Annual report 2014 Menu – Management’s review
MANAGEMENT’S REVIEW
16 Commercial
34 Group Executive Management
3
Income overview
18 Corporate
36
Corporate Social Responsibility in Tryg
4
Introduction: World-class insurance
20 Sweden
5 Events in 2014
22
Investment activities
FINANCIAL STATEMENTS
6 Targets and strategy
24
Capital and risk management
38 Financial statements
10 Financial targets and outlook
26 Shareholder information
105 Group chart
11 Tryg’s results
14 Private
28 Corporate governance
106 Glossary
32 Supervisory Board
107 Products
Learn more
Reference to further information at tryg.com.
Reference to further information in the
annual report.
Reference to menu.
This is a translation of the Danish annual report 2014.
In case of any discrepancy between the Danish and the
English versions of the annual report 2014, the Danish
version shall apply.
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 3,600 employees provide peace of mind for 2.7 million customers and handle more than
850,000 claims on a yearly basis.
Our ambition is to become the world’s best insurance company.
Editor Investor Relations | Publication 28 January 2015 | Layout amo design
Annual report 2014 | Tryg A/S |
2
Income overview
DKKm
Q4 2014
Q4 2013
2014
2013
2012
2011
2010
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 DKK 25
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
| Menu – Management’s review
4,646
775
13
768
633
640
338
11,119
23.0
57,824
-0.1
64.1
4.7
68.8
14.9
83.7
91.0
-7.3
4.3
2.6
82.4
74.5
90.4
98.3
4,737
546
154
639
564
565
247
11,107
20.5
59,374
-2.4
74.9
-1.2
73.7
15.4
89.1
94.3
-5.2
1.1
8.8
87.7
85.8
94.7
88.2
18,652
3,032
360
3,302
2,547
2,557
1,131
11,119
23.0
57,824
43.7
192.3
29.0 a)
15.8
-1.1
67.8
1.8
69.6
14.6
84.2
90.3
-6.1
3.1
2.4
82.5
79.4
89.8
92.0
19,504
2,496
588
2,993
2,373
2,369
20,314
2,492
585
3,017
2,180
2,208
19,948
1,572
61
1,603
1,148
1,140
970
1,015
944
11,107
21.5
59,374
39.4
187.1
27.0
13.3
-2.7
73.9
-1.8
72.1
15.6
87.7
92.7
-5.0
2.1
3.2
86.0
85.4
91.7
91.2
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
81.3
91.4
95.3
9,007
13.1
60,373
18.9
149.2
6.5
16.8
3.6
79.1
-2.5
76.6
16.6
93.2
97.9
-4.7
2.7
3.6
92.7
89.6
93.6
102.9
18,894
460
550
1,006
741
593
824
8,458
6.6
60,634
9.5
139.5
4.0
21.7
3.9
80.0
1.6
81.6
16.7
98.3
102.7
-4.4
3.8
6.3
97.5
99.0
96.3
105.7
3
Annual report 2014 | Tryg A/S |
World-class insurance
even quicker and better at launching new products
price, the Supervisory Board will propose to the
in the coming years.
upcoming annual general meeting that the share be
split in the ratio 1:5.
Efficient risk management
Risk management is an essential part of running an
Success culture yields results
insurance business in relation to both customers
In recent years, Tryg has seen many major changes,
and shareholders. For this reason, risk management
and we appreciate the positive effect they have had
constitutes a central element of our strategy, and in
on our results. It is also important to emphasise that
our day-to-day operations we focus on streamlining
this journey has only been possible because of the
Our ambition is to make Tryg the world’s best insur-
use our strong position to integrate these in
and continuously optimising it. The Supervisory
hard work that our employees put in every day. We
ance company. However, this will only be possible
our business. For this reason, acquisitions are
Board defines the overall framework for our risk
are well on the way to creating the success culture
if we have our customers’ support and maintain
something that we will continue to focus on in
exposure – both in terms of our core business, the
that is necessary to ensure that everyone in our
our positive financial development. With this end in
the coming years.
Group’s investments and the overall capital level,
organisation contributes to realising our ambitious
mind, in 2014 we continued our work to implement
which must strike the right balance between risk
targets – and we have positive expectations for the
a number of important initiatives to strengthen Tryg’s
Positive customer experience yields results
and rules on the one hand and Tryg’s general targets
work to be undertaken in the coming year. We will
insurance operations in a permanent way. We have
We will step up our efforts to become even better
on the other.
streamlined our internal processes across the organi-
at guiding and servicing our customers. The aim is
focus fully on the many initiatives that are to ensure
that we will be able to offer a positive customer
sation and made structural changes to ensure that
for our customers to be so satisfied with our ser-
Higher returns for shareholders
experience and achieve world-class financial results
the machine driving the entire business is geared to
vices that they will stay with Tryg, buy more – and
It must be attractive to be a shareholder in Tryg – and
– and thereby create peace of mind and value for
supporting our most important mission – to deliver a
recommend us to others. This is the ambition be-
we strive to ensure that our increasing returns will
customers, employees and shareholders.
world-class customer experience. At the same time,
hind the many strategic customer initiatives we are
also benefit our shareholders. The improved result
these initiatives have led to substantial improve-
currently working on, and we have set up concrete
combined with Tryg’s low investment risk allows us
ments in our financial results. The profit for the year
and ambitious targets for this work.
to offer our shareholders an attractive distribution
totalled DKK 2,557m, equivalent to a return on equity
while still maintaining a solid capital base. For this
of 23.0%, while the combined ratio was 84.2.
An important aspect of the customer experience
reason, the Supervisory Board proposes a dividend of
is that the price customers pay for their insurance
DKK 29 per share in accordance with our dividend
In 2014, we managed to realise considerable
is fair and competitive. For this reason, another
policy of distributing 60-90% of the profit for the year
savings, which means that we are now close to
strategic focus area is that we must become even
and having an increasing dividend in nominal terms.
achieving our targets for 2015. We have raised the
better at developing and pricing products to fulfil
bar for 2017, and will strive for further efficiency
our customers’ needs and to reflect the individual
We also see share buy back as an effective way of
improvements of DKK 750m (see page 8). In
risk. In 2014 we launched a number of price-
increasing value creation for our shareholders. In
addition, we will optimise our customer service
differentiated products which have been very well
2014, we completed a share buy back programme
business procedures.
received by our customers. This boosts our sales,
of DKK 1bn, and in 2015 we have initiated another
reduces our claims ratio and ultimately results in
DKK 1bn programme. The share price also reflected
In 2014, we acquired three smaller companies
more satisfied customers. We expect that our con-
the previous year’s value creation with a return of
Jørgen Huno Rasmussen
Morten Hübbe
and portfolios, as we believe that we will be able to
tinued focus on this area will enable us to become
36.5%, including dividend. Based on the high share
Chairman
Group CEO
| Menu – Management’s review
4
Annual report 2014 | Tryg A/S |
Events
in 2014
Share buy back
programme initiated
On 2 January, Tryg initiated
New motorcycle insurance
Tryg launched a new motorcycle insurance product in Denmark,
where customers are now able to take out separate cover in addition
an extraordinary share buy
to third-party liability insurance. Another extension option requested
back, which was completed
by customers is Roadside Assistance. Customers now have the
on 19 December 2014. Tryg
opportunity to tailor this new insurance far better to their needs.
acquired own shares for an
amount totalling DKK 1bn.
Read more about motorcycle insurance at tryg.dk.
The fewest complaints The
Insurance Complaints Board
published its annual state-
ment of com plaints, showing
that Tryg once again had the
fewest complaints relative to
market share within motor,
house and contents insurance.
Acquisition of pet portfolio
Tryg’s branch in Sweden,
Moderna, acquired the
renewal right for Optimal
Djuförsäkring’s portfolio of
pet insurance products.
Capital Markets Day Tryg held its Capital Markets Day in London,
where the Executive Mana gement presented, among other things, new
financial targets and customer targets up to 2017. The aim is a return on
equity for 2017 of 21% or more, a combined ratio of 87 or less and an
expense ratio of 14 or less. The customer targets aim for an increase
in the retention rate of 1 percentage point, an increase in the share of
customers with three or more products of 5 percentage points and a
doubling of the Net Promoter Score (NPS).
January
February
Marts
April
May
June
July
August
September
October
November
December
Automatic claims handling
Tryg’s Swedish branch, Mod-
erna, launched an automatic
Moderna, insurance broker
of the year For the second
year running, Tryg’s branch
Tryg’s ‘A-’ maintained
The credit rating agency
Standard & Poor’s re-
Acquisition of Securator
Tryg acquired Securator,
IT transition
Tryg migrated to a new IT
thereby further consolidat-
platform, and the change to
claims handling system. The
in Sweden, Moderna, was
confirmed Tryg and Tryg
ing its position in the Nordic
its new IT operations pro-
customer registers a claim
named insurance broker
Garanti’s ‘A-/stable’ rating.
countries as a market-lead-
vider TCS was implemented
online, and the entire claims
of the year within the Cor-
handling process is perform-
porate brokerage business.
ing provider of additional
successfully. In January, Tryg
cover for electronic equip-
concluded a five-year agree-
Tryg acquired
agricultural portfolio
Tryg acquired the renewal
ed automatically, including
claims payment. When the
process is completed, it is
right to Codan’s agricultural
notified with a text message.
portfolio of approximately
1,600 smaller agricultural
customers. More than 80%
of the former Codan
customers opted to be
covered by Tryg’s insurance
products.
Three new price-differenti-
ated products Tryg launched
three new price-differentiated
products in Norway: leisure
boat, group life and com-
pany car insurances. The
products were well-received,
with high sales rates and
improved risk selection.
Extended annual travel insurance On 1 August, the new blue EU health
insurance card was introduced in Denmark, replacing the old yellow
public health card. The blue card does not provide the same cover
when travelling in the EU as the yellow card. Tryg extended its annual
travel insurance to ‘all inclusive’, offering our customers the same cover
as before.
Read more about annual travel insurance at tryg.dk.
Cloudburst in Copenhagen On 30 August, central Copenhagen was hit
by a heavy cloudburst. Approx. 2,300 claims were reported, primarily
by business owners. As a result of claims prevention measures, the
extent of damage was much less than after the cloudburst in 2011.
ment.
ment, which will provide
better operational reliability
and reduce costs.
Four new price-differentiated products in Private As part of its price
differentiation project, Tryg launched new house, short-term travel,
dog and cat insurance policies. Prices are adjusted according to the
customer’s risk.
Read more about Tryg’s products at tryg.dk.
Floods hit Norway On 30 October, the western part of Norway was
hit by floods. Tryg received 120 claims, the majority of which were
processed in 2014.
| Menu – Management’s review
5
Annual report 2014 | Tryg A/S |
Targets and strategy
employee will be able to resolve and close the
financial targets for the period up until 2015. Tryg
vast majority of cases.
is well on its way to achieving these targets, which
Tryg believes that loyal customers and solid finan-
new and equally ambitious targets, which were
cial results are deeply intertwined. Loyal customers
presented in connection with the Capital Markets
meant that it was natural to set out a range of
have a high retention rate. This means that the
Day in November 2014.
cost of attracting new customers can be kept low,
which contributes to a low expense ratio. Like
Tryg strives for a shareholder-friendly dividend
Tryg’s efficiency programme, a high retention rate
policy, and has in recent years paid out a steadily
Our purpose
value for customers, employees and shareholders,
results and competitive position and reduces the
Tryg’s ambition is to create peace of mind and
is of value to customers because it strengthens our
increasing dividend combined with share buy back.
We create peace of mind and value for
The Nordic insurance market is characterised
customers, employees and shareholders.
Tryg’s ambition is to become the world’s best insur-
Our employees – our most important resource
by consumers and businesses who have largely
and this must be at the core of everything we do.
need to increase prices.
Stable Nordic insurance market
ance company. This ambition lies at the heart of all
Our employees are our most important resource
covered their insurance needs, combined with
the strategic measures implemented in Tryg.
and will ensure that our vision to become the
relatively low economic growth. Profitability in the
Our ambition
world’s best insurance company becomes a reality.
insurance industry is generally high due to the fact
To become the world's best insurance
company, which will help us meet our targets and
employees feel that they have an opportunity to
earnings instead of growth. However, competition
company.
support the company’s ambition.
be successful. Clear and ambitious targets must
is fierce and intensified in 2014, especially in the
Tryg has identified the fundamental values of our
An important part of achieving this is that all
that the vast majority of the companies focus on
Our values
Our customers – our most important asset
feedback must be provided.
market in the form of price portals offering com-
Our customers are our most important asset. Tryg
parisons of insurance prices. Tryg generally recom-
strives to continuously strengthen our customer
Tryg wants a higher level of employee satisfaction
mends that customers use Tryg’s own website, or
be set for each individual employee, and regular
Danish market where new players entered the
Our values are highly integrated in our
relationship through advice, products, concepts,
compared to the financial sector in the Nordic
alternatively one of the insurance industries’ own
culture and consistent with our purpose.
claims handling and claims prevention. In 2014,
region. Tryg’s employee satisfaction survey 2014
comparison sites, which are not required to pay
we focused on customer-oriented initiatives and
showed that employee satisfaction had increased
the suppliers of the comparison portals.
•
We meet people with respect,
will intensify this focus further in the coming
markedly since 2013 and was now on a level with
openness and trust.
years. Tryg’s target is to offer world-class service
the Nordic financial sector. The target is for em-
The market situation in Denmark and Norway has
•
We show initiative, share knowledge
in all dealings with our customers. A very import-
ployee satisfaction to surpass that of the Nordic
been stable for most of 2014. Consumer optimism
and take responsibility.
ant part of achieving this objective is that our
financial sector in 2015.
•
We deliver solutions based on quality
customers’ issues are resolved quickly at all times.
in Denmark increased slightly, reflected in increas-
ing real estate prices, especially for flats. Unem-
and simplicity.
This must be evaluated from the customer’s
Value creation for our shareholders
ployment was stable at a level of around 5%.
•
We create sustainable results.
perspective, and for Tryg this means that we will
Tryg’s shareholders must see Tryg as a company
Total car sales in 2014 were 3.8% higher than in
have to introduce far-reaching changes in our
which sets ambitious targets and achieves them.
2013, and characterised in particular by increased
internal business procedures so that the first-line
In 2012, Tryg presented a number of ambitious
sales of small cars. Norway’s economy was also
| Menu – Management’s review
6
Annual report 2014 | Tryg A/S | relatively stable with an unemployment rate at
erable focus on customers through, among other
initiatives planned for 2015 are all a natural exten-
Next level pricing
around 3.5% and a low interest rate level. Car sales
things, the strategic initiative Customer journey
sion of the initiatives for 2014. In other words, we
Price differentiation was an important initiative in
in Norway increased by 1.4% in 2014. Towards the
& success culture. Based on the progress realised
are building on the foundations laid during the
both 2013 and 2014. Up to the end of 2014, more
end of the year, the financial situation in Norway
in the individual areas and the new activities in
previous strategy period.
than 20 new price-differentiated products were
deteriorated due to a sharp decline in oil prices
the pipeline, the financial targets have now been
developed, which also shows that the time it takes
leading to a drop in the value of the Norwegian
upgraded for the period up to 2017. The custom-
Strategic initiatives 2014
to develop new products has been significantly
krone. This development has reduced expectations
er-related targets were established on the basis
• Price differentiation
reduced, down by almost 50% since 2012.
for economic growth and employment with the
of the experience gained in connection with the
• Customer journey & success culture
risk of a recession in Norway in 2015.
work throughout the year with Customer journey
• Cost and claims reduction
At the end of 2014, 75% of the tariffs are assessed
& success culture.
•
IT stability
to be on a par with those of our major competitors
Targets
against less than a third at the start 2013.
Tryg has worked hard to realise its targets for 2015,
Tryg is looking to offer a customer experience that
Strategic initiatives 2015
which were announced in 2012. 2014 saw consid-
makes our customers feel they can recommend
• Next level pricing
The new price-differentiated products proved their
Financial targets 2015
the end of 2017. The NPS shows the likelihood
•
IT stability and digitisation
means that our pricing is more correct and better
us to others. For this reason, we have set a target
• Customer journey & success culture
worth, with improved rates of sales to new custom-
of doubling the Net Promoter Score (NPS) up to
• Leading in efficiency
ers and a lower claims ratio. For our customers this
• Return on equity of 20% after tax
• Combined ratio ≤90
• Expense ratio <15
Financial targets 2017
• Return on equity of ≥21% after tax
• Combined ratio ≤87
• Expense ratio ≤14
Customer targets 2017
• NPS + 100%
• Retention rate + 1 pp
of customers recommending Tryg in general. The
NPS for 2014 was 15; however, with considerable
variation between the different areas, from -11 in
Commercial Norway to 25 in Private Denmark.
The target for the end of 2017 is 30.
The retention rate is generally high in Tryg. It
expresses the extent to which customers will re-
select Tryg as their insurance company. However,
Tryg wishes to raise the retention rate further
by 1 percentage point between now and 2017.
Customers with multiple insurance products are
generally more satisfied and contribute to profit-
reflects the individual risk.
How is the NPS defined?
The basic principle of the recommendation rate, the Net Promoter Score (NPS)®, is that each customer
can be divided into three categories: Promoters, Passives and Detractors. The NPS is based on the fol-
lowing question: Would you recommend Tryg to a friend or colleague? The NPS is expressed as a value
between -100 and 100. Example: If we ask 100 customers, and we score 9-10 with 50 customers and
1-6 with 40 customers, our NPS will be: 50-40 = 10
ability. For this reason, Tryg is keen to increase the
NPS =
Promoters
share of customers with three or more products
by 5 percentage points.
1
2
3
–
4
Detractors
5
6
7
8
9
10
Strategic initiatives
Detractors
Passives
Promoters
• Customers ≥3 products + 5 pp
Tryg has set up four strategic initiatives to support
the financial and customer targets. The strategic
| Menu – Management’s review
7
Annual report 2014 | Tryg A/S |
In the coming years, Tryg will continue its work
Customer journey & success culture
more than 4,500 days of teaching, where the focus
customers are given wider authority, and that
to improve pricing and the use of its own and
Customer journey & success culture was a new stra-
is on improving our customers’ experience of Tryg.
procedures are adjusted to streamline customer
external data. Also, we will still be focusing on time
tegic initiative in 2014. The objective is to improve
Also, in 2015, an executive for customer experi-
service. In this way, we aim to ensure that the first-
to market. The ambition is to further reduce de-
customer experience and thus loyalty by strength-
ence is appointed for each of the main business
line employee will be able to resolve and close the
velopment time to five months, and in connection
ening the customer culture within Tryg.
areas.
with this to update the pricing of the individual
case 90% of the time. The target of increasing the
number of customers with three or more products
products annually.
In order to find out more about how customers
We performed several NPS surveys of the degree
also has a direct bearing on the NPS, as these
perceive Tryg, we introduced SMS follow-ups after
to which customers recommend the company
customers have higher NPS scores.
More differentiated pricing will also strengthen the
customer contact. In 2014, more than 144,000
in 2014. The results gradually improved over the
business areas’ scope for performing segmenta-
SMS text messages were sent to request feedback
year from 10 in the first surveys to 15 by the end
Leading in efficiency
tion and subsequent selection. This will be based
from customers, and we then followed up on the
of 2014, which shows that the initiatives had an
The most important initiative to improve results in
on a comparison of own data with external data
customers’ reactions. The results were generally
effect.
and then selecting the customers that we believe
very satisfactory. To gain a common understanding,
2013 and 2014 was the measures to reduce expens-
es and claims. In 2012, we set up an overall target of
to be the most profitable. This selection will
the Group Executive Management also took their
Up to 2017, we will continue to focus on initiatives
saving DKK 1,000m by year-end 2015. At the end of
reduce the claims level and ensure more efficient
turn at calling both satisfied and dissatisfied custom-
to improve our customers’ perception of Tryg with
2014, claims costs were down by approximately
use of our distribution channels, which will also
ers as part of following up on the SMS messages.
the aim of achieving a significant increase in the
DKK 700m, while expenses had been reduced by
have a positive impact on the cost level. Tariffs
All dissatisfied customers are contacted in order to
NPS. Experience from customer interviews and
DKK 250m. This means that savings of approximately
must be improved further, and the objective is
obtain valuable input to improve customer service.
surveys shows that quickly processing a customer
DKK 50m are yet to be realised.
that, from 2017, Tryg will have tariffs which for
enquiry is the most important factor in terms
25% of the portfolio are more advanced than
To enhance the internal customer culture, an inter-
of giving customers a positive experience. This
In November 2014, we set new targets for the
those of our major competitors.
nal training course was initiated. This has involved
requires that the employees engaged in servicing
efficiency programme corresponding to a total of
2013
2014
Denmark
Contents
Camp.
Workers’
compensation
Travel
Holiday
home
Van
Motor-
cycle
House
Cat
Dog
Short-term
travel
Building
- commercial
Norway
Workers’
compensation
House
Illness
House-
owner
Motor
Group
life
Boat
Company
car
Sweden
Contents
Accident
Boat
Holiday
home
DKK 750m by 2017, namely DKK 500m related to
the procurement of claims services and administra-
tion and DKK 250m related to expenses. With only
DKK 50m remaining for the 2015 expense targets,
the additional savings to be achieved by 2017 will
be DKK 700m, bringing the total target for the two
efficiency programmes to DKK 1,700m.
Expense reduction will be achieved by a continued
focus on outsourcing, improvement of the retention
rate and efficiency gains deriving from more efficient
customer service, for which the target, as men-
tioned above, is for 90% of all customer enquiries
to be processed and closed by the first-line
employee.
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
8
Annual report 2014 | Tryg A/S |
M&A
In 2014, Tryg acquired three smaller com-
panies and portfolios, as we will be able to
use our strong position to integrate these in
our business. This is something that we will
continue to focus on in the coming years.
Claims reductions will be realised by continuing
ture, which will give Tryg a more flexible develop-
to streamline procurement of claims services. The
ment model and access to new competencies.
number of suppliers has been reduced significantly
Together, the new agreements will ensure better
in recent years, and it is possible to reduce this
operational stability, while reducing costs.
figure even further, which will contribute to reducing
claims. In addition, the use of new process manage-
It is important for customers that we are able to
ment systems for repairing building damage, in
offer a digital service. To accommodate this, Tryg
particular, will lead to a reduction in claims, just
is continuously developing new solutions to meet
as efficiency improvements in staff functions and
customer needs. The target for 2017 is that 80%
the claims organisation will also make a positive
of claim notifications are handled digitally, and that
contribution.
50% of all other transactions with customers are
effected digitally. This will require the development
IT stability and digitisation
of an improved digital platform and integrating the
IT stability is important for being able to offer our
work on digital solutions in Tryg’s culture.
customers efficient service in claims handling, sales,
service and policy renewal. IT stability was not sat-
Corporate Social Responsibility
isfactory in 2013, for which reason Tryg launched a
In Tryg, Corporate Social Responsibility is an
strategic initiative to strengthen this area. As a result,
integrated part of our core business which is to
an agreement with a new IT operations provider, Tata
create peace of mind and value for our customers,
Consultancy Services Limited (TCS), was concluded
employees and shareholders. This means that Cor-
in 2014. This will provide Tryg with a more modern
porate Social Responsibility is always taken into
IT platform. The change of IT providers in 2014
account in our business decisions, when we im-
has been completed, and it was a demanding but
prove and develop products and services, optimise
successful process. Also in 2014, an IT development
our operations and otherwise contribute positively
outsourcing agreement was concluded with Accen-
to society at large through our activities.
Targets – claims procurement 2015-2017
Targets – expenses 2015-2017
DKKm
500
400
300
200
100
0
250
500
150
100
2015
2016
2017
Total target
DKKm
250
200
150
100
50
0
125
250
75
50
2015
2016
2017
Total target
| Menu – Management’s review
9
Annual report 2014 | Tryg A/S | Financial targets and outlook
Financial targets 2015
DKK 250m related to expenses, in the period up
hedged in the financial markets.
of claims services and administration and
kroner and Swedish kronor is continuously
to and including 2017.
• Return on equity of 20% after tax
• Combined ratio ≤90
• Expense ratio <15
Tryg expects that the development in gross
large claims are expected to be unchanged at
premium income will be slightly negative to
DKK 500m and DKK 550m, respectively.
In 2015, weather claims net of reinsurance and
Financial targets 2017
• Return on equity of ≥21% after tax
• Combined ratio ≤87
• Expense ratio ≤14
unchanged in 2015 and on a par with the growth
in GDP in 2016.
The investment portfolio is generally divided into
a match portfolio corresponding to the technical
Tryg has a solid reserve position, which was also
provisions and a free portfolio. The objective is for
confirmed in connection with an external review
the return on the match portfolio and changes in
by KPMG in 2014. This review has strengthened
the technical provisions due to interest changes
Tryg's assessment of its reserve position, and it is
to be neutral when taken together.
therefore deemed likely that the run-off level in the
coming years will be higher than that realised in
The return on bonds in the free portfolio will vary,
previous years.
but considering the current interest rate level, a
low current return is expected. For shares and
We will strive to become even
more efficient up to 2017.
Tor Magne Lønnum | Group CFO
With the results for 2014, we are close to having
The interest rate used for discounting Tryg’s tech-
property, the expectations are a return of 7% and
Denmark, the tax rate was 24.5% in 2014 and will
delivered on the 2015 financial targets announced
nical provisions is historically low, and we do not
6%, respectively.
in 2012. We have raised the bar for the period up
expect any significant interest rate increases in the
be reduced to 22% up to 2016. The Norwegian tax
rate was 27%, while the Swedish rate was 22%.
to 2017, and have presented new and ambitious
short term. A higher interest rate level will have a
Investment activities include other types of invest-
financial targets and customer targets.
positive effect on Tryg’s results.
ment income and expenses, especially the costs
When calculating the total tax payable, it should
To ensure that we realise these financial targets,
Earnings in 2015
foreign currency hedges and interest paid on loans.
on shareholdings are not taxed in Norway. All in
Tryg is launching a new efficiency programme. The
The value of the Norwegian krone fell in 2014,
all, this will cause the expected tax payable for an
aim is to reduce expenses and claims by a total of
which had a negative impact on Tryg’s operating
Tax rates have gradually been lowered in Den-
average year to be reduced from around 23-24%
DKK 750m, DKK 500m related to the procurement
profit. The share of equity held in Norwegian
mark, Norway and Sweden in recent years. In
to 22-23% for 2015.
of managing the investments, gains and losses on
also be taken into account that gains and losses
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
10
Annual report 2014 | Tryg A/S | Tryg’s results
In 2014, many price-differentiated products were
retention rate was improved in 2014, particularly
developed, primarily for new customers. However,
in the Danish part, but there is a general need to
a large part of the portfolio was converted in 2014
boost sales to achieve a positive development of
to ensure that all customers have the most up-to-
the portfolio. The Swedish business also required
date products. This conversion is also contributing
significant structural measures within both pricing
to making Tryg’s processes more efficient, as old
and distribution, which, in combination with the
products may be discontinued. It also ensures that
termination of the distribution agreement with
staff will only have one product to consider in their
Nordea, caused the premium income to fall in
advisory and claims work.
2014. For Corporate, growth was positive at 1.1%
Financial highlights 2014
ratio of 84.2, Tryg once again delivered a
The investment return was DKK 360m, and was
area, Tryg is prepared for larger fluctuations in
With a return on equity of 23.0% and a combined
(-2.9%), which is satisfactory. For this business
satisfactory result in line with the defined targets
especially affected by increasing equity prices, a
premium income due to the competitive situation
•
The profit after tax for the year was
of a return on equity of 20% and a combined
low interest rate level and a domicile write-down
and the focus on having a profitable portfolio.
DKK 2,557m (DKK 2,369m).
ratio below 90. This result was achieved despite
of DKK 106m in Q4 2014. The primary purpose
•
The return on equity after tax was 23.0%
a slightly higher total level of weather claims
of the investment business is to support the
Bank insurance is an important distribution
(21.5%).
and large claims in 2014 than in 2013. The
insurance business, and the aim is to have a low
channel, and Tryg has a sound agreement with
•
Technical result improved to DKK 3,032m
improvement of the technical result was mainly the
risk profile. The investment return for 2014 was
Nordea on bank insurance in Denmark and
(DKK 2,496m).
• Combined ratio of 84.2 (87.7).
•
Premium income reduced by 1.1%
(-2.7%).
•
Claims ratio, net of ceded business,
of 69.6 (72.1).
•
Expense ratio improved to 14.6 (15.6)
and 15.3, excluding one-off effects.
•
Investment return, after transfer to
insurance, of DKK 360m (DKK 588m).
• Proposed dividend of DKK 29 per share.
•
Share split in the ratio 1:5 to be approved
at the annual general meeting in 2015.
•
Share buy back of DKK 1bn in 2015.
result of Tryg’s efficiency programme, but is also
thus higher than what was generally expected.
Norway, while Tryg sells to and services Nordea’s
attributable to the effect of the many new price-
differentiated products launched in recent years.
Premiums
Liv & Pension customers. In Sweden, Tryg has a
distribution agreement with Danske Bank, which
Premium income totalled DKK 18,652m
has distributed insurance for Tryg on the Swedish
2014 saw intensive work on increasing customer
(DKK 19,504m), representing a fall of 1.1% when
market since the spring of 2014.
loyalty in the different business areas. Together
measured in local currencies. The development
with the improved products and the targeted
in premium income was expected in view of the
In 2014, Tryg acquired a number of small
selection, this had a positive impact on results.
initiatives implemented to improve profitability
companies and portfolios, including Securator,
in recent years. In 2014, Private saw an improved
a market-leading provider of additional cover for
The efficiency programme affected results
development trend, accounting for about 50%
electronic equipment in Denmark. In addition, Tryg
positively by DKK 395m, corresponding to
of the Group’s premium income. Both the
acquired the renewal right for Codan’s agricultural
an improvement of the combined ratio by
development in the number of customers and
portfolio, which has been successfully integrated
approximately 2 percentage points. In 2014, the
the development in sales for the new price-
in Tryg’s agricultural portfolio. Also, Tryg acquired
efficiency programme once again made it possible
differentiated products, in particular, improved in
a small Swedish portfolio within pet insurance.
to avoid any major general price increases, and
2014 relative to 2013. The improvements in both
These acquisitions have shown that Tryg is capable
the prices have largely only been adjusted to
2013 and 2014 were primarily due to efficiency
of successfully integrating portfolios and achieving
take account of claims inflation. If unsatisfactory
improvements and a strengthened customer
synergies that support Tryg’s objectives and create
development of products or segments is identified,
focus, which had a significant positive effect on the
value for its shareholders. This is also something
selective price measures may of course be taken.
development in premium income. Commercial’s
that Tryg will focus on in the coming years.
| Menu – Management’s review
11
Annual report 2014 | Tryg A/S |
Claims
price agreements were introduced for a number of
reason for this was the many preventative measures
Expenses
The gross claims ratio was 67.8 (73.9), and the
defined standard house and building repairs. At the
launched after the cloudburst in 2011. After this
The expense ratio was 14.6 (15.6). Adjusted for
claims ratio, net of ceded business, which covers
end of 2014, Tryg started using the IN4MO system
cloudburst, Tryg offered customers an inspection
one-off effects related to the Norwegian pension
both claims and business ceded as a percentage of
for the management of all processes and deliveries
of their homes and required them to place their
scheme and the change of IT suppliers in Q2 2014,
gross premiums, was 69.6 (72.1). The claims level
in connection with building claims. This system
belongings in basements above floor level. In
the expense ratio was 15.3. The improvement of 0.3
is due to a combination of better procurement of
will contribute to reducing claims expenses in the
addition, in case of repeated claims, Tryg required
percentage points was achieved through the ongoing
claims services and administration of DKK 282m,
coming years, and allows all stakeholders to follow
customers to install an anti-flooding device.
efficiency programme and should be seen in the light
corresponding to 1.5%, and an overall higher level
the progress when damage is being repaired, which
Moreover, the limit of cover for basement rooms
of the expense ratio target of less than 15 in 2015
of weather and large claims of 5.5% (5.3%). The
will improve customer experience.
was reduced, and a higher excess was introduced.
and 14 or less in 2017.
run-off level was slightly higher at 6.1% (5.0%),
which reflects a solid level of provisions.
