and real property.
Transfer to insurance activities was DKK 773m in 2003
against DKK 1,017m in 2002.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 35 of 98
Tax
Tax on the profit for the year was DKK 48m.
Development of the shareholders’ equity in 2003
(DKKm)
Shareholders' equity, 1 January 2003
The low tax expense was due to unrealised gains on
shares, which are not subject to tax, a lower tax rate in
Norway as well as to the use of some tax assets. The
lower tax rate is not expected in future.
Capital increase
Profit for the year
Dividend
4,268
400
742
-50
Shareholders' equity as at 31st December 2003
5,360
Balance sheet
Relative to 2002, the balance sheet was increased by
DKK 1,526m, the technical provisions by DKK 869m
Cash flows
and the shareholders’ equity by DKK 1,092m.
Cash flows from operations in 2003 amounted to DKK
3,182m, which primarily was used to increase
investments in bonds. Cash flows from funding
amounted to DKK 383m and was made up of capital
increase in Tryg Vesta Group A/S of DKK 400m and
subordinate loan of DKK 700m and debt repaid to credit
institutions of DKK 717m.
Assets, provisions and shareholders’ equity
(31.12.2003)
40,000
30,000
m
K
K
D
20,000
10,000
0
9
5
3
,
1
3
3
3
8
,
9
2
6
0
6
,
1
2
5
7
4
,
2
2
0
6
3
,
5
8
6
2
,
4
Assets
Provisions
2002
Shareholders'
equity
2003
On assets, the increase was seen in the form of an
increased bond portfolio and amounts owing, whereas
there was a fall in relation to land and buildings owing to
divestment of real estate property.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 36 of 98
Financial highlights and key ratios per business area
DKKm
2003
2002 *)
2001 *)
2000 *)
The Group
Gross earned premiums
Technical result
Profit/loss on investments
Other ordinary expenses
Profit/loss on ordinary activities before tax
Combined ratio
The Group, continued business
Gross earned premiums
Technical result
Profit/loss on investments
Other ordinary expenses
Profit/loss on ordinary acitivites before tax
Combined ratio
Danish general insurance
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Combined ratio
Norwegian general insurance
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Combined ratio
TBi
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
17.333
136
675
-22
789
102,8
16.702
373
685
-22
1.036
100,8
8.242
439
393
832
96,6
7.161
42
316
358
103,9
716
-10
10
0
17.002
-851
-175
-52
-1.078
111,7
15.791
-559
-170
-52
-781
109,1
7.411
-64
-128
-192
105,6
7.111
-276
-55
-331
110,6
722
-112
2
-110
13.536
88
1
0
89
105,5
12.615
105
4
0
109
105,4
6.467
-49
49
0
106,8
5.134
202
-42
160
101,6
552
-12
-1
-13
11.700
-315
726
0
411
110,5
11.162
-321
711
0
390
110,6
6.211
-233
607
374
111,0
4.170
3
78
81
108,8
426
-55
0
-55
Combined ratio
105,8
120,3
110,2
115,5
Finnish general insurance
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
61
-48
-1
-49
21
-66
-1
-67
2
-29
0
-29
Combined ratio
182,0
493,5
1.886,2
-
-
-
-
-
*) The figures are pro forma figures as the Tryg Vesta Group was established on 28 June 2002.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 37 of 98
Financial highlights and key ratios per business area, continued
DKKm
2003
2002 *)
2001 *)
2000 *)
Polish general insurance
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
491
-49
4
-45
496
-28
32
4
462
-7
-2
-9
361
-36
26
-10
Combined ratio
119.2
111.7
106.3
120.5
Estonian general insurance
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
39
-1
0
-1
41
-13
0
-13
Combined ratio
106.1
136.5
Business in run-off**
Gross earned premiums
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Combined ratio
Tryg Vesta Group A/S (parent company)
Loss on investments (excluding
subsidiaries)
Other ordinary expenses
Loss on ordinary activities before tax
631
-237
-10
-247
175.6
-37
-22
-59
1,211
-292
-5
-297
149.8
-20
-52
-72
-
-
-
-
-
921
-17
-3
-20
-
-
-
-
-
538
6
15
21
108.3
108.6
-
-
-
-
-
-
*) The figures are pro forma figures as the Tryg Vesta Group was established on 28 June 2002.
**) Business in run-off comprises run-off across the legal structure, including Chevanstell Ltd.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 38 of 98
Danish general insurance
DKKm
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Loss on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Key ratios accounted for according to other method
Gross claims ratio
Ceded business in percentage rel. to gross premiums
Gross claims ratio, net of ceded business
Gross expense ratio
Gross combined ratio, net of expenses to reinsurance
2003
8,242
7,493
221
-5,657
-1,584
-34
439
393
832
88
11,777
75.5
21.1
96.6
70.6
6.2
76.8
20.3
97.1
Number of full-time employees at the end of the period
2,248
Pro forma
2002
Pro forma
2001
Pro forma
2000
7,411
6,314
326
-5,265
-1,399
-40
-64
-128
-192
55
10,396
83.4
22.2
105.6
82.2
1.7
83.9
21.1
105.0
2,330
6,467
5,781
338
-4,776
-1,399
7
-49
49
0
-334
8,842
82.6
24.2
106.8
79.0
2.6
81.6
23.9
105.5
2,458
6,211
5,729
392
-4,829
-1,528
3
-233
607
374
-518
8,313
84.3
26.7
111.0
90.7
-6.2
84.5
25.9
110.4
2,552
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 39 of 98
Financial results
Key ratios
The profit on ordinary activities before tax of the Danish
Combined ratio, net of reinsurance, Personal
general insurance operations for 2003 amounted to
DKK 832m against a loss of DKK 192m for 2002. The
profit was composed of a technical result of DKK 439m
and a profit on investments of DKK 393m.
The technical result for 2003 was a profit of DKK 439m
against a loss of DKK 64m reported in 2002. The
positive development of the technical result was a
consequence of the many profitability measures taken.
Further, weather-related losses and large losses have
been below average. Moreover, the technical result
includes build-up of equalisation provisions by DKK
34m.
In addition, the financial results were affected by a very
low technical interest, net of reinsurance, of DKK 221m
for 2003 against DKK 326m recorded in 2002. The
technical interest rate for 2003 was 2.62 per cent
against 3.90 per cent in 2002.
The positive development of the technical result was
expressed in a combined ratio, net of reinsurance, of
96.6, which was a significant improvement relative to
the combined ratio, net of reinsurance, of 105.6
recorded in 2002.
108.7
105.7
101.4
97.0
120
110
100
90
80
2000*
2001*
2002*
2003
* Pro forma figures
Throughout the period, the personal insurance business
showed a continued improved development towards a
satisfactory level in 2003.
Combined ratio, net of reinsurance, Commercial
130
120
117.0
114.6
113.7
110
100
90
80
98.3
2000*
2001*
2002*
2003
* Pro forma figures
Relative to the level in 2002 and the years before,
targeted measures within the commercial insurance
operations resulted in a marked change of level in
2003.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 40 of 98
Premiums
The claims level for the personal accident business
The gross earned premiums for 2003 were DKK
remained unsatisfactory, which is why this business
8,242m against DKK 7,411 recorded in 2002,
area will be subject to considerations as to further price
equivalent to an increase of 11.2 per cent, which is
adjustments in 2004.
higher than the general level in the market.
This considerable increase was in particular attributable
force in the middle of 2002, targeted work concerning
to recent years’ premium increases having materialised.
active claims handling has been performed within the
Since the new Danish Damages Liability Act came into
The premium increases should be viewed as part of the
initiatives to enhance profitability, among other things in
connection with the statutory changes concerning The
Danish Damages Liability Act.
personal business area. To be specific, this has
resulted in the establishment of a differentiated and
targeted administration for handling personal accident
claims. Experience so far has been positive, and active
claims handling is, other things being equal, expected
to reduce the claims expenses within this business
In connection with the premium increases, Tryg saw
that the paramount part of its customers chose to
area.
continue being insured by Tryg. The reason for this was
The development in claims under the Workers’
partly that the premium increases in particular were
directed towards the commercial customers in relation
to whom the insurance agents have a close
relationship, and partly that the insurers in the Danish
market in general increased premiums on commercial
policies in 2003.
In relation to the personal insurance business in 2003,
general premium increases were introduced on
household contents insurance policies by an average of
14 per cent.
The initiatives within the commercial insurance
business were primarily targeted at the relatively large
Compensation insurance policies was not satisfactory,
which has necessitated a considerable strengthening of
the reserves. The negative development resulted in a
run-off loss of DKK 150m within this area. In order to re-
establish profitability, the premiums of selected
customer segments have been increased. On 1
January 2004, a new Act on industrial injuries came into
force. The Act extends the insurance cover
considerably. This will among other things lead to
compensation being payable for back injuries which
were not covered previously under the Workers’
Compensation insurance. The amendment leads to
premium increases of an average of 55 per cent.
commercial customers. Consequently, the contents and
property insurance policies for this customer segment
Costs
were on average increased by approximately 48 per
cent.
Claims
In 2003, the claims ratio, net of reinsurance, was 75.5,
which was an improvement relative to the claims ratio of
83.4 recorded in 2002. The marked improvement is in
particular due to the premium increases mentioned on
commercial policies as well as to loss limiting initiatives,
which typically comprise an increase in the customers’
deductibles and safeguarding requirements.
The development of expenses in 2003 was satisfactory,
expressed by an expense ratio, net of reinsurance, of
21.1, which compared with 2002, was an improvement
of 1.1 percentage point. The improvement of the
expense ratio can partly be ascribed to the premium
increases referred to and partly to the continued focus
on streamlining internal processes. In addition to this,
the expense ratio was affected favourably by the Zurich
business acquired and integrated into Tryg, and by the
achievement of anticipated synergies in this connection.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 41 of 98
Norwegian general insurance
DKKm
Exchange rate DKK/NOK, average of the year
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Profit/loss on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Technical provisions, net of reinsurance, NOK
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Key ratios accounted for according to other method
Gross claims ratio
Ceded business in percentage rel. to gross premiums
Gross claims ratio, net of ceded business
Gross expense ratio
Gross combined ratio, net of expenses to reinsurance
Number of full-time employees at the end of the period
2003
93.68
7,161
5,612
339
-4,419
-1,414
-76
42
316
358
-547
8,788
9,940
78.7
25.2
103.9
72.9
7.8
80.7
22.4
103.1
1,460
Pro forma
2002
98.46
Pro forma
2001
92.16
Pro forma
2000
91.71
7,111
5,163
469
-4,404
-1,304
-200
-276
-55
-331
-494
9,030
9,193
85.3
25.3
110.6
75.8
9.2
85.0
22.6
107.6
1,374
5,134
3,818
343
-2,999
-881
-79
202
-42
160
46
6,404
6,868
78.5
23.1
101.6
77.2
2.0
79.2
22.0
101.2
1,272
4,170
3,290
327
-2,752
-825
-37
3
78
81
45
5,763
6,358
83.6
25.1
108.7
86.6
-4.1
82.5
24.4
106.9
1,141
Financial results
The profit on ordinary activities before tax of the
Norwegian general insurance operations for 2003 was
DKK 76m in 2003, which in particular related to
transfers to the Norwegian Pool of Natural Perils. The
Norwegian Pool of Natural Perils is primarily employed
for equalising expenses in connection with storm and
DKK 358m against a loss of DKK 331 for 2002. The
flooding.
profit was composed of a technical result of DKK 42m
and a profit on investments of DKK 316m.
Further, the technical result was affected by the falling
The technical result for 2003 was DKK 42m against a
loss of DKK 276m reported in 2002. The development
of the financial results was in general satisfactory and
was primarily attributable to the profitability measures
taken and to the fact that 2003 did not see any large
losses. The equalisation provisions were increased by
interest rates in Norway, expressed in a technical
interest of DKK 339m, which was DKK 130m less than
in 2002. Like in the Danish market, a continued very low
interest level will, other thing being equal, necessitate
profitability initiatives in the Norwegian market.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 42 of 98
The positive development of the technical result was
Combined ratio, net of reinsurance, Commercial
expressed in a combined ratio, net of reinsurance, of
103.9, which was a significant improvement relative to
the combined ratio, net of reinsurance, recorded in
2002, which was 110.6. The combined ratio, exclusive
of run-off losses, was 100.8 per cent in 2003.
In 2003, the reserves were strengthened considerably
for the Norwegian operations. The strengthening of the
reserves – so-called run-off losses – amounted to just
over DKK 500m, which primarily was attributable to the
personal accident insurance business. This
corresponded to an impact on the combined ratio, net of
reinsurance, of 9.8 percentage points in 2003.
As appears from the first line in the table above, the
exchange rate of NOK fell relative to DKK during 2003.
Consequently, the earnings in Norway, translated to
Danish kroner, will show a falling trend due to the falling
exchange rate.
Key ratios
Combined ratio, net of reinsurance, Personal
104.0
101.1
101.7
110
100
90
80
2000*
2001*
2002*
2003
* Pro forma figures
Throughout the entire period, the personal insurance
business developed at a satisfactory level, which was
further improved in 2003.
124.5
129.4
116.3
106.7
140
130
120
110
100
90
80
2000*
2001*
2002*
2003
* Pro forma figures
The profitability of the commercial insurance business
was in general not satisfactory, and consequently there
is a demand for further initiatives in the years ahead.
Premiums
The gross earned premiums for 2003 were DKK
7,161m compared with DKK 7,111m recorded in 2002.
In local currency, this corresponds to an increase of 6.3
per cent.
commercial insurance portfolio – having materialised.
Further, it was attributable to Vesta’s customers having
chosen to remain customers in Vesta, and to a
satisfactory inflow of new customers.
The growth in the personal insurance portfolio was 6
per cent in 2003, whereas the industrial customer
segment saw a negative growth of 8 per cent, and the
small and medium-sized commercial customer segment
experienced a negative growth of 4 per cent. The
development is in keeping with the wish to alter the
Norwegian portfolio composition to include a relatively
larger share of personal insurance policies.
