Annual report 2013
Contents
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Annual report 2013
Management’s review
1
Income overview
16 Tryg’s results
20 Private
40 Corporate governance
46 Supervisory Board
2
Introduction by the Chairman
22 Commercial
48
Group Executive Management
3
Introduction by the Group CEO
24 Corporate
50
Corporate Social Responsibility in Tryg
4 Events in 2013
26 Sweden
8 Targets and strategy
28
Investment activities
Financial statements
54 Financial statements
12 Strategic initiatives 2014
34
Capital and risk management
137 Group chart
13 Financial outlook and targets
36 Shareholder information
138 Glossary
140 Products
Tryg is the second-largest insurance company in the Nordic region.
We are the largest player in Denmark and the third-largest in Norway.
In Sweden, we are the fifth-largest company in the market.
We offer a broad range of insurance products to both private
individuals and businesses.
Our 3,700 employees provide peace of mind for 2.7 million customers.
Learn more
Reference to further information at tryg.com.
Reference to further information in the annual report.
Find more QR codes in the annual report. If you have
installed a QR reader on your smartphone, you can
access reports and websites containing further
information about Tryg by scanning the QR code.
Editors Investor Relations | Publication 30 January 2014 | Design e-types | Layout amo design | Print Centertryk A/S | Paper Munken Polar
Income overview
DKKm
Q4 2012
Q4 2013
2012
2013
Gross premium income
Technical result
Investment return after insurance technical interest
Profit/loss before tax
Profit/loss on continuing business
Profit/loss
Run-off gains/losses, net of reinsurance
Key figures
Total equity
Return on equity after tax (%)
Number of shares 31 December (1,000)
Earnings per share of 25 DKK
Net asset value per share (DKK)
Dividend per share (DKK)
Price/Earnings
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Combined ratio on business areas
Private
Commercial
Corporate
Sweden
a) Proposed dividend
5,076
648
5
638
394
404
237
4,737
546
154
639
564
565
247
-0.5
70.2
0.9
71.1
16.3
87.4
92.1
-4.7
4.3
2.2
86.8
82.6
90.7
87.5
-2.4
74.9
-1.2
73.7
15.4
89.1
94.3
-5.2
1.1
8.8
87.7
92.2
88.7
88.2
20,314
2,492
585
3,017
2,180
2,208
1,015
10,979
22.1
60,695
36.5
180.9
26.0
11.8
-0.1
72.2
-0.4
71.8
16.4
88.2
93.2
-5.0
2.3
1.8
87.7
83.7
87.7
95.3
19,504
2,496
588
2,993
2,373
2,369
970
11,107
21.5
59,374
39.4
187.1
27.0 a)
13.3
-2.7
73.9
-1.8
72.1
15.6
87.7
92.7
-5.0
2.1
3.2
86.0
87.9
88.9
91.2
Income overview | Annual report 2013 | Tryg A/S |
1
Chairman of the Supervisory Board: Focus on strategic
and financial targets
tributing 60-90% of the profit. In 2013, Tryg acquired own shares totalling
DKK 800m, and with reference to the policy of not maintaining un-
necessary capital surplus cover, we initiated a new DKK 1,000m share buy
back programme on 2 January 2014.
Corporate governance
Corporate governance is an important foundation for all businesses,
and the Supervisory Board stresses the importance of complying with
the Recommendations on Corporate Governance. Transparency about
the composition, skills and work of the Supervisory Board is one issue
which is particularly important for us.
In 2013, we also established a better understanding of the risks which
the company must address. This is important, among other things when
Tryg is a well-run business with a strong position in the Nordic countries
determining the adequacy of the capital base. The Supervisory Board is
and an ambition of creating peace of mind and value for customers, em-
responsible for ensuring that the capital resources are fully adequate in
ployees and shareholders. This has been a natural focus point in my first
relation to risks and regulations, while on the other hand making sure
year as Chairman of the Supervisory Board. In the next strategy period,
that they are not inappropriately high.
this ambition will be supplemented with a number of new initiatives
designed to strengthen customer experience and create an even stronger
Tryg is a listed company, and it is important that decisions to invest
culture with a view to delivering on our ambitious targets. Providing long-
in the Tryg share can be made on an informed basis. A high priority is
term peace of mind for customers is at the core of everything we do, and
therefore given to having an open and ongoing dialogue with sharehold-
this must be clear to our customers in their daily dealings with Tryg.
ers. The management holds regular meetings with investors and par-
ticipates in conferences; also, shareholders can meet the Supervisory
Results for the year and financial targets
Board at the annual general meeting.
Tryg’s many talented employees and strong management ensured that
the combined ratio target set back in 2010 was attained. Despite two
Peace of mind and value
severe storms at the end of 2013, results were satisfactory.
The Supervisory Board attaches importance to ensuring the right balance
between customer satisfaction and value creation for shareholders. This
In 2013, Tryg defined a set of more specific financial targets. The aim
is the only way of guarding the long-term interests of these stakeholders.
is a return on equity after tax of 20%. This must be achieved through
Together with the Group Executive Management, we have decided on the
a combined ratio of 90 or less. The return on equity target was met,
strategic themes for the next few years; our focus is on new initiatives and
constituting a satisfactory 21.5% in 2013.
benefits for customers as the foundation for good and stable earnings.
Distribution to shareholders
Tryg is characterised by stability, and the company’s strong position
At the end of 2012, we adopted a new dividend policy, the overall ob-
must be maintained. As Chairman, I aim to ensure that Tryg continues
jective being to ensure a stable dividend for our shareholders, while at
to create long-term peace of mind and value for customers, employees
the same time maintaining a solid capital base, which is deemed key
and shareholders.
to customer and shareholder confidence. Based on the satisfactory
results for 2013, the Supervisory Board proposes a dividend of DKK
27 per share, corresponding to the distribution of DKK 1,656m. This
represents a nominal increase compared with the dividend distributed
last year, which is in line with the policy. The dividend equates to 70%
Jørgen Huno Rasmussen
of the net profit for the year, which is also in line with the aim of dis-
Chairman
2
| Tryg A/S | Annual report 2013 | Introduction by Chairman of the Supervisory Board
Group CEO: Our customers – our most important asset
Customer journey & success culture
Tryg’s ambition is to be the best in the industry at insurance, people and
earnings. In recent years, we have worked hard to strengthen our profitability.
In future, we want to further strengthen and balance all three ambitions.
In the coming years, we will continue the development of price-
differentiated products as well as the ongoing improvements of our
benefits programmes. However, the relationship between price and
risk can also be improved through claims prevention measures. Claims
costs can be reduced both by preventing damage and by mitigating the
effects of any damage. Consequently, prevention will be integrated into
our products to a larger extent.
The customer survey conducted in 2013 (EPSI) for the Private market
The results for 2013 were satisfactory and lived up to the agreed targets.
showed a stable and high level of satisfaction in Denmark, and the highest
In the coming years, we will build on these results by further strengthen-
level of satisfaction ever in Norway. Our ambition is an even higher level
ing customer experience and create an even stronger culture. Basically,
of customer satisfaction and higher loyalty than our competitors, which
it is about ensuring that customer experience is so strong that our
our initiatives must reflect. We have therefore decided that in 2014 we
customers are confirmed in their choice of insurance company every
will consolidate our work with customer experience across the Group,
time they contact Tryg.
while at the same time working with our culture. We have named this
‘Customer journey & success culture’. It involves a number of initiatives
Efficiency improvements must benefit customers
to strengthen customer experience and enhance customer satisfaction
In 2011 and 2012, Tryg’s results were improved in particular through
and loyalty. We will also strengthen our culture by focusing on giving our
higher insurance prices. The improvements seen in 2013 were attribut-
employees better opportunities for continuous improvement of per-
able especially to efficiency improvements, cost cuts and better procure-
formance and development. This is an important precondition for
ment. At the end of 2013, we were hit by two severe storms, resulting in
our employees successfully meeting their own ambitious targets and
45,000 claims. The claims handling organisation had an extremely busy
knowing how they contribute to realising Tryg’s targets and success.
time providing swift and efficient assistance to customers. Importantly, we
made a decision to help customers before the events had officially been
Corporate social responsibility in Tryg
recognised as floods. This left our customers in no doubt that Tryg, can
In Tryg, we integrate corporate social responsibility into our practice in a
make a difference and provide instant peace of mind.
way that creates results – for the climate, for people and financially. It is
important for us to show our customers, employees, suppliers, investors
Despite the storm claims, the combined ratio was 87.7 in 2013 against 88.2
and other partners that we comply with UN’s Global Compact principles on
in 2012. Our internal programmes contributed 2 percentage points to this
protection of the climate, human rights, labour rights and anti-corruption,
improvement. The aim of the internal efficiency programme is a total re-
demonstrating tangible action in areas which are relevant to our business.
duction in claims costs and expenses of DKK 1bn in the period leading up
to 2015. At the end of 2013, a reduction of DKK 557m had been realised.
Through all these steps, we want to become better and better – at
insurance, at people, and at earnings. Our ambition is to create peace
The expense ratio was 15.6 against 16.4 in 2012, representing a
of mind and value for customers, employees and shareholders.
significant improvement, which was achieved mainly through
efficiency improvements and fewer employees in staff functions.
The lower expense ratio is in line with the aim of an expense ratio
below 15 in 2015. Efficiency improvements and lower costs will
Morten Hübbe
contribute to offering better concepts and benefits for our customers.
Group CEO
Introduction by Group CEO | Annual report 2013 | Tryg A/S |
3
Events in 2013
New Group EVP, Claims
New programme for Private customers
Birgitte Kartman stepped down as Group
In Denmark, Tryg launched the Tryg Plus
Executive Vice President (EVP), Claims.
special benefits programme comprising:
Jesper Joensen, Director of Tjeneste-
Tryg Home Alarm, Tryg Backup, Tryg Safe
mænd enes Forsikring and Partneraftaler
in Life and Tryg ID.
Read about the
Privat, was appointed Acting Group EVP,
benefits programme on page 14.
Share buy back initiated
Claims. Later in December, he was
On 15 March, Tryg initiated an extraor-
appointed Group EVP, Claims.
New holiday home insurance
The pricing of Tryg’s New Holiday Home
dinary share buy back which was com-
pleted on 19 December 2013. Under the
programme, Tryg acquired own shares
for an amount of DKK 800m.
New Chairman of the Supervisory Board
Insurance is based on 15 parameters as
Michael Olufsen was succeed by Jørgen
opposed to only two.
Read about
Huno Rasmussen as new Chairman of the
New Holiday Home Insurance on page 6.
Supervisory Board. Jørgen Huno Rasmussen
has been a member of the Supervisory
Board since 2012 and is former Group
CEO of FLSmidth & Co.
Tryg’s ‘A-’ rating maintained
Standard & Poor’s reconfirmed Tryg’s
and Tryg Garanti’s ‘A-’ rating.
January
February
March
April
May
June
July
August
September
October
November
December
New home insurance
Tryg launched the New Home Insurance
in Norway. Premium is based on several
criteria to more accurately reflect risk.
Read more about New Home
Insurance at tryg.no.
Sustainability prize
Tryg was no. 2 in the Sustainability Brand
Index among Danish enterprises.
New workers’ compensation insurance
Tryg launched the New Workers’ Com-
pensation Insurance for the Commercial
and Corporate segments, a modernised
product with price matching risk.
Read about New Workers’
Compensation at tryg.dk and tryg.no.
4
| Tryg A/S | Annual report 2013 | Events in 2013
Tryg and Falck new partners
Tryg and Falck formed a new partnership aimed at delivering peace of mind for Nordic
customers. The partnership differentiates Tryg in the market, strengthens profitability and
the strategic focus on prevention.
New annual travel insurance
Tryg launched the New Annual Travel Insurance for Private customers which is much more
tailored to the individual customer’s actual needs and risks.
Read about the new annual
travel insurance at tryg.dk.
High customer satisfaction maintained
Storm hit Denmark and Sweden
According to the EPSI customer satisfaction survey, Tryg’s customer
On 5 December, the second severe storm of the year, named Bodil,
satisfaction remained high in the private market, up slightly by 0.2
hit Denmark and Sweden. Tryg decided to help and provide peace
points in Denmark and up by 1.8 points in Norway.
of mind for customers immediately and before the events were
Tryg launched new van insurance
officially recognised as floods on 10 December.
Tryg launched the New Van Insurance for the Commercial and Cor-
New share buy back programme
porate segments. The insurance provides several new types of cover
Tryg announced that a new extraordinary share buy back pro-
which customers can select to suit their requirements.
gramme totalling DKK 1,000m would run from 2 January 2014
Read about the New Van Insurance at tryg.dk.
until the end of 2014.
Moderna launched new product covers
Tryg entered IT operating contract with TCS
Moderna, Tryg’s branch in Sweden, launched new types of product
Tryg terminated the IT operating contract with CSC from 1 August 2014
cover. Customers can choose between three different types of cover:
and entered a new agreement with TCS (Tata Consultancy
basis, medium and large, depending on level of cover.
Services Limited) on 29 January 2014.
Read about the new product structure at modernaforsakringar.se.
January
February
March
April
May
June
July
August
September
October
November
December
Next Level Sourcing won prestigious prize
Tryg/Next Level Sourcing and Efficio
won the prize for the Best Procurement
Consultancy Project of the Year. The prize
is awarded annually by the Chartered
Institute of Purchasing and Supply (CIPS)
and is regarded as the most prestigious
Denmark hit by storm
international prize within procurement
On 28 October, a severe storm crossed Denmark. Tryg received approximately
and logistics.
28,000 claims, a large part of which were processed in 2013.
New Group Executive Vice President,
New special benefits programme in Norway
Commercial
Trond Bøe Svestad took up the position
of Group EVP, Commercial. Trond came
from a position as Deputy Head of the
Tryg launched the new Tryg Pluss benefits programme for private customers in Norway.
The special benefits programme comprises three new and unique elements: Tryg Home Alarm,
Tryg Backup and Tryg ID.
Read about the benefits programme on page14.
Nordic private area in If. Furthermore,
Moderna concluded strategic partnership agreement with Danske Bank
Trond has more than 10 years of experi-
Moderna Försäkringar, Tryg’s branch in Sweden, entered into a strategic partnership
ence within the commercial area in If.
agreement with Danske Bank concerning general insurance in Sweden.
Events in 2013 | Annual report 2013 | Tryg A/S |
5
New Holiday Home Insurance In 2013, Tryg launched a new holiday home
insurance product in which both product content and pricing are tailored to our
focus on customers and price differentiation. The new product includes two
new types of cover, while the existing types of cover have been adjusted to suit
‘modern holiday homes’.
Previously, pricing was based on only two parameters
which customers have to answer. We have developed a
– type of roof and size of holiday home. Thus, it was not
product that provides considerable peace of mind and
possible to ensure genuine product differentiation. With
value for customers; it has been welcomed by the market,
the new product, pricing is determined on the basis of
resulting in improved rates of sales. Approximately one
15 parameters for each individual holiday home. The
in three new customers choose the new extended cover,
additional parameters are largely obtained from external
which increases Tryg’s business volume.
data sources, which minimises the number of questions
Targets and strategy
Financial targets and strategic initiatives 2013
Improved price differentiation
Tryg’s financial targets were specified and announced in June 2012.
Having been reluctant to differentiate prices relative to customer risk
The overall financial target is a return on equity of 20% after tax and
for a number of years, Tryg decided to work intensively with price dif-
a combined ratio of 90 or less. Also, the expense ratio must be under
ferentiation. This decision was made at a time when other companies
15 from 2015. With a combined ratio of 87.7 and a return on equity
in the markets also embarked on increasing price differentiation. As
of 21.5%, the financial targets were met in 2013.
the largest player in the Danish market, and the third-largest in the
Key Performance Indicators 2013
√ Return on equity
√ Combined ratio
√ Expense ratio
√ Customer satisfaction
÷ Employee satisfaction
Norwegian market, Tryg has very extensive data on which to base the
pricing of products to most accurately reflect risks. In 2013, differenti-
ated prices were developed for 13 of our insurance products in Den-
mark, Norway and Sweden; this is more price differentiation in just one
year than had been introduced in the previous seven years altogether.
Together with an improved risk selection, the launch in 2013 has
significantly increased the rate of sales for these products.
Based on a significantly improved financial standing, five strategic
Commercial back on track
initiatives were defined to ensure that the financial targets were
Improved profitability in the Commercial segment was of the utmost
achieved.
Strategic initiatives 2013
√ Improved price differentiation
√ Commercial back on track
√ Solid foundation in Sweden
√ Competitive level of expenses and claims costs
√ Simplification of products and systems
importance to meeting the financial targets, and it was therefore de-
fined as a strategic initiative. The implementation of risk-adjusted pric-
ing, segmentation, efficiency improvements and structural measures
within distribution have significantly improved performance in this
business area, as expressed in a combined ratio of 87.9 for 2013.
Solid foundation in Sweden
At the beginning of 2013, Tryg’s Swedish business was still dominated
very distinctly by bank insurance on the one hand, and on the other by
Price-differentiated products launched in 2013
Country
Launched Q1-Q3 2013
Launched Q4 2013
Denmark
Contents
Camp.
Workers’
Compensation
Travel
Holiday Home
Van
Norway
Workers’
Compensation
House
Illness
Houseowner
Motor
Sweden
Contents
Boat
8
| Tryg A/S | Annual report 2013 | Targets and strategy
Moderna, which was acquired in 2009. In 2013, we therefore focused
different from the products which Tryg is currently offering customers.
on creating a shared foundation through the standardisation of products
Consequently, special efforts have gone into substituting these older
and processes and the use of a shared IT system. Also, many initiatives
products with more up-to-date products. In the course of the year,
have been introduced to improve profitability and optimise distribu-
two thirds of the older Private products have been phased out. This
tion through structural changes. At the end of the year, the Swedish
slightly exceeds the original target for the year. The number of IT
business has some of the best products in the market, has partly
systems has also been reduced during the year, especially in Sweden,
implemented the future distribution structure and has entered into
where the number of core systems was reduced from two to one.
a new bank insurance partnership with Danske Bank in Sweden,
Thus, now each country has one core system.
following termination of the contract with Nordea. With a combined
ratio of 91.2, the financial results for the year are very satisfactory.
Insurance market
The Nordic insurance market is characterised by consumers and busi-
Competitive level of expenses and claims costs
nesses having largely covered their insurance needs. At the same time,
A high level of efficiency is important to realising the financial targets,
the situation is one of relatively low economic growth and a continued
and, in addition, low costs are also important to improving competi-
net transfer of workplaces to countries with lower labour costs. All in all,
tiveness. Compared with other insurance companies in the Nordic
these factors are leading to low growth in the demand for insurance in
countries, Tryg’s expense ratio is relatively low, and it will fall further
the Nordic market. In the long term, the growth in insurance revenue is
towards the target ratio of below 15 in 2015. Tryg’s cost level is mark-
expected to equate to the development in the gross domestic product.
edly lower than those of companies outside the Nordic region. The
efficiency programme which has been launched with the ambition
The Nordic insurance market is characterised by pan-Nordic com-
of reducing costs by DKK 1bn in 2015 has progressed according to
panies aiming for a combined ratio of about 90, calculated according
plan, and cost reductions of DKK 382m were realised in 2013 against
to Danish accounting principles. Low market growth is resulting in
a target for the year of DKK 320m. This initiative has significantly
intensified competition. The larger companies focus on profitability,
impacted the results for 2013.
especially through efficiency improvements and price differentiation.
This is to ensure that financial targets are realised and that competi-
Simplification of products and systems
tiveness is improved.
In recent decades, Tryg has acquired companies which are now fully
integrated parts of Tryg. Tryg’s portfolio includes products which
In addition to the large pan-Nordic companies, the market is char-
were taken over in connection with these acquisitions and which are
acterised by a number of large local companies and many smaller
Targets – expenses
Targets – claims
DKKm
300
250
200
150
100
50
0
300
125
137
125
50
Expense
savings
2013
2013
2014
2015
DKKm
800
700
600
500
400
300
200
100
0
700
100
120
250
300
250
100
Claims
savings
2012
2012
2013
2013
2014
2015
Target
Achieved 2012
Achieved 2013
Target
Achieved
Targets and strategy | Annual report 2013 | Tryg A/S |
9
companies. The smaller companies, of which there are many in the
economy was thought to be picking up compared to previous years.a)
Danish market in particular, very often have special local knowledge and
In 2013, the Norwegian market was characterised by unchanged eco-
are characterised by high levels of customer loyalty and less ambitious
nomic growth of approximately 1.8%, which resulted in growth in the in-
financial targets, paired, on the other hand, with higher costs and fewer
surance market for both private and business customers. Sales of private
opportunities for entering into purchasing agreements than in the larger
cars were 3% higher in 2013 than in 2012. Pay increases averaged about
companies. Nordic insurance companies are generally both profitable
3.6%, and house prices also increased in the course of the year. This de-
and efficient.
velopment meant that Tryg was particularly aware of claims inflation and
the need to adjust prices to reflect the increased insurance risk. Towards
Tryg believes that Tryg’s low costs compared with other insurance provid-
the end of the year, there was concern that the dramatically increasing
ers in the European market have been a significant reason why only few
house prices would have a negative effect on the Norwegian economy.a)
new players have chosen to establish themselves in the Nordic market
within the Private and Commercial sectors. Most new players are seen
Tryg’s ambition
within Corporate insurance, with distribution through insurance brokers.
Tryg’s ambition is to create peace of mind and value, and this must be
As new players generally attract customers by offering lower prices, com-
at the core of everything we do. It means that we must be the best in
panies with a strong focus on profitability sometimes experience periods
the industry when it comes to insurance, people and earnings. All three
of declining sales. In 2013, a number of companies tried to establish
elements are fundamental to creating peace of mind and value for our
themselves in the Danish market through online sales.
customers, employees and shareholders.
The economic climate naturally affects the insurance market. For the
Danish market, 2013 was characterised by low economic growth of
approximately 0.3%, among other things due to low levels of private
spending, to which small and medium-sized businesses tend to be
particularly sensitive. The Corporate market is affected, in particular, by
It’s all about creating peace of mind
We create peace of mind and value for customers,
employees and shareholders.
economic developments for our most important trading partners, espe-
Customers
cially Germany and Sweden. The Private market is impacted by gener-
Our customers are fundamental to our company, and are therefore at
ally low economic growth and increasing sales of small cars, resulting
the core of everything we do in Tryg. Tryg wants to build and maintain
in diminishing insurance requirements. Towards the end of the year, the
close customer relations.
Best at insurance, people and earnings
Customer satisfaction
Index
120
110
100
90
80
2009
2010
2011
2012
2013
Best at people
B
e
s
t a
t e
a
r
nin
g
s
Peace of mind
Value
Best at insurance
a) Source: Nordea Markets, Economic Outlook (December 2013).
10 | Tryg A/S | Annual report 2013 | Targets and strategy
In spite of the price increases which were implemented in the period
Tryg wants a higher level of employee satisfaction than the bench-
up until 2012, and which were necessary to ensure a sustainable
mark for the Nordic financial sector. The strong focus on costs and
balance between risk and profitability, in 2013 Tryg achieved increas-
the significant changes which have been implemented and which
ing customer satisfaction. However, some parts of the market saw a
have affected many employees were expected to adversely affect
greater increase in customer satisfaction.
employee satisfaction in the short term. This was in fact seen in
Tryg wants to increase customer satisfaction and, in addition to
had a negative impact on employee satisfaction include staff cuts,
the initiatives currently being implemented within price differentia-
the outsourcing of tasks and a new office structure. A turnaround in
tion, selection, benefits programmes and efficient claims handling
employee satisfaction is expected in the coming years.
the employee satisfaction survey in 2013. The changes which have
and prevention, in 2014 we will launch a new strategic initiative
aimed at supporting greater customer focus. Moreover, the efficiency
Further focus on and the creation of a success culture will also help
programme will contribute to enhancing customer satisfaction
to reverse the negative employee satisfaction trend seen in 2013.
through a strengthened competitive position and thereby a reduced
need for general price increases.
Shareholders
Tryg’s shareholders must see Tryg as a company which sets ambi-
In Denmark, the Tryg Plus programme was launched in Q2 2013. In
tious targets and achieves them. This is the background against
addition to multiple-policy discounts, the programme comprises
which Tryg has defined the above-mentioned targets. Tryg’s share-
Tryg ID, Tryg Safe in Life, Tryg Home Alarm and Tryg Backup (read
holders naturally expect the company to focus on efficiency. This is
more on pages 14-15). In the second half of 2013, a similar benefits
important, not just from the point of view of achieving the financial
programme was introduced in Norway, and a new type of motor insur-
targets, but also in terms of strengthening the company’s competi-
ance cover was introduced which means that customers no longer
tive position. In this light, Tryg has set an expense ratio target of less
lose bonus points in connection with damage to their parked car, even
than 15 from 2015.
if it is not known who caused the damage. In Sweden, a new subdivi-
sion of the most commonly used private insurance products – motor,
In accordance with the financial targets, Tryg decided at the end of
contents, house and holiday home – was launched, and a benefits
2012 to amend its dividend policy, so that shareholders can expect
programme similar to the Danish and Norwegian ones was developed.
a steadily increasing dividend. This policy is well in line with the
ambition of continually improving the insurance business and an
Tryg has a strong focus on claims prevention, which is reflected in our
investment policy which is primarily designed to support insurance
customer-oriented activities such as Tryg Basement Check and Tryg
operations.
See more in the section on Shareholder information
Burglary Check. We are generally keen to integrate claims prevention
on page 36.
in our products, for example by offering discounts to customers who
install Tryg Home Alarm or water seals.
CSR
Employees
In Tryg, we integrate CSR into our practice in a way that creates
results – for the climate, for people and financially. We have achieved
It is Tryg’s ambition to be best at people. To realise this ambition, we
good results in relation to healthy, green and efficient transport, and
believe that it is important that all employees feel that they have an
we are improving well-being and customer service through our com-
opportunity to be successful. This means that individual employees
mitment to diversity. This benefits our customers, employees and
must feel that they are continuously developing and becoming better
shareholders, and has a positive effect on society.
See more in
at their job. Clear and ambitious targets must be set for each individu-
the section on Corporate Social Responsibility in Tryg on page 50.
al employee and linked to Tryg’s ambitious targets, and regular feed-
back must be provided so that everybody knows how they contribute.
Targets and strategy | Annual report 2013 | Tryg A/S |
11
Strategic initiatives 2014
Strategic initiatives 2014
• Price differentiation
• Customer journey & success culture
• Cost and claims reduction
•
IT stability
Customer journey & success culture
In step with Tryg’s development of better products and customer
concepts, it is important that the customer experience is strengthened
accordingly in order to establish ever stronger relations with Tryg.
To do this, we must focus even more on customer experience in the
entire Group and build an even stronger culture, both with regard to
customer experience but also to ensure that our employees constantly
improve and experience success by being able to deliver on increas-
ingly ambitious personal targets. We will, among other things, achieve
this by focusing more on motivating individual feedback, by celebrating
In order to provide peace of mind and create value for customers,
and honouring success and by ensuring that the individual front-line
employees and shareholders, Tryg must be a financially well-run
employee has the widest possible authority to help the customer.
business. The targets still include a return on equity of 20% after
tax and a combined ratio of 90 or less.
Cost and claims reduction
Tryg is reducing its cost and claims level through its efficiency pro-
Our customers are our most important asset, which is why we are
gramme. The programme will be the chief initiative to improve results
implementing a number of initiatives designed to strengthen customer
and will also contribute to strengthening Tryg’s competitiveness.
experience in the coming years. Our goal is to strengthen customer
As part of the overall target of DKK 1bn, the sub-target is to achieve
experience and make it so strong that our customers are confirmed
improvements totalling DKK 850m by the end of 2014, comprising
in their choice of insurance company every time they contact Tryg
DKK 250m in cost reductions and DKK 600m in claims reductions.
and are willing to actively recommend us to others. Therefore we
We will follow up on the programme in each quarter in connection
also want to measure to what extent our customers are willing to
with the external result reporting.
recommend us to others.
IT stability
In order to strengthen customer experience while at the same time
IT stability is important to offering our customers efficient service in
maintaining consistently high earnings, Tryg has defined a number
claims handling, sales, service and policy renewal. Consequently, IT
of strategic initiatives for 2014.
stability has an impact on customer satisfaction and on the productivity
Price differentiation
and job satisfaction of the individual employee. IT stability was not
satisfactory in 2013 and affected productivity, customer service and
Price differentiation and improved pricing relative to the customer’s
employee satisfaction negatively during the year.
risk was a strategic initiative for Tryg in 2013 and will continue to be
so in 2014. A number of price-differentiated products were developed
Since 2003, Tryg ’s IT operations have been outsourced, and in 2013
in 2013, and the aim is for Tryg to reach or exceed the level of the
it was decided to change suppliers. Tryg intends to follow up on this
majority of our competitors by 2015 for most of our products.
agreement and other agreements with external partners, which is a
For 2014, the objective is that Tryg’s pricing relative to the risk will
IT stability to be improved with the help of our new external supplier.
testament to Tryg’s focus on performance. In 2014, the objective is for
be at the same or above the level of our competitors for 75% of the
products by the end of the year.
12 | Tryg A/S | Annual report 2013 | Strategic initiatives 2014
Financial targets and outlook
Tryg’s financial targets
• Combined ratio of 90 or less.
• Expense ratio below 15 in 2015.
• Return on equity of 20% after tax.
In 2014, price
differentiation remains
key to strengthening
Tryg’s earnings.
Tor Magne Lønnum
Group CFO
The investment portfolio is generally divided into a match portfolio
corresponding to the technical provisions and a free portfolio. The
target is for the return on the match portfolio and changes in the
technical provisions due to interest changes to be neutral when
taken together. The return on bonds in the free portfolio will vary,
but considering the current interest rate level, a low current return is
expected. For equities and property, the expectations are a return of
7% and 6%, respectively. Investment activities include other types of
investment income and expenses, especially the costs of managing
In order to ensure the realisation of Tryg’s financial targets, Tryg
the investments, gains and losses on foreign currency hedges and
announced in 2012 an efficiency programme, with an aim to reduce
interest paid on loans.
costs and claims by a total of DKK 1bn in the period up to 2015.
Tryg has not set up any targets for premium income growth, but
Norway. In Denmark, the tax rate will be reduced from 25% in 2013
expects it to be slightly negative in 2014 due to the measures that
to 24.5% in 2014, and then gradually reduced further to 22% in
Tax rate adjustments have been adopted both in Denmark and in
have been implemented.
2016. In Norway, the tax rate has been reduced from 28% in 2013 to
27% in 2014. When calculating the total tax payable by Tryg, it should
As regards the claims level in 2014, weather claims net of reinsur-
also be taken into account that gains and losses on shareholdings
ance are expected to total DKK 500m, and large claims DKK 550m.
in Norway are not taxed. All in all, the tax changes will cause the
Tryg has taken out a sideways cover for situations where the net
expected tax payable for an average year to be reduced from around
costs for weather claims exceed DKK 300m and up to DKK 900m.
24-25% to 23-24% for 2014.
The agreement runs from 1 July 2013 to 30 June 2014, and as a
result of the high level of weather claims in the second half of 2013,
Tryg will only to a limited degree be exposed to weather claims in
the first half of 2014.
As a consequence of a legislative amendment in Denmark, the
payroll tax will gradually increase in the coming years from the
current level of 10.9% to 11.4% in 2014, followed by a gradual
increase up to 2020, when the payroll tax will have reached 15.2%.
This amendment will not affect Tryg’s target of bringing its
expense ratio down below 15 by 2015.
Financial targets and outlook | Annual report 2013 | Tryg A/S |
13
Tryg Plus I In June 2013, Tryg launched a new special benefits programme for private
customers, Tryg Plus in Denmark and Tryg Pluss in Norway. The purpose of the
programme is to ensure that we become even better at creating peace of mind and
value for our customers. To become a Tryg Plus customer in Denmark, the customer
must have contents insurance and at least one of our newest insurance products
or a pension in Nordea Liv & Pension. In Norway, the customer must have house,
contents or motor insurance and at least two other insurance products. Read more
about Tryg Plus at tryg.dk and about Tryg Pluss at tryg.no.
Watch the Tryg Plus film
Watch the Tryg Pluss film
The four elements of the Danish programme are: Tryg ID,
Tryg Backup, Tryg Home Alarm and Tryg Safe in Life.
Tryg Home Alarm
Apart from burglary protection, Tryg Home Alarm also in-
In Norway, the programme comprises Tryg ID, Tryg Backup
cludes the possibility of preventing water and fire damage.
and Tryg Home Alarm.
Tryg ID
Tryg ID offers customers advice and help to prevent,
discover and limit misuse of the customer’s identity.
Tryg Backup
Tryg Backup offers customers easy, inexpensive and
Tryg Home Alarm is always connected to an emergency
response centre and is offered in cooperation with Falck.
Customers only pay a low, monthly subscription fee,
depending on the size of their home.
Tryg Safe in Life
Tryg Safe in Life is a health and crisis hotline. The customer
can pick up the phone and ask for help if suffering from
continuous automatic backup of photos, videos, docu-
problems such as serious illness, stress and divorce.
ments and other valuable content on their computers.
The call is anonymous for Tryg. The customer will speak
Tryg Backup includes access to unlimited online backup
to therapists from Falck Healthcare. All therapists are
on two computers.
health professionals such as nurses, health visitors,
social workers, midwives or addiction counsellors.
Tryg’s results
Financial highlights
•
The profit after tax for the year was DKK 2,369m (DKK 2,208m),
and the return on equity after tax was 21.5% (22.1%).
• Technical result of DKK 2,496m (DKK 2,492m).
• Combined ratio of 87.7 (88.2).
• Gross premiums reduced by 2.7%.
•
Higher weather claims level, corresponding to 3.2% (1.8%).
• Expense ratio improved from 16.4 to 15.6.
•
Investment return, after transfer to insurance, of DKK 588m
(DKK 585m).
•
Proposed dividend of DKK 27 per share.
As mentioned above, many differentiated products with a better cor-
relation between price and risk were developed in 2013. So far, these
have primarily been offered to new customers. In general, the rate of
sales for these products has been higher than for the old products.
In the coming years, there will be a gradual conversion of policies to
these products, which will provide a portfolio with a better balance
between price and risk.
The investment return totalled DKK 588m and was especially affected
by rising share prices and a consistently low interest rate level. The
primary purpose of the investment business is to support the insurance
business, and the aim is to have a low risk profile. In this respect, the
investment return in 2013 was extraordinarily high and must, given the
low interest rate levels, be expected to be lower in the coming years.
• Share buy back of DKK 1,000m in 2014 initiated on 2 January.
Premiums
Premium income was DKK 19,504m (DKK 20,314m), which rep-
resents a drop in premium income of 2.7% in local currencies. The
premium income was affected by the sound profitability of partner
With a return on equity of 21.5% and a combined ratio of 87.7, 2013
agreements, which provides a higher level of profit sharing for these
was a satisfactory year for Tryg. The results are thus in line with the
agreements and thus a reduction of premium income. This has
defined targets of a return on equity of 20% and a combined ratio
impacted premium growth negatively by 0.9%, which means that
of 90 or lower. The good results were achieved despite a generally
growth excluding this impact would be negative by 1.8%.
higher level of weather claims and large claims in 2013 than in 2012,
and than expected for an average year. In Q4 in particular, the level of
The development in premium income was expected based on the above-
storm claims was high, with more than 45,000 claims processed.
mentioned initiatives to improve profitability in Commercial and Sweden.
These areas saw a decline of 3.2% and 4.9%, respectively. Private expe-
The good results were achieved especially by means of the ongoing
rienced a fall of 2.2%, or 0.5% excluding profit sharing. The low growth
efficiency programme, which improved results by DKK 382m, corre-
in Private was expected as a result of the profitability initiatives taken in
sponding to an improvement of the combined ratio by 2.0 percent-
previous years, which reduced the number of unprofitable customers, in
age points. In 2013, price adjustments have generally only been
particular. In addition, the Danish part of Private was affected by both low
effected to counter claims inflation. Despite a high level of weather
economic growth and a continuing increase in the sales of small cars.
claims in 2013, no extraordinary price increases are planned for
Corporate saw negative growth of 2.8%, but Tryg is prepared to accept
2014. If segments and products develop in an unsatisfactory
larger fluctuations for this business area due to the competitive situation
direction, selective price measures will still be taken.
and the objective of having a profitable portfolio. The competition in
Corporate was particularly intense in the Norwegian part. The controlled
All business areas generated strong results, and the balance in terms
expansion of the portfolio continued in the Swedish part of Corporate.
of earnings is thus satisfactory in the general portfolio. A few years
ago, profitability in the business areas of Sweden and Commercial
Tryg is continuously adapting its distribution to the customers’ chang-
was not satisfactory, and strategic initiatives were put in place to
ing requirements. This is the reason why Tryg has chosen to reduce
improve it. Against this background, it is particularly satisfactory that
the local representation and make targeted selections of distribution
Commercial and Sweden achieved very good results in 2013 with
channels for the different customer segments in connection with new
combined ratios of 87.9 and 91.2, respectively.
sales, upselling, renewals and service.
16 | Tryg A/S | Annual report 2013 | Tryg’s results
Bank insurance is an important distribution channel, and Tryg has a
As mentioned above, weather claims impacted the combined ratio by
sound agreement with Nordea on bank insurance in Denmark and Nor-
3.2% (1.8%) and are particularly related to the October and December
way, while Tryg sells to and services Nordea Liv & Pension customers.
storms in the Danish business. The total weather claims expenses
In connection with the decision to terminate the cooperation with
amounted to DKK 875m, but since Tryg has a reinsurance agreement,
Nordea in Sweden, it was a positive development that a referral agree-
the impact on profit was only DKK 620m, which also includes expenses
ment was concluded with Danske Bank in Sweden in October 2013.
for repurchase of a reinsurance agreement. However, to give the 45,000
Claims
customers with claims the best possible service, temporary staff was
employed. Telephone hours were extended, and the staff did everything
The claims ratio, net of ceded business, which covers both claims
they could to live up to Tryg’s values of being best at insurance and
and business ceded as a percentage of gross premiums, was 72.1
people. The Danish Storm Council recognised the claims after the
(71.8). The claims level includes an improvement due to the claims
December storm as flood claims, but even before this had been deter-
initiatives of DKK 300m, corresponding to 1.5%, and a higher
mined, Tryg elected to give its customers the best possible service.
weather claims level of 3.2% (1.8%) due to the storms in Denmark in
Q4, in particular. In 2013, the large claims level was approximately
Tryg has concluded a sideway reinsurance agreement running
2.1% (2.3%), and the run-off level was unchanged at 5.0%, which
from 1 July 2013 to 30 June 2014. When the total weather claims
reflects a solid level of provisions.
expenses exceed DKK 300m, the agreement will cover the next
DKK 600m. To be covered by the agreement, a claims event must
The claims measures implemented have first and foremost included
exceed DKK 20m. With this agreement, Tryg’s exposure to storm
improved agreements with car repair shops, but 2013 also saw initia-
and cloudburst claims will be limited in the first half of 2014.
tives that have improved the procurement of claims services within
contents insurance, among other things in the form of the agreement
The large claims level was 2.1% (2.3%). The large claims level is ex-
with Scalepoint, which benefits both customers and Tryg. The cus-
pected to fluctuate over the years. The largest individual claim of
tomers are offered freedom of choice among claims products, and
the year of DKK 0.7bn related to an insolvent contractor insured in
Tryg has access to favourable purchasing agreements and updated
Tryg Garantiforsikring. However, due to a considerable reinsurance
prices for similar products, which is particularly important in the field
cover for this type of business, the effect on Tryg’s results was only
of electronics claims. In addition, the claims initiatives are affected by
DKK 30m. In step with the expansion of the Swedish part of the
the efficiency improvements implemented in the claims organisation.