The gross claims ratio improved to 67.8 (73.9),
Tryg has concluded a lateral reinsurance agreement
The efficiency programme contributed DKK 113m in
which is especially attributable to better
running from 1 July 2014 to 30 June 2015. When
2014, corresponding to an impact on the expense
The claims measures implemented have first and
procurement of claims services and administration
the total storm and cloudburst claims expenses
ratio of 0.6 percentage points. The initiatives comprised
foremost included improved agreements with
of DKK 282m, particularly related to purchasing
exceed DKK 300m, the agreement will cover the
a reduction in the number of employees, particularly
car repair shops, but 2014 also saw initiatives
agreements within contents insurance, web
next DKK 600m. To be covered by the agreement,
in the staff functions, but also in the business areas.
that have improved the procurement of claims
auctions for extensive damage repairs and the
a claims event must exceed DKK 20m. Storm and
Tryg has generally focused on reducing complexity,
services within contents insurance, among
introduction of fixed-price agreements for a
cloudburst claims amounted to approximately
just as the number of offices has been reduced.
other things in the form of the agreement with
number of house and building repairs.
DKK 220m in the second half of 2014, which means
Sourcing has also been an im portant initiative in
Scalepoint, which benefits both customers and
that after another approximately DKK 80m of claims,
2014, which was demonstrated in particular in the
Tryg. Customers are offered freedom of choice
Tryg’s focused work on claims prevention bore
this agreement will provide cover in the first half of
change of IT suppliers from CSC to TCS, while IT
among claims products, and Tryg has access to
fruit when we received several cloudburst claims in
2015. This is one example of how Tryg strives to
development was outsourced to Accenture. Sourcing
favourable purchasing agreements and updated
Q3 2014. The extent of damage was considerably
achieve stability in the results of the insurance business.
will continue to contribute to reducing the expense
prices for similar products, which is particularly
lower than in connection with the cloudburst in
level in the years to come. In 2014, the number of
important in the field of electronics claims. Fixed-
the Copenhagen area in July 2011. A significant
Large claims amounted to 3.1% in 2014 (2.1%)
employees was reduced from 3,703 to 3,599.
Weather claims
Large claims
DKKm
2,000
1,600
1,200
800
400
0
Expected level, net for 2014: DKK 500m
2010
2011
2012
2013
2014
DKKm
1,500
1,200
900
600
300
0
Expected level, net for 2014: DKK 550m
and weather claims 2.4% (3.2%). The level of large
claims and weather claims was DKK 1,021m, which
The expense level is also affected by increases in
largely corresponds to the level of DKK 1,050m
the payroll tax in Denmark, from 10.9% to 11.4% in
which is expected for an average year.
2014. The tax will gradually increase and will stand
The run-off level stood at 6.1% (5.0%), which
target of an expense ratio of below 15 in 2015 and of
at 12.3% in 2021. However, this will not affect Tryg’s
underlines Tryg’s solid provisions coverage, as was
14 or less in 2017.
announced on the Capital Markets Day in November
2014. The run-off gain was highest in Corporate,
Profit/loss on discontinued business
2010
2011
2012
2013
2014
because the share of long-term business in the form
The profit on discontinued business was DKK 10m
Gross
Net
Gross
Net
of workers’ compensation, in particular, is larger
in 2014, and comprised gains on provisions,
than for the other business areas.
primarily relating to the marine run-off business.
| Menu – Management’s review
12
Annual report 2014 | Tryg A/S | Investment return
of the Norwegian and Swedish currencies. Foreign
included in the capital adequacy calculation.
Results for Q4 2014
The investment return was DKK 360m (DKK 588m)
currency hedging is aligned with Tryg’s objective of
Tryg’s capital adequacy calculation includes about
The profit after tax totalled DKK 640m for Q4 2014
in 2014. Tryg’s investment portfolio is divided into
having a generally low risk profile.
NOK 1.2bn from the Norwegian Natural Perils Pool
(DKK 565m) based on a technical result of DKK 775m
a match portfolio and a free portfolio.
and the Norwegian guarantee scheme after tax. This
(DKK 546m), an improvement of 42%. The investment
Tax
matter has not been clarified further in Q4 2014.
return was DKK 13m (DKK 154m), and this was
The match portfolio totalled DKK 29.5bn,
Tax on profit for the year totalled DKK 755m,
affected by a write-down of DKK 106m relating to the
and was made up of bonds which match the
or 23% of the profit before tax. In 2014, Tryg
In relation to Solvency II, final clarification of the
domicile in Ballerup. The combined ratio was 83.7
insurance provisions so that fluctuations resulting
paid DKK 512m in income tax as well as various
expected future profit and the future recognition of
(89.1), and was only slightly impacted by weather
from interest rate changes are offset to the
payroll taxes totalling DKK 332m, making the total
subordinate loan capital is still pending; this will have
claims, which stood at 2.6 (8.8). The large claims
greatest possible extent. The free portfolio is a
payment DKK 844m in 2014.
a positive impact on Tryg’s capital. The final Solvency
level was 4.3 (1.1) and was affected by a higher large
diversified portfolio of real estate, equities and
II rules will take effect from 1 January 2016.
claims level in both Commercial and Corporate. At
bonds which largely reflect the company’s total
Capital position
equity. At 31 December 2014, the value of the
Tryg’s equity totalled DKK 11,119m (DKK 11,107m)
Dividend policy
free portfolio totalled DKK 12.4bn. The return on
at the end of 2014. Tryg determines the individual
According to Tryg’s dividend policy, the aim is
7.3 (5.2), the run-off level was considerably higher,
which reflects Tryg’s solid level of provisions.
the match portfolio was DKK 181m (DKK 40m)
solvency requirement according to the Danish
to pay out 60-90% of the profit for the year, and
The premium level in local currencies fell by 0.1%
after transfer to insurance technical interest.
Financial Supervisory Authority’s guidelines. The
for the dividend to be steadily increasing. For
(-2.4%) and was affected by premiums relating to
individual solvency requirement was DKK 6,560m
2014, a dividend of DKK 29 (DKK 27) per share is
Securator of DKK 24m.
The return on the free investment portfolio
at the end of 2014, and is measured based on the
proposed, corresponding to a total of DKK 1,731m
was DKK 548m (DKK 891m). The return was
adequate capital base, which amounted to
(DKK 1,656m), which amounts to 68% of the profit
impacted by price increases for equities, in
DKK 9,938m. After recognition of a share buy
for the year.
particular. The return on the equity portfolio
back, Tryg’s surplus cover is DKK 3,378m,
Financial highlights Q4 2014
was positive at 10.0%. Bonds produced a
corresponding to 51%.
In 2014, a share buy back of DKK 1bn was
•
Profit after tax of DKK 640m
return of 2.1% and, for high-yield and emerging
completed, and on the Capital Markets Day on 5
(DKK 565m).
market bonds in particular, there was a high
In Q2 2014, the Danish Financial Supervisory
November, Tryg announced that from 2 January
•
Technical result of DKK 775m
return in 2014.
Authority performed an ordinary inspection. The
2015 and throughout the year, an additional share
(DKK 546m).
Other financial income and expenses were
opinion on risk management, reserve and capital
negative (net) by DKK 369m, partly due to the
position.
Events after the balance sheet
inspection confirmed the authority’s favourable
buy back of DKK 1bn will be initiated.
• Combined ratio of 83.7 (89.1).
•
Weather claims impacted the combined
ratio by 2.6 percentage points (8.8).
usual interest expenses relating to subordinate
In the opinion of Management, from the balance
•
Large claims impacted the combined
loans, foreign currency hedging and expenses for
On 19 June 2014, the Financial Supervisory
sheet date to the present date no other matters
investment activities, and partly due to a write-
Authority of Norway made an announcement
of major significance have arisen that are likely
down of owner-occupied property of DKK 106m.
concerning issues associated with Solvency II. In the
to materially influence the assessment of the
announcement, the Financial Supervisory Authority
company’s financial position.
Gains on foreign currency hedges relating to
of Norway estimates that the Norwegian Natural
equity and intercompany balances stood at
Perils Pool and the Norwegian guarantee scheme in
approximately DKK 260m due to a fall in the price
their current form should only to a limited extent be
ratio by 4.3 percentage points (1.1).
• Expense ratio of 14.9 (15.4).
•
The investment return was DKK 13m
(DKK 154m), and was affected by a
write-down of DKK 106m relating to
the domicile in Ballerup.
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13
Annual report 2014 | Tryg A/S | Private
in line with inflation, this meant that the retention
rate was high. The increased customer focus in
combination with improved price-differentiated
products and selection had a positive impact on the
development in sales in both Denmark and Norway.
The improved price-differentiated products in
combination with improved selection have made
Tryg more attractive to profitable customers, which
will also result in a slight increase in premiums.
Private encompasses the sale of insurance
Results
products to private individuals in Denmark and
The technical result for 2014 was DKK 1,612m
The development in premium income in Denmark
Norway. Sales are effected via call centres, the
(DKK 1,335m), with a combined ratio of 82.5
is still affected by the sale of small cars which
Internet, Tryg’s own agents, franchisees (Norway),
(86.0). The improvement was achieved mainly
generally have more safety features. This leads
interest organisations, car dealers, estate agents
through Tryg’s efficiency programme, but there
to a reduction in both premiums and claims. In
and Nordea’s branches. The business area
was also a positive impact from the many new
addition, competition on the Danish car market
accounts for 49% of the Group’s total premium
price-differentiated products in combination with
Emphasis was on customer focus,
and this will be intensified further
in the coming years.
Lars Bonde | Group Executive Vice President,
Private
income.
Financial highlights 2014
•
Technical result improved by DKK 277m
to DKK 1,612m (DKK 1,335m).
•
Combined ratio improved by 3.5
percentage points to 82.5 (86.0).
•
Gross premiums in local currencies
were unchanged (-2.2%).
•
Significant reduction of the expense
ratio to 14.5 (15.1).
| Menu – Management’s review
improved selection. The improved profitability,
which resulted from better pricing and selection,
meant that only limited extraordinary price increases
were implemented in 2014. Also, the claims level
was positively affected by a lower level of weather
claims and a considerably higher run-off level than in
2013. The expense ratio was reduced considerably
from 15.1 to 14.5, which was achieved concurrently
with a largely unchanged premium income.
Premiums
The development in gross premium income was
significantly improved in 2014. Premium income
was maintained, while 2013 saw a reduction
of 2.2% in local currencies. The improved
development was expected, and is the result of
many years of focusing on improving profitability. In
2014, significant efforts were directed at improving
customers’ perception of Tryg, and combined
with the fact that the prices were only increased
Key figures – Private
DKKm
Q4 2014
Q4 2013
Gross premium income
Gross claims
Gross expenses
2,249
-1,468
-337
2,290
-1,731
-334
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 (%)
444
-48
4
400
47
-0.2
65.3
2.1
67.4
15.0
82.4
84.5
-2.1
0.0
2.6
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
2014
9,051
-6,129
-1,311
1,611
-23
24
1,612
357
0.0
67.7
0.3
68.0
14.5
82.5
86.4
-3.9
0.1
2.5
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
14
Annual report 2014 | Tryg A/S |
in particular was more intense, which resulted in
15.3. The nominal expenses were considerably
a reduction of the premium level for the market
reduced as a result of a reduction in staff costs as
as a whole. In that connection, Tryg has been able
part of the efficiency programme and continued
to capitalise on the enhanced competitiveness
optimisation of the distribution costs, in particular.
achieved through the efficiency programme.
The number of employees was reduced from
The reduction in premium income in Private in
923 at the end of 2013 to 903 in 2014, reflecting
Denmark was 1.4% (-3.8%).
an increase in distribution and a reduction in
administration.
Developments in Norway were affected by
competition from small market players, while the
new price-differentiated products and improved
selection also had a positive impact. Growth in
Private in Norway was 1.5% (-0.3%), and generally
developed positively throughout the year.
Claims
The gross claims ratio amounted to 67.7 (70.4), and
the claims ratio, net of ceded business, was 68.0
(70.9). The underlying improvement amounted
to 1.6 percentage points, and is attributable in
particular to the efficiency programme implemented
Financial highlights Q4 2014
•
Technical result of DKK 400m
(DKK 286m).
• Combined ratio of 82.4 (87.7).
•
Claims ratio, net of ceded business,
of 67.4 (73.1).
• Expense ratio of 15.0 (14.6).
as well as the initial effects of the price differentiation
Results for Q4 2014
and improved selection. The level of weather claims
The technical result totalled DKK 400m (DKK 286m)
was largely unchanged, with a higher level in the
and was positively affected by a low level of
first three quarters and a considerably lower level
weather claims. In addition, the run-off gains
in Q4 relative to 2013. The expenses for weather
were at a lower level at 2.1 (3.1), and, all in all, the
claims amounted to 2.5 (3.2). Run-off gains/losses
results were positively affected by the efficiency
Peace of mind on holiday In 2014, public health insurance cover was
reduced for travel in Europe. With Tryg’s annual travel insurance, our
customers can still feel safe while on holiday.
improved the combined ratio by 3.9 (3.3) and were
programme. The combined ratio was 82.4 (87.7)
When Jan Koch’s father had a stroke in
Without his travel insurance, Jan Koch’s
thus slightly higher than in 2013.
in Q4 2014. Gross premiums were reduced by
Spain last August, Tryg’s annual travel insur-
father would have had to be treated in a
Expenses
0.2% (-1.7%). The retention rate in Denmark was
increased to 89.6 (89.2), while the retention rate
ance covered the expenses for his stay in a
public hospital in Spain and pay for his treat-
private hospital and home transport, and
ment. “My advice is that everyone should
The expense ratio was 14.5 (15.1). The expense
in Norway was 87.0 (87.2). The gross claims ratio
the Danish emergency call centre provided
take out travel insurance. It provides peace
level was affected by the one-off effects of the
was 65.3 (75.6), and the claims ratio, net of ceded
extra peace of mind. “I felt safe knowing that
of mind now that the yellow health card no
Norwegian pension scheme and the change of IT
business, was 67.4 (73.1). The expense ratio was
my father was in good hands, and I received
longer covers,” says Jan Koch.
Read
suppliers. Adjusted for this, the expense ratio was
15.0 (14.6).
regular updates on the situation from a
more about Tryg’s annual travel insurance
dedicated contact at Tryg,” says Jan Koch.
at tryg.dk.
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
15
Commercial
the important measures implemented in previous
years as well as the fact that the smaller Danish
companies are still struggling financially.
The growth in the Norwegian business has
been achieved through, among other things, a
significant increase in sales from the franchise
distribution channel, which is attributable to a
number of factors, including sales and service
Commercial encompasses the sale of insurance
This shows that the efforts to improve the results
training for commercial products. The change
products to small and medium-sized businesses in
in Commercial have borne fruit, and that the area
in the setup of Commercial and Corporate led
Denmark and Norway. Sales are effected by Tryg’s
contributes positively to achieving the Group’s
to an increase in premiums of approximately
own sales force, brokers, franchisees (Norway),
objectives. The improvement in results was
DKK 900m. The new additions have now been fully
customer centres as well as through group agree-
achieved through both the efficiency programme
integrated and included in Commercial’s service
ments. The business area accounts for 23% of
and the impact of previous profitability measures.
concepts. Similarly, the acquisition of the renewal
Integration of customers from Cor-
porate and an acquired agricultural
portfolio were important focus areas.
Trond Bøe Svestad | Group Executive Vice
President, Commercial
the Group’s total premium income.
In addition, new price-differentiated products were
Results
introduced in Commercial. These increased the
rate of sales and reduced the need for discounts to
In 2014, Commercial continued its positive
adjust the price based on the risk.
development and improved the results significantly
Key figures – Commercial
DKKm
Q4 2014
Q4 2013
relative to 2013. The technical result was improved
It has been very important to reduce the expense
to DKK 875m (DKK 654m), with a combined ratio
level to improve the competitive situation. Against
Gross premium income
Gross claims
Gross expenses
of 79.4 (85.4).
Financial highlights 2014
this background, it is very satisfactory that the
expense ratio has been reduced to 15.8 (18.6),
which was achieved concurrently with a reduction
of the premium level. Adjusted for one-off effects
related to the Norwegian pension scheme and the
change of IT suppliers, the expense ratio was 16.9.
•
Technical result of DKK 875m
Premiums
(DKK 654m).
• Combined ratio of 79.4 (85.4).
•
•
Gross premiums reduced by 3.0% (-2.9%).
Significant improvement of the expense
ratio to 15.8 (18.6).
A combined fall in premium income of 3.0%
(-2.9%) was realised, when measured in local
currencies. The largely unchanged development
comprised a reduction in the Danish business of
4.5% and growth in the Norwegian business of
0.6%. The reduction in Denmark is attributable to
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 (%)
1,050
-580
-164
306
-39
3
270
126
-1.8
55.2
3.7
58.9
15.6
74.5
86.5
-12.0
4.2
2.6
1,080
-797
-193
90
64
3
157
76
-1.2
73.8
-5.9
67.9
17.9
85.8
92.8
-7.0
0.3
15.7
| Menu – Management’s review
2014
4,190
-2,673
-664
853
8
14
875
310
-3.0
63.8
-0.2
63.6
15.8
79.4
86.8
-7.4
4.3
1.9
2013
4,411
-2,978
-820
613
29
12
654
265
-2.9
67.5
-0.7
66.8
18.6
85.4
91.4
-6.0
4.5
4.5
16
Annual report 2014 | Tryg A/S |
right for Codan’s agricultural portfolio progressed
structure and synergies in connection with the
very satisfactorily with considerable positive
integration of the business transferred from
support and full integration in Commercial.
Corporate. Reducing the expense level will continue
to be an important focus area for Commercial in the
The retention rate improved significantly to 87.0
coming years, which will contribute to improving
(86.1) in 2014 in the Danish part of Commercial,
competitiveness and supporting the Group’s
while the Norwegian part saw a small improve-
expense ratio reduction target.
ment to 87.8 (87.6).
For Commercial, improving sales is thus the
most important factor for improving premium
development.
Claims
The gross claims ratio amounted to 63.8 (67.5),
and the claims ratio, net of ceded business, was
63.6 (66.8). The low level is attributable to both the
historic profitability measures, the implementation
of price-differentiated products and the efficiency
Financial highlights Q4 2014
•
Technical result of DKK 270m
(DKK 157m).
• Combined ratio of 74.5 (85.8).
•
Claims ratio, net of ceded business,
of 58.9 (67.9).
• Expense ratio of 15.6 (17.9).
programme. The level of weather claims was 1.9
Results for Q4 2014
(4.5), and was positively affected by mild winter
A technical result of DKK 270m (DKK 157m) was
weather in Q4 in both Denmark and Norway.
posted, and this was primarily affected by milder
weather in Q4, a high level of large claims and a
At 4.3 (4.5), the level of large claims was largely
high level of run-off gains.
unchanged relative to 2013, while the run-off level
was somewhat higher at 7.4 (6.0).
The combined ratio was 74.5 (85.8), and was
Back to work in no time Anja Holt’s claim was processed smoothly and
quickly, which meant that she was able to get back to work soon after
suffering a slipped disc.
affected by the lower level of weather claims, a
When Anja Holt suffered a slipped disc, her
ensured that she was able to get back to
Expenses
higher level of large claims and a high run-off level.
Norwegian employer’s treatment insurance
work quickly. In addition to easing Anja’s dis-
The expense ratio was 15.8 (18.6), and adjusted
with Tryg provided cover. “I was treated by
comfort, the short treatment time minimised
for one-off effects related to the Norwegian
Gross premiums fell by 1.8% (-1.2%) in Q4, which
the best experts, which ensured that I was
the loss suffered by her employer. “The time
pension scheme and the change of IT suppliers,
was a positive development relative to 2014 as a
quickly back on my feet,” says Anja Holt.
from reporting the injury to the operating
the expense ratio was 16.9. This development is
whole. The retention rate in Denmark was 87.0
table was very short, and I was back at work
very satisfactory and was achieved by means of the
(86.1), while it was 87.8 (87.6) in Norway. The
The treatment insurance guarantees short
after only six weeks. This meant that my
efficiency programme and structural adjustments
gross claims ratio was 55.2 (73.8), the claims ratio,
treatment times and covers, among other
employer did not have to manage without
in the Commercial organisation. This comprises,
net of ceded business, was 58.9 (67.9), and the
things, costs relating to diagnosis, surgery
me for long,” says Anja Holt.
among other things, changes in the distribution
expense ratio was 15.6 (17.9).
and rehabilitation. For Anja, the insurance
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
17
Corporate
when large customers are added to or removed
from the portfolio.
As part of the change in the setup of Corporate
and Commercial, small customers with a total
premium of approximately DKK 900m were
moved. Against this background, Corporate has
been able to continue its work on developing
focused advisory concepts for large customers
Corporate sells insurance products to corporate
2013 in total. Adjusted for this, the underlying
in a more targeted way.
customers under the brand ‘Tryg’ in Denmark and
development in results was positive; among other
Norway, ‘Moderna’ in Sweden and ‘Tryg Garanti’.
things due to a lower level of medium-sized claims.
Claims
Sales are effected both via Tryg’s own sales force
The gross claims ratio amounted to 71.2 (88.0),
and via insurance brokers. Moreover, customers with
The Corporate portfolio comprises a higher share
and the claims ratio, net of ceded business, was
international insurance needs are served by Corporate
of long-tailed business than the other areas, for
78.7 (79.9). Adjusted for run-off level, weather
The focus was on implementing a
new organisation and enhanced
concepts for international customers.
Truls Holm Olsen | Group Executive Vice
President, Corporate
through its cooperation with the AXA Group. The
which reason the capital requirement is higher.
business area accounts for 21% of the Group’s total
For this reason, Corporate should have a lower
premium income.
Results
combined ratio over time than the other business
areas to contribute to Tryg’s financial targets.
Key figures – Corporate
DKKm
Q4 2014
Q4 2013
The technical result improved to DKK 427m
Premiums
(DKK 358m), and the combined ratio amounted to
As a matter of course, the Corporate market
89.8 (91.7). The result was affected by a significantly
comprises large single customers. As the market is
higher overall level of large claims and weather
also highly competitive, focus in Corporate will be
claims, approximately DKK 200m higher than in
on maintaining profitability, which means that the
Financial highlights 2014
•
Technical result of DKK 427m
(DKK 358m).
• Combined ratio of 89.8 (91.7).
•
Increase in gross premiums of 1.1%
(-2.9%).
• Expense ratio of 11.1 (11.8).
| Menu – Management’s review
premium income will fluctuate more than for the
other business areas.
In 2014, premium income increased by 1.1%
(-2.9%). This is especially attributable to the
Swedish part of Corporate, which is still being built
up with a focus on profitability. In Sweden, growth
amounted to 8.6%, and growth was positive at
0.8% for the Danish part and negative at 0.8% for
the Norwegian part. The development in Denmark
and Norway is attributable to normal fluctuations
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 (%)
1,015
-682
-108
225
-128
1
98
162
1.5
67.2
12.6
79.8
10.6
90.4
106.4
-16.0
15.4
2.9
1,025
-769
-124
132
-78
5
59
77
-2.1
75.0
7.6
82.6
12.1
94.7
102.2
-7.5
3.6
5.5
2014
4,033
-2,872
-446
715
-304
16
427
421
1.1
71.2
7.5
78.7
11.1
89.8
100.2
-10.4
9.4
3.0
2013
4,158
-3,661
-490
7
338
13
358
375
-2.9
88.0
-8.1
79.9
11.8
91.7
100.7
-9.0
4.7
2.5
18
Annual report 2014 | Tryg A/S |
claims and large claims, the claims ratio, net of
ceded business, was significantly better than in
2013, which underlines the profitability focus
in Corporate. However, at the same time, it
Financial highlights Q4 2014
•
Technical result of DKK 98m (DKK 59m).
must be concluded that the claims level for the
• Combined ratio of 90.4 (94.7).
Swedish part was less satisfactory towards the
•
Claims ratio, net of ceded business, of
end of the year.
79.8 (82.6).
• Expense ratio of 10.6 (12.1).
Providing advice on risks is an integral part of
Corporate’s advisory concept, and this has been
extended further in recent years, which has had
a positive impact on the claims level.
Results for Q4 2014
Expenses
The technical result was DKK 98m (DKK 59m),
and the combined ratio was 90.4 (94.7). The
The expense ratio was 11.1 (11.8), and adjusted
improved result is especially attributable to the
for one-off effects related to the Norwegian
claims level, but also to a significantly lower
pension scheme and IT operating expenses,
expense level.
the expense ratio was 11.6.
Gross premiums rose by 1.5% (-2.1%) in Q4,
The development in the expense level is
almost corresponding to the level for the full year.
satisfactory viewed in the context of the efforts
The claims level was 67.2 (75.0), and the claims
to improve competitiveness and the financial
ratio, net of ceded business, was 79.8 (82.6) and
results. The coming years will see a focus on
was affected by both a high level of large claims
streamlining the handling of large customers even
and a high run-off level.
more and reducing the expense level further.
The number of employees was reduced from 365
improvement, adjusted for run-off, large claims
at the end of 2013 to 279 at the end of 2014. Of
and weather claims. The expense ratio was
this, approximately 60 positions were moved in
10.6 (12.1), which was a satisfactory low level,
Also, the claims ratio reflected a good underlying
Tryg and Tivoli prevent cloudburst damage After the cloudburst
in Copenhagen in 2011, Tivoli suffered a double-digit million kroner loss.
The preventive measures proved their worth when a cloudburst hit
again in 2014.
During the cloudburst in August 2014, twice
“After the cloudburst in 2011, we teamed
connection with the new division of Corporate
underlining Corporate’s focus on having a
as much rain fell on Copenhagen as in the
up with Tryg to prepare an emergency plan
and Commercial.
competitive expense level.
cloudburst in July 2011. Nevertheless, Tivoli’s
and implement preventive measures to
loss was only one third of that suffered in 2011,
ensure that we are fully prepared for such
which was the result of preventive measures
cloudbursts,” says Mogens Ramsløv, Vice
initiated by Tivoli and Tryg that year.
President of Tivoli.
| Menu – Management’s review
| Menu – Management’s review
19
Annual report 2014 | Tryg A/S | Sweden
including ICA and Villaägerne (The house
owners) in Sweden, to ensure profitability.
This development was countered through the
continued development of the cooperation with
Danske Bank and the acquisition of the company
Securator, which is a market-leading provider
of extended guarantee insurance for electronic
equipment in Denmark, as well as the acquisition
of a small portfolio within insurance for pets.
Sweden comprises the sale of insurance products
in 2013, and was achieved in a year which saw
to private customers under the ‘Moderna’ brand.
an expected gradual reduction of the Nordea
Towards the end of the year, it could be con-
Moreover, insurance is sold under the brands
portfolio as a result of terminating the partner
cluded that the level of sales was now generally
Atlantica, Bilsport & MC, Securator and Moderna
agreement in Sweden. In 2014, the cooperation
higher than before the agreement with Nordea
Djurförsäkringar. Sales are effected via Tryg’s own
with Danske Bank in Sweden was gradually
was terminated. This was achieved through the
salespeople, call centres and the Internet. The
expanded, and new, small portfolios were
establishment of one call centre in Malmö.
business area accounts for 7% of the Group’s total
acquired. In addition, the important agreement
Cross-selling, automatic claims
handling and the integration of
Securator were focus areas.
Per Fornander | Group Executive Vice
President, Sweden
premium income.
Results
with Elkjöp on product insurance distribution
has been extended. At the same time, significant
structural measures were also implemented in
The results of this business area have improved
2014 with regard to distribution, as a result of
significantly in recent years. The combined
which the call centre in Luleå was closed, with
ratio for 2014 was largely at the same level as
only one call centre remaining based in Malmö.
Financial highlights 2014
The technical result was DKK 118m (DKK 149m).
This was achieved through a continued focus
on profitability within the broad private market
and the usual sound results in the niche areas
comprising leisure boats, motorcycles and
•
Technical result of DKK 118m (DKK
product insurance.
149m).
• Combined ratio of 92.0 (91.2).
•
Gross premiums reduced by 7.4% (-4.9%)
as a result of the termination of the
agreement with Nordea.
• Expense ratio of 19.2 (17.6).
| Menu – Management’s review
Premiums
Premium income was reduced by 7.4%
(-4.9%). This reduction was primarily due to
the mentioned termination of the partner
agreement with Nordea, just as the number of
partner agreements in general was reduced,
Key figures – Sweden
DKKm
Q4 2014
Q4 2013
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 (%)
338
-252
-75
11
-5
1
7
3
1.6
74.6
1.5
76.1
22.2
98.3
99.2
-0.9
1.5
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
2014
1,399
-998
-268
133
-21
6
118
43
-7.4
71.3
1.5
72.8
19.2
92.0
95.1
-3.1
1.5
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
20
Annual report 2014 | Tryg A/S |
Claims
The gross claims ratio amounted to 71.3 (74.2), and
the claims ratio, net of ceded business, was 72.8
(73.6). The largely unchanged claims ratio, net of
Financial highlights Q4 2014
•
Technical result of DKK 7m (DKK 44m).
ceded business, is satisfactory and positively affected
• Combined ratio of 98.3 (88.2).
by the gradual reduction of the Nordea portfolio,
while it is negatively affected by a few mid-sized
•
Claims ratio, net of ceded business,
of 76.1 (68.9).
claims and an increasing claims frequency within
• Expense ratio of 22.2 (19.3).
contents insurance. Claims handling in Moderna is
characterised by a high degree of efficiency, and the
introduction of automatic claims handling without
claims handlers continues. The claims handling is
telemarketing in Malmö was completed in 2014,
determined by the type of claim, the customer’s
which means that the corresponding function in
claims history and a number of other factors. Tryg
Luleå has now finally been closed.
sees great potential in this kind of claims handling for
the Group as a whole. This is also a very efficient form
Results for Q4 2014
of claims handling for customers, as a large portion
The technical result was DKK 7m (DKK 44m),
of claims are registered and finalised on the same
and the combined ratio was 98.3 (88.2).
day, which results in high customer satisfaction and a
positive effect on the claims level.
Gross premiums increased by 1.6% in Q4 and were
positively affected by the inclusion of the premium
Run-off amounted to 3.1% (1.3%), which reflects
income from Securator. Securator accounted for
that the Swedish part of the business has now also
DKK 24m in Q4.
built a solid reserve position.
Expenses
The claims ratio was 74.6 (71.8), and the claims
ratio, net of ceded business, was 76.1 (68.9). The
The expense ratio was 19.2 (17.6), or 18.8
higher claims ratio compared to the same period in
excluding one-off effects. The higher expense level
2013 is attributable to a lower level of run-off gains
is related to the reduction in premium income.
and the run-off gains achieved in Q4 2013 on the
It was expected that the expense ratio would
provisions made during the year.
increase, as it was not possible to adapt to a
considerably lower premium level in the short term.
The expense ratio was 22.2 (19.3), and the number of
Accordingly, in the coming years, initiatives will be
employees was increased from 356 to 382. Excluding
implemented to ensure a reduction in expenses.
employees associated with the portfolios acquired,
The centralisation of customer service and
the number of employees was reduced by 22.
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
21
Investment activities
Key figures – investments
DKKm
Q4 2014
Q4 2013
2014
2013
Free portfolio, gross return
Match portfolio, regulatory deviation and performance
Other financial income and expenses
Total investment return
154
39
-180
13
283
38
-167
154
548
181
-369
360
891
40
-343
588
The purpose of the investment activities is
At 31 December 2014, the investment portfolio
and intercompany balances, equity in 2014 would
demonstrations in Hong Kong and the new
primarily to support the insurance business
totalled DKK 41.9bn. The investment portfolio is
be approximately DKK 260m lower.
tensions in the Middle East.
by minimising the impact of interest and
divided into a match portfolio and a free portfolio
exchange rate fluctuations and by managing
of DKK 29.5bn and DKK 12.4bn, respectively.