Moreover, the development within the commercial
insurance area has been characterised by targeted
98.5
The growth was in particular attributable to recent
years’ premium increases – primarily within the
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 43 of 98
work performed in relation to re-evaluating the
unsatisfactory, and the expense ratios for the areas
commercial insurance policies, and within selected
were 130, 166 and 147 respectively.
areas premiums have been increased considerably. As
early as in 2002, considerable premium increases were
Costs
introduced in relation to Workers’ Compensation
insurance policies in order to enhance profitability. The
effects of the measures initiated are expected to further
materialise in 2004.
In 2002, Vesta decided to completely withdraw from
insuring municipalities, a business area that had been
unprofitable for several years. Viewed separately, this
has led to a reduction in the market share of Norwegian
Workers’ Compensation insurance from 26 per cent at
the end of 2002 to 19 per cent at the end of 2003.
Claims
In 2003, the expense ratio was 25.2, which was a small
reduction relative to the level of 25.3 in 2002. The
expense ratio was affected, like in 2002, by provisions
for pension commitments as a result of the low interest
level. In 2003, provisions of just over DKK 94m were
made in respect of pension commitments to the
employees, corresponding to an increase in the
expense ratio of 1.7 percentage point. The employees
of Vesta are guaranteed a fixed monthly retirement
benefit, and accordingly the company’s pension
contributions to employees vary in line with interest
rates.
In 2003, the claims ratio, net of reinsurance, was 78.7,
The expenses were affected in the opposite direction by
which was an improvement relative to the claims ratio of
a procurement project, which reduced the
85.3 recorded in 2002.
administrative expenses.
The development was satisfactory within the personal
insurance business and less satisfactory within the
commercial business area despite the fact that Vesta’s
commercial customers were spared large losses again
this year.
A contributory factor to the unsatisfactory performance
of the commercial insurance business was that the
development within the personal insurance business,
which formed 23 per cent of the total portfolio,
performed unsatisfactorily. Consequently, it was
necessary to strengthen the claims reserves
considerably within this area.
Most of the increased claims reserves related to losses
on business written in earlier years, which resulted in
substantial run-off losses. In the financial results for
2003, the run-off losses on the personal insurance
business were approximately DKK 265m.
It was in particular within the areas: Workers’
Compensation, diseases and other personal accident
insurance in businesses that performance in 2003 was
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 44 of 98
Tryg-Baltica international (TBi)
DKKm
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Profit/loss on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Number of full-time employees at the end of the period
2003
716
655
19
-495
-198
9
-10
10
0
-64
735
75.6
30.2
105.8
30
Pro forma
2002
Pro forma
2001
Pro forma
2000
722
646
24
-506
-271
-5
-112
2
-110
-20
667
78.3
42.0
120.3
32
552
511
24
-369
-194
16
-12
-1
-13
16
621
72.2
38.0
110.2
28
426
374
23
-303
-129
-20
-55
0
-55
18
393
81.0
34.5
115.5
28
Financial results
The results before tax for TBi were DKK 0 against a
loss of DKK 110m for 2002. The financial results still
were not satisfactory, but they express an increased
focus on profitability over growth, which was in focus in
earlier years.
The combined ratio, net of reinsurance, was 105.8,
which was an improvement of 14.5 percentage points
relative to the combined ratio of 120.3 recorded in 2002.
The combined ratio was affected negatively by
considerable run-off losses for 2001 and earlier, and
positively by enhanced profitability for 2002 and 2003.
The technical result amounted to a loss of DKK 10m,
Premiums
which was an improvement relative to the negative
The premium development was formed by two opposite
results for the previous years.
trends: Earned premiums were reduced in line with the
On 31 December 2003, TBi sold its wholly owned
subsidiary Chevanstell Ltd., in relation to which run-off
procedures were initiated on 4 September 2003.
Chevanstell Ltd. was sold to Tryg Forsikring A/S.
Consequently, the figures relating to Chevanstell Ltd.
do not appear under TBi, on the other hand, they
appear under business in run-off.
plans for this business area since the extent of business
written was reduced, and simultaneously, the rates
increased. Therefore, the correlation between premium
and risk was improved considerably in spite of the
falling absolute premium level.
Claims
The claims ratio, net of reinsurance, was 75.6, which
was an improvement of 2.7 percentage points on the
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 45 of 98
figure for 2002. This was especially attributable to the
fact that Europe, where most of TBi’s business is
placed, was spared large natural disasters owing to
mild weather. The intensified demands for profitability of
the business written also contributed considerably to
the improved claims ratio.
Costs
The expense ratio, net of reinsurance, was 30.2, which
was an improvement of 11.8 percentage points on the
figure for 2002. The expenses were considerably
affected by a one-off income influencing the expense
ratio positively by 5.4 percentage points. The reduction
in the administrative expenses was attributable to the
reinsurance system which was implemented in 2002,
and which has increased efficiency in the
administration.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 46 of 98
Finnish general insurance
DKKm
Exchange rate DKK/EUR, average of the year
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Loss on investments
Loss on ordinary activities before tax
Profit on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Number of full-time employees at the end of the period
2003
742.92
Pro forma
2002
743.08
Pro forma
2001
745.74
Pro forma
2000
-
61
60
1
-47
-62
0
-48
-1
-49
1
50
78.2
103.8
182.0
42
21
17
1
-18
-66
0
-66
-1
-67
0
21
2
2
0
-2
-29
0
-29
0
-29
-
-
104.3
389.2
493.5
35
91.1
1,795.1
1,886.2
14
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial results
The loss on ordinary activities before tax of the Finnish
general insurance operations for 2003 was DKK 49m,
which was an improvement relative to the loss of DKK
67m recorded in 2002.
The Finnish operations are still in a start-up phase and
the most important goal is to achieve a sound and
profitable business volume. Consequently, the financial
results of the Finnish operations cannot be compared
with the levels of the Tryg Vesta Group’s Norwegian
and Danish general insurance operations, on the other
hand, the Finnish operations should be viewed as an
investment in compliance with the Group’s wish to be
by the growth in the premium volume in spite of an
unchanged level of expenses.
Premiums
The gross earned premiums were DKK 61m, which was
a trebling relative to the DKK 21m recorded in 2002.
Insurance policies are sold through Nordea’s branches
in Finland, which have a market share of approximately
40 per cent of the Finnish market for banking services.
Therefore, there is a significant potential for a further
sizeable increase in premium earnings.
During the year, the product portfolio was expanded
with health insurance products among other things.
present in the Nordic countries, where profitable
operations are anticipated in the years ahead.
Claims
The Finnish operations continued their positive
development, which among other things was expressed
The claims ratio, net of reinsurance, was 78.2 for 2003
against 104.3 for 2002, which was a considerable
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 47 of 98
improvement. In view of the age of the portfolio, the
level is considered satisfactory.
Costs
The expense ratio for 2003 was 103.8, which was a
marked reduction relative to the expense ratio of 389.2
recorded in 2002. The level of expenses reflects the
fact that the operations in Finland are in a start-up
phase. In connection with this, the fixed costs will be
large relative to the total level of expenses.
The expenses are among other things affected by
substantial depreciation of investments in an insurance
technical system. In this way, investments were made
in an advanced insurance system, which will be able to
keep up with the continued development in the
composition of customers and products. These
expenses influenced the expense ratio, net of
reinsurance, by 29.3 percentage points.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 48 of 98
Polish general insurance
DKKm
Exchange rate DKK/PLN, average of the year
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Profit/loss on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Number of full-time employees at the end of the period
2003
169.49
Pro forma
2002
194.16
Pro forma
2001
204.69
Pro forma
2000
185.59
491
336
14
-234
-166
1
-49
4
-45
3
276
69.7
49.5
119.2
523
496
320
10
-205
-153
0
-28
32
4
0
275
64.0
47.7
111.7
495
462
290
10
-181
-126
0
-7
-2
-9
-11
263
62.8
43.5
106.3
489
361
212
9
-157
-99
-1
-36
26
-10
-3
198
73.8
46.7
120.5
494
Financial results
The loss on ordinary activities before tax of the Polish
general insurance operations for 2003 was DKK 45m,
which was a deterioration relative to the profit of DKK
4m recorded in 2002. The financial results were
unsatisfactory and were composed of a negative
technical result of DKK 49m and a profit on investments
of DKK 4m.
The financial results were impacted by a deliberate
change of the portfolio composition reflecting a wish for
a larger share of the personal insurance market.
Premiums
The gross earned premiums were DKK 491m, which by
and large correspond to the level recorded in 2002.
Further, the development in earned premiums was
affected by the change towards a relatively larger share
of personal customers in the portfolio. From a portfolio
composition where the personal customers’ share of the
earned premiums was approximately 60 per cent, this
share is now approximately 70 per cent.
In 2003, premium increases were implemented in
relation to comprehensive motor insurance policies, and
at the same time, it was decided to discontinue the sale
of certain types of insurance policies due to their
negative performance.
Claims
The claims ratio, net of reinsurance, for 2003 was 69.7
which was an increase of 5.7 percentage points. This
was in particular attributable to a poorer performance in
the motor portfolio, represented by a poorer
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 49 of 98
performance of claims both within the comprehensive
and theft insurance products. In addition to this, the
number of damage to motor cars abroad was relatively
large.
For the rest of the portfolio, the claims level
corresponded by and large to the levels of earlier years.
Costs
The expense ratio for 2003 was 49.5, which was a
slight increase on the level of 47.7 recorded in 2002. In
2004, efforts will be made to reduce the ratio by way of
using less cost-consuming sales channels. Further, the
number of employees in Poland was increased relative
to 2002. This shall be seen as part of the initiatives to
set up a less cost-consuming sales force to replace
agents.
In 2003, focus was on the implementation and
distribution of a new IT system for policy and claims
administration in Tryg Polska, just as electronic
communications have been established between the
head office in Radom and the 28 branch offices.
In addition to this, the expense ratio was affected by a
one-off adjustment concerning reinsurance
commissions of DKK 16m.
New name in 2003
As a consequence of the spin-off from Nordea, the
Group’s Polish general insurance company changed its
name from Nordea Ubezpieczenia to Tryg Polska in
March 2003.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 50 of 98
Estonian general insurance
DKKm
Exchange rate DKK/EEK, average of the year
Gross earned premiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Loss on ordinary activities before tax
Profit on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Number of full-time employees at the end of the period
Financial results
The loss on ordinary activities before tax of the
Estonian general insurance operations for 2003
amounted to DKK 1m, which was a significant
improvement on the loss for 2002, which was DKK
13m. In spite of the improvement, the financial results
were not satisfactory.
Premiums
The gross earned premiums were DKK 39m, which was
a relatively small decrease of DKK 2m relative to 2002.
The premium development was characterised by the
considerable tariff rises implemented in relation to the
portfolio and by an improved selection procedure in
relation to customers. A natural consequence of this is
2003
47.48
Pro forma
2002
47.49
Pro forma
2001
-
Pro forma
2000
-
39
34
1
-23
-13
0
-1
0
-1
2
21
67.2
38.9
106.1
76
41
37
1
-30
-21
0
-13
0
-13
0
20
81.4
55.1
136.5
82
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
a net loss of customers, however it has also enhanced
the profitability of the remaining portfolio.
Claims
The claims ratio was 67.2 per cent, which was a sharp
reduction on the level of 81.4 for 2002. The improved
level was characterised by the mentioned profitability
enhancement initiatives in relation to the portfolio.
Costs
The expense ratio was 38.9 relative to the expense
ratio of 55.1 for 2002. This was primarily due to a
change of Estonian legislation, which reduced the fixed
administrative expenses on motor policies significantly.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 51 of 98
New name in 2004
In January 2004, the Tryg Vesta Group’s company in
Estonia changed its name from Nordea Kindlustus to
Nordicum Kindlustus.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 52 of 98
Business in run-off
DKKm
Gross earned permiums
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance
Change in equalisation provisions
Technical result
Profit/loss on investments
Profit/loss on ordinary activities before tax
Loss on business in run-off, net of reinsurance
Technical provisions, net of reinsurance
Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance
Combined ratio, net of reinsurance
Number of full-time employees at the end of the period
2003
631
376
46
-469
-189
-1
-237
-10
-247
-182
828
125.2
50.4
175.6
41
Pro forma
2002
Pro forma
2001
Pro forma
2000
1,211
814
68
-857
-363
46
-292
-5
-297
-170
1,197
105.2
44.6
149.8
63
921
751
68
-575
-240
-21
-17
-3
-20
-32
1,543
76.3
32.0
108.3
55
538
426
74
-325
-138
-31
6
15
21
-21
1,159
76.3
32.3
108.6
49
Background
Chevanstell Ltd.
The Tryg Vesta Group’s business in run-off comprises
In September 2003, after a number of years with
run-off across the legal structure. It includes primarily
losses, the Tryg Vesta Group chose to put the activities
Chevanstell Ltd., which has carried on insurance
of the company which is now called Chevanstell Ltd.
business in the London market, a stop-loss agreement
into run-off.
between Chevanstell Ltd. and Tryg Forsikring to cover
run-off from 1999 and earlier in Chevanstell Ltd., a
relatively small reinsurance portfolio originally written by
The technical result of Chevanstell Ltd. was a loss of
DKK 115m relative to a loss of DKK 199m recorded in
Baltica Forsikring (Tryg Forsikring), run-off in relation to
2002.
old mortgage guarantees and the like.
The technical provisions within the business in run-off
area were essentially related to Chevanstell Ltd.
Financial results
The total technical result was a loss of DKK 237m,
which was an improvement of DKK 55m relative to
The earned premiums, net of reinsurance, were as
planned reduced by more than 50 per cent. After the
company was put into run-off, no new reinsurance
treaties have been made.
The claims ratio, net of reinsurance, was 93.6 relative to
98.2 in 2002, which is still at a high level.
2002.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 53 of 98
The English based actuarial firm, Tillinghast, has
evaluated that the total reserves and provisions for
claims reflect the recommendations of Tillinghast.
The expense ratio, net of reinsurance was 9.1
percentage points higher than in 2002. The reason for
this was the lower earned premiums as it has been
impossible to adjust expenses to the small premium
earnings.
The results of the run-off procedures of Chevanstell Ltd.
involve some uncertainty. In the parent company, Tryg
Forsikring A/S, provisions of DKK 179m were made to
cover this uncertainty among other things. Moreover,
the provisions were made to cover the extraordinary
expenses incurred in connection with restructuring in
the Group.
Other business in run-off
The technical result of other business in run-off was a
loss of DKK 122m relative to a loss of DKK 93m in
2002.