Corporate segment, a higher large claims level must also be expected
Weather claims
Large claims
DKKm
2,000
1,600
1,200
800
400
0
Expected level, net for 2013: DKK 500m
2009
2010
2011
2012
2013
DKKm
1,500
1,200
900
600
300
0
Expected level, net for 2013: DKK 450m
2009
2010
2011
2012
2013
Weather claims, gross
Weather claims, net
Large claims, gross
Large claims, net
Tryg’s results | Annual report 2013 | Tryg A/S |
17
here, and, in combination with a slightly less favourable agreement
with the reinsurance companies within guarantee insurance, based
With an intensified customer focus in the coming years, it is also
on the above-mentioned claim, this is the main reason why the
important that the efficiency programme allows investments that sup-
expectations for the level of large claims, net of reinsurance, have
port this focus, with regard to both internal employee development
increased from
DKK 450m to DKK 550m.
and technological development.
The run-off level was 5.0% (5.0%), which underlines Tryg’s solid pro-
roll taxes in Denmark, which will increase further in 2014 from 10.9%
visions coverage. The run-off gain was highest in Corporate, because
to 11.4%. The tax will gradually increase from 2014 and will stand at
the share of long-term business in the form of workers’ compensa-
15.2% in 2020. This increase will not affect Tryg’s expense ratio target
tion, in particular, is larger than for the other business areas.
of less than 15 from 2015.
In recent years, the cost level has been impacted by increases in pay-
Claims prevention activities in the form of Tryg Basement Check and
Profit/loss on discontinued business
Tryg Burglary Check, among others, were also important in 2013.
The profit/loss on discontinued business was DKK -4m.
Tryg will continue its claims prevention activities, but also strives
to integrate them in products and benefits programmes. This has
Investment return
already been done in the benefits programmes launched on the
The investment return was DKK 588m (DKK 585m) in 2013. Tryg’s in-
Danish and Norwegian markets in 2013.
vestment portfolio is divided into a match portfolio and a free portfolio.
Expenses
The match portfolio totalled DKK 30bn, and was made up of bonds which
The expense ratio was 15.6 (16.4). This very large improvement was es-
match the insurance provisions so that fluctuations resulting from interest
pecially achieved through the ongoing efficiency programme and should
rate changes are offset to the greatest possible extent.
be seen in the light of the expense ratio target of less than 15 in 2015.
The free portfolio is a diversified portfolio of real estate, equities and
The efficiency programme contributed DKK 82m in 2013, corre-
bonds which reflect the company’s total equity. At 31 December
sponding to an impact on the expense ratio of 0.4 percentage points.
2013, the value of the free portfolio totalled DKK 13bn.
The initiatives were especially targeted at reducing the staff functions,
focusing on simplification and efficiency as well as an assessment of
In general, the division of the investment portfolio entails a low finan-
what Tryg’s core competencies should be, and what should be out-
cial risk and reflects Tryg’s focus on the insurance business.
sourced. The simplification has resulted in fewer management levels,
and the number of managers relative to the number of employees has
The return on the match portfolio was DKK 40m (DKK 75m) after
been significantly reduced. These measures have reduced the number
transferred return of technical provisions.
of managers by 10% since the beginning of the efficiency programme.
The number of employees was reduced from 3,913 to 3,703 in 2013.
The return on the free investment portfolio was DKK 891m
(DKK 1,130m). The return was impacted by price increases for equi-
IT costs account for a considerable share of the total costs, and in
ties, in particular. The equity portfolio, which is a globally diversified
light of the unsatisfactory operations during the year, a process was
portfolio, generated a positive return of 23.0% (13.0%). Bond invest-
initiated to determine what will be outsourced and which partners
ments were impacted by the development in interest rates in Europe
Tryg will use. As a result of this process, Tryg concluded a four-year
and produced a return of 3.3% and, for high-yield and emerging mar-
agreement with TCS (Tata Consultancy Services Limited) on IT ser-
ket bonds in particular, there was a high return in 2013. The composi-
vices in January 2014.
tion of the free portfolio was basically unchanged in 2013.
In light of the lower premium income, it has also been necessary
Other financial income and expenses were negative by DKK 343m,
to continuously streamline cost levels in addition to the above-
particularly due to the write-down of owner-occupied property of
mentioned efficiency programme.
DKK 76m.
18 | Tryg A/S | Annual report 2013 | Tryg’s results
Tax
Tax on profit for the year totalled DKK 620m, or 21% of the profit
before tax. The low tax rate in 2013 is attributable to a high return on
equities, which is exempt from taxation in Norway, and to the reduc-
tion of income tax in the coming years in both Denmark and Norway,
Financial highlights for Q4 2013
• Profit after tax of DKK 565m (DKK 404m).
• Technical result of DKK 546m (DKK 648m).
which has reduced deferred tax. In 2013, Tryg paid DKK 1,017m in
• Combined ratio of 89.1 (87.4).
income tax as well as various payroll taxes totalling DKK 342m,
making the total payment DKK 1,359m in 2013.
Capital position
•
•
Weather claims impacted the combined ratio by 8.8 percentage
points, especially due to storms during the quarter.
Large claims impacted the combined ratio by
1.1 percentage points (4.3).
Tryg’s equity totalled DKK 11,107m (DKK 10,979m) at 31 December
• Expense ratio of 15.4 (16.3).
2013. According to the Danish Financial Supervisory Authority’s
guidelines, an individual solvency requirement of DKK 6,366m
as at year-end 2013 was calculated, based on a capital base of
DKK 9,578m after proposed dividend. Tryg thus has surplus cover
•
Investment return of DKK 154m (DKK 5m).
of DKK 3,212m, corresponding to 50.5%.
division will be included in the finacial reporting from H1 2014.
Results for Q4 2013
Dividend policy
The profit after tax totalled DKK 565m for Q4 2013 (DKK 404m).
According to Tryg’s dividend policy, the aim is to pay out a share of
The technical result was DKK 546m (DKK 648m), and this was
the profit for the year in the range of 60-90% and for the nominal
affected by costs for the storms of approximately DKK 400m.
dividend to be steadily increasing. For 2013, a dividend of DKK 27
The investment return was DKK 154m (DKK 5m), which was
per share is proposed, corresponding to DKK 1,656m, which
mainly due to a high return on equities.
amounts to 70% of the profit for the year.
In 2013, a share buy back of DKK 800m was completed, and
October and December storms, which in combination with the winter
in December, Tryg announced that from 2 January 2014 and
effect impacted the combined ratio by 8.8 (2.2), a low large claims
throughout the year, an additional extraordinary share buy back
level corresponding to 1.1 (4.3) and a higher run-off level by 5.2 (4.7).
of DKK 1,000m will be initiated.
In connection with the October and December storms, Tryg’s claims
organisation rallied to help the many customers who were affected.
The combined ratio was 89.1 (87.4), and this was impacted by the
Events after the statement of financial position date
On 29 January, Tryg published a company announcement concerning
The premium level in local currencies fell in Q4 by 2.4% (0.5%),
sourcing agreements with TCS (Tata Conlsultancy Services Limited)
and exclusive of the impact of profit sharing, the premium growth
on IT operations and Accenture on parts of the IT development. The
was negative by 1.5%.
agreements are entered to ensure more modern and future-orien-
tated IT oprations and as part of Tryg’s target to reduce the expense
ratio to below 15 in 2015.
At the end of January 2014, Tryg changed the portfolio division of
the Commercial and Corporate business areas. The purpose of the new
subdivision is to make Corporate more focused on major customers,
while placing customers with more standardised insurance require-
ments in Commercial. With this change, almost DKK 1bn worth of busi-
ness will be moved from Corporate to Commercial. The new portfolio
Tryg’s results | Annual report 2013 | Tryg A/S |
19
Private
Financial highlights
•
Technical result improved by DKK 102m to DKK 1,335m (DKK
1,233m), despite the storms in Q4.
• Combined ratio improved by 1.7 percentage points to 86 (87.7).
•
Claims ratio, net of ceded business, improved by 1.1 percentage
points to 70.9 (72).
• Gross premiums reduced by 2.2% against growth of 1.5% in 2012.
through efficiency improvements, which more than compensated for
a considerably higher level of weather claims. Very few extraordinary
price increases were implemented in 2013, only to counter infla-
tion. The expense ratio was reduced considerably from 15.7 to 15.1
in 2013, which was achieved concurrently with a falling premium
income.
Premiums
Gross premiums fell by 2.2% against growth of 1.5% in local curren-
cies in 2012. Development in Denmark was negative at 3.8%, and the
• Significant reduction of the expense ratio from 15.7 to 15.1.
premium income was largely unchanged in Norway. The develop-
ment in Denmark is partly attributable to the sound profitability
of partner agreements with profit sharing. Adjusted for the higher
Private encompasses the sale of insurance products to private in-
level of profit sharing, growth in Denmark was negative by 1.1%. In
dividuals in Denmark and Norway. Sales are effected via call centres, the
addition, growth is affected by the increase in Denmark in the sale of
Internet, Tryg’s own agents, franchisees (Norway), interest organisa-
small cars, which involve a lower risk and thus a lower price level due
tions, car dealers, estate agents and Nordea’s branches. The business
to their size and safety features. The development was also affected
area accounts for 48% of the Group’s total premium income.
by the price measures implemented in previous years, which have
Results
brought down the number of customers. The zero growth in Norway
can be ascribed to a combination of several factors: a Norwegian
The technical result was DKK 1,335m (DKK 1,233m), with a com-
economy with solid growth, a retention rate which remains high and
bined ratio of 86 (87.7). The improvement was achieved mainly
a highly competitive market, which led to a fall in sales.
Key figures – Private
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
20
| Tryg A/S | Annual report 2013 | Private
Q4 2012
Q4 2013
2,449
-1,717
-383
2,290
-1,731
-334
349
-27
4
326
40
0.6
70.1
1.1
71.2
15.6
86.8
88.4
-1.6
0.6
2.5
225
57
4
286
72
-1.7
75.6
-2.5
73.1
14.6
87.7
90.8
-3.1
0.4
8.0
2012
9,733
-7,084
-1,524
1,125
81
27
1,233
326
1.5
72.8
-0.8
72.0
15.7
87.7
91.0
-3.3
0.1
2.4
2013
9,366
-6,596
-1,418
1,352
-43
26
1,335
310
-2.2
70.4
0.5
70.9
15.1
86.0
89.3
-3.3
0.1
3.2
Price differentiation
and new customer
benefits were the main
focus of 2013.
Lars Bonde, Group Executive
Vice President, Private
Tryg’s retention rate remained high, which is supported by customer
surveys from EPSI for 2013 which show that customer satisfaction
in Tryg, in both Denmark and Norway, increased. Private has focused
on introducing new price-differentiated products, and introduced
eight new products in 2013. The combination of such products and
Financial highlights for Q4 2013
• Technical result of DKK 286m (DKK 326m).
a targeted selection of customers led to a considerably higher rate of
• Combined ratio of 87.7 (86.8).
sales than for the old products.
•
The quarter was characterised by claims resulting from storms
in October and December.
Claims
• Expense ratio of 14.6 (15.6).
The gross claims ratio amounted to 70.4 (72.8), and the claims ratio,
net of ceded business, was 70.9 (72.0). The improvement is attribut-
able to the efficiency programme implemented, which led to lower
claims costs despite a higher level of weather claims in connection
Results for Q4 2013
with the storms which hit Denmark in October and December.
The technical result totalled DKK 286m (DKK 326m) and was
Private focused strongly on providing advice to and helping customers
mainly affected by the October and December storms in Denmark.
in connection with the 32,000 claims.
In addition, the run-off gains were at a high level of 3.1 (1.6), and, all
Run-off gains/losses affected the combined ratio positively by
programme. The combined ratio was 87.7 (86.8) in Q4 2013. Gross
in all, the results were positively affected by the ongoing efficiency
3.3 percentage points (3.3).
Expenses
premiums fell by 1.7% in Q4, representing a lower reduction than
for the full year. The retention rate in Denmark was 89.2 (90.2),
which was still high, while the retention rate in Norway was 87.2
The expense ratio was 15.1 (15.7). This considerable reduction was
(86.8). The gross claims ratio was 75.6 (70.1) and the claims ratio,
achieved through a reduction of staff costs as part of the efficiency
net of ceded business, was 73.1 (71.2). The expense ratio was
programme as well as through continued optimisation of the distri-
14.6 (15.6). The considerable fall is due to the ongoing efficiency
bution costs, in particular. The number of employees was increased
programme, but was also affected by the usual fluctuations in costs
from 887 in 2012 to 923 in 2013.
between the quarters.
Customer retention – Private
%
94
92
90
88
86
84
82
2008
2009
2010
2011
2012
2013
Denmark
Norway
Private | Annual report 2013 | Tryg A/S |
21
Commercial
Financial highlights
• Good technical result of DKK 439m (DKK 604m).
• Combined ratio of 87.9 (83.7).
•
The gross premiums were reduced by 3.2% (2.0%) as a
result of profitability measures and the economic situation
for businesses in Denmark.
• Significant reduction in the expense ratio to 19.3 (20.3).
initiative to ensure a profitable and sustainable business. The
result was that the segment achieved satisfactory results both in
2012 and in 2013. The higher combined ratio in 2013 is due to
the storms in Q4.
The technical result was DKK 439m (DKK 604m), with a combined
ratio of 87.9 (83.7). These results reflect that Commercial has
reached a satisfactory level, contributing positively to the Group’s
overall profit. This was achieved through efficiency improvements
and the implemented profitability and segmentation measures.
Commercial also developed price-differentiated products in 2013,
Commercial encompasses the sale of insurance products to small
and it has been particularly important to introduce a new workers’
and medium-sized businesses in Denmark and Norway. Sales are
compensation product which reflects the risk far better than before.
effected by Tryg’s own sales force, franchisees (Norway), customer
This resulted in a higher rate of sales for this product.
centres as well as through group agreements. The business area
accounts for 18% of the Group’s total premium income.
Cost reductions have been vital to improve the competitive situation
Results
and to contribute to strengthening results. Against this background,
it is very satisfactory that the expense ratio was reduced by 1 per-
The results of Commercial have historically been unsatisfactory,
centage point to 19.3, and that this was achieved at the same time
which spurred the decision to define the segment as a strategic
as the premium level was reduced.
Key figures – Commercial
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
22
| Tryg A/S | Annual report 2013 | Commercial
Q4 2012
Q4 2013
906
-542
-181
183
-25
-2
156
29
-3.3
59.8
2.8
62.6
20.0
82.6
85.8
-3.2
5.0
4.0
862
-691
-158
13
54
3
70
30
-1.5
80.2
-6.3
73.9
18.3
92.2
95.7
-3.5
0.2
17.2
2012
3,687
-2,372
-748
567
32
5
604
212
-2.0
64.3
-0.9
63.4
20.3
83.7
89.4
-5.7
1.5
1.9
2013
3,528
-2,438
-680
410
19
10
439
176
-3.2
69.1
-0.5
68.6
19.3
87.9
92.9
-5.0
2.2
5.2
With yet another strong
year, Commercial has
built a solid foundation for
continued customer focus.
Trond Bøe Svestad , Group Executive
Vice President, Commercial
Premiums
A combined fall in premium income of 3.2% (2.0%) was realised,
when measured in local currencies. The fall was based on negative
growth in Denmark of -4.7% and in Norway of -0.3%. The negative
development in Denmark was expected due to selective measures
taken against unprofitable customers and segments to improve
profitability. The negative development in Norway is also attribut-
able to profitability measures, but the very competitive market also
played a part. In the last half of the year, specialisation of customer
Financial highlights for Q4 2013
• Technical result of DKK 70m (DKK 156m).
• Combined ratio of 92.2 (82.6).
•
Claims ratio, net of ceded business, of 73.9 (62.6) characterised
by a high level of weather claims, mainly due to the October and
December storms in Denmark.
sales and service was introduced. This has, among other things,
• Run-off gains of 3.5 (3.2).
involved increased automation, the development of sales channels
• Expense ratio of 18.3 (20.0).
and the optimisation of the booking of meetings, which is expected
to contribute positively in future.
Results for Q4 2013
Claims
A technical result of DKK 70m (DKK 156m) was posted, and was
The gross claims ratio amounted to 69.1 (64.3), and the claims ratio,
affected by the storms in Denmark, in particular, and a high level of
net of ceded business, was 68.6 (63.4). The low level is attributable
run-off gains.
to the profitability measures and the efficiency programme. Com-
mercial was also affected by the October and December storms, and
The combined ratio was 92.2 (82.6), and was affected by the above-
as the level of medium-sized claims was also higher, the claims ratio,
mentioned storm claims which caused weather claims to have an
net of ceded business, was slightly higher than in 2012. Extensive ef-
effect of 17.2 (4.0). Against this background, the combined ratio
forts were also directed at consulting and helping the many affected
was satisfactory.
commercial customers.
At 2.2 (1.5), the large claims level was slightly higher than the
ment seen in 2013. The retention rate in Denmark was 86.1 (84.6),
previous year. Run-off gains stood at 5.0 (5.7), and the high level is
while it was 87.6 (87.4) in Norway. The gross claims ratio was 80.2
mainly attributable to run-off gains within workers’ compensation
(59.8), the claims ratio, net of ceded business, was 73.9 (62.6), and
The gross premiums fell by 1.5% (3.3%) in Q4, halting the develop-
insurance.
Expenses
the expense ratio was 18.3 (20.0).
The expense ratio was 19.3 (20.3), which was a satisfactory develop-
ment achieved despite the reduction in premium income. The lower
Customer retention – Commercial
cost level is attributable to the efficiency programme and the above-
mentioned structural measures in relation to distribution. Commer-
cial will continue to focus on cost reduction in the coming years, as
this is important to strengthen competitiveness and results.
%
92
90
88
86
84
82
2008
2009
2010
2011
2012
2013
Denmark
Norway
Commercial | Annual report 2013 | Tryg A/S |
23
Corporate
Financial highlights
• Technical result of DKK 573m (DKK 650m).
• Combined ratio of 88.9 (87.7).
•
Gross premiums reduced by 2.8% (2.0%) primarily due
to profitability measures.
• Expense ratio of 12.5 (12.3).
more personal business, in particular, the capital requirement has in-
creased, for which reason Corporate should have a lower combined
ratio than the other business areas.
The technical result for 2013 was DKK 573m (DKK 650m), with a
combined ratio of 88.9 (87.7). These results are not satisfactory for
certain areas when considering the capital requirement. Because of
this, individual measures have been implemented for unprofitable
customers in Denmark, Norway and Sweden.
Premiums
Corporate sells insurance products to corporate customers under the
All in all, gross premiums fell by 2.8% (2.0%) in local currencies. The
‘Tryg’ and ‘Tryg Garanti’ brands in Denmark and Norway and under the
negative development was a combination of a negative development
‘Moderna’ brand in Sweden. Sales are effected both via Tryg’s own sales
of 2.8% in Denmark and 5.3% in Norway, and positive growth in
force and via insurance brokers. Moreover, customers with international
Sweden of 9%. The development in both Denmark and Norway can
insurance needs are served by Corporate through its cooperation with
be ascribed to price increases, adjustments to the customer portfolio
the AXA Group. Tryg Garanti is also included in Corporate results. The
and lower sales. A characteristic of the corporate market is that a few
business area accounts for 26% of the Group’s total premium income.
customers can have a significant effect on premium development.
Results
New players will often compete on price, which means that premium
income will fluctuate more here than in the other business areas.
The Corporate business area is focused on generating results which
Throughout the year, Corporate continued its work on developing
are satisfactory relative to the capital attributable to the area. Due to
customer benefits targeted at the various customer groups. The
Key figures – Corporate
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
24
| Tryg A/S | Annual report 2013 | Corporate
Q4 2012
Q4 2013
1,330
-1,035
-162
133
-9
-3
121
169
-1.4
77.8
0.7
78.5
12.2
90.7
103.4
-12.7
11.8
0.8
1,243
-875
-159
209
-68
5
146
123
-1.9
70.4
5.5
75.9
12.8
88.7
98.6
-9.9
3.1
6.3
2012
5,258
-3,929
-648
681
-37
6
650
506
-2.0
74.7
0.7
75.4
12.3
87.7
97.3
-9.6
7.6
0.6
2013
5,041
-4,201
-630
210
348
15
573
464
-2.8
83.3
-6.9
76.4
12.5
88.9
98.1
-9.2
6.3
2.3
A future model for
corporate customer service
was an important focus
area for Corporate.
Truls Holm Olsen, Group Executive
Vice President, Corporate
requirements vary considerably between the different customers,
for example between the very big industrial groups and the medium-
sized businesses that are served by brokers.
Financial highlights for Q4 2013
Claims
• Technical result of DKK 146m (DKK 121m).
The gross claims ratio amounted to 83.3 (74.7), and the claims ratio,
• Combined ratio of 88.7 (90.7).
net of ceded business, was 76.4 (75.4). Gross claims were affected
by a large claim of DKK 0.7bn in Tryg Garanti, related to an insolvent
•
Gross premiums reduced by 1.9% (1.4%) primarily due
to profitability measures.
contractor, which after reinsurance affected the claims by DKK 30m.
• Expense ratio of 12.8 (12.2).
Adjusted for run-off level, weather and large claims, the claims ratio,
net of ceded business, was at the same level as in 2012. The develop-
ment in the Swedish part of the Corporate segment, in particular,
Results for Q4 2013
was not quite satisfactory, and measures were taken to improve
The technical result was DKK 146m (DKK 121m), which was satis-
profitability. The action taken included pruning of customers and
factory in light of the high level of weather claims, in particular. The
measures across the portfolio. Run-off gains/losses impacted the
combined ratio was 88.7 (90.7). The lower level can be attributed to
combined ratio positively by 9.2 percentage points.
a positive development in claims. The gross premiums fell by 1.9%
Expenses
in Q4, which was expected considering the development in the rest
of the year. The claims ratio was 70.4 (77.8), and the claims ratio, net
The expense ratio was 12.5 (12.3) in 2013, which is satisfactory in
of ceded business, was 75.9 (78.5), despite the above-mentioned
light of the reduced premium levels. The reduction was achieved
higher level of weather claims. The expense ratio was 12.8 (12.2),
through the ongoing efficiency programme as well as through a re-
which was slightly higher, due, in particular, to a reduction in pre-
duction in cost levels effected to adapt to the lower business volume.
mium income.
Corporate | Annual report 2013 | Tryg A/S |
25
Sweden
Financial highlights
plemented in 2013, and with the results achieved in recent years,
the profitability target has been fulfilled.
•
Technical result improved by DKK 47m to DKK 149m.
•
•
Combined ratio improved by 4.1 percentage points
to 91.2 (95.3).
Gross premiums reduced by 4.9% (0.7%) as a result of profit-
ability measures and termination of Nordea bank distribution.
A profit of DKK 149m (DKK 102m) was posted. This has been
achieved through improved profitability within the broad private
market. The improvement was also helped by reducing the bank insur-
ance business volume, where profitability has been unsatisfactory.
The niche areas comprising leisure boats, motorcycles and product
insurance in connection with electronics purchases continue to be
very profitable.
Sweden comprises the sale of insurance products to private
Premiums
customers under the ‘Moderna’ brand. Sales are effected via Tryg’s
Premium income was reduced by 4.9% against growth of 0.7% in
own salespeople, call centres and the Internet. The business area
2012. The negative development is due to Tryg’s focus on profitability
accounts for 8% of the Group’s total premium income.
and the considerable price increases in recent years within the Private
segment, just as the number of partner agreements has been signifi-
Results
cantly reduced to ensure profitability.
In recent years, improving earnings in the business area in Sweden
has been an important strategic initiative to improve Tryg’s results.
In addition, as expected, premium income is affected by the termin-
Key initiatives have included pricing improvements and integrating
ation of the distribution agreement with Nordea. Instead an agreement
the original bank insurance business and the acquired Moderna.
was concluded in 2013 with Danske Bank in Sweden to supplement
Significant structural measures in relation to distribution were im-
the existing agreement with ICA Bank.
Key figures – Sweden
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Weather claims, net of reinsurance (%)
26
| Tryg A/S | Annual report 2013 | Sweden
Q4 2012
Q4 2013
399
-268
-84
47
3
4
54
-1
0.9
67.2
-0.8
66.4
21.1
87.5
87.2
0.3
1.3
348
-250
-67
31
10
3
44
22
-10.6
71.8
-2.9
68.9
19.3
88.2
94.5
-6.3
2.3
2012
1,654
-1,267
-306
81
-3
24
102
-29
0.7
76.6
0.2
76.8
18.5
95.3
93.5
1.8
1.2
2013
1,587
-1,178
-280
129
9
11
149
20
-4.9
74.2
-0.6
73.6
17.6
91.2
92.5
-1.3
1.4
Structural changes in
relation to distribution
were in focus in 2013.
Per Fornander
Group Executive Vice President,
Sweden
Claims
The gross claims ratio amounted to 74.2 (76.6), and the claims ratio,
net of ceded business, was 73.6 (76.8). This improvement is the
result of price increases and a reduction of unprofitable customer
groups. In addition, improved tariffs within both motor and house
insurance and new customer benefits have had a positive effect.
Financial highlights for Q4 2013
•
Technical result of DKK 44m (DKK 54m).
• Combined ratio of 88.2 (87.5).
The claims ratio is otherwise positively affected by major efficiency
• Expense ratio of 19.3 (21.1).
improvements in claims handling, and the fact that a very large pro-
portion of claims are being registered and finalised on the same day,
which, from experience, results in high customer satisfaction and a
positive effect on the claims level.
Results for Q4 2013
Expenses
The technical result was DKK 44m (DKK 54m), and the combined
ratio was 88.2 (87.5 ), which was very satisfactory. Gross premiums
An improved expense ratio of 17.6 (18.5) was achieved in 2013,
fell by 10.6% in Q4, a high level which, among other things, resulted
which is very satisfactory and was achieved concurrently with
from the termination of the bank distribution cooperation with
negative premium growth. To ensure further growth, Moderna has
Nordea.
implemented a number of structural initiatives, which has resulted
in cost level improvements and will contribute further in the coming
The claims ratio was 71.8 (67.2), and the claims ratio, net of ceded
years. The initiatives have, among other things, included a central-
business, was 68.9 (66.4).
isation of functions within distribution, claims handling and staff
services. The customer service and telemarketing functions were
The expense ratio was 19.3 (21.1), which was satisfactory in light of
gathered in Malmö, and a similar function was closed down in Luleå
the falling premium level.
in northern Sweden. In the course of 2013, Moderna converted to
using only one IT system, which will contribute to further cost
reductions.
Sweden | Annual report 2013 | Tryg A/S |
27
Investment activities
Financial highlights
•
Investment return of DKK 588m (DKK 585m).
• Return on match portfolio after transfer to insurance of
DKK 40m (DKK 75m).
• Gross return on free portfolio of DKK 891m (DKK 1,130m).
At 31 December 2013, the investment portfolio totalled DKK 43.0bn.
It is divided into a match portfolio and a free portfolio of DKK 30bn
and DKK 13bn, respectively. The sole purpose of the match portfolio
is to hedge fluctuations in the discounting of insurance provisions and
to reduce the interest risk attaching to the claims provisions. The free
investment portfolio generally corresponds to equity and is invested
in bonds, property and equities.
• Write-down of owner-occupied property of DKK 76m.
Investment return
2013 was in many ways the year when optimism returned, and the
equity markets developed positively. In 2013, Tryg’s total investment
Tryg mainly invests in bonds, equities and property. The investment
portfolio yielded a gross return of DKK 1,116m (DKK 2,205m). The
activities are regulated by legislation and by the policies and
return for the year totalled 2.5% of the average invested capital.
guidelines adopted and issued by the Supervisory Board.
The insurance activities provide the basis for the Tryg Group being
equity markets. The same was true for bonds, where credit spreads
able to generate good and stable earnings, while the purpose of
developed favourably, not least for high-yield bonds.
The satisfactory results were achieved in particular due to positive
the investment business is to support the insurance business.
This has been adopted in the strategy for the investment area,
2013 was also impacted by concerns relating to the American monetary
where the objective is to minimise the effect of interest rate changes
and fiscal policy. It was characterised by speculations concerning the
and to drive the investments with as low a risk as possible and with
Federal Reserve’s possible gradual tapering of bond purchases, and the
as low a capital requirement as possible.
politicians’ disagreements on the US budget and the so-called debt ceiling.
Key figures for the year – Investments
DKKm
Bonds, cash deposits etc. a)
Equities
Real estate
Total
Value adjustments, changed discount rate
Transferred to insurance technical interest
Total investment return before other financial items
Other financial income and expenses, investment b)
Total investment return
Other financial income and expenses, non-investment b)
Investment return
Investment assets
31.12.13
31.12.12
40,802
2,444
2,081
38,339
2,656
2,022
45,327
43,017
Free
247
564
80
891
891
Return
2012
Total
Return 2013
Match
225
225
298
-483
40
1,731
269
205
2,205
-475
-525
1,205
-70
1,135
-550
585
472
564
80
1,116
298
-483
931
-40
891
-303
588
a) Bonds, cash deposits etc. at 31 December 2012 has been adjusted. Bonds from the Finnish branch have been removed.
b) The item comprises interest on operating assets and bank debt, exchange rate adjustments of insurance items, writedown of owner-occupied property
and costs of investment activities.
28
| Tryg A/S | Annual report 2013 | Investment activities
Tryg achieved a satisfactory free portfolio return of DKK 891m.
The return on the match portfolio must thus cover price adjustments of
To this should be added a mismatch of DKK 40m, as described
the claims provisions and the insurance technical interest.
below. All in all, this yielded a gross return after transfer to technical
interest of DKK 931m.
Tryg’s aim of reducing deviations as much as possible yielded an overall
positive mismatch of DKK 40m, although the year was characterised
The value of Tryg’s owner-occupied property in Ballerup was
by major interest rate fluctuations.
adjusted to the market rent level through a write-down of DKK 76m,
which affected other financial expenses and income negatively.
For example, in May, the 10-year Danish swap rate fell to a historically
low level of 1.6%, subsequently increasing to a level of 2.6% at the
After transfer of insurance technical interest to insurance and other
beginning of September. At the end of 2013, the interest rate had fallen
financial expenses and income, the total investment return totalled
again to 2.4%. The European interest rates fluctuated less, and, all in
DKK 588m (DKK 585m).
all, the local hedging in Denmark, Norway and Sweden was satisfactory
with a positive mismatch of DKK 40m. This corresponded to a deviation
The match portfolio
of approximately 0.2% of the value of the match portfolio.
The interest rate risk for the claims provisions is hedged by Danish,
Norwegian and Swedish interest rate swaps. Thereby Tryg avoids
The match portfolio totalled DKK 30bn at the end of the year.
fluctuations in the fair value of its long-term liabilities in the respec-
tive countries. Fluctuations in swap rates, which are sometimes
The free investment portfolio
greater or smaller than the Danish Financial Supervisory Authority’s
The free investment portfolio generated a total gross return of
rates, may cause a mismatch to arise. In addition, a mismatch may
DKK 891m, corresponding to 7.5% of the average invested capital.
arise from other risks which are not interest rate risks and which
The free portfolio amounted to approximately DKK 13bn at the end of
cannot be hedged accurately.
2013, up DKK 2.2bn (DKK 10.8bn).
Key figures for investments Q4
DKKm
Bonds, cash deposits etc. a)
Equities
Real estate
Total
Value adjustments, changed discount rate
Transferred to insurance technical interest
Total investment return before other financial items
Other financial income and expenses, investment b)
Total investment return
Other financial income and expenses, non-investment b)
Investment return
Return
Q4
2012
Return Q4 2013
Total
Match
Investment
assets
31.12.13
Free
38,339
2,656
2,022
43,017
140
140
18
-120
38
111
163
9
283
283
374
67
43
484
-104
-105
275
-20
255
-250
5
251
163
9
423
18
-120
321
-14
307
-153
154
a) Bonds, cash deposits etc. at 31 December 2012 has been adjusted. Bonds from the Finnish branch have been removed.
b) The item comprises interest on operating assets and bank debt, exchange rate adjustments of insurance items, writedown of owner-occupied property
and costs of investment activities.
Investment activities | Annual report 2013 | Tryg A/S |
29
In 2013, investor confidence largely returned, and the positive devel-
worry about investments in the developing countries, in particular,
opment on the equity markets, where the world index only developed
and also in high-yield bonds. All in all, the bonds in the free portfolio
negatively in two of the 12 months, provided a positive return on Tryg’s
yielded a return of 3.3%.
equity portfolio of DKK 564m, corresponding to 23.2%. Tryg’s equity
portfolio is globally diversified, and the Japanese equites in particular,
The real estate portfolio, comprising Danish and Norwegian invest-
but also American and Nordic equities, contributed positively to the
ment properties, generated a return of DKK 80m, which was below
return on Tryg’s equity portfolio. By comparison, the Japanese Nikkei
the expected level of 6% due to property write-downs.
index yielded a return of approximately 57%, but also American and
Nordic equities yielded a return of more than 20%.
Other financial income and expenses
Other financial income and expenses, which are included in the
The exposure to credit bonds has also contributed satisfactorily to
investment return, were negative at DKK 343m in total (DKK 620m).
the return on the free bond portfolio of DKK 247m. This has been
This item comprises a number of elements, including the expense of
achieved in spite of uncertainty regarding the US Federal Reserve’s
hedging the currency risk of Tryg’s own equity in Sweden and Norway.
gradual tapering of bond purchases in Q2, which caused investors to
Another element is related to the expenses of DKK 89m due to Tryg’s
subordinate loans. In addition, Tryg effected a write-down on its owner-
occupied property of DKK 76m.
Total investment portfolio
7
5
3
3
9
Per cent
76
Mortgage bonds
High-yield bonds
Government bonds
Real estate
Equities
Bank deposits
Match portfolio
Free investment portfolio
6
Per cent
94
Mortgage bonds
Bank deposits
17
36
Per cent
22
15
9
1
Mortgage bonds
High-yield bonds
Government bonds
Real estate
Equities
Bank deposits
30
| Tryg A/S | Annual report 2013 | Investment activities
Financial highlights for Q4 2013
•
Investment return of DKK 154m (DKK 5m).
• Return on match portfolio of DKK 38m (DKK 19m).
• Return on free portfolio of DKK 283m (DKK 256m).
• Write-down of owner-occupied property of DKK 76m.
Investment activities in Q4 2013
In Q4, Tryg’s investment portfolio yielded a gross return of DKK 423m,
where the bond portfolio contributed a return of DKK 251m, and the
equity portfolio DKK 163m. The return on the real estate portfolio was
DKK 9m. After transfers to insurance technical interest, the net return
totalled DKK 321m The match portfolio yielded a positive mismatch
of DKK 38m, while the free portfolio yielded a return of DKK 283m.
In Q4, other financial income and expenses were impacted by
DKK 76m relating to the above-mentioned write-down of Tryg’s
owner-occupied property. After other financial income and
expenses totalling DKK 167m, the total return on Tryg’s investment
activities was DKK 154m in Q4.
Investment activities | Annual report 2013 | Tryg A/S |
31
Tryg ID I Identity theft is one of the fastest-growing crimes in the world and is also a
growing problem in Denmark. Tryg offers free access to identity protection for our
Tryg Plus customers. The identity protection service helps customers reduce the risk
of identity theft and handle cases of suspected or confirmed identity theft.
Are you receiving unexpected bills? Or are you suddenly
Investigating identity theft and getting your life back is
no longer receiving post? Then you may be the victim of
an overwhelming and time-consuming task. We therefore
identity theft. Each year, more than 70,000 Danes are
advise on ways of minimising the risk of theft, and help
affected by identity theft.
with all the practicalities in cases of misuse of personal
information. In this way, we hope to provide more peace
We hear from increasing numbers of customers who are
of mind for our customers.
concerned about the issue.
Capital and risk management
Read more about Tryg’s
risk management and risk
types in Note 1 on page 67.
Credit ratings
At 31 December 2013
Tryg Forsikring A/S
Tryg Garantiforsikring A/S
Standard & Poor’s
‘A-’/stable
‘A-’/stable
The main concept of insurance is that of spreading risk. By pooling
among other things, of a calculation of the capital requirements, and
risks from a large number of customers, an insurance company’s
against this background an annual review is made of the company’s
risks are spread more evenly and are also more predictable, thereby
risk appetite and limits.
redu cing the capital required to cover negative fluctuations. The
assessment and management of the company’s aggregate risk and
To support the company’s risk management, the Supervisory Board
the associated capital requirements therefore constitute a central
has appointed a Risk Committee consisting of representatives of the
element in the management of an insurance company.
Supervisory Board and the day-to-day executive management. The
Risk Committee monitors Tryg’s risk scenario at all times.
Risk profile and appetite
Tryg’s Supervisory Board defines the company’s risk appetite and
Capital requirement and management
thereby also the capital which must be available to cover any losses.
Capital management is based on Tryg’s internal capital model which
The risk appetite is described in the company’s policies via exposure
is based on the risk profile, and which thus takes account of the
limits for different types of risk. Examples of this is the management of
composition of the insurance portfolio, the geographical spread,
the investment risk via exposure limits within different asset classes
the provision profile, the reinsurance programme, the investment
(equities, property etc.) and the management of the total interest risk
portfolio and Tryg’s profitability in general. The model calculates the
via the company’s match strategy. This prescribes that the company’s
statutory capital requirement (Individual Solvency Requirement) with
investment assets corresponding to the technical provisions must be
a 99.5% certainty level, meaning that Tryg would statistically be able
invested in interest-related assets, the interest rate sensitivity of which
to honour claims in 199 out of 200 years.
precisely matches and thereby hedges the interest rate sensitivity of
the discounted provisions.
At the end of 2013, the Individual Solvency Requirement totalled
DKK 6,366m (DKK 6,410m). The capital required to meet the Indi-
The fundamental insurance risk is managed via limits for the size of
vidual Solvency Requirement is called the capital base. At the end of
single large commitments and via the use of reinsurance, thereby
2013, the capital base totalled DKK 9,578m after dividend, corres-
limiting the maximum cost of large claims, expenses due to a storm,
ponding to a surplus cover of DKK 3,212m.
cloudburst or another event which affects a number of insurances
simultaneously. Moreover, the insurance risk is managed through
The Supervisory Board regularly assesses the need for capital adjust-
geographical limitations and by refraining from offering certain types
ments. Any adjustments are effected once a year in connection with
of insurance such as aviation and marine insurance. Operating within
the distribution of dividend. Extraordinary adjustments are made
these limits, the company’s risk will depend on the decisions made by
through share buy backs. The assessments are made in the com-
the company as well as the development in the underlying risk factors
pany’s capital plan, in which the the Individual Solvency requirement
such as share prices, the price of reinsurance, claims frequencies etc.
is projected based on Tryg’s budgets, seeking to realise a number of
the identified risks through various scenarios.
Good risk management requires the ongoing identification and quanti-
fication of these risk factors, subsequent reduction of undesired risks
In the light of the expected satisfactory results for 2013 and the solid
and reporting of the whole risk scenario. The quantification consists,
capital position, a decision was made in December 2013 to implement
34 | Tryg A/S | Annual report 2013 | Capital and risk management
Download
dividend and capital
management brief
an extraordinary share buy back totalling DKK 1bn. The buy back
panies (Bekendtgørelse om solvens og driftsplaner for forsikringssel-
will take place between 2 January 2014 and the end of the year.
skaber) with effect from 1 January 2014. The executive order contains
Moreover, at the annual general meeting to be held on 3 April 2014,
provisions for the uniform calculation of the solvency requirement
the Supervisory Board will propose that dividend of DKK 27 per
based on either a predefined standard formula or an internal model.
share be paid, corresponding to the distribution of DKK 1,656m.
Tryg’s capital model is based on the Solvency II principles, and the re-
In conjunction with the capital plan, a contingency plan has been pre-
the company’s Individual Solvency Requirement. The executive order
pared which describes specific measures which may be introduced
contains a transitional provision on the calculation of the capital base
in the short term, should the company’s desired capital position be
which results in a moderate increase in Tryg’s solvency surplus cover.
vised executive order therefore does not noticeably impact the size of
threatened.
Capital structure
The executive order also contains requirements for a specific risk assess-
ment, the form and scope of which are very similar to the assessment
Tryg’s capital base consists of equity and subordinate loan capital.
known as the Own Risk and Solvency Assessment (ORSA) under the
The relative sizes of these two categories are subject to ongoing
Solvency II rules. Tryg has for several years prepared ORSA reports, which
assessment with a view to maintaining an optimum structure which
assess the general risk profile and propose improvements. In 2013, such
takes account of the target return on equity, the capital costs for the
a risk assessment was also carried out and considered by the company’s
two categories and the desired financial flexibility.
day-to-day management and Supervisory Board, which are consequently
entering 2014 with a fully updated view of Tryg’s risk profile.
