Tryg Annual Report 2015 | Quarterlytics

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Annual report 2015Contents – Management’s review

MANAGEMENT’S REVIEW

16 Commercial

34 Executive Board

Income overview

Introduction

5 Events in 2015

18 Corporate

20 Sweden

Corporate Social Responsibility in Tryg

Investment activities

FINANCIAL STATEMENTS

6 Targets and strategy

Capital and risk management

37 Financial statements

9 Financial targets and outlook

26 Shareholder information

104 Group chart

10 Tryg’s results

14 Private

28 Corporate governance

105 Glossary

32 Supervisory Board

106 Product overview

Learn more

Reference to further information at tryg.com.

Reference to further information in the

annual report.

Reference to contents.

Tryg is the second-largest non-life 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 3,400 employees provide peace of mind for 2.8 million customers and handle
approximately 950,000 claims on a yearly basis.

Our ambition is to become the world’s best insurance company.

Editor Investor Relations | Publication 21 January 2016 | Layout amo design | Proofreading TextMinded

Annual report 2015 | Tryg A/S |

Income overview

DKKm

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

Profit/loss

Run-off gains/losses, net of reinsurance

Key figures
Total equity
Return on equity after tax (%)
Number of shares at 31 December (1,000)
Earnings per share
Net asset value per share (DKK)
Dividend per share (DKK)

Premium growth in local currencies

Gross claims ratio
Net reinsurance ratio

Claims ratio, net of ceded business
Gross expense ratio

Combined ratio

Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)

Combined ratio on business areas
Private
Commercial
Corporate
Sweden

Q4 2015

Q4 2014

4,393
-2,988
-615

790
-272
4

522
201
-19

704
11

715
6

721

241

4,646
-2,976
-684

986
-220
9

775
13
-20

768
-135

633
7

640

338

9,831
27.5
282,316
2.53

11,119
23.0
289,120
2.19

-1.6

68.0
6.2

74.2
14.2

88.4

-5.5
3.1
5.4

87.0
85.0
99.4
73.2

-0.1

64.1
4.7

68.8
14.9

83.7

-7.3
4.3
2.6

82.4
74.5
90.4
98.3

2015

17,977
-13,562
-2,720

1,695
710
18

2,423
-5
-91

2,327
-395

1,932
49

1,981

1,212

9,831
18.9
282,316
6.95
34.82

6.00a)

-0.8

75.4
-3.9

71.5
15.3

86.8

-6.7
3.4
3.4

85.4
83.6
90.7
83.5

2014

18,652
-12,650
-2,689

3,313
-341
60

3,032
360
-90

3,302
-755

2,547
10

2,557

1,131

11,119
23.0
289,120
8.74
38.46
5.80

-1.1

67.8
1.8

69.6
14.6

84.2

-6.1
3.1
2.4

82.5
79.4
89.8
92.0

2013

19,504
-14,411
-3,008

2,085
349
62

2,496
588
-91

2,993
-620

2,373
-4

2,369

970

11,107
21.5
296,870
7.88
37.41
5.40

-2.7

73.9
-1.8

72.1
15.6

87.7

-5.0
2.1
3.2

86.0
85.4
91.7
91.2

2012

20,314
-14,675
-3,295

2,344
86
62

2,492
585
-60

3,017
-837

2,180
28

2,208

1,015

10,979
22.1
303,474
7.30
36.18
5.20

-0.1

72.2
-0.4

71.8
16.4

88.2

-5.0
2.3
1.8

87.7
81.3
91.4
95.3

a) Dividend per share in 2015 includes dividend paid out in July of DKK 2.50 and proposed dividend of DKK 3.50.

| Contents – Management’s review

2011

19,948
-15,783
-3,271

894
507
171

1,572
61
-30

1,603
-455

1,148
-8

1,140

944

9,007
13.1
301,866
3.77
29.84
1.30

3.6

79.1
-2.5

76.6
16.6

93.2

-4.7
2.7
3.6

92.7
89.6
93.6
102.9

Annual report 2015 | Tryg A/S |

Customer focus and increasing dividend

Enhanced customer experience

ity’s approval of Tryg’s internal capital model, which

In 2015, we continued our efforts to improve custo m-

means that Tryg is well-prepared for the implementa-

er experience. Focus has most important ly been on

tion of the Solvency II regulatory regime from 2016.

improving our customer services, for example through

Risk management is also important in relation to

the increased empowerment of front-line staff as

individual products, and in 2015 a small number of

a way of increasing first-contact resolution. We are

products, in particular contents and property, did

continuously following up on our customers’ assess-

not develop satisfactorily. Minor price adjustments

ment of their contact with Tryg. We are therefore

and improved claims assessment procedures will

pleased to note a significant improvement in our NPS

therefore be introduced. Tryg continuously assesses

score, up from 11 at the Capital Markets Day in

developments in the number and size of claims.

November 2014 to 22 in Q4 2015 and with more than

78% of our customers returning ratings of 9 or 10 in

Stable and increasing dividend for shareholders

the text message surveys used to capture customer

Being a shareholder in Tryg must be attractive, and in

feedback after each customer contact. It is also good

accordance with Tryg’s dividend policy, we strive to

news for Tryg’s customers that Tryg hedsGruppen,

ensure that a steadily increasing dividend is paid to

which owns 60% of Tryg, has decided to pay out a

Tryg’s shareholders. The Supervisory Board proposes

bonus to Tryg’s Danish customers from 2016.

that a dividend of DKK 3.50 be paid for the second half

of the year, bringing the dividend paid out for 2015 to

Efficient insurance operations

DKK 6.00 per share. Tryg also assesses the relevance

A profit of DKK 1,981m was returned, equivalent

of extraordinary share buy backs as a way of increas-

to a return on equity of 18.9%, together with a

ing value creation for our shareholders. In 2015, we

com bined ratio of 86.8 and an expense ratio of

completed a DKK 1bn share buy back programme,

14.9 before one-off costs. The return on equity was

and in 2016 we will execute a similar programme,

below target due to very low investment income and

while at the same time ensuring a solid capital base.

one-offs. Tryg met the combined ratio and expense

The total yield to shareholders was 6.9% for 2015.

ratio targets for 2015. Tryg aims to achieve efficiency

improvements of DKK 750m in the period up until

Thank-you to employees

2017, and the delivery of savings of DKK 165m in

The delivery of an enhanced customer experience

2015 exceeded the target for the year. The efficiency

and the financial results has only been possible

programme will be key to improving results and

through the committed efforts of Tryg’s employees,

reaching an expense ratio of 14 or below in 2017.

and the Supervisory Board and the Executive Board

would like to thank all for their hard work.

Efficient risk management

Risk management is essential for an insurance com-

pany – spanning from the overall risk management

of Tryg to the pricing of our products. A milestone in

Morten Hübbe

Jørgen Huno Rasmussen

2015 was the Danish Financial Supervisory Author-

Group CEO

Chairman

| Contents – Management’s review
| Contents – Management’s review

Annual report 2015 | Tryg A/S |

4
4

Annual report 2015 | Tryg A/S |
Events in 2015

Share buy back
programme initiated
On 2 January, Tryg initiated
an extraordinary share buy
back of DKK 1bn, which was
completed on 18 December
2015.

Contents
insurance ‘Best in Test’
Tryg’s contents insurance was
named ‘Best in Test’ by the
Danish Consumer Council’s
magazine TÆNK. The criteria
tested are coverage, customer
satisfaction, number of
appeals and price.

New car insurance product
Tryg launched a new car in-
surance product in Denmark.
The product provides basic
coverage, and in addition
customers can buy add-on
products to cover their
exact insurance needs.
Read about the car

insurance at tryg.dk.

New car insurance in Sweden
Moderna, Tryg’s Swedish branch, launched a new car insurance product,
‘Moderna Smart’. The price of the new product is differentiated depend-
ing on the driver’s driving style, which is recorded by a mobile app.
Read more about the insurance on modernaforsakringar.se.

Acquisition of Swedish child insurance portfolio
Tryg acquired Skandia’s child and adult insurance portfolio with a
premium volume of approximately SEK 250m. The portfolio will be
integrated into Tryg’s Swedish branch Moderna in H1 2016.

Tryg’s ‘A-’ rating maintained
The credit rating agency
Standard & Poor’s recon-
firmed Tryg and Tryg Garanti’s
‘A-/stable’ rating.

TryghedsGruppen’s members’ bonus scheme approved
Tryg’s majority shareholder TryghedsGruppen’s member bonus
scheme was approved by the Danish Business Authority. The
scheme allows TryghedsGruppen to pay out some of its profit to
members (policyholders of Tryg Forsikring A/S in Denmark).

New health insurance
in Denmark
A new health insurance
product was launched in
Denmark, which includes
a prevention app named
‘TrygHealth’. The app
provides access to a medical
hotline via mobile video
conferencing and includes
Healthcare profile Plus cover,
which allows the insured to
hold video conferences with
a dietitian or physiotherapist.

Read more about
the new health insurance
at tryg.dk.

January

February

March

April

May

June

July

August

September

October

November

December

Tryg share split 1:5
On 12 May, Tryg split its share in 1:5, meaning each share with a
nominal value of DKK 25 was replaced by five shares with a nominal
value of DKK 5. The Tryg share was split as the price was up to more
than DKK 600 in 2014, making it the second-most expensive share
in the C20 index.

Tryg’s car insurance Best in Test
Tryg’s new car insurance product launched in March 2015 was
recommended as ‘Best in Test’ by the Danish Consumer Council.
The test also showed that Tryg is the company with the lowest
number of complaints tried before the appeals board.

Launch of change of car ownership insurance
Tryg was the first company to introduce a change of car ownership
insurance product in Denmark. The product is for customers buying
and selling cars privately and covers mechanical damage for the
first six months.

Read more about the insurance at tryg.dk.

Launch of new accident insurance
Tryg launched new personal accident products in Denmark and Nor-
way. The products provide basic cover with the option of taking out
additional cover, for example for critical illness for children and young
people.

Read more about the products at tryg.dk and tryg.no.

Moderna – insurance broker of the year
For the third year running, Tryg’s branch in Sweden, Moderna, was
named insurance broker of the year within the commercial and
corporate segments.

CFO resigning
Group CFO Tor Magne Lønnum is resigning to take up a position
as CFO of Aimia Inc in Montreal, Canada. He will stay on as CFO of
Tryg until the end of April 2016.

Denmark hit by storm
On 29 November, Denmark was hit by a storm, named Gorm. Tryg
received approximately 9,000 claims, of which 24% were reported
within the first 24 hours, and 20% were reported online.

Internal capital model
Tryg’s internal capital model
in relation to Solvency II was
approved by the Danish FSA.

New bond issue
Tryg Forsikring A/S entered
into an agreement on the issu-
ance of Solvency II-compliant
Tier 2 capital in the form of a
bond issue in the amount of
NOK 1.4bn (DKK 1.1bn) in
the Norwegian market.

Flooding in parts of Norway
The eastern parts of Norway
were hit by severe floods. Tryg
received approx. 500 claims.

Organisational change
Tryg announced an organisa tional change of its daily management
structure as of 1 January 2016. The Nordic business areas are trans-
ferred to national business areas with new directors. The new struc-
ture replaces the Group Executive Management and top management
com prise an Executive Board com prising CEO, CFO and COO.

| Contents – Management’s review

Annual report 2015 | Tryg A/S | Targets and strategy

Aiming for the highest level of employee satisfac-

than growth. However, competition remained

tion in the financial sector in the Nordic region,

fierce in 2015 in both the Danish and Norwegian

Tryg was pleased to note a continued increase in

markets. In Denmark, the situation is impacted by

employee satisfaction in 2015, with Tryg surpass-

the high profitability of car insurance combined

ing the general level of employee satisfaction in

with high sales of smaller and safer cars. Generally

the financial sector in the region.

speaking, this development in car sales is leading

to a lowering of insurance risk and a correspond-

Value creation for our shareholders

ing reduction in average premiums, reducing total

Tryg’s shareholders must see Tryg as a company

premium income. Tryg has developed a new price-

Our purpose

for customers, employees and shareholders, and

increasing dividends. In 2015, Tryg did not meet its

this development through a slightly higher average

Tryg’s purpose is to create peace of mind and value

with ambitious targets disbursing stable and

differentiated car product which partly mitigates

We create peace of mind and value for

income and one-off costs. Tryg met the combined

affected the market somewhat, while a number

customers, employees and shareholders.

Tryg’s ambition is to become the world’s best insur-

ratio and expense ratio targets for 2015 and is on

of minor competitors actively gained market

this must be at the core of everything we do.

return on equity target due to very low investment

premium. In Norway, the weakened economy

ance company. This ambition lies at the heart of all

track to achieving the ambitious financial targets

share. In general, the impact of aggregators was

the strategic measures implemented by Tryg. Tryg

set for the period up until 2017.

limited in both Denmark and Norway. Overall,

Our ambition

has identified its fundamental corporate values,

Tryg’s retention rate was quite stable, indicating

To become the world's best insurance

the company’s ambition.

The Nordic insurance market is characterised

insurance company. In Denmark, the retention

which will help us meet our targets and support

Stable Nordic insurance market

that customers are generally satisfied with their

company.

Our values

by consumers and businesses that have largely

rate increased somewhat, while a slight drop was

Our customers – our most important asset

covered their insurance needs, combined with

seen in Norway.

Our customers are our most important asset. Tryg

relatively low rates of economic growth. Profitability

strives to continuously strengthen customer relations

in the insurance industry is generally high as the vast

Market developments differed in Denmark and

through our advisory services, products, concepts,

majority of companies focus on earnings rather

Norway in 2015. In Denmark, consumer optimism

Our values are highly integrated in our

claims handling procedures and claims prevention

culture and consistent with our purpose.

measures. In 2015, we had a strong focus on initia-

tives supporting the customer targets for 2017.

Employee satisfaction 2011-2015

•

We meet people with respect,

openness and trust

Our employees – our most important resource

•

We show initiative, share knowledge

Our employees are our most important resource and

and take responsibility

key to realising our vision of becoming the world’s

•

We deliver solutions based on quality

best insurance company. As an important step

and simplicity

towards achieving this, all our employees must feel

•

We create sustainable results

that they have an opportunity to be successful. Clear

Index

increased, leading to increasing real estate prices

and a lower unemployment rate of around 4.6%

at the end of 2015. Total car sales were up 9.9%

in 2015 compared with 2014 and were character-

ised, in particular, by increased sales of small cars.

The Norwegian economy deteriorated in 2015

primarily due to the significant drop in oil prices

although the Norwegian economy is generally

and ambitious targets must be set for each individual

Tryg

Nordic financial market

Nordic market

to around 4.4%. Car sales in Norway were up

employee, and regular feedback must be provided.

4.5% in 2015.

| Contents – Management’s review

2011

2012

2013

2014

2015

very strong. The unemployment rate increased

Annual report 2015 | Tryg A/S | Targets

strong focus on improving customer experience

have sent more than 600,000 automated text mes-

throughout all management and employee levels.

Tryg has a strong focus on both financials and

in all parts of the organisation.

sages to customers after they have been in contact

This creates clarity in terms of how the individual

customers, and targets have therefore been set

with us and received more than 200,000 replies.

employee contributes to the overall corporate

for both areas. Financial and customer targets are

Strategic initiatives

78% rated their experience with Tryg between 9

targets, which in turn leads to a more structured

inextricably linked. Loyal customers mean high

Tryg has set up four strategic initiatives to support

and 10 on a scale of 1-10. Tryg’s overall NPS score

and continuous dialogue regarding the employee’s

retention rates, keeping the expenses associated

its financial and customer targets. The strategic

has almost doubled since the Capital Markets Day

own personal development.

with attracting new customers low, thereby con-

initiatives for 2016 are unchanged from 2015.

in November 2014, from 11 to 22, which means

tributing to a low expense ratio. With the financial

that our 2017 target of an NPS score of 22 has been

Leading in efficiency

results posted for 2015, Tryg is on track to meeting

Strategic initiatives 2016

achieved. Concurrently with the implementation of

After having delivered on the previous efficiency

the financial targets for 2017.

• Next level pricing

automated NPS data, all managers and front-line

programme targets, Tryg launched its new efficiency

• Customer journey & success culture

employees have received training and coaching in

programme in 2015 with the aim of further reducing

In 2015, Tryg improved its performance on all

• Leading in efficiency

delivering a superior customer dialogue as close

claims and direct costs by DKK 750m by the end

customer-related parameters as a result of a

• IT stability and digitalisation

relations and the sense of genuinely being listened

of 2017, with DKK 500m relating to claims and

Next level pricing

most highly in the overall customer experience.

a further consolidation of Tryg’s Nordic procurement

to are two of the factors which our custo mers rate

DKK 250m to expenses. As regards the claims costs,

Financial targets 2015

Next level pricing (price differentiation) has been an

volume and the dedication of more resources to

ongoing initiative and Tryg’s most important initia-

To increase employee competences and motivation,

com batting fraud will be among the primary drivers,

• Return on equity of 20% after tax

tive in recent years. By the end of 2015, Tryg had

Tryg implemented the SuccessFactors tool in 2015,

while outsourcing, digitalisation and process

developed 33 new price-differentiated products,

which allows corporate KPIs to be cascaded down

optimi sation will contribute positively to reducing

• Combined ratio ≤90

• Expense ratio <15

Financial targets 2017

• Return on equity of ≥21% after tax

• Combined ratio ≤87

• Expense ratio ≤14

and it is estimated that 85% of Tryg’s tariffs are at

peer level. This development supports the target of

being ahead of peers for 25% of products and on a

par with peers for the remaining products in 2017.

In 2016, as an important part of the next level

pricing initiative, the portfolio will be converted

to the new price-differentiated products. This will

positively impact both profitability and efficiency,

especially in claims handling through the stand-

ardised handling of insurance agreements with

Customer targets 2017

similar terms and conditions.