The loss was primarily attributable to the stop-loss
agreement between Tryg Forsikring and Chevanstell
Ltd., which represents a loss of DKK 130m.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 54 of 98
Investment activities
Investment activities
DKKm
Danish general insurance
Norwegian general insurance
TBi
Polish general insurance
Estonian general insurance
Chevanstell Ltd.
Total
Tryg Vesta Group A/S
Total investments
Profit/loss
2003
2002*
Assets (end-year)
2002
2003
699
701
29
18
1
37
1,485
-36
1,448
278
463
27
41
1
52
862
-20
842
13,096
10,379
10,666
10,640
815
369
31
962
688
435
27
1,243
25,939
23,412
-554
-298
25,385
23,114
Transferred to technical interest
Investment income
* Pro forma
-773
-1,017
675
-175
The Tryg Vesta Group’s total profit on investment
activities before transfer to technical interest was DKK
1,448m equivalent to a return of 6.2 per cent for the
financial year 2003. The investment return was affected
by a positive return on bonds, shares and real property.
The total return and the return on bonds are calculated
inclusive of debt in the parent company and all returns
are calculated inclusive of currency hedges.
Asset allocation
As shown in the subsequent table, the proportion of
shares in the Group was 9.2 per cent as at 31
December 2003 relative to 8.0 per cent as at 31
December 2002, as shares worth DKK 351m were
per cent of the total investment assets against 14.6 per
cent at the end of 2002.
As at 31 December 2003, the total investment portfolio
of the Tryg Vesta Group was allocated with
approximately DKK 13.9bn in the Danish companies,
approximately DKK 10.7bn in the Norwegian
Asset allocation
DKKm
2003
%
2002
%
Bonds etc.
Shares
Real property
21,035
82.9
2,341
2,009
9.2
7.9
17,903
1,840
3,371
77.5
8.0
14.6
acquired in 2003. During the same period of time, the
Total
25,385
100.0
23,114
100.0
proportion of bonds was increased from approximately
77 per cent to approximately 83 per cent. Real property
worth DKK 1,278 was sold in 2003, reducing the
portfolio of investment properties to DKK 2.0bn or 7.9
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 55 of 98
Investment assets
Bonds
etc.
Real
property
Return
Investments
Total
(nominal)
(%)
(net)
companies, and small amounts in the other companies
of the Tryg Vesta Group. The net investments were
approximately DKK 3.3bn in 2003.
Tryg Vesta Group – investment assets, investments and return
31.12.2003
DKKm
Denmark
Norway
Tryg-Baltica international
Poland
Estonia
Chevanstell
Total
Shares
1,883
457
0
1
0
0
9,873
9,543
815
365
31
962
1,339
667
13,096
10,666
0
3
0
0
815
369
31
962
Tryg Vesta Group A/S
0
-554
0
-554
2,341
20,627
2,009
24,977
Total, Tryg Vesta Group
2,341
21,035
2,009
25,385
1,448
6.2
Return
(nominal)
(%)
328
16.9
906
4.9
215
6.9
1,448
6.2
699
701
29
18
1
37
1,448
-36
6.1
6.8
3.9
4.5
2.6
3.5
-
-
2,491
1,097
118
5
4
-169
3,715
-243
3,302
Bond portfolio
DKKm
2003
%
2002
%
Norwegian money market, cash etc.*
Danish mortgage bonds
Other corporate bonds
3,041
6,400
1,512
14.5
30.4
7.2
Government bonds and money market
10,082
47.9
1,496
6,066
2,652
7,689
8.4
33.9
14.8
42.9
Total
21,035 100.0
17,903 100.0
* Excl. government certificates in the money market
The return on the total bond portfolio in the Tryg Vesta
Group, including cash funds and loans, was DKK 906m,
corresponding to 4.9 per cent for the full year 2003,
while the return on the bond portfolio, excluding cash
funds, was 5.4 per cent in Tryg and 6.7 per cent in
Vesta. By way of comparison, a Danish government
bond index with a term to maturity of 1-5 years yielded
4.2 per cent in 2003.
The proportion of money market placements increased
during the financial year as a result of Vesta having had
a large inflow of new funds. The Norwegian money
market was very attractive in the beginning of the year
with an interest rate of just over 6 per cent. But as a
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 56 of 98
result of the Norwegian central bank’s interest rate cuts
The portfolio is well diversified and consists of high-
from 6.50 per cent at the end of 2002 to 2.25 per cent at
quality buildings, typically in prime locations in major
the end of 2003, the money market rate is now close to
cities in Denmark and Norway. The portfolio mainly
the level in Denmark and the Euro area.
comprises office property, but also a small proportion of
other commercial property and residential property. The
considerable reduction in the real property portfolio,
which has taken place this year, has not affected the
characteristics of the portfolio noticeably.
Shares
Most of the equities are in the Danish and Norwegian
portfolios, while the Polish and Estonian portfolios and
that of Tryg-Baltica international contain almost no
shares.
During the year, the Tryg Vesta Group’s equity portfolio
has changed so that the ratio between domestic
equities (Denmark and Norway) and foreign equities
now is 25/75, relative to 45/55 at the end of 2002.
Furthermore, most of the international share mandates
were indexed in an American and a European portfolio,
where they previously were active mandates and
different in Denmark and Norway. The domestic
mandates are still active, but with reduced possibility for
deviating from benchmark.
93 per cent of the Tryg Vesta Group’s bond portfolio –
equivalent to DKK19.5bn – comprises Danish mortgage
bonds, placements in the Norwegian money market and
government bonds. The remaining part is invested in
other corporate bonds with credit quality corresponding
to investment grade. In the first six months, Tryg’s
portfolio with Eastern European government bonds was
sold, both as a consequence of the potential for further
spread narrowing being limited and of the currency
exposure. At the end of 2002, the portfolio was DKK
282m. Furthermore, Tryg’s portfolio of mortgage deeds
of about DKK 207m was sold in 2003.
The option-adjusted duration, including cash and cash
equivalents, of the entire Group’s bond portfolio was
1.83 years at 31 December 2003, relative to 1.85 years
at 31 December 2002, due to, among other things,
Vesta’s strong focus on the money market.
Real property
The investment return on real property was DKK 215m,
corresponding to a total return of 6.9 per cent.
At the end of 2003, the proportion of real property in
Tryg was reduced by DKK 1.29bn, which corresponds
to a halving of the Danish real property portfolio. At the
end of 2003, the total proportion was 9.6 per cent
relative to 23.5 per cent at the end of 2002. During the
year, Vesta’s proportion of real property was reduced
from 7.2 per cent to 6.3 per cent.
At the end of 2003, the renting percentage was 94.3 per
cent against 94.7 per cent at the end of 2002 in Tryg
and 95.5 per cent against 95.6 per cent in Vesta. There
are no noticeable real property investments in the other
companies of the Group.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 57 of 98
Geographical spread, shares
DKKm
Danish
Norwegian
Other European
North American
Other
Total
2003
%
2002
%
418
162
831
876
53
17.9
6.9
35.5
37.4
2.3
601
236
696
271
37
32.7
12.8
37.8
14.7
2.0
2,341 100.0
1,840 100.0
The financial year was very satisfactory for the
international equity markets with good price rises and
extraordinarily satisfactory for the Danish and
Norwegian markets. For the financial year, the return on
investments in equities was DKK 328m, equivalent to a
return of 16.9 per cent.
The Danish listed equities produced a yield of 21.4 per
cent, whereas the Norwegian listed equities produced a
yield of 24.6 per cent. The international listed equities
produced a yield of 19.3 per cent. The total yield was
negatively affected by the poor, relative performance of
the non-indexed portfolios of listed equities and by the
unsatisfactory return on unlisted and illiquid equities.
Moreover, the calculation of the return was affected by
considerable changes in the equity portfolio during the
year.
Unlisted equities amounted to DKK 226m against DKK
267m at the end of 2002, and in Vesta particularly, the
unlisted equity portfolio carries great weight.
Continuous efforts will be made to reduce this portfolio.
The total yield on unlisted shares was –3.9 per cent.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 58 of 98
Targets reached in 2003
Focus areas
In the Tryg Vesta Group’s financial statements for 2002,
the Group presented the below-mentioned areas
targeted for special initiatives in 2003:
(cid:57) Outsourcing of IT production
(cid:57) Cost savings
Denmark
In connection with the interim financial statements, the
Group expected that the combined ratio, net of
reinsurance, for the Danish general insurance
operations would be improved by 2 percentage points
relative to the originally expected 102 for the full year
2003. In connection with the presentation of the
financial results for the nine months ended 30
September 2003, the expectations were that the
combined ratio would be under 100 at the end of 2003.
The combined ratio for the Danish general insurance
operations was 96.9, which meets these expectations.
(cid:57) Procurement in relation to claims
Norway
A new Nordic partnership outside banking and finance
Group expected a combined ratio of 106 in 2003 for its
In the financial statements for 2002, the Tryg Vesta
(cid:57) Establishment of the Group’s management
development programme
Norwegian general insurance operations. In connection
with the presentation of the financial results for the six
months ended 30 June 2003, this expectation was
downrated to a level a little below the originally
The establishment of a new Nordic partnership outside
expected 106. The combined ratio for Norwegian
banking and finance is still the Tryg Vesta Group’s
general insurance operations was 103.9, which is better
target. This may both include partnership models in
than expected.
relation to product combinations and in relation to
distribution like the collaboration with Nordea. Further, it
may be in relation to procurement. During 2003, the
Group has discussed different models and talked with
various potential partners, but since focus mainly was
on profitability, the target as to a new partnership did
not materialise.
Targets reached
The Group’s profit on ordinary activities of DKK 789m
meets the expectations of a satisfactory profit on
ordinary activities before tax for the full year 2003.
At 30 June 2003, the Group downrated its expectations
to the technical result due to the relatively low technical
interest. The Group’s technical result for 2003 was DKK
136m, which lives up to the expectations of a positive
technical result.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 59 of 98
Outlook
down administrative expenses, and by ensuring early
awareness of and reaction to predictable developments.
Strategic focus areas
In 2004, the Tryg Vesta Group will work with six
strategic focus areas. The six areas shall contribute to
the materialisation of the company’s total strategy
supported by a Balanced Scorecard.
The company’s six strategic focus areas are:
•
Increased profitability
Preserve and extend our present profitable
customer base
This means that the Tryg Vesta Group shall continue to
be a customer-oriented company founded on close
relations to its customers. The company determines
and measures on current basis customer retention,
satisfaction and loyalty at all levels of the company, and
service programmes must exist which ensure a good
dialogue with the customers. Minimum 90 per cent of
the customers must renew their insurance policies in
2004 and function as ambassadors for the companies
• Preserve and extend our present profitable
of the Group.
customer base
• Adjust the resources and extend group synergies
• Optimise the industrial portfolio
Adjust the resources and extend Group synergies
The individual companies of the Tryg Vesta Group must
be brought closer together, and the interaction between
the units of the Group must be encouraged. The Group
• Growth in the personal and commercial portfolios
will gather its resources to harvest synergies and create
even better results in future to the benefit of
• Create a common identity and establish shared
shareholders, customers and employees. The Group
values
In addition, one of the focus areas from 2003 will
remain in focus:
• A new Nordic partnership outside banking and
finance
Increased profitability
With this strategic focus area, the Tryg Vesta Group will
ensure coherence between claims paid and earned
premiums, and at the same time optimise the
company’s expenses relative to earned premiums. The
target is to reduce the company’s combined ratio to the
target set for 2004 by identifying and fixing the correct
price per risk, providing prudent and excellent claims
handling enabling customers to understand the
handling and settlement of their claims, implementing
efficient work processes in the entire company to keep
will specify the areas within which a coherent
organisation, common processes, values and policies
are to be established, and it will use resources on
implementing new and up-to-date technology and on
establishing a coherent IT strategy for the entire Group.
Optimise the industrial portfolio
The Tryg Vesta Group will improve the coherence
between price, risk and return on shareholders’ equity
within its industrial portfolio, and will continue its efforts
to create a portfolio, which from an overall perspective
is even more balanced. Based on a sound risk analysis,
the Group will examine its industrial business area and
improve its underwriting guidelines so that they reflect
the actual capital expenditure and create an even better
coherence between price and risk.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 60 of 98
Growth in the personal and commercial portfolios
increase in the requirements to the combined ratio in
The Tryg Vesta Group sees great possibility of growth
order to maintain the return on the shareholders’ equity.
in the existing profitable part of the personal and
On the basis of the falling rates and other measures
commercial portfolios in the Nordic region. The Group
taken, the Group intensified its target for combined ratio
will target and develop the profitable part of the
in connection with the presentation of the financial
portfolio, and turn single-product customers into multi-
results for the nine months ended 30 September 2003.
product customers. The Group will attract new
Therefore, the combined ratio for 2004 was fixed close
customers based on a managed process – always
to 100 for 2004 – aiming at a level of about 95 for 2005.
taking profitability into mind – and the Group will focus
An ambitious but realistic target.
on offering concepts creating peace of mind, rather than
on selling single products.
Create a common identity and establish shared
values
By this strategic focus area, the Tryg Vesta Group
means that focus must be on establishing one common
identity and a set of shared values, which will serve as
guidance for all of the Group’s activities in relation to
customers, partners and employees. The Tryg Vesta
Group is a Nordic insurance business based on Nordic
values, and the employees must perceive their
workplace as one united Group. Areas where it is
These expectations are still intact. In order to reflect the
natural movements in the business, the target for 2004
has been expressed by an interval delimited by
“favourable development” and “negative development”.
This allows for external circumstances, which are
beyond the control of the Tryg Vesta Group. Such
external circumstances may affect earnings – and
consequently also the level of the combined ratio. A
mild winter, few storms, few large losses and loyal
customers affect the financial results positively,
whereas a winter with changeable weather, many
heavy storms and relatively many large losses will have
crucial to share a common approach, and areas where
a negative effect. To be specific, this means – as
the national differences and characteristics of the Group
mentioned under the paragraph on risk management –
will continue to be its competitive strength, must be
specified. Targets and policies will be established
centrally – but business will be carried out locally.