Read
Based on such an assessment, in 2013 Tryg repaid a subordinate
more about Tryg’s risk management under Note 1 on page 67.
loan from TryghedsGruppen of EUR 65m, replacing it with a new sub-
ordinate loan of NOK 800m. Unlike the old loan, the new sub ordinate
Standard & Poor’s
loan is for a perpetual term, which therefore means that the loan
Tryg has achieved an ‘A-’ rating from Standard & Poor’s and aims to
is included in the capital base in full, which thus increased by NOK
maintain this rating.
800m. Against this background, in 2013 an extraordinary distribution
was made through the acquisition of own shares for an amount of
DKK 800m. All in all, the distribution and the new sub ordinate loan
did not change the size of the capital base, but the equity share was
reduced, which in isolation makes a positive contribution to the future
Capital
return on equity, for the benefit of Tryg’s shareholders. Moreover,
the new subordinate loan is expected to qualify for inclusion as Tier
2 capital under the new capital solvency rules (Solvency II).
Read
more about Tryg’s subordinate loan under Note 2 on page 79.
At the end of 2013, Tryg’s subordinate loan capital corresponded to
16% of equity, with total interest expenses of DKK 89m.
New individual solvency and Solvency II
The forthcoming joint European rules providing uniform protection
for policyholders (Solvency II) are now expected to take effect on 1
January 2016. The implementation date has been postponed several
DKKm
12,000
10,000
8,000
6,000
4,000
2,000
0
Individual Solvency
Solvency II a)
Capital requirement
Buffer
times, and the Danish Financial Supervisory Authority has therefore
decided to implement the most important elements via the revised
Executive Order on Solvency and Operating Plans for Insurance Com-
a) Tryg’s expectations as regards the future Solvency II standard model are
based on the Danish Financial Supervisory Authority’s revised Executive
Order on Solvency and Operating Plans for Insurance Companies, which
came into force on 1 January 2014.
Capital and risk management | Annual report 2013 | Tryg A/S |
35
Shareholder information
‘Investor Relations’ (IR) is responsible for communication with the
equity market. It is important for Tryg that investors, shareholders,
Financial calendar 2014
analysts and other stakeholders are able to form a true and fair view
of developments, including the financial results. For this reason, we
emphasise openness and transparency to ensure that stakeholder
information requirements are accommodated best possible.
3 April 2014
4 April 2014
9 April 2014
Annual general meeting
Tryg shares trade ex-dividend
Payment of dividend
IR is also responsible for contact to rating agencies and bond investors.
10 April 2014
Interim report for Q1 2014
Tryg’s IR policy is available at tryg.com > Investor.
10 July 2014
Interim report for H1 2014
10 October 2014
Interim report for Q1-Q3 2014
Following the publication of interim reports, IR heads out on a road-
show with Tryg’s Executive Management to discuss the company’s
development with investors and analysts. In addition, Tryg participates
accounted for 41.8% of the turnover of the Tryg share. In addition,
in a number of financial conferences. In 2013, we held investor meet-
13% of trading in 2013 was carried out on alternative exchanges
ings in the financial centres in Europe, the USA and Canada, and we
(MTF trades), led by BATS Chi-X as the largest alternative exchange.
visited Asia twice. These were the first investor meetings in Asia and
Nasdaq OMX is still the most important trading platform for the Tryg
were arranged following increased interest in the Tryg share. The Tryg
share, where most of the trading takes place, and where the price of
share is followed closely by 22 analysts, who continuously update
the Tryg share is determined. Other trading platforms such as OTC
their expectations for and views on the share.
See a list of analysts
(over-the-counter) and dark pools represent a large share of the re-
and their recommendations of Tryg at tryg.com > Investor.
maining trade, but it takes place outside of the established exchanges
and MTFs and thus does not have a direct impact on the price of
The Tryg share
and the liquidity in the share.
The Tryg share is listed on Nasdaq OMX Copenhagen and is covered
by the OMX C20 index (OMX C20 CAP), comprising the 20 most
In 2013, a share buy back programme totalling DKK 800m, correspond-
traded shares on the exchange. In accordance with the recommenda-
ing to 1.6 million shares, was completed. This had a positive impact on
tions issued by Nasdaq OMX Copenhagen, Tryg does not comment
the turnover of the Tryg share. The total turnover (including OTC trades)
on financial results or outlook two weeks before the publication of
of the share increased from 34 million shares in 2012 to 43 million
interim reports and four weeks before the publication of the annual
shares in 2013.
report. All financial information is published on tryg.com in Danish and
English. It is possible to order annual reports and subscribe for news
Share capital and ownership
and RSS feeds on the website. It is also possible to follow @Tryg IR on
Tryg has a total share capital of DKK 1,532,902,575, comprising a
Twitter.
The company announcements issued in 2013 are avail-
single share class (61,316,103 shares with a nominal value of DKK 25),
able at tryg.com > Investor > News.
and all shares rank pari passu. The principal shareholder, Trygheds-
The Tryg share started the year at a price of 426.50 and ended 2013
only shareholder owning more than 5% of the company’s shares.
at 524.50. Including a dividend of DKK 26, the share rose by 29.1%
TryghedsGruppen invests in peace of mind and healthcare providers
during 2013 (23% excluding dividend). By comparison, the OMX C20
in the Nordic region, and supports non-profit-making activities.
Gruppen, smba, Denmark, owns 60% of the issued shares and is the
CAP index rose by 24.1% in 2013. The index of insurance shares in
Europe, the Euro STOXX Insurance Index, rose by 28.9% in 2013. The
At the end of 2013, there was a free float of 40% of the shares, divided
positive development of the Tryg share in 2013 was affected by the
among 25,951 registered shareholders. The 200 largest shareholders
development in results, driven by the improvements resulting from
owned 88% of the shares. At the end of 2013, and after the share buy
Tryg’s efficiency programme.
back programme, Tryg held 1,942,142 own shares, corresponding to
3.2% of the share capital. At Tryg’s general meeting on 3 April 2014,
Nasdaq OMX in Copenhagen is still the primary exchange where most
the Supervisory Board intends to propose to nullify the 1.6 million
of the trading in the Tryg share takes place. In 2013, Nasdaq OMX
shares that have been repurchased.
36
| Tryg A/S | Annual report 2013 | Shareholder information
Distribution
DKKm
Dividend
Dividend per share (DKK)
Payout ratio
Extraordinary share buy back
2009
991
15.5
49%
799
2010
256
4
43%
0
2011
400
6.52
35 %
0
2012
1,594
26
72 %
800
2013a)
1,656
27
70 %
1,000
a) Dividend proposed by the Supervisory Board for adoption by the annual general meeting.
Dividend policy
Based on Tryg’s dividend policy and the satisfactory 2013 results, the
Tryg’s dividend policy aims to achieve a higher degree of stability in the
Supervisory Board will propose a dividend of DKK 1,656m, corres-
annual distribution. The dividend policy reflects our expectations of
ponding to DKK 27 per share, at the 2014 annual general meeting.
high earnings in the insurance business and a low risk profile within the
This corresponds to payment of 70% of the profit after tax. In addition,
investment activities, as well as the requirement to have a solid capital
in December 2013, it was decided to initiate an extraordinary share
position based on Tryg’s internal capital model (Individual Solvency).
buy back of DKK 1bn starting on 2 January 2014. This decision was
Tryg’s internal capital model provides the framework for the company’s
made against the background of Tryg’s solid capital position and
capital requirement until this is replaced in accordance with the Solvency II
expected earnings.
rules. Tryg’s dividend policy is based on the following assumptions:
•
A general objective of creating long-term value for the
Annual general meeting
company’s shareholders.
Tryg’s annual general meeting will be held on 3 April 2014 at 14:00 at
•
A competitive dividend policy in comparison with those
Falkoner Centret, Falkoner Allé 9, 2000 Frederiksberg, Denmark. The
of our Nordic insurance competitors.
notice will be advertised in the daily press in March 2014 and will be
•
•
Distribution of 60-90% of the profit after tax.
sent to shareholders, if requested. The annual general meeting will
Aspiration to distribute a dividend which is steadily increasing
also be announced on tryg.com, where shareholders not able to at-
in nominal terms.
tend can follow proceedings live via webcast.
•
The capital level must at all times reflect the objective of a 20%
return on equity as well as the Group’s strategic plans.
•
The capital level may extraordinarily be adjusted through
a share buy back.
Shareholders
At 31 December 2013
12
Per cent
60
16
12
TryghedsGruppen
Large Danish
shareholders a)
Large international
shareholders a)
Small shareholders
Free float – geographical distribution
At 31 December 2013
11
5
15
Per cent
51
18
Denmark
UK
United States
Nordic region
Others
a) Shareholders holding more than 10,000 shares.
Free float is exclusive of TryghedsGruppen.
Shareholder information | Annual report 2013 | Tryg A/S |
37
Floods I Many residents in Jyllinge Nordmark were hit by Bodil, the storm which
swept Denmark in December 2013. Tryg took mobile site huts to the most exposed
areas, including Jyllinge Nordmark, to answer questions and help house owners with
practical issues. Because Bodil was a flood, insurance companies were not obliged
to be on site. However, residents were very positive about the assistance and help
provided by Tryg.
Tryg has many customers in the affected area and decided
‘We were rather overwhelmed by the extent of the damage
to go there, even though the Danish Storm Council was not
when we first arrived, but we soon got a grip on the situation,
due to meet until the week following the storm. Claims as-
and we stayed for as long as customers needed us there.
sessors went round to all the houses to answer questions
The Danish Storm Council covers some of the costs, but
and help the owners take steps to mitigate the damage.
we are the ones who know how to tackle such a situation.
That's why we were there to help anybody who needed it.’
Peter Sylvester Iversen | Tryg claims assessor
Corporate governance
Tryg focuses on managing the company in accordance with the
meeting, which as a minimum includes the following items:
principles for good corporate governance and generally complies with
•
Report by the Board on the company’s activities during the
the recommendations prepared by the Committee on Corporate Gov-
past financial year.
ernance, most recently updated in 2013. The recommendations can
•
Presentation of the annual report for adoption, including
be found at corporategovernance.dk. Tryg has published its statutory
remuneration for the Board and discharge from liability
corporate governance report based on the ‘comply or explain’ principle
of the Board and Executive Management.
at tryg.com.
Download Tryg’s report at tryg.com > Investor
•
Resolution concerning the appropriation of profits or the
> Download.
cover of losses in accordance with the annual report.
• Proposals from the Board or from shareholders.
Dialogue between Tryg, shareholders and other stakeholders
• Election of members to the Board.
The Investor Relations (IR) department maintains regular contact
• Appointment of auditors.
with analysts and investors. Together with the Executive Management,
• Any other business.
IR organises investor meetings, conference calls and webcasts and
attends conferences in Denmark and abroad. IR also communicates
All shareholders are encouraged to attend the annual general meeting.
with stakeholders in the social media via Twitter, @TrygIR. The
The annual general meeting is transmitted, allowing stakeholders to
Supervisory Board (the Board) is informed regularly of the dialogue
watch it at tryg.com both during and after the meeting.
with investors and other stakeholders.
According to Tryg’s IR policy, all company announcements and
the annual general meeting and may ask questions before and at the
financial statements are published in Danish and English, and Tryg
annual general meeting. Shareholders may vote in person at the annual
publishes quarterly interim financial statements. Moreover, Tryg
general meeting, by post or appoint the Board or a third party as their
prepares quarterly investor presentations for use in the dialogue
proxy. Shareholders may consider each item on the agenda. The proxy
with investors and analysts. All announcements, financial state-
form and form for voting by post are available at tryg.com prior to the
Shareholders may propose items to be included on the agenda for
ments and presentations are available at tryg.com. This provides all
annual general meeting.
stakeholders with a comprehensive picture of Tryg’s position and
development. The consolidated financial statements are presented
The annual general meeting is held by personal attendance as the
in accordance with IFRS. At tryg.com, stakeholders can order printed
Board values oral dialogue with the shareholders.
annual reports and subscribe to press releases and company an-
nouncements as well as insider trading announcements. A number
Takeover bids
of internal guidelines ensure that the disclosure of price-sensitive
The Board will consider any public takeover bid as prescribed by
information complies with the stock exchange codes of conduct.
legislation and, depending on the nature of such bid, convene an
extra ordinary general meeting.
Tryg has a number of policies which describe the relationship between
different stakeholders.
See IR policy at tryg.com > Investor
Duties and responsibilities of Supervisory Board
> IR contacts > IR policy, and CSR policy at tryg.com > CSR > CSR
The Board is responsible for the central strategic management and
strategy > CSR policy.
Annual general meeting
financial control of Tryg and for ensuring that the business is organised
in a sound way. This is achieved by monitoring targets and frameworks
based on regular and systematic review of the strategy and risks.
Tryg holds its annual general meeting each year before the end of April.
The Executive Management reports to the Board on strategies and
As required by the Danish Companies Act and the Articles of Associa-
action plans, market developments and group performance, funding
tion, the annual general meeting is convened via a company announce-
issues, capital resources and special risks. The Board holds one annual
ment and at tryg.com subject to at least three weeks’ notice. Share-
strategy seminar to decide on and/or adjust the Group’s strategy with
holders may also opt to receive the notice by post or email. The notice
a view to sustaining the value creation in the company. The Executive
contains information about time and venue as well as an agenda for the
Management works with the Board to ensure that the Group’s strategy
40 | Tryg A/S | Annual report 2013 | Corporate governance
Download
Statutory corporate governance
report
is developed and monitored. The Board ensures that the necessary
ment levels. Tryg has prepared an action plan which sets out specific
skills and financial resources are available for Tryg to achieve its
targets to ensure diversity and equal opportunities and access to manage-
strategic targets. The Board specifies its activities in a set of rules of
ment positions for qualified men and women. Tryg aims to increase the
procedure and an annual cycle for its work.
total number of women in management positions by 2% by the end
Share and capital structure
Tryg’s share capital comprises a single share class, and all shares
of 2014. In 2013, the proportion of women at management level was
34.6%, up from 34.0% in 2012.
See action plan at tryg.com > CSR.
rank pari passu. The principal shareholder, TryghedsGruppen smba,
Corporate social responsibility
owns 60% of the issued shares and is the only shareholder holding
Corporate social responsibility (CSR) constitutes an integral part of the
more than 5% of the company’s shares.
way in which Tryg operates its business. The Board has adopted a CSR
policy, and Tryg has joined several voluntary initiatives.
Read more
The Board ensures that Tryg’s capital structure is in line with the
at tryg.com > CSR.
needs of the Group and the interests of its shareholders and that it
complies with the requirements applicable to Tryg as a financial
Chairman and Deputy Chairman of Supervisory Board
undertaking. Tryg has adopted a capital plan and a contingency
The Board is headed by a Chairmanship consisting of a Chairman and
capital plan, which are reviewed annually by the Board.
a Deputy Chairman. The Deputy Chairman will act in the Chairman’s
absence and serves as a discussion partner for the Chairman.
Depending on the development in results, the Board each year
proposes a dividend and possibly an extraordinary share buy back,
The tasks of the Chairman and Deputy Chairman are defined in the
if further adjustment of the capital structure is required. In 2010, the
Board’s rules of procedure. The tasks of the Chairman include chair-
annual general meeting authorised the Board to allow Tryg to acquire
ing and evaluating the work of the Board and being in charge of the
own shares amounting to up to 10% of the share capital until 14 April
cooperation with the Executive Management. The Chairman also acts
2015. On 15 March 2013, Tryg initiated a share buy back programme
as spokesman for the Board.
which ran until 19 December 2013. Under the programme, Tryg ac-
quired own shares for an amount of DKK 800m. On 2 January 2014,
The Chairman and Deputy Chairman hold preparatory meetings with
Tryg initiated a new share buy back programme totalling DKK 1bn,
the Executive Management before all board meetings. According to
which runs until the end of 2014.
the Board’s rules of procedure, no board member may perform work
for Tryg without a prior decision to that effect by the Board. Further-
Duties and composition of Executive Management
more, such work must be of a non-recurring nature.
Each year, the Board reviews and adopts the rules of procedure of
the Board and the Executive Management with relevant policies,
Composition and organisation of Supervisory Board
guidelines and instructions describing requirements for reporting
The Board performs an annual evaluation of its work and skills to
and communication with the Executive Management. Financial
ensure that it possesses the expertise required to perform its duties in
legislation also requires the Executive Management to disclose all
the best possible way. The Board focuses, in particular, on expertise
relevant information to the Board and report on compliance with
within management experience, financial insight, kowledge on insur-
limits defined by the Board and in legislation.
ance matters, accounting insight, financial knowledge and experience,
The Board considers the composition, development, risks and suc-
See the description of skills at tryg.com and the notice convening
M&A experience, market insights and international experience.
cession plans of the Executive Management in connection with the
the annual general meeting.
annual evaluation of the Executive Management and regularly in
connection with Board meetings.
New board members
Each year, the Board discusses Tryg’s activities to guarantee diversity at
transparent for members. The Articles of Association stipulate that
management levels. Tryg attaches importance to diversity at all manage-
the Chairman of TryghedsGruppen’s Board must also be Chairman of
The process of selecting new board members is thorough and
Corporate governance | Annual report 2013 | Tryg A/S |
41
Tryg’s Board. Furthermore, TryghedsGruppen’s Board recommends
Board members elected by employees
three members to Tryg’s Board from among the members of Trygheds -
Under the Danish Companies Act, employees are entitled to elect a
Gruppen’s Board. The Nomination Committee selects new candidates
number of representatives to the Board, equal to half the number of
for the four other board posts and presents its recommendation to
other members at the time employee elections are held. Tryg has agreed
the Board. Seven members of the Board are women, including three
with Tryg’s staff organisations that two board members are elected
employee representatives, and the requirement for equality is thus met.
among employees in Denmark, one among employees in Norway and
The Board has members from Denmark, Sweden and Norway.
one among employees in Sweden. The next ordinary election will be
Prior to the election of new members, the Board prepares a descrip-
same rights, obligations and responsibilities as other board members.
held in 2016. Under Danish law, employee representatives have the
tion of the candidates’ background, directorships, professional
qualifications and experience. A balanced composition of the Board
Meeting frequency
in terms of, e.g., age, gender and nationality is sought, and the need
The Board holds at least seven meetings a year and an annual strategy
for integrating new talent and different skills is considered. New
seminar to discuss and define the strategy and targets for the years
board members are given an introduction to Tryg.
See pages 46-47
ahead. In 2013, the Board held seven meetings and the annual seminar.
and tryg.com > Governance > Management > Supervisory Board.
Board committees
Retirement age and election period
Tryg’s Board has set up an Audit Committee, a Risk Committee, a Nomi-
Board members elected by the annual general meeting are up for
nation Committee and a Remuneration Committee.
The board
election each year at the annual general meeting. See pages 46-47
committees’ terms of reference can be seen at tryg.com > Governance
for information on when members joined the Board, were re-elected
> Management > Supervisory Board > Board committees, including
and when their current election period expires. To integrate new
descriptions of members, meeting frequency, responsibilities and
talent on the Board, members elected by the annual general meeting
activities during the year.
The special skills of all members are
may hold office for a maximum of nine years. Furthermore, members
also described at tryg.com.
of the Board must retire at the first general meeting following their
70th birthday.
See pages 46-47 and tryg.com > Governance
Three out of four Audit Committee and Risk Committee members,
> Management > Supervisory Board.
including the committees’ Chairman, are independent persons. Of the
four members of the Remuneration Committee, one member is an
Independence of Supervisory Board
independent person, while one out of two members of the Nomination
Eight members of the Board are elected by the annual general meeting
Committee is independent. Board committee members are elected
for one year at a time. Of the eight members elected at the annual
primarily based on special skills that are considered important by the
general meeting, four are independent persons as stated in recommen-
Board. Involvement of the employee representatives in the committees
dation 3.2.1. in the Recommendations on Corporate Governance, while
is also considered important. The committees exclusively prepare mat-
the other four members are not independent persons as they are ap-
ters for decision by the entire Board.
pointed by the principal shareholder TryghedsGruppen.
See pages
46-47 and tryg.com > Governance > Management > Supervisory Board.
Audit Committee
This is also described in the notice convening the general meeting.
The framework of the Audit Committee’s work is defined in its terms
of reference. The committee has four members with knowledge and
Board members and other directorships and executive functions
experience of financial matters as well as accounting and auditing in
The Board and the individual board members deem that all members
publicly listed companies. The Audit Committee held five meetings in
have adequate time and resources to perform their duties as board
2013 and reported regularly to the Board. In August 2013, the Audit
members of Tryg in a satisfactory manner. Information about the
Committee carried out an evaluation of the preceding year’s work.
board members’ position, directorships and executive functions,
See the Audit Committee’s tasks in 2013 at tryg.com > Governance
shareholding and changes in portfolio can be found under their CVs.
> Management > Supervisory Board > Board committees.
See pages 46-47 and tryg.com > Governance > Management >
Supervisory Board.
42 | Tryg A/S | Annual report 2013 | Corporate governance
Risk Committee
and approves the rules of procedure of the Board and the Executive
The Risk Committee supervises capital and risk management and
Management each year to ensure alignment with Tryg’s requirements.
monitors the risk management environment and related processes.
The Risk Committee has five members and held five meetings in
Remuneration of Management
2013.
See the Risk Committee’s tasks at tryg.com > Governance
Tryg has adopted a remuneration policy for the Board and the Execu-
> Management > Supervisory Board > Board committees.
tive Management, including general guidelines for incentive pay. The
Nomination Committee
Tryg has a Nomination Committee which ensures the correct compos-
remuneration policy for 2013 was adopted by the Board in Decem-
ber 2012 and by the annual general meeting on 18 April 2013.
ition and size of the Executive Management and the Board. The Nomin-
Information about remuneration policy
ation Committee consists of the Chairmanship and held two meetings
The Chairman of the Board reports on Tryg’s remuneration policy each
in 2013.
See the Nomination Committee’s tasks at tryg.com >
year in connection with the consideration of the annual report at the an-
Governance > Management > Supervisory Board > Board committees.
nual general meeting. The Board’s proposal for the remuneration of the
Remuneration Committee
Board for the current financial year is also submitted for approval by the
shareholders at the annual general meeting. The remuneration policy
The Remuneration Committee carries out preparatory work for the
also covers Tryg employees whose activities have a significant influence
Board relating to remuneration of the Board, the Group Executive
on the Group’s risk profile, known as risk-takers, as well as employees
Management and significant risk-takers. The Remuneration Committee
in control functions such as compliance and internal audit.
See
has four members, and the Chairman of the Board is Chairman of the
remuneration policy at tryg.com > Governance > Remuneration.
committee. Moreover, the committee must consist of one member of
TryghedsGruppen and at least one independent Board member. The
Remuneration of Supervisory Board
committee has one independent member at the present time. The
Members of Tryg’s Board receive a fixed fee and are not comprised
Remuneration Committee held four meetings in 2013. The Remuner-
by any form of incentive or severance programme. Their remuner-
ation Committee’s work is carried out with reference to Tryg’s remuner-
ation is based on trends in peer companies, taking into account board
ation policy.
See the Remuneration Committee’s tasks at tryg.com >
members’ required skills, efforts and the scope of the board’s work,
Governance > Management > Supervisory Board > Board committees.
including the number of meetings. The remuneration received by the
Chairman of the Board is triple that received by ordinary members,
Evaluation of Supervisory Board and Executive Management
while the Deputy Chairman’s remuneration is double that received by
The Board has adopted an evaluation procedure involving an annual
ordinary members of the Board. The Board has no pension scheme.
evaluation of the composition, skills, contributions and results of the
Board as a whole as well as its individual members, and its coopera-
Remuneration of Executive Management
tion with the Executive Management. The Chairman oversees the
Members of the Executive Management are employed on a contractual
evaluation of the Board, and the outcome is subsequently discussed
basis, and all terms of their remuneration are established by the Board.
at a Board meeting. In 2014, an external consultant will be involved
The Board fixes the remuneration of the Executive Management for one
in the process.
year at a time. This is based on the work and results of the individual
members of the Executive Management and on the need to attract and
The Board has 12 members and deems the number of members ad-
retain the most highly qualified members of the Executive Management.
equate to ensure a constructive debate, sufficient diversification and
The fixed pay element must be competitive and appropriate for the mar-
efficient decision-making. The Board considers the number of board
ket and provide sufficient motivation for all members of the Executive
members each year when preparing the annual general meeting.
Management to do their best to achieve the company’s defined targets.
The Board carries out an annual evaluation of the work and performance
The Executive Management’s remuneration consists of a fixed pay
of the Executive Management and of the cooperation between the
element, pension and a variable pay element. The variable pay constitutes
Board and the Executive Management. In addition, the Board reviews
only a limited part of the overall remuneration. The Board can decide
Corporate governance | Annual report 2013 | Tryg A/S |
43
that the fixed pay be supplemented with a variable pay element of up
Financial reporting, risk management and auditing
to 10% of the fixed basic pay including pension at the time of allocation.
Being an insurance business, Tryg is subject to the risk management
The variable pay element consists of a matching shares programme.
requirements of the Danish Financial Business Act. In policies, the
Four years after the purchase by a member of the Executive Manage-
Board defines Tryg’s risk management framework as regards insur-
ment of a specified number of shares, such member is allocated a
ance risk, investment risk and operational risk, as well as IT security.
corresponding number of free shares in Tryg. The allocation of matching
Guidelines are issued by the Board to the Executive Management. A
shares is not dependent on performance. The purpose of the pro-
Risk Management Committee comprising the Group CFO, Head of
gramme is both to retain members of the Executive Management, and to
Group Risk and Head of Investments monitors the risk management
create a joint financial interest between the Executive Management and
environment.
shareholders.
Read more at tryg.com > Governance > Remuneration.
Risks associated with relevant new and expected financial reporting
Some members of the Executive Management still have unexercised
rules and accounting policies are monitored and considered by the Audit
share options, which were allocated under a previous programme.
Committee, the finance management and the internal auditors. Material
See Note 7 on page 88.
legal and tax-related issues and the financial reporting of such issues are
assessed on an ongoing basis.
Other risks associated with financial
Each member of the Executive Management is entitled to 12 months’
reporting are described on page 34 and in Note 1 on page 67.
notice of termination and 12 months’ severance pay. However, the
Group CEO is entitled to 12 months’ notice and to 18 months’ sever-
Tryg engages in ongoing risk identification, mapping insurance risks
ance pay plus pension contributions during this period.
and other risks related to realising the Group’s strategy or which
Each member of the Executive Management has 25% of the basic
position. The process involves registering and quantifying the risks
salary paid into a pension scheme. However, the Group CEO receives
identified. In 2013, Tryg undertook an Own Risk and Solvency Assess-
a defined-benefit pension, disbursed from the retirement date.
ment (ORSA) in preparation of the statutory requirements soon to be
The pension is determined by the period of employment and consti-
introduced for insurance companies. The purpose of the ORSA is to
tutes a percentage of the pay received at the time of retiring.
link strategy, risk management and solvency with the aim of ensuring
may have a potentially substantial impact on the Group’s financial
Total remuneration of the Supervisory Board in 2013
DKK
Jørgen Huno Rasmussen
Torben Nielsen
Paul Bergqvist
Anya Eskildsen
Vigdis Fossehagen
Ida Sofie Jensen
Bill-Owe Johansson
Lone Hansen
Jesper Hjulmand a)
Lene Skole
Tina Snejbjerg b)
Mari Thjømøe
Mikael Olufsen c)
Jens Bjerg Sørensen c)
Fee
Audit
Committee
Risk Remuneration
Committee
Committee
793,833
660,000
330,000
231,917
330,000
231,917
330,000
330,000
330,000
330,000
330,000
330,000
294,250
98,084
225,000
150,000
105,416
150,000
44,583
105,417
70,278
100,000
100,000
47,849
44,583
29,722
94,875
90,000
63,250
90,000
26,750
40,125
Total
888,708
1,035,000
420,000
295,167
420,000
231,917
330,000
330,000
532,444
580,000
474,583
483,266
334,375
172,389
a) New member of the Audit Committee and the Risk Committee and resigned from the Remuneration Committee
b) Resigned from the Audit Committee
c) Resigning members of the Supervisory Board
44 | Tryg A/S | Annual report 2013 | Corporate governance
Total remuneration of the Executive Management in 2013
DKK
Morten Hübbe
Tor Magne Lønnum
Lars Bonde
a) At time of allocation.
Basic salary
Pension
Car/
car allowance
Total
fixed salary
8,584,825
4,824,291
4,265,838
2,146,206
900,840
1,066,460
255,000
154,564
255,000
10,986,031
5,879,695
5,587,298
Value of
matching
shares a)
850,000
550,000
400,000
Total fee
11,836,031
6,429,695
5,987,298
a sensible correlation between the strategy for assuming risks and
Audit
the available capital over a period of three to five years. In December
The Board ensures monitoring by competent and independent auditors.
2013, the Board adopted an individual solvency policy which provides
The Group’s internal auditor attends all board meetings. The independ-
a specific framework for calculating capital requirements and prepar-
ent auditor attends the annual board meeting at which the annual
ing a capital contingency plan and ORSA. The policy took effect on
report is presented.
1 January 2014.
Each year, the annual general meeting appoints an independent auditor
The Board and the Executive Management approve and monitor the
recommended by the Board. In 2013, a call for tenders for the provision
Group’s overall policies and guidelines, procedures and controls in
of independent auditing services was launched. The recommendation
important risk areas. They receive reports about developments and
was that Deloitte be reappointed. In connection with the Board’s review
about the ways in which the frameworks are used. The Board checks
of the annual report, it discusses accounting policies and other issues.
that the risk management and internal controls are effective. Non-
The audit results are discussed by the Audit Committee and at board
compliance with the frameworks and guidelines is reported to the
meetings to assess the auditor’s observations and conclusions. The
Board. The Risk Committee monitors risk management on an
internal and independent auditors’ long-form audit reports are reviewed
ongoing basis and reports quarterly to the Board.
by the Board. The audit agreement and associated audit fee are agreed
between the Board and the auditor based on a recommendation from
The Group’s internal control systems are based on clear organisa-
the Audit Committee. Each year, the Audit Committee reviews the scope
tional structures and guidelines, general IT controls and segregation
of the independent auditors’ non-audit services.
of functions, which are supervised by the internal auditors. Tryg has
a decentralised set-up; risk managers in the business areas carry out
At least once a year, the internal and independent auditors meet with
controlling tasks for the risk management environment and Tryg’s
the Audit Committee without the presence of the Executive Manage-
compliance function. The Executive Management has established
ment. The Chairman of the Audit Committee deals with any matters
a formal process for the Group comprising monthly reporting,
that need to be reported to the Board.
including budget and deviation reports etc.
Internal audit
Risk management is an integral part of Tryg’s business operations.
Tryg has set up an internal audit department which regularly reviews the
The Group seeks at all times to minimise the risk of unnecessary
quality of the internal control systems and business procedures. It is respon-
losses in order to optimise returns on the company’s capital.
sible for planning, performing and reporting the audit work to the Board.
Read more on page 34 and in Note 1 on page 67.
Deviations and explanations
Whistle-blowing scheme
Tryg follows the Recommendations on Corporate Governance with the
Tryg’s Ethical Hotline is managed by an external operator and allows
exception of the recommendation for the number of independent
employees, customers or business partners to report any serious
members of the board committees, with which Tryg complies partially,
wrongdoing or suspected irregularities. Reporting is confidential.
see item 3.4.2 of the Recommendations on Corporate Governance.
Read more at tryg.com > Governance > Ethical Hotline.
See statutory corporate governance report at tryg.com > Download.
Corporate governance | Annual report 2013 | Tryg A/S |
45
Supervisory Board
Members of the Supervisory Board
are elected for a term of one year.
Employee representatives are, however,
elected for a term of four years. The
next election of employee representa-
tives will be held in 2016.
Jørgen Huno Rasmussen a)
Chairman
Born 1952. Joined: 2012. Nationality: Danish.
Professional member of the Supervisory Board.
Adjunct Professor, CBS. Former Group CEO
of the FLSmidth Group.
Education: Graduate Diploma in Organisation
and Graduate Engineer and Lic.techn.
Chairman: Tryg A/S, Tryg Forsikring A/S,
TryghedsGruppen smba, the Lundbeck Foundation
and LundbeckFond Invest A/S.
Board member: Vestas Wind Systems A/S,
Bladt Industries A/S, Terma A/S and Haldor
Topsøe A/S.
Committee memberships: Remuneration Com-
mittee (Chairman) and Nomination Committee
(Chairman) in Tryg A/S.
Number of shares held: 366
Change in portfolio in 2013: 0
As former CEO of FLSmidth, Jørgen Huno Ras-
mussen has experience in international manage-
ment of listed companies and special compe-
tencies within strategy, business development,
communication, risk management and finance.
Torben Nielsen b)
Deputy Chairman
Born 1947. Joined: 2011. Nationality: Danish.
Professional board member. Adjunct Professor,
CBS. Former Governor of Danmarks Nationalbank.
Education: Savings bank training, Graduate
Diplomas in Organisation and Work Sociology
as well as Credit and Financing.
Chairman: Investeringsforen. Sparinvest, Inves-
teringsforen. Sparinvest Sicav, Luxembourg, EIK
banki p/f, VP Lux S.a.r.l., Capital Market Partners,
Museum Southeast Denmark.
Deputy Chairman: Tryg A/S, Tryg
Forsikring A/S and VP Securities a/s.
Board member: Sampension KP Livsforsikring A/S,
Sydbank A/S, Dansk Landbrugs Realkredit and
member of the Executive Board of Bombebøssen.
Committee memberships: Audit Committee and
Risk Committee (Chairman) and Nomination
Committee in Tryg A/S.
Number of shares held: 3,500
Change in portfolio in 2013: 0
Torben Nielsen has special skills in management,
governance, finance, financial ser vices and risk
management from his former role as Governor of
Danmarks Nationalbank and several board positions.
Paul Bergqvist b)
Born 1946. Joined: 2006. Nationality: Swedish.
Professional board member. Former CEO of
Carlsberg A/S.
Education: Economist and engineer.
Chairman: Sverige Bryggerier AB,
East Capital Explorer AB, Pieno Zvaigzdes AB,
Norrköpings Segel Sällskap, Östkinds
Häradsallmänning.
Board member: Tryg A/S, Tryg Forsikring A/S.
Committee memberships: Remuneration
Committee in Tryg A/S.
Number of shares held: 100
Change in portfolio in 2013: 0
Paul Bergqvist has international management
and board experience within M&A, strategic
development, marketing, branding and financial
management. Being a Swedish citizen, Paul
Bergqvist has special insights into Swedish
market conditions.
Vigdis Fossehagen
Employee representative
Born 1955. Joined: 2012. Nationality: Norwegian.
Chairman of Finance Sector Union of Norway, Tryg.
Employed in 1996.
Education: Educated in the area of agricultural
mechanics.
Board member: Tryg A/S and Tryg Forsikring A/S.
Committee memberships: Remuneration
Committee in Tryg A/S.
Number of shares held: 0
Lone Hansen
Employee representative
Born 1966. Employed in 1990. Joined: 2012.
Nationality: Danish. Chairman of the Association
for Tied Agents and Key Account Managers in Tryg.
Education: Certified commercial insurance agent.
Various insurance and sales courses and
negotiation training.
Board member: Tryg A/S and Tryg Forsikring A/S.
Number of shares held: 86
Change in portfolio in 2013: 0
Anya Eskildsen
Born 1968. Joined: 2013. Nationality: Danish. Presi-
dent of Niels Brock Copenhagen Business College.
Education: MSc in Political Science, the certified
IoD Board Program.
Board member: Tryg A/S, Tryg Forsikring A/S and
TryghedsGruppen smba.
Committee memberships: Remuneration Com-
mittee in Tryg A/S. Member of the Danish Growth
Council, Nykredits Regionsråd, Confederation of
Danish Labour Unions’ forum for the promotion
of education, Copenhagen Rotary and NOCA.
Number of shares held: 0
Anya Eskildsen has experience within financial
management, strategic management, communi-
cation and marketing, innovation and ideas gener -
ation and international system exports.
46 | Tryg A/S | Annual report 2013 | Supervisory Board
a) Dependent member of the
Supervisory Board
b) Independent member of the
Supervisory Board, as per the
definition in Recommendations
on Corporate Governance.
Jesper Hjulmand a)
Born 1963. Joined: 2010. Nationality: Danish.
CEO of SEAS-NVE A.m.b.a. Former CFO and
CEO of NVE A.m.b.a.
Education: MSc in Economics and Business
Administration and Lieutenant-Colonel
of the Danish Air Force Reserve.
Chairman: Association of Danish Energy and
Distribution Companies (DEA), Energi Danmark
A/S, CLEVER.
Deputy Chairman: TryghedsGruppen smba.
Board member: Tryg A/S, Tryg Forsikring A/S,
DI General Council.
Committee memberships: Audit Committee and
Risk Committee in Tryg A/S, Chairman of Executive
Director Committee of Dansk Energi and member
of Dansk Energi Fælles Forum, Danish Intelligent
Energy Alliance and Chairman of the Green
Committee in Region Zealand.
Number of shares held: 1,750
Change in portfolio in 2013: 0
From his positions with SEAS-NVE and his former
work with the Danish Air Force, Jesper Hjulmand
has experience within the fields of M&A, strategy,
organisational and management development,
communication and business development.
Ida Sofie Jensen
Born 1958. Joined: 2013. Nationality: Danish.
Director General of Lif (Danish Association of
the Pharmaceutical Industry). Director General
of the subsidiary DLI (Dansk Lægemiddel
Information A/S).
Education: MSc in Political Science, European
Health Leadership Programme INSEAD, Executive
Management Programme INSEAD.
Board member: Tryg A/S and Tryg Forsikring A/S,
TryghedsGruppen smba, Plougmann & Vingtoft
A/S and Den Erhvervsdrivende Fond Hans
Knudsen Instituttet.
Number of shares held: 94
Change in portfolio in 2013: +94
Ida Sofie Jensen has experience from business
operations and the health sector as well as
management, strategy, politics and finance.
Mari Thjømøe b)
Joined: 2012. Nationality: Norwegian.
Professional board member and independent
advisor. Former CFO of KLP.
Education: Master of Economics and Business
Administration, Financial Analyst (CFA) and
management programme from London
Business School.
Chairman: Onshore Petroleum Company AS
and Seilsport Maritimt Forlag AS.
Board member: Tryg A/S, Tryg Forsikring A/S,
Argentum Fondsinvesteringer AS, Nordic Mining
ASA, Forskningskonsernet Sintef, E-CO Energi,
Infratek ASA and Sevan Marine ASA.
Committee memberships: Audit Committee
and Risk Committee in Tryg A/S.
Number of shares held: 300
Change in portfolio in 2013: +100
Mari Thjømøe has experience from international
management and competencies within strategy,
finance, capital management, Investor Relations,
branding and special knowledge of the insurance
market. Being a Norwegian citizen, Mari Thjømøe
has special insights into Norwegian market
conditions.
Bill-Owe Johansson
Employee representative
Born 1959. Joined: 2010. Nationality: Swedish.
Claims handler, Moderna (Swedish branch).
Employed in 2002.
Education: Insurance training.
Board member: Tryg A/S and Tryg Forsikring A/S.
Number of shares held: 200
Change in portfolio in 2013: 0
Tina Snejbjerg
Employee representative
Born 1962. Joined: 2010. Nationality: Danish.
Head of Section in Tryg’s HR Department.
Employed since 1987.
Education: Insurance training.
Board member: Tryg A/S and Tryg Forsikring A/S.
Committee memberships: Risk Committee
in Tryg A/S.
Number of shares held: 86
Change in portfolio in 2013: 0
Lene Skole b)
Born 1959. Joined: 2010. Nationality: Danish.
Executive Vice President of Coloplast A/S.
Former CFO of The Maersk Company Ltd., UK.