• NPS + 100%

• Retention rate + 1 pp

Customer journey & success culture

In 2015, Tryg implemented the Net Promoter Score

• Customers ≥3 products + 5 pp

(NPS) system in all sales and claims teams across

Denmark, Norway and Sweden. In just one year, we

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

NPS =

Promoters

–

Detractors

Passives

Promoters

| Contents – Management’s review

Annual report 2015 | Tryg A/S | Change of car ownership
insurance

Tryg was the first company to introduce a

change of car ownership insurance product in

Denmark. The product is for customers buying

and selling cars privately and consists of a car

test and a change of car ownership insurance.

expenses and supporting the expense ratio target

agreed to all future communications with Tryg being

of 14 or below in 2017. During 2015, the out-

solely digital, while the figure for Norway is 63%. The

sourcing programme continued as planned, with 46

digitalisation programme has focused on creating a

employees being out sourced, primarily in Finance.

better customer experience in Tryg’s claims handling

The potential of the out sourcing programme is

and services, and secondly on automation, also in

deemed to be significant.

the claims division. The programme is swiftly gaining

momentum, having already released a number of new

IT stability and digitalisation

solutions. For 2016, the focus will be on self-service,

IT stability is extremely important for an insurance

automation, lead generation and cross sales. The

company which is very dependent on IT systems

target for 2017 is for 90% of our customers to be

for its customer communications within both sales

digital and for 80% of claims notifications from digital

and claims handling. Following the switch to TCS

customers to be reported via Tryg’s webpages.

Tata Consultancy, Tryg has seen a continuous im-

provement in IT stability and is now within sight of

Corporate Social Responsibility

the maximum downtime target. This is due to the

Corporate Social Responsibility is an integrated part of

joint efforts of Tryg and its partners, encompassing

Tryg’s core business, which is to create peace of mind

the transition of services, process optimisation,

and value for our customers, employees and share-

monitoring, upgrades and simplification of the

holders. This means that Corporate Social Respon-

IT structure and systems.

sibility plays a constant role in the decisions which

we make, in the improvement and development of

Digitalisation is very important and will become even

our products and services, in the optimisation of our

more important in future. An expansion of Tryg’s

operations and in the positive contributions which

digital communication with customers requires the

we make to society at large through our activities.

necessary acceptance by customers that we commu-

Read more about Tryg's CSR activities on pages

nicate digitally. In Denmark, 80% of customers have

35-36.

Efficiency programme – claims procurement

Efficiency programme – expenses

DKKm

500

400

300

200

100

250

500

150

100 105

2015

2016

2017

Total target

DKKm

250

200

150

100

125

250

50 60

2015

2016

2017

Total target

Target

Achieved

Target

Achieved

| Contents – Management’s review

Annual report 2015 | Tryg A/S |

Annual report 2015 | Tryg A/S | Financial targets and outlook

Financial targets 2017

highly skilled organisation.

and administration and DKK 250m relating to

is around 7% with the MSCI world index as the

tion through integration into Tryg's efficient and

relating to the procurement of claims services

return is expected. For shares, the expected return

expenses. The target is DKK 225m for 2016 and

benchmark, while the expected return for property

• Return on equity of ≥21% after tax

Tryg has a solid reserve position, and at the Capital

DKK 375m in 2017.

• Combined ratio ≤87

• Expense ratio ≤14

Markets Day in November 2014, Tryg therefore

is around 6%. Investment activities also include

other types of investment income and expenses,

announced that the run-off level was likely to be

The investment portfolio is divided into a match

especially the cost of managing investments, the

higher than the run-off level during the pre-2015

portfolio corresponding to the technical provi-

cost of currency hedges and interest paid on loans.

period. Tryg expects this to be the case until the

sions and a free portfolio. The objective is for the

end of 2017, after which we expect a long-term

return on the match portfolio and changes in the

There has been a gradual lowering of tax rates in

The return on equity for 2015 was below target

run-off level of 2.5-3%.

technical provisions due to interest rate changes

Denmark, Norway and Sweden in recent years. In

due to very low investment income and one-off

to be neutral when taken together. From 2016,

Denmark, the tax rate was 23.5% in 2015 and will

costs. Tryg met the combined ratio and expense

In 2016, weather claims net of reinsurance and

the curve used for discounting technical provi-

be reduced to 22% in 2016. The Norwegian tax

ratio targets for 2015 and is well positioned for

large claims are expected to be DKK 500m and

sions will change due to the implementation of

rate was 27% in 2015 and will be reduced to 25%

meeting the targets for 2017.

DKK 550m, respectively, which is unchanged

the Solvency II directive, and this might result in

in 2016, while the Swedish rate was 22%. When

relative to 2015.

slightly more volatile match portfolio net results.

calculating the total tax payable, account should

Tryg expects growth in gross premium income

The new curve increases the interest rate risk of

also be taken of the fact that gains and losses on

of 0-2% in local currencies in 2016. From 2017,

The interest rate used to discount Tryg’s technical

the technical provisions, thereby introducing a

shareholdings are not taxed in Norway. All in all,

we expect premium growth to be in line with GDP.

provisions is historically low. An interest rate in-

larger difference between the match return and

this causes the expected tax payable for an

The size of the motor market will generally be

crease will have a positive effect on Tryg’s results.

the changes in the technical provisions. Moreover,

average year to be reduced from around 22-23%

negatively impacted by technological develop-

Generally speaking, an interest rate increase of

the curve introduces a component, 'Credit Risk

to around 21% in 2016.

ments, and Tryg has therefore announced that we

1 percentage point will increase the pre-tax result

Adjustment – or CRA', which cannot be hedged,

will be taking a more active approach to acquiring

by around DKK 300m and vice versa.

and the impact from this component can only

The value of the NOK fell in 2015, which had

smaller port folios and developing the market for

be negative.

products which are expected to see higher growth

For the purpose of realising the financial targets,

a negative impact on Tryg’s operating profit.

The share of equity held in NOK and SEK is

rates such as pet insurance and child insurance.

Tryg launched an efficiency programme aimed at

The return on bonds in the free portfolio will

continuously hedged in the financial markets.

In general, acquisitions should support value crea-

realising savings of DKK 750m, with DKK 500m

vary, but given current interest rate levels, a low

| Contents – Management’s review

Annual report 2015 | Tryg A/S | Tryg’s results

The one-off costs of DKK 120m incurred in Q3

2015 were in line with Tryg’s statement at the

Capital Markets Day (CMD) in November 2014

Customer highlights 2015

and relate primarily to Tryg’s sourcing programme,

•

NPS improved from 11 to 22

but also to initiatives designed to achieve our first-

• Retention rate improved from 87.9 to 88.1

contact resolution targets and improve our digital

•

Number of customers with three or more

solutions. As communicated at the CMD, a thorough

products up from 56.3% to 56.7%

analysis undertaken by Tryg in cooperation with

•

TryghedsGruppen’s members’ bonus

its sourcing partner has identified a significant

scheme approved by the Danish Business

A result of DKK 1,981m affected by one-off costs

Results

sourcing potential both in the claims and in the

Authority

and a low investment return. Proposed dividend

Reporting a return on equity of 18.9%, a combined

administration parts of the business areas.

of DKK 3.50 per share equivalent to a dividend

ratio of 86.8 and an expense ratio of 15.3, Tryg

of DKK 6 per share for 2015. A share buy back

met its combined ratio and expense ratio targets.

In 2015, Tryg maintained a strong focus on the

The share of customer with three or more products

programme of DKK 1,000m is planned for 2016.

The target was a combined ratio below 90 and an

customer targets for 2017. The Net Promoter

increased from 56.3% to 56.7%. Increasing the

Financial highlights 2015

•

Profit after tax of DKK 1,981m

(DKK 2,557m)

•

Return on equity after tax of 18.9% (23.0%)

Technical result of DKK 2,423m

(DKK 3,032m)

• Combined ratio of 86.8 (84.2)

• Premium income reduced by 0.8% (-1.1%)

•

Claims ratio, net of ceded business, of

expense ratio below 15, and adjusted for one-off

Score (NPS) improved from 11 at the CMD to 22

number of products per customer is an effective

costs of DKK 120m relating to the ongoing ef-

by the end of 2015. Improving in all business areas

way of improving customer loyalty and has been a

ficiency programme, an expense ratio of 14.9 was

in the course of the year, the NPS has proven to be

focus area in all parts of the organisation.

realised. Due to the above-mentioned one-off

a strong driver for improving customer loyalty. In

costs and the very low investment result, Tryg did

2015, the score improved very significantly, espe-

In August, the Danish Business Authority approved

not meet the target of the return on equity of 20%.

cially for Tryg’s Norwegian business. At the end of

the members’ bonus scheme of TryghedsGruppen,

2015, the NPS was also implemented by Corporate

Tryg’s majority shareholder. Tryg expects the

Profit after tax was DKK 1,981m (DKK 2,557m),

with very high scores, with a particularly high score

bonus scheme and the expected disbursement

positively affected by the ongoing efficiency pro-

of 63 being achieved by our Guarantee business.

of bonus corresponding to 5-8% of the prior-year

gramme, which contributed savings of DKK 165m

At 88.1, the retention rate was up from 87.9 at the

premium to support our customer targets and

in 2015 against a target of DKK 150m. Profit after

CMD. In 2015, we saw a significant improvement

especially customer retention. The first bonus

tax was adversely impacted by a low level of in-

in Commercial Denmark from 86.6 at CMD to

will be disbursed in spring 2016.

71.5 (69.6)

vestment income and one-off costs relating to the

87.9 in Q4 2015.

•

Expense ratio of 15.3 (14.6) and

efficiency programme. The total effect of weather

14.9 (15.3) before one-off effects

claims, large claims and run-off was somewhat

•

Investment return, after transfer to

higher than in 2014. A slightly negative develop-

insurance, of DKK -5m (DKK 360m)

ment was observed during the year, especially for

•

Proposed dividend of DKK 3.5 per share

the property lines across the different business

and DKK 6.0 when including H1 dividend

•

DKK 1bn share buy back completed and a

new DKK 1bn programme planned in 2016

areas, and this will be mitigated through price

increases to the tune of 3% and new targeted

claims assessment initiatives in 2016.

Customer targets

DKKm

Net Promoter Score (NPS)
Retention rate
Customers with ≥3 products (%)

| Contents – Management’s review

CMD
(Nov. 2014)

11
87.9
56.3

2015

22
88.1
56.7

Target
2017

22
88.9
61.3

Annual report 2015 | Tryg A/S |

As part of Tryg’s customer focus, Commercial

Council recommended Tryg’s new car insurance

We know that many customers prefer self-service

development in the portfolio. Corporate posted

radically changed its structure in 2015 through

product as being ‘Best in Test’. Tryg also launched

solutions, and we have therefore developed a self-

premium growth of 0.0% (1.1%) in local currencies.

increased empowerment of the front-line organi-

new house insurance, travel insurance, accident

service solution for our most important product,

For this business area, Tryg is prepared for more

sation and a reduction in back-office functions.

insurance and pet insurance products in Norway,

motor, in both Denmark and Norway, which allows

substantial fluctuations in premium income due to

This change will support first-contact resolution by

while in Denmark we launched a new accident

customers to register their current kilometre read-

the competitive situation and the focus on having a

removing a lot of unnecessary stops in connection

insurance product along with many products for

ings and yearly mileages.

profitable portfolio. The Swedish business saw a 3.1%

with the selling of insurance. In Q4, Commercial

our largest affinity agreement, including house,

(-7.4%) drop in premium income in local currencies.

also introduced Tryg Plus for commercial custom-

pet and motorcycle insurance.

Claims reporting is one of the most important

After the implementation of significant structural

ers with many customer advantages.

parameters for customers, and in Q4 a solution for

changes in recent years, the Swedish business gener-

Within Private, many new initiatives were intro-

Smart motor app, which from the start has re-

launched in Denmark. Tryg will continue to develop

levels under the distribution agreement with Nordea.

In Q4 2015, Moderna launched the Moderna

the digital reporting of private contents claims was

ated higher-level sales in 2015 compared to sales

duced to improve first-contact resolution through

ceived much attention from customers and gener-

user-friendly solutions in 2016. To increase the

new customer centre workflows. In Denmark,

ated very strong sales. The app records the driver’s

number of products per customer, Tryg will also,

In Norway, Tryg’s child insurance was acclaimed

a significant improvement was achieved, with a

driving style, and the car insurance price is

as part of the digitalisation programme, encourage

as Best in Test by the Norwegian Family Economy

first-contact resolution rate of 83% being realised,

then differentiated accordingly.

customers to buy new products through Tryg’s ‘My

(Norsk Familieøkonomi). In 2015, Tryg made an agree-

which is close to the target of 90%. In Private

page’ online solution in both Denmark and Norway.

ment to acquire Skandia’s child insurance portfolio.

Norway, first-contact resolution stood at 75%,

In 2015, a number of old products were converted

and with many initiatives in the pipeline for 2016.

to new and more up-to-date products. The conver-

Premiums

The portfolio is worth around SEK 250m, and the trans-

action is expected to take effect in H1 2016. Tryg gen-

sion process was generally successful with a high

Premium income totalled DKK 17,977m

erally views child insurance as a future growth area.

In 2015, Tryg also had a strong focus on claims

hit rate. In 2016, the conversion of products will be

(DKK 18,652m), representing a fall of 0.8% (-1.1%)

prevention. In 2014, Tryg was the first insurance

a very im portant focus area. Tryg will convert almost

when measured in local currencies. The develop-

Claims

company to start offering synthetic DNA marking

1 million insurance policies in 2016 primarily within

ment in premium income improved for Private and

The gross claims ratio was 75.4 (67.8), with a claims

in Denmark. The scheme was further rolled out

the main areas of activity – motor, house and ac-

Sweden, but was somewhat lower for Commercial

ratio, net of ceded business, which covers both claims

in both Denmark and Norway in 2015 with good

cident. This will contribute to increasing efficiency

and Corporate. In 2015, Private saw an improved

and business ceded as a percentage of gross pre-

results, leading to a significant drop in break-ins in

as old products can then be phased out. It also

development trend, and the development in both

miums, of 71.5 (69.6). The claims level was positively

the targeted areas and also very positive customer

ensures that em ployees will only have one product

customer numbers and sales improved in 2015 rela -

impacted by the efficiency programme in the amount

responses, which attracted new customers to Tryg.

to consider in their advisory and claims handling

tive to 2014. The improvements were primarily due

of DKK 105m due to combination of the improved

functions.

to a strengthened customer focus and new price-

procurement of claims services and claims administra-

The development of price-differentiated products

differen tiated products with improved coverage,

tion. The net impact from weather claims, large claims

continued in 2015, and in March Tryg launched

Digitalisation is a key strategic initiative for Tryg.

which had a positive effect on the development in

and run-off impacted the claims ratio negatively by

a new car insurance product in Denmark. This

In 2015, Tryg further increased the number of

premium income. Premium income in Commercial

0.1 percentage points. Apart from this, an increase

was the most important product launch since the

customers we contact digitally, both in our daily

was down by 2.9% (-3.0%) in local currencies. In

was seen in the level of medium-sized claims as well

start of Tryg’s strategic initiative to develop price-

dealings with customers, but also as part of pre-

2015, the Commercial retention rate improved in

as a higher claims level especially for the property

differentiated products in 2012. The new product

paring for the customer bonus scheme. Tryg has

Denmark, but dropped in Norway. There is a general

lines across the different areas. The development

improved Tryg’s competitive position in this very

digitalised 80% of its Danish and more than 60%

need to improve the balance between sales and

in property insurance claims will be offset by minor

important market, and the Danish Consumer

of its Norwegian customers.

retention rates in Commercial to achieve a positive

price adjustments, but also through improved quality

| Contents – Management’s review

Annual report 2015 | Tryg A/S |
control for certain types of claims such as, for exam-

Large claims amounted to 3.4% (3.1%) in 2015

The return on the match portfolio was DKK 1m

6,193m at the end of 2015, and is measured based

ple, claims relating to pipes. Tryg saw an increase

and weather claims to 3.4% (2.4%). Large claims

(DKK 181m) after transfer to insurance tech nical

on the adequate capital base, which amounted to

in such claims in 2015. We also saw an increase in

and weather claims totalled DKK 1,227m, which

interest. The return on the free investment portfolio

DKK9,525m. After recognition of a share buy back

the level of travel insurance claims, highlighting the

is somewhat higher than the average level of

was DKK 232m (DKK 548m). The return on the

in 2015, Tryg’s surplus cover is DKK 3,332m,

fact that the price increases introduced in August

DKK 1,050m a year. The run-off level stood at 6.7%

equity portfolio was positive at 3.4%, which was

corresponding to 54%.

2014 in connection with the extension of cover

(6.1%), which underlines Tryg’s solid provisions.

significantly lower than in 2014, which saw a return

for health-related issues no longer covered under

of 10% and was impacted by a volatile develop-

Tryg’s capital adequacy calculation includes approxi-

the public health insurance schemes were too low.

Expenses

ment for equities especially in Q3, which saw a sig-

mately NOK 1.2bn after tax from the Norwegian

This development will be mitigated through price

The expense ratio was 15.3 (14.6). Adjusted for

nificant drop leading to a negative return of 10.3%.

Na t ural Perils Pool and the Norwegian guarantee

adjustments.

one-off costs of DKK 120m relating to the ef-

Bonds produced a negative return of 0.1% (2.1%),

scheme. On 26 August 2015, the Norwegian Ministry

ficiency programme, the expense ratio was 14.9

with the total return being impacted especially by a

of Justice and Public Security started a consultation

The claims-related measures implemented in 2015

and in line with the target of an expense ratio

negative return of 0.6% on covered bonds.

in relation to the use of the Norwegian Natural Perils

included improved agreements on the procure-

below 15 in 2015.

Pool (NNP) as an Own Funds item under the Solv-

ment of claims services within contents insurance,

Profit/loss on discontinued business

ency II scheme. The most important message in the

including an agreement with Scalepoint and the

The efficiency programme contributed DKK 60m

A profit of DKK 49m (DKK 10m) was realised

consultation material is that the classification of the

gradual implementation of the IN4MO system for

in 2015, corresponding to an impact on the ex-

on discontinued business, comprising gains

Natural Perils Pool will be allowed as a Tier 2 capital

the management of all processes and deliveries in

pense ratio of 0.3 percentage points. The initiatives

on provisions, primarily relating to the marine

item. Tryg expects a final solution to be announced in

connection with building claims. Most agreements

comprised cuts in Finance and IT as part of the

run-off business.

with claims service companies are based on a

outsourcing programme, but the changed

general model of fixed prices for specific tasks. This

Commercial structure also had a positive impact.

