Tryg Annual Report 2004 | Quarterlytics

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Annual Report 2004

and for the community, because insurance counteracts

and alleviates the consequences when forces of nature

and human beings turn from being friends and helpers

We believe that we play a signiﬁcant role in society

We create stability and foresight for the individual

supplier of the Nordic region on the markets and

to being enemies and destroyers.

within the business areas chosen by us.

and for the people and companies we serve.

d It is our vision to be the leading peace-of-mind
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healthhazard

Water is the very foundation of life. Deserts bloom

when touched by the life force of water. A thundering

waterfall can be tamed and its power can be harnessed

for the beneﬁt of us all.

However, sudden downpours and ﬂoods can hit with

enormous and unpredictable power, transforming

water into a force of death. Water is powerful in all its

forms. The Christian Bible mentions huge hailstones

among the great plagues.

Just as we value water, it also

demands our respect and humility.

healthhazard

visionary villainous

Intelligence, communication and creativity make

human beings the most successful race on earth.

We are constantly surprised by our ability to develop

new ideas.

There is no greater force of nature than the human

brain. It is a vehicle for both good and evil. In fact,

humans are the only beings who have the capacity to

be consciously cruel.

As history bears out, there is not necessarily a link

between thought and thoughtfulness.

drive destruction

Conquering ﬁre is possibly the greatest feat of man in

the history of humanity. Fire provides warmth. Fire

provides light. Fire is an important ally.

However, ﬁre can destroy values and visions built on

the dreams of men and women over many decades. We

have therefore feared the blind, consuming power of

ﬁre for just as long as we have regarded it as an ally.

Our civilisation, progress and prosperity would not

have been possible without the mighty force of ﬁre.

drive destruction

force fragility

Humans spend much more time training the body than

any other being on earth. A year is very likely to pass

before a human baby can stand and toddle hesitantly

into the arms of mum or dad.

Day by day and year by year, we train and develop our

bodies as a tool. A grip. A step. A tender stroke or a

powerful punch.

The human body is like a strong machine but it is not

invulnerable. Snap. Twist. Suddenly, the helplessness

of our infancy returns.

force fragility

vitality violence

Harnessed by the arms of windmills and the sails of

ships, wind has been carrying the heavy load for man for

thousands of years. Wind aids us in producing ﬂour from

grain, crossing frontiers, experiencing new worlds and

creating the energy we need.

However, wind is also capricious and violent. A breeze

becomes a storm. A storm becomes a hurricane. Every-

thing can be turned upside down.

We owe wind a great deal, because it shares its

propellant force with us.

Management’s report

Foreword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

The year in review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

The external environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Strategy and goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Financial perspectives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Financial forecast for 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Risk management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Financial highlights and key ratios for TrygVesta . . . . . . . . . . . . . . . . . . . . . 42

Review of TrygVesta’s ﬁnancial performance . . . . . . . . . . . . . . . . . . . . . . . 43

Personal & Commercial Denmark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Personal & Commercial Norway . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

Finnish general insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

Other business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Investment activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

Accounts

Statement by the Supervisory Board and the Executive Management . . . . . . . . 70

Internal auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

Auditors’ report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72

Accounting policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

New accounting rules as from 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Financial highlights and key ratios by geographical area . . . . . . . . . . . . . . . . 82

Income statement, balance sheet and cash ﬂow statement for TrygVesta . . . . . 86

Income statement and balance sheet for TrygVesta A/S (parent company) . . . . 102

Group overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Financial calendar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107

Vesta Forsikring AS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Facts about TrygVesta

Facts about TrygVesta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109

TrygVesta’s history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

Organisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

Supervisory Board and Executive Management . . . . . . . . . . . . . . . . . . . . . 115

Glossary of technical terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .120

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Management’s report Foreword

Focus on Nordic customers

TrygVesta’s prime objective is to provide peace of mind to our

We reduced costs signiﬁ cantly during the past year. We improved

two million customers in the Nordic region; both when we

our corporate business substantially. We divested three companies

advise our customers on insurance and pension and on loss

in order to focus on our core business: direct Nordic insurance.

prevention, and when we service customers with a claim. We

We laid the foundation for a shared identity and shared values

work on an ongoing basis to make our service even better and

throughout the Group. And we seriously began offering products

to develop even further in order to continue to make our cus-

in the form of concepts based on the stages our customers go

tomers feel good and secure every time they are in contact

through in their lifetime.

with us. And we will be in touch with them several times a year

– also outside claims situations.

We have every reason to be pleased with our performance. We

Our employees constitute our basis for being the customers’

for our next step: We intend to stay focused on our Nordic customers

preferred supplier of products and services that offer peace

and develop by taking care of our employees and their potential.

have come a long way in a short time, and we have a clear strategy

of mind. Therefore, it is vital that we always ensure that Tryg -

Vesta is an attractive place to work. We invest in education and

We want to be known for the results we create, and not for the under-

training and help each individual develop their full potential

lying strategy. The Balanced Scorecard is our key tool in realising

in our large, Nordic organisation.

our strategy and achieving sustained proﬁ tability. It also makes our

strategy concrete and measurable and ensures that all employees

All the changes that have occurred over the past year affect

are aware of their own targets and those of the entire Group.

our employees. They feel their own worth from and take pride

in the results they have helped achieve. But we are also aware

I hope you will enjoy reading our annual report.

Stine Bosse

Group CEO

that all the changes have had a signiﬁ cant impact on their

everyday working lives. They need time to adapt and for the

changes to sink in.

During 2004 we have reaped the beneﬁ ts of our ﬁ rst wave of

Nordic synergies, which gave us room to make new investments.

We set up shared staff functions, claims procurement, rein-

surance and IT operations. Today, TrygVesta has a sound capital

base, restored proﬁ tability and a strong strategic platform. We

are riding on the second wave of Nordic synergies, which ma-

terialise through our continued efforts to implement efﬁ ciency

enhancements and cost savings throughout our organisation.

And we are getting ready for the third wave, which we begin by

strengthening our service and sales power vis-à-vis our customers.

The year in review

E A R N E D P R E M I U M S ,
N E T O F R E I N S U R A N C E

14.2

14.5

DKKbn

12.5

9.6

10.4

C O M B I N E D R AT I O ,
N E T O F R E I N S U R A N C E

110.3

109.2

105.4

115

110

105

100

100.9

93.1

2000*

2001*

2002*

2003

2004

2000*

2001*

2002*

2003

2004

P R O F I T O N O R D I N A R Y A C T I V I T I E S
B E F O R E TA X

S H A R E H O L D E R S ’ E Q U I T Y

DKKm

1,947

1,045

423

109

-774

2000*

2001*

2002*

2003

2004

DKKbn

6.1

5.4

4.3

4.6

4.3

2000*
31 Dec

2001*
31 Dec

2002
31 Dec

2003
31 Dec

2004
31 Dec

2,000

1,500

1,000

500

-500

-1,000

*) Throughout this annual report, figures for 2000, 2001 and 2002
are pro forma figures, as TrygVesta was established on 28 June 2002.

Reference is also made to Financial highlights and key ratios for TrygVesta

Management’s report The year in review

The year in review

Financial performance in 2004

• TrygVesta’s Finnish operations generated premium growth

• TrygVesta improved its ﬁnancial results considerably in

of almost 60% in 2004, winning more than 1.5% of the

2004, generating a proﬁt on ordinary activities before tax

Finnish market for personal customers in just three years.

of DKK 1,947m against DKK 1,045m in 2003.

• The divestment of the Polish and Estonian subsidiaries

• The improvement was driven by the Group’s primary

and the reinsurance company TBi focused operations even

operations. Insurance operations reported a technical

more in 2004. The divested companies reported a total

result of DKK 1,456m for 2004, an increase of almost

loss on ordinary activities before tax of DKK 172m for

DKK 1,100m relative to last year.

2002-2004, and the divestment is expected to improve

• The improvement materialised more quickly and strongly

the Group’s long-term earnings.

than we had expected. The combined ratio, net of rein-

• TrygVesta proposes that a dividend of DKK 650m be

surance, of 93.1 and the return on equity of 33.9% before

declared.

tax far outperformed the Group’s long-term target of a

• TrygVesta estimates that the combined ratio, net of

return on equity of 18-20%.

reinsurance, for 2005 will be at the level of 92-96 with

• The Group’s earnings are well balanced. The technical

an expectation of 94 and a proﬁt on ordinary activities

result was a proﬁt of DKK 722m for the Norwegian

before tax of DKK 1,600m.

business and DKK 790m for the Danish business.

• The three primary business areas improved their ﬁnancial

results strongly in 2004. The combined ratio, net of rein-

surance, was 93.4 for Personal & Commercial Denmark,

84.3 for Personal & Commercial Norway, and 97.1 for

the Nordic corporate business.

• The results reﬂect a 2.1 point improvement of the expense

ratio, generated by a DKK 225m reduction in the nominal

amount of operating expenses, and a 5.7 point reduction

of the claims ratio, achieved despite a signiﬁcant strength-

ening of reserves within personal accident insurance as well

as the impact of the ﬁreworks blaze in Kolding, Denmark,

and the tsunami in Asia.

Highlights of the ﬁrst quarter of 2004

Highlights of the fourth quarter of 2004

• TrygVesta established a Nordic organisation, introducing

• TrygVesta divested its reinsurance company TBi.

shared staff functions across national borders, two dedicated

• Losses resulting from the ﬁreworks blaze in Kolding,

local business areas for personal and commercial customers,

Denmark cost TrygVesta DKK 100m.

one in Norway and one in Denmark, and one dedicated

• TrygVesta divested its Polish subsidiary.

Nordic business area for the corporate market.

• TrygVesta divested its Estonian subsidiary.

• TrygVesta launched its value process and adopted the

• Injuries suffered by Danish and Norwegian tourists and

name of ‘TrygVesta’ rather than the ‘Tryg Vesta Group’.

damage to their luggage as a result of the tsunami in

• The partnership with CSC on IT operations was extended

Asia cost TrygVesta DKK 28m after taking into account

to comprise TrygVesta in Norway.

the reinsurers’ share.

• TrygVesta launched three new concepts in Denmark:

Tryg Ung, Tryg Senior and Tryg Firma.

Highlights of early 2005

• TrygVesta moved into the market for unemployment

• The storm that hit all of Denmark on 8 January is expected

insurance in Denmark.

to result in claims payments of between DKK 750m and

DKK 1bn to TrygVesta’s customers. Net of reinsurance, the

Highlights of the second quarter of 2004

storm will entail expenses for TrygVesta of DKK 100m plus

• Standard & Poor’s and Moody’s awarded good ratings to

DKK 50-70m in reinsurance renewals.

TrygVesta, conﬁrming TrygVesta’s renewed strength.

• TrygVesta began selling unemployment insurance on an

• Dansk Kaution was awarded a similar good rating by

individual basis.

Standard & Poor’s.

• TrygVesta’s value process led to the formulation of common

• TrygVesta strengthened provisions for workmen’s com-

values for employees and customers.

pensation in Denmark by DKK 175m due to the so-called

• TrygVesta expands health insurance area in Norway.

‘ﬂex job ruling’ by the Supreme Court. Provisions in the

workmen’s compensation and industrial diseases area in

Norway were strengthened by DKK 135m.

Highlights of the third quarter of 2004

• TrygVesta set up a common intranet and introduced

an employee magazine across national borders.

Management’s report The external environment

M A R K E T S H A R E S I N N O R D I C
I N S U R A N C E , 2 0 0 3

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Source: Financial supervisory authorities and trade organisations

The external environment

Stable Nordic insurance markets

In TrygVesta’s opinion, this risk has been reduced considerably

The Nordic general insurance markets stabilised in 2004 in the

through the industry’s increased focus on risk management

wake of large and necessary premium increases in 2002 and

and return on capital. After many years of earnings signiﬁ-

2003. The insurance industry’s proﬁtability has reached a

cantly underperforming investor return requirements, focus

satisfactory level following years of unsustainably low proﬁt-

on capital and risk should keep the industry’s attention on

ability, especially in respect of insuring corporate customers.

long-term earnings.

Developments in the international insurance markets showed

In recent years, insurance companies have given much greater

very moderate pressure on prices in the second half of 2004.

priority to risk management. The approach to risk is moving

Not least the major natural disasters in 2004 weighed heavily

towards more proactive management and prevention. This has

on US and international insurance companies. This has moti-

contributed to a change in corporate cultures towards increased

vated the industry to stay focused on proﬁtability, thereby

focus on proﬁtability. Moreover, the level of interest rates is

reducing the risk of competition on prices in the Nordic market.

considerably lower than it was, for example, ﬁve years ago.

We are currently not seeing any signs of signiﬁcant changes

This forces businesses to maintain a better correlation be-

in proﬁtability in the Danish, Norwegian or Finnish markets

tween premiums and claims as compared with only a few years

in 2005 and 2006.

ago. TrygVesta expects ﬂuctuations in insurance proﬁtability in

the future as well. However, there is reason to be optimistic

The insurance industry has had a history of recording highly

about earnings in the next few years, and we have reason to be

ﬂuctuating earnings on insurance operations, due in part to

conﬁdent that the insurance industry generally wishes to

the annual ﬂuctuations in the volume of claims. In addition,

maintain stable earnings.

we have seen multi-year periods of poor proﬁtability as a result

of ﬁerce competition on prices. And these periods have been

Price competition by the back door?

succeeded by periods of steep price increases in an effort to

The market is currently moving towards the use of multiple

restore earnings. Historically, cyclical movements cause con-

tariff criteria, thereby establishing a sharper division of

cern for a decline in earnings. The rationale seems to be that

customers into risk classes. We ﬁnd it disturbing when large

such restored earnings might tempt some insurers to increase

parts of the market expect to increase their earnings by intro-

their market share at the expense of proﬁtability.

ducing additional tariff criteria. Depending on how aggressively

insurers intend to use these new criteria, there is a risk of allowing

price competition to slip in by the back door.

S E L E C T E D S H A R E I N D I C E S , 2 0 0 4

S E L E C T E D T W O -Y E A R
G O V E R N M E N T B O N D S , 2 0 0 4

-10

3.50
3.25
3.00
2.75
2.50
2.25
2.00
1.75
1.50
1.25
1.00

Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

OSEBX, Norway

MSCI, Europe

KBX, Denmark

MSCI, USA

Norway

Denmark

Eurozone

USA

Public and private insurance

Insurance against terrorist attacks

The welfare debate continued throughout 2004 in the Nordic

Due to terrorist activity all over the world, TrygVesta runs the

countries and other European countries, challenging, among

risk of incurring substantial losses in case a major terrorist

other things, the insurance industry. Insurance already con-

attack occurs in Denmark or Norway. The section Risk

tributes to welfare in Denmark, and so far almost 300,000

management contains an account of TrygVesta’s reinsurance

Danes are comprised by some form of private health insur-

of the risk of terrorist attacks.

ance. Growing private wealth has already spurred the need for

new insurance products, for example unemployment insur-

TrygVesta believes that there are three valid reasons for estab-

ance and health insurance. It is not uncommon for businesses

lishing a government guarantee to counter the effects of major

to protect employee groups against illness, and in Norway

terrorist events: Terrorism is presumed to be politically moti-

health and unemployment insurance is being introduced in

vated. It is impossible to hedge the risk related to terrorist

the market. Both the Danish and Norwegian insurance indus-

attacks sufﬁciently in the reinsurance market. Finally, working

tries support initiatives that supplement traditional public ar-

groups under the auspices of the Norwegian Finansnæringens

eas. TrygVesta considers this to be a growth area, and we will

Hovedorganisasjon and the Danish trade association, Forsikring

participate actively in developing our role in society.

& Pension, have prepared scenarios which show that a terrorist

Increased focus on risk management

nies losing their entire shareholders’ equity. Forsikring & Pension

The global markets focus increasingly on risk, and risk man-

has initiated a dialogue with the Danish government to address

agement has become a much greater priority for large and

this issue, and Finansnæringens Hovedorganisasjon has initiated

medium-sized enterprises over the past couple of years. For

a similar dialogue with the Norwegian government.

attack could result in Norwegian and Danish insurance compa-

businesses it is not simply a question of hedging risk in relation

to ﬁre, terrorist attacks, management scandals or bad weather.

Securities markets

It is also a question of taking a more professional approach to

The beginning of 2004 was characterised by strong economic

risk in order to better control costs and hence reduce the risk

growth, but also by a series of unfavourable US unemployment

of a loss. As a direct consequence of this, corporate customers

ﬁgures and doubt as to the sustainability of the economic

are tightening their requirements to insurers’ ﬁnancial strength.

recovery. As appears from the chart, these factors contributed

This brings focus on insurance company credit ratings, that is,

to dampening the ﬁnancial markets and gave rise to falling interest

an analysis of an insurance company’s ﬁnancial strength,

rates on both sides of the Atlantic. The uncertainty following

strategy, management, proﬁtability and risk management, etc.

the bombings in Madrid on 11 March 2004 and speculations in

a coming ECB rate cut also contributed to falling interest rates

in the ﬁrst quarter.

Management’s report The external environment

In the early spring, the market refocused on a more positive

growth scenario for the global economy. At the same time, the

key industrial and retail indicators gained momentum, thereby

shifting focus from fear of deﬂation to an inﬂation scenario

offering fair economic growth. This spurred expectations of

a tighter US monetary policy, and in June 2004 interest rates

were hiked for the ﬁrst time in four years.

The second half of 2004 was characterised by strong activity

in the US with rising interest rates towards the end of the year

and decent share price increases. This rubbed off on European

shares, but economic activity in Europe remained weak with

slightly falling interest rates. In particular the high EUR exchange

rates caused concern in the European business sector. The

Norwegian stock market rose drastically due, among other

things, to high oil prices, whereas the steep increase in the

Danish KBX index was spurred by good returns generated

by small and medium-sized shares and favourable company-

speciﬁc news.

New view of insurance and prevention
after large ﬁ re
Paul Edvin Bersaas, Haugesund
Customer with TrygVesta, Norway

‘You get a more varied view of insurance when you’ve gone

to limit payments, within reasonable limits, of course. In our

through something like this. We used to save on our cover

dialogue with Vesta, it was a little bit of give and take from

and terms and conditions to minimise the monthly premium.

both parties, but we ended up with a result that was satisfactory

We’ve stopped doing that.’

to everybody,’ says Paul Edvin Bersaas.

Paul Edvin Bersaas, managing director of Haugesund Ventilasjon

Haugesund Ventilasjon Service is now back to almost pre-ﬁ re

Service in Norway, was close to the worst experience a business

levels. The business has moved into a new building, which is

owner can have in 2003. A ﬁ re broke out in a private home next to

ﬁ tted with modern ﬁ re protection systems, and the backup

the business, and the ﬁ re spread explosively to Paul Edvin Bersaas’

procedures have been tightened.

premises.

‘Everybody knows the importance of safeguarding yourself

‘All 40,000 square metres burnt down to the ground and we

against ﬁ re and similar events. Nevertheless, you often ‘forget’

lost everything: our machines, products, furniture and equip-

to do something about it. Very few people remember to consult

ment, and, worst of all, all our data and our backups. It felt like

their insurer for advice and guidance, but we actually have a

a living nightmare. But very quickly, a claims handler came

common interest in this respect: to prevent and minimise the

from Vesta in Bergen. He assisted us in getting an overview,

risk of ﬁ re, and – if it happens anyway – to limit the damage as

which helped us a lot during the ﬁ rst days,’ says Paul Edvin Bersaas.

much as possible,’ emphasises Paul Edvin Bersaas.

Considering the circumstances, Paul Edvin Bersaas is satisﬁ ed

with the assistance from Vesta.

‘In such a situation, both parties naturally seek to maximise

beneﬁ ts for themselves. As a customer, you’re naturally inter-

ested in getting maximum cover, while the insurer will seek

BatsfjordVardoVadsoKirkenesLakselvHammerfestAltaTromsoHarstadNarvikBodoMo���������������������������������������������������������������������Management’s report Strategy and goals

Strategy and goals

TrygVesta’s strategy for 2004-2006, which was deﬁned in 2003,

ing measures, in particular within staff functions, while at the

remains unchanged in all respects. No events in 2004 in the

same time making investments in growth and development.

external environment or internally gave rise to strategy changes.

See Financial perspectives for additional information on the

The initiatives launched in 2003 and 2004 yielded quicker and

ﬁrst, second and third waves of Nordic synergies. With the ini-

better results than expected, thereby giving us the opportunity

tiatives planned for 2005, we will embark on the next stage of

to make increased investments in improving our customer

our strategic transformation.

service in the long term. As a consequence, we have only

made few adjustments to our strategic focus areas for 2005.

TrygVesta’s strategic focus areas for 2005 include:

We intend to maintain our focus on proﬁtability in 2005, but

• Retained commitment to existing customers

at the same time we will retain our commitment to generating

• Growth in personal and commercial portfolio

growth and development in our operations.

• Adjustments of resources and realisation of

• Focus on direct Nordic insurance

We have reaped the beneﬁts of our ﬁrst wave of Nordic syner-

• Optimisation of corporate portfolio

gies through shared staff functions, claims procurement, rein-

• Common identity and shared values

surance and IT operations, and today we have adequate capi-

Group synergies

tal resources, restored proﬁtability and a strong strategic

The strategic focus areas will be discussed brieﬂy below and in

platform. We will be reaping the beneﬁts of the second wave

detail in the four subsequent sections: Customers, Processes,

of Nordic synergies through efﬁciency improving and cost-sav-

Employees and Financial perspectives.

Initiatives in 2004

TrygVesta launched a wide variety of initiatives in 2004, including:

• Establishment of a restructured Nordic organisation and

• Divestment of the subsidiaries in Poland and Estonia

implementation of the ﬁrst wave of Nordic synergies

• Interactive rating with S&P and Moody’s (A- and A3)

• Establishment of a joint procurement function, including

• Launch of unemployment insurance in Denmark

claims procurement

• Implementation of reinsurance programme

• Divestment of the reinsurance company TBi

• Development of new concepts and service programmes

• Completion of a joint employee survey

• Launch of value process

From recovery to development

2002

2003

2004

2005

• Formation of TrygVesta
• Contribution of capital
• Loss of DKK 1.1 bn

before tax

• Premium increases and

phase-out of unproﬁtable
segments

• Focus on direct Nordic

• Customer-oriented

insurance

activities

• Restructured Nordic

• Second wave of Nordic

organisation

• First wave of Nordic

synergies

Focus on direct Nordic insurance

Growth in personal and commercial portfolio

TrygVesta aims to further strengthen its core business. The

We intend to continue the growth trend in 2005, and we are

reinsurance company TBi was divested in October 2004, and

conﬁdent that even more Danish, Norwegian and Finnish

in December the Polish and Estonian subsidiaries followed suit.

customers will take out insurances with us.

This means that we intend to focus exclusively on our Nordic

customers in the future. We will meet our customers’ needs

In the long term, we expect to gain market shares by combin-

for peace of mind through general insurance and life and pen-

ing our concepts with strong distribution channels. We intend

sion insurance products in cooperation with our partner Nordea.

to strengthen sales of new policies through our partnership

with Nordea and through our other sales channels.

Retaining commitment to existing customers

– with focus on concepts

Our focus on proﬁtability remains unchanged, and our sales

The needs to secure oneself, one’s family and company change

performance in Finland is a case in point that growth can be

over time. TrygVesta intends to meet the needs of our custom-

achieved without resorting to price competition. Our long-term

ers by pooling products and service beneﬁts in concepts tar-

ambition is to grow our market share from 22% to 25% in

geted at speciﬁc life stages and customer groups.

Denmark, from 19% to 21% in Norway and from over 1.5% of

the personal market in Finland to 8% by 2010.

In addition, we intend to invest in increased proximity to our

customers – also outside claims situations. We will make on-

In 2004, our focus on direct insurance in the Nordic countries

going efforts to ensure correct insurance for our customers

spurred our interest in Swedish insurer Trygg-Hansa, which

through our service programmes.

was put up for sale for a period of time by its owner. TrygVesta

is currently contemplating alternative ways for gaining a foot-

We also intend to improve our claims handling procedures

hold on the Swedish market.

with a view to increasingly provide solutions rather than just

provide ﬁnancial compensation.

Adjustment of resources and realisation of Group synergies

The organisational changes carried out in 2004 completed the

More than eight out of ten personal and commercial custom-

platform for achieving our strategic goals for the coming years.

ers renewed their insurance policies with us in 2004, which is

We have established two country-speciﬁc business areas, viz.

not quite up to our long-term goal of achieving renewal from

Personal & Commercial Denmark and Personal & Commercial

nine out of ten customers. Increased customer focus in the

Norway, and one Nordic business area for corporate custom-

coming years will support the attainment of this goal.

ers in Norway and Denmark. In addition, we have introduced

pan-Nordic staff functions.

Management’s report Strategy and goals

In 2004, we brought down total costs by DKK 225m and

Optimisation of corporate portfolio

when disregrading the activities divested, the total number

Developments in TrygVesta’s corporate business contributed

of employees was reduced by 29.

to signiﬁcantly improved proﬁtability in that area in 2004. In 2005,

we intend to take a number of steps to consolidate proﬁtability.

We intend to implement further cost savings in 2005, primarily

in our staff functions, but also in our three business areas,

We intend to strengthen the risk advice we provide to our

with a view to providing scope for substantial investments in

corporate customers by applying and improving our strong

employee training, IT and increased selling power. These cost

competencies within risk management. Forging closer relations

savings and investments will safeguard and consolidate our

with our customers will position us as an active player in the

position in terms of combined ratio and contribute to achieving

ongoing efforts by businesses to professionalise their risk man-

substantial competitive strength.

agement. Our ambition to be an attractive partner within risk

management applies to existing and new customers alike.

Balanced Scorecard in TrygVesta

Since 1999, TrygVesta has used the Balanced Scorecard (BSC)

All TrygVesta employees must know the goals deﬁned for the

as the most important tool in pursuing our strategy.

Group as a whole and for their speciﬁc business areas. We believe

We use BSC to translate the general goals of our strategy into

employees contribute to deﬁning the activities required to

that we will become better at implementing the strategy if all

concrete actions and results within the ﬁelds of ﬁnance,

attain our goals.

customers, processes and employees.

BSC enables us to constantly maintain coherence between the

BSC approach for the newly-formed Group. In 2004, our BSC

strategy’s overall goals and the actions implemented through-

efforts also focused on making the individual BSCs accessible

out the Group. BSC makes the strategy more concrete and

to all employees of the Group on our shared intranet. We strive

measurable and helps the individual employees prioritise their

to obtain the greatest possible degree of openness and

tasks in accordance with the overall focus of the Group and the

transparency in our activities.