Education: A.P. Møller Group international shipping
education, Graduate Diploma in Financing and
various international management programmes.
Board member: Tryg A/S, Tryg Forsikring A/S
and DFDS A/S.
Committee memberships: Audit Committee
and Risk Committee in Tryg A/S.
Number of shares held: 745
Change in portfolio in 2013: 0
Lene Skole has experience from international
companies through her work in Coloplast and
Maersk, UK. Lene Skole has competencies within
strategy, finance, financing and communication.
Supervisory Board | Annual report 2013 | Tryg A/S |
47
Standing from left Tor Magne Lønnum, Lars Bonde, Morten Hübbe.
Seated Rikke Larsen, Truls Holm Olsen, Trond Bøe Svestad, Per Fornander, Jesper Joensen.
Group Executive Management
Morten Hübbe
CEO/Group CEO
Tor Magne Lønnum
CFO/Group CFO
Born 1972. Employed in 2002. Joined the
Group Executive Management in 2003.
Member of the Executive Management and
the Group Executive Management.
Born 1967. Employed in 2011. Joined the
Group Executive Management in 2011.
Member of the Executive Management and
the Group Executive Management.
Education: BSc in International Business
Administration and Modern Languages, MSc
in Finance and Accounting and management
programme at Wharton.
Education: State-authorised public
accountant, Executive Master of Business and
Administration, University of Bristol and Ecole
Nationale des Ponts et Chaussées.
Board member: Tryg Ejendomme A/S,
Ejendomsselskabet af 8. maj 2008 A/S and
Tjenestemændenes Forsikring.
Board member: Tryg Garantiforsikring A/S,
Thermopylae AS (Chairman), Finansnæringens
Fellesorganisasjon and TGS Nopec ASA.
Lars Bonde
Group Executive Vice President, Private,
Country Manager in Denmark and COO
Born 1965. Employed in 1998. Joined the
Group Executive Management in 2006.
Member of the Executive Management and
the Group Executive Management.
Education: Insurance training, LL.M.
Board member: The Danish Employers’
Association for the Financial Sector,
Tjenestemændenes Forsikring,
Forsikringsakademiet and the Danish
Insurance Association.
Number of shares held: 11,760
Change in portfolio in 2013: +1,850
Number of shares held: 4,910
Change in portfolio in 2013: +1,400
Number of shares held: 4,605
Change in portfolio in 2013: +918
Per Fornander
Group Executive Vice President
and Country Manager in Sweden
Born 1963. Employed in 2011. Joined the
Group Executive Management in 2011.
Education: Marketing DIHM, IHM Business
School in Stockholm.
Board member:Tryg Garantiforsikring A/S,
Svensk Försäkring, Försäkringsbranschens
Arbetsgivarorganisation and Försäkrings-
branschens Pensionskassa.
Number of shares held: 2,990
Change in portfolio in 2013: +880
Jesper Joensen
Group Executive Vice President, Claims
Born 1963. Employed in 1992. Joined the
Group Executive Management in 2013.
Education: Agricultural economist, certified
insurance agent.
Board member: Procea.
Number of shares held: 1,086
Change in portfolio in 2013: 0
Rikke Larsen
Group Executive Vice President, People
and Reputation
Born 1971. Employed in 2000. Joined the
Group Executive Management in 2012.
Education: LL.M. and lawyer.
Number of shares held: 781
Change in portfolio in 2013: +746
Truls Holm Olsen
Group Executive Vice President, Corporate
and Country Manager in Norway
Trond Bøe Svestad
Group Executive Vice President,
Commercial
Born 1964. Employed in 1998. Joined the
Group Executive Management in 2009.
Born 1967. Employed in 2013. Joined the
Group Executive Management in 2013.
Education: LL.M.
Board member: Tryg Garantiforsikring A/S,
Norsk Naturskadepool and Tryg Almen -
nyttige Stiftelse.
Number of shares held: 2,707
Change in portfolio in 2013: +690
Education: Master of Management,
Business/Commerce and Bachelor
of Commerce.
Number of shares held: 193
Change in portfolio in 2013: +193
Group Executive Management | Annual report 2013 | Tryg A/S |
49
Corporate Social Responsibility in Tryg
Tryg’s ambition is to create peace of mind and value for customers,
In 2014, we are launching a web-based tool, VisAdapt, which will en-
employees and shareholders. This obviously implies that we must be
able our customers to establish their vulnerability and risk with regard
responsible members of society.
to climate-related damage in the area where their homes or commer-
cial buildings are located. This tool has been developed in a cooperation
We make our knowledge of insurance, customer requirements and risk
between four Nordic insurance companies and a team of researchers
management available in areas where we see challenges for society.
under NORDSTAR, the Nordic Council’s Nordic Centre of Excellence.
For this reason, we focus on climate-related damage, diversity,
sustainable sourcing and responsible investments.
Our preventive measures comprise good customer advice on the
handling of fires, floods and storm damage.
Read about damage
The CSR measures involve transforming the UN Global Compact
prevention after storms and cloudbursts (in Danish) at tryg.dk
principles into processes and practices that make protection of
> Prevent damage
See our advice and checklists for the
the climate and the environment, human rights, labour rights and
prevention of fire (in Danish) at tryghedsraadgiveren.dk > fire.
anti-corruption tangible and relevant. We would like to show our
customers, employees, suppliers, investors and society at large that
Mobility Management
CSR contributes to value creation – for them and for us.
Read
In the past year, Tryg continued its cooperation with Formel M,
our CSR policy at tryg.com > CSR > CSR strategy > CSR Policy.
the Municipality of Ballerup and the neighbouring companies in
Climate
Lautrupgård on Mobility Management. The project is about how to
get from your home to the office and to meetings in a sustainable
Prevention of climate-related damage is high on our agenda. In our
way, which will benefit both the environment and health and bring
day-to-day contact with our customers and suppliers, we use our
down transport costs and local traffic congestion.
knowledge and experience of the consequences of cloudbursts,
storms and landslides to help them prevent, minimise and handle
Activities during the year included two campaigns supporting the use
the damage these cause. For this purpose, are engaged in co-
of green transport for work and for commuting. Employees are able
operation and partnerships with public authorities and researchers
to define and set their own targets for their contribution to intelligent
on the development of contingency plans, prevention and tools to
transport. The project is supported by a workshop concept and
adapt areas, buildings and processes to climate changes.
materials available on Tryg’s intranet.
CO2 emissions
Tonnes
3,000
2,500
2,000
1,500
1,000
500
0
Electricity
Heating oil
Air travel
Motor
2012
2013
Waste
Kg
120,000
100,000
80,000
60,000
40,000
20,000
0
In 2013, Air travel also includes trips to and from Sweden.
50 | Tryg A/S | Annual report 2013 | Corporate Social Responsibility in Tryg
Paper &
corrugated
cardboard
It, batteries
& light
sources
Bio waste
Iron & metal
Residual
When the project started in 2011, Tryg carried out a survey of its em-
Human rights
ployees’ transport habits. In 2013, a follow-up survey was conducted in
It is a key objective for Tryg to respect and promote the human rights
Ballerup. This showed an increase in the number of employees cycling to
and labour rights that are relevant for our business and the areas in
work of 6 percentage points from 11% to 17% . The share of employees
which we operate. This applies both internally and in our relations
using their own car fell during the same period by 8 percentage points
with our customers, suppliers, investors and partners. For this reason,
from 80% to 72%. Futhermore, there has been an increase in the use of
we have focused our efforts on the human rights which we are most
public transport and the combination of means of transportation.
at risk of infringing, including the right not to be discriminated against,
the right to data protection and the rights of workers.
Our local Ballerup network was selected as one of nine winning pro-
jects in a campaign run by the Danish Broadcasting Corporation and
Inclusion
the newspaper Information called ‘What do we do now? Our transition
Tryg attaches great importance to diversity, protects against discrimi-
to a sustainable society’.
Sustainable domiciles
Tryg’s CO2 emissions come from the consumption of electricity, heat
and transport as well as from waste. In 2013, Tryg markedly reduced
its CO2 emissions, down 49.7% relative to 2007. The reduction is
attributable primarily to the replacement of a cooling plant in Ballerup
nation and guarantees equal treatment of our employees, regardless
of gender, age, ethnic origin, disability, sexual orientation, faith or
religion. Our diversity and our different competencies, perspectives
and experience contribute to job satisfaction and enable us to better
understand our customers and their needs.
The share of women in management was 34.6% in 2013, compared
and a restructuring of the car fleet to include fewer and fuel-saving
to 34% in 2012. Tryg aims to increase the total number of women in
vehicles. The emissions reduction target is 25% in 2014. In 2013,
management positions by 2 % by the end of 2014.
Tryg came second in the top 10 of the most sustainable brands in
Denmark in the Sustainability Brand Index.
Read more about
Tryg’s focus on women in management is often mentioned as an
Tryg’s climate action at tryg.com > CSR > Thematic areas > Climate.
example of good practice, and in 2013 it was presented at seven
Employee mix
No.
2,000
1,600
1,200
800
400
0
Men
Women
Age
<30 yrs
Age
30-49 yrs
Age
>50 yrs
Flexi job
Non-
western
background a)
(a) Non-Western background has been compiled by Statistics Denmark.
events in Denmark and the EU.
See our plan of action for women in
management 2013 at tryg.com > CSR > CSR strategy > Plans of action.
For almost 20 years, Tryg has endeavoured to include employees with
a different ethnic origin than Danish and Norwegian in our organisation.
Through our cooperation with ambisjoner.no, The Association New
Dane (Nydansker) and ONE Danmark, we promote our efforts and
share our experience with diversity in our day-to-day work.
Our target of 4% of our employees having a non-Western background
was met in 2013.
Read more about our inclusion activities at tryg.
com > CSR > Thematic areas > Inclusion.
Read more about labour
rights at tryg.com > CSR > Thematic areas > Well-being > Labour rights.
Corporate Social Responsibility in Tryg | Annual report 2013 | Tryg A/S |
51
The staff turnover was 11.8% in 2013, corresponding to 448 em-
Anti-corruption
ployees (221 women and 227 men). The gender distribution is even
An important prerequisite for creating peace of mind is that our
in all age groups. Most of the employees who left Tryg were evenly
employees have high moral standards and conduct themselves in
distributed in the 30-49 and 50+ age groups. Only a small number
an ethically correct manner and in accordance with the law. In 2013,
of employees in the under-30 age group left Tryg.
Tryg’s general rules and guidelines in these areas were codified in the
‘Tryg Code of Conduct’, which all employees must know and observe.
Data protection
To earn our customers’ trust, it is pivotal that we treat personal
In 2011, Tryg set up an Ethical Hotline, which allows all employees
information correctly in our day-to-day customer contact and claims
and other stakeholders to confidentially report any wrongdoing or
handling. To teach our employees about the significance and import-
attempts to circumvent Tryg’s rules. The Ethical Hotline was used
ance of obtaining consent for the use and disclosure of information
once in 2013.
on insurance affairs and claims ratios, we held 24 workshops on data
protection in both business areas and support functions in 2013.
Sourcing
This work will be continued in 2014.
Read more about our work
In 2013, another 136 new suppliers in the Motor area were asked to
at tryg.com > CSR > Thematic areas > Prevention > Data protection.
Children’s rights
report their CSR performance. These obligations include CO2 emis-
sions from heating, electricity and waste, the number of discrimin-
ation cases and equality initiatives, human rights screening
Tryg also contributes to promoting the rights of the child through a
of sub-suppliers and anti-corruption initiatives.
financial training course offered in cooperation with Youth Town and
Nordea. Eighty-nine Year 8 and Year 9 school classes completed the
Responsible investments
course in 2013. In the first half of 2014, 30 courses will be offered.
Tryg’s equity investments are handled by a number of investment
companies. They are all members of the UN Principle for Respon-
sible Investments (PRI) and control the risk of a negative climate
impact, human rights violations and corruption in connection with
investments.
In this way, Tryg’s fund managers ensure that our investments
respect the relevant international standards on responsible invest-
ments, for which reason Tryg has chosen to discontinue its own
membership of UN PRI.
In 2013, Tryg was entered on the STOXX Sustainability Index: Global
ESG Leaders, which comprises the leading global companies in
terms of environmental, social and governance criteria (ESG). The
international index includes around 1,800 companies, of which five
are Danish.
Employee turnover
Number of employees
120
100
80
60
40
20
0
< 30 years
30-49 years
>50 years
Men
Women
52 | Tryg A/S | Annual report 2013 | Corporate Social Responsibility in Tryg
53
Xxx | Annual report 2013 | Tryg A/S | Tryg’s Group consolidated
financial statements are prepared
in accordance with IFRS and
published in Danish and English.
Contents – Financial statements
Financial statements 2013
Note Tryg Group
Statement by the Supervisory Board and the Executive Management
Independent auditor’s reports
Financial highlights
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Cash flow statement
1 Risk management
2 Capital management
3 Operating segments
3 Geographical segments
3 Technical result, net of reinsurance, by line of business
4 Premium income, net of reinsurance
5
6 Claims, net of reinsurance
7
8 Interest income and dividends etc.
9 Value adjustments
Insurance technical interest, net of reinsurance
Insurance operating costs, net of reinsurance
Intangible assets
Investment property
10 Tax
11 Profit/loss on discontinued and divested business
12
13 Property, plant and equipment
14
15 Equity investments in associates
16 Financial assets
17 Reinsurers’ share
18 Current tax
19 Assets held for sale and associated liabilities
20 Equity
21 Premium provisions
21 Claims provisions
22 Pensions and similar liabilities
23 Deferred tax
24 Other provisions
25 Amounts owed to credit institutions
26 Debt relating to unsettled funds transactions and repos
27 Earnings per share
28 Contractual obligations, collateral and contingent liabilities
29 Related parties
30 Financial highlights
31 Accounting policies
Tryg A/S (parent company)
Income statement – Tryg A/S (parent company)
Statement of financial position – Tryg (parent company)
Statement of changes in equity (parent company)
Notes (parent company)
Q4 2013
Q4 2013 | Quarterly outline
Q4 2013 | Geographical segments
Other key ratios
Group chart
Glossary
Product overview
Disclaimer
Page
56
57
59
60
61
62
64
66
67
78
80
82
84
86
86
86
86
91
91
92
92
93
95
97
98
99
102
103
103
104
104
105
106
109
110
110
110
110
111
113
114
115
126
127
128
129
132
134
136
137
138
140
141
Statement by the Supervisory Board
and the Executive Management
The Supervisory Board and the Executive Management have today
parent company’s assets, liabilities and financial position at 31 Decem-
considered and adopted the annual report for 2013 of Tryg A/S and
ber 2013 and of the results of the Group’s and the parent company’s
the Tryg Group.
operations and the cash flows of the Group for the financial year
1 January-31 December 2013.
The consolidated financial statements have been prepared in accord-
ance with the International Financial Reporting Standards as adopted
Furthermore, in our opinion the Management’s report gives a true and
by the EU, and the financial statements of the parent company have
fair view of developments in the activities and financial position of
been prepared in accordance with the Danish Financial Business Act.
the Group and the parent company, the results for the year and of the
In addition, the annual report has been presented in accordance with
Group’s and the parent company’s financial position in general and
additional Danish disclosure requirements for the annual reports of
describes significant risk and uncertainty factors that may affect the
listed financial enterprises.
Group and the parent company.
In our opinion, the accounting policies applied are appropriate, and
We recommend that the annual report be adopted by the shareholders
the annual report gives a true and fair view of the Group’s and the
at the annual general meeting.
Ballerup, 30 January 2014
Executive Management
Morten Hübbe
Group CEO
Supervisory Board
Tor Magne Lønnum
Group CFO
Lars Bonde
Group Executive Vice President and COO
Jørgen Huno Rasmussen
Chairman
Torben Nielsen
Deputy Chairman
Paul Bergqvist
Anya Eskildsen
Vigdis Fossehagen
Lone Hansen
Jesper Hjulmand
Ida Sofie Jensen
Bill-Owe Johansson
Lene Skole
Tina Snejbjerg
Mari Thjømøe
56 | Tryg A/S | Annual report 2013 | Statement by the Supervisory Board and the Executive Management
Independent auditor’s reports
To the shareholders of Tryg A/S
statements, whether due to fraud or error. In making those risk assess-
Report on the consolidated financial statements
ments, the auditor considers internal control relevant to the entity’s
and parent financial statements
preparation of consolidated and parent financial statements that give a
We have audited the consolidated and parent financial statements of
true and fair view in order to design audit procedures that are appropri-
Tryg A/S for the financial year 1 January to 31 December 2013, page
ate in the circumstances, but not for the purpose of expressing an opin-
59-131, which comprise the income statement, statement of compre-
ion on the effectiveness of the entity’s internal control. An audit also
hensive income, statement of financial position, statement of changes
includes evaluating the appropriateness of accounting policies used
in equity and notes, including the accounting policies, for the Group as
and the reasonableness of accounting estimates made by manage-
well as for the parent company, and the consolidated cash flow state-
ment, as well as the overall presentation of the consolidated and parent
ment. The consolidated financial statements are prepared in accord-
financial statements. We believe that the audit evidence is sufficient and
ance with International Financial Reporting Standards as adopted by
appropriate to provide a basis for our audit opinion. Our audit has not
the EU and the parent financial statements are prepared in accordance
resulted in any qualification.
with the Danish Financial Business Act. In addition, the consolidated
and parent financial statements are prepared in accordance with Danish
Opinion
disclosure requirements for listed financial services companies.
In our opinion, the consolidated financial statements give a true and
fair view of the Group’s financial position at 31 December 2013, and
Management’s responsibility for the consolidated
of the results of its operations and cash flows for the financial year
financial statements and parent financial statements
1 January to 31 December 2013 in accordance with International
Management is responsible for the preparation of consolidated
Financial Reporting Standards as adopted by the EU and Danish disclo-
financial statements that give a true and fair view in accordance with
sure requirements for listed financial services companies. Moreover, in
International Financial Reporting Standards as adopted by the EU and
our opinion, the parent financial statements give a true and fair view of
Danish disclosure requirements for listed financial services companies
the parent company’s financial position at 31 December 2013, and of the
as well as for the preparation of parent financial statements that give
results of its operations for the financial year 1 January to 31 December
a true and fair view in accordance with the Danish Financial Business
2013 in accordance with the Danish Financial Business Act and Danish
Act and Danish disclosure requirements for listed financial services
disclosure requirements for listed financial services companies.
companies, and for such internal control as management determines
is necessary to enable the preparation and fair presentation of con-
Statement on the mangement’s review
solidated and parent financial statements that are free from material
Pursuant to the Danish Financial Business Act, we have read the
misstatement, whether due to fraud or error.
mangement’s review. We have not performed any further procedures in
Auditor’s responsibility
addition to the audit of the consolidated and parent financial state-
ments. On this basis, it is our opinion that the information provided in
Our responsibility is to express an opinion on the consolidated and
the mangement’s review is consistent with the consolidated and parent
parent financial statements based on our audit. We conducted our
financial statements.
audit in accordance with International Standards on Auditing and
additional requirements under Danish audit regulation. This requires
that we comply with ethical requirements and plan and perform
Ballerup, 30 January 2014
Deloitte
the audit to obtain reasonable assurance about whether the con-
Statsautoriseret Revisionspartnerselskab
solidated and parent financial statements are free from material
misstatement. An audit involves performing procedures to obtain
audit evidence about the amounts and disclosures in the consolidated
and parent financial statements. The procedures selected depend
Lars Kronow
on the auditor’s judgement, including the assessment of the risks of
State Authorised
material misstatements of the consolidated and parent financial
Public Accountant
Lone Møller Olsen
State Authorised
Public Accountant
Independent auditor’s reports | Annual report 2013 | Tryg A/S |
57
58
| Tryg A/S | Annual report 2013 | Notes Financial highlights
DKKm
2009
2010
2011
2012
2013
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Investment return after insurance technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on continuing business
Profit/loss on discontinued and divested business after tax a)
Profit/loss for the year
Run-off gains/losses, net of reinsurance
Statement of financial position
Total provisions for insurance contracts
Total reinsurers’ share of provisions for insurance contracts
Total equity
Total assets
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Gross expense ratio without adjustment
Operating ratio
Relative run-off gains/losses
Return on equity after tax (%)
Solvency ratio (Solvency I)
17,390
-12,467
-2,861
18,894
-15,111
-3,136
19,948
-15,783
-3,271
20,314
-14,675
-3,295
19,504
-14,411
-3,008
2,062
-518
145
1,689
1,083
-38
2,734
-625
2,109
-101
2,008
692
29,042
1,320
9,631
44,762
71.7
3.0
74.7
16.6
91.3
16.5
90.4
3.6
22.5
97
647
-311
124
460
550
-4
1,006
-265
741
-148
593
824
32,031
1,588
8,458
50,591
80.0
1.6
81.6
16.7
98.3
16.6
97.6
3.9
6.6
125
894
507
171
1,572
61
-30
1,603
-455
1,148
-8
1,140
944
34,220
2,067
9,007
53,362
79.1
-2.5
76.6
16.6
93.2
16.4
92.2
4.0
13.1
112
2,344
86
62
2,492
585
-60
3,017
-837
2,180
28
2,208
1,015
34,355
2,317
10,979
55,022
72.2
-0.4
71.8
16.4
88.2
16.2
87.8
4.1
22.1
90
2,085
349
62
2,496
588
-91
2,993
-620
2,373
-4
2,369
970
32,939
2,620
11,107
53,371
73.9
-1.8
72.1
15.6
87.7
15.4
87.2
3.9
21.5
90
The gross expense ratio without adjustment is calculated as the ratio of actual gross insurance operating costs to gross premium income. Other key ratios are
calculated in accordance with ‘Recommendations & Financial Ratios 2010’ issued by the Danish Society of Financial Analysts. The adjustment, which is made
pursuant to the Danish Financial Supervisory Authority’s and the Danish Society of Financial Analysts’ definitions of expense ratio and combined ratio, involves
the addition of a calculated expense (rent) in recpect of owner-occupied property based on a calculated market rent and the deduction of actual depreciation
and operating costs on owner-occupied property.
a) Profit/loss on discontinued and divested business after tax includes Marine Hull insurance, which was divested in 2010 and the Finnish branch of Tryg
Forsikring, which was sold in 2012, with authority approval in May 2013.
Financial highlights | Annual report 2013 | Tryg A/S |
59
Income statement
DKKm
Note General insurance
Gross premiums written
Ceded insurance premiums
Change in premium provisions
Change in reinsurers’ share of premium provisions
4 Premium income, net of reinsurance
5
Insurance technical interest, net of reinsurance
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers’ share of claims provisions
6 Claims, net of reinsurance
Bonus and premium discounts
Acquisition costs
Administration expenses
Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers
7
Insurance operating costs, net of reinsurance
3 Technical result
15
Investment activities
Income from associates
Income from investment property
Interest income and dividends
8
9 Value adjustments
Interest expenses
8
Administration expenses in connection with investment activities
Total investment return
5 Return on insurance provisions
Total Investment return after insurance technical interest
Other income
Other costs
Profit/loss before tax
10 Tax
Profit/loss on continuing business
11 Profit/loss on discontinued and divested business
Profit/loss for the year
27 Earnings per share of DKK 25 – continuing business
Earnings per share of DKK 25
Diluted earnings per share of DKK 25
Earnings per share of DKK 25 – discontinued and divested business
Diluted earnings per share of DKK 25 – discontinued and divested business
60 | Tryg A/S | Annual report 2013 | Income statement
2012
2013
20,128
-1,147
354
35
19,370
19,820
-1,220
36
24
18,660
62
62
-15,480
964
805
131
-13,580
-168
-2,490
-805
-3,295
103
-3,192
2,492
6
123
1,196
-16
-100
-99
1,110
-525
585
106
-166
3,017
-837
2,180
28
-14,059
1,034
-352
406
-12,971
-352
-2,227
-781
-3,008
105
-2,903
2,496
0
107
1,029
111
-112
-64
1,071
-483
588
100
-191
2,993
-620
2,373
-4
2,208
2,369
36.0
36.5
36.4
0.5
0.5
39.4
39.4
39.3
0.0
0.0
Statement of comprehensive income
DKKm
Profit/loss for the year
Other comprehensive income
Other comprehensive income which cannot subsequently be reclassified as profit or loss
Revaluation of owner-occupied property for the year
Tax on revaluation of owner-occupied property for the year
Actuarial gains/losses on defined-benefit pension plans
Tax on actuarial gains/losses on defined-benefit pension plans
Other comprehensive income which can subsequently be reclassified as profit or loss
Exchange rate adjustments of foreign entities for the year
Hedging of currency risk in foreign entities for the year
Tax on hedging of currency risk in foreign entities for the year
Total other comprehensive income
Comprehensive income
2012
2,208
2013
2,369
42
-12
-62
16
-16
193
-184
46
55
39
9
-3
179
-54
131
-326
305
-76
-97
34
2,247
2,403
Statement of comprehensive income | Annual report 2013 | Tryg A/S |
61
Statement of financial position
DKKm
Note Assets
12
Intangible assets
Operating equipment
Owner-occupied property
Assets under construction
13 Total property, plant and equipment
14
Investment property
15 Equity investments in associates
Total investments in associates
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments
Total other financial investment assets
2012
2013
759
758
138
1,443
11
1,592
122
1,304
0
1,426
2,081
2,022
21
21
199
3,261
38,862
949
1,256
44,527
18
18
150
3,741
36,971
1,301
692
42,855
16 Total investment assets
46,629
44,895
Reinsurers’ share of premium provisions
21 Reinsurers’ share of claims provisions
17 Total reinsurers’ share of provisions for insurance contracts
Receivables from policyholders
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Receivables from Group undertakings
Other receivables
16 Total receivables
18 Current tax assets
Cash at bank and in hand
19 Assets held for sale
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
237
2,080
2,317
1,149
1,149
227
1
612
1,989
0
504
742
1,246
369
121
490
237
2,383
2,620
1,088
1,088
299
0
1,033
2,420
145
553
0
698
406
148
554
Total assets
55,022
53,371
62 | Tryg A/S | Annual report 2013 | Statement of financial position
Statement of financial position
DKKm
Equity and liabilities
Note
20 Equity
2 Subordinate loan capital
21 Premium provisions
21 Claims provisions
Provisions for bonuses and premium discounts
Total provisions for insurance contracts
22 Pensions and similar obligations
23 Deferred tax liability
24 Other provisions
Total provisions
Debt relating to direct insurance
Debt relating to reinsurance
25 Amounts owed to credit institutions
26 Debt relating to unsettled funds transactions and repos
16 Derivative financial instruments
18 Current tax liabilities
19
Liabilities associated with assets held for sale
Other debt
Total debt
Accruals and deferred income
Total equity and liabilities
1 Risk management
2 Capital management
28 Contractual obligations, collateral and contingent liabilities
29 Related parties
30 Financial highlights
31 Accounting policies
2012
2013
10,979
11,107
1,597
1,818
6,688
27,242
425
34,355
1,102
1,143
98
2,343
415
256
14
1,470
775
652
742
1,030
5,354
6,212
26,087
640
32,939
791
1,057
23
1,871
447
330
6
2,821
514
409
0
652
5,179
394
457
55,022
53,371
Statement of financial position | Annual report 2013 | Tryg A/S |
63
Statement of changes in equity
DKKm
Reserve
for foreign
exchange
rate
reserves adjustment
Revalua-
tion
Equalisa-
tion
reserves
Share
capital
Other
reservesa) earnings
Retained Proposed
dividend
Total
Equity at 31 December 2011
1,533
42
92
59
1,089
5,792
400
9,007
2012
Profit/loss for the year
Change in equalisation reserve for the year
Revaluation of owner-occupied
property for the year
Exchange rate adjustment
of foreign entities for the year
Hedging of foreign currency risk in foreign
entities for the year
Actuarial gains and losses on
pension obligation
Tax on changes in equity
Total comprehensive income
0
Dividend paid
Dividend, own shares
Purchase and sale of own shares
Exercise of share options
Issue of share options and matching shares
42
-12
30
192
-184
46
54
2,208
0
42
193
-184
-62
50
2
-44
658
-2
1,594
-1
2
2
-45
-62
16
612
6
66
44
9
1,594
2,247
-400
-400
6
66
44
9
Total changes in equity in 2012
Equity at 31 December 2012
0
1,533
30
72
54
146
2
61
-45
737
1,194
1,972
1,044
6,529
1,594
10,979
64 | Tryg A/S | Annual report 2013 | Statement of changes in equity
Statement of changes in equity
DKKm
Reserve
for foreign
exchange
rate
reserves adjustment
Revalua-
tion
Equalisa-
tion
reserves
Share
capital
Other
reservesa) earnings
Retained Proposed
dividend
Total
Equity at 31 December 2012
1,533
72
146
61
1,044
6,529
1,594
10,979
2013
Profit/loss for the year
Revaluation of owner-occupied property
Exchange rate adjustment of foreign
entities for the year
Hedging of foreign currency risk
in foreign entities for the year
Actuarial gains and losses
on pension obligation
Tax on changes in equity
Total comprehensive income
0
Dividend paid
Dividend own shares
Purchase and sale of own shares
Exercise of share options
Issue of share options and matching shares
9
-3
6
-326
305
-76
-97
0
-156
-156
869
1,656
2,369
9
-326
305
179
-133
179
-54
994
15
-800
100
4
313
1,656
2,403
-1,594
62
-1,594
15
-800
100
4
128
6,842
1,656
11,107
Total changes in equity in 2013
Equity at 31 December 2013
0
1,533
6
78
-97
49
0
61
-156
888
a) Other reserves contains Norwegian Natural Perils Pool.
Proposed dividend per share DKK 27 (in 2012 DKK 26)
Dividend per share is calculated as the total dividend proposed by the Supervisory Board after the end of the financial year divided by the number
of shares at the end of the year (61,316,103 shares). The dividend is not paid until approved by the shareholders at the annual general meeting.
The possible payment of dividend from Tryg Forsikring A/S to Tryg A/S is influenced by contingency fund provisions of DKK 3,020 (DKK 3,363m in 2012).
The contingency fund provisions can be used to cover losses in connection with the settlement of insurance provisions or otherwise for the benefit of
the insured.
Statement of changes in equity | Annual report 2013 | Tryg A/S |
65
Cash flow statement
DKKm
2012
2013
Cash from operating activities
Premiums
Claims
Ceded business
Costs
Change in other debt and other amounts receivable
Cash flow from insurance activities
Interest income
Interest expenses
Dividend received
Taxes
Other income and costs
Cash from operating activities, continuing business
Cash from operating activities, discontinued and divested business
Total cash flow from operating activities
Investments
Purchase and refurbishment of real property
Sale of real property
Purchase/sale of equity investments and unit trust units (net)
Purchase/sale of bonds (net)
Deposits with credit institutions
Purchase/sale of operating equipment (net)
Hedging of currency risk
Investments, continuing business
Investments, discontinued and divested business
Total investments
Financing
Exercise of share options/purchase of own shares (net)
Subordinate loan capital
Dividend paid
Change in amounts owed to credit institutions
Financing, continuing business
Financing, discontinued and divested business
Total financing
Change in cash and cash equivalents, net
Cash and cash equivalents – discontinued and divested business
Exchange rate adjustment of cash and cash equivalents, beginning of year
Change in cash and cash equivalents, gross
Cash and cash equivalents 1 january
Cash and cash equivalents 31 December
66 | Tryg A/S | Annual report 2013 | Cash flow statement
20,200
-15,105
42
-3,094
-137
1,906
1,340
-100
15
-425
-61
2,675
37
2,712
-53
278
-563
-1,897
163
-54
-184
-2,310
-74
-2,384
110
0
-400
3
-287
58
-229
99
-11
14
102
402
504
19,610
-14,048
-63
-3,032
-1
2,466
1,006
-142
19
-1,017
-91
2,241
25
2,266
-18
2
-128
657
-420
-6
305
392
-584
-192
-700
316
-1,594
-8
-1,986
0
-1,986
89
0
-39
50
504
553
Notes
1 Risk management
Risk management in Tryg
Risk management is a key element for an insurance business and an
integral part of Tryg’s business model. Tryg’s Supervisory Board has the
overall responsibility for risk management and determines Tryg’s risk
appetite, which is laid down in policies and incorporated in the compa-
ny’s business procedures.
Danish law imposes important and labour-intensive obligations on the
Supervisory Board in terms of capital and risk management, for which
reason Tryg has chosen to set up a special sub-committee ‘the Super-
visory Board’s Risk Committee’ with representatives from the Super-
visory Board and the company’s executive management. This committee
meets once every quarter and considers subjects relating to capital and
risk management in detail.
The risk management environment is administered by the Risk Manage-
ment Committee and its sub-committees.
This takes place at an operational level and involves establishing business
procedures, contingency plans and control descriptions and ensuring
that risks are hedged as appropriate. This work is supported by decen-
tralised risk managers affiliated with the individual areas.
The risk management function is a part of the second line of defence and
ensures a consistent risk management approach across business areas.
This function carries out measurements and assessments at Group level,
and recommendations for capital management and general risk hedging
(reinsurance, inflation swaps, currency hedging etc.) are made. The risk
management function is charged with maintaining the general overview
of the company’s most important risks and reporting on an ongoing basis
on the development to the Supervisory Board and the management. In
addition, the risk management function is responsible for calculating the
company’s solvency requirement and proving that the basis for this cal-
culation takes sufficient account of the identified risks.
Risk management in Tryg is organised on the basis of three lines of de-
fence: The first line of defence is the business managers, who manage
and control all significant risks associated with their own activities.
The third line of defence is the internal audit, the most important task of
which is to carry out independent assessments of the control environ-
ment etc. for the Supervisory Board.
Line of defence
Supervisory Board
1. Line of defence
2. Line of defence
3. Line of defence
External audit
• Operational control
• Business controls
• Risk management
• Compliance
• Aktuarial function
• Internal audit
Executive Management
67
Notes | Annual report 2013 | Tryg A/S | Notes
Tryg's risk management environment
Supervisory
Board
Executive
Management
Risk management environment
• Risk appetite
• Capital
• Strategy
• Crisis
management
Supervisory Board’s
Risk Committee
Policies
Risk Management Committee
Policies
Risk reporting
Recommen-
dations
Underwriting
Reinsurance
Committee
Provisions
Committee
Investment
Risk
Committee
Operational
Risk
Committee
Systematic risk
assessment
Reporting
• Contingency
• Control
• Risk
identification
• Risk
management
The company’s own risk assessment ‘ORSA’
(Own Risk and Solvency Assessment)
ORSA is the company’s own risk assessment that is summarised in an
annual report, which is subject to Tryg’s Supervisory Board’s approval.
The risk assessment was incorporated in Danish law on 1 January 2014
through the revised Executive Order on Solvency and Operating Plans
for Insurance Companies (Bekendtgørelse om solvens og driftsplaner
for forsikringsselskaber). This risk assessment is based on the Solvency
II principles, which implies that Tryg must assess all material risks that
the company is or may be exposed to. In addition, the risk assessment
must include a review of whether the solvency requirement calculated
is sufficiently in line with Tryg’s risk profile. Finally, the risk assessment
must comprise an estimate of the capital adequacy over the strategic
planning period based on budgets and business plans taking into
account the identified risks.
In Tryg, the ORSA report has long been part of the risk management activi-
ties, and it is supported by continuous processes. The risk assessment is
thus performed continuously during the year, which means that the report
provides an annual status of the work put into identifying, measuring,
managing and monitoring risks, just as it describes the company’s general
risk profile and proposes improvements. The Supervisory Board is also
deeply involved in the ongoing ORSA processes through its board work.
Capital management
Tryg’s individual solvency requirement is calculated using a partial inter-
nal model with a safety level of 99.5%, which means that Tryg is able to
honour claims in 199 out of 200 years in compliance with the Executive
Order on Solvency and Operating Plans for Insurance Companies. This
model has been used for a number of years to calculate the individual
solvency requirement, and it is envisaged that it will be used as a partial
internal model under the coming Solvency II regime from 2016.
ORSA-report
Ongoing ORSA-processes
Risk profile assessment
• Strategy brief and business model
• Risk appetite
• Capital allocation
• Risk reports
Capital requirement assessment
• Model documentation
(description of the model, data,
validation and model change policy)
• Standard model assessment
Available capital assessment
• Capital plan
• Contingent capital plan
• Dividend & capital structure
• Reserve reports
68
| Tryg A/S | Annual report 2013 | Notes Notes
Major risk types
Underwriting risk
The risk relating to the conclusion of insurance contracts. The risk
that claims at the end of an insurance contract deviate significantly
from our pricing assumptions when concluding the contract.
Handled by the Underwriting Reinsurance Committee
Provisioning risk
At the end of a financial period, the level of technical provisions are
set to cover expected future payments in respect of claims already
incurred. The provisioning risk is the risk that future payments deviate
significantly from our assumptions when making the provisions.
Handled by the Provisions Committee
Investment risk
The risk of volatility in the financial markets impacting the Group’s
results. Investment risk includes elements such as interest rate risk,
equity risk, currency risk, credit risk and liquidity risk.
Handled by the Investment Risk Committee
Operational risk
The risk of errors, fraud or failures in internal procedures, systems
and processes.
Handled by the Operational Risk Committee
Strategic risk
The risk of changes to the conditions under which Tryg operates,
including changed legislation, competition, partnerships or market
conditions.
Handled by the Risk Management Committee
Sensitivity analysis
Insurance risk
DKKm
2012
2013
Effect of 1% change in:
Combined ratio (1 percentage point)
Claim frequency (1 percentage point)
Average claim
Premium rates
+ / -200
+/- 1,599
+/-141
+/- 197
+ / -192
+/- 1,437
+/-139
+/- 190
Provisioning risk
1% change in social inflation
10% error in the assessment of
long-tailed lines of business
(workers’ compensation, motor
liability, accident)
Investment risk
Interest rate market
Effect of 1% increase in interest curve:
Impact of interest-bearing securities
Higher discounting of
claims provisions
Net effect of interest rate rise
Impact of Norwegian
pension obligation a)
Equity market
15 % decline in equity market
Effect of derivatives
Real estate market
15 % decline in real estate markets
Currency market
Equity:
15 % decline in exposed currency
(exclusive of EUR) relative to DKK
Impact of derivatives
+/- 779
+/- 684
+/-1,870
+/-1,753
-851
864
13
291
-367
18
-849
755
-94
282
-398
-35
-530
-499
-851
868
-1,031
985
Technical result per year:
Effect of 15% change in exchange
rates of NOK and SEK relative to DKK
+/- 175
+/- 195
a) additional sensitivity information in note 22
‘Pensions and similar obligations’
69
Notes | Annual report 2013 | Tryg A/S |
Notes
In Tryg’s partial internal model, insurance risks are modelled using inter-
nal components, while investment risks, operational risks and other
risks that are not part of Tryg’s primary business concept are described
using the standard Solvency II model.
ing Tryg’s internal capital model, in which the price of reinsurance is
compared with the reduction in the capital requirement that can be
achieved.
The individual solvency requirement must be covered by the ‘adequate
capital base’ (see Note 2). The purpose of capital management in Tryg is
to support the key business objectives:
• A solid capital base, supporting both the statutory requirements and
the ambition of keeping the ‘A-’ rating from Standard & Poor’s
• A steadily rising nominal dividend per share with a distribution of 60-
90% of the net profit for the year after tax
• Return on the average equity of 20% after tax
The two first objectives are met by means of a high capital buffer, while
the last objective requires that the capital buffer is kept at a minimum,
or that the capital base mainly consists of subordinate loan capital. This
balance is assessed in the company’s capital plan and ORSA report and
forms the basis of recommendations on dividend and any extraordinary
share buy backs (see Note 2).
Based on the higher frequency of weather claims, Tryg has adjusted its
risk assessment associated with weather-related events upwards. As a
consequence of this, Tryg has taken out what is known as lateral cover
for combinations of nature-related claims. This covers a total amount of
DKK 600m with a retention of DKK300m for all claims above DKK 20m.
This means that for each nature-related claim above DKK 20m, Tryg will
be indemnified if it has already paid the retention of DKK 300m, up to a
maximum of DKK 600m.