Tax

Q1 2016. The inclusion of the Natural Perils Pool as

Tier 2 capital will lead to a potential for issuing future

subordinated debt of approximately DKK 1bn.

approach is easy to manage and encourages the

Going forward, outsourcing in the various business

Tax on profit for the year totalled DKK 395m, or 17%

swift handling of reported claims.

areas will play an important role in meeting the

of the profit before tax. The relatively low tax rate was

On 2 January 2015, Tryg initiated a buy back of own

DKK 250m target for the period up until 2017.

due to a lower Norwegian tax rate and a merger of

shares for an amount of DKK 1,000m, which was

Tryg renewed a horizontal reinsurance agreement

Tryg’s property com panies, which meant that a tax

finalised on 18 December 2015.

for the period from 1 July 2015 to 30 June 2016.

In 2015, the number of employees was reduced

deficit in one of Tryg’s properties could be utilised.

In the event of total storm and cloudburst claims

from 3,599 to 3,359.

In 2015, Tryg paid DKK 765m in income tax as well

As earlier mentioned, Tryg has acquired Skandia’s

expenses in excess of DKK 300m, the agreement

as various payroll taxes totalling DKK 362m, result-

child insurance portfolio. This will lead to a capital

will cover the next DKK 600m. Only claims events

Investment return

ing in total tax payments of DKK 1.127m in 2015.

impact of DKK 400-500m, both due to the price paid

in excess of DKK 20m are covered by the agree-

The investment return was negative by DKK 5m

for the portfolio and the capital requirement relating

ment. In H2 2015, storm and cloudburst claims

(DKK 360m) in 2015. The match portfolio totalled

Capital position

to the portfolio.

totalled approximately DKK 190m, which means

DKK 28.1bn and is made up of bonds which match

Tryg’s equity totalled DKK 9,831m (DKK 11,119m)

that after claims for another approximately

the insurance provisions so that fluctuations re-

at the end of 2015. Tryg determines the individual

In general, Tryg wants to acquire small portfolios

DKK 110m, the agreement will provide cover

sulting from interest rate changes are offset to the

solvency requirement according to the Danish

which can be integrated in an effective way and sup-

in H1 2016.

greatest possible extent. At 31 December 2015,

Financial Supervisory Authority’s guidelines.

port Tryg’s financial targets over a three-year horizon,

the value of the free portfolio totalled DKK 10.7bn.

The individual solvency requirement was DKK

supporting a return on equity of 21%.

| Contents – Management’s review

Annual report 2015 | Tryg A/S | The transition to Solvency II from 1 January 2016

Results for Q4 2015

Claims

The number of employees was further reduced

will have a positive impact on Tryg’s capital

The profit after tax totalled DKK 721m

The gross claims ratio was 68.0 (64.1), with a

in the quarter by 66 full-time employees, leaving

pos ition. Tryg has a Solvency II ratio of 176 on

(DKK 640m) based on a technical result of

claims ratio, net of ceded business, which covers

3,359 full-time employees at the end of the year.

1 January 2016.

Dividend policy

DKK 522m (DKK 775m) and an investment

both claims and business ceded as a percentage

result of DKK 201m (DKK 13m).

of gross premiums, of 74.2 (68.8). The higher

Investments

level of claims can be ascribed especially to a high

The investment return was DKK 201m (DKK 13m)

According to Tryg’s dividend policy, the aim is

Profit after tax was positively affected by the on-

level of weather claims of 5.4% (2.6%). Sweep-

with a result from the match portfolio of DKK

for the dividend to be steadily increased. For H2

going efficiency programme which had an impact

ing across Denmark at the end of November, the

44m (DKK 39m), a result from the free portfolio

2015, a dividend of DKK 3.5 per share is proposed,

of DKK 32m in the quarter. The investment income

storm Gorm resulted in claims of approximately

of DKK 201m (154m) and other financial income

corres ponding to a total dividend per share based

rebounded somewhat from the very negative de-

DKK 120m, while the flooding caused by the storm

and expenses totalling DKK -44m. The high return

on the 2015 results of DKK 6 (DKK 5.8), represent-

velopment in Q3 2015 with a result of DKK 201m.

Synne in Norway at the beginning of December led

on the free portfolio was due to a rebound in the

ing total dividend payments of DKK 1,759 or 89%

The net effect of weather claims, large claims and

to claims of approximately NOK 215m, of which

equity market reflected in a return on equities of

of the profit for the year.

run-off was up by 3 percentage points in the

Tryg covers approximately NOK 23m. In addition

DKK 111m (DKK 75m) or 4.5% (3.2%). The return

quarter, with weather claims being especially high.

to these specific weather claims came the usual

on Investment property was DKK 71m (DKK 50m)

In 2015, a DKK 1bn share buy back was com-

The claims level was also impacted by a higher

winter claims, especially in Norway. The high level

following a positive revaluation for some invest-

pleted, and Tryg has planned a DKK 1bn share buy

claims level from the property lines across the

of weather claims means that Tryg will be covered

ment properties.

back programme once approved by the Danish

different business areas.

under a horizontal reinsurance agreement after

Financial Supervisory Authority.

further weather claims of DKK 110m.

Premiums

The total yield for shareholders was 6.9% in 2015.

Premiums developed negatively by 1.6% (-0.1%) in

In Q4, claims levels generally remained high for

Financial highlights Q4 2015

local currencies. In Private, the positive develop-

the property lines, which will be mitigated through

Events after balance sheet date

ment continued with growth of 1.1% (-0.2%) in

minor price adjustments and claims initiatives.

The introduction of Solvency II will have a signifi-

local currencies, reflecting both a strong develop-

Claims initiatives will include more thorough in-

• Profit after tax of DKK 721m (DKK 640m)

•

Technical result of DKK 522m (DKK 775m)

cant impact on Tryg’s capital position in various

ment in sales and stable retention rates. In Com-

vestigations, in particular of pipe-related claims.

• Combined ratio of 88.4 (83.7)

areas and will be taken in to account as of 1 January

mercial, premiums dropped by 5.0% (-1.8%) in lo-

2016.

Read more on in the section Capital and risk

cal currencies, reflecting a competitive Norwegian

Expenses

•

Weather claims impacting the combined

ratio by 5.4 percentage points (2.6)

management on pages 24-25 and

Download the

market which was also impacted by the economic

The expense ratio was 14.2 (14.9).The efficiency

•

Large claims impacting the combined

newsletter at Tryg.com

situation, whereas Commercial in Denmark saw

programme contributed DKK 15m in the quarter,

ratio by 3.1 percentage points (4.3)

stable development but was impacted by the in-

corresponding to an impact on the expense ratio

• Expense ratio of 14.2 (14.9)

In the opinion of Management, from the balance

dividual regulation of a number of large accounts.

of 0.3 percentage points. Apart from the contri-

•

Investment return of DKK 201m

sheet date to the present date no other matters

In Corporate, premium growth was negative at

bution from the efficiency programme, the low

(DKK 13m)

of major significance have arisen that are likely

2.1% (1.5%) in local currencies, reflecting a more

expense ratio was also due to the organisation’s

•

Proposed dividend of DKK 3.5 per share

to materially influence the assessment of the

competitive Norwegian market. The Swedish

efforts to meet the overall target for 2015 of an

and DKK 6.0 when including H1 dividend

company’s financial position.

business saw a drop in premium income of 6.1%

expense ratio below 15.

(1.6%) in local currencies following the termination

of a large affinity agreement.

•

DKK 1bn share buy back completed and a

new DKK 1bn programme planned in 2016

| Contents – Management’s review

Annual report 2015 | Tryg A/S |
Private

retention rate dropped from 87.0 to 86.4 due to the

storm Gorm in Denmark but also flooding in Norway

above-mentioned developments in the Norwegian

and higher claims levels for some lines of business.

economy and the competitive market situation.

House insurance saw a particularly negative

Sales and customer numbers developed positively,

development in claims, as did some minor lines of

which can also be ascribed to the increased cus tomer

business such as travel insurance. Tryg constantly

focus. Sales in Denmark were 7% higher than in 2014,

monitors developments in claims, and steps are

and Norwegian sales were also slightly higher, especi-

taken to counter any consistently negative trends.

ally due to strong sales via the franchise sales channel.

Initiatives will often be a combination of minor

Private encompasses the sale of insurance products

in premiums was slightly positive and improved

price adjustments and claims prevention.

to private individuals in Denmark and Norway. Sales

compared to 2014. Adjusted for the one-off effects

Claims

are effected via call centres, the Internet, Tryg’s own

in 2014 of Norwegian pension and IT costs, the

The gross claims ratio amounted to 69.0 (67.7), with a

Expenses

agents, franchisees (Norway), interest organisations,

expense ratio improved by 0.6 percentage points.

claims ratio, net of ceded business, of 70.7 (68.0). The

The expense ratio was 14.7 (14.5). Adjusted for the

car dealers, estate agents and Nordea’s branches.

increase was ascribable to the efficiency programme

one-off effects of the Norwegian pension scheme

The business area accounts for 49% of the Group’s

Premiums

and a higher level of weather claims related to the

and the change of IT suppliers in 2014, the expense

total premium income.

Results

The development in gross premium income improved

by 0.3% in local currencies against an unchanged level

in 2014 and a 2.2% drop in 2013. Premiums increased

Key figures – Private

The technical result for 2015 was DKK 1,298m

by 0.4% in Denmark, which was very satisfactory

(DKK 1,612m), with a combined ratio of 85.4

given also that the average price of the motor product

(82.5). The development was attributable to a

fell by a further 2.6 percentage points due to higher

combination of a positive impact from the ef-

sales of smaller and safer cars. In Norway, premium

ficiency programme, a higher level of weather

income increased by 0.3% in local currencies, which

claims and a higher level of claims especially from

was acceptable, considering the competitive market

the property lines of business. The development

situation and the weakened Norwegian economy.

Financial highlights 2015

•

Technical result of DKK 1,298m

(DKK 1,612m)

• Combined ratio of 85.4 (82.5)

•

Gross premiums in local currencies

increased by 0.3% (0.0%)

• Expense ratio of 14.7 (14.5)

| Contents – Management’s review

The improved premium development can be ascribed

to a strong customer focus, which has resulted in a

significant improvement in the Net Promoter Score

(NPS) from 21 in 2014 to 26 in 2015. The develop-

ment was significant in both Denmark and Norway.

In Denmark, the NPS improved from 25 to 29, while

an improvement from 15 to 22 was seen in Norway.

The development in the NPS also supported a posi-

tive development in the retention rate in Denmark,

which improved from 89.6 to 89.9. In Norway, the

DKKm

Q4 2015

Q4 2014

Gross premium income
Gross claims
Gross expenses

2,172
-1,548
-290

2,249
-1,468
-337

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
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)

334
-51
2

285
49

1.1

71.3
2.3
73.6
13.4

87.0
-2.3
0.4
7.6

444
-48
4

400
47

-0.2

65.3
2.1
67.4
15.0

82.4
-2.1
0.0
2.6

2015

8,803
-6,074
-1,291

1,438
-148
8

1,298
324

0.3

69.0
1.7
70.7
14.7

85.4
-3.7
0.3
4.5

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
-3.9
0.1
2.5

Annual report 2015 | Tryg A/S |

ratio improved by 0.6 percentage points. This

a competitive market situation and the weakened

development was the result of a consistent focus

Norwegian economy. The positive development in

on improving expense levels, and in 2015 outsour-

the NPS continued in Q4 with an improvement of

cing initiatives were implemented in Private. The

1 point to 29 in Denmark and an unchanged level of

initiatives centred on reducing expense levels in the

22 in Norway. The positive development in customer

back-office functions and improving sales efficiency

numbers continued with a significant increase in

through improved management and training.

Denmark and a slight reduction in Norway. Sales were

The number of employees was reduced from 903

channels contributed positively to the development,

at the end of 2014 to 837 in 2015, mainly through

and in Norway the franchise sales channel posted

job cuts in the administration.

consistently high sales levels.

high in both Denmark and Norway. In Denmark, all

Financial highlights Q4 2015

The retention rate in Denmark increased to 89.9

(89.6), and the retention rate in Norway was 86.4

(87.0). The high level in Denmark was probably partly

•

Technical result of DKK 285m

due to awareness of the customer bonus that will be

(DKK 400m)

implemented from spring 2016.

• Combined ratio of 87.0 (82.4)

• Claims ratio, net of ceded business,

Claims

of 73.6 (67.4)

The gross claims ratio was 71.3 (65.3), and the

• Expense ratio of 13.4 (15.0)

claims ratio, net of ceded business, was 73.6 (67.4).

Results Q4 2015

The high level was primarily due to the weather in

Denmark and Norway. A storm in Denmark resulted

in more than 9,000 claims, and in Norway severe

The technical result totalled DKK 285m (DKK 400m),

flooding caused damage of an estimated NOK 215m

with a combined ratio of 87.0 (82.4), and was

for the market as a whole, on top of which came the

negatively affected by a significantly higher level

impact from winter claims. We saw a slight increase

of weather claims than in 2014. The expense level

in property claims in Denmark, which underpins the

was very low at 13.4 (15.0).

importance of implementing both price and claims

prevention initiatives from 2016.

Premiums

Gross premiums increased by 1.1% (-0.2%) in local

Expenses

currencies. Premium growth in Denmark was 2.6%,

In Denmark, the expense ratio was 13.4 (15.0),

partly due to a low level of bonus and premium

reflecting a strong focus on efficiency and a lower

rebates, while premium growth in Norway was

level of commissions and marketing spend. The

negative at -0.7% in local currencies, still reflecting

number of employees was reduced by 15 in Q4.

Prevention creates peace of mind and increases sales Tryg is the
first insurance company to actively use DNA marking in an effort to
prevent break-ins.

The DNA marking technology consists of an

the home-owners using DNA marking. Tryg

invisible and synthetic liquid which can be

extended the trial to Norway, distributing

applied to all valuables. The liquid is visible

DNA kits to 280 households in Hasleåsen in

under UV light and cannot be removed.

Sandefjord, another residential area plagued

by high break-in rates. In addition to reducing

Tryg first carried out a trial in a residential

the number of break-ins, the initiative has

district in the town of Sønderborg in southern

attracted more than 50 new customers in

Denmark with a particularly high incidence

the area.

of break-ins, and 90 residents said yes to the

DNA kit. Police data show that the number

Studies show that synthetic DNA marking

of break-ins in the Sønderborg area in general

has a clearly preventive effect on burglary

has fallen by 26%, while Tryg’s data from the

rates.

Read more at tryg.com >

understanding of their operations and to support

workshops. One focused on bicycle safety and the

equal gender representation at management level,

CSR > Thematic area > Business ethics.

them during the first few weeks after taking over the

other one on prevention of fire. Both workshops

our initiatives include an action plan aimed at ensur-

new processes. Partners are asked to submit an

received positive feedback, and we are planning to

ing the recruitment and promotion of more women

As a part of Tryg's business ethics including anti-

annual CSR report.

Read more at tryg.com >

host at least one workshop in 2016. To increase our

in management roles. Internal recruiters as well as

corruption, we have a code of ethics which all em-

CSR > Thematic area > Business ethics.

engagement with the local community, we will also

external agencies are instructed to work actively to

ployees must know and adhere to. At the same time,

re-launch a financial training course in 2016 aimed

present qualified candidates of both genders.

our employees are obliged to report any activities

The offshoring programme has resulted in redun-

at enabling young people to assume responsibility

that do not comply with our code of ethics or ap-

dancies. Tryg has made a new-placement agree-

for their finances.

Read more at tryg.com >

events targeted at high-potential women in Tryg.

pays all relevant taxes.

Denmark. In 2015, Tryg distributed 280 marking kits

CSR > Thematic areas > Peace of mind.

The target for 2016 is 38% or more women in

in Sandefjord, Norway. In October 2015, preliminary

management position.

Read more at tryg.com >

Responsible offshoring

results from Sønderborg showed a 50% decline in

Lifebuoys

CSR > Thematic area > People.

In 2015, Tryg extended its offshoring programme

the number of break-ins for the 90 properties using

The red-and-white lifebuoy has become a symbol of

to include accounting. In its choice of partners, Tryg

DNA marking compared to a 26% decline in the

safety along the coastlines in Denmark, Norway and

Business ethics

has paid much attention to working conditions,

area in general. In 2016, we will be able to conclude

Sweden. Since 1952, more than 39,000 life buoys

In Tryg, we respect human rights in everything we

wanting to ensure that our partners respect human

on the long-term preventive effect of synthetic DNA

have been installed in Norway alone, and every year

do, and we want to improve our preventive efforts

and labour rights. At the same time, a risk analysis

marking in Sønderborg.

Read more at tryg.com >

they help prevent drownings. In 2015, the demand

to minimise the risk of human rights violations. To

of each partner is performed before signing the

CSR > Thematic areas > Peace of mind.

for more lifebuoys increased as Tryg distributed over

ensure that Tryg’s values are part of our suppliers’

contract. Tryg also wants to make sure that workers

2,000 compared to around 1,000 in 2014. In 2016,

mindset, all our suppliers have to comply with

receive the necessary training, which is why our

Engagement with the local community

Tryg will continue to donate lifebuoys to enhance

our CSR reporting guidelines. Therefore, we have

partners’ employees have been visiting Tryg to learn

To create peace of mind and share our knowledge

safety at the seaside.

Read more at tryg.com >

introduced a new reporting system. Trialling the new

about our systems and processes. Tryg employees

about prevention, we invited 120 students from the

CSR > Thematic areas > Peace of mind.

| Contents – Management’s review

Annual report 2015 | Tryg A/S |
Menu – Financial statements 2015

TRYG GROUP

Insurance technical interest,

17 Current tax

Note Statement by the Supervisory

net of reinsurance

Board and the Executive

5 Claims, net of reinsurance

Management

Insurance operating costs,

Independent auditor’s reports

Financial highlights

Income statement

Statement of comprehensive

income

net of reinsurance

6 Share option programme

6 Matching shares

Interest income and

dividends etc.

Statement of financial position 43

8 Value adjustments

Statement of changes in equity 44

9 Tax

Cash flow statement

1 Risk and capital management

2 Operating segments

2 Geographical segments

Profit/loss on discontinued

and divested business

Intangible assets

12 Property, plant and equipment

Technical result, net of

Investment property

18 Equity

19 Premium provisions

19 Claims provisions

20 Pensions and similar liabilities

21 Deferred tax

22 Other provisions

Amounts owed to credit

institutions

Debt relating to unsettled

funds transactions and repos

25 Earnings per share

Contractual obligations,

collateral and contingent

liabilities

27 Acquisition of subsidiaries

reinsurance, by line of business 60

14 Equity investments in associates 72

28 Related parties

Premium income, net of

15 Financial assets

reinsurance

16 Reinsurers’ share

29 Financial highlights

30 Accounting policies

TRYG A/S (PARENT COMPANY)

Income statement – Tryg A/S

(parent company)

Statement of financial position

– Tryg A/S (parent company)

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

100

102

103

104

105

106

107

Tryg’s Group consolidated financial statements are prepared
in accordance with IFRS.

| Menu – Financial statements

Annual report 2015 | Tryg A/S |

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 2015 and of the results of the Group’s

and of the Group’s and the parent company’s

annual report for 2015 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 2015.