2004 was characterised by efforts to commu-nicate a common

business area.

TrygVesta’s common values

We supply peace of mind because:

• We show people respect, openness and trust

• We show initiative, share knowledge and assume responsibility

• We provide solutions characterised by quality and simplicity

• We create sustainable results

Common identity and shared values

Creating a common identity and shared values across national

borders is an important prerequisite for the continued success

of our Nordic integration and strategy. 2004 was characterised

by efforts to improve TrygVesta’s value process. As part of

these efforts we carried out a survey asking several hundred

Danish, Norwegian and Finnish customers how they perceive

the values that currently reﬂect our Group. In early 2005,

our efforts were translated into a set of common values for

employees and customers throughout the Group.

Actual ﬁgures for selected BSC benchmarks for TrygVesta

Customers, personal customers (index)

Renewal ratio

Customer loyalty

Share of customers with concept agreements

Processes (index)

Portfolio (nominal prices) per full-time employee

Customer satisfaction in claims handling

Employees (index)

Employee satisfaction

Financial perspectives

Return on equity after tax (%)

Combined ratio, net of reinsurance

Gross expense ratio

2004

2003

2002

2001

101

109

106

129

104

100

106

102

124

102

101

116

100

105

102

101

100

24.5

93.1

21.2

15.4

100.9

22.4

-47.4

109.2

23.6

1.2

105.4

24.3

Management’s report Customers

S H A R E O F D A N I S H M U LT I P L E - P O L I C Y
C U S T O M E R S

1998

1999

2000

2001

2002

2003

2004

Tryg’s longstanding focus on concepts has induced an increasing
number of Danish customers to take out more than one policy
with the company.

Customers

TrygVesta’s ambition is to have the highest level of customer

The Tryg Firma concept targeting small businesses was also

loyalty in the Nordic region.

launched in 2004.

One of TrygVesta’s strategic focus areas in 2004 was to

To the concepts, we add agreements such as Tryg Reparation

preserve and extend the existing proﬁtable customer base.

and Tryg Bygning, under which we cooperate with selected

We have now created proﬁtability. Therefore, our forward-

garages, sewerage builders and plumbers. These agreements

looking strategic focus area is our commitment to our existing

enable TrygVesta to offer much better services to customers

customers and generation of growth in the personal and com-

with a claim, while our claims expenses are reduced, and the

mercial portfolios. Our goal is that nine out of ten customers

repairers’ turnover is increased.

renew their insurance policies with us.

We know from customer satisfaction surveys that customers

involving, among other things, a new pricing system. In further

having more than one policy with the company are more loyal

developing the concept philosophy we will, of course, draw on

than customers having only one policy. This is one of the reasons

the experience we have gained from the Danish and Norwegian

TrygVesta intends to launch new concepts in Norway in 2005,

why we continually develop our concept philosophy, which offers

markets.

customers cash beneﬁts as well as added security when they

take out all their policies with the company. You can read more

TrygVesta has strong brands in the Danish and Norwegian

in this section, which also describes all the beneﬁts we derive

markets, built up over many years. We therefore not only

from our partnership with Nordea.

intend to maintain the branding of Tryg in Denmark and of

Concepts

Vesta in Norway, but will aim to position the brands even

more strongly and make the values embedded in the brands

One of TrygVesta’s characteristics as a supplier of products

common to both.

and services that offer peace of mind are concepts that target

customer needs. We want to offer customers a comprehensive

The Tryg and Vesta brands will be visible in the marketplaces,

insurance package comprising products, service guarantees

while TrygVesta as a brand will be used to designate the

and related services.

Group, eventually also in relation to corporate customers.

More than 280,000 Danes have already chosen the Tryg Familie

concept which was launched in 1998. Another two life-stage

oriented concepts for personal customers were added in 2004,

when TrygVesta launched Tryg Ung and Tryg Senior.

TrygVesta’s customer concepts

Customers who take out all their policies with TrygVesta get

Tryg Familie is for the 29 to 59 year olds. In addition to the cash

added security as well as cash beneﬁts.

beneﬁts on, for example, policies and private alarms, Tryg Familie

customers are covered by free psychological crisis therapy and

Vesta Avtalen is an offer to customers holding at least three

an under-insurance guarantee. They can also take out a motor

policies. In addition to cash beneﬁts, the customers are covered

insurance with a slightly increased deductible, which ensures

by an under-insurance guarantee. Psychological crisis therapy is

that the premium vill not rise if they report a claim.

available to them, and they are eligible for a rental car for up to

ten days if their car is damaged and it is insured under a

Tryg Senior offers cash beneﬁts and added security to people

comprehensive policy with Vesta.

over 50 years old, including health check-ups at a special price

and cover in the event of theft by deception.

Tryg Ung is for customers under the age of 29, who do not own a

home or holiday home. In addition to cash beneﬁts, policyholders

Tryg Firma is a special offer to small businesses based on their

are offered courses in driving technique, antivirus software, free

special insurance, advice and service requirements. In addition

psychological crisis therapy and social counselling.

to ﬁnancial beneﬁts on insurance of passenger cars, vans and

lorries, the offer to businesses includes a special favourably priced

security package ensuring service and salvage in a number of

important areas.

The TrygVesta Group’s brands

Management’s report Customers

D I S T R I B U T I O N PA R T N E R S H I P W I T H N O R D E A I N
T H E N O R D I C R EG I O N

s
r
e
m
o
t
s
u
C

General insurance products

Life insurance products

s
r
e
m
o
t
s
u
C

Partnership with Nordea

The market is growing

The partnership with Nordea enables TrygVesta to offer our

While the welfare debate is raging in the Nordic and other

customers life and pension insurances. At the same time,

European countries, the market continues to grow, and

Nordea’s customers are offered TrygVesta’s general insurance

TrygVesta continuously seeks to meet any new demands that

policies through the banks in Denmark, Norway and Finland.

may arise. One example is unemployment insurance, which

emerged as an important new business area for the insurance

Generating 11% growth in 2004 relative to 2003, Nordea’s

companies in 2003 and 2004.

sales of our general insurance products continued to generate

fair growth. Bank distribution accounted for 11% of TrygVesta’s

TrygVesta launched unemployment insurance in Denmark in

total sales of new policies to personal customers in 2004.

early 2004. During the year, members of seven unemployment

insurance funds were offered to take out unemployment

We set up a branch in Finland in 2001 to sell insurance through

insurance to supplement their beneﬁts. The new type of insur-

Nordea, which has 40% of the banking market for personal

ance has been subject to great interest since it was launched

customers in Finland. Insurance sales continue to surge, and

on 1 April 2004. In January 2005, TrygVesta furthermore began

sales of new policies increased by 30% to 64,500 in 2004, while

selling unemployment insurance in Denmark that does not

gross earned premiums increased by almost 60%. Of total sales,

require membership of speciﬁc unemployment insurance funds.

5% was accounted for by the ‘Solo market’, Nordea’s elec-

tronic Internet marketplace. In 2004, the partnership

TrygVesta intends to expand health policies in Norway in 2005

resulted in TrygVesta achieving a market share of over 1.5%.

and the Norwegian trade has introduced unemployment policies.

TrygVesta’s partnership with Nordea has reached its most

mature stage in Denmark. After many years, bank distribution

still generates strong and satisfactory new sales, standing at

almost 50,000 policies or almost 18% of TrygVesta’s total sales

of new policies in 2004 and contributing to continued growth

in the total portfolio in 2004.

Nordea’s Norwegian branches began selling TrygVesta’s Nor-

wegian policies in 2003, and bank distribution now accounts

for 3% of our sales to Norwegian personal customers. There is

still a very great potential in Norway.

130,000

120,000

110,000

100,000

90,000

80,000

70,000

60,000

50,000

S A L E S O F N E W P O L I C I E S T H R O U G H
B A N K D I S T R I B U T I O N

S A L E S O F N E W P O L I C I E S
T H R O U G H B A N K D I S T R I B U T I O N
B Y M A R K E T S 2 0 0 4

123,000

Number

111,000

96,000

2002

2003

2004

Denmark

Norway

Finland

Insure their car rather than their children

A survey of Norwegians’ top insurance objects priorities puts

The survey, made by market research ﬁrm Norstat for Vesta

children in ﬁfth place – after their home, their car, the contents

in 2004, asked parents about their insurance priorities.

of their home and themselves. Although as many as 72% of the

population were aware of the insurance companies’ children’s

The replies were:

insurances, only 37% of the respondents had considered insuring

1. Home/house/villa

their own children. Among those who had, only a small portion

2. Car

had actually taken out the children’s insurance. Accordingly,

900,000 children in Norway are not adequately insured.

3. Home/contents

4. Personal/accident

5. Children

6. Travel/leisure

7. Cottage/holiday home

8. Boat

9. Dog

10. Bicycle etc.

68 %

66 %

53 %

48 %

24 %

13 %

11 %

9 %

4 %

3 %

Yes please, send me a smoke alarm

More than 52,000 customers accepted TrygVesta’s offer of

an approved smoke alarm given in a letter to more than

215,000 Danish concept customers in late November 2004.

As TrygVesta’s business is the customer’s peace of mind, we

wish to help customers prevent damage and therefore paid

the cost of the smoke alarm as well as the postage.

Management’s report Customers

Customer satisfaction

Each year we survey how customers perceive TrygVesta. The

results of the surveys are used to ensure that the Group’s services

match customer requirements. The more satisﬁed and loyal

customers are, the longer they keep their policies with the

Group, which beneﬁts proﬁtability in the ﬁnal analysis.

TrygVesta’s surveys are based on EPSI (European Performance

Satisfaction Index), the pan-European model for measuring

customer satisfaction. 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.

S AT I S FA C T I O N A N D L O YA LT Y
I N D E N M A R K 2 0 0 3 - 2 0 0 4

Competitor 3

EPSI

Competitor 2

Competitor 4

Tryg

Competitor 1

y
t
l
a
y
o
L

Satisfaction

Tryg tops the score among the four biggest insurance companies

in Denmark as far as customer satisfaction and loyalty are

2003

2004

concerned. Loyalty scores unchanged, while satisfaction

scores slightly lower than in 2003. We have addressed this

challenge by boosting customer advisory services. The survey,

conducted by Dansk KundeIndex, also shows that the small

companies have the most satisﬁed and loyal customers – a

phenomenon which is also known from the banking world.

This is the ﬁrst time the survey in Norway was based on the

pan-European EPSI model, and we are therefore unable to track

a year-on-year trend. This year’s survey shows that compared

with our Norwegian competitors, Vesta faces a challenge with

respect to customer satisfaction and loyalty. We expect that

the upcoming stronger positioning of TrygVesta’s brands both

in Denmark and Norway and the further development of the

Group’s concept philosophy in the Norwegian market will

provide the necessary boost.

S AT I S FA C T I O N A N D L O YA LT Y
I N N O R W AY 2 0 0 4

EPSI

y
t
l
a
y
o
L

Competitor 2

Competitor 1

Vesta
Competitor 3

Satisfaction

Source: Danish Customer Index and EPSI Norway

When comparing the results for Denmark and Norway,
it is important to consider the impact of diffferences of
opinion and cultural differences between the two countries.

A 1,500 kilo sowing machine landed on his foot
Mogens Povlsen and Kaj Brødsgaard, Ørbæk
Customers with TrygVesta, Denmark

‘Such an accident is annoying – I wish we could undo it. But

‘I think that at most two weeks went by after the accident

now that it has happened, it’s a comfort that our insurances

before everything had been settled by Tryg. We got a fair

were in order and up to date. Imagine if they hadn’t been …,’

treatment. Kaj got preliminary damages for pain and suffering

says farmer Mogens Povlsen.

and for lost earnings. My liability and workmen’s compensation

policy covered that. I’m glad we did not have to go to court –

On the morning of 16 September 2004, Mogens Povlsen and

you can easily imagine a lot of arguing, so we were very happy

his long-standing friend and colleague, Kaj Brødsgaard, were

to have the matter settled so quickly,’ says Mogens Povlsen.

repairing a sowing machine. When they lowered the machine,

the jack didn’t work properly, and the full weight of the

‘Once we had reported the claim and submitted the medical

one-and-a-half tonne sowing machine crashed down on

report, everything went smoothly. You hear a lot about how

Kaj Brødsgaard’s foot.

difﬁ cult these things can be, but we didn’t have to ﬁ ght with

Tryg about anything,’ says Kaj Brødsgaard.

‘It hurt terribly. Normally, when something like this happens,

you go into shock, but it just hurt too much. When we got the

machine lifted and my boot off, we could see that something

was really wrong,’ says Kaj Brødsgaard.

Kaj Brødsgaard, who had never had a work-related injury dur-

ing his 45 years on the labour market, suffered two open frac-

tures of his mid-foot. He was operated on and stitched up, and

has had metal pins in his foot for the past four months.

There’s no doubt in Mogens Povlsen’s and Kaj Brødsgaard’s

minds about how they rate Tryg’s handling of the matter:

�������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������������Management’s report Processes

Processes

TrygVesta’s ambition is to improve productivity and enhance

identical in Denmark and Norway, and we introduced the

quality by automating and centralising on an ongoing basis.

former Norwegian model throughout the Group. Read about

One of our strategic focus areas in 2004 was to adjust resources

the results of the survey in the section Employees.

and expand synergies in the Group.

In this section, we focus on our Nordic integration and exploi-

Our intranet gives all Norwegian employees access to detailed

tation of synergies, and on our work processes, in particular in

underwriting guidelines. The fast, electronic access makes it

Best practice – Underwriting guidelines

claims situations.

Nordic integration

easier to offer a customer the correct insurance and ensures

that the price matches the customer’s risk. TrygVesta is in the

process of transferring the experience gained to other busi-

As an extension of our Nordic strategy, TrygVesta changed its

ness areas as part of harmonising the Group’s operational risk

organisational structure at the beginning of 2004 in order to

management.

build a stronger foundation for improved efﬁciency and proﬁt-

able growth. TrygVesta now has shared staff functions, two lo-

Nordic IT synergies

cal, dedicated business areas for personal and commercial cus-

We are also making targeted efforts to generate Nordic syner-

tomers, one in Denmark and one in Norway, and one Nordic

gies in the IT area. The outsourcing to CSC, which has handled

business area dedicated to the corporate market in Denmark

all the Group’s IT operations since 1 June 2004, has yielded the

and Norway. Companies with more than 50 employees or

planned, important beneﬁts on the cost side, but also in the

paying more than DKK 500,000 in annual premiums as well

quality of our IT operations in the form of increased accessibil-

as guarantee insurance customers belong to the Corporate

ity and speed. For example, in 2004 we migrated to the latest

business area.

version of the Windows operating system for all workplaces

in Denmark, while reducing the total number of IT products

We have launched initiatives to further reduce costs and reap

signiﬁcantly.

the beneﬁts from the next wave of Nordic synergies, such as

investments in shared, modern IT systems. We have also focused

Based on TrygVesta’s common IT strategy, we are aiming to

sharply on making our in-house work processes more efﬁcient

introduce common developments and common IT systems

based on the best practice principle, which involves making

where this is relevant. We introduced a shared intranet in the

the best method in either Denmark or Norway the one to be

autumn 2004 and prepared migrating to a common SAP

used in both countries in the future.

ﬁnancial management system in the summer of 2005.

Best practice – Common employee survey

We are already generating synergies from using a common

As always, all TrygVesta’s employees participated in an annual

software package for customer servicing in both Norway

employee survey. For the ﬁrst time, the questionnaire was

and Denmark. The systems support communications across

departments and functions, giving all employees, who serve

In 2003, we introduced Tryg Reparation in Denmark, which in-

customers in TrygVesta, direct access to updated information.

volves that customers are offered to have their car repaired at

The customer service systems also provide access to viewing

one of the garages we cooperate with. In 2004, we launched

the customer’s products and documents the dialogue with

Tryg Bygning in Denmark. Under this service, customers with

the customer. This provides a sound basis for a good dialogue

drain or sewer claims are offered to have the repairs made by

with and efﬁcient servicing of the customer. As planned in the

one of the sewerage builders TrygVesta has a special collabora-

implementation of the IT strategy, systems are gradually be-

tion with – for the beneﬁt of the customer, TrygVesta and the

coming more and more integrated, generating development

sewerage builders. The service was extended in January 2005

synergy and helping to keep costs down: IT staff with identical

to include plumbers.

competencies work together on solving shared problems in

Denmark and Norway, and experience from new solutions in

In Norway, TrygVesta has worked with procurement in con-

one country is transferred to the other.

nection with motor claims since 2001. The concept is based

Claims handling

on agreements with selected authorised garages, which charge

lower prices to TrygVesta for repairing the customers’ cars

Surveys show greater satisfaction among customers who have

than other garages.

reported a claim than among customers who have not had any

claims. Furthermore, it is in the claims situation that TrygVesta

TrygVesta is in the process of developing a similar service for

must truly prove its ability to supply peace of mind. As a result

contents insurance in Norway. This service involves that a

of many years’ focus on and the continued development of

customer whose personal property has been damaged or lost

good and competent claims handling, it is a natural part of

will be offered to buy a new product through a selected supplier.

TrygVesta’s employees’ professional approach to stay focused

The beneﬁts are obvious: The products will be offered to the

on the customer’s needs in a claims situation. This has triggered

customers at favourable prices, the supplier will get more

an increase in customer satisfaction with our claims handling

customers, while TrygVesta offers good service at a good price.

over the past few years, as witnessed by the BSC benchmarks

in the section Strategy and goals.

The new service was introduced in the autumn of 2004, initially

Claims procurement

with respect to travel claims involving the customer’s loss of a

mobile phone, PC, camera or video camera. The service will

In recent years, TrygVesta has focused on procurement in rela-

later be extended to a much larger range of areas. Eventually,

tion to claims, generating savings of more than DKK 100m in

the service will be transferred to Denmark, and similarly, Tryg

2004 alone.

Bygning will be implemented in Norway.

Management’s report Processes

T R Y G V E S TA A L A R M 2 0 0 3 - 2 0 0 4

Number
of calls

1,200

1,000

800

600

400

200

Jan Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

2003

2004

The alarm centre handles an increasing number of calls. This is
because customers make increased use of the alarm centre, and
because psychological and health claims have been included in
the alarm centre’s tasks over the past couple of years.

Enhanced efﬁciency in customer servicing

TrygVesta Alarm

Customer servicing and enhanced efﬁciency are key words in

TrygVesta has had a common alarm centre since 2002, which

a new process to handle motor claims TrygVesta intends to

is open round the clock for calls from Danish, Norwegian and

introduce this process in Denmark in 2005. The process and

Finnish travel insurance customers. In addition, TrygVesta

the underlying IT system support the dialogue between the

Alarm assists Danish customers requiring psychological crisis

employee and the customer. IT tools guide the employee

therapy or requesting to use their health insurance. On evenings,

through a number of questions when a customer phones to

nights and weekends, the alarm centre also functions as a

report a motor claim. This leaves more room for the employee

24-hour claims service for Danish customers, who can call for

to focus on the customer. In addition, the IT tool automatically

assistance if their roof has been blown off in a storm or the

handles all correspondence with the customer as well as with

basement is ﬂooded.

witnesses, the police and other insurance companies involved.

The request for payment of the deductible and a concluding

The disastrous consequences of the tsunami in Asia on 26

letter to the customer have also been automated.

December 2004 gave the alarm centre a busy time. The centre

Due to the system’s efﬁciency, we expect that 40% of all motor

many calls were received during the days following the tsunami.

claims can be ﬁnalised after the telephone conversation with the

The staff worked 12-14 hours on end for several days, and Tryg-

customer. In the longer term, the system holds potential for a

Vesta’s crisis team of psychologists and doctors was deployed

larger degree of self-service when customers report claims.

to help survivors in the distressed areas.

normally handles an average of 150 calls a day, but twice as

Limiting business interruption for museum

When a ﬁre broke out at the North Sea Museum at Hirtshals,

and to achieve a fair number of visitors. The museum had about

Denmark in December 2003, TrygVesta immediately sent staff

50% fewer visitors than normal in the summer of 2004 – despite

to the site. TrygVesta had written the buildings, contents and

reduced admission fees. Visitor volumes are expected to return

business interruption policies, and it was vital to get an early

to normal levels after the scheduled reopening of the museum’s

over-view of the extent of the damage and do whatever could

large Oceanarium in the summer of 2005.

be done to limit further damage.

Efforts to limit business interruption continued for all of 2004

DKK 100m, including DKK 20m in business interruption losses,

and will last until September 2005. TrygVesta and the North Sea

primarily due to the lower visitor volumes. Damage to buildings

Museum together launched marketing activities, including

totalled DKK 57m, damage to contents DKK 22m, and the cost of

The ﬁre at the North Sea Museum cost TrygVesta approximately

advertisements about the museum in newspapers and the local

catching new ﬁsh was DKK 1m.

community. The aim was for the museum to remain in focus

R E G I S T E R E D C L A I M S A F T E R T H E S T O R M
I N D E N M A R K O N 8 J A N U A R Y 2 0 0 5
( A C C U M U L AT E D )

Number ’000 60

600 DKKm

500

400

300

200

100

9 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 17 Jan 18 Jan 19 Jan

Number

Estimate of the extent of the claims*)

*) Based on the first estimate of the extent of the claim after the

initial contact with the customer

110,000 calls in one day

The violent storm that hit Denmark on Saturday, 8 January

The estimate is based on daily measurements of the number of

2005, also hit TrygVesta’s telephones. TrygVesta immediately

claims entered in the IT system and the frequency with which

deployed its emergency resources, increasing the number of

they are received. We also look at the initial estimate of the extent

staff handling telephone calls in Denmark many times over. On

of the loss, which our experienced claims handlers typically make

the Monday alone, TrygVesta received 110,000 telephone calls

during their ﬁrst talk with the customer. The ﬁgure above shows

– the total number for all of December 2004 being 120,000.

some of these measurements. Finally, we compare these data

with similar experience from previous storms and our experience

Staff from all departments answered the calls, temporary staff

with the claims handlers’ initial estimate of the claims expense

was called in, and retired employees lent a hand. Our customer

relative to the payment our customer ultimately received.

service system and teamwork stood their test: Five days after

the storm, 30,000 new claims had been entered in the system.

Net of reinsurance, the storm is expected to entail expenses for

There was no longer any queuing on the phones and no delay in

TrygVesta of DKK 100m plus DKK 50-70m in reinsurance renewals.

replying to e-mails.

The ﬁgures are a long way from those of the December 1999

hurricane, when TrygVesta recorded a little more than 80,000

The consequences of the storm have not been ﬁnally calculated

claims totalling DKK 2.1bn.

yet, but we estimate that a total of 46.000 customers were hit.

In January we estimated that the storm would entail claims pay-

ments of between DKK 750m and DKK 1bn to our customers.

We now expect claims to be in the lower range of this estimate.

Management’s report Employees

Employees

TrygVesta’s ambition is to be an attractive workplace, offering

Our employees live our brands

employees manoeuvring space and responsibility, and focusing

The value process included an analysis of the position of Tryg-

on learning and knowledge sharing. Our strategic focus area in

Vesta’s brands, among other things to enhance our insight into

2004 with respect to our employees was to create a common

the customers’ requirements and how they perceive insurance.

identity and establish shared values. This focus area will remain

unchanged for 2005, and the value process launched in 2004

The results showed that both Tryg and Vesta are strong brands

will continue unabated.

thoroughly founded in tradition. Customers meet the brands

through our employees, and we are therefore now focusing

This section describes our efforts to create a common identity

our efforts to live by our new values and position the Tryg and

and establish shared values, including the preliminary results

Vesta brands even more strongly. This includes a comprehen-

of the value process. We also describe how we intend to make

sive sales and service training programme throughout the

TrygVesta an attractive workplace in the year 2005.

Group in 2005.

Common identity and shared values

Managers in a process of change

In early 2004, TrygVesta changed its overall organisational

In order to promote the change and integration process, members

structure to be better able to act as one business. As a natural

of TrygVesta’s senior management team were given the oppor-

extension of the organisational, managerial and commercial

tunity of sparring with a personal coach through all of 2004.

integration, the Group launched a value process shortly

The coaching enhanced managers’ decision-making abilities.

afterwards.

It is vital that managers themselves are clear about things in

such a process in order for them to engage their employees.

A team of 19 Danish and Norwegian employees were appointed

as value scouts. Their task was to conduct interviews with a

TrygVesta’s managers remain one of the primary drivers in for-

total of 200 colleagues in Denmark, Norway and Finland in or-

mulating and implementing solutions across the organisation.

der to expose and document real examples of how values and

Regular meetings of managers across Denmark and Norway

rules of conduct are reﬂected in different companies, depart-

have helped strengthen our in-house cooperation and know-

ments and functions. The value scouts subsequently took part

ledge sharing. Our management development programmes

in the work of uniting Tryg’s and Vesta’s mission, vision, values

also focus on values. The big challenge for TrygVesta’s managers

and rules of conduct, and deﬁning a common basis for the Group.

is to seek to achieve the necessary balance between good results

and a good, albeit busy working environment. Stress manage-

ment is also on TrygVesta’s agenda.

Furthermore, large-scale meetings have been organised for all

their own role in the organisation is at a fair level, especially

employees in both Denmark and Norway, at which the Group

considering the relatively large organisational changes we

Executive Management had an opportunity to meet all em-

implemented early in the year. The survey also showed a ten-

ployees in person and present the Group’s targets, ambitions

dency to a fast work pace and a big work load. Like other or-

and results. The direct contact between management and

ganisations, we are facing a constant challenge of coping with

employees is important in a big company with many commu-

phenomena such as stress and strain in a time of great demands

nication channels such as TrygVesta. In addition, the large-scale

and rapid change. We aim to achieve a balance between work

meetings were used as part of the value process to enhance the

and family life, and urge the Group’s managers and employees

visibility of TrygVesta’s stakeholders – customers, employees,

to discuss the distribution of work regularly, handling peak

owners, politicians, ﬁnancial analysts, partners and suppliers –

workloads by means of good planning.

all of whom relate to TrygVesta’s values.

The rapid speed of change is here to stay. An attractive work-

Common in-house media

place needs to provide managers and employees with tools

The launch of a shared intranet and a magazine for all employees

and techniques to cope with change, among other things

after the summer of 2004 made it even more clear to most

by training and enhancing employees’ competencies on an

Danish and Norwegian employees that we are now one united

ongoing basis. We dedicate substantial funds each year to

Group. The shared media are intended to enhance the frame-

training, which we regard as an investment in the future.

work for internal communication in TrygVesta. Both media are

naturally focusing on the work involving our values, allowing

all employees to monitor and participate in the process on an

ongoing basis.