In the field of buildings and contents insurance, major events in 2014
are covered by catastrophe reinsurance cover of DKK 5.5bn with reten-
tion of DKK 150m. The primary risk for individual events is storms, and
the scope of the cover is defined using simulation models such that this
cover will prove insufficient in statistical terms less than once every
250 years. The reinsurance programme for catastrophes also covers
other disastrous events, including terrorist attacks, up to a maximum
of DKK 4.0bn.
Risks
Underwriting risk
The underwriting risk is the risk relating to the conclusion of insurance
contracts and thus the risk that premium income does not adequately
cover the claims that Tryg is obliged to pay when damage has occurred.
This risk can to a certain extent be assessed based on statistical analy-
ses of historical experience within various business sectors.
For accident, workers’ compensation and Norwegian group life policies,
Tryg has purchased catastrophe reinsurance with cover of up to DKK
1.5bn for claims originating from the same event, including terrorism.
Accident and workers’ compensation, Norwegian group life, liability,
auto, goods and fish farming have been joined under one cover with
retention of DKK 100m for the first claim and DKK 25m for subsequent
claims.
The insurance premium must be adequate to cover expected claims,
but must also comprise a risk premium equal to the return on the part
of Tryg’s capital that is used to protect against random fluctuations. All
things being equal, this means that insurance sectors or areas which,
from experience, are subject to major fluctuations, must comprise a
larger risk premium as these require a larger capital base.
In Tryg, the ongoing assessment of the underwriting risk is based on the
capital model, which defines the target premium levels for each area of
the insurance business. This applies both when determining and updat-
ing tariffs, and when individually pricing major agreements for the cor-
porate and partner segments. The underwriting risk is managed by
means of ongoing profitability monitoring, business processes, accept-
ance policy, proxies and reinsurance. The overall management frame-
work is defined by the Supervisory Board in Tryg’s insurance policy.
Reinsurance is used to reduce the risk in areas where a special need for
this exists. The need for reinsurance is assessed on an ongoing basis us-
Denmark has established a national guarantee scheme to cover NBCR
(Nuclear Biological Chemical Radioactive) terrorist attacks. Insurance
companies in the Danish market pay claims of a total of up to DKK
500m for these types of events, and joint reinsurance then covers up to
DKK 5bn. Claims above DKK 5bn will be covered by a government guar-
antee of DKK 15bn. Tryg’s share of the total retention will be approxi-
mately DKK 100m, which will be the maximum claim as a consequence
of NBCR events.
Property damage caused by natural disasters in Norway are covered
under the Norwegian Natural Perils Pool (NNP). Insurance companies
in the Norwegian market pay claims of up to NOK 1bn for these types
of events, and joint reinsurance then covers up to NOK 12.5bn. Tryg
pays a market share of this retention (approx. 12.2% in 2014), which is
again covered by Tryg’s catastrophe programme. Tryg also utilises the
option of member companies to act as reinsurers for NNP correspond-
ing to its own share of the pool. The risk assumed is subsequently
hedged through Tryg’s catastrophe programme, thereby reducing costs.
70
| Tryg A/S | Annual report 2013 | Notes Notes
In addition, reinsurance is bought for a number of sectors which, from
experience, are exposed to major claims. The largest single risks in
Tryg’s corporate portfolio are in the area of buildings and contents in-
surance, protected by reinsurance cover of DKK 1.7bn and with reten-
tion of DKK 50m, but with additional annual retention. This means that,
in practice, retention is DKK 100m for the first claim, DKK 75m for the
second claim and DKK 50m for subsequent claims. If there are more
than four major claims in the same year, additional frequency cover has
been purchased, reducing retention to DKK 25m for subsequent
claims. Tryg buys facultative reinsurance cover for buildings and con-
tents risks with exposure above DKK 1.7bn. For Tryg’s subsidiary Tryg
Garantiforsikring A/S, the maximum retention is limited to DKK 30m.
In the event of a major insurance event covered by the reinsurance pro-
gramme, receivables from reinsurers may increase, entailing a credit
risk. This risk is managed through requirements to assess the reinsur-
ers’ credit ratings and to spread reinsurance across several reinsurers.
Provisioning risk
At the end of the term of insurance, the insurance risk relates to the
claims provisions made to cover future payments in respect of damage
which has already occurred. When damage occurs, there may be a cer-
tain delay before the customer submits a claim. Depending on the com-
plexity of the claim, a longer or shorter period of time may pass before
the size of the claim is finally agreed. This may be a prolonged process,
particularly for personal injuries. Even once the claim has been settled,
there is a risk that it will be reopened at a later date, triggering further
payments.
In determining the claims provisions, both individual assessments
and statistical calculations are used. At the end of 2013, claims provi-
sions totalled DKK 28,087m. The duration of these provisions, that is,
the average time until these amounts were disbursed to customers,
was 3.4 years. Most of the claims provisions relate to personal injury
claims. These provisions are exposed to changes in inflation, the dis-
count rate, disbursement patterns, economic trends, legislation and
court decisions.
The calculation of claims provisions will always be subject to uncer-
tainty. Historically, many insurers have experienced substantial positive
as well as negative impacts on profit (run-off) resulting from provision-
ing risk, and this is also expected to be the case in future. The Supervi-
sory Board defines the overall framework for managing provision risk in
Tryg’s insurance policy.
This implies, among other things, that the provisions assessments are
based on underlying model analyses, that quarterly internal control cal-
culations are performed, supplemented by periodic external reviews,
and that a safety surcharge is charged to approximate market value.
Claims provisions relating to annuities under Danish workers’ compen-
sation insurance are discounted using the current market rate and si-
multaneously increased based on the wage inflation rate each year.
This exposes Tryg to an explicit inflation risk. To hedge this, Tryg uses a
number of zero coupon inflation swaps in Danish kroner, in which Tryg
receives a fixed amount in return for payment of an amount based on
the trend in Danish consumer prices. Tryg is exposed to interest rate
changes as a result of its provisions under the Norwegian pension
scheme, which is a defined-benefit plan covering approximately1,376
employees. This scheme was closed to new employees in 2008, and
the total provision was DKK 723m at the end of 2013. The Norwegian
pension provision is also sensitive to changes in the life expectancy as
well as salary and pension adjustments.
It is expected that a new bill on occupational pensions will be passed in
Norway in 2014. It is not yet clear what the exact consequences of this
legislation will be, but it will probably lead to a reduction of Tryg’s Nor-
wegian pension provision. Changes in the pension provision are not
recognised in the income statement, but are charged directly to equity.
Operational risk
Operational risk relates to errors or failures in internal procedures,
fraud, breakdown of infrastructure, IT security and similar factors. As
operational risks are mainly internal, Tryg focuses on establishing an ad-
equate control environment for its operations. In practice, this work is
organised by means of procedures, controls and guidelines that cover
the various aspects of Tryg’s operations, including the IT security policy.
Tryg has also set up a security and investigation unit to handle internal
fraud, IT security, physical security and contingency plans.
The Supervisory Board defines the overall framework for managing op-
erational risk in Tryg’s IT security policy and operational risk policy.
These risks are managed via the Operational Risk Committee, which is
a sub-committee of the Group’s Risk Committee.
Tryg has set up a crisis management structure to deal with the eventual-
ity that Tryg is hit by major crises. This comprises a Crisis Management
Team at Group level, national contingency teams at country level and fi-
nally business contingency in the individual areas. Tryg has prepared
contingency plans to handle the most important areas, such as contin-
gency plans for handling prolonged IT breakdowns in the individual ar-
eas of the business. The contingency plans were tested in the autumn
of 2013 in a major exercise with a satisfactory result.
Strategic risk
Strategic risk relates to Tryg’s choice of strategic position, including IT
strategy, flexibility relative to the market, business partners and reputa-
tion, as well as changed market conditions. The Supervisory Board is
closely involved in the management of strategic risk.
71
Notes | Annual report 2013 | Tryg A/S | Notes
DKKm
Claims provisions – estimated accumulated claims
Gross
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Estimated acc.
claims, end of year 10,406
10,513
1 year later
10,191
2 years later
10,185
3 years later
10,218
4 years later
10,192
5 years later
10,120
6 years later
9,990
7 years later
9,904
8 years later
9,924
9 years later
9,829
10 years later
9,829
10,753
10,768
10,629
10,517
10,253
10,336
10,116
10,003
9,966
9,926
11,486
11,381
11,221
10,834
10,981
10,920
10,823
10,835
10,807
11,276
11,533
11,055
11,288
11,221
11,211
11,189
11,151
12,210
12,814
13,396
13,377
13,372
13,275
13,143
12,832
14,208
14,084
14,094
14,049
13,951
14,261
14,933
14,957
14,734
14,611
16,579
16,681
16,627
16,502
16,904
17,317
17,300
14,392
14,371
14,225
9,926
10,807
11,151
13,143
13,951
14,611
16,502
17,300
14,371
14,225 145,815
Cumulative
payments to date
Provisions before
discounting, end
of year
Discounting
Reserves from 2002
and prior years
Other
Gross claims pro-
visions, end of year
-9,395
-9,416
-10,099
-10,160
-11,936
-12,116
-12,614
-13,857
-14,097
-10,356
-6,570 -120,615
434
-55
510
-78
708
-112
990
-157
1,207
-154
1,835
-224
1,997
-214
2,646
-233
3,203
-234
4,015
-251
7,655
-279
25,201
-1,990
2,060
816
26,087
Ceded business
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
896
861
857
913
835
831
840
838
898
942
945
945
823
837
877
875
861
870
870
859
857
861
935
829
835
829
855
851
835
834
826
287
286
272
305
305
301
299
301
508
473
488
493
514
484
514
172
239
203
192
192
179
297
371
349
301
303
1,478
2,206
2,328
697
778
771
747
256
289
567
861
826
301
514
179
303
747
2,328
289
567
7,861
-856
-799
-804
-289
-483
-170
-275
-538
-1,821
-171
-44
-6,250
90
-5
61
-5
22
-2
12
-1
32
-2
9
-1
28
-1
209
-3
507
-16
118
-7
523
-5
1,610
-46
216
603
2,383
Estimated acc.
claims, end of year
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
7 years later
8 years later
9 years later
10 years later
Cumulative
payments to date
Provisions before
discounting,
end of year
Discounting
Reserves from 2002
and prior years
Other
Reinsurers’ share
of claims provis-
ions, end of year
72
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
Claims provisions – estimated accumulated claims
Net of reinsurance
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Estimated acc.
claims, end of year
1 year later
2 years later
3 years later
4 years later
5 years later
6 years later
7 years later
8 years later
9 years later
10 years later
Cumulative
payments to date
Provisions before
discounting,
end of year
Discounting
Reserves from 2002
and prior years
Other
Claims provisions,
net of reinsurance,
end of year
9,510
9,652
9,334
9,272
9,383
9,362
9,279
9,152
9,006
8,982
8,884
8,884
9,930
9,931
9,753
9,642
9,392
9,466
9,245
9,144
9,109
9,066
10,551
10,552
10,386
10,006
10,126
10,070
9,988
10,001
9,981
10,989
11,247
10,782
10,982
10,916
10,910
10,890
10,850
11,702
12,340
12,908
12,884
12,858
12,791
12,629
12,660
13,968
13,880
13,901
13,857
13,773
13,964
14,562
14,608
14,432
14,307
15,882
15,903
15,856
15,755
15,426
15,111
14,972
14,136
14,082
13,657
9,066
9,981
10,850
12,629
13,773
14,307
15,755
14,972
14,082
13,657 137,955
-8,539
-8,617
-9,295
-9,871
-11,454
-11,946
-12,339
-13,319
-12,275
-10,184
-6,526 -114,365
345
-50
449
-73
686
-111
979
-156
1,175
-152
1,826
-223
1,968
-213
2,437
-230
2,696
-218
3,898
-244
7,132
-274
23,591
-1,944
1,844
213
23,704
Other provisions comprise the claims provisions for Tryg Garantiforsikring A/S.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2013 to prevent the impact of
exchange rate fluctuations.
73
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
0-1 year
1-2 years
2-3 years
> 3 years
Other
Expected cash flow
Claims provisions (continued)
2013
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2012
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
5,765
-219
9,820
-842
14,524
6,107
-222
9,914
-941
14,858
136
0
4,442
-253
4,325
180
0
4,562
-387
4,355
131
0
2,805
-249
2,687
182
0
2,956
-190
2,948
144
0
8,204
-436
7,912
189
0
9,410
-375
9,224
36
-18
816
-603
231
30
-15
400
-187
228
Carrying
amount
Total
6,212
-237
26,087
-2,383
29,679
6,688
-237
27,242
-2,080
31,613
Other comprises Tryg Garantiforsikring A/S.
Investment risk
The overall framework for managing investment risk is defined by the
Supervisory Board in Tryg’s investment policy. In overall terms, Tryg’s in-
vestment portfolio is divided into a match portfolio and a free portfolio.
The match portfolio corresponds to the value of the discounted claims
provisions and is designed to hedge the interest rate sensitivity of these
to the widest possible extent. Tryg carries out daily monitoring, follow-
up and risk management of the Group’s interest rate risk. The swap and
bond portfolio is thus adjusted continuously to minimise the net inter-
est rate risk.
In practice, it is not possible or expedient to aim for a complete match.
The administration costs alone associated with a complete match
mean that, in practice, a certain degree of mismatch is acceptable
within an appropriate limit defined in the investment policy. Add to this
that the provisions are discounted using a mathematical interest rate
curve specified by the Danish Financial Supervisory Authority, which
cannot be perfectly replicated in the market, for which reason a certain
degree of mismatch must be accepted for regulatory reasons.
In addition, the free portfolio is subject to the framework defined by the
Supervisory Board through the investment policy. Tryg’s largest invest-
ment risk pertains to its shareholdings, the value of which is directly de-
pendent on how the equity markets fare. At the end of 2013, the equity
portfolio accounted for 6.2% of the total investment assets. This share
is expected to be at a similar level in 2014.
74
Tryg’s property portfolio mainly comprises owner-occupied and invest-
ment properties, the value of which is adjusted based on the conditions
on the property market through property valuations. At the end of
2013, investment properties accounted for 4.7%, while owner-occu-
pied properties accounted for 2.8% of the total investment assets.
Property investments are expected to be at a similar level in 2014.
Tryg’s does not wish to speculate in foreign currency, but since Tryg in-
vests and operates its business in other currencies than Danish kroner,
Tryg is exposed to currency risk. Tryg is primarily exposed to fluctua-
tions in the other Scandinavian currencies due to its ongoing insurance
activities. Premiums earned and claims paid in other currencies create
a natural currency hedge, for which reason other risk mitigation meas-
ures are not required in this area. However, the part of equity held in
other currencies than Danish kroner will be exposed to currency risk.
This risk is hedged on an ongoing basis using currency swaps.
In addition to the above-mentioned risks, Tryg is exposed to credit,
counterparty and concentration risk. These risks primarily relate to ex-
posures in high-yield bonds, emerging market debt exposures as well as
Tryg’s investments in AAA-rated Nordic and European government and
mortgage bonds. These risks are also managed through the investment
policy and the framework for reinsurance defined in the insurance pol-
icy. For an insurance company like Tryg, liquidity risk is practically non-
existent, as premium payments fall due before claims payments.
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
Investment risk
Bond portfolio
Duration 1 year or less
Duration 1 year – 5 years
Duration 5 – 10 years
Duration more than 10 years
Total
Duration
The option adjusted duration is used to measure duration. The option adjustment relates primarily to Danish
mortgage bonds and reflects the expected duration-shortening effect of the borrower’s option to cause the
bond to be redeemed through the mortgage institution at any point in time.
Listed shares
Nordic countries
United Kingdom
Rest of Europe
United States
Asia etc.
Total
The portfolio of unlisted shares totals
The share portfolio includes exposure from share derivaties of DKK 325m. ( in 2012 DKK -120m)
Unlisted equity investments are based on an estimated market price
2012
2013
20,210
15,735
2,641
2,216
40,802
2.1
18,748
14,000
3,188
2,403
38,339
2.3
2012
2013
458
102
483
632
429
2,104
199
393
141
793
892
591
2,810
150
Exposure to exchange rate risk
Property
Bonds
incl. derivatives
Shares incl.
derivatives
Insurance
Hedge
Exposure
2013
USD
EUR
GBP
NOK
SEK
Other
Total
2012
USD
EUR
GBP
NOK
SEK
Other
Total
0
0
0
820
1
0
0
0
0
941
1
0
290
1,189
0
12,252
3,255
0
0
1,819
0
14,785
2,702
731
1,074
389
70
506
29
570
728
412
94
577
589
508
23
-1,054
11
-10,352
-1,979
-5
-15
-1,547
10
-12,950
-1,741
-87
-1,335
664
-91
-2,981
-1,280
-379
-700
-338
-104
-3,481
-1,546
-1,003
52
1,188
-10
245
26
186
1,707
13
346
0
-128
5
149
641
75
Notes | Annual report 2013 | Tryg A/S |
Notes
Impact of exchange rate fluctuations in SEK and NOK
on technical result
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Impact of exchange rate fluctuations in SEK and NOK
on technical result
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Impact of exchange rate fluctuations in SEK and NOK
on statement of financial position
Assets
Intangible assets
Total property, plant and equipment
Investment property
Investments in associates
Other financial investment assets
Reinsurers’ share of provisions for insurance contracts
Receivables
Other assets
Prepayments and accrued income
Total assets
Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Total provisions
Other debt
Accruals and deferred income
Total equity and liabilities
76
2012
20,314
-14,675
-3,295
2,344
86
62
2,492
2011
19,948
-15,783
-3,271
894
507
171
1,572
2013
Change
Currency
Change excl.
effect currency effect
19,504
-14,411
-3,008
2,085
349
62
2,496
-810
264
287
-259
263
0
4
-253
161
38
-54
11
-1
-44
-557
103
249
-205
252
1
48
2012
Change
Currency
Change excl.
effect currency effect
20,314
-14,675
-3,295
2,344
86
62
2,492
366
1,108
-24
1,450
-421
-109
920
376
-274
-65
37
2
3
42
-10
1,382
41
1,413
-423
-112
878
2012
2013
Change
Currency
Change excl.
effect currency effect
759
1,592
2,081
21
44,527
2,317
1,989
1,246
490
55,022
10,979
1,597
34,355
2,343
5,354
394
55,022
758
1,426
2,022
18
42,855
2,620
2,420
698
554
53,371
11,107
1,818
32,939
1,871
5,179
457
53,371
-1
-166
-59
-3
-1,672
303
431
-548
64
-1,651
128
221
-1,416
-472
-175
63
-1,651
-24
-75
-51
-3
-2,582
-146
-98
-34
-20
-3,033
-21
-90
-2,936
-238
-738
-10
-3,033
23
-91
8
0
910
449
529
-514
84
1,382
149
311
520
-234
563
73
1,382
| Tryg A/S | Annual report 2013 | Notes
Notes
Impact of exchange rate fluctuations in SEK and NOK
on statement of financial position
Assets
Intangible assets
Total property, plant and equipment
Investment property
Investments in associates
Other financial investment assets
Reinsurers’ share of provisions for insurance contracts
Receivables
Other assets
Prepayments and accrued income
Total assets
Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Total provisions
Other debt
Accruals and deferred income
Total equity and liabilities
Credit risk
Bond portfolio by ratings
AAA to A
Other
Not rated
Total
Reinsurance balances
AAA to A
Other
Not rated
Total
2011
2012
Change
Currency
Change excl.
effect currency effect
952
1,857
2,199
14
43,392
2,067
1,665
495
721
53,362
9,007
1,589
34,398
2,228
5,808
332
53,362
759
1,592
2,081
21
44,527
2,317
1,989
1,246
490
55,022
10,979
1,597
34,355
2,343
5,354
394
55,022
2012
DKKm
37,900
716
246
38,862
1,578
9
136
1,723
-193
-265
-118
7
1,135
250
324
751
-231
1,660
1,972
8
-43
115
-454
62
1,660
2012
%
97.5
1.8
0.6
100.0
91.6
0.5
7.9
100.0
24
33
23
1
1,153
74
46
23
4
1,381
7
0
929
138
300
7
1,381
2013
DKKm
36,456
514
1
36,971
2,268
1
140
2,409
-217
-298
-141
6
-18
176
278
728
-235
279
1,965
8
-972
-23
-754
55
279
2013
%
98.6
1.4
0.0
100.0
94.2
0.0
5.8
100.0
77
Notes | Annual report 2013 | Tryg A/S |
Notes
Liquidity risk
Maturity of the Group’s financial obligations including interest
2013
0-1 year
1-5 years
> 5 years
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
2012
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
89
6
2,821
219
1,838
4,973
541
14
1,470
85
3,095
5,205
356
0
0
199
0
555
201
0
0
160
0
361
2,558
0
0
125
0
2,683
1,514
0
0
694
0
2,208
Total
3,003
6
2,821
543
1,838
8,211
2,256
14
1,470
939
3,095
7,774
Interest on loans for a perpetual term has been recognised for the first fifteen years.
2 Capital management
Tryg’s capital base consists of equity and subordinate loan capital. The
relationship between these is evaluated on an ongoing basis in order to
maintain an optimum structure which takes into account the return on
equity, the capital cost and flexibility. The authorities impose a require-
ment that companies must determine the capital base, which consists
of equity minus intangible assets, discount effect and other statutory
corrections plus subordinate loan capital. The additional capital can be
included by up to 50% of the minimum requirement under Solvency I,
although additional capital with a definite maturity may not exceed 25%
of the minimum requirement.
The new version of the Executive Order on Solvency and Operating
Plans contains an annex on calculation of the ‘adequate capital base’.
However, this is only a temporary measure of the companies’ individual
solvency requirement until the entry into force of a new financial state-
ments order (expected on 1 January 2015). For Tryg, the adequate capi-
tal base will be slightly higher than the capital base for accounting pur-
poses, as some of the above-mentioned corrections do not apply to the
calculation of an adequate capital base. It is expected that a new finan-
cial statements order, which will enter into force in 2015, will offer
wider scope for including capital elements and for gearing.
Given Tryg’s desire to optimise its capital structure in light of the
currently favourable market conditions for core capital, Tryg refinanced
a subordinate loan of EUR 65m with a definite maturity to a new sub-
ordinate loan of NOK 800m with indefinite maturity in 2013. Due to
its indefinite maturity, the new subordinate loan may be included in
the capital base by up to 50% of the company’s minimum requirement
under Solvency I. It is also expected that the subordinate loan may be
included as Tier 2 capital under Solvency II.
Tryg’s total subordinated debt is DKK 1,818m. In total, debt amounted
to 16% of equity at the end of 2013, and interest expenses in 2013
amounted to DKK 89m.
Based on its strong capital position, expectations for future earnings
and the objective of achieving a return on equity of 20% after tax, Tryg
initiated an extraordinary share buy back of DKK 1,000m on 2 January
2014. This will continue throughout 2014.
78
| Tryg A/S | Annual report 2013 | Notes
Notes
Mio. DKK
Capital adequacy
Equity according to annual report
Proposed dividend
Solvency requirements of subsidiaries – 50%
Tier 1 Capital
Subordinate loan capital
Solvency requirements of subsidiaries – 50%
Capital base
Weighted assets
Solvency ratio
2012
2013
10,979
-1,594
-2,406
6,979
873
-2,405
5,447
11,107
-1,656
-2,307
7,144
1,551
-2,307
6,388
6,048
7,111
90
90
The capital base and the solvency ratio are calculated in accordance with the Danish Financial Business Act..
Subordinary loan capital
Tryghedsgruppen smba
EUR 65m
Bond loan
EUR 150m
Bond loan
NOK 800m
2012
2013
2012
2013
2012
2013
The fair value of the loan at the statement
of financial position date
The fair value of the loan at the statement
of financial position date is based on a price of
Total capital losses and costs at the statement
of the financial position date
Interest expenses for the year
Effective interest rate
490
101
0
30
0.4%
-
-
-
6
-
1,119
1,127
100
7
50
4.4%
101
5
50
4.1%
Loan terms:
Lender
Principal
Issue price
Issue date
Maturity year
Loan may be called by lender as from
Repayment profile
Interest structure
Called in April 2013.
Listed bonds
EUR 150m
99.017
December 2005
2025
2015
Interest-only
-
-
-
-
-
741
105
5
33
4.8%
Listed bonds
NOK 800m
100
March 2013
Perpetual
2023
Interest-only
4.5%
(until 2015)
3.75 % above NIBOR 3M
(until 2023)
2.1% above EURIBOR 3M
(from 2015)
4.75 % above NIBOR 3M
(from 2023)
The share of capital included in the calculation of the capital base total DKK 1,551m ( in 2012 DKK 873m). The loans are initially recognised at fair value on
the date on which a loan is entered and subsequently measured at amortised cost. The loans are taken by Tryg Forsikring A/S.The creditors have no option to
call the loans before maturity or otherwise terminate the loan agreements. The loans are automatically accelerated upon the liquidation or bankruptcy of Tryg
Forsikring A/S. Prices used for determination of fair value in respect of both loans are based on actual traded prices from Bloomberg.
79
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other
Group
3 Operating segments
2013
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Investment return after insurance
technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on continuing business
Profit/loss on discontinued and
divested business
Profit/loss
Run-off gains/losses,
net of reinsurance
Intangible assets
Equity investments in associates
Reinsurers’ share of premium
provisions
Reinsurers’ share of claims provisions
Assets held for sale
Other assets
Total assets
Premium provisions
Claims provisions
Provisions for bonuses and
premium discounts
Liabilities associated with
assets held for sale
Other liabilities
Total liabilities
9,366
-6,596
-1,418
-43
26
1,335
3,528
-2,438
-680
19
10
439
5,041
-4,201
-630
348
15
573
1,587
-1,178
-280
9
11
149
-18
2
0
16
0
0
310
176
464
8
265
9
404
219
1,641
2,727
6,377
507
1,281
5,992
29
1,374
11,961
94
20
463
1
73
830
1,757
10
0
295
18
0
0
0
49,975
0
0
0
0
9,325
19,504
-14,411
-3,008
349
62
2,496
588
-91
2,993
-620
2,373
-4
2,369
970
758
18
237
2,383
0
49,975
53,371
6,212
26,087
640
0
9,325
42,264
80
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other
Group
3 Operating segments (continued)
2012
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Investment return after insurance
technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on continuing business
Profit/loss on discontinued and
divested business
Profit/loss
Run-off gains/losses,
net of reinsurance
Intangible assets
Equity investments in associates
Reinsurers’ share of premium
provisions
Reinsurers’ share of claims provisions
Assets held for sale
Other assets
Total assets
Premium provisions
Claims provisions
Provisions for bonuses
and premium discounts
Liabilities associated with assets
held for sale
Other liabilities
Total liabilities
Description of segments
9,733
-7,084
-1,524
81
27
1,233
3,687
-2,372
-748
32
5
604
5,258
-3,929
-648
-37
6
650
1,654
-1,267
-306
-3
24
102
-18
-23
-69
13
0
-97
326
212
506
1
249
0
319
236
1,448
2,899
6,479
291
1,397
6,203
1,414
13,011
32
101
-29
502
0
64
978
1,549
0
0
257
21
0
0
742
51,183
0
0
1
742
8,946
20,314
-14,675
-3,295
86
62
2,492
585
-60
3,017
-837
2,180
28
2,208
1,015
759
21
237
2,080
742
51,183
55,022
6,688
27,242
425
742
8,946
44,043
Please refer to the accounting principles for a description of operating segments. Amounts relating to eliminations, restructuring expenses
and discontinued and divested business are included under ‘Other’. Other assets and liabilities are managed at Group level and are therefore
not allocated to the individual segments but are included under ‘Other’.
Costs are allocated according to specific keys, which are believed to provide the best estimate of assessed resource consumption.
81
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
2009
2010
2011
2012
2013
3 Geographical segments
Danish general insurance a)
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
9,533
1,190
423
71.4
2.5
73.9
14.6
88.5
9,648
195
615
81.6
0.7
82.3
16.2
98.5
10,019
1,033
770
83.3
-8.1
75.2
15.1
90.3
9,910
1,441
571
71.1
-0.2
70.9
14.5
85.4
9,534
1,202
566
79.5
-7.0
72.5
15.0
87.5
Number of full-time employees 31 December
2,296
2,349
2,315
2,187
2,046
Norwegian general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
6,750
618
277
70.8
3.7
74.5
17.0
91.5
7,490
389
177
76.7
3.1
79.8
15.7
95.5
7,916
598
181
73.2
3.2
76.4
17.0
93.4
8,239
1,017
465
72.4
-1.0
71.4
16.8
88.2
7,819
1,258
387
65.1
4.1
69.2
15.3
84.5
Number of full-time employees 31 December
1,398
1,338
1,338
1,282
1,199
Swedish general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Number of full-time employees 31 December
1,111
-75
-8
80.6
1.8
82.4
25.1
107.5
425
1,769
-124
32
84.6
0.8
85.4
22.4
107.8
414
2,050
-59
-7
82.0
2.6
84.6
20.3
104.9
423
2,183
131
-21
75.3
1.5
76.8
18.6
95.4
444
2,169
36
17
80.6
0.7
81.3
17.6
98.9
458
82
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
2009
2010
2011
2012
2013
3 Geographical segments
Other b)
Gross premium income
Technical result
Tryg
Gross premium income
Technical result
Investment return
Other income and costs
Profit/loss before tax
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio c)
Combined ratio
-4
-44
-13
0
-37
0
-18
-97
-18
0
17,390
18,894
19,948
20,314
19,504
1,689
1,083
-38
2,734
692
71.7
3.0
74.7
16.6
91.3
460
550
-4
1,006
824
80.0
1.6
81.6
16.7
98.3
1,572
61
-30
1,603
944
79.1
-2.5
76.6
16.6
93.2
2,492
585
-60
3,017
1,015
72.2
-0.4
71.8
16.4
88.2
2,496
588
-91
2,993
970
73.9
-1.8
72.1
15.6
87.7
Number of full-time employees, continuing business
at 31 December
4,119
4,101
4,076
3,913
3,703
Number of full-time employees, discontinued and
divested business at 31 December
217
191
242
189
0
a) Includes Danish general insurance and Finnish guarantee insurance.
b) Amounts relating to eliminations, restructuring expenses and discontinued and divested business are included under ‘Other’.
c) Adjustment of gross expense ratio included only in ‘Tryg ‘. The adjustment is explained in a footer to Financial highlights.
83
Notes | Annual report 2013 | Tryg A/S |
NotesNotes
DKKm
3 Technical result, net of reinsurance, by line of business
Accident and health
Health care
Workers’ compensation
Motor TPL insurance
Motor comprehensive insurance
Marine, aviation and cargo insurance
2012
1,838
1,831
- 1,456
- 241
- 12
4
126
79.5
93.3
4.2%
39,432
36,243
2013
1,798
1,740
- 1,282
- 219
- 3
4
240
73.7
86.4
4.4%
36,905
36,480
2012
327
350
- 224
- 29
0
1
98
64.0
72.3
2013
324
326
- 209
- 29
0
1
89
64.1
73.0
106.3%
5,837
47,547
108.8%
4,918
45,694
2012
1,076
1,089
- 687
- 135
- 14
- 21
232
63.1
76.8
16.5%
97,258
9,582
2013
1,039
1,007
- 394
- 128
- 36
- 6
443
39.1
55.4
16.8%
89,638
9,209
Fire and contents (Private)
Fire and contents (Commercial)
Change of ownership
Liability insurance
Credit and guarantee insurance
Tourist assistance insurance
2012
4,803
4,831
- 3,664
- 863
97
20
421
75.8
91.7
2013
4,739
4,693
- 3,405
- 794
- 21
18
491
72.6
89.9
7.8%
11,856
306,088
9.0%
10,508
348,296
2012
2,758
2,793
- 2,051
- 436
46
14
366
73.4
87.4
18.6%
58,678
32,471
2013
2,651
2,632
- 1,933
- 419
- 126
10
164
73.4
94.1
23.1%
56,519
38,033
2012
2013
35
89
- 81
- 7
0
0
1
91.0
98.9
7.2%
25,631
4,280
66
79
- 52
- 8
0
0
19
65.8
75.9
8.1%
25,531
4,349
Other
insurance c)
Total exclusive of
Norwegian Group Life
Norwegian Group Life,
one-year policies
2012
114
100
- 127
- 159
30
0
- 156
127.0
256.0
34,658
512
2013
2012
2013
19,574
19,730
- 14,139
- 3,259
87
54
2,473
71.7
88.0
19,276
18,980
- 13,887
- 2,977
351
56
2,523
73.2
87.2
101
102
- 24
- 74
- 12
0
- 8
23.5
107.8
63,990
210
2012
554
584
- 536
- 36
- 1
8
19
91.8
98.1
2013
544
524
- 524
- 31
- 2
6
- 27
100.0
106.3
18.1%
11,244
240,070
19.4%
10,644
238,955
20.1%
84,256
2,659
21.0%
68,910
2,621
2012
4,013
4,011
- 2,617
- 641
- 4
16
765
65.2
81.3
2012
309
307
- 201
- 61
- 28
3
20
65.5
94.5
0.3%
83
2013
3,986
3,884
- 2,532
- 602
- 2
14
762
65.2
80.7
2013
336
326
- 888
- 47
629
2
22
272.4
93.9
0.3%
127
2012
392
386
- 158
- 39
- 25
0
164
40.9
57.5
2012
564
569
- 413
- 79
- 1
3
79
72.6
86.6
2013
359
344
- 167
- 39
- 91
1
48
48.5
86.3
2013
569
571
- 425
- 80
- 1
2
67
74.4
88.6
2,541,601
6,994,362
12.3%
8,889
53,491
14.0%
8,265
54,848
2012
2,400
2,456
- 1,742
- 430
- 12
14
286
70.9
88.9
5.1%
25,090
72,300
2012
945
918
- 718
- 139
10
0
71
78.2
92.3
2013
2,322
2,298
- 1,728
- 403
- 36
7
138
75.2
94.3
5.7%
24,059
73,973
2013
986
978
- 848
- 135
50
3
48
86.7
95.4
10.0%
76,535
8,927
11.6%
59,246
10,566
Total
2012
2013
20,128
20,314
- 14,675
- 3,295
86
62
2,492
72.2
88.2
19,820
19,504
- 14,411
- 3,008
349
62
2,496
73.9
87.7
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Average claims DKK b)
Total claims
84
| Tryg A/S | Annual report 2013 | Notes
Notes
Accident and health
Health care
Workers’ compensation
Motor TPL insurance
Motor comprehensive insurance
Marine, aviation and cargo insurance
2012
2,400
2,456
- 1,742
- 430
- 12
14
286
70.9
88.9
5.1%
25,090
72,300
2013
2,322
2,298
- 1,728
- 403
- 36
7
138
75.2
94.3
5.7%
24,059
73,973
2012
4,013
4,011
- 2,617
- 641
- 4
16
765
65.2
81.3
2013
3,986
3,884
- 2,532
- 602
- 2
14
762
65.2
80.7
2012
392
386
- 158
- 39
- 25
0
164
40.9
57.5
2013
359
344
- 167
- 39
- 91
1
48
48.5
86.3
18.1%
11,244
240,070
19.4%
10,644
238,955
20.1%
84,256
2,659
21.0%
68,910
2,621
Fire and contents (Private)
Fire and contents (Commercial)
Change of ownership
Liability insurance
Credit and guarantee insurance
Tourist assistance insurance
2012
945
918
- 718
- 139
10
0
71
78.2
92.3
2013
986
978
- 848
- 135
50
3
48
86.7
95.4
2012
309
307
- 201
- 61
- 28
3
20
65.5
94.5
2013
336
326
- 888
- 47
629
2
22
272.4
93.9
2012
564
569
- 413
- 79
- 1
3
79
72.6
86.6
2013
569
571
- 425
- 80
- 1
2
67
74.4
88.6
10.0%
76,535
8,927
11.6%
59,246
10,566
0.3%
2,541,601
83
0.3%
6,994,362
127
12.3%
8,889
53,491
14.0%
8,265
54,848
Total
2012
2013
20,128
20,314
- 14,675
- 3,295
86
62
2,492
72.2
88.2
19,820
19,504
- 14,411
- 3,008
349
62
2,496
73.9
87.7
a) The claims frequency is calculated as the number of claims
incurred in the year in proportion to the average number of
insurance contracts in the year.
b) Average claims are total claims before run-off in the year
relative to the number of claims in the year.
c) Other insurance, gross claims and gross operating expenses
include restructuring costs of DKK 28m and DKK 69m,
respectively, in 2012
85
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Average claims DKK b)
Total claims
2012
1,838
1,831
- 1,456
- 241
- 12
4
126
79.5
93.3
4.2%
39,432
36,243
2012
4,803
4,831
- 3,664
- 863
97
20
421
75.8
91.7
2012
114
100
- 127
- 159
30
0
- 156
127.0
256.0
34,658
512
2013
1,798
1,740
- 1,282
- 219
- 3
4
240
73.7
86.4
4.4%
36,905
36,480
2013
4,739
4,693
- 3,405
- 794
- 21
18
491
72.6
89.9
101
102
- 24
- 74
- 12
0
- 8
23.5
107.8
63,990
210
2012
327
350
- 224
- 29
0
1
98
64.0
72.3
106.3%
5,837
47,547
2012
2,758
2,793
- 2,051
- 436
46
14
366
73.4
87.4
18.6%
58,678
32,471
19,574
19,730
- 14,139
- 3,259
87
54
2,473
71.7
88.0
2013
324
326
- 209
- 29
0
1
89
64.1
73.0
108.8%
4,918
45,694
2013
2,651
2,632
- 1,933
- 419
- 126
10
164
73.4
94.1
23.1%
56,519
38,033
19,276
18,980
- 13,887
- 2,977
351
56
2,523
73.2
87.2
2012
2013
2012
1,076
1,089
- 687
- 135
- 14
- 21
232
63.1
76.8
16.5%
97,258
9,582
35
89
- 81
- 7
0
0
1
91.0
98.9
7.2%
25,631
4,280
2012
554
584
- 536
- 36
- 1
8
19
91.8
98.1
2013
1,039
1,007
- 394
- 128
- 36
- 6
443
39.1
55.4
16.8%
89,638
9,209
66
79
- 52
- 8
0
0
19
65.8
75.9
8.1%
25,531
4,349
2013
544
524
- 524
- 31
- 2
6
- 27
100.0
106.3
7.8%
11,856
306,088
9.0%
10,508
348,296
Other
insurance c)
Total exclusive of
Norwegian Group Life
Norwegian Group Life,
one-year policies
2013
2012
2013
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
2012
2013
4 Premium income, net of reinsurance
Direct insurance
Indirect insurance
Unexpired risk provision
Ceded direct insurance
Ceded indirect insurance
20,395
60
20,455
27
20,482
-1,051
-61
19,370
Direct insurance, by location of risk
2012
2013
Denmark
Other EU countries
Other countries
Gross
9,947
2,176
8,299
Ceded
-541
-61
-449
Gross
9,709
2,162
7,902
19,740
83
19,823
33
19,856
-1,161
-35
18,660
Ceded
-719
-39
-403
20,422
-1,051
19,773
-1,161
5
Insurance technical interest, net of reinsurance
Return on insurance provisions
Discounting transferred from claims provisions
6 Claims, net of reinsurance
Claims
Run-off previous years, gross
Reinsurance cover received
Run-off previous years, reinsurers’ share
7
Insurance operating costs, net of reinsurance
Commission regarding direct insurance contracts
Other acquisition costs
Total acquisition costs
Administration expenses
Insurance operating costs, gross
Commission from reinsurers
86
2012
525
-463
62
-14,958
283
-14,675
363
732
-13,580
-477
-2,013
-2,490
-805
-3,295
103
-3,192
2013
483
-421
62
-15,273
862
-14,411
1,332
108
-12,971
-379
-1,848
-2,227
-781
-3,008
105
-2,903
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
2012
2013
7
Insurance operating costs, net of reinsurance (continued)
Administative expenses include fee to the auditors appointed by the annual general meeting:
Deloitte
The fee is divided into:
Statutory audit
Tax advice
Other services
In adddition, expenses have been incurred for the Group´s Internal Audit Department.