Targets
In the financial statements for 2002, the Tryg Vesta
Group expressed its expectations for a combined ratio
of 102 in 2004 and 100 in 2005. In connection with the
presentation of the financial results for the six months
ended 30 June 2003, these expectations were
preserved. But in connection with the financial results
that should the Tryg Vesta Group incur a claim of
between DKK 100m and DKK 300m, it would affect the
combined ratio, net of reinsurance, by between 0.5
percentage point and 0.7 percentage point, and would
impact the financial results by between DKK 65m and
DKK 95m. While a storm in Denmark resulting in claims
between DKK 600m and DKK 3bn, would affect the
Group’s combined ratio, net of reinsurance, by 1.3
percentage point to 1.7 percentage point,
corresponding to a negative effect on the result of DKK
185m to DKK 240m.
for the nine months ended 30 September 2003, the
The movements have been illustrated by the
results achieved so far by the Group as well as the
subsequent graph.
increased focus on earnings within the actual insurance
operations motivated an upgrading of the expectations.
The background of focusing on earnings was the falling
interest rates. A fall in the interest rates causes an
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 61 of 98
Combined ratio: Actual, targets and scenarios
The return on investments for 2004 is expected to be
112
103
115
110
105
100
95
90
DKK 300-400m after transfer of technical interest,
corresponding to a return on investment assets of 3.8
per cent. The expectations to the return on investments
are based on the assumption that shares will produce a
yield of 7.2 per cent, bonds a yield of 3.5 per cent and
real property investments 6.8 per cent for the full year
100
2004.
95
The expectations to the profit/loss on ordinary activities
before tax correspond to a return on the shareholders’
equity before tax of 14 per cent for 2004.
On the whole, all expectations relate to 2004 and
quarterly deviations are expected during the year – for
instance seasonal variations resulting from the weather.
2002
2005
2004
2003
Actual
Expected
Negative development
Favourable development
Previously expected
As mentioned, the Tryg Vesta Group has a target for a
combined ratio of 100 for 2004. As a result of the risks
involved in the operations, this means an expected
combined ratio for 2004 within the level 98-102.
Expectations to the results for 2004
DKKm
Technical result
Profit on investments
Operating profit pre-tax
Combined ratio (%)
Actual
2003
136
675
789
102.8
Expected
Favourable
Negative
2004 development development
475
300
750
100
700
150
98
102
The reason for the relatively large spread in the
expectations to the technical result is that a deviation of
one percentage point in relation to the combined ratio
will affect the financial results by approximately DKK
150m in case of anticipated earned premiums, net of
reinsurance, of DKK 15bn in 2004. During the year, the
Tryg Vesta Group will relate the actual results to the
expectations and targets, and examine whether
deviations, if any, merely result from operational
movements or from actual deviations from the targets.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 62 of 98
Management’s signatures
financial position and results as wells as cash flows of
the Group.
Today, the annual report for 2003 for Tryg Vesta Group
annual report be adopted.
We propose to the Annual General Meeting that the
A/S and the Tryg Vesta Group was considered by the
Supervisory Board and the Executive Management and
approved by the Supervisory Board.
The annual report has been prepared in accordance
with the Danish Consolidated Insurance Business Act
and the Danish Financial Supervisory Authority’s
executive orders. We consider the accounting policies
adopted appropriate to the effect that the annual report
gives a true and fair view of the assets and liabilities,
Ballerup, 17 March 2004
Executive Management
Stine Bosse
Erik Gjellestad
Morten Hübbe
/Fatiha Benali
Supervisory Board
Mikael O. Olufsen
Chairman
Mogens Jacobsen
Deputy Chairman
Per Skov
Deputy Chairman
Jørn Wendel Andersen
John R. Frederiksen
Jørn Hesselholt
Håkon J. Huseklepp
Jens Lyngbo
Peter Wagner Mollerup
Birthe Petersen
Niels Erik Schultz-Petersen
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 63 of 98
Internal auditors’ report
We have audited the annual report of Tryg Vesta Group
A/S for the financial year 2003.
Supplementary information
As appears from the applied accounting policies on
The annual report is the responsibility of the company’s
page 66-67, the annual report contains pro forma
Management. Our responsibility is to express an
comparative figures for the financial years 2000, 2001
opinion on the annual report based on our audit.
and 2002 for the Group. The Tryg Vesta Group was
established on 28 June 2002 via payment in kind of the
Nordea AB Group’s general insurance activities in Tryg
Vesta Group A/S. Therefore, the pro forma figures
represent accounting figures for a period of time during
which the Group did not exist as a legal entity.
Reference is made to the Executive Management’s
description of the basis for stating the pro forma figures.
We agree with the Executive Management on its
comments on pro forma comparative figures and
support the view that the pro forma comparative figures
add increased informative value to the technical
operations.
Basis of opinion
We conducted our audit on the basis of the Danish
Financial Supervisory Authority’s executive order on the
presentation of consolidated financial statements by
financial enterprises and financial Groups and in
accordance with Danish Auditing Standards. Based on
materiality and risk we have evaluated the business
procedures, the accounting policies used and the
significant estimates made and verified the basis for
amounts and disclosures in the annual report. We
believe that our audit provides a reasonable basis for
our opinion.
Our audit has not resulted in any qualifications.
Opinion
In our opinion, the annual report gives a true and fair
view of the Group and parent company’s assets,
liabilities and financial positions at 31 December 2003
and of the results of the Group and the parent
company’s operations and of the Group’s cash flows for
the financial year 2003 in accordance with Danish
Accounting Standards.
Ballerup, 17 March 2004
Gert Stubkjær
Chief Internal Auditor
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 64 of 98
Auditors’ report
To the shareholder of Tryg Vesta Group A/S
We have audited the annual report of Tryg Vesta Group
A/S for the financial year 2003.
The annual report is the responsibility of the company’s
Management. Our responsibility is to express an
opinion on the annual report based on our audit.
Basis of opinion
We conducted our audit in accordance with Danish
Auditing Standards. These standards require that we
plan and perform the audit to obtain reasonable
assurance that the annual report is free of material
misstatement. An audit included examining, on a test
basis, evidence supporting the amounts and
disclosures in the annual report. An audit also included
assessing the accounting policies used and significant
estimates made by the Management, as well as
evaluating the overall annual report representation. We
believe that our audit provides a reasonable basis for
our opinion.
Our audit has not resulted in any qualifications.
Opinion
In our opinion, the annual report gives a true and fair
view of the Group and parent company’s assets,
liabilities and financial positions at 31 December 2003
and of the results of the Group and the parent
company’s operations and of the Group’s cash flows for
the financial year 2003 in accordance with Danish
Accounting Standards.
Supplementary information
As appears from the applied accounting policies on
page 66-67, the annual report contains pro forma
comparative figures for the financial years 2000, 2001
and 2002 for the Group. The Tryg Vesta Group was
established on 28 June 2002 via payment in kind of the
Nordea AB Group’s general insurance activities in Tryg
Vesta Group A/S. Therefore, the pro forma figures
represent accounting figures for a period of time during
which the Group did not exist as a legal entity.
Reference is made to the Executive Management’s
description of the basis for stating the pro forma figures.
We agree with the Executive Management on its
comments on pro forma comparative figures and
support the view that the pro forma comparative figures
add increased informative value to the technical
operations.
Copenhagen, 17 March 2004
Deloitte
Grant Thornton
Statsautoriseret Revisionsaktieselskab
Statsautoriseret Revisionsaktieselskab
Lone Møller Olsen
Thomas Elsborg Jensen
Christian Fløistrup
State Authorised
State Authorised
Public Accountant
Public Accountant
State Authorised
Public Accountant
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 65 of 98
Accounting policies
Basis of preparation
The consolidated financial statements and financial
statements of Tryg Vesta Group A/S have been
prepared in accordance with the Danish Consolidated
Insurance Business Act and the Danish Financial
Supervisory Authority’s executive orders on the
presentation of consolidated financial statements by
insurance companies and financial statements by
general insurance companies.
In principle, the parent company, Tryg Vesta Group
A/S, is subject to the provisions of the Danish Financial
Statements Act. As the object of the parent company is
to own subsidiary undertakings whose activities are
primarily focused on insurance business, the parent
company financial statements have been presented in
accordance with the Danish Consolidated Insurance
Business Act to which the consolidated financial
statements are subject.
Apart from the changes described below, the
accounting policies are unchanged from last year.
‘Intangible assets’ includes capitalised development
costs and software, which are amortised on a straight-
line basis over four years.
With reference to the transitional provisions of section
83(3) of the executive order on general insurance
companies relating to recognition and measurement of
goodwill, development costs and software in future
periods, comparative figures have not been restated.
The above changes in the accounting policies do not
affect the results for the year and shareholders’ equity.
A few items in the income statement and balance sheet
have been reclassified relative to last year. The
reclassifications do not affect the results and
shareholders’ equity.
International accounting standards
The Tryg Vesta Group intends to implement
international accounting standards for the consolidated
financial statements as at 1 January 2005.
The Group has set up a working group to analyse the
impact on the Group’s financial reporting of
implementing the international accounting standards.
The rules for accounting for goodwill, development
Pro forma comparative figures
costs and software were changed effective 1 January
The management’s review, the financial highlights and
2003. Goodwill, development costs and software
key ratios, the income statement and the notes to the
acquired after 1 January 2003 are recognised and
financial statements present pro forma comparative
measured as follows:
Any difference (goodwill) at the time of acquisition
between the cost and the proportionate share of the
acquired undertakings’ shareholders’ equity made up in
figures for 2000, 2001 and 2002 prior to the formation of
Tryg Vesta Group A/S as at 28 January 2002 and the
company’s subsequent acquisition of the general
insurance activities of Nordea AB as at 28 June 2002.
accordance with the accounting policies applied by Tryg
These sections of the annual report specify where pro
Vesta Group A/S is recognised in the item ‘Intangible
forma comparative figures are included. Pro forma
assets’. Goodwill is amortised on a straight-line basis
comparative figures are included in the annual report in
over the expected useful life.
order to make the annual report more informative with
respect to the technical operations of the general
insurance companies forming part of the Tryg Vesta
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 66 of 98
Group irrespective of the former ownership of the
more than 50 per cent of the voting rights or is
companies.
otherwise able to exercise or actually exercises a
Pro forma comparative figures are stated on the basis
of a consolidation of the companies forming part of the
Group as at 31 December 2003. See the Group
overview on page 92.
The following should be taken into account when
evaluating the pro forma comparative figures:
controlling influence.
Minority interests
The proportionate share of the profit and shareholders’
equity of subsidiaries attributable to minority interests is
stated separately in the statement of the consolidated
profit and consolidated shareholders’ equity.
Tryg Forsikring A/S and Vesta Forsikring AS are stated
Basis of consolidation
net of their life and pension insurance activities, which
The consolidated financial statements are prepared on
were operated by wholly-owned subsidiaries.
Tryg Polska SA and Nordicum Kindlustuse Eesti AS are
included from the date when the companies were
the basis of the financial statements of the parent
company and its subsidiary undertakings by adding
items of a uniform nature.
acquired by Tryg Forsikring A/S and the Nordea Group,
The financial statements of undertakings that present
respectively.
Insurance portfolios acquired from other companies,
such as Zurich’s Danish and Norwegian general
insurance portfolio, are included from the date of
acquisition of the relevant portfolio.
Tryg Ejendomme I A/S, which was divested on 31
December 2003, is included in the pro forma figures for
the full period.
Where the accounting policies have been changed
during the period, the comparative figures of each
financial statements under other legislative rules are
restated to the accounting policies applied by the Group
unless the result of such restatement is immaterial to
the true and fair view.
On consolidation, intragroup income and expenses,
intragroup accounts and dividends, and gains and
losses arising on transactions between the consolidated
undertakings are eliminated.
Shares in subsidiary undertakings are set off against
the parent company’s proportionate share of the
shareholders’ equity of the undertakings at 31
company have to the extent possible been adjusted on
consolidation to comply with the current accounting
December.
policies. Such adjustments have only a minor impact on
Goodwill arising on acquisitions represents the
the amounts of the pro forma figures.
difference at the time of acquisition between the
acquisition price and the proportionate share of the
Consolidated financial statements
shareholders’ equity of the acquired undertaking made
The consolidated financial statements comprise the
up in accordance with the accounting policies applied
financial statements of Tryg Vesta Group A/S (the
by Tryg Vesta Group A/S. The full amount of goodwill
parent company) and undertakings (subsidiary
was previously amortised through the income statement
undertakings) controlled by the parent company. See
in the year of acquisition. As from and including the
the Group overview on page 92. Control is achieved
2003 financial year, goodwill is capitalised. See ‘Basis
where the parent company directly or indirectly holds
of preparation’ above.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 67 of 98
Newly acquired or divested subsidiary undertakings are
Technical interest
consolidated at the results for the period subsequent to
Technical interest represents a calculated return on the
acquisition or prior to divestment, respectively.
average technical provisions. The interest rate applied
Any gains or losses arising on divestment of subsidiary
undertakings are included in the income statement
under ‘Investment gains or losses’.
Currency translation
The results of foreign subsidiary undertakings are
based on translation of the items in the income
statement at quarterly average exchange rates. Income
and expenses in domestic undertakings denominated in
foreign currency are translated at the exchange rate
ruling on the date of the transaction. Assets and
is the year’s average pre-tax yield to maturity on all
bonds with a term to maturity of less than three years.
Claims incurred
Claims incurred represent claims paid during the year
adjusted for changes in provisions for claims less
reinsurers’ share. Amounts to cover expenses incurred
to combat and contain losses and to survey and assess
claims are included in the item. In addition, the item
includes run-off results regarding previous years. The
part of the increase in technical provisions that can be
ascribed to discounting is transferred to technical
liabilities denominated in foreign currency are translated
interest.
at the exchange rate at year-end.
All currency translation gains and losses are included in
the income statement under the item ‘Exchange rate
adjustments’.
Intragroup transactions
Intragroup services are settled on a cost-covering basis
or on market terms.
Bonus and premium rebates
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 laid down prior to the financial
year or when the business was written.
Insurance operating expenses
Intragroup transactions in securities and other
Insurance operating expenses represent acquisition
investment assets are settled at market value.
costs and administrative expenses less reinsurance
Income statement
Earned premiums and claims incurred in relation to
general insurance comprise general insurance as well
as simple types of cover on death related to general
insurance policies written by the general insurance
companies.