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, 21 January 2016

Executive Board

Morten Hübbe
Group CEO

Tor Magne Lønnum
Group CFO

Lars Bonde
Group COO

Supervisory Board

Jørgen Huno Rasmussen
Chairman

Torben Nielsen
Deputy Chairman

Anya Eskildsen

Vigdis Fossehagen

Lone Hansen

Jesper Hjulmand

Ida Sofie Jensen

Bill-Owe Johansson

Lene Skole

Tina Snejbjerg

Mari Thjømøe

Carl-Viggo Östlund

| Contents – Financial statements

Annual report 2015 | 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

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

Financial Business Act and Danish disclosure

circumstances, but not for the purpose of express-

Pursuant to the Danish Financial Business Act, we

requirements for listed financial services compa-

ing an opinion on the effectiveness of the entity’s in-

have read the management’s review. We have not

nies, and for such internal control as management

ternal control. An audit also includes evaluating the

performed any further procedures in addition to

Statement on the management’s
review

We have audited the consolidated and parent

determines is necessary to enable the preparation

appropriateness of accounting policies used and

the audit of the consolidated and parent financial

financial statements of Tryg A/S for the financial

and fair presentation of consolidated and parent

the reasonableness of accounting estimates made

statements. On this basis, it is our opinion that the

year 1 January to 31 December 2015, page 40-99,

financial statements that are free from material

by management, as well as the overall presentation

information provided in the management’s review

which comprise the income statement, statement

misstatement, whether due to fraud or error.

of the consolidated and parent financial statements.

is consistent with the consolidated and parent

of comprehensive income, statement of financial

We believe that the audit evidence is sufficient and

financial statements.

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, 21 January 2016

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 2015, and of

CVR-nr. 33 96 35 56

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 2015 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

2015, 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 2015 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

| Contents – Financial statements

Annual report 2015 | Tryg A/S |
Financial highlights

DKKm

2015

2014

2013

2012

2011

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

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 (%)

17,977
-13,562
-2,720

18,652
-12,650
-2,689

19,504
-14,411
-3,008

20,314
-14,675
-3,295

19,948
-15,783
-3,271

1,695
710
18

2,423
-5
-91

2,327
-395

1,932
49

1,981

1,212

31,571
3,176
9,831
51,281

75.4
-3.9
71.5
15.3

86.8

15.1
86.5
4.8
18.9

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

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

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

Solvency ratio (Solvency I – ratio between base capital and weighted assets)

108

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 2015'' 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 and the
Finnish branch of Tryg Forsikring, which was sold in
2012.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Income statement

DKKm

2015

2014

DKKm

2015

2014

Note General insurance

Gross premiums written
Ceded insurance premiums
Change in premium provisions
Change in reinsurers' share of premium provisions

Premium income, net of reinsurance

18,150
-1,165
61
1

17,047

18,672
-1,059
268
-57

17,824

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

Insurance technical interest, net of reinsurance

Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers' share of claims provisions

5 Claims, net of reinsurance

-13,095
471
-467
1,301

-11,790

-13,695
1,361
1,045
-688

-11,977

Bonus and premium discounts

-234

-288

Acquisition costs
Administration expenses

Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers

Insurance operating costs, net of reinsurance

-2,042
-678

-2,720
102

-2,618

-1,955
-734

-2,689
102

-2,587

Technical result

2,423

3,032

Total investment return

Return on insurance provisions

Total investment return after insurance technical interest

Other income
Other costs

Profit/loss before tax
Tax

Profit/loss on continuing business

Profit/loss on discontinued and divested business

42
94
794
-493
-95
-88

254

-259

-5

81
-172

2,327
-395

1,932

10
94
949
-95
-115
-69

774

-414

360

81
-171

3,302
-755

2,547

Profit/loss for the year

1,981

2,557

Earnings per share – continuing business
Diluted earnings per share – continuing business
Earnings per share
Diluted earnings per share

6.77
6.77
6.95
6.95

8.70
8.70
8.74
8.73

| Contents – Financial statements

Annual report 2015 | 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
Change in taxes on security 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

2015

1,981

21
141
4
2
-12
3

159

-89
86
-21

-24

135

2,116

2014

2,557

26
0
2
0
-46
12

-6

-178
191
-47

-34

-40

2,517

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Statement of financial position

DKKm

Note
11

Assets
Intangible assets

Operating equipment
Owner-occupied property
Assets under construction

Total property, plant and equipment

Investment property

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

Total investment assets

Reinsurers' share of premium provisions
Reinsurers' share of claims provisions

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

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

2015

2014

DKKm

2015

2014

Note
18

Equity and liabilities
Equity

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

9,831

1,698

5,571
25,427
573

31,571

264
701
132

1,097

603
330
64
4,074
612
357
1,001

7,041

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

Total equity and liabilities

51,281

52,224

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

1,038

62
1,144
2

1,208

1,838

229

138
3,589
35,705
0
843

40,275

42,342

173
3,003

3,176

1,261

1,261
199
871

2,331

118
471

589

281
316

597

984

97
1,153
11

1,261

1,828

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

Total assets

51,281

52,224

| Contents – Financial statements

Annual report 2015 | 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 2014

1,492

106

848

6,847

1,731

11,119

2015
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 2015

Equity at 31 December 2015

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

-24

22
-1

-104
22

-82

-24

-9

127

-82

766

-34

60
-15

-81
41

-40

-44

1,448

1,533

-41

1,492

-34

106

-40

848

304
132

436

97
-1,044
13
2
5

-447

6,400

1,759

-2,477

-718

1,013

1,981
135

2,116

0
-2,477
97
-1,044
13
2
5

-1,288

9,831

847
-34

813

59
-1,005
49
45
3

1,731

-1,656

2,557
-40

2,517

0
-1,656
59
-1,005
49
45
3

6,847

1,731

11,119

888

6,842

1,656

11,107

Dividend per share in 2015 includes dividend paid out
in July of DKK 2.5 and proposed dividend of DKK 3.5,
totalling DKK 6.0 (DKK 5.8 in 2014 ). Proposed dividend
per share of DKK 3.50 is calculated as the total dividend
proposed by the Supervisory Board after the end of the
financial year divided by the total number of shares at
the end of the year (289,559,550 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 2,516m (DKK 2,622m in 2014)
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

| Contents – Financial statements

Annual report 2015 | 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 property
Sale of 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 intangible assets
Hedging of currency risk

Investments, continuing business

Investments, discontinued and divested business

Total investments

2015

2014

DKKm

2015

2014

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

-1,031
12
-2,380
-53

-3,452

-37
0
3

-34

505

471

-956
0
-1,656
110

-2,502

-37
14
-25

-48

553

505

17,721
-13,040
-412
-2,771
-158

1,340

807
-95
47
-765
-91

1,243

-32

1,211

-46
10
480
1,070
641
0
0
86

2,241

-37

2,204

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

| Contents – Financial statements

Annual report 2015 | 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, quantified
and reported to the management and the Supervisory
Board. Given the extensive requirements for the
Super visory Board’s involvement in capital and risk
management, Tryg’s Supervisory Board has decided
to set up a special Risk Committee to address these
topics separately during the year. The Committee
meets five times a year for a detailed review of various
risk management topics and regularly keeps the en-
tire Supervisory Board up-to-date on the status.

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-
mented, and day-to-day compliance is verified. This is
supported by decentralised risk managers affiliated
with the individual areas. The risk management func-
tion is the second level of control, and ensures a con-

Lines of defence

Supervisory Board

sistent approach across the organization, risk assess-
ment at group level and reporting to the management
and the Supervisory Board. 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, investment risk manage-
ment and more. Tryg’s risk management function is
also responsible for determining the company’s capital.

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 ‘A-’ rating from Standard &
Poor’s.
Support of a steadily rising nominal dividend per
share, where 60-90% of the annual net profit is
paid out in two instalments.
Return on the average equity of at least 20%
after tax. However 21% from 2017.

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

1. Line of defence

2. Line of defence

3. Line of defence

External audit

• Operational control
• Business controls

• Risk management
• Compliance
• Actuarial function

• Internal audit

Executive Management

| Contents – Financial statements

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

NotesAnnual report 2015 | Tryg A/S |

Viewed in isolation, in order to fulfil the first two
objectives, 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 mainly 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 an internal model,
while other risks are described using the Solvency II
standard model.

The model calculates Tryg’s capital requirement with
99.5% solvency level 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 was approved
by the Danish Financial Supervisory Authority in 2015
which means that the present solvency requirement
will be maintained as Solvency II has come into force
as of 1 January 2016.

The introduction of Solvency II will have a major
influence on Tryg’s capital position in various areas
from 1 January 2016. The Solvency capital require-
ment will decrease by approximately DKK 1.200m
due to the inclusion of the loss absorbency capacity
of deferred tax. The capital base will increase by
approximately DKK 400m due to the inclusion of ex-
pected future profits (DKK 600m) and the transition
to a new Solvency II discounting curve (DKK -200m).
The net effect form these new elements will result in
a relative large increase in the capital buffer, where
the core equity will constitute a lesser part of the
capital base.

Tryg has two subordinated loans that amount to
DKK 1,707m. The first is a NOK 1,400m loan that was
issued in November 2015 and is classified as a Tier 2
element under Solvency II. The second is a NOK
800m loan that was issued in March 2013 and is ac-
cordingly to the grandfathering rules treated as a Tier
1 element under Solvency II.

Read more about Tryg’s capitalisation after the

introduction of Solvency II in the newsletter.

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 calculation of solvency
capital requirement is reasonable and is reflecting
Tryg’s actual risk profile. Moreover, the projected capital
requirement is also assessed over the company’s
strategic planning period. Tryg’s risk activities are
implemented via continuous risk management pro-
cesses, where the main results are reported to 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
Underwriting risk is the risk that insurance premiums
will not be sufficient to cover the compensations and
other costs associated with the insurance business.
Underwriting risk is managed primarily through the
company’s insurance policy defined by the Super-
visory Board, and administered through business

procedures, underwriting guidelines etc. Underwriting
risk is assessed in Tryg’s capital model, determining
the capital impact from insurance products.

Reinsurance is used to reduce the underwriting risk
in situations where this can not be achieved to a suffi-
cient degree via ordinary diversification. In case of
major events involving damage to buildings and
contents, Tryg’s reinsurance programme provides
protection for up to DKK 5.75bn, which statistically
is sufficient to cover at least a 250-year event. Reten-
tion for such events is DKK 150m. In the event of a
frequency of natural disasters, Tryg is covered for
up to DKK 600m for, 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 2bn. Re-
tention for large claims is DKK 100m, gradually drop-
ping to DKK 25m. Single risks exceeding DKK 2bn are
covered 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 sub-
sequent claims. For the individual sectors, individual
cover has subsequently been taken out as needed.

For Tryg’s subsidiary Tryg Garantiforsikring A/S, the
maximum retention is DKK 30m. The use of reinsur-
ance creates a natural counterparty risk. This risk be
handled by applying a wide range of reinsurers with
at least an ‘A’ rating and USD 100m in capital.

Reserving risk
Reserving risk relates to the risk of Tryg’s insurance
provisions being inadequate. The Supervisory Board
lays down the overall framework for the handling of
reserving risk in the insurance policy, while the overall
risk is measured in the capital model. The uncertainty
associated with the calculation of claims reserves af-
fects Tryg’s results through the run-off on reserves.

Long-tailed reserves 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 reserves. In order to
manage the inflation risk of Danish workers’ compen-
sation claims reserves, Tryg has bought zero coupon
inflation swaps. Tryg determines the claims reserves
via statistical methods as well as individual assess-
ments. At the end of 2015, Tryg’s claims reserves
totalled DKK 25,427m with an average duration of
4,0 years.

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 dis-
counted claims reserves and is designed to hedge the
interest rate sensitivity of these as closely as possible.
Tryg carries out daily monitoring, follow-up and risk
management of the Group’s interest rate risk. The
swap and bond portfolio is thus adjusted continuously
to minimise the net interest rate risk.

The free portfolio is subject to the framework 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
equity portfolio constitutes the company’s largest in-
vestment risk. At the end of 2015, the equity portfolio
accounted for 5.9% of the total investment assets. This
share is expected to be at a similar level in 2016. Tryg’s
property portfolio mainly comprises owner-occupied
and investment properties, the value of which is ad-
justed based on the conditions on the property market
through internal valuations backed by external valua-
tions. At the end of 2015, investment properties
accounted for 5.1%, while owner-occupied properties
accounted for 3.0% of the total investment assets.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | Property investments are expected to be at a similar
level in 2016. Tryg’s does not wish to speculate in
foreign currency, but since Tryg invests and operates
its insurance business in other currencies than Danish
kroner, Tryg is exposed to currency risk. Tryg is primarily
exposed to fluctuations in the other Scandinavian
currencies due to its ongoing insurance activities.

Premiums earned and compensation paid in other cur-
rencies create a natural currency hedge, for which rea-
son other risk mitigation measures are not required in
this area. However, the part of equity held in other cur-
rencies than Danish kroner will be exposed to currency
risk. This risk is hedged on an ongoing basis using cur-
rency swaps. In addition to the above-mentioned risks,
Tryg is exposed to credit, counterparty and concentra-
tion 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 Eu-
ropean 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. The only significant as-
sets on Tryg’s balance sheet, which by nature is some-
what illiquid, are the property portfolio.

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. 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.
A special crisis management structure is set up 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 covers
both business transactions, IT strategy, choice of
business partners and changed market conditions.
Tryg’s strategic position is determined by Tryg’s Super -
visory Board in close collaboration with the Executive
Board. Before determining the strategic position, the
strategic decisions are subjected to a risk assessment,
explaining the risk of the chosen strategy to Tryg’s
Supervisory Board and Executive Board.

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 centrally via the
Group’s legal department, which, among other things,
sits on industry committees in connection with legis-
lative monitoring, ensures implementation in Tryg
through business procedures and participates in the
ongoing training of the organisation.

Emerging risk
Emerging risk cover 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 market and adapt the
products as the conditions change. In the event of a
change in insurance terms, it is ensured that Tryg’s re-
insurance cover is consistent with the new conditions.

Sensitivity analysis

Insurance risk
DKKm

Effect of 1 percentage point change in:
Combined ratio (1 percentage point)
Claim frequency (1 percentage point)
Average claim
Premium rates

Provisioning risk
1% change in inflation on person-related lines of business a)
10% error in the assessment of long-tailed lines of business
(workers' compensation, motor liability, liability, accident)

Investment risk

Interest rate market
Effect of 1 % increase in interest curve:
Impact of interest-bearing securities
Higher discounting of claims provisions
Net effect of interest rate rise
Impact of Norwegian pension obligation b)

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

2015

2014

+/- 177
+/- 1,450
+/- 132
+/-175

+ / -184
+/- 1,369
+/-122
+/- 190

+/- 476

+/- 300

+/- 1,671

+/- 1,752

-940
947
7
153

-341
-7

-480

-647
614
-33

-880
793
-87
87

-393
-72

-488

-835
791
-44

+/- 176

+/- 230

a) Including the effect of the zero coupon inflation swap.
b) Additional sensitivity information in note 20 'Pensions and similar obligations'.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Claims provisions – estimated accumulated claims – DKKm

Gross

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

10,935
10,825
10,685
10,315
10,460
10,405
10,311
10,323
10,294
10,189
10,020
10,020
-9,746

273
-41

Estimated accumulated claims
End of year
1 year later
2 year later
3 year later
4 year later
5 year later
6 year later
7 year later
8 year later
9 year later
10 year later

Cumulative payments to date

Provisions before
discounting, end of year
Discounting
Reserves from 2004
and prior years
Other reserves
Gross provisions
for claims, end of year

10,711
10,972
10,515
10,743
10,679
10,671
10,649
10,612
10,428
10,361

10,361
-9,771

589
-68

11,629
12,199
12,773
12,752
12,755
12,661
12,535
12,529
12,461

12,162
13,500
13,383
13,396
13,357
13,262
13,231
12,981

13,534
14,189
14,204
14,002
13,884
13,787
13,770

15,782
15,884
15,836
15,718
15,631
15,567

16,126
16,516
16,515
16,466
16,304

13,659
13,644
13,581
13,431

13,532
13,845
13,682

12,841
13,188

14,853

12,461
-11,610

12,981
-11,796

13,770
-12,386

15,567
-13,967

16,304
-14,383

13,431
-11,187

13,682
-11,048

851
-99

1,185
-138

1,384
-156

1,600
-161

1,921
-159

2,245
-174

2,634
-167

13,188
-9,504

3,685
-205

14,853
-6,714

146,618
-122,112

8,139
-193

24,506
-1,561

2,127
355

25,427

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Claims provisions – estimated accumulated claims – DKKm

Ceded business

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Estimated accumulated claims
End of year
1 year later
2 year later
3 year later
4 year later
5 year later
6 year later
7 year later
8 year later
9 year later
10 year later

Cumulative payments to date

915
811
816
811
840
836
822
822
814
826
823
823
-811

Provisions before discounting,
end of year
Discounting
Reserves from 2004
and prior years
Other reserves
Provisions for claims, end of year

12
-1

272
272
259
292
293
288
287
288
286
286

286
-278

8
-1

498
465
480
485
505
476
505
496
496

496
-483

14
-1

155
220
189
179
179
166
171
165

165
-159

7
0

284
354
332
289
292
297
292

292
-283

10
0

668
748
738
714
723
744

744
-685

60
-1

1,449
2,145
2,267
2,307
2,271

2,271
-2,176

95
-1

228
259
297
304

304
-264

40
-1

550
961
942

942
-642

300
-3

250
302

2,068

302
-213

88
-2

2,068
-41

2,027
-7

8,695
-6,034

2,660
-17

210
151
3,003

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Claims provisions – estimated accumulated claims – DKKm