In the calculation of the expense ratio, costs are stated exclusive of depreciation and operating costs
on the owner-occupied property but including a calculated rent concerning the owner-occupied
property based on a calculated market rent of DKK 41m (DKK 46m in 2012).
Insurance operating costs, gross, classified by type
Commissions
Staff expenses
Other staff expenses
Office expenses, fees and headquarter expenses
IT operating and maintenance costs, software expenses
Depreciation, amortisation and impairment losses and write-downs
Other income
Total lease expenses amount to DKK 30m (DKK 36m in 2012)
Insurance operating costs and claims include the following staff expenses:
Salaries and wages
Commision
Allocated share options and matching shares
Defined-contribution pension plans
Defined-benefit pension plans
Other social security costs
Payroll tax
-6
-6
-6
0
0
-6
-477
-1,977
-206
-473
-218
-129
185
-3,295
-2,379
-10
-9
-295
-98
-5
-369
-3,165
-13
-13
-6
-1
-6
-13
-379
-1,802
-224
-411
-237
-110
155
-3,008
-2,122
-8
-4
-287
-75
-5
-355
-2,856
Remuneration for the Supervisory Board and Executive Management is disclosed in note 29
‘Related parties’.
Average number of full-time employees during the year (continuing business)
4,016
3,800
Restructuring costs
In order to improve cost-efficiency and profitability, in 2012 Tryg planned to reduce the number of employees by approx. 400,
of which a reduction of 294 employees was realised by the end of 2013. As at 31 December 2013, the restructuring provisions
amounted to DKK 23m (DKK 97m in 2012).
87
Notes | Annual report 2013 | Tryg A/S |
Notes
7
Share option programmes
Spec. of outstanding options:
2013
Allocation 2008-2011
Allocated in 2008-2011,
1 January
Exercised
Cancelled
Expired
Outstanding options from
2008-2011 allocation
31 Dec. 2013
Number of options exercisable
TOTAL NUMBERS
MARKET VALUE
Executive
Manage-
Other
Other
senior
ment employees employees
Total
Per option Total value
at time of at time of
allocation allocation
(DKKm)
(DKK)
at 31
Per option Total value
at 31
December December
(DKKm)
(DKK)
238/226/238
238/226/238
238/226/238
238/226/238
60/118/115/137
60/118/115/137
60/118/115/137
60/118/115/137
60/118/115/137
42
-23
-1
-1
18
64
0
-10
0
-12
42
99
-43
-2
0
54
71
0
-10
-1
0
60
92,818
-43,777
391,877
-227,782
-7,525
-8,580
66,580
-28,201
-3,427
-2,100
551,275
-299,760
-10,952
-10,680
69/94/75/72
69/94/75/72
69/94/75/72
69/94/75/72
49,041
147,990
32,852
229,883
31 Dec. 2013
40,756
53,727
9,046
103,529
2012
Allocation 2007-2011
Allocated in 2007-2011,
31 December
Category changes
Exercised
Cancelled
Expired
Outstanding options from
2007-2011 allocation
31 Dec. 2012
Number of options exercisable
121,638
-11,575
-17,245
581,090
18,859
-103,177
-4,883
-100,012
98,106
-18,859
-6,780
-1,887
-4,000
800,834 99/69/94/75/72
0 99/69/94/75/72
-121,532 99/69/94/75/72
-6,770 99/69/94/75/72
-121,257 99/69/94/75/72
92,818
391,877
66,580
551,275
31 Dec. 2012
51,165
153,305
18,670
223,140
88
| Tryg A/S | Annual report 2013 | Notes
Notes
7
Share option programmes
Specification of outstanding options:
Year of allocation
Years of exercise
1 Jan. 2013
Additions
Exercised
Cancelled
Expired
31 Dec. 2013
2008
2009
2010
2011
2011-2013
2012-2014
2013-2015
2014-2016
Outstanding options
31 December 2013
124,978
98,162
194,532
133,603
551,275
0
0
0
0
0
-113,598
-57,254
-128,908
0
-700
0
-3,003
-7,249
-10,680
0
0
0
0
40,908
62,621
126,354
-299,760
-10,952
-10,680
229,883
Assumptions for calculation of market value at time of allocation
Year of
allocation
2008
2009
2010
2011
Average share
price at time
of allocation
(DKK)
Years of
exercise
Expected
volatility
Expected
maturity
Risk-free
interest rate
Average
time to expiry,
31 Dec. 2013
Average
exercise
price,
31 Dec. 2013
2011-2013
2012-2014
2013-2015
2014-2016
378.24
313.51
320.04
295.83
20.30%
37.70%
29.20%
30.00%
4 years
4 years
4 years
4 years
3.60%
2.80%
2.70%
3.00%
0.00
0.08
0.58
1.11
0.00
286.34
300.02
288.90
Tryg did not allocate share options in 2013. At 31 December 2013, the share option plan comprised 229.883 share options (551,275 share
options at 31 December 2012). Each share option entitles the holder to acquire one existing share with a nominal value of DKK 25 in Tryg
A/S. The share option plan entitles the holders to buy 0.4% of the share capital in Tryg A/S if all share options are exercised.
In 2013, the fair value of share options recognised in the consolidated income statement amounted to DKK 2m (DKK 7m in 2012). At 31 De-
cember 2013, a total amount of DKK 78m was recognised for share option programmes issued in 2006-2011. Fair values at the time of allo-
cation are based on the Black & Scholes option pricing formula.
The Group Executive Management includes retired managers with a total of 8.285 units with a value of DKK 0,6m at the time of allocation.
Risk-takers are included under ‘Other senior employees’.
The following assumptions were applied in calculating the market value of outstanding share options at the time of allocation: The expected
volatility is based on the average volatility of Tryg shares. The expected term is 4 years, corresponding to the average exercise period of 3 to
5 years.
The risk-free interest rate is based on a bullet loan with the same term as the expected term of the options at the time of allocation. The
calculation is based on the strike price as set out in the option agreement and the average share price at the time of allocation.
The dividend payout ratio is not included in the calculation as the strike price is reduced by dividends paid in order to prevent option holders
from being placed at a disadvantage in connection with the company’s dividend payments. The assumptions for calculating the market
value at the end of term are based on the same principles as for the market value at the time of allocation.
89
Notes | Annual report 2013 | Tryg A/S |
Notes
7 Matching shares
TOTAL NUMBERS
MARKET VALUE
2013
Allocated in 2013
Matching shares allocated at 31. Dec.
Allocated in 2012
Cancelled
Executive
Manage-
ment
Risk-
takers
Total
3,928
3,928
2,526
2,526
6,454
6,454
5,948
3,846
9,794
0
-1,005
-1,005
Matching shares allocated at 31. Dec.
5,948
2,841
8,789
Allocated in 2011
Cancelled
Matching shares allocated at 31. Dec.
2012
Allocated in 2012
Matching shares allocated at 31. Dec.
Allocated in 2011
Matching shares allocated at 31. Dec.
4,979
5,996
10,975
0
4,979
-988
5,008
-988
9,987
5,948
5,948
4,979
4,979
3,846
3,846
5,996
5,996
9,794
9,794
10,975
10,975
Average per
matching
Average per
Total
share at Total value matching
share at
at time of
time of
value
31 Dec. at 31 Dec.
allocation
allocation
(DKKm)
(DKKm)
(DKK)
(DKK)
457
457
301
301
301
302
302
302
301
301
302
302
3
3
3
0
3
4
0
4
3
3
4
4
525
525
525
525
525
525
525
525
427
427
427
427
3
3
5
0
5
5
0
5
4
4
5
5
In 2011, 2012 and 2013, Tryg entered into an agreement on matching shares for the Executive Management and selected risk-takers as a
consequence of the Group’s remuneration policy. The Executive Management and selected risk-takers are allocated one share in Tryg A/S
for each share that the Executive Management member or risk-taker acquires in Tryg A/S at market rate for liquid cash at a contractually
agreed sum. The shares are reported at market value and are accrued over the 4-year maturation period. In 2013, the reported fair value of
matching shares for the Group amounted to DKK 2m (DKK 2m in 2012). At 31 December 2013, a total amount of DKK 4m was recognised
for matching shares.
90
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
2012
2013
8
Interest and dividends etc.
Interest income and dividends
Dividends
Interest income cash at bank and in hand
Interest income bonds
Interest income, other
Interest expenses
Interest expenses subordinate loan capital and credit institutions
Interest expenses, other
9 Value adjustments
Value adjustments concerning financial assets or liabilities at fair value
with value adjustment in the income statement:
Equity investments
Unit trust units
Share derivatives
Bonds
Interest derivatives
Other loans
Value adjustments concerning assets or liabilities that cannot be attributed to IAS 39:
Investment property
Owner-occupied property
Discounting
Other statement of financial position items
Exchange rate adjustments concerning financial assets or liabilities which cannot be stated
at fair value total DKK -146m (DKK 37m in 2012)
15
26
1,133
22
1,196
-80
-20
-100
1,096
2
378
-2
202
263
0
843
82
-350
-475
-116
-859
-16
19
18
984
8
1,029
-89
-23
-112
917
-42
578
30
-250
-300
-5
11
-21
-76
298
-101
100
111
91
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
10 Tax
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Tax adjustment, previous years
Adjustment of non-taxable income and costs
Change in valuation of tax assets
Change in tax rate
Other taxes
Effective tax rate
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Change in tax rate
Adjustment of non-taxable income and costs
Change in valuation of tax assets
11 Profit/loss on discontinued and divested business
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Total investment return after insurance technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on discontinued and divested business
Run-off regarding discontinued Marine Hull insurance
Divested finnish branch
2012
2013
-754
-57
2
49
-89
12
0
-837
%
25
2
0
-2
3
28
611
-484
-244
-117
-4
4
-117
32
113
28
0
28
1
27
-749
-58
-2
152
-20
58
-1
-620
%
25
2
-2
-5
1
21
202
-149
-55
-2
0
1
-1
0
1
0
-4
-4
11
-15
Profit/loss on discontinued and divested business includes Marine Hull insurance, which was divested in 2010 and the Finnish branch of
Tryg Forsikring which was sold in 2012, with authority approval in May 2013.
For the year 2013 there has been no line of business with premium income which exceed DKK 70m.
92
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
12
Intangible assets
2013
Cost
Cost at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Transferred from assets under construction
Additions for the year
Disposals for the year
Cost at 31 December
Amortisation and write-downs
Amortisation and write-downs at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Amortisation for the year
Impairment losses and write-downs for the year
Amortisation and write-downs at 31 December
Carrying amount at 31 December
2012
Cost
Cost at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Transferred from asset under construction
Additions for the year
Disposals for the year
Cost at 31 December
Amortisation and write-downs
Amortisation and write-downs at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Amortisation for the year
Impairment losses and write-downs for the year
Reversed amortisation
Amortisation and write-downs at 31 December
Trademarks
and customer
relations
Goodwill
Assets
under
Software a) construction a)
Total
397
-16
0
0
0
0
381
0
0
0
0
0
0
381
380
17
0
0
0
0
397
0
0
0
0
0
0
0
178
-7
0
0
0
0
171
-73
3
0
-19
0
-89
82
170
8
0
0
0
0
178
-51
-2
0
-20
0
0
-73
869
-26
0
77
16
0
936
-747
22
0
-81
-13
-819
227
-1
0
-77
121
0
270
-92
0
0
0
0
-92
1,671
-50
0
0
137
0
1,758
-912
25
0
-100
-13
-1,000
117
178
758
882
12
-4
14
13
-48
869
-632
-9
3
-143
-2
36
-747
257
0
0
-14
82
-98
227
-54
0
0
0
-38
0
-92
1,689
37
-4
0
95
-146
1,671
-737
-11
3
-163
-40
36
-912
Carrying amount at 31 December
397
105
122
135
759
a) In cost at 31 December is included developed in-house DKK 245m (DKK 134m at 31 December).
93
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
12
Intangible assets (continued)
Impairment test
Goodwill
At 31 December 2013, management performed an impairment test of the carrying amount of goodwill based on the allocation of the cost of
goodwill to the cash-generating unit, which consists of the total Swedish insurance activities.
In 2009, Tryg acquired Moderna Försäkringar Sak AB, Modern Re S.A., Netviq AB and MF Bilsport & MC Specialförsäkringar. The insurance
activities were incorporated into the Tryg Group’s business structure in 2009 and are reported under Sweden. In 2010, the companies, ex-
cluding Modern Re S.A., were merged into Tryg Forsikring A/S as Moderna Forsäkringar, a branch of Tryg Forsikring A/S. Modern Re S.A. was
discontinued in 2011.
Assumptions for impairment test: The Value-in-use method is used.
The cash flows appearing from the latest budgets approved by management for the next 5 financial years are used when calculating the
value in use of the total Swedish activities acquired. The cash flows in the latest budget period have been extrapolated for financial years af-
ter the budget periods (terminal period) and adjusted for expected growth rates determined on the basis of expectations for the general eco-
nomic growth. The required return is based on an assessment of the risk profile of the tested business activities compared with the market’s
expectations for the Group.
The impairment test shows a calculated value in use of approximately DKK 1.4bn relative to a recognised equity of DKK 0.8bn and does not
indicate any impairment.
2013
Moderna
2012
Moderna
Assumed
annual growth
0-10 years
Assumed
annual growth
> 10 years
Required
return
before tax
2.0%
0.0%
12.5%
2.0%
2.0%
12.4%
Trademarks and customer relations
As at 31 December 2013, management performed a test of the carrying amounts of trademarks and customer relations as an integral part
of the goodwill test. The test did not indicate any impairment.
Software and assets under construction
As at 31 December 2013, management performed a test of the carrying amounts of software and assets under construction.
The impairment test compares the carrying amount with the estimated present value of future cash flows. The test indicated
impairment of a small number of projects, resulting in impairment losses. The total impairment of intangible assets amounts to
DKK 13m (DKK 138m in 2012).
94
| Tryg A/S | Annual report 2013 | Notes
Operating Owner-occupied
property
equipment
Assets under
construction
Total
Notes
DKKm
13 Property, plant and equipment
2013
Cost
Cost at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Transferred from assets under construction
Additions for the year
Disposals for the year
Cost at 31 December
Accumulated value adjustments
Accumulated value adjustments at 1 January
Exchange rate adjustments
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount in other
comprehensive income
Accumulated value adjustments at 31 December
Accumulated depreciation
Accumulated depreciation at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Reversed depreciation
Depreciation for the year
Accumulated depreciation at 31 December
228
-8
0
0
18
-1
237
0
0
0
0
0
-90
3
0
0
-28
-115
1,786
-60
0
10
2
0
1,738
-281
-11
-76
9
-359
-62
2
0
0
-15
-75
Carrying amount at 31 December
122
1,304
101
-6
0
-10
0
0
85
-90
5
0
0
-85
0
0
0
0
0
0
0
2,115
-74
0
0
20
-1
2,060
-371
-6
-76
9
-444
-152
5
0
0
-43
-190
1,426
95
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
13 Property, plant and equipment (continued)
2012
Cost
Cost at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Transferred from assets under construction
Additions for the year
Disposals for the year
Cost at 31 December
Accumulated value adjustments
Accumulated value adjustments at 1 January
Exchange rate adjustments
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount
in other comprehensive income
Accumulated value adjustments at 31 December
Accumulated depreciation
Accumulated depreciation at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Reversed depreciation
Depreciation for the year
Accumulated depreciation at 31 December
Operating Owner-occupied
property
equipment
Assets under
construction
Total
187
3
-8
0
55
-9
228
0
0
0
0
0
-85
-1
4
8
-16
-90
1,760
27
0
10
8
-19
1,786
27
0
-350
42
-281
-42
-1
0
0
-19
-62
98
2
0
-10
11
0
101
-88
-2
0
0
-90
0
0
0
0
0
0
2,045
32
-8
0
74
-28
2,115
-61
-2
-350
42
-371
-127
-2
4
8
-35
-152
Carrying amount at 31 December
138
1,443
11
1,592
External experts were involved in valuing the owner-occupied properties.
Impairment test
Property, plant and equipment
A valuation of the owner-occupied property has been carried out, including the improvements made, and a revaluation of DKK 9m relating
to the domicile in Bergen was subsequently included in other comprehensive income (DKK 42m in 2012) and impairment of DKK76m
relating to the domicile in Ballerup in the income statement (DKK 350m in 2012). The impairment test performed for operating equipment
did not indicate any impairment.
In determining the fair value of the properties, not only publicly available market data are included, corresponding to the ‘non-observable
input’ in the fair value hierarchy. No reclassifications have been made between this category and other categories in the fair value hierarchy
during the year. The following return percentages have been applied:
Return percentages weighted average
Office property
2012
6.9
2013
6.7
96
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
14
Investment property
Fair value at 1 January
Exchange rate adjustments
Additions for the year
Disposals for the year
Value adjustments for the year
Reversed on sale
Fair value at 31 December
2012
2013
2,199
24
35
-259
47
35
2,081
2,081
-52
16
-2
-21
0
2,022
Total rental income for 2013 is DKK 139m (DKK 152m in 2012).
Total expenses for 2013 are DKK 32m (DKK 29m in 2012). Of this amount, expenses for non-let property total DKK 2m (DKK 2m in 2012);
total expenses for the income-generating investment property are DKK 30m (DKK 27m in 2012).
External experts were involved in valuing the majority of the investment property.
In determining the fair value of the properties, not only publicly available market data are included, corresponding to the ‘non-observable
input’ in the fair value hierarchy. No reclassifications have been made between this category and other categories in the fair value hierarchy
during the year. The following return percentages were used for each property category:
Return percentages weighted average
Business property
Office property
Residential property
Total
2012
2013
7.0
6.4
5.9
6.5
7.0
6.5
6.0
6.5
97
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
15 Equity investments in associates
Cost
Cost at 1 January
Cost at 31 December
Revaluations at net asset value
Revaluations at 1 January
Exchange rate adjustments
Value adjustments for the year
Revaluations at 31 December
Carrying amount at 31 December
2012
2013
0
0
14
1
6
21
21
0
0
21
-3
0
18
18
Shares in associates according to the latest annual report:
Name and registered office
Assets
Equity and
liabilities
Equity
Revenue
Profit/loss
for the year
Ownership
share in %
2013
Komplementarselskabet
af 1. marts 2006 ApS, Denmark
Bilskadeinstituttet AS, Norway
AS Eidsvåg Fabrikker, Norway
2012
Komplementarselskabet af
1. marts 2006 ApS, Denmark
Bilskadeinstituttet AS, Norway
AS Eidsvåg Fabrikker, Norway
0
5
52
0
5
60
0
0
7
0
0
19
0
5
45
0
5
42
0
2
16
0
2
22
0
0
6
0
0
9
50
30
28
50
30
28
Individual estimates are made of the degree of influence under the contracts made.
98
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
16 Financial assets
2012
2013
Financial assets at fair value with value adjustments in the income statement
45,014
42,782
Derivative financial instruments at fair value used for hedge accounting with value adjustment
in other comprehensive income
Receivables measured at amortised cost with value adjustment in the income statement
Total financial assets
Financial assets at amortised cost only deviate to a minor extent from fair value.
Financial liabilities
Derivative financial instruments at fair value with value adjustments in the income statement
Derivative financial instruments at fair value with value adjustments in other comprehensive income
Financial liabilities at fair value with value adjustment in the income statement
Total financial liabilities
Information on valuation of subordinate loan capital at fair value is stated in note 2.
Other financial liabilities measured at amortised cost only deviate to a minor extent from fair value.
Fair value hierarchy for financial instruments measured at fair value in the statement of financial position.
0
2,634
47,648
737
38
6,176
6,951
2013
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments
2012
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments
Assets held for sale
Quoted
market price
Observable
input
Non-observ-
able input
0
3,741
25,068
1,301
0
30,110
0
3,261
24,794
949
0
487
29,491
0
0
11,903
0
178
12,081
0
0
14,058
0
481
0
14,539
150
0
0
0
0
150
199
0
10
0
0
0
209
73
3,118
45,973
514
0
6,483
6,997
Total
150
3,741
36,971
1,301
178
42,341
199
3,261
38,862
949
481
487
44,239
Financial instruments measured at fair value in the statement of financial position
on the basis of non-observable input:
Carrying amount at 1 January
Exchange rate adjustments
Gains/losses in the income statement
Purchases
Sales
Transfers to/from the group ‘non-observable input’
Carrying amount at 31 December
Gains/losses in the income statement for assets held at the statement of financial position
date recognised in value adjustments
2012
2013
217
5
-13
15
-10
-5
209
-13
209
-10
-48
3
-4
0
150
-42
Bonds measured on the basis of observable inputs mainly consist of Norwegian bonds issued by banks and to some extent Danish semi-liq-
uid bonds, where no quoted prices based on actual trades are available. No significant reclassifications have been made between the cate-
gories ‘Quoted prices’ and ‘Observable input’ in 2013. Inflation derivatives are measured at fair value on the basis of non-observable input
and are included under claims provisions at a fair value of DKK -166m (DKK 3m in 2012).
99
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
16 Financial assets (continued)
Reconciliation between investment assets as per ‘Investment Activities’
in the management’s review and the statement of financial position
2013
Investment assets as per the section ‘Investment activities’
in the management’s review
Consisting of:
Cash and cash equivalents allocated to portfolio management
Debt and receivables relating to unsettled funds
and property transactions
Unit trust units
Deposits with credit institutions
Derivative financial instruments
Repo debt and reverse receivables
Accrued interest
Associated shares
Investment assets according to the statement of financial position
Unit trust units
Deposits with credit institutions
Derivative financial instruments
Associated shares
Total investment assets according to the statement of financial position
2012
Investment assets as per the section ‘Investment activities’
in the Management’s report
Consisting of:
Cash and cash equivalents allocated to portfolio management
Debt and receivables relating to unsettled funds
and property transactions
Unit trust units
Deposits with credit institutions
Derivative financial instruments
Repo debt and reverse receivables
Accrued interest
Assets held for sale
Associated shares
Investment assets according to the statement of financial position
Unit trust units
Deposits with credit institutions
Derivative financial instruments
Associated shares
Total investment assets according to the statement of financial position
Bonds
Shares
Investment
property
Total
38,339
2,656
2,022
43,017
-253
148
-1,256
-1,301
-88
1,788
-406
0
36,971
0
0
-2,485
0
-3
0
0
-18
150
0
0
0
0
0
0
0
0
2,022
-253
148
-3,741
-1,301
-91
1,788
-406
-18
39,143
3,741
1,301
692
18
44,895
40,802
2,444
2,081
45,327
-61
0
905
-1,037
-949
-511
94
-369
-12
0
38,862
0
-2,224
0
0
0
0
0
-21
199
0
0
0
0
0
0
0
0
0
2,081
-61
905
-3,261
-949
-511
94
-369
-12
-21
41,142
3,261
949
1,256
21
46,629
100
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
16 Financial assets (continued)
Sensitivity information
Impact on equity from the following changes:
Interest rate increase of 0.7-1.0 percentage point
Interest rate fall of 0.7-1.0 percentage point
Equity price fall of 12 %
Fall in property prices of 8 %
Exchange rate risk (VaR 99)
Loss on counterparties of 8 %
2012
2013
112
-182
-279
-283
-19
-320
-18
-41
-349
-266
-25
-396
The impact on the income statement is similar to the impact on equity. The statement complies with
the disclosure requirements set out in the Executive Order on Financial Reports for Insurance Companies
and Multi-Employer Occupational Pension Funds issued by the Danish FSA.
Derivative financial instruments
Derivatives with value adjustments in the income statement at fair value:
2012
2013
Market value
in statement
of financial
position
Nominal
Market value
in statement
of financial
position
Nominal
Interest derivatives
Share derivatives
Exchange rate derivatives
Derivatives according to statement of financial position
Inflation derivatives, recognised in claims provisions
Total derivative financial instruments
Due after less than 1 year
Due within 1 to 5 years
Due after more than 5 years
Derivatives, repos and reverses are used continuously as part of the cash
and risk management carried out by Tryg and its portfolio managers.
27,078
120
7,949
35,147
2,590
37,737
8,079
10,955
18,703
511
0
-30
481
3
484
-30
42
472
Derivative financial instruments used in connection with hedging of foreign entities for accounting purposes
Gains and losses on hedges charged
to other comprehensive income:
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
Gains
1,256
191
1,447
2012
Losses
-1,580
-375
-1,955
Net
Gains
-324
-184
-508
1,447
340
1,787
26,015
325
9,352
35,692
3,311
39,003
16,003
14,169
8,831
2013
Losses
-1,955
-35
-1,990
88
3
87
178
-166
12
-58
55
15
Net
-508
305
-203
101
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
16 Finansielle aktiver (forsat)
Value adjustments
Value adjustments of foreign entities recognised in other comprehensive income in the amount of:
Value adjustments at 1 January
Value adjustment for the year
Value adjustments at 31 December
Receivables
Receivables from insurance enterprises
Receivables from Group undertakings
Reverse repos
Other receivables
Specification of write-downs on receivables from insurance contracts:
Write-downs at 1 January
Exchange rate adjustments
Transferred to assets held for sale
and write-downs and reversed write-downs for the year
Write-downs at 31 December
Receivables are written down in full when submitted for debt collection. The write-down is reversed if
payment is subsequently received from debt collection and amounts to DKK 43m in 2013 (DKK 48m in 2012).
Receivables in connection with insurance contracts include overdue recievables totalling:
Falling due:
Within 90 days
After 90 days
Including writedowns of due amounts
Other receivables do not contain overdue receivables
17 Reinsurer’s share
Reinsurers’ share
Write-downs after impairment test
2012
2013
337
192
529
1,376
1
326
286
1,989
143
2
-32
113
160
108
268
113
529
-326
203
1,387
0
885
148
2,420
113
-7
6
112
194
108
302
112
2,354
-37
2,317
2,647
-27
2,620
Impairment test
As at 31 December 2013, management performed a test of the carrying amount of total reinsurers’ share of provisions for insurance
contracts. The impairment test resulted in impairment charges totalling DKK 27m (DKK 37m in 2012). Write-downs for the year include
reversed write-downs totalling DKK 0m (DKK 16m i 2012). There is no overdue reinsurers’ share other than the share already provided for.
102
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
18 Current tax
Net current tax, 1 January
Exchange rate adjustments
Current tax for the year
Current tax on equity entries
Adjustment of current tax in respect of previous years
Tax paid for the year
Net current tax at 31 December
Current tax is recognised in the statement of finansiel position as follows:
Under assets, current tax
Under liabilities, current tax
Net current tax
19 Assets held for sale and associated liabilities
Intangible assets
Property, plant and equipment
Investment assets and cash and cash equivalents
Reinsurers’ share of claims provisions
Receivables
Assets held for sale
Premium provisions
Claims provisions
Other debt
Liabilities associated with assets held for sale
Net assets held for sale
In the statement of financial position at 31 December 2012 assets and liabilities related to
the Finnish branch are classified as ‘Assets held for sale’ and ‘Liabilities associated with assets held for sale.
The Group had no other assets held for sale and associated liabilites.
The proceeds from the sale are equal to the carrying amount of the related assets and liabilities.
The profit is unchanged in relation to the assessment per 31.12.2012
The activity which comprised assets and liabilities held for sale and constituted the Group’s activities
in Finland was definitively disposed of on 1 May 2013. The sale can be specified as follows:
Intangible assets
Property, plant and equipment
Investment assets, cash and cash equivalents
Reinsurers’ share of claims provisions
Receivables
Premium provisions
Claims provisions
Other debt
Carrying amount of net assets sold
Total consideration
2012
2013
-167
-16
-949
46
9
425
-652
0
-652
-652
112
2
603
7
18
742
125
540
77
742
0
0
0
0
0
0
0
0
0
0
0
-652
64
-631
-76
14
1,017
-264
145
-409
-264
0
0
0
0
0
0
0
0
0
0
0
112
1
3
696
48
168
565
15
112
112
103
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
20
Equity
Share capital
Number of shares, exclusive of own shares
Number of shares at 1 January
Bought during the year
Sold during the year
Used in connection with exercise of incentive programme
2012
2013
Number of Nominal value
(DKK ’000)
shares
Number of Nominal value
(DKK ’000)
shares
60,373,269
0
200,000
121,542
1,509,332
0
5,000
3,038
60,694,811
-1,620,637
0
299,787
1,517,370
-40,516
0
7,495
Number of shares at 31 December
60,694,811
1,517,370
59,373,961
1,484,349
Own shares
Own shares at 1 January
Bought during the year
Sold during the year
Cancellation in connection with
buyback programme
Used in connection with exercise
of incentive programme
Own shares at 31 December
2012
2013
Number of Nominal value
(DKK ’000)
shares
% of
share capital
Number of Nominal value
(DKK ’000)
shares
% of
share capital
942,834
0
-200,000
23,571
0
-5,000
0
0
-121,542
621,292
-3,039
15,532
1.54
0.00
-0.33
0.00
-0.20
1.01
621,292
1,620,637
0
15,532
40,516
0
0
0
-299,787
1,942,142
-7,495
48,553
1.01
2.65
0.00
0.00
-0.49
3.17
Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to 10.0% of the share capital in the period up until 14 April
2015. Own shares are acquired for use in the Group’s incentive programme and as part of the share buyback programme.
21 Premium provisions
Premium provision at 1 January
Value adjustments of provisions, beginning of year
Paid in the financial year
Change in premiums in the financial year
Exchange rate adjustments
Premium provisions at 31 December
Other a)
2012
6,770
185
20,139
-20,434
-2
6,658
30
6,688
2013
6,658
-335
18,740
-18,881
-6
6,176
36
6,212
104
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
21 Claims provisions
2013
Claims provisions at 1 January
Value adjustments of provisions , beginning of year
Paid in the financial year in respect of the current year
Paid in the financial year in respect of prior years
Change in claims in the financial year in respect of the current year
Change in claims in the financial year in respect of prior years
Discounting and exchange rate adjustments
Claims provisions at 31 December
Other a)
2012
Total at 1 January
Value adjustments of provisions, beginning of year
Paid in the financial year in respect of the current year
Paid in the financial year in respect of prior years
Change in claims in the financial year in respect of the current year
Change in claims in the financial year in respect of prior years
Gross
Ceded
Net of
reinsurance
26,842
-1,569
25,273
-6,571
-6,604
-13,175
13,902
-854
13,048
125
25,271
816
26,087
26,159
720
26,879
-7,442
-8,233
-15,675
14,978
-300
14,678
1,893
-126
1,767
-43
-628
-671
562
103
665
19
1,780
603
2,383
1,755
44
1,799
-92
-867
-959
268
740
1,008
24,949
-1,443
23,506
-6,528
-5,976
-12,504
13,340
-957
12,383
106
23,491
213
23,704
24,404
676
25,080
-7,350
-7,366
-14,716
14,710
-1,040
13,670
Discounting and exchange rate adjustment
960
45
915
Claims provisions at 31 December
Other a)
26,842
400
27,242
1,893
187
2,080
24,949
213
25,162
a)
Comprises premium and claims provisions for Tryg Garantiforsikring A/S.
105
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
22 Pensions and similar obligations
Jubilees
Recognised liability
Defined-benefit pension plans:
Present value of pension obligations funded through operations
Present value of pension obligations funded through establishment of funds
Pension obligation, gross
Fair value of plan assets
Pension obligation, net
Specification of change in recognised pension obligations:
Recognised pension obligation at 1 January
Exchange rate adjustments
Present value of pensions earned during the year
Capital cost of previously earned pensions
Acturial gains/losses
Paid during the period
Recognised pension obligation at 31 December
Change in carrying amount of plan assets:
Carrying amount of plan assets at 1 January
Exchange rate adjustments
Investments in the year
Estimated return on pension funds
Acturial gains/losses
Paid during the period
Carrying amount of plan assets at 31 December
Total pensions and similar obligations at 31 December
Total recognised obligation at 31 December
Specification of pension cost for the year:
Present value of pensions earned during the year
Interest expense on accrued pension obligation
Expected return on plan assets
Accrued employer contributions
Total year’s cost of defined-benefit plans
The premium for the following financial years is estimated at:
Number of active persons and number of pensioners
Estimated distribution of plan assets:
Shares
Bonds
Property
Average return on plan assets
106
2012
2013
60
60
106
2,045
2,151
1,109
1,042
1,990
120
81
52
-22
-70
2,151
1,013
58
130
41
-84
-49
1,109
1,042
1,102
69
51
-40
11
91
68
68
86
1,671
1,757
1,034
723
2,151
-278
63
39
-157
-62
1,756
1,109
-144
81
21
10
-44
1,033
723
791
56
42
-23
11
86
114
1,428
78
1,376
%
9
74
17
2.5
%
10
73
17
3.3
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
22 Pensions and similar obligations (continued)
Assumptions used
Discount rate
Estimated return on pension funds
Salary adjustments
Pension adjustments
G adjustments
Turnover
Employer contributions
Mortality table
Sensitivity information
The sensitivity analysis is based on a change in one of the assumptions, assuming that all other
assumptions remain constant. In reality, this is rarely the case, and changes to some assumptions may
be subject to covariance. The sensitivity analysis has been carried out using the same method as the
actuarial calculation of the pension provisions in the statement of financial position.
Impact on equity from the following changes:
Interest rate increase of 0.3 percentage point
Interest rate decrease of 0.3 percentage point
Pay increase rate, increase of 1 percentage point
Pay increase rate, decrease of 1 percentage point
Pension adjustment, increase of 0.5 percentage point
pension adjustment, decrease of 0.5 percentage point
Turnover, increase of 2.0 percentage point
Turnover decrease of 2.0 percentage point
2012
2013
%
%
2.4
2.5
3.5
3.3
3.3
7.0
14.1
Adj. K2005
3.3
3.3
3.8
3.5
3.5
7.0
14.0
Adj. K2013
84
-90
-105
86
-151
128
-77
99
80
-70
-65
69
-140
121
-66
84
107
Notes | Annual report 2013 | Tryg A/S |
Notes
22 Pensions and similar obligations (continued)
Description of the Norwegian plan
In the Norwegian part of the group, 56 % of the employees have a defined-benefit pension plan. The plans are based on the employees’ ex-
pected final pay, providing the members of the plan with a guaranteed level of pension benefits throughout their lives. The pension benefits
are determined by the employees’ term of employment and salary at the time of retiring. Employees having made contributions for a full pe-
riod of contribution are guaranteed a pension corresponding to 66% of their final pay.
Pensions being disbursed are regulated in step with the basic amount of old-age pension paid in Norway (G regulation). Under the present
defined-benefit plan, members earn a free policy entitlement comprising disability cover, spouse and cohabitant cover and children’s pension.
In connection with new legislation on occupational pensions in Norway, adopted and applicable from 1 January 2014, changes are ex-
pected to be made to the defined-benefit pension plan. These changes will affect the future recognition and measurement of the obligation.
The pension funds are managed by Nordea Liv & Pension and regulated by local legislation and practice.
Description of the Swedish plan
Moderna Försäkringar, a branch of Tryg Forsikring A/S, complies with the Swedish industry pension agreement, the FTP plan, which is in-
sured with Försäkringsbranschens Pensionskassa – FPK. Under the terms of the agreement, the Group’s Swedish branch has undertaken,
along with the other businesses in the collaboration, to pay the pensions of the individual employees in accordance with the applicable rules.
The FTP plan is primarily a defined-benefit plan in terms of the future pension benefits. FPK is unable to provide sufficient information for
the Group to use defined-benefit accounting. For this reason, the Group has accounted for the plan as if it were a defined-contribution plan
in accordance with IAS 19.30.
This years premium paid to FPK amounted to DKK 16m, which is about 3% of the annual premium in FPK (2012). FPK writes in its interim
report for 2013 that it had a collective consolidation ratio of 114 at 30 June 2013 (consolidation ratio 104 at 30 June 2012). The collective
consolidation ratio is defined as the fair value of the plan assets relative to the total collective pension obligations.
108
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
23 Deferred tax
Tax asset
Operating equipment
Debt and provisions
Capitalised tax loss
Tax liability
Intangible rights
Land and buildings
Bonds and loans secured by mortgages
Contingency funds
Deferred tax
Unaccrued timing differences of statement of financial position items
Development in deferred tax
Deferred tax at 1 January
Exchange rate adjustments
Change in deferred tax relating to change in tax rate
Change in deferred tax previous years
Change in capitalised tax loss
Change in deferred tax taken to the income statement
Change in valuation of tax asset
Change in deferred tax taken to equity
Deferred tax at 31 December
Tax value of non-capitalised tax loss
Denmark
Sweden
Finland
2012
2013
22
290
13
325
76
253
78
1,061
1,468
1,143
118
1,191
56
-12
7
65
-247
89
-6
1,143
18
4
0
14
105
6
125
75
227
45
835
1,182
1,057
122
1,143
-119
-50
16
5
-7
20
49
1,057
18
3
1
The loss in Tryg A/S cannot be utilised in the Danish joint taxation scheme. The loss can be carried forward indefinitely.
Loss determined according to Swedish and Finnish rules can be carried forward indefinitely.
The losses are not recognised as tax assets until it has been substantiated that the company can generate sufficient future taxable income to
offset the tax loss.
The total current and deferred tax relating to items recognised in equity is recognised in the statement of financial position in the amount of
DKK -133m. (2012 DKK 50m).
109
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
24 Other provisions
Other provisions 1 January
Change in provisions
Other provisions 31 December
Other provisions relate to provisions for the Group’s own insurance claims and restructuring costs.
The provision for restructuring costs has been reassessed and amounts to DKK 23m at 31 December 2013.
25 Amounts owed to credit institutions
Overdraft facilities
26 Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt
Unsettled fund transactions include debt for bonds purchased in 2012 and 2013; however,
with settlement in 2013 and 2014, respectively.
27 Earnings per share
Profit/loss from continuing business
Profit/loss on discontinued and divested business
Profit/loss for the year
Average number of shares (1,000)
Diluted number of shares (1,000)
Diluted average number of shares (1,000)
Earnings per share, continuing business
Earnings per share
Diluted earnings per share
Earnings per share, discontinued and divested business
Diluted earnings per share, discontinued and divested business
2012
2013
11
87
98
14
14
98
-75
23
6
6
1,050
420
1,470
148
2,673
2,821
2,180
28
2,208
60,491
223
60,714
36.0
36.5
36.4
0.5
0.5
2,373
-4
2,369
60,155
104
60,259
39.4
39.4
39.3
0.0
0.0
110
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
<1 year
1-3 years
Obligations due by period
3-5 years
> 5 years
28 Contractual obligations, collateral
and contingent liabilities
Contractual obligations
2013
Operating leases
Other contractual obligations
2012
Operating leases
Other contractual obligations
150
298
448
136
397
533
182
12
194
215
86
301
75
0
75
65
0
65
73
0
73
57
0
57
Total
480
310
790
473
483
956
Tryg has signed the following contracts with amounts above DKK 50m:
Tryg Forsikring A/S and Tryg Forsikring, a Norwegian branch of Tryg Forsikring A/S, have signed a letter of intent concerning an outsourcing
agreement with TCS. Telephony services contract with Telenor for DKK 98m, which expires after 2015. Lease contracts on premises for DKK
293m. The contracts expire after 5 years.
Collateral
The Danish companies in the Tryg Group are jointly taxed with TryghedsGruppen smba. As of 1. july 2012, the companies and the other
jointly taxed companies are liable for any obligations to withhold taxes at source on interest, royalties and dividends in respect of the jointly
taxed companies.