Financial markets in 2014
Investment return 2014
the investments in the best possible way while
The sole purpose of the match port-folio is to
Activity in the global economy gradually gained
The investment return was affected by both
taking account of market risk and capital use.
hedge fluctuations in the discounting of insurance
momentum in the course of 2014, especially in
positive equity and credit markets and falling
provisions and thus reduce the interest rate risk
the USA and the UK. However, growth in Europe
interest rates as well as good performance.
attaching to Tryg’s claims provisions. In addition
was a little more restrained, while the Chinese
The return on the free portfolio was DKK 548m,
to transferring the change in the value of the
and Japanese economies also slowed down. The
while the return on the match portfolio was
commitments, the match portfolio will also
central banks also had a bearing on the agenda
DKK 181m. After financial income and expenses
provide interest on the provisions to transfer
in 2014. While the American central bank cut
of DKK -369m, the total investment return
insurance technical interest. The free investment
back its monetary easing by reducing its monthly
amounted to DKK 360m.
portfolio generally corresponds to equity and is
acquisition of bonds, the European central bank
invested in bonds, real estate and equities.
eased its monetary policy on several occasions
The result of the match portfolio comprises
to boost the economy. In the Nordic countries,
performance of DKK 104m and a regulatory
Another purpose of the investment activities is to
the Norwegian central bank’s interest rate cut
deviation of DKK 77m. The positive performance
Financial highlights 2014
This is done by means of hedging, which in terms
driven by the marked fall in oil prices. The
doing well relative to the local market.
reduce the impact of exchange rate fluctuations.
was particularly noteworthy, and was primarily
was primarily due to the selected local bonds
of expenses is included under other financial
general impression of 2014 is a global economy
•
Investment return of DKK 360m
income and expenses.
with historically low inflation, interest rates and
The regulatory deviation is explained by the fact
(DKK 588m).
commodity prices plus growth which is still low
that the commitments are primarily calculated on
•
Return on match portfolio of DKK 181m
Hedging covers the currency risk in the Norwegian
and which is primarily being driven by America.
the basis of euro swaps, while hedging is local. The
(DKK 40m).
•
Gross return on free portfolio of DKK
548m (DKK 891m).
and Swedish branches, and especially towards
difference between euro swaps and Norwegian
the end of 2014, it protected against fluctuations
The uncertainty in the financial markets has
swaps, in particular, explains most of the regulatory
due to a significant drop in the Norwegian krone.
primarily been due to one-off events such
deviation. The interest rate difference between, for
Without this hedging, which relates to Tryg's equity
as Russia’s annexation of the Crimea, the
example, the two-year European and Norwegian
| Menu – Management’s review
22
Annual report 2014 | Tryg A/S |
Return – match portfolio
DKKm
Return, match portfolio
Value adjustments, changed discount rate
Transferred to insurance technical interest
Match, regulatory deviation and performance
Hereof:
Match, regulatory deviation
Match, performance
Return
Q4 2014
340
-217
-84
39
31
8
Return
2014
1,336
-741
-414
181
77
104
Investment activities in Q4 2014
The gross return on Tryg’s free investment
portfolio in Q4 was DKK 154m. The return on
Financial highlights Q4 2014
the bond portfolio was DKK 29m for the quarter,
•
Investment return of DKK 13m
while the equity portfolio contributed a return of
(DKK 154m).
DKK 75m. The return on the real estate portfolio
•
Return on match portfolio of DKK 39m
was DKK 50m.
(DKK 38m).
•
Return on free portfolio of DKK 154m
The match portfolio yielded a positive regulatory
(DKK 283m).
deviation of DKK 31m in Q4 2014 after transfer to
•
Write-down of owner-occupied property
insurance, while the result of match performance
of DKK 106m.
was DKK 8m.
swap rates is now only 1 percentage point, which is
number of elements, of which the largest are the
the lowest level since 2009.
expense relating to Tryg’s hedging of the currency
After other financial income and expenses of
risk of DKK 95m, as mentioned above, and the
DKK 180m, the total return on Tryg’s investment
In addition, the development in the financial
expenses relating to Tryg’s subordinate loan of
activities was DKK 13m in Q4.
markets resulted in positive returns on equities,
DKK 90m. The value of Tryg’s domicile in Ballerup
credit exposure and the bond position in the
was wrote down by DKK 106m.
free portfolio. The return was DKK 548m,
corresponding to 4.4% on the average invested
capital for the period. The return on Tryg’s equity
portfolio was DKK 250m, or 10.0%. The reduction
Return – free portfolio
of the interest rate level in 2014 combined with the
DKKm
positive return on high-yield bonds and emerging
market bonds resulted in a return of DKK 168m,
or 2.1%. Real estate investments contributed
positively with DKK 130m. The value of the
properties in Norway increased slightly, while the
situation is largely unchanged in Denmark.
Other financial income and expenses
Other financial income and expenses totalled
Government bonds
Covered bonds
Emerging market bonds
High-yield bonds
Other a)
Interest rate and credit exposure
Equity exposure
Investment property
Total gross return
Return
Q4 2014
Return (%)
Q4 2014
Return
2014
Return (%)
2014
Investment assets
31.12.2014
31.12.2013
9
24
-3
4
-5
29
75
50
154
3.3
0.5
-0.6
0.5
-0.5
0.4
3.2
2.4
1.2
15
78
23
35
17
168
250
130
548
4.7
1.6
5.9
5.2
1.4
2.1
10.0
6.4
4.4
279
5,188
410
910
1,085
7,872
2,470
2,099
501
4,736
387
802
1,944
8,370
2,966
2,022
12,441
13,358
DKK -369m in 2014. This item comprises a
a) Bank deposits and derivative financial instruments hedging interest rate risk and credit risk.
| Menu – Management’s review
23
Annual report 2014 | Tryg A/S |
Capital and
risk management
The main concept of insurance is that of spreading
limits, Tryg’s risk will depend on the company’s
risk. By pooling risks from a large number of cus-
choice of exposure within different segments and
tomers, an insurance company’s risks are spread
industries in the insurance market.
more evenly and are also more predictable, there-
by reducing the capital required to cover negative
Another example of the operationalisation of risk ap-
fluctuations. The assessment and management of
petite is the management of the investment risk via
Tryg’s aggregate risk and the associated capital re-
exposure limits within different asset classes (shares
quirements therefore constitute a central element
and property etc.) and the management of the total
in the management of an insurance company.
interest risk via Tryg’s match strategy. This prescribes
that Tryg’s investment assets corresponding to the
Risk profile and appetite
technical provisions must be invested in interest-
Tryg’s Supervisory Board defines the framework for
bearing assets, the interest rate sensitivity of which
the company’s target risk appetite and thereby also
precisely matches and thereby hedges the interest
the capital which must be available to cover any
rate sensitivity of the discounted provisions.
losses. The risk appetite is described in Tryg’s pol-
icies via exposure limits for different types of risk.
Good risk management requires, among other
things, the ongoing identification and quantifi-
The fundamental insurance risk is managed via
cation of risk factors, subsequent reduction of
limits for the size of single large commitments and
undesired risks and the reporting of the whole risk
via the use of reinsurance, thereby limiting the
scenario. The quantification consists, among other
maximum cost of large claims, expenses due to a
things, of a calculation of the capital requirements
storm, cloudburst or other event which affects a
and, against this background, an annual review is
number of insurance customers simultaneously.
made of the framework for Tryg’s risk appetite.
Moreover, the insurance risk is managed through
geographical limitations and by refraining from
To support the work with risk management, the
offering certain types of insurance such as aviation
Supervisory Board has appointed a special Risk
and marine insurance. Operating within these
Committee, whose task is to focus on the Board’s
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
24
responsibility in terms of capital and risk
equity and capital buffer) and its dividend policy.
Tryg’s capital base consists of equity and subordinate
•
Norwegian Natural Perils Pool, which may have
management.
Against the background of the expected satisfactory
loan capital. The relative sizes of these two categories
a negative effect of DKK -1 to 0bn. Tryg expects
results for 2014 and the solid capital position, a de-
are subject to ongoing assessment with a view to
that Norwegian Natural Perils Pool will still
Capital requirement and management
cision was made in November 2014 to implement
maintaining an optimum structure which takes ac-
be available as a tier 2 capital element when
Capital management is based on Tryg’s internal
an extraordinary share buy back totalling DKK 1bn.
count of the target return on equity, the capital costs
Solvency II has entered into force.
capital model. The capital model is based on the
The share buy back takes place between 2 January
and the desired financial flexibility. In 2015, this will
•
Norwegian warranty provision, which may
risk profile, and thus takes account of the compo-
2015 and the end of the year. Moreover, at the an-
be reassessed in connection with the refinancing of
have a negative effect of DKK -0.2 to 0bn. Tryg
sition of the insurance portfolio, the geographical
nual general meeting to be held on 25 March 2015,
Tryg’s subordinate loan of EUR 150m. This refinan-
expects that the warranty provision will still be
spread, the provision profile, the reinsurance
the Board will propose that dividend of DKK 29 per
cing will take the future Solvency II rules into account.
available as a tier 1 or tier 2 capital element
programme, the investment portfolio and Tryg’s
share be paid, corresponding to the distribution of
under Solvency II.
profitability in general. The model calculates the
DKK 1,731m. Looking ahead, Tryg has decided to
At the end of 2014, Tryg’s total subordinate loan
•
The Solvency II assessment of premium provi-
statutory capital requirement (Individual Solvency
start paying dividend twice a year, the first time be-
capital amounted to 16% of equity, with total inter-
sions will contribute positively with DKK 0.5 to
Requirement) with a 99.5% certainty level, such
ing in connection with the half-year report 2015.
est expenses of DKK 90m.
Read more about
0.7bn to the own funds statement (expected
that Tryg would statistically be able to honour
Tryg’s subordinated loan in Note 1 on page 47.
future profit).
claims in 199 out of 200 years.
In conjunction with the capital plan, a contingency
plan has been prepared which describes specific
Towards Solvency II
•
An increased possibility for raising subordinate
loan capital amounts from DKK 1.5 to 2.5bn.
At the end of 2014, the Individual Solvency Re-
measures that may be introduced in the short
The coming European solvency rules, Solvency II,
quirement totalled DKK 6,560m (DKK 6,366m in
term, should the company’s desired capital posi-
will enter into force on 1 January 2016.
Tryg thus expects an overall positive capital effect
2013). The capital required to meet the Individual
tion be threatened. Both the capital plan and the
in connection with the transition to Solvency II.
Solvency Requirement is called the adequate
contingency plan have been approved by Tryg’s
Under Solvency II, a company is allowed to calcu-
The Solvency II provisions also introduce a require-
capital base. At the end of 2014, this totalled DKK
Supervisory Board.
late its capital requirement using an internal model
ment for an Own Risk and Solvency Assessment
9,938m after dividend, corresponding to a surplus
cover of DKK 3,378m or 51%.
The Supervisory Board regularly assesses the need
for capital adjustments. In practice, extraordinary
adjustments are made through share buy backs.
The assessments are made in the company’s capital
plan, in which the Individual Solvency Requirement
is projected on the basis of Tryg’s budgets. The
Capital
DKKm
10,000
8,000
6,000
4,000
2,000
0
3,378
6,560
1,662
8,276
approved by the Financial Supervisory Authority.
(ORSA). Tryg has for several years prepared ORSA
Tryg expects its internal model to be approved so
reports, which assess the general risk scenario
that it can continue to be used by the company. If
and propose improvements. In 2014, such a risk
the approval process takes longer than expected,
assessment was also carried out and considered
it will be necessary to use the Solvency II standard
by the company’s day-to-day management and
model for a period, which will result in a lower
Supervisory Board, which are consequently enter-
solvency surplus.
ing 2015 with a fully updated view of Tryg’s risk
profile.
Read more about Tryg’s risk manage-
Individual Solvency
Solvency II a)
When Solvency II enters into force, the concept
ment in Note 1 on page 47.
projection is partly based on whether it will accom-
Capital requrement
Buffer
of ‘adequate capital base’ will be replaced by the
modate the initiatives addressed in the company’s
strategy for the coming three years, and also on the
most significant risks from the company’s risk iden-
tification. Adequacy is measured in relation to Tryg’s
strategic targets (including in respect of return on
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.
Solvency II concept of ‘own funds’. There are still
Standard & Poor’s
some unresolved issues as to the interpretation of
In 2014, Tryg achieved an ‘A-’ rating from the credit
this capital calculation method, which may have a
rating agency Standard & Poor’s, and aims to
significant impact on Tryg’s capital situation. The
maintain this rating.
capital elements still to be clarified are:
| Menu – Management’s review
25
Annual report 2014 | Tryg A/S | Shareholder information
the liquidity of the share, and thereby determines
capital. TryghedsGruppen invests in peace-of-mind
the price of the Tryg share. Other trading platforms
and healthcare providers in the Nordic region, and
such as OTC (over-the-counter) and dark pools
supports non-profit-making activities.
represent a large share of the remaining trade, but
it takes place outside of the established exchanges
At Tryg’s annual general meeting on 25 March
and MTFs and thus does not have a direct impact
2015, it will be proposed to split each share of
on the price of and the liquidity in the share.
DKK 25 into five shares of DKK 5. The reason for
In 2014, shares totalling DKK 1bn, corresponding
velopment, bringing the price up to more than DKK
this is that the Tryg share has seen a positive de-
Tryg is a listed company, and it is important that
exchange. In accordance with the recommenda-
to approximately 1.8 million shares, were repur-
600, which makes it the second-most expensive
decisions to invest in the Tryg share can be made
tions issued by NASDAQ Copenhagen, Tryg does
chased. This had a positive impact on the turnover
share in the C20 index. In addition, the share split
on an informed basis. A high priority is therefore
not comment on financial results or outlook two
of the Tryg share. The total turnover (including
is expected to increase the liquidity of the share.
given to having an open and ongoing dialogue with
weeks before the publication of interim reports
OTC trades) of the share increased from 43 million
shareholders, analysts and other stakeholders.
and four weeks before the publication of the
shares in 2013 to 49 million shares in 2014.
At the end of 2014, there was a free float of 40% of
annual report. All financial information is published
the shares, divided among approximately 27,000
Investor Relations (IR) is responsible for communi-
on tryg.com in both Danish and English. It is pos-
Share capital and ownership
registered shareholders. The 200 largest share-
cation with the equity market as well as for contact
sible to subscribe to interim and annual reports,
Tryg had a total share capital of DKK 1,492,387,900
holders owned 89% of the shares.
to rating agencies and bond investors.
news and RSS feeds on the website. It is also
on 31 December 2014. This comprised one share
possible to follow @Tryg IR on Twitter.
class (59,695,516 shares with a nominal value
At the end of 2014, and after the share buy back
After publication of interim and annual reports,
of DKK 25), and all shares rank pari passu. The
programme, Tryg held 1,871,579 own shares,
Tryg’s management and IR hold investor meetings
In 2014, the Tryg share rose from 524.5 to 689.0.
majority shareholder, TryghedsGruppen smba,
corresponding to 3.1% of the share capital. At the
to discuss the company’s development with inves-
Including a dividend of DKK 27 per share, the share
Denmark, owns 60% of the shares and is the only
coming annual general meeting, the Supervisory
tors and analysts. In addition, Tryg participates in a
rose by 36.5% (31.4% excluding dividend). By com-
shareholder owning more than 5% of the share
Board will propose to cancel the repurchased shares.
number of financial conferences. In 2014, investor
parison, the OMX C20 CAP index rose by 20.9% in
meetings were held in the financial centres in
2014, while the index of insurance shares in Europe,
Europe, the USA, Canada and Asia.
Euro STOXX Insurance, rose by 9.8%.
The Tryg share is followed closely by 21 analysts,
NASDAQ in Copenhagen is still the primary ex-
who continuously update their expectations for and
change where most of the trading in the Tryg share
views on the share.
See a list of analysts and their
takes place. In 2014, NASDAQ Copenhagen ac-
Shareholders
At 31 December 2014
17
recommendations of Tryg at tryg.com > Investor.
counted for 50% of the turnover of the Tryg share.
14
Per cent
The Tryg share
In addition, 15% of trading in 2014 was carried
out on alternative exchanges (MTF trades), led by
9
The Tryg share is listed on NASDAQ Copenhagen
BATS Chi-X as the largest alternative exchange. This
and is covered by the C20 index (OMX C20 CAP),
means that NASDAQ and the alternative exchanges
TryghedsGruppen
Large Danish
shareholders a)
Large international
shareholders a)
Small shareholders
60
Free float – geographical distribution
At 31 December 2014
6
14
14
14
Per cent
52
Denmark
UK
USA
Nordic region
Others
comprising the 20 most traded shares on the
account for two-thirds of the trading that impacts
a) Shareholders holding more than 10,000 shares.
Free float is excluding TryghedsGruppen.
| Menu – Management’s review
26
Annual report 2014 | Tryg A/S | Distribution
DKKm
Dividend
Dividend per share (DKK)
Payout ratio
Extraordinary share buy back
2014a)
1,731
29
68%
1,000
2013
1,656
27
70%
1,000
2012
1,594
26
72%
800
2011
2010
400
6.52
35%
0
256
4
43%
0
a) Dividend proposed by the Supervisory Board for adoption by the annual general meeting.
•
•
Distribution of 60-90% of the profit after tax.
Falkoner Allé 9, 2000 Frederiksberg, Denmark.
Aspiration to distribute a dividend which is steadily
The notice will be advertised in the daily press in
increasing in nominal terms on a full-year basis.
February 2015 and will be sent to shareholders,
•
The capital level must at all times reflect the
if requested.
The annual general meeting will
return on equity targets and the statutory
also be announced on tryg.com.
capital requirements.
•
The capital level may extraordinarily be
The company announcements issued in 2014
adjusted through a share buy back.
are available at tryg.com > Investor > News.
The Supervisory Board encourages all shareholders to participate at the annual general meeting, where
they have the opportunity to ask questions to the Chairman of the Supervisory Board and the Group CEO.
Based on Tryg’s dividend policy and the satisfactory
2014 results, the Supervisory Board will propose
a dividend of DKK 29 per share, corresponding to
DKK 1,731m, at the 2015 annual general meeting.
Semi-annual dividend from 2015
within the investment activities, as well as the
This corresponds to payment of 68% of the profit
In connection with Tryg’s Capital Markets Day in
requirement to have a solid capital position
after tax.
November 2014, it was announced that the Super-
based on Tryg’s internal capital model (Individual
Financial calendar 2015
25 March 2015 Annual general meeting
26 March 2015
Tryg shares trade ex-dividend
visory Board has decided to pay out semi-annual
Solvency). Tryg’s internal capital model provides
In connection with the Capital Markets Day, it was
30 March 2015
Payment of dividend based on
dividend from the second half of 2015. This means
the framework for the company’s capital require-
announced that it had been decided to initiate an
annual results 2014
that the next payout in March 2015 will be based
ment until this is replaced by the Solvency II rules.
extraordinary share buy back of DKK 1bn starting
on the profit for 2014, after which time all future
Tryg’s dividend policy is based on the following
on 2 January 2015. This decision was made against
payouts will be based on the half-year results.
assumptions:
the background of Tryg’s solid capital position and
Tryg’s dividend policy aims to achieve stability in
•
A general objective of creating long-term value
the distribution on a full-year basis. The dividend
for the company’s shareholders.
Annual general meeting
policy reflects our expectations of high earnings
•
A competitive dividend policy in comparison
Tryg’s annual general meeting will be held on
in the insurance business and a low risk profile
with those of our Nordic competitors.
25 March 2015 at 14:00 at Falkoner Centret,
expected earnings.
15 April 2015
Interim report for Q1 2015
10 July 2015
Half-year report 2015
13 July 2015
Tryg shares trade ex-dividend
15 July 2015
Payment of dividend based on
half-year results 2015
9 October 2015 Interim report for Q1-Q3 2015
| Menu – Management’s review
27
Annual report 2014 | Tryg A/S |
Corporate governance
Annual general meeting
Depending on the development in results, each
Tryg holds an annual general meeting every year.
year the Board proposes a dividend and possibly
As required by the Danish Companies Act and the
an extraordinary share buy back, if further adjust-
Articles of Association, the annual general meeting
ment of the capital structure is required. At the an-
is convened via a company announcement and at
nual general meeting on 25 March 2015, the Board
tryg.com subject to at least three weeks’ notice.
will propose a half-year dividend from the second
Shareholders may also opt to receive the notice by
half of 2015. In 2014, the annual general meeting
post or email. The notice contains information about
authorised the Board to allow Tryg to acquire own
time and venue as well as an agenda for the meeting.
shares amounting to up to 10% of the share capital
Tryg focuses on managing the company in accordance
journalists, where among other things, new finan-
until 3 April 2019. On 2 January 2014, Tryg initi-
with the principles for good corporate governance
cial targets and customer targets for the period up
All shareholders are encouraged to attend the an-
ated a share buy back programme which ran until
and generally complies with the recommendations.
to 2017 were presented.
nual general meeting. The annual general meeting
19 December 2014. Tryg acquired own shares for
The Danish recommendations have been prepared by
is held by personal attendance as the Board values
an amount of DKK 1bn. On 2 January 2015, Tryg
the Committee on Corporate Governance and most
Tryg has adopted an Investor Relations policy which
personal contact with the Group’s shareholders.
initiated a new share buy back programme total-
recently updated in 2014. The Recommendations
states, among other things, that all company an-
Shareholders may propose items to be included
ling DKK 1bn, which runs until the end of 2015.
on Corporate Governance can be found at corpo-
nouncements and financial statements are published
on the agenda for the annual general meeting,
rategovernance.dk. At tryg.com, Tryg has published
in Danish and English and that Tryg publishes interim
and may ask questions before and at the meeting.
Duties, responsibilities and composition
the statutory corporate governance report based on
financial statements each quarter. Moreover, Tryg
Shareholders may vote in person at the annual
of the Supervisory Board
the ‘comply or explain’ principle for each individual
prepares quarterly investor presentations which are
general meeting, by post or appoint the Board
The Board is responsible for the central strategic
recommendation. This section on corporate govern-
used in the dialogue with investors and analysts. All
or a third party as their proxy. Shareholders may
management and financial control of Tryg and for
ance is an excerpt of the corporate governance report.
announcements, financial statements, investor pres-
consider each item on the agenda. The proxy
ensuring that the business is organised in a sound
Download Tryg’s statutory corporate governance
entations and newsletters are available at tryg.com.
form and form for voting by post are available at
way. This is achieved by monitoring targets and
report at tryg.com > Investor > Download.
This material provides all stakeholders with a compre-
tryg.com prior to the annual general meeting.
framework on the basis of regular and systematic
hensive picture of Tryg’s position and performance.
reviews of the strategy and risks. The Executive
Dialogue between Tryg, shareholders
The consolidated financial statements are presented
Share and capital structure
Management reports to the Board on strategies
and other stakeholders
in accordance with IFRS. At tryg.com, stakeholders
Tryg’s share capital comprises a single share
and action plans, market developments and group
The Investor Relations (IR) department main-
are able to subscribe to press releases and company
class, and all shares rank pari passu. The majority
performance, funding issues, capital resources and
tains regular contact with analysts and inves-
announcements as well as insider trading announce-
shareholder, TryghedsGruppen smba, owns 60%
special risks. The Board holds one annual strategy
tors. Together with the Executive Management,
ments. A number of internal guidelines ensure that
of the issued shares and is the only shareholder
seminar to decide on and/or adjust the Group’s
Investor Relations organises investor meetings and
the disclosure of price-sensitive information com-
owning more than 5% of the company’s shares.
strategy with a view to sustaining value creation in
conference calls and participates in conferences in
plies with the stock exchange codes of conduct.
The Board ensures that Tryg’s capital structure is in
the company. The Executive Management works
Denmark and abroad. IR also communicates with
line with the needs of the Group and the interests
with the Board to ensure that the Group’s strategy
stakeholders in the social media via Twitter@TrygIR.
Tryg has adopted a number of policies which describe
of its shareholders and that it complies with the
is developed and monitored. The Board ensures
The Supervisory Board (Board) is informed of the
the relationship between different stakeholders.
requirements applicable to Tryg as a financial
that the necessary competencies and financial re-
dialogue with investors and other stakeholders
See the IR policy at tryg.com > Investor > IR
undertaking. Tryg has adopted a capital plan and
sources are available for Tryg to achieve its strategic
on a regular basis. In November 2014, Tryg held
contacts > IR policy, and
the CSR policy at tryg.
a contingency capital plan, which are reviewed
targets. The Board specifies its activities in a set of
a Capital Markets Day for analysts, investors and
com > CSR > CSR strategy > CSR policy.
annually by the Board.
rules of procedure and an annual cycle for its work.
| Menu – Management’s review
28
Annual report 2014 | Tryg A/S | Board members elected by the annual general
Board focuses on the following qualifications and
opportunities and access to management positions
Three out of four members of the Audit Com-
meeting are up for election each year at the annual
skills: management experience, financial insights,
for qualified men and women. In 2014, the propor-
mittee and the Risk Committee, including the
general meeting. See pages 32-33 for information
knowledge of insurance, including the organisation
tion of women at management level was 36.5%
chairman of the committees, are independent
on when the individual members joined the Board,
of insurance companies, product development of
against 34.6% in 2013. It is Tryg’s target to increase
persons. Of the four members of the Remunera-
were re-elected and when their current election
financial services, reinsurance, capital requirements
the total proportion of women at management
tion Committee, one member is an independent
period expires. To ensure the integration of new
and special accounting principles in insurance law,
level to 38% in 2015.
See the action plan at
person, while one out of two members of the
talent on the Board, members elected by the
accounting insights, financial knowledge and experi-
tryg.com > CSR.
annual general meeting may hold office for a maxi-
ence, M&A experience, market insights and interna-
mum of nine years. Furthermore, members of the
tional experience.
See CVs and descriptions
Board committees
Nomination Committee is independent. Board
committee members are elected primarily based
on special skills that are considered important by
Board must retire at the first annual general meet-
of the skills in the section Supervisory Board on
Tryg has an Audit Committee, a Risk Committee,
the Board. Involvement of the employee repre-
ing following their 70th birthday. The Board has 12
pages 32-33 and at
tryg.com> Governance
a Nomination Committee and a Remuneration
sentatives in the committees is also considered
members, five men and seven women (including
> Management > Supervisory Board.
Committee. The framework of the committees’
important. The committees exclusively prepare
one male and three female employee representa-
work is defined in their terms of reference.
matters for decision by the entire Board.
The
tives). The Board has members from Denmark,
Duties and composition of the Executive
The board committees’ terms of reference can
special skills of all members are also described
Sweden and Norway. Women are thus not under-
Management
be found at tryg.com > Governance > Management
at tryg.com.
represented on Tryg’s Supervisory Board.
Each year, the Board reviews and adopts the
> Super visory Board > Board committees, includ-
rules of procedure of the Board and the Executive
ing descriptions of members, meeting frequency,
Remuneration of Management
Eight members of the Board are elected by the
Management with relevant policies, guidelines and
responsibilities and activities during the year.
Tryg has adopted a remuneration policy for the
annual general meeting for a term of one year. Of
instructions describing reporting requirements and
See the tasks of the board committees in 2014 at
Board and the Executive Management, including
the eight members elected at the annual general
requirements for communication with the Execu-
tryg.com > Governance > Management > Supervi-
general guidelines for incentive pay.
meeting, four are independent persons as stated
tive Management. Financial legislation also requires
sory Board > Board committees.
in recommendation 3.2.1 in Recommendations on
the Executive Management to disclose all relevant
Corporate Governance, while the other four mem-
information to the Board and report on compliance
bers are dependent persons as they are appointed
with limits defined by the Board and in legislation.
by the majority shareholder TryghedsGruppen.
See details about the independent board
The Board considers the composition, develop-
members in the section Supervisory Board on
ment, risks and succession plans of the Executive
pages 32-33 and at
tryg.com> Governance
Management in connection with the annual evalu-
> Management> Supervisory Board.
ation of the Executive Management, and regularly
in connection with board meetings.
The Board performs an annual evaluation of its work
and skills to ensure that it possesses the expertise re-
Each year, the Board discusses Tryg’s activities to
quired to perform its duties in the best possible way.
guarantee diversity at management levels. Tryg at-
In 2014, external assistance was brought in to
taches importance to diversity at all management
contribute to this, which resulted in the recruit-
levels. Tryg has prepared an action plan which sets
ment of a new member for the Board in 2015. The
out specific targets to ensure diversity and equal
| Menu – Management’s review
Total remuneration of the Supervisory Board in 2014
Audit
Fee Committee Committee
DKK
Risk Remuneration
Committee
Total
Jørgen Huno Rasmussen
Torben Nielsen
Paul Bergqvist
Anya Eskildsen
Vigdis Fossehagen
Ida Sofie Jensen
Bill-Owe Johansson
Lone Hansen
Jesper Hjulmand
Lene Skole
Tina Snejbjerg
Mari Thjømøe
990,000
660,000
330,000
330,000
330,000
330,000
330,000
330,000
330,000
330,000
330,000
330,000
225,000
150,000
150,000
150,000
150,000
100,000
100,000
100,000
100,000
90,000
90,000
90,000
135,000 1,125,000
1,035,000
420,000
420,000
420,000
330,000
330,000
330,000
580,000
580,000
430,000
580,000
29
Annual report 2014 | Tryg A/S |
Total remuneration of the Executive Management in 2014
DKK
Basic salary
Car/
Pension car allowance
Total fixed
salary
the Executive Management, and to create a joint
Risks associated with new financial reporting rules
Value of
matching
shares a)
Total
fee
financial interest between the Executive Manage-
and accounting policies are monitored and consid-
ment and shareholders.
Read more about the
ered by the Audit Committee, the finance manage-
matching shares programme in the remuneration
ment and the internal auditors. Material legal and
Morten Hübbe
Tor Magne Lønnum
Lars Bonde
8,928,218
5,022,283
4,385,281
2,232,055
1,184,610
1,096,320
255,000 11,415,273
6,361,457
154,564
5,736,602
255,000
850,000 12,265,273
6,911,457
550,000
6,136,602
400,000
a) At time of allocation.
policy at tryg.com > Governance > Remuneration.
tax-related issues and the financial reporting of
such issues are assessed on an ongoing basis.
Some members of the Executive Management
Other risks associated with the financial
still have unexercised share options, which were
reporting are described in the section Capital and
allocated under a previous programme.
See
risk management on pages 24-25 and
in Note
Note 6 on page 66.
1 Risk management on page 47.
The remuneration policy for 2014 was adopted by
Remuneration of Executive Management
the Board in December 2013 and by the annual
Members of the Executive Management are em-
Each member of the Executive Management is
Tryg engages in ongoing risk identification, map-
general meeting on 3 April 2014.
ployed on a contractual basis, and all terms of their
entitled to 12 months’ notice of termination and
ping insurance risks and other risks related to
remuneration are established by the Board. This
12 months’ severance pay. However, the Group
realising the Group’s strategy or which may have
The Chairman of the Board reports on Tryg’s remu-
is based on the work and results of the individual
CEO is entitled to 12 months’ notice of termination
a potentially substantial impact on the Group’s
neration policy each year in connection with the con-
members of the Executive Management and on the
and 18 months’ severance pay.
financial position. The process involves registering
sideration of the annual report at the annual general
need to attract and retain the most highly qualified
and continually monitoring the risks identified. In
meeting. The Board’s proposal for the remuneration
members of the Executive Management. The fixed
Each member of the Executive Management
2014, Tryg undertook an Own Risk and Solvency
of the Board for the current financial year is also sub-
pay element must be competitive and appropriate
has 25% of the basic salary paid into a pension
Assessment (ORSA). The purpose of the ORSA is to
mitted for approval by the shareholders at the annual
for the market and provide sufficient motivation for
scheme. Up until 31 July 2014, the Group CFO
link strategy, risk management and solvency, as the
general meeting.
See the remuneration policy at
all members of the Executive Management to do
received a defined-benefit pension, disbursed from
aim of the ORSA is to ensure a sensible correlation
tryg.com > Governance > Remuneration.
their best to achieve the company’s defined targets.
the retirement date. The benefit is determined by
between the strategy for assuming risks and the
the final salary and how long the Group CFO has
available capital over a period of three to five years.