High job satisfaction, fast pace – and room for the family

Our working environment was scrutinised in the ﬁrst common

employee satisfaction survey in TrygVesta, which was con-

ducted in 2004. The survey showed that our employees are

generally happy about working for the Group. Job satisfaction

is high, and employees’ awareness of and expectations for

Management’s report Financial perspectives

T E C H N I C A L R E S U LT I N T R Y G V E S TA

2,000

1,500

1,000

500

-500

-1,000

-1,500

-2,000

DKKm

1,456

105

376

-288

-558

2000

2001

2002

2003

2004

Financial perspectives

TrygVesta’s ambition is to build the most proﬁtable portfolio

gement of the Group and as a basis for speciﬁc initiatives in

in the Nordic region within the next three to ﬁve years. Proﬁt-

relation to individual products and, thus, individual customers.

ability remained our primary strategic focus area also in 2004.

A key target was to reduce the combined ratio to 100 in 2004.

Marked improvement of corporate business

We achieved this target and set a new one of 94 for 2005.

TrygVesta’s corporate business improved signiﬁcantly in 2003

and 2004. Since 2003, we have made targeted efforts to reas-

This section focuses on customer proﬁtability, cost savings,

sess the correlation between price and risk for each corporate

the results of our strategic focus, and our credit ratings with

customer. Premiums were increased for many customers in

rating agencies. It also describes our strategic focus area of

2003, and at the same time TrygVesta required more safe-

focusing on direct Nordic general insurance.

guarding measures and higher deductibles. Despite the

changes, most corporate customers kept their policies with

Proﬁtability

TrygVesta.

Insurance companies have generated lower investment in-

come due to the sharp fall in interest rates over the past ﬁve

Large premium increases for workmen’s

years, and the industry has been forced into a healthy process

compensation insurance

of refocusing on the proﬁtability of the core business. Tryg-

An exception from the positive trend is the Norwegian corporate

Vesta’s efforts over the past few years to improve proﬁtability

and commercial customers’ workmen’s compensation and in-

have been successful: our insurance operations have become

dustrial diseases policies. Proﬁtability has not yet been restored

proﬁtable.

to these policies. The area is marked by an ever higher incidence

of allergy-related diseases and lung diseases due to dust and

In our efforts to deﬁne ﬁnancial targets for the business areas,

poisonous substances in the working environment.

we use calculations from our ﬁnancial Asset Liability Management

model, which is described in the section Risk management.

TrygVesta launched a ‘personal injury project’ in Norway in the

The model permits us to take into account the different charac-

summer of 2004 aimed at improving proﬁtability in the areas

teristics of both the business areas and the products (such as

of workmen’s compensation and industrial diseases. The project

risks of major ﬂuctuations, reinsurance and distribution and

is carried out across the business areas for corporate customers

administrative expenses) when deﬁning ﬁnancial targets. In

and commercial customers, and also draws on experience and

this way, we ensure that relevant activities are implemented

knowledge from Danish colleagues, who have previously made

within the right product and customer areas. Our use of this

a similar effort.

model is an example of our increasing involvement of well-proven

ﬁnancial models in our considerations, both in the overall mana-

WO R K M E N ’ S CO M P E N S AT I O N I NS U R A N C E
W I T H T RYG V E S TA I N D E N M A R K

Number 40

300 DKKm

275

250

225

200

175

150

125

100

1996

1997 1998

1999

2000 2001

2002

2003

2004

Claims per year per 1,000 persons

Average claim (index 100=1996)

Generally, we have increasingly focused on the workmen’s

ordinary premium increases due to changes in the practice of

compensation area in the past few years. It is difﬁcult to forecast

the National Board of Industrial Injuries and court decisions.

the cost of workmen’s compensation claims as claims may be

The new index, called the ‘Social Inﬂation Index’, is published

ﬁled long after a policy has expired, and old cases often develop

by the Danish Insurance Association. It regulates premiums

contrary to the insurance companies’ expectations due to new

based on developments in private sector salaries, developments

judgments and changes in practice. This is an unfortunate

in the average occupational disability awarded by the National

development with signiﬁcant ﬁnancial consequences for the

Board of Industrial Injuries, and developments in the practice

insurance industry as it is impossible to foresee changes with

applied by the National Board of Industrial Injuries in awarding

retroactive effect. Along with the rest of the insurance indus-

occupational disability. As a result of the new method, premiums

try, TrygVesta is therefore anxious to have progressive and

will increase by 7.95% in 2005, as opposed to 3.34% that would

forward-looking legislation.

have resulted from the ordinary wage index.

In order to make the area balance, TrygVesta has raised premiums

TrygVesta will enhance efforts to prevent personal injury in 2005.

for workmen’s compensation insurance considerably in both

This will be done through a closer dialogue with commercial

Denmark and Norway over the past few years. Some customers

and corporate customers holding workmen’s compensation

are astonished that premiums go up while claims numbers

policies on how they safeguard their staff by working actively

have fallen. The explanation is that premiums are required to

in relation to the working environment, introducing a policy

match claims expenses, not the number of claims, and claims

for sickness and similar efforts.

expenses have risen considerably because the average claim

paid has doubled over the past ﬁve years.

Focus on subrogation paying off

This doubling was, in particular, attributable to the new Danish

subrogation – among other things by hiring employees in Nor-

act on workmen’s compensation, which came into effect on 1

way who exclusively work with subrogation. These efforts have

In the past year, TrygVesta has enhanced its efforts in seeking

January 2004. Under the new act, more claims are required to

been successful ﬁnancially.

be covered under workmen’s compensation policies. As a con-

sequence, premiums for customers in the Danish market in-

Subrogation means that TrygVesta will claim indemniﬁcation

creased by more than 50% on average in 2004, solely because

for its expenses from the party responsible for the damage. If,

of the changed legislation.

for example, a ﬁre in a thatched house, insured with TrygVesta,

On 1 January 2005, TrygVesta and most other Danish insurance

ker’s liability insurer or the worker himself must pay instead of

companies began using a new index for adjusting prices for

TrygVesta. In other words, our active efforts to seek subroga-

workmen’s compensation insurance in Denmark. We have

tion place the liability for a claim where it properly belongs.

done this in order to avoid, to the extent possible, future extra-

These efforts are preventive, and also improve proﬁtability.

has been set off by a worker using open ﬁre nearby, the wor-

Management’s report Financial perspectives

AV E R A G E M O T O R C L A I M F O R
T R Y G V E S TA ’ S D A N I S H C U S T O M E R S
2 0 0 2 - 2 0 0 4

DKK

Jan
2003

Apr
2003

Jul
2003

Oct
2003

Jan
2004

Apr
2004

Jul
2004

Oct
2004

15,000

14,500

14,000

13,500

13,000

12,500

12,000

Claims expenses reduced in Denmark

So far, less than 1% of our customers have chosen to switch

Recent years’ systematic efforts have enabled TrygVesta to sub-

from the 5% to the 8% limit.

stantially reduce the average claims expense for personal and

commercial customers in Denmark without jeopardising quality.

Costs

Part of the credit for the lower average claim is due to Tryg

savings and reduce costs. As a result, both staff functions and

Reparation. Under this agreement, customers who make a

business areas identiﬁed substantial savings. This has already

claim under their motor insurance get special service at the ga-

materialised in a 2.1 point reduction of TrygVesta’s expense

rage, while TrygVesta pays less for the repairs. When introduc-

ratio in 2004. The effect will be even stronger in the years ahead.

In 2004, TrygVesta intensiﬁed the efforts to identify additional

ing such new methods we follow the claims calculations

closely, and during 2004 the average motor claim among our

The fall in costs was also attributable to the ﬁrst wave of Nordic

Danish customers fell from DKK 13,200 to DKK 12,900. Try-

synergies, shared IT outsourcing and distribution efﬁciency

gVesta’s annual motor claims expenses in Denmark amount to

enhancements, including a reduction of the number of ofﬁces

approximately DKK 1.2bn.

in Denmark. Total costs were DKK 225m lower in 2004. In ad-

dition, we reduced the number of employees by 29 by leaving

Personal accident insurance in Denmark

vacant positions unﬁlled and by focusing on redeploying em-

TrygVesta’s personal accident business in Denmark has per-

ployees. The Group’s divested activities reduced the total

formed with a negative balance between premiums and claims

number of employees by an additional 629.

over several years. Accordingly, we notiﬁed Danish personal

policyholders of average premium increases of around 25% on

We are now reaping the beneﬁts of the second wave of Nordic

their personal accident policies in the summer of 2004. However,

synergies in the form of efﬁciency enhancements and savings,

we gave each customer the opportunity to get a lower increase

in particular in the staff functions. The savings should be seen

by accepting reduced cover to the effect that the policy will

as a means of strengthening and maintaining TrygVesta’s

cover if the customer suffers 8% permanent disability, while it

good business and ﬁnancial performance. At the same time,

previously covered at 5%.

we are advancing the third wave of Nordic synergies, which we

are about to ride by investing part of the savings in increased

However, to ensure customers the greatest degree of peace of

selling power, as well as in employee development and IT.

mind, we recommended that they keep the 5% limit, which

means that they will also be compensated for minor injuries

such as a sprained or broken knee, back or foot, or if they lose

the tip of a ﬁnger.

Lower postal expenses in Norway

Focus on Nordic business

In 2004, TrygVesta reviewed the products and services which

TrygVesta’s sale of its reinsurance company, TBi, its Polish

the Group buys from the Norwegian postal service and

subsidiary, Tryg Polska, and its Estonian subsidiary, Nordicum

switched to sending some of its letters by bulk mail, thereby

Kindlustus, in 2004 was consistent with the Group’s strategy

saving several million kroner each year. Furthermore, the IT

to focus on its core business, which is direct Nordic insurance.

operating agreement with CSC involves that all Norwegian

The three companies generated a loss on ordinary operations

insurance contracts are now printed in Copenhagen, which

before tax of DKK 172m from 2002-2004. The divestments

generates additional savings.

complete TrygVesta’s strategic adjustment and enable us to

devote all our efforts to the Nordic marketplace. In the longer

Combined competencies at central customer centres

term, having a presence in Sweden would be natural for Tryg-

As more and more personal and commercial customers prefer

Vesta, and we are considering ways of positioning TrygVesta

quick and efﬁcient service by telephone or via electronic media,

in the Swedish market.

we will combine our competencies in ﬁve central customer

centres in Denmark and three in Norway, which will be supple-

Ratings – more than two steps up

mented by local ofﬁces. Some of the existing ofﬁces will be

Good ratings are vital for TrygVesta. Brokers and corporate

merged, bringing more employees together. Customers will

customers expect us to be rated, and a rating gives us easier

perceive us as being more accessible, as we will be less vulner-

and less expensive access to capital. We were therefore en-

able when staff is off due to sickness, training and holidays,

couraged to see our ratings improve in 2004. Standard & Poor’s

and more staff will be available to answer the telephones.

(S&P) rated us two grades better. This was very satisfactory

since the rating was based on S&P’s knowledge of unpublished

We ﬁnalised combining local ofﬁces in Denmark in 2004 and

material from the TrygVesta Group and therefore much better

early in 2005. This ﬁnalised the implementation of the distri-

founded than earlier ratings.

bution strategy we launched in 2000 and which has contri-

buted greatly to TrygVesta’s cost savings.

In May 2004, S&P assigned A- ratings with stable outlook to

both Tryg and Vesta. In June 2004, Moody’s Investors Service

In early 2004, we implemented changes to the sales organisa-

(Moody’s) assigned an A3 rating with stable outlook to Vesta

tion in Norway. The new regional structure makes for better

and conﬁrmed Tryg’s A3 rating with stable outlook. All of these

distribution among the different Norwegian sales channels:

are interactive ratings, based on the rating agencies having

sales persons, franchise outlets, Nordea’s branches and car

been able to assess TrygVesta’s ﬁnancial strength, risk manage-

dealers. The change of the organisation has already yielded

ment, senior management and prospects in a thorough

results in the form of new customers.

review.

Management’s report Financial perspectives

In their evaluation, both rating agencies emphasised that the

Ratings in TrygVesta

Group continues to move forward: TrygVesta is more proﬁt-

able, generates more earnings than before, has enhanced its

risk management and strengthened it capital base through

positive management decisions.

S&P

Moody’s

Tryg

Vesta

Dansk Kaution

A-

Before the interactive ratings, both Tryg and Vesta were rated

BBB(pi) by S&P, and Tryg was also rated A3 by Moody’s in 2003.

These ratings were ‘pi-ratings’, which are based on publicly

available information.

Furthermore, TrygVesta’s guarantee insurance company,

Dansk Kaution, was assigned an A- rating with stable outlook

from S&P in May 2004. The rating was based primarily on

Dansk Kaution’s strong market position, capitalisation and

good operating results over a number of years.

Looking for shared values
Lisbeth Sjursen and Bent Lundorf, Bergen and Lyngby
Employees of TrygVesta

TrygVesta’s values have been deﬁ ned after a comprehensive

‘The Group gets much better value for its money by allowing

value process covering the entire Group. During 2004, 19 value

us to utilise our skills and resources on complicated cases. At

scouts have been looking for values and rules of conduct in

the same time, we also ﬁ nd such assignments more exciting

both Tryg and Vesta. The process made it clear that Tryg and

and challenging. On the other hand, the number of assessors

Vesta have similar trains of thought and action in many respects.

has fallen. This may result in stress at times,’ says Bent Lundorf.

Lisbeth Sjursen was one of the 19 value scouts. She works in

Market Support in Bergen, Norway:

Lisbeth Sjursen presented the value scouts’ report to manage-

‘I was positively surprised by the sincerity, honesty and com-

ment in late 2004.

mitment my colleagues put into the project – both by telling

‘We consider ourselves the employees’ mouthpiece. It’s im-

very personal stories and in the form of well-founded pride and

portant that the values are visible in the day-to-day manage-

criticism,’ says Lisbeth Sjursen.

ment, and the problems, such as stress, we have identiﬁ ed

must be addressed,’ according to Lisbeth Sjursen.

The value process also identiﬁ ed weaknesses and requirements

for enhancement of the organisation. One such area is uncer-

Lisbeth Sjursen and the other value scouts will be offered to

tainty resulting from the growing requirements from our exter-

become value coaches from 2005 onwards. Their task will be

nal environment and the continuous need to become better

to help embed the new values

and more efﬁ cient.

throughout the Group.

Bent Lundorf is one TrygVesta employee, who has felt the in-

creased work pressure. Bent Lundorf assesses claims under

contents policies in Denmark. Over the past few years, damage

control service providers have been charged with assessing

small claims, leaving scope for TrygVesta’s own assessors to

deal with large claims in depth.

Financial forecast for 2005

TrygVesta expects to report strong ﬁnancial results also for 2005,

reaping the beneﬁts of the second wave of Nordic synergies

with a projected low combined ratio and attractive returns on

through efﬁciency enhancements and savings. At the same

equity of around 25% before tax. The Group forecasts a proﬁt

time, we intend to advance investments in customer-oriented

on ordinary activities before tax of DKK 1,600m for the full

initiatives that are part of the third wave of Nordic synergies.

year 2005 compared with the full-year proﬁt for 2004 of DKK

1,947m. The forecast assumes an unchanged level of interest

The investment result is the proﬁt on investment activities af-

rates and stable equity markets from 31 December 2004.

ter transfer of technical interest. The forecast investment re-

sult assumes annual yields of 7.0% on shares, 2.9% on bonds

TrygVesta estimates that the combined ratio, net of reinsurance,

and 7.1% on real property.

for 2005 will be at the level of 92-96 with an expectation of 94

compared with the 93.1 achieved for 2004. The forecast for

As a consequence of the transition to new accounting policies

2005 assumes a normal claims performance for TrygVesta.

as from 2005, interest rate changes will affect both the techni-

The storm in Denmark on 8 January 2005 was within the limits

Under the policies applied so far, such changes only affected

cal result and the investment return – in opposite directions.

of a year’s normal claims experience and is incorporated in the

the investment result.

forecast, although it increases the risk that total expenses in re-

lation to storm claims may be greater in 2005 than in a normal

In addition to provisions for claims and the asset portfolio,

year.

TrygVesta’s pension commitment in Norway is affected by

interest rate ﬂuctuations. Changes in this commitment are

The effect of TrygVesta’s strategic initiatives launched in 2003

recognised as an expense, and accordingly, an interest rate

and 2004 was quicker and stronger than was expected at the

increase of 1 percentage point would decrease the combined

beginning of 2004. However, we maintain our programme for

ratio, net of reinsurance, by 0.7 point.

Financial forecast for 2005

DKKm

Technical result

Investment result

Pre-tax operating proﬁt

Actual

Forecast Favourable Negative

2003

2004

2005

scenario scenario

376

685

1,045

1,456

517

1,947

1,325

300

1,600

1,000

Combined ratio, net of reinsurance

100.9

93.1

T R YG V E S TA G R O S S E A R N E D P R E M I U M S
F O R C O R E A C T I V I T I E S A N D A C T I V I T I E S
D I V E S T E D I N 2 0 0 4

TrygVesta

Divested activities, 2004

The continuing activities of TrygVesta reported gross earned
premiums of DKK 15,281m in 2004.

115

110

105

100

AC T UA L A N D FO R EC A S T CO M B I N E D R AT I O,
N E T O F R E I N S U R A N C E

109.2

100.9

93.1

2002

2003

2004

2005

Actual

Negative

Forecast

Favourable

The section Risk management contains a more detailed descrip-

•

The second wave of Nordic cost synergies

tion of the operational and ﬁnancial sensitivity in terms of risk

•

The improvement of the correlation between price and risk

management. The section New accounting rules as from 2005

in the personal area within the Corporate business area

describes the changed interest rate sensitivity. In the following,

we describe the basis for our ﬁnancial forecast for 2005.

Other things being equal, the divestment of the Polish and Esto-

nian activities and TBi will reduce the combined ratio by 0.6

Details of ﬁnancial forecast for 2005

point relative to a normal level for 2002-2004, when the three

The ﬁnancial forecast for 2005 is based, among other things,

companies contributed a loss of DKK 172m to the consolidated

on the Group’s portfolio model. The model uses historical data

proﬁt before tax. Gross earned premiums in these companies

to project developments in the claims ratio, including prob-

amounted to DKK 1,035m in the 2004 ﬁnancial statements.

able variation factors such as claims frequency in the personal

market, average expense per claim, frequency of large losses

The second wave of Nordic cost synergies will have a positive

and the extent of catastrophe and storm events.

impact on proﬁts in 2005 and 2006, while also facilitating a

number of investments in customer-oriented initiatives. The

Relative to a normal year, 2004 was affected by the following:

overall effect is expected to be a reduction of approximately 1

•

Large losses at normal level

point in the Group’s expense ratio relative to 2004. In addition,

•

Storm and weather related claims at normal level

following the adoption of IFRS standards in our ﬁnancial report-

•

Claims frequency in the mass market signiﬁcantly better

ing, internal claims handling costs are to be included in the

than normal level

claims ratio and not in the expense ratio. This will further reduce

•

Above-normal performance for property and liability policies

the expense ratio by approximately 3 points, but increase the

in the Corporate business area

claims ratio accordingly.

•

Poorer-than-normal performance for personal claims expenses

In aggregate, these factors had a positive effect of 2 points on

to further enhance proﬁtability within the personal accident areas

the combined ratio, net of reinsurance, relative to a normal year.

of Norwegian corporate business. These measures are expected

A number of initiatives were introduced in the autumn of 2004

to have a positive effect on the Group’s combined ratio for 2005.

The forecast combined ratio, net of reinsurance, of 94 for 2005

thus reﬂects stricter earnings requirements and incorporates a

Combined ratio, net of reinsurance

number of factors intended to improve the performance.

– actual, forecast and sensitivity

The following factors in particular contribute positively to the

the ﬁgure above, and the overall probable ﬂuctuation of the

forecast for 2005:

combined ratio, net of reinsurance, is estimated to be in the

The overall forecast and probable ﬂuctuations are illustrated in

•

The divestment of the Polish and Estonian subsidiaries and

range of 92-96.

the reinsurance company TBi

Management’s report Risk management

Risk management

Risk management is a natural and fundamental part of Tryg-

TrygVesta’s targeted risk management efforts are based on

Vesta’s business philosophy, and competency in this area is an

our ambition to operate a proﬁtable insurance business while

important success criterion. Risk management is very important,

at the same time meeting our target of being the customers’

not only to TrygVesta, but also to the Group’s owner, the super-

preferred supplier of products and services that offer peace of

visory authorities and in particular to TrygVesta’s customers.

mind. At the same time, the risk management efforts help

Customers who choose to take out policies with TrygVesta

prepare TrygVesta for the new and stricter requirements from

do it because they trust that TrygVesta will be able to meet its

our external environment as to how an insurance business

obligations of any kind, be it claims in connection with a in-

should be run. Supervisory authorities and international rating

dustrial property burnt down or damage caused by storms.

agencies, in particular, focus increasingly on risk management.

Competent risk management is fundamental to this trust.

This trend will continue in the years ahead, partly due to the

work with the new EU solvency rules for insurance companies

Risk management in an insurance company involves assessing

(Solvency 2) and partly due to the insurance markets becom-

a large number of risks affecting various parts of the company’s

ing increasingly internationalised. Operating a successful in-

activities (see fact box). In respect of ﬁnancial types of risk,

surance business in the future will undoubtedly be even more

TrygVesta is making targeted efforts to develop methods to

dependent on the companies’ ability to plan, monitor and

measure and manage such risk, in particular in the areas of

manage their risk.

provisions, investments and reinsurance. As far as operational

types of risk are concerned, TrygVesta focuses on management

through a coherent structure of policies, business procedures

and guidelines.

Risk types

Financial risks

Insurance risk

Premium risk

Provisions risk

Operational risks

Strategic risks

IT breakdowns

Crime

Process errors

Market conditions

Legislative changes

Investment risk

Interest rate risk

Market risk

Currency risk

Inﬂation risk

Examples of types of risk within the three main areas ﬁnancial, operational and strategic risks

TrygVesta’s policies

Risk type

Insurance risk

Investment risk

Operational risk

Strategic risk

Policy

Underwriting and acceptance policy

Provisioning policy

Reinsurance and Security policy

Claims policy

Investment policy

Security policies

Business strategy

Risk management structure

The commercial part of risk management is carried out daily in

In 2004, an important part of implementing TrygVesta’s pan-

each business area in connection with the writing of policies,

Nordic organisation was to harmonise the different elements

payment of claims and individual underwriting of large corporate

of the Group’s risk management.

customers. Such risks are primarily managed through tariffs,

policies, business procedures and structured follow-up.

The Group’s CFO is responsible for the overall ﬁnancial and

operational risk management, comprising management of

TrygVesta made targeted efforts in 2004 to deﬁne a risk man-

risks relating to TrygVesta’s investment activities, manage-

agement structure and implement it in the organisation.

ment and monitoring of operational risk, analyses of tariffs,

provisions, Asset Liability Management and reinsurance.

The structure is based on a number of overall policies deﬁned

Working together with the business areas, efforts are made to

by the Supervisory Board. The policies lay down the framework

ensure that risk management is developed, coordinated and

for the circumstances in which TrygVesta will assume risks.

harmonised throughout the Group.

Policies have been laid down for the most important areas of

TrygVesta’s business, covering various risk types.

Management’s report Risk management

The overall policies are supplemented by detailed guidelines

When the period of the insurance has expired, insurance risk

and business procedures prepared by the individual business

relates to the provisions for claims – also referred to as the re-

and staff areas. A number of committees have been set up to

serves – made to cover future payments on claims already in-

ensure implementation of the overall policies in the business

curred. A case in point is industrial injuries discovered many

areas. These committees have been composed so as to ensure

years after the policy was written. If TrygVesta’s provisions for

coordination across the Group, and, where required, they ap-

claims are inadequate and have to be increased, the company

prove the implementation by the business areas of the rele-

incurs a run-off loss. Long-tail business is especially exposed to

vant overall policy. The committees report to the Group Exe-

run-off losses, and history has shown that areas involving per-

cutive Management and may also act as an advisory body for

sonal injury are subject to considerable risk. This risk is enhanced

the Executive Management in connection with questions

by the fact that a change in the claims record several years after

within the ﬁeld of each committee.

the policy was written may be expected to affect all claims in

A ‘Policy and Strategy Room’ describing each individual policy

far behind. Maintaining provisions at the correct level and

has been created on the Group’s intranet in order to ensure

monitoring developments is therefore a vital element in ensuring

the intervening period, with the result that premiums may lag

that TrygVesta’s employees are familiar with the Group’s over-

proﬁtable insurance operations.

all policies. Furthermore, our intranet gives all Norwegian em-

ployees access to detailed guidelines for writing individual

TrygVesta’s provisioning policy deﬁnes the framework for man-

products. TrygVesta is in the process of transferring the expe-

aging insurance risk related to provisions for claims. According

rience gained to other business areas as part of harmonising

to the provisioning policy, TrygVesta makes provisions that en-

the Group’s operational risk management.

sure that the likelihood of run-off gains exceeds the likelihood

Insurance risk

of run-off losses at any time. The actual calculation and mo-

nitoring is carried out by TrygVesta’s provisioning department,

The most important risk factor for TrygVesta is the risk in-

which is responsible for TrygVesta’s provisions in both Norway

volved in the insurance operations. A key element in the ef-

and Denmark. Provisions for claims are calculated by means of

forts to manage insurance risk is analysing risk on the different

a number of statistical methods as well as assessments based

insurance types.

on knowledge in the business areas. A reserve committee is

responsible for coordinating across the organisation. The com-

Insurance risk connected with writing insurance is generally

mittee consists of representatives from claims handling and

assessed by means of tariffs based on statistical analyses of the

the provisioning department to allow early recording of any

risk type. TrygVesta’s pan-Nordic analysis function is respon-

changing circumstances. Close follow-up on claims permits

sible for making tariff analyses.

TrygVesta to take swift action as and when the risk situation

changes, for example in the personal accident area.

A S S E T L I A B I L I T Y M A N A G E M E N T M O D E L

Profit/loss

Technical result

Investment result

Reinsurance

Large claims

Small claims

Real property returns

Bond returns

Equity returns

Schematic illustration of TrygVesta’s ALM model. The individual elements
are subject to several thousand computer simulations, making it possible to
measure the aggregate effect of, for example, changes in investment strategy,
business mix or reinsurance.