Tryg Forsikring A/S and Tryg Garantiforsikring A/S have registered the following assets as
having been held as security for the insurance provisions:
Equity investments in associates
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Receivables relating to reinsurance
Bonds and cash and cash equivalents included in the item ‘Assets held for sale’
Interest and rent receivable
Equity investments in and receivables from Group undertakings which have been
eliminated in the consolidated financial statements
Total
2012
2013
21
199
3,261
37,458
949
1,614
587
365
2,128
46,582
18
150
3,741
34,867
1,301
585
0
403
1,944
43,009
111
Notes | Annual report 2013 | Tryg A/S |
Notes
28 Offsetting and collateral in relation to financial assets and obligations
2013
Assets
Reverse repos
Derivative financial instruments
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised
in claims provisions
2012
Assets
Reverse repos
Derivative financial instruments
Inflation derivatives, recognised
in claims provisions
Liabilities
Repo debt
Derivative financial instruments
Gross amount
before offsetting
Offsetting
According to the
statement of
financial position
Bonds as collateral
for repos/
reverse repos
Collateral in
cash
Net amount
Collateral which is not offset in
the statement of financial position
885
692
1,577
2,673
514
166
3,353
326
1,256
3
1,585
420
775
1,195
0
0
0
0
0
0
0
0
0
0
0
0
0
0
885
692
1,577
2,673
514
166
3,353
326
1,256
3
1,585
420
775
1,195
-885
0
-885
-2,673
0
0
-2,673
-326
0
0
-326
-420
0
-420
0
-553
-553
0
-433
-155
-588
0
-536
-9
-545
0
-230
-230
0
139
139
0
81
11
92
0
720
-6
714
0
545
545
Contingent liabilities
Companies in the Tryg Group are party to a number of disputes.
Tryg decided to initiate a transition of its IT-operation for implementation in 2014. In 2013 a letter of intent concerning an agreement on the
outsourcing of oprations was signed with TCS. Costs may be incurred in connection with the transition in 2014.
Management believes that the outcome of disputes and IT-transition will not affect the Group’s financial position significantly beyond the
obligations recognised in the statement of financial position at 31 December 2013.
112
| Tryg A/S | Annual report 2013 | Notes
Notes
DKKm
29 Related parties
The group has no related parties with a decisive influence other than the parent company,
TryghedsGruppen smba and the subsidiaries of TryghedsGruppen smba (other related parties).
Related parties with significant influence include the Supervisory Board, the Executive Management
and their members’ family.
2012
2013
0.3
0.4
3.0
0.0
0.1
0.2
0.3
0.4
1.9
0.2
0.1
0.2
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Specification of remuneration
2013
Supervisory Board
Executive Management
Risk-takers
Of which retired
Supervisory Board
Executive Management
Risk-takers
Number of persons Basic salary Variable salary
Pension
Total a)
0
1
0
1
0
4
5
9
7
23
25
55
14
3
10
27
7
18
20
45
Number of
persons
Severance
pay
2
0
1
3
0
0
5
5
The maximum amount paid in severance pay to an individual is DKK 5m.
2012
Supervisory Board
Executive Management
Risk-takers
Of which retired
Supervisory Board
Executive Management
Risk-takers
Number of persons Basic salary Variable salary
Pension
Total a)
0
1
2
3
0
4
5
9
6
23
29
58
16
3
11
30
6
18
22
46
Number of
persons
Severance
pay
4
0
1
5
0
0
20
20
The maximum amount paid in severance pay to an individual is DKK 20m.
a) Exclusive of severance pay
113
Notes | Annual report 2013 | Tryg A/S |
Notes
DKKm
29 Related parties (continued)
Fees are charges incurred during the financial year. Variable salary includes the charges for matching shares, which are recognised over 4
years and share options, which are recognised over 3 years. Reference is made to section Corporate governance’ of the management’s re-
view on the corresponding disbursements.
The Executive Management and risk-takers are included in incentive programmes. Please refer to note 7 for information concerning this.
The members of the Supervisory Board in Tryg A/S are paid with a fixed remunaration and are not covered by the incentive schemes. The Ex-
ecutive Management is paid a fixed remuneration and pension. The variable salary is awarded in the form of a matching share programme,
see ‘Corporate governance’.
Each member of the Executive Management is entitled to 12 months’ notice and severance pay equal to 12 months’ salary plus pension
contribution (Group CEO is entitled to severance pay equal to 18 months’ salary). Members of the Executive Management can assert no fur-
ther claims in this respect, for example claims for compensation pursuant to Sections 2a and/or 2b of the Dansih Salaried Employees Act, as
such claims are regarded as being included in the severance pay.
Risk-takers are defined as employees whose activities have a significant influence on the company’s risk profile. The Supervisory Board de-
cides which employees should be considered to be risk-takers.
Parent company
Tryghedsgruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
Intra-group trading involved:
- Subordinate loan capital, called in April 2013
- Interest expenses
2012
490
30
2013
0
6
Transactions between TryghedsGruppen smba and Tryg A/S are conducted on an arm’s lenth basis.
Intra-group transactions
Administration fee, etc. is fixed on a cost-recovery basis. Intra-group accounts are offset and carry interest on market terms. The companies
in the Tryg Group have entered into reinsurance contracts on market terms. Transactions with Group undertakings have been eliminated in
the consolidated financial statements in accordance with the accounting policies.
30 Financial highlights
Please refer to page 59.
114
| Tryg A/S | Annual report 2013 | Notes
Notes
31 Accounting policies
The consolidated financial statements are prepared in accordance with
the International Financial Reporting Standards (IFRS) as per adopted
by the EU on 31 December 2013 and in accordance with the Danish
Statutory Order on Adoption of IFRS.
The annual report of the parent company is prepared in accordance with
the executive order on financial reports presented by insurance compa-
nies and lateral pension funds issued by the Danish FSA. The deviations
from the recognition and measurement requirements of IFRS are:
• Investments in subsidiaries are valued according to the equity
method, whereas under IFRS valuation is made at cost or fair value.
Furthermore the requirements regarding presentation and disclosure
are less comprehensive than under IFRS.
• The Danish FSA’s executive order does not allow provisions for
deferred tax of contingency reserves allocated from untaxed funds.
Deferred tax and the other comprehensive income of the parent
company have been adjusted accordingly on the transition to IFRS.
Change in accounting policies
A reclassification has been made in respect of derivative financial in-
struments of DKK 709m in 2012 from the main items ‘Total other finan-
cial investment assets’ and ‘Total debt’ due to the grossing-up of deriva-
tive instruments at contract level.
The comparative figures have been restated to reflect the above
changes. Except as noted above, the accounting policies have been
applied consistently with last year.
Accounting regulation
Implementation of changes to accounting standards
and interpretation in 2013
The International Accounting Standards Board (IASB) has issued a num-
ber of changes to the international accounting standards, and the Inter-
national Financial Reporting Interpretations Committee (IFRIC) has also
issued a number of interpretations.
No standards or interpretations have been implemented for the first
time for the accounting year that began on 1st January 2013 that will
have a significant impact on the group. New or amended standards and
interpretations that have been implemented but have not significantly
affected the group:
• Amendments to IFRS 7 ‘Offsetting of assets and liabilities’
• IFRS 13 ‘Fair Value Measurement’
• Amendments to IAS 1 ‘Presentation of Items of Other
Comprehensive Income’
• Amendments to IAS 1 ‘Annual Improvements 2009-2011 Cycle
(Comparative information)’
• Amendments to IAS 16 ‘Annual Improvements 2009-2011 Cycle
(Servicing Equipment)’
• IAS 19 (as revised in 2011) ‘Employee Benefits’
• Amendments to IAS 32 ‘Annual Improvements 2009-2011 Cycle
(tax effect of equity distribution)’
Future orders, standards and interpretations that the group has not im-
plemented and which have still not entered into force:
• IFRS 7 ‘Deferral of mandatory effective dates’ b)
• IFRS 9 ‘Financial Instruments’ b)
• Reissue of IFRS 9 to include requirements for the classification
and measurement of financial liabilities and incorporate existing
derecognition requirements’ b)
• Amendments to IFRS 9 ‘Deferral of mandatory effective dates’ b)
• Amendments to IFRS 9 ‘Additional hedge accounting disclosures’ b)
• Amendments to IAS 39 ‘Novations of derivatives’ a)
• IFRS 10 ‘ Consolidated Financial Statements’ a)
• IFRS 11 ‘Joint Arrangements’ a)
• IFRS 12 ‘Disclosure of Interests in Other Entities’ a)
• Amendments to IFRS 10, 11 and 12 ‘transitional guidance’ a)
• IAS 27 (as revised in 2011) ‘Separate Financial Statements’ a)
• IAS 28 (as revised in 2011) ‘Investments in Associates and
Joint Ventures’ a)
• IFRIC 21 ‘Levies’ a)
• Amendments to IAS 19 ‘Clarify the requirements that relate to
how contributions from employees or third parties that are linked
to service should be attributed to periods of service’ a)
• Amendments to IAS 32 ‘Offsetting of assets and liabilities’ a)
• Amendments to IAS 36 ‘Recoverable Amount Disclosures for
Non-financial Assets’ a)
a) enters into force for the accounting year commencing
1 January 2014 or later.
b) enters into force for the accounting year commencing
1 July 2015 or later.
The changes will be implemented going forward from 2013.
The changes will not significantly affect the Group.
Changes to accounting estimates
The calculation of insurance technical interest was changed with effect
from Q2 2013. Insurance technical interest is subsequently calculated
based on the monthly average provision plus interest under the present
yield curve for each individual group of risks taking into account the pro-
visions’ expected run-off pattern. A co-weighted interest from the pre-
sent yield curve was previously used for each individual group of risks.
The change does not affect the net profit for the period as it concerns
a redistribution between the technical result and the investment return
net of insurance technical interest. It is estimated that the change has
improved the technical result by as much as DKK 12m, with the invest-
ment return being reduced by the same amount.
115
Notes | Annual report 2013 | Tryg A/S | Notes
The reduction of the estimated tax rate from 25% to 23% in Q3 2013 is due
to a change in the expected tax-free share gains in Norway as well as recog-
nition of the reduction in the tax rate in Denmark in the coming years.
also an option-adjusted mortgage interest rate spread, is used to dis-
count Danish claims provisions.
Significant accounting estimates and assessments
The preparation of financial statements under IFRS requires the use of
certain critical accounting estimates and requires management to exer-
cise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complex-
ity, or areas where assumptions and estimates are significant to the
consolidated financial statements are:
• Liabilities under insurance contracts
• Valuation of defined benefit plans
• Fair value of financial assets and liabilities
• Valuation of property
• Measurement of goodwill, Trademarks and Customer relations
Liabilities under insurance contracts
Estimates of provisions for insurance contracts represent the Group’s
most critical accounting estimates, as these provisions involve a num-
ber of uncertainty factors.
Claims provisions are estimated based on actuarial and statistical pro-
jections of claims and the administration of claims. The projections are
based on Tryg’s knowledge of historical developments, payment pat-
terns, reporting delays, duration of the claims settlement process and
other factors that might influence future developments in the liabilities.
The Group makes claims provisions, in addition to provisions for known
claims, which cover estimated compensation for losses that have been
incurred, but not yet reported to the Group (known as IBNR reserves)
and future developments in claims which are known to the Group but
have not been finally settled. Claims provisions also include direct and
indirect claims settlement costs or loss adjustment expenses that arise
from events that have occurred up to the statement of financial position
date even if they have not yet been reported to Tryg.
The calculation of the claims provisions is therefore inherently uncer-
tain and, by necessity, relies upon the making of certain assumptions as
regards factors such as court decisions, amendments to legislation,
social inflation and other economic trends, including inflation. The
Group’s actual liability for losses may therefore be subject to material
positive or negative deviations relative to the initially estimated claims
provisions.
Claims provisions are discounted. As a result, initial changes in discount
rates or changes in the duration of the claims provisions could have
positive or negative effects on earnings. Discounting affects the motor
third-party liability, general third-party liability, workers’ compensation
classes, including sickness and personal accident, in particular.
The Financial Supervisory Authority’s adjusted discount curve, which is
based on euro swap rates, national spreads and Danish swap rates, and
The Norwegian and Swedish provisions are discounted based on euro
swap rates, to which a country-specific interest rate spread is added
that reflects the difference between Norwegian and Swedish govern-
ment bonds and the interest rate on German government bonds. Finn-
ish provisions are discounted using the Danish discount curve.
Several assumptions and estimates underlying the calculation of the
claims provisions are mutually dependent. This has the greatest impact
on assumptions regarding interest rates and inflation.
Defined benefit pension schemes
The Group operates a defined-benefit plan in Norway. A defined-benefit
plan is a pension plan that defines an amount of pension benefit that an
employee will receive on retirement, depending on age, years of service
and salary.
The net obligation with respect to the defined- benefit plan is based on
actuarial calculations involving a number of assumptions. The assump-
tions include discount interest rate, expected future salary and pension
adjustments, turnover, mortality and disability.
Fair value of financial assets and liabilities
Measurements of financial assets and liabilities for which prices are
quoted in an active market or which are based on generally accepted
models with observable market data are not subject to material esti-
mates. For securities that are not listed on a stock exchange, or for
which no stock exchange price is quoted that reflects the fair value of
the instrument, the fair value is determined using a current OTC price of
a similar financial instrument or using a model calculation. The valua-
tion models include the discounting of the instrument cash flow using
an appropriate market interest rate with due consideration for credit
and liquidity premiums.
Valuation of property
Property is divided into owner-occupied property and investment prop-
erty. Owner-occupied property is assessed at the reassessed value that
is equivalent to the fair value at the time of reassessment, with a deduc-
tion for depreciation and write-downs. The fair value is calculated
based on a market-determined rental income, as well as operating ex-
penses in proportion to the property’s required rate of return in per
cent. Investment property is recognised at fair value. The calculation of
fair value is based on market prices, taking into consideration the type
of property, location and maintenance standard, and based on a mar-
ket- determined rental income as well as operating expenses in propor-
tion to the property’s required rate of return.
Measurement of goodwill, Trademarks and Customer relations
Goodwill, Trademarks and customer relations was acquired in connection
with acquisition of businesses. Goodwill is allocated to the cash-generat-
ing units under which management manages the investment. The carry-
ing amount is tested for impairment at least annually. Impairment testing
116
| Tryg A/S | Annual report 2013 | Notes Notes
involves estimates of future cash flows and is affected by a number of
factors, including discount rates and other circumstances dependent on
economic trends, such as customer behaviour and competition.
achieved through direct or indirect ownership or control of more than
20% but less than 50% of the votes.
Description of accounting policies
Recognition and measurement
The annual report has been prepared under the historical cost conven-
tion, as modified by the revaluation of owner-occupied property, where
increases are recognised in other comprehensive income, and revalua-
tion of investment property, financial assets held for trading and finan-
cial assets and financial liabilities (including derivative instruments) at
fair value in the income statement.
Assets are recognised in the statement of financial position when it is
probable that future economic benefits will flow to the Group, and the
value of such assets can be measured reliably. Liabilities are recognised
in the statement of financial position when the Group has a legal or
constructive obligation as a result of a prior event, and it is probable
that future economic benefits will flow out of the Group, and the value
of such liabilities can be measured reliably.
On initial recognition, assets and liabilities are measured at cost, with
the exception of financial assets, which are recognised at fair value.
Measurement subsequent to initial recognition is effected as described
below for each item. Anticipated risks and losses that arise before the
time of presentation of the annual report and that confirm or invalidate
affairs and conditions existing at the statement of financial position
date are considered at recognition and measurement.
Income is recognised in the income statement as earned, whereas costs
are recognised by the amounts attributable to this financial year. Value
adjustments of financial assets and liabilities are recognised in the in-
come statement unless otherwise described below.
All amounts in the notes are shown in millions of DKK, unless otherwise
stated.
Consolidation
The consolidated financial statements comprise the financial state-
ments of Tryg A/S (the parent company) and subsidiaries controlled by
the parent company. Control is achieved where the parent company di-
rectly or indirectly holds more than 50% of the voting rights or is other-
wise able to exercise or actually exercises a controlling influence.
The consolidated financial statements are prepared on the basis of the
financial statements of the parent company and its subsidiaries by com-
bining items of a uniform nature. The financial statements of subsidiar-
ies that present financial statements under other legislative rules are re-
stated with reference to the accounting policies applied by the Group.
Undertakings in which the Group exercises significant influence but not
control are classified as associates. Significant influence is typically
Investments in joint ventures are recognised using the pro rata consolida-
tion method. Using pro rata consolidation, the Group’s share of joint ven-
ture assets and liabilities is recognised in the statement of financial posi-
tion. The share of income and costs and assets and liabilities are
presented on a line-by-line basis in the consolidated financial statements.
On consolidation, intra-group income and costs, shareholdings, intra-
group accounts and dividends, and gains and losses arising on transac-
tions between the consolidated enterprises are eliminated.
Newly acquired or divested subsidiaries are consolidated with the re-
sults for the period subsequent to taking over or before surrendering
control, respectively. Profit and loss in divested subsidiaries and profit
and loss from discontinued activities are included under discontinued
and divested business in the income statement.
Unrealised gains on transactions between consolidated companies (in-
cluding associates) are eliminated to the extent of the Group’s interest
in the companies. Unrealised losses are eliminated in the same way as
unrealised gains unless impairment has occurred.
Business combinations
Newly acquired undertakings are recognised in the consolidated finan-
cial statements from the date of acquisition. Comparative figures are
not restated to reflect new acquisitions.
The purchase method is applied for new acquisitions if the Tryg Group
gains control of the company acquired. Identifiable assets, liabilities and
contingent liabilities in undertakings acquired are measured at fair value at
the date of acquisition. The tax effect of revaluations is taken into account.
The date of acquisition is the date on which control of the acquired
company actually passes to Tryg.
The cost of a company is the fair value of the agreed consideration paid
plus, for acquisitions before 1 January 2010, costs directly attributable
to the acquisition. If the final amount of the consideration is conditional
on one or more future events, these adjustments are only recognised in
cost if the event in question is likely to occur and its effect on cost can
be measured reliably.
Any excess of the cost of acquisition of the enterprise over the fair value
of the acquired identifiable assets, liabilities and contingent liabilities is
recognised as goodwill under intangible assets. Goodwill is tested for
impairment at least once a year. If the carrying amount of an asset ex-
ceeds its recoverable amount, the asset is written down to the lower re-
coverable amount.
Currency translation
A functional currency is determined for each of the reporting entities in
the Group. The functional currency is the currency used in the primary
117
Notes | Annual report 2013 | Tryg A/S |
Notes
economic environment in which the reporting entity operates. Transac-
tions in currencies other than the functional currency are transactions
in foreign currencies.
On initial recognition, transactions in foreign currencies are translated
into the functional currency using the exchange rate applicable at the
transaction date. Assets and liabilities denominated in foreign curren-
cies are translated using the exchange rates applicable at the statement
of financial position date. Translation differences are recognised in the
income statement under price adjustments.
On consolidation, the assets and liabilities of the Group’s foreign opera-
tions are translated using the exchange rates applicable at the state-
ment of financial position date. Income and expense items are trans-
lated using the average exchange rates for the period. Exchange rate
differences arising on translation are classified as other comprehensive
income and transferred to the Group’s translation reserve. Such transla-
tion differences are recognised as income or as expenses in the period
in which the activities are divested. All other foreign currency transla-
tion gains and losses are recognised in the income statement. The pres-
entation currency in the annual report is DKK.
Segment reporting
Segment information is based on the Group’s management and internal
financial reporting system and supports the management decisions on
allocation of resources and assessment of the Group’s results divided
into segments.
The operational business segments in the Tryg are Private, Commercial,
Corporate and Sweden. Private encompasses the sale of insurances to
private individuals in Denmark and Norway. Commercial encompasses
the sale of insurances to small and medium sized businesses, in Den-
mark and Norway. Corporate sells insurances to industrial clients pri-
marily in Denmark, Norway and Sweden. In addition, Corporate handles
all business involving brokers. Sweden encompasses the sale of insur-
ance products to private individuals in Sweden.
Geographical information is presented on the basis of the economic en-
vironment in which the Tryg Group operates. The geographical areas
are Denmark, Norway and Sweden.
Segment income and segment costs as well as segment assets and liabili-
ties comprise those items that can be directly attributed to each individ-
ual segment and those items that can be allocated to the individual seg-
ments on a reliable basis. Unallocated items primarily comprise assets
and liabilities concerning investment activity managed at Group level.
Key ratios
Earnings per share (EPS) are calculated according to IAS 33. This and
other key ratios are calculated in accordance with Recommendations
and Ratios 2010 issued by the Danish Society of Financial Analysts and
the Executive Order on Financial Reports for Insurance Companies and
Multi-Employer Occupational Pension Funds issued by the Danish Fi-
nancial Supervisory Authority.
Income statement
Premiums
Premium income represents gross premiums written during the year,
net of reinsurance premiums and adjusted for changes in premium pro-
visions, corresponding to an accrual of premiums to the risk period of
the policies, and in the reinsurers’ share of the premium provisions.
Premiums are calculated as premium income in accordance with the risk
exposure over the cover period, calculated separately for each individual in-
surance contract. The calculation is generally based on the pro rata method,
although this is adjusted for an unevenly divided risk between lines of busi-
ness with strong seasonal variations or for policies lasting many years.
The portion of premiums received on contracts that relate to unexpired
risks at the statement of financial position date is reported under pre-
mium provisions.
The portion of premiums paid to reinsurers that relate to unexpired
risks at the statement of financial position date is reported as the rein-
surers’ share of premium provisions.
Technical interest
According to the Danish FSA’s executive order, technical interest is pre-
sented as a calculated return on the year’s average insurance liability
provisions, net of reinsurance. The calculated interest return for
grouped classes of risks is calculated as the monthly average provision
plus an actual interest from the present yield curve for each individual
group of risks. The interest is applied according to the expected run-off
pattern of the provisions.
Insurance technical interest is reduced by the portion of the increase in
net provisions that relates to unwinding.
Claims
Claims are claims paid during the year and adjusted for changes in
claims provisions less the reinsurers’ share. In addition, the item in-
cludes run-off gains/losses in respect of previous years. The portion of
the increase in provisions which can be ascribed to unwinding is trans-
ferred to insurance technical interest.
Claims are shown inclusive of direct and indirect claims handling costs,
including costs of inspecting and assessing claims, costs to combat and
mitigate damage and other direct and indirect costs associated with the
handling of claims incurred.
Changes in claims provisions due to changes in yield curve and ex-
change rates are recognised as a price adjustment.
Tryg hedges the risk of changes in future pay and price figures for provi-
sions for workers’ compensation. Tryg uses zero coupon inflation swaps
acquired with a view to hedging the inflation risk. Value adjustments of
these swaps are included in claims, thereby reducing the effect of
changes to inflation expectations under claims.
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| Tryg A/S | Annual report 2013 | Notes Notes
Bonus and premium discounts
Bonuses and premium discounts represent anticipated and refunded
premiums to policyholders, where the amount refunded depends on
the claims record, and for which the criteria for payment have been de-
fined prior to the financial year or when the insurance was taken out.
Insurance operating expenses
Insurance operating costs represent acquisition costs and administra-
tion expenses less reinsurance commissions received. Expenses relat-
ing to acquiring and renewing the insurance portfolio are recognised at
the time of writing the business. Underwriting commission is recog-
nised when a legal obligation occurs and is accrued over the term of the
policy. Administration expenses are all other expenses attributable to
the administration of the insurance portfolio. Administration expenses
are accrued to match the financial year.
Leasing
Leases are classified either as operating or finance leases. The assess-
ment of the lease is based on criteria such as ownership, right of pur-
chase when the lease term expires, considerations as to whether the
asset is custom- made, the lease term and the present value of the
lease payments.
Assets held under operating leases are not recognised in the statement of
financial position, but the lease payments are recognised in the income
statement over the term of the lease, corresponding to the economic life-
time of the asset. The Group has no assets held under finance leases.
Share-based payment
The Tryg Group’s incentive programmes comprise share option pro-
grammes and matching shares.
Share option programme
The value of services received as consideration for options granted is
measured at the fair value of the options.
Equity-settled share options are measured at fair value at the time of alloca-
tion and recognised under staff expenses over the period from the time of
allocation until vesting. The balancing item is recognised directly in equity.
The options are issued at an exercise price that corresponds to the market
price of the Group’s shares at the time of allocation plus 10%. No other
vesting conditions apply. Special provisions are in place concerning sick-
ness and death and in case of change to the Group’s capital position etc.
The share option agreement entitles the employee to the options un-
less the employee resigns his position or is dismissed due to breach of
the contract of employment. In case of termination due to restructuring
or retirement, the employee is still entitled to the options.
The share options are exercisable exclusively during a 13-day period,
which starts the day after the publication of full-year, half-year and
quarterly reports and in accordance with Tryg’s in-house rules on trad-
ing in the Group’s shares. The options are settled in shares. A part of the
Group’s holding of own shares is reserved for settlement of the
options allocated.
On initial recognition of the share options, the number of options ex-
pected to vest for employees and members of the Executive Manage-
ment is estimated. Subsequently, adjustment is made for changes in the
estimated number of vested options to the effect that the total amount
recognised is based on the actual number of vested options. The value
for retired employees who retain their right to options is reported for
the remaining period of the financial year in which the employee retires.
The fair value of the options granted is estimated using the Black &
Scholes option model. The calculation takes into account the terms and
conditions of the share options granted.
Matching shares
Members of Executive Management and risk takers have been allocated
shares in accordance with the ‘Matching shares’ scheme. Under Match-
ing shares, the individual management member or risk takers is allo-
cated one share in Tryg A/S for each share the Executive management
member or risk taker acquires in Tryg A/S at the market rate for certain
liquid cash at a contractually agreed sum in connection with the Match-
ing share programme.
The holder acquires the shares in the open window following publication
of the annual report for the previous year. The shares (matching shares)
are provided free of charge, four years after the time of purchase. The
holder may not sell the shares until six months after the matching time.
The shares are recognised at market value and are accrued over the
four-year maturation period, based on the market price at the time of
acquisition. Recognition is from the end of the month of acquisition un-
der staff expenses with a balancing entry directly in equity. If an Execu-
tive Management member or risk-taker retires during the maturation
period but remains entitled to shares, the remaining expense is recog-
nised in the current accounting year.
Investment activities
Income from associates includes the Group’s share of the associates’
net profit.
Income from investment properties before fair value adjustment repre-
sents the profit from property operations less property management
expenses.
Interest and dividends represent interest earned and dividends received
during the financial year. Realised and unrealised investment gains and
losses, including gains and losses on derivative financial instruments,
value adjustment of investment property, foreign currency translation
adjustments and the effect of movements in the yield curve used for
discounting, are recognised as price adjustments.
Investment management charges represent expenses relating to the
management of investments.
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Notes | Annual report 2013 | Tryg A/S | Notes
Other income and expenses
Other income and expenses include income and expenses which can-
not be ascribed to the Group´s insurance portfolio or investment assets,
including the sale of products for Nordea Liv & Pension.
Discontinued and divested business
Discontinued and divested business is consolidated in one item in the
income statement and supplemented with disclosure of the discontin-
ued and divested business in a note to the financial statements. Discon-
tinued and divested business includes gross premiums, gross claims,
gross costs, profit/loss on ceded business, insurance technical interest
net of reinsurance, investment return after insurance technical interest,
other income and costs and tax in respect of the discontinued business.
Any reversal of earlier impairment is recognised under other income
and costs.
The statement of financial position items concerning discontinued ac-
tivities are reported unchanged under the respective entries whereas
assets and liabilities concerning divested activities are consolidated un-
der one item as assets held for sale and liabilities associated with assets
held for sale.
The comparative figures, including five-year financial highlights and key
ratios, have been restated to reflect discontinued business. Discontin-
ued and divested business in the income statement includes the profit/
loss after tax of the run-off for the marine hull business in 2010 and the
divested activities in the Finnish branch in 2012. Discontinued business
also comprises the Tryg Forsikring A/S run-off business.
Statement of financial position
Intangible assets
Goodwill
Goodwill was acquired in connection with acquisition of business.
Goodwill is calculated as the difference between the cost of the under-
taking and the fair value of acquired identifiable assets, liabilities and
contingent liabilities at the time of acquisition. Goodwill is allocated to
the cash-generating units under which management manages the in-
vestment and is recognised under intangible assets. Goodwill is not am-
ortised but is tested for depreciation at least once per year.
Trademarks and customer relations
Trademarks and customer relations have been identified as intangible
assets on acquisition. The intangible assets are recognised at fair value
at the time of acquisition and amortised on a straight-line basis over the
expected economic lifetime of 5–12 years.
Software
Acquired computer software licences are capitalised on the basis of the
costs incidental to acquiring and bringing to use the specific software.
The costs are amortised based on an estimated economic lifetime of up
to 4 years.
Costs for group developed software that are directly connected with the
production of identifiable and unique software products, where there is
sufficient certainty that future earnings will exceed the costs in more
than one year, are reported as intangible assets. Direct costs include
personnel costs for software development and directly attributable rele-
vant fixed costs. All other costs connected with the development or
maintenance of software are continuously charged as expenses.
After completion of the development work, the asset is amortised ac-
cording to the straight-line method over the assessed economic life-
time, though over a maximum of 4 years. The amortisation basis is re-
duced by any impairment and write-downs.
Assets under construction
Group-developed intangibles are recorded under the entry ‘Assets un-
der construction’ until they are put into use, whereupon they are reclas-
sified as software and are amortized in accordance with the amortiza-
tion periods stated above.
Fixed assets
Operating equipment
Fixtures and operating equipment are measured at cost less accumu-
lated depreciation and any accumulated impairment losses. Cost en-
compasses the purchase price and costs directly attributable to the ac-
quisition of the relevant assets until the time when such assets are
ready to be brought into use.
Depreciation of operating equipment is calculated using the straight-
line method over its estimated economic lifetime as follows:
• IT, 4 years
• Vehicles, 5 years
• Furniture, fittings and equipment, 5-10 years
Leasehold improvements are depreciated over the expected economic
lifetime, however maximally the term of the lease.
Gains and losses on disposals and retired assets are determined by
comparing proceeds with carrying amounts. Gains and losses are rec-
ognised in the income statement. When revalued assets are sold, the
amounts included in the revaluation reserves are transferred to retained
earnings.
Land and buildings
Land and buildings are divided into owner-occupied property and invest-
ment property. The Group’s owner-occupied properties consist of the head
office buildings in Ballerup and Bergen and a small number of holiday
homes. The remaining properties are classified as investment property.
Owner-occupied property
Owner-occupied property is property that is used in the Group’s opera-
tions. Owner-occupied properties are measured in the statement of fi-
nancial position at their revalued amounts, being the fair value at the date
of revaluation, less any subsequent accumulated depreciation and im-
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| Tryg A/S | Annual report 2013 | Notes Notes
pairment losses. Revaluations are performed regularly to avoid material
differences between the carrying amounts and fair values of owner-occu-
pied property at the statement of financial position date. The fair value is
calculated on the basis of market-specific rental income per property and
typical operating expenses for the coming year. The resulting operating
income is divided by the required return on the property in per cent,
which is adjusted to reflect market interest rates and property character-
istics, corresponding to the present value of a perpetual annuity.
Impairment test for intangible assets, property
and operating equipment
Operating equipment and intangible assets are assessed at least once
per year to ensure that the depreciation method and the depreciation
period that is used are connected to the expected economic lifetime.
This also applies to the salvage value. Write-down is performed if
depreciation has been demonstrated. A continuous assessment of
owner-occupied property is performed.
Increases in the revalued carrying amounts of owner-occupied property
are recognised in the revaluation reserve in equity. Decreases that offset
previous revaluations of the same asset are charged against the revalu-
ation reserves directly in equity; all other decreases are charged to the
income statement.
Costs are included in the asset’s carrying amount or recognised as a
separate asset, as appropriate, when it is probable that future eco-
nomic benefits associated with the item will flow to the Group, and the
cost of the item can be measured reliably. Ordinary repair and mainte-
nance costs are expensed in the income statement when incurred.
Depreciation on owner-occupied property is calculated based on the
straight-line method and using an estimated economic lifetime of up to
50 years. Land is not depreciated.
Assets under construction
In connection with the refurbishment of owner-occupied property,
costs to be capitalised are recognised at cost under owner-occupied
property. On completion of the project, it is reclassified as owner-occu-
pied property, and depreciation is made on a straight-line basis over the
expected economic lifetime, up to the number of years stated under the
individual categories.
Investment property
Properties held for renting yields that are not occupied by the Group are
classified as investment properties.
Investment property is recognised at fair value. Fair value is based on
market prices, adjusted for any differences in the nature, location or
maintenance condition of specific assets. If this information is not avail-
able, the Group uses alternative valuation methods such as discounted
cash flow projections and recent prices in the market.
The fair value is calculated on the basis of market-specific rental in-
come per property and typical operating expenses for the coming year.
The resulting operating income is divided by the required return on the
property in per cent, which is adjusted to reflect market interest rates
and property characteristics, corresponding to the present value of a
perpetual annuity. The value is subsequently adjusted with the value in
use of the return on prepayments and deposits and adjustments for
specific property issues such as vacant premises or special tenant
terms and conditions.
Changes in fair values are recorded in the income statement.
Goodwill is tested annually for impairment, or more often if there are in-
dications of impairment, and impairment testing is performed for each
cash-generating unit to which the asset belongs. The present value is
normally established using budgeted cash flows based on business
plans. The business plans are based on past experience and expected
market developments.
Equity investments in Group undertakings
The parent company’s equity investments in subsidiaries are recog-
nised and measured using the equity method. The parent company’s
share of the enterprises’ profits or losses after elimination of unrealised
intra-group profits and losses is recognised in the income statement.
In the statement of financial position, equity investments are measured
at the pro rata share of the enterprises’ equity.
Subsidiaries with a negative net asset value are recognised at zero
value. Any receivables from these enterprises are written down by
the parent company’s share of such negative net asset value where
the receivables are deemed irrecoverable. If the negative net asset value
exceeds the amount receivable, the remaining amount is recognised
under provisions if the parent company has a legal or constructive
obligation to cover the liabilities of the relevant enterprise.
Net revaluation of equity investments in subsidiaries is taken to reserve
for net revaluation under equity if the carrying amount exceeds cost.
The results of foreign subsidiaries are based on translation of the items
in the income statement using average exchange rates for the period.
Income and costs in domestic enterprises denominated in foreign
currencies are translated using the exchange rates applicable on the
transaction date.
Statement of financial position items of foreign subsidiaries are trans-
lated using the exchange rates applicable at the statement of financial
position date.
Equity investments in associates
Associates are enterprises in which the Group has significant influence
but not control, generally in the form of an ownership interest of between
20% and 50% of the voting rights. Equity investments in associates are
measured using the equity method so that the carrying amount of the
investment represents the Group’s proportionate share of the enter-
prises’ net assets.
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Notes | Annual report 2013 | Tryg A/S | Notes
Profit after tax from equity investments in associates is included as a
separate line in the income statement. Income is made up after elimi-
nation of unrealised intra-group profits and losses.
Associates with a negative net asset value are measured at zero value. If
the Group has a legal or constructive obligation to cover the associate’s
negative balance, such obligation is recognised under liabilities.
Investments
Investments include financial assets at fair value which are recognised
in the income statement. The classification depends on the purpose for
which the investments were acquired. Management determines the
classification of its investments on initial recognition and re-evaluates
this at every reporting date.
Financial assets measured at fair value with recognition of value adjust-
ments in the income statement comprise assets that form part of a
trading portfolio and financial assets designated at fair value with value
adjustment via the income statement.
Financial assets at fair value recognised in income statement
Financial assets are recognised at fair value on initial recognition if they
are entered in a portfolio that is managed in accordance with fair value.
Derivative financial instruments are similarly classified as financial as-
sets held for sale, unless they are classified as security.
Realised and unrealised profits and losses that may arise as a result of
changes in the fair value for the category financial assets at fair value are
recognised in the income statement in the period in which they arise.
Financial assets are derecognised when the rights to receive cash flows
from the financial assets have expired, or if they have been transferred, and
the Group has also transferred substantially all risks and rewards of owner-
ship. Financial assets are recognised and derecognised on a trade date ba-
sis, the date on which the Group commits to purchase or sell the asset.
The fair values of quoted securities are based on stock exchange prices at
the statement of financial position date. For securities that are not listed
on a stock exchange, or for which no stock exchange price is quoted that
reflects the fair value of the instrument, the fair value is determined using
valuation techniques or using OTC prices. These include the use of simi-
lar recent arm’s length transactions, reference to other instruments that
are substantially the same and a discounted cash flow analysis.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to financial risks, including changes in
share prices, foreign exchange rates, interest rates and inflation. Forward
exchange contracts and currency swaps are used for currency hedging
of portfolios of shares, bonds, hedging of foreign entities and insurance
statement of financial position items. Interest rate derivatives in the form
of futures, forward contracts, repos, swaps and FRAs are used to man-
age cash flows and interest rate risks related to the portfolio of bonds
and insurance provisions. Share derivatives in the form of futures and
options are used from time to time to adjust share exposures.
Derivative financial instruments are reported from the trading date and
are measured in the statement of financial position at fair value. Posi-
tive fair values of derivatives are recognised as derivative financial in-
struments under assets. Negative fair values of derivatives are recog-
nised under derivative financial instruments under liabilities. Positive
and negative values are only offset when the company is entitled or in-
tends to make net settlement of more financial instruments.
Calculation of value is generally performed on the basis of rates sup-
plied by Nordea with relevant information providers and is checked by
the Group’s valuation technicians. Discounting on the basis of market
interest rates is applied in the case of derivative financial instruments
involving an expected future cash flow.
Recognition of the resulting gain or loss depends on whether the deriv-
ative is designated as a hedging instrument and, if so, the nature of the
item being hedged. The Group designates certain derivatives as hedges
of investments in foreign entities. Changes in the fair value of deriva-
tives that are designated and qualify as net investment hedges in foreign
entities and which provide effective currency hedging of the net invest-
ment are recognised directly in equity. The net asset value of the foreign
entities estimated at the beginning of the financial year is hedged 90-
100% by entering into short-term forward exchange contracts accord-
ing to the requirements of hedge accounting. Changes in the fair value
relating to the ineffective portion are recognised in the income state-
ment. Gains and losses accumulated in equity are included in the in-
come statement on disposal of the foreign entity.
Reinsurers’ share of provisions for insurance contracts
Contracts entered into by the Group with reinsurers under which the
Group is compensated for losses on one or more contracts issued by
the Group and that meet the classification requirements for insurance
contracts are classified as reinsurers’ share of provisions for insurance
contracts. Contracts that do not meet these classification requirements
are classified as financial assets.
The benefits to which the Group is entitled under its reinsurance con-
tracts held are recognised as assets and reported as reinsurers’ share of
provisions for insurance contracts.
Amounts receivable from reinsurers are measured consistently with the
amounts associated with the reinsured insurance contracts and in ac-
cordance with the terms of each reinsurance contract.
Changes due to unwinding are recognised in insurance technical inter-
est. Changes due to changes in the yield curve or foreign exchange
rates are recognised as price adjustments.
The Group continuously assesses its reinsurance assets for impairment.
If there is objective evidence that the reinsurance asset is impaired, the
Group reduces the carrying amount of the reinsurance asset to its re-
coverable amount. Impairment losses are recognised in the income
statement.
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| Tryg A/S | Annual report 2013 | Notes Notes
Receivables
Total receivables comprise accounts receivable from policyholders and
insurance companies as well as other accounts receivable. Other receiv-
ables primarily contain accounts receivable in connection with property.
Derivative financial instruments are reported from the trading date and
are measured in the statement of financial position at fair value. Receiv-
ables that arise as a result of insurance contracts are classified in this
category and are reviewed for impairment as a part of the impairment
test of accounts receivable.
Receivables that are not derivative financial instruments are recognised
initially at fair value and are subsequently assessed at amortised cost.
The income statement includes an estimated reservation for expected
unobtainable sums when there is a clear indication of asset impair-
ment. The reservation entered is assessed as the difference between
the carrying amount of an asset and the present value of expected fu-
ture cash flows.
Assets held for sale and associated liabilities
Assets held for sale comprise non-current assets and disposal groups
held for sale. A disposal group is a group of assets which an entity in-
tends to dispose of in a single transaction. Liabilities associated with as-
sets held for sale are liabilities which are directly associated with these
assets, which will be transferred as part of the transaction. Assets are
classified as ‘held for sale’ when their carrying amount will be recovered
primarily via a formally planned sale within a period of 12 months
rather than through continued use.
Impairment or reversal of earlier impairment arising in connection with
the first classification as held for sale and gains or losses in connection
with subsequent measurements at the lower of carrying amount and
fair value less costs to sell are recognised in the income statement un-
der the relevant items. Gains and losses are specified in the notes. As-
sets and disposal groups held for sale are measured at the lower of car-
rying amount at the time of classification as held for sale and fair value
less costs to sell. Assets are not depreciated or amortised from the time
of classification as held for sale.