Premiums
Earned premiums represent gross premiums during the
year, net of outward reinsurance premiums and
changes in unearned premium provisions,
commissions received. Expenses relating to acquiring
and renewing the insurance portfolio are recognised at
the time of writing the business. Administrative
expenses are accrued to match the financial year.
Depreciation is charged on a straight-line basis over
three to five years. Minor acquisitions costing less than
DKK 100,000 are recognised as an expense in the year
of acquisition, except for assets acquired as part of a
specific project. Computer equipment held under
finance leases is recognised and depreciated as if
purchased by the company.
corresponding to an accrual of premiums to the risk
Costs are based on estimated time consumed or the
period of the policies.
Annual Report 2003
The Tryg Vesta Group
estimated cost charge and are distributed in the
18 March 2004
page 68 of 98
statement by line of insurance and between acquisition
Extraordinary items
and administrative expenses.
Reinsurance accepted
Premiums, claims and commissions relating to
Extraordinary items include amounts which by their
nature are unusual for the company and which are
clearly different from the ordinary operations.
reinsurance accepted are generally included in the
Tax
income statement on an estimated and assessed basis
The item ‘Tax’ represents estimated Danish and foreign
and accrued relative to expiry of the contracts.
corporation taxes for the year and movements in
Commissions relating to unearned premium provisions
deferred tax or tax asset. Tax on the profit for the year
are included under ‘Prepayments and accrued income’.
is calculated based on the pre-tax profit for the year
Investment activities
Profit from group undertakings includes the parent
company’s share of the profit on ordinary activities of
the subsidiary undertakings. Exchange differences
arising on the translation of the net asset value of
foreign subsidiary undertakings at the beginning of the
year are included under the item ‘Exchange rate
adjustments’.
adjusted for non-taxable income and expenses.
Tryg Vesta Group A/S is jointly taxed with the parent
company Tryg i Danmark smba and the majority of the
company’s subsidiary undertakings, including the
subsidiary Tryg Forsikring A/S. Tax relating to the jointly
taxed income is recognised in the jointly taxed Danish
companies in proportion to their profit. Changes in
deferred taxes or deferred tax assets are recognised in
the companies having the liability or the claim.
Income from land and buildings before value
adjustment represents the profit from property
Balance sheet
operations less property management expenses.
Intangible assets
Interest, dividends etc. represent interest earned,
dividends received etc. during the financial year. In
addition, the item includes gains and losses on bonds
drawn for redemption.
Realised and unrealised investment gains and losses,
including value adjustment of land and buildings, are
recognised in the income statement.
Development costs and capitalised software are
measured at cost less amortisation. The assets are
amortised on a straight-line basis over four years from
the date they are taken into use.
Goodwill acquired after 1 January 2003 is measured as
the difference at the time of acquisition between the
cost and the proportionate share of the acquired
undertaking’s shareholders’ equity made up in
Realised and unrealised gains and losses on derivative
accordance with the accounting policies applied by Tryg
financial instruments are also recognised in the income
Vesta Group A/S. Goodwill is amortised on a straight-
statement.
line basis over the expected useful life.
Investment management charges represent expenses
relating to the management of investments. Brokerage
and commission have been included in the purchase
and sales price of the investment assets.
Investments
Land and buildings
Land and buildings are measured at market value in
accordance with the guidelines issued by the Danish
Financial Supervisory Authority. The guidelines provide
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 69 of 98
for the market value of the Group’s land and buildings
Other assets
to be determined based on a systematic annual
assessment of each individual property taking into
account expected future operating return and a return
requirement for each property.
New developments and property under construction are
measured at cost.
Capital participation in subsidiary undertakings
Capital participation in subsidiary undertakings is
measured at the parent company’s proportionate share
of the subsidiary undertakings’ shareholders’ equity at
31 December made up in accordance with the Group’s
accounting policies.
Listed shares, unit trust units, bonds etc.
Listed shares, unit trust units, bonds etc. are measured
at the most recent prices quoted at the end of the year.
Unquoted shares, fixed-interest loans etc. are
measured at a conservatively estimated market value at
the end of the year based on the companies’ most
recent financial statements available.
Operating equipment
Operating equipment is measured at cost less
accumulated depreciation. Operating equipment is
depreciated on a straight-line basis over the estimated
useful economic lives of the assets, which are three to
five years.
Computer equipment held under finance leases is
treated as if purchased by the company. The lease debt
is included in ‘Other debt’.
Tax asset
The tax asset comprises deferred net tax assets
calculated as 30 per cent of the present value of net
positive timing differences between accounting and
taxable values, plus tax losses to the extent they are
expected to be offset against future taxable income.
Accruals and deferred income
Prepaid acquisition costs mainly comprise the part of
commission expenses to other insurance companies
etc. relating to unearned premiums provisions.
Derivative financial instruments
Other accruals and deferred income comprise prepaid
Derivative financial instruments are measured at the
expenses and claims expenses paid in respect of future
market value at the end of the year. Derivative financial
settlements with cedants.
instruments are used to the extent they enable the
Group to manage its assets and liabilities more
efficiently, thereby reducing risk or causing only a small
increase in risk.
Dividend
Proposed dividends are recognised as a liability when
adopted by the shareholders at the general meeting.
Dividends expected to be declared for the year are
Deposits with ceding undertaking, receivable
shown in the profit allocation.
Deposits comprise amounts owed to the company in
respect of reinsurance business accepted, and retained
Technical provisions
by the ceding undertaking pursuant to the reinsurance
contract.
Amounts owing
Unearned premium provisions represent the proportion
of premiums and reinsurance premiums collected which
relates to subsequent financial years.
Amounts owing are measured at nominal value less a
Provisions for claims represent amounts to cover claims
provision for any losses.
Annual Report 2003
The Tryg Vesta Group
incurred before the balance sheet date, whether
18 March 2004
page 70 of 98
reported or not. Provisions for claims are calculated on
Provisions for other risks and charges
the basis of information available concerning the extent
Provisions for other risks and charges comprise
of the losses plus an amount based on past experience
amounts intended to cover liabilities or expenses
to cover claims incurred but not reported. The
attributable to the past financial year or prior financial
provisions include direct costs of combating, containing,
years, and which on the balance sheet date are likely or
inspecting and assessing claims. Long-tail provisions
certain, but uncertain in respect of size or time of
calculated using statistical methods are discounted.
payment.
Provisions for bonus and premium rebates represent
The commitment relating to the pension scheme in
amounts expected to be paid to policyholders in view of
Vesta, which is a defined benefit plan, has been marked
the claims experience during the financial year.
to estimated market employing Norwegian assumptions
in relation to the long-term real economy, pension and
Provisions for annuities relate to compulsory Workers’
Compensation insurance in Denmark, which is settled
mortality.
by payment of annuities. The provisions are calculated
Provisions for tax comprise deferred net tax amounts
using actuarial principles at the present value by
calculated as 30 per cent of the present value of net
discounting expected future payments.
positive timing differences between accounting and
Equalisation provisions represent amounts included to
equalise future claims, net of reinsurance, in areas
where experience has shown that claims vary.
Equalisation provisions in credit and guarantee
insurance are calculated in accordance with rules laid
down by the Danish Financial Supervisory Authority.
For Workers’ Compensation insurance in Denmark,
equalisation provisions are calculated as the difference
between the technical provisions made up at basic
interest rates of 2.00 per cent and 2.75 per cent,
respectively. In addition, equalisation provisions
comprise the compulsory Norwegian Pool of Natural
Perils in Vesta, Norway. The rules governing the setting
up and application of equalisation provisions are laid
down by the regulatory authorities of the relevant
countries.
taxable values less tax losses to the extent that they are
expected to be offset against future positive taxable
income.
Deferred tax is not provided on untaxed contingency
reserves. It is not expected that future movements in
technical provisions will result in a crystallisation of tax
on the contingency reserve. The untaxed contingency
reserves are disclosed in the notes to the financial
statements under shareholders’ equity.
Deposits with ceding companies, payable
Deposits comprise amounts due in respect of
reinsurance business accepted and retained pursuant
to the reinsurance contracts.
Debt
Debt is generally measured at nominal value.
Other technical provisions represent provisions for risk
not yet run off. The provisions represent the amounts
Cash flow statement
deemed necessary, in addition to unearned premiums
The cash flow statement is presented in accordance
provisions and future premium rates, to cover future,
with the indirect method based on premiums.
anticipated expenses and settlement of claims not yet
incurred within the period of coverage of the policies.
The cash flow statement shows the actual inflow and
outflow of payments for the year divided into cash inflow
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 71 of 98
from operations, and changes in liquidity resulting from
purchases or sales of investments as well as funding
activities. The item ‘Cash and cash equivalents’
comprises cash at bank and at hand and demand
deposits.
.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 72 of 98
Income statement, balance sheet and cash flow
statement, the Tryg Vesta Group
Income Statement
DKKm
Note
General Insurance
Earned Premiums
Gross premiums written
Ceded reinsurance premiums
Change in the gross provisions for unearned premiums
Change in the reinsurers' share of the provisions for unearned premiums
1
2
Earned premiums, net of reinsurance
Technical interest, net of reinsurance
Claims incurred
Gross claims paid
Reinsurance recoveries
Change in the gross provisions for claims
Change in the reinsurers' share of the provisions for claims
3
Claims incurred, net of reinsurance
Change in other insurance provisions, net of reinsurance
Bonus and premium rebates
Insurance operating expenses
Acquisition costs
Administrative expenses
Acquisition costs and administrative expenses
Commission and profit commission from the reinsurers
4
Total insurance operating expenses, net of reinsurance
Change in the equalisation provisions
5
Technical result
2003
17,053
-2,552
336
-215
14,622
641
-10,967
1,672
-1,808
-256
-11,359
15
-56
-2,080
-1,885
-3,965
339
-3,626
-101
136
Pro forma
2002
28.01.-31.12.2002 *)
17,073
-3,730
-11
39
13,371
899
-11,992
2,528
-1,255
-583
-11,302
17
-60
-2,038
-2,091
-4,129
552
-3,577
-199
-851
7,230
-1,771
2,001
-357
7,103
449
-5,769
1,194
-1,030
-269
-5,874
12
-34
-1,037
-1,044
-2,081
321
-1,760
-181
-285
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 73 of 98
Income Statement
DKKm
Note
Investment activities
Income from investment assets
Income from non-consolidated undertakings
Income from land and buildings
Interest and dividends, etc.
Realised gains on investment assets
6
7
Total income from investment assets
7
Unrealised gains on investment assets
Charges relating to investment assets
Investment management charges
Interest expenses
Total charges relating to investment assets
7
Unrealised losses on investment assets
Exchange rate adjustments
Return on investment activities before transfer
to insurance activities
2
Technical interest transferred to insurance activities
Total return on investment activities
4
Other ordinary expenses
Profit/loss from ordinary activities before tax
8
Extraordinary expenses
Profit/loss before tax
9
Tax
Profit/loss for the year
The minority interests share of the profit/loss
Tryg Vesta Group's share of the profit/loss for the year
2003
Pro forma
2002
28.01.-31.12.2002 *)
0
193
883
165
1,241
476
-55
-77
-132
0
-137
1,448
-773
675
-22
789
0
789
-48
741
1
742
17
230
978
286
1,511
0
-49
-34
-83
-450
-136
842
-1,017
-175
-52
-1,078
-1,256
-2,334
243
-2,091
0
-2,091
0
112
541
60
713
0
-18
-19
-37
-3
-62
611
-518
93
-52
-244
-1,482
-1,726
47
-1,679
0
-1,679
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 74 of 98
Balance Sheet as at 31 December
DKKm
Note
Assets
10
Intangible assets
11
12
Investment assets
Land and buildings
Other financial investment assets
Capital participation
Unit trust units
Bonds
Loans secured by mortgage
Other loans
Deposits in credit institutions
13
Total other financial investment assets
Deposits with ceding undertakings, receivable
Total investment assets
Amounts owing
Amounts owing in connection with direct insurance business
From policyholders
From insurance brokers
Total amounts owing in relation to direct insurance business
Amounts owing from insurance companies
Amounts owing from subsidiary undertakings
14 Other amounts owing
Total amounts owing
Other assets
Furniture, equipment, computer hardware, motor vehicles, etc.
Cash in hand and at bank
Tax assets
Other
15
Total other assets
Prepayments and accrued income
Accrued interest and rent earned
Prepaid acquisition costs
Other prepayments and accrued income
Total prepayments and accrued income
Total assets
Total assets to cover the Danish companies' insurance provisions
2003
2002
2002
39
2,009
2,323
18
19,968
0
70
415
22,794
142
29,945
803
478
1,281
1,474
51
1,810
4,616
392
558
425
9
1,384
262
41
72
375
31,359
16,791
0
#REFERENCE!
3,371
1,825
14
17,785
200
73
291
3,526
#REFERENCE!
#REFERENCE!
17,785
200
73
291
20,188
#REFERENCE!
147
147
23,706
#REFERENCE!
1,098
764
1,862
1,358
408
468
735
282
86
355
723
1,098
764
1,862
1,358
0
408
3,628
468
735
495
7878
#REFERENCE!
#REFERENCE!
#REFERENCE!
1,776
#REFERENCE!
282
86
355
723
29,833
#REFERENCE!
-
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 75 of 98
Balance Sheet as at 31 December
DKKm
Note
Liabilities
16
Shareholders' equity
Share capital
Share premium account
Retained profits
Total shareholders' equity
Minority interests
Subordinate loan capital
Insurance provisions
Provisions for unearned premiums
Gross provisions
The reinsurers' share
Provisions for unearned premiums, net of reinsurance
Provisions for claims
17 Gross provisions
The reinsurers' share
Provisions for claims, net of reinsurance
Provisions for annuities by Workers' Compensation
Gross provisions
Provisions for annuities, net of reinsurance
18
Provisions for bonuses and premium rebates, net of reinsurance
Equalisation provisions
19
20 Other insurance provisions, net of reinsurance
Total insurance provisions, net of reinsurance
Provisions for other risks and charges
Provisions for pensions and similar obligations
21 Other provisions
Total provisions for other risks and charges
Deposists with ceding undertakings, payable
Debt
Debt related to direct insurance
Debt related to reinsurance
Debt to credit institutions
Corporation tax
Other debt
Dividend for the financial year
22
Total Debt
Accruals and deffered income
Total liabilities
2003
2002
2002
1,700
2,968
692
5,360
4
700
5,239
-393
4,846
18,212
-3,324
14,888
1,159
1,159
76
1,424
82
22,475
141
179
320
0
391
520
656
22
647
50
2,286
214
31,359
1,300
2,968
0
4,268
1010
0
5,711
-667
5,044
17,836
-3,965
13,871
1,139
1,139
64
1,438
50
1,300
#REFERENCE!