Asset Liability Management

The ALM model is an important tool for TrygVesta’s internal

In a ﬁnancial group such as TrygVesta, part of the ﬁnancial risk

risk management, and it ensures that impact analyses are

is related to the relationship between the Group’s liabilities

made within a common calculation framework.

and the assets available to cover these liabilities. Interest rate

risk is a case in point, currently affecting almost exclusively the

We will continue developing the ALM model in 2005 and intend

value of investments in interest-bearing instruments such as

to use it also for assessing the impact of longer-term strategic

bonds. In connection with TrygVesta adopting IFRS standards

decisions.

effective from the 2005 ﬁnancial year, provisions for claims will

also be affected more by interest rate ﬂuctuations due to in-

Reinsurance

creased discounting, and the interaction of assets and liabilities

TrygVesta’s reinsurance department contributes to strength-

will have a greater impact on the ﬁnancial statements. Manage-

ening the analysis and model based support in connection

ment of interest rate risk and other risks impacting both assets

with purchasing reinsurance.

and liabilities is referred to as ‘Asset Liability Management’ (ALM).

In order to support this part of our risk management, TrygVesta

TrygVesta’s synergies in placing the Group’s reinsurance.

has for several years made targeted efforts to develop a ﬁnan-

Accordingly, the reinsurance programme is as far as possible

cial ALM model with which to calculate risk in the various parts

organised in joint treaties comprising the entire Group, and

of our activities and illustrate the consequences.

the treaties are assessed and analysed at Group level.

The reinsurance department is responsible for maximising

Work with the ﬁnancial ALM model was given a more syste-

The scope of the reinsurance department’s work is deﬁned

matic structure in 2004. The model has been extended to

once a year in TrygVesta’s ‘Reinsurance and Security policy’,

cover the entire Group, and it describes risks affecting

which is subject to approval by the Supervisory Board of

TrygVesta’s investment assets as well as its insurance liabilities.

TrygVesta. The practical aspects of TrygVesta’s reinsurance

are handled in a close collaboration with the business areas.

During the year, we used the ALM model for a number of im-

See also the description of risk management in the Corporate

portant aspects of planning and monitoring TrygVesta’s risks:

Governance section.

•

risk based allocation of capital as a basis for proﬁtability

assessments, tariff adjustments and budgeting

•

calculation of TrygVesta’s internal risk equalisation and a

related calculation of a limit for TrygVesta’s retention in

connection with reinsurance

•

assessment of the risk of TrygVesta’s rating being affected

in connection with alternative investment strategies.

Management’s report Risk management

S TA N D A R D & P O O R ’ S

International credit rating agency Standard & Poor’s rates
borrowers’ ability to honour their obligations. Ratings are
awarded in accordance with the following scale:

AAA
AA
A
BBB
BB
B
C

Extremely strong
Very strong
Strong
Good
Marginal
Weak
Very weak

BBB is the lowest rating that is considered ‘safe’. The scale is
used to rate bonds issued by governments, banks and similar
institutions as well as insurance and reinsurance companies.
A + or – may be added to the letters for further grading.

In rating insurance companies, Standard & Poor’s uses a
publicly accessible rating model that measures the company’s
capital relative to its risk profile.

More joint treaties

Personal accident and workmen’s compensation

Over the past couple of years, an increasing number of Tryg

Finally, TrygVesta has set up joint catastrophe reinsurance for its

and Vesta’s reinsurance treaties have been combined into joint

personal accident and workmen’s compensation policies. In early

treaties, generating annual synergies in the range of DKK 40m.

2004, we reassessed the scenarios – the so-called Realistic Disas-

In 2003, TrygVesta changed its reinsurance from proportional

ter Scenarios – on which our cover is based to include terrorist

to non-proportional cover. Thanks to a healthier gross busi-

attacks. As a result of this work, TrygVesta increased its cover per

ness, this change generated savings of DKK 30m in 2003 and

event from DKK 350m to DKK 1,000m. TrygVesta’s retention

additional savings of DKK 140m in 2004.

was DKK 20m in 2004 and from 2005, it has been increased to

Natural disasters

DKK 50m. We have increased this cover to DKK 1,500m as

from 2005, and we estimate that it will be difﬁcult to buy addi-

TrygVesta has bought joint reinsurance for natural disasters,

tional cover in the reinsurance market up to full terrorist cover.

which also covers the part of Norwegian natural disasters that

is not covered by the Norwegian Pool of Natural Perils. The

Credit rating requirements

cover is up to DKK 3.5bn with retentions of DKK 100m in Den-

The placing of reinsurance exposes TrygVesta to a credit risk

mark and NOK 70m in Norway. The cover has been determined

from the reinsurers it contracts with. This risk is managed

based on the risk to which the portfolio is exposed. The risk

through TrygVesta’s Reinsurance and Security policy, which

exposure has been analysed using market-based simulation

deﬁnes minimum credit rating requirements that must be met

models and has been determined on the assumption that a

prior to signing a reinsurance treaty. The policy speciﬁes that

loss of more than DKK 3.5bn occurs less often than once every

reinsurers must have at least a Standard & Poor’s BBB or similar

one hundred years. Should a terrorist event occur in Denmark

rating in order for TrygVesta to cooperate with them on short-

or Norway, the joint reinsurance cover for natural disasters and

tail business up to 2.5 years. In the case of long-tail business

terrorist events is up to DKK 1.5bn for buildings, contents and

over 2.5 years, reinsurers are required to be rated at least A by

business interuption policies (the so-called property policies)

Standard & Poor’s or to have a similar rating.

with a total insurance sum of up to DKK 370m.

Investment risk

Property

The investment activities are managed by the Group Invest-

TrygVesta has furthermore bought joint reinsurance in respect

ments department, which is responsible for investments on

of the industrial and commercial customers’ property policies.

behalf of all companies in TrygVesta.

The cover is up to DKK 800m with a retention of DKK 50m per

event (DKK 100m for the ﬁrst event) and also comprises one-off

Based on a general, overall investment strategy, Group Invest-

events due to terrorist events. TrygVesta buys individual cover

ments draws up investment policies for each company in the

(facultative reinsurance) for risks exceeding DKK 800m.

Group. This is done taking into consideration the characteristics

of each company and the legislative framework for its operations.

E X C E S S C O R E C A P I TA L R E L AT I V E T O
R E D - A N D Y E L L O W - L I G H T S C E N A R I O S

DKKm

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

Dec
03

Mar
04

Jun
04

Sep
04

Dec
04

Redlight

Yellowlight

The chart shows the excess core capital relative to the Danish
Financial Supervisory Authority’s traffic light system. The amount
of excess core capital increased throughout 2004 thanks to much
of TrygVesta’s earnings being invested in low-risk investment assets.

Based on the investment policies, Group Investments deﬁne

As described under the heading Asset Liability Management,

the operational framework for the asset mix, including limits

an increase in interest rates will trigger a fall in the value of Tryg-

on asset types and the duration, geographic distribution and

Vesta’s bond portfolio, while the value of TrygVesta’s liabilities

risk proﬁle of bonds, shares and real property, respectively.

will only decrease to the extent they are discounted. At present,

Most of TrygVesta’s investment portfolio is then managed by

as only provisions for workmen’s compensation in Denmark

external portfolio managers.

and Norway are discounted, an increase in interest rates would

The investment policy aims to maximise return, taking into

in this annual report, the adoption of IFRS accounting standards

account the composition and duration of liabilities and the

will entail increased discounting of provisions for claims, reducing

Group’s risk proﬁle, solvency and rating. Overall, TrygVesta’s

the effect of interest rate changes on future ﬁnancial results.

trigger an accounting loss for TrygVesta. As described elsewhere

liabilities have a duration of about two years, which dictates

an asset mix focused on a high degree of security and strong

The Danish Supervisory Authority’s trafﬁc lights

liquidity. Therefore, liquid listed bonds with low credit risk and

As a guideline for assessing general insurance companies’

short duration will continue to constitute the major part of

investment risk, including interest rate risk, the Danish Finan-

the investment portfolio.

cial Supervisory Authority introduced the so-called trafﬁc light

The credit risk on TrygVesta’s bond investments is limited.

ﬂect companies’ ability to endure a number of hypothetical

Most of the portfolio consists of mortgage credit and govern-

market scenarios, such as falling equity prices and interest

system at 31 December 2003. The system is intended to re-

ment bonds with AAA or equivalent ratings from leading

rate changes.

credit rating agencies. Only a small part of the portfolio is

made up of corporate bonds.

To be in the green scenario, the company’s core capital must

TrygVesta is exposed to currency risk through its investments

requirement, which is calculated in proportion to the insurance

in securities outside Denmark and Norway. The Group gener-

risk. TrygVesta was rated green at 31 December 2004 with an

ally hedges this risk relating to investments in shares and

excess of DKK 3bn relative to a yellow rating and DKK 3.6bn

cover both the trafﬁc light scenario and the company’s solvency

bonds denominated in foreign currency. Equity investments in

relative to a red rating.

subsidiaries outside Denmark have been hedged in 2004.

The assets are marked-to-market on a current basis, and Tryg-

its risk capacity. This means that the company can more than

Vesta’s investment portfolio is therefore affected by ﬂuctua-

double its investment risk without moving out of the green-

Relative to the yellow-light scenario, TrygVesta uses 38% of

tions in interest rates, equity prices, exchange rates and real

light scenario.

property prices.

Management’s report Risk management

The excess of the capital base reﬂects the low risk involved in

TrygVesta’s investment portfolio. It also shows that only a

small proportion of the Group’s accumulated proﬁts is allo-

cated to equity investments.

TrygVesta’s management of risk limits is based on the Danish

Red-light scenario

An adverse, albeit realistic development would

threaten the company’s solvency

• Interest rate change of 0.7-1.0%

• Equity price fall of 12%

• Fall in property prices of 8%

Financial Supervisory Authority’s realistic scenario (red-light

• Foreign exchange and credit losses

scenario). The table ‘Investment risk’ shows investment risk at

31 December 2004 calculated on this basis.

If all the adverse impacts shown occurred simultaneously, the

total effect on earnings would be DKK 1,004m or 16% of Tryg-

Vesta’s shareholders’ equity at 31 December 2004. By com-

parison, the effect would be equal to a 6.7 point deterioration

of the combined ratio, net of reinsurance.

Yellow-light scenario

An unrealistic, albeit not inconceivable develop-

ment would threaten the company’s solvency

• Interest rate change of 1-1.5%

• Equity price fall of 30%

• Fall in property prices of 12%

• Foreign exchange and credit losses

Green scenario

An unrealistic, but not inconceivable development

would not threaten the company’s solvency

Impact

Earnings effect DKKm

0.7-1.0% rate increase

12% price fall

8% price fall

Value at Risk

Weighted loss

279

378

172

164

1,004

Investment risk

Asset type

Bonds

Real property

Foreign exchange

Credit risk

Total

Natural for the bank to sell insurance
Seija Korre and Taina Kujanen, Helsinki
Customer with TrygVesta, Finland, and banking
consultant with Nordea

‘For me, it’s a natural thing to discuss insurance with my bank-

triggering a thunderstorm. Seija Korre’s house was hit by light-

ing adviser because she knows me well and I feel safe about

ning and caught ﬁ re. Her house, sauna and car were badly

her handling it,’ says Seija Korre of Helsinki, Finland.

damaged, but luckily nobody was hurt.

A couple of years ago Seija Korre discovered she could be

‘I was very frightened and worried and did not know what to

insured through her bank when she had a meeting with

do. When I called TrygVesta’s Finnish branch, Nordea Vahinko-

Taina Kujanen, her banking adviser. Seija Korre is happy she

vakuutus, and told about the damage, they calmed me down

accepted the offer of being insured with TrygVesta through

and gave good advice.’

Nordea in Finland.

‘I’m pleased that Taina Kujanen looks after my insurances as

well as my banking requirements. It’s easy that all vital matters

are handled in one place. It also seems natural for the bank to

sell insurance.’

The policies were needed as late as last summer, when Seija

Korre stayed in her holiday cottage at Kirkkonummi – 50 km

west of Helsinki. On a hot summer’s day a storm came on,

������������������������������������������������������������������������������Management’s report Financial highlights and key ratios for TrygVesta

Financial highlights and key ratios for TrygVesta

DKKm

Gross earned premiums
Gross claims incurred
Gross expenses

Proﬁt/loss on gross business

2004

3,954
-2,846
-829

279

2003

4,209
-3,178
-936

2004

2003

2002

2001

2000

16,308
-11,020
-3,462

16,702
-11,940
-3,745

15,792
-12,334
-3,732

1,826

1,017

-274

12,620
-9,782
-3,063

-225

11,152
-9,801
-2,891

-1,540

Proﬁt/loss on ceded business

-133

-204

-814

-1,135

-871

-329

552

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 income
Other ordinary expenses

Proﬁt/loss on ordinary activities before tax

Extraordinary items and minority interests
Tax

Proﬁt/loss for the period, continuing business

Loss for the period, discontinued business

Proﬁt/loss for the period

Run-off gains/losses, net of reinsurance

Balance sheet
Technical provisions, net of reinsurance
Total shareholders’ equity
Total assets

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio. net of reinsurance

Combined ratio. net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio. net of expenses to reinsurance

Annualised return on equity
Return on equity before tax
Return on equity after tax and discontinued business

3,570
129
-2,661
-763
2

277

314
41
-48

584

0
-152

432

-17

415

74.5
21.4

95.9

72.0
3.4

75.4
21.0

96.4

192
31
-41

258

0
110

368

-84

284

79.5
23.5

103.0

75.4
4.9

80.3
22.2

102.5

3,672
143
-2,918
-863
42

14,525
537
-10,296
-3,217
-93

14,190
595
-10,866
-3,442
-101

12,497
832
-10,422
-3,220
-245

1,456

376

-558

517
121
-147

1,947

0
-485

1,462

-55

1,407

685
115
-131

1,045

1
-87

959

-217

742

-170
127
-173

-774

-1,256
213

-1,817

-274

-2,091

10,402
715
-8,327
-2,629
-56

105

4
121
-121

109

7
-43

-22

9,599
755
-8,014
-2,573
-55

-288

711
122
-122

423

0
-83

340

-7

333

-516

-458

-283

-457

23,467
6,117
33,553

22,475
5,360
31,337

21,606
4,268
29,833

17,673
4,564
24,032

15,826
4,305
23,575

70.9
22.2

93.1

67.6
5.0

72.6
21.2

93.8

33.9
24.5

76.6
24.3

100.9

71.5
6.8

78.3
22.4

83.4
25.8

109.2

78.1
5.5

83.6
23.6

80.1
25.3

105.4

77.5
2.6

80.1
24.3

83.5
26.8

110.3

87.9
-5.0

82.9
25.9

100.7

107.2

104.4

108.8

21.7
15.4

-46.0
-47.4

2.6
1.2

8.9
7.0

Number of full-time employees at the end of the period

3,762

4,420

4,411

4,316

4,264

T E C H N I C A L R E S U LT

2,000

1,500

1,000

500

-500

-1,000

105

376

-288

-558

DKKm

1,456

C O M B I N E D R AT I O ,
N E T O F R E I N S U R A N C E

110.3

109.2

105.4

115

110

105

100

100.9

93.1

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

Review of TrygVesta’s ﬁnancial performance

TrygVesta improved its ﬁnancial results markedly in 2004, re-

was included in the ordinary activities until the time of sale.

porting a proﬁt on ordinary activities of DKK 1,947m before tax

The divested companies contributed an ordinary loss totalling

and a return on equity of 33.9% before tax and 24.5% after tax.

DKK 172m during the period 2002-2004. The combined effect

The strong proﬁt growth was primarily attributable to a signiﬁ-

tivities totalling DKK 63m in 2004, while the restructuring and

cant improvement of the operating proﬁt. Insurance operations

run-off provision of DKK 179m remaining at 31 December

of the divestments was recognised as proﬁt on insurance ac-

reported an increase of DKK 1,080m relative to 2003 and DKK

2003 was applied in full.

2,014m relative to 2002 resulting from improved technical

results in all of TrygVesta’s business areas.

Higher net premiums in general and strong growth in Finland

Growth in earned premiums in TrygVesta’s three primary busi-

Through targeted efforts since the Group’s establishment in

ness areas was 3.4%. This ﬁgure was composed of growth in

2002, TrygVesta has reduced its combined ratio by 16.1 points

Personal & Commercial Denmark of 5.6%, growth in Personal

from 109.2 in 2002 to 93.1 in 2004.

& Commercial Norway of 2.1% and slightly weaker growth in

the Corporate business area relative to 2003. It should be

TrygVesta has established a sound balance in Group earnings,

noted that growth in Personal & Commercial Norway was

generating a technical result of DKK 790m from its Danish

made up in the local currency. In addition, premium growth in

operations and DKK 722m from its Norwegian operations.

the Corporate business area was inﬂuenced by the transition

to net prices in business served by brokers, which reduced pre-

As in 2003, the largest part of TrygVesta’s earnings was gener-

miums by approximately DKK 160m, corresponding to just

ated by Personal & Commercial Denmark and Personal & Com-

over 3% of the Corporate business area.

mercial Norway reporting technical results of DKK 604m and

DKK 662m, respectively. In addition, the Corporate business

In addition, TrygVesta’s Finnish business recorded strong

area continued the positive trend from 2003, recording a tech-

growth in 2004 through an increase in gross earned premiums

nical result of DKK 246m in 2004, despite large claims and a

by approximately 60% to DKK 97m. Since venturing onto the

considerable strengthening of reserves within personal accident

Finnish market in 2001, TrygVesta has reached a market share

insurance.

of just over 1.5% of the personal insurance market in Finland at

31 December 2004. Nordea Bank Finland, which is TrygVesta’s

In 2004, TrygVesta divested its activities in Poland and Estonia

primary distribution channel in the Finnish market, has a share

and its reinsurance activities, which were operated through

of some 40% of the personal market, and the potential for con-

Tryg-Baltica International (TBi). The proﬁt from these activities

tinuing this growth rate is hence signiﬁcant.

Management’s report Review of TrygVesta’s financial performance

P R E M I U M S , N E T O F R E I N S U R A N C E ,
D I S T R I B U T E D O N B U S I N E S S A R E A S
I N 2 0 0 4

Personal & Commercial Denmark

Corporate

Personal & Commercial Norway

Other

Total earned premiums were furthermore affected by the

In the corporate market, general price adjustments were im-

divestment of TrygVesta’s reinsurance operations and the ac-

plemented over the course of 2002 and 2003 within property

tivities in Poland and Estonia in 2004, since earned premiums

and personal accident insurance in particular, while adjust-

from the divested activities were only included until the time

ments during 2004 were fewer in number and of a more spe-

of sale. Overall, gross premiums were adversely affected by

ciﬁc nature. Initiatives to adjust prices and to provide more ac-

the divestment of other activities in the amount of DKK 190m.

tive risk advice to customers in the property area have been

successful, hence restoring proﬁtability in this business area.

Restructuring of the Group’s reinsurance programmes and the

Results within personal accident insurance were affected by a

establishment of pan-Nordic reinsurance procurement reduced

doubling of average claims over the past ﬁve years, and despite

the reinsurance premium from DKK 2,512m in 2003 to DKK

a falling claims frequency, this area was still not proﬁtable in

1,783m in 2004, and we expect a further reduction of the re-

2004. The implementation of the so-called ‘Social Inﬂation

insurance premium in 2005.

Index’ in Denmark in 2005 will, however, contribute to also

making this product area proﬁtable.

Proﬁtability restored in the primary operations

The technical result of DKK 1,456m in 2004 was to a large ex-

In addition, the Group focused on costs during 2003 and 2004

tent attributable to recent years’ efforts to ensure a healthier

and launched a number of targeted cost saving and efﬁciency

correlation between risk and price.

improving measures both in staff functions and in the individual

In the mass market (Personal & Commercial Denmark and

proﬁtability in 2004 and will continue to contribute to improve-

business areas. This contributed signiﬁcantly to the improved

Personal & Commercial Norway), general price adjustments

ments during 2005 and 2006.

were implemented during 2003, within contents and house

insurance. In 2004, TrygVesta worked proactively to reduce

Reduction in claims despite large provisions

claims expenses and improve the overall customer package,

TrygVesta’s claims ratio, net of reinsurance, was reduced sig-

for example by entering into agreements with garages and

niﬁcantly in 2004 as well, now totalling 70.9, down 5.7 points

craftsmen. These efforts resulted in lower average claims and

relative to 2003. The reduction can primarily be attributed to

improved customer packages in the form of, for example, a

recent years’ efforts to ensure a healthier correlation between

replacement car during the repair period and a guarantee for

risk and price, as described above.

a high standard of workmanship in repairing building damage.

L A R G E C L A I M S

800

700

600

500

400

300

200

100

DKKm

170

567

199

428

123

194

108

304

210

250

200

150

100

G R O S S D I S A S T E R A N D W I N D S TO R M
E X P E N S E S , I N C L U D I N G T H E N O R W E G I A N
P O O L O F N AT U R A L P E R I L S

DKKm

105

160

1
47

25
27

750

100

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

2005

Normal year

Norway

Blaze in Kolding

Normal year

Disasters and windstorms in Norway, pool of natural perils

Denmark

Disasters and windstorms in Denmark, excluding hurricane run-off 1999

Storm 8 January 2005

However, the claims performance was also adversely affected

Improved expense ratio through efﬁciency

in 2004 by events such as the blaze at a ﬁreworks factory in the

improving measures and synergies

Danish town of Kolding and by the tsunami disaster in Asia,

Over the course of 2003 and 2004, TrygVesta made targeted

which impacted TrygVesta’s claims by a total of DKK 128m,

efforts to reduce costs in the short term as well as in the long term.

net of reinsurance, thereby increasing the combined ratio by

0.9 point. The ﬂex job ruling by the Danish Supreme Court and

In the short term, actual costs were reduced by DKK 225m

the implementation of a broader deﬁnition of industrial disease

relative to 2003. Likewise, the expense ratio was reduced from

in Norway affected claims adversely by an aggregate of DKK

24.3 in 2003 to 22.2 in 2004.

265m. Finally, TrygVesta incurred large claims totalling DKK

412m in 2004 – an increase of DKK 140m over 2003.

Staff-related expenses make up 66% of total costs, and all

things being equal pay increases resulting from collective

On the positive side, the general underlying improvement

agreements would have increased costs by DKK 72m in 2004.

which characterised 2003 and 2004 contributed favourably to

TrygVesta’s performance in 2004. In the mass markets in par-

Instead, TrygVesta reduced the cost level on a quarterly basis

ticular, the 2004 claims performance was favourably affected

over the past year, thereby achieving in a net reduction of total

by a lower-than-average claims frequency, especially within

costs of DKK 225m in 2004.

house insurance in Norway and motor insurance in Denmark.

The savings were achieved through the ﬁrst wave of pan-Nordic

Improved risk selection, improved security and higher deductibles

synergies. In particular, the integration of Group staff functions,

combined with generally milder-than-average winters resulted

including joint IT sourcing and outsourcing of IT operations,

in a lower claims ratio in the mass markets. These markets have

had a signiﬁcant impact. In addition, efﬁciency improvements

generally been characterised by declining claims frequencies

in the distribution network and increased focus on costs

in recent years. The claims frequency for house insurance in

throughout the organisation contributed to reducing the cost

Norway declined from index 100 to index 77 during the period

level.

from 2000 to 2004, which bears witness to a particularly low

claims frequency in 2004 as compared with a normal year.

The cost reduction was implemented without any major staff

retrenchment programmes.

Claims incurred, net of reinsurance, totalled DKK 10,296m,

corresponding to a decline of DKK 570m relative to 2003.

Management’s report Review of TrygVesta’s ﬁnancial performance

A C T U A L Q U A R T E R LY
E X P E N S E S

DKKm 880

860

840

820

800

780

760

740

720

24 %

23.5

22.5

21.5

20.5

Q4
2003

Q1
2004

Q2
2004

Q3
2004

Q4
2004

Insurance operating expenses, net of reinsurance

Expense ratio, net of reinsurance

In the longer term, TrygVesta expects to further reduce its

Transfer to technical interest totalled DKK 537m in 2004 against

cost level. This will continue to be a focus area, and in 2004

DKK 595m in 2003. The decline in the amount transferred can

TrygVesta laid the groundwork for additional efﬁciency im-

be attributed to the generally lower level of interest rates in

provements within our staff functions and continued focus

2004 as compared with 2003.

on process improvements within the individual business areas.

This will contribute to a continued reduction of the expense

Tax

ratio during 2005 and 2006, when the second wave of the

Tax on the proﬁt for the year amounted to DKK 485m against

Group’s Nordic synergies is launched.

DKK 87m in 2003. The effective tax rate was 25 as compared

Investments

with 6 in 2003. This increase was due to the 2003 tax rate being

affected by tax losses carried forward from prior years and off-

Proﬁt on investments before transfer to insurance activities,

set against the taxable income and by tax-exempt unrealised

but after payment of costs, totalled DKK 1,192m, correspond-

capital gains.

ing to a reduction of DKK 226m relative to 2003.

The tax expense included a current tax charge of DKK 289m

This ﬁgure was positively affected by capital gains on shares

and a reduction of DKK 174m of TrygVesta’s tax assets.

and bonds, albeit to a much lesser extent than in 2003, whereas

it was only mildly affected by the divestments of the Polish and

Other ordinary income and expenses

Estonian subsidiaries and by the divestment of Tryg-Baltica In-

Other ordinary net income and expenses amounted to a loss

ternational. The provision of DKK 179m to restructure the

of DKK 26m against a loss of DKK 16m in 2003. This amount

Group remaining at 31 December 2003 was applied in accord-

primarily included holding expenses in TrygVesta and commission

ance with the intentions, and the investment income was only

income less related expenses in connection with the sale and

affected by a net gain of DKK 63m from the divestment.

provision of life and pension products on behalf of Nordea.

The proﬁt corresponds to a return on investments before

Discontinued activities

divestment of subsidiaries of 4.7%, which was an increase of

The loss on discontinued activities amounted to DKK 55m,

0.2 point over TrygVesta’s benchmark. In the fourth quarter of

which was an improvement of DKK 162m over 2003, when the

2004, we saw very favourable developments within shares in

activities in England were put into run-off. This improvement

particular, which, overall, increased the return for the full year.

was primarily due to accelerated run-off.