Equity
Share capital
Shares are classified as equity when there is no obligation to transfer
cash or other assets. Incremental costs directly attributable to the issue
of equity instruments are shown in equity as a deduction from the pro-
ceeds, net of tax.
Revaluation reserves
Revaluation of owner-occupied property is recognised in other compre-
hensive income unless the revaluation offsets a previous impairment loss.
Foreign currency translation reserve
Assets and liabilities of foreign entities are recognised using the ex-
change rate applicable at the statement of financial position date. In-
come and expense items are recognised using the average monthly ex-
change rates for the period. Any resulting differences are recognised in
equity. When an entity is wound up, the balance is transferred to the in-
come statement. The hedging of the currency risk in respect of foreign
entities is also offset in other comprehensive income in respect of the
part that concerns the hedge.
Contingency fund reserves
Contingency fund reserves are recognised as part of retained earnings
under equity. The reserves may only be used when so permitted by the
Danish Financial Supervisory Authority and when it is for the benefit of
the policyholders. The Norwegian contingency fund reserves include
provisions for the Norwegian Natural Perils Pool, security reserve and
guarantee reserve. The Danish and Swedish provisions comprise con-
tingency fund provisions. Deferred tax on the Norwegian and Swedish
contingency fund reserves is allocated.
Dividends
Proposed dividend is recognised as a liability at the time of adoption by
the shareholders at the annual general meeting (date of declaration).
Own shares
The purchase and sale sums of own shares and dividends thereon are
taken directly to retained earnings under equity. Own shares include shares
acquired for incentive programmes and share buyback programme.
Assets and associated liabilities are specified separately in the statement
of financial position, and the main items are specified in the notes. Com-
parative figures in the statement of financial position are not restated.
Proceeds from the sale of own shares in connection with the exercise of
share options or matching shares are taken directly to equity.
Other assets
Other assets include current tax assets and cash at bank and in hand.
Current tax assets are receivables concerning tax for the year adjusted
for on-account payments and any prior-year adjustments. Cash at bank
and in hand is recognised at nominal value at the statement of financial
position date.
Subordinate loan capital
Subordinate loan capital is recognised initially at fair value, net of trans-
action costs incurred. Subordinate loan capital is subsequently stated at
amortised cost; any difference between the proceeds (net of transac-
tion costs) and the redemption value is recognised in the income state-
ment over the borrowing period using the effective interest method.
Prepayments and accrued income
Prepayments include expenses paid in respect of subsequent financial
years and interest receivable. Accrued underwriting commission relat-
ing to the sale of insurance products is also included.
Provisions for insurance contracts
Premiums written are recognised in the income statement (premium in-
come) proportionally over the period of coverage and, where necessary,
adjusted to reflect any time variation of the risk. The portion of premiums
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Notes | Annual report 2013 | Tryg A/S | Notes
received on in-force contracts that relates to unexpired risks at the state-
ment of financial position date is reported as premium provisions. Pre-
mium provisions are generally calculated according to a best estimate of
expected payments throughout the agreed risk period; however, as a min-
imum as the part of the premium calculated using the pro rata temporis
principle until the next payment date. Adjustments are made to reflect
any risk variations. This applies to gross as well as ceded business.
Claims and claims handling costs are expensed in the income state-
ment as incurred based on the estimated liability for compensation
owed to policyholders or third parties sustaining losses at the hands of
the policy- holders. They include direct and indirect claims handling
costs that arise from events that have occurred up to the statement of
financial position date even if they have not yet been reported to the
Group. Claims provisions are estimated using the input of assessments
for individual cases reported to the Group and statistical analyses for
the claims incurred but not reported and the expected ultimate cost of
more complex claims that may be affected by external factors (such as
court decisions). The provisions include claims handling costs.
Claims provisions are discounted. Discounting is based on a yield curve
reflecting duration applied to the expected future payments from the
provision. Discounting affects the motor liability, professional liability,
workers’ compensation and personal accident and health insurance
classes, in particular.
Provisions for bonuses and premium discounts etc. represent amounts
expected to be paid to policyholders in view of the claims experience
during the financial year.
Claims provisions are determined for each line of business based on ac-
tuarial methods. Where such business lines encompass more than one
business area, short-tailed claims provisions are distributed based on
number of claims reported while long-tailed claims provisions are dis-
tributed based on premiums earned. The models currently used are
Chain-Ladder, Bornhuetter-Ferguson, the Loss Ratio method and De
Vylder’s credibility method. Chain-Ladder techniques are used for lines
of business with a stable run-off pattern. The Bornhuetter-Ferguson
method, and sometimes the Loss Ratio method, are used for claims
years in which the previous run-off provides insufficient information
about the future run-off performance. De Vylder’s credibility method is
used for areas that are somewhere in between the Chain-Ladder and
Bornhuetter-Ferguson/Loss Ratio methods, and may also be used in sit-
uations that call for the use of exposure targets other than premium
volume, for example the number of insured.
The provision for annuities under workers’ compensation insurance is
calculated on the basis of a mortality corresponding to the G82 calcula-
tion basis (official mortality table).
In some instances, the historic data used in the actuarial models is not
necessarily predictive of the expected future development of claims.
For example, this is the case with legislative changes where an a priori
estimate is used for premium increases related to the expected in-
crease in claims. In connection with legislative changes, the same esti-
mate is used for determining the change in the level of claims. Subse-
quently, this estimate is maintained until new loss history materialises
which can be used for re-estimation.
Several assumptions and estimates underlying the calculation of the
claims provisions are mutually dependent. Most importantly, this can
be expected to be the case for assumptions relating to interest rates
and inflation.
Workers’ compensation is an area in which explicit inflation assump-
tions are used, with annuities for the insured being indexed based on
the workers’ compensation index. An inflation curve that reflects the
market’s inflation expectations plus a real wage spread is used as an ap-
proximation to the workers’ compensation index.
For other lines of business, the inflation assumptions, because present
only implicitly in the actuarial models, will cause a certain lag in predict-
ing the level of future losses when a change in inflation occurs. On the
other hand, the effect of discounting will show immediately as a conse-
quence of inflation changes to the extent that such changes affect the
interest rate.
Other correlations are not deemed to be significant.
Liability adequacy test
Tests are continuously performed to ensure the adequacy of the insur-
ance provisions. In performing these tests, current best estimates of fu-
ture cash flows of claims, gains and direct and indirect claims handling
costs are used. Any deficiency results in an increase in the relevant pro-
vision, and the adjustment is recognised in the income statement.
Employee benefits
Pension obligations
The Group operates various pension schemes. The schemes are funded
through contributions to insurance companies or trustee-administered
funds. In Norway, the Group operates a defined-benefit plan. In Den-
mark, the Group operates a defined-contribution plan. A defined-
contribution plan is a pension plan under which the Group pays fixed
contributions into a separate entity (a fund) and will have no legal or
constructive obligation to pay further contributions. In Sweden, the
Group complies with the industry pension agreement, FTP-Planen.
FTP-Planen is primarily a defined-benefit plan as regards the future
pension benefits. Försäkringsbranschens Pensionskassa (FPK) is unable
to provide sufficient information for the Group to use defined-benefit
accounting. The plan is therefore accounted for as a defined-contribu-
tion plan.
For the defined-benefit plan recognised in the statement of financial
position, an annual actuarial calculation is made of the capital value of
the future benefits to which employees are entitled as a result of their
employment with the group so far and which must be disbursed ac-
cording to the plan. The capital value is calculated using the Projected
Unit Credit Method.
124
| Tryg A/S | Annual report 2013 | Notes
Notes
The capital value of the pension obligations less the fair value of any
plan assets is recognised in the statement of financial position under
pension assets and pension obligations, respectively, depending on
whether the net amount is an asset or a liability.
In case of changes to assumptions concerning the discounting factor,
inflation, mortality and disability or in case of differences between ex-
pected and realised returns on pension assets, actuarial gains or losses
ensue. These gains and losses are recognised under other comprehen-
sive income.
In case of changes to the benefits stemming from the employees’ em-
ployment with the group so far,a change is seen in the actuarially calcu-
lated capital value which is considered as pension costs for previous fi-
nancial years. The change is recognised in the results immediately.
The plan is closed for new business.
Other employee benefits
Employees of the Group are entitled to a fixed payment when they
reach retirement and when they have been employed with the Group
for 25 and for 40 years. The Group recognises this liability at the time of
signing the contract of employment.
In special instances, the employee can enter into a contract with the
Group to receive compensation for loss of pension benefits caused by
reduced working hours. The Group recognises this liability based on
statistical models.
Income tax and deferred tax
The Group expenses current tax according to the tax laws of the juris-
dictions in which it operates. Current tax liabilities and current tax re-
ceivables are recognised in the statement of financial position as esti-
mated tax on the taxable income for the year, adjusted for change in tax
on prior years’ taxable income and for tax paid under the on-account
tax scheme.
Deferred tax is measured according to the statement of financial posi-
tion liability method on all timing differences between the tax and ac-
counting value of assets and liabilities. Deferred income tax is meas-
ured using the tax rules and tax rates that apply in the relevant countries
on the statement of financial position date when the deferred tax asset
is realised or the deferred income tax liability is settled.
Deferred income tax assets, including the tax value of tax losses carried
forward, are recognised to the extent that it is probable that future taxa-
ble profit will be realised against which the temporary differences can
be offset.
Deferred income tax is provided on temporary differences concerning
investments, except where Tryg controls when the temporary difference
will be realised, and it is probable that the temporary difference will not
be realised in the foreseeable future.
Other provisions
Provisions are recognised when the Group has a legal or constructive
obligation as a result of an event prior to or at the statement of financial
position date, and it is probable that future economic benefits will
flow out of the Group. Provisions are measured at the best estimate by
management of the expenditure required to settle the present obliga-
tion. The measurement of provisions is based on a discounting of the
costs necessary to settle the obligation if this has a significant effect on
the measurement of the obligation.
Provisions for restructurings are recognised as obligations when a de-
tailed formal restructuring plan has been announced prior to or at the
statement of financial position date at the latest to the persons affected
by the plan.
Own insurance is included under other provisions. The provisions apply
to the Group’s own insurance claims and are reported when the damage
occurs according to the same principle as the Group’s other claims pro-
visions.
Debt
Debt comprises debt in connection with direct insurance and reinsurance,
amounts owed to credit institutions, current tax obligations and other
debt. Derivative financial instruments are assessed at fair value according
to the same practice that applies to financial assets. Other liabilities are as-
sessed at amortised cost based on the effective interest method.
Cash flow statement
The consolidated cash flow statement is presented using the direct
method and shows cash flows from operating, investing and financing
activities as well as the Group’s cash and cash equivalents at the begin-
ning and end of the financial year. No separate cash flow statement has
been prepared for the parent company because it is included in the
consolidated cash flow statement.
Cash flows from operating activities are calculated whereby major
classes of gross cash receipts and gross cash payments are disclosed.
Cash flows from investing activities comprise payments in connection
with the purchase and sale of intangible assets, property, plant and equip-
ment as well as financial assets and deposits with credit institutions.
Cash flows from financing activities comprise changes in the size or
composition of Tryg’s share capital and related costs as well as the rais-
ing of loans, repayments of interest-bearing debt and the payment of
dividends.
Cash and cash equivalents comprise cash and demand deposits.
125
Notes | Annual report 2013 | Tryg A/S | Income statement (parent company)
DKKm
Note
1
Investment activities
Income from Group undertakings
Interest expenses
Administration expenses in connection with investment activities
Total Investment return
2 Other expenses
Profit/loss before tax
3 Tax
Profit/loss on continuing business
Profit/loss for the year
Proposed distribution for the year:
Dividend
Transferred to reserve for net revaluation according to the equity method
Transferred to retained profit
Statement of comprehensive income
Profit/loss for the year
Other comprehensive income
Other comprehensive income which cannot subsequently be reclassified as profit or loss
Revaluation of owner-occupied property for the year
Tax on revaluation of owner-occupied property for the year
Actuarial gains/losses on defined-benefit pension plans
Tax on actuarial gains/losses on defined-benefit pension plans
Deferred tax on contingency fund provision
Other comprehensive income which can subsequently be reclassified as profit or loss
Exchange rate adjustments of foreign entities for the year
Hedging of currency risk in foreign entities for the year
Tax on hedging of currency risk in foreign entities for the year
Total other comprehensive income
Comprehensive income
126 | Tryg A/S | Annual report 2013 | Income statement (parent company)
2012
2013
2,265
0
-8
2,410
1
-6
2,257
2,405
-67
-52
2,190
2,353
18
14
2,208
2,367
2,208
2,367
1,594
1,865
-1,251
2,208
1,656
817
-106
2,367
2,208
2,367
42
-12
-62
16
0
-16
193
-184
46
55
39
9
-3
179
-54
0
131
-326
305
-76
-97
34
2,247
2,401
Statement of financial position (parent company)
DKKm
Note Assets
4
Equity investments in Group undertakings
Total investments in Group undertakings
Total investment assets
Receivables from Group undertakings
Total receivables
5 Current tax assets
Cash at bank and in hand
Total other assets
Total assets
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
Total equity and liabilities
6 Deferred tax assets
7 Capital adequacy
8 Contractual obligations, contingent liabilities and collateral
9
10
11 Accounting policies
Related parties
Reconciliation of profit/loss and equity
2012
2013
10,889
10,889
11,740
11,740
10,889
11,740
85
85
24
1
25
0
0
14
1
15
10,999
11,755
10,996
11,122
0
3
3
629
4
633
10,999
11,755
Statement of financial position (parent company) | Annual report 2013 | Tryg A/S |
127
Statement of changes in equity (parent company)
DKKm
Share
capital
Revaluation
reserves
Retained
earnings
Proposed
dividend
Equity at 31 December 2011
1,533
1,998
5,093
400
2012
Profit/loss for the year
Revaluation of owner-occupied properties
Exchange rate adjustment of foreign entities for the year
Hedging of currency risk in foreign entities for the year
Actuarial gains and losses on pension obligation
Tax on changes in equity
Total comprehensive income
Dividend paid
Dividend, own shares
Purchase and sale of own shares
Exercise of share options
Issue of share options
Total changes in equity in 2012
Equity at 31 December 2012
1,865
42
193
-184
-62
50
1,904
0
0
1,533
1,904
3,902
2013
Profit/loss for the year
Revaluation of owner-occupied property for the year
Exchange rate adjustments of foreign entities for the year
Hedging of currency risk in foreign entities for the year
Actuarial gains and losses on pension obligation
Tax on changes in equity
Total comprehensive income
0
817
9
-326
305
179
-133
851
Dividend paid
Dividend own shares
Purchase and sale of own shares
Exercise of share options
Issue of share options and matching shares
Total changes in equity in 2013
0
851
-1,251
1,594
-1,251
6
66
44
9
-1,126
3,967
1,594
-400
1,194
1,594
-106
1,656
-106
15
-800
100
4
-787
1,656
-1,594
62
Total
9,024
2,208
42
193
-184
-62
50
2,247
-400
6
66
44
9
1,972
10,996
2,367
9
-326
305
179
-133
2,401
-1,594
15
-800
100
4
126
Equity at 31 December 2013
1,533
4,753
3,180
1,656
11,122
Proposed dividend per share DKK 27 (in 2012 DKK 26)
Dividend per share is calculated as the total dividend proposed by the Supervisory Board after the end of the financial year divided by the number
of shares at the end of the year (61,316,103 shares). The dividend is not paid until approved by the shareholders at the annual general meeting.
The possible payment of dividend from Tryg Forsikring A/S to Tryg A/S is influenced by contingency fund provisions of DKK 3,020m (DKK 3,363m in 2012).
The contingency fund provisions can be used to cover losses in connection with the settlement of insurance provisions or otherwise for the benefit of
the insured.
128 | Tryg A/S | Annual report 2013 | Statement of changes in equity (parent company)
Notes (parent company)
DKKm
1
Income from Group undertakings
Tryg Forsikring A/S
2 Other expenses
Administration expenses
2012
2013
2,265
2,265
2,410
2,410
-67
-67
-52
-52
Remuneration for the Executive Management is paid partly by Tryg A/S and partly by Tryg Forsikring A/S
and Tryg Forsikring, a Norwegian branch of Tryg Forsikring A/S and is charged to Tryg A/S via the cost
allocation. Remuneration for the Supervisory Board, the Executive Management and risk-takers can be
seen from note 29 concerning related parties of the Tryg Group. Refer to Note 7 of the consolidated
financial statements for a specification of the audit fee.
Average number of full-time employees for the year
11
11
3 Tax
Reconciliation of tax costs
Tax on accounting loss before profit/loss in subsidiaries and tax
Tax adjustments, previous years
Effective tax rate
Tax on accounting profit
Charge in respect of previous years
4
Equity investments in Group undertakings
Cost
Cost at 1 January
Cost at 31 December
Revaluation and impairment to net asset value
Revaluation and impairment at 1 January
Revaluations for the year
Dividend paid
Revaluation and impairment at 31 December
Carrying amount at 31 December
Name and registered office
2013
Tryg Forsikring A/S, Ballerup
2012
Tryg Forsikring A/S, Ballerup
-19
1
-18
%
25
-1
24
6,987
6,987
1,998
2,304
-400
3,902
-14
0
-14
%
25
0
25
6,987
6,987
3,902
2,445
-1,594
4,753
10,889
11,740
Ownership
share in %
Equity
100
100
100
100
Notes (parent company) | Annual report 2013 | Tryg A/S |
129
Notes (parent company)
DKKm
5 Current tax assets
Tax payable at 1 January
Current tax for the year
Adjustment of current tax in respect of previous years
Tax paid for the year
Tax payable at 31 December
6 Deferred tax assets
Capitalised tax losses
Tryg A/S
Non-capitalised tax losses
Tryg A/S
The loss in Tryg A/S can only be utilised in Tryg A/S.
The loss can be carried forward indefinitely.
The losses are not recognised as tax assets until it has been substantiated that the company can generate
sufficient future taxable income to offset the tax losses.
7 Capital adequacy
Equity according to annual report
Proposed dividend
Solvency requirements of subsidiaries – 50%
Tier 1 capital
Subordinate loan capital
Solvency requirements of subsidiaries – 50%
Capital base
Weighted items
Solvency ratio
2012
2013
17
24
-7
-10
24
0
18
24
14
0
-24
14
0
18
10,996
-1,594
-2,406
6,996
873
-2,405
5,464
11,122
-1,656
-2,307
7,159
1,551
-2,307
6,403
6,078
7,126
90
90
8 Contractual obligations, contingent liabilities and collateral
The Danish companies in the Tryg Group are taxed jointly with TryghedsGruppen smba. As of 1 July 2012, the companies and the other
jointly taxed companies are thus jointly and severally liable for any obligations to withhold tax deducted at source on interest, royalties and
dividends in respect of the jointly taxed companies.
Companies in the Tryg Group are party to a number of disputes. Management believes that the outcome of these legal proceedings will not
affect the Group’s financial position over and above the receivables and liabilities recognised in the statement of financial position
at 31 December 2013.
130 | Tryg A/S | Annual report 2013 | Notes (parent company)
Notes (parent company)
DKKm
9
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company,
TryghedsGruppen smba. Related parties with a significant influence include the Supervisory Board,
the Executive Management and their members’ related family. Related parties are the same as for the
Tryg Group; please see Note 29 in the consolidated financial statements.
2012
2013
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
Transactions with Group undertakings and associates
Tryg A/S exercises full control over Tryg Forsikring A/S.
Intra-group trading involved
- Providing and receiving services
- Intra-group accounts’
Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.
10
Reconciliation of profit/loss and equity
The executive order on application of International Financial Reporting Standards for companies subject
to the Danish Financial Business Act issued by the Danish FSA requires disclosure of differences
between the format of the annual report under International Financial Reporting Standards and the
rules issued by the Danish FSA. The following is a reconciliation of profit/loss and equity.
Reconciliation of profit/loss
Profit/loss – IFRS
Change during the year of deferred tax provisions for contingency funds
Profit/loss – Danish FSA executive order
Reconciliation of equity
Equity – IFRS
Deferred tax provisions for contingency funds
Change during the year of deferred tax provisions for contingency funds
Equity – Danish FSA executive order
11 Accounting policies
Please refer to Tryg Group’s accounting policies.
-40
84
-23
-629
2,208
0
2,208
10,979
17
0
10,996
2,369
-2
2,367
11,107
17
-2
11,122
Notes (parent company) | Annual report 2013 | Tryg A/S |
131
Q4 2013 | Quarterly outline
DKKm
Private
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Gross premium income
2,373
2,401
2,405
2,478
2,449
2,384
2,363
2,329
2,290
Technical result
192
152
351
404
326
245
364
440
286
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Commercial
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Corporate
76.0
0.3
76.3
16.3
92.6
94.4
916
133
64.2
2.1
66.3
19.4
85.7
95.9
80.4
-2.3
78.1
16.0
94.1
98.4
920
87
78.2
-7.1
71.1
20.0
91.1
95.7
71.8
-2.1
69.7
16.0
85.7
90.1
930
168
62.6
-1.4
61.2
21.1
82.3
90.4
69.0
-0.1
68.9
15.0
83.9
87.0
931
193
56.8
2.3
59.1
20.1
79.2
86.3
70.1
1.1
71.2
15.6
86.8
88.4
906
156
59.8
2.8
62.6
20.0
82.6
85.8
72.9
1.8
74.7
15.3
90.0
93.5
908
98
67.7
2.1
69.8
19.4
89.2
93.9
68.5
0.8
69.3
15.6
84.9
89.0
899
94
73.1
-2.1
71.0
18.9
89.9
93.0
64.7
1.7
66.4
15.1
81.5
84.0
859
177
55.3
4.1
59.4
20.5
79.9
88.6
75.6
-2.5
73.1
14.6
87.7
90.8
862
70
80.2
-6.3
73.9
18.3
92.2
95.7
Gross premium income
1,308
1,305
1,312
1,311
1,330
1,270
1,287
1,241
1,243
Technical result
29
150
284
95
121
134
198
95
146
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
90.0
-4.6
85.4
13.1
98.5
Combined ratio exclusive of run-off
112.9
78.9
-2.2
76.7
12.6
89.3
96.7
64.0
1.8
65.8
12.7
78.5
92.1
78.2
2.5
80.7
11.9
92.6
97.3
77.8
0.7
78.5
12.2
90.7
103.4
68.9
7.6
76.5
13.1
89.6
97.8
82.7
-9.6
73.1
11.8
84.9
95.5
111.8
-31.3
80.5
12.3
92.8
100.9
70.4
5.5
75.9
12.8
88.7
98.6
132 | Tryg A/S | Annual report 2013 | Q4 2013 | Quarterly outline
DKKm
Sweden
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Other a)
Gross premium income
Technical result
Tryg
Gross premium income
Technical result
Investment return
Other income and costs
Profit/loss before tax
Profit/loss
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
370
-44
361
-28
88.1
0.5
88.6
24.9
113.5
115.1
87.5
0.6
88.1
21.9
110.0
107.8
417
28
77.7
-0.2
77.5
17.7
95.2
92.8
477
48
75.3
1.0
76.3
14.5
90.8
88.7
399
54
67.2
-0.8
66.4
21.1
87.5
87.2
377
23
75.6
-0.3
75.3
19.6
94.9
92.0
420
28
76.7
0.0
76.7
17.6
94.3
94.3
442
54
72.6
0.5
73.1
14.7
87.8
89.8
348
44
71.8
-2.9
68.9
19.3
88.2
94.5
-17
0
-2
0
-7
0
-1
-88
-8
-9
-1
0
-7
0
-4
0
-6
0
4,950
4,985
5,057
5,196
5,076
4,938
4,962
4,867
4,737
310
144
13
467
344
78.5
-0.9
77.6
16.9
94.5
361
353
-12
702
556
79.9
-2.7
77.2
16.6
93.8
98.5
831
-111
-19
701
515
68.7
-1.0
67.7
16.5
84.2
91.1
652
338
-14
976
733
70.3
1.0
71.3
16.4
87.7
91.5
648
5
-15
638
404
70.2
0.9
71.1
16.3
87.4
92.1
500
269
-10
759
575
71.2
3.1
74.3
16.0
90.3
94.8
684
13
-9
688
514
73.7
-2.6
71.1
15.6
86.7
91.9
766
152
-11
907
715
75.9
-6.6
69.3
15.5
84.8
89.8
546
154
-61
639
565
74.9
-1.2
73.7
15.4
89.1
94.3
Combined ratio exclusive of run-off
101.2
a) Amounts relating to eliminations, restructuring expenses and discontinued and divested business are included under ‘Other’.
A more detailed version of the table can be found at tryg.com > investor > Downloads.
Q4 2013 | Quarterly outline | Annual report 2013 | Tryg A/S |
133
Q4 2013 | Geographical segments
DKKm
Danish general insurance a)
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Number of full-time employees 31 December
Norwegian general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Number of full-time employees 31 December
Swedish general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Number of full-time employees 31 December
134 | Tryg A/S | Annual report 2013 | Q4 2013 | Geographical segments
Q4
2012
Q4
2013
2012
2013
2,456
536
159
62.6
2.4
65.0
12.7
77.7
2,091
54
80
79.9
-0.6
79.3
18.5
97.8
537
67
-2
65.7
1.9
67.6
20.7
88.3
2,364
128
124
86.0
-6.6
79.4
15.4
94.8
1,885
412
117
59.4
5.3
64.7
13.9
78.6
494
6
6
80.0
0.8
80.8
18.8
99.6
9,910
1,441
571
71.1
-0.2
70.9
14.5
85.4
9,534
1,202
566
79.5
-7.0
72.5
15.0
87.5
2,187
2,046
8,239
1,017
465
72.4
-1.0
71.4
16.8
88.2
7,819
1,258
387
65.1
4.1
69.2
15.3
84.5
1,282
1,199
2,183
131
-21
75.3
1.5
76.8
18.6
95.4
444
2,169
36
17
80.6
0.7
81.3
17.6
98.9
458
DKKm
Other b)
Gross premium income
Technical result
Tryg
Gross premium income
Technical result
Investment return
Other income and costs
Profit/loss before tax
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio c)
Combined ratio
Number of full-time employees, continuing business at 31 December
Number of full-time employees, discontinued and divested business at 31 Dec.
Q4
2012
Q4
2013
2012
2013
-8
-9
-6
0
-18
-97
-18
0
5,076
4,737
20,314
19,504
648
5
-15
638
237
70.2
0.9
71.1
16.3
87.4
546
154
-61
639
247
74.9
-1.2
73.7
15.4
89.1
2,492
585
-60
3,017
1,015
72.2
-0.4
71.8
16.4
88.2
3,913
189
2,496
588
-91
2,993
970
73.9
-1.8
72.1
15.6
87.7
3,703
0
a) Includes Danish general insurance and Finnish guarantee insurance.
b) Amounts relating to eliminations, restructuring expenses and discontinued and divested business are included under ‘Other’.
c) Adjustment of gross expense ratio included only in ‘Tryg ‘. The adjustment is explained in a footnote to Financial highlights.
Q4 2013 | Geographical segments | Annual report 2013 | Tryg A/S |
135
Other key figures
Claims ratio, net
Expense ratio, net with adjustment
Combined ratio, net with adjustment
Expense ratio, net without adjustment
Gross profit ratio
Profit ratio, net of reinsurance
Gross technical interest ratio
Technical interest ratio, net of reinsurance
Return on equity before tax on continuing business (%)
Return on equity after tax on continuing business (%)
Average premium provisions
Average claims provisions
Average reinsurers’ share of provisions for insurance contracts
Reserve ratio, premium provisions (%)
Reserve ratio, claims provisions (%)
Total reserve ratio
Number of full-time employess, continued business,
at 31 December
Number of full-time employess, discontinued and
divested business at 31 December
Share performance
Earnings per share (DKK)
Diluted earnings per share (DKK)
Earnings per share (DKK) of continuing business
Number of shares, end of period (1,000)
Average number of shares (1,000)
Diluted average number of shares (1,000)
Share price at 31 December (DKK)
Net asset value per share (DKK)
Market price/net asset value
Dividend per share (DKK)
Price/Earnings
2009
2010
2011
2012
2013
73.8
16.9
90.7
16.8
9.7
10.2
0.8
0.9
30.7
23.6
5,654
21,110
1,178
35.7
129.2
164.9
81.4
17.1
98.5
17.0
2.4
2.6
0.7
0.7
11.1
8.2
6,514
23,677
1,454
36.1
131.7
167.8
75.7
17.0
92.7
16.9
7.9
8.3
0.9
0.9
18.4
13.1
6,876
25,894
1,828
34.8
134.9
169.7
70.7
16.9
87.6
16.6
12.3
13.0
0.3
0.3
30.2
21.8
6,810
27,073
2,192
32.9
134.1
167.0
70.8
16.1
86.9
15.9
12.8
13.6
0.3
0.3
27.1
21.5
6,450
26,665
2,469
31.8
133.8
165.6
4,119
4,101
4,076
3,913
3,703
217
191
242
189
0
31.7
31.7
33.3
63,228
63,334
63,448
342.8
152.3
2.3
15.50
10.3
9.5
9.5
11.9
60,634
62,362
62,444
257.5
139.5
1.8
4.00
21.7
18.9
18.9
19.0
60,373
60,401
60,401
319.0
149.2
2.1
6.52
16.8
36.5
36.4
36.0
60,695
60,491
60,714
426.5
180.9
2.4
26.00
11.8
39.4
39.3
39.4
59,374
60,155
60,259
524.5
187.1
2.8
27.00
13.3
The expense ratio, net without adjustment, is calculated as the ratio of actual insurance operating costs, net of reinsurance to premium income,
net of reinsurance. Other key ratios are calculated in accordance with ‘Recommendations & Financial Ratios 2010’ issued by the Danish Society
of Financial Analysts.
The adjustment, which is made pursuant to the Danish Financial Supervisory Authority’s and the Danish Society of Financial Analysts’ definitions
of expence ratio and combined ratio, involves the addition of a calculated cost (rent) in respect of owner-occupied property based on a calculated
market rent and the deduction of actual depreciation and operating costs on owner-occupied property.
136 | Tryg A/S | Annual report 2013 | Other key figures
Group chart
Tryg A/S
Tryg Forsikring A/S
Tryg Garanti-
forsikring A/S
(Dansk Kaution)
Moderna
Försäkringar
(Swedish branch)
Tryg Forsikring
(Norwegian
branch)
Respons
Inkasso AS
(Norway)
Tryg Garanti
(Norwegian
branch)
Moderna
Garanti
(Swedish branch)
Tryg Garanti
(Finnish branch)
Ejendoms-
selskabet
af 8. maj 2008
A/S
Vesta
Eiendom AS
(Norway)
Tryg
Ejendomme A/S
Komplementar-
selskabet
af 1. marts
2006 ApS (50 %)
Thunesvei 2 AS
946 919 845
(Norway)
Ejendoms-
selskabet af
1. marts
2006 P/S (50 %)
ANS Grensen 3
848 383 082
(99 %)
(Norway)
Group chart at 1 January 2014. Companies and branches are wholly owned by Danish owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
Group chart | Annual report 2013 | Tryg A/S |
137
Glossary
The financial highlights and key ratios of Tryg have been prepared in
accordance with the Executive Order issued by the Danish Financial
Supervisory Authority on the Financial Reports for Insurance Companies
and Multi-Employer Occupational Pension Funds and also comply with
‘Recommendations & Financial Ratios 2010’ issued by the Danish Society
of Financial Analysts.
Gross expense ratio
Calculated as the ratio of gross insurance operating costs, including
adjustment and gross premium income. The adjustment involves the
deduction of depreciation and operating costs on the owner-occupied
property and the addition of a calculated cost (rent) concerning the
owner-occupied property based on a calculated market rent.
Capital base
Equity plus share of subordinate loan capital and less intangible assets,
tax asset, discounting, equalisation reserve and proposed dividend.
Gross insurance operating costs with adjustment x 100
Gross premium income
Claims ratio, net of ceded business
Gross claims ratio + net reinsurance ratio
Combined ratio
The sum of the gross claims ratio, the net reinsurance ratio and the gross
expense ratio.
Danish general insurance
Comprises the legal entities Tryg Forsikring A/S (excluding the Norwegian
and Swedish branches) and Tryg Garantiforsikring A/S (including Finnish
branch).
Diluted average number of shares
Average number of shares adjusted for number of share options which
may potentially dilute.
Discounting
Expresses recognition in the financial statements of expected future pay-
ments at a value below the nominal amount, as the recognised amount
carries interest until payment. The size of the discount depends on the
market-based discount rate applied and the expected time to payment.
Dividend per share
Earnings per share
Proposed dividend
Number of shares at year-end
Profit or loss for the year x 100
Average number of shares
Earnings per share of continuing business
Gross expense ratio without adjustment
Gross insurance operating costs x 100
Gross premium income
Gross premium income
Calculated as gross premium income adjusted for change in gross premium
provisions, less bonuses and premium discounts.
Gross profit ratio
Technical result x 100
Gross premium income
Gross technical interest ratio
Insurance technical interest net of reinsurance x 100
Gross premium income
Individual solvency
New Danish solvency requirements for insurance companies comprising
the companies’ own determination of their capital requirements calculated
using their own methods.
The rules entered into force on 1 January 2008, and the figures must be
reported to the Danish Financial Supervisory Authority four times a year.
Market price/net asset value
Share price
Net asset value per share
Diluted earnings from continuing business after tax
Diluted average number of shares
Net asset value per share
Gross claims ratio
Gross claims x 100
Gross premium income
Year-end equity
Number of shares at year-end
138 | Tryg A/S | Annual report 2013 | Glossary
Net reinsurance ratio
Total reserve ratio
Reserve ratio, claims provisions + premium provisions
Solvency II
New solvency requirements for insurance companies issued by the
EU Commission. The new rules are expected to come into force in 2016,
at the earliest.
Solvency ratio (Solvency I)
Ratio between capital base and weighted assets.
Swedish general insurance
Comprises Tryg Forsikring A/S, Swedish branch, and the Swedish branch
of Tryg Garantiforsikring A/S.
Unwinding
Unwinding of discounting takes place with the passage of time as the
expected time to payment is reduced. The closer the time of payment,
the smaller the discount. This gradual increase of the provision is not
recognised under claims, but under technical interest in the income
statement.
Profit or loss from reinsurance x 100
Gross premium income
Norwegian general insurance
Comprises Tryg Forsikring A/S, Norwegian branch, and the Norwegian
branch of Tryg Garantiforsikring A/S.
Operating ratio
Calculated as the combined ratio plus insurance technical interest in the
denominator.
Claims + insurance operating costs +
profit or loss from reinsurance x 100
Gross premium income + insurance technical interest
Percentage return on equity after tax
Profit for the year after tax x 100
Average equity
Price/Earnings
Share price
Earnings per share
Relative run-off gains/losses
Run-off gains/losses net of reinsurance relative to claims provisions net
of reinsurance, beginning of year.
Reserve ratio, claims provisions
Claims provisions x 100
Gross premium income
Reserve ratio, premium provisions
Premium provisions x 100
Gross premium income
Run-off gains/losses
The difference between the claims provisions at the beginning of the fi-
nancial year (adjusted for foreign currency translation adjustments and
discounting effects) and the sum of the claims paid during the financial
year and that part of the claims provisions at the end of the financial year
pertaining to injuries and damage occurring in earlier financial years.
Tier 1 capital
Equity less proposed dividend and share of capital claims in subsidiaries.
Glossary | Annual report 2013 | Tryg A/S |
139
Product overview
Being one of the largest insurance companies in the Nordic region,
Tryg sells its products primarily via its own sales channels such as
Tryg offers a broad range of insurance products to both private
call centres, the Internet, tied agents, franchisees (Norway), interest
individuals and businesses. Tryg continuously develops new
organisations, car dealers, real estate agents, insurance brokers and
products and adapts existing peace of mind solutions to customer
Nordea branches. Moreover, Tryg engages in international cooperation
requirements and developments in society. Also, Tryg focuses
with the AXA Group. It is an important element of Tryg’s distribution
strongly at all times on striking a better balance between price
strategy to be available in places where customers want it and that
and risk.
most distribution takes place via the company’s own sales channels.
Motor insurance
Fire and contents – Commercial
Motor insurance accounts for 32% of total premium income and
comprises mandatory third-party liability insurance providing cover
for injuries to a third party or damage to a third party’s property, and
a voluntary comprehensive insurance policy that provides cover for
damage to the customer’s own vehicle from collision, fire or theft.
Commercial fire and contents insurance, which includes building
insurance, represents 14% of total premium income and covers the
loss of or damage to the buildings, stock or equipment of commercial
customers. Moreover, Tryg provides cover for operating losses in
connection with covered claims.
In Denmark, motor insurance taken out by concept customers includes
Tryg’s roadside assistance, such as towing and battery jump-start.
Workers’ compensation insurance
Fire and contents – Private
Fire and contents insurance for private customers represents 24% of
total premium income and includes, for example, house and contents
insurance.
House insurance covers damage to properties caused by, for example,
fire, storm or water, legal assistance and the customer’s liability as
owner of the property. The contents insurance covers loss of or damage
to private household contents and covers in and outside of the home.
Moreover, the insurance includes liability and legal assistance, to which
can be added a number of supplementary covers, for example cover of
sudden damage and damage to electronic equipment.
Personal accident insurance
Personal accident insurance accounts for 9% of total premium income
and covers accidental bodily injury and death resulting from accidents.
Workers’ compensation insurance accounts for 5% of total premium
income and covers employees against bodily injury sustained at work
(in Norway, also occupational diseases). Workers’ compensation
insurance is mandatory and covers a company’s employees (except for
public sector employees and persons working for sole proprietors).
General third-party liability insurance
General third-party liability insurance represents 5% of total premium
income and covers various types of liability, including claims incurred
by a company arising from the conduct of its business or in connection
with its products, and third-party liability for professionals.
Transport insurance
Transport insurance represents 2% of total premium income and
covers damage to goods in transit due to the collision, overturning or
crashing of the means of transport.
Compensation takes the form of a lump sum intended to help the customer
cope with the financial consequences of an accident, thereby making
their daily lives easier. The insurance can include a number of supple-
mentary covers, including treatment by a physiotherapist or chiropractor.
Health insurance
Health insurance represents 2% of total premium income. The insurance
covers the costs of examinations, treatment, medicine, surgery and
rehabilitation at a private health facility.
140
| Tryg A/S | Annual report 2013 | Products
Disclaimer | Certain statements in this annual report are
based on the beliefs of our management as well as assumptions
made by and information currently available to management.
Statements regarding Tryg’s future operating results, financial
position, cash flows, business strategy, plans and future objectives
other than statements of historical fact can generally be identified
by the use of words such as ‘targets’, ‘believes’, ‘expects’, ‘aims’,
‘intends’, ‘plans’, ‘seeks’, ‘will’, ‘may’, ‘anticipates’, ‘would’, ‘could’,
‘continues’ or similar expressions.
events such as natural disasters or terrorist attacks, changes
in legislation or case law and reinsurance. Should one or
more of these risks or uncertainties materialise, or should any
underlying assumptions prove to be incorrect, Tryg’s actual
financial condition or results of operations could materially
differ from that described herein as anticipated, believed,
estimated or expected. Tryg is not under any duty to update
any of the forward-looking statements or to conform such
statements to actual results, except as may be required by law.
A number of different factors may cause the actual performance
Read more in the chapter Capital and risk management in
to deviate significantly from the forward-looking statements
the annual report on page 34, and in Note 1 on page 67, for a
in this annual report, including but not limited to general
description of some of the factors which may affect the Group’s
economic developments, changes in the competitive environ-
performance or the insurance industry.
ment, developments in the financial markets, extraordinary
This is a translation of the Danish annual report 2013. In case of any discrepancy between the Danish and the English version
of the annual report 2013, the Danish version shall apply.
Produktoversigt | Årsrapport 2012 | Tryg A/S |
141
Xxx | Annual report 2013 | Tryg A/S | Tryg A/S
Klausdalsbrovej 601
2750 Ballerup
Denmark
+45 70 11 20 20
tryg.com
CVR-no. 26460212