#REFERENCE!
0
0
5,711
-667
5,044
17,836
-3,965
13,871
1,139
1,139
64
1,438
51
21,606
#REFERENCE!
185
352
537
6
425
580
1,249
3
953
0
3,210
196
#REFERENCE!
185
352
6
425
580
1,249
3
953
0
#REFERENCE!
196
29,833
#REFERENCE!
Forward transactions, etc.
23 Capital adequacy
24
25 Contingent liabilities
26
Intra-group transactions
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 76 of 98
Cash flow statement
DKKm
Cash generated from operations
Premiums
Claims paid
Ceded business
Expenses
Change in other payables and other amounts receivable
Cash flow from insurance activities
Interest and dividends
Taxes
Total cash generated from operations
Investments
Acquisition/sale of real property (net)
Acquisition/sale of equity investments and unit trust units (net)
Purchase/sale of bonds (net)
Purchase/sale of secured loans and other loan (net)
Purchase/sale of operating equipment (net)
Acquisition of subsidiaries
Total investments
Funding
Capital increase
Subordinate loan capital
Change in debt to credit institutions
Total funding
Changes in cash and cash equivalents, net
Price adjustment of cash and cash equivalents, beginning-of-year
Additions relating to acquisition of subsidiaries
Changes in cash and cash equivalents, gross
Cash and cash equivalents, beginning-of-year
Cash and cash equivalents, year-end
Cash and cash equivalents comprise cash balance and demand deposits.
2003
17,479
-11,076
-562
-3,542
-254
2,045
1,393
-256
3,182
22
-394
-3,464
210
-56
-6
-3,688
400
700
-717
383
-123
-54
-177
735
558
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 77 of 98
Notes
DKKm
1
Earned premiums, net of reinsurance
Direct insurance
Indirect insurance
Ceded reinsurance premiums
Direct insurance, by location of the risks
Denmark
Other EU countries
Other countries
2
3
Technical interest, net of reinsurance
Transferred from investment activities
Discounting
Claims incurred, net of reinsurance
Direct business
Indirect business
Reinsurance recoveries
Run-off gains/losses previous years, net of reinsurance
Run-off previous year, gross
Run-off previous year, reinsurers' share
2003
16,468
921
17,389
-2,767
14,622
8,114
226
8,128
16,468
773
-132
641
-12,268
-507
-12,775
1,416
-11,359
-1,215
516
-699
Pro forma
2002
28.01.-31.12.2002 *)
16,006
1,056
17,062
-3,691
13,371
7,314
279
8,413
16,006
1,017
-118
899
-12,524
-723
-13,247
1,945
-11,302
-620
-8
-628
8,671
561
9,232
-2,129
7,103
3,920
155
4,596
8,671
518
-69
449
-6,382
-417
-6,799
925
-5,874
-270
-105
-375
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 78 of 98
Notes
DKKm
4
Insurance operating expenses, net of reinsurance
Commission regarding direct business
Other acquisition costs
Total acquisition costs
Total administrative expenses
Insurance operating expenses, gross
Commission, etc. from reinsurers
Insurance operating expenses, gross includes the following
staff expenditure:
Salaries and wages
Commission
Pensions
Other expenses to social security
Payroll tax, etc.
Average number of full-time employees during the year
Administrative expenses include fee to the
auditors appointed by the Annual General Meeting
Deloitte
Grant Thornton
KPMG
Of which services other than audit
Deloitte
KPMG
Beyond this, other ordinary expenses are defrayed to the Group's Internal Audit Department.
Other ordinary expenses
Holding expenses form part of other ordinary expenses
Remuneration for the Executive Management is paid by Tryg Forsikring A/S
and Vesta Forsikring AS and is charged to Tryg Vesta Group A/S via
the cost allocation.
Remuneration for the Executive Management
Remuneration for the Supervisory Board
2003
-655
-1,425
-2,080
-1,885
-3,965
339
-3,626
-1,657
-9
-231
-120
-97
-2,114
-4,438
-11.1
-0.6
0.0
-11.7
-5.0
0.0
-5.0
-22
7
2
Pro forma
2002
28.01.-31.12.2002 *)
-527
-1,511
-2,038
-2,091
-4,129
552
-3,577
-1,775
-7
-239
-163
-118
-2,302
4,437
-10.8
0.0
-2.2
-13.0
-4.6
-0.5
-5.1
-52
-
-
-219
-818
-1,037
-1,044
-2,081
321
-1,760
-940
-3
-37
-97
-55
-1,132
4,437
-3.6
0.0
-0.6
-4.2
-3.5
-0.4
-3.9
-52
-
-
Incentive schemes based on shares have not been made with the Executive Management. But the Executive Management has earned
bonuses of DKK 2,5m for 2003.
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 79 of 98
Notes
DKKm
5
Technical result, net of reinsurance, distributed on business lines
1
1
2
3
4
5
Accident
and health
insurance
Workers'
compensation
insurance
Motor
TPL
Comprehensive
motor
insurance
Marine,
aviation and
cargo
2003
2002
2003
2002
2003
2002
2003
2002
2003
2002
2,597
2,544
3,079
2,973
2,679
-2,477
2,421
-2,082
3,080
-1,798
2,966
-2,070
10
-2
-514
-36
-1
152
-189
92.2
19.2
7
-1
-591
-40
-13
190
-108
85.7
24.4
0
-38
-607
-8
-1
62
691
59.1
20.0
0
-42
-632
-50
3
85
260
70.8
21.6
773
945
-723
0
-3
-214
-182
-1
28
-149
76.7
22.7
1,334
1,385
-888
0
-7
-371
-418
66
53
-179
64.4
26.9
Liability
2003
2002
Credit and
guarantee insurance
2002
2003
Other
insurance
2003
2002
764
802
-593
0
0
-179
-97
-20
45
-42
73.9
22.3
699
714
-386
0
0
-180
-158
-4
64
51
54.1
25.2
130
132
10
7
0
-40
-36
0
6
80
-12.8
30.3
120
122
-6
0
0
-50
-33
0
9
42
5.1
40.9
1,437
1,459
1,478
-1,035
1,521
-881
0
0
-518
39
-67
71
-32
70.1
35.0
5
0
-475
-275
-5
34
-78
57.6
31.3
Gross premiums
Gross earned premiums
Gross claims incurred
Change in other
technical provisions
Bonuses and premium rebates
Gross operating expenses
Profit/loss on ceded business
Change in equalisation provisions
Technical interest, net of reinsurance
Technical result
Gross claims ratio
Gross expense ratio
1,960
1,974
1,987
-2,063
2,000
-2,016
-2
-3
-489
-13
0
111
-471
4
-1
-491
75
-1
147
-281
806
789
-897
0
0
-109
-30
-15
12
-250
774
810
-979
0
0
-141
-5
-5
66
-254
104.1
100.6
113.6
120.8
24.6
24.5
13.8
17.4
Fire and
contents
(personal)
2003
2002
Fire and
contents
(commercial)
2003
2002
Gross premiums
2,833
2,682
2,675
2,514
Gross earned premiums
Gross claims incurred
Change in other
technical provisions
Bonuses and premium rebates
Gross operating expenses
Profit/loss on ceded business
Change in equalisation provisions
Technical interest, net of reinsurance
Technical result
Gross claims ratio
Gross expense ratio
Gross premiums
Gross earned premiums
Gross claims incurred
Change in other
technical provisions
Bonuses and premium rebates
Gross operating expenses
Profit/loss on ceded business
Change in equalisation provisions
Technical interest, net of reinsurance
Technical result
Gross claims ratio
Gross expense ratio
2,768
-1,940
2,560
-1,948
2,728
-1,260
2,563
-1,993
0
-8
-663
-71
8
78
172
70.3
24.0
0
-3
-601
-95
-51
128
-10
76.2
23.5
0
-2
-633
-579
-3
74
325
46.2
23.2
0
-5
-598
-195
-189
123
-295
77.9
23.4
Total
2003
2002
17,053
17,073
17,389
-12,775
17,062
-13,247
15
-56
-3,965
-1,013
-101
641
136
73.6
22.9
17
-60
-4,129
-1,194
-199
899
-851
77.8
24.3
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 80 of 98
Notes
DKKm
6
7
Interest and dividends, etc.
Dividends on capital participation
Interest on securities, etc.
Capital gains by drawing and servicing
of securities, etc.
Realised and unrealised gains/losses on investment assets
Land and buildings
Other capital participation
Bonds listed on the stock exchange excl. index-linked bonds
Mortgage loans
Other loans and advances
Allocated to the following items
Net realised gains/losses on investment assets
Net unrealised gains/losses on investment assets
8 Extraordinary expenses
Goodwill in connection with acquisition of subsidiares
Restructuring and run-off expenses
9 Taxation
Taxation regarding previous years
Current tax
Dividend tax foreign equities
Change in deferred tax assets
Tax prepaid
2003
Pro forma
2002
28.01.-31.12.2002 *)
52
917
-86
883
21
252
361
7
0
641
165
476
641
0
0
0
52
-29
-3
-68
-48
250
46
949
-17
978
57
-889
670
0
-2
-164
286
-450
-164
-956
-300
-1,256
10
185
-1
49
243
0
9
542
-10
541
51
-447
455
0
-2
57
60
-3
57
-1,182
-300
-1,482
12
57
-1
-21
47
0
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 81 of 98
Notes
DKKm
10
Intangible assets
Acquisition sum
Balance 1 January
Additions during the year
Balance 31 December
Amortisation and write-downs
Balance 1 January
Amortisation during the year
Balance 31 December
Book value 31 December
11
Land and Buildings
Acquisition sum
Balance 1 January
Forein exchange adjustment, beginning-of-year
Additions by the acquisition of subsidiares
Additions during the year
Disposals during the year
Balance 31 December
Write-ups
Balance 1 January
Additions by the acquisition of subsidiaries
Write-ups during the year
Reversal of revaluation
Revaluation, real property disposed of
Balance 31 December
Depreciation and write-downs
Balance 1 January
Additions by the acquisition of subsidiaries
Write-downs during the year
Reversal of write-downs
Write-downs, real property disposed of
Balance 31 December
Book value 31 December
Book value by type of property
Business property
Office property
Production and warehouse property
Residential property
Of which property used by the companies for their operation
Public land assessment
Non-assessed property
In establishing the market value of the properties, the
following return percentages were used for each property category
Business property
Office property
Production and warehouse property
Residential property
2003
2002
2002
0
42
42
0
-3
-3
39
3,091
-100
0
289
-1,409
1,871
357
0
77
-19
-223
192
-77
0
-48
5
66
-54
2,009
121
1,694
0
194
2,009
358
1,140
6
-
-
-
-
-
-
-
0
14
3,032
45
0
3,091
0
314
50
-7
0
357
0
-84
-1
8
0
-77
3,371
314
2,798
44
215
3,371
409
2,276
9494
0
14
3,032
45
0
3,092
0
314
50
-7
0
357
0
-84
-1
8
-77
#REFERENCE!
3,526
314
2,798
44
215
3,371
409
2,276
Lowest
%
2003
Tryg / Vesta
8.00 / -
6.50 / 8.75
- / -
5.50 / -
Average
%
2003
Tryg / Vesta
8.00 /
7.25 / 7.47
- / -
6.07 / -
Highest
%
2003
Tryg / Vesta
8.00 /
8.00 / 21.86
- / -
6.50 / -
All properties
5.50 / 8.75
7.03 / 7.47
8.00 / 21.86
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 82 of 98
Notes
DKKm
12 Capital participation
Book value
Acquisition value
Shareholding of more than 5% of the company share capital
according to the latest annual reports
Eidsvåg Fabrikker, Bergen
Bilskadeinstituttet, Oslo
Nygårdstangen, Bergen
Finansnærings huset, Oslo
Account Data A/S, Frederiksberg
Forsikringsakademiet A/S, Hørsholm Kommune
A/S Forsikringens Hus, København
Moskenes Fiskindustri, Moskenes
Lofoten Trålerrederi, Stamsund
Norsk Tillitsmann, Oslo
Riksheim Henningsvær, Henningsvær
Minox Technology, Notodden
Industrifinans Boligeiendom, Oslo
Andøy Trafikklag, Andenes
Privathospitalet Hamlet af 1994 A/S, Frederiksberg
Norsk Stålpress, Bergen
Høyteknologisenteret, Bergen
13 Other financial investment assets
Book value
Capital participation
Unit trust units
Ordinary bonds
Foreign bonds
Loans secured by mortgage
Other loans
Deposits in credit institutions
Acquisition value
Capital participation
Unit trust units
Bonds
Loans secured by mortgage
Other loans
Deposits in credit institutions
14 Other amounts owing
The sale of Tryg Ejendom I A/S to Nordea Pension Danmark, livsforsikringsselskab A/S,
forms part of amounts owing by DKK 1,2 bn
15
Tax assets
Land and buildings
Bonds and loans secured by mortgage
Operating equipment and provisions, etc.
Other assets
Debt
Tax loss to be carried forward
2003
2,323
2,218
The company
shareholders' equity
2003
2002
#REFERENCE!
2,113
2002
1,825
2,113
Ownership
share
2003
29
4
20
32
1
31
43
3
46
20
-1
11
33
2
11
5
70
2,323
18
9,302
10,666
0
70
415
22,794
2,218
25
18,987
0
70
100
21,400
63
-59
227
36
23
135
425
28
23
15
15
14
12
12
10
10
10
10
8
7
6
6
6
6
1,825
14
6,935
10,850
200
73
291
20,188
2,113
27
17,584
199
73
291
20,285
69
-2
240
24
15
149
495
#REFERENCE!
#REFERENCE!
6,935
10,850
200
73
291
#REFERENCE!