Remuneration of Supervisory Board
The Executive Management’s remuneration con-
been covered by the defined-benefit pension.
Members of Tryg’s Board receive a fixed fee and
sists of a fixed pay element, pension and a variable
On 1 August 2014, Tor Magne Lønnum changed
The Board and the Executive Management ap-
are not comprised by any form of incentive or
pay element. The variable pay element constitutes
to a Danish employment contract with a pension
prove and monitor the Group’s overall policies
severance programme or pension scheme. Their
only a limited part of the overall remuneration. The
scheme of 25% of his basic salary.
and guidelines, procedures and controls in
remuneration is based on trends in peer com-
Board can decide that the fixed pay be supple-
important risk areas. They receive reports about
panies, taking into account board members’
mented with a variable pay element of up to 10%
Financial reporting, risk management and auditing
developments in these areas and about the ways
required skills, efforts and the scope of the Board’s
of the fixed basic pay including pension at the time
Being an insurance business, Tryg is subject to
in which the frameworks are used. The Board
work, including the number of meetings. The re-
of allocation. The variable pay element consists of
the risk management requirements of the Danish
checks that the company’s risk management and
muneration received by the Chairman of the Board
a matching shares programme. Four years after
Financial Business Act. In its policies, the Board
internal controls are effective. Non-compliance
is triple that received by ordinary members, while
the purchase by a member of the Executive Man-
defines Tryg’s risk management framework as
with the frameworks and guidelines established
the Deputy Chairman’s remuneration is double that
agement of a specified number of shares, such
regards insurance risk, investment risk and oper-
by the Board is reported to the Board. The Risk
received by ordinary members of the Board.
member is allocated a corresponding number of
ational risk, as well as IT security. Guidelines are
Committee monitors the risk management on an
free shares in Tryg. The purpose of the matching
issued by the Board to the Executive Management.
ongoing basis and reports quarterly to the Board.
shares programme is both to retain members of
| Menu – Management’s review
30
Annual report 2014 | Tryg A/S |
The Group’s internal control systems are based
attends all board meetings. The independent
on clear organisational structures and guidelines,
auditor attends the annual board meeting at
general IT controls and segregation of functions,
which the annual report is presented.
which are supervised by the internal auditors. Tryg
has a decentralised set-up whereby risk managers
Each year, the annual general meeting appoints an
in the business areas carry out controlling tasks
independent auditor recommended by the Board.
for the risk management environment and Tryg’s
After a call where five external auditors were
compliance function.
evaluated, at the beginning of 2014 the Board
The Executive Management has established a
reappointed at the annual general meeting in April
formal process for the Group comprising monthly
2014. At least once a year, the internal and inde-
reporting, including for example budget and
pendent auditors meet with the Audit Committee
decided to recommend Deloitte, and Deloitte was
deviation reports.
without the presence of the Executive Manage-
ment. The Chairman of the Audit Committee deals
Risk management is an integral part of Tryg’s
with any matters that need to be reported to the
business operations. The Group seeks at all times
Board.
to minimise the risk of unnecessary losses in order
to optimise returns on the company’s capital.
Internal audit
Read more about Tryg’s risk management
Tryg has set up an internal audit department which
in the section Capital and risk management on
regularly reviews the quality of the Group’s internal
pages 24-25 and
in Note 1 on page 47.
control systems and business procedures. It is
responsible for planning, performing and reporting
Whistleblowing scheme
the audit work to the Board.
Tryg has set up an Ethical Hotline (whistleblowing
scheme), which allows employees, customers
Deviations and explanations
or business partners to report any serious wrong-
Tryg complies with the Recommendations on
doing or suspected irregularities. Reporting takes
Corporate Governance with the exception of the
place in confidence to the Chairman of the Audit
recommendation for the number of independent
Committee.
Read more about Tryg’s Ethical
members of the board committees, with which Tryg
Hotline at tryg.com > Governance > Ethical
complies partially; see item 3.4.2 of the Recom-
Hotline.
Audit
mendations on Corporate Governance.
The
deviation is explained in Tryg’s statutory corporate
governance report, which is available at tryg.com
The Board ensures monitoring by competent and
> Investor > Download.
independent auditors. The Group’s internal auditor
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
31
Tryg has published the statutory corporate governance report based on the ‘comply or explain’ principle for each individual recommendation. Download the report at tryg.com > Investor > Download. Supervisory Board
Jørgen
Huno Rasmussen a)
Chairman
Born 1952. Joined: 2012.
Nationality: Danish. Profes-
sional board member. Adjunct
Professor, CBS. Former Group
CEO of the FLSmidth Group.
Educational background:
Graduate Diploma in Organisa-
tion, Graduate Engineer and
Lic.techn.
Chairman: Tryg A/S, Tryg Forsik -
ring A/S, TryghedsGruppen
smba, the Lundbeck Foundation
and LundbeckFond Invest A/S.
Board member: Rambøll
Group A/S, Bladt Industries A/S,
Terma A/S, Haldor Topsøe A/S,
Otto Mønsted A/S and Thomas
B. Thriges Fond.
Committee memberships:
Remuneration Committee
(Chairman), Nomination Com-
mittee (Chairman) in Tryg A/S.
Number of shares held: 366
Change in portfolio in 2014: 0
As former CEO of FLSmidth,
Jørgen Huno Rasmussen has
experience in international
management of listed com-
panies and special skills within
strategy, business development,
communication, risk manage-
ment and finance.
Torben Nielsen b)
Paul Bergqvist b)
Anya Eskildsen a)
Vigdis Fossehagen
Lone Hansen
Born 1946. Joined: 2006.
Nationality: Swedish.
Professional board member.
Former CEO of Carlsberg A/S.
Educational background:
Economist and engineer.
Chairman: Sveriges Bryggerier
AB, East Capital Explorer AB,
Pieno Zvaigzdes AB,
Norrköpings Segel Sällskap and
Östkinds Häradsallmänning.
Board member: Tryg A/S,
Tryg Forsikring A/S and
Green carrier AB.
Committee memberships:
Remuneration Committee
in Tryg A/S.
Number of shares held: 100
Change in portfolio in 2014: 0
Paul Bergqvist has international
management and board experi-
ence within M&A, strategic
development, marketing, brand-
ing and financial manage-
ment. Being a Swedish citizen,
Paul Bergqvist has special
knowledge of Swedish market
conditions.
Born 1968. Joined: 2013.
Nationality: Danish.
President of Niels Brock
Copenhagen Business College.
Education: MSc in Political
Science, the certified IoD Board
Program.
Board member: Tryg A/S and
Tryg Forsikring A/S, Trygheds-
Gruppen smba, California In-
ternational Business University
and Lær for Livet.
Committee memberships:
Remuneration Committee in
Tryg A/S. Member of the Danish
Growth Council, Nykredits
Regionsråd, Danish Chinese
Business Forum, minister-
appointed GS coordinator, VL 21,
Copen hagen Rotary and NOCA.
Number of shares held: 0
Anya Eskildsen has experience
within financial management,
strategic management, commu-
nication and marketing, innova-
tion and ideas generation and
international system exports.
Deputy Chairman
Born 1947. Joined: 2011.
Nationality: Danish. Profession-
al board member. Adjunct Pro-
fessor, CBS. Former Governor of
Danmarks Nationalbank.
Education: Savings bank
educated, Graduate Diplomas in
Organisation and Work Sociology,
Credit and Financing.
Chairman: Investeringsforenin-
gen Sparinvest, Investeringsfore-
ningen Sparinvest Sicav, Luxem-
bourg, EIK banki p/f, Færøerne,
Capital Market Partners and
Museum Sydøstdanmark.
Deputy Chairman:
Tryg A/S, Tryg Forsikring A/S
and Sydbank A/S.
Board member: Sampension KP
Livsforsikring A/S, Dansk Land-
brugs Realkredit and Executive
Board of Bombebøssen.
Committee memberships: Audit
Committee (Chairman), Risk
Committee (Chairman), Nomi-
nation Committee in Tryg A/S.
Number of shares held: 3,500
Change in portfolio in 2014: 0
Torben Nielsen has special skills
in the fields of management,
finance, financial services and risk
management as former Gover-
nor of Danmarks Nationalbank.
Employee representative
Born 1955. Joined: 2012.
Nationality: Norwegian.
Chairman of Finansforbundet,
Tryg Norway. 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 and Lay Judge in the
District Court of Bergen.
Number of shares held: 20
Change in portfolio in 2014: +20
Employee representative
Born 1966. Joined: 2012.
Nationality: Danish.
Chairman of the Association
for Tied Agents and Key
Account Managers in Tryg.
Employed in 1990.
Education: Certified commer-
cial insurance agent. Various
insurance and sales courses
and negotiation training.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Other duties: Member of the
Insurance Agent Committee
of the Financial Services Union
Denmark.
Number of shares held:106
Change in portfolio in 2014: +20
Members of the 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 representatives will be held in 2016.
a) Dependent member of the Supervisory Board.
b) Independent member of the Supervisory Board, as per the definition in
Recommendations on Corporate Governance.
| Menu – Management’s review
32
Annual report 2014 | Tryg A/S | Supervisory Board
Jesper Hjulmand a)
Ida Sofie Jensen a)
Mari Thjømøe b)
Lene Skole b)
Tina Snejbjerg
Bill-Owe Johansson
Born 1958. Joined: 2013.
Nationality: Danish.
Director General of Lif (Danish
Association of the Pharmaceuti-
cal Industry). Director General
of the subsidiary DLI (Dansk
Lægemiddel Information A/S).
Education: MSc in Political
Science, European Health
Leadership Programme IN-
SEAD, Executive Management
Programme INSEAD, Executive
Program Columbia Business
School.
Board member: Tryg A/S and
Tryg Forsikring A/S, Trygheds-
Gruppen smba, Plougmann &
Vingtoft A/S and Den Erhvervs-
drivende Fond Hans Knudsen
Instituttet.
Number of shares held: 173
Change in portfolio in 2014: +79
Ida Sofie Jensen has experience
from business operations and
the health sector as well as
management, strategy, politics
and finance.
Born 1963. Joined: 2010.
Nationality: Danish.
CEO of SEAS-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 Com-
panies (DEA), Energi Danmark
A/S, Fibia P/S, SEAS-NVE Vind
AB, SEAS-NVE Strømmen A/S.
Deputy Chairman: Trygheds-
Gruppen smba.
Board member: Tryg A/S, Tryg
Forsikring A/S, DI General
Council, Dansk Energi and Danish
Intelligent Energy Alliance.
Committee memberships: Audit
Committee and Risk Committee
in Tryg A/S, Executive Director
Committee of Dansk Energi
(Chairman) and Green Commit-
tee, Region Zealand (Chairman).
Number of shares held: 1,750
Change in portfolio in 2014: 0
From his positions with
SEAS-NVE, Jesper Hjulmand
has experience within M&A,
strategy, organisa tional and
management development,
communication and business
development.
Born 1962. Joined: 2012.
Nationality: Norwegian.
Professional board member and
independent advisor.
Education: Master of Economics
and Business Administration,
Financial Analyst (CFA). Manage-
ment programme, London and
Harvard Business School.
Chairman: Seilsport Maritimt
Forlag AS.
Board member: Tryg A/S, Tryg
Forsikring A/S, Argentum
Fondsinvesteringer as, Nordic
Mining ASA, Forskningskonsernet
Sintef, E-CO Energi, Scatec Solar
ASA, Avinor, Sevan Marine ASA.
Committee memberships: Audit
Committee and Risk Committee,
Tryg A/S. Audit Committee, Sevan
Marine ASA and E-CO (Chairman),
Audit Committee, Scatec Solar
ASA and Remuneration Com-
mittee, Argentum.
Number of shares held: 300
Change in portfolio in 2014: 0
Mari Thjømøe has experience
from international manage-
ment, strategy, finance, capital
management, investor relations,
branding and special knowledge
of the insurance market, and
special insights into Norwegian
market as a Norwegian citizen.
Born 1959. Joined: 2010.
Nationality: Danish. CEO of the
Lundbeck Foundation.
Education: A.P. Møller Group’s
international shipping educa-
tion, Graduate Diploma in
Financing and various interna-
tional management pro-
grammes.
Board member: Tryg A/S, Tryg
Forsikring A/S and ALK.
Committee memberships: Audit
Committee and Risk Committee
in Tryg A/S and Audit Commit-
tee in ALK.
Number of shares held: 745
Change in portfolio in 2014: 0
Lene Skole has experience
from international companies,
among other things through
her previous work in Coloplast
and The Maersk Company Ltd.,
UK. Lene Skole has skills within
strategy, finance, financing and
communication.
Employee representative
Born 1962. Joined: 2010.
Nationality: Danish.
Head of Section in Tryg’s staff
association. Employed in 1987.
Education: Insurance training.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Committee memberships: Risk
Committee in Tryg A/S and
DFL’s General Council.
Number of shares held: 106
Change in portfolio in 2014: +20
Employee representative
Born 1959. Joined: 2010.
Nationality: Swedish.
Claims handler in Moderna
(Swedish branch). Employed
in 2002.
Education: Insurance training.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Number of shares held: 220
Change in portfolio in 2014: +20
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 representatives will be held in 2016.
a) Dependent member of the Supervisory Board
b) Independent member of the Supervisory Board, as per the definition in
Recommendations on Corporate Governance.
| Menu – Management’s review
33
Annual report 2014 | Tryg A/S | Group Executive Management
Standing from left: Trond Bøe Svestad, Tor Magne Lønnum, Jesper Joensen, Morten Hübbe, Per Fornander, Lars Bonde and Truls Holm Olsen.
| Menu – Management’s review
Annual report 2014 | Tryg A/S |
34
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.
Education: BSc in International Business
Administration and Modern Languages, MSc
in Finance and Accounting and management
programme at Wharton.
Board member: Tryg Ejendomme A/S,
Ejendomsselskabet af 8. maj 2008 A/S and
Tjenestemændenes Forsikring.
Born 1967. Employed in 2011.
Joined the Group Executive Management in 2011.
Member of the Executive Management and the
Group Executive Management.
Education: State-authorised public accountant,
Executive Master of Business and Administration,
University of Bristol and École Nationale des Ponts
et Chaussées.
Board member: Tryg Garantiforsikring A/S, Thermo-
pylae AS (Chairman) and Finansnæringens Felles-
organisasjon, TGS Nopec ASA and P/f Bakkafrost.
Number of shares held: 13,453
Change in portfolio in 2014: +1,693
Number of shares held: 6,000
Change in portfolio in 2014: +1,090
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, the Danish
Insurance Association and Cphbusiness.
Number of shares held: 5,411
Change in portfolio in 2014: +806
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,
Stockholm.
Board member: Tryg Garantiforsikring A/S,
Svensk Försäkring, Försäkringsbranschens
Arbetsgivarorganisation, Försäkringsbranschens
Pensionskassa, Securator A/S (Chairman) and
Moderna Djurförsäkring i Norr AB.
Number of shares held: 3,372
Change in portfolio in 2014: +582
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.
Number of shares held: 1,673
Change in portfolio in 2014: +587
Truls Holm Olsen
Group Executive Vice President, Corporate
and Country Manager in Norway
Born 1964. Employed in 1998. Joined the Group
Executive Management in 2009.
Education: LL.M.
Board member: Tryg Garantiforsikring A/S, Norsk
Naturskadepool and Tryg Almennyttige Stiftelse.
Member of the committee of shareholders of
Livsforsikringsselskapet Nordea Liv Norge AS.
Number of shares held: 3,305
Change in portfolio in 2014: +598
Trond Bøe Svestad
Group Executive Vice President, Commercial
Born 1967. Employed in 2013. Joined the Group
Executive Management in 2013.
Education: Master of Management, Business/
Commerce and Bachelor of Commerce.
Number of shares held: 780
Change in portfolio in 2014: +587
Rikke Larsen, former Group Executive Vice President, People and Reputation left the Group Executive Management in October 2014.
| Menu – Management’s review
35
Annual report 2014 | Tryg A/S | Corporate Social Responsibility in Tryg
Statutory Corporate Social Responsibility report
is possible to take preventive action and mitigate
Human rights
or avoid damage.
In Tryg, we respect human rights in all aspects of our
work, and we want to improve our preventive efforts
Carbon emissions
to minimise the risk of human rights violations.
Our aim is to reduce Tryg’s environmental impact,
Also, we focus on the well-being of our employees
and each year we measure our carbon emissions
and their right to a healthy and safe workplace. Tryg
and waste volumes. Most of the daily carbon emis-
wants to respect and promote the human rights
sions are associated with the lighting and heating
and labour rights that are relevant to our business
of our offices, as well as car and plane travel.
and activity areas. This applies both internally and
Tryg’s ambition is to create peace of mind and value
suppliers. To provide the best possible solutions,
in relations with our customers, suppliers, inves-
for customers, employees and shareholders. Cor-
we engage in cooperation and partnerships with
Tryg has defined carbon emission targets since 2007,
tors and partners. Our efforts focus primarily on
porate Social Responsibility therefore constitutes an
public authorities and researchers, and together
and initiatives have been implemented to reduce
inclusion, equality and labour rights as well as data
integral part of our core business and plays a key role
we develop contingency plans and solutions which
carbon emissions at our offices in Ballerup and in
protection.
Read more at tryg.com > CSR
in connection with the development and improve-
can ensure that local areas, buildings and pro-
Bergen. At the same time, focus has been on reduc-
> Thematic areas > Well-being > Labour rights.
ment of our products and services as well as the opti-
cesses are geared to withstanding climate change.
ing carbon emissions from travel by plane and car.
misation of our operations and our activities. In Tryg,
Read more at tryg.com > CSR > Thematic
In 2014, carbon emissions were reduced by 48.1%
Inclusion
Corporate Social Responsibility is associated primar-
areas > Climate.
relative to 2007. The target for 2015 is a reduction
Tryg welcomes diversity, and we ensure non-discrim-
ily with our insurance products, our history and our
of 50% relative to 2007. The reduction was primarily
ination through equal treatment of all our employees,
expertise, and our efforts focus on climate, claims
Preventing water and storm damage
due to the reduced consumption of heating oil, as
regardless of gender, age, disabilities, ethnic origin,
prevention, inclusion and employee well-being.
In Tryg, we work actively to prevent and minimise
the office in Bergen made more use of heat pumps
sexual orientation and religion. As a workplace
the risk of damage and not only help once the
instead of oil boilers for heating, which also explains
characterised by diversity and the representation of
Our efforts are based on the principles of the United
damage has happened. Tryg focuses on how cus-
the increase in electricity consumption.
Read
different perspectives, we increase the quality of our
Nations Global Compact and the United Nations
tomers can avoid storm damage, and offers for ex-
more about the climate initiatives at tryg.com
services by having a better understanding of our cus-
Guiding Principles on Business and Human Rights;
ample to check their basements for free. By being
> CSR > Thematic areas > Climate.
tomers and their requirements. In 2014, 4% of Tryg’s
these focus on the possibilities and risks inherent
aware of the risk of flooding due to cloudbursts, it
Danish employees were of non-Western origin; thus
in our business activities with regard to the climate,
human rights, labour rights and anti-corruption.
Tryg’s CSR policy is approved annually by the Super-
visory Board.
Download the policy at tryg.com >
CSR > CSR strategy > CSR policy.
Climate
For Tryg, it is crucial to consistently promote sus-
tainable initiatives which can prevent and address
the issue of climate-related damage which we
experience in our daily work with customers and
| Menu – Management’s review
Carbon emissions
Tonnes
3,000
2,500
2,000
1,500
1,000
500
0
Electricity
Heating oil
Air travel
Motor
2013
2014
The carbon emissions chart covers both Norway and
Denmark; air travel also includes Sweden.
Waste
Kg
200,000
160,000
120,000
80,000
40,000
0
Employee mix
No.
1,800
1,500
1,200
900
600
300
0
Men
Women
Age
<30 yrs
Age
30-49 yrs
Paper &
corrugated
cardboard
IT, batteries
& light
sources
Bio waste
Iron & metal
Residual
Age
<50 yrs
Non-
Western
background a)
Flexi job
a) Non-Western background has been compiled by
Statistics Denmark.
36
Annual report 2014 | Tryg A/S |
we did not meet our target of 4.2%. We will consist-
guarantee confidentiality between counsellor and
and 49 Norwegian customers contacted Tryg ID.
ently focus on increasing the share of employees
customer. ‘Tryg i Livet’ has been welcomed by our
Read more about data protection in Tryg at
of non-Western origin even though this is not
customers, and the initiative will continue in 2015.
tryg.com > CSR > Thematic areas > Prevention
a specific KPI in 2015. To make the most of our
> Data protection.
employees’ linguistic and cultural expertise, in 2014
Active steps to reduce burglaries in Denmark
we launched a new insurance advisory service for
Tryg has introduced a number of initiatives to reduce
Anti-corruption
our private customers called 6 languages. The new
burglaries. As the first insurance company in Den-
To create the best possible conditions for providing
initiative was welcomed both by our employees
mark, Tryg is offering synthetic DNA marking to cus-
peace of mind, it is important that we encourage
and by our customers, of whom 280 made use of
tomers. Through customers marking their valuable
our employees to maintain high moral standards, to
the service.
Read more about inclusion in Tryg
possessions, we are supporting police investigations
conduct themselves in an ethically correct fashion
at tryg.com > CSR > Thematic areas > Inclusion.
of burglaries and ensuring that burglars can be linked
and in compliance with applicable legislation. To
Read more about guidance in six languages at
to the crime scene. In other countries, DNA marking
make it easier for our employees to observe all
tryg.dk > Privat > Kontakt os > Other languages.
has been shown to be an effective deterrent against
relevant rules and instructions, Tryg is continuously
burglary. Tryg has launched an experiment in Sønder-
updating the internal code of conduct which all
Equal rights
borg, with the aim of documenting the preventive
employees must know and adhere to. Through Tryg's
To ensure compliance with section 99b of the Danish
effect of DNA marking in Denmark. The purpose is to
Ethical Hotline (whistleblowing scheme) employees
Financial Statements Act on equal gender represen-
raise awareness of the benefits of DNA marking with
and external stakeholders are able to report, in con-
tation at management level, Tryg is devoting targeted
a view to the long-term crime prevention.
fidentiality, any suspected instances of non-com-
efforts to ensuring gender equality with regard to
pay as well as equal career opportunities. We have
Data protection
pliance with the guidelines or breaches of the law.
The whistleblower scheme was applied four times
an action plan aimed at ensuring the representation
As part of our daily work, we handle sensitive
in 2014.
Read more about the ethical hotline at
of more women in management, and in 2014 the
information from our customers, and it is crucial
tryg.com > Governance > Ethical Hotline.
target of a 2% increase was almost met with 36.5%
that they trust our handling of their personal data.
against 34.6% in 2013. The target figure for 2015
In 2014, we therefore held four workshops about
CSR in sourcing
is 38% for more women in management.
Read
personal data protection in Denmark.
To ensure that Tryg’s values and fundamental
more about women in management at tryg.com
desire to run a responsible business are also
> CSR > CSR strategy > Plans of action.
In the past, Tryg used to send all information contain-
reflected in the way they do business, our suppliers
ing sensitive personal data to our customers by
are required to conduct themselves in a socially
Responsible investments
In Tryg, we screen our investments to make
sure that they do not have a negative impact
on the environment, human rights and anti-
corruption. The screening is carried out by
Nordea Invest and Skagen Fondene, both of
which have signed UN Principles for Responsi-
ble Investment (UN PRI).
Read more about
responsible investments at tryg.com > CSR.
Complaints
Customers who feel discriminated against
in their relations with Tryg can complain.
They can do so by sending an email to
kvalitet@tryg.dk.
Tryg employees who are exposed to discrimi-
nation in their daily work must first contact
their immediate superior. If this does not
solve the problem, employees can contact
their union representative or HR.
Everyday peace of mind
ordinary mail. However, in 2014, Tryg implemented
responsible manner. Among other things, suppli-
Global Reporting Initiative
In 2014, Tryg was the first Danish insurance com-
an email solution which makes it possible to send
ers of automobile services to our customers and
pany to roll out a hotline ‘Tryg i Livet’ counselling
encrypted emails. Hence, Tryg has further improved
services to our business units must report annually
Tryg’s monitoring and reporting of our CSR
service. The purpose is to ensure peace of mind for
our data protection standards, while at the same
on specific initiatives and results in the environ-
efforts are based on the Global Reporting
our Tryg Plus customers in their daily lives by offer-
time ensuring that customers receive our communi-
mental area and with respect to human rights,
Initiative G3.
Read more about the
ing free counselling by psychologists who can help
cations as quickly as possible.
labour rights and anti-corruption. In 2014, 25
reporting system at globalreporting.org.
them tackle crises or even prevent a problem from
caravan workshops reported on their CSR efforts,
Read more about Tryg’s CSR KPIs at
developing into a crisis. Customers have unlim-
Tryg Plus customers are helped in case of theft or
and in 2015 an additional 400 car repairers will be
tryg.com > CSR > CSR strategy > CSR KPIs.
ited access to the service, which is anonymous to
abuse of their personal data. In 2014, 240 Danish
required to report.
| Menu – Management’s review
37
Annual report 2014 | Tryg A/S | Menu – Financial statements 2014
TRYG GROUP
4
Insurance technical interest,
19 Premium provisions
Note Statement by the Supervisory
net of reinsurance
Board and the Executive
5 Claims, net of reinsurance
64
64
19 Claims provisions
20 Pensions and similar liabilities
Management
39
6
Insurance operating costs,
21 Deferred tax
Independent auditor’s reports
Financial highlights
Income statement
40
41
42
dividends etc.
net of reinsurance
64
22 Other provisions
7
Interest income and
23
Amounts owed to credit
Statement of comprehensive
8 Value adjustments
income
43
9 Tax
Statement of financial position 44
10
Profit/loss on discontinued
Statement of changes in equity 45
and divested business
Cash flow statement
1 Risk and capital management
2 Operating segments
2 Geographical segments
46
47
58
60
11
Intangible assets
12 Property, plant and equipment
13
Investment property
69
69
69
69
70
72
73
institutions
24
Debt relating to unsettled
funds transactions and repos
25 Earnings per share
26
Contractual obligations,
collateral and contingent
liabilities
27 Acquisition of subsidiaries
14 Equity investments in associates 73
28 Related parties
2
Technical result, net of
15 Financial assets
reinsurance, by line of business 62
16 Reinsurers’ share
3
Premium income, net of
17 Current tax
reinsurance
64
18 Equity
75
77
77
77
29 Financial highlights
30 Accounting policies
Tryg’s Group consolidated financial statements are prepared
in accordance with IFRS and published in Danish and English.
78
78
79
81
81
81
81
81
82
84
84
85
86
TRYG A/S (PARENT COMPANY)
Income statement – Tryg A/S
(parent company)
95
Statement of financial position
– Tryg A/S (parent company)
96
Statement of changes in equity
(parent company)
Notes (parent company)
REPORTING FOR Q4
Quarterly outline
Geographical
segments
INFORMATION
Other key ratios
Group chart
Glossary
Product overview
Disclaimer
97
98
101
103
104
105
106
107
108
| Menu – Financial statements
Annual report 2014 | Tryg A/S |
38
Statement by the Supervisory Board and the Executive Management
The Supervisory Board and the Executive Manage-
company have been prepared in accordance with
assets, liabilities and financial position at 31
and the parent company, the results for the year
ment have today considered and adopted the
the Danish Financial Business Act. In addition, the
December 2014 and of the results of the Group’s
and of the Group’s and the parent company’s
annual report for 2014 of Tryg A/S and the Tryg
annual report has been presented in accordance
and the parent company’s operations and the cash
financial position in general and describes signifi-
Group.
with additional Danish disclosure requirements for
flows of the Group for the financial year
cant risk and uncertainty factors that may affect
the annual reports of listed financial enterprises.
1 January-31 December 2014.
the Group and the parent company.
The consolidated financial statements have been
prepared in accordance with the International
In our opinion, the accounting policies applied are
Furthermore, in our opinion the Management’s
We recommend that the annual report be adopted
Financial Reporting Standards as adopted by the
appropriate, and the annual report gives a true and
report gives a true and fair view of developments
by the shareholders at the annual general meeting.
EU, and the financial statements of the parent
fair view of the Group’s and the parent company’s
in the activities and financial position of the Group
Ballerup, 28 January 2015
Executive Management
Morten Hübbe
Group CEO
Tor Magne Lønnum
Group CFO
Lars Bonde
Group Executive Vice President and COO
Supervisory Board
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
| Menu – Financial statements
39
Annual report 2014 | Tryg A/S |
Independent auditor’s reports
To the shareholders of Tryg A/S
financial services companies as well as for the
preparation of consolidated and parent financial
Statement on the mangement’s review
Report on the consolidated financial
statements and parent financial
statements
preparation of parent financial statements that give
statements that give a true and fair view in order to
a true and fair view in accordance with the Danish
design audit procedures that are appropriate in the
Pursuant to the Danish Financial Business Act, we
Financial Business Act and Danish disclosure
circumstances, but not for the purpose of express-
have read the mangement’s review. We have not
requirements for listed financial services compa-
ing an opinion on the effectiveness of the entity’s in-
performed any further procedures in addition to
nies, and for such internal control as management
ternal control. An audit also includes evaluating the
the audit of the consolidated and parent financial
We have audited the consolidated and parent fi-
determines is necessary to enable the preparation
appropriateness of accounting policies used and
statements. On this basis, it is our opinion that the
nancial statements of Tryg A/S for the financial year
and fair presentation of consolidated and parent
the reasonableness of accounting estimates made
information provided in the mangement’s review is
1 January to 31 December 2014, page 41-100,
financial statements that are free from material
by management, as well as the overall presentation
consistent with the consolidated and parent finan-
which comprise the income statement, statement
misstatement, whether due to fraud or error.
of the consolidated and parent financial statements.
cial statements.
of comprehensive income, statement of financial
We believe that the audit evidence is sufficient and
position, statement of changes in equity and notes,
Auditor’s responsibility
appropriate to provide a basis for our audit opinion.
including the accounting policies, for the Group as
Our responsibility is to express an opinion on the
Our audit has not resulted in any qualification.
well as for the parent company, and the consolidat-
consolidated and parent financial statements based
ed cash flow statement. The consolidated financial
on our audit. We conducted our audit in accord-
Opinion
Ballerup, 28 January 2015
statements are prepared in accordance with Inter-
ance with International Standards on Auditing
In our opinion, the consolidated financial state-
Deloitte
national Financial Reporting Standards as adopted
and additional requirements under Danish audit
ments give a true and fair view of the Group’s
Statsautoriseret Revisionspartnerselskab
by the EU and the parent financial statements are
regulation. This requires that we comply with ethi-
financial position at 31 December 2014, and of
prepared in accordance with the Danish Financial
cal requirements and plan and perform the audit
the results of its operations and cash flows for the
Business Act. In addition, the consolidated and
to obtain reasonable assurance about whether
financial year 1 January to 31 December 2014 in
parent financial statements are prepared in accord-
the con solidated and parent financial statements
accordance with International Financial Reporting
ance with Danish disclosure requirements for listed
are free from material misstatement. An audit
Standards as adopted by the EU and Danish dis-
financial services companies.
involves performing procedures to obtain audit
closure requirements for listed financial services
Jens Ringbæk
evidence about the amounts and disclosures in
companies. Moreover, in our opinion, the parent
State Authorised Public Accountant
Management’s responsibility for the consolidated
the consolidated and parent financial statements.
financial statements give a true and fair view of the
financial statements and parent financial statements
The procedures selected depend on the auditor’s
parent company’s financial position at 31 December
Management is responsible for the preparation
judgement, including the assessment of the risks
2014, and of the results of its operations for the
of consolidated financial statements that give a
of material misstatements of the consolidated and
financial year 1 January to 31 December 2014 in
true and fair view in accordance with International
parent financial statements, whether due to fraud
accordance with the Danish Financial Business
Financial Reporting Standards as adopted by the
or error. In making those risk assessments, the audi-
Act and Danish disclosure requirements for listed
Lone Møller Olsen
EU and Danish disclosure requirements for listed
tor considers internal control relevant to the entity’s
financial services companies.