R E T U R N R AT I O 2 0 0 4 T R Y G V E S TA

B A L A N C E S H E E T

Jan

Feb Mar Apr May Jun

Jul Aug Sep Oct Nov Dec

Assets

Provisions

Shareholders’ equity

Real property

Total

Bonds

2003

2004

DKKm

Balance sheet

TrygVesta’s total assets increased from DKK 31,337m in 2003

to DKK 33,553m in 2004. Liabilities included shareholders’

equity of DKK 6,117m and technical provisions in the amount

of DKK 23,467m.

Technical provisions increased by a total of DKK 992m relative

to 2003, thereby bringing TrygVesta’s provisioning ratio to

106.9 as against 104.5 in 2003. The increase in total assets

included increased holdings of shares and bonds.

The return on equity was 33.9% before tax and discontinued

activities against 21.7% in 2003.

Shareholder information

Tryg i Danmark smba is the sole shareholder of TrygVesta A/S.

Distribution of proﬁt

The proﬁt for the year was DKK 1,407m. It is proposed that

a dividend of DKK 650m be declared and that the remaining

amount of DKK 757m be carried forward to next year.

Shareholders’ equity

Shareholders’ equity stood at DKK 6,117m at 31 December

2004, an increase of DKK 757m, corresponding to the proﬁt

for the year less dividends paid.

Management’s report Personal & Commercial Denmark

Personal & Commercial Denmark

DKKm

Gross earned premiums

Gross claims incurred

Gross expenses

Proﬁt/loss on gross business

Proﬁt/loss on ceded business

Technical interest, net of reinsurance

Change in equalisation provisions

Technical result

Key ratios, net of reinsurance

Claims ratio, net of reinsurance

Expense ratio. net of reinsurance

Combined ratio. net of reinsurance

Gross key ratios

Gross claims raito

Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business

Gross expense ratio

Combined ratio, net of expenses to reinsurance

2004

1,529

-1,245

-277

-22

82.7

18.3

101.0

81.4

1.4

82.8

18.1

100.9

2003

1,448

-1,060

-337

2004

2003

2002

2001

2000

5,977

-4,257

-1,235

485

5,660

-4,194

-1,287

179

5,191

-4,070

-1,194

-73

4,666

-3,843

-1,183

-360

4,487

-4,025

-1,241

-779

-39

-99

-167

-180

-10

198

-5

75.2

24.0

99.2

73.2

2.7

75.9

23.3

99.2

164

604

72.5

20.9

93.4

71.2

1.7

72.9

20.7

93.6

147

-39

120

76.3

23.5

99.8

74.1

3.0

77.1

22.7

99.8

219

-15

81.2

24.1

105.3

78.4

3.5

81.9

23.0

233

-123

82.7

25.6

108.3

82.4

0.2

82.6

25.4

274

-292

85.1

28.1

113.2

89.7

-4.4

85.3

27.7

104.9

108.0

113.0

The technical result generated by Personal & Commercial Den-

claims situations, while reducing average claim expenses

mark recorded strong growth over the course of 2004, and

through claims procurement projects, such as Tryg Reparation

despite events such as the ﬁreworks factory blaze in Kolding

and Tryg Bygning.

and the tsunami disaster in Asia, the technical result increased

by DKK 484m to DKK 604m in 2004.

In addition, TrygVesta made systematic efforts in this business

area to reduce costs incurred in distribution and policy issuance

Performance was positively affected by the general price ad-

in particular. Likewise, TrygVesta launched initiatives expected

justments within household insurance in 2003 and within per-

to reduce administrative claims handling expenses in the com-

sonal accident insurance in 2004. In 2004, TrygVesta suc-

ing years.

ceeded in improving quality as perceived by customers in

C O M B I N E D R AT I O ,
N E T O F R E I N S U R A N C E

113.2

108.3

105.3

99.8

93.4

2000

2001

2002

2003

2004

115

110

105

100

Retaining market shares

Since 2000, the combined ratio, net of reinsurance, has been

TrygVesta generated growth in gross earned premiums of 5.6%

reduced from 113.2 to 93.4 through proactive efforts to re-

relative to 2003, including index regulations totalling approx-

duce our claims and expense ratios.

imately 2.5%, which was satisfactory in a competitive market.

It is particularly satisfactory that sales through Nordea’s branches

The claims ratio was 72.5 in 2004, down 3.8 points relative

Excellent improvement in claims ratio

continued to generate signiﬁcant net growth in 2004. Likewise,

to 2003.

sales of group insurance were highly satisfactory. Over the course

of 2004, TrygVesta was successful in increasing the volume of

This improvement was achieved in spite of the proﬁt being ad-

business with individual customers to the effect that custom-

versely affected by claims related to the ﬁreworks factory blaze

ers have increasingly pooled their insurance policies with one

in Kolding in November 2004 totalling just over DKK 100m be-

insurer. This is the result of dedicated efforts to meet the

fore equalisation. In particular, house and contents insurance

entire range of needs a customer may have with concepts

were affected by these claims. The blaze affected the claims

adapted to that speciﬁc customer’s stage in life.

ratio by a total of approximately 1.5 points.

Within personal insurance, TrygVesta launched a new product

Claims related to the tsunami disaster in Asia in December 2004

in 2004, unemployment insurance, which was well-received by

affected Personal & Commercial Denmark’s proﬁt adversely by

the customers.

DKK 15m. The amount was reduced through reinsurance con-

tracts, and the impact on TrygVesta’s ﬁnancial results was

A new Danish act on workmen’s compensation took effect on

therefore around DKK 8m.

1 January 2004. This act widely expanded insurance coverage,

thereby entailing increased claims expenses. Among other

The reduction of the overall claims ratio in spite of these events

things, the new act introduced damages for back injuries which

was attributable, among other things, to the introduction of

were not previously covered by workmen’s compensation in-

Tryg Reparation and Tryg Bygning.

surance. The legislative amendment resulted in substantial

premium increases of 50% on average.

In addition, Personal & Commercial Denmark experienced a

Combined ratio, net of reinsurance, improved by 6.4 points

for motor and house insurance from 2004. The claims frequency

The strong growth in the technical result was reﬂected in a

for house insurance increased signiﬁcantly in 2002, only to re-

combined ratio, net of reinsurance, of 93.4 in 2004, corre-

turn to a more normal level in 2004. The frequency for motor

sponding to an improvement of 6.4 points relative to 2003.

insurance has been declining in recent years and was lower

continuation of the favourable trend in the claims frequency

than expected in 2004.

Management’s report Personal & Commercial Denmark

The claims performance in workmen’s compensation and per-

This project was carefully planned, and we have therefore

sonal accident insurance was not satisfactory in 2004, and it

been successful in reducing our staff primarily through natural

was therefore necessary to strengthen TrygVesta’s reserves.

wastage, thereby achieving cost savings without resorting to

The adverse developments led to a strengthening of reserves

layoffs to any signiﬁcant extent.

in the amount of DKK 175m in these two areas. The unsatis-

factory trend in workmen’s compensation is due, among other

During 2005, the DPI project will be followed by efﬁciency im-

things, to run-off losses as a result of the ‘ﬂex job ruling’ by the

provements within claims handling processes, starting with

Supreme Court stipulating that no set-off can be made against

motor claims – an area characterised by particularly heavy

claims related to ﬂex jobs.

case loads and substantial correspondence.

In 2004, equalisation provisions were applied in connection

with the ﬁreworks factory blaze in Kolding. Furthermore,

TrygVesta allocated equalisation provisions as a result of

favourable weather conditions.

Fair improvement in expense ratio

Expenses developed very satisfactorily with an expense ratio

of 20.9, down 2.6 points relative to 2003.

In particular, recent years’ focus on distribution costs proved

successful. Moreover, TrygVesta laid the groundwork for fu-

ture cost savings on claims handling in 2004. In recent years,

Personal & Commercial Denmark has implemented a compre-

hensive project entitled ‘Decentralised Policy Issuance’ (DPI)

aimed at making substantial efﬁciency improvements within

processes related to quotations and policy issuance processes,

while improving the level of quality.

Explosions and ﬁ re blazes at Kolding
Henning Holluf Nielsen, Svendborg,
Claims assessor with TrygVesta, Denmark

The explosions and blaze that hit ﬁ reworks plant N.P. Johnsens

‘My colleagues and I got an update on psychological crisis

Fyrværkerifabrik in Kolding, Denmark, in November 2004 also

therapy to prepare us to meet with the customers. We were

hit around 275 of Tryg’s personal customers. Many lost their

told that when we meet people who are in a bad state, they

homes in the course of a few hours, and it will take long into

may conceive things we say differently from what they nor-

2005 before all houses have been repaired or rebuilt.

mally do. We were also taught how as colleagues we could

help each other get our mind off things at the end of each

Tryg set up an emergency team at the claims centre at Kolding

working day.’

immediately after the blaze, which remained open until late

in the evening and over the weekend. Tryg also had claims

Some 550 claims were reported by Tryg customers as a result

assessors at the school to which people had been evacuated,

of the accident in Kolding, costing TrygVesta DKK 100m in

providing advice and guidance to customers. All affected

claims expenses.

customers were offered psychological crisis therapy, and the

deductible and bonus loss on their policies were suspended

for claims related to the blaze.

In the week that followed, more than 20 claims assessors from

Funen and Jutland went from house to house to assess the extent

of the damage. One of them was Henning Holluf Nielsen, who

normally works in Svendborg, Funen. It was a challenge meeting

so many customers in a crisis:

Personal & Commercial Norway

DKKm

2004

2003

2004

2003

2002

2001

2000

DKK/NOK rate, quartely/annual average

90.71

90.80

88.79

93.68

98.46

92.16

91.71

Gross earned premiums
Gross claims incurred
Gross expenses

Proﬁt/loss on gross business

Proﬁt/loss on ceded business

Technical interest, net of reinsurance
Change in equalisation provisions

Technical result

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio, net of expenses to reinsurance

1,088
-641
-325

122

-20

33
-20

115

57.9
31.5

89.4

58.9
1.8

60.7
29.9

90.6

1,111
-682
-277

152

4,421
-2,615
-1,106

700

4,553
-3,275
-1,123

155

-16

45
-19

162

62.0
24.6

86.6

61.4
1.4

62.8
24.9

87.7

-86

140
-92

662

58.4
25.9

84.3

59.1
1.9

61.0
25.0

86.0

-93

204
-57

209

72.1
26.3

98.4

71.9
2.0

73.9
24.7

98.6

4,211
-3,032
-1,136

-228

263
-140

-62

77.4
27.9

105.3

72.0
5.4

77.4
27.0

104.4

3,103
-2,465
-810

-172

2,811
-2,012
-801

-2

240

197
-55

210

70.6
26.7

97.3

79.4
-7.7

71.7
26.1

97.8

125

198
-26

295

65.9
28.9

94.8

71.6
-4.4

67.2
28.5

95.7

The technical result of Personal & Commercial Norway im-

In general, this business area has performed satisfactorily over

proved by DKK 453m relative to 2003, reﬂecting a combined

the past ﬁve years. The improvements achieved over the course

ratio, net of reinsurance, of 84.3 and a particularly proﬁtable

of 2003 and 2004 were highly encouraging and can be attrib-

mass market in Norway.

uted to price adjustments particularly within house and motor

insurance in 2003, improved risk selection, improved claims

procurement and an unusually low claims frequency for house

insurance in Norway in 2004.

C O M B I N E D R AT I O ,
N E T O F R E I N S U R A N C E

105.3

98.3

97.3

94.8

115

110

105

100

84.3

2000

2001

2002

2003

2004

The Norwegian market is inﬂuenced by geographical and

Combined ratio, net of reinsurance, improved by 14.1 points

weather-related conditions, which caused in particular house

The positive development of the technical result was reﬂected

claims and weather-related claims to affect results very differ-

in a combined ratio, net of reinsurance, of 84.3, which was a

ently from year to year. The 2004 ﬁnancial year beneﬁted from

strong improvement of 14.1 points relative to 2003. As men-

a combination of highly favourable weather conditions and a

tioned earlier, the improvement was inﬂuenced by the claims

very limited number of large ﬁre claims within house insurance.

frequency for house insurance which cannot be expected to

continue unchanged in the years ahead.

TrygVesta made substantial equalisation provisions in respect

of the Pool of Natural Perils in Norway. The Pool of Natural Per-

NOK depreciated relative to DKK in 2004. All things being equal,

ils is primarily used to equalise expenses related to windstorms

earnings in Norway will therefore show a falling trend when

and ﬂooding.

expressed in Danish kroner. Exchange differences had an adverse

effect of approximately DKK 36m on the ﬁnancial results in

In 2004, the technical result was affected by falling Norwegian

2004 as compared with 2003.

interest rates as expressed by a technical interest, net of rein-

surance, of DKK 140m relative to DKK 204m in 2003.

Signiﬁcantly improved claims ratio

The claims ratio, net of reinsurance, was 58.4 in 2004, an

Moderate premium growth

improvement of 13.7 points over 2003.

Gross earned premiums were DKK 4,421m in 2004. Expressed

in the local currency this was an increase of 2.1% relative to

This signiﬁcant improvement was due to a generally good

2003, which was slightly below the earnings target. This reﬂects

claims performance in the individual areas and a particularly

a year in which the relationship between customer inﬂow and

positive claims performance in motor and house insurance.

customer outﬂow was unsatisfactory during the ﬁrst six months,

Following considerable increases in the claims frequency for

but improved during the last six months following the imple-

motor insurance in 2002 and 2003, we experienced a drop in

mentation of a restructured sales organisation.

2004, which had a positive effect on the claims ratio. Within

house insurance, we have seen a trend in recent years towards

The increase in gross premiums reﬂected recent years’ pre-

a declining claims frequency, but the 2004 claims frequency

mium increases, satisfactory sales growth but also larger than

for house insurance was recorded at a mere index 77 as com-

expected customer movements. This trend applies especially

pared with index 100 in 2000. This unusually low ﬁgure can be

to the personal customer segment and should be viewed in

attributed to favourable weather conditions and signiﬁcantly

conjunction with the highly satisfactory proﬁtability in a com-

fewer house ﬁres than in a normal year.

petitive market.

Management’s report Personal & Commercial Norway

For Personal & Commercial Norway, the tsunami disaster in

Asia in December 2004 resulted in claims of NOK 28m. Like in

Denmark, the Norwegian claims were covered by reinsurance,

and the share payable by Personal & Commercial Norway was

around NOK 12m.

In general, the performance in commercial customer opera-

tions was satisfactory, composed of a slightly less than satis-

factory performance within personal accident insurance and a

very satisfactory performance in other areas.

Expenses trending downwards

The expense ratio, net of reinsurance, was 25.9 in 2004, up

0.4 point relative to 2003.

Personal & Commercial Norway was positively affected by the

ﬁrst wave of cost synergies prompting cost reductions relative

to 2003 from staff functions in particular.

In the fourth quarter of 2004, costs were adversely affected

by a non-recurring impact from harmonisation of the Group’s

depreciation policies.

In the years ahead, the expense ratio in this business area will

be positively affected by the second wave of Nordic synergies.

Likewise, experience gained from the implementation in Norway

of ‘Decentralised Policy Issuance’, which reduced distribution

costs in Denmark substantially, will contribute to a reduction

of the expense ratio.

Quick help when the tsunami hit
Gunhild Horn, Tønsberg,
Customer adviser with TrygVesta, Norway

‘The hotel was 200 metres from the beach, but we didn’t see the

costs so we could go home as soon as possible. That was exactly

waves coming even though the surroundings were ﬂ at. People

what we needed the most. The travel agency was useless. We

came rushing from all directions while we were having breakfast

really learnt that a good travel insurance policy is invaluable!’

outdoors. The water rose one metre up the hotel wall, but it was

stone-built to a height that prevented the water from getting

‘We were lucky despite the abrupt end to our holiday. We got

into the hotel. So we escaped the disaster without a scratch.’

all our luggage, tickets and passports out, and we could return

to Norway after a couple of days. It is still difﬁ cult to compre-

Gunhild Horn from Vesta’s ofﬁ ce in Tønsberg, Norway was

hend the scale of this disaster’.

spending her Christmas holidays at Patong Beach, Phuket,

Thailand. The party comprised two adults, two daughters

A total of 277 Danish and Norwegian TrygVesta customers

aged 13 and 18, and a friend aged 18.

were affected by the disaster. Injuries suffered by Danish and

Norwegian tourists and damage to their luggage as a result of

‘The earthquake woke us, but we did not give it much thought.

the tsunami in Asia will cost TrygVesta DKK 28m after taking

Somebody said a bomb had gone off on the beach. Later we

into account the reinsurers’ share.

heard about a giant wave. There were very different reactions at

the hotel. Some people bathing in a pool that was not affected

The TrygFonden donated DKK 500,000 to the victims of the

continued as if nothing had happened. Others helped them-

disaster in early January 2005. Furthermore, TrygVesta’s staff

selves in the bar when the frightened staff disappeared.’

collected more than DKK 40,000.

‘We were among the ﬁ rst to be evacuated to the mountains in trucks.

Danish Red Cross.

The money was donated to the

The locals brought us food and water, and they offered us shelter

for the night. Luckily I had my mobile phone. I called TrygVesta

Alarm, who updated me on the latest news and reassured that

they would take care of all the practical matters and cover the

BatsfjordVardoVadsoKirkenesLakselvHammerfestAltaTromsoHarstadNarvikBodoMo������������������������������������������������������������Management’s report Corporate

Corporate

DKKm

2004

2003

2004

2003

2002

2001

2000

DKK/NOK rate, quartely/annual average

90.71

90.80

88.79

93.68

98.46

92.16

91.71

Gross earned premiums
Gross claims incurred
Gross expenses

Proﬁt/loss on gross business

1,212
-859
-165

188

1,290
-1,077
-215

-2

4,786
-3,417
-689

680

5,190
-3,555
-873

762

5,120
-4,368
-846

-94

3,832
-2,810
-681

341

3,069
-3,125
-573

-629

Proﬁt/loss on ceded business

-102

-128

-570

-801

-363

-495

201

Technical interest, net of reinsurance
Change in equalisation provisions

Technical result

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums
Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio. net of expenses to reinsurance

46
-44

78.8
12.5

91.3

70.9
8.4
79.3
13.6

92.9

40
52

-38

96.5
17.3

113.8

83.5
9.9
93.4
16.7

110.1

190
-54

246

81.9
15.2

97.1

71.4
11.9
83.3
14.4

97.7

209
-15

155

82.5
18.6

101.1

68.5
15.4
83.9
16.8

314
-119

-262

96.2
18.2

114.4

85.3
7.1
92.4
16.5

251
-31

88.0
17.8

105.8

73.3
12.9
86.2
17.8

100.7

108.9

104.0

251
-23

-200

100.0
19.0

119.0

101.8
-6.5
95.3
18.7

114.0

The Nordic business area Corporate continued on the growth

The performance is satisfactory and to a large extent due to

track from 2003, improving the 2004 technical result by DKK

the substantial general price adjustments implemented in

91m to DKK 246m in spite of increased expenses related to

2002 and 2003. These adjustments were necessary to ensure

large claims totalling DKK 140m and considerable expenses in-

proﬁtability in this market, which showed a highly unsatisfac-

curred within personal accident insurance as a result of a Dan-

tory underlying proﬁtability in 2000 and 2001. The adjust-

ish Supreme Court ruling and the implementation of a broader

ments enabled TrygVesta to allocate increased resources to

deﬁnition of industrial disease in Norway.

dialogue with individual customers concerning risk preventive

measures – an area which will also be in focus in 2005.

C O M B I N E D R AT I O ,
N E T O F R E I N S U R A N C E

119.0

114.4

105.8

125

120

115

110

105

100

101.1

97.1

2000

2001

2002

2003

2004

There is still a need to make minor price adjustments within

As mentioned earlier, workmen’s compensation premiums in

Norwegian personal accident insurance in order for the Cor-

Denmark alone increased by 50% in 2004 as a result of new

porate business area to meet TrygVesta’s internal targets. However,

legislation.

the Norwegian Corporate business area showed rapid improve-

ments over the course of the last six months of 2004 in par-

Overall, the Corporate business area has become much more

ticular and now contributes positively to the technical result.

proﬁtable, although earnings in this area have yet to reach the

level of earnings generated by the mass markets in Denmark

Relative to 2003, the ﬁnancial results were affected by falling

and Norway.

interest rates in Denmark and Norway as expressed by a tech-

nical interest, net of reinsurance, of DKK 190m in 2004 as

Combined ratio, net of reinsurance, improved by 4.0 point

compared with DKK 209m in 2003.

The positive development of the technical result was reﬂected

in a combined ratio, net of reinsurance, of 97.1, which was an

Lower earned premiums, unproﬁtable customers phased out

improvement of 4.0 points relative to 2003. The Corporate

Gross earned premiums stood at DKK 4,786m in 2004, down

business area was furthermore affected by large ﬂuctuations

7.8% relative to 2003, with exchange rate developments con-

in year-on-year ﬁnancial results. This is quite natural in a mar-

tributing negatively by DKK 120m, which corresponds to

ket where single, large claims may have a substantial impact

approximately 2.5 percentage points.

on the ﬁnancial results in a given year. The underlying business

The adverse impact on gross premiums was related, among

ance in 2002 was attributable to substantial large claims oc-

has improved since 2002. The less than satisfactory perform-

other things, to the introduction by TrygVesta of net pricing to

curring that year.

customers served by brokers, which reduced earned premiums

by some DKK 160m. Adjusted for the exchange rate impact

Claims ratio in line with 2003

and the introduction of net pricing to customers served by

The claims ratio, net of reinsurance, was 81.9, an improve-

brokers, gross earned premiums fell by just over DKK 120m,

ment of 0.6 point over 2003.

which was largely attributable to the strategic phase-out of

unproﬁtable customers in the Norwegian part of the business.

The claims ratio was composed of a generally good claims

Moreover, a limited number of customers, especially within

performance in traditional corporate insurance – property,

the group of customers served by brokers, left TrygVesta.

liability, motor, cargo, etc. On the other hand, the claims

performance in the marine and personal accident businesses

remained unsatisfactory.

Management’s report Corporate

2004 was characterised by an above-average number of large

Reduced expenses through change in settlement to brokers

marine claims. We do not see this as a reﬂection of a general

The expense ratio, net of reinsurance, was 15.2, an improve-

trend but rather as individual claims events. In particular two

ment of 3.4 points over 2003.

large claims, which in aggregate represented claims totalling

some DKK 100m, had a negative impact on the ﬁnancial

The positive trend in the expense ratio was primarily due to

results: the tanker Panam Serena, which exploded in January

lower absolute costs in 2004 compared with 2003, as a result,

2004 near Sardinia, and the suction dredger Thor, which sank

among other things, of changed principles for settlement to

in September 2004 after a collision.

brokers and general cost constraint. Moreover, the corporate

As in 2003, provisions for claims in respect of prior years were

costs than in the business areas catering to the mass markets.

business was characterised by a signiﬁcantly lower level of

strengthened signiﬁcantly. In particular the ﬂex job ruling in

Denmark and the implementation of a broader deﬁnition of

industrial disease in Norway resulted in a DKK 265m increase

of reserves. Moreover, developments within the personal acci-

dent business were generally not satisfactory.

TrygVesta also recorded a large claim within property insurance

– a ﬁre at a Danish laminated wood factory amounting to DKK

100m. The combined ratio was affected by the full amount of

this claim. However, it did not impact the technical result to

any noteworthy extent, as part of the claim was covered though

equalisation provisions.

Long wait in telephone queue when ﬂ ames
consumed everything
The Stokke family, Oslo
Customers with TrygVesta, Norway

The Stokke’s home burnt down on 1 April 2004. It was an ex-

‘The house was my childhood home, it was built in 1947 and

plosive ﬁ re, and the family had to get out in a hurry. The house

it had our family’s soul embedded in its walls,’ says Kjell Torgeir

was so damaged by ﬁ re, smoke, soot and water that it could

Stokke. ‘It was very difﬁ cult to walk through 12 ruined rooms.

not be saved. It was just before Easter, and the family initially

Thanks to excellent work on the part of damage control service

took refuge in their cottage in the Norwegian mountains. The

provider Polygon, which Vesta hired, a few of our treasures can

family’s members took comfort in the fact that ‘we may have

luckily be saved.’

a much poorer home, but we’re all here.’ They now live in a

temporary home in Oslo, not far from the site of the ﬁ re.

‘The claims statement as such is only the tip of an iceberg. Below

the surface lurks a lot of worry and concern, you’re unhappy

‘On the ﬁ rst day after the ﬁ re we did not think highly of Vesta.

about all the things you’ve lost and concerned about the future.

We only had the clothes on our backs, and when we called

We were therefore relieved to ﬁ nd that Vesta did not come for-

Vesta from the mobile phone to report the ﬁ re and ask for help,

ward as our adversary, but as a partner with the same cause,

we were told we were number 14 in line. We left a message,

just as interested in ﬁ nding good solutions as we were.’

but they didn’t call us back. When we ﬁ nally got through, we

were told that the staff had gone to lunch,’ says Kjell Torgeir

‘We had to listen to a lot of horror stories about difﬁ cult insurers,

Stokke from Norway.

and this was one of the reasons we chose to engage a lawyer.

But the process we expected to be a long ﬁ ght against a hostile

The relationship improved after the unfortunate start. Kjell

insurer turned out for the best,’ says Kjell Torgeir Stokke.

Torgeir Stokke ended up by sending a letter to Vesta, thanking

them for ‘exemplary’ treatment after having met ‘under-

standing and calm, commendable customer handling.’