Net of reinsurance

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

10,439
10,700
10,256
10,450
10,386
10,383
10,362
10,323
10,142
10,075

10,075
-9,493

582
-68

Estimated accumulated claims
End of year
1 year later
2 year later
3 year later
4 year later
5 year later
6 year later
7 year later
8 year later
9 year later
10 year later

10,020
10,014
9,869
9,504
9,619
9,569
9,489
9,502
9,481
9,363
9,196
9,196
Cumulative payments to date -8,935

261
-40

Provisions before discounting,
end of year
Discounting
Reserves from 2004
and prior years
Other reserves
Provisions for claims,
net of reinsurance,
end of the year

11,131
11,734
12,293
12,267
12,250
12,186
12,030
12,033
11,965

12,007
13,280
13,194
13,217
13,178
13,096
13,059
12,816

13,250
13,835
13,872
13,713
13,592
13,491
13,477

15,115
15,137
15,098
15,004
14,907
14,823

14,677
14,370
14,248
14,160
14,033

13,432
13,386
13,284
13,127

12,982
12,884
12,740

12,591
12,886

12,786

11,965
-11,128

12,816
-11,637

13,477
-12,103

14,823
-13,282

14,033
-12,206

13,127
-10,923

12,740
-10,406

837
-98

1,179
-138

1,374
-156

1,540
-160

1,826
-157

2,204
-173

2,334
-164

12,886
-9,290

3,596
-204

12,786
-6,675

137,924
-116,079

6,112
-186

21,846
-1,543

1,917
204

22,424

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 2015 to prevent the impact of exchange rate fluctuations.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Claims provisions (continued)

DKKm

2015
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded

2014
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

5,149
-146
9,045
-1,959

12,089

5,337
-156
9,041
-529

13,693

126
0
4,029
-395

3,760

130
0
4,282
-311

4,101

67
0
2,646
-213

2,500

124
0
2,716
-199

2,641

87
0
11,150
-311

10,926

133
0
9,945
-263

9,815

142
-28
357
-151

320

86
-22
678
-451

291

5,571
-174
27,227
-3,029

29,595

5,810
-178
26,662
-1,753

30,541

Other comprises Tryg Garantiforsikring A/S and premium provisions in Securator A/S.

| Contents – Financial statements

NotesAnnual report 2015 | 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

2015

52
90
501
1,165
516

2,324

138

2015

2014

Impact of exchange rate fluctuations in SEK and NOK on technical result

14,856
13,011
4,175
2,363

34,405

2.5

2015

2014

Change

Gross premium income
Gross claims
Total insurance operating costs

17,977
-13,562
-2,720

1,695
Profit/loss on gross business
Profit/loss on ceded business
710
Insurance technical interest, net of reinsurance 18

Technical result

2,423

18,652
-12,650
-2,689

3,313
-341
60

3,032

-675
-912
-31

-1,618
1,051
-42

-609

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

2014

2013

Change

18,652
-12,650
-2,689

3,313
-341

19,504
-14,411
-3,008

2,085
349

3,032

2,496

-852
1,761
319

1,228
-690

-2

536

Currency
effect

Change excl.
currency
effect

-534
374
81

-79
11
-2

-70

-141
-1,286
-112

-1,539
1,040
-40

-539

Currency
effect

Change excl.
currency
effect

-642
437
86

-119
10

-3

-112

-210
1,324
233

1,347
-700

648

16,622
13,925
4,129
2,836

37,512

2.2

2014

413
207
674
1,096
563

2,953

128

The share portfolio includes exposure from share derivatives of DKK 47m (DKK 477m in 2014)
Unlisted equity investments are based on an estimated market price.

Exposure to exchange rate risk

2015

2014

Assets and
debt

Hedge

Exposure

Assets and
debt

Hedge

Exposure

2,355
633
197
1,991
1,114
477

-2,313
-524
-189
-1,867
-1,007
-429

42
109
8
124
107
48

438

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

USD
EUR
GBP
NOK
SEK
Other

Total

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Impact of exchange rate fluctuations in SEK and NOK on the statement of financial position

Credit risk

DKKm

2015

2014

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

1,038
1,208
1,838
229
40,275

3,176
2,331
589
597

984
1,261
1,828
225
43,172

1,938
1,662
505
649

Total assets

51,281

52,224

Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Total provisions
Other debt
Accruals and deferred income

Total equity and liabilities

9,831
1,698
31,571
1,097
7,041
43

51,281

11,119
1,768
31,692
1,447
6,152
46

52,224

54
-53
10
4
-2,897

1,238
669
84
-52

-943

-1,288
-70
-121
-350
889
-3

-943

12
-26
-20
-1
-704

-45
-19
0
-3

-806

0
-82
-518
-43
-163
0

-806

42
-27
30
5
-2,193

1,283
688
84
-49

-137

-1,288
12
397
-307
1,052
-3

-137

| Contents – Financial statements

Bond portfolio by ratings

AAA to A
Other
Not rated

Total

Reinsurance balances

AAA to A
Other
Not rated

Total

2015
DKKm

35,181
523
1

35,705

2,772
0
120

2,892

98.5
1.5
-

2014
DKKm

36,930
244
1

99.3
0.7
0.0

100.0

37,175

100.0

95.9
-
4.1

100.0

1,447
1
147

1,595

90.7
0.1
9.2

100.0

Liquidity risk
Maturity of the Group’s financial obligations including interest

2015

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

2014

Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt

66
64
4,074
181
2,291

6,676

87
116
2,902
428
2,335

5,868

263
0
0
219
0

482

243
0
0
225
0

468

3,362
0
0
259
0

3,621

2,209
0
0
189
0

2,398

Interest on loans for a perpetual term has been recognised for the first fifteen years.

Total

3,691
64
4,074
659
2,291

10,779

2,539
116
2,902
842
2,335

8,734

NotesAnnual report 2015 | 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 statement of financial
position date is based on a price of
Total capital losses and costs at the statement of the financial position date
Interest expenses for the year
Effective interest rate

Bond loan
EUR 150m

Bond loan
NOK 800m

2015

-
-
49
-

2014

1,106

99
3
50
4.5%

2015

671

108
4
34
3.6%

Bond loan
NOK 1,400
2015

1,086

100
6
3
3.9%

2014

714

108
4
40
3.6%

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
Called by Tryg in December 2015

Listed bonds
NOK 800m
100
March 2013
Perpetual
2023

Listed bonds
NOK 1,400m
100
November 2015
2045
2025

Interest-only
4.5% (until 2015)
2.1% above EURIBOR 3M (from 2015)

Interest-only
3.75 % above NIBOR 3M (until 2023)
4.75 % above NIBOR 3M (from 2023)

Interest-only
2.75 % above NIBOR 3M (until 2025)
3.75 % above NIBOR 3M (from 2025)

The share of capital included in the calculation of the
capital base total DKK 1,707m (DKK 1,496m in 2014)
The loans are initially recognised at fair value on the
date on which a loan is entered and subsequently
measured at amortised cost.

The loans are taken by Tryg Forsikring A/S.
The creditors have no option to call the loans before
maturity or otherwise terminate the loan agreements.
The loans are automatically accelerated upon the liq-
uidation 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.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

Private

Commercial

Corporate

Sweden

Other a)

Group

Operating segments

2015

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

8,803
-6,074
-1,291

-148
8

1,298

Run-off gains/losses, net of reinsurance

324

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

17
141

2,342
5,791
457

3,992
-2,612
-683

-44
5

658

388

16
408

1,318
6,566
54

3,894
-3,987
-420

877
5

369

351

140
2,422

1,062
11,357
50

1,317
-852
-246

-1
0

218

149

597

0
32

849
1,713
12

-29
-37
-80

26
0

-120

408
229
0
0
46,838

0
0
0
9,879

17,977
-13,562
-2,720

710
18

2,423
-442

1,981

1,212

1,038
229
173
3,003
46,838

51,281

5,571
25,427
573
9,879

41,450

Description of segments
Please refer to the accounting principles for a description
of operating segments.

Costs are allocated according to specific keys, which
are believed to provide the best estimate of assessed
resource consumption.

a) Amounts relating to eliminations and in 2015 also
restructuring expenses are included under 'Other'.
Details of amounts in note 2 Geographical segments.
Other assets and liabilities are managed at Group
level and are therefore not allocated to the individual
segments but are included under 'Other'.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

Private

Commercial

Corporate

Sweden

Other a)

Group

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

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

600

0
38

799
1,714
9

-21
22
0

-1
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

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

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

2015

2014

2013

2012

2011

Includes Danish general insurance and
Finnish guarantee insurance.

9,346

1,371
512

80.5
-9.2
71.3
13.9

85.2

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

Number of full-time employees 31 December

1,859

2,007

2,046

2,187

2,315

Norwegian general insurance

Gross premium income

Technical result
Run-off gains/losses, net of reinsurance

Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio

Combined ratio

6,766

844
492

70.9
2.1
73.0
14.9

87.9

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
181

73.2
3.2
76.4
17.0

93.4

Number of full-time employees 31 December

1,113

1,167

1,199

1,282

1,338

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

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 Dec.

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

b) Amounts relating to eliminations. In 2012 discon-
tinued business and restructuring expenses were
included under 'Other'. In 2014 the costs were
positively affected by a one-time effect regarding
changed pension terms in Norway and they were
negatively affected by a provision in connection
with the transfer to the new it-supplier. The joint
effect was approx DKK 135m. In 2015 costs and
claims were negatively effected by DKK 80m and
DKK 40m respectively due to provisioning for the
efficiency programme.

Adjustment of gross expense ratio included only in
'Tryg '. The adjustment is explained in a footnote to
Financial highlights.

2015

2014

2013

2012

2011

1,894

328
208

63.5
1.7
65.2
17.5

82.7

387

-29

-120

1,975

44
66

77.6
2.2
79.8
18.4

98.2

425

-21

2,169

36
17

80.6
0.7
81.3
17.6

98.9

458

-18

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

17,977

18,652

19,504

20,314

19,948

2,423
-5
-91
2,327
1,212

75.4
-3.9
71.5
15.3

86.8

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

Number of full-time employees, continuing business at 31 Dec.
Number of full-time employees, discontinued
and divested business at 31 Dec.

3,359

3,599

3,703

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

2 Technical result, net of reinsurance, by line of business

DKKm

Gross premiums written

2015

1,652

Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance

1,629
- 1,026
- 219
- 4
2

Technical result

Gross claims ratio
Combined ratio

Claims frequency a)
Average claims DKK b)
Total claims

382

63.0
76.7

4.4%
29,968
40,135

Accident and
health

Health care

Worker’s
compensation

Motor TPL

Motor comprehensive
insurance

Marine, aviation and
cargo insurance

2014

1,692

1,663
- 1,212
- 224
- 7
5

225

72.9
86.8

4.5%
33,560
37,228

2015

321

316
- 255
- 32
- 1
0

80.7
91.1

2014

313

314
- 223
- 37
- 1
1

71.0
83.1

2015

890

893
- 85
- 103
- 10
1

696

9.5
22.2

2014

951

970
- 155
- 108
- 8
3

702

16.0
27.9

130.3%
3,905
56,697

128.3%
4,334
50,173

17.6%
65,254
10,469

17.4%
79,102
9,463

2015

1,980

1,963
- 1,164
- 339
- 33
2

429

59.3
78.2

5.5%
17,846
77,164

2014

2,098

2,134
- 1,556
- 337
- 51
7

197

72.9
91.1

5.6%
22,248
72,195

2015

3,680

3,573
- 2,446
- 542
- 2
3

586

68.5
83.7

2014

3,747

3,715
- 2,295
- 555
16
11

892

61.8
76.3

2015

332

337
- 218
- 41
- 53
1

64.7
92.6

2014

353

320
- 256
- 39
21
1

80.0
85.6

17.9%
10,110
241,311

18.1%
10,376
224,791

21.2%
75,653
2,871

19.8%
111,361
2,470

Fire and contents
(Private)

Fire and contents
(Commercial)

Change of ownership

Liability insurance

Credit and guarantee
insurance

Tourist assistance
insurance

Gross premiums written

2015

4,363

Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance

4,328
- 3,130
- 647
- 117
2

Technical result

Gross claims ratio
Combined ratio

Claims frequency a)
Average claims DKK b)
Total claims

2014

4,453

4,492
- 3,139
- 671
22
12

716

69.9
84.3

2015

2,427

2,442
- 3,750
- 363
1,438
2

- 231

153.6
109.5

436

72.3
90.0

7.9%
8,742
370,685

7.6%
9,615
333,943

16.1%
116,003
32,331

2014

2,556

2,535
- 1,957
- 376
- 113
7

77.2
96.5

15.8%
62,035
29,686

2015

64
- 118
- 10
0
0

- 64

184.4
200.0

9.9%
26,008
4,275

2014

65
- 63
- 12
0
0

- 10

96.9
115.4

9.2%
20,263
4,255

2015

962

958
- 612
- 153
- 67
1

127

63.9
86.8

10.2%
68,006
10,454

2014

985

979
- 917
- 148
- 10
3

- 93

93.7
109.8

11.3%
81,763
10,454

2015

352

347
247
- 45
- 392
0

157

-71.2
54.8

2014

338

327
16
- 45
- 188
1

111

-4.9
66.4

0.1%
790,685
111

0.1%
1,068,663
83

2015

610

607
- 580
- 81
- 2
1

- 55

95.6
109.2

19.6%
5,893
96,774

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.

| Contents – Financial statements

2014

573

568
- 450
- 79
- 2
2

79.2
93.5

19.4%
5,673
79,007

Annual report 2015 | Tryg A/S |

Notes

2 Technical result, net of reinsurance, by line of business

DKKm

Other
insurance c)

Total exclusive of
Norwegian Group Life

Norwegian Group Life
one-year policies

2015

2014

2015

2014

Gross premiums written

Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance

60
- 46
- 95
- 46
1

Technical result

Gross claims ratio
Combined ratio

Average claims DKK b)
Total claims

- 126

76.7
311.7

392,147
34

84
- 14
- 15
- 20
1

16.7
58.3

59,818
220

17,690

18,196

17,517
- 13,183
- 2,670
711
16

18,166
- 12,221
- 2,646
- 341
54

2,391

3,012

75.3
86.4

67.3
83.7

2015

460

460
- 379
- 50
- 1
2

82.4
93.5

2014

476

486
- 429
- 43
0
6

88.3
97.1

Total

2015

2014

18,150

18,672

17,977
- 13,562
- 2,720
710
18

18,652
- 12,650
- 2,689
- 341
60

2,423

3,032

75.4
86.8

67.8
84.2

b) Average claims are total claims before run-off in the year relative to the number of claims in the year.
c) Other insurance, gross claims and gross operating expenses include restructuring costs of DKK 40m and DKK 80m, respectively, in 2015.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

DKKm

Premium income, net of reinsurance
Direct insurance
Indirect insurance

Unexpired risk provision

Ceded direct insurance
Ceded indirect insurance

Direct insurance, by location of risk

2015

2014

Gross

9,419
1,893
6,855

Ceded

-625
-46
-432

Gross

9,488
1,943
7,442

18,167

-1,103

18,873

Denmark
Other EU countries
Other countries a)

a) Mainly Norway

2015

2014

DKKm

2015

2014

18,166
44

18,210
1

18,211
-1,103
-61

17,047

18,872
67

18,939
1

18,940
-1,067
-49

17,824

Ceded

-689
-30
-348

-1,067

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

Administrative expenses include fee to the auditors appointed
by the annual general meeting:
Deloitte

The fee is divided into:
Statutory audit
Tax advice
Other services

-368
-1,674

-2,042
-678

-2,720
102

-2,618

-7

-3
-2
-2

-7

-395
-1,560

-1,955
-734

-2,689
102

-2,587

-11

-3
-1
-7

-11

-10

DKKm

Insurance technical interest, net of reinsurance
Return on insurance provisions
Discounting transferred from claims provisions

Claims, net of reinsurance
Claims
Run-off previous years, gross

Reinsurance cover received
Run-off previous years, reinsurers' share

2015

2014

Expenses have been incurred for the Group´s Internal Audit Department.

-9

In the calculation of the expense ratio, costs are stated exclusive of depreciation and operating costs
on the owner-occupied property but including a calculated rent concerning the owner-occupied
property based on a calculated market rent of DKK 36m. (DKK 38m in 2014)

259
-241

-15,063
1,500

-13,563
2,061
-288

-11,790

414
-354

-13,376
726

-12,650
268
405

-11,977

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

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 27m (DKK 26m in 2014)

Insurance operating costs and claims include the following
staff expenses:
Salaries and wages
Commission
Allocated share options and matching shares
Pension plans a)
Other social security costs
Payroll tax

a) In 2015 defined benefit plans were included with DKK 40m.

Remuneration for the Supervisory Board and Executive Management
is disclosed in note 28 'Related parties'.

2015

2014

-368
-1,680
-179
-364
-261
-102
234

-2,720

-2,108
-6
-5
-300
-4
-371

-2,794

-395
-1,463
-213
-459
-272
-108
221

-2,689

-2,098
-7
-3
143
-5
-351

-2,321

Average number of full-time employees during the year
(continuing business)

3,472

3,639

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Notes

DKKm

Share option programmes
Spec. of outstanding options:

TOTAL NUMBERS a)

FAIR VALUE

2015

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 2010-2011
Allocated in 2010-2011, 1 January
Exercised
Expired

113,450
-113,450
0

132,860
-120,775
0

20,590
-13,570
-3,335

266,900
-247,795
-3,335

15/14
15/14
15/14

Outstanding options from 2010-2011

allocation 31 Dec. 2015

Number of options exercisable

31 Dec. 2015

12,085

3,685

15,770

12,085

3,685

15,770

2014

Allocation 2009-2011
Allocated in 2009-2011, 1 January
Exercised
Expired

Outstanding options from 2009-2011

245,205
-131,755
0

739,950
-599,090
-1,600

164,260 1,149,415
-861,265
-130,420
-4,250
-2,650

19/15/14
19/15/14
19/15/14

allocation 31 Dec. 2014

113,450

132,860

20,590

266,900

Number of options exercisable

31 Dec. 2014

113,450

132,860

20,590

266,900

4
-4
0

18
-13
0

55/44
55/44
55/44

55/52
55/52
55/52

14
-13
0

50
-36
0

a) In May 2015 each share with a nominal value of DKK 25 was replaced by five new shares with a nominal value of DKK 5.

The share split does not change the Group's share capital. Comparative figures have been restated to reflect the change in trading unit.