State Authorised Public Accountant
| Menu – Financial statements
40
Annual report 2014 | Tryg A/S |
Financial highlights
DKKm
2014
2013
2012
2011
2010
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 (%)
18,652
-12,650
-2,689
19,504
-14,411
-3,008
20,314
-14,675
-3,295
19,948
-15,783
-3,271
18,894
-15,111
-3,136
3,313
-341
60
3,032
360
-90
3,302
-755
2,547
10
2,557
1,131
31,692
1,938
11,119
52,224
67.8
1.8
69.6
14.6
84.2
14.4
83.8
4.8
23.0
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
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
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
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
Solvency ratio (Solvency I – ratio between base capital and weighted assets)
87
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 respect 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 mainly Marine Hull insurance, which was
divested in 2010 and 2014 and the Finnish branch of
Tryg Forsikring, which was sold in 2012.
| Menu – Financial statements
41
Annual report 2014 | Tryg A/S |
Income statement
DKKm
2014
2013
DKKm
2014
2013
Note General insurance
Gross premiums written
Ceded insurance premiums
Change in premium provisions
Change in reinsurers' share of premium provisions
3
Premium income, net of reinsurance
18,672
-1,059
268
-57
17,824
19,820
-1,220
36
24
18,660
Note
14
7
8
7
Investment activities
Income from associates
Income from investment property
Interest income and dividends
Value adjustments
Interest expenses
Administration expenses in connection with investment activities
4
Insurance technical interest, net of reinsurance
60
62
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers' share of claims provisions
5 Claims, net of reinsurance
-13,695
1,361
1,045
-688
-11,977
-14,059
1,034
-352
406
-12,971
Bonus and premium discounts
-288
-352
Acquisition costs
Administration expenses
Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers
6
Insurance operating costs, net of reinsurance
-1,955
-734
-2,689
102
-2,587
-2,227
-781
-3,008
105
-2,903
2
Technical result
3,032
2,496
Total investment return
4
Return on insurance provisions
Total investment return after insurance technical interest
Other income
Other costs
Profit/loss before tax
Tax
9
Profit/loss on continuing business
10
Profit/loss on discontinued and divested business
10
94
949
-95
-115
-69
774
-414
360
81
-171
3,302
-755
2,547
10
6
97
1,029
115
-112
-64
1,071
-483
588
100
-191
2,993
-620
2,373
-4
Profit/loss for the year
2,557
2,369
25
Earnings per share of DKK 25 – continuing business
Diluted earnings per share of DKK 25 – continuing business
Earnings per share of DKK 25
Diluted earnings per share of DKK 25
43.5
43.5
43.7
43.7
39.4
39.3
39.4
39.3
| Menu – Financial statements
42
Annual report 2014 | Tryg A/S |
Statement of comprehensive income
DKKm
Note
Profit/loss for the year
Other comprehensive income
Other comprehensive income which cannot
subsequently be reclassified as profit or loss
Change in equalisation provision and other provisions
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
2014
2,557
26
2
0
-46
12
-6
-178
191
-47
-34
-40
2,517
2013
2,369
0
9
-3
179
-54
131
-326
305
-76
-97
34
2,403
| Menu – Financial statements
43
Annual report 2014 | Tryg A/S |
Statement of financial position
DKKm
Note
11
Assets
Intangible assets
Operating equipment
Owner-occupied property
Assets under construction
12
Total property, plant and equipment
13
Investment property
14
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
15
Total investment assets
Reinsurers' share of premium provisions
Reinsurers' share of claims provisions
19
16
Total reinsurers' share of provisions for insurance contracts
Receivables from policyholders
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Other receivables
15
Total receivables
17 Current tax assets
Cash at bank and in hand
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
2014
2013
DKKm
2014
2013
Note
18
Equity and liabilities
Equity
1
Subordinate loan capital
Premium provisions
19
19 Claims provisions
Provisions for bonuses and premium discounts
Total provisions for insurance contracts
Pensions and similar obligations
20
21 Deferred tax liability
22 Other provisions
Total provisions
Debt relating to direct insurance
Debt relating to reinsurance
Amounts owed to credit institutions
23
24 Debt relating to unsettled funds transactions and repos
15 Derivative financial instruments
17 Current tax liabilities
Other debt
Total debt
Accruals and deferred income
11,119
1,768
5,810
25,272
610
31,692
342
1,022
83
1,447
565
188
116
2,902
799
429
1,153
6,152
46
11,107
1,818
6,212
26,087
640
32,939
791
1,057
73
1,921
447
330
6
2,821
514
409
1,033
5,560
26
Total equity and liabilities
52,224
53,371
1
26
27
28
29
30
Risk and capital management
Contractual obligations, collateral and contingent liabilities
Acquisition of subsidiaries
Related parties
Financial highlights
Accounting policies
984
97
1,153
11
1,261
1,828
225
225
128
3,884
37,175
667
1,318
43,172
45,225
219
1,719
1,938
1,232
1,232
208
222
1,662
0
505
505
337
312
649
758
122
1,304
0
1,426
1,831
215
215
150
3,741
36,971
1,301
692
42,855
44,901
237
2,383
2,620
1,088
1,088
299
1,027
2,414
145
553
698
406
148
554
Total assets
52,224
53,371
| Menu – Financial statements
44
Annual report 2014 | Tryg A/S |
Statement of changes in equity
Reserve for
DKKm
Share Revaluation- exchange rate Equalisation-
reserve
capital
adjustment
reserves
Other
reservesa)
Retained
earnings
Proposed
dividend
Total
Equity at 31 December 2013
1,533
78
49
61
888
6,842
1,656
11,107
2014
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Nullification of own shares
Dividend paid
Dividend own shares
Purchase and sale of own shares
Exercise of share options
Issue of employee shares
Issue of share options and matching shares
Total changes in equity in 2014
Equity at 31 December 2014
Equity at 31 December 2012
2013
Profit/loss for the year
Other comprehensive income
Total comprehensive income
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
Equity at 31 December 2013
0
-41
-41
1,492
1,533
0
0
0
1,533
2
2
-34
-34
60
-15
45
-81
41
-40
847
-34
813
41
59
-1,005
49
45
3
5
1,731
1,731
-1,656
75
2,557
-40
2,517
0
-1,656
59
-1,005
49
45
3
12
6,847
1,731
11,119
2
80
72
6
6
6
78
-34
15
45
106
-40
848
146
61
1,044
6,529
1,594
10,979
-97
-97
0
0
-156
0
-156
-97
49
0
61
-156
888
869
125
994
15
-800
100
4
313
1,656
0
1,656
-1,594
62
2,369
34
2,403
-1,594
15
-800
100
4
128
6,842
1,656
11,107
Proposed dividend per share DKK 29 (DKK 27 in 2013)
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 (59,695,516 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 2,622m (DKK 3,020m in 2013).
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.
a)
Other reserves contains Norwegian Natural
Perils Pool
| Menu – Financial statements
45
Annual report 2014 | Tryg A/S |
Cash flow statement
DKKm
Note
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)
Acquisition of intangble assets
Hedging of currency risk
Investments, continuing business
Total investments
2014
2013
DKKm
2014
2013
Note
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
Total financing
Change in cash and cash equivalents, net
Additions relating to purchase of subsidiaries
Exchange rate adjustment of cash and cash equivalents, 1 January
Change in cash and cash equivalents, gross
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
-956
0
-1,656
110
-2,502
-2,502
-37
14
-25
-48
553
505
-700
316
-1,594
-8
-1,986
-1,986
88
0
-39
49
504
553
18,139
-13,584
229
-2,862
-190
1,732
995
-115
39
-512
-90
2,049
-58
1,991
-14
7
291
-386
630
-17
-228
191
474
474
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
0
305
392
-192
| Menu – Financial statements
46
Annual report 2014 | Tryg A/S |
1 Risk and capital management
Risk management in Tryg
The Supervisory Board defines the company’s risk
appetite through its business model and strategy,
and this is operationalised through the company’s
policies. The company’s risk management forms
the basis for the risk profile being in line with the
specified risk appetite at all times.
Tryg’s risk profile is continuously measured, quanti-
fied and reported to the management and the Super-
visory Board.
Given that the requirements for the Supervisory
Board’s involvement in the company’s capital and risk
management are considerable and ever-growing,
Tryg’s Supervisory Board has decided to set up a
special Risk Committee to address these topics sepa-
rately in the course of the year. The Committee meets
five times a year for a detailed review of various risk
management topics and regularly keeps the entire
Supervisory Board up-to-date on the status.
mented, and day-to-day compliance is verified on a
regular basis. Risk management at the first level of
control is supported by decentralised risk managers
affiliated with the individual areas.
At the second level of control, there is the risk
management function which ensures consistent risk
management across the organisation, among other
things. The risk management function measures and
assesses risks at group level and prepares continuous
reporting to the management and the Supervisory
Board. Among other things, this involves an ongoing
identification and assessment of the most significant
risks in the company. Furthermore, the function pre-
pares specific recommendations in relation to capital
management, reinsurance, interest rate risk identifica-
tion and more. Tryg’s risk management function
is also responsible for determining the company’s
capital requirements and for assessing whether the
calculated solvency requirement is reasonable given
the identified risks.
Tryg’s risk management is organised into three levels
of control. The first level of control is handled in the
business where the company’s policies are imple-
At the second level, there is also Tryg’s committee en-
vironment which deals with and monitors risk topics
of a more principal and interdisciplinary nature.
Line of defence
Supervisory Board
1. Line of defence
2. Line of defence
3. Line of defence
External audit
(cid:127) Operational control
(cid:127) Business controls
(cid:127) Risk management
(cid:127) Compliance
(cid:127) Aktuarial function
(cid:127) Internal audit
Executive Management
| Menu – Financial statements
What risk profile does Tryg want?
- Business model
- Strategy
- Policies
How is this supported?
Tactically
- Policies
- Capital plan
- Contingency plan
Operationally
- Frameworks
- Limitations
- Instructions
- Allocated capital
- Contingency plans
How is the actual risk profile measured?
Tactically
- Risk reports
- Internal controls
- Capital model
- Stress tests
Tryg's risk management environment
Supervisory
Board
• Risk appetite
• Capital
• Strategy
• Crisis
management
Supervisory Board’s
Risk Committee
Risk management environment
Policies
Executive Management
Policies
Risk reporting
Recommen-
dations
Insurance
Risk
Committee
Model
Risk
Committee
Investment
Risk
Committee
Operational
Risk
Committee
Systematic risk
assessment
Reporting
• Contingency
• Control
• Risk
identification
• Risk
management
47
NotesAnnual report 2014 | Tryg A/S | The third level consists of the internal audit which
performs independent assessments of the entire
control environment.
Capital management
Tryg’s capital management is based on the key
business objectives:
•
•
•
A solid capital base, supporting both the
statutory requirements and a continued ‘
A-’ rating from Standard & Poor’s.
Support of a steadily rising nominal
dividend per share, where 60-90% of the net
profit or loss for the yearis paid out in two
instalments.
Return on the average equity of at least 21% after tax.
Viewed in isolation, in order to fulfil the first two ob-
jectives, the company’s capital buffer must be as large
as possible, while the third objective is best achieved
by keeping the capital buffer to a minimum or by
ensuring that the capital base is mostly made up of
subordinate loan capital. The balance between the
different objectives and the resulting capital require-
ment is assessed in the company’s capital plan.
The capital base is continuously measured against the
individual solvency requirement calculated on the basis
of Tryg’s partial internal model, where insurance risks
are modelled using a internal model, while other risks
are described using the Solvency II standard model.
The model calculates Tryg’s capital requirement with
99.5% certainty with a 1-year horizon, which means
that Tryg will be able to fulfil its obligations in 199 out
of 200 years. The partial internal model has been used
for a number of years, and Tryg expects that the model
will be approved by the Danish Financial Supervisory
Authority at the end of 2015 so that the present sol-
vency requirement can be maintained when Solvency II
comes into force on 1 January 2016.
The model reflects all significant risks and takes
(like the Solvency II standard model) into account the
diversification between the different types of risks.
The individual solvency requirement should be kept
within the adequate capital base consisting of the
company’s equity minus intangible assets plus sub-
ordinate loan capital. The balance between equity and
subordinate loan capital will be assessed in the course
of 2015 in connection with the refinancing of the sub-
Major risks
DKKm
10,000
8,000
6,000
4,000
3,222
2,429
287
915
243
2,898
6,560
2,362
2,000
0
Non-life
insurance
Health
insurance
Market risk
Counterpart risk
Operational
risk
Tryg
Garanti
Diversification
Total Solvency
requirement
ordinate loan of EUR 150m. This assessment takes
into account the future Solvency II term ‘own funds’
as well as the temporarily increased access to in-
cluding subordinate loan capital implemented by
the Danish Financial Supervisory Authority from
1 January 2015.
Underwriting risk
Underwriting risk is the risk of the premium charged
in connection with the conclusion of insurance con-
tracts not being sufficient to cover the compensation
that the company is obliged to pay once a claim is
made.
Tryg’s total subordinate debt amounts to
DKK 1,768m, corresponding to 16% of equity at
the end of 2014.
Given Tryg’s strong results, Tryg decided to announce
extraordinary dividend in November 2014 in the form
of a share buyback programme of DKK 1,000m.
The share buyback programme was launched on
2 January 2015.
Company’s own risk assessment ‘ORSA’
(Own Risk and Solvency Assessment)
ORSA is the company’s own risk assessment based
on the Solvency II principles, which implies that Tryg
must assess all material risks that the company is or
may be exposed to. The ORSA report also contains an
assessment of whether the individual solvency re-
quirement is sensibly calculated in relation to Tryg’s
actual risk profile. Moreover, the capital requirement
is also assessed over the company’s strategic plan-
ning period, and Tryg’s provisions and reinsurance
are also subject to assessment.
Tryg’s risk activities are underpinned by continuous
risk management processes, which are dealt with by
the Supervisory Board and the risk committee during
the year, while the ORSA report is an annual summary
document assessing all these processes and present-
ing the total risk picture to Tryg’s Supervisory Board.
Insurance risk
Insurance risk comprises two main types of risks:
underwriting risk and provisioning risk.
Underwriting risk is managed first and foremost
through the company’s insurance policy defined by
the Supervisory Board, and administered through
business procedures, insurance take out guidelines
etc. Underwriting risk is assessed in Tryg’s capital
model, determining the capital impact from various
insurance products.
Reinsurance is used as an important tool to reducing
underwriting risk where a special need for this exists.
In the event of major events involving damage
to buildings and contents, Tryg’s reinsurance pro-
gramme provides cover for up to DKK 5.75bn, which
statistically is sufficient to cover a 250-year event.
Retention for such events is DKK 150m. In the event
of a frequency of natural disasters, Tryg is covered for
up to DKK 600m for all claims above DKK 20m, after
total annual retention of DKK 300m.
Tryg has also taken out reinsurance for the risk of
large claims occurring in sectors with very large sums
insured. Tryg’s largest individual building and contents
risks are covered by up to DKK 1.7bn. Retention for
large claims is DKK 100m, gradually falling to DKK
25m. Single risks exceeding DKK 1.7bn are hedged
individually.
Tryg has combined the minimum cover of other
sectors into a joint cover with retention of DKK 100m
for the first claim and DKK 25m for subsequent
claims. For the individual sectors, individual cover
has subsequently been taken out as needed.
| Menu – Financial statements
48
NotesAnnual report 2014 | Tryg A/S | For Tryg’s subsidiary Tryg Garantiforsikring A/S,
the maximum retention is DKK 30m.
The use of reinsurance creates a natural counterparty
risk. This risk be handled by applying a wide range of rein-
surers with at least an ‘A’ rating and USD 100m in capital.
Provisioning risk
Provisioning risk relates to the risk of Tryg’s insurance
provisions proving to be inadequate. The Supervisory
Board lays down the overall framework for the han-
dling of provisioning risk in the insurance policy, while
the overall risk is measured in the capital model. The
uncertainty associated with the calculation of claims
provisions affects Tryg’s results through the run-off on
provisions.
Long-tail provisions in particular are subject to inter-
est rate and inflation risk. Interest rate risk is hedged
by means of Tryg’s match portfolio which corre-
sponds to the discounted claims provisions. In order
to counter the inflation risk of Danish workers’ com-
pensation claims provisions, Tryg has bought zero
coupon inflation swaps.
Tryg determines the claims provisions via statistical
calculations and individual assessments. At the end of
2014, Tryg’s claims provisions totalled DKK 25,272m
with an average duration of 3.7 years. The duration
expresses the average length of time from the provi-
sion is determined until the compensation is paid and
varies considerably from sector to sector.
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 investment 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, fol-
low-up and risk management of the Group’s interest
rate risk. The swap and bond portfolio is thus adjusted
continuously to minimise the net interest rate risk.
Sensitivity analysis
Insurance risk
DKKm
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 frame-
work defined by the Supervisory Board through the
investment policy. The purpose of the free portfolio is
to achieve the highest possible return relative to risk.
Tryg’s shareholdings constitute the company’s largest
investment risk. At the end of 2014, the equity portfo-
lio accounted for 5.7% of the total investment assets.
This share is expected to be at a similar level in 2015.
Tryg’s property portfolio mainly comprises owner-
occupied and investment properties, the value of
which is adjusted based on the conditions on the
property market through internal valuations backed
by external valuations. At the end of 2014, investment
properties accounted for 4.9%, while owner-occupied
properties accounted for 2.7% of the total investment
assets. Property investments are expected to be at a
similar level in 2015.
Tryg’s does not wish to speculate in foreign currency,
but since Tryg invests and operates its insurance busi-
ness in other currencies than Danish kroner, Tryg is
exposed to currency risk. Tryg is primarily exposed to
Effect of 1% change in:
Combined ratio (1 percentage point)
Claim frequency (1 percentage point)
Average claim
Premium rates
Provisioning risk
1% change in inflation in person-related lines of business
10% error in the assessment of long-tail lines of business
(workers’ compensation, motor liability, liability, accident)
Investment risk
Interest rate market
Effect of 1% increase in interest curve:
Impact on interest-bearing securities
Higher discounting of claims provisions
Net impact of interest rate increase
Impact of Norwegian pension obligation a)
Equity market
15% decline in equity market
Impact 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
Net impact of exchange rate decline
Technical result per year:
Impact of 15% change in NOK and SEK exchange rates relative to DKK
2014
2013
+/- 184
+/- 1,369
+/- 122
+/- 190
+/- 192
+/- 1,437
+/- 139
+/- 190
+/- 715
+/- 684
+/- 1,752
+/- 1,753
-880
793
-87
87
-393
-72
-488
-835
791
-44
-849
755
-94
282
-398
-35
-499
-1,031
985
-46
+/- 230
+/- 195
a) Additional sensitivity information can be found in Note 20 ‘Pensions and similar obligations’
| Menu – Financial statements
49
NotesAnnual report 2014 | Tryg A/S |
Emerging risk
Emerging risk covers new risks or known risks, with
changing characteristics.
The management of this type of risk will be handled in
the individual business areas, which monitor the mar-
ket and adapt the products as the conditions change.
In the event of a change in insurance terms, it is en-
sured that Tryg’s reinsurance cover is consistent with
the new conditions.
One example of this is drone insurance, where Tryg in
2014 decided to insure commercial purpose drones
of up to 25 kg. In this context, there has been an ongo-
ing dialogue with Tryg’s reinsurers to ensure that Tryg
does not accept risks without having considered and
identified the specific risk at the desired level.
fluctuations in the other Scandinavian currencies due
to its ongoing insurance activities. Premiums earned
and compensation paid in other currencies create a
natural currency hedge, for which reason other risk
mitigation measures are not required in this area. How-
ever, 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 ex-
posed to credit, counterparty and concentration risk.
These risks primarily relate to exposures 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
policy. For an insurance company like Tryg, liquidity
risk is practically non-existent, as premium payments
fall due before claims payments.
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 an adequate control
environment for its operations. In practice, this work
is organised by means of procedures, controls and
guidelines covering the various aspects of the Group’s
operations. Tryg has also set up a security and investi-
gation unit to handle internal fraud, IT security, physi-
cal security and contingency plans.
The Supervisory Board defines the overall framework
for managing operational risk in Tryg’s IT security
policy and operational risk policy. These risks are
controlled via the Operational Risk Committee.
Tryg has set up a crisis management structure to deal
with the eventuality that Tryg is hit by major crises.
This comprises a Crisis Management Team at Group
level, national contingency teams at country level and
finally business contingency in the individual areas.
Tryg has prepared contingency plans to address the
most important areas. In addition, comprehensive IT
contingency plans have been established, primarily
focusing on the business-critical systems.
Other risks
Strategic risk
The strategic risk is the risk of loss as a result of Tryg’s
chosen strategic position. The strategic position cov-
ers both business transactions, IT strategy, choice of
business partners and changed market conditions.
Tryg’s strategic position is determined by Tryg’s
Supervisory Board in close collaboration with the
Group Executive Management.
Before determining the strategic position, the strate-
gic decisions are subjected to a risk assessment,
explaining the risk of the chosen strategy to Tryg’s
Supervisory Board and Group Executive Management.
Compliance risk
Compliance risk is the risk of loss as a result of lack
of compliance with rules and regulations.
The handling of compliance risk is coordinated cen-
trally via the Group’s legal department, which, among
other things, sits on industry committees in connec-
tion with legislative monitoring, ensures implementa-
tion in Tryg through business procedures and partici-
pates in the ongoing training of the organisation.
Certain parts of the operationalisation take place via
the decentralised risk manager structure, ensuring
additional anchoring in the individual business areas.
| Menu – Financial statements
50
NotesAnnual report 2014 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Gross
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
10,443
10,468
10,334
10,224
9,962
10,035
9,814
9,702
9,666
9,625
9,393
9,393
-9,174
219
-10
Estimated accumulated 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 2003
and prior years
Other
Gross claims provisions,
end of year
11,172
11,065
10,916
10,539
10,666
10,609
10,514
10,526
10,499
10,393
10,393
-9,898
495
-48
10,954
11,214
10,747
10,957
10,893
10,884
10,862
10,825
10,641
11,879
12,464
13,017
12,994
12,993
12,898
12,771
12,764
12,451
13,775
13,645
13,657
13,616
13,523
13,491
13,811
14,456
14,475
14,264
14,145
14,044
16,056
16,154
16,103
15,982
15,892
16,386
16,783
16,776
16,726
13,905
13,877
13,814
13,754
14,065
13,074
10,641
-9,939
12,764
-11,764
13,491
-11,900
14,044
-12,489
15,892
-13,801
16,726
-14,331
13,814
-10,964
14,065
-10,249
13,074
-6,214
144,298
-120,724
702
-68
999
-89
1,592
-130
1,555
-123
2,091
-133
2,395
-129
2,850
-138
3,816
-144
6,860
-156
23,574
-1,167
2,194
671
25,272
| Menu – Financial statements
51
NotesAnnual report 2014 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Ceded business
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
775
790
828
827
813
823
823
812
810
814
814
814
-757
56
-3
Estimated accumulated 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 2003
and prior years
Other
Reinsurers' share of claims
provisions, end of year
924
819
824
819
844
840
825
825
817
829
829
-797
32
-1
278
278
265
296
297
292
290
292
290
290
-282
8
0
503
469
482
488
507
478
507
498
498
-484
14
0
163
227
193
183
183
170
176
176
-162
14
-1
287
357
335
290
293
298
298
-288
10
0
674
751
745
721
731
731
-562
169
-2
1,465
2,171
2,292
2,334
2,334
-2,171
163
-3
240
271
311
311
-269
42
-1
556
969
262
969
-570
399
-4
262
-91
170
-2
7,512
-6,434
1,078
-18
212
447
1,719
| Menu – Financial statements
52
NotesAnnual report 2014 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Net of reinsurance
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
10,248
10,246
10,092
9,720
9,822
9,770
9,689
9,702
9,682
9,564
9,564
-9,101
463
-47
Estimated accumulated 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
9,668
9,678
9,506
9,397
9,149
9,212
8,991
8,890
8,856
8,811
8,580
8,580
Cumulative payments to date -8,417
163
-8
Provisions before discounting,
end of year
Discounting
Reserves from 2003
and prior years
Other
Claims provisions,
net of reinsurance,
end of year
10,676
10,936
10,483
10,661
10,596
10,592
10,571
10,533
10,351
11,377
11,995
12,535
12,506
12,486
12,420
12,264
12,266
12,288
13,548
13,452
13,474
13,433
13,354
13,316
13,524
14,099
14,140
13,973
13,852
13,745
15,381
15,403
15,359
15,260
15,161
14,921
14,612
14,483
14,392
13,666
13,606
13,503
13,198
13,096
12,813
10,351
-9,657
12,266
-11,280
13,316
-11,737
13,745
-12,201
15,161
-13,239
14,392
-12,160
13,503
-10,696
694
-68
986
-89
1,578
-129
1,545
-123
1,922
-130
2,232
-126
2,808
-137
13,096
-9,679
3,417
-140
12,813
-6,124
136,786
-114,291
6,690
-153
22,497
-1,149
1,981
224
23,553
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 2014 to prevent the impact of exchange rate fluctuations.
| Menu – Financial statements
53
NotesAnnual report 2014 | Tryg A/S |
Claims provisions (continued)
DKKm
2014
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2013
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
Expected cash flow, not discounted
0-1 year
1-2 years
2-3 years
> 3 years
Other
Total
5,337
-156
9,041
-529
13,693
5,765
-219
9,701
-844
14,403
130
0
4,282
-311
4,101
136
0
4,513
-255
4,394
124
0
2,716
-199
2,641
131
0
2,897
-258
2,770
133
0
9,945
-263
9,815
144
0
10,489
-496
10,137
86
-22
678
-451
291
36
-18
816
-603
231
5,810
-178
26,662
-1,753
30,541
6,212
-237
28,416
-2,456
31,935
Other comprises Tryg Garantiforsikring A/S and from 2014 premium provisions in Securator A/S.
| Menu – Financial statements
54
NotesAnnual report 2014 | Tryg A/S |
DKKm
Investment risk
Bond portfolio including interest derivatives
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
2014
413
207
674
1,096
563
2,953
128
2014
2013
Impact of exchange rate fluctuations in SEK and NOK on technical result
16,622
13,925
4,129
2,836
37,512
2.2
2014
2013
Change
Gross premium income
Gross claims
Total insurance operating costs
18,652
-12,650
-2,689
3,313
Profit/loss on gross business
Profit/loss on ceded business
-341
Insurance technical interest, net of reinsurance 60
Technical result
3,032
19,504
-14,411
-3,008
2,085
349
62
2,496
-852
1,761
319
1,228
-690
-2
536
2013
2012
Change
Gross premium income
Gross claims
Total insurance operating costs
19,504
-14,411
-3,008
2,085
Profit/loss on gross business
Profit/loss on ceded business
349
Insurance technical interest, net of reinsurance 62
Technical result
2,496
20,314
-14,675
-3,295
2,344
86
62
2,492
-810
264
287
-259
263
0
4
Currency
effect
Change excl.
currency
effect
-642
437
86
-119
10
-3
-112
-210
1,324
233
1,347
-700
1
648
Currency
effect
Change excl.
currency
effect
-253
161
38
-54
11
-1
-44
-557
103
249
-205
252
1
48
18,748
14,000
3,188
2,403
38,339
2.3
2013
393
141
793
892
591
2,810
150
The share portfolio includes exposure from share derivaties of DKK 477m (DKK 325m in 2013)
Unlisted equity investments are based on an estimated market price.
Exposure to exchange rate risk
2014
2013
Assets and
debt
Hedge
Exposure
Assets and
debt
Hedge
Exposure
1,952
530
79
3,701
1,076
541
-1,918
706
-69
-3,507
-998
-474
34
1,236
10
194
78
67
1,619
1,387
524
81
3,226
1,306
565
-1,335
664
-91
-2,981
-1,280
-379
52
1,188
-10
245
26
186
1,707
USD
EUR
GBP
NOK
SEK
Other
Total
| Menu – Financial statements
55
NotesAnnual report 2014 | Tryg A/S |
Impact of exchange rate fluctuations in SEK and NOK on the statement of financial position
Credit risk
DKKm
2014
2013
Change
Currency
effect
Change excl.
currency
effect
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
984
1,261
1,828
225
43,172
1,938
1,662
505
649
758
1,426
1,831
215
42,855
2,620
2,414
698
554
226
-165
-3
10
317
-682
-752
-193
95
-30
-36
-25
-1
-1,391
-62
-65
-19
-9
Total assets
52,224
53,371
-1,147
-1,638
Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Total provisions
Other debt
Accruals and deferred income
Total equity and liabilities
11,119
1,768
31,692
1,447
6,152
46
52,224
11,107
1,818
32,939
1,921
5,560
26
53,371
12
-50
-1,247
-474
592
20
-1,147
13
-50
-1,062
-84
-453
-2
-1,638
256
-129
22
11
1,708
-620
-687
-174
104
491
-1
0
-185
-390
1,045
22
491
| Menu – Financial statements
Bond portfolio by ratings
AAA to A
Other
Not rated
Total
Reinsurance balances
AAA to A
Other
Not rated
Total
2014
DKKm
36,930
244
1
37,175
1,447
1
147
1,595
%
99.3
0.7
-
2013
DKKm
36,456
514
1
%
98.6
1.4
0.0
100.0
36,971
100.0
90.7
0.1
9.2
100.0
2,268
1
140
2,409
Liquidity risk
Maturity of the Group’s financial obligations including interest
2014
0-1 years
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
2013
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
87
116
2,902
428
2,335
5,868
89
6
2,821
219
2,219
5,354
243
0
0
225
0
468
356
0
0
199
0
555
2,209
0
0
189
0
2,398
2,558
0
0
125
0
2,683
Interest on loans for a perpetual term has been recognised for the first fifteen years.
94.2
0.0
5.8
100.0
Total
2,539
116
2,902
842
2,335
8,734
3,003
6
2,821
543
2,219
8,592
56
NotesAnnual report 2014 | Tryg A/S |
Notes
Subordinate loan capital
The fair value of the loan at the statement of financial position date
The fair value of the loan at the statment 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
Bond loan
EUR 150m
Bond loan
NOK 800m
2014
1,106
99
3
50
4.5%
2013
1,127
101
5
50
4.1%
2014
714
108
4
40
3.6%
2013
741
105
5
33
4.8%
Loan terms:
Lender
Principal
Issue price
Issue date
Maturity year
Loan may be called by lender as from
Repayment profile
Interest structure
Listed bonds
EUR 150m
99.017
December 2005
2025
2015
Interest-only
4.5% (until 2015)
2.1% above EURIBOR 3M (from 2015)
Listed bonds
NOK 800m
100
March 2013
Perpetual
2023
Interest-only
3.75 % above NIBOR 3M (until 2023)
4.75 % above NIBOR 3M (from 2023)
The share of capital included in the calculation of the
capital base total DKK 1,496m (DKK 1,551m in
2013).
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 credi-
tors have no option to call the loans before maturity
or otherwise terminate the loan agreements. The
loans are automatically accelerated upon the liquida-
tion 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.
| Menu – Financial statements
57
Annual report 2014 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other
Group
2
Operating segments
2014
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Other items
Profit/loss
9,051
-6,129
-1,311
-23
24
1,612
Run-off gains/losses, net of reinsurance
357
Intangible assets
Equity investments in associates
Reinsurers' share of premium provisions
Reinsurers' share of claims provisions
Other assets
Total assets
Premium provisions
Claims provisions
Provisions for bonuses and premium discounts
Other liabilities
Total liabilities
10
154
2,423
6,062
488
4,190
-2,673
-664
8
14
875
310
37
12
346
1,425
6,742
51
4,033
-2,872
-446
-304
16
427
421
197
1,181
1,163
10,754
62
1,399
-998
-268
-21
6
118
43
600
0
38
799
1,714
9
-21
22
0
-1
0
0
0
347
225
0
0
49,077
0
0
0
9,413
18,652
-12,650
-2,689
-341
60
3,032
-475
2,557
1,131
984
225
219
1,719
49,077
52,224
5,810
25,272
610
9,413
41,105
Description of segments
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.
| Menu – Financial statements
58
Annual report 2014 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other
Group
2
Operating segments
2013
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Other items
Profit/loss
9,366
-6,596
-1,418
-43
26
1,335
4,411
-2,978
-820
29
12
654
4,158
-3,661
-490
338
13
358
Run-off gains/losses, net of reinsurance
310
265
375
Intangible assets
Equity investments in associates
Reinsurers' share of premium provisions
Reinsurers' share of claims provisions
Other assets
Total assets
Premium provisions
Claims provisions
Provisions for bonuses and premium discounts
Other liabilities
Total liabilities
8
265
2,727
6,377
507
9
404
1,281
6,462
29
219
1,641
1,374
11,491
94
1,587
-1,178
-280
9
11
149
20
463
1
73
830
1,757
10
-18
2
0
16
0
0
0
295
215
0
0
49,778
0
0
0
9,325
19,504
-14,411
-3,008
349
62
2,496
-127
2,369
970
758
215
237
2,383
49,778
53,371
6,212
26,087
640
9,325
42,264
| Menu – Financial statements
59
Annual report 2014 | Tryg A/S |
Notes
DKKm
2
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
2014
2013
2012
2011
2010
a)
Includes Danish general insurance and
Finnish guarantee insurance.