BatsfjordVardoVadsoKirkenesLakselvHammerfestAltaTromsoHarstadNarvikBodoMo����������������������������������������������������Management’s report Finnish general insurance

Finnish general insurance

DKKm

2004

2003

2004

2003

2002

2001

2000

DKK/EUR rate, quartely/annual average

743.43

743.30

743.99

742.92

743.08

745.74

Gross earned premiums
Gross claims incurred
Gross expenses

Proﬁt/loss on gross business

Proﬁt/loss on ceded business

Technical interest, net of reinsurance
Change in equalisation provisions

Technical result

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio. net of reinsurance

Combined ratio. net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

28
-17
-21

-10

1
0

-8

63.2
71.0

134.2

63.1
0.2

63.3
70.9

19
-13
-16

-10

0
0

-9

97
-66
-78

-47

2
0

61
-47
-63

-49

1
0

21
-18
-66

-63

-4

1
0

2
-1
-29

-28

-1

0
0

-45

-48

-66

-29

70.4
81.0

68.6
80.0

151.4

148.6

69.9
0.8

70.7
80.3

68.5
0.2

68.7
79.8

78.2
103.8

182.0

77.5
1.0

78.5
102.8

181.3

104.3
389.2

493.5

84.8
18.7

103.5
316.3

419.8

91.1
1,795.1

1,886.2

91.1
0.0

91.1
1,795.1

1,886.2

Combined ratio. net of expenses to reinsurance

134.2

151.0

148.5

-
-
-

-
-

Strong growth and proﬁt in line with expectations

Banking customers are good insurance customers

TrygVesta’s Finnish business, Nordea Vahinkovakuutus, gener-

The claims ratio, net of reinsurance, was 68.6, a highly satis-

ated growth in gross earned premiums of almost 60% in 2004,

factory improvement of 9.6 points over 2003. This is remark-

corresponding to earned premiums of DKK 97m as compared

able considering the size and age of the portfolio. And it sup-

with earned premiums of just DKK 2m in 2001.

ports the assertion that a banking customer who buys

The increase was primarily due to a strengthening of the part-

nership with Nordea, which handles the sale of insurance

Markedly improved expense ratio

through its branches and its Internet portal, Solo Market.

The expense ratio, net of reinsurance, was 80.0, down 23.8

insurance typically has a satisfactory claims performance.

points relative to 2003. The positive trend was primarily due to

Sales of new insurance business developed satisfactorily in

the increase in earned premiums.

2004. A total of 64,500 insurance policies were sold in 2004,

an increase of 30% over 2003. Nordea has a share of some 40%

Absolute costs increased by approximately 20% relative to 2003.

of the Finnish market for banking services. Accordingly, there

This increase was mainly attributable to a rise in commissions

is still a large sales potential in this area.

in step with increased sales and costs related to further develop-

ment of IT systems supporting the development of the business.

The technical result amounted to a loss of DKK 45m, which was

The increase in expenses was furthermore related to the fact

in line with expectations, and the results returned by the Finnish

that the Finnish business is still in the start-up phase with con-

business should be viewed as an investment. It is therefore ex-

siderable depreciation of previous investments in an insurance-

tremely encouraging that growth in the volume of business

technical IT system. Depreciation amounted to 26% of costs.

during the company’s short existence has been as planned. The

share of the Finnish personal market totals over 1.5%.

The combined ratio, net of reinsurance, improved by 33.4

points relative to 2003.

Management’s report Other business

Other business

Business in run-off

Divested activities

TrygVesta’s business in run-off primarily comprises the

In line with TrygVesta’s focused Nordic strategy, the Group di-

Group’s wholly-owned UK subsidiary, Chevanstell Ltd.

vested the activities of the reinsurer Tryg-Baltica International

(TBi) and of the general insurers Tryg Polska in Poland and Nor-

Business in run-off generated a technical loss of DKK 54m

dicum Kindlustus in Estonia in the autumn of 2004.

compared with a loss of DKK 246m in 2003.

The divested operations reported a total technical loss of DKK

As was expected, gross earned premiums in respect of business

11m against a loss of DKK 60m in 2003.

in run-off fell to DKK 30m from DKK 631m in 2003.

The run-off process has progressed as expected in 2004, but

tember 2004 against a loss of DKK 10m for 2003. The Polish

is still subject to some uncertainty. The parent company has

company is included at a loss of DKK 26m until 30 November

provided a total amount of DKK 346m in this respect. The

2004 against a loss of DKK 49m for 2003, while the Estonian

provision amounted to DKK 383m in 2003.

company is included at a loss of DKK 2m until 17 December

The result includes a proﬁt of DKK 17m for TBi until 30 Sep-

TrygVesta is endeavouring to implement a solvent scheme of

arrangement for Chevanstell Ltd. in late 2005, which would ac-

Reference is made to the section Financial highlights and key

celerate the ﬁnal winding up of the business in Chevanstell Ltd.

ratios by geographical area for data in respect of the activities

This socalled commutation is based on an agreement between

in TBi, Poland and Estonia.

2004 against a loss of DKK 1m for 2003.

Chevanstell Ltd. and its creditors, but is subject to UK court

approval.

Financial communication to the level
of listed companies
Per Grønborg, København
Equity analyst with Alfred Berg ABN AMRO

Even if you are not a listed company, nothing prevents you

It should be borne in mind that competition in the market

from acting like one. At any rate not as regards the quality of

has diminished because several foreign competitors have

your ﬁ nancial communication. Equity analyst Per Grønborg of

withdrawn from the Nordic market. And we have seen a

investment bank Alfred Berg ABN AMRO is satisﬁ ed with Tryg-

couple of years with unusually favourable weather.

Vesta’s communications to the ﬁ nancial market:

‘If TrygVesta were a listed company, its ﬁ nancial market

will be key to TrygVesta in the future: maintaining the

communications would rank high among its peers,’ says

operational improve ments achieved and clarifying the

Per Grønborg.

ownership structure.

Per Grønborg believes that two challenges, in particular,

‘Strangely enough, the company actually communicates at a

‘Should the company decide to retain the mutually-based

higher level today than when it was part of a listed company.

ownership structure, or should it prepare for an IPO? Unlike

Analysts always require more and more detailed information.

some years ago, the issue of procuring capital is no longer

But I’m actually quite content with TrygVesta. It’s especially a

the main factor when considering a possible listing,’ says

big advantage that TrygVesta discloses segmented and coun-

Per Grønborg.

try-speciﬁ c ﬁ nancial information. Many of its competitors

tend to go the opposite direction.’

Per Grønborg has respect for TrygVesta’s strong ﬁ nancial

performance:

‘First and foremost, TrygVesta has been extremely competent

in streamlining the organisation and becoming more efﬁ cient.

Investment activities

TrygVesta’s investments yielded a total return in 2004 before

transfer to technical interest and other ﬁnancial income and

expenses of DKK 1,244m, equivalent to 4.7%. The return was

affected by positive returns on bonds, shares and real property.

DKKm

Denmark

Norway

Tryg-Baltica International

Poland

Estonia

TrygVesta A/S

Total

Other ﬁnancial income and expenses

Total investments

Transferred to technical interest

Investment income

Discontinued activities

Proﬁt/loss

Assets (year-end)

2004

2003

2004

2003

797

396

902

677

16,248

12,563

12,492

10,497

109

581

369

150

1,244

1,626

28,920

24,119

-52

1,192

-675

517

-11

-208

1,418

-733

685

-10

745

878

Asset allocation

Throughout 2004, TrygVesta maintained a high proportion of

Net investments amounted to approximately DKK 5.6bn in

highly liquid bonds in its portfolio for security and rating con-

2004. Seen in isolation, the divested activities Tryg-Baltica In-

siderations. The share portfolio increased by DKK 820m in 2004

ternational and Tryg Polska reduce the balance sheet by ap-

resulting from net investments, divestments and rising share

proximately DKK 900m.

prices. This did not give rise to major changes in the asset location.

Asset allocation

Bonds etc.

Real property

Total

2004

DKKm

3,161

23,759

2,000

28,920

Investment activities, 31 December 2004

DKKm

Bonds etc.

property

Total

Real

1,318
682
0
0
0

2,000

16,248
12,563
0
0
109

28,920

Denmark
Norway
Tryg-Baltica International
Poland
TrygVesta A/S

Total
Other ﬁnancial income
and expenses

Total

Discontinued activities

Return (nom.)
Return (%)

2,557
590
0
0
14

3,161

406
15.9

12,373
11,291
0
0
95

23,759

745

692
3.2

2003

DKKm

2,341

19,769

2,009

24,119

9.7

82.0

8.3

100.0

Return

Investments

(%)

5.7
3.5
3.3
6.4

4.7

(net)

3,520
1,836
206
51
-40

5,573

10.9

82.2

6.9

100.0

Return

(nom.)

797
396
23
24
4

1,244

-52

1,192

745

3.4

-110

146
7.8

1,244
4.7

Management’s report Investment activities

Bond portfolio

Danish bonds

Norwegian bonds and money market

Other bonds

Total

2004

DKKm

11,886

10,371

1,502

2003

DKKm

50.0%

43.7%

6.3%

9,762

8,473

1,534

49.4%

42.8%

7.8%

23,759

100.0%

19,769

100.0%

Bonds

Real property

The return on the overall bond portfolio in TrygVesta including

The investment return on real property was DKK 146m, equi-

cash and cash equivalents was DKK 692m, equal to 3.2% for

valent to a total return of 7.8%. The Group sold investment pro-

the full year 2004, while bonds in the Danish companies and in

perties worth DKK 50m in 2004. At 31 December 2004, the

Vesta yielded returns of 3.5% and 2.6%, respectively. By com-

occupancy rate was 95.6% against 95.5% at 31 December 2003.

parison, a Danish government bond index with a term to

maturity of 1-3 years yielded 3.2% in 2004.

The portfolio is well-diversiﬁed and consists of quality property,

96% of TrygVesta’s bond portfolio – equivalent to DKK 22.9bn

Norway. The portfolio mainly comprises ofﬁce premises, but

– comprises Danish mortgage bonds, placements in the Nor-

also a small proportion of other commercial property and resi-

wegian money market and government bonds. The remaining

dential property.

typically in prime locations in major cities in Denmark and

part is invested in other corporate bonds, primarily of invest-

ment grade credit quality. High yielding and emerging market

bonds account for less than 1% of the overall portfolio.

The option-adjusted duration, including cash and cash equi-

valents, of the entire Group’s bond portfolio was 1.3 years at

31 December 2004 against 1.8 years at 31 December 2003.

The short duration was, among other factors, attributable to

Vesta’s strong focus on the money market and expectations

that interest rates would increase during the year.

Geographical spread, shares

Denmark

Norway

Other european

North America

Other

Total

2004

DKKm

419

200

1,223

1,197

122

2003

DKKm

13.3%

6.3%

38.7%

37.8%

3.9%

418

162

831

877

17.9%

6.9%

35.5%

37.5%

2.2%

3,161

100.0%

2,341

100.0%

TrygVesta’s portfolio of listed shares is highly diversiﬁed.

For the ﬁnancial year, the return on investments was DKK

Firstly, the portfolio includes a very low proportion of listed

406m, equivalent to 15.9%. The healthy performance was

Danish and Norwegian shares, accounting for approximately

driven by fair returns in the big international equity markets

15% of the portfolio of listed shares at 31 December 2004.

and extraordinarily high returns in the Danish and Norwegian

Secondly, international equity mandates are placed in low

equity markets. Danish shares yielded 22.5%, while Norwegian

tracking error portfolios, that is, the portfolio return is expected

shares yielded no less than 39.2% compared with 23.2% for the

to more or less match the benchmark return. TrygVesta intends

Danish KBX index and 38.5% for the Norwegian OSEBX index.

to maintain a diversiﬁed international equity portfolio in order

Other international shares yielded 14.3% compared with12.2%

to minimise risk relating to any single market or any single

and 10.1% for MSCI Europe and MSCI US, respectively. Unlisted

company. In both Denmark and Norway, the ﬁve largest com-

shares amounted to a total of DKK 159m at 31 December 2004.

panies account for some 55% of the index, while the ﬁve larg-

Continuous efforts will be made to reduce this portfolio.

est components of TrygVesta’s total equity portfolio account

for 9.3%.

4
0
0
2
s
t
n
u
o
c
c
a

Accounts Statement by the Supervisory Board and the Executive Management

Statement by the Supervisory Board and the Executive Management

The Supervisory Board and the Executive Management have today considered and the Supervisory Board has adopted the annual

report for 2004 of TrygVesta A/S and the TrygVesta Group.

The annual report has been presented in accordance with the Danish Insurance Business Act and the Danish Financial Supervisory

Authority’s executive orders. We consider the accounting policies adopted to be appropriate to the effect that the annual report gives

a true and fair view of the Group’s and the parent company’s assets and liabilities, ﬁnancial position, results of operations and cash

ﬂows.

We recommend that the annual report be adopted by the shareholders at the annual general meeting.

Ballerup, 1 March 2005

Executive Management

Stine Bosse

Morten Hübbe

Erik Gjellestad

Supervisory Board

Mikael Olufsen

chairman

Mogens Jacobsen

deputy chairman

Per Skov

deputy chairman

Jørn Wendel Andersen

John R. Frederiksen

Jørn Hesselholt

Håkon J. Huseklepp

Jens Lyngbo

(employee representative)

Peter Wagner Mollerup

(employee representative)

Birthe Petersen

Niels Erik Schultz-Petersen

(employee representative)

Accounts Internal auditors’ report

Internal auditors’ report

We have audited the annual report of TrygVesta A/S for the

Opinion

ﬁnancial year 2004. The annual report is presented in accord-

In our opinion, the annual report gives a true and fair view of

ance with the Danish Insurance Business Act.

the Group’s and the parent company’s assets, liabilities and

equity and ﬁnancial position at 31 December 2004 and of the

The annual report is the responsibility of the company’s

results of the Group’s and the parent company’s operations

Management. Our responsibility is to express an opinion on

and of the Group’s cash ﬂows for the ﬁnancial year 2004 in

the annual report based on our audit.

accordance with the Danish Insurance Business Act.

Basis of opinion

Emphasis of matter

We conducted our audit on the basis of the Danish Financial

As described in Accounting policies on page 73, the annual

Supervisory Authority’s executive order on the presentation

report contains pro forma ﬁnancial ﬁgures for the Group

of consolidated ﬁnancial statements by ﬁnancial enterprises

for the 2000, 2001 and 2002 ﬁnancial years. The TrygVesta

and ﬁnancial groups and in accordance with Danish Auditing

Group was established on 28 June 2002 by a non-cash contri-

Standards. Based on an evaluation of materiality and risk, we

bution of the Nordea AB Group’s general insurance activities

examined the business procedures, the accounting policies

to TrygVesta A/S.

applied and the estimates made and veriﬁed the basis for the

amounts and other disclosures in the annual report. We be-

Therefore, the pro forma ﬁgures represent a period during

lieve that our audit provides a reasonable basis for our opinion.

which the Group did not exist as a legal entity. Reference is

made to Management’s description of the basis for stating the

The audit has not resulted in any qualiﬁcations.

pro forma ﬁgures.

We agree with Management’s comments on the pro forma

ﬁgures, including the view that the ﬁgures make the annual

report more informative with respect to the technical opera-

tions.

Ballerup, 1 March 2005

Gert Stubkjær

Chief Internal Auditor

Accounts Auditors’ report

Auditors’ report

To the shareholder of TrygVesta A/S

Opinion

We have audited the annual report of TrygVesta A/S for the

In our opinion, the annual report gives a true and fair view of

ﬁnancial year 2004. The annual report is presented in accord-

the Group’s and the parent company’s assets, liabilities and

ance with the Danish Insurance Business Act.

equity and ﬁnancial position at 31 December 2004 and of the

results of the Group’s and the parent company’s operations

The annual report is the responsibility of the company’s

and of the Group’s cash ﬂows for the ﬁnancial year 2004 in

Management. Our responsibility is to express an opinion on

accordance with the Danish Insurance Business Act.

the annual report based on our audit.

Emphasis of matter

Basis of opinion

As described in Accounting policies on page 73, the annual

We conducted our audit in accordance with Danish Auditing

report contains pro forma ﬁnancial ﬁgures for the Group for

Standards. These standards require that we plan and perform

the 2000, 2001 and 2002 ﬁnancial years. The TrygVesta Group

the audit to obtain reasonable assurance that the annual

was established on 28 June 2002 by a non-cash contribution of

report is free of material misstatement. An audit includes

the Nordea AB Group’s general insurance activities to

examining, on a test basis, evidence supporting the amounts

TrygVesta A/S.

and disclosures in the annual report. An audit also includes

assessing the accounting policies used and signiﬁcant esti-

Therefore, the pro forma ﬁgures represent a period during

mates made by Management, as well as evaluating the overall

which the Group did not exist as a legal entity. Reference is

annual report presentation. We believe that our audit provides

made to Management’s description of the basis for stating the

a reasonable basis for our opinion.

pro forma ﬁgures.

Our audit has not resulted in any qualiﬁcations.

We agree with Management’s comments on the pro forma

ﬁgures, including the view that the ﬁgures make the annual

report more informative with respect to the technical

operations.

Copenhagen, 1 March 2005

Deloitte

Grant Thornton

Statsautoriseret Revisionsaktieselskab

Lone Møller Olsen

Christian Fløistrup

State authorised public accountant

Thomas Elsborg Jensen

State authorised public accountant

Accounts Accounting policies

Accounting policies

Basis of preparation

Pro forma comparative ﬁgures

The consolidated ﬁnancial statements and the annual report

Management’s review and the ﬁnancial highlights and key

of TrygVesta A/S have been prepared in accordance with the

ratios present pro forma comparative ﬁgures for 2000, 2001

Danish Insurance Business Act and the Danish Financial Super-

and 2002 prior to the formation of TrygVesta A/S as at 28

visory Authority’s executive orders on the presentation of

January 2002 and the company’s subsequent acquisition of

consolidated ﬁnancial statements by insurance companies and

the general insurance activities of Nordea AB as at 28 June 2002.

ﬁnancial statements by general insurance companies.

These sections of the annual report specify where pro forma

In principle, the parent company, TrygVesta A/S, is subject to

comparative ﬁgures are included. Pro forma comparative ﬁg-

the provisions of the Danish Financial Statements Act. As the

ures have been included in the annual report in order to provide

object of the parent company is to own subsidiary undertak-

more information in the annual report with respect to the

ings whose activities are primarily focused on insurance

technical operations of the general insurance companies form-

business, the parent company ﬁnancial statements have been

ing part of TrygVesta irrespective of the former ownership of

presented in accordance with the Danish Insurance Business

these companies.

Act to which the consolidated ﬁnancial statements are subject.

Apart from the changes described below, the accounting

consolidation of the companies forming part of the Group as

policies are unchanged from last year.

at 31 December 2003.

The pro forma comparative ﬁgures are stated on the basis of a

TrygVesta has adopted IFRS 5 for presentation of discontinu-

The following should be taken into account when evaluating

ing operations in the annual report 2004. The key provisions of

the pro forma comparative ﬁgures:

IFRS 5 are that discontinued activities shall be consolidated in

one line in the income statement and supplemented with

Tryg Forsikring A/S and Vesta Forsikring AS are stated net of

disclosure of the discontinued activities in a note to the ﬁnan-

their life and pension insurance activities, which were

cial statements. Recognition of the balance sheet items in re-

operated by wholly-owned subsidiaries.

spect of the discontinued activities is unchanged in the re-

spective items. The comparative ﬁgures, including ﬁnancial

Insurance portfolios acquired from other companies, such as

highlights and key ratios, have been restated accordingly.

Zurich’s Danish and Norwegian general insurance portfolio,

are included from the date of acquisition of the relevant port-

Discontinued activities in the income statement include the

folio.

post-tax proﬁt of TrygVesta’s business in run-off. Business in

run-off comprises the wholly-owned subsidiary Chevanstell

Tryg Ejendomme I A/S, which was divested on 31 December

Ltd. UK and business in run-off in Tryg Forsikring A/S.

2003, is included in the pro forma ﬁgures for the full period.

The above change in accounting policies does not affect the

Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S is

results for the year or shareholders’ equity. The combined

included in the pro forma ﬁgures until the date of divestment,

ratio, net of reinsurance, for 2004 and 2003 improved by 0.6

6 October 2004.

and 1.9 points, respectively.

A few items in the income statement and balance sheet have

from the date the companies were acquired by Tryg Forsikring

been reclassiﬁed relative to last year. The reclassiﬁcations do

A/S and the Nordea Group, respectively, until the date they

not affect the results or shareholders’ equity.

were divested, these being 1 December and 17 December

Tryg Polska SA and Nordicum Kindlustuse Eesti AS are included

2004, respectively.

Accounts Accounting policies

Where the accounting policies have been changed during the

Goodwill arising on acquisition represents the difference at the

period, the comparative ﬁgures of each company have to the

time of acquisition between the acquisition price and the pro-

extent possible been adjusted on consolidation to comply with

portionate share of shareholders’ equity of the acquired under-

the current accounting policies. Such adjustments only have a

taking made up in accordance with the accounting policies ap-

minor impact on the pro forma ﬁgures.

plied by TrygVesta A/S. Any difference (goodwill) is recognised

in the item ‘Intangible assets’ and amortised on a straight-line

Consolidated ﬁnancial statements

basis over the expected useful life.

The consolidated ﬁnancial statements comprise the ﬁnancial

statements of TrygVesta A/S (the parent company) and under-

Newly acquired or divested subsidiary undertakings are con-

takings (subsidiary undertakings) controlled by the parent

solidated at the results for the period subsequent to acquisi-

company. See the section Group overview. Control is achieved

tion or prior to divestment, respectively.

where the parent company directly or indirectly holds more

than 50% of the voting rights or is otherwise able to exercise or

Any gains or losses arising on divestment of subsidiary

actually exercises a controlling inﬂuence.

undertakings are included in the income statement under

‘Investment gains or losses’.

Minority interests

The proportionate share of the proﬁt and shareholders’ equity

Currency translation

of subsidiaries attributable to minority interests is stated sepa-

The results of foreign subsidiary undertakings are based on

rately in the statement of the consolidated proﬁt and consoli-

translation of the items in the income statement at quarterly

dated shareholders’ equity.

average exchange rates. Income and expenses in domestic

undertakings denominated in foreign currency are translated

Basis of consolidation

at the exchange rate ruling on the date of the transaction.

The consolidated ﬁnancial statements are prepared on the

Assets and liabilities denominated in foreign currency are

basis of the ﬁnancial statements of the parent company and its

translated at the exchange rate at year-end.

subsidiary undertakings by adding items of a uniform nature.

All currency translation gains and losses are included in the

The ﬁnancial statements of undertakings that present ﬁnancial

income statement under the item ‘Exchange rate adjustment’.

statements under other legislative rules are restated to the

accounting policies applied by the Group unless the result of

Intragroup transactions

such restatement is immaterial to the true and fair view.

Intragroup services are settled on a cost-covering basis or on

On consolidation, intragroup income and expenses, intragroup

market terms.

accounts and dividends, and gains and losses arising on trans-

Intragroup transactions in securities and other investment

actions between the consolidated undertakings are eliminated.

assets are settled at market value.

Equity investments in subsidiary undertakings are eliminated

by the parent company’s proportionate share of the undertak-

ings’ shareholders’ equity at 31 December.

Income statement

Depreciation is charged on a straight-line basis over three to

Earned premiums and claims incurred represent general

ﬁve years. Minor acquisitions costing less than DKK 100,000

insurance and simple types of death cover (Group Life in

are recognised as an expense in the year of acquisition, except

Norway) related to general insurance policies written by

for assets acquired as part of a speciﬁc project. Computer

general insurance companies.

equipment held under ﬁnance leases is recognised and

depreciated as if purchased by the company.

Premiums

Earned premiums represent gross premiums during the year,

Costs are based on estimated time consumed or the estimated

net of outward reinsurance premiums and changes in un-

cost charge and are distributed in the statement by line of in-

earned premium provisions, corresponding to an accrual of

surance and between acquisition and administrative expenses.

premiums to the risk period of the policies.

Reinsurance accepted

Technical interest

Premiums, claims and commissions relating to reinsurance

Technical interest represents a calculated return on the

accepted included in the income statement are generally

average technical provisions. The interest rate applied is the

stated on an estimated and assessed basis and accrued

year’s average pre-tax yield to maturity on all bonds with a

relative to expiry of the contracts. Commissions relating to

term to maturity of less than three years.

unearned premium provisions are recognised under ‘Prepay-

ments and accrued income’.

Claims incurred

Claims incurred represent claims paid during the year adjusted

Investment activities

for changes in provisions for claims less the reinsurers’ share.

Proﬁt from group undertakings includes the parent company’s

Amounts to cover expenses incurred to combat and contain

share of the proﬁt on ordinary activities of the subsidiary

losses and to survey and assess claims are included in the item.

undertakings before tax. Tax relating to group undertakings is

In addition, the item includes run-off results regarding

included in the item ‘Tax’. Exchange differences arising on the

previous years. The part of the increase in technical provisions

translation of the net asset value of foreign subsidiary under-

which can be ascribed to discounting is transferred to techni-

takings at the beginning of the year are included under the

cal interest.

item ‘Currency translation adjustment’.

Bonus and premium rebates

Income from associated undertakings includes the parent

Bonus and premium rebates represent anticipated and reim-

company’s share of the proﬁt on ordinary activities of the

bursed premiums where the amount reimbursed depends on

associated undertakings.

the claims record, and for which the criteria for payment have

been laid down prior to the ﬁnancial year or when the business

Income from land and buildings before value adjustment

was written.

represents the proﬁt from property operations less property

Insurance operating expenses

Insurance operating expenses represent acquisition costs and

Interest, dividends etc. represent interest earned, dividends

administrative expenses less reinsurance commissions re-

received etc. during the ﬁnancial year. In addition, the item

ceived. Expenses relating to acquiring and renewing the

includes gains and losses on bonds drawn for redemption.

management expenses.

insurance portfolio are recognised at the time of writing the

business. Administrative expenses are accrued to match the

ﬁnancial year.

Accounts Accounting policies

Realised and unrealised investment gains and losses, including

Discontinued activities

value adjustment of land and buildings, are recognised in the

Discontinued activities represent the parent company’s share

income statement.

of the post-tax proﬁt of TrygVesta’s business in run-off.

Business in run-off comprises the results of the wholly-owned

Realised and unrealised gains and losses on derivative ﬁnancial

subsidiary Chevanstell Ltd. UK and business in run-off in

instruments are also recognised in the income statement.

Tryg Forsikring A/S.

Investment administrative expenses represent expenses

Balance sheet

relating to the management of investments. Brokerage and

Intangible assets

commission is included in the purchase and selling price of

Development costs and capitalised software are measured at

investment assets.

Other ordinary items

cost less amortisation. The assets are amortised on a straight-

line basis over four years from the date they are taken into use.

Other items include the parent company’s administrative

Goodwill acquired after 1 January 2003 is measured as the

expenses and income and expenses related to the sale of

difference at the time of acquisition between the cost and the

products for Nordea Liv og Pension.

proportionate share of the acquired undertaking’s share-

Extraordinary items

holders’ equity made up in accordance with the accounting

policies applied by TrygVesta A/S. Goodwill is amortised on a

Extraordinary items include amounts which by their nature are

straight-line basis over the expected useful life.

unusual for the company and which are clearly different from

the ordinary operations.

