Annual report 2016
Contents – Management’s review
MANAGEMENT’S REVIEW
17 Commercial
35 Executive Board
3
Income overview
19 Corporate
36
Corporate Social Responsibility in Tryg
4
Introduction by Chairman and CEO
21 Sweden
5 Events in 2016
23
Investment activities
FINANCIAL STATEMENTS
6 Targets and strategy
25
Capital and risk management
39 Financial statements
9 Financial targets and outlook
27 Shareholder information
109 Group chart
10 Tryg’s results
15 Private
29 Corporate governance
110 Glossary
33 Supervisory Board
111 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 offer a broad range of insurance products to both private individuals and businesses.
Our 3,300 employees provide peace of mind for more than 3 million customers and handle
approximately 950,000 claims annually.
Our ambition is to become the world’s best insurance company.
Editor Investor Relations | Publication 20 January 2017 | Layout amo design | Proofreading TextMinded
Annual report 2016 | Tryg A/S |
2
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 (%) a)
Number of shares 31 December (1,000)
Earnings per share (DKK)
Net asset value per share (DKK)
Ordinary dividend per share (DKK)
Proposed extraordinary 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 2016
Q4 2015
4,504
-3,245
-802
457
-140
-3
314
598
-112
800
-240
560
0
560
301
4,393
-2,988
-615
790
-272
4
522
242
-19
745
3
748
6
754
241
9,437
24.1
274,595
2.03
9,644
32.0
282,316
2.64
1.7
72.0
3.1
75.1
18.0
93.1
-6.7
4.4
2.6
83.6
82.8
99.1
92.9
-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
2016
17,707
-11,619
-2,737
3,351
-951
-10
2,390
987
-157
3,220
-748
2,472
-1
2,471
1,239
9,437
26.2
274,595
8.84
34.37
6.20 b)
3.54
0.1
65.6
5.4
71.0
15.7
86.7
-7.0
2.2
2.0
83.8
82.1
88.8
90.7
2015
17,977
-13,562
-2,720
1,695
710
18
2,423
-22
-91
2,310
-390
1,920
49
1,969
1,212
9,644
20.0
282,316
6.91
34.16
6.00
-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
23.7
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
21.8
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
22.3
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) From 1 January 2016, Tryg has implemented Executive order on financial reports presented by insurance companies and lateral pension funds issued by the Danish FSA, which prescribes applying a new yield curve and a new
way of calculating Return on equity after tax (%). Comparative figures have been restated accordingly. Please refer to details of the new yield curve in note 31 Accounting policies.
b) Ordinary dividend per share in 2016 includes dividend paid out in July of DKK 2.60 and proposed ordinary dividend of DKK 3.60.
| Contents – Management’s review
3
Annual report 2016 | Tryg A/S |
Customer focus
2016 was characterised by many initiatives with a focus
Efficient operations and risk management
on customers. To accelerate decision-making processes for
Tryg continues to work concertedly to reduce costs and to
the benefit of customers, our organisational structure was
negotiate favourable agreements for the procurement of
changed with more responsibilities and decision-making
claims services, ensuring that Tryg operates as efficiently as
powers being delegated to the management teams in the
possible for the benefit of customers and shareholders. Risk
individual countries early in the year. This has, among other
management is in many ways key to running an insurance
things, resulted in the establishment by the Private organ-
business – covering everything from the overall risk manage-
isations in both Denmark and Norway of a front-office func-
ment of Tryg as a company to the pricing of our products.
tion, which ensures that customers are met by employees
who can process claims, provide advisory services and effect
2016 was the first year with the Solvency II rules, and
sales. In summer 2016, our Danish customers received the
according to these rules Tryg has a solid capital base. This
first member’s bonus payout by TryghedsGruppen, amount-
creates peace of mind for customers and supports Tryg’s
ing to 8% of total premiums for 2015. Tryg is continuously
dividend policy.
following up on customer satisfaction as reflected in our
Net Promoter Score (NPS), and we are pleased with our
Stable and increasing dividends for shareholders
2016 NPS score of 22, which already meets our target
Being a shareholder in Tryg must be attractive, and we attach
of 22 for 2017. Tryg also measures NPS immediately after
importance to distributing stable and increasing dividends
customers have been in touch with Tryg, and our NPS
to shareholders in accordance with Tryg’s dividend policy.
score here was 49.
Good results in 2016
The Supervisory Board therefore proposes a dividend of
DKK 3.60 per share for the second half of 2016, resulting
in a total payout of DKK 6.20 per share in 2016. Based on
We posted a profit of DKK 2,471, which was an improve-
our good results and solid capital position, the Supervisory
ment compared to 2015. The results were achieved
Board has decided to propose that an extraordinary dividend
through customer focus, improved products and further
of DKK 1,000m for 2016 be paid in 2017 concurrently with
optimisation of operations.
the introduction of quarterly dividend payments.
New products
World-class employees
Tryg has a strong focus on developing and marketing new
The good results, the many new initiatives and the high
products. New products have been launched in areas with
customer satisfaction scores have only been possible
growth potential, such as children and pets. Commercial and
through the committed efforts of Tryg’s employees, and
Corporate launched a new cyber insurance product to meet
both the Supervisory Board and the Executive Board
businesses’ new insurance need. As a source of inspiration
would like to thank them for their hard work.
for future insurance solutions, Tryg has rented out an area at
our head office in Denmark to smaller start-up enterprises
focusing on innovation. Tryg has in recent years focused
strongly on developing existing products to better meet
customer needs and to ensure more risk-based pricing. In
2016, the majority of our customers had the most up-to-date
Jørgen Huno Rasmussen
Morten Hübbe
products as more than 500,000 policies were updated.
Chairman
Group CEO
| Contents – Management’s review
Annual report 2016 | Tryg A/S |
4
4
Annual report 2016 | Tryg A/S |
Events in 2016
New bond issue
Tryg Forsikring A/S took
out a Solvency II-compliant
Tier 2 subordinated call-
able bond issue of SEK 1bn
(approx. DKK 800m) in the
Swedish market.
New online claims reporting
Tryg launched new improved
digital claims reporting solu-
tion, enabling customers to
report claims on tablets and
smartphones.
New CFO appointed
Christian Baltzer was ap-
pointed Group CFO, taking
up his new position on
15 April 2016.
Acquisition completed
Tryg obtained approval from
the authorities, hence the
acquisition of Skandia’s child
insurance portfolio was final-
ised on 1 September 2016.
The portfolio was integrated
into Tryg’s Swedish business,
Moderna.
New improved Tryg Pluss
Norway launched an up dated
Tryg Pluss benefits program-
me for private customers.
The programme offers three
main benefits: Tryg ID, Tryg
Care and Tryg House Assist-
ance.
See tryg.no.
New motorcycle app
Moderna launched the
Moderna Smart MC app.
The app records the driver’s
driving style, and the motor-
cycle insurance price is then
differentiated accordingly.
Driving safely triggers a dis-
count the following year.
New jointly produced Tryg family film
For the first time, Tryg, TryghedsGruppen and TrygFonden released
a film together based on a true story about saving a life. As a Tryg
customer, you contribute to saving lives. Tryg’s Danish customers
are members of TryghedsGruppen, which is behind TrygFonden
and involved in hundreds of peace-of-mind activities in Denmark.
Watch the film.
January
February
March
April
May
June
July
August
September
October
November
December
Share buy back programme initiated
On 6 April, Tryg initiated an extraordinary share buy back of
DKK 1bn, which was completed on 16 December 2016.
‘A2’ rating from Moody’s
Tryg was assigned an ‘A2’ financial strength rating with a positive
outlook from Moody’s. At the same time, the rating agreement
with Standard & Poor’s was terminated.
Members’ bonus paid
In March 2016, TryghedsGruppen’s Board of Representatives
decided to pay out a bonus to its members (Tryg’s Danish customers),
corresponding to 8% of the premium paid for 2015. On 1 June 2016,
a bonus of DKK 696m was paid to members.
Tryg ID on social media
Tryg launched a campaign informing our Tryg Plus
customers of Tryg’s offer of advice and help to
prevent, discover and limit the misuse of personal
information on the social media. Misuse of one’s
identity can take the form of a fake Facebook pro-
file or misuse of personal pictures, for example.
New and improved ‘My page’
Tryg launched a new and improved ‘My page’. ‘My page’ enables cus-
tomers to access insurance policies and edit coverage of insurance
products. ‘My page’ is tailored to the customer’s needs and suggests
recommended products.
Moderna, best company of the year
For the fourth year running, Tryg’s branch in
Sweden, Moderna, was named insurance broker
of the year in the commercial and corporate
segments.
Launch of new child insurance
Tryg launched a new child insurance product
in Denmark with three different levels of
coverage; from Tryg Child Super to Tryg
Child Minimum.
insurance on tryg.dk.
Read more about child
TryghedsGruppen proposes new rules
for election of Tryg’s Chairman
TryghedsGruppen, the majority shareholder
in Tryg, will propose an amendment to
Tryg’s Articles of Associations at Tryg’s AGM
in 2017, hence the Chairman of Trygheds-
Gruppen is not automatically Chairman
of Tryg.
Opening of The Camp
5 October 2016 was the official opening of
The Camp, a co-work space for start-ups
at Tryg’s head office in Ballerup. The Camp
contributes to innovation, developing
Tryg’s current and new business.
Launch of cyber risk insurance
Tryg launched a cyber risk insur-
ance product in Commercial and
Corporate in Denmark, Norway and
Sweden. With this cyber insurance
product, Tryg can help customers
manage cyber-attacks, while also
covering any economic losses sus-
tained as a result of such attacks.
Tryg upgraded to ’A1’
Moody’s upgraded Tryg from
‘A2’ to ‘A1’ with a stable outlook.
Denmark hit by storm
On 26 December, Denmark was hit
by a storm. Tryg received approx.
1,600 claims. Northern Jutland
and the Copenhagen area were
hit the hardest.
| Contents – Management’s review
Annual report 2016 | Tryg A/S |
5
Targets and strategy
Tryg surpassing the general level of employee satis-
faction in the financial sector in the region.
Employee satisfaction 2012-2016
Value creation for our shareholders
Tryg’s shareholders must see Tryg as a company
with ambitious targets disbursing stable and
increasing dividends. Tryg delivered a strong result
in 2016 and is on track to achieving its ambitious
financial targets for 2017.
Index
75
70
65
60
55
50
2012
2013
2014
2015
2016
Tryg
Nordic financial market
Nordic market
Our purpose
value for customers, employees and shareholders,
Tryg’s business model
Tryg’s purpose is to create peace of mind and
We create peace of mind and value for
Tryg’s ambition is to become the world’s best
offering them insurance against risk, efficient claims
holders. Via TryghedsGruppen’s 60% ownership of
customers, employees and shareholders.
insurance company.
handling, and advice and services to prevent claims
Tryg, part of the company’s profit is returned to cus-
and this must be at the core of everything we do.
Tryg creates peace of mind for its customers by
o mers’ peace of mind, we benefit all of Tryg’s stake-
from arising in the first place. By ensuring our cust-
tomers, who are also members of TryghedsGruppen.
Our ambition
Our customers – our most important asset
Our customers are our most important asset.
Tryg strives to continuously strengthen customer
Tryg’s business model
To become the world's best insurance
relations through our advisory services, products,
company.
concepts, claims handling procedures and claims
prevention measures. In 2016, we had a strong
focus on initiatives supporting the customer
Our values
targets for 2017.
Our values are highly integrated in our
Our employees – our most important resource
culture and consistent with our purpose.
Our employees are our most important resource
and key to realising our vision of becoming the
•
We meet people with respect,
world’s best insurance company. As an important
openness and trust
step towards achieving this, all our employees
•
We show initiative, share knowledge
must feel that they have an opportunity to be suc-
and take responsibility
cessful. Clear and ambitious targets must be set
•
We deliver solutions based on quality
for each individual employee, and regular feedback
and simplicity
must be provided. Aiming for the highest level of
•
We create sustainable results
employee satisfaction in the financial sector in the
Nordic region, Tryg was pleased to note a continued
high level of employee satisfaction in 2016, with
Tryg is a pure non-life insurer creating peace of mind and value for our customers, employees
and shareholders.
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E M P LOY E E S
D I ST R I B U T I O N
Own sales force
and partners
I N S U R A N C E
P R E V E N T I O N
C L A I M S
H A N D L I N G
P R O C E SS E S
Combination of in-house
& sourcing
E M P LOY E E S
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O U R A M B I T I O N
To become the world's
best insurance company.
G E O G R A P H Y
S E G M E N T S
Private, Commercial
and Corporate
| Contents – Management’s review
6
Annual report 2016 | Tryg A/S |
Stable Nordic insurance market
actly the impact will be on the insurance business
Targets
port the target of being ahead of peers for 25% of
The Nordic insurance market is characterised
remains an open question. So far, the development
Tryg has a strong focus on both financials and cus-
products and on a par with peers for the remaining
by consumers and businesses that have largely
of more technically advanced cars has led to a
tomers, and targets have therefore been set for both
products in 2017.
covered their insurance needs, combined with rela-
reduction in the number of people who are injured
areas. Financial and customer targets are inextric-
tively low rates of economic growth. Profitability in
in car accidents, but at the same time it is also
ably linked. Loyal customers mean high retention
Customer journey & success culture
the insurance industry is generally high as the vast
clear that the more advanced cars are much more
rates, keeping the expenses associated with attract-
In 2016, Tryg has continued its many initiatives to
majority of companies focus on earnings rather
expensive to repair.
ing new customers low, thereby contributing to a
improve the customer experience. Tryg sent out ap-
than growth. Customers are generally loyal to their
low expense ratio. With the financial results posted
proximately 900,000 text messages to customers
insurance company based on good customer ser-
Contrary to developments in motor insurance,
for 2016, Tryg is on track to meeting the financial
asking them to rate their experience, and more
vice and claims handling processes. For customers
other areas are expected to grow in the future.
targets defined for 2017. In 2016, Tryg had a strong
than 440,000 responded. Eighty-two per cent rated
looking for a new insurance provider, competition
This goes, especially, for the insurance of people,
focus on improving the customer experience in all
Tryg between 9 and 10 on a scale of 1-10 where 10
is always intense, generally combined also with a
pets and technology. Based on these develop-
parts of the organisation to improve its performance
is best. This is a strong feedback on the good ser-
focus on profitability.
ments, Tryg has been actively acquiring companies
on customer-related parameters.
vice provided by our customer service and claims
Motor insurance accounts for a significant share of
pet insurance and cyber insurance products.
Strategic initiatives
in these areas and developing new child insurance,
representatives. Tryg’s overall NPS score was 22,
and thus Tryg has already met the target of an NPS
the non-life insurance market, and the insurance
Tryg has set up four strategic initiatives to support
of 22 as set at the Capital Markets Day in 2014.
business therefore closely monitors how technical
In Norway, the weakened economy affected the
its financial and customer targets. The strategic
developments affect this area. With the develop-
overall premiums development, and at the same
initiatives for 2017 are unchanged from 2016.
Tryg continues to capture feedback in order to
ment of the autonomous car, the motor insurance
time a number of very aggressive insurers ended up
further improve the customer experience. Key
market is expected to shrink in the future. What ex-
into financial difficulties. In general, the impact of
Strategic initiatives 2017
initiatives evolving from this are projects aimed at
aggregators continues to be limited in both Den-
• Next level pricing
improving customer loyalty. The feedback has also
Financial targets 2017
mark and Norway. Market developments differed
• Customer journey & success culture
shown an appetite for closer and better dialogue
in Denmark and Norway in 2016. In Denmark,
• Leading in efficiency
with Tryg, which has contributed to changes to the
• Return on equity of ≥21% after tax
to slightly increasing real estate prices and a lower
consumer sentiment was quite stable, which led
• Digitalisation
way in which Tryg approaches both consumers and
businesses in order to improve customer loyalty
• Combined ratio ≤87
• Expense ratio ≤14
unemployment rate of around 4.2% at the end of
Next level pricing
and advocacy.
2016. Total car sales were up 7.4% in 2016 com -
Next level pricing (price differentiation) has been
Customer targets 2017
• NPS + 100%
• Retention rate +1 pp
• Customers ≥3 products +5 pp
pared with 2015, and a shift from sales of small
an ongoing initiative and Tryg’s most important
To develop the skills and boost the motivation
cars to medium-sized cars was observed. The
initiative in recent years. Tryg has developed more
of managers and employees, Tryg continued to
Norwegian economy remained challenged in
than 35 new price-differentiated products since
use the SuccessFactors suite of tools in 2016,
2016, especially in the oil-related areas, although
defining this as a strategic initiative. In 2016, focus
which allows corporate KPIs to be cascaded down
the Norwegian economy is generally very strong.
was on converting Private customers to the new
throughout all management and employee levels.
The unemployment rate was largely unchanged at
and updated products. At the end of 2016, 88%
An important SuccessFactors tool which was
around 4.8%. Car sales in Norway were up 2.6%
of customers had the new and updated products.
implemented in 2016 is People Review. People
in 2016.
Tryg will continue to enhance its products to sup-
reviews are carried out for all managers and
| Contents – Management’s review
7
Annual report 2016 | Tryg A/S | employees in the organisation, the purpose being
Digitalisation
to work systematically with feedback and to sup-
Digitalisation is one of the key drivers for im-
port the development of managers and employ-
proved customer service and claims handling
ees. In Tryg, we want to acknowledge employees
processes. In 2016, focus was on self-service,
who deliver an extraordinary performance, and an
automation, lead generation and cross-sales.
employee recognition programme was therefore
Tryg developed many digital solutions in 2016
implemented in 2016 with the aim of celebrating
shown in the chart Digitalisation of Tryg. Tryg was
employees who are supportive of Tryg’s targets.
named Best Digital Finance Company of the Year
Leading in efficiency
Tryg launched a new efficiency programme in
among insurance companies by FinansWatch
(Danish media) and Wilke (Analysis institute).
2015 with the aim of further reducing claims and
With more than 80% of customers having signed
direct costs by DKK 750m by the end of 2017,
up for digital communication in Denmark and
with DKK 500m relating to claims and DKK 250m
Norway, Tryg has a very high level of digital
to expenses. The programme is on track, and sig-
customers. This is reflected in more than 1 million
nificant structural changes were implemented in
online visits in 2016. For direct customers, all
2016 in both the Norwegian and Danish organisa-
relevant claims can be filed online. Tryg will
tions. In Norway, two major structural initiatives
continue to develop digital solutions in 2017 and
were implemented in 2016, and in Denmark the
going forward capitalise on the developed solu-
merger of customer service and claims handling
tions to reduce expenses and claims costs.
for the less complicated products was a significant
initiative. The continued development of digital
Corporate Social Responsibility
solutions and initiatives directed against fraud
Corporate Social Responsibility (CSR) is an inte-
will also support reaching the targets for 2017.
grated part of Tryg’s core business. Through in-
Efficiency programme up until 2017
ers, employees and shareholders. This means
surance, claims handling and prevention, we work
to create peace of mind and value for our custom-
DKKm
Old programme
New programme
400
350
300
250
200
150
100
50
0
388
395
175
125
250
50
100
60
105
75
65
150
145
2012
2013
2014
Target
2015
2015
Target
2016
2016
Target
2017
Claims
Expenses
that CSR plays a constant role in the decisions we
make, in the improvement and development of
our products and services, in the optimisation of
our operations and in the positive contributions
which we make to society at large through our
activities.
Read more on pages 36-38.
Digitalisation of Tryg
2015
2016
Self-
service
Denmark
Claims
Self-
service
Norway
Claims
Self-
service
Claims
Sweden
My Page
Tjeneste-
mændenes
Forsikring
| Contents – Management’s review
8
8
Annual report 2016 | Tryg A/S | Financial targets and outlook
Some of the claims initiatives relate to previous
There has been a gradual lowering of tax rates
claims years and will therefore impact the run-off.
in Denmark, Norway and Sweden in recent
years. In Denmark, the tax rate was 22 in 2016,
At the end of 2016, a tax on salaries for financial
and this will also be the level for 2017. The
companies was approved in Norway. The tax will
Norwegian tax rate was 25 in 2016, while the
have an impact of approximately NOK 40m for
Swedish rate was 22. When calculating the total
2017, which will hit claims costs and expenses.
tax payable, account should also be taken of the
The investment portfolio is divided into a match
not taxed in Norway. All in all, this causes the
fact that gains and losses on shareholdings are
Financial targets 2017
pre-2015 period. Tryg expects this to be the case
sions, and a free portfolio. The objective is for
around 22-23% in 2017.
likely to be higher than the run-off level during the
portfolio corresponding to the technical provi-
expected tax payable for an average year to be
• Return on equity of ≥21% after tax
run-off level to gradually converge towards the
in the technical provisions due to interest rate
until the end of 2017. Hereafter, we expect the
the return on the match portfolio and changes
• Combined ratio ≤87
• Expense ratio ≤14
long-term level of 2.5-3%.
changes to be close to zero.
In 2017, weather claims net of reinsurance and
From 2016, the curve used for discounting
Weather claims, net of reinsurance
large claims are expected to be DKK 500m and
technical provisions changed due to the im-
DKK 550m, respectively, which is unchanged
plementation of the Solvency II directive, and
The return on equity for 2016 was 26.2%, and the
relative to 2016.
this might result in slightly more volatile match
portfolio net results. The new curve increases
combined ratio was 86.7. Tryg is well-positioned
The interest rate used to discount Tryg’s technical
the interest rate risk of the technical provisions,
for meeting the targets for 2017.
provisions is historically low. An interest rate in-
thereby introducing a larger difference between
crease will have a positive effect on Tryg’s results.
the match return and the changes in the tech-
Tryg expects growth in gross premium income of
Generally speaking, an interest rate increase of
nical provisions.
0-2% in local currencies in 2017.
1 percentage point will increase the pre-tax result
by around DKK 300m and vice versa.
The return on bonds in the free portfolio will
DKKm
Expected level 2017: DKK 500m
800
600
400
200
0
2012
2013
2014
2015
2016
Tryg will continue to take an active approach
vary, but given current interest rate levels, a low
Large claims, net of reinsurance
to acquiring smaller portfolios and developing
For the purpose of realising the financial targets,
return is expected. For shares, the expected
Expected level 2017: DKK 550m
the market for products which are expected to
Tryg has launched an efficiency programme
return is around 7% with the MSCI World Index
see higher growth rates such as pet and child
aimed at realising savings of DKK 750m, with
as the benchmark, while the expected return
insurance.
DKK 500m relating to the procurement of
for property is around 6%. Investment activities
Tryg has a solid reserve position, and at the Capital
DKK 250m relating to expenses. The target is
and expenses, especially the cost of managing
Markets Day in November 2014, Tryg therefore an-
DKK 375m in 2017 after targets for 2015 and
investments, the cost of currency hedges and
nounced that the run-off level going forward was
2016 of DKK 125m and DKK 250m.
interest paid on loans.
claims services and administration and
also include other types of investment income
800
600
400
200
0
2012
2013
2014
2015
2016
| Contents – Management’s review
9
Annual report 2016 | Tryg A/S | Tryg’s results
(DKK 2,423m), positively affected by the ongoing
efficiency programme, which contributed savings of
DKK 210m in 2016 against a target of DKK 225m.
Customer highlights 2016
The efficiency programme and price adjustments of
around 3% had a positive impact on profitability as
•
•
NPS unchanged at 22
Retention rate dropped slightly from
reflected in an improved trend through-out the year.
88.1 to 88.0
The total effect of weather claims, large claims and
•
Number of customers with three or more
run-off was much lower than in 2015.
products up from 56.7% to 57.2%
Financial highlights 2016
A result after tax of DKK 2,471m impacted by
In 2016, a slightly higher level of claims inflation
one-offs. Proposed H2 dividend of DKK 3.60 per
was observed for the profitable motor insurance
share equivalent to a full-year dividend of DKK
area. Tryg believes that this is driven by an increase
•
Profit after tax of DKK 2,471m
6.20 per share for 2016. Extraordinary dividend
in accident numbers as well as the use of more
(DKK 1,969m)
of DKK 1,000m for 2016. Solvency ratio of 194
expensive spare parts primarily in medium/high-
•
First year with TryghedsGruppen’s
members’ bonus for Danish customers
•
The majority of customers now have
Tryg’s most updated products
•
•
Return on equity after tax of 26.2% (20.0%)
after H2 dividend and extraordinary dividend.
end models. For extended warranty insurance of
The investment result was impacted by the sale
Technical result of DKK 2,640m
(DKK 2,543m) adjusted for one-offs
Results
electronic goods, a smaller product area, claims
of investment properties and domiciles, which
inflation was also observed. To improve the under-
had a positive impact on the investment result of
•
Combined ratio of 85.3 (86.1)
adjusted for one-offs
•
Premium income increased by 0.1%
in local currency (-0.8%)
•
Expense ratio of 14.8 (14.9)
adjusted for one-offs
•
Investment return of DKK 987
(DKK -22m) impacted by sale of
investment properties and domiciles and
high returns on several asset classes
•
Proposed H2 dividend of DKK 3.60
and DKK 6.20 per share for 2016
•
DKK 1bn share buy back completed.
Proposed DKK 1bn extraordinary dividend
to be paid after the AGM in 2017
•
Quarterly dividend from Q1 2017
At the beginning of 2016, Tryg announced a new
lying claims level, and following on from the price
DKK 500m. Adjusted for gains on investment
country-based organisation. This has created a
adjustments made in 2016, Tryg will be implement-
properties and domiciles, an investment result
more agile organisation, as reflected in the many
ing further price adjustments corresponding to
of DKK 487m was posted, boosted strongly by
business initiatives launched in 2016 in Denmark,
around 3% in 2017.
positive capital market developments.
Norway and Sweden.
A profit after tax of DKK 2,471m (DKK 1,969m) was
posted, together with a return on equity of 26.2%
(20.0%) and a combined ratio of 86.7 (86.8). The
results show that Tryg is on the track to meet its
financial targets for 2017 with a return on equity
at or above 21% and a combined ratio at or below
87. The expense ratio was 14.8 (14.9) adjusted
for one-offs, primarily related to write-downs on
intangible assets in 2016 and one-off costs in 2015.
Tryg launched many new initiatives in 2016, which
– in combination with further initiatives in 2017
– will support an expense ratio target at or below
14 in 2017. The technical result was DKK 2,390m
Key figures adjusted for write-downs on intangibles and one-offs
DKKm
Technical result
Investment income
Other income/costs
Pre-tax result
Claims ratio, net
Gross expense ratio
Combined ratio
Q4 2016
adjusted
Q4 2015
2016
adjusted
2015
adjusted
564
98
-12
650
73.2
14.4
87.6
522
242
-19
745
74.2
14.2
88.4
2,640
487
-57
3,070
70.5
14.8
85.3
2,543
-22
-91
2,430
71.2
14.9
86.1
2016 adjusted for DKK 250m, primarily related to write-downs on intangibles and DKK 500m extraordinary capital gain
on the sale of properties. 2015 adjusted for the one-off charge of DKK120m related to the effieciency programme.
| Contents – Management’s review
10
Annual report 2016 | Tryg A/S |
Tryg has a strong focus on the customer targets for
whereas there was a drop in Norway. To reverse
Having acquired the Skandia portfolio, in autumn
In the course of 2016, many new digital solutions
2017. Our customer targets are generally strongly
the trend in Norway, a more focused approach
2016 Tryg also launched a new child insurance
were developed (see page 8) which both make it
linked to our financial targets and have been per-
for cross-selling to customers who have bought
product for the Danish market. For Commercial and
more convenient for customers to buy and change
ceived as very appealing by the organisation.
motor insurance through the car sales channel
Corporate customers, Tryg launched a cyber insur-
products and also report claims. The digital solu-
has been initiated.
ance product in autumn of 2016. Going forward,
tions also support cross-selling by suggesting that
The Net Promoter Score (NPS) was unchanged
Tryg expects cyber insurance to become increas-
customers buy additional covers based on their
at 22 at the end of 2016. There was a positive
In 2016, Danish customers received their first
ingly important for both small and large companies.
expected insurance needs.
development for especially Private customers in
members’ bonus from TryghedsGruppen. The 8%
Sweden Private continued its innovative product
Denmark and a slight drop for Private Norway.
bonus has been well received by customers, and
development and developed three new smart app
Premiums
For Commercial, the NPS score dropped slightly,
Tryg expects the bonus to provide an important
products for car, motorcycle and health.
Premium income totalled DKK 17,707m
primarily in the Danish part of Commercial.
competitive advantage by improving customer
(DKK 17,977m), representing premium growth
Tryg also measures customer satisfaction after
loyalty and customer targets. TryghedsGrup-
In Private in both Denmark and Norway, a
income of 0.1% (-0.8%) when measured in local
customers have been in contact with Tryg, defined
pen has announced that they expect to make
structural initiative was implemented involving
currencies. The development in premium income
as the Transactional Net Promotor Score or TNPS.
recurring bonus payouts, but that payouts will be
the integration of customer service and claims
improved for Private and Sweden, but was some -
The figure was 49 in 2016.
decided each year by TryghedsGruppen.
handling for the most simple products. This
what lower for Commercial and Corporate. It is
integration supports Tryg’s overall ambition of
positive that after a challenging period Tryg achieved
At 88.0, the retention rate in 2016 was slightly
Price differentiation has been a very important ini-
first-contact resolution as employees can handle
a positive development in premium growth, despite
lower than in 2015 at 88.1. The retention level was
tiative for Tryg in recent years. In 2016, focus was
claims and also advise customers about their
the economic situation in Norway and falling aver-
more or less unchanged for Private in Denmark
on updating customers to the improved products
insurance needs. The integration also supports
age prices for motor insurance in Denmark.
and Norway. The retention rate dropped some-
which have been developed over the past few
up-selling and increasing the number of
what for Commercial in Denmark due to selected
years. More than 500,000 policies were updated
customers with three or more products.
In 2016, Private saw improved growth of 0.8%
price initiatives whereas for Commercial Norway,
in 2016, meaning that the majority of Private
(0.3%), which was driven by the development in the
the retention rate improved due to improved
customers now have the most recent products.
In Commercial, a more specialised structure was
Danish Private business, which posted premium
customer focus.
implemented with the aim of providing customers
growth of 1.8%. The members’ bonus supported
In 2016, many new products were added to Tryg’s
with more professional customer services. The new
this development, and at the same time the suc-
The share of customers with three or more prod-
product portfolio. Tryg bought a child insurance
structure segments customers into large accounts,
cessful conversion of customers to new products
ucts increased from 56.7% to 57.2%. In Denmark,
portfolio from Skandia in Sweden. The product is
the liberal professions, technique and agriculture.
resulted in many customers buying add-on covers,
the number increased by 1 percentage point
very profitable, and with a good sales potential.
thereby increasing premium levels. Premium growth
Customer targets
Net Promoter Score (NPS)
Retention rate
Customers with ≥3 products (%)
2016
22
88.0
57.2
2015
22
88.1
56.7
Target
2017
22
88.9
61.3
In both Commercial and Corporate, Tryg’s co-
for Private Norway was slightly negative by 0.5%,
operation with brokers is strong. For the fourth
which was ascribable to the competitive situation
year running, Corporate Sweden was nominated
and a weakened economic situation in Norway. The
as the best non-life insurance company. Corporate
development was also due to a lack of distribution
implemented a new concept, which means that
power, and several structural initiatives were initiated
customers can both be served by Tryg’s own sales
in 2016 to address this. The initiatives reduced back-
organisation and by brokers as customers in some
office costs, and some of the savings were invested
instances prefer this set-up.
in more distribution power through an upscale of the
| Contents – Management’s review
11
Annual report 2016 | Tryg A/S |
franchise distribution. Also, our co-operation with
both claims and business ceded as a percentage of
the In4mo system continued to generate savings in
ratio of 0.4 percentage points. Initiatives launched
Nordea was strengthened through the establish-
gross premiums, of 71.0 (71.5). Adjusted for one-off
different areas, for example from cash settlements.
comprised cost reductions and general optimisa-
ment of outbound teams in Nordea branches.
effects, the claims ratio, net of ceded business, was
tions following the implementation of the new
70.5 (71.2). The claims level was positively impacted
In 2016, large claims totalled 2.2% (3.4%) and
country-based structure at the beginning of 2016,
Premium income in Commercial was down 1.3%
by the efficiency programme in the amount of
weather claims 2.0% (3.4%). In Q4 2016, the storm
in addition to the effects from sourcing of staff
(-2.9%) in local currencies, with a slightly bigger
DKK 145m due to a combination of the improved
Urd hit Denmark and Norway with an esti mated im -
functions and to a lesser extent business sourcing.
drop in the Norway. In order to in crease premium
procurement of claims services and claims admin-
pact of DKK 60m. Large and weather claims were
income, the back-office organisation in Norway
istration. The negative impact from large claims
approximately DKK 300m lower than average level
In Q4 2016, Tryg announced a write-down of
was reduced, and some of the savings were
and weather claims was more than offset by higher
of DKK 1,050m a year. The run-off level was 7.0%
intangible assets by approximately DKK 250m.
invested in more distribution power. In Denmark,
run-offs and had a positive 2.8 percentage point net
(6.7%), which underlines Tryg’s solid provision level.
The write-down relates predominantly to IT
customer segmentation, a new agreement with
impact on the claims ratio.
Nordea and the delegation of more powers to the
Expenses
systems for payment, digitalisation and IT system
integration. The write-down is generally due to the
sales organisation were important initiatives aimed
In 2016, a number of initiatives were implemented
The expense ratio was 15.7 (15.3). Adjusted for
annual assessment of intangible assets, according
at increasing Tryg’s distribution power.
to mitigate the claims inflation seen especially for
one-off costs, the expense ratio was 14.8 (14.9).
to which the related system development costs
Corporate saw a drop in premium income of
claims had a positive impact on the development in
2016 as the organisation has been very focused on
benefits are also expected to be lower.
1.2% (0.0%) in local currencies. In general, more
claims, but at the same time, an increase was seen
implementing initiatives that have limited effect in
substantial fluctuations in premium income for
in salaries for construction workers in Denmark due,
2016, but which support the target of an expense
In 2016, the number of employees was reduced
property claims. A team dedicated to controlling pipe
No steep drop in the expense ratio was expected in
will be higher, while for some of the systems,
this area are expected on account of the competi-
among other things, to public building projects.
ratio at or below 14 in 2017. The initiatives have
from 3,359 to 3,264.
tive situation and the impact of gaining or losing
been most visible in the Norwegian part of the
major clients. Developments were generally more
Motor insurance continues to be very profitable, but
organisation. The initiatives introduced in both the
Investment return
positive in Corporate in Denmark as customers
in 2016 an increased claims frequency was seen,
first and second half of 2016 generally focused
The investment return was positive by DKK 987m
welcomed TryghedsGruppen’s members’ bonus.
while it is also apparent that average repair costs for
on reducing back-office functions with the aim of
(DKK -22m) in 2016. The match portfolio totalled
cars will increase due to the use of more advanced
reducing expense levels and increasing distribution
DKK 29,105m and is made up of bonds which
The Swedish business realised an increase in pre-
electronic solutions in cars. As mentioned, the
power. In Denmark, the initiatives centred mostly
match the insurance provisions so that fluctuations
mium income of 3.4% (-3.1%) in local currencies.
development in claims will be mitigated through
around the integration of our customer service and
resulting from interest rate changes are offset
The acquisition of Skandia’s child insurance port-
price adjustments averaging 3% in 2017.
claims handling functions. In Q4, the Danish part of
to the greatest possible extent. At 31 December
folio had a positive impact of approximately 5% in
Commercial reduced the number of support func-
2016, the value of the free portfolio totalled
2016. The Swedish business compensated for the
The claims-related measures implemented in 2016
tions in sales, while at the same time delegating
DKK 11,995m. The return on the match portfolio
loss of distribution power following the loss of two
included initiatives that bring injured policyholders
more powers to the sales force. In the Danish part
was DKK 210m (DKK -16m) after transfer to
large affinity agreements through an increase in
back to work. This initiative is positive for the injured
of Corporate, the number of sales departments
insurance technical interest. The return on the free
sales via our own sales channels.
policyholder and for the employer getting the
were reduced from three to two, reducing the num-
investment portfolio was DKK 939m (DKK 232m).
Claims
a reduction of claims expenses. As these claims
8.4%, which was significantly higher than in 2015,
The gross claims ratio was 65.6 (75.4), with a
typically relate to claims for previous years, the
The efficiency programme contributed DKK 65m in
which saw a return of 3.4%.
claims ratio, net of ceded business, which covers
savings support the run-off level. In 2016, the use of
2016, corresponding to an impact on the expense
employee back to work, and also for Tryg through
ber of back-office employees.
The return on the equity portfolio was positive at
| Contents – Management’s review
12
Annual report 2016 | Tryg A/S | In Q4 2016, Tryg sold some of its bigger invest-
2016. During the year, own funds were mostly
nary dividend after assessing the company’s capital
Results Q4 2016
ment properties and domiciles in Denmark and
impacted positively by net profits and negatively by
plan, in which the SCR is projected on the basis of
Norway. This resulted in a gain of DKK 600m, of
dividends and buy backs. Additionally, Tryg issued
Tryg’s forecasts. The projections include initiatives
The profit after tax totalled DKK 560m (DKK 754m)
which DKK 500m is recognised as investment
SEK 1.0bn subordinated, Solvency II-compliant debt.
set out in the company’s strategy for the coming
based on a technical result of DKK 314m (DKK 522m)
income and DKK 100m in shareholders’ equity.
This boosted Own funds in its Tier 2 component.
years, and also the most significant risks identified
and an investment result of DKK 598m (DKK 242).
The main purpose was to create a more diversi-
The Solvency ratio was 194 at year-end 2016.
by the company. The adequacy is measured in
Adjusted for one-offs, the profit after tax totalled
fied investment portfolio in accordance with Tryg’s
relation to Tryg’s strategic targets, including return
DKK 410m (DKK 754m) based on a technical result
overall risk profile, and also to enter into less risky
The key components of Tryg’s own funds are
on equity and dividend policy.
of DKK 564m (DKK 522m) and an investment result
and more flexible agreements for the domiciles.
shareholders’ equity, intangibles, Tier 2 instruments
of DKK 98m (DKK 242).
(subordinated debt and natural perils pool), ATier 1
Dividend policy
Other income and costs
instruments (old subordinated debt which has been
According to Tryg’s dividend policy, the aim is for
Profit after tax was positively affected by the ongoing
Other income and costs were primarily impacted
grandfathered) and future profits. The vast majority
the dividend to be steadily increased. For H2 2016,
efficiency programme, which had an impact of DKK
by write-down of goodwill of DKK 100m related to
of Tryg’s own funds are constituted by shareholders’
a dividend of DKK 3.60 per share is proposed,
59m in Q4. The net effect of weather claims, large
the acquisition of Securator.
equity. The Tier 2 capacity has been fully utilised
corresponding to a total dividend of DKK 6.20
claims and run-off was 0.3 percentage points due
after the SEK 1bn sub ordinated debt issue in May
(DKK 6.00) per share based on the 2016 results.
mainly to a high level of weather and large claims.
Profit/loss on discontinued business
2016. Currently, some DKK 200m of Tier 2 instru-
This equates to total dividend payments of
DKK -1m (DKK 49m) was realised on dis-
ments are not included in the own funds as they
DKK 1,770 or 72% of the profit for the year. In 2016,
Premiums
continued business, comprising adjustments
exceed the 50% SCR cap. Tryg has an additional
a DKK 1bn (3.5 per share) buy back was completed,
Premiums developed positively by 1.7% (-1.6%) in
on provisions, primarily relating to the marine
ATier 1 capacity of DKK 1.0bn at the end of 2016.
while Tryg will pay a DKK 1bn extraordinary dividend
local currencies. In Private, the positive develop-
run-off business.
Tax
Tryg’s solvency ratio displays low sensitivities to
will be effected as dividends rather than buy backs.
currencies, reflecting strong growth of 2.7% in the
capital market movements. The highest sensitivity
Additionally, Tryg has decided to pay a quarterly
Danish part of Private. In Commercial, premiums de-
in 2017. Going forward, any extraordinary payments
ment continued with growth of 1.3% (1.1%) in local
Tax on profit for the year totalled DKK 748m
is towards spread risk, where a widening/tightening
dividend starting from Q1 2017. The dividend will
clined by 0.8% (-5.0%) in local currencies, reflecting
(DKK 390m), or 23% of the profit before tax.
of 100 basis points would impact the solvency ratio
be evenly distributed across the year.
an improved development especially in Denmark,
In 2016, Tryg paid DKK 529m in income tax as
by approximately 14 percentage points. Lower sen-
whereas Commercial in Norway was impacted by
well as various payroll taxes totalling DKK 417m,
sitivities are displayed towards equity market falls
Moody’s rating upgraded
the economic situation. The growth figures for Q4
resulting in total tax payments of DKK 946m.
and interest rate movements. A change in the UFR
In December 2016, Moody’s upgraded Tryg
2015 were negatively impacted by the individual
(Ultimate Forward Curve) would have a very modest
Forsikring’s insurance financial strength rating (IFSR)
regulation of a number of large accounts. In Corpor-
Capital position
impact as the solvency ratio would fall 1 percent-
from ‘A2’ to ‘A1’ with a stable outlook. In its press re-
ate, premium growth was positive at 0.9% (-2.1%)
Tryg’s solvency capital requirement (SCR) was
age point. This in unsurprising considering that Tryg
lease, Moody’s noted that the ‘A1’ IFSR reflects Tryg’s
in local currencies, reflecting a positive premium
DKK 5.1bn at the end of 2016, which is on a par
underwrites only non-life risks, and the duration of
leadership position in Property & Casualty (P&C)
development in Q4 2016. The Swedish business saw
with the level as at 1 January 2016, when Sol-
the business is below four years.
insurance in the Nordic region, its strong profitabil-
an increase in premium income of 12.2% (-6.1%) in
vency II went live. At the end of 2016, Tryg’s own
ity both from a return on capital and underwriting
local currencies due to the Skandia child insurance
funds were DKK 9,850m (after deducting the H2
The Supervisory Board regularly assesses the need
(combined ratio) perspective, very good asset quality
portfolio. Excluding Skandia, premium income
dividend and the proposed extraordinary dividend
for capital adjustments. In 2017, Tryg has decided
and relatively low financial leverage.
dropped by 4.2%, which was an improvement com-
of DKK 1bn) against DKK 10.3bn on 1 January
to announce the payment of DKK 1bn in extraordi-
pared to the prior-year period.
| Contents – Management’s review
13
Annual report 2016 | Tryg A/S | On 26 December 2016, Denmark was hit by the storm
‘Urd’. Northern Jutland and the Copenhagen area were hit
the hardest. The event was officially recognised as a flood
event. Tryg received 1,600 claims, which impacted the
result by approximately DKK 60m.
Claims
Investments
The gross claims ratio was 72.0 (68.0) and 70.1
The investment return was positive by DKK 598m
before one-offs. The claims ratio, net of ceded
(DKK 242m) in Q4 2016. The return of the match
business, which covers both claims and busi-
portfolio was 8m (DKK 85m), and the return on
ness ceded as a percentage of gross premiums,
the free investment portfolio was DKK 541m
was 75.1 (74.2) and 73.2 before one-offs. The
(DKK 201m).
lower claims level after one-offs was due to a
lower weather claims level of 2.6% (5.4%). In Q4,
In Q4 2016, Tryg sold some of its bigger invest-
Tryg was hit by the storm Urd with an impact of
ment properties and domiciles in Denmark and
approximately DKK 60m, which was significantly
Norway. This resulted in a gain of DKK 600m, of
less than the storm in Q4 2015 with an impact of
which DKK 500m is recognised as investment
approximately DKK 180m.
income and DKK 100m in shareholders’ equity.
The underlying claims level adjusted for one-offs
was 0.7 percentage points higher for the Group
and 0.3 percentage points higher for Private,
confirming the positive trend seen recently of an
underlying claims ratio which is still deteriorating
but less so compared to previous quarters. Tryg
still expects an improvement in the underlying
claims ratio in 2017.
Expenses
The expense ratio was 18.0 (14.2) and 14.4 after
one-offs. The efficiency programme contributed
DKK 18m in the quarter, corresponding to an
impact on the expense ratio of 0.4 percentage
points. In Q4, Commercial in Denmark restruc-
tured the organisation, leading to a reduced
number of back-office employees in sales and
the delegation of more powers to the sales
organisation. The number of employees was
further reduced in the quarter by 46, leaving
3,264 employees at the end of the year.
Financial highlights Q4 2016
• Profit after tax of DKK 560m (DKK 754m)
•
•
Technical result of DKK 314m (DKK 522m)
Combined ratio of 87.6 (88.4) adjusted
for one-offs
•
Premium growth of 1.7 (-1.6) in local
currencies
•
Expense ratio of 14.4 (14.2) adjusted
for one-offs
•
Investment return of DKK 598m
(DKK 242m) impacted by sale of
investment properties and domiciles
and high returns on several asset classes
•
Proposed H2 dividend of DKK 3.60
per share and DKK 6.20 per share for
the full year
•
DKK 1bn share buy back completed.
Proposed DKK 1bn extraordinary dividend
to be paid after the AGM in 2017
| Contents – Management’s review
Annual report 2016 | Tryg A/S | 14
14
Annual report 2016 | Tryg A/S | Private
Financial highlights 2016
•
Technical result of DKK 1,404m
(DKK 1,298m)
•
•
Combined ratio of 83.8 (85.4)
Gross premiums increased by 0.8%
(0.3%) in local currencies
• Expense ratio of 14.2 (14.7)
point for Private customers in Denmark and a drop
in the number of customers with three or more prod-
ucts in Norway. To improve the level of customers
Private encompasses the sale of insurance
products to private individuals in Denmark
with three or more products in Norway, the car sales
and Norway. Sales are effected via call centres,
channel, where many customers have few products,
the Internet, Tryg’s own agents, franchisees
was restructured with the aim, among other things,
(Norway), interest organisations, car dealers,
of increasing cross-selling to these customers.
Claims
estate agents and Nordea branches. The
business area accounts for 49% of the Group’s
total premium income.
very satisfactory given also that the average price of
The gross claims ratio totalled 67.8 (69.0), with a
motor insurance continued to fall by 0.6 percentage
claims ratio, net of ceded business, of 69.6 (70.7).
points. In Norway, premium income declined by 0.5%
The improvement was ascribable to the efficiency
pipe claims. In fact, claims inflation increased
in local currencies mainly due to the competitive mar-
programme and a lower level of weather claims.
due to higher construction costs because of wage
ket situation and the weakened Norwegian economy.
House insurance was still under pressure despite
increases for construction workers, and in Norway
positive results from the claims team focusing on
higher prices for materials due to the weakened
Customer focus is very strong in both Denmark and
Norway, as evidenced by the continued improve-
ment in Tryg’s Net Promoter Score (NPS) to 29 in
Key figures – Private
2016 (26). This development was significant in
DKKm
Results
Denmark whereas there was a slight drop in Norway.
In Denmark, the NPS score improved from 29 to
The technical result for 2016 was DKK 1,404m
35, and in Norway there was a slight drop from 22
(DKK 1,298m), with a combined ratio of 83.8
to 21. The members’ bonus from TryghedsGruppen
(85.4). The development was attributable to a
is expected to have a positive impact on customer
combination of positive impacts from the efficiency
loyalty among Private customers in Denmark. In
programme, a lower level of weather claims and a
2016, more than 500,000 insurance policies were
higher level of claims especially from the property
converted to new and more updated products. As
lines of business. The development in premiums
the products are more correctly priced, this also
was positive and improved compared to 2015, and
means that some customers will experience a higher
the expense ratio was at a significantly lower level.
price, and the conversion is therefore expected to
Premiums
have a slightly negative impact on retention rates.
The retention rate in Denmark dropped slightly to
The gross premium income development im proved
89.7 from 89.9, while in Norway the retention rate
by 0.8% (0.3%) in local currencies, which was in
was unchanged at 86.4. The number of customers
line with the improvements seen since 2013. Pre-
with three or more products increased from 56.7%
miums increased by 1.8% in Denmark, which was
to 57.1% with a significant increase of 1 percentage
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
| Contents – Management’s review
Q4 2016
Q4 2015
2,235
-1,518
-310
2,172
-1,548
-290
407
-40
-1
366
61
1.3
67.9
1.8
69.7
13.9
83.6
86.3
-2.7
0.0
3.8
334
-51
2
285
49
1.1
71.3
2.3
73.6
13.4
87.0
89.3
-2.3
0.4
7.6
2016
8,710
-5,904
-1,240
1,566
-158
-4
1,404
312
0.8
67.8
1.8
69.6
14.2
83.8
87.4
-3.6
0.0
2.8
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
89.1
-3.7
0.3
4.5
15
Annual report 2016 | Tryg A/S |
In 2016, Norway launched an updated Tryg Pluss
benefits programme for private customers.
The programme offers three main benefits:
• Tryg ID – Helping customers if they believe
or know that their identity has been misused
• Tryg Care – Professional help from psychologists
for customers experiencing a personal crisis
• Tryg House assistance – Advisory services and
access to Tryg’s network of building experts
Norwegian currency. Tryg has a strong focus on
Results Q4 2016
developments in motor insurance, and throughout
the year we saw slightly higher claims inflation
The technical result totalled DKK 366m
due to higher frequency levels and higher average
(DKK 285m), with a combined ratio of 83.6 (87.0),
claims for cars with more advanced electronic sys-
and was positively affected by a significantly lower
tems. Against this background, Tryg has decided to
level of weather claims than in 2015.
introduce price adjustments of approximately 3% to
mitigate this development and improve profitability.
Premiums
Expenses
Gross premiums increased by 1.3% (1.1%) in local
currencies. Continued premium growth at a rate
The expense ratio was 14.2 (14.7). This develop-
of 2.7% was seen in Denmark, whereas premium
ment resulted from a consistent focus on improv-
income for Norway dropped by 0.5% due to a
ing expense levels, and many initiatives were im-
com petitive market situation and the weakened
plemented in 2016. In both Denmark and Norway,
Norwegian economy. The positive development in
customer service and claims handling functions
the NPS score continued in Q4 with an improvement
were integrated to improve customer loyalty,
of six percentage points to 35 in Denmark and a slight
while at the same time reducing expense levels. In
drop from 22 to 21 in Norway. The retention rate in
Norway, many initiatives were implemented which
Denmark dropped slightly from 89.9 to 89.7, whereas
will reduce employee numbers by a total of 60, the
the retention rate in Norway was stable at 86.4.
primary impact of which will be seen in 2017 after
almost no impact in 2016. Employee numbers
Claims
were reduced from 933 at the end of 2015 to 929
The gross claims ratio was 67.9 (71.3), and the claims
in 2016, mainly through job cuts in back-office
ratio, net of ceded business, was 69.7 (73.6). The lower
functions but also transfer of employees from the
level was primarily due to mild weather in Denmark
Claims department as part of the integration of
and Norway despite the storm Urd, which had a much
customer service and claims handling.
lower impact than the storm in Q4 2015. We saw a
Financial highlights Q4 2016
•
Technical result of DKK 366m
(DKK 285m)
• Combined ratio of 83.6 (87.0)
•
Claims ratio, net of ceded business,
of 69.7 (73.6)
• Expense ratio of 13.9 (13.4)
slight increase in motor claims in Denmark, which
underpins the importance of implementing both price
and claims prevention initiatives from 2017.
Expenses
The expense ratio was 13.9 (13.4). As mentioned,
focus in 2016 was on implementing initiatives that
will reduce expenses in 2017. Employee numbers
increased by 16 in Q4 2016 to 929 due to the
transfer of claims employees to the Private area.
| Contents – Management’s review
Annual report 2016 | Tryg A/S | 16
16
Annual report 2016 | Tryg A/S | Commercial
lower run-off result. The claims level for property
improved through the selected price and prun-
ing initiatives. Due to price increases, exposure
Commercial encompasses the sale of
insurance products to small and medium-
to the segment of large agricultural customers
sized businesses in Denmark and Norway.
was reduced, which had a positive impact on
Sales are effected via Tryg’s own sales force,
profitability. There is still a need for selected price
brokers, franchisees (Norway), customer
adjustments in the Commercial area, especially
centres as well as group agreements. The
for property. These price adjustments will be
business area accounts for 22% of the
implemented in 2017.
Group’s total premium income.
Financial highlights 2016
large agricultural customers. In Norway, the market
Expenses
other things led to a drop in the market share for
•
Technical result of DKK 695m
by the slowdown in the Norwegian economy. In
level is generally too high for Commercial,
employee numbers were reduced by approxi-
(DKK 658m)
both Norway and Denmark, structural initiatives
and initiatives were therefore implemented to
mately 40 employees. In Denmark, the number
• Combined ratio of 82.1 (83.6)
were implemented to support an improved devel-
improve this in 2016. The most significant steps
of employees was reduced by approximately ten
was generally very competitive and also impacted
The expense ratio was 17.0 (17.1). The expense
were taken by Commercial in Norway, where
• Gross premiums reduced by 1.3% (-2.9%)
opment in premiums.
• Expense ratio of 17.0 (17.1)
The Net Promoter Score (NPS) decreased to 6 in
Key figures – Commercial
2016 (12). In Denmark, the NPS score decreased
DKKm
Q4 2016
Q4 2015
Results
from 18 to 6, and in Norway an improvement from
The technical result for 2016 was DKK 695m
-1 to 9 was seen. The development in the NPS
(DKK 658m), with a combined ratio of 82.1 (83.6).
score also reflected retention rates. The retention
The combined ratio was positively affected by a
rate for Commercial in Denmark fell from 87.9 to
lower level of weather and large claims but also a
87.1, and in Norway, the retention rate improved
lower level of run-off. The development in premiums
significantly from 87.1 to 87.5. The negative
improved in 2016, but was still not satisfactory.
development for Commercial in Denmark can be
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Premiums
ascribed to price initiatives aimed at improving
profitability, whereas the improvement in Norway
The development in gross premium income was
can be ascribed to a more focused organisation
negative by 1.3% (-2.9%) in local currencies, which
with improved customer contact.
was a significant improvement compared with
2015, but at the same time an unsatisfactory devel-
Claims
opment. The drop in premiums was slightly higher
The gross claims ratio totalled 61.1 (65.4), with a
in the Norwegian part of Commercial. The develop-
claims ratio, net of ceded business, of 65.1 (66.5).
ment in the Danish part was affected by price hikes
The lower claims level was ascribable to a combin-
to improve profitability for property, which among
ation of lower weather and large claims, but also a
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
972
-567
-160
245
-78
-1
166
91
-0.8
58.3
8.0
66.3
16.5
82.8
92.2
-9.4
2.8
1.9
970
-604
-167
199
-53
1
147
61
-5.0
62.3
5.5
67.8
17.2
85.0
91.3
-6.3
1.9
4.8
| Contents – Management’s review
2016
3,893
-2,380
-663
850
-154
-1
695
304
-1.3
61.1
4.0
65.1
17.0
82.1
89.9
-7.8
2.2
1.6
2015
3,992
-2,612
-683
697
-44
5
658
388
-2.9
65.4
1.1
66.5
17.1
83.6
93.3
-9.7
6.7
2.8
17
Annual report 2016 | Tryg A/S |
In 2016, Tryg launched a cyber risk insurance product
in Commercial and Corporate in Denmark, Norway and
Sweden. With this cyber insurance product, Tryg can help
customers manage cyber-attacks, while also covering any
economic losses sustained as a result of such attacks.
through a reduction in back-office functions.
Claims
Total employee numbers were reduced from
The gross claims ratio was 58.3 (62.3), with a
527 at the end of 2015 to 474 in 2016.
claims ratio, net of ceded business, of 66.3 (67.8).
Results Q4 2016
The low level was primarily due to benign weather
in both Denmark and Norway, while large claims
were at a higher level and run-off gains at a
higher level.
The technical result totalled DKK 166m
(DKK 147m), with a combined ratio of 82.8
Expenses
(85.0). The result was positively affected by a low
The expense ratio was 16.5 (17.2), and the
level of weather claims and large claims, but also
number of employees was reduced by 13
a much higher level of run-off gains. Premium
to 474 in Q4 2016.
growth was negative by 0.8% (-5.0%), and the
expense level was 16.5 (17.2).
Premiums
Gross premiums declined by 0.8% (-5.0%) in
local currencies based on a slight increase of
0.1% in Denmark and a drop in Norway of 3.3%
in local currencies as a result of the competitive
market situation in general and the weakened
Norwegian economy. In Norway, the NPS score
was improved from -1 to 9, whereas the NPS
score dropped in Denmark from 18 to 6. The re-
tention rate in Denmark dropped to 87.1 (87.9),
while the retention rate in Norway improved
significantly to 87.5 (87.1).
Financial highlights Q4 2016
•
Technical result of DKK 166m
(DKK 147m)
• Combined ratio of 82.8 (85.0)
•
Claims ratio, net of ceded business,
of 66.3 (67.8)
• Expense ratio of 16.5 (17.2)
| Contents – Management’s review
Annual report 2016 | Tryg A/S |
18
Corporate
large accounts. In 2017, these initiatives will, in
general, follow the normal process with individual
customer initiatives in all markets although in the
Swedish market, priority will be given to initiatives
targeting motor insurance.
Expenses
The expense ratio was 11.0 (10.8) as a result of the
reduced premium income. Although expense levels
Financial highlights 2016
economy. In Sweden, which accounts for only 20%
on reducing expenses as a way of improving the
the broker channel, and the weakened Norwegian
are quite low, Corporate also has a strong focus
of the total Corporate business, premium growth
competitive position. In Denmark, the structure of
Corporate sells insurance products
to corporate customers under the brands
‘Tryg’ in Denmark and Norway, ‘Moderna’ in
Sweden and ‘Tryg Garanti’. Sales are effected
both via Tryg’s own sales force and via insur-
ance brokers. Moreover, customers with
international insurance needs are served by
Corporate through its cooperation with the
AXA Group. The business area accounts for
22% of the Group’s total premium income.
•
Technical result of DKK 421m
was zero (6.2%) due to price increases and pruning
the sales organisation was optimised, leading to a
The number of employees was reduced from
(DKK 369m)
of the portfolio. In Corporate, there is a strong fo-
reduction in employee numbers by five employees.
265 at the end of 2015 to 257 in 2016.
• Combined ratio of 88.8 (90.7)
cus on the relations with brokers as they constitute
• Gross premiums dropped by 1.2% (0.0%)
an important distribution channel. In Sweden, the
• Expense ratio of 11.0 (10.8)
Swedish brokers ranked Moderna’s Corporate busi-
ness as the best corporate company for the fourth
Key figures – Corporate
year running. In both Denmark and Norway, there
DKKm
Q4 2016
Q4 2015
Results
was a strong focus on improving broker relations.
The technical result for 2016 was DKK 421m
In Denmark, it was possible for customers to be
(DKK 369m), with a combined ratio of 88.8 (90.7).
served either by brokers or through direct distribu-
Gross premium income
Gross claims
Gross expenses
The result was positively affected by a higher run-
tion as customers in some cases find this is the
off level and a slightly lower level of weather claims,
best solution.
whereas large claims were at the same level as in
2015. The moderate development in premiums
Claims
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
seen in recent years continued in 2016 with a drop
The gross claims ratio totalled 60.8 (102.4), with a
of 1.2% (0.0%), measured in local currencies.
claims ratio, net of ceded business, of 77.8 (79.9).
Premiums
The lower claims level was primarily due to a high
level of run-off gains as large claims and weather
The development in gross premium income saw a
claims declined slightly. In 2016, in Denmark and
drop of 1.2% (0.0%) in local currencies. Premiums
Norway, as part of the normal renewals process,
increased by around 2.4% in Denmark, whereas in
Corporate increased prices, adjusted retention
Norway, premium income declined by 4.9% in local
levels and changed coverage to improve profitabil-
currencies due to the loss of some large custom-
ity. In Sweden, more significant steps were taken
ers, a competitive market situation, especially for
to improve profitability, especially for some of the
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
966
-814
-102
50
-41
0
9
121
0.9
84.3
4.2
88.5
10.6
99.1
111.6
-12.5
17.6
0.9
949
-657
-92
200
-195
0
5
65
-2.1
69.2
20.5
89.7
9.7
99.4
106.2
-6.8
11.3
2.0
2016
3,775
-2,295
-416
1,064
-643
0
421
506
-1.2
60.8
17.0
77.8
11.0
88.8
102.2
-13.4
8.1
1.0
| Contents – Management’s review
2015
3,894
-3,987
-420
-513
877
5
369
351
0,0
102.4
-22.5
79.9
10.8
90.7
99.7
-9.0
8.2
2.2
19
Annual report 2016 | Tryg A/S |
In 2016, Tryg introduced DNA marking for Commercial
and Corporate customers. DNA marking is an excellent
tool to prevent theft from construction sites, for example.
With DNA marking, the owner of stolen copper cables, for
example, is easily identified, which saves the contractor
having to order new custom-made cables for the job.
Results Q4 2016
Claims
The gross claims ratio was 84.3 (69.2), with a
The technical result amounted to DKK 9m
claims ratio, net of ceded business, of 88.5 (89.7).
(DKK 5m), with a combined ratio of 99.1 (99.4),
The high level was primarily due to a high level of
and was negatively affected by a high level of
large claims in all countries. The high large claims
large claims. Premium growth was positive by
level did not represent a trend, but normal volatility
0.9% (-2.1%).
Premiums
for large-sized claims.
Expenses
Gross premiums increased by 0.9% (-2.1%) in
The expense ratio was 10.6 (9.7), which is higher
local currencies based on an increase in Denmark
than last year due to normal fluctuations in ex-
and a drop in Norway in local currencies, reflect-
pense levels. The number of employees was 257,
ing a competitive market situation and the weak-
down 8 in Q4 2016.
ened Norwegian economy. Competition remains
more pronounced in the broker channel, although
competition from some of the smaller players has
eased somewhat. The quarter was, as always, im-
Financial highlights Q4 2016
pacted by preparations for the customer renewals
process starting on 1 January 2017.
• Technical result of DKK 9m (DKK 5m)
• Combined ratio of 99.1 (99.4)
•
Claims ratio, net of ceded business,
of 88.5 (89.7)
• Expense ratio of 10.6 (9.7)
| Contents – Management’s review
| Contents – Management’s review
20
Annual report 2016 | Tryg A/S | Sweden
pacted the claims ratio by 1.7 percentage points.
The various initiatives will continue in 2017 with
the aim of improving profitability, especially for ex-
tended warranty insurance of electronic products.
Expenses
The expense ratio was slightly higher at 19.0
(18.7). Integration and efficiency initiatives will
support a lower expense ratio and strengthen
Financial highlights 2016
an active M&A approach.
to improve its market position in Sweden through
Tryg’s competitive position.
•
Technical result of DKK 120m
Premiums
The number of employees was 337 (338) at the
end of 2016, which was almost unchanged despite
(DKK 218m)
Premium income rose by 3.4% (-3.1%) in local
the acquisition of Skandia.
• Combined ratio of 90.7 (83.5)
currencies. This was due to the acquisition of
•
Gross premiums increased by 3.4%
Skandia’s child insurance portfolio, which is highly
(-3.1%)
profitable and characterised by high retention
• Expense ratio of 19.0 (18.7)
levels. The acquisition also supports Tryg’s aim of
growth in the Nordics as child insurance has con-
Key figures – Sweden
Sweden comprises the sale of insurance
products to private customers under the
‘Moderna’ brand. Moreover, insurance is sold
under the brands Atlantica, Bilsport & MC,
Securator, Moderna Barnförsäkringar and
Moderna Djurförsäkringar. Sales take place
through its own sales force, call centres, part-
ners and online. The business area accounts
for 7% of the Group’s total premium income.
siderable growth potential in both Denmark and
DKKm
Q4 2016
Q4 2015
Results
Norway. Through 2016, focus was on mitigating
the loss of a number of large affinity agreements
Sweden Private posted a result of DKK 120m
and the impact on distribution. The Swedish
(DKK 218m) for 2016, which represented a signifi-
organisation was able to offset this through higher
cant reduction compared to the prior-year result.
sales in Q4 2016 compared with Q4 2015, partly
This was mainly due to a harmonisation of reserv-
through cross-selling to customers in the boat
ing models in 2015, resulting in a positive impact of
and motorcycle insurance niche segments.
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
approximately DKK 70m. The result for 2016 was
also impacted by persistent challenges with ex-
Claims
tended warranty insurance for electronic products
The gross claims ratio totalled 71.5 (64.7) and
and profit-sharing agreements. The profit-sharing
was affected by higher claims levels, especially for
relates to prior-year results. The combined ratio
extended warranty insurance products. Initiatives
was 90.7 (83.5), and premium income increased
encompassing price hikes, claims prevention and
by 3.4% (-3.1%) due to the acquisition of Skandia’s
adjustment of terms have been implemented. The
child insurance portfolio. With the acquisition of
claims level was also impacted by a profit-sharing
Skandia’s child insurance portfolio, Tryg continues
agreement based on prior-year results, which im-
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Weather claims, net of reinsurance (%)
337
-245
-68
24
0
-1
23
28
12.2
72.7
0.0
72.7
20.2
92.9
101.2
-8.3
0.9
313
-162
-66
85
-1
1
85
66
-6.1
51.8
0.3
52.1
21.1
73.2
94.3
-21.1
1.6
2016
1,348
-964
-256
128
-3
-5
120
117
3.4
71.5
0.2
71.7
19.0
90.7
99.4
-8.7
0.8
| Contents – Management’s review
2015
1,317
-852
-246
219
-1
0
218
149
-3.1
64.7
0.1
64.8
18.7
83.5
94.8
-11.3
1.7
21
Annual report 2016 | Tryg A/S |
Results Q4 2016
models used to calculate the claims reserves. The
claims level for extended warranty insurance of
The technical result totalled DKK 23m (DKK 85m),
electronic goods was still high, but as mentioned
with a combined ratio of 92.9 (73.2). In Q4 2015,
earlier, initiatives have been introduced to bring
a harmonisation of claims reserving models led
down this level.
to a run-off of approximately DKK 70m, which
is the main reason for the higher result this year.
Expenses
Weather claims were at a slightly lower level.
The expense ratio was 20.2 (21.1), reflecting the
Premium growth was positive by 12.2% (-6.1%).
fact that Skandia’s child insurance portfolio is now
The expense level improved to 20.2 (21.1),
part of the business and with a low expense level.
primarily as a result of the acquisition of the
Skandia business.
The number of employees was 337(349),
reflecting a decrease of 12 employees in Q4 2016
Premiums
despite the acquisition of Skandia.
Gross premiums increased by 12.2% (-6.1%) in
local currencies, which was due to the acquisition
of the Skandia insurance portfolio with an impact
of approximately 16%. The portfolio was still
impacted by the loss of a number of large agree-
ments. Sales were at a higher level than before
the loss of these large agreements.
Claims
The gross claims ratio was 72.7 (51.8) and net of
ceded business 72.7 (52.1). The low claims ratio
in Q4 2015 was due to the harmonisation of the
Financial highlights Q4 2016
• Technical result of DKK 23m (DKK 85m)
• Combined ratio of 92.9 (73.2)
•
Claims ratio, net of ceded business,
of 72.7 (52.1)
• Expense ratio of 20.2 (21.1)
| Contents – Management’s review
Annual report 2016 | Tryg A/S |
22
In 2016, Moderna launched the Moderna Smart MC
app. The app records the driver’s driving style, and
the motorcycle insurance price is then differentiated
accordingly. Driving safely triggers a price discount
the following year.
Investment activities
Key figures – investments
DKKm
Q4 2016
Q4 2015
2016
2015
Free portfolio, gross return
Match portfolio, regulatory deviation and performance
Other financial income and expenses
Total investment return
541
8
49
598
201
85
-44
242
939
210
-162
987
232
-16
-238
-22
Financial highlights 2016
•
Investment return of DKK 987m
(DKK –22m)
•
Return on free portfolio of DKK 939m
(DKK 232m)
•
Return on match portfolio of
DKK 210m (DKK -16m)
capital gain in Q4 of DKK 500m, plus a DKK 100m
interest rate risk of its Danish liabilities, partly using
and the US presidential election. The market digested
increase of shareholders’ equity on the sale of a
Danish swaps and partly also Euro swaps. When
the unexpected outcomes fairly quickly and the year
property portfolio. The purpose of the investment
the yield difference between Danish and Euro swap
ended on a positive note. The result of the free port-
strategy is to support a high and stable technical
rates decreases, the regulatory deviation should
folio was very strong in 2016, helped also by the capi-
result and thus to reduce overall volatility to the
produce a positive result; however, when the yield
tal gain in Q4 on the sale of a property portfolio of DKK
greatest possible extent. Since 2010, this purpose
difference increases, the result is likely to be nega-
500m. The result, excluding the extraordinary capital
has been supported by the strategic split of the
tive. In 2016, the spread narrowed by 5 basis points,
gain, was driven primarily by interest rate and credit
investment portfolio into a match portfolio (assets
driving a regulatory deviation of DKK 47m.
exposure (DKK 196m) and equities (DKK 194m).
matching the insurance reserves) and a free port-
folio (the capital of the company). Tryg reported a
The most important driver of ‘performance’ is the
Interest rates decreased to historically low levels in
DKK 939m (DKK 232m) return on the free portfo-
difference in yields between Danish, Norwegian
2016. The yield of the 10-year German government
lio, a DKK 210m (DKK -16m) return on the match
and Swedish covered bonds and equivalent swap
bond touched -0.19% at the end of June before
2016 was an eventful year characterised by volatil-
portfolio and other financial income and expenses
rates. If spreads narrow (versus swap rates), the
moving up to 0.25% in December. High-yield bonds
ity caused primarily by important political events
of DKK -162m (DKK -238m).
overall performance is positive; otherwise the over-
(approximately 6% of the free portfolio and less than
such as the ‘Brexit’ referendum in the UK and the
all performance is negative. Tryg seeks to maintain
2% of total investments) produced a return in excess of
US presidential election. After some initial turmoil,
Match result
stability in its covered-bonds portfolio, also in terms
10.6%, while emerging-markets bonds (USD-denom -
equity markets recovered, and overall reactions can
The result of the match portfolio is the difference
of maturity; hence, spread movement should be a
inated sovereign bonds) produced a return just below
be said to be relatively moderate. The highest-ever
between the return on the portfolio and the amount
good indicator of overall performance. In 2016, the
9.5%. Equity markets had a volatile year, but produced
spread between US and German rates was seen
transferred to the technical result. The ‘net’ result
‘performance’ result was an unusually high DKK
overall solid returns, and Tryg’s equity portfolio was up
towards the end of December with US 10-year
can be split into a ‘regulatory deviation’ and a ‘per-
163m. Spreads narrowed substantially, driven by
8.4%, resulting in an overall DKK 194m return. The sale
notes yielding more than 230bps compared to
formance’ component. The most important driver
the so-called ‘quantitative easing’ enabled by the
of three investment properties in central Copenhagen
German notes. One noticeable area of turbulence
of the ‘regulatory deviation’ is the yield difference
bond-buying programme of the ECB.
boosted the investment result by DKK 420m; a highly
was the currency markets where the British pound
between Euro swap rates and Danish swap rates.
and EM currencies weakened significantly.
In Norway and Sweden, Tryg hedges using local
Free portfolio result
concentrated property portfolio has been swapped
for a globally diversified portfolio which is more
swaps corresponding to the EIOPA curve; hence,
In 2016, financial markets were influenced by sev eral
carefully aligned with Tryg’s overarching investment
Tryg’s investment activities produced an overall
only the Danish exposure is relevant. Since the
significant events such as the UK referendum on
strategy. The overall property exposure remains
result of DKK 987m (DKK -22m), boosted by a
beginning of 2016, Tryg has started to hedge the
continued membership of the European Union
unchanged after the aforementioned transaction.
| Contents – Management’s review
23
Annual report 2016 | Tryg A/S |
Return – match portfolio
DKKm
Q4 2016
Q4 2015
Return, match portfolio
Value adjustments, changed discount rate
Transferred to insurance technical interest
Match, regulatory deviation and performance
Hereof:
Match, regulatory deviation
Match, performance
-275
323
-40
8
8
0
63
86
-64
85
76
9
2016
547
-188
-149
210
47
163
2015
140
103
-259
-16
12
-28
financial markets were influenced by the interest
The match portfolio returned DKK 8m (DKK 85m)
rate hike from the US central bank. This led to
after transfer to the insurance part, which is in line
increasing equity markets, with e.g. MSCI All Coun-
with expectations.
tries returning 3.7%, while high-yields also did well.
The US dollar appreciated by almost 7%. On the
Other financial income and expenses of DKK 49m
other hand, inflation-linked, emerging-market and
(DKK -44m) were impacted by the sale of domi-
investment-grade bonds tumbled at the beginning
ciles in Bergen and Ballerup in the amount
of Q4 due to nervousness prior to the US election
of DKK 93m. All in all, the return on Tryg’s invest-
and sharply increasing interest rates.
ment activities totalled DKK 598m in Q4 2016
For the free portfolio, this resulted in a return on
(DKK 242m).
Other financial income and expenses
2016, but the overall interest expenses on the sub-
the equity and bond portfolio of DKK 115m and
The other financial income and expenses component
ordinated debt remained largely unchanged thanks
DKK -42m, respectively. The negative contribution
is primarily made up of interest expenses related to
to the falling interest rates. Expenses from the hedg-
of DKK -42m is primarily explained by negative
outstanding subordinated debt, the cost of the cur-
ing of the foreign currency exposure on Tryg’s equity
returns from emerging-market, inflation-linked and
rency hedge to protect our shareholders’ equity and
totalled DKK -57m, and interest expenses on Tryg’s
investment-grade bonds of DKK -59m, whereas
the cost of running our investment operations. These
subordinated loans were DKK -88 m.
the interest rate increases in Q4 did not have much
are the main elements included in other financial in-
impact on the portfolio of covered bonds. The
come and expenses. The other financial income and
Investment activities in Q4 2016
investment return is positively influenced by the
expenses line produced a result of DKK -162m. Tryg
In Q4, the positive sentiment after the US election
sale of investment properties with a return on the
issued additional subordinated debt of SEK 1bn in
in November was predominant. Additionally, the
free portfolio of DKK 541m (DKK 201m).
Financial highlights Q4 2016
•
Investment return of DKK 598m
(DKK 242m)
•
Return on free portfolio of DKK 541m
(DKK 201m)
•
Return on match portfolio of
DKK 8m (DKK 85m)
Return – free portfolio
DKKm
Q4 2016
Q4 2016 (%)
Q4 2015
Q4 2015 (%)
2016
2016 (%)
2015
2015 (%)
30.12.2016
31.12.2015
Investment assets
Government bonds
Covered bonds
Inflation linked bonds
Investment grade credit
Emerging market bonds
High-yield bonds
Other a
Interest rate and credit exposure
Equity exposure b)
Investment property
Total gross return
0
6
-20
-21
-18
13
-2
-42
115
468
541
0.0
0.1
-3.5
-4.2
-4.1
1.8
-0.6
5.3
22.2
4.7
4
7
-4
0
6
-4
10
19
111
71
201
1.6
0.2
-0.9
0.0
1.5
-0.5
1.4
0.3
4.5
3.5
1.8
1
69
41
-14
41
81
-23
196
194
549
939
0.4
1.8
8.1
-0.9
9.5
10.6
2.8
8.4
26.1
8.0
4
-26
-1
0
2
-8
19
-10
91
151
232
1.4
-0.6
-0.2
0.0
0.5
-0.8
2.1
-0.1
3.4
7.2
1.9
a) Senior/Bank deposits less than 1 year and derivative financial instruments hedging interest rate risk and credit risk. b) In addition to the equity portfolio exposure is futures contracts of DKK 97m.
| Contents – Management’s review
322
4,464
539
546
447
730
220
7,268
2,187
2,540
265
3,602
484
0
412
837
712
6,312
2,374
2,052
11,995
10,738
24
Annual report 2016 | Tryg A/S |
Capital and
risk management
Risk Committee (ORC) reports directly to the
out risk identification routines, written ORSA
Risk Committee. The ORC is responsible for all
(Own Risk and Solvency Assessment) reports,
operational risks and is under an obligation to
acted in a setup comprising three lines of defence
report high risks to the Risk Committee. Fraud is
and appointed a special Risk Committee under
a priority focus area in Tryg, when it comes to
the Supervisory Board which focuses on capital
both regular insurance fraud and internal fraud.
and risk management. Tryg’s partial internal
A dedicated unit in the Claims department covers
Solvency II model was approved by the Danish
the insurance fraud angle, and a special Corpo-
FSA in November 2015. Read more about Tryg’s
rate Security unit covers the internal fraud angle.
risk management in Note 1 on page 50.
Risk management is based on Tryg’s targets and
claims and weather events, and reinsurance is used
Intensive controls are carried out based on fraud
strategies and the risk exposure limits decided
extensively to smooth the impact on earnings.
scenarios, and dedicated persons in Corporate
Capital management
by the Supervisory Board. The assessment and
Security investigate the outcome.
Capital management is based on Tryg’s partial
management of Tryg’s aggregated risk and the
Investment risk
internal capital model, which was approved by
associated capital requirements therefore consti-
The investment risk is managed by looking at total
IT security is a major operational risk area. Tryg’s
the supervisory authorities in November 2015.
tute a central element in the management of the
exposure and capital consumption by asset classes
IT security policy is based on the ISO 27000
Tryg has modelled the insurance risk internally,
company. Tryg’s Supervisory Board defines the
(bonds, shares, properties etc.). A very important
framework, and Tryg has a dedicated second-
while using the standard formula for all other
framework for the company’s target risk appetite
element in managing Tryg’s investment risk is the
level Corporate Security unit performing security
risks. The capital model is based on the risk
and thereby the capital which must be available
company’s matching strategy, according to which
assessments of projects, controlling outsourcing
profile, and therefore takes into consideration
to cover any losses. Risk management is primar-
invested assets corresponding to the technical pro-
partners and performing regular IT risk analyses.
the composition of Tryg’s insurance portfolio,
ily focused on insurance risk, investment risk and
visions must be invested in interest-bearing assets,
We also have a strong focus on user awareness
geographical diversification, its claims reserves
operational risk.
Insurance risk
where the interest rate sensitivity of these assets
as social engineering is the criminals’ preferred
profile, reinsurance programme, investment mix
matches and thereby hedges the interest rate sen-
way of penetrating company IT systems. Further-
and Tryg’s profitability in general.
sitivity of the discounted provisions as closely as
more, Tryg has a whistleblower line, which allows
The insurance risk is managed by limiting the size
possible. The so-called match portfolio represents
employees, customers and business partners
The Solvency Capital Requirement (SCR) is
of single large commitments and through the use
approximately 70% of total group investments,
to report any serious wrongdoings or suspected
calculated in such a way that Tryg would stat-
of reinsurance, thus reducing the maximum cost
while the free portfolio (the capital of the company)
irregularities.
of large claims. Furthermore, the insurance risk is
represents the remaining 30%.
managed through geographical limitations and by
Solvency II
istically be able to honour its obligations in
199 out of 200 years. In other words, Tryg
could have a loss greater than DKK 5.1bn
refraining from offering certain types of insurance
Operational risk
The Solvency II regime emphasises the need for
(the SCR) in 1 out of 200 years.
such as aviation and marine hull insurance. Operat-
The operational risk covers several different areas
sound risk management and introduces additional
ing within these boundaries, Tryg’s risk depends on
of Tryg’s operations. The most important ones
requirements concerning risk governance, consist-
Tryg’s SCR was DKK 5.1bn at the end of 2016,
the company’s choice of exposure within different
are physical security, fraud, whitewash, crisis
ency across the Group and top management
which is the same level as on 1 January 2016, when
segments and industries in the insurance market.
management, competencies and processes, and IT
reporting and involvement. Tryg has been working
Solvency II went live. At the end of 2016, Tryg’s
Tryg operates in a relatively stable line of business.
security. The Operational Risk Policy is approved
towards implementing the principles of Solvency II
Own funds were DKK 9,850m (after deducting
Quarterly fluctuations are driven mainly by large
by the Supervisory Board while the Operational
for years and has, amongst other things, carried
the H2 dividend and the proposed extraordinary
| Contents – Management’s review
25
Annual report 2016 | Tryg A/S | dividend of DKK 1bn) against DKK 10.3bn at
ATier 1 instruments (old subordinated debt which
company’s strategy for the coming years, and
Moody’s rating
1 January 2016. Own funds during the year have
has been grandfathered) and future profits. The
also on the most significant risks identified by the
In 2016, Tryg decided to terminate the rating
mostly been impacted positively by net profits
vast majority of Tryg’s Own funds are represented
company. The adequacy is measured in relation to
agreement with Standard and Poor’s and acquire
and negatively by dividends and buy backs.
by shareholders’ equity.
Tryg’s strategic targets, including return on equity
a rating from Moody’s. At the end of April, Tryg
Additionally, Tryg issued SEK 1.0bn sub ordinated,
and dividend policy.
Solvency II-compliant debt. This boosted the Own
The Tier 2 capacity has been fully utilised after
was assigned an ‘A2’ financial strength rating with
a positive outlook. The rating was upgraded in
funds in its Tier 2 component. The Solvency ratio
the SEK 1bn subordinated debt issue in May
At the annual general meeting to be held on
December 2016 to an ‘A1’ financial strength rating
was 194 at year-end 2016.
2016. Currently, some DKK 200m of Tier 2 instru-
8 March 2017, Tryg’s Supervisory Board will
with a stable outlook. In its press release, Moody’s
ments are not included in the Own funds as they
propose an H2 dividend of DKK 3.60 per share.
noted that the A1 IFSR reflects Tryg’s leadership
The key components of Tryg’s Own funds are
exceed the 50% SCR cap. Tryg had additional
In 2016, Tryg also paid a semi-annual dividend
position in Property & Casualty (P&C) insurance in
shareholders’ equity, intangibles, Tier 2 instru-
ATier 1 capacity of DKK 1.0bn at the end of 2016.
of DKK 2.60 per share. The full-year dividend is
the Nordic region, its strong profitability both from
ments (subordinated debt and natural perils pool),
thus DKK 6.20 per share, equivalent to the total
a return on capital and underwriting (combined
Tryg’s solvency ratio displays low sensitivities to
distribution of DKK 1,770m.
ratio) perspective, very good asset quality and
capital market movements. The highest sensitiv-
relatively low financial leverage.
Own funds
DKKm
12,000
10,000
8,000
6,000
4,000
2,000
0
ity is towards spread risk, where a widening/
In conjunction with the capital plan, a contingency
tightening of 100 basis points would impact the
plan is made. It describes specific measures that
solvency ratio by approximately 12 percentage
may be introduced in the near term, should the
points. Lower sensitivities are displayed towards
company’s desired capital position be threatened.
equity market falls and interest rate movements.
Tryg’s Supervisory Board has approved both the
9,850
10,286
capital plan and the contingency plan. Read more
A change in the UFR (Ultimate Forward Curve)
about Tryg’s risk management and Solvency II in
Q4 2016
1 Jan. 2016
would have a very modest impact as the sol-
note 1 on page 50.
Solvency capital requirement
DKKm
6,000
5,000
4,000
3,000
2,000
1,000
0
5,077
5,137
vency ratio would fall 1 percentage point. This is
unsurprising considering that Tryg underwrites
only non-life risks with low duration.
Shareholder remuneration
Ordinary and extraordinary dividend
The Supervisory Board regularly assesses the
need for capital adjustments. In 2017, Tryg has
decided to announce a DKK 1bn (DKK 3.54 per
share) extraordinary dividend after assessing
the company’s capital plan, in which the SCR
DKK
10
8
6
4
2
0
2.6
5.2
3.2
5.4
3.4
5.8
3.5
6.0
3.5
6.2
2012
2013
2014
2015
2016
Q4 2016
1 Jan. 2016
is projected on the basis of Tryg’s forecasts.
Ordinary dividend
The projections include initiatives set out in the
Extraordinary buy back
Extraordinary dividend
| Contents – Management’s review
26
Annual report 2016 | Tryg A/S | Shareholder information
ance investors remained very focused on Solvency
own shares, corresponding to 2.7% of the share
II (the new capital regime introduced on 1 January
capital. At the annual general meeting, the
2016), adding an increased level of scrutiny to
Supervisory Board will propose the cancellation
European insurers’ balance sheets. This remains
of the repurchased shares.
Investor Relations (IR) is responsible for Tryg’s
The Tryg share
particularly true for the traditional life insurers
whose business model is under heavy pressure
from the extremely low interest rate levels.
NASDAQ Copenhagen remains the primary
exchange for trading in the Tryg share. In 2016,
communication with the capital markets. It is
The Tryg share is listed on NASDAQ Copenhagen.
NASDAQ Copenhagen accounted for 59.3% of
important that investors, analysts and other
In accordance with the recommendations issued
the turnover of the Tryg share. This means that
stakeholders are able to form a true and fair view
by NASDAQ Copenhagen, Tryg does not com-
approxi mately 41% of all trading in 2016 was
TrygFonden
of developments, including Tryg’s financial results.
ment on the company’s financial results or out-
carried out on alternative exchanges (MTF trades),
For this reason, we strive to be as open and trans-
look two weeks before the publication of interim
led by Turquoise as the largest alternative ex-
parent as possible to ensure that stakeholders’
reports and four weeks before the publication of
change. Average daily turnover on NASDAQ was
information requirements are met at the highest
the annual report. Company announcements,
DKK 58m and average daily volume was 1,498.
possible level. IR is in charge of communication
press releases and transaction statements are
The numbers were higher in 2015 impacted,
with equity investors, fixed-income investors and
published in both Danish and English, whereas
amongst other things, by Tryg’s 1:5 share split.
rating agencies.
Tryg’s IR policy is available at
interims and annual reports are published in
tryg.com/investor.
English.
It is possible to subscribe to all financial
Share capital and ownership
After the publication of quarterly and annual
Twitter.
reports, Tryg’s management and IR team travel
31 December 2016. It comprised one share class
(282,541,204 shares with a nominal value of
extensively to meet with shareholders and poten-
The Tryg share started the year at a price of
DKK 5), and all shares rank pari passu.
information on tryg.com.
Follow @TrygIR on
Tryg’s share capital totalled 1,412,706,020 on
tial investors. Quarterly analyst presentations are
DKK 137.4 and ended 2016 at DKK 127.7. The
also held in Copenhagen and London. Tryg also
total return of the share including dividends was
The majority shareholder, TryghedsGruppen smba,
attends various financial conferences. In 2016, we
-2.6% . The Tryg share followed an unusually
owns 60% of the shares and is the only share-
held almost 300 investor meetings – mostly one-
volatile pattern in 2016, to some extent due to
holder owning more than 5% of the share capital.
to-ones but also some group meetings in Europe,
a number of remarkable political events which
TryghedsGruppen invests in peace-of-mind and
the USA, Canada and Asia (Japan and Singapore).
sharply impacted financial stocks.
healthcare providers in the Nordic region, and
The Tryg share is covered by 21 analysts, who
supports non-profit-making activities.
continuously update their recommendations
Brexit and the US presidential election resulted in
and earnings forecasts.
See a list of analysts
large swings in the equity markets, in particular
At the end of 2016, and after completion of the
and their recommendations at tryg.com/investor.
for banks’ and insurers’ stocks. Additionally, insur-
share buy back programme, Tryg held 7,946,118
TrygFonden works actively to create peace
of mind in Denmark, supporting around 800
activities that contribute to this, such as
coastal lifeguards and defibrillators. Behind
TrygFonden is TryghedsGruppen, which owns
60% of the shares in Tryg and contributed
DKK 550m to projects that create peace
of mind throughout Denmark in 2016.
The amount will be increased to DKK 600m
in 2017.
TryghedsGruppen
In 2016, Tryg’s majority shareholder,
TryghedsGruppen, paid out a members’
bonus to Tryg’s Danish customers
corresponding to 8% of the annual
premium paid for 2015.
| Contents – Management’s review
27
Annual report 2016 | Tryg A/S | Quarterly dividends from 2017
•
An aspiration to distribute steadily increasing
Tryg paid out semi-annual dividends in 2015
dividend in nominal terms on a full-year basis.
and 2016 and will start paying out quarterly
•
Annual distribution of 60-90% of the profit
Distribution
DKKm
dividends in 2017. Tryg’s share has a distinct
after tax.
income profile; the business generally grows in
•
The capital level must at all times reflect
line with GDP, producing high margins, which
the return on equity targets and the
are mostly returned to shareholders. The pro-
statutory capital requirements.
longed period of very low interest rates means
•
The capital level may be adjusted via
that investors, all else being equal, attach even
extraordinary dividends.
greater importance to dividends than in more
normal environments. From an investment
Based on Tryg’s dividend policy and the satisfac-
perspective, a quarterly dividend will be a clear
tory 2016 results, the Supervisory Board will
Dividend
Dividend per share (DKK) a)
Payout ratio
Extraordinary share buy back
Extraordinary dividend b)
2016
1,770
6.2
72%
0
1,000
2015
1,759
6.0
89%
1,000
2014
1,731
5.8
68%
1,000
2013
1,656
5.4
70%
1,000
2012
1,594
5.2
72%
800
a) Dividend per share includes dividend for H1 of DKK 2.60 paid out in July 2016 and dividend of DKK 3.60 proposed
by the Supervisory Board for adoption by the annual general meeting. b) Proposed by the Supervisory Board for
adoption by the annual general meeting.
reminder of the high profitability of the business
propose an H2 dividend of DKK 3.60 per share at
allows such extraordinary payments. Based on
and its focus on returning capital to sharehold-
the annual general meeting on 8 March 2017. The
many investor meetings in 2016, it has become
Financial calendar 2017
ers. Tryg’s dividend policy is based on the
full-year dividend corresponds to a payout of 72%
clear that in general, there is a higher prefer-
following assumptions:
of the profit after tax.
ence for dividends than buy backs. The proposed
•
A general objective of creating long-term value
Extraordinary dividends from 2017
total DKK 1bn corresponding to a dividend
for the company’s shareholders.
Starting 2017, Tryg has decided to move from
of DKK 3.54 per share.
•
A competitive dividend policy in comparison
effecting extraordinary buy backs to paying out
with the policies of our Nordic competitors.
extraordinary dividends when the capital position
Annual general meeting
extraordinary dividend payout in 2017 will
8 Mar. 2017
Annual general meeting
9 Mar. 2017
Tryg shares are traded
ex-dividend
13 Mar. 2017
Payment of H2 2016 dividend
and extraordinary dividend
7 Apr. 2017
Interim report Q1 2017
Shareholders
At 31 December 2016
13
15
12
Per cent
60
TryghedsGruppen
Large Danish
shareholders a)
Large international
shareholders a)
Small shareholders
Free float – geographical distribution
At 31 December 2016
6
4
15
20
Per cent
55
Denmark
UK
USA
Nordic region
Others
a) Shareholders holding more than 10,000 shares.
Free float is exclusive of TryghedsGruppen.
Tryg’s annual general meeting will be held on
10 Apr. 2017
8 March 2017 at 15:00 CET at Tryg’s head office,
Klausdalsbrovej 601, 2750 Ballerup, Denmark.
Tryg shares are traded
ex-dividend
12 Apr. 2017
Payment of Q1 dividend
The notice will be advertised in the daily press in
11 July 2017
February 2017 and will be sent to shareholders
upon request.
The annual general meeting
12 July 2017
will also be announced at tryg.com.
Interim report Q2
and H1 2017
Tryg shares are traded
ex-dividend
The company announcements issued in
2016 can be seen at tryg.com > Investor > News.
14 July 2017
Payment of Q2 dividend
10 Oct. 2017
Interim report Q1-Q3 2017
11 Oct. 2017
Tryg shares are traded
ex-dividend
13 Oct. 2017
Payment of Q3 dividend
| Contents – Management’s review
28
Annual report 2016 | Tryg A/S |
Corporate governance
Annual general meeting
Depending on the development in results, each
Tryg holds an annual general meeting (AGM) every
year the Supervisory Board proposes the distri-
year. As required by the Danish Companies Act and
bution of semi-annual dividend, and possibly an
the Articles of Association, the AGM is convened
extraordinary share buy back if further adjustment
via a company announcement and at tryg.com
of the capital structure is required. From Q1 2017,
subject to at least three weeks’ notice. Sharehold-
Tryg will introduce a quarterly dividend. At the
ers may also opt to receive the notice by post or
annual general meeting in 2016, the shareholders
email. The notice contains information about time
authorised the Supervisory Board to allow Tryg
and venue as well as an agenda for the meeting.
to acquire own shares amounting to up to 10%
Tryg focuses on managing the company in ac-
other things, that all company announcements are
of the share capital during the period up until
cordance with the principles of good corporate
published in Danish and English. Tryg publishes
All shareholders are encouraged to attend the AGM.
31 December 2017. On 6 April 2016, Tryg initiated
governance and generally complies with the Danish
quarterly interim reports in English. Furthermore,
The AGM is held by personal attendance as the
a share buy back programme, which ran until
recommendations prepared by the Committee on
Tryg publishes an annual profile in Danish, English
Supervisory Board values personal contact with the
16 December 2016. Tryg acquired own shares for
Corporate Governance. The Recommendations on
and Norwegian. The profile is addressed to Tryg’s
Group’s shareholders. Shareholders may propose
an amount of DKK 1bn. Starting 2017, Tryg has
Corporate Governance are available at corporate-
private shareholders, customers, employees and
items to be included on the agenda for the annual
decided to move from extraordinary buy backs to
governance.dk. At tryg.com, Tryg has published
other stakeholders and is published on 26 January
general meeting, and may ask questions before and
extraordinary dividends when the capital position
its statutory corporate governance report based
2017. Moreover, Tryg prepares quarterly investor
at the meeting. Shareholders may vote in person
allows extraordinary payments. The proposed
on the ‘comply-or-explain’ principle for each
presentations, which are used in the dialogue
at the annual general meeting, by post or appoint
extraordinary dividend is DKK 1bn in 2017.
individual recommendation. This section on cor-
with investors and analysts. All announcements,
the Supervisory Board or a third party as their
porate governance is an excerpt of the corporate
financial reports, presentations and newsletters
proxy. Shareholders may consider each item on the
Duties, responsibilities and composition
governance report.
Download Tryg’s statutory
are available at tryg.com. This material provides
agenda. The proxy form and form for voting by post
of the Supervisory Board
corporate governance report at tryg.com > Investor
all stakeholders with a comprehensive picture of
are available at tryg.com prior to the AGM.
The Supervisory Board is responsible for the central
> Download.
Tryg’s position and performance. The consolidated
strategic management and financial control of Tryg
financial reports are presented in accordance
Share and capital structure
and for ensuring that the business is organised
Dialogue between Tryg, shareholders
with IFRS. At tryg.com, stakeholders are invited to
Tryg’s share capital comprises a single share class,
in a sound way. This is achieved by monitoring
and other stakeholders
subscribe to press releases, company announce-
and all shares rank pari passu. The majority share-
targets and frameworks on the basis of regular and
The Investor Relations (IR) department maintains
ments as well as insider trading announcements.
holder, TryghedsGruppen smba, owns 60% of the
systematic reviews of the strategy and risks. The
regular contact with analysts and investors.
A number of internal guidelines ensure that the
shares and is the only shareholder owning more
Executive Board reports to the Supervisory Board
Together with the Executive Board, IR organises
disclosure of price-sensitive information complies
than 5% of the company’s shares. The Supervi-
on strategies and action plans, market develop-
investor meetings and conference calls and par-
with legislation and the stock exchange’s codes of
sory Board ensures that Tryg’s capital structure is
ments and Group performance, funding issues,
ticipates in conferences in Denmark and abroad.
conduct. Tryg has adopted a number of policies
aligned with the needs of the Group and the inter-
capital resources and special risks. The Supervisory
IR also communicates with stakeholders in the
describing the relationship between different s
ests of its shareholders and that it complies with
Board holds one annual strategy seminar to decide
social media via Twitter@TrygIR. The Supervisory
takeholders.
See the IR policy at tryg.com
the requirements applicable to Tryg as a financial
on and/or adjust the Group’s strategy with a view to
Board is informed about the dialogue with investors
> Investor > IR contacts > IR policy,
and the
undertaking. Tryg has adopted a capital plan and a
sustaining value creation in the company. The Ex-
and other stakeholders on a regular basis. Tryg
CSR policy at tryg.com > CSR > CSR strategy
contingency capital plan, which are reviewed
ecutive Board works with the Supervisory Board to
has adopted an IR policy, which states, among
> CSR policy.
annually by the Supervisory Board.
ensure that the Group’s strategy is developed and
| Contents – Management’s review
29
Annual report 2016 | Tryg A/S | monitored. The Supervisory Board ensures that
The Supervisory Board performs an annual evalu-
guarantee diversity at management levels. Tryg at-
committees, are independent persons. Of the four
the necessary skills and financial resources are
ation of its work and skills to ensure that it pos-
taches importance to diversity at all management
members of the Remuneration Committee, one
available for Tryg to achieve its strategic targets.
sesses the expertise required to perform its duties
levels. Tryg has prepared an action plan, which sets
member is an independent person, while one out
The Supervisory Board specifies its activities in a
in the best possible way. The Supervisory Board fo-
out specific targets to ensure diversity and equal
of two members of the Nomination Committee
set of rules of procedure and an annual cycle for
cuses primarily on the following qualifications and
opportunities and access to management pos-
is independent. Board committee members are
its work.
skills: management experience, financial insight,
itions for qualified men and women.
elected primarily based on special skills that are
organisation, IT, product development, commu-
considered important by the Supervisory Board.
Eight members of the Supervisory Board are
nication, market insight, international experience,
In 2016, the proportion of women at management
Involvement of the employee representatives in
elected by the annual general meeting for a term
knowledge of insurance, reinsurance, capital
level was 36.4% against 35.4% in 2015. The target
the committees is also considered important.
of one year. Of the eight members elected at the
requirements, general accounting insight and ac-
for 2016 of 38% or more women at management
The committees exclusively prepare matters
annual general meeting, four are independent
counting principles (GAAP), including regulations
level was therefore not met. Tryg maintains the
for decision by the entire Supervisory Board.
persons as stated in recommendation 3.2.1 in
and principles designed for the insurance industry
target to increase the total proportion of women
The special skills of all members are also
Recommendations on Corporate Governance,
and M&A experience.
See CV’s and descriptions
at management level to 38% or more in 2017.
described at tryg.com.
while the other four members are dependent
of the skills in the section Supervisory Board on
See the action plan at tryg.com > CSR
persons as they are appointed by the majority
pages 33-34
and at tryg.com > Governance >
> Thematic areas > People.
Remuneration of Management
shareholder TryghedsGruppen. See pages 33-34
Management > Supervisory Board.
for information on when the individual members
Board committees
Tryg has adopted a remuneration policy for the
Supervisory Board and the Executive Board,
joined the Supervisory Board, were re-elected and
Duties and composition of the Executive Board
Tryg has an Audit Committee, a Risk Committee,
including general guidelines for incentive pay. The
when their current election period ends. To ensure
Each year, the Supervisory Board reviews and
a Nomination Committee and a Remuneration
remuneration policy for 2016 was adopted by the
the integration of new talent on the Supervisory
adopts the rules of procedure of the Supervisory
Committee. In 2016, Tryg set up a temporary
Supervisory Board in January 2016 and approved
Board, members elected by the annual general
Board and the Executive Board with relevant
IT Committee to allow the Board to work more
by the annual general meeting on 16 March 2016.
meeting may hold office for a maximum of nine
policies, guidelines and instructions describing
closely with Tryg’s IT strategy. The framework of
The Chairman of the Supervisory Board reports on
years. Furthermore, members of the Supervisory
reporting requirements and requirements for com-
the committees’ work is defined in their terms of
Tryg’s remuneration policy each year in connection
Board must retire at the first annual general meet-
munication with the Executive Board. Financial
reference.
The board committees’ terms of
with the review of the annual report at the annual
ing following their 70th birthday. The Supervisory
legislation also requires the Executive Board to
reference can be found at tryg.com > Governance
general meeting. The Board’s proposal for the
Board has 12 members, seven men and five
disclose all relevant information to the Supervisory
> Management > Supervisory Board > Board com-
remuneration of the Supervisory Board for the cur-
women (including two male and two female
Board and report on compliance with limits de-
mittees, including descriptions of members, meet-
rent financial year is also submitted for approval
employee representatives). Women are thus not
fined by the Supervisory Board and in legislation.
ing frequency, responsibilities and activities during
by the shareholders at the annual general meeting.
underrepresented on Tryg’s Supervisory Board.
the year.
See the tasks of the board committees
See the remuneration policy at tryg.com
The Supervisory Board has members from
The Supervisory Board considers the composi-
in 2016 at tryg.com > Governance > Management
> Governance > Remuneration.
Denmark, Sweden and Norway.
See details
tion, development, risk and succession plans of
> Supervisory Board > Board committees.
about the independent board members in the
the Executive Board in connection with the annual
Remuneration of Supervisory Board
section Supervisory Board on pages 33-34
evaluation of the Executive Board, and regularly
Three out of four members of the Audit Com-
Members of Tryg’s Supervisory Board receive a
and at tryg.com > Governance > Management
in connection with board meetings. Each year, the
mittee and three out of five members of the
fixed fee and are not comprised by any form of
> Supervisory Board.
Supervisory Board discusses Tryg’s activities to
Risk Committee, including the chairman of the
incentive or severance programme or pension
| Contents – Management’s review
30
Annual report 2016 | Tryg A/S | Total remuneration of the Supervisory Board in 2016
within the framework of the approved remuner-
fulfilment of additional conditions such as contin-
ation policy. Tryg wants to strike an appropriate
ued employment and back testing (a testing prior
Audit
Fee Committee
Risk Remuneration
Committeea) Committeea)
Total
balance between management remuneration,
to matching, to ensure that the criteria forming
predictable risk and value creation for the share-
the basis of the calculation of the variable salary
DKK
Jørgen Huno Rasmussen
Torben Nielsen
Tom Eileng b)
Lone Hansen
Anders Hjulmand b)
Jesper Hjulmand
Ida Sofie Jensen
Bill-Owe Johansson
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
Anya Eskildsen c)
Vigdis Fossehagen c)
225,000
197,581
150,000
131,720
150,000
150,000
131,720
131,720
131,720
1,061,371
707,581
285,484
353,790
285,484
353,790
353,790
353,790
353,790
353,790
353,790
353,790
68,307
68,307
75,430
79,301
146,895 1,208,266
1,130,162
364,785
353,790
285,484
635,510
429,220
353,790
635,510
485,510
635,510
451,720
86,936
86,936
97,930
18,629
18,629
a) Fee increased as from 1 April 2016 b) Joined the Supervisory Board in March 2016
c) Resigned from the Supervisory Board in March 2016
holders in the short and long term.
are still met at the time of matching). The purpose
of the Matching Shares Programme is to ensure
The Executive Board’s remuneration consists of a
alignment of interests between the Executive
base salary, a pension contribution of 25% of the
Board and the company’s shareholders.
base salary and other benefits. The base salary
must be competitive and appropriate for the
Each year the Supervisory Board evaluates the
market and provide sufficient motivation for
performance of the Executive Board against the
all members of the Executive Board to do their
targets set by the Supervisory Board for the fiscal
best to achieve the company’s defined targets.
year. The overall fulfilment of the weighted targets
The Supervisory Board can decide that the base
determines the number of investment shares of-
salary should be supplemented with a variable
fered to each member of the Executive Board. The
pay element of up to 25% of the fixed base salary
targets for 2016 were a combination of long-term
including pension.
strategic targets and developmental targets, 60%
weighted on the year's fulfilment of Tryg's CMD
scheme. Their remuneration is based on trends in
remuneration is twice that received by ordinary
The variable pay element consists of a Matching
2017 targets, which were specified as combined
peer companies, taking into account the required
members of the Supervisory Board.
Shares Programme. The Executive Board may,
ratio, expense ratio, premium growth, Net Promo-
skills, efforts and the scope of the Supervisory
using taxed funds, buy shares (so-called invest-
tor Score (NPS) and employee satisfaction, and
Board’s work, including the number of meetings
Remuneration of Executive Board
ment shares) in Tryg A/S at market price for a
40% weighted on development targets, including
held. The remuneration received by the Chair-
Members of the Executive Board are employed
predefined amount. Four years after the purchase,
targets such as moving closer to the customers
man of the Board is three times that received by
on a contractual basis, and all terms of their remu-
Tryg will grant one matching share per investment
(higher degree of customers who are fully insured
ordinary members, while the Deputy Chairman’s
neration are established by the Supervisory Board
share free of charge. Matching is conditional upon
in Tryg), creating a strong customer centre, em-
Total remuneration of the Executive Board in 2016
DKK
Morten Hübbe
Lars Bonde
Christian Baltzer b)
Tor Magne Lønnum c)
Base salary
Pension
Car
allowance
Other
benefits
Total fixed
salary
Share-based
remuneration a)
Total
fee
9,701,848
4,811,092
2,125,000
1,757,715
2,425,462
1,202,773
531,250
391,578
255,000
255,000
180,625
45,081
26,000
26,000
18,417
7,583
12,408,310
6,294,865
2,855,292
2,201,957
2,000,000
938,000
531,250
14,408,310
7,232,865
3,386,542
2,201,597
a) The maximum investment opportunity offered under the Matching Shares Programme at the beginning of 2017 (performance year 2016) b) Group CFO as of 15 April 2016
c) Resigned as Group CFO on 15 April 2016. Tor Magne Lønnum’s base salary includes a non-relocation allowance of DKK 191,403.
powering the different lines of business, achieving
high levels of innovation and development of prod-
ucts/services and the impact and success of Tryg's
leaders.
Read more about the Matching Shares
Programme in the remuneration policy at tryg.com
> Governance > Remuneration.
Financial reporting, risk management and auditing
Being an insurance business, Tryg is subject to the
risk management requirements of the Danish
Financial Business Act and Solvency II. In its
| Contents – Management’s review
31
Annual report 2016 | Tryg A/S |
policies, the Supervisory Board defines Tryg’s risk
reports on non-compliance with the frameworks
Independent and internal audit
Tryg’s internal audit department regularly reviews
management framework as regards insurance risk,
and guidelines established by the Supervisory
The Supervisory Board ensures monitoring by
the quality of the Group’s internal control systems
investment risk and operational risk, as well as IT
Board. The Risk Committee monitors the risk
competent and independent auditors. The Group’s
and business procedures. It is responsible for plan-
security, and issues guidelines to the Executive
management on an ongoing basis and reports
internal auditor attends all Board meetings. The
ning, performing and reporting on the audit work to
Board. Risks associated with new financial report-
quarterly to the Supervisory Board.
independent auditor attends the annual Board
the Supervisory Board.
ing rules and accounting policies are monitored
meeting at which the annual report is presented.
and considered by the Audit Committee, the
The Group’s internal control systems are based
Deviations and explanations
finance management and the internal auditors.
on clear organisational structures and guidelines,
The annual general meeting annually appoints
Tryg complies with the Recommendations on
Material legal and tax-related issues and the
general IT controls and segregation of functions,
an independent auditor recommended by the
Corporate Governance with the exception of the
financial reporting of such issues are assessed on
which are supervised by the internal auditors.
Supervisory Board. The internal and independent
recommendation concerning the number of inde-
an ongoing basis.
Other risks associated with
auditors attend the Audit and Risk Committee
pendent members of the board committees, with
the financial reporting are described in the section
As part of the internal control system, Tryg has es-
meetings, and at least once a year the auditors
which Tryg complies partially; see recommenda-
Capital and risk management on pages 25-26
tablished independent risk management, compli-
meet with the Audit Committee without the pres-
tion 3.4.2 of the Recommendations on Corporate
and in Note 1 Risk management on page 50.
ance and actuarial functions. The functions report
ence of the Executive Board. The Chairman of the
Governance.
The deviation is explained in Tryg’s
Tryg engages in ongoing risk identification, map-
Risk Committee. Tryg has a decentralised set-up
to be reported to the Supervisory Board.
available at tryg.com > Investor > Download.
to the Executive Board and the Supervisory Board’s
Audit Committee deals with any matters that need
statutory corporate governance report, which is
ping insurance risks and other risks which may
whereby risk managers in the business areas carry
endanger the realisation of Tryg’s strategy or which
out controlling tasks for the risk management and
may potentially have a substantial impact on Tryg’s
compliance functions.
financial position. The process involves identifying
and continually monitoring the risks identified. As
Risk management is an integral part of Tryg’s
in previous years, Tryg undertook an Own Risk and
business operations. The Group seeks at all times
Solvency Assessment (ORSA) in 2016. The purpose
to minimise the risk of unnecessary losses in order
of the ORSA is to ensure and demonstrate a link
to optimise returns on the company’s capital.
between strategy, risk management, risk appetite,
Read more about Tryg’s risk management
solvency and capital planning over the planning
in the section Capital and risk management on
period.
pages 25-26
and in Note 1 on page 50.
The Supervisory Board and the Executive Board ap-
Whistleblower line
prove and monitor the Group’s overall policies and
Tryg has a whistleblower line, which allows em-
guidelines, procedures and controls in important
ployees, customers and business partners to report
risk areas. They receive reports about develop-
any serious wrongdoings or suspected irregularities.
ments in these areas and about the ways in which
Reporting takes place in confidence to the Chair-
the frameworks are applied. The Supervisory Board
man of the Audit Committee and the Head of Com-
checks that the company’s risk management and
pliance.
Read more about Tryg’s whistleblower
internal controls are effective. The Board receives
line at tryg.com > Governance > Whistleblower line.
Tryg has published its statutory
corporate governance report based
on the ‘comply-or-explain’ principle
for each individual recommendation.
Download the report at tryg.com
> Investor > Download.
| Contents – Management’s review
Annual report 2016 | Tryg A/S |
32
Supervisory Board
Jørgen
Huno Rasmussen a)
Chairman
Born in 1952. Joined: 2012.
Danish citizen. Professional
board member. Adjunct
professor, CBS. Former CEO
of the FLSmidth Group.
Education: B.Com. (Organisa-
tion), MSc (Civ. Eng.), PhD
(Constr. Man.).
Chairman: Tryg A/S, Tryg For-
sikring A/S, TryghedsGruppen
smba, Lundbeckfonden and
Lundbeckfond Invest A/S.
Deputy Chairman: Terma A/S,
Rambøll Group A/S and Haldor
Topsøe A/S.
Board member: Bladt Industries
A/S, Otto Mønsted A/S and
Thomas B. Thriges Fond.
Committee memberships:
Chairman of Tryg's Remuneration
and Nomination Committees
and the Remuneration Commit-
tee in Haldor Topsøe A/S.
Number of shares held: 1,830
Change in portfolio 2016: 0
As former CEO of FLSmidth,
Jørgen Huno Rasmussen has
experience in international man-
agement of listed companies
and special skills within strategy,
business development, com-
munication, risk management
and finance.
Torben Nielsen b)
Anders Hjulmand
Ida Sofie Jensen a)
Lone Hansen
Bill-Owe Johansson
Deputy Chairman
Born in 1947. Joined: 2011.
Danish citizen. Professional
board member, Adjunct Pro-
fessor, CBS. Former Governor
of Danmarks Nationalbank
(Danish Central Bank).
Education: Savings bank
training, Graduate Diplomas in
Organisation, Work Sociology,
Credit and Financing.
Chairman: Sydbank A/S, Inves-
teringsforeningen Sparinvest
DK, EIK banki p/f and Museum
South East Denmark.
Deputy Chairman: Tryg A/S and
Tryg Forsikring A/S.
Board member: Sampension KP
Livsforsikring A/S, Dansk Land-
brugs Realkredit and a member
of the Executive Management
of Bombebøssen.
Committee memberships: Tryg’s
Audit Committee (Chairman),
Risk Committee (Chairman) and
Remuneration Committee.
Number of shares held: 20,000
Change in portfolio 2016: +1,000
Torben Nielsen has special skills
in the fields of management,
finance, financial services and
risk management as former
Governor of Danmarks Natio-
nalbank.
Born in 1951. Joined: 2016.
Danish citizen. Lawyer and
partner at HjulmandKaptajn.
Education: LL.M.
Chairman: B&E STÅL A/S,
Brdr. Schlie’s Fiskeeksport
A/S, Conscius A/S, CPS A/S,
Danish Label Coating A/S,
Friis & Moltke A/S, Lastvogn &
Trailer Center A/S, Nordjyske
Jernbaner A/S, Palle Mørch A/S,
Pava Produkter A/S, Seafood
International Holding A/S,
Scan Fish Danmark A/S, Utzon
Center A/S, Kunsten – Museum
of Modern Art, PSC A/S and a
number of subsidiaries.
Deputy Chairman: The Royal
Danish Theatre.
Board member: Tryg A/S and
Tryg Forsikring A/S, Trygheds-
Gruppen smba, Flemming
Christensens Fond, FDE
Fonden, Effer Krancenter A/S,
Sawo A/S and Utzon Fond.
Number of shares held: 1,168
Change in portfolio 2016: +1,168
Anders Hjulmand is experienced
in the counselling of a number
of Danish and international,
privately and publicly owned
companies and foundations, and
he is experienced within the areas
of law, management, strategy
and business development.
Born in 1958. Joined: 2013.
Danish citizen. CEO of Lif
(Danish Association of the Phar-
maceutical Industry), the subsid-
iary DLI A/S (Danish Medicine
Information) and the subsidiary
ENLI ApS (Ethical Board for the
Pharmaceutical Industry).
Education: MSC in Political
Science, European Health
Leadership Programme
INSEAD, Executive Management
Programme INSEAD, Executive
Program Columbia Business
School, Executive Program
Singularity University.
Board member: Tryg A/S and
Tryg Forsikring A/S, Trygheds-
Gruppen smba, Plougmann &
Vingtoft A/S and Hans Knudsen
Instituttet (business trust).
Committee memberships:
Remuneration Committee
in Tryg.
Number of shares held: 1,175
Change in portfolio 2016: 0
Ida Sofie Jensen has experience
from business operations and
the healthcare sector as well as
management, strategy, politics
and finance.
Employee representative
Born in 1959. Joined: 2010.
Swedish citizen. Claims handler
in Atlantica (Moderna, Swedish
subsidiary). Employed since
2002.
Education: Insurance training.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Number of shares held: 1,500
Change in portfolio 2016: +235
Employee representative
Born in 1966. Joined: 2012.
Danish citizen. Employed
since 1990.
Education: Certified commer-
cial insurance agent. Various
insurance and sales courses
and negotiation training.
Chairman: The Association for
Tied Agents and Key Account
Managers in Tryg.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Member of the Tied Agents’
District Board of the Financial
Services Union Denmark.
Number of shares held: 695
Change in portfolio 2016: 0
Members of the Supervisory Board are elected for a term of one year.
Employee representatives are, however, elected for a term of four years.
An employee election was held in 2016.
a) Dependent member of the Supervisory Board.
b) Independent member of the Supervisory Board, as per the definition
in Recommendations on Corporate Governance.
| Contents – Management’s review
33
Annual report 2016 | Tryg A/S | Supervisory Board
Jesper Hjulmand a)
Lene Skole b)
Mari Thjømøe b)
Carl-Viggo Östlund b)
Tom Eileng
Tina Snejbjerg
Born in 1963. Joined: 2010.
Danish citizen. CEO of SEAS-
NVE A.m.b.A.
Education: MSc in Economic
and Business Administration,
Lieutenant-Colonel Royal Danish
Air Force Reserve, Pathfinder.
Chairman: Employers association
of Danish utility companies (DEA),
Energi Danmark A/S, Fibia P/S,
and SEAS-NVE Net A/S
Deputy Chairman: Trygheds-
gruppen smba
Board member: Tryg A/S, Tryg
Forsikring A/S, DI Executive
Committee and Executive Com-
mittee of the Danish Energy
Association.
Committee memberships: Audit
Committee and Risk Committee
in Tryg, Executive Committee
of Danish Energy Association
(Chairman), member of the
Board of Representatives
in Tryghedsgruppen and in
Nykredit.
Number of shares held: 8,750
Change in portfolio 2016: 0
From his positions with
SEAS-NVE, Jesper Hjulmand
has experience within M&A,
strategy, organisational and
management development,
communication and business
development.
Born in 1959. Joined: 2010.
Danish citizen. CEO of Lund-
beckfonden and Lundbeckfond
Invest A/S.
Education: The A.P. Møller
Group International shipping
education, Graduate Diploma in
Finance and various international
management programmes.
Chairman: LFI Equity A/S
Deputy Chairman: Dong Energy
A/S, H. Lundbeck A/S, ALK-
Abelló A/S and Falck A/S
Board member: Tryg A/S and
Tryg Forsikring A/S
Committee memberships: Audit
Committee and Risk Committee
in Tryg, the Audit & Nomination
Committee in ALK-Abelló A/S
and the Audit and Remuneration
Committee in H. Lundbeck A/S,
Audit Committee in Falck A/S
Number of shares held: 5,525
Change in portfolio 2016: 0
Lene Skole has experience
from international companies,
among other things through
her previous work in Coloplast
and The Maersk Company Ltd.,
UK. Lene Skole has skills within
strategy, financing and com-
munication.
Born in 1962. Joined: 2012.
Norwegian citizen. Professional
board member and independ-
ent advisor.
Education: Master’s degree in
Economy and Business Admin-
istration, Chartered Financial
Analyst (CFA) as well as Senior
Executive Programmes from
London Business School and
Harvard Business School.
Chairman: Seilsport Maritimt
Forlag AS, Færder Nasjonalpark-
senter IKS, ThjømøeKranen AS.
Board member: Tryg A/S, Tryg
Forsikring A/S, Nordic Mining
ASA, Forskningskonsernet
Sintef, E-CO Energi and Scatec
Solar ASA.
Committee memberships: Audit
Committee and Risk Committee
in Tryg. Audit Committee of E-CO
(Chairman), Scatec Solar ASA.
Number of shares held: 3,300
Change in portfolio 2016: +1,500
Mari Thjømøe has experience
from financial planning and
control, restructuring/financing,
investment analysis, investor
relations, asset management,
strategic planning and special
knowledge of the insurance
market. As a Norwegian citizen,
she has special insights into
Norwegian markets.
Born in 1955. Joined: 2015.
Swedish citizen. Professional
Board member and independent
advisor. Former CEO of Nordnet
and the insurance company
SalusAnsvar.
Education: Bachelor of Science,
education in International Busi-
ness and Finance & Accounting.
Chairman: BLKCHN Scandi-
navia AB, Bridge Scandinavia
Ventures AB, Creador AB,
FCG Fonder AB, HappyX AB,
Insiderfonder AB, Our Interest
AB, The PAUSE Foundation,
Wunderbar AB.
Board member: DBT Capital
AB, Havsgaard AB, Holmö
Fastigheter AB, Ponture AB,
Tryg A/S, Tryg Forsikring A/S,
Wonderbox AB.
Advisory Board member:
Daniel Wellington AB
Committee memberships:
Remuneration Committee
Number of shares held: 170
Change in portfolio 2016: +170
Carl-Viggo Östlund has experi-
ence from the packaging industry,
logistics, insurance, finance and
banking, from leading positions
in listed and private companies.
As a Swedish citizen, Carl-Viggo
Östlund has special knowledge
of Swedish market conditions.
Employee representative
Born in 1954. Joined: 2016
Norwegian citizen. Employed
since 1986.
Education: Business Economist
Chairman: Chairman of
Finansforbundet, Tryg and
Senior Commercial Advisor
Board member: Tryg A/S,
Tryg Forsikring A/S and Vesta
Støttefond.
Committee memberships:
Remuneration Committee
in Tryg A/S
Number of shares held: 265
Change in portfolio 2016: 0
Employee representative
Born in 1962. Employed since
1987. Joined the Supervisory
Board in 2010. Danish citizen.
Officer of Tryg’s Personnel
Department.
Education: Insurance training.
Board member: Tryg A/S and
Tryg Forsikring A/S.
Committee memberships:
Trygs Audit Committee
and the Central Board of
Forsikringsforbundet.
Number of shares held: 695
Change in portfolio 2016: 0
Members of the Supervisory Board are elected for a term of one year.
Employee representatives are, however, elected for a term of four years.
An employee election was held in 2016.
a) Dependent member of the Supervisory Board.
b) Independent member of the Supervisory Board, as per the definition
in Recommendations on Corporate Governance.
| Contents – Management’s review
34
Annual report 2016 | Tryg A/S | Executive Board
| Contents – Management’s review
| Contents – Management’s review
Annual report 2016 | Tryg A/S | 35
35
Annual report 2016 | Tryg A/S | Morten Hübbe Group CEOBorn in 1972. Joined Tryg in 2002. Joined the Executive Board in 2003.Education: BSc in International Business Administration and Modern Languages, MSc in Finance and Accounting and management programme at Wharton. Board member: Tjenestemændenes Forsikring, KMD A/S and KMD Holding A/S.Number of shares held: 111,510 Change in portfolio in 2016: +25,770Christian Baltzer Group CFOBorn 1978. Joined Tryg in 2009. Joined the Executive Board in 2016.Education: Masters in Insurance Science. Number of shares held: 3,235Change in portfolio in 2016: +1,400Lars BondeGroup COOBorn in 1965. Joined Tryg in 1998. Joined the Executive Board in 2006.Education: Insurance training, LL.M.Chairman: Tryg Liv og The Faroe Insurance CompanyBoard member: Danish Employers’ Association for the Financial Sector, Tjenestemændenes Forsikring, Forsikringsakademiet, the Danish Insurance Association and Cphbusiness.Number of shares held: 42,600Change in portfolio in 2016: +5,755 Corporate Social Responsibility in Tryg
Statutory Corporate Social Responsibility report
year, the lifebuoys saved three lives. Tryg has donated
Our focus on DNA marking is also evident in Norway.
more than 40,000 lifebuoys over the years and over
In 2016, we joined forces with the Norwegian police
2,000 lifebuoys in 2016.
Read more at tryg.com >
in handing out DNA kits to private house owners in
CSR > Thematic areas > Peace of mind > Society
Bergen. In collaboration with the police, we have also
Night Ravens
increased our focus on burglaries in the construc-
tion industry, which is seeing an increase in the
The Night Ravens are volunteers who walk the
number of burglaries and thefts of expensive tools
streets at night to prevent violence and crime in
from construction sites and from work vans. In an
Norway. A total of approximately 370 local groups
attempt to prevent this problem, Tryg, the police and
Tryg’s Corporate Social Responsibility (CSR) initia-
to ensure that they can fill in a complaint. Even
are involved in this preventive work. Tryg acts
the construction industry recommend synthetic DNA
tives focus on peace of mind, people, business
though claims handling is key to our business,
partly as a secretary for the Night Ravens, while
marking and labelling of special tools and machines.
ethics as well as the environment and climate.
we still believe it creates peace of mind if we can
also paying for clothing and other necessary
As a first major project, construction sites along
These areas are closely linked to our business
prevent claims from arising in the first place, which
materials and supporting operations and events.
the E39 between Bergen and Os in Hordaland have
model (see page 6), since CSR concerns issues
is why we focus on claims prevention. We focus
Read more at tryg.com > CSR > Thematic
started using DNA marking. To encourage more large
relating to our focus on insurance, prevention
on safety, health and climate, and in 2016 we
areas > Peace of mind > Society
customers to use DNA marking, Tryg has handed out
and claims handling. By addressing some of the
increased our focus on preventing break-ins and
DNA kits to customers all across Norway.
areas most closely linked to our business model,
fires, while also seeking to improve safety at the
DNA marking
CSR is actively ensuring that Tryg is working in a
seaside, for cyclist and among young people in
Break-ins are a concern for the Danish population
Bicycle safety
respon sible way with both internal and external
public spaces.
Find Tryg’s complaint process at
and pose a great problem for Tryg, our customers
We focus on safety for cyclists and road safety in
processes, while always focusing on creating prod-
tryg.dk > Om Tryg > Kontakt os > Klagemuligheder
and society as a whole, which is why we want to
general. In 2016, we further highlighted the import-
ucts and solutions that generate value for Tryg, our
help prevent break-ins from happening. Synthetic
ance of wearing a helmet and being visible to others
customers and society.
Find our CSR policy at
It is important for us to engage in prevention,
DNA marking and labelling is one simple preven-
when riding a bike, for example by using reflectors.
tryg.com > CSR > CSR strategy > CSR policy
since the potential negative effects of no preven-
tive mechanism that has proved rather effective
To increase awareness of the importance of using
Read more about CSR at tryg.com > CSR
tion represents a risk for our customers and soci-
in preventing break-ins and theft. In 2017, we will
reflectors, we launched Facebook campaigns in
Peace of mind
ety. It is also a risk for Tryg since no prevention can
continue to focus on the area and try to establish
both Norway and Denmark in 2016. In Denmark,
result in an increased number of claims. However,
large-scale DNA-marking projects.
we also created an online universe offering advice
opportunities exist in this area – as the proactive
and information on bicycle safety. Our ambition is
Tryg’s overall vision is to create peace of mind for
prevention of risks creates opportunities for edu-
To test the effect of synthetic DNA marking, we
to further develop our focus on bicycle safety with
our customers and for society as a whole. In order
cating and involving the community in Tryg’s work.
started a pilot project in Sønderborg, Denmark, in
more activities in 2017.
Find more information
to improve the way we work and achieve satisfied
Read more about prevention at tryg.dk
2014. Our results from 2016 show an almost 40%
on bicycle safety at tryg.dk > Forebyg skade > Cykel
customers, it is important always to focus on our
> Skader > Forebyg skade
decline in the number of break-ins for the 90 proper-
dialogue with customers. A major point of contact
ties using DNA marking throughout the test period
Educating society
is our claims handling process, where we have
Lifebuoys
compared to an average decline of 24% in the entire
In order to engage society in prevention, we believe
processes in place to ensure the equal treatment
The red and white lifebuoy has become a symbol
city of Sønderborg. These statistics indicate that
it is necessary to offer education for different groups
of all customers. If customers are not satisfied
of safety along the Norwegian coastline since 1952
DNA marking can – to some extent – help prevent
in society. In 2016, we invited 60 students from the
with our services, we also have processes in place
and has prevented more than 1,000 drownings. This
break-ins in residential areas.
local community in Ballerup to participate in an
| Contents – Management’s review
36
Annual report 2016 | Tryg A/S |
innovation workshop focusing on fire prevention.
employees. By addressing these issues, we think it
with a number of Danish companies with the aim
Tryg welcomed three refugees to a six-month part-
The workshop was well-received, and most of the
is possible to improve the well-being and develop-
of sharing knowledge on how to develop the next
time internship focusing on language training and job
students felt that their newly acquired knowledge
ment of our employees, which is positive for reten-
generation of female leaders. At the same time, we
culture. The internship was a combination of language
would be useful for them in their everyday lives.
tion rates as well as Tryg’s business as a whole. We
are motivating women in Tryg to apply for next-level
school and job training. By the end of 2016, three
Fire prevention is also the focus of the new free ‘VR
support our employees by offering flexible working
management jobs by sending five women to the
more refugees were a part of a preparatory 13-week
HouseFire’ app which Tryg launched in 2016. It is a
hours and the possibility of working from home.
Danish Diversity Council women’s leadership pro-
internship. After a successful start, we are looking for-
virtual reality app, and the first of its kind in Norway.
At the same time, we offer education and training
gramme in 2017. With this programme, our ambi-
ward to continuing our efforts in 2017 by welcoming
The ambition is to make people more aware of how
in order to upgrade our employees’ qualifications
tion is to develop role models and motivate female
more refugees to participate in the internship.
to prevent fires from starting, and how to handle fires
and improve their career prospects. To monitor
leaders to reach for the next level of management.
if they occur. The app has been downloaded close
developments in employee satisfaction, we conduct
to 1,900 times in 2016 and is also used by the
an internal employee satisfaction survey each year.
Our target for 2017 is to attain 38% women at
Business ethics
Norwegian fire department to teach people how
Despite the organisational changes which took
management levels. In addition, we already have an
In Tryg, we work in a responsible way by respecting
to handle and prevent fires.
Download the app
place in 2016, employee satisfaction increased from
equal gender distribution on our Supervisory Board
both human and labour rights, while also focusing
for iPhone or
Download it for for Android
index 73 in 2015 to index 74 in 2016, 6 index points
with three of the eight members appointed by the
on anti-corruption. At the same time, we acknowledge
higher than the Nordic financial market benchmark.
annual general meeting being women.
our responsibility for the climate and the environ-
People
Equal opportunities
In addition to focusing on equal opportunities for
and external partners adhere to our standards at all
ment. Therefore, it is important that our employees
As clearly set out in our business model, we believe
In Tryg, processes are in place to ensure that men
our employees, we also want to engage with the
times. Tryg has formulated a CSR Code of Conduct
our employees are one of our most important
and women enjoy equal treatment in terms of pay
local community in order to share our knowledge
based on the UN Global Compact, which we expect
resources and assets, and that they should be treated
levels and career opportunities. Our initiatives
and help more people to get a chance to enter the
suppliers to comply with. We also have another
as such. In Tryg, we focus on the well-being of our
include, for example, an action plan aimed at ensur-
Danish labour market. In 2016, Tryg worked with the
Code of Conduct, which all employees must know
employees and their right to a healthy and safe work-
ing the recruitment and promotion of more women
Municipality of Ballerup to help prepare refugees for
and adhere to. To avoid corruption, Tryg has laid
place. We welcome diversity and ensure non-discrim-
in management roles. Both internal recruiters and
entering the Danish labour market. In early 2016,
down an anti-corruption policy stating that all em-
ination through equal treatment of all our employees
external agencies are instructed to work actively to
regardless of gender, age, disabilities, ethnic origin,
present qualified candidates of both genders.
sexual orientation and religion. We see our different
Employee mix
perspectives as an asset that increases the quality of
In 2016, we had an ambitious target of 38% women
our services through ensuring a better understand-
at management level. Through organisation changes
ing of our customers’ needs.
Read more about
and our focus on equal representation in recruitment,
people at tryg.com > CSR > Thematic areas > People
we achieved 36.4% women at management levels,
Employee satisfaction
5.4% higher than the 2015 Danish financial market
benchmark. In 2017, we will maintain our focus on
In Tryg, we believe that satisfied employees are
this issue, and to qualify and motivate more women
key to improving our business and services. We
to apply for management jobs, we have signed an
are actively working to minimise the risks of dis-
agreement with the Danish Diversity Council. This
No.
2,000
1,600
1,200
800
400
0
Men
Women
Age
<30 yrs
Age
30-49 yrs
Age
>50 yrs
Non-
Western
background a)
Flexi job
a) Non-Western background has been compiled by
satisfaction, discrimination and stress among our
means that we will be entering into a partnership
Statistics Denmark.
ployees and everyone acting on behalf of Tryg must
comply with existing anti-corruption legislation.
Read more about business ethics at tryg.com
> CSR > Thematic areas > Business Ethics
Find our anti-corruption policy at tryg.com >
CSR > CSR strategy > CSR policy
Employees and business ethics
It is important that our employees follow our Code
of Conduct at all times. This includes, for example,
policies on good practices for marketing, handling
of personal data, anti-discrimination, diversity and
anti-corruption, including gifts. In order to mitigate
| Contents – Management’s review
37
Annual report 2016 | Tryg A/S | the risks associated with our working processes,
a new monitoring system, asking six offshoring
Tryg is actively working to educate our employees
partners to hand in a report focusing on their CSR
Climate and environment
our emissions by 1% a year. Even though we want
to minimise our negative impact on the climate,
in using the guidelines in the Code of Conduct to
obligations towards Tryg. These reports will provide
Tryg is highly affected by more extreme weather
the overall effect of our efforts is likely to be limited
ensure that they can handle the risks associated
a starting point for our monitoring efforts, which
conditions since they can increase the number and
since Tryg’s carbon emissions are mainly associ-
with their position.
Find our Code of Conduct
involve continuous dialogue with our partners and
frequency of climate-related claims. This repre-
ated with heating and electricity use at our offices
here at tryg.com > CSR > CSR strategy > CSR policy
regular visits to follow up on their commitments.
sents a risk to Tryg since it will increase our claims
and with car, train, and air travel. Tryg is therefore
costs. The risk becomes even greater if we do not
not an energy-intensive company. Neverthe-
To educate our employees on how to handle infor-
Investments
have the necessary focus on claims prevention.
less, we are still endeavouring to minimise the
mation online, in 2016 we launched a campaign
Tryg’s is a non-life insurance company, and our
Therefore, Tryg continuously focuses on finding
environmental impact of our daily operations by
focusing on IT security covering everything from
main activities are naturally related to all aspects
solutions which can prevent damage from happen-
trying to minimise food waste in canteens and by
hacking and social media to general data protec-
of insurance such as claims handling and preven-
ing in the first place. Our aim is to use our knowl-
renting new energy-efficient office premises, for
tion and phishing. As part of the campaign, we
tion. This also means that investments only ac-
edge to offer solutions and advice on prevention for
example. Reducing our energy consumption also
introduced a phishing button which employees can
count for a small part of our business, which is one
society and customers so that everybody is better
means cost reductions, which is further motivating
use to report phishing. To test awareness, all users
of the reasons why we have decided to have ex-
prepared for more extreme weather events.
us to attain our target each year. In 2016, Tryg’s
were a part of a major phishing exercise. This
ternal portfolio managers handle our investments.
Read more about environment and climate at
total estimated carbon emissions were 4267.5
showed that employees were more aware than
80% of Tryg’s investments are Nordic AAA covered
tryg.com > CSR > Climate and environment
tonnes compared to an actual emission of 4481.5
was the case in 2015 since more than 200 reported
or government bonds. This means only minor
phishing. In 2017, we are planning to maintain our
investments in lower-grade risk assets, which are
Hordaklim
tonnes in 2015. Our estimated reduction was
therefore 4.78%. Thus, we achieved our goal of a
focus on raising awareness in this area.
well-diversified and listed global government or
The Hordaklim project is one initiative in which
1% reduction, which is mainly associated with a
To encourage employees and external partners to
observant when it comes to our investments, due
related issues. The project is a research partner-
a 1% reduction compared to 2016.
Read more
report any activities that do not comply with our
to the underlying risk of Tryg violating international
ship which involves Tryg helping and advising a
at tryg.com > CSR > Thematic areas > Climate and
Code of Conduct or applicable legislation, Tryg
standards such as the UN Global Compact or ESG
number of local authorities in Hordaland, Norway,
environment > CO2 reduction
corporate bonds or equities. We are internally very
we contribute with new perspectives on climate-
decrease in travel activities. In 2017, our target is
has set up a whistleblower line that can be used in
when investing. To the best of our knowledge we
on how to identify areas that are most affected by
confidentiality. In 2016, the whistleblower line was
believe that there are no major challenges nor
climate change. Our property claims statistics are
used four times. All incidents are evaluated by the
violations when it comes to our investments.
valuable in this process and can help the author-
Carbon emissions
Legal & Compliance Department before any further
action is taken.
Find Tryg’s whistleblower line
Taxes
ities prevent damage to existing buildings while at
the same time planning for a safer future. The aim
at tryg.com > Governance > Whistleblower Line
Tryg contributes to the society of which we are
of the project is to produce new data that can be
Offshoring and supply chain
legislation. To ensure compliance with legislation at
We expect our employees and our suppliers to work
all times, internal processes are in place to ensure
Reducing Tryg’s carbon footprint
in a responsible way. It is therefore important to
we pay all relevant taxes. Aiming to be as transpar-
Since Tryg is highly affected by more extreme
part, and we pay our taxes according to national
useful for the rest of Western Norway.
Tonnes
5,000
4,000
3,000
2,000
1,000
0
Electricity
Heating oil
Air and train
travel
Motor
Total
2016 (estimated)
2015 (actual)
make it clear to our suppliers that they must respect
ent as possible, we have published our tax policy.
weather events, it is important for us to take part
our guidelines and Code of Conduct as part of their
Find our tax policy at tryg.com > CSR >CSR
in the global community’s endeavours to minimise
obligations towards Tryg. In 2016, we introduced
strategy > CSR Policy
greenhouse gas emissions. Our target is to reduce
The carbon emissions chart covers both Norway and
Denmark; air travel and train also include Sweden while
motor only applies for Denmark.
| Contents – Management’s review
38
Annual report 2016 | Tryg A/S | Contents – Financial statements 2016
TRYG GROUP
5 Claims, net of reinsurance
66
19 Claims provisions
Note Statement by the Supervisory
6
Insurance operating costs,
20 Pensions and similar liabilities
Board and the Executive Board
40
net of reinsurance
Independent auditor’s reports
Financial highlights
Income statement
41
44
45
6 Share option programme
6 Matching shares
7
Interest income and
Statement of comprehensive
dividends etc.
income
46
8 Value adjustments
Statement of financial position 47
9 Tax
Statement of changes in equity 48
10
Profit/loss on discontinued
Cash flow statement
1 Risk and capital management
2 Operating segments
2 Geographical segments
2
Technical result, net of
49
50
60
62
and divested business
11
Intangible assets
12 Property, plant and equipment
13
Investment property
66
68
69
70
70
70
70
71
74
75
21 Deferred tax
22 Other provisions
23
Amounts owed to credit
institutions
24
Debt relating to unsettled
funds transactions and repos
25 Earnings per share
26 Sale of properties
27
Contractual obligations,
collateral and contingent
liabilities
28 Acquisition of subsidiaries
14 Equity investments in associates 75
29 Related parties
reinsurance, by line of business 64
15 Financial assets
3
Premium income, net of
16 Reinsurers’ share
reinsurance
66
17 Current tax
4
Insurance technical interest,
18 Equity
net of reinsurance
66
19 Premium provisions
77
79
79
79
80
30 Financial highlights
31 Accounting policies
Tryg’s Group consolidated financial statements are prepared
in accordance with IFRS.
81
82
84
84
84
84
84
85
85
88
88
89
90
TRYG A/S (PARENT COMPANY)
Income statement – Tryg A/S
(parent company)
99
Statement of financial position
– Tryg A/S (parent company)
100
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
101
102
105
107
108
109
110
111
112
| Contents – Financial statements
Annual report 2016 | Tryg A/S |
39
Statement by the Supervisory Board and the Executive Board
The Supervisory Board and the Executive Board
requirements of the NASDAQ Copenhagen for
assets, liabilities and financial position at
and of the Group’s and the parent company’s
have today considered and adopted the annual
the prensentation of financial statement of listed
31 December 2016 and of the results of the
financial position in general and describes signifi-
report for 2016 of Tryg A/S and the Tryg Group.
companies. In addition, the annual report has been
Group’s and the parent company’s operations
cant risk and uncertainty factors that may affect
presented in accordance with additional Danish
and the cash flows of the Group for the financial
the Group and the parent company.
The consolidated financial statements have been
disclosure requirements for the annual reports of
year 1 January-31 December 2016.
prepared in accordance with the International
listed financial enterprises.
We recommend that the annual report be adopted
Financial Reporting Standards as adopted by the
Furthermore, in our opinion the Management’s
by the shareholders at the annual general meeting.
EU, and the financial statements of the parent
In our opinion, the accounting policies applied are
review gives a true and fair view of developments
company have been prepared in accordance
appropriate, and the annual report gives a true and
in the activities and financial position of the Group
with the Danish Financial Business Act and the
fair view of the Group’s and the parent company’s
and the parent company, the results for the year
Ballerup, 20 January 2017
Executive Board
Morten Hübbe
Group CEO
Christian Baltzer
Group CFO
Lars Bonde
Group COO
Supervisory Board
Jørgen Huno Rasmussen
Chairman
Torben Nielsen
Deputy Chairman
Tom Eileng
Lone Hansen
Anders Hjulmand
Jesper Hjulmand
Ida Sofie Jensen
Bill-Owe Johansson
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
| Menu – Financial statements
40
Annual report 2016 | Tryg A/S |
Independent auditor’s report
To the shareholders of Tryg A/S
1 January to 31 December 2016 in accordance
with the Danish Financial Business Act.
Opinion
We have audited the consolidated financial state-
Basis for opinion
ments and the parent financial statements of Tryg
We conducted our audit in accordance with Inter-
A/S for the financial year 1 January to 31 Decem-
national Standards on Auditing (ISAs) and additional
ber 2016, pages 44-104, which comprise the
requirements applicable in Denmark. Our responsi-
income statement, statement of comprehensive
bilities under those standards and requirements are
income, balance sheet, statement of changes in eq-
further described in the Auditor’s responsibilities for
uity and notes, including a summary of significant
the audit of the consolidated financial statements
accounting policies, for the Group as well as the
and the parent financial statements section of this
Parent and the cash flow statement of the Group.
auditor’s report. We are independent of the Group in
The consolidated financial statements are prepared
accordance with the International Ethics Standards
in accordance with International Financial Report-
Board of Accountants’ Code of Ethics for Profes-
ing Standards as adopted by the EU and additional
sional Accountants (IESBA Code) and the additional
Danish requirements for listed financial companies,
requirements applicable in Denmark, and we have
and the parent financial statements are prepared in
fulfilled our other ethical responsibilities in accord-
accordance with the Danish Financial Business Act.
ance with these requirements. We believe that the
In our opinion, the consolidated financial state-
appropriate to provide a basis for our opinion.
audit evidence we have obtained is sufficient and
ments give a true and fair view of the Group’s
financial position at 31 December 2016 and of
Key audit matters
Claims provisions
How the matter was addressed in the audit
Management’s estimates of the claims provisions
are based on actuarial methods and involve complex
statistical methods as well as estimates of future
events. Changes in methods and assumptions may
result in a material impact on the size of the claims
provisions. Consequently, the audit of the claims
provisions is considered a key audit matter.
The claims provisions amount to DKK 25,452m
at 31 December 2016 (2015: DKK 25,670m).
Management has specified the risks etc. related to
the estimates of the claims provisions in note 1
”Risk and capital management” on pages 51-52 and
in ”Accounting policies”, note 31 on pages 90-91.
The principles of estimating the claims provisions
have been specified in ”Accounting policies”,
note 31 on page 97, and further specified in note 1
on pages 53-56 and in note 19.
The estimates of the claims provisions depend on
accurate and complete insurance data of current
and historical claims, including the development in
claims and payment patterns, as these data are used
to establish the expectations for future claims for
the purpose of the statistical models.
• Assessment and test of controls related to the
processes of claims handling and the recognition
and measurement of provisions for known
claims.
• In cooperation with our own internationally
qualified actuaries, we have tested controls
related to the actuarial estimates of the claims
provisions of selected lines of business.
• We have tested the accuracy and the complete-
ness of the data that are included in the actuarial
estimates of the claims provisions.
• In cooperation with our own internationally qual-
ified actuaries and based on our knowledge of
the industry, experience and historical observa-
tions, we have assessed the statistical models
applied to estimate the claims provisions and we
have tested significant estimates and assump-
tions focusing on consistency and possible
changes.
• Based on the actuarial estimates of the claims
provisions and analyses and in cooperation with
our own internationally qualified actuaries, we
have assessed the development in the claims
provisions, including run-off gains/losses and the
development in the size of the margin included in
Management’s estimate of the claims provisions.
the results of its operations and cash flows for the
Key audit matters are those matters that, in our
financial year 1 January to 31 December 2016 in
professional judgement, were of most significance
The most important assessments and assumptions
of future events relate to:
accordance with International Financial Reporting
in our audit of the consolidated financial state-
• Estimated future claims payments, which are
Standards as adopted by the EU and Danish disclo-
ments and the parent financial statements for the
sure requirements for listed financial companies.
financial year 1 January to 31 December 2016.
These matters were addressed in the context of our
Further, in our opinion, the parent financial state-
audit of the consolidated financial statements and
ments give a true and fair view of the Parent’s
the parent financial statements as a whole, and in
financial position at 31 December 2016, and of
forming our opinion thereon, and we do not provide
the results of its operations for the financial year
a separate opinion on these matters.
based on the completeness and the accuracy of
historical claims and payment patterns, among
other things.
• Expectations for future inflation.
• Determination of the margin included in
Management’s estimate of the claims provisions
to address the uncertainty related to the actuarial
estimates.
| Menu – Financial statements
41
Annual report 2016 | Tryg A/S |
Statement on the management’s review
Solvency ratio
Financial Reporting Standards as adopted by the
auditor’s report that includes our opinion. Rea-
Management is responsible for the management’s
Management is responsible for the key figure
EU and Danish disclosure requirements for listed
sonable assurance is a high level of assurance,
review.
“Solvency ratio” evident from the statement of
financial companies as well as the preparation of
but is not a guarantee that an audit conducted
financial highlights and key figures on page 44
parent financial statements that give a true and
in accordance with International Standards on
Our opinion on the consolidated financial state-
of the annual report.
fair view in accordance with the Danish Financial
Auditing and additional requirements applicable
ments and the parent financial statements does
Business Act, and for such internal control as
in Denmark will always detect a material mis-
not cover the management’s review, and we do not
As disclosed in the statement of financial high-
Management determines is necessary to enable
statement when it exits. Misstatements can arise
express any form of assurance conclusion thereon.
lights and key figures, the solvency ratio is exempt
the preparation of consolidated financial state-
from fraud or error and are considered material
In connection with our audit of the consolidated
from the requirement to be audited. Consequently,
ments and parent financial statements that are
if, individually or in the aggregate, they could rea-
financial statements and the parent financial state-
our opinion on the consolidated financial state-
free from material misstatement, whether due
sonably be expected to influence the economic
ments, our responsibility is to read the manage-
ments and the parent financial statements does
to fraud or error.
ment’s review and, in doing so, consider whether
not cover the solvency ratio, and we do not express
decisions of users taken on the basis of these
consolidated financial statements and these par-
the management’s review is materially inconsist-
any form of assurance conclusion thereon.
In preparing the consolidated financial statements
ent financial statements.
ent with the consolidated financial statements and
and the parent financial statements, Management
the parent financial statements or our knowledge
In connection with our audit of the consolidated
is responsible for assessing the Group’s and the
As part of an audit in accordance with International
obtained in the audit or otherwise appears to be
financial statements and the parent financial state-
Parent’s ability to continue as a going concern, for
Standards on Auditing and additional requirements
materially misstated.
ments, our responsibility is to consider whether the
disclosing, as applicable, matters related to going
applicable in Denmark, we exercise professional
solvency ratio is materially inconsistent with the
concern, and for using the going concern basis of
judgement and maintain professional scepticism
Moreover, it is our responsibility to consider
financial statements or our knowledge obtained
accounting in the preparation of the consolidated
throughout the audit. We also:
whether the management’s review provides the
in the audit or otherwise appears to be materially
financial statements and the parent financial
information required under the Danish Financial
misstated.
statements unless Management either intends to
• Identify and assess the risks of material
Business Act.
liquidate the Group or the Parent or to cease op-
misstatement of the consolidated financial
If, based on this, we conclude that the solvency ra-
erations, or has no realistic alternative but to do so.
statements and the parent financial statements,
Based on the work we have performed, we con-
tio is materially misstated, we are required to report
whether due to fraud or error, design and per-
clude that the management’s review is in accord-
on this. We have nothing to report in this respect.
Auditor’s responsibilities for
form audit procedures responsive to those risks,
ance with the consolidated financial statements
the audit of the consolidated financial statements
and obtain audit evidence that is sufficient and
and the parent financial statements and has been
Management’s responsibility for
and the parent financial statements
appropriate to provide a basis for our opinion.
prepared in accordance with the requirements
the consolidated financial statements
Our objectives are to obtain reasonable assur-
The risk of not detecting a material misstate-
of the Danish Financial Business Act. We did not
and the parent financial statements
ance about whether the consolidated financial
ment resulting from fraud is higher than for one
identify any material misstatement of the manage-
Management is responsible for the preparation of
statements and the parent financial statements
resulting from error, as fraud may involve collu-
ment’s review.
consolidated financial statements that give a true
as a whole are free from material misstatement,
sion, forgery, intentional omissions, misrepre-
and fair view in accordance with International
whether due to fraud or error, and to issue an
sentations, or the override of internal control.
| Menu – Financial statements
42
Annual report 2016 | Tryg A/S | • Obtain an understanding of internal control
• Evaluate the overall presentation, structure and
From the matters communicated with Those
relevant to the audit in order to design audit
content of the consolidated financial statements
Charged with Governance, we determine those
procedures that are appropriate in the circum-
and the parent financial statements, including
matters that were of most significance in the audit of
stances, but not for the purpose of expressing
the disclosures in the notes, and whether the
the consolidated financial statements and the parent
an opinion on the effectiveness of the Group’s
consolidated financial statements and the par-
financial statements of the current period and are
and the Parent’s internal control.
ent financial statements represent the underly-
therefore the key audit matters. We describe these
ing transactions and events in a manner that
matters in our auditor’s report unless law or regula-
• Evaluate the appropriateness of accounting
gives a true and fair view.
tion precludes public disclosure about the matter
policies used and the reasonableness of
or when, in extremely rare circumstances, we de-
accounting estimates and related disclosures
• Obtain sufficient appropriate audit evidence re-
termine that a matter should not be communicated
made by Management.
garding the financial information of the entities or
in our report because the adverse consequences of
business activities within the Group to express an
doing so would reasonably be expected to outweigh
• Conclude on the appropriateness of Manage-
opinion on the consolidated financial statements.
the public interest benefits of such communication.
ment’s use of the going concern basis of ac-
We are responsible for the direction, supervision
counting in the preparation of the consolidated
and performance of the group audit. We remain
financial statements and the parent financial
solely responsible for our audit opinion.
Ballerup, 20 January 2017
statements, and, based on the audit evidence
obtained, whether a material uncertainty exists
We communicate with Those Charged with
Deloitte
related to events or conditions that may cast
Governance regarding, among other matters,
Statsautoriseret Revisionspartnerselskab
significant doubt on the Group’s and the Parent’s
the planned scope and timing of the audit and
Business Registration No 33 96 35 56
ability to continue as a going concern. If we con-
significant audit findings, including any significant
clude that a material uncertainty exists, we are
deficiencies in internal control that we identify
required to draw attention in our auditor’s report
during our audit.
to the related disclosures in the consolidated
financial statements and the parent financial
We also provide Those Charged with Governance
Jens Ringbæk
statements or, if such disclosures are inad-
with a statement that we have complied with
State Authorised Public Accountant
equate, to modify our opinion. Our conclusions
relevant ethical requirements regarding independ-
are based on the audit evidence obtained up to
ence, and to communicate with them all relation-
the date of our auditor’s report. However, future
ships and other matters that may reasonably be
events or conditions may cause the Group and
thought to bear on our independence, and where
the Parent to cease to continue as
applicable, related safeguards.
Kasper Bruhn Udam
a going concern.
State Authorised Public Accountant
| Menu – Financial statements
43
Annual report 2016 | Tryg A/S | Financial highlights
DKKm
2016
2015
2014
2013
2012
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 (%)
Solvency ratio b)
17,707
-11,619
-2,737
17,977
-13,562
-2,720
18,652
-12,650
-2,689
19,504
-14,411
-3,008
20,314
-14,675
-3,295
3,351
-951
-10
2,390
987
-157
3,220
-748
2,472
-1
2,471
1,239
31,527
2,034
9,437
49,861
65.6
5.4
71.0
15.7
86.7
15.5
86.5
5.5
26.2
194
1,695
710
18
2,423
-22
-91
2,310
-390
1,920
49
1,969
1,212
31,814
3,176
9,644
51,281
75.4
-3.9
71.5
15.3
86.8
15.1
86.5
5.1
20.0
108
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
23.7
87
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
21.8
90
2,344
86
62
2,492
585
-60
3,017
-837
2,180
28
2,208
1,015
34,355
2,317
10,979
55,022
72.2
-0.4
71.8
16.4
88.2
16.2
87.8
4.1
22.3
90
The gross expense ratio without adjustment is calculated
as the ratio of actual gross insurance operating costs to
gross premium income.
Other key ratios are calculated in accordance with
‘’Recommendations & Financial Ratios 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 recpect of owner-occupied property
based on a calculated market rent and the deduction
of actual depreciation and operating costs on owner-
occupied property. The sale of owner-occupied property
in December 2016 does not affect the calculation.
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.
b) Solvency I ratios in 2012-2015 are the ratio between
base capital and weighted assets and are audited.
Solvency II ratio in 2016 is the ratio betwen own
funds and the solvency capital requirement and is
exempt from the requirement for auditing and thus
not audited.
| Menu – Financial statements
44
Annual report 2016 | Tryg A/S |
Income statement
DKKm
2016
2015
DKKm
2016
2015
Note General insurance
Gross premiums written
Ceded insurance premiums
Change in premium provisions
Change in reinsurers’ share of premium provisions
3
Premium income, net of reinsurance
17,842
-1,210
151
13
16,796
18,150
-1,165
61
1
17,047
Note
14
7
8
7
Investment activities
Income from associates
Income from investment property
Interest income and dividends
Value adjustments
Interest expenses
Administration expenses in connection with investment activities
4
Insurance technical interest, net of reinsurance
-10
18
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers’ share of claims provisions
5 Claims, net of reinsurance
-13,947
1,260
2,328
-1,164
-11,523
-13,095
471
-467
1,301
-11,790
Bonus and premium discounts
-286
-234
Acquisition costs
Administration expenses
Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers
6
Insurance operating costs, net of reinsurance
-2,029
-708
-2,737
150
-2,587
-2,042
-678
-2,720
102
-2,618
2
Technical result
2,390
2,423
Total investment return
4
Return on insurance provisions
Total investment return after insurance technical interest
Other income
Other costs
Profit/loss before tax
Tax
9
Profit/loss on continuing business
10
Profit/loss on discontinued and divested business
42
105
671
518
-113
-87
1,136
-149
987
104
-261
3,220
-748
2,472
-1
42
94
794
-510
-95
-88
237
-259
-22
81
-172
2,310
-390
1,920
49
Profit/loss for the year
2,471
1,969
25
Earnings per share – continuing business
Diluted earnings per share – continuing business
Earnings per share
Diluted earnings per share
8.84
8.84
8.84
8.84
6.74
6.73
6.91
6.91
| Menu – Financial statements
45
Annual report 2016 | 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 taxrates on security provisions
Sale of owner-occupied property a)
Sale of owner-occupied property, revaluation from previous years a)
Tax on sale of owner-occupied property
Tax on revaluation of owner-occupied property from previous years
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
a) Please refer to note 26 Sale of properties.
2016
2,471
2015
1,969
15
0
215
-115
-53
29
-95
24
20
51
-50
11
12
32
21
141
0
4
0
2
-12
3
159
-89
86
-21
-24
135
2,503
2,104
| Menu – Financial statements
46
Annual report 2016 | Tryg A/S |
Statement of financial position
DKKm
Note
11
Assets
Intangible assets
Operating equipment
Owner-occupied property
Assets under construction
12
Total property, plant and equipment
13
Investment property
14
Equity investments in associates
Total investments in associates
Equity investments
Unit trust units
Bonds
Derivative financial instruments
Total other financial investment assets
15
Total investment assets
Reinsurers’ share of premium provisions
Reinsurers’ share of claims provisions
19
16
Total reinsurers’ share of provisions for insurance contracts
Receivables from policyholders
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Other receivables
15
Total receivables
17 Current tax assets
Cash at bank and in hand
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
2016
2015
DKKm
2016
2015
884
49
0
0
49
2,323
218
218
48
3,950
35,254
1,000
40,252
42,793
214
1,820
2,034
1,108
1,108
183
1,646
2,937
0
475
475
224
465
689
1,038
62
1,144
2
1,208
1,838
229
229
138
3,589
35,705
843
40,275
42,342
173
3,003
3,176
1,261
1,261
199
871
2,331
118
471
589
281
316
597
Note
18
Equity and liabilities
Equity
1
Subordinate loan capital
Premium provisions
19
19 Claims provisions
Provisions for bonuses and premium discounts
Total provisions for insurance contracts
Pensions and similar obligations
20
21 Deferred tax liability
22 Other provisions
Total provisions
Debt relating to direct insurance
Debt relating to reinsurance
Amounts owed to credit institutions
23
24 Debt relating to unsettled funds transactions and repos
15 Derivative financial instruments
17 Current tax liabilities
Other debt
Total debt
Accruals and deferred income
9,437
2,567
5,487
25,452
588
31,527
345
702
125
1,172
555
426
178
1,732
702
317
1,203
5,113
45
9,644
1,698
5,571
25,670
573
31,814
264
645
132
1,041
603
330
64
4,074
612
357
1,001
7,041
43
Total equity and liabilities
49,861
51,281
1
26
27
28
29
30
31
Risk and capital management
Sale of properties
Contractual obligations, collateral and contingent liabilities
Acquisition of activities
Related parties
Financial highlights
Accounting policies
Total assets
49,861
51,281
| Menu – Financial statements
47
Annual report 2016 | 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
Equity at 31 December 2015
1,448
86
-9
127
766
6,213
1,013
2016
Adjustment 01.01.2016 b)
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 share options and matching shares
Total changes in equity in 2016
Equity at 31 December 2016
2015
Adjustment 1.1.2015 c)
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
-86
-86
12
12
-127
-127
56
56
0
-35
-35
1,413
-86
0
-127
0
56
822
127
-355
106
-122
35
52
-1,000
1
3
-1,031
5,182
2,770
2,770
-1,766
1,004
2,017
12
3
15
-24
-24
6
6
0
-44
22
-1
21
-104
22
-82
-44
1,448
6
86
-24
-9
21
127
-82
766
-175
292
132
424
44
97
-1,044
13
2
5
-634
6,213
1,759
1,759
-2,477
-718
1,013
-175
1,969
135
2,104
0
-2,477
97
-1,044
13
2
5
-1,475
9,644
Equity at 31 December 2014
1,492
80
106
848
6,847
1,731
11,119
Total
9,644
0
2,471
32
2,503
0
-1,766
52
-1,000
1
3
-207
9,437
Dividend per share in 2016 includes ordinary dividend
paid out in July of DKK 2.60, proposed ordinary dividend
of DKK 3.60, totalling DKK 6.20 (DKK 6.00 in 2015) and
extraordinary dividend of DKK 3.54. Proposed dividend
per share is calculated as the 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 (282,541,204 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 1,774m (DKK 2,516m in 2015). 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.
b) A new executive order from the Danish FSA from
1 January 2016 has abolished the requirements
of equalisation reserves in credit and guarantee
insurance.
c) New executive order from the Danish FSA on yield
curves based on EIOPA. Please refer to note 31
Accounting policies.
| Menu – Financial statements
48
Annual report 2016 | 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 intangble assets
Hedging of currency risk
Investments, continuing business
Investments, discontinued and divested business
Total investments
2016
2015
DKKm
2016
2015
17,729
-13,744
340
-2,699
-129
1,497
723
-113
25
-529
-56
1,547
-1
1,546
-122
6
147
413
0
-1
-135
-50
258
0
258
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
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
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
Liabilities arising from financing activities
-999
800
-1,714
115
-1,798
-1,798
6
-2
4
471
475
2016
Carrying amount at 1 January
Exchange rate adjustments
Cash flow
Carrying amount at 31 December
2015
Carrying amount at 1 January
Exchange rate adjustments
Cash flow
Carrying amount at 31 December
Subordinated
loans
Amounts owed
to credit
institutions
1,698
69
800
2,567
1,768
-82
12
1,698
64
-1
115
178
116
1
-53
64
-1,031
12
-2,380
-53
-3,452
-3,452
-37
3
-34
505
471
Total
1,762
68
915
2,745
1,884
-81
-41
1,762
| Menu – Financial statements
49
Annual report 2016 | 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
Supervisory Board’s involvement in capital and risk
management, Tryg’s Supervisory Board has decided
to set up a special Supervisory Board Risk Committee
to address these topics separately during the year.
The Committee meets minimum four times a year for
a detailed review of various risk management topics
and regularly keeps the entire Supervisory Board
up-to-date on the status.
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. The
risk management function is the second level of
Lines of defence
Supervisory Board
control, supported by decentralised risk managers
affiliated with the individual business areas. The risk
management function ensures a consistent approach
across the organization, risk assessment 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 prepares specific recommen-
dations in relation to capital management, reinsurance,
investment risk management and more. Tryg’s risk
management function is also responsible for determining
the company’s capital requirement. The third level con-
sists 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:
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?
•
•
•
A solid capital base, supporting both the statutory
requirements and a single ‘A’ rating from Moody’s.
Support of a steadily increasing nominal dividend
per share, with a payout ratio in the interval 60-90%.
Return on the average equity of at least 21% after
tax.
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 Board
| Menu – Financial statements
Supervisory
Board
• Risk appetite
• Capital
• Strategy
• Crisis
management
Supervisory Board’s
Risk Committee
Risk management environment
Business areas
Policies
Executive Board
Policies
Risk Committee
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
50
NotesAnnual report 2016 | Tryg A/S | The capital base is continuously measured against the
capital 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.
The introduction of Solvency II had a major influence
on Tryg’s solvency ratio in various areas . The Solvency
capital requirement decreased by approximately
DKK 1,200m due to the inclusion of the loss absor-
bency capacity of deferred tax. The capital base
increased by approximately DKK 500m due to the
inclusion of expected future profits (DKK 700m) and
the transition to a new Solvency II discounting curve
(DKK -200m). The net impact from these new ele-
ments increased the solvency ratio of the Group.
Tryg has three subordinated loans that amount to
DKK 2,567m. The first is a NOK 1,400m loan that was
issued in November 2015 and the second is a SEK
1,000m loan which was issued in May 2016. Both
classified as a Tier 2 element under Solvency II. The
third is a NOK 800m loan that was issued in March
2013 and is according to the grandfathering rules
treated as a Tier 1 element under Solvency II.
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 capi-
tal 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.
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 Supervi-
sory Board, and administered through business pro-
cedures, underwriting guidelines etc. Underwriting
risk is assessed in Tryg’s capital model, determining
the capital impact from insurance products. Reinsur-
ance is used to reduce the underwriting risk in situa-
tions where this can not be achieved to a sufficient
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. Retention for such
events is DKK 150m. In the event of a frequency of
natural disasters, Tryg is covered for up to DKK 600m
for, 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. Retention for large claims
is DKK 100m, gradually dropping to DKK 25m. Single
risks exceeding DKK 2bn are covered individually.
Tryg has combined the minimum cover of other sec-
tors into a joint cover with retention of DKK 100m for
the first claim and DKK 25m for subsequent claims.
For the individual sectors, individual cover has subse-
quently been taken out as needed. The use of reinsur-
ance creates a natural counterparty risk. This risk is
handled by applying a wide range of reinsurers with
at least an ‘A’ rating and DKK 750m 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 corresponds
to the discounted claims reserves. In order to manage
the inflation risk of Danish workers’ compensation
claims reserves, Tryg has bought zero coupon inflation
swaps. Tryg determines the claims reserves via statis-
tical methods as well as individual assessments.
At the end of 2016, Tryg’s claims reserves totalled
DKK 25,452m with an average duration of approx-
imately 4 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 portfo-
lio is subject to the framework defined by the Super-
visory 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 investment risk. At
the end of 2016, the equity portfolio accounted for
5.4% of the total investment assets. Tryg’s property
portfolio comprises investment properties, the value
of which is adjusted based on the conditions on the
property market through internal valuations backed
by external valuations. At the end of 2016, investment
properties accounted for 6.3%. Tryg does not wish to
speculate in foreign currency, but since Tryg invests
and operates its insurance business in other curren-
cies 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 claims paid in other currencies
create a natural currency hedge, for which reason
other risk mitigation measures are not required in this
area. However, the part of equity held in other curren-
cies than Danish kroner will be exposed to currency
risk. This risk is hedged on an ongoing basis using
currency swaps. In addition to the above-mentioned
risks, Tryg is exposed to credit, counterparty and
concentration risk. These risks primarily relate to
exposures in high-yield bonds, emerging market debt
exposures as well as Tryg’s investments in AAA-rated
Nordic and European government and mortgage
bonds. These risks are also managed through the
investment policy and the framework for reinsurance
defined in the insurance policy. For a non-life insur-
ance company like Tryg, liquidity risk is practically
non-existent, as premium payments fall due before
claims payments. The only significant assets on
Tryg’s balance sheet, which by nature is somewhat
illiquid, are the property portfolio.
| Menu – Financial statements
51
NotesAnnual report 2016 | Tryg A/S | Compliance risk
Compliance risk is the risk of loss as a result of lack of
compliance with rules, regulations, market standards
or internal guidelines. The handling of compliance risk
is coordinated centrally via the Group’s Compliance
& Legal department, which, among other things, sits
on industry committees in connection with legislative
monitoring, ensures implementation of regulation in
Tryg through business procedures, provides ongoing
training in compliance matters and performs compli-
ance controls within the organisation. Compliance
risks and the result of the performed compliance
controls are reported to the Supervisory Board’s
Risk Committee.
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 reinsurance cover is consistent with the
new conditions.
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 Op-
erational risk policy. These risks are controlled via the
Operational Risk Committee. A special crisis manage-
ment 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 contin-
gency 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
Supervisory Board in close collaboration with the
Executive Board. Before determining the strategic
position, the strategic decisions are subject to a risk
assessment, explaining the risk of the chosen strategy
to Tryg’s Supervisory Board and Executive Board.
Sensitivity analysis
Insurance risk
DKKm
Effect of 1 percentage point change in:
Combined ratio (1 percentage point)
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
2016
2015
+/- 175
+/- 173
+/- 177
+/-175
+/- 436
+/- 476
+/- 1,800
+/- 1,671
-1,131
1,061
-70
173
-365
-15
-229
-763
728
-35
-940
947
7
153
-341
-7
-480
-647
614
-33
+/- 158
+/- 176
a) Including the effect of the zero coupon inflation swap.
b) Additional sensitivity information in note 20 ‘Pensions and similar obligations’.
| Menu – Financial statements
52
NotesAnnual report 2016 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Gross
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
10,928
11,188
10,723
10,929
10,865
10,856
10,834
10,797
10,613
10,546
10,444
10,444
-9,948
496
-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 2005
and prior years
Other reserves a)
Gross provisions for claims,
end of year
11,853
12,436
12,985
12,961
12,960
12,865
12,739
12,731
12,663
12,613
12,420
13,737
13,607
13,618
13,577
13,486
13,454
13,203
13,074
13,772
14,413
14,431
14,221
14,103
14,002
13,985
13,867
16,008
16,106
16,055
15,934
15,845
15,780
15,778
16,338
16,734
16,727
16,678
16,514
16,569
13,860
13,831
13,768
13,617
13,356
13,710
14,022
13,858
13,666
13,030
13,376
13,153
15,066
15,003
13,130
12,613
-11,824
13,074
-12,042
13,867
-12,644
15,778
-14,287
16,569
-14,744
13,356
-11,550
13,666
-11,542
13,153
-10,481
15,003
-11,127
13,130
-6,590
150,652
-126,777
789
-63
1,032
-86
1,223
-97
1,492
-108
1,825
-116
1,806
-111
2,124
-113
2,672
-135
3,876
-131
6,541
-157
23,874
-1,159
2,378
358
25,452
a) Other provisions comprise the claims provisions for guarantee insurance.
| Menu – Financial statements
53
NotesAnnual report 2016 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Ceded business
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
278
278
264
295
296
291
289
291
289
289
288
288
-281
7
0
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 2005
and prior years
Other reserves a)
Provisions for claims,
end of year
502
468
482
487
507
478
506
497
497
497
497
-484
13
-1
162
226
192
182
182
169
175
168
168
168
-162
6
0
286
355
333
289
292
297
293
293
293
-283
10
0
672
749
742
719
728
751
756
756
-701
55
0
1,464
2,169
2,290
2,331
2,295
2,292
2,292
-2,208
84
-1
239
270
309
316
310
310
-284
26
0
555
968
949
946
946
-861
85
0
260
313
289
289
-236
52
0
2,088
1,893
176
1,893
-880
1,014
-2
176
-31
145
-1
7,908
-6,411
1,496
-7
211
120
1,820
a) Other provisions comprise the claims provisions for guarantee insurance.
| Menu – Financial statements
54
NotesAnnual report 2016 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Net of reinsurance
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
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
10,651
10,911
10,458
10,633
10,569
10,565
10,544
10,506
10,324
10,257
10,156
10,156
-9,667
Cumulative payments to date
Provisions before
discounting, end of year
Discounting
Reserves from 2005
and prior years
Other reserves a)
Provisions for claims,
net of reinsurance,
end of the year
11,351
11,968
12,503
12,474
12,454
12,388
12,233
12,234
12,166
12,116
12,258
13,512
13,415
13,436
13,396
13,317
13,279
13,035
12,906
13,486
14,058
14,098
13,932
13,811
13,705
13,692
13,575
15,336
15,357
15,313
15,215
15,116
15,029
15,023
14,874
14,565
14,438
14,347
14,219
14,277
13,622
13,561
13,459
13,301
13,045
13,155
13,053
12,909
12,720
12,770
13,063
12,864
12,979
13,109
12,955
12,116
-11,340
12,906
-11,880
13,575
-12,361
15,023
-13,586
14,277
-12,535
13,045
-11,266
12,720
-10,681
12,864
-10,244
13,109
-10,247
12,955
-6,560
142,744
-120,367
489
-41
776
-62
1,025
-86
1,213
-97
1,437
-108
1,741
-116
1,779
-111
2,039
-112
2,619
-135
2,862
-129
6,396
-155
22,378
-1,152
2,168
238
23,632
a) Other provisions comprise the claims provisions for guarantee insurance.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2016 to prevent the impact of exchange rate fluctuations.
| Menu – Financial statements
55
NotesAnnual report 2016 | Tryg A/S |
Claims provisions (continued)
DKKm
2016
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2015
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 a)
Total
5,234
-182
8,071
-833
12,290
5,149
-146
9,045
-1,959
12,089
114
0
4,001
-379
3,736
126
0
4,029
-395
3,760
56
0
2,685
-215
2,526
67
0
2,646
-213
2,500
21
0
11,642
-287
11,376
87
0
11,150
-311
10,926
62
-32
358
-120
268
142
-28
357
-151
320
5,487
-214
26,757
-1,835
30,195
5,571
-174
27,227
-3,029
29,595
a) Other comprises guarantee insurance and in 2015
premium provisions in Securator A/S.
| Menu – Financial statements
56
NotesAnnual report 2016 | Tryg A/S |
2016
2015
Impact of exchange rate fluctuations in SEK and NOK on technical result
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
14,758
13,692
5,373
2,369
36,192
2.9
14,856
13,011
4,175
2,363
34,405
2.5
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
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
2016
47
95
283
1,533
426
2,384
48
2015
52
90
501
1,165
516
2,324
138
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
The share portfolio includes exposure from share derivatives of DKK 97m (DKK 47m in 2015)
Unlisted equity investments are based on an estimated market price.
Exposure to exchange rate risk
2016
2015
Assets and
debt
Hedge
Exposure
Assets and
debt
Hedge
Exposure
2,960
1,231
263
2,808
346
525
-2,872
-1,203
-254
-2,623
-314
-469
88
28
9
185
32
56
398
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
USD
EUR
GBP
NOK
SEK
Other
Total
2016
2015
Change
Currency
effect
Change excl.
currency
effect
17,707
-11,619
-2,737
3,351
-951
-10
2,390
17,977
-13,562
-2,720
1,695
710
18
2,423
-270
1,943
-17
1,656
-1,661
-28
-33
-293
190
45
-58
15
0
-43
23
1,753
-62
1,714
-1,676
-28
10
2015
2014
Change
17,977
-13,562
-2,720
1,695
710
18,652
-12,650
-2,689
3,313
-341
18
60
2,423
3,032
-675
-912
-31
-1,618
1,051
-42
-609
Currency
effect
Change excl.
currency
effect
-534
374
81
-79
11
-2
-70
-141
-1,286
-112
-1,539
1,040
-40
-539
| Menu – Financial statements
57
NotesAnnual report 2016 | Tryg A/S |
Impact of exchange rate fluctuations in SEK and NOK on the statement of financial position
Credit risk
DKKm
2016
2015
Change
Currency
effect
Change excl.
currency
effect
Bond portfolio by ratings
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
884
49
2,323
218
40,252
2,034
2,937
475
689
1,038
1,208
1,838
229
40,275
3,176
2,331
589
597
Total assets
49,861
51,281
Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Other provisions
Other debt
Accruals and deferred income
Total equity and liabilities
9,437
2,567
31,527
1,172
5,113
45
49,861
9,644
1,698
31,814
1,041
7,041
43
51,281
-154
-1,159
485
-11
-23
-1,142
606
-114
92
-1,420
-207
869
-287
131
-1,928
2
-1,420
-21
0
19
0
563
31
6
2
11
611
0
71
353
45
143
-1
611
-133
-1,159
466
-11
-586
-1,173
600
-116
81
-2,031
-207
798
-640
86
-2,071
3
-2,031
| Menu – Financial statements
AAA to A
Other
Not rated
Total
Reinsurance balances
AAA to A
Other
Not rated
Total
2016
DKKm
35,233
20
1
35,254
1,536
0
157
1,693
%
99.9
0.1
-
2015
DKKm
35,181
523
1
%
98.5
1.5
0.0
100.0
35,705
100.0
90.7
-
9,3
100.0
2,772
0
120
2,892
Liquidity risk
Maturity of the Group’s financial obligations including interest
2016
0-1 years
1-5 years
> 5 years
Subordinate loan capital a)
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
2015
Subordinate loan capital a)
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
98
178
1,732
650
2,501
5,159
66
64
4,074
181
2,291
6,676
392
0
0
112
0
504
263
0
0
219
0
482
3,547
0
0
-53
0
3,494
3,362
0
0
259
0
3,621
a) Interest on loans for a perpetual term has been recognised for the first fifteen years.
95.9
0.0
4.1
100.0
Total
4,037
178
1,732
709
2,501
9,157
3,691
64
4,074
659
2,291
10,779
58
NotesAnnual report 2016 | Tryg A/S |
Notes
Subordinate loan capital
DKKm
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 dates 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
Loan terms:
Lender
Principal
Issue price
Issue date
Maturity year
Loan may be called by lender as from
Repayment profile
Interest structure
Bond loan
NOK 800m
Bond loan
NOK 1,400m
Bond loan
SEK 1,000m
2016
2015
2016
2015
2016
2015
685
105
3
32
4.9%
671
108
4
34
3.6%
1,124
1,086
98
4
46
3.8%
100
6
3
3.9%
796
102
4
10
2.2%
Listed bonds
NOK 800m
100
March 2013
Perpetual
2023
Listed bonds
NOK 1,400m
100
November 2015
2045
2025
-
-
-
-
-
Listed bonds
SEK 1,000m
100
May 2016
2046
2021
Interest-only
3.75 % above NIBOR 3M (until 2023)
4.75 % above NIBOR 3M (from 2023)
Interest-only
Interest-only
2.75% above STIBOR 3M (until 2026)
2.75 % above NIBOR 3M (until 2025)
3.75 % above NIBOR 3M (from 2025) 3.75% above STIBOR 3M (from 2026)
The share of capital included in the calculation of the
capital base totals DKK 2,371m (DKK 1,707m in
2015). The loans are initially recognised at fair value
on the date on which a loan is entered and subse-
quently measured at amortised cost.
The loans are taken by Tryg Forsikring A/S. The credi-
tors have no option to call the loans before maturity
or otherwise terminate the loan agreements. The
loans are automatically accelerated upon the liquida-
tion or bankruptcy of Tryg Forsikring A/S.
Prices used for determination of fair value in respect
of both loans are based on actual traded prices from
Bloomberg.
| Menu – Financial statements
59
Annual report 2016 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
2
Operating segments
2016
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
8,710
-5,904
-1,240
-158
-4
1,404
Run-off gains/losses, net of reinsurance
312
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
16
67
2,236
5,655
461
3,893
-2,380
-663
-154
-1
695
304
29
24
247
1,292
6,637
61
3,775
-2,295
-416
-643
0
421
506
174
1,476
1,092
10,255
53
1,348
-964
-256
-3
-5
120
117
596
0
30
867
2,905
13
-19
-76
-162
7
0
-250
0
259
218
0
0
46,725
0
0
0
8,897
17,707
-11,619
-2,737
-951
-10
2,390
81
2,471
1,239
884
218
214
1,820
46,725
49,861
5,487
25,452
588
8,897
40,424
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 one-off items.
Details of amounts in note 2 Geographical segments.
Other assets and liabilities are managed at Group level
and are not allocated to the individual segments but
are included under ‘Other’.
| Menu – Financial statements
60
Annual report 2016 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
a) Amounts relating to eliminations and one-off items.
Details of amounts in note 2 Geographical segments.
Other assets and liabilities are managed at Group level
and are not allocated to the individual segments but
are included under ‘Other’.
2
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
5,827
457
3,992
-2,612
-683
-44
5
658
388
33
16
408
1,318
6,688
54
3,894
-3,987
-420
877
5
369
351
140
2,422
1,062
11,505
50
1,317
-852
-246
-1
0
218
149
597
0
32
849
1,650
12
-29
-37
-80
26
0
-120
0
408
229
0
0
46,838
0
0
0
9,823
17,977
-13,562
-2,720
710
18
2,423
-454
1,969
1,212
1,038
229
173
3,003
46,838
51,281
5,571
25,670
573
9,823
41,637
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61
Annual report 2016 | Tryg A/S |
Notes
DKKm
2
Geographical segments
Danish general insurance a)
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Run-off, net of reinsurance (%)
Number of full-time employees 31 December
Norwegian general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Run-off, net of reinsurance (%)
Number of full-time employees 31 December
2016
2015
2014
2013
2012
a) Includes Danish general insurance and
Finnish guarantee insurance.
9,467
1,587
509
63.7
6.0
69.7
13.4
83.1
-5.4
1,839
6,371
1,013
678
63.9
5.1
69.0
15.2
84.2
-10.6
1,040
9,346
1,371
512
80.5
-9.2
71.3
13.9
85.2
-5.5
1,859
6,766
844
492
70.9
2.1
73.0
14.9
87.9
-7.3
1,113
9,361
1,510
564
66.9
2.1
69.0
15.1
84.1
-6.0
2,007
7,337
1,478
501
66.5
1.4
67.9
12.5
80.4
-6.8
1,167
9,534
1,202
566
79.5
-7.0
72.5
15.0
87.5
-5.9
2,046
7,819
1,258
387
65.1
4.1
69.2
15.3
84.5
-4.9
1,199
9,910
1,441
571
71.1
-0.2
70.9
14.5
85.4
-5.8
2,187
8,239
1,017
465
72.4
-1.0
71.4
16.8
88.2
-5.6
1,282
| Menu – Financial statements
62
Annual report 2016 | Tryg A/S |
b) Amounts relating to eliminations and one-off
items. In 2012 discontinued business and
restructuring expenses were included under
‘Other’. In 2015 costs and claims were negatively
affected by DKK 80m and DKK 40m respectively
due to provisioning for the efficiency programme.
In 2016 costs and claims were negatively affected
by DKK 162m and DKK 88m respectively, mainly
due to impairment of software.
c)
Adjustment of gross expense ratio included only in
‘Tryg ‘. The adjustment is explained in a footnote to
Financial highlights.
Notes
DKKm
2
Geographical segments
Swedish general insurance
Gross premium income
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Run-off, net of reinsurance (%)
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
Run-off, net of reinsurance (%)
Number of full-time employees, continuing business at 31 Dec.
Number of full-time employees, discontinued and
divested business at 31 Dec.
2016
2015
2014
2013
2012
1,888
40
52
76.4
3.3
79.7
17.8
97.5
-2.8
385
-19
-250
1,894
328
208
63.5
1.7
65.2
17.5
82.7
-11.0
387
-29
-120
1,975
44
66
77.6
2.2
79.8
18.4
98.2
-3.3
425
-21
0
2,169
36
17
80.6
0.7
81.3
17.6
98.9
-0.8
458
-18
0
2,183
131
-21
75.3
1.5
76.8
18.6
95.4
1.0
444
-18
-97
17,707
17,977
18,652
19,504
20,314
2,390
987
-157
3,220
1,239
65.6
5.4
71.0
15.7
86.7
-7.0
3,264
0
2,423
-22
-91
2,310
1,212
75.4
-3.9
71.5
15.3
86.8
-6.7
3,359
0
3,032
360
-90
3,302
1,131
67.8
1.8
69.6
14.6
84.2
-6.1
3,599
0
2,496
588
-91
2,993
970
73.9
-1.8
72.1
15.6
87.7
-5.0
3,703
0
2,492
585
-60
3,017
1,015
72.2
-0.4
71.8
16.4
88.2
-5.0
3,913
189
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63
Annual report 2016 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2016
1,741
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance
1,666
- 960
- 223
- 7
- 1
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
475
57.6
71.4
4.7%
25,091
46,883
Accident and
health c)
Health care
Worker’s
compensation
Motor TPL
Motor comprehensive
insurance
Marine, aviation and
cargo insurance
2015
1,652
1,629
- 1,026
- 219
- 4
2
382
63.0
76.7
4.4%
29,968
40,135
2016
338
332
- 308
- 41
- 1
0
- 18
92.8
105.4
115.2%
4,558
57,186
2015
321
316
- 255
- 32
- 1
0
28
80.7
91.1
2016
860
858
- 191
- 98
- 8
0
561
22.3
34.6
2015
890
893
- 85
- 103
- 10
1
696
9.5
22.2
130.3%
3,905
56,697
19.8%
72,474
11,008
17.6%
65,254
10,469
2016
1,779
1,839
- 1,167
- 321
- 44
- 1
306
63.5
83.3
6.0%
17,913
77,441
2015
1,980
1,963
- 1,164
- 339
- 33
2
429
59.3
78.2
5.5%
17,846
77,164
2016
3,545
3,537
- 2,407
- 532
- 24
- 2
572
68.1
83.8
2015
3,680
3,573
- 2,446
- 542
- 2
3
586
68.5
83.7
20.2%
9,837
250,450
17.9%
10,110
241,311
2016
275
274
- 113
- 39
- 130
0
- 8
41.2
102.9
24.7%
57,384
2,896
2015
332
337
- 218
- 41
- 53
1
26
64.7
92.6
21.2%
75,653
2,871
Fire and contents
(Private)
Fire and contents
(Commercial)
Change of ownership
Liability insurance
Credit and guarantee
insurance
Tourist assistance
insurance
Gross premiums written
2016
4,266
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance
4,221
- 3,250
- 617
- 129
- 6
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
219
77.0
94.7
8.9%
9,036
363,113
7.9%
8,742
370,685
2015
4,363
4,328
- 3,130
- 647
- 117
2
436
72.3
90.0
2016
2,426
2,408
- 1,474
- 365
- 439
- 1
129
61.2
94.6
16.2%
53,344
30,020
2015
2,427
2,442
- 3,750
- 363
1,438
2
- 231
153.6
109.5
16.1%
116,003
32,331
2016
55
61
- 55
- 8
0
- 1
- 3
90.2
103.3
11.3%
21,846
3,807
2015
62
64
- 118
- 10
0
0
- 64
184.4
200.0
9.9%
26,008
4,275
2016
1,025
1,000
- 658
- 148
- 47
- 1
146
65.8
85.3
2015
962
958
- 612
- 153
- 67
1
127
63.9
86.8
2016
398
390
- 82
- 31
- 96
0
181
21.0
53.6
2015
352
347
247
- 45
- 392
0
157
-71.2
54.8
2016
655
650
- 497
- 90
- 2
0
61
76.5
90.6
11.6%
64,807
10,917
10.2%
68,006
10,454
0.1%
765,692
120
0.1%
790,685
111
19.9%
5,716
96,868
a) The claims frequency is calculated as the number of claims incurred in the year in proportion to the average number of insurance contracts in the year.
b) Average claims are total claims before run-off in the year relative to the number of claims in the year.
c) Including the acquired insurance portfolio from Skandia.
| Menu – Financial statements
2015
610
607
- 580
- 81
- 2
1
- 55
95.6
109.2
19.6%
5,893
96,774
64
Annual report 2016 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Other
insurance d)
Total exclusive of
Norwegian Group Life
Norwegian Group Life
one-year policies
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance tech. interest, net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Average claims DKK b)
Total claims
2016
57
55
- 95
- 179
- 23
2
- 240
172.7
540.0
2015
2016
2015
59
60
- 46
- 95
- 46
1
- 126
76.7
311.7
17,420
17,690
17,291
- 11,257
- 2,692
- 950
- 11
17,517
- 13,183
- 2,670
711
16
2,381
2,391
65.1
86.2
75.3
86.4
2016
422
416
- 362
- 45
- 1
1
9
87.0
98.1
2015
460
460
- 379
- 50
- 1
2
32
82.4
93.5
958,750
12
392,147
34
b) Average claims are total claims before run-off in the
year relative to the number of claims in the year.
d) Other insurance, gross claims and gross operating
expenses are negatively affected by DKK 88m and
DKK 162m in 2016, mainly by impairment of soft-
ware. (DKK 40m and DKK 80m, mainly due to ac-
cruals for efficieny programme , in 2015).
Total
2016
2015
17,842
18,150
17,707
- 11,619
- 2,737
- 951
- 10
2,390
65.6
86.7
17,977
- 13,562
- 2,720
710
18
2,423
75.4
86.8
| Menu – Financial statements
65
Annual report 2016 | Tryg A/S |
2016
2015
DKKm
2016
2015
17,949
43
17,992
1
17,993
-1,178
-19
16,796
18,166
44
18,210
1
18,211
-1,103
-61
17,047
Ceded
-625
-46
-432
-1,103
6
Insurance operating costs, net of reinsurance
Commissions regarding direct insurance contracts
Other acquisition costs
Total acquisition costs
Administration expenses
Insurance operating costs, gross
Commission from reinsurers
Administrative expenses include fee to the auditors appointed
by the annual general meeting:
Deloitte
The fee is divided into:
Statutory audit
Other audit assignments
Tax advice
Other services
-296
-1,733
-2,029
-708
-2,737
150
-2,587
-7
-7
-3
-1
-1
-2
-7
-368
-1,674
-2,042
-678
-2,720
102
-2,618
-7
-7
-3
0
-2
-2
-7
-9
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 36m in 2015).
DKKm
3
Premium income, net of reinsurance
Direct insurance
Indirect insurance
Unexpired risk provision
Ceded direct insurance
Ceded indirect insurance
Direct insurance, by location of risk
2016
2015
Gross
9,533
1,928
6,489
Ceded
-613
-110
-455
Gross
9,419
1,893
6,855
17,950
-1,178
18,167
Denmark
Other EU countries
Other countries a)
a) Mainly Norway
DKKm
4
Insurance technical interest, net of reinsurance
Return on insurance provisions
Discounting transferred from claims provisions
5
Claims, net of reinsurance
Claims
Run-off previous years, gross
Reinsurance cover received
Run-off previous years, reinsurers’ share
2016
2015
149
-159
-10
-13,048
1,429
-11,619
286
-190
-11,523
259
-241
18
-15,062
1,500
-13,562
2,060
-288
-11,790
| Menu – Financial statements
66
NotesAnnual report 2016 | Tryg A/S |
DKKm
6
Insurance operating costs, gross, classified by type
Commissions
Staff expenses
Other staff expenses
Office expenses, fees and headquarter expenses
IT operating and maintenance costs, software expenses
Depreciation, amortisation and impairment losses and write-downs
Other income
Total lease expenses amount to DKK 26m (DKK 27m in 2015)
Insurance operating costs and claims include the following
staff expenses:
Salaries and wages
Commision
Allocated share options and matching shares
Pension plans a)
Other social security costs
Payroll tax
2016
2015
-296
-1,615
-164
-416
-249
-223
226
-2,737
-2,036
-8
-3
-286
-4
-354
-2,691
-368
-1,680
-179
-364
-261
-102
234
-2,720
-2,108
-6
-5
-300
-4
-371
-2,794
a) In 2016 defined benefit plans were included with DKK 33m (DKK 40m in 2015).
Remuneration for the Supervisory Board and Executive Board
is disclosed in note 29 ‘Related parties’.
Average number of full-time employees during the year
(continuing business)
3,306
3,472
| Menu – Financial statements
67
NotesAnnual report 2016 | Tryg A/S |
Notes
DKKm
6
Share option programmes
Spec. of outstanding options:
2016
Allocation 2011
Allocated in 2011, 1 January
Exercised
Expired
Outstanding options from 2011
allocation 31 Dec. 2016
Number of options exercisable
31 Dec. 2016
2015
Allocation 2010-2011
Allocated in 2010-2011, 1 January
Exercised
Expired
Total numbers a)
Fair value
Executive
Board
Other
senior
employees
Other
employees
Total
Per option
at time of
allocation
DKK
Total value
at time of
allocation
DKKm
Per option
at 31 Dec.
DKK
Total
value at
31 Dec.
DKKm
0
0
0
0
0
12,085
-12,085
0
3,685
-3,450
-235
15,770
-15,535
-235
14
14
14
0
0
0
0
0
0
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
0
0
0
0
55/44
55/44
55/44
0
0
0
0
4
-4
0
0
0
0
0
0
14
-13
0
1
Outstanding options from 2010-2011
allocation 31 Dec. 2015
Number of options exercisable
31 Dec. 2015
0
0
12,085
3,685
15,770
12,085
3,685
15,770
Tryg did not allocate share options in 2016.
At 31 December 2016, the share option plan
comprised 0 share options (15,770 share options
at 31 December 2015).
In 2016, the fair value of share options recognised
in the income statement amounted to DKK 0m
(DKK 0m in 2015).
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.
| Menu – Financial statements
68
Annual report 2016 | Tryg A/S |
In 2011-2016, Tryg entered into an agreement on
matching shares for the Executive Board and
selected other senior employees as a consequence
of the Group’s remuneration policy. The Executive
Board and Other senior employees are allocated one
share in Tryg A/S for each share that the Executive
Board member or Other senior employees acquires in
Tryg A/S at market rate for liquid cash at a contractu-
ally agreed sum. The shares are reported at market
value and are accrued over the 3- or 4-year matura-
tion period. In 2016, the reported fair value of match-
ing shares for the Group amounted to DKK 3m
(DKK 5m in 2015). At 31 December 2016, a total
amount of DKK 16m was recognised for matching
shares.
Notes
DKKm
6 Matching shares
Total numbers a)
Fair value
Executive
Board
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
2016
Allocated in 2016
17,233
15,562
32,795
Matching shares allocated
in 2016 at 31.12.16
17,233
15,562
32,795
Allocated in 2011-2015
Category changes
Cancelled
Exercised
106,045
1,835
-15,355
-54,635
125,635
-1,835
-17,130
-39,245
231,680
0
-32,485
-93,880
Matching shares allocated
in 2011-2015 at 31.12.16
Number of Matching shares
exercisable 31 Dec. 2016
37,890
67,425
105,315
0
0
0
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
Cancelled
Exercised
91,630
0
-18,000
91,895
-19,000
-19,540
183,525
-19,000
-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
128
128
94
94
94
94
94
160
160
77
77
77
77
4
4
22
0
-3
-9
10
8
8
14
-1
-3
10
127
127
127
127
127
127
127
137
137
137
137
137
137
4
4
29
0
-4
-12
13
7
7
25
-3
-5
17
| Menu – Financial statements
69
Annual report 2016 | Tryg A/S |
DKKm
7
Interest and dividends
Interest income and dividends
Dividends
Interest income, cash at bank and in hand
Interest income, bonds
Interest income, other
Interest expenses
Interest expenses subordinate loan capital and credit institutions
Interest expenses, other
8
Value adjustments
Value adjustments concerning financial assets or liabilities
at fair value with value adjustment in the income statement:
Equity investments
Unit trust units
Share derivatives
Bonds
Interest derivatives
Value adjustments concerning assets or liabilities
that cannot be attributed to IAS 39:
Investment property
Owner-occupied property a)
Discounting
Other statement of financial position items
2016
2015
DKKm
2016
2015
9
Tax
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Tax adjustment, previous years
Adjustment of non-taxable income and costs
Change in valuation of tax assets
Change in tax rate
Other taxes
Effective tax rate
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Adjustment of non-taxable income and costs
Change in valuation of tax assets
Change in tax rate
10
Profit/loss on discontinued and divested business
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss before tax
Tax
Profit/loss on discontinued and divested business
-708
-40
8
-24
17
0
-1
-748
%
22.0
1.0
1.0
-1.0
0.0
23.0
0
1
-2
-1
0
-1
-543
-26
0
-15
129
65
0
-390
%
23.5
1.0
1.0
-5.5
-3.0
17.0
3
54
7
64
-15
49
Profit/loss on discontinued and divested business primarily relates to Marine Hull insurance.
25
1
642
3
671
-88
-25
-113
558
78
190
-19
-83
81
247
431
93
-188
-65
271
518
47
2
742
3
794
-89
-6
-95
699
13
57
14
-608
-42
-566
17
0
103
-64
56
-510
Exchange rate adjustments concerning financial assets or liabilities which cannot be stated at fair
value total DKK 1m (DKK 58m in 2015)
a) Please refer to note 26 Sale of properties
| Menu – Financial statements
70
NotesAnnual report 2016 | Tryg A/S |
DKKm
11
Intangible assets
2016
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
Impairment losses and write-downs
for the year
Trademarks
and customer
relations
Goodwill
Assets
under con-
Software a)
struction a)
558
-16
0
77
619
-4
0
0
-100
205
-6
0
58
257
-129
5
-23
0
1,153
7
246
12
1,418
-950
-8
-94
-200
297
3
-246
131
185
-92
0
0
0
Total
2,213
-12
0
278
2,479
-1,175
-3
-117
-300
DKKm
11
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 asset
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
Amortisation and write-downs
at 31 December
-104
-147
-1,252
-92
-1,595
Carrying amount at 31 December
515
110
166
93
884
Carrying amount at 31 December
554
76
203
205
1,038
a) Hereof proprietary software DKK 203m (DKK 317m at 31 December 2015)
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71
NotesAnnual report 2016 | Tryg A/S |
DKKm
11 Intangible assets (continued)
Impairment test
Goodwill
In 2016, Tryg acquired Skandia’s child and adult accident insurance portfolio. The insurance activities were
incorporated into the Tryg Group’s business structure from 1 september 2016.
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 2016, 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, Securator and
the Skandia portfolio, 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
experiences. 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 1.2bn (DKK 1.3bn) relative to a
recognised goodwill of DKK 354m (DKK 368m) and Equity of DKK 0.7bn (DKK 0.6bn) and does not indicate
any impairment in 2016.
DKKm
2016
2015
- 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%
16
-15
-157
199
-146
147
2%
1%
13%
93%
25
-24
-161
189
-144
144
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 84m (DKK 184m) relative to
a recognised goodwill of DKK 84m (DKK 184m) and equity of DKK 138m (DKK 174m) which have led to
an impairment in 2016 of DKK 100m which is recognised in other costs. The impairment is due to a lower
sale of electronics, than expected and the loss of two major partners, which has led to a decline in the
assumptions used.
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72
NotesAnnual report 2016 | Tryg A/S |
DKKm
2016
2015
DKKm
- 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
10%
3%
12%
89-91%
13%
3%
11%
83-91%
6
-6
-15
20
-11
10
6
-5
-35
48
-16
17
Software and assets under construction
As at 31 December 2016 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 indicate an impairment of DKK 200m due to revaluation of the groups it-systems.
The write-down relates predominantliy to IT systems for payment, digitalisation and IT integration. The write-
down is due to related systems development cost will be higher, while for some of the systems benefits are
also expected to be lower. The cost is recognised as write-downs under depreciations in the income state-
ment. 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 lifetime 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 recognised in the income statement.
The recoverable amount is the higher of fair value less sales costs and value in use.
An increase in the required return or combined ratio will result in a write-down of the goodwill associated
with Securator. We do not expect an increase in these assumptions.
Skandia child and adult accident insurance
The impairment test at year-end for Skandia portfolio is based on the valuation at the time of acquisition
due to the short ownership period and the lack of indications of impairment since the acquisition.
Goodwill recognised DKK 77m. Please refer to note 28.
The assets and liabilities have not changed significantly since the latests calculation and the recoverable
amount calculated would exceed the carrying amount with the same margin or very close to that margin.
Trademarks and customer relations
As at 31 December 2016 management performed a test of the carrying amounts of trademarks and customer
relations as an integral part of the Moderna and Skandia portfolio 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.
| Menu – Financial statements
73
NotesAnnual report 2016 | Tryg A/S |
Notes
12
Property, plant and equipment
DKKm
2016
Cost
Cost at 1 January
Exchange rate adjustments
Additions for the year
Disposals for the year
Cost at 31 December
Operating equipment
Owner-occupied
property
Assets under
construction
235
3
1
0
239
-173
-2
-15
0
0
0
-190
49
241
-2
0
0
-4
235
-144
1
-34
0
4
-173
62
1,715
20
75
-1,810
0
-571
3
-17
53
100
432
0
0
1,711
-22
11
15
0
1,715
-558
-3
-14
4
0
-571
1,144
83
2
12
-97
0
-81
-2
0
0
0
83
0
0
94
-2
-11
2
0
83
-83
2
0
0
0
-81
2
The owner-occupied properties were sold in
December 2016. Please refer to note 26 Sale
of properties.
Total
2,033
25
88
-1,907
239
-825
-1
-32
53
100
515
-190
49
2,046
-26
0
17
-4
2,033
-785
0
-48
4
4
-825
1,208
Accumulated depreciation and value adjustments
Accumulated depreciation and value adjustments at 1 January
Exchange rate adjustments
Depreciation for the year
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount in other comprehensive income
Reversed depreciation and value adjustments
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
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
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
| Menu – Financial statements
74
Annual report 2016 | Tryg A/S |
DKKm
13
Investment property
Fair value at 1 January
Exchange rate adjustments
Additions for the year
Disposals for the year
Value adjustments for the year
Reversed on sale
Fair value at 31 December
2016
2015
DKKm
2016
2015
1,838
16
47
-6
431
-3
2,323
1,828
-19
31
-17
8
7
1,838
13
Investment property (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. The sensitivity
in 2016 is exclusive of the property sold.
Total rental income for 2016 is DKK 129m (DKK 120m in 2015).
Total expenses for 2016 are DKK 24m (DKK 31m in 2015). Of this amount, expenses for
non-let property total DKK 0m (DKK 0m in 2015), total expenses for the income-generating
investment property are DKK 24m (DKK 31m in 2015).
Value adjustments of DKK 420m and a fair value as at 31 December 2016 of DKK 1,017m
relates to sale of property in 2016. External experts were involved in valuing the majority of
the other investment properties.
In determining the fair value of the properties, not only publicly available market data are included,
corresponding to the ‘non-observable input’ in the fair value hierarchy. No reclassifications have
been made between this category and other categories in the fair value hierarchy during the year.
The following return percentages were used for each property category:
Return percentages, weighted average
2016
2015
Business property
Office property
Residential property
Total
6.9
6.9
6.0
6.8
7.0
6.5
6.0
6.5
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%
14
Equity investments in associates
Cost
Cost at 1 January
Cost at 31 December
Revaluations at net asset value
Revaluations at 1 January
Exchange rate adjustments
Dividend received, this year
Reversed on sale
Value adjustments for the year
Revaluations at 31 December
Carrying amount at 31 December
2016
-51
57
-37
-9
201
201
28
0
-10
-14
13
17
218
2015
-70
78
-57
-13
201
201
24
-2
-32
-4
42
28
229
| Menu – Financial statements
75
NotesAnnual report 2016 | Tryg A/S |
Notes
DKKm
14
Equity investments in associates (continued)
Shares in associates according to the latest annual report:
Name and registered office
Assets
Liabilities
Equity
Revenue
Profit/loss
for the year
Ownership
share in %
2016
Komplementarselskabet af 1. marts 2006 ApS, Denmark
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
0
1,106
2015
Komplementarselskabet af 1. marts 2006 ApS, Denmark
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
AS Eidsvåg Fabrikker, Norway
0
1,107
47
0
234
0
248
7
0
872
0
859
40
0
66
0
60
16
0
54
0
150
5
50
25
50
25
28
Individual estimates are made of the degree of
influence under the contracts made.
| Menu – Financial statements
76
Annual report 2016 | Tryg A/S |
DKKm
15
2016
2015
DKKm
15
Financial assets (Continued)
Fair value hierarchy for financial instruments measured at fair value in the statement of financial position
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
40,252
40,220
0
3,412
43,664
55
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
681
21
6,978
7,680
598
14
8,127
8,739
2016
Equity investments
Unit trust units
Bonds
Derivative financial instruments, assets
Derivative financial instruments, debt
2015
Equity investments
Unit trust units
Bonds
Derivative financial instruments, assets
Derivative financial instruments, debt
Qouted Observable
input
market price
Non-
observable
input
0
2,999
17,555
0
0
20,554
0
3,589
18,254
0
0
21,843
0
942
17,698
1,000
-702
18,938
0
0
17,450
843
-612
17,681
48
9
1
0
0
58
138
0
1
0
0
139
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:
Carrying amount at 1 January
Exchange rate adjustments
Gains/losses in the income statement
Purchases
Sales
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
2016
139
3
36
32
-152
58
-39
| Menu – Financial statements
77
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. In
2016 a few large unit trust units were not traded recently before 31.12.16 and thus transferred to cate-
gory Observable input. 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 -398m (DKK -417m in 2015).
Total
48
3,950
35,254
1,000
-702
39,550
138
3,589
35,705
843
-612
39,663
2015
129
-1
3
11
-3
139
2
NotesAnnual report 2016 | Tryg A/S |
DKKm
15
Financial assets (continued)
Sensitivity information
Impact on equity from the following changes:
Interest rate increase of 0.7-1.0 percentage point
Interest rate fall of 0.7-1.0 percentage point
Equity price fall of 12 %
Fall in property prices of 8 % (exclusive of property sold).
Exchange rate risk (VaR 99)
Loss on counterparties of 8 %
2016
2015
DKKm
-199
-150
-275
-104
-14
-466
-153
-161
-297
-239
-14
-372
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
2016
2015
Fair value
in statement
of financial
position
347
7
-56
Nominal
32,889
607
7,735
Nominal
27,415
47
7,993
41,231
298
35,455
3,143
44,374
18,508
10,754
15,112
-398
-100
-91
-16
7
2,683
38,138
17,038
9,606
11,494
Fair value
in statement
of financial
position
283
0
-52
231
-417
-186
-56
-106
-24
Derivatives, repos and reverses are used continuously as part of the cash and risk management
carried out by Tryg and its portfolio managers.
15
Financial assets (continued)
Derivative financial instruments used in connection with
hedging of foreign entities for accounting purposes
Gains and losses on hedges charged to other comprehensive income:
2016
Gains and losses at 1 January
Reversed hedges in profit/loss
Value adjustments for the year
Gains and losses at 31 December
2015
Gains and losses at 1 January
Reversed hedges in profit/loss
Value adjustments for the year
Gains and losses at 31 December
Gains
2,496
156
2,652
Gains
2,152
344
2,496
Losses
-2,420
-23
-183
-2,626
Losses
-2,162
-258
-2,420
Net
76
-23
-27
26
Net
-10
86
76
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
Exchange rate adjustment for the year recognised in profit/loss
Value adjustments at 31 December
-66
26
25
-15
23
-89
0
-66
2016
2015
| Menu – Financial statements
78
NotesAnnual report 2016 | Tryg A/S |
2016
2015
DKKm
2016
2015
DKKm
15
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
1,108
183
0
0
1,646
2,937
116
3
-2
117
1,261
199
120
370
381
2,331
107
-3
12
116
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 50m (DKK 53m in 2015).
Receivables in connection with insurance contracts include overdue receivables totalling:
Falling due:
Within 90 days
After 90 days
116
137
253
116
135
251
Other receivables do not contain overdue receivables
16
Reinsurer’s share
Impairment test
As at 31 December 2016, 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 2m (DKK 3m in 2015). The use of reinsurance creates a natural
counterparty risk. The Risk will be handled by applying a wide range of reinsurers with at least an
‘A’ rating.
17
Current tax
Net current tax at 1 January
Exchange rate adjustments
Current tax for the year
Current tax on equity entries
Adjustment of current tax in respect of previous years
Tax paid for the year
Net current tax at 31 December
Current tax is recognised in the statement of financial position as follows:
Under assets, current tax
Under liabilities, current tax
-239
-9
-636
0
38
529
-317
0
-317
-317
-429
16
-495
-96
0
765
-239
118
-357
-239
Net current tax
18
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
2015
2016
282,316
-7,793
289,120
-7,074
Own shares
2016
7,243
7,793
2015
9,358
7,074
0
-7,018
-8,919
0
72
270
-72
7,946
2.81
40
-270
7,243
2.50
36
Number of shares at 31 December
274,595
282,316
Number of shares as a percentage of
issued shares at 31 December
Nominal value at 31 december (DKKm)
97.19
1,373
97.50
1,412
Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to 10.0% of
the share capital in the period up until 31 December 2017. Own shares are acquired for use
in the Group’s incentive programme and as part of the share buyback programme.
| Menu – Financial statements
79
NotesAnnual report 2016 | Tryg A/S |
DKKm
18
Equity (continued)
2016
Own funds
From 1 January 2016 new Solvency II rules are effective:
Equity according to annual report
Proposed dividend
Intangible assets
Profit margin, solvency purpose
Taxes
Subordinate loan capital
Own funds
2015
Capital adequacy
For 2015 the calculation is based on the Solvency I rules:
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
2016
2015
DKKm
2016
2015
19
Premium provisions
Premium provision at 1 January
Adjustment regarding Norwegian Group life beginning of year
Addition on acquisition of Skandia activity
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)
a) Comprises premium provisions for guarantee insurance.
5,517
0
35
32
17,570
-17,742
13
5,425
62
5,487
5,767
-124
0
-54
17,399
-17,458
-13
5,517
54
5,571
9,437
-2,017
-884
970
-27
2,371
9,850
9,831
-1,013
-3,868
4,950
1,707
-3,868
2,789
The capital base and the solvency ratio are calculated in accordance
with the Danish Financial Business Act. The calculation of 2015 Solvency I ratio
has not been ajusted for the FSA executive order on yield curves from 1 January 2016.
| Menu – Financial statements
80
NotesAnnual report 2016 | Tryg A/S |
Gross
Ceded Net of reinsurance
DKKm
Gross
Ceded Net of reinsurance
DKKm
19
Claims provisions
2016
Claims provisions at 1 January
Addition, purchase of Skandia portfolio
Value adjustments of provisions,
beginning of year
Paid in the financial year in respect
of the current year
Paid in the financial year in respect
of prior years
Change in claims in the financial year
in respect of the current year
Change in claims in the financial year
in respect of prior years
Discounting and exchange rate adjustments
353
Claims provisions at 31 December
Other 1)
25,096
358
25,452
25,315
1,362
392
27,069
-6,812
-7,045
-13,857
12,961
-1,432
11,529
-2,852
0
-36
-2,888
22,463
1,362
356
24,181
30
-6,782
1,100
1,130
-175
180
5
53
-1,700
-120
-1,820
-5,945
-12,727
12,786
-1,252
11,534
406
23,396
238
23,632
24,601
-1,272
23,329
19
Claims provisions
2015
Claims provisions at 1 January
Adjustment 1.1.2015 regarding new yield curves.
Please refer to note 31 Accounting policies.
Adjustment regarding Norwegian Group life
beginning of year
Value adjustments of provisions,
beginning of year
Paid in the financial year
in respect of the current year
Paid in the financial year
in respect of prior years
Change in claims in the financial year in respect
of the current year
Change in claims in the financial year in respect
of prior years
226
124
-464
24,487
-6,676
-6,011
-12,687
14,606
-1,232
13,374
Discounting and exchange rate adjustment
141
Claims provisions at 31 December
Other a)
25,315
355
25,670
a) Comprises claims provisions for guarantee insurance.
0
0
32
-1,240
37
414
451
-2,021
15
-2,006
-57
-2,852
-151
-3,003
226
124
-432
23,247
-6,639
-5,597
-12,236
12,585
-1,217
11,368
84
22,463
204
22,667
| Menu – Financial statements
81
NotesAnnual report 2016 | Tryg A/S |
DKKm
2016
2015
DKKm
2016
2015
20
Pensions and similar obligations
Jubilees
Recognised liability
37
37
Defined-benefit pension plans:
Present value of pension obligations funded through operations
70
Present value of pension obligations funded through establishment of funds 1,198
Pension obligation, gross
Fair value of plan assets
Pension obligation, net
1,268
960
308
50
50
62
1,130
1,192
978
214
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
1,192
1,290
37
64
18
22
-8
-57
-10
-74
35
29
-23
-55
20
Pensions and similar obligations (continued)
Specification of pension cost for the year:
Present value of pensions earned during the year
Interest expense on accrued pension obligation
Expected return on plan assets
Accrued employer contributions
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
Recognised pension obligation at 31 December
1,268
1,192
Average return on plan assets
Weighted average duration of the defined benefit obligation (years)
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
978
51
34
7
-66
-44
960
308
345
1,010
-58
91
25
-49
-41
978
214
264
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.
Assumptions used
Discount rate
Estimated return on pension funds
Salary adjustments
G adjustments
Turnover
Employer contributions
Mortality table
11
22
-6
6
33
49
517
637
8.00
%
8
76
12
3
0.7
13
1.4
1.4
2.3
2.0
7.0
14.0
K2013
31
30
-26
5
40
53
595
586
7.81
%
10
73
15
2
2.6
18
1.9
1.9
2.5
2.3
7.0
14.1
K2013
| Menu – Financial statements
82
NotesAnnual report 2016 | Tryg A/S |
DKKm
20
2016
2015
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
52
-55
-103
88
31
-33
46
-49
-99
83
25
-29
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. The plan
are closed for new business.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.
20
Pensions and similar obligations (continued)
Description of the Swedish plan
Moderna Försäkringar, a branch of Tryg Forsikring A/S, complies with the Swedish industry pension
agreement, the FTP plan, which is insured with Försäkringsbranschens Pensionskassa – FPK.
Under the terms of the agreement, the Group’s Swedish branch has undertaken, along with the other
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 19m, which is about 3,9 % of the annual premium
in FPK (2015). FPK writes in its interim report for 2016 that it had a collective consolidation ratio of
128 at 30 June 2016 (consolidation ratio of 114 at 30 June 2015).
The collective consolidation ratio is defined as the fair value of the plan assets relative to the total
collective pension obligations.
| Menu – Financial statements
83
NotesAnnual report 2016 | Tryg A/S |
2016
2015
DKKm
2016
2015
DKKm
21
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
Adjustment 1.1.2015 regarding new yield curves.
Please refer to note 31 Accounting policies.
Exchange rate adjustments
Change in deferred tax relating to change in tax rate
Change in deferred tax previous years
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
30
1
39
33
70
38
600
741
702
0
645
24
0
31
60
-17
-41
702
16
0
8
91
1
100
77
96
-40
612
745
645
20
1,022
-51
-116
13
0
-63
-128
-32
645
16
0
The loss in Tryg A/S cannot be utilised in the Danish joint taxation scheme. The loss can be carried
forward indefinitely. Loss determined according to Swedish 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 -30m (DKK 32m at 31 December 2015).
| Menu – Financial statements
22
Other provisions
Other provisions at 1 January
Change in provisions
Other provisions 31 December
132
-7
125
83
49
132
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 50m and reasses-
ment of the beginning of year balance amounts to DKK -57m. The balance as at 31 December 2016
amounts to DKK 123m (DKK 130m at 31 December 2015).
23
Amounts owed to credit institutions
Overdraft facilities
24
Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt
Unsettled fund transactions include debt for bonds purchased in 2015
and 2016, however, with settlement in 2016 and 2017, respectively.
25
Earnings per share
Profit/loss from continuing business
Profit/loss on discontinued and divested business
Profit/loss for the year
Average number of shares (1,000)
Diluted number of shares (1,000)
Diluted average number of shares (1,000)
Earnings per share, continuing business
Diluted earnings per share, continuing business
Earnings per share
Diluted earnings per share
Earnings per share, discontinued and divested business
Diluted earnings per share, discontinued and divested business
178
178
258
1,474
1,732
2,472
-1
2,471
279,399
0
279,399
8.84
8.84
8.84
8.84
0.00
0.00
64
64
290
3,784
4,074
1,920
49
1,969
285,073
28
285,101
6.74
6.73
6.91
6.91
0.17
0.18
84
NotesAnnual report 2016 | Tryg A/S |
DKKm
26
Sale of properties
In December 2016, Tryg signed sales contracts of its two owner-occupied properties in Ballerup and
Bergen and 3 investment properties. The recognition in the accounts in 2016 is:
Carrying
amount
1 Jan.
2016
597
1,144
1,741
Recognised in
Income
Other
statement
compre-
hensive
value
income adjustments
100
100
100
420
93
513
-13
500
Carrying
amount
31 Dec.
2016
1,017
-
1,017
Investment property, sold
Owner-occupied property, sold a)
Total property sold
Other estimated costs concerning the sales
Total impact in 2016
New lease contracts for the continued rental of both owner-occupied properties have been
signed in 2016.
a) Carrying amount is recognised in other receivables.
DKKm
27
Contractual obligations, collateral and contingent liabilities
Contractual obligations
2016
Operating leases
Other contractual obligations
2015
Operating leases
Other contractual obligations
<1 year
1-3 years
3-5 years
> 5 years
Obligations due by period
140
202
342
66
282
348
246
0
246
110
103
213
299
0
299
76
0
76
260
0
260
56
0
56
Total
945
202
1,147
308
385
693
2016
Tryg has signed the following contracts with amounts above DKK 50m:
In December 2016 Tryg signed sales contracts about its two owner-occupied properties in Ballerup
and Bergen and 3 investment properties. Please also refer to note 26 Sale of properties.
Outsourcing agreement with TCS for DKK 64m for a 4 year period, which expires in 2017.
2015
In august 2015 Tryg and Skandia signed an agreement whereby Tryg acquired Skandia’s activities
within child and adult accident insurance and integrated them into its Swedish business, Moderna
Forsäkringar. The transaction was subject to regulatory approvals and the parties completed it in
second half 2016. Thereafter Tryg took over the control of the portfolios. The acquisition had no
effect on the financial statement for 2015.
| Menu – Financial statements
85
NotesAnnual report 2016 | Tryg A/S |
DKKm
2016
2015
27 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
interest, royalties, dividends and income taxes etc. in respect of the jointly taxed companies.
Tryg Forsikring A/S and Tryg Livsforsikring 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
Interest and rent receivable
Equity investments in and receivables from Group undertakings
which have been eliminated in the consolidated financial statements
0
36
3,950
33,534
224
3,172
Total
40,916
14
138
3,589
32,121
281
2,706
38,849
| Menu – Financial statements
86
NotesAnnual report 2016 | Tryg A/S |
Contingent liabilities
Companies in the Tryg Group are party to a number
of disputes.
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 2016.
Notes
DKKm
27
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
2016
Assets
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
2015
Assets
Reverse repos
Derivative financial instruments
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
1,000
16
1,016
1,474
702
414
2,590
370
843
1,213
3,784
612
417
4,813
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,000
16
1,016
1,474
702
414
2,590
370
843
1,213
3,784
612
417
4,813
0
0
0
-1,474
0
0
-1,474
-370
0
-370
-3,784
0
0
-3,784
-1,004
-13
-1,017
-4
-727
-425
-1,156
0
-940
-940
-1
-641
-421
-1,063
-4
3
-1
-4
-25
-11
-40
0
-97
-97
-1
-29
-4
-34
| Menu – Financial statements
87
Annual report 2016 | Tryg A/S |
DKKm
28
Acquisition of subsidiaries
2016
In august 2015 Tryg and Skandia signed an agreement whereby Tryg acquired Skandia’s activities
within child and adult accident insurance and integrated them into its Swedish business, Moderna
Forsäkringar. The transaction was approved by the Danish FSA and implemented 1 September 2016.
The acquisition affects the Financial statement from 1 September 2016:
DKKm
29
2016
2015
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 Board and their members’
family.
Net assets acquired
Intangible assets
Cash and cash equivalents
Total provisions for insurance contracts
Net assets acquired
Goodwill
Purchase price
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
2016
58
1,471
-1,389
140
77
217
0.5
0.4
3.7
0.0
0.1
1.8
0.3
0.3
1.9
0.1
0.0
0.5
The Group has not incurred any significant acquisition costs in connection with the acquisition.
The purchase price is final. In connection with the acquisition, a sum was paid which exceeds the fair
value of the identifiable acquired assets and total provisions for insurance contracts. This positive
balance is mainly attributable to customer relations and to expected synergies between the portfolios
in the acquired activities and the Group’s existing activities, which are not separately identifiable.
If the activities were included with a full year, the premium income would amount to approx.
DKK 200m and the technical result would be approx. DKK 30-60m. Management believes that these
pro forma figures reflect the Group’s earnings level after the acquisition of the activities and that the
amounts may form the basis for comparisons in subsequent financial years.
The determination of the pro forma amounts for premium income and technical result 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 acqui-
sition balance sheets for premium and claims provisions, rather than the original carrying amounts.
• Other costs, including amortisation of intangible assets, have been calculated on the basis of the
fair values determined in the acquisition balance sheets, rather than the original carrying amounts.
.
| Menu – Financial statements
88
NotesAnnual report 2016 | Tryg A/S |
DKKm
29
Related parties (continued)
Specification of remuneration
DKKm
29
2016
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Basis
salary
Variable
salary a)
Pension
Total
14
4
8
26
7
19
15
41
0
2
0
2
0
5
2
7
7
26
17
50
a) Including charges for matching shares allocated in 2016 for fiscal year 2015.
See section “Corporate governance” in Management review for matching shares allocated
in 2017 for fiscal year 2016.
Of which retired:
Supervisory Board
Executive Board
Risk-takers
2015
Supervisory Board
Executive Board
Risk-takers
Number
of persons
Severance
pay
2
1
1
4
0
0
0
0
Number of
persons
Basis
salary
Variable
salary
Pension
Total a)
13
3
8
24
6
21
19
46
0
2
1
3
0
5
5
10
6
28
25
59
a) Exclusive of severance pay
Of which retired:
Supervisory Board
Risk-takers
Number
of persons
Severance
pay
1
3
4
0
14
14
Related parties (continued)
Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares, which are recognised over 3-4 years and share options, which are recognised over 3 years.
Reference is made to section ‘Corporate governance’ of the management’s review on the corres-
ponding disbursements. The Executive Board and risk-takers are included in incentive
programmes. Please refer to note 6 for information concerning this.
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 Board 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 Executive Board
have free car appropriate to their position as well as other market conformal employee benefits.
Each member of the Executive Board 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).
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
2016
0
2015
0
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.
The maximum amount paid in severance pay to an individual is DKK 7m.
30
Financial highlights
Please refer to page 44.
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89
NotesAnnual report 2016 | Tryg A/S |
31 Accounting policies
Change in accounting policies
The consolidated financial statements are prepared in
accordance with the International Financial Reporting
Standards (IFRS) as per adopted by the EU on 31 De-
cember 2016 and in accordance with the Danish Stat-
utory Order on Adoption of IFRS.
The annual report of the parent company is prepared
in accordance with the executive order on financial re-
ports presented by insurance companies and lateral
pension funds issued by the Danish FSA. The devia-
tions from the recognition and measurement require-
ments of IFRS are:
•
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.
Tryg has implemented the amendments which pre-
scribes applying a new yield curve from the Executive
order on financial reports by insurance companies
and lateral pension funds issued by the Danish FSA
from 1 January 2016. 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.
For Tryg, this means applying a yield curve at a lower
level. The comparative figures for 2015 are restated
accordingly. Figures for previous years have not been
restated as this is impracticable due to the non exist-
ence of the new yield curve published by EIOPA be-
fore 01.01.2015.
The comparative figures have been restated for 2015
with the following amounts:
Income statement
DKKm
Total Investment return after insurance technical interest
Tax
Profit and loss for the period
Statement of financial position
DKKm
Equity
Insurance provisions
Deferred tax liabilities
2015
-17
5
-12
1.1.2015
31.12.15
-175
226
-51
-187
243
-56
It is Tryg’s assessment that the amendments to the
Executive Order from 2016 can be accommodated
within IFRS. Except as noted above, the accounting
policies have been applied consistently with
last year.
Accounting regulation
Implementation of changes to accounting standards
and interpretation in 2016
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
2016 that will have a significant impact on the group.
There has not been implemented any new or
amended standards and interpretations that have
affected the group significantly.
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:
•
•
IFRS 16 ‘Leases’ a)
IFRS 9 ‘Financial Instruments’ b)
a) enters into force for the accounting year
•
commencing 1 January 2019.
b) enters into force for the accounting year
commencing 1 January 2018 or later insurance
companies are expected to be allowed to
postpone the implementation.
However, IFRS 16 will change the composition of the
statement of financial position, but without adding
new risks. Regarding IFRS 16 Tryg expects to get more
assets and liabilities in the balance sheet but it is not
expected to have a significant impact on either profit
or loss or equity. Tryg will primarily be effected by
lease agreements related to cars and premises. The
total impact on the balance sheet is being analysed in
relation to the length of the lease agreements and
amounts payable.
Regarding IFRS 9 the assessment of no significant
impact on the statement of financial position or profit
and loss is based on the assumption that Tryg already
carry all financial instruments at fair value through
profit and loss. The implementation of IFRS 9, will not
effect Trygs recognition and measurement.
The changes will be implemented going forward from
the effective date
The new executive order will only have effect on
recognition and measurement in the Group’s financial
reporting in the following area.
• Claims provisions
The claims provisions has changed following the
transition to a new interest curve. 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 at a lower level.
It is Tryg’s assessment that the amendments to
the Executive Order from 2016 can be accommo-
dated within IFRS, therefore there are not any dif-
ferences between the Parent Company and the
consolidated financial statements as a result of
the new accounting regulation.
The implementation of IFRS 9 ‘financial instruments’
IFRS 16 ‘leases’ is not expected to significantly change
the group’s financial position.
Changes to accounting estimates
There have been no changes to the accounting
estimates in 2016.
| Menu – Financial statements
90
NotesAnnual report 2016 | Tryg A/S |
Significant accounting estimates and assessments
The preparation of financial statements under IFRS
requires the use of certain critical accounting esti-