9,361
1,510
564
66.9
2.1
69.0
15.1
84.1
9,534
1,202
566
79.5
-7.0
72.5
15.0
87.5
9,910
1,441
571
71.1
-0.2
70.9
14.5
85.4
10,019
1,033
770
83.3
-8.1
75.2
15.1
90.3
9,648
195
615
81.6
0.7
82.3
16.2
98.5
Number of full-time employees 31 December
2,007
2,046
2,187
2,315
2,349
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
7,337
1,478
501
66.5
1.4
67.9
12.5
80.4
7,819
1,258
387
65.1
4.1
69.2
15.3
84.5
8,239
1,017
465
72.4
-1.0
71.4
16.8
88.2
7,916
598
182
73.2
3.2
76.4
17.0
93.4
7,490
389
177
76.7
3.1
79.8
15.7
95.5
Number of full-time employees 31 December
1,167
1,199
1,282
1,338
1,338
| Menu – Financial statements
60
Annual report 2014 | Tryg A/S |
Notes
DKKm
2
Geographical segments
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
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
2014
2013
2012
2011
2010
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.
1,975
44
66
77.6
2.2
79.8
18.4
98.2
425
-21
0
2,169
36
17
80.6
0.7
81.3
17.6
98.9
458
-18
0
2,183
131
-21
75.3
1.5
76.8
18.6
95.4
444
-18
-97
2,050
-59
-7
82.0
2.6
84.6
20.3
104.9
423
-37
0
1,769
-124
32
84.6
0.8
85.4
22.4
107.8
414
-13
0
18,652
19,504
20,314
19,948
18,894
3,032
360
-90
3,302
1,131
67.8
1.8
69.6
14.6
84.2
2,496
588
-91
2,993
970
73.9
-1.8
72.1
15.6
87.7
2,492
585
-60
3,017
1,015
72.2
-0.4
71.8
16.4
88.2
3,913
189
1,572
61
-30
1,603
944
79.1
-2.5
76.6
16.6
93.2
4,076
242
460
550
-4
1,006
824
80.0
1.6
81.6
16.7
98.3
4,101
191
Number of full-time employees, continuing business at 31 Dec.
Number of full-time employees, discontinued
and divested business at 31 December
3,599
3,703
0
0
| Menu – Financial statements
61
Annual report 2014 | Tryg A/S |
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2014
1,692
1,663
Gross premium income
- 1,212
Gross claims
- 224
Gross operating expenses
Profit/loss on ceded business
- 7
Insurance technical interest, net of reinsurance 5
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
225
72.9
86.8
4.5%
33,560
37,228
Accident and
health
Health care
Worker’s
compensation
Motor TPL
Motor comprehensive
insurance
Marine, aviation and
cargo insurance
2013
1,798
1,740
- 1,282
- 219
- 3
4
240
73.7
86.4
4.4%
36,905
36,480
2014
313
314
- 223
- 37
- 1
1
54
71.0
83.1
2013
324
326
- 209
- 29
0
1
89
64.1
73.0
2014
951
970
- 155
- 108
- 8
3
702
16.0
27.9
2013
1,039
1,007
- 394
- 128
- 36
- 6
443
39.1
55.4
128.3%
4,334
50,173
108.8%
4,918
45,694
17.4%
79,102
9,463
16.8%
89,638
9,209
2014
2013
2014
2013
2,098
2,134
- 1,556
- 337
- 51
7
197
72.9
91.1
5.6%
22,248
72,195
2,322
2,298
- 1,728
- 403
- 36
7
138
75.2
94.3
5.7%
24,059
73,973
3,747
3,715
- 2,295
- 555
16
11
892
61.8
76.3
3,986
3,884
- 2,532
- 602
- 2
14
762
65.2
80.7
2014
353
320
- 256
- 39
21
1
47
80.0
85.6
2013
359
344
- 167
- 39
- 91
1
48
48.5
86.3
18.1%
10,376
224,791
19.4%
10,644
238,955
19.8%
111,361
2,470
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
2013
2014
2013
2014
2013
2014
2013
Gross premiums written
2014
4,453
4,492
Gross premium income
- 3,139
Gross claims
- 671
Gross operating expenses
Profit/loss on ceded business
22
Insurance technical interest, net of reinsurance 12
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
4,739
4,693
- 3,405
- 794
- 21
18
491
72.6
89.9
716
69.9
84.3
7.6%
9,615
333,943
9.0%
10,508
348,296
2,556
2,535
- 1,957
- 376
- 113
7
96
77.2
96.5
15.8%
62,035
29,686
2,651
2,632
- 1,933
- 419
- 126
10
164
73.4
94.1
23.1%
56,519
38,033
62
65
- 63
- 12
0
0
- 10
66
79
- 52
- 8
0
0
19
96.9
115.4
9.2%
20,263
4,255
65.8
75.9
8.1%
25,531
4,349
985
979
- 917
- 148
- 10
3
- 93
93.7
109.8
11.3%
81,763
10,454
986
978
- 848
- 135
50
3
48
86.7
95.4
2014
338
327
16
- 45
- 188
1
111
-4.9
66.4
2013
336
326
- 888
- 47
629
2
22
272.4
93.9
2014
573
568
- 450
- 79
- 2
2
39
79.2
93.5
2013
569
571
- 425
- 80
- 1
2
67
74.4
88.6
11.6%
59,246
10,566
0.1%
1,068,663
83
0.3%
6,994,362
127
19.4%
5,673
79,007
14.0%
8,265
54,848
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.
a)
b) Average claims are total claims before run-off in the year relative to the number of claims in the year.
| Menu – Financial statements
62
NotesAnnual report 2014 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2014
75
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
84
- 14
- 15
- 20
1
Technical result
Gross claims ratio
Combined ratio
Average claims DKK b)
Total claims
36
16.7
58.3
59,818
220
Other
insurance
Total exclusive of
Norwegian Group Life
Norwegian Group Life
one-year policies
2013
2014
2013
18,196
19,276
18,166
- 12,221
- 2,646
- 341
54
18,980
- 13,887
- 2,977
351
56
3,012
2,523
67.3
83.7
73.2
87.2
101
102
- 24
- 74
- 12
0
- 8
23.5
107.8
63,990
210
2014
476
486
- 429
- 43
0
6
20
88.3
97.1
2013
544
524
- 524
- 31
- 2
6
- 27
100.0
106.3
Total
2014
2013
18,672
19,820
18,652
- 12,650
- 2,689
- 341
60
19,504
- 14,411
- 3,008
349
62
3,032
2,496
67.8
84.2
73.9
87.7
| Menu – Financial statements
63
Annual report 2014 | Tryg A/S |
2014
2013
DKKm
2014
2013
18,872
67
18,939
1
18,940
-1,067
-49
17,824
19,740
83
19,823
33
19,856
-1,161
-35
18,660
Ceded
-719
-39
-403
-1,161
6
Insurance operating costs, net of reinsurance
Commissions regarding direct insurance contracts
Other acquisition costs
Total acquisition costs
Administration expenses
Insurance operating costs, gross
Commission from reinsurers
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
-395
-1,560
-1,955
-734
-2,689
102
-2,587
-11
-11
-3
-1
-7
-11
-379
-1,848
-2,227
-781
-3,008
105
-2,903
-13
-13
-6
-1
-6
-13
-11
Expenses have been incurred for the Group´s Internal Audit Department.
-10
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 pro-
perty based on a calculated market rent of DKK 38m. (DKK 41m in 2013).
DKKm
3
Premium income, net of reinsurance
Direct insurance
Indirect insurance
Unexpired risk provision
Ceded direct insurance
Ceded indirect insurance
Direct insurance, by location of risk
2014
2013
Denmark
Other EU countries
Other countries
Gross
9,488
1,943
7,442
Ceded
-689
-30
-348
Gross
9,709
2,162
7,902
18,873
-1,067
19,773
DKKm
4
Insurance technical interest, net of reinsurance
Return on insurance provisions
Discounting transferred from claims provisions
5
Claims, net of reinsurance
Claims
Run-off previous years, gross
Reinsurance cover received
Run-off previous years, reinsurers' share
2014
2013
414
-354
60
-13,376
726
-12,650
268
405
-11,977
483
-421
62
-15,273
862
-14,411
1,332
108
-12,971
| Menu – Financial statements
64
NotesAnnual report 2014 | Tryg A/S |
DKKm
6
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 26m (DKK 30m in 2013)
Insurance operating costs and claims include the following
staff expenses:
Salaries and wages
Commision
Allocated share options and matching shares
Pension plans
Other social security costs
Payroll tax
2014
2013
-395
-1,463
-213
-459
-272
-108
221
-2,689
-2,098
-7
-3
143
-5
-351
-2,321
-379
-1,802
-224
-411
-237
-110
155
-3,008
-2,122
-8
-4
-362
-5
-355
-2,856
Remuneration for the Supervisory Board and Executive Management
is disclosed in note 28 'Related parties'.
Average number of full-time employees during the year
(continuing business)
3,639
3,800
| Menu – Financial statements
65
NotesAnnual report 2014 | Tryg A/S |
Notes
DKKm
6
Share option programmes
Spec. of outstanding options:
TOTAL NUMBERS
FAIR VALUE
2014
Group Executive
Management
Other
senior
employees
Other
employees
Total
Per option Total value
at time of at time of
allocation allocation
DKKm
DKK
Per option
at 31 Dec.
DKK
Total
value at
31 Dec.
DKKm
Allocation 2009-2011
Allocated in 2009-2011, 1 January
Exercised
Expired
Outstanding options from 2009-2011
49,041
-26,351
0
147,990
-119,818
-1,600
32,852
-26,084
-2,650
229,883
-172,253
-4,250
94/75/72
94/75/72
94/75/72
allocation 31 Dec. 2014
22,690
26,572
4,118
53,380
Number of options exercisable
31 Dec. 2014
22,690
26,572
4,118
53,380
2013
Allocation 2008-2011
Allocated in 2008-2011, 1 January
Exercised
Cancelled
Expired
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
Outstanding options from 2008-2011
allocation 31 Dec. 2013
49,041
147,990
32,852
229,883
Number of options exercisable
31 Dec. 2013
40,756
53,727
9,046
103,529
273/262
273/262
273/262
238/226/238
238/226/238
238/226/238
238/226/238
18
-13
0
5
42
-23
-1
-1
18
50
-36
0
14
99
-43
-2
0
54
Tryg did not allocate share options in 2014.
At 31 December 2014, the share option plan com-
prised 53.380 share options (229.883 share options
at 31 December 2013). 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 0,1 % of the share capital in
Tryg A/S if all share options are exercised.
In 2014, the fair value of share options recognised in
the consolidated income statement amounted to
DKK 0m (DKK 2m in 2013). At 31 December 2014, a
total amount of DKK 78m was recognised for share
option programmes issued in 2006-2011. Fair values
at the time of allocation are based on the Black &
Scholes option pricing formula.
There are no resigned Group Executive Managers
with outstanding options at 31 December 2014. 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 calcu-
lation 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.
| Menu – Financial statements
66
Annual report 2014 | Tryg A/S |
Notes
DKKm
6
Share option programmes (continued)
Spec. of outstanding options:
Year of allocation
Years of exercise
1 Jan. 2014
Allocation
Exercised
Cancelled
Expired
31 Dec. 2014
2009
2010
2011
2012-2014
2013-2015
2014-2016
Outstanding options 31 December 2014
40,908
62,621
126,354
229,883
0
0
0
0
-36,658
-18,577
-117,018
-172,253
0
0
0
0
-4,250
0
0
-4,250
0
44,044
9,336
53,380
The assumptions by calculating the marketvalue at time of allocation
Year of allocation
Years of exercise
2009
2010
2011
2012-2014
2013-2015
2014-2016
Average share
price at time
of allocation
DKK
313.51
320.04
295.83
Expected
Volatility
37.70%
29.20%
30.00%
Expected
maturity
Risk-free
interest rate
4 years
4 years
4 years
2.80%
2.70%
3.00%
Average term Average exercise
share price
31 Dec. 2014
to maturity
31 Dec. 2014
0.00
0.08
0.55
0.00
273.02
261.90
| Menu – Financial statements
67
Annual report 2014 | Tryg A/S |
Notes
DKKm
6 Matching shares
TOTAL NUMBERS
FAIR VALUE
Group Executive
Management
Other senior
employees
Average per
matching share
at grant date
DKK
Total
Total value
Average per
at time of matching share
at 31 Dec.
allocation
DKK
DKKm
Total value
at 31 Dec.
DKKm
2014
Allocated in 2014
3,471
6,011
9,482
Matching shares tildelt
2014 pr. 31.12.14
3,471
6,011
9,482
Allocated in 2011-2013
14,855
Cancelled
0
12,368
-2,644
27,223
-2,644
Matching shares allocated in
2011-2013 at 31.12.14
14,855
9,724
24,579
2013
Allocated in 2011-2013
14,855
Cancelled
0
12,368
-1,993
27,223
-1,993
Matching shares allocated in
2011-2013 at 31.12.13
14,855
10,375
25,230
515
515
339
339
339
339
339
339
5
5
9
0
9
9
0
9
689
689
689
689
689
525
525
525
7
7
19
-2
17
14
-1
13
In 2011-2014, Tryg entered into an agreement on
matching shares for the Executive Management and
selected other senior employees as a consequence of
the Group’s remuneration policy. The Executive Man-
agement 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
2014, the reported fair value of matching shares for
the Group amounted to DKK 3m (DKK 2m in 2013).
At 31 December 2014, a total amount of DKK 7m was
recognised for matching shares.
Bonus programmme
In 2014 Tryg has adopted a bonus program based on
share-based compensation and awards made in cash.
The plan is designed to reward employees for their
contribution to the performance of the Group and has
conditions related to the financial performance. Each
employee has the opportunity to decide on one of the
two compensation elements. The recognition of the
bonus program in 2014 constituting DKK 71 m.
| Menu – Financial statements
68
Annual report 2014 | Tryg A/S |
DKKm
7
Interest and dividends
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
8
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
2014
2013
DKKm
2014
2013
9
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
Tax adjustment, previous years
Adjustment of non-taxable income and costs
Change in valuation of tax assets
Change in tax rate
10
Profit/loss on discontinued and divested business
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Insurance technical interest, net of reinsurance
Technical result
Other income and costs
Profit/loss before tax
Tax
Profit/loss on discontinued and divested business
39
8
893
9
949
-90
-25
-115
834
-18
354
17
-129
596
2
822
23
-106
-741
-93
-917
-95
19
18
984
8
1,029
-89
-23
-112
917
-42
578
30
-250
-300
-5
11
-17
-76
298
-101
104
115
-809
-58
-8
140
-24
6
-2
-755
%
24.5
1.5
0.5
-4.0
1.0
-0.5
23.0
-3
31
-14
14
0
14
0
14
-4
10
-749
-58
-2
152
-20
58
-1
-620
%
25.0
2.0
0.0
-5.0
1.0
-2.0
21.0
202
-149
-55
-2
1
-1
1
0
-4
-4
Exchange rate adjustments concerning financial assets or liabilities which cannot be stated at fair
value total DKK -179m (DKK -146m in 2013)
| Menu – Financial statements
69
NotesAnnual report 2014 | Tryg A/S |
DKKm
11
Intangible assets
Trademarks
and customer
relations
Goodwill
Assets
under con-
Software a)
struction a)
2014
Cost
Cost at 1 January
Exchange rate adjustments
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
Amortisation for the year
Reversed amortisation
Amortisation and write-downs
at 31 December
381
-23
0
188
0
546
0
0
-4
0
-4
171
-11
0
40
0
936
-14
86
28
-8
200
1,028
-89
5
-20
0
-819
12
-82
9
270
-1
-86
107
0
290
-92
0
0
0
Total
1,758
-49
0
363
-8
2,064
-1,000
17
-106
9
-104
-880
-92
-1,080
DKKm
11
Intangible assets
Trademarks
and customer
relations
Goodwill
2013
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from asset
under construction
Additions for the year
Cost at 31 December
397
-16
0
0
381
Amortisation and write-downs
Amortisation and write-downs
at 1 January
Exchange rate adjustments
Amortisation for the year
Impairment losses and write-downs
for the year
Amortisation and write-downs
at 31 December
0
0
0
0
0
178
-7
0
0
171
-73
3
-19
0
-89
Assets
under con-
Software a)
struction a)
869
-26
77
16
936
-747
22
-81
-13
227
-1
-77
121
270
-92
0
0
0
Total
1,671
-50
0
137
1,758
-912
25
-100
-13
-819
-92
-1,000
Carrying amount at 31 December
542
96
148
198
984
Carrying amount at 31 December
381
82
117
178
758
a) Hereof developed in-house DKK 245m (DKK 245m at 31 December 2013)
| Menu – Financial statements
70
NotesAnnual report 2014 | Tryg A/S |
11 Intangible assets (continued)
11 Intangible assets (continued)
Impairment test
In 2014, Tryg acquired Securator A/S, Optimal Djurförsäkring i Norr AB and Codan's agricultural portfolio.
The insurance activities were incorporated into the Tryg Group's business structure.
Goodwill
At 31 December 2014, 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 Moderna and Securator,
respectively.
2014
Moderna
Securator
2013
Moderna
Assumed annual Assumed annual
groeth 0-10 years growth > 10 years
Required return
before tax
2.0%
3,0-36,0%
1.0%
3.0%
12.7%
10.8%
Assumed annual Assumed annual
groeth 0-10 years growth > 10 years
Required return
before tax
2.0%
0.0%
12.5%
Trademarks and customer relations
As at 31 December 2014, management performed a test of the carrying amounts of trademarks and
customer relations as an integral part of the goodwill test.
The impairment test of the acquired agricultural portfolio is based on renewal and retention rates, which are
on the expected level. The test did not indicate any impairment.
Software and assets under construction
As at 31 December 2014, 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 0m (DKK 13m in 2013).
Assumptions for impairment test:
The Value-in-use method is used.
Moderna
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, excluding Modern Re S.A., were merged into Tryg For-
sikring A/S as Moderna Forsäkringar, a branch of Tryg Forsikring A/S. Modern Re S.A. was discontinued in 2011.
The cash flows appearing from the latest budgets approved by management for the next 3 financial years a
re used when calculating the value in use of Moderna. The cash flows in the latest budget period have been
extrapolated for financial years after the budget periods (terminal period) and adjusted for expected growth
rates determined on the basis of expectations for the general economic 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 eq-
uity of DKK 0.5bn and does not indicate any impairment.
Securator
The test for Securator A/S is based on the valuation at the time of acquisition due to the short ownership
period and the lack of indications of impairment since the acquisition.
The cash flows appearing from the latest budgets approved by management for the next 3 financial years
are used when calculating the value in use of Securator. The cash flows in the latest budget period have been
extrapolated for financial years after the budget periods (terminal period) and adjusted for expected growth
rates determined on the basis of expectations for the general economic 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 238m relative to a recognised
equity of DKK 174m and does not indicate any impairment.
| Menu – Financial statements
71
NotesAnnual report 2014 | Tryg A/S |
Notes
12
Property, plant and equipment
DKKm
2014
Cost
Cost at 1 January
Exchange rate adjustments
Additions for the year
Cost at 31 December
Operating equipment
Owner-occupied
property
Assets under
construction
237
-5
9
241
-115
2
-31
0
0
-144
97
228
-8
0
18
-1
237
-90
3
-28
0
0
-115
122
1,738
-29
2
1,711
-434
-5
-15
-106
2
-558
1,153
1,786
-60
10
2
0
1,738
-343
-9
-15
-76
9
-434
1,304
85
-2
11
94
-85
2
0
0
0
-83
11
101
-6
-10
0
0
85
-90
5
0
0
0
-85
0
2014
6.7
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 2m relating to the domicile in Ber-
gen was subsequently included in other comprehen-
sive income (DKK 9m in 2013) and impairment of
DKK 106m relating to the domicile in Ballerup in the
income statement (DKK 76m in 2013). The impair-
ment 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, cor-
responding 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 hierar-
chy during the year.
Total
2,060
-36
22
2,046
-634
-1
-46
-106
2
-785
1,261
2,115
-74
0
20
-1
2,060
-523
-1
-43
-76
9
-634
1,426
2013
6.7
Accumulated depreciation and value adjustments
Accumulated depreciation and value adjustments at 1 January
Exchange rate adjustments
Depreciation for the year
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount in other comprehensive income
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
2013
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from assets under construction
Additions for the year
Disposals for the year
Cost at 31 December
Accumulated depreciation and value adjustments
Accumulated depreciation and value adjustments at 1 January
Exchange rate adjustments
Depreciation for the year
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount in other comprehensive income
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
The following return percentages have been applied:
Return percentages, weighted average
Office property
| Menu – Financial statements
72
Annual report 2014 | Tryg A/S |
DKKm
13
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
2014
2013
DKKm
2014
2013
1,831
-30
12
-7
23
-1
1,828
1,886
-52
16
-2
-17
0
1,831
14
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
Dividend received, this year
Reversed on sale
Value adjustments for the year
Revaluations at 31 December
201
201
14
-1
0
-1
12
24
201
201
19
-3
-8
0
6
14
Carrying amount at 31 December
225
215
Total rental income for 2014 is DKK 124m (DKK 126m in 2013).
Total expenses for 2014 are DKK 30m (DKK 29m in 2013). Of this amount, expenses for non-let
property total DKK 4m (DKK 2m in 2013), total expenses for the income-generating investment
property are DKK 26m (DKK 27m in 2013).
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 follo-
wing return percentages were used for each property category:
Return percentages, weighted average
2014
2013
Business property
Office property
Residential property
Total
7.0
6.5
6.0
6.5
7.0
6.5
6.0
6.5
| Menu – Financial statements
73
NotesAnnual report 2014 | Tryg A/S |
Notes
DKKm
14
Equity investments in associates (continued)
Shares in associates according to the latest annual report:
Name and registered office
Assets
Liabilities
Equity
Revenue
Profit/loss
for the year
Ownership
share in %
2014
Komplementarselskabet af 1. marts 2006 ApS, Denmark 0
936
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
54
AS Eidsvåg Fabrikker, Norway
2013
Komplementarselskabet af 1. marts 2006 ApS, Denmark 0
394
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
52
AS Eidsvåg Fabrikker, Norway
5
Bilskadeinstituttet AS, Norge
0
240
7
0
0
7
0
0
696
47
0
394
45
5
0
47
18
0
26
16
2
0
36
4
0
12
6
0
50
30
28
50
50
28
30
Individual estimates are made of the degree of
influence under the contracts made.
| Menu – Financial statements
74
Annual report 2014 | Tryg A/S |
DKKm
15
Financial assets
Financial assets at fair value with value adjustments in
the income statement
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
142
2,167
45,339
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
Financial liabilities at fair value with value adjustment
in the income statement
Total financial liabilities
799
7,121
7,920
73
3,112
45,967
514
6,864
7,378
Information on valuation of subordinate loan capital at fair value is stated in note 1. Other financial li-
abilities measured at amortised cost only deviate to a minor extent from fair value.
2014
2013
DKKm
15
Financial assets (Continued)
Fair value hierarchy for financial instruments measured at fair value in the statement of financial position
43,030
42,782
2014
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments, assets
Derivative financial instruments, debt
2013
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments, assets
Derivative financial instruments, debt
Qouted Observable
input
market price
Non-
observable
input
0
3,884
22,259
667
0
0
26,810
0
3,741
25,068
1,301
0
0
30,110
0
0
14,915
0
1,318
-799
15,434
0
0
11,903
0
692
-514
12,081
128
0
1
0
0
0
129
150
0
0
0
0
0
150
Financial instruments measured at fair value in the statement of financial
position on the basis of non-observable input:
2014
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
150
-4
-18
8
-8
1
129
-18
Total
128
3,884
37,175
667
1,318
-799
42,373
150
3,741
36,971
1,301
692
-514
42,341
2013
209
-10
-48
3
-4
0
150
-42
Bonds measured on the basis of observable inputs consist of Norwegian bonds issued by banks and to
some extent Danish semi-liquid bonds, where no quoted prices based on actual trades are available.
No significant reclassifications have been made between the categories 'Quoted prices' and 'Observable
input' in 2014. 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 -438m (DKK -166m in 2013).
| Menu – Financial statements
75
NotesAnnual report 2014 | Tryg A/S |
DKKm
15
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 %
2014
2013
DKKm
34
-95
-371
-239
-11
-399
-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:
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
2014
2013
Fair value
in statement
of finacial
position
434
0
85
Nominal
25,882
477
7,790
Nominal
26,015
325
9,352
34,149
519
35,692
3,221
37,370
19,438
9,720
8,212
-438
81
86
-70
65
3,311
39,003
16,003
14,169
8,831
Fair value
in statement
of finacial
position
88
3
87
178
-166
12
-58
55
15
Derivatives, repos and reverses are used continuously as part of the cash and risk management
carried out by Tryg and its portfolio managers.
15
Financial assets (continued)
Derivative financial instruments used in connection with
hedging of foreign entities for accounting purposes
Gains and losses on hedges charged to other comprehensive income
2014
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
2013
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
Gains
1,787
365
2,152
Gains
1,447
340
1,787
Losses
-1,988
-174
-2,162
Losses
-1,953
-35
-1,988
Net
-201
191
-10
Net
-506
305
-201
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
2014
201
-178
23
2013
527
-326
201
| Menu – Financial statements
76
NotesAnnual report 2014 | Tryg A/S |
2014
2013
DKKm
2014
2013
DKKm
15
Financial assets (continued)
Receivables
Receivables from insurance enterprises
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
1,439
0
223
1,662
112
-4
-1
107
1,387
885
142
2,414
113
-7
6
112
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 54m (DKK 43m in 2013).
Receivables in connection with insurance contracts include overdue receivables totalling:
Falling due:
Within 90 days
After 90 days
164
122
Including writedowns of due amounts
Other receivables do not contain overdue receivables
16
Reinsurer's share
Reinsurers' share
Write-downs after impairment test
286
107
1,958
-20
1,938
194
108
302
112
2,647
-27
2,620
17
Current tax
Net current tax at 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
-264
26
-632
-47
-24
512
-429
0
-429
-429
-652
64
-631
-76
14
1,017
-264
145
-409
-264
Net current tax
18
Equity
Number of shares
Number of shares of 25 DKK (1,000)
Number of shares at 1 January
Bought during the year
Cancellation in connection with
buyback programme
Used in connection with exercise
of incentive programme
Shares outstanding
2013
2014
59,374
-1,793
60,695
-1,621
Own shares
2014
1,942
1,793
2013
621
1,621
0
0
-1,620
0
Number of shares at 31 December
57,824
59,374
243
300
-243
1,872
-300
1,942
Impairment test
As at 31 December 2014, management performed a test of the carrying amount of total reinsurers'
share of provisions for insurance contracts. The impairment test resulted in impairment charges total-
ling DKK 20m (DKK 27m in 2013). Write-downs for the year include reversed write-downs totalling
DKK 0m (DKK 0m in 2013). There is no overdue reinsurers' share other than the share alredy provided for.
Number of shares as a percentage
of issued shares at 31 December
Nominal value at 31 december (DKKm)
96.86
1,446
96.83
1,484
3.14
47
3.17
49
Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to 10.0% of the share
capital in the period up until 3 April 2019. Own shares are acquired for use in the Group's incentive
programme and as part of the share buyback programme.
| Menu – Financial statements
77
NotesAnnual report 2014 | Tryg A/S |
2014
2013
DKKm
Gross
Ceded Net of reinsurance
DKKm
18
Equity (continued)
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
11,119
-1,731
-2,353
7,035
1,496
-2,353
6,178
11,107
-1,656
-2,307
7,144
1,551
-2,307
6,388
7,122
7,111
Solvency ratio
(Solvency I – ratio between capital base and weighted assets)
87
90
The capital base and the solvency ratio are calculated in accordance with
the Danish Financial Business Act.
19
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)
6,176
-202
17,692
-17,951
9
5,724
86
5,810
6,658
-335
18,740
-18,881
-6
6,176
36
6,212
a) Comprises premium provisions for Tryg Garantiforsikring A/S and Securator A/S.
19
Claims provisions
2014
Claims provisions at 1 January
Value adjustments of provisions , beginning of year
25,271
-839
24,432
Paid in the financial year in respect of the current year
Paid in the financial year in respect of prior years
-6,215
-6,917
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)
2013
Total at 1 January
Value adjustments of provisions, beginning of year
-13,132
12,835
-638
12,197
1,104
24,601
671
25,272
26,842
-1,569
25,273
Paid in the financial year in respect of the current year
Paid in the financial year in respect of prior years
-6,571
-6,604
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 adjustment
Claims provisions at 31 December
Other a)
-13,175
13,902
-854
13,048
125
25,271
816
26,087
a) Comprises claims provisions for Tryg Garantiforsikring A/S.
-1,780
58
-1,722
90
1,143
1,233
-251
-481
-732
-51
-1,272
-447
-1,719
-1,893
126
-1,767
43
628
671
-562
-103
-665
-19
-1,780
-603
-2,383
23,491
-781
22,710
-6,125
-5,774
-11,899
12,584
-1,119
11,465
1,053
23,329
224
23,553
24,949
-1,443
23,506
-6,528
-5,976
-12,504
13,340
-957
12,383
106
23,491
213
23,704
| Menu – Financial statements
78
NotesAnnual report 2014 | Tryg A/S |
DKKm
2014
2013
DKKm
2014
2013
20
Pensions and similar obligations
Jubilees
Recognised liability
62
62
Defined-benefit pension plans:
Present value of pension obligations funded through operations
63
Present value of pension obligations funded through establishment of funds 1,227
Pension obligation, gross
Fair value of plan assets
Pension obligation, net
Specification of change in recognised pension obligations:
Recognised pension obligation at 1 January
Adjustment regarding plan changes not recognised in
the income statement and expected estimate deviation a)
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
1,290
1,010
280
1,756
-421
-123
41
38
58
-59
1,290
1,033
-72
57
32
4
-44
1,010
280
342
68
68
86
1,671
1,757
1,034
723
2,151
0
-278
63
39
-157
-62
1,756
1,109
-144
81
21
10
-44
1,033
723
791
a) The change of the pension scheme in Norway is carried out in the same way as has been done for
other major financial companies in Norway and causes a reduction in the provision.
20
Pensions and similar obligations (continued)
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
Effect associated with change in agreement
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
Other
Average return on plan assets
Weighted average duration of the defined benefit obligation
Assumptions used:
Discount rate
Estimated return on pension funds
Salary adjustments
Pension adjustments
G adjustments
Turnover
Employer contributions
Mortality table
38
39
-33
6
-421
-371
53
1,289
%
10
73
15
2
2.7
18
2.1
2.1
3.3
0.1
3.0
7.0
14.1
K2013
56
42
-23
11
0
86
78
1,376
%
10
73
15
2
3.3
18
3.3
3.3
3.8
3.5
3.5
7.0
14.0
K2013
| Menu – Financial statements
79
NotesAnnual report 2014 | Tryg A/S |
DKKm
20
2014
2013
DKKm
Pensions and similar obligations (continued)
Sensitivity information
The sensitivity analysis is based on a change in one of the assumptions, assuming that all other as-
sumptions 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.