Investment assets

Land and buildings

Tax

Land and buildings are measured at market value in accord-

The item ‘Tax’ represents estimated Danish and foreign corpo-

ance with the guidelines issued by the Danish Financial Super-

ration taxes for the year and movements in deferred tax or tax

visory Authority. The guidelines provide for the market value

assets. Tax on the proﬁt for the year is calculated based on the

of the Group’s land and buildings to be determined based on

pre-tax proﬁt for the year adjusted for non-taxable income and

a systematic annual assessment of each individual property

expenses. Tax relating to discontinued activities is included in

taking into account the expected future operating returns

the item ‘Discontinued activities’.

and a return requirement for each property.

TrygVesta A/S is jointly taxed with Tryg i Danmark smba and

New developments and property under construction are

the majority of its subsidiary undertakings. Tax relating to the

measured at cost.

jointly taxed income is recognised in the jointly taxed Danish

companies in proportion to their proﬁt. Changes in deferred

Equity investments in group undertakings

taxes or deferred tax assets are recognised in the companies

Equity investments in group undertakings are measured at the

having the liability or the claim.

parent company’s proportionate share of the subsidiary under-

takings’ shareholders’ equity at 31 December made up in ac-

cordance with the Group’s accounting policies.

Equity investments in associated undertakings

Equity investments in associated undertakings are measured

at the parent company’s proportionate share of the share-

holders’ equity of the undertakings at 31 December.

Listed shares, unit trust units, bonds etc.

Accruals and deferred income

Listed shares, unit trust units, bonds etc. are measured at the

Other accruals and deferred income comprise prepaid

prices quoted at the end of the year. Unlisted shares, ﬁxed-

expenses. Prepaid acquisition costs mainly comprise the part

interest loans etc. are measured at a conservatively estimated

of commission expenses to other insurance companies etc.

market value at the end of the year based on the companies’

relating to unearned premium provisions.

most recent ﬁnancial statements available.

Dividend

Derivative ﬁnancial instruments

Proposed dividends are recognised as a liability when adopted

Derivative ﬁnancial instruments are measured at market value

by the shareholders at the general meeting. Dividends ex-

at the end of the year. Derivative ﬁnancial instruments are

pected to be declared for the year are shown in the proﬁt

used to the extent they enable the Group to manage its assets

allocation.

and liabilities more efﬁciently, thereby reducing risk or causing

only a small increase in risk.

Technical provisions

Reinsurance deposits, receivable

premiums and reinsurance premiums collected which relates

Deposits comprise amounts owed to the company in respect

to subsequent ﬁnancial years.

of reinsurance business accepted, and retained by ceding

undertakings pursuant to reinsurance contracts.

Provisions for claims represent amounts to cover claims

Unearned premium provisions represent the proportion of

Amounts owing

incurred before the balance sheet date, whether reported

or not. Provisions for claims are calculated on the basis of

Amounts owing are measured at nominal value less a provi-

information available concerning the extent of the losses plus

sion for any losses.

Other assets

Operating equipment

an amount based on past experience to cover claims incurred

but not reported. The provisions include direct costs of com-

bating, containing, inspecting and assessing claims. Long-tail

provisions calculated using statistical methods are discounted.

Operating equipment is measured at cost less accumulated

depreciation. Operating equipment is depreciated on a

Provisions for annuities relate to compulsory workmen’s com-

straight-line basis over the estimated useful economic lives of

pensation insurance in Denmark, which is settled by payment

the assets, which are three to ﬁve years.

of annuities. The provisions are calculated using the ﬁxed-rate

method at the present value by discounting expected future

Computer equipment held under ﬁnance leases is treated as if

payments.

purchased by the company. The lease debt is included in

‘Other debt’.

Tax asset

Provisions for bonus and premium rebates represent amounts

expected to be paid to policyholders in view of the claims

experience during the ﬁnancial year.

The tax asset comprises deferred net tax assets calculated as

30% of the present value of net positive timing differences

Equalisation provisions represent amounts included to

between accounting and taxable values, plus tax losses to the

equalise future claims, net of reinsurance, in areas where

extent they are expected to be offset against future taxable

experience has shown that claims vary.

income.

Accounts Accounting policies

Equalisation provisions in credit and guarantee insurance are

Deferred tax is not provided on untaxed contingency reserves.

calculated in accordance with rules laid down by the Danish

It is not expected that future movements in technical provi-

Financial Supervisory Authority. For workmen’s compensation

sions will result in a crystallisation of tax on the contingency

insurance in Denmark, equalisation provisions are calculated

reserve. The untaxed contingency reserves etc. are disclosed

as the difference between the technical provisions made up at

in a note to the ﬁnancial statements under shareholders’

basic interest rates of 2.00% and 2.75%, respectively. In addi-

equity.

tion, equalisation provisions comprise the compulsory Nor-

wegian Pool of Natural Perils in Vesta Forsikring AS, Norway.

Deposits with ceding companies, payable

The rules governing the setting up and application of equalisa-

Deposits comprise amounts due in respect of reinsurance

tion provisions are laid down by the regulatory authorities of

business accepted and retained pursuant to the reinsurance

the relevant countries.

contracts.

Other technical provisions represent provisions for risk not yet

Debt

run off. The provisions represent the amounts deemed neces-

Debt is generally measured at nominal value.

sary, in addition to unearned premium provisions and future

premium rates, to cover future, anticipated expenses and

Cash ﬂow statement

settlement of claims not yet incurred within the period of

The cash ﬂow statement is presented in accordance with the

cover of the policies.

direct method based on premiums.

Provisions for other risks and charges

The cash ﬂow statement shows the actual inﬂow and outﬂow

Provisions for other risks and charges comprise amounts in-

of payments for the year divided into cash inﬂow from opera-

tended to cover liabilities or expenses attributable to the past

tions, and changes in cash and cash equivalents resulting from

ﬁnancial year or prior ﬁnancial years, and which on the balance

the purchase or sale of investment assets as well as funding

sheet date are likely or certain, but uncertain in respect of size

activities. The item ‘Cash and cash equivalents’ comprises

or time of payment.

cash at bank and in hand and demand deposits.

The commitment relating to the pension scheme in Vesta

Forsikring AS, which is a deﬁned beneﬁt plan, is stated at an

estimated market value using Norwegian assumptions relating

to long-term economic developments, pension and mortality.

Provisions for tax comprise deferred net tax amounts calcu-

lated as 30% of the present value of net positive timing differ-

ences between accounting and taxable values less tax losses to

the extent that they are expected to be offset against future

positive taxable income.

Accounts New accounting rules as from 2005

New accounting rules as from 2005

In 2004, TrygVesta conducted a process with a view to adopt-

Some of the rules are still in a draft version and subject

ing international ﬁnancial reporting standards (IFRS) begin-

to change until 31 December 2005. Furthermore, some

ning 1 January 2005.

standards already published are still subject to interpretation.

Effective from the 2005 ﬁnancial year, all listed companies in

TrygVesta has decided to provide the additional information

the EU are required to present consolidated ﬁnancial reporting

required by IFRS, enhancing the level of detail for certain

in accordance with the IFRS standards (IAS standards). Up till

items.

now, the ﬁnancial sector in Denmark has been required to

prepare their ﬁnancial statements in accordance with rules

The principal aspects that are IFRS inconsistent relate to the

published by the Danish Financial Supervisory Authority.

presentation of the income statement and balance sheet. For

the time being, TrygVesta will comply with the Danish Finan-

TrygVesta intends to adopt IFRS because we wish to contribute

cial Supervisory Authority’s executive order in this respect.

to greater transparency in the market, as most of TrygVesta’s

competitors are listed companies and therefore required to

On transition to IFRS, the present accounting policies will be

adopt IFRS standards. TrygVesta furthermore wishes that

changed in a number of respects, partly with respect to recog-

rating agencies, banks and other stakeholder groups treat the

nition and measurement, partly with respect to the presenta-

Group on an equal footing with other international ﬁnancial

tion in annual and interim reports.

companies.

In order to prepare for the introduction of the EU require-

Below is a statement of opening equity at 1 January 2005

ments for the presentation of ﬁnancial statements by listed

made up in accordance with IFRS standards adopted at

companies, the Danish Financial Supervisory Authority issued

31 December 2004.

Equity reconciliation

new accounting rules for ﬁnancial companies in Denmark in

2004, which are consistent with IFRS.

The rules issued by the Danish Financial Supervisory Authority

Equalisation provisions including Pool of Natural Perils

Equity at 31 December 2004

limits some of the options available under IFRS. Furthermore,

Provisions for claims

the disclosure requirements are less comprehensive, and in a

Discounting

few respects, the rules are inconsistent with IFRS. On the other

Claims handling costs

hand, the statutory order is more farreaching than the present

Pension liabilities

IFRS stage 1 in a few respects.

Dividend

Other items, including employee beneﬁts

Tax on IFRS changes

including contingency fund provisions

Equity at 1 January 2005

DKKbn

6.1

1.4

0.7

-0.4

-0.3

0.7

-0.2

- 1.1

6.9

Accounts New accounting rules as from 2005

Comments on the equity reconciliation:

Claims handling costs

Equalisation provisions

In future, provisions for claims are required to include a provi-

sion to cover direct and indirect costs in connection with run-

Equalisation provisions have so far represented amounts in-

off on the provision for claims. Such costs were previously

cluded to equalise future claims, net of reinsurance, in areas

expensed as incurred.

where experience has shown that claims vary. Equalisation

provisions in TrygVesta comprise

Pension liabilities

• the Norwegian Pool of Natural Perils in Norway

TrygVesta has previously recognised a commitment in respect

•

equalisation provisions in credit and guarantee insurance

of the pension scheme in Vesta Forsikring AS. The scheme is a

calculated in accordance with rules laid down by the Danish

deﬁned beneﬁt plan, which was previously measured at an

Financial Supervisory Authority

estimated market value using assumptions relating to long-

•

the difference between technical provisions in workmen’s

term economic developments. IFRS requires the liability to be

compensation in Denmark made up at basic interest rates

stated at market value based on the economic factors ruling

of 2.00% and 2.75%, respectively

on the balance sheet date.

• equalisation of storm and large losses.

Dividend

IFRS prohibits recognition as a liability of equalisation provi-

Under IFRS, dividend will not reduce equity until the time of

sions, and the existing equalisation provisions will therefore be

payment.

dissolved. Equalisation provisions relating to the difference

between differences in the basic rate will be transferred to

Employee beneﬁts

provisions for claims, while equalisation provisions in respect

IFRS requires provisions to be established for long-term

of the Pool of Natural Perils, credit and guarantee, and storm

employee beneﬁts such as anniversary awards and pension

and large loss equalisation will be transferred to equity after

beneﬁts. Such costs were previously expensed as incurred.

deduction of deferred tax.

Provisions for claims

Discounting

Deferred tax

The TrygVesta Group recognises untaxed contingency fund

provisions in Norway and to a lesser extent untaxed contin-

IFRS requires discounting of provisions for claims, net of rein-

gency fund provisions in Denmark. Previously, no deferred tax

surance, if such discounting is sizeable. This requirement will

was provided in respect of such provisions.

reduce the provisions for claims.

TrygVesta already applies discounting of provisions relating to

fund provisions if all or part of the insurance portfolio is trans-

A tax liability will only materialise in respect of contingency

compulsory workmen’s compensation insurance, but has

ferred or sold.

decided to discount all provisions for claims.

Discounting will affect the motor liability, professional liability

and personal accident classes, in particular.

Whether deferred tax must be provided in respect of such

provisions is subject to uncertainty. TrygVesta has, however,

decided to provide for deferred tax on contingency fund

provisions in both Norway and Denmark.

IFRS prohibits the recognition of provisions for deferred

tax and tax assets on a discounted basis. Under the previous

accounting rules, TrygVesta’s tax asset was recognised on a

discounted basis. On transition to IFRS, the tax asset will be

adjusted for the recognised effect of discounting.

Direct and indirect claims handling

costs to be recognised in claims incurred

Claims incurred will in future include direct and indirect claims

handling costs – contrary to the previous practice, under

which only the costs of claims assessors were included in this

item.

Estimated rent of own properties

It is no longer required to determine the estimated rent of

own properties used in the company’s operations. TrygVesta

owns a few headquarter properties in Denmark relating to the

decentralised organisation as well as the headquarter property

in Norway, and the future expense ratio will be reduced by the

estimated rent.

Accounts Financial highlights and key ratios by geographical area

Financial highlights and key ratios by geographical area

DKKm

The Group
Gross earned premiums
Technical result
Proﬁt/loss on investments
Other ordinary income
Other ordinary expenses
Proﬁt/loss on ordinary activities before tax

Key ratios. net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio, net of expenses to reinsurance

2004

2003

2004

2003

2002

2001

2000

3,954
277
314
41
-48
584

74.5
21.4

95.9

72.0
3.4

75.4
21.0

96.4

4,209
76
192
31
-41
258

79.5
23.5

103.0

75.4
4.9

80.3
22.2

102.5

16,308
1,456
517
121
-147
1,947

70.9
22.2

93.1

67.6
5.0

72.6
21.2

93.8

16,702
376
685
115
-131
1,045

76.6
24.3

100.9

71.5
6.8

78.3
22.4

15,792
-558
-170
127
-173
-774

83.4
25.8

109.2

78.1
5.5

83.6
23.6

12,620
105
4
121
-121
109

80.1
25.3

105.4

77.5
2.6

80.1
24.3

11,152
-288
711
122
-122
423

83.5
26.8

110.3

87.9
-5.0

82.9
25.9

100.7

107.2

104.4

108.8

Number of full-time employees at the end of the period

3,762

4,420

4,411

4,316

4,264

Danish general insurance
Gross earned premiums
Technical result
Proﬁt/loss on investments
Other ordinary income
Other ordinary expenses
Proﬁt/loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio, net of expenses to reinsurance

2,128
69
264
26
-23
336

84.1
17.1

101.2

81.7
2.0

83.7
17.4

101.1

2,104
134
147
17
-16
282

77.4
21.4

98.8

73.2
4.7

77.9
21.0

98.9

8,570
790
450
76
-71
1,245

74.3
19.4

93.7

71.6
3.5

75.1
19.0

94.1

8,242
443
393
71
-68
839

75.4
21.2

96.6

70.4
6.1

76.5
20.4

96.9

7,411
-61
-128
78
-74
-185

83.3
22.2

105.5

82.0
1.6

83.6
21.1

6,467
-49
49
92
-92
0

82.6
24.2

106.8

80.5
1.6

82.1
23.9

6,197
-200
607
95
-95
407

83.9
26.6

110.5

89.6
-5.7

83.9
25.8

104.7

106.0

109.7

Number of full-time employees at the end of the period

2,223

2,248

2,330

2,458

2,552

DKKm

Norwegian general insurance
Gross earned premiums
Technical result
Proﬁt/loss on investments
Other ordinary income
Other ordinary expenses
Proﬁt/loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio. net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

Combined ratio, net of expenses to reinsurance

2004

2003

2004

2003

2002

2001

2000

1,701
227
59
15
-15
286

61.3
25.0

86.3

59.1
6.0

65.1
23.4

88.5

1,745
38
68
14
-13
107

76.9
23.5

100.4

73.1
5.1

78.2
22.1

100.3

6,614
722
94
45
-44
817

66.1
22.9

89.0

62.7
6.9

69.6
21.2

90.8

7,161
41
316
44
-42
359

78.7
25.2

103.9

72.9
7.8

80.7
22.4

7,111
-278
-55
49
-47
-331

85.3
25.3

110.6

75.8
9.2

85.0
22.6

5,134
202
-42
29
-29
160

78.5
23.1

101.6

76.1
3.1

79.2
22.0

4,170
3
78
27
-27
81

83.7
25.1

108.8

86.6
-4.1

82.5
24.4

103.1

107.6

101.2

106.9

Number of full-time employees at the end of the period

1,454

1,460

1,374

1,272

1,141

Finnish general insurance
Gross earned premiums
Technical result
Loss on investments
Loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio. net of reinsurance

Combined ratio. net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio. net of ceded business
Gross expense ratio

28
-8
-1
-9

63.2
71.0

134.2

63.1
0.2

63.3
70.9

19
-9
0
-9

70.4
81.0

151.4

69.9
0.8

70.7
80.3

97
-45
-2
-47

68.6
80.0

148.6

68.5
0.2

68.7
79.8

Combined ratio. net of expenses to reinsurance

134.2

151.0

148.5

61
-48
-1
-49

78.2
103.8

182.0

77.5
1.0

78.5
102.8

181.3

21
-66
-1
-67

104.3
389.2

493.5

84.8
18.7

103.5
316.3

419.8

2
-29
0
-29

91.1
1,795.1

1,886.2

91.1
0.0

91.1
1,795.1

1,886.2

Number of full-time employees at the end of the period

-
-
-
-

-
-

Accounts Financial highlights and key ratios by geographical area

DKKm

TBi
Gross earned premiums
Technical result
Proﬁt/loss on investments
Proﬁt/loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio. net of ceded business
Gross expense ratio

Combined ratio, net of expenses to reinsurance

2004

2003

2004

2003

2002

2001

2000

-
-
-
-

-
-

218
-61
-8
-69

116.8
22.8

139.6

115.0
0.8

115.8
21.3

137.1

526
17
7
24

69.3
30.4

99.7

60.6
9.0

69.6
30.1

99.7

716
-10
10
0

75.6
30.2

105.8

72.9
4.9

77.8
27.5

722
-112
2
-110

78.3
42.0

120.3

70.7
9.8

80.5
37.6

552
-12
-1
-13

72.2
38.0

110.2

71.0
5.8

76.8
26.8

426
-55
0
-55

81.0
34.5

115.5

90.1
-7.5

82.6
31.1

105.3

118.1

103.6

113.7

Number of full-time employees at the end of the period

Polish general insurance
Gross earned premiums
Technical result
Proﬁt/loss on investments
Proﬁt/loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

98
-9
0
-9

75.0
41.9

116.9

85.1
-9.2

75.9
39.6

118
-26
-8
-34

82.2
58.7

140.9

75.3
17.6

92.9
36.0

473
-26
-3
-29

70.4
42.2

112.6

69.8
1.9

71.7
38.8

491
-49
4
-45

69.7
49.5

119.2

65.2
9.3

74.5
38.3

496
-28
32
4

64.0
47.7

111.7

61.2
6.5

67.7
39.8

462
-7
-2
-9

62.8
43.5

106.3

59.4
7.7

67.1
36.9

361
-36
26
-10

73.8
46.7

120.5

70.7
1.4

72.1
39.9

Combined ratio, net of expenses to reinsurance

115.5

128.9

110.5

112.8

107.5

104.0

112.0

Number of full-time employees at the end of the period

523

495

489

494

2004

2003

2004

2003

2002

2001

2000

DKKm

Estonian general insurance
Gross earned premiums
Technical result
Proﬁt/loss on investments
Loss on ordinary activities before tax

Key ratios, net of reinsurance
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

Gross key ratios
Gross claims ratio
Ceded business as percentage of gross premiums

Gross claims ratio, net of ceded business
Gross expense ratio

7
-2
0
-2

71.7
74.7

146.4

67.3
13.0

80.3
45.9

10
0
0
0

78.1
40.6

118.7

79.7
-1.0

78.7
37.3

36
-2
0
-2

56.5
49.2

105.7

54.0
12.6

66.6
37,0

39
-1
0
-1

67.2
38.9

106.1

73.2
-4.2

69.0
36.4

41
-13
0
-13

81.4
55.1

136.5

90.8
-8.7

82.1
51.3

Combined ratio, net of expenses to reinsurance

126.2

116.0

103.6

105.4

133.4

Number of full-time employees at the end of the period

TrygVesta A/S (parent company)
Proﬁt/loss on investments (excluding
subsidiaries)
Other ordinary expenses
Loss on ordinary activities before tax

Business in run-off
Gross earned premiums
Techical result
Proﬁt/loss on investments
Loss on ordinary activities before tax

Number of full-time employees at the end of the period

-8
-10
-18

-19
5
-17
-12

-7
-12
-19

125
-107
-9
-116

-29
-32
-61

30
-54
-11
-65

-37
-22
-59

631
-246
-10
-256

-20
-52
-72

1,211
-299
-5
-304

-
-
-
-

-
-

-
-
-

-
-
-
-

-
-

-
-
-

921
-17
-4
-21

552
-27
15
-12

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Income statement, balance sheet and cash ﬂow statement for TrygVesta

2004

2003

16,274
-1,697
185
-86

14,676

537

-9,493
929
-1,502
-205

-10,271

-25

-151

-1,701
-1,761

-3,462
245

-3,217

-93

1,456

16,613
-2,375
145
-137

14,246

595

-10,531
1,716
-1,424
-642

-10,881

-56

-1,936
-1,809

-3,745
303

-3,442

-101

376

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

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

Total insurance operating expenses, net of reinsurance

Change in the equalisation provisions

Technical result

Income statement

DKKm

Note

Investment activities
Income from investment assets
Income from associated undertakings
Income from land and buildings
Interest and dividends, etc.

6
7 Realised gains on investment assets

2004

2003

0
115
828
143

0
193
822
176

Total income from investment assets

1,086

1,191

7 Unrealised gains on investment assets

Charges relating to investment assets
Investment management charges
Interest expenses

Total charges relating to investment assets

Exchange rate adjustments

Return on investment activities before transfer to insurance activities

Technical interest transferred to insurance activities

Total return on investment activities

4 Other ordinary expenses

Proﬁt before tax

Tax

Proﬁt on continuing business

Loss on discontinued business

Proﬁt for the year

The minority interests’ share of the proﬁt

TrygVesta’s share of the proﬁt for the year

240

-52
-74

-126

-8

1,192

-675

517

-26

1,947

-485

1,462

-55

1,407

489

-53
-70

-123

-139

1,418

-733

685

-16

1,045

-87

958

-217

741

742

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Balance sheet as at 31 December

DKKm

Note

Assets

Intangible assets

Investment assets
Land and buildings

Investments in associated undertakings
Equity investments in associated undertakings

Total investments in associated undertakings

Other ﬁnancial investment assets

13 Capital participation

Unit trust units

Bonds
Other loans
Deposits in credit institutions

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
Other amounts owing

Total amounts owing

Other assets

Furniture, equipment, computer hardware, motor vehicles, etc.

Cash in hand and at bank

Tax assets

Other

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

2004

112

2003

119

2,000

2,009

3,104
246
23,951
0
116

27,417

29,473

817
119

936
960
0
708

2,604

173
490
251
9

923

383
0
58

441

2,309
18
19,968
70
415

22,780

142

24,945

931
350

1,281
1,474
51
1,788

4,594

312
558
425
9

1,304

262
41
72

375

33,553

31,337

Balance sheet as at 31 December

DKKm

Note

Liabilities
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
Reinsurers’ share

Provisions for unearned premiums, net of reinsurance

Provisions for claims

17 Gross provisions
Reinsurers’ share

Provisions for claims, net of reinsurance

Provisions for annuities by workmen’s compensation

Gross provisions

Provisions for annuities, net of reinsurance

Provisions for bonuses and premium rebates, net of reinsurance
Equalisation provisions

19
20 Other insurance provisions, net of reinsurance

2004

2003

1,700
0
4,417

6,117

700

4,989
-212

4,777

18,611
-2,920

15,691

1,267

153
1,530
49

1,700
2,968
692

5,360

700

5,239
-393

4,846

17,975
-3,087

14,888

1,159

76
1,424
82

Total technical provisions, net of reinsurance

23,467

22,475

Provisions for other risks and charges
Provisions for pensions and similar obligations

21 Other provisions

Total provisions for other risks and charges

Debt
Debt related to direct insurance
Debt related to reinsurance
Debt to credit institutions
Debt to subsidiary undertakings
Corporation tax
Other debt
Dividend for the ﬁnancial year

Total debt

Accruals and deferred income

Total liabilities

Forward transactions, etc.

23 Capital adequacy
24
25 Contingent liabilities
26

Intragroup transactions

169
0

169

367
485
609
37
95
607
650

2,850

250

33,553

141
179

320

391
520
656
0
0
647
50

2,264

214

31,337

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

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 operations

Interest and dividends
Taxes
Other ordinary items

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 loans (net)
Purchase/sale of operating equipment (net)
Acquisition of subsidiaries
Purchase/sale of associated undertakings

Total investments

Funding
Capital increase
Subordinate loan capital
Dividend paid
Change in debt to credit institutions

Total funding

Change in cash and cash equivalents, net
Price adjustment of cash equivalents, beginning-of-year
Additions relating to sale of subsidiaries

Changes in cash and cash equivalents, gross

Cash and cash equivalents, beginning-of-year

Cash and cash equivalents, year-end

Discontinued business

Total cash generated from operations
Total investments
Total funding

Change in cash and cash equivalents, net

Price adjustment of cash equivalents, beginning-of-year

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.

2004

2003

17,076
-9,513
-708
-3,121
1,518

5,252

792
-611
-26

5,407

69
-710
-5,276
70
-81
517
-14

-5,425

0
0
-50
91

23
-11
-5

558

565

-257
87
95

-75

16,804
-10,423
-582
-3,223
-320

2,256

1,346
-256
-16

3,330

22
-394
-3,672
210
-56
-6
0

-3,896

400
700
0
-703

397

-169
-54
0

-223

735

512

-148
208
-14

Notes

DKKm

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

Technical interest, net of reinsurance
Transferred from investment activities

Discounting

Technical interest in respect of discontinued activities

3 Claims incurred, net of reinsurance

Direct business

Indirect business

Reinsurance recoveries

Run-off gains/losses previous years, net of reinsurance
Run-off previous years, gross
Run-off previous years, reinsurers’ share

2004

2003

15,887
572

16,459
-1,783

14,676

8,546
659
6,682

15,887

675
-128

547
-10

537

-10,636
-359

-10,995
724

-10,271

169
-166

15,992
766

16,758
-2,512

14,246

8,110
115
7,767

15,992

733
-132

601
-6

595

-11,390
-565

-11,955
1,074

-10,881

-589
73

-516

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Notes

DKKm

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

Gross insurance operating expenses, including the following staff expenditure:

Salaries and wages

Commission
Pensions

Other expenses to social security

Payroll tax, etc.

The item Pensions includes adjustment of corridor in Vesta Forsikring AS.