2,113
27
17,584
199
73
291
20,285
69
-2
240
24
15
149
495
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 83 of 98
Notes
DKKm
16
Shareholders' equity
Share capital
Balance 1 January
Share capital when founded
Capital contribution by way of non-cash contributions
Capital increase during the year
Balance 31 December
The share capital is distributed in shares of DKK 100 or multiples thereof
Share premium account
Balance 1 January
Premium by way of non-cash contributions
transferred to retained profits
Balance 31 December
Retained profits
Balance 1 January
Balance 1 January before change of accounting policies
Transferred from share premium account
Balance 31 December
Total shareholders' equity
2003
1,300
0
0
400
1,700
2,968
0
0
2,968
0
692
0
692
5,360
In Vesta Forsikring AS and Dansk Kautionsforsikrings-Aktieselskab untaxed provisions for
contingency fonds form part of the shareholders' equity with NOK 2.026m and DKK 139m respectively
17 Gross provisions
(provisions for claims)
Of which provisions calculated by discounting
Workers' Compensation (Denmark)
Reduction from discounting
Settlement period
Discounting interest rate
Inflation
Workers' Compensation (Norway)
Reduction from discounting
Settlement period
Discounting interest rate
Inflation
18
Provisions for annuities
Workers' Compensation
Settlement period
Discounting interest rate
Inflation
19
Equalisation provisions
Financial quarantee insurance
Workers' Compensation
Storm and large perils
Equalisation provisions for Norwegian general insurance
Other insurance
18,212
793
54
4,3 year
3.2%
3.2%
2,393
399
4,2 year
3.5%
3.5%
1,159
11,5 year
2.75%
0%
270
94
185
869
6
1,424
2002
0
1
1,000
300
1,300
0
4,647
-1,679
2,968
0
-1,679
1,679
0
2002
0
1
1,000
300
1,300
0
#REFERENCE!
-1,679
#REFERENCE!
0
#REFERENCE!
1,679
#REFERENCE!
4,268
#REFERENCE!
17,836
575
46
4,3 year
3.5%
3.5%
2,355
407
4,8 year
3.5%
3.5%
1,139
12,0 year
2,75%
0%
270
79
166
907
1616
1,438
17,836
575
#REFERENCE!
4,3 år
3.5%
3.5%
#REFERENCE!
#REFERENCE!
4,8 år
3.5%
3.5%
1,139
12 år
2,75%
0%
270
79
166
907
1,438
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 84 of 98
Notes
DKKm
20 Other insurance provisions, net of reinsurance
Provisions for life insurance, indirect insurance
Provisions for open financial years
Provision for unexpired risk
21 Other provisions
Costs of restructuring and run-off
During the year, DKK 173m has been spent of which DKK 121m
was spent on Chevanstell Ltd, the wholly owned subsidiary of Tryg Forsikring
22 Debt
Of which debt falling due after more than 5 years
23 Capital adequacy
Shareholders' equity according to the annual report
Capitalised tax assets
Solvency requirements to subsidiary undertakings
Supplementary capital
Capital base
Weighted assets
Solvency pursuant to s. 21, subs.1 of the Commercial Banks and
Savings Banks, etc. Consolidated Act
24
Forward transactions, etc.
Forward transactions, etc
Market value
Purchase of interest derivatives
Sale of interest derivatives
Forward purchase of foreign currency
Forward sale of foreign exchange
Unsettled deals
Acquisition value
Purchase of interest derivatives
Sale of interest derivatives
Forward purchase of foreign currency
Forward sale of foreign exchange
Unsettled deals
25 Contingent liabilities
Surety, guaranty and lease agreements, etc.
beyond insurance obligations do not exceed
Additional circumstances
2003
2002
2002
1
7
42
50
352
352
3,210
#REFERENCE!
1
7
42
51
352
352
67
67
4,268
0
-2,561
0
1,707
2,818
61%
3,307
715
110
3,455
130
3,309
713
109
3,400
130
375
3,307
715
110
3,455
130
3,309
713
109
3,400
130
375
1
0
81
82
179
179
2,286
0
5,360
-6
-2,610
700
3,444
3,999
86%
1,025
1,218
122
5,599
281
1,026
1,212
122
5,795
299
425
Tryg Forsikring A/S has concluded a collaboration agreement with CSC according to which CSC will handle the IT
operations of Tryg Forsikring A/S, amounting to DKK 513m. The agreement is for a period of five years.
Tryg Forsikring A/S has an annual obligation towards Danica regarding lease of head office in Ballerup.
The annual rent and tax, etc. currently amount to DKK 74m. Remaining contract period is 22 years.
Tryg Forsikring A/S committed itself towards Nordea Pension Danmark, livsforsikringsselskab A/S,
to repurchase one property in connection with spinn-off of the subsidiary, Tryg Ejendomme I. Lease guarantees have
been issued and consequently, the liabilities provided for amounted to DKK 33m.
Tryg Ejendomme II DKE A/S is jointly and severally liable together with the partly split up company Ejendom I A/S
for all obligations existing at the time of the publication of the spin-off, however maximum with the
reversed value of DKK 382m.
Most of the companies of the Tryg Vesta Group are jointly taxed and jointly and severally
liable for payment of imposed corporation tax.
Most of the Danish companies within the Tryg Vesta Group are commonly registered for VAT
and payroll tax, and are jointly and severally liable for payment of all such direct and indirect taxes.
Companies of the Group are part of some disputes the outcome of which is
not estimated to affect the financial position of the Group.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 85 of 98
Notes
DKKm
26
Intra-group transactions
The management fee is fixed on a cost-covering basis.
The companies of the Tryg Vesta Group have concluded reinsurance treaties and agreements
about interest payment on current accounts based on market terms.
Under the item " Gross claims paid", DKK 50m has been recognised as revenue, which can be related
to the fact that Tryg i Danmark smba (Owner of Tryg Vesta Group A/S, which is the parent company
of Tryg Forsikring A/S) has quaranteed and consequently will pay Tryg Forsikring A/S an amount
corresponding to the loss which Tryg Forsikring may incur in connection with the case: AON 77.
2003
2002
2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 86 of 98
Income statement and balance sheet for Tryg Vesta
Group A/S (parent company)
Income Statement
DKKm
Note
Investment activities
Income from investment activities
Income from subsidiary undertakings
Interest and dividends, etc.
1
2
Total income from investment assets
Charges relating to investment assets
Investment management charges
Interest expenses
Total charges relating to investment assets
Exchange rate adjustment
Total Return on investment activities
3
Other ordinary expenses
Profit/loss from ordinary activities before tax
4
Extraordinary expenses
Profit/loss before tax
5
Tax
Profit/loss for the year
2003
28.01.-31.12.2002 *)
795
43
838
-10
-57
-67
-13
758
-22
736
0
736
6
742
-425
4
-421
-3
-5
-7
-16
-445
-52
-497
-1,182
-1,679
0
-1,679
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 87 of 98
Balance Sheet as at 31 December
DKKm
Note
Assets
6
6
7
8
Investments in subsidiary undertakings
Capital participation in subsidiary undertakings
Loans to subsidiary undertakings
Total investments in
subsidiary undertakings
Other financial investment assets
Deposits in credit institutions
Total other financial investment assets
Total investment assets
Amounts owing
Amounts owing from subsidiary undertakings
Other amounts owing
Total amounts owing
Other Assets
Cash in hand and at bank
Deferred tax assets
Total other assets
Total assets
Liabilities
Shareholders' equity
Share capital
Share premium account
Retained profits
Total shareholders' equity
Subordinate loan capital
Debt
Debt to credit institutions
Other debt
Dividend for the financial year
Total debt
Total liabilities
9
Capital adequacy
10 Contingent liabilities
11
Intra-group transactions
2003
5,929
600
6,529
100
100
6,629
47
0
47
50
6
56
2002
4,584
702
5,286
0
0
5,286
92
1
93
14
0
14
6,732
5,393
1,700
2,968
692
5,360
700
601
21
50
672
6,732
1,300
2,968
0
4,268
0
1,100
25
0
1,125
5,393
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 88 of 98
Notes
DKKm
2003
28.01.-31.12.2002 *)
1
2
3
4
5
Income from subsidiary undertakings
Tryg Forsikring A/S
Vesta Forsikring AS
Nordicum Kindlustuse Eesti AS
Interest and dividends, etc.
Interest on securities, etc.
Other ordinary expenses
Administrative expenses
Remuneration for the Executive Management is paid by Tryg Forsikring AS
and Vesta Group A/S and is charged to Tryg Vesta Group A/S via the
cost allocation.
Average number of full-time employees
Remuneration for the Executive Management
Remuneration for the Supervisory Board
Administrative expenses include fee to the auditors appointed by the General Meeting:
Deloitte
Grant Thornton
KPMG
Of which services other than audit:
Deloitte
KPMG
Beyond this expenses are defrayed to the Group's Internal Audit Department
Extraordinary Expenses
Goodwill in connection with the acquisition of subsidiaries
Tax
Change in deferred tax asset
795
-
-
795
43
43
-22
-22
0
5
2
-1.5
-0.2
0.0
-1.7
-1.0
0.0
-1.0
0
0
6
6
-524
101
-2
-425
4
4
-52
-52
0
-
-
-1.9
0.0
-0.6
-2.5
-1.3
-0.5
-1.8
-1,182
-1,182
0
0
*) Subsidiaries included from 28 June 2002
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 89 of 98
Notes
DKKm
6
Capital participation in subsidiary undertakings
Acquisition sum
Balance at 1 January
Exchange rate adjustment during the period
Additions by non-cash contributions
Divestments during the year
Capital increase during the period
Balance at 31 December
7
8
Write-downs
Balance 1 January
Write-down by non-cash contribution
Profit/loss for the year of subsidiaries
Write-downs of subsidiaries divested
Dividend
Balance at 31 December
Book Value 31 December
Name and registered office
Tryg Forsikring A/S, Ballerup
The company has advanced a subordinate loan
of DKK 600m to Tryg Forsikring A/S.
Tax asset
Operating equipment and provision etc.
Shareholders' equity
Share capital
Balance 1 January
Share capital when founded
Capital contribution by non-cash contribution
Capital increase
Balance 31 December
The share capital is distributed in shares of DKK 100 or multiples thereof
Share premium account
Balance 1 January
Premium on non-cash contribution
Transferred to Retained profits
Balance 31 December
Retained profits
Balance 1 January
Transferred from share premium account
Transferred cf. distribution of profit
Balance 31 December
Total Shareholders' Equity
In Vesta Forsikring AS and Dansk Kautionsforsikring-Aktieselskab, untaxed provisions
for contingency fonds form part of the shareholders' equity with NOK 2.026m
and DKK 139m, respectively.
2003
6,190
0
2,546
-2,527
600
6,809
-1,606
0
795
-19
-50
-880
5,929
2002
0
43
5,647
0
500
6,190
0
-1,182
-424
0
0
-1,606
4,584
Ownership
interest %
Profit
for the year
Shareholders'
equity as at 31.12.2003
100
795
5,929
6
6
1,300
0
0
400
1,700
2,968
0
0
2,968
0
0
692
692
5,360
0
0
0
1
1,000
300
1,300
0
4,647
-1,679
2,968
0
1,679
-1,679
0
4,268
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 90 of 98
Notes
DKKm
9
Capital adequacy
Shareholders' equity according to the annual report
Capitalise tax assets
Solvency requirements to affiliated undertakings
Tier 2 capital
Capital base
Weighted assets
Solvency pursuant to s. 21, subs. 1 of the Commercial Banks and
Savings Banks, etc. Consolidated Act
10 Contingent Liabilities
2003
5,360
-6
-2,610
700
3,444
3,999
86%
2002
4,268
0
-2,561
0
1,707
2,818
61%
The company is jointly taxed together with most companies of the Tryg Vesta Group, and together
they are jointly and severally liable for payment of imposed tax.
The company is commonly registered for VAT and pay roll tax together with most of the Danish companies
within the Tryg Vesta Group, and together they are jointly and severally liable for payment
of all such direct and indirect taxes.
The company is part of some disputes the outcome of which is not estimated to affect the financial position of the company.
11
Intra-Group transactions
The management fee is fixed on a cost-covering basis.
The companies of the Tryg Vesta Group have concluded reinsurance treaties
and agreements about interest payment on current accounts based on market terms.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 91 of 98
Group overview
Tryg Vesta Group A/S has the following
subsidiaries:
Overview
DKKm
Tryg Vesta Group A/S
Tryg Forsikring A/S
Vesta Forsikring AS
Enter Forsikring
Slettebakksveien
Respons Inkasso
Thunes Vei 2
Dansk Kautionsforsikrings-Aktieselskab
ApS SMBK nr. 98
Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S
Tryg Forsikring II A/S *)
Tryg Forsikring, Rejse og Sundhed A/S *)
Tryg Polska Towarzystwo Ubezpieczen S.A.
Chevanstell Ltd.
Nordicum Kindlustuse Eesti AS
ApS KBIL 9 nr. 2032
Tryg Ejendomme II / DKE A/S
*) Expected to have merged into Tryg Forsikring A/S as at 1 January 2004.
Registered
office
Profit/loss
for the year Ownership
Share Shareholders'
equity
capital
31.12.2003
2003 share in % 31.12.2003
Country
Denmark
Ballerup
Norway
Bergen
Norway
Bergen
Norway
Bergen
Norway
Bergen
Norway
Bergen
Denmark
Ballerup
Denmark
Ballerup
k
Denmar
Ballerup
Denmark
Ballerup
Denmark
Ballerup
Radom
Poland
London United Kingdom
Estonia
Tallinn
Denmark
Ballerup
k
Denmar
Ballerup
795
381
64
1
2
4
87
0
-258
41
10
-41
-257
-1
0
0
100
100
100
100
100
100
100
100
100
100
100
98
100
100
100
100
1.100
0
44
6
0
46
193
0
850
160
3
190
624
0
0
1
5.929
2.573
149
26
1
49
491
0
458
278
69
139
158
9
0
381
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 92 of 98
Supervisory Board and
Executive Management
Supervisory Board
Member of the Supervisory Board of Arla Foods
Holding A/S, CEO Arla Foods International A/S.
Mr John R. Frederiksen
Born in 1948
Chairman of the Supervisory Board of A/S
Kollektivhuset Hellebo, Chairman of the Supervisory
This overview shows the executive positions of the
Board of Ejendomsselskabet Norden A/S, Chairman of
members of the Supervisory Board in Danish
the Supervisory Board of Ejendomsselskabet Storken
companies which are not fully owned by the Tryg Vesta
A/S, Chairman of the Supervisory Board of
Group.