Tryg did not allocate share options in 2015.
At 31 December 2015, the share option plan com-
prised 15,770 share options (266,900 share options
at 31 December 2014). Each share option entitles the
holder to acquire one existing share with a nominal
value of DKK 5 in Tryg A/S. The share option plan
entitles the holders to buy 0.01 % of the share capital
in Tryg A/S if all share options are exercised.

In 2015, the fair value of share options recognised
in the consolidated income statement amounted to
DKK 0m (DKK 0m in 2014). At 31 December 2015,
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 2015. Risk-tak-
ers 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.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

Share option programmes (continued)
Spec. of outstanding options:

Year of allocation

Years of exercise

1 Jan. 2015

Allocation

Exercised

Cancelled

Expired

31 Dec. 2015

2010
2011

2013-2015
2014-2016

Outstanding options 31 December 2015

220,220
46,680

266,900

0
0

-216,885
-30,910

-247,795

-3,335
0

-3,335

0
0

0
15,770

15,770

The assumptions by calculating the market value at time of allocation

Year of allocation

Years of exercise

2010
2011

2013-2015
2014-2016

Average share
price at time
of allocation
DKK

64.01
59.17

Expected
Volatility

29.20%
30.00%

Expected
maturity

4 years
4 years

Risk-free
interest rate

2.70%
3.00%

Average term Average exercise
share price
31 Dec. 2015

to maturity
31 Dec. 2015

0.00
0.05

0.00
44.08

| Contents – Financial statements

Annual report 2015 | 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 fair value
at 31 Dec.
DKKm

2015

Allocated in 2015

14,415

33,740

48,155

Matching shares allocated

in 2015 at 31.12.15

14,415

33,740

48,155

Allocated in 2011-2014

91,630

Cancelled

Exercised

-18,000

78,675

-5,780

-19,540

170,305

-5,780

-37,540

Matching shares allocated
in 2011-2014 at 31.12.15

Number of Matching shares
exercisable 31 Dec. 2015

73,630

53,355

126,985

6,895

5,500

12,395

2014

Allocated in 2014

17,355

30,055

47,410

Matching shares allocated

in 2014 at 31.12.14

17,355

30,055

47,410

Allocated in 2011-2013

74,275

Cancelled

61,840

-13,220

136,115

-13,220

Matching shares allocated
in 2011-2013 at 31.12.14

74,275

48,620

122,895

103

-3

137

138

-1

-5

-2

In 2011-2015, 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
2015, the reported fair value of matching shares for
the Group amounted to DKK 5m (DKK 3m in 2014).
At 31 December 2015, a total amount of DKK 12m
was recognised for matching shares.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

DKKm

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

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

2015

2014

DKKm

2015

2014

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

Profit/loss on discontinued and divested business
Gross premium income
Gross claims
Total insurance operating costs

Profit/loss before tax
Tax

Profit/loss on discontinued and divested business

-548
-26
0
-15
129
65
0

-395

%
23.5
1.0
0.0
1.0
-5.5
-3.0

17.0

3
54
7

64
-15

-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
-4

Profit/loss on discontinued and divested business primarily relates to Marine Hull Insurance.

47
2
742
3

794

-89
-6

-95

699

13
57
14
-608
-42
0

-566

17
0
120
-64

-493

39
8
893
9

949

-90
-25

-115

834

-18
354
17
-129
596
2

822

23
-106
-741
-93

-917

-95

Exchange rate adjustments concerning financial assets or liabilities which cannot be stated at fair
value total DKK 58m (DKK -179m in 2014)

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

Intangible assets

Trademarks
and customer
relations

Goodwill

Assets
under con-

Software a)

struction a)

DKKm

Intangible assets

Trademarks
and customer
relations

Goodwill

Assets
under con-

Software a)

struction a)

2015
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from assets
under construction
Additions 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

Amortisation and write-downs
at 31 December

546
12

0
0

558

-4
0
0

-4

200
5

0
0

1,028
-9

127
7

205

1,153

290
0

-127
134

297

Total

2,064
8

0
141

2,213

-104
-3
-22

-880
8
-78

-92
0
0

-1,080
5
-100

-129

-950

-92

-1,175

2014
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from asset
under construction
Additions for the year
Disposals for the year

Cost at 31 December

Amortisation and write-downs
Amortisation and write-downs
at 1 January
Exchange rate adjustments
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

Carrying amount at 31 December

554

203

205

1,038

Carrying amount at 31 December

542

148

198

984

a) Hereof proprietary software DKK 317m (DKK 245m at 31 December 2014)

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

11 Intangible assets (continued)

Impairment test
Goodwill
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 and merged into Tryg in 2015.
At 31 December 2015, 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.

The Value-in-use method is used.

Primary assumptions for impairment test:
When assessing the cash flow management has based its estimates of premiums earned on the insurance
portfolio adjusted to reflect the expected effect of business decisions and market development from past ex-
periences. The portfolio is indexed with the wage and salary index. Claims incurred are based on expected
claims ratios, which corresponds to current levels. Moderna is adjusted for weather and large-scale claims as
well. Reinsurance is taken into account when looking at the overall technical result together with the expected
cost ratio. Required returns are based on management's own requirements for returns of the individual cash
generation units and are not expected to change significantly in the near future.

Moderna
Comprises the sale of insurance products to private customers under the ‘Moderna’ brand. Moreover,
insurance is sold under the brands Atlantica, Bilsport & MC and Moderna Djurförsäkringar. Sales take place
through its own sales force, call centres and online.

The cash flows appearing from the latest prognosis approved by management for the next 6 quarters are
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 1.3bn (1.4 bn) relative to a recog-
nised goodwill of DKK 368m (358m) and Equity of DKK 0.6bn (0.5bn) and does not indicate any impairment in
2015.

DKKm

2015

2014

- Earned premium assumed CAGR 0-10 years
- Earned premium assumed CAGR >10 years
- Required return before tax
- Expected level of Combined ratio

Sensitivity information
Impact on equity from the following changes:
CAGR +1.0 percentage point (0-10 years)
CAGR -1.0 percentage point (0-10 years)
Required return +1.0 percentage point
Required return -1.0 percentage point
Combined ratio +1.0 percentage point
Combined ratio -1.0 percentage point

2%
1%
13%
93%

25
-24
-161
189
-24
25

2%
1%
12%
93%

15
-12
-172
202
-27
27

Securator
In 2014, Tryg acquired Securator A/S. The insurance activities were incorporated into the Tryg Group's
business structure in 2014 and are reported under Sweden. In 2015, Securator was merged into Tryg
Forsikring A/S and is reported as part of the Swedish affinity portfolio. Securator is a Danish market leader
within the sale and brokering of multi-annual product insurance via dealers in the electronics and tele-
communications sector and supermarket chains.

The cash flows appearing from the latest prognosis approved by management for the next 6 quarters 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 184m (238m)relative to a recog-
nised Goodwill of DKK 184m (184m) and equity of DKK 174m (174m) and does not indicate any impairment
in 2015.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

2015

2014

DKKm

- Earned premium assumed CAGR 0-10 years
- Earned premium assumed CAGR >10 years
- Required return before tax
- Expected level of Combined ratio

13%
3%
11%
83-91%

12%
3%
11%
79-91 %

6
-5
-35
48
-16
17

9
-9
-49
70
-18
18

Software and assets under construction
As at 31 December 2015, 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 did not indicate any impairment. Assets under construction are not depreciated but tested once a
year for impairment or when there is any indication of a decrease in value. Software with a limited useful life-
time is amortised over 4 years using the straight-line method. Amortised software is assessed for impairment
at the balance sheet date or when there are indications that the future cash flow cannot justify the carrying
amount. In the event that the recoverable amount is lower than the carrying amount, the difference is recog-
nised in the income statement. The recoverable amount is the higher of fair value less sales costs and value
in use.

A decline in the growth rate of more than 1% per cent will result in a write-down of the goodwill associated
with Securator. We do not expect a decline in the growth rate due to an expected expansion of the Securator
business to Norway and Sweden.

Correction
During a partial supervisory review the Danish Financial Supervisory Authority (DFSA) has found that the
consolidated financial statements for 2014 for Tryg A/S were insufficient as these statements do not provide
sufficient information on goodwill and the impairment test made for this purpose. It has no effect on profit for
the year, total assets, liabilities or shareholders' equity in the 2014 Annual Report nor in the 2015 interim and
annual reports. The lack of information required in accordance with IAS 36, Impairment of assets, covers all
primary assumptions to which the calculation of the future cash flow is most sensitive, the method used to set
these assumptions and information on the growth rate used in the terminal period. On the basis of the DFSA's
partial supervisory review, Tryg has chosen to include the required information for 2015 and 2014 in the note
on intangible asset, including goodwill, in the 2015 Annual Report.

Trademarks and customer relations
As at 31 December 2015, management performed a test of the carrying amounts of trademarks and
customer relations as an integral part of the Moderna 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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Notes

Property, plant and equipment

DKKm

2015
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

Operating equipment

Owner-occupied
property

Assets under
construction

241
-2
0
0
-4

235

-144
1
-34
0
4

-173

237
-5
9

241

-115
2
-31
0
0

-144

1,711
-22
11
15
0

1,715

-558
-3
-14
4
0

-571

1,144

1,738
-29
2

1,711

-434
-5
-15
-106
2

-558

1,153

94
-2
-11
2
0

-83
2
0
0
0

-81

85
-2
11

-85
2
0
0
0

-83

2015

6.8
6.5

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 4m relating to the domicile
in Bergen was subsequently included in other com-
prehensive income (DKK 2m in 2014). The value of
the domicile in Ballerup was not changed in 2015
(DKK -106m in 2014). The impairment test performed
for operating equipment did not indicate any im-
pairment.

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.

Total

2,046
-26
0
17
-4

2,033

-785
0
-48
4
4

-825

1,208

2,060
-36
22

2,046

-634
-1
-46
-106
2

-785

1,261

2014

6.8
6.5

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 other comprehensive income
Reversed depreciation

Accumulated depreciation and value adjustments at 31 December

Carrying amount at 31 December

2014
Cost
Cost at 1 January
Exchange rate adjustments
Additions for the year

Cost at 31 December

Accumulated depreciation and value adjustments at 31 December

Carrying amount at 31 December

The following return percentages have been applied:

Return percentages

Klausdalsbrovej 601, Ballerup
Folke Bernadottesvei 50, Bergen

Office property, weighted average

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

2015

2014

DKKm

2015

2014

DKKm

Property, plant and equipment (continued)
Sensitivity
Tryg’s property valuations are based on the market-based rental income and operating expenses
of the individual property relative to the required rate of return. The most important factors
impacting the valuations are the applied rates of return, annual net rental income and occupancy
rates. The average rates of return applied are stated above.

Impacts on the fair value of properties

Increase in applied rate of return of 0.25%
Decrease in applied rate of return of 0.25%
Decrease in net rental income of 3%
Decrease in occupancy rate of 3%

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

2015

-41
45
-35
-8

1,828
-19
31
-17
8
7

1,838

2014

-46
42
-36
-8

1,831
-30
12
-7
23
-1

1,828

Total rental income for 2015 is DKK 120m (DKK 124m in 2014).

Total expenses for 2015 are DKK 31m (DKK 30m in 2014). Of this amount, expenses for non-let
property total DKK 0m (DKK 4m in 2014), total expenses for the income-generating investment
property are DKK 31m (DKK 26m in 2014).

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.

| Contents – Financial statements

Investment property (continued)
The following return percentages were used for each property category:

Return percentages, weighted average
Business property
Office property
Residential property

Total

7.0
6.5
6.0

6.5

7.0
6.5
6.0

6.5

Sensitivity
Tryg’s property valuations are based on the market-based rental income and operating expenses
of the individual property relative to the required rate of return. The most important factors
impacting the valuations are the applied rates of return, annual net rental income and occupancy
rates. The average rates of return applied are stated above.

Impacts on the fair value of properties

Increase in applied rate of return of 0.25%
Decrease in applied rate of return of 0.25%
Decrease in net rental income of 3%
Decrease in occupancy rate of 3%

Equity investments in associates
Cost
Cost at 1 January

Cost at 31 December

Revaluations at net asset value
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

Carrying amount at 31 December

2015

-77
82
-50
-9

201

24
-2
-32
-4
42

229

2014

-81
85
-61
-11

201

14
-1
0
-1
12

225

NotesAnnual report 2015 | Tryg A/S |

Notes

DKKm

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 %

2015
Komplementarselskabet af 1. marts 2006 ApS, Denmark
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
AS Eidsvåg Fabrikker, Norway

0
1,107
47

2014
Komplementarselskabet af 1. marts 2006 ApS, Denmark
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
AS Eidsvåg Fabrikker, Norway

0
936
44

0
248
7

0
240
6

0
859
40

0
696
39

0
60
16

0
47
15

0
150
5

0
36
3

50
25
28

50
30
28

Individual estimates are made of the degree of
influence under the contracts made.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

2015

2014

DKKm

Financial assets (Continued)
Fair value hierarchy for financial instruments measured at fair value in the statement of financial position

40,220

43,030

DKKm

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

2,920

43,195

Financial assets at amortised cost only deviate to a minor extent from fair value.

Financial liabilities
Derivative financial instruments at fair value with value
adjustments in the income statement
Derivative financial instruments at fair value with value
adjustments in other comprehensive income
Financial liabilities at amortised cost with value adjustment
in the income statement

Total financial liabilities

598

8,127

8,739

142

2,167

45,339

799

7,121

7,920

2015
Equity investments
Unit trust units
Bonds
Derivative financial instruments, assets
Derivative financial instruments, debt

2014
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
3,589
18,254
0
0

21,843

0
3,884
22,259
667
0
0

26,810

0
0
17,450
843
-612

17,681

0
0
14,915
0
1,318
-799

15,434

138
0
1
0
0

139

128
0
1
0
0
0

129

Information on valuation of subordinate loan capital at fair value is stated in note 1.
Other financial liabilities measured at amortised cost only deviate to a minor extent from fair value.

Financial instruments measured at fair value in the statement of financial
position on the basis of non-observable input:

2015

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

129
-1
3
11
-3
0

139

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 2015. 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 -417m (DKK -438m in 2014).

| Contents – Financial statements

Total

138
3,589
35,705
843
-612

39,663

128
3,884
37,175
667
1,318
-799

42,373

2014

150
-4
-18
8
-8
1

129

-18

NotesAnnual report 2015 | Tryg A/S |

DKKm

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 %

2015

2014

DKKm

-153
-161
-297
-239
-14
-372

34
-95
-371
-239
-11
-399

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

2015

2014

Fair value
in statement
of financial
position

283
0
-52

Nominal

27,415
47
8

Nominal

25,882
477
7,790

27,470

231

34,149

5,366

32,836
9,210
10,638
12,988

-417

-186
-56
-106
-24

3,221

37,370
16,592
11,121
9,657

Fair value
in statement
of financial
position

434
0
85

519

-438

81
86
-70
65

Derivatives, repos and reverses are used continuously as part of the cash and risk management
carried out by Tryg and its portfolio managers.

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:

2015

Gains and losses at 1 January
Value adjustments for the year

Gains and losses at 31 December

2014

Gains and losses at 1 January
Value adjustments for the year

Gains and losses at 31 December

Gains

2,152
344

2,496

Gains

1,787
365

2,152

Losses

-2,162
-258

-2,420

Losses

-1,988
-174

-2,162

Net

-10
86

Net

-201
191

-10

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

2015

23
-89

-66

2014

201
-178

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

2015

2014

DKKm

2015

2014

DKKm

Financial assets (continued)
Receivables
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Unsettled transactions
Reverse repos
Other receivables

Specification of write-downs on receivables from insurance contracts:

Write-downs at 1 January

Exchange rate adjustments

Write-downs and reversed write-downs for the year

Write-downs at 31 December

1,261
199
120
370
381

2,331

107
-3
12

116

1,232
208
0
0
222

1,662

112
-4
-1

107

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 53m (DKK 54m in 2014).

Receivables in connection with insurance contracts include overdue receivables totalling:
Falling due:
Within 90 days
After 90 days

116
135

Other receivables do not contain overdue receivables

Reinsurer's share
Reinsurers' share

Write-downs after impairment test

251

3,179
-3

3,176

164
122

286

1,958
-20

1,938

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 financial position as follows:
Under assets, current tax
Under liabilities, current tax

-429
16
-495
-96
0
765

-239

118
-357

-239

-264
26
-632
-47
-24
512

-429

0
-429

-429

Net current tax

Equity
Number of shares

Number of shares of DKK 5 (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
2014
2015

289,120
-7,074

296,870
-8,963

Own shares

2015

9,358
7,074

2014

9,711
8,963

-8,919

-8,103

270

1,213

Number of shares at 31 December

282,316

289,120

Number of shares as a percentage of
issued shares at 31 December
Nominal value at 31 December (DKKm)

97.50
1,412

96.86
1,446

-270

7,243

2.50
36

-1,213

9,358

3.14
47

Impairment test
As at 31 December 2015, management performed a test of the carrying amount of total
reinsurers' share of provisions for insurance contracts and receivables. The impairment test
resulted in impairment charges totalling DKK 3m (DKK 20m in 2014). Write-downs for the
year include reversed write-downs totalling DKK 30m (DKK 0m in 2014). There is no overdue
reinsurers' share other than the share already provided for.

In May 2015 each share with a nominal value of DKK 25 was replaced by five new shares with
a nominal value of DKK 5. The share split did not change the Group's share capital. Comparative
figures have been restated to reflect the change in trading unit.

Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to 10.0% of the share
capital in the period up until 25 March 2020. Own shares are acquired for use in the Group's incentive
programme and as part of the share buyback programme.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

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

2015

2014

DKKm

9,831
-1,013
-3,868

4,950
1,707
-3,868

2,789

11,119
-1,731
-2,353

7,035
1,496
-2,353

6,178

2,571

7,122

Solvency ratio
(Solvency I – ratio between capital base and weighted assets)

108

The capital base and the solvency ratio are calculated in accordance
with the Danish Financial Business Act.

Premium provisions
Premium provision at 1 January
Adjustment regarding Norwegian Group life beginning of year
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)

5,724
-124
-53
17,311
-17,416
-13

5,429
142

5,571

6,176
0
-202
17,692
-17,951
9

5,724
86

5,810

a) Comprises premium provisions for Tryg Garantiforsikring A/S and Securator A/S.