2004

2003

-360
-1,341

-1,701
-1,761

-3,462
245

-3,217

-1,634
-10
-277
-119
-92

-2,132

-543
-1,393

-1,936
-1,809

-3,745
303

-3,442

-1,626
-9
-330
-117
-97

-2,179

Average number of full-time employees during the year

4,396

4,438

Administrative expenses include fee to the auditors appointed by the Annual General Meeting
Deloitte
Grant Thornton

Of which services other than audit
Deloitte

Beyond this, other ordinary expenses are defrayed to the Group’s Internal Audit Department.

Other ordinary items
Other ordinary income
Other ordinary expenses

-12.2
-0.9

-13.1

-7.4

121
-147

-26

Other ordinary items include holding expenses and income and expenses related to the sale of products for Nordea Life and Pension.

Remuneration for the Executive Management is paid by Tryg Forsikring A/S and Vesta Forsikring AS

and is charged to TrygVesta A/S via the cost allocation.

Remuneration for the Executive Management
Remuneration for the Supervisory Board

10
3

No share-based incentive schemes have been made with the Executive Management.

-11.6
-1.0

-12.6

-4.3

115
-131

-16

7
2

Notes

DKKm

Balance on the technical account, net of reinsurance, by line of business

Accident &
health

2004

2003

Marine,
workmen’s
compensation
2003
2004

Motor
TPL

2004

2003

Motor
comprehensive
2003
2004

Aviation &
cargo

2004

2003

Gross premiums written

1,949

1,936

961

806

2,546

2,597

3,043

3,079

556

610

Gross earned premiums
Gross claims
Change in other
insurance provisions
Bonuses and premium rebates
Gross operating expenses
Proﬁt/loss on business ceded
Change in equalisation provisions
Technical interest, net of reinsurance

1,989
-1,901

1,946
-2,036

963
-1,219

6
-6
-403
5
0
104

-2
-3
-477
-2
0
109

-1
0
-121
13
-25
1

789
-897

0
0
-109
-30
-15
12

2,601
-2,240

2,679
-2,477

3,112
-1,649

3,081
-1,798

-30
-9
-568
-22
7
149

10
-2
-514
-35
-1
152

0
-65
-592
-6
5
50

0
-38
-608
-8
-1
62

576
-333

0
-11
-109
-53
4
39

643
-355

0
-3
-127
-118
-1
14

Balance on the technical account

-206

-465

-389

-250

-112

-188

855

690

113

Fire &
contents
pers. lines

Fire &
contents
commercial

Liability

Credit &
guarantee insurance

Other
insurance

2004

2003

2004

2003

2004

2003

2004

2003

2004

2003

Gross premiums written

2,928

2,833

2,386

2,675

707

764

135

130

1,063

1,182

2,925
-1,701

2,768
-1,940

2,507
-1,200

2,728
-1,260

0
-22
-643
-53
74
66

0
-8
-664
-71
8
78

0
3
-586
-425
-8
54

0
-2
-634
-579
-3
74

736
-362

0
-40
-166
-82
-17
40

802
-593

0
0
-179
-97
-20
45

Balance on the technical account

646

171

345

324

109

-42

134
-2

0
0
-37
-26
0
6

132
10

7
0
-40
-36
0
7

916
-388

1,190
-609

0
-1
-237
-165
-133
28

0
0
-393
-159
-68
42

Notes

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Notes

DKKm

Gross premiums written

16,274

16,612

754

642

Total

Norwegian group life 1)
One-year policies

2004

2003

2004

2003

Gross earned premiums
Gross claims
Change in other insurance provisions
Bonuses and premium rebates
Gross operating expenses
Proﬁt/loss on business ceded
Change in equalisation provisions
Technical interest, net of reinsurance

16,459
-10,995
-25
-151
-3,462
-814
-93
537

16,758
-11,955
15
-56
-3,745
-1,135
-101
595

728
-660
0
0
-160
-1
0
0

618
-508
0
0
-140
-10
0
0

Balance on the technical account

1,456

376

-93

-40

1) Personal accident and health insurance includes one-year group life policies of Vesta Forsikring AS, see above.

Notes

DKKm

Interest and dividends, etc.
Dividends on capital participation

Interest on securities, etc.

Capital gains by drawing and servicing of securities, etc.

7 Realised and unrealised gains/losses on investment assets

Land and buildings

Other capital participation

Bonds listed on the stock exchange exclusive of index-linked bonds

Mortgage loans
Divestment of subsidiaries

Allocated to the following items
Net realised gains/losses on investment assets
Net unrealised gains/losses on investment assets

Tax
Tax regarding previous years

Current tax
Dividend tax foreign equities
Change in deferred tax assets

Tax prepaid

Loss on discountinued activities
Earned premiums, net of reinsurance
Technical interest, net of reinsurance

Claims incurred, net of reinsurance

Total insurance operating expenses, net of reinsurance

Change in the equalisation provisions

Technical result

Return on investment activities

Proﬁt from ordinary activities before tax
Tax

Insurance provisions, net of reinsurance

2004

2003

85
791
-48

828

31
329
-40
0
63

383

143
240

383

-24
-233
-6
-222

-485

410

25
37
-79
-43
6

-54
-11

-65
10

-55

929

52
856
-86

822

21
252
385
7
0

665

176
489

665

13
-29
-3
-68

-87

250

376
46
-479
-189
0

-246
-10

-256
39

-217

1,211

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Notes

DKKm

Intangible assets

Acquisition sum

Balance 1 January
Foreign exchange adjustment

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

Land and Buildings

Acquisition sum

Balance 1 January
Foreign exchange adjustment, beginning-of-year

Additions during the year
Disposals during the year

Balance 31 December

Write-ups

Balance 1 January

Write-ups during the year
Reversal of revaluation
Revaluation, real property disposed of

Balance 31 December

Depreciation and write-downs

Balance 1 January

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
Residential property

Of which property used by the companies for their operation

Public land assessment
Non-assessed property

2004

2003

142
1
14

157

-23
-22

-45

112

1,871
14
39
-75

1,849

192
38
-16
-11

203

-54
0
2
0

-52

99
0
43

142

-19
-4

-23

119

3,091
-100
289
-1.409

1,871

357
77
-19
-223

192

-77
-48
5
66

-54

2,000

2,009

120
1,677
203

2,000

263

1,170
7

121
1,694
194

2,009

358

1,140
6

Notes

DKKm

In establishing the market value of the properties, the
following return percentages were used for each property category

Business property

Ofﬁce property
Residential property

All properties

Equity investments in associated undertakings

Acquisition sum

Balance 1 January

Additions during the year

Balance 31 December

Write-ups

Balance 1 January

Write-ups during the year

Balance 31 December

Book value 31 December

2004

2003

Lowest
%
2004

Average
%
2004

Highest
%
2004

Tryg / Vesta
8.00 /

Tryg / Vesta
8.00 /
7.00 / -10.01 7.63 / 9.57
6.08 /
5.50 /

Tryg / Vesta
8.00 /
8.50 / 45.19
6.50 /

7.00 / -10.01 7.61 / 9.57

8.50 / 45.19

0
14

14
0

0
0

14
0

In the year, equity investments in associated undertakings have been transferred from unlisted shares

Shares in associated undertakings according to annual accounts

Shareholders’ equity
2004

Ownership share %
2004

Nordisk Flyforsikring A/S, Copenhagen, Insurance

The company was established at the end of 2004.
Bilskadeinstituttet, Oslo, property
Eidsvåg Fabrikker, Bergen, property

13 Capital participation

Book value

Acquisition value

50
4
31

3,104

2,884

28
30
28

2,309

2,218

Shareholding of more than 5% of the company share capital
according to the latest annual reports

The company shareholders’ equity
2004

Ownership share
2004

Account Data A/S, Frederiksberg

Forsikringsakademiet A/S, Hørsholm Kommune

A/S Forsikringens Hus, København

Finansnærings huset, Oslo
Privathospitalet Hamlet af 1994 A/S, Frederiksberg
Lofoten Trålerrederi, Stamsund

Riksheim Henningsvær, Henningsvær
Minox Technology, Notodden
Høyteknologisenteret, Bergen

1
32
42
36
24
45
-1
-4
94

14
12
12
15
6
10
10
8
8

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Notes

DKKm

14 Other ﬁnancial investment assets

Book value

Capital participation
Unit trust units

Bonds
Other loans
Deposits in credit institutions

Acquisition value
Capital participation
Unit trust units

Bonds
Other loans
Deposits in credit institutions

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

Shareholders’ equity
Share capital
Balance 1 January

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
Transferred to Retained proﬁts

Balance 31 December

Retained proﬁts
Balance 1 January
Transferred from Share premium account
Transferred in accordance with Distribution of proﬁt

Balance 31 December

Total shareholders’ equity

Vesta Forsikring AS and Dansk Kautionsforsikrings-Aktieselskab have untaxed provisions for contingency funds
of NOK 2,104m and DKK 139m, respectively, which are included in shareholders’ equity.

2004

2003

3,104
246
23,951
0
116

27,417

2,884
225
23,856
0
0

26,965

43
-20
141
9
78
0

251

1,700
0

1,700

2,968
-2,968

692
2,968
757

4,417

6,117

2,309
18
19,968
70
415

22,780

2,218
25
18,987
70
100

21,400

63
-59
227
36
23
135

425

1,300
400

1,700

2,968
0

2,968

0
0
692

692

5,360

Notes

DKKm

17 Gross provisions (provisions for claims)

Including provisions calculated with regard for discounting:

Workmen’s compensation (Denmark)

Reduction from discounting

Settlement period

Discounting interest rate

Inﬂation

Workmen’s compensation (Norway)

Reduction from discounting

Settlement period

Discounting interest rate

Inﬂation

18 Provisions for annuities

Workmen’s compensation

Settlement period

Discounting interest rate

Inﬂation

Equalisation provisions
Financial guarantee insurance

Workmen’s compensation
Windstorm and large perils

Equalisation provisions for Norwegian general insurance

Other insurance

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

DKK 179m of the provision was applied in the year in connection with the sale of the subsidiaries
Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S and Nordicum Kindlustuse Eesti AS.

22 Debt

Of which debt falling due after more than 5 years

2004

18,611

1,146

107

4.1 years
2.2%
2.2%

2,586

366

4.4 years
3.0%
4.0%

2003

17,975

793

4.3 years
3.2%
3.2%

2,393

399

4.2 years
3.5%
4.0%

1,267

1,159

11.3 years
2.75%
0%

11.5 years
2.75%
0%

270
119
120
1,021
0

1,530

0
1
48

2,850

270
94
185
869
6

1,424

1
0
81

179

2,264

Accounts Income statement, balance sheet and cash ﬂow statement for TrygVesta

Notes

DKKm

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

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

2004

2003

6,117
-3
-2,447
700

4,367

5,545

79%

2,583
0
9
6,959
1,322

2,590
0
9
6,974
1,322

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

25 Contingent liabilities

Surety, guarantee and lease agreements, etc.

beyond insurance obligations do not exceed

325

425

Additional circumstances

Tryg Forsikring A/S and Vesta Forsikring AS have signed an operating agreement with CSC for an amount of

DKK 634m for a period of 4-5 years.

Tryg Forsikring A/S has an annual obligation to Danica Pension with respect to the lease of the head ofﬁce in Ballerup.
The annual rent, taxes etc. currently amount to DKK 79m. The remaining lease period is 21 years.

Tryg Ejendomme A/S is jointly and severally liable with the demerged company Nordea Pension Danmark, ejendomsselskab
IV A/S for the liabilities existing at the time of publication of the demerger, up to a maximum of the
reversed value of DKK 382m.

Most of the companies of the TrygVesta Group are jointly taxed and jointly and severally

liable for payment of imposed corporation tax.

Most of the Danish companies within the TrygVesta 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.

100

Notes

DKKm

Intragroup transactions

The management fee is ﬁxed on a cost-covering basis.

The companies of TrygVesta have concluded reinsurance treaties and agreements
about interest payment on current accounts based on market terms.

An amount of DKK 8m has been recognised in the item Gross claims paid in 2004, which is attributable

to the fact that Tryg i Danmark smba (the owner of TrygVesta A/S, which is the parent company of Tryg Forsikring A/S) has

guaranteed and thus committed itself to paying to Tryg Forsikring A/S the amount of any loss suffered by Tryg Forsikring

in relation to one speciﬁc court case, the AON 77. The corresponding amount in 2003 was DKK 50m.
The AON 77 is hereby concluded.

101

Accounts Income statement and balance sheet for Tryg Vesta A/S (parent company)

Income statement and balance sheet for TrygVesta A/S (parent company)

2004

2003

2,009
38

2,047

-3
-64

-67

-1
0

1,979

-32

1,947

-485

1,462

-55

1,407

1,104
43

1,147

-10
-57

-67

0
-12

1,068

-22

1,046

-87

959

-217

742

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

Unrealised gains on investment assets

Exchange rate adjustment

Total return on investment activities

3 Other ordinary expenses

Proﬁt before tax

4 Tax

Proﬁt before tax on continuing activities

Loss on discontinued activities after tax

Proﬁt for the year

102

Balance sheet as at 31 December

DKKm

Note

Assets

Investments in group and associated undertakings
6 Capital participation in subsidiary undertakings
6
6
7

Equity investments in group undertakings in respect of discontinued activities
Loans to subsidiary undertakings
Investments in associated undertakings

Total investments in group and associated undertakings

Other ﬁnancial investment assets

Bonds

Deposits in credit institutions

Total other ﬁnancial investment assets

Total investment assets

Amounts owing
Amounts owing from subsidiary undertakings

Total amounts owing

Other assets
Cash in hand and at bank

9 Deferred tax assets

Total other assets

Prepayments and accrued income
Accrued interest and rent earned

Total prepayments and accrued income

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

11 Capital adequacy
12 Contingent liabilities
13

Intragroup transactions

2004

2003

6,625
125
600
14

7,364

92
0

7,456

617

1
3

5,771
158
600
0

6,529

0
100

100

6,629

50
5

8,079

6,732

1,700
0
4,417

6,117

700

601
11
650

1,262

8,079

1,700
2,968
692

5,360

700

601
21
50

672

6,732

103

Accounts Income statement and balance sheet for Tryg Vesta A/S (parent company)

Notes

DKKm

Note

Income from subsidiary undertakings
Tryg Forsikring A/S

Proﬁt before tax on continuing activities

Tax in subsidiary undertakings
Loss on discontinued activities after tax

Interest and dividends, etc.
Interest on securities, etc.

3 Other ordinary expenses
Administrative expenses

2004

2003

2,009

2,009
483
-55

1,471

-32

1,104

1,104
-92
-217

795

-22

Remuneration for the Executive Management is paid by Tryg Forsikring AS and Vesta Group AS and is charged to TrygVesta 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

Of which services other than audit:
Deloitte

Beyond this expenses are defrayed to the Group’s Internal Audit Department.

4 Tax

Change in deferred tax asset

Tax in subsidiary undertakings

5 Loss on discountinued activities

Earned premiums, net of reinsurance
Technical interest, net of reinsurance

Claims incurred, net of reinsurance

Total insurance operating expenses, net of reinsurance

Change in the equalisation provisions

Technical result

Return on investment activities

Proﬁt from ordinary activities before tax
Tax

104

8
3

-3.3
-0.2

-3.5

-2.7

-2
-483

-485

25
37
-79
-43
6

-54
-11

-65
10

-55

5
2

-2.1
-0.3

-2.4

-1.0

5
-92

-87

376
46
-479
-189
0

-246
-10

-256
39

-217

Notes

DKKm

Note

6 Capital participation in subsidiary undertakings

Acquisition sum

Balance at 1 January

Additions by non-cash contributions
Divestments during the year
Capital increase during the period

Balance at 31 December

Write-downs

Balance 1 January
Proﬁt 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.

Shares in associated undertakings

Acquisition sum

Balance at 1 January

Divestments during the year

Balance at 31 December

Book value 31 December

2004

2003

6,809
0
0
0

6,809

-880
1,471
0
-650

-59

6,750

6,190
2,546
-2,527
600

6,809

-1,606
795
-19
-50

-880

5,929

Ownership
interest %

Proﬁt for
the year

Share-

holders’
equity

100

1,471

6,750

0
14

0
0

Shares in associated undertakings according to latest annual accounts

Shareholders’ equity
2004

Ownership share in %
2004

Nordisk Flyforsikring A/S, Copenhagen, Insurance
The company was established at the end of 2004.

8 Other ﬁnancial investment assets

Book value
Bonds

Acquisition value

Bonds

Tax asset

Operating equipment and provision etc.

105

Accounts Income statement and balance sheet for Tryg Vesta A/S (parent company)

Notes

DKKm

Note

Shareholders’ equity
Share capital
Balance 1 January

Capital increase

Balance 31 December

The share capital is distributed in shares of DKK 100 or multiples thereof

Share premium account
Balance 1 January
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 2,104m and DKK 139m, respectively.

11 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

12 Contingent liabilities

2004

2003

1,700
0

1,700

2,968
-2,968

692
2,968
757

4,417

6,117

6,117
-3
-2,447
700

4,367

5,545

79%

1,300
400

1,700

2,968
0

2,968

0
0

692

5,360

5,360
-6
-2,610
700

3,444

3,999

86%

The company is jointly taxed together with most companies of the TrygVesta Group, and they are jointly
and severally liable for payment of imposed tax.

The company is jointly registered for VAT and payroll tax purposes with Tryg i Danmark smba and most of
its Danish subsidiaries, and is jointly and severally liable with these companies for the payment of such taxes.

The company is part of some disputes the outcome of which is not estimated to affect the ﬁnancial position of the company.

Intragroup transactions
The management fee is ﬁxed on a cost-covering basis.

The companies of the TrygVesta Group have concluded reinsurance treaties and agreements about interest payment

on current accounts based on market terms.

106

Accounts Group overview

Group overview

TrygVesta A/S has the following subsidiaries

Proﬁt/loss

DKKm

Tryg Forsikring A/S
Vesta Forsikring AS

Enter Forsikring AS
Slettebakksveien AS
Respons Inkasso AS
Thunes Vei 2 AS

Dansk Kautionsforsikrings-Aktieselskab

ApS SMBK nr. 98

Chevanstell Ltd.
ApS KBIL 9 nr. 2032
Tryg Ejendomme A/S
TrygVesta IT A/S

Registered
ofﬁce

Ballerup
Bergen
Bergen
Bergen
Bergen
Bergen
Ballerup
Ballerup
London
Ballerup
Ballerup
Ballerup

Country

2004

Denmark
Norway
Norway
Norway
Norway
Norway
Denmark
Denmark
UK
Denmark
Denmark
Denmark

1,471
624
53
0
2
5
73
0
-32
0
22
0

for Ownership

Share Shareholders’
equity
capital
share, % 31.12.2004 31.12.2004

100
100
100
100
100
100
100
100
100
100
100
100

1,100
779
50
7
0
52
193
0
619
0
1
1

6,750
3,074
169
29
1
55
408
0
125
0
460
1

Mergers
Tryg Forsikring II A/S and Tryg Forsikring, Rejse og Sundhed A/S merged into Tryg Forsikring A/S as at 1 January 2004.

Companies divested in 2004
Tryg-Baltica Forsikring, internationalt forsikringsselskab A/S
(divested as at 30 September 2004)
Tryg Polska Towarzystno Ubezpieczenia S.A.
(divested as at 1 December 2004)
Nordicum Kindlustuse Eesti AS (divested as at 17 December 2004)

Ballerup

Denmark

Radom
Tallinn

Poland
Estonia

-28
0

100

100
100

0
0

Financial calendar

Financial results for the three months ending 31 March 2005:
Financial results for the six months ending 30 June 2005:
Financial results for the nine months ending 30 September 2005:

18 May 2005
25 August 2005
16 November 2005

107

Accounts Vesta Forsikring AS

Vesta Forsikring AS

NOKm

Gross written premiums

Earned premiums, net of reinsurance
Net ﬁnancial income
Claims incurred, net of reinsurance
Insurance operating expenses, net of reinsurance

Operating proﬁt/loss
Contingency provisions etc.*)

Proﬁt/loss on ordinary activities before tax

Balance sheet
Technical provisions
Total shareholders’ equity
Total assets

Key ratios
Claims ratio, net of reinsurance
Expense ratio, net of reinsurance

Combined ratio, net of reinsurance

2004

2003

2004

2003

1,472

1,553

7,422

7,681

1,578
127
-981
-371

353
-37

316

1,575
144
-1,346
-382

-9
-34

-43

6,157
419
-4,133
-1,336

1,107
-231

876

6,001
713
-4,892
-1,377

445
-249

196

13,203
1,383
16,029

12,470
936
14,431

62.2
23.5

85.7

85.5
24.2

109.7

67.1
21.7

88.8

81.5
22.9

104.4

*) The amount comprises provisions for security, reinsurance and administration as well as funds
for natural disasters and guarantees.

The tabel presents the result and selected balance sheet items together with key ratios for the Vesta Forsikring AS Group.
The information is presented in accordance with generally accepted accounting principles in Norway, which correspond
to the policies described in the annual report of Vesta Forsikring AS for 2004.

108

Facts about TrygVesta Facts about TrygVesta

Facts about TrygVesta

TrygVesta is the second-largest general insurer in the Nordic

region. The Group comprises Tryg, Denmark’s largest general

insurer with a market share of just over 22%, Vesta, Norway’s

third largest insurer with a market share of around 19%,

guarantee insurer Dansk Kaution and a rapidly growing branch

in Finland.

TrygVesta has a strong strategic partnership with Nordea.

The bank sells TrygVesta’s general insurance products, while

TrygVesta sells Nordea’s life and pension products. Moreover,

Nordea Asset Management is TrygVesta’s portfolio manager.

TrygVesta furthermore has a partnership with CSC, which

handles the Group’s IT operations.

TrygVesta’s distribution strategy is based on marketing one

brand in each country, offering the same product, price and

quality through all sales channels. TrygVesta pursues a multi-

ple channel distribution strategy. The most important chan-

nels are large customer centres, service centres or franchisees,

TrygVesta’s own insurance agents and sales through real

estate agents, car dealers and Nordea’s branches. In addition,

TrygVesta has signed agreements with a number of trade

unions and professional groups to offer their members personal

insurance. Likewise, TrygVesta has industry agreements and

agreements with insurance brokers in the commercial market.

TrygVesta’s some 3,800 employees represent quality, advice

and service, both to the individual personal customer and to

the large industrial enterprise with several thousand employ-

ees.

TrygVesta has about two million customers. The Group

generates premiums of DKK 16.3bn annually. Its employees

processed 500,000 claims and paid claims in the amount of

DKK 11bn in 2004.

G R O S S P R E M I U M S , N E T O F R E I N S U R A N C E ,
D I S T R I B U T E D O N B U S I N E S S A R E A S
I N 2 0 0 4

Personal & Commercial Denmark

Corporate

Personal & Commercial Norway

Other

G R O S S P R E M I U M S D I S T R I B U T E D O N
P R O D U C T S I N 2 0 0 4

Motor TPL

Marine, transport, etc.

Fire, etc. (commercial)

Accident

Motor comprehensive

Fire, etc. (personal)

Workmen’s compensation

Other

109

Facts about TrygVesta TrygVesta’s history

TrygVesta’s history

TrygVesta owes its history to a number of mergers and

In 1991, Vesta established a subsidiary by the name of Dial,

acquisitions. The oldest component is the Danish insurance

which name was changed to Enter in 2000. Enter is a wholly-

company Kjøbenhavns Brand which was established by Royal

owned subsidiary of Vesta and sells insurance through se-

Decree of 1731 after the great Copenhagen ﬁre of 1728. The

lected business partners, including car dealers.

name Tryg ﬁrst emerged in 1911.

Vesta was established in 1880, and the name Vesta is derived

Nordea. One year later, Tryg set up a branch in Finland to sell

from Roman Mythology. Vesta is the goddess of hearth, home

insurance to Nordea’s Finnish banking customers.

In 2000, Unibank and Tryg contributed to the formation of

and family.

In 1994, Tryg acquired the Danish insurance operations of

Estonian Nordicum Kindlustus, which was established in 1990.

In 2002, Tryg acquired the general insurance activities of

Winterthur.

In 1995, Tryg and Baltica merged to become Tryg-Baltica,

insurance activities of Nordea, thereby forming TrygVesta.

which name was changed to Tryg in 2001.

At the same time, the Group acquired the Danish and

Later that year, Tryg i Danmark smba acquired the general

Norwegian general insurance activities of Zurich.

Dansk Kaution, which was established in 1895, became a part

of Tryg in 1998. In that same year, Tryg entered the Polish

In 2004, TrygVesta divested the reinsurance company TBi,

insurance market, acquiring a strategic stake in the company

the Polish subsidiary Tryg Polska and the Estonian subsidiary

Energo-Asekuracja, which was established in 1994. Tryg

Nordicum Kindlustus. These three divestments are in line

gained controlling inﬂuence in 2000, and in 2002 the name

with TrygVesta’s strategy to focus on direct Nordic general

of the company was changed to Tryg Polska.

insurance.

In 1999, Tryg merged with Denmark’s second-largest banking

group, Unidanmark, and the general insurance activities of

Unibank were integrated into Tryg.

In that same year, Tryg acquired the English company Colonia

Baltica, which was integrated into Tryg’s reinsurance company

Tryg-Baltica International to form TBi.

At the end of 1999, Vesta, which had formed part of Skandia

since 1989, became part of the family. Vesta’s history also in-

cludes a merger between Æolus and Bergens Brand in 1962,

the acquisition of Cornhill’s Norwegian activities in 1997 and

the acquisition of Aktiv Forsikring in 1998. In 2001, Vesta took

over the Norwegian company Allianz.

110

Facts about TrygVesta Organisation

O R G A N I S AT I O N

Organisation

Tryg i Danmark smba

TrygVesta A/S

Tryg Forsikring A/S

Vesta Forsikring AS

Subsidiaries including
Enter Forsikring AS

Nordea
Vahinkovakuutus

Dansk Kautionsforsikrings-
Aktieselskab

Overview of the TrygVesta Group, simplified legal structure.
Tryg Forsikring A/S’ subsidiaries TrygVesta IT A/S, Tryg Ejendomme A/S and Chevanstell Ltd.
in run-off have been left out.

Tryg

Divestments in 2004:

Tryg is Denmark’s largest general insurer. Tryg has some 2,230

employees and sells insurance through in-house service cen-

Tryg-Baltica International (TBi)

tres, insurance brokers in the industrial and upper commercial

In October 2004, TrygVesta sold its reinsurance company to

markets, and through Nordea’s branch network. In addition,

Sirius International, a member of the White Mountains Insur-

Tryg sells Nordea’s pension products.

ance Group, Ltd. The transfer is expected to be ﬁnalised by 1