Mr Mikael Olufsen, Chairman
Born in 1943
Chairman of the Supervisory Board of Danish Cereal
Holding A/S, Member of the Supervisory Board of
Egmont International Holding A/S.
Mr Mogens Jacobsen, Deputy Chairman
Born in 1944
Member of the Supervisory Board of Nordea Pension
Danmark, livsforsikringsselskab A/S.
Mr Per Skov, Deputy Chairman
Born in 1941
Chairman of the Supervisory Board of Utility
Development A/S, Member of the Supervisory Board of
Dagrofa A/S, Member of the Supervisory Board of
Denerco Oil A/S, Member of the Supervisory Board of
Denerco Petroleum A/S, Member of the Supervisory
Board of DSV, De Sammensluttede Vognmænd af
13.7.1976 A/S, Member of the Supervisory Board of
Kemp & Lauritzen A/S, Member of the Supervisory
Board of Nordlux A/S, Member of the Supervisory
Board of Privathospitalet Hamlet A/S, Member of the
Supervisory Board of Superfos A/S, Member of the
Supervisory Board of Superfos Industries A/S.
Mr Jørn Wendel Andersen
Born in 1951
Member of the Supervisory Board of AF A/S, Member
of the Supervisory Board of Arla Foods Finance A/S,
Ejendomsselskabet Uglen A/S, Chairman of the
Supervisory Board of Jacob Holm & Sønner A/S,
Chairman of the Supervisory Board of Jacob Holm &
Sønner Finans A/S, Chairman of the Supervisory Board
of Jacob Holm Industries A/S, Chairman of the
Supervisory Board of Jacob Holm Industriinvest A/S,
Chairman of the Supervisory Board of JHS af 27.
februar 1997 A/S, Member of the Supervisory Board of
Danarota Technic A/S, Member of the Supervisory
Board of Dønnerup A/S, Member of the Supervisory
Board of Fortunen A/S, Member of the Supervisory
Board of Freja Ejendomme A/S (Statens Ejendomssalg
A/S), Member of the Supervisory Board of Højgård
Ejendomme A/S, Member of the Supervisory Board of
Holdingselskabet Allindemaglegård A/S, Member of the
Supervisory Board of Holdingselskabet Dønnerup Agri
A/S, Member of the Supervisory Board of Oak Property
Invest A/S, Member of the Supervisory Board of RGS
90 Industrimiljø, Stigsnæs A/S, Member of the
Supervisory Board of Råstof og Genanvendelse
Selskabet af 1990 A/S, Member of the Supervisory
Board of Sjælsø Enterprise A/S, Member of the
Supervisory Board of Sjælsø Gruppen A/S, Member of
the Supervisory Board of RENOFLEX-GRUPPEN A/S,
CEO Fortunen A/S, CEO Oak Property Invest A/S.
Mr Jørn Hesselholt
Born in 1944
CEO Hesselholt Fisk Eksport A/S.
Mr Håkon J. Huseklepp, employee representative
Born in 1955
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 93 of 98
Mr Jens Lyngbo
Born in 1943
Member of the Supervisory Board of Nordea Pension
Danmark, livsforsikringsselskab A/S.
Mr Peter Wagner Mollerup, employee representative
Born in 1966
Ms Birthe Petersen, employee representative
Born in 1949
Mr Niels Erik Schultz-Petersen
Born in 1941
Deputy Chairman H.A.G. A/S.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 94 of 98
Executive Management
Ms Stine Bosse, Group CEO
Born in 1960
Joined Tryg in 1987
Education
2002: LinKS, University of Pennsylvania, USA
2001: LinKS, Insead, France
1997: Knowledge Management, ICBI, London
1990: The Danish Employers’ Association’s Executive
Training at Bøgehøj
1987: LLM, University of Copenhagen
Executive positions
CEO Tryg i Danmark smba, CEO Tryg Forsikring A/S,
Chairman of the Supervisory Board of Tryg Forsikring,
Rejse og Sundhed A/S, Chairman of the Supervisory
Board of Tryg-Baltica Forsikring, internationalt
Mr Erik Gjellestad, Member of the Group Executive
Management
Born in 1953
Joined Vesta in 2002
Education
2001-2002: Corporate Entrepreneurship, Babson
College – USA
1995: Leadership Development, Henley management
College, Great Britain
1976: B. Com., Norway Business School
Executive positions
CEO Vesta Forsikring AS, Member of the Executive
Management of Tryg Forsikring A/S, Member of the
Supervisory Board of Tryg Forsikring II A/S, Member of
the Supervisory Board of Fjord Line AS, Member of the
Supervisory Board of Finansnæringens
Hovedorganisation (the Norwegian Financial Service
Association), Representative, Nordea Liv AS.
forsikringsselskab A/S, Chairman of the Supervisory
Previous positions
1997-2002: CEO, Sparebank1 Skadeforsikring AS
1996-1997: European IT Development Centre Manager,
General Accident plc.
1991-1996: Director, Aktiv Forsikring AS
1989-1991: CEO, NICE AS
1986-1988: Head of Insurance operations, Aktiv
Forsikring AS
1981-1986: Product Manager, Marketing Manager,
Deputy Manager, Storebrand Skadeforsikring AS
1977-1981: Advertisement Sales Representative,
Market Analyst, Sales Manager, Det Beste AS
Board of Vesta Forsikring AS, Chairman of the
Supervisory Board of Tryg Forsikring II A/S, Chairman
of the Supervisory Board of ApS KBIL 9 NR. 2032,
Member of the Supervisory Board of Tryg Ejendomme
II/DKE A/S, Member of the Supervisory Board of Center
For Ledelse, Member of the Supervisory Board of
Flügger A/S, Member of the Supervisory Board of
Forsikring og Pension.
Previous positions
1999-2001: Director, Tryg
1995-1999: Human Resource Director, Tryg
1993-1995: Personnel Manager, Tryg
1991-1993: Deputy Functional Manager responsible for
product and concept development, Claims and
Underwriting Department, Tryg
1990-1991: Head of Underwriting Department, Tryg
1988-1990: Head of Claims Department, Tryg
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 95 of 98
Mr Morten Hübbe, Group CFO
Mr Peter Falkenham, Member of the Group
Born in 1972
Joined Tryg in 2003
Education
Executive Management
Born in 1958
Joined Tryg in 2000
1996: MSc, Finance and Accounting, Copenhagen
Education
Business School
1984: B. Com (International Trade), Copenhagen
1994: BSc in International Business Administration and
Business School
Modern Languages (Baint. – SPRØK), Copenhagen
1982: MSc Engineering, The Technical University of
Business School
Executive positions
Member of the Executive Management of Tryg i
Danmark smba, Member of the Executive Management
of Tryg Forsikring A/S, Member of the Supervisory
Board of Tryg Forsikring II A/S, Member of the
Supervisory Board of Tryg-Baltica Forsikring,
internationalt forsikringsselskab A/S, Member of the
Supervisory Board of Dansk Kautionsforsikrings-
Aktieselskab A/S, Member of the Supervisory Board of
Tryg Ejendomme II/DKE A/S, Member of the
Supervisory Board of Vesta Forsikring AS, Member of
the Supervisory Board of m Tryg Polska Towarzystwo
Ubezpieczen SA.
Previous positions
2002-2003: CFO, Tryg
Denmark
Executive positions
Member of the Executive Management of Tryg
Forsikring A/S, Chairman of the Supervisory Board of
Dansk Kautionsforsikrings-Aktieselskab, Chairman of
the Supervisory Board of Tryg Polska Towarzystwo
Ubezpieczen SA, Chairman of the Supervisory Board of
Nordicum Kindlustuse Eesti AS, Chairman of the
Supervisory Board of SafeExIT A/S, Member of the
Supervisory Board of Tryg Ejendomme II/DKE A/S,
Member of the Supervisory Board of Tryg Forsikring II
A/S, Member of the Supervisory Board of Tryg
Forsikring, Rejse og Sundhed A/S, Member of the
Supervisory Board of Tryg-Baltica Forsikring,
internationalt forsikringsselskab A/S, Member of the
Supervisory Board of ApS KBIL 9 NR. 2032, Member of
the Supervisory Board of Vesta Forsikring AS, Member
2001-2002: Nordic CFO, Zurich Nordic
of the Supervisory Board of Solar Holding A/S.
2000-2001: Deputy CFO, Zurich Nordic
1999-2000: Operations Manager – Nordic Investment
Previous positions
Dept., Zurich Nordic
1996-2000: Managing Director, ABB Energi og Industri
1997-1999: Financial Analyst, Alm. Brand Forsikring
A/S
1991-1997: Controller, Zurich
1989-1996: Managing Director, ABB Komponent A/S
1988-1989: Managing Director, ABB Cylinda A/S
1987-1988: Manager, Asea Cylinda A/S, 1987-88
1985-1987: Head of Export Marketing, LK as
1985: Management Assistant, LK as
1982-1984: Project Manager, Crone og Koch
Rådgivende Ingeniører
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 96 of 98
Mr Stig Ellkier-Pedersen, Member of the Group
office, Egnssparekassen Lolland-Falster, Sparekassen
SDS
1974-1978: Vice President and Head of Central
Personnel, Copenhagen, Sparekassen SDS
Mr Bjørn Thømt, Member of the Group Executive
Management
Born in 1954
Joined Vesta in 1981
Education
1985: University degree in insurance, Norwegian
School of Management
1979: B. Com., Norwegian School of Economics and
Business Administration
Executive positions
Deputy Managing Director of Vesta Forsikring AS,
Member of the Executive Management of Tryg
Forsikring A/S, Chairman of the Supervisory Board of
Enter Forsikring AS, Chairman of the Supervisory
Board of Polygon AS, Member of the Supervisory Board
of Finansnæringens Hus AS, Member of the
Supervisory Board of Norsk Varekrigsfond
Previous positions
2000-2004; Division Manager, Products, Vesta
1994-2002: Division Manager, Group Services, Vesta
1988-1994: Division Manager, Claims Dept., Vesta
1987-1988: Functional Director, Næringsliv, Vesta
1985-1987: Product Manager, Fire – Commercial,
Vesta
1983-1985: Head of Department, Commercial
Underwriting, Vesta
1981-1983: Claims Consultant, Vesta
1979-1981: First Consultant, Prisdirektoratet
Executive Management
Born in 1947
Joined Tryg in 1999
Education
2000: Leadership in the Knowledge Society, Insead,
France
1995: Strategy, Change and Leadership, Insead,
France
1994-95: Leadership in Organisations, Insead, France
1971: Machine engineer, Danmarks Ingeniørakademi
(the Danish Engineering Academy), production line
Executive positions
Member of the Executive Management of Tryg
Forsikring A/S, Member of the Executive Management
of Tryg Forsikring II A/S, Member of the Supervisory
Board of Tryg Forsikring, Rejse og Sundhed A/S,
Member of the Supervisory Board of
Forsikringshøjskolen Rungstedgård A/S (The Danish
Insurance Academy), Member of the Supervisory Board
of FA, Finanssektorens Arbejdsgiverforening (Danish
Employers’ Association for the Financial Sector).
Previous positions
2000-2001: Executive Vice President, Business Area
Personal, Service Centres and Bank Distribution, Tryg
1999-2000: Executive Vice President, Business Area
Personal, Sales East and Bank Distribution, Tryg
1996-1999: CEO, Livsforsikringsaktieselskabet
Enhjørningen and Skadeforsikringsaktieselskabet
Enhjørningen, Unibank
1994-1996: CEO, Livsforsikringsaktieselskabet
Enhjørningen, Unibank
1990-1994: Executive Vice President and Head of
Personnel and Education and Management
Development, Unibank
1986-1990: Executive Vice President and Head of
Personnel and Education, Copenhagen, Sparekassen
SDS
1977-1986: Senior Vice President and Head of main
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 97 of 98
Glossary of technical
terms
The financial highlights and key ratios of the Tryg Vesta
Group have been prepared in accordance with the
Danish Financial Supervisory Authority’s executive
order on the presentation of consolidated financial
statements by general insurance companies. Under
“Accounting policies”, the items of the income statement
and balance sheet are further commented.
Gross earned premiums
include gross premiums adjusted for reserves (earned
premiums) with the deduction of bonus and premium
rebates.
Net of reinsurance (n.o.r.)
means that the amount is calculated after deduction of
reinsurers’ share.
Return on shareholders’ equity in percentages
expresses the relation between the profit/loss for the
year and the average shareholders’ equity for the year.
Profit/loss for the year x 100
Average shareholders’ equity
Key ratios accounted for according to other method
refers to the fact that the key ratios in the annual report
of the Tryg Vesta Group are calculated in accordance
with the rules stipulated by the Danish Financial
Supervisory Authority, according to which the combined
ratio, net of reinsurance, is stated as the sum of the
claims ratio, net of reinsurance, and the expense ratio,
net of reinsurance. However, the key ratios may also be
accounted for according to another method, which is
used by some other players in the Danish insurance
market. Accoding to this method, the combined ratio is
calculated as the sum of the gross claims ratio, gross
expense ratio and the result of ceded business in
percentage relative to gross premiums. This method
makes it easier to indentify the actual costs of
reinsurance.
Claims ratio, net of reinsurance
expresses the relation between claims incurred, net of
Danish general insurance
reinsurance, and earned premiums, net of reinsurance.
Claims incurred, net of reinsurance, x 100
Earned premiums, net of reinsurance
consists of the legal companies Tryg Forsikring A/S,
Tryg Forsikring II A/S (exclusive of the branch in
Finland), Tryg Rejse og Sundhed as well as Dansk
Kaution.
Norwegian general insurance
consists of Vesta Forsikring AS, including subsidiaries.
Expense ratio, net of reinsurance
expresses the relation between insurance operating
expenses, net of reinsurance, and earned premiums,
net of reinsurance.
Insurance operating exp. net of reinsurance, x 100
Earned premiums, net of reinsurance
Combined ratio, net of reinsurance
is the sum of the expense ratio, net of reinsurance, and
the expense ratio, net of reinsurance.
Annual Report 2003
The Tryg Vesta Group
18 March 2004
page 98 of 98