Gross

Ceded Net of reinsurance

Claims provisions
2015
Claims provisions at 1 January
Adjustment regarding Norwegian Group life
beginning of year
Value adjustments of provisions, beginning of year

24,601

124
-464

24,261

Paid in the financial year in respect of the current year
Paid in the financial year in respect of prior years

-6,676
-6,011

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)

2014
Claims provisions at 1 January
Value adjustments of provisions, beginning of year

-12,687

14,606

-1,232

13,374
124
25,072
355

25,427

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 adjustment
Claims provisions at 31 December
Other a)

-13,132

12,835

-638

12,197
1,104
24,601
671

25,272

a) Comprises claims provisions for Tryg Garantiforsikring A/S.

-1,272

23,329

0
32

-1,240

37
414

451

-2,021

-2,006
-57
-2,852
-151

-3,003

-1,780
58

-1,722

90
1,143

1,233

-251

-481

-732
-51
-1,272
-447

-1,719

124
-432

23,021

-6,639
-5,597

-12,236

12,585

-1,217

11,368
67
22,220
204

22,424

23,491
-781

22,710

-6,125
-5,774

-11,899

12,584

-1,119

11,465
1,053
23,329
224

23,553

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

2015

2014

DKKm

2015

2014

Pensions and similar obligations
Jubilees

Recognised liability

Defined-benefit pension plans:
Present value of pension obligations funded through operations
62
Present value of pension obligations funded through establishment of funds 1,130

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

1,192
978

214

1,290

-10
-74
35
29
-23
-55

1,192

1,010
-58
91
25
-49
-41

978

214

264

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
Number of pensioners
Average expected remaining service time (years)

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

63
1,227

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

31
30
-26
5
0

53
595
586
7.81

10
73
15
2

2.6
18

1.9
1.9
2.5
0.0
2.3
7.0
14.1
K2013

38
39
-33
6
-421

-371

53
714
575
8.09

10
73
15
2

2.7
18

2.1
2.1
3.3
0.1
3.0
7.0
14.1
K2013

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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

DKKm

2015

2014

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.

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 percentage point
Turnover, decrease of 2 percentage point

46
-49
-99
83
25
-29

27
-30
-55
45
49
-61

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
contributions 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.

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
businesses in the collaboration, to pay the pensions of the individual employees in accordance with
the applicable rules.

The FTP plan is primarily a defined-benefit plan in terms of the future pension benefits. FPK is unable
to provide sufficient information for the Group to use defined-benefit accounting. For this reason, the
Group has accounted for the plan as if it were a defined-contribution plan in accordance with IAS 19.30.

This years premium paid to FPK amounted to DKK 18m, which is about 4 % of the annual premium
in FPK (2014). FPK writes in its interim report for 2015 that it had a collective consolidation ratio of
114 at 30 June 2015 (consolidation ratio of 110 at 30 June 2014). The collective consolidation ratio
is defined as the fair value of the plan assets relative to the total collective pension obligations.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

2015

2014

DKKm

2015

2014

DKKm

Deferred tax
Tax asset
Operating equipment
Debt and provisions
Capitalised tax loss

Tax liability
Intangible rights
Land and buildings
Bonds
Contingency funds

Deferred tax

Unaccrued timing differences of statement of financial position items

Development in deferred tax
Deferred tax at 1 January
Exchange rate adjustments
Change in deferred tax relating to change in tax rate
Change in deferred tax previous years
Change in capitalised tax loss
Change in deferred tax taken to the income statement
Change in valuation of tax asset
Change in deferred tax taken to equity

Deferred tax at 31 December

Tax value of non-capitalised tax loss
Denmark
Sweden

8
35
1

77
96
-40
612

745

701

1,022
-116
13
0
0
-58
-128
-32

701

16
0

11
60
1

77
229
3
785

1,094

1,022

146

1,057
-62
-6
-16
6
22
24
-3

1,022

18
2

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 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 32m (DKK14m at 31 December 2014).

| Contents – Financial statements

Other provisions
Other provisions at 1 January
Change in provisions

Other provisions 31 December

83
49

132

73
10

Other provisions relate to provisions for the Group’s own insurance claims and restructuring costs.
Additions to the provision for restructuring costs during the year amounts to DKK 120m and reas-
sessment of the beginning of year balance amounts to DKK -69m. The balance as at 31 December
2015 amounts to DKK 130m (DKK79m at 31 December 2014).

Amounts owed to credit institutions
Overdraft facilities

Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt

Unsettled fund transactions include debt for bonds purchased in 2014
and 2015; however, with settlement in 2015 and 2016, respectively.

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

290
3,784

4,074

1,932
49

1,981

285,073
28

285,101

6.77
6.77
6.95
6.95
0.18
0.18

116

885
2,017

2,902

2,547
10

2,557

292,521
267

292,788

8.70
8.70
8.74
8.73
0.04
0.03

NotesAnnual report 2015 | Tryg A/S |

DKKm

2015

2014

Contractual obligations, collateral and contingent liabilities
Contractual obligations

2015

<1 year

1-3 years

3-5 years

> 5 years

Total

Obligations due by period

Operating leases
Other contractual obligations

2014

Operating leases
Other contractual obligations

66
282

348

62
410

472

110
103

213

101
83

184

76
0

71
0

56
0

67
0

308
385

693

301
493

794

In august 2015 Tryg and Skandia have signed an agreement whereby Tryg will acquire Skandia’s
activities within child and adult accident insurance and integrate them into its Swedish business,
Moderna Forsäkringar. The transaction is subject to regulatory approvals and the parties expect
it to be completed in second half 2016. Hereafter Tryg will take over the control of the portfolios.
The acquisition has no effect on the financial statement for 2015.

Tryg has signed the following contracts with amounts above DKK 50m:
Outsourcing agreement with TCS for DKK 156m for a 4 year period, which expires in 2017.
Lease contracts on premises for DKK 265m. The contracts expire after 5 years.

26 Contractual obligations, collateral and contingent liabilities (continued)

Collateral
The Danish companies in the Tryg Group are jointly taxed with TryghedsGruppen smba. The companies
and the other jointly taxed companies are liable for any obligations to withhold taxes at source on inter-
est, 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

14
138
3,589
32,121
0
0
281

2,706

Total

38,849

15
128
3,884
34,273
667
439
337

1,730

41,473

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |

Notes

DKKm

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

2015
Assets
Reverse repos
Derivative financial instruments

Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions

2014
Assets
Derivative financial instruments

Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions

370
843

1,213

3,784
612
417

4,813

1,318

2,017
799
438

3,254

0
0

0
0
0

370
843

1,213

3,784
612
417

4,813

1,318

2,017
799
438

3,254

-370
0

-370

-3,784
0
0

-3,784

-2,017
0
0

-2,017

0
-940

-940

-1
-641
-421

-1,063

-1,324

-1
-767
-448

-1,216

0
-97

-97

-1
-29
-4

-34

-6

-1
32
-10

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 these
disputes will not affect the Group's financial position
significantly beyond the obligations recognized in the
statement of financial position at 31 December 2015.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

DKKm

2015

DKKm

2015

2014

Acquisition of subsidiaries
2015
In august 2015 Tryg and Skandia have signed an agreement whereby Tryg will acquire Skandia’s
activities within child and adult accident insurance. See note 26 for further information.

2014
In 2014 the Tryg Group has taken control of Securator A/S and 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 portfolio and distribution chan-
nels. 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.

Net assets acquired

Intangible assets
Equipment
Receivables, other assets and accrued income
Provisions for insurance contracts
Debt and accruals and deferred income

Net assets acquired

Goodwill

Purchase price

hereof cash

Purchase price in cash

2014

0
1
65
-37
-40

-11

188

177

163

The Group has not incurred any significant acquisition costs in connection with the acquisition. The
purchase price is final. In connection with the acquisitions, a sum was paid which exceeds the fair
value of the identifiable acquired assets, liabilities and contingent liabilities. This positive balance is
mainly attributable to expected 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 identi-
fiable. Goodwill is not expected 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 fig-
ures 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.

| Contents – Financial statements

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.

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
members’ 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
1.9

0.1
0.0
0.5

0.3
0.3
2.5

0.1
0.1
0.3

NotesAnnual report 2015 | Tryg A/S |

DKKm

Related parties (continued)
Specification of remuneration

2015

Supervisory Board
Executive Management
Risk-takers

a) Exclusive of severance pay

Of which retired:

Supervisory Board
Risk-takers

Number of
persons

Basis
salary

Variable
salary

Pension

Total a)

13
3
8

6
21
19

0
2
1

0
5
5

6
28
25

Number
of persons

Severance
pay

1
3

0
14

The maximum amount paid in severance pay to an individual is DKK 7m.

2014

Supervisory Board
Executive Management
Risk-takers

a) Exclusive of severance pay

Of which retired:

Risk-takers

Number of
persons

Basis
salary

Variable
salary

Pension

Total a)

12
3
10

7
19
22

0
2
1

0
4
5

7
25
28

Number
of persons

Severance
pay

There has not been paid any severance pay of more than DKK 1m.

Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares, which are recognised over 4 years and share options, which are recognised over 3 years.
Reference is made to section 'Corporate governance' of the management's review on the corresponding
disbursements. 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 remuneration 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 Danish 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

2015
0

2014
1

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.

Financial highlights
Please refer to page 40.

| Contents – Financial statements

NotesAnnual report 2015 | 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 December 2015 and in accordance with
the Danish Statutory Order on Adoption of IFRS.

The annual report of the parent company is prepared
in accordance with the executive order on financial
reports presented by insurance companies and lateral
pension funds issued by the Danish FSA. The deviations
from the recognition and measurement requirements
of IFRS are:

•

The Danish FSA’s executive order does not allow
provisions for deferred tax of contingency reserves
allocated from untaxed funds. Deferred tax and
the other comprehensive income of the parent
company have been adjusted accordingly on
the transition to IFRS.

The accounting policies have been applied consistently
with last year.

Correction
During a partial supervisory review the Danish Financial
Supervisory Authority (DFSA) has found that the con-
solidated financial statements for 2014 for Tryg A/S
were insufficient as these statements do not provide
sufficient information on goodwill and the impairment
test made for this purpose.

It has no effect on profit for the year, total assets,
liabilities or shareholders' equity in the 2014 Annual
Report nor in the 2015 interim and annual reports.

The lack of information required in accordance with
IAS 36, Impairment of assets, covers all primary as-
sumptions to which the calculation of the future cash
flow is most sensitive, the method used to set these
assumptions and information on the growth rate used
in the terminal period.

On the basis of the DFSA's partial supervisory review,
Tryg has chosen to include the required information
for 2015 and 2014 in the note on intangible asset,
including goodwill, in the 2015 Annual Report.

The new executive order will only have effect on
recognition and measurement in the Group’s financial
reporting in the following area.

Accounting regulation

Implementation of changes to accounting standards
and interpretation in 2015
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 implemented for the first
time for the accounting year that began on 1st January
2015 that will have a significant impact on the group.

Claims provisions
The executive order prescribes a change from
applying a yield curve issued by the Danish Financial
Supervisory Authority to applying a new yield curve
published by EIOPA – the new yield curve is expected
to be at a lower level. The change will amount to
approx. DKK 240m.

It is Tryg’s assessment that the amendments to the
Executive Order from 2016 can be accommodated
within IFRS, therefore it is not expected that there are
any major differences between the Parent Company
and the consolidated financial statements as a result
of the new accounting regulation.

There has not been implemented any new or
amended standards and interpretations that have
affected the group significantly.

Changes to accounting estimates
There have been no changes to the accounting
estimates in 2015.

Future orders, standards and interpretations that
the group has not implemented and which have still
not entered into force but could effect the group
significantly:

•

•
•

Executive order on financial reports presented by
insurance companies and lateral pension funds is-
sued by the Danish FSA1)
IFRS 15 ‘Revenue from Contracts with Customers’2)
IFRS 9 ‘Financial Instruments’2)

enters into force for the accounting year
commencing 1 January 2016.

2) enters into force for the accounting year
commencing 1 January 2018 or later.

The changes will be implemented going forward from
the effective date

Significant accounting estimates and assessments
The preparation of financial statements under
IFRS requires the use of certain critical accounting
estimates and requires management to exercise its
judgement in the process of applying the Group’s
accounting policies. The areas involving a higher
degree of judgement or complexity, or areas where
assumptions and estimates are significant to the
consolidated financial statements are:

• Liabilities under insurance contracts
• Valuation of defined benefit plans
• Fair value of financial assets and liabilities
• Valuation of property
•

Measurement of goodwill, Trademarks and
Customer relations

Liabilities under insurance contracts
Estimates of provisions for insurance contracts repre-
sent the Group’s most critical accounting estimates,
as these provisions involve a number of uncertainty
factors.

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 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 rela-
tive 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
motor third-party liability, general third-party liability,
workers’ compensation classes, including sickness
and personal accident, in particular.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | The Financial Supervisory Authority’s adjusted
discount curve, which is based on euro swap rates,
national spreads and Danish swap rates, and also an
option-adjusted mortgage interest rate spread, is
used to discount Danish claims provisions.

The Norwegian and Swedish provisions are discounted
based on euro swap rates, to which a country-specific
interest rate spread is added that reflects the difference
between Norwegian and Swedish government bonds
and the interest rate on German government bonds.
Finnish provisions are discounted using the Danish
discount curve.

Several assumptions and estimates underlying the
calculation of the claims provisions are mutually d
ependent. 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
service 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 observ-
able market data are not subject to material esti-
mates. For securities that are not listed on a stock ex-
change, or for which no stock exchange price is
quoted that reflects the fair value of the instrument,
the fair value is determined using a current OTC price
of a similar financial instrument or using a model cal-

culation. The valuation models include the discount-
ing of the instrument cash flow using an appropriate
market interest rate with due consideration for credit
and liquidity premiums.

Valuation of property
Property is divided into owner-occupied property and
investment property. Owner-occupied property is as-
sessed at the reassessed value that is equivalent to
the fair value at the time of reassessment, with a de-
duction for depreciation and write-downs. The fair
value is calculated based on a market-determined
rental income, as well as operating expenses in pro-
portion to the property’s required rate of return in per
cent. Investment property is recognised at fair value.
The calculation of fair value is based on market prices,
taking into consideration the type of property, loca-
tion and maintenance standard, and based on a mar-
ket- 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.

ognised in other comprehensive income, and revalua-
tion of investment property, financial assets held for
trading and financial assets and financial liabilities (in-
cluding derivative instruments) at fair value in the in-
come statement.

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
can be measured reliably. Liabilities are recognised in
the statement of financial position when the Group
has a legal or constructive obligation as a result of a
prior event, and it is probable that future economic
benefits will flow out of the Group, and the value of
such liabilities can be measured reliably.

On initial recognition, assets and liabilities are 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 in-
come statement unless otherwise described below.

All amounts in the notes are shown in millions of
DKK, unless otherwise stated.

Description of accounting policies

Consolidation

Recognition and measurement
The annual report has been prepared under the his-
torical cost convention, as modified by the revaluation
of owner-occupied property, where increases are rec-

Consolidated financial statements
The consolidated financial statements comprise the fi-
nancial 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.

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 statements
are prepared by combining items of a uniform nature.

The financial statements used for the consolidation
are prepared in accordance with the Group’s account-
ing policies.

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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | 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 recog-
nised in the pre-acquisition balance sheet only if they
constitute an obligation for the acquired enterprise.
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.

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.

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
supports the management decisions on allocation of
resources and assessment of the Group’s results di-
vided into segments.

The operational business segments in the Tryg are Pri-
vate, Commercial, Corporate and Sweden. Private en-
compasses the sale of insurances to private individu-
als in Denmark and Norway. Commercial
encompasses the sale of insurances to small and me-
dium sized businesses, in Denmark and Norway. Cor-
porate sells insurances to industrial clients primarily
in Denmark, Norway and Sweden. In addition, Corpo-
rate handles all business involving brokers. Sweden
encompasses the sale of insurance products to pri-
vate 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 2015 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.

Income statement

Premiums
Premium income represents gross premiums
written during the year, net of reinsurance premiums
and adjusted for changes in premium provisions,
corresponding to an accrual of premiums to the risk
period of the policies, and in the reinsurers’ share
of the premium provisions.

Premiums are calculated as premium income in 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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |
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.

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 effect 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. Ad-
ministration expenses are all other expenses attribut-

able to the administration of the insurance portfolio.
Administration expenses are accrued to match the fi-
nancial year.

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.

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 share option programme was closed in 2012

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 allocation until vesting.
The balancing item is recognised directly 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.

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 reserved for set-
tlement of the options allocated.

The fair value of the options granted is estimated using
the Black & Scholes option model. The calculation
takes into account the terms and conditions of the
share options granted.

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 be-
tween receiving shares or cash. The expected value of the
shares will be expensed over the vesting period. The
scheme will be treated as a complex 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 eq-
uity 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, the
individual management member or risk takers is allo-
cated one share in Tryg A/S for each share the Execu-
tive management member or risk taker acquires in Tryg
A/S at the market rate for certain liquid cash at a con-

tractually agreed sum in connection with the Match-
ing share programme.

The holder acquires the shares in the open window
following publication of the annual report for the 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 instruments,
value adjustment of investment property, foreign cur-
rency translation adjustments and the effect of move-
ments in the yield curve used for discounting, are rec-
ognised as price adjustments.

Investment management charges represent expenses
relating to the management of investments including
salary and management fees on the investment area.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |
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.
Discontinued business also comprises the Tryg For-
sikring 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 al-
located 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 cer-
tainty that future earnings will exceed the costs in more
than one year, are reported as intangible assets. Direct
costs include personnel costs for software development
and directly attributable 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.

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 accu-
mulated impairment losses. Cost encompasses the
purchase price and costs directly attributable to the
acquisition of the relevant assets until the time when
such assets are ready to be brought into use.

Depreciation of operating equipment is calculated
using the straight-line method over its estimated
economic lifetime as follows:
•
IT, 4 – 8 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.

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

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 de-
preciation and impairment losses. Revaluations are
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 typical
operating expenses for the coming year. The resulting
operating income is divided by the required return on
the property in per cent, which is adjusted to reflect
market interest rates and property characteristics, cor-
responding 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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | Investment property
Properties held for renting yields that are not occupied
by the Group are classified as investment properties.

based on business plans. The business plans are
based on past experience and expected market devel-
opments.

Investment property is recognised at fair value. Fair
value is based on market prices, adjusted for any dif-
ferences in the nature, location or maintenance con-
dition of specific assets. If this information is not avail-
able, the Group uses alternative valuation methods
such as discounted cash flow projections and recent
prices in the market.