20
Pensions and similar obligations (continued)
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 insured with Försäkringsbranschens Pensionskassa – FPK. Under
the terms of the agreement, the Group’s Swedish branch has undertaken, along with the other busi-
nesses in the collaboration, to pay the pensions of the individual employees in accordance with the
applicable rules.
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
Turnover, increase of 2.0 percentage point
Turnover, decrease of 2.0 percentage point
27
-30
-55
45
49
-61
80
-70
-65
69
66
-84
Description of the Norwegian plan
In the Norwegian part of the group, about half of the employees have a defined-benefit pension plan.
The plans are based on the employees' expected 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 contri-
butions for a full period of contribution are guaranteed a pension corresponding to 66% of their final
pay. As of 2014, pensions being disbursed are no longer regulated in step with the basic amount of
old-age pension paid in Norway (G regulation), but are subject to a minimum regulation.
Under the present defined-benefit plan, members earn a free policy entitlement comprising disability
cover, spouse and cohabitant cover and children's pension.
The pension funds are managed by Nordea Liv & Pension and regulated by local legislation and practice.
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 2 % of the annual premium
in FPK (2013). FPK writes in its interim report for 2014 that it had a collective consolidation ratio of
110 at 30 June 2014 (consolidation ratio of 114 at 30 June 2013). The collective consolidation ratio
is defined as the fair value of the plan assets relative to the total collective pension obligations.
| Menu – Financial statements
80
NotesAnnual report 2014 | Tryg A/S |
2014
2013
DKKm
2014
2013
DKKm
21
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
11
60
1
72
77
229
3
785
1,094
1,022
Unaccrued timing differences of statement of financial position items
146
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
1,057
-62
-6
-16
6
22
24
-3
1,022
18
2
0
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 gen-
erate 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 14m (DKK -133m at 31 December 2013).
| Menu – Financial statements
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
22
Other provisions
Other provisions at 1 January
Change in provisions
Other provisions 31 December
73
10
83
98
-25
73
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 79m (DKK 23m at
31 December 2013).
23
Amounts owed to credit institutions
Overdraft facilities
24
Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt
116
116
885
2,017
2,902
Unsettled fund transactions include debt for bonds purchased in 2013 and 2014;
however, with settlement in 2014 and 2015, respectively.
25
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
Diluted 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
2,547
10
2,557
58,504
54
58,558
43.5
43.5
43.7
43.7
0.2
0.2
6
6
148
2,673
2,821
2,373
-4
2,369
60,155
104
60,259
39.4
39.3
39.4
39.3
0.0
0.0
81
NotesAnnual report 2014 | Tryg A/S |
DKKm
DKKm
2014
2013
26
Contractual obligations, collateral and contingent liabilities
Contractual obligations
26 Contractual obligations, collateral and contingent liabilities (continued)
Collateral
2014
<1 year
1-3 years
3-5 years
> 5 years
Total
Obligations due by period
Operating leases
Other contractual obligations
2013
Operating leases
Other contractual obligations
62
410
472
150
298
448
101
83
184
182
12
194
71
0
71
75
0
75
67
0
67
73
0
73
301
493
794
480
310
790
Tryg has signed the following contracts with amounts above DKK 50m:
Outsourcing agreement with TCS for DKK 193m for a 4 year period, which expires in 2017.
Lease contracts on premises for DKK 265m. The contracts expire after 5 years.
Operation of mainframe contract of DKK 62m, which expires in late 2017.
Telephony services contract with Telenor for DKK 84m, which expires in 2015 and 2017 respectively.
Collateral
The Danish companies in the Tryg Group are jointly taxed with TryghedsGruppen smba. The compa-
nies and the other jointly taxed companies are liable for any obligations to withhold taxes at source
on interest, royalties, dividends and income taxes etc. 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
Interest and rent receivable
Equity investments in and receivables from Group
undertakings which have been
eliminated in the consolidated financial statements
Total
15
128
3,884
34,273
667
439
337
1,730
41,473
18
150
3,741
34,867
1,301
585
403
1,944
43,009
| Menu – Financial statements
82
NotesAnnual report 2014 | Tryg A/S |
Contingent liabilities
Companies in the Tryg Group are party to a number of
disputes in Denmark, Norway and Sweden.
Management believes that the outcome of disputes
will not affect the Group's financial position signifi-
cantly beyond the obligations recognized in the state-
ment of financial position at 31 December 2014.
Notes
DKKm
26
Contractual obligations, collateral and contingent liabilities (continued)
Offsetting and collateral in relation to financial assets and obligations
Gross amount
before offsetting
According to the
statement of
financial position
Offsetting
Bonds as colla-
teral for repos/
reverse repos
Collateral
in cash
Net amount
Collateral which is not offset in
the statement of financial position
2014
Assets
Derivative financial instruments
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
2013
Assets
Reverse repos
Derivative financial instruments
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
1,318
1,318
2,017
799
438
3,254
885
692
1,577
2,673
514
166
3,353
0
0
0
0
0
0
0
0
0
0
0
0
0
1,318
1,318
2,017
799
438
3,254
885
692
1,577
2,673
514
166
3,353
0
0
-2,017
0
0
-2,017
-885
0
-885
-2,673
0
0
-2,673
-1,324
-1,324
-1
-767
-448
-1,216
0
-553
-553
0
-433
-155
-588
-6
-6
-1
32
-10
21
0
139
139
0
81
11
92
| Menu – Financial statements
83
Annual report 2014 | Tryg A/S |
2014
DKKm
2014
2013
DKKm
27
Acquisition of subsidiaries
In June 2014 the Tryg Group has taken control of Securator A/S and in September 2014 of Optimal
Djurförsäkring i Norr AB by acquiring all shares in the companies. Securator A/S is a Danish market
leader within the sale and brokering of multi-annual product insurance via dealers in the electronics
and telecommunications sector and supermarket chains. The acquisition is expected to increase
Tryg's market share within product insurance by providing access to Securator A/S's customer port-
folio and distribution channels. Optimal Djurförsäkring i Norr AB is a swedish market leader within
the sale of pet insurance. Tryg also expects to realise cost savings through synergies.
Intangible assets
Intangible assets
Equipment
Receivables, other assets and accrued income
Provisions for insurance contracts
Other provisions
Debt and accruals and deferred income
Net assets acquired
Goodwill
Purchase price
Hereof cash
Purchase price in cash
0
1
65
-37
0
-40
-11
188
177
14
163
The Group has not incurred any significant acquisition costs in connection with the acquisition. In
connection with the acquisitions, a sum was paid which exceeds the fair value of the identifiable ac-
quired assets, liabilities and contingent liabilities. This positive balance is mainly attributable to ex-
pected synergies between the activities in the acquired enterprises and the Group’s existing activities,
future growth opportunities as well as the staff of the acquired enterprises. These synergies have not
been recognised separately from goodwill as they are not separately identifiable. Goodwill is not ex-
pected to be deductible for tax purposes.
The enterprises are included in premium income and in the results for the year with an insignificant
amount due to the short ownership period and the Management believes that these pro forma figu-
res reflect the Group’s earnings level after the acquisition of the enterprises and that the amounts
may therefore form the basis for comparisons in subsequent financial years.
| Menu – Financial statements
27
Acquisition of subsidiaries (continued)
The determination of the pro forma amounts for premium income and profit for the period is based
on the following significant assumptions:
• Premiums and claims have been calculated on the basis of the fair values determined in the
pre-acquisition balance sheets for premium and claims provisions, rather than the original carrying
amounts.
• Other costs, including depreciation of property, plant and equipment and amortisation of
intangible assets, have been calculated on the basis of the fair values determined in the
pre-acquisition balance sheets, rather than the original carrying amounts.
28
Related parties
The group has no related parties with a decisive influence other than the parent company, Trygheds-
Gruppen smba and the subsidiaries of TryghedsGruppen smba (other related parties). Related parties
with significant influence include the Supervisory Board, the Executive Management and their mem-
bers’ family.
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
0.3
0.3
2.5
0.1
0.1
0.3
0.3
0.4
1.9
0.2
0.1
0.2
84
NotesAnnual report 2014 | Tryg A/S |
DKKm
28
DKKm
28
Related parties (continued)
Specification of remuneration
2014
Supervisory Board
Executive Management
Risk-takers
a) Exclusive of severance pay
Of which retired:
Risk-takere
Number of
persons
Basis
salary
Variable
salary
Pension
Total a)
12
3
10
25
7
19
22
48
0
2
1
3
0
4
5
9
7
25
28
60
Number
of persons
Serverance
pay
2
2
0
0
There has not been paid any severance pay of more than DKK 1m.
2013
Supervisory Board
Executive Management
Risk-takers
a) Exclusive of severance pay
Of which retired:
Bestyrelse
Risk-takere
Number of
persons
Basis
salary
Variable
salary
Pension
Total a)
14
3
10
27
7
18
20
45
0
1
0
1
0
4
5
9
7
23
25
55
Number
of persons
Serverance
pay
2
1
3
0
5
5
The maximum amount paid in severance pay to an individual is DKK 5m.
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. Refer-
ence is made to section 'Corporate governance' of the management's review on the corresponding dis-
bursements. The Executive Management and risk-takers are included in incentive programmes. Please
refer to note 6 for information concerning this.
Related parties (continued)
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 Executive Management is paid a fixed remuneration and pension. The variable salary is awarded
in the form of a matching share programme, see 'Corporate governance'. Besides this, the directors
have free car appropriate to their position as well as other market conformal employee benefits.
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 further claims in this respect,
for example claims for compensation pursuant to Sections 2a and/or 2b of the Dansih Salaried Em-
ployees 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 decides 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::
- Providing and receiving services
- Interest expenses
2014
1
0
2013
0
6
Transactions between TryghedsGruppen smba and Tryg A/S are conducted on an arm's length basis.
Intra-group transactions:
Administration fee, etc. is fixed on a cost-recovery basis. Intra-group accounts are offset and carry in-
terest 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.
29
Financial highlights
Please refer to page 41.
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85
NotesAnnual report 2014 | Tryg A/S |
30 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 De-
cember 2014 and in accordance with the Danish Stat-
utory Order on Adoption of IFRS.
The annual report of the parent company is prepared
in accordance with the executive order on financial re-
ports presented by insurance companies and lateral
pension funds issued by the Danish FSA. The devia-
tions from the recognition and measurement require-
ments of IFRS are:
•
•
Investments in subsidiaries are valued according
to the equity method, whereas under IFRS valua-
tion is made at cost or fair value. Furthermore the
requirements regarding presentation and disclo-
sure are less comprehensive than under IFRS.
The Danish FSA’s executive order does not allow pro-
visions for deferred tax of contingency reserves allo-
cated 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
Some of the Group's assets, mainly "Investment prop-
erty" of DKK 191m in 2013, have been reclassified to
"Investments in associates" following the implemen-
tation of IFRS 11 and IAS 28, according to which the
Group's interest in joint ventures must be accounted
for using the equity method. So far, property has been
recognised using the pro-rata method. A reclassifica-
tion has been made in respect of other debt of DKK
431m in 2013 from the main item "Accruals and de-
ferred income" to "Total debt". The reclassification is
due to change in due date.
The distribution on segments between Commercial
an Corporate as to medium sized enterprise has been
altered during H1 2014.
The comparative figures have been restated to reflect
the above changes. Except as noted above, the account-
ing policies have been applied consistently with last year.
Future orders, standards and interpretations that the
group has not implemented and which have still not
entered into force:
Accounting regulation
Implementation of changes to accounting standards
and interpretation in 2014
The International Accounting Standards Board (IASB)
has issued a number of changes to the international
accounting standards, and the International Financial
Reporting Interpretations Committee (IFRIC) has also
issued a number of interpretations.
No standards or interpretations have been imple-
mented for the first time for the accounting year that
began on 1st January 2014 that will have a significant
impact on the group.
New or amended standards and interpretations that
have been implemented but have not significantly af-
fected the group:
•
•
• Amendments to IAS 39 ‘novations of derivaties’
IFRS 10 ‘ Consolidated Financial Statements’
•
IFRS 11 ‘Joint Arrangements’
•
IFRS 12 ‘Disclosure of interests in Other Entities’
•
Amendments to IFRS 10, 11 and 12 ‘transitional
•
guidedance’
IAS 27 (as revised in 2011) ‘Separate Financial
Statements’
IAS 28 (as revised in 2011) ‘Investments in
Associates and Joint Ventures’
IFRIC 21 ‘Levies’
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 periodes of service’
Amendments to IAS 32 ‘offsetting of assets
and liabilities’
Amendments to IAS 36 ‘Recoverable Amount
Disclosures for Non-financial Assets’
•
•
•
•
•
•
•
•
•
•
•
IFRS 7 ‘Deferral of mandatory effective dates’ b)
Amendments to IFRS 2 ‘Definition of ‘vesting
condition’’ a)
Amendments to IFRS 3 ‘accounting for
contingent consideration’ a)
Amendments to IFRS 3 ‘scope exception for
joint ventures’ a)
Amendments to IFRS 8 ‘aggregation of
segments, reconciliation of segment assets’ a)
Amendments to IFRS 13 ‘scope of the portfolio
exception in paragraph 52’ a)
Amendments to IAS 16 and IAS 38
‘proportionate restatement of accumulated
depreciation on revaluation’ a)
• Amendments to IAS 24 ‘management entities’ a)
•
•
•
•
•
•
Amendments to IAS 40 ‘interrelationship
between IFRS 3 and IAS 40’ a)
IFRS 14 ‘Regulatory Deferral Accounts’ c)
Amendments to IAS 16 ‘Clarification of acceptable
methods of depreciatioon and amotisation’ c)
Amendments to IAS 19 ‘Actuarial assumptions:
discount rate’ c)
Amendments to IAS 27 ‘reinstating the equity
method as an accounting option for investments
in subsidiaries, joint ventures and associates in an
entity’s separate financial statements’ c)
Amendments to IAS 28 ‘regarding the sale
or contribution of assets between an investor
and its associate or joint venture’ c)
• Amendments to IAS 34 ‘Other disclosures’ c)
•
Amendments to IAS 38 ‘Clarification of acceptable
methods of depreciatioon and amotisation’ c)
IFRS 15 ‘Revenue from Contracts with
Customers’ d)
IFRS 9 ‘Financial Instruments’ e)
•
•
a)
b)
c)
d)
e)
enters into force for the accounting
year commencing 1 July 2014 or later.
enters into force for the accounting
year commencing 1 January 2015 or later.
enters into force for the accounting
year commencing 1 January 2016 or later.
enters into force for the accounting
year commencing 1 January 2017 or later.
enters into force for the accounting
year commencing 1 January 2018 or later.
The changes will be implemented going forward
from 2015.
As for now the changes will not significantly affect
the Group
Changes to accounting estimates
There have been no changes to the accounting
estimates in 2014.
Significant accounting estimates and assessments
The preparation of financial statements under IFRS
requires the use of certain critical accounting esti-
mates and requires management to exercise its judge-
ment in the process of applying the Group’s account-
ing policies. The areas involving a higher degree of
judgement or complexity, or areas where assump-
tions 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 repre-
sent the Group’s most critical accounting estimates,
as these provisions involve a number of uncertainty
factors.
| Menu – Financial statements
86
NotesAnnual report 2014 | Tryg A/S | Claims provisions are estimated based on actuarial
and statistical projections of claims and the adminis-
tration of claims. The projections are based on Tryg’s
knowledge of historical developments, payment pat-
terns, reporting delays, duration of the claims settle-
ment process and other factors that might influence
future developments in the liabilities.
The Norwegian and Swedish provisions are dis-
counted based on euro swap rates, to which a coun-
try-specific interest rate spread is added that reflects
the difference between Norwegian and Swedish gov-
ernment bonds and the interest rate on German gov-
ernment bonds. Finnish provisions are discounted us-
ing the Danish discount curve.
sessed 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 in-
come, as well as operating expenses in proportion to
the property’s required rate of return in per cent.
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.
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 re-
serves) 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 uncertain 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 nega-
tive effects on earnings. Discounting affects the mo-
tor third-party liability, general third-party liability,
workers’ compensation classes, including sickness
and personal accident, in particular.
The Financial Supervisory Authority’s adjusted dis-
count curve, which is based on euro swap rates, na-
tional spreads and Danish swap rates, and also an op-
tion-adjusted mortgage interest rate spread, is used to
discount Danish claims provisions.
Several assumptions and estimates underlying the
calculation of the claims provisions are mutually de-
pendent. This has the greatest impact on assump-
tions 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 ser-
vice and salary.
The net obligation with respect to the defined- benefit
plan is based on actuarial calculations involving a
number of assumptions. The assumptions include
discount interest rate, expected future salary and pen-
sion 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 observa-
ble market data are not subject to material estimates.
For securities that are not listed on a stock exchange, or
for which no stock exchange price is quoted that re-
flects the fair value of the instrument, the fair value is
determined using a current OTC price of a similar finan-
cial 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.
Investment property is recognised at fair value. The
calculation of fair value is based on market prices, tak-
ing into consideration the type of property, location
and maintenance standard, and based on a market-
determined rental income as well as operating ex-
penses in proportion to the property’s required rate of
return. Cf. note 12 and 13.
Measurement of goodwill, Trademarks
and Customer relations
Goodwill, Trademarks and customer relations was ac-
quired in connection with acquisition of businesses.
Goodwill is allocated to the cash-generating units un-
der which management manages the investment. The
carrying amount is tested for impairment at least an-
nually. Impairment testing involves estimates of future
cash flows and is affected by a number of factors, in-
cluding discount rates and other circumstances de-
pendent on economic trends, such as customer be-
haviour and competition. Cf. note 11.
Description of accounting policies
Recognition and measurement
The annual report has been prepared under the historical
cost convention, as modified by the revaluation of owner-
occupied property, where increases are recognised in
other comprehensive income, and revaluation of invest-
ment property, financial assets held for trading and finan-
cial assets and financial liabilities (including derivative in-
struments) at fair value in the income statement.
Valuation of property
Property is divided into owner-occupied property and
investment property. Owner-occupied property is as-
Assets are recognised in the statement of financial po-
sition when it is probable that future economic bene-
fits will flow to the Group, and the value of such assets
On initial recognition, assets and liabilities are meas-
ured at cost, with the exception of financial assets,
which are recognised at fair value. Measurement sub-
sequent 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 re-
port and that confirm or invalidate affairs and condi-
tions 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
income statement unless otherwise described below.
All amounts in the notes are shown in millions of DKK,
unless otherwise stated.
Consolidated financial statements
The consolidated financial statements comprise the
financial statements of Tryg A/S (the parent company)
and the enterprises (subsidiaries) controlled by the
parent company. The parent company is regarded as
controlling an enterprise when it i) exercises a control-
ling influence over the relevant activities in the enter-
prise in question, ii) is exposed to or has the right to a
variable return on its investment, and iii) can exercise
its controlling influence to affect the variable return.
Enterprises in which the Group directly or indirectly
holds between 20% and 50% of the voting rights and
exercises significant influence but no controlling influ-
ence are classified as associates.
| Menu – Financial statements
87
NotesAnnual report 2014 | Tryg A/S | Basis of consolidation
The consolidated financial statements are prepared
on the basis of the financial statements of Tryg A/S
and its subsidiaries. The consolidated financial state-
ments are prepared by combining items of a uniform
nature. The financial statements used for the consoli-
dation are prepared in accordance with the Group’s
accounting policies.
The tax effect of revaluations is taken into account.
The acquisition price of an enterprise consists of the
fair value of the price paid for the acquired
enterprise. If the final determination of the price is
conditional upon one or more future events, such
events are recognised at their fair values at the date of
acquisition. Costs relating to the acquisition are rec-
ognised in the income statement as incurred.
On consolidation, intra-group income and costs, intra-
group accounts and dividends, and gains and losses
arising on transactions between the consolidated en-
terprises are eliminated.
Items of subsidiaries are fully recognised in the con-
solidated financial statements.
Business combinations
Newly acquired or newly established enterprises are
recognised in the consolidated financial statements
from the date of acquisition and the date of formation,
respectively. The date of acquisition is the date on
which control of the acquired enterprise actually
passes to Tryg. Divested or discontinued enterprises
are recognised in the consolidated statement of com-
prehensive income up to the date of disposal or the
settlement date. The date of disposal is the date
on which control of the divested enterprise actually
passes to a third party.
The purchase method is applied for new acquisitions
if the Group gains control of the acquired enterprise.
Subsequently, identifiable assets, liabilities and con-
tingent liabilities in the acquired enterprises are meas-
ured at fair value at the date of acquisition. Non-cur-
rent assets which are acquired with the intention of
selling them are, however, measured at fair value less
expected selling costs.
Restructuring costs are recognised in the pre-acquisi-
tion balance sheet only if they constitute an obligation
for the acquired enterprise.
Any positive balances (goodwill) between the acquisi-
tion price of the acquired enterprise, the value of mi-
nority interests in the acquired enterprise and the fair
value of previously acquired equity investments, on
the one hand, and the fair value of the acquired as-
sets, liabilities and contingent liabilities, on the other
hand, are recognised as an asset under intangible as-
sets, and are tested for impairment at least once a
year. If the carrying amount of the asset exceeds its
recoverable amount, it is impaired to the lower recov-
erable amount.
In the event of negative balances (negative goodwill),
the calculated fair values, the calculated acquisition
price of the enterprise, the value of minority interests
in the acquired enterprise and the fair value of previ-
ously acquired equity investments are revalued. If the
balance is still negative, the amount is recognised as
income in the income statement.
If, at the date of acquisition, there is uncertainty as to
the identification or measurement of acquired assets,
liabilities or contingent liabilities or the determination
of the acquisition price, initial recognition is based on
a preliminary determination of values. The preliminar-
ily determined values may be adjusted or additional
assets or liabilities may be recognised up to 12
months after the acquisition, provided that new infor-
mation has come to light regarding matters existing at
the date of acquisition which would have affected the
determination of the values at the date of acquisition,
had such information been known.
As a general rule, subsequent changes in estimates of
conditional acquisition prices are recognised directly
in the income statement.
supports the management decisions on allocation of
resources and assessment of the Group’s results di-
vided into segments.
Currency translation
A functional currency is determined for each of the re-
porting entities in the Group. The functional currency
is the currency used in the primary economic environ-
ment 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 curren-
cies 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 applica-
ble at the statement of financial position date. Trans-
lation differences are recognised in the income
statement under price adjustments.
On consolidation, the assets and liabilities of the
Group’s foreign operations are translated using the
exchange rates applicable at the statement of finan-
cial position date. Income and expense items are
translated using the average exchange rates for the
period. Exchange rate differences arising on transla-
tion are classified as other comprehensive income
and transferred to the Group’s translation reserve.
Such translation differences are recognised as income
or as expenses in the period in which the activities are
divested. All other foreign currency translation gains
and losses are recognised in the income statement.
The presentation currency in the annual report is
DKK.
Segment reporting
Segment information is based on the Group’s man-
agement and internal financial reporting system and
The operational business segments in the Tryg are Pri-
vate, Commercial, Corporate and Sweden. Private en-
compasses the sale of insurances to private individuals
in Denmark and Norway. Commercial encom passes
the sale of insurances to small and medium sized
businesses, in Denmark and Norway. Corporate sells
insurances to industrial clients primarily in Denmark,
Norway and Sweden. In addition, Corporate handles
all business involving brokers. Sweden encompasses
the sale of insurance products to private individuals in
Sweden as well as sale of Product insurances in the
nordic region.
Geographical information is presented on the basis of
the economic environment in which the Tryg Group
operates. The geographical areas are Denmark, Nor-
way and Sweden.
Segment income and segment costs as well as seg-
ment assets and liabilities comprise those items that
can be directly attributed to each individual segment
and those items that can be allocated to the individual
segments on a reliable basis. Unallocated items pri-
marily comprise assets and liabilities concerning in-
vestment 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 ac-
cordance with Recommendations and Ratios 2010 is-
sued by the Danish Society of Financial Analysts and
the Executive Order on Financial Reports for Insur-
ance Companies and Multi-Employer Occupational
Pension Funds issued by the Danish Financial Super-
visory Authority.
| Menu – Financial statements
88
NotesAnnual report 2014 | Tryg A/S |
Income statement
Premiums
Premium income represents gross premiums written
during the year, net of reinsurance premiums and ad-
justed for changes in premium pro- visions, corre-
sponding to an accrual of premiums to the risk period
of the policies, and in the reinsurers’ share of the pre-
mium provisions.
Premiums are calculated as premium income in ac-
cordance with the risk exposure over the cover period,
calculated separately for each individual insurance
contract. The calculation is generally based on the pro
rata method, although this is adjusted for an unevenly
divided risk between lines of business 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 premium provisions.
The portion of premiums paid to reinsurers that relate
to unexpired risks at the statement of financial posi-
tion date is reported as the reinsurers’ share of pre-
mium provisions.
Technical interest
According to the Danish FSA’s executive order, techni-
cal interest is presented as a calculated return on the
year's average insurance liability provisions, net of re-
insurance. 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 in-
terest 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 un-
winding.
| Menu – Financial statements
Claims
Claims are claims paid during the year and adjusted
for changes in claims provisions less the reinsurers’
share. In addition, the item includes run-off gains/
losses in respect of previous years. The portion of the
increase in provisions which can be ascribed to un-
winding is transferred to insurance technical interest.
Leasing
Leases are classified either as operating or finance
leases. The assessment of the lease is based on crite-
ria such as ownership, right of purchase 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.
The share options are exercisable exclusively during a
13-day period, which starts the day after the publica-
tion of full-year, half-year and quarterly reports and in
accordance with Tryg’s in-house rules on trading in
the Group’s shares. The options are settled in shares.
A part of the Group’s holding of own shares is re-
served for settlement of the options allocated.
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 exchange rates are recognised as a price
adjustment.
Tryg hedges the risk of changes in future pay and price
figures for provisions 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 ef-
fect of changes to inflation expectations under claims.
Bonus and premium discounts
Bonuses and premium discounts represent antici-
pated and refunded premiums to policyholders,
where the amount refunded depends on the claims
record, and for which the criteria for payment have
been defined prior to the financial year or when the
insurance was taken out.
Insurance operating expenses
Insurance operating costs represent acquisition costs
and administration expenses less reinsurance com-
missions received. Expenses relating to acquiring and
renewing the insurance portfolio are recognised at the
time of writing the business. Underwriting commis-
sion is recognised 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. Administra-
tion expenses are accrued to match the financial year.
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 eco-
nomic lifetime of the asset. The Group has no assets
held under finance leases.
Share-based payment
The Tryg Group’s incentive programmes comprise
share option programmes, employee shares and
matching shares.
Share option programme
The value of services received as consideration for op-
tions granted is measured at the fair value of the op-
tions.
Equity-settled share options are measured at fair
value at the time of allocation and recognised under
staff expenses over the period from the time of alloca-
tion until vesting. The balancing item is recognised di-
rectly in equity.
The options are issued at an exercise price that corre-
sponds to the market price of the Group’s shares at
the time of allocation plus 10%. No other vesting con-
ditions apply. Special provisions are in place concern-
ing sickness and death and in case of change to the
Group’s capital position etc.
The share option agreement entitles the employee to
the options unless the employee resigns his position or
is dismissed due to breach of the contract of employ-
ment. In case of termination due to restructuring or re-
tirement, the employee is still entitled to the options.
On initial recognition of the share options, the number
of options expected to vest for employees and mem-
bers of the Executive Management is estimated. Sub-
sequently, adjustment is made for changes in the esti-
mated number of vested options to the effect that the
total amount recognised is based on the actual num-
ber of vested options. The value for retired employees
who retain their right to options is reported for the re-
maining period of the financial year in which the em-
ployee retires.
The fair value of the options granted is estimated us-
ing the Black & Scholes option model. The calculation
takes into account the terms and conditions of the
share options granted.
Employee shares
According to established rules, the Group’s employees
can be granted a bonus in the form of employee
shares. When the bonus is granted, employees can
choose between receiving shares or cash. The ex-
pected value of the shares will be expensed over the
vesting period. The scheme will be treated as a com-
plex financial instrument, consisting of the right to
cash settlement and the right to request delivery of
shares. The difference between the value of shares
and the cash payment is recognised in equity and is
not remeasured. The remainder is treated as a liability
and is remeasured until the time of exercise, such that
the total recognition is based on the actual number of
shares or the actual cash amount.
Matching shares
Members of Executive Management and risk takers
have been allocated shares in accordance with the
“Matching shares” scheme. Under Matching shares,
89
NotesAnnual report 2014 | Tryg A/S | the individual management member or risk takers is
allocated one share in Tryg A/S for each share the Ex-
ecutive 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
Matching share programme.
The holder acquires the shares in the open window
following publication of the annual report for the pre-
vious 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 af-
ter the matching time.
The shares are recognised at market value and are ac-
crued over the four-year maturation period, based on
the market price at the time of acquisition. Recogni-
tion is from the end of the month of acquisition under
staff expenses with a balancing entry directly in eq-
uity. If an Executive 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 represents the profit from property opera-
tions 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 in-
struments, value adjustment of investment property,
foreign currency translation adjustments and the ef-
fect of movements in the yield curve used for dis-
counting, are recognised as price adjustments.
Investment management charges represent expenses
relating to the management of investments including
salary and management fees on the investment area.
| Menu – Financial statements
Other income and expenses
Other income and expenses include income and ex-
penses which cannot be ascribed to the Group´s in-
surance 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 discontinued and divested busi-
ness in a note to the financial statements. Discontin-
ued and divested business includes gross premiums,
gross claims, gross costs, profit/loss on ceded busi-
ness, insurance technical interest net of reinsurance,
investment return after insurance technical interest,
other income and costs and tax in respect of the dis-
continued business. Any reversal of earlier impair-
ment is recognised under other income and costs.
The statement of financial position items concerning
discontinued activities are reported unchanged under
the respective entries whereas assets and liabilities con-
cerning divested activities are consolidated under one
item as assets held for sale and liabilities held for sale.
The comparative figures, including five-year financial
highlights and key ratios, have been restated to reflect
discontinued business. Discontinued and divested
business in the income statement includes the profit/
loss after tax of the run-off for the marine hull busi-
ness 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 undertaking and the fair value
of acquired identifiable assets, liabilities and contin-
gent liabilities at the time of acquisition. Goodwill is
allocated to the cash-generating units under which
management manages the investment and is recog-
nised under intangible assets. Goodwill is not amor-
tised but is tested for depreciation at least once per
year.
Trademarks and customer relations
Trademarks and customer relations have been identi-
fied as intangible assets on acquisition. The intangible
assets are recognised at fair value at the time of ac-
quisition 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 de-
velopment and directly attributable relevant 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 according to the straight-line method
over the assessed economic lifetime, 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 under construction” until they are put
into use, whereupon they are reclassified 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 accumulated depreciation and any accumu-
lated impairment losses. Cost encompasses the pur-
chase 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 us-
ing the straight-line method over its estimated eco-
nomic lifetime as follows:
IT, 4 years
•
• Vehicles, 5 years
• Furniture, fittings and equipment, 5-10 years
Leasehold improvements are depreciated over the ex-
pected 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 recognised in the in-
come 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 investment 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 clas-
sified as investment property.
Owner-occupied property
Owner-occupied property is property that is used in
the Group’s operations. Owner-occupied properties
are measured in the statement of financial position at
their revalued amounts, being the fair value at the
date of revaluation, less any subsequent accumulated
depreciation and impairment losses. Revaluations are
90
NotesAnnual report 2014 | Tryg A/S | performed regularly to avoid material differences be-
tween the carrying amounts and fair values of owner-
occupied property at the statement of financial posi-
tion date. The fair value is calculated on the basis of
market-specific rental income per property and typi-
cal operating expenses for the coming year. The re-
sulting operating income is divided by the required re-
turn on the property in per cent, which is adjusted to
reflect market interest rates and property characteris-
tics, corresponding to the present value of a perpetual
annuity.
Increases in the revalued carrying amounts of owner-
occupied property are recognised in the revaluation
reserve in equity. Decreases that offset previous reval-
uations of the same asset are charged against the re-
valuation reserves directly in equity; all other de-
creases 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 economic benefits associ-
ated with the item will flow to the Group, and the cost
of the item can be measured reliably. Ordinary repair
and maintenance costs are expensed in the income
statement when incurred.
Depreciation on owner-occupied property is calcu-
lated 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-occu-
pied property, costs to be capitalised are recognised at
cost under owner-occupied property. On completion of
the project, it is reclassified as owner-occupied prop-
erty, 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.
on business plans. The business plans are based on
past experience and expected market developments.
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 available, 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 income per property and typical oper-
ating expenses for the coming year. The resulting op-
erating income is divided by the required return on the
property in per cent, which is adjusted to reflect mar-
ket interest rates and property characteristics, corre-
sponding 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 va-
cant premises or special tenant terms and conditions.
Changes in fair values are recorded in the income
statement.
Impairment test for intangible assets,
property and operating equipment
Operating equipment and intangible assets are as-
sessed at least once per year to ensure that the depre-
ciation method and the depreciation period that is
used are connected to the expected economic life-
time. This also applies to the salvage value. Write-
down is performed if depreciation has been demon-
strated. A continuous assessment of owner-occupied
property is performed.
Goodwill is tested annually for impairment, or more of-
ten if there are indications of impairment, and impair-
ment testing is performed for each cash-generating
unit to which the asset belongs. The present value is
normally established using budgeted cash flows based
Equity investments in Group undertakings
The parent company’s equity investments in subsidi-
aries are recognised and measured using the equity
method. The parent company’s share of the enter-
prises’ profits or losses after elimination of unrealised
intra-group profits and losses is recognised in the in-
come statement. In the statement of financial posi-
tion, equity investments are measured at the pro rata
share of the enterprises’ equity.
Subsidiaries with a negative net asset value are recog-
nised at zero value. Any receivables from these enter-
prises are written down by the parent company’s
share of such negative net asset value where the re-
ceivables are deemed irrecoverable. If the negative
net asset value exceeds the amount receivable, the re-
maining 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 trans-
lation of the items in the income statement using av-
erage exchange rates for the period unless they devi-
ate significantly from the transaction day exchange
rates. Income and costs in domestic enterprises de-
nominated in foreign currencies are translated using
the exchange rates applicable on the transaction date.
Statement of financial position items of foreign sub-
sidiaries are translated using the exchange rates appli-
cable at the statement of financial position date.
Equity investments in associates
Associates are enterprises in which the Group has sig-
nificant 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 pro-
portionate share of the enterprises’ net assets.
Profit after tax from equity investments in associates
is included as a separate line in the income statement.
Income is made up after elimination of unrealised in-
tra-group profits and losses.
Associates with a negative net asset value are meas-
ured at zero value. If the Group has a legal or construc-
tive obligation to cover the associate’s negative bal-
ance, 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 recogni-
tion and re-evaluates this at every reporting date.
Financial assets measured at fair value with recogni-
tion of value adjustments 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 man-
aged in accordance with fair value. Derivative financial
instruments are similarly classified as financial assets
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 cate-
gory financial assets at fair value are recognised in the
income statement in the period in which they arise.
| Menu – Financial statements
91
NotesAnnual report 2014 | Tryg A/S | Financial assets are derecognised when the rights to
receive cash flows from the financial assets have ex-
pired, or if they have been transferred, and the Group
has also transferred substantially all risks and rewards
of ownership. Financial assets are recognised and
derecognised on a trade date basis, the date on which
the Group commits to purchase or sell the asset.
Calculation of value is generally performed on the ba-
sis of rates supplied by Danske Bank with relevant in-
formation providers and is checked by the Group’s
valuation technicians. Discounting on the basis of
market interest rates is applied in the case of deriva-
tive financial instruments involving an expected
future cash flow.
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 tech-
niques. These include the use of similar recent arm’s
length transactions, reference to other similar instru-
ments or discounted cash flow analysis.
Derivative financial instruments
and hedge accounting
The Group’s activities expose it to financial risks, in-
cluding changes in share prices, foreign exchange rates,
interest rates and inflation. Forward exchange con-
tracts and currency swaps are used for currency hedg-
ing 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
manage cash flows and interest rate risks related to the
portfolio of bonds and insurance provisions. Share de-
rivatives 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 fi-
nancial position at fair value. Positive fair values of de-
rivatives are recognised as derivative financial instru-
ments under assets. Negative fair values of derivatives
are recognised under derivative financial instruments
under liabilities. Positive and negative values are only
offset when the company is entitled or intends to
make net settlement of more financial instruments.
Recognition of the resulting gain or loss depends on
whether the derivative is designated as a hedging in-
strument 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 derivatives that are designated and
qualify as net investment hedges in foreign entities and
which provide effective currency hedging of the net in-
vestment are recognised directly in equity. The net as-
set value of the foreign entities estimated at the begin-
ning of the financial year is hedged 90-100% by
entering into short-term forward exchange contracts
according to the requirements of hedge accounting.
Changes in the fair value relating to the ineffective por-
tion are recognised in the income statement. Gains
and losses accumulated in equity are included in the
income statement on disposal of the foreign entity.
Reinsurers’ share of provisions
for insurance contracts
Contracts entered into by the Group with reinsurers un-
der 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 insur-
ance contracts. Contracts that do not meet these classi-
fication 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 in-
surance contracts.
Amounts receivable from reinsurers are measured con-
sistently with the amounts associated with the rein-
sured insurance contracts and in accordance with the
terms of each reinsurance contract.
Changes due to unwinding are recognised in insurance
technical interest. 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 recover-
able amount. Impairment losses are recognised in the
income statement.
Receivables
Total receivables comprise accounts receivable from
policyholders and insurance companies as well as other
accounts receivable. Other receivables primarily contain
accounts receivable in connection with property Receiva-
bles that arise as a result of insurance contracts are
classified in this category and are reviewed for impair-
ment as a part of the impairment test of accounts re-
ceivable.
Receivablesare 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 as-
set impairment. The reservation entered is assessed as
the difference between the carrying amount of an asset
and the present value of expected future cash flows.
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.
Prepayments and accrued income
Prepayments include expenses paid in respect of sub-
sequent financial years and interest receivable. Ac-
crued underwriting commission relating to the sale of
insurance products is also included.
Equity
Share capital
Shares are classified as equity when there is no obli-
gation to transfer cash or other assets. Costs directly
attributable to the issue of equity instruments are
shown in equity as a deduction from the proceeds,
net of tax.
Revaluation reserves
Revaluation of owner-occupied property is recognised
in other comprehensive income unless the revalua-
tion offsets a previous impairment loss.
Foreign currency translation reserve
Assets and liabilities of foreign entities are recognised
using the exchange rate applicable at the statement of
financial position date. Income and expense items are
recognised using the average monthly exchange rates
for the period. Any resulting differences are recog-
nised in Other comprehensive income. When an en-
tity 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 com-
prehensive income in respect of the part that con-
cerns 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 and security reserve. The Danish and
Swedish provisions comprise contingency fund provi-
sions. Deferred tax on the Norwegian and Swedish
contingency fund reserves is allocated.
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92
NotesAnnual report 2014 | Tryg A/S | 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 divi-
dends thereon are taken directly to retained earnings
under equity. Own shares include shares acquired for
incentive programmes and share buyback pro-
gramme.
Proceeds from the sale of own shares in connection
with the exercise of share options or matching shares
are taken directly to equity.
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 statement over the borrowing period us-
ing the effective interest method.
Provisions for insurance contracts
Premiums written are recognised in the income state-
ment (premium income) proportionally over the pe-
riod of coverage and, where necessary, adjusted to re-
flect any time variation of the risk. The portion of
premiums received on in-force contracts that relates
to unexpired risks at the statement of financial posi-
tion date is reported as premium provisions. Premium
provisions are generally calculated according to a best
estimate of expected payments throughout the
agreed risk period; however, as a minimum 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 statement as incurred based on the estimated
liability for compensation owed to policyholders or
third parties sustaining losses at the hands of the pol-
icy- holders. They include direct and indirect claims
handling costs that arise from events that have oc-
curred 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 as-
sessments 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 fac-
tors (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. Dis-
counting affects the motor liability, professional liabil-
ity, 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 policyhold-
ers in view of the claims experience during the finan-
cial year.
Claims provisions are determined for each line of
business based on actuarial 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 distributed 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 pat-
tern. The Bornhuetter-Ferguson method, and some-
times the Loss Ratio method, are used for claims
years in which the previous run-off provides insuffi-
cient information about the future run-off perfor-
mance. De Vylder’s credibility method is used for ar-
eas that are somewhere in between the Chain-Ladder
and Bornhuetter-Ferguson/Loss Ratio methods, and
may also be used in situations that call for the use of
exposure targets other than premium volume, for ex-
ample the number of insured.
The provision for annuities under workers’ compensa-
tion insurance is calculated on the basis of a mortality
corresponding to the G82 calculation basis (official
mortality table).
In some instances, the historic data used in the actu-
arial models is not necessarily predictive of the ex-
pected 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 increase in claims. In connection with
legislative changes, the same estimate is used for de-
termining the change in the level of claims. Subse-
quently, this estimate is maintained until new loss his-
tory materialises which can be used for re-estimation.
Several assumptions and estimates underlying the
calculation of the claims provisions are mutually de-
pendent. 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 in-
flation assumptions are used, with annuities for the
insured being indexed based on the workers’ compen-
sation index. An inflation curve that reflects the mar-
ket’s inflation expectations plus a real wage spread is
used as an approximation to the workers’ compensa-
tion index.
For other lines of business, the inflation assumptions,
because present only implicitly in the actuarial mod-
els, will cause a certain lag in predicting the level of fu-
ture losses when a change in inflation occurs. On the
other hand, the effect of discounting will show imme-
diately as a consequence 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 ade-
quacy of the insurance provisions. In performing
these tests, current best estimates of future cash
flows of claims, gains and direct and indirect claims
handling costs are used. Any deficiency results in an
increase in the relevant provision, 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 insur-
ance companies or trustee-administered funds. In
Norway, the Group operates a defined-benefit plan. In
Denmark, the Group operates a defined-contribution
plan. A defined-contribution plan is a pension plan un-
der which the Group pays fixed contributions into a
separate entity (a fund) and will have no legal or con-
structive obligation to pay further contributions. In
Sweden, the Group complies with the industry pension
agreement, FTP-Planen. FTP-Planen is primarily a de-
fined-benefit plan as regards the future pension bene-
fits. Försäkringsbranschens Pensionskassa (FPK) is
unable to provide sufficient information for the Group
to use defined-benefit accounting. The plan is there-
fore accounted for as a defined-contribution plan.
| Menu – Financial statements
93
NotesAnnual report 2014 | Tryg A/S |
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 pay-
ments in connection with the purchase and sale of in-
tangible assets, property, plant and equipment as well
as financial assets and deposits with credit institu-
tions.
Cash flows from financing activities comprise
changes in the size or composition of Tryg’s share
capital and related costs as well as the raising of loans,
repayments of interest-bearing debt and the payment
of dividends.
Cash and cash equivalents comprise cash and de-
mand deposits.
For the defined-benefit plan recognised in the state-
ment of financial position, an annual actuarial calcula-
tion 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 according to the plan. The capital value is
calculated using the Projected Unit Credit Method,
which are based on input Cf. note 20.
The capital value of the pension obligations less the
fair value of any plan assets is recognised in the state-
ment 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 expected and realised
returns on pension assets, actuarial gains or losses
ensue. These gains and losses are recognised under
other comprehensive income.
In case of changes to the benefits stemming from the
employees' employment with the group so far,
a change is seen in the actuarially calculated capital
value which is considered as pension costs for previ-
ous financial years. The change is recognised in the
results immediately. Net finance costs for the year are
recognised in the investment return. All other costs
are recognised under insurance operating costs.The
plan is closed for new business.
Other employee benefits
Employees of the Group are entitled to a fixed pay-
ment 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 jurisdictions in which it operates. Current
tax liabilities and current tax receivables are recog-
nised 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 position liability method on all timing dif-
ferences between the tax and accounting value of as-
sets and liabilities. Deferred income tax is measured
using the tax rules and tax rates that apply in the rele-
vant countries on the statement of financial position
date when the deferred tax asset is realised or the de-
ferred income tax liability is settled.
Deferred income tax assets, including the tax value of
tax losses carried forward, are recognised to the ex-
tent that it is probable that future taxable profit will be
realised against which the temporary differences can
be offset.
Deferred income tax is provided on temporary differ-
ences concerning investments, except where Tryg
controls when the temporary difference will be real-
ised, 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 es-
timate by management of the expenditure required to
settle the present obligation. The measurement of
provisions is based on a discounting of the costs nec-
essary to settle the obligation if this has a significant
effect on the measurement of the obligation.
Provisions for restructurings are recognised as obliga-
tions when a detailed formal restructuring plan has
been announced prior to or at the statement of finan-
cial 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 ac-
cording to the same principle as the Group’s other
claims provisions.
Debt
Debt comprises debt in connection with direct insur-
ance and reinsurance, amounts owed to credit institu-
tions, current tax obligations and other debt. Deriva-
tive financial instruments are assessed at fair value
according to the same practice that applies to finan-
cial assets. Other liabilities are assessed 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.
| Menu – Financial statements
94
NotesAnnual report 2014 | Tryg A/S | Income statement for Tryg A/S (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
2,600
0
-7
2,593
-51
2,410
1
-6
2,405
-52
Profit/loss before tax
2,542
2,353
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
15
2,557
2,557
1,731
143
683
2,557
14
2,367
2,367
1,656
817
-106
2,367
2014
2013
DKKm
2014
2013
Note
Statement of comprehensive income
Profit/loss for the year
Other comprehensive income
2,557
2,367
Other comprehensive income which cannot subsequently
be reclassified as profit or loss
Change in equalisation provision and other provisions
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
26
2
0
-46
12
-6
-178
191
-47
-34
-40
0
9
-3
179
-54
131
-326
305
-76
-97
34
Comprehensive income
2,517
2,401
| Menu – Financial statements
95
Annual report 2014 | Tryg A/S |
Statement of financial position for Tryg A/S (parent company)
DKKm
2014
2013
Note
4
Assets
Equity investments in Group undertakings
Total investments in Group undertakings
11,843
11,843
11,740
11,740
Total investment assets
11,843
11,740
5
Current tax assets
Cash at bank and in hand
Total other assets
14
0
14
14
1
15
Total assets
11,857
11,755
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
11,134
11,122
718
5
723
629
4
633
Total equity and liabilities
11,857
11,755
6
7
8
9
10
11
Deferred tax assets
Capital adequacy
Contractual obligations, contingent liabilities and collateral
Related parties
Reconciliation of profit/loss and equity
Accounting policies
| Menu – Financial statements
96
Annual report 2014 | Tryg A/S |
Statement of changes in equity (parent company)
DKKm
Equity at 31 December 2013
2014
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Nullification of own shares
Dividend paid
Dividend own shares
Purchase and sale of own shares
Exercise of share options
Issue of employee shares
Issue of share options and matching shares
Total changes in equity in 2014
Equity at 31 December 2014
Share
capital
Revaluation
reserves
Retained
earnings
Proposed
dividend
Total
1,533
4,753
3,180
1,656
11,122
143
-40
103
0
-41
-41
1,492
103
4,856
683
683
41
59
-1,005
49
45
3
-125
3,055
1,731
1,731
-1,656
75
1,731
2,557
-40
2,517
0
-1,656
59
-1,005
49
45
3
12
11,134
Proposed dividend per share DKK 29 (DKK 27 in 2013 )
Dividend per share is calculated as the total dividend
proposed by the Supervisory Board after the end of
the financial year divided by the total number of sha-
res at the end of the year (59,695,516 shares). The di-
vidend 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 2,622m (DKK 3,020m in 2013).
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.
Equity at 31 December 2012
1,533
3,902
3,967
1,594
10,996
2013
Profit/loss for the year
Other comprehensive income
Total comprehensive income
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
Equity at 31 December 2013
817
34
851
0
0
1,533
851
4,753
-106
-106
15
-800
100
4
-787
3,180
1,656
1,656
-1,594
62
1,656
2,367
34
2,401
-1,594
15
-800
100
4
126
11,122
| Menu – Financial statements
97
Annual report 2014 | Tryg A/S |
Notes
DKKm
1
Income from Group undertakings
Tryg Forsikring A/S
2
Other expenses
Administration expenses
2,600
2,600
-51
-51
2,410
2,410
-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 28 concerning related parties of the Tryg Group. Refer to Note 6 of the consolidated
financial statements for a specification of the audit fee.
Average number of full-time employees for the year
3
Tax
Reconciliation of tax costs
Tax on profit/loss for the year
Tax adjustments, previous years
Effective tax rate
Tax on profit/loss for the year
Tax adjustment, previous years
13
14
1
15
%
24.5
0.5
25.0
11
14
0
14
%
25.0
0.0
25.0
2014
2013
DKKm
2014
2013
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
6,987
6,987
4,753
1,759
-1,656
4,856
6,987
6,987
3,902
2,445
-1,594
4,753
Carrying amount at 31 December
11,843
11,740
Name and registered office
Ownership share in %
Equity
2014
Tryg Forsikring A/S, Ballerup
2013
Tryg Forsikring A/S, Ballerup
5
Current tax assets
Tax receivable at 1 January
Current tax for the year
Adjustment of current tax in respect of previous years
Tax paid for the year
Tax receivable at 31 December
100
11,843
100
11,740
14
14
0
-14
14
24
14
0
-24
14
| Menu – Financial statements
98
Annual report 2014 | Tryg A/S |
Notes
DKKm
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.
2014
2013
DKKm
2014
2013
0
18
0
18
8
C ontractual obligations, contingent liabilities and collateral
The Danish companies in the Tryg Group are jointly taxed with TryghedsGruppen smba. The compa-
nies and the other jointly taxed companies are liable for any obligations to withhold taxes at source
on interest, royalties, dividends and income taxes etc. in respect of the jointly taxed companies.
Companies in the Tryg Group are party to a number of disputesin Denmark, Norway and Sweden.
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 2014.
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
11,134
-1,731
-2,353
7,050
1,496
-2,353
6,193
11,122
-1,656
-2,307
7,159
1,551
-2,307
6,403
7,137
7,126
9
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company, Trygheds-
Gruppen smba. Related parties with a significant influence include the Supervisory Board, the Execu-
tive Management and their members’ related family. Related parties are the same as for the Tryg
Group; please see Note 28 in the consolidated financial statements.
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'
-15
-718
-23
-629
Solvency ratio (Solvency I – ratio between capital
base and weighted assets)
87
90
Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.
| Menu – Financial statements
99
Annual report 2014 | Tryg A/S |
Notes
DKKm
10
2014
2013
Reconciliation of profit/loss and equity
The executive order on application of International Financial Reporting Standards for companies sub-
ject 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
2,557
0
2,557
11,119
15
0
11,134
2,369
-2
2,367
11,107
17
-2
11,122
11
Accounting policies
Please refer to Tryg Group's accounting policies.
| Menu – Financial statements
100
Annual report 2014 | Tryg A/S |
Q4 2014 | Quarterly outline
DKKm
Privat
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of reinsurance
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 reinsurance
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Corporate
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of reinsurance
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
106.4
Q4
2014
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
A more detailed version of the table can be seen at
tryg.com >investor > Downloads.
2,249
400
2,289
445
2,275
494
2,238
273
2,290
286
2,329
440
2,363
364
2,384
245
2,449
326
65.3
2.1
67.4
15.0
82.4
84.5
64.6
1.1
65.7
15.1
80.8
85.3
69.0
-2.6
66.4
12.4
78.8
82.4
72.1
0.4
72.5
15.5
88.0
93.7
75.6
-2.5
73.1
14.6
87.7
90.8
64.7
1.7
66.4
15.1
81.5
84.0
68.5
0.8
69.3
15.6
84.9
89.0
72.9
1.8
74.7
15.3
90.0
93.5
70.1
1.1
71.2
15.6
86.8
88.4
1,050
270
1,045
188
1,053
224
1,042
193
1,080
157
1,075
230
1,124
153
1,132
114
1,129
146
55.2
3.7
58.9
15.6
74.5
86.5
1,015
98
67.2
12.6
79.8
10.6
90.4
63.9
0.9
64.8
17.5
82.3
92.1
999
130
63.0
13.0
76.0
11.5
87.5
94.9
72.1
-5.6
66.5
12.6
79.1
81.9
1,030
180
73.3
0.1
73.4
9.5
82.9
86.8
63.9
0.3
64.2
17.7
81.9
86.9
989
19
81.5
4.6
86.1
12.6
98.7
73.8
-5.9
67.9
17.9
85.8
92.8
1,025
59
75.0
7.6
82.6
12.1
94.7
113.4
102.2
56.0
3.5
59.5
19.5
79.0
87.3
1,025
42
122.9
-38.2
84.7
11.6
96.3
104.8
69.5
-1.1
68.4
18.3
86.7
94.5
1,062
139
88.5
-12.2
76.3
10.9
87.2
94.4
70.5
0.8
71.3
18.6
89.9
91.0
1,046
118
66.2
10.1
76.3
12.5
88.8
101.7
65.9
2.1
68.0
18.7
86.7
92.8
1,107
131
75.2
0.9
76.1
11.9
88.0
99.7
| Menu – Financial statements
101
Annual report 2014 | Tryg A/S |
The distribution on segments between Commercial
an Corporate as to medium sized enterprise has been
altered during Q1 2014.
Comparative figures have been restated accordingly.
a) Amounts relating to eliminations are included under
'Other'
A more detailed version of the table can be seen
at tryg.com >investor > Downloads.
Q4 2014 | Quarterly outline
DKKm
Sweden
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of reinsurance
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 reinsurance
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Q4
2014
Q3
2014
Q2
2014
Q1
2014
Q4
2013
Q3
2013
Q2
2013
Q1
2013
Q4
2012
338
7
74.6
1.5
76.1
22.2
98.3
99.2
-6
0
386
30
76.2
0.8
77.0
15.5
92.5
97.7
-7
0
4,646
4,712
775
13
-20
768
640
64.1
4.7
68.8
14.9
83.7
91.0
793
-1
-10
782
593
64.9
3.7
68.6
15.1
83.7
90.0
358
43
69.3
-0.3
69.0
19.6
88.6
91.7
-5
0
4,711
941
259
-50
1,150
869
70.7
-2.6
68.1
12.6
80.7
84.1
317
38
64.4
4.4
68.8
19.9
88.7
91.5
-3
0
348
44
71.8
-2.9
68.9
19.3
88.2
94.5
-6
0
442
54
72.6
0.5
73.1
14.7
87.8
89.8
-4
0
420
28
76.7
0.0
76.7
17.6
94.3
94.3
-7
0
377
23
75.6
-0.3
75.3
19.6
94.9
92.0
-1
0
399
54
67.2
-0.8
66.4
21.1
87.5
87.2
-8
-9
4,583
4,737
4,867
4,962
4,938
5,076
523
89
-10
602
455
71.7
1.6
73.3
15.9
89.2
96.5
546
154
-61
639
565
74.9
-1.2
73.7
15.4
89.1
94.3
766
152
-11
907
715
75.9
-6.6
69.3
15.5
84.8
89.8
684
13
-9
688
514
73.7
-2.6
71.1
15.6
86.7
91.9
500
269
-10
759
575
71.2
3.1
74.3
16.0
90.3
94.8
648
5
-15
638
404
70.2
0.9
71.1
16.3
87.4
92.1
| Menu – Financial statements
102
Annual report 2014 | Tryg A/S |
Q4 2014 | 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
Q4
2014
2,346
651
262
52.1
7.9
60.0
12.4
72.4
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 Dec.
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 Dec.
1,839
190
86
73.1
0.9
74.0
16.0
90.0
467
-66
-10
89.1
3.9
93.0
21.4
114.4
| Menu – Financial statements
Q4
2013
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
2014
2013
DKKm
Q4
2014
Q4
2013
2014
2013
Other b)
Gross premium income
Technical result
Tryg
-6
0
-6
0
-21
0
-18
0
Gross premium income
4,646
4,737
18,652
19,504
Technical result
Investment return
Other income and costs
Profit/loss before tax
Run-off gains/losses, net of reinsurance
Nøgletal
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio C)
Combined ratio
775
13
-20
768
338
64.1
4.7
68.8
14.9
83.7
546
154
-61
639
247
74.9
-1.2
73.7
15.4
89.1
3,032
360
-90
3,302
1,131
67.8
1.8
69.6
14.6
84.2
Number of full-time employees, continuing business at 31 Dec.
Number of full-time employees, discontinued and divested business at 31 Dec.
3,599
0
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)
c) Adjustment of gross expense ratio included only in 'Tryg '.
Amounts relating to eliminations are included under 'Other'.
The adjustment is explained in a footnote to Financial highlights.
9,361
1,510
564
66.9
2.1
69.0
15.1
84.1
2,007
7,337
1,478
501
66.5
1.4
67.9
12.5
80.4
1,167
1,975
44
66
77.6
2.2
79.8
18.4
98.2
425
9,534
1,202
566
79.5
-7.0
72.5
15.0
87.5
2,046
7,819
1,258
387
65.1
4.1
69.2
15.3
84.5
1,199
2,169
36
17
80.6
0.7
81.3
17.6
98.9
458
103
Annual report 2014 | Tryg A/S |
Other key figures
2014
2013
2012
2011
2010
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 of continuing business (DKK)
Number of shares (1,000) end of period
Average number of shares (1,000)
Diluted average number of shares (1,000)
Share price (DKK)
Net asset value per share (DKK)
Market price/net asset value
Dividend per share (DKK)
Price/Earnings
68.3
15.0
83.3
14.8
16.3
17.3
0.3
0.3
29.7
22.9
6,012
25,680
2,279
31.2
135.5
166.7
3,599
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
3,703
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
3,913
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
4,076
0
0
189
242
43.7
43.7
43.5
57,824
58,504
58,558
689.0
192.3
3.6
29.00
15.8
39.4
39.3
39.4
59,374
60,155
60,259
524.5
187.1
2.8
27.00
13.3
36.5
36.4
36.0
60,695
60,491
60,714
426.5
180.9
2.4
26.00
11.8
18.9
18.9
19.0
60,373
60,401
60,401
319.0
149.2
2.1
6.52
16.8
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
4,101
191
9.5
9.5
11.9
60,634
62,362
62,444
257.5
139.5
1.8
4.00
21.7
The expense ratio, net without adjustment, is calcu-
lated as the ratio of actual insurance operating costs,
net of reinsurance to premium income, net of reinsur-
ance. 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 Dan-
ish 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.
| Menu – Financial statements
104
Annual report 2014 | Tryg A/S |
Group chart
Tryg A/S
Tryg Forsikring A/S
Tryg Garanti-
forsikring A/S
(Dansk Kaution)
Moderna
Försäkringar
(Swedish branch)
Tryg Forsikring
(Norwegian branch)
Vesta
Eiendom AS
(Norway)
Ejendoms-
selskabet
af 8. maj 2008
A/S
Tryg Garanti
(Norwegian branch)
Optimal
Djurförsäkring
i Norr AB
(Sweden)
Respons
Inkasso AS
(Norway)
Thunesvei 2 AS
(Norway)
Securator A/S
(Denmark)
Tryg
Ejendomme A/S
(Denmark)
Komplementar-
selskabet
af 1. marts
2006 ApS (50%)
Moderna Garanti
(Swedish branch)
Tryg Garanti
(Finnish branch)
Group chart at 1 January 2015. Companies and branches are wholly owned by Danish
owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
| Menu – Management’s review
ANS Grensen 3
(99%)
(Norway)
Claims
Management A/S
(Denmark)
Ejendoms-
selskabet af 1. marts
2006 P/S (30%)
105
Annual report 2014 | Tryg A/S | 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.
Capital base
Equity plus share of subordinate loan capital and less
intangible assets, tax asset, discounting, equalisation
reserve and proposed dividend.
Earnings per share of continuing business
Diluted earnings from continuing business after tax
Diluted average number of shares
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),
Tryg Garantiforsikring A/S (including Finnish branch)
and Securator A/S.
Gross claims ratio
Gross claims x 100
Gross premium income
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.
Diluted average number of shares
Average number of shares adjusted for number of
share options which may potentially dilute.
Gross insurance operating costs with adjustment x 100
Gross premium income
Discounting
Expresses recognition in the financial statements of
expected future payments at a value below the nomi-
nal amount, as the recognised amount carries interest
until payment. The size of the discount depends on
the market-based discount rate applied and the ex-
pected time to payment.
Dividend per share
Proposed dividend
Number of shares at year-end
Earnings per share
Profit or loss for the year x 100
Average number of shares
| Menu – Management’s review
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
Relative run-off gains/losses
Run-off gains/losses net of reinsurance relative to
claims provisions net of reinsurance, beginning of year.
Individual solvency
New Danish solvency requirements for insurance
companies comprising the companies’ own determi-
nation 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.
Reserve ratio, claims provisions
Claims provisions x 100
Gross premium income
Reserve ratio, premium provisions
Premium provisions x 100
Gross premium income
Market price/net asset value
Share price
Net asset value per share
Net asset value per share
Year-end equity
Number of shares at year-end
Net reinsurance ratio
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 tech-
nical 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
Price/Earnings
Average equity
Share price
Earnings per share
Run-off gains/losses
The difference between the claims provisions at the
beginning of the financial year (adjusted for foreign
currency translation adjustments and discounting ef-
fects) and the sum of the claims paid during the finan-
cial 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.
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 ex-
pected 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.
106
Annual report 2014 | Tryg A/S |
Product overview
Being one of the largest insurance companies in
the Nordic region, Tryg offers a broad range of
insurance products to both private individuals
and businesses. Tryg continuously develops
new products and adapts existing peace of
mind solutions to customer requirements and
developments in society. Also, Tryg focuses
strongly at all times on striking a better balance
between price and risk.
Tryg sells its products primarily via its own sales
channels such as call centres, the Internet, tied
agents, franchisees (Norway), interest organisa-
tions, car dealers, real estate agents, insurance
brokers and Nordea branches. Moreover, Tryg
engages in international cooperation with the AXA
Group. It is an important element of Tryg’s
distribution strategy to be available in places
where customers want it and that most distribu-
tion takes place via the company’s own sales
channels.
Motor insurance
Fire and contents – Commercial
Motor insurance accounts for 31% 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 13% 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.
Fire and contents – Private
Fire and contents insurance for private customers represents 24% of total pre-
mium 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
Workers’ compensation insurance accounts for 5% of total premium income and
covers employees against bodily injury sustained at work (in Norway, also occu-
pational 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 supplementary 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.
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Annual report 2014 | Tryg A/S | Disclaimer
Certain statements in this annual report are based
financial markets, extraordinary events such as
on the beliefs of our management as well as
natural disasters or terrorist attacks, changes in
assumptions made by and information currently
legislation or case law and reinsurance. Should
available to management. Statements regarding
one or more of these risks or uncertainties
Tryg’s future operating results, financial position,
materialise, or should any underlying assumptions
cash flows, business strategy, plans and future
prove to be incorrect, Tryg’s actual financial
objectives other than statements of historical fact
condition or results of operations could
can generally be identified by the use of words
materially differ from that described herein as
such as ‘targets’, ‘believes’, ‘expects’, ‘aims’,
anticipated, believed, estimated or expected.
‘intends’, ‘plans’, ‘seeks’, ‘will’, ‘may’, ‘anticipates’,
Tryg is not under any duty to update any of the
‘would’, ‘could’, ‘continues’ or similar expressions.
forward-looking statements or to conform such
statements to actual results, except as may be
A number of different factors may cause the
required by law.
Read more in the chapter
actual performance to deviate significantly
Capital and risk management in the annual
from the forward-looking statements in this
report on page 24-25, and
in Note 1 on
annual report, including but not limited to
page 47, for a description of some of the factors
general economic developments, changes in the
which may affect the Group’s performance or
competitive environ ment, developments in the
the insurance industry.
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Annual report 2014 | Tryg A/S |