The fair value is calculated on the basis of market-
specific rental 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
often if there are indications of impairment, and im-
pairment testing is performed for each cash-generat-
ing unit to which the asset belongs. The present value
is normally established using budgeted cash flows

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.

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.

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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | 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.

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 con-
tracts
Contracts entered into by the Group with reinsurers
under which the Group is compensated for losses on
one or more contracts issued by the Group and that
meet the classification requirements for insurance
contracts are classified as reinsurers’ share of provi-
sions for insurance contracts. Contracts that do not
meet these classification requirements are classified
as financial assets.

The benefits to which the Group is entitled under its
reinsurance contracts held are recognised as assets
and reported as reinsurers’ share of provisions for in-
surance contracts.

Amounts receivable from reinsurers are measured
consistently with the amounts associated with the re-
insured insurance contracts and in accordance with
the terms of each reinsurance contract.

Changes due to unwinding are recognised in insur-
ance technical interest. Changes due to changes in
the yield curve or foreign exchange rates are recog-
nised as price adjustments.

The Group continuously assesses its reinsurance as-
sets for impairment. If there is objective evidence that
the reinsurance asset is impaired, the Group reduces
the carrying amount of the reinsurance asset to its re-
coverable amount. Impairment losses are recognised
in the income statement.

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.

Receivables that arise as a result of insurance con-
tracts are classified in this category and are reviewed
for impairment as a part of the impairment test of ac-
counts receivable.

Receivables are recognised initially at fair value and are
subsequently assessed at amortised cost. The income
statement includes an estimated reservation for expected
unobtainable sums when there is a clear indication of 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.

tax on the Norwegian and Swedish contingency fund
reserves is allocated.

Prepayments and accrued income
Prepayments include expenses paid in respect of sub-
sequent financial years and interest receivable. Accrued
underwriting commission relating to the sale of insur-
ance products is also included.

Dividends
Proposed dividend is recognised as a liability at the
time of adoption by the shareholders at the annual
general meeting (date of declaration).

Equity
Share capital
Shares are classified as equity when there is no obliga-
tion to transfer cash or other assets. Costs directly at-
tributable 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 revaluation
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 recognised
in Other comprehensive income. When an entity is
wound up, the balance is transferred to the income
statement. The hedging of the currency risk in respect of
foreign entities is also offset in other comprehensive in-
come in respect of the part that concerns the hedge.

Contingency fund reserves
Contingency fund reserves are recognised as part of re-
tained earnings under equity. The reserves may only be
used when so permitted by the Danish Financial Super-
visory Authority and when it is for the benefit of the pol-
icyholders. The Norwegian contingency fund reserves
include provisions for the Norwegian Natural Perils
Pool and security reserve. The Danish and Swedish pro-
visions comprise contingency fund provisions. Deferred

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 programme.

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 transaction 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.

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S | 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. rep-
resent amounts expected to be paid to policyholders in
view of the claims experience during the financial year.

Claims provisions are determined for each line of
business based on 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 infla-
tion assumptions are used, with annuities for the in-
sured being indexed based on the workers’ compensa-
tion index. An inflation curve that reflects the market’s
inflation expectations plus a real wage spread is used as
an approximation to the workers’ compensation 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.

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-

| Contents – Financial statements

NotesAnnual report 2015 | Tryg A/S |
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
deferred income tax liability is settled.

Deferred income tax assets, including the tax value
of tax losses carried forward, are recognised to the
extent that it is probable that future taxable profit will
be realised against which the temporary differences
can be offset.

Deferred income tax is provided on temporary
differences concerning investments, except where
Tryg controls when the temporary difference will be
realised, and it is probable that the temporary differ-
ence will not be realised in the foreseeable future.

Other provisions
Provisions are recognised when the Group has a legal
or constructive obligation as a result of an event prior
to or at the statement of financial position date, and it
is probable that future economic benefits will flow out
of the Group. Provisions are measured at the best
estimate by management of the expenditure required
to settle the present 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
according to the same principle as the Group’s
other claims provisions.

Debt
Debt comprises debt in connection with direct
insurance and reinsurance, amounts owed to credit
institutions, current tax obligations and other debt.
Derivative financial instruments are assessed at fair
value according to the same practice that applies to
financial assets. Other liabilities are assessed at amor-
tised cost based on the effective interest method.

Cash flow statement
The consolidated cash flow statement is presented
using the direct method and shows cash flows from
operating, investing and financing activities as well as
the Group’s cash and cash equivalents at the begin-
ning and end of the financial year. No separate cash
flow statement has been prepared for the parent
company because it is included in the consolidated
cash flow statement.

Cash flows from operating activities are calculated
whereby major classes of gross cash receipts and
gross cash payments are disclosed.

Cash flows from investing activities comprise
payments in connection with the purchase and sale
of intangible assets, property, plant and equipment
as well as financial assets and deposits with credit
institutions.

Cash flows from financing activities comprise changes
in the size or composition of Tryg’s share capital and
related costs as well as the raising of loans, repayments
of interest-bearing debt and the payment of dividends.

Cash and cash equivalents comprise cash and
demand deposits.

| Contents – Financial statements

NotesAnnual report 2015 | 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

2,044
1
-7

2,038

-75

2,600
0
-7

2,593

-51

Profit/loss before tax

1,963

2,542

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 earnings

1,981

1,759
-1,656
1,878

1,981

2,557

1,731
143
683

2,557

2015

2014

DKKm

2015

2014

Note

Statement of comprehensive income
Profit/loss for the year

Other comprehensive income

1,981

2,557

Other comprehensive income which cannot subsequently
be reclassified as profit or loss
Change in equalisation provision and other provisions
Change in taxes on security 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

Total other comprehensive income

21
141
4
2
-12
3

159

-89
86
-21

-24

135

26
0
2
0
-46
12

-6

-178
191
-47

-34

-40

Comprehensive income

2,116

2,517

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Statement of financial position for Tryg A/S (parent company)

DKKm

2015

2014

Note
4

Assets
Equity investments in Group undertakings

Total investments in Group undertakings

10,322

11,843

Total investment assets

10,322

11,843

Current tax assets
Cash at bank and in hand

Total other assets

18
1

14
0

Total assets

10,341

11,857

Equity and liabilities
Equity

Debt to Group undertakings
Other debt

Total debt

9,846

11,134

487
8

495

718
5

723

Total equity and liabilities

10,341

11,857

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

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Statement of changes in equity (parent company)

DKKm

Equity at 31 December 2014

2015
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 2015

Equity at 31 December 2015

Share
capital

Revaluation
reserves

Retained
earnings

Proposed
dividend

Total

1,492

4,856

3,055

1,731

11,134

-1,656
135

-1,521

0
-44

-44

1,448

-1,521

3,335

1,878

1,759

1,878
44

97
-1,044
13
2
5

995

4,050

1,759

-2,477

-718

1,013

1,981
135

2,116
0
-2,477
97
-1,044
13
2
5

-1,288

9,846

Dividend per share in 2015 includes dividend paid
out in July of DKK 2.50 and proposed dividend of
DKK 3.50, totalling DKK 6.00 (DKK 5.80 in 2014 ).
Proposed dividend per share of DKK 3.50 is calculated
as the total dividend proposed by the Supervisory
Board after the end of the financial year divided by
the total number of shares at the end of the year
(289,559,550 shares). The dividend is not paid until
approved by the shareholders at the annual general
meeting.

Equity at 31 December 2013

1,533

4,753

3,180

1,656

11,122

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

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

-1,656

1,731

2,557
-40

2,517
0
-1,656
59
-1,005
49
45
3

11,134

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

Income from Group undertakings
Tryg Forsikring A/S

Other expenses
Administration expenses

2,044

-75

2,600

-51

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

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

19
-1

23.5
-1.0

22.5

14
1

24.5
0.5

25.0

2015

2014

DKKm

2015

2014

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

4,856
2,179
-3,700

3,335

6,987

4,753
1,759
-1,656

4,856

Carrying amount at 31 December

10,322

11,843

Name and registered office

Ownership share in %

Equity

2015
Tryg Forsikring A/S, Ballerup

2014
Tryg Forsikring A/S, Ballerup

Current tax assets
Tax receivable at 1 January
Current tax for the year
Tax paid for the year

Tax receivable at 31 December

100

10,322

100

11,843

14
18
-14

14
14
-14

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

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.

2015

2014

DKKm

2015

2014

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 disputes in Denmark, Norway and Sweden.
Management believes that the outcome of these disputes 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 2015.

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

9,846
-1,013
-3,868

4,965
1,707
-3,868

2,804

11,134
-1,731
-2,353

7,050
1,496
-2,353

6,193

2,586

7,137

Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company,
TryghedsGruppen smba. Related parties with a significant influence include the Supervisory Board,
the Executive Management and their members’ related family. Related parties are the same as for
the Tryg Group; please see Note 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

-13
-487

-15
-718

Solvency ratio (Solvency I – ratio between capital
base and weighted assets)

108

Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Notes

DKKm

2015

2014

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

Profit/loss – Danish FSA executive order

Reconciliation of equity
Equity – IFRS
Deferred tax provisions for contingency funds

Equity – Danish FSA executive order

Accounting policies
Please refer to Tryg Group's accounting policies.

1,981

9,831
15

9,846

2,557

11,119
15

11,134

| Contents – Financial statements

Annual report 2015 | Tryg A/S |

Q4
2015

Q3
2015

Q2
2015

Q1
2015

Q4
2014

Q3
2014

Q2
2014

Q1
2014

Q4
2013

A further detailed version of the presentation
can be downloaded from tryg.com/uk > investor
> Downloads > tables

2,172

285

2,211

398

2,226

434

2,194

181

2,249

400

2,289

445

2,275

494

2,238

273

2,290

286

Q4 2015 | Quarterly outline

DKKm

Private

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

106.2

71.3
2.3
73.6
13.4

87.0

89.3

970

147

62.3
5.5
67.8
17.2

85.0

91.3

949

69.2
20.5
89.7
9.7

99.4

65.1
2.3
67.4
14.7

82.1

86.5

1,022

136

77.1
-6.8
70.3
16.6

86.9

98.6

984

195

99.9
-30.1
69.8
10.6

80.4

98.1

63.3
2.1
65.4
15.3

80.7

83.7

997

220

55.7
5.2
60.9
17.2

78.1

84.5

993

170.5
-91.2
79.3
11.0

90.3

94.5

76.5
0.0
76.5
15.3

91.8

96.8

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

1,003

155

1,050

270

1,045

188

1,053

224

1,042

193

1,080

157

66.3
0.9
67.2
17.4

84.6

98.9

968

67.6
13.4
81.0
11.9

92.9

55.2
3.7
58.9
15.6

74.5

86.5

1,015

67.2
12.6
79.8
10.6

90.4

100.1

106.4

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

81.5
4.6
86.1
12.6

98.7

73.8
-5.9
67.9
17.9

85.8

92.8

1,025

75.0
7.6
82.6
12.1

94.7

113.4

102.2

| Contents – Financial statements

100

Annual report 2015 | Tryg A/S |

Q4 2015 | 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
2015

Q3
2015

Q2
2015

Q1
2015

Q4
2014

Q3
2014

Q2
2014

Q1
2014

Q4
2013

313

51.8
0.3
52.1
21.1

73.2

94.3

-11

373

73.2
0.5
73.7
15.8

89.5

92.4

-7

-120

342

61.1
0.0
61.1
17.8

78.9

93.2

-8

289

72.0
-0.7
71.3
20.8

92.1

100.1

-3

338

74.6
1.5
76.1
22.2

98.3

99.2

-6

386

76.2
0.8
77.0
15.5

92.5

97.7

-7

4,393

4,583

4,550

4,451

4,646

4,712

522
201
-19
704
721

68.0
6.2
74.2
14.2

88.4

93.9

647
-383
-20
244
580

76.6
-6.8
69.8
16.3

86.1

94.9

825
-84
-27
714
525

84.8
-17.8
67.0
15.2

82.2

87.1

429
261
-25
665
640

72.0
3.1
75.1
15.6

90.7

98.5

775
13
-20
768
593

64.1
4.7
68.8
14.9

83.7

91.0

793
-1
-10
782
869

64.9
3.7
68.6
15.1

83.7

90.0

358

69.3
-0.3
69.0
19.6

88.6

91.7

-5

4,711

941
259
-50
1,150
455

70.7
-2.6
68.1
12.6

80.7

84.1

317

64.4
4.4
68.8
19.9

88.7

91.5

-3

348

71.8
-2.9
68.9
19.3

88.2

94.5

-6

4,583

4,737

523
89
-10
602
565

71.7
1.6
73.3
15.9

89.2

96.5

546
154
-61
639

74.9
-1.2
73.7
15.4

89.1

94.3

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 further detailed version of the presentation
can be downloaded from tryg.com/uk > investor >
Downloads > tables

| Contents – Financial statements

101

Annual report 2015 | Tryg A/S |

Q4 2015 | Geographical segments

Q4
2015

2,330

289
116

65.2
9.3
74.5
13.1

87.6

1,611

124
44

74.4
4.3
78.7
13.8

92.5

463

109
81

54.6
3.0
57.6
19.0

76.6

DKKm

Danish general insurance a)

Gross premium income

Technical result
Run-off gains/losses, net of reinsurance

Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio

Combined ratio

Number of full-time employees 31 Dec.

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.

| Contents – Financial statements

Q4
2014

2,346

651
262

52.1
7.9
60.0
12.4

72.4

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

9,346

1,371
512

80.5
-9.2
71.3
13.9

85.2

1,859

6,766

844
492

70.9
2.1
73.0
14.9

87.9

1,113

1,894

328
208

63.5
1.7
65.2
17.5

82.7

387

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

2015

2014

DKKm

Other b)

Gross premium income

Technical result

Tryg

Q4
2015

-11

Q4
2014

-6

2015

2014

-29

-120

-21

Gross premium income

4,393

4,646

17,977

18,652

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

522
201
-19
704
241

68.0
6.2
74.2
14.2

88.4

775
13
-20
768
338

64.1
4.7
68.8
14.9

83.7

2,423
-5
-91
2,327
1,212

75.4
-3.9
71.5
15.3

86.8

Number of full-time employees, continuing business at 31 Dec.
Number of full-time employees, discontinued and divested business at 31 Dec.

3,359
0

3,032
360
-90
3,302
1,131

67.8
1.8
69.6
14.6

84.2

3,599
0

a)
b)

Includes Danish general insurance and Finnish guarantee insurance.
Amounts relating to eliminations. In 2015 also restructuring expenses are included under 'Other'.
In 2014 the costs were positively affected by a one-time effect regarding changed pension terms in
Norway and they were negatively affected by a provision in connection with the transfer to the new
it-supplier. The joint effect was approx DKK 135m. In 2015 costs and claims were negatively effected
by DKK 80m and DKK 40m respectively due to provisioning for the efficiency programme.

c) Adjustment of gross expense ratio included only in 'Tryg '. The adjustment is explained in a footnote

to Financial highlights.

102

Annual report 2015 | Tryg A/S |

Other key figures

2015

2014

2013

2012

2011

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)
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

70.1
15.8
85.9
15.6
13.5
14.4
0.1
0.1
22.2
18.4
5,691
25,350
2,557
31.0
141.4
172.4
3,359

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

189

6.95
6.95
6.77
282,316
285,073
285,101
137.40
34.82
4.0
6.00
20.3

8.74
8.73
8.70
289,120
292,521
292,788
137.80
38.46
3.6
5.80
15.8

7.88
7.86
7.89
296,870
300,777
301,295
104.90
37.41
2.8
5.40
13.3

7.30
7.27
7.21
303,474
302,455
303,571
85.30
36.18
2.4
5.20
11.8

75.7
17.0
92.7
16.9
7.9
8.3
0.9
0.9
18.4
13.1
6,876
25,894
1,828
34.8
134.9
169.7
4,076

242

3.77
3.77
3.80
301,866
302,003
302,003
63.80
29.84
2.1
1.30
16.8

In May 2015 each share with a nominal value of
DKK 25 was replaced by five new shares with a
nominal value of DKK 5. The share split did not
change the Group's share capital. Comparative
figures have been restated to reflect the change
in trading unit.

The expense ratio, net without adjustment, is
calculated as the ratio of actual insurance operating
costs, net of reinsurance to premium income, net
of reinsurance. Other key ratios are calculated in
accordance with ''Recommendations & Financial
Ratios 2015'' issued by the Danish Society of
Financial Analysts.

The adjustment, which is made pursuant to the Danish
Financial Supervisory Authority’s and the Danish
Society of Financial Analysts’ definitions of expence
ratio and combined ratio, involves the addition of a
calculated cost (rent) in respect of owner-occupied
property based on a calculated market rent and the
deduction of actual depreciation and operating costs
on owner-occupied property.

| Contents – Financial statements

103

Annual report 2015 | Tryg A/S |

Group chart

Tryg A/S
(Denmark)

Tryg Forsikring A/S
(Denmark)

Tryg Garanti-
forsikring A/S
(Denmark)

Moderna
Försäkringar
(Branch Sweden)

Tryg Forsikring
incl. Enter
(Branch Norway)

A/S af 7. juli 2015
(Denmark)

Vesta
Eiendom AS
(Norway)

Tryg
Ejendomme A/S
(Denmark)

Optimal
Djurförsäkring
i Norr AB
(Sweden)

Respons
Inkasso AS
(Norway)

Tryg Garanti
(Branch Norway)

Moderna Garanti
(Branch Sweden)

Tryg Garanti
(Branch Finland)

Komplementar-
selskabet
af 1. marts
2006 ApS (50%)

Thunesvei 2 AS
(Norway)

ANS Grensen 3
(99%)
(Norway)

Group chart at 1 January 2016. Companies and branches are wholly owned by Danish
owners and domiciled in Denmark, unless otherwise stated.

Company

Branch

| Contents – Management’s review

104

Annual report 2015 | 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 2015’ 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

| Contents – 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

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 comes
into force at 1 January 2016.

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.

105

Annual report 2015 | 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 14% of total premium income and covers the loss of or damage to the
buildings, stock or equipment of commercial customers. Moreover, Tryg provides
cover for operating losses in connection with covered claims.

In Denmark, motor insurance taken out by concept customers includes Tryg’s
roadside assistance, such as towing and battery jump-start.

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.

| Contents – Management’s review

106

Annual report 2015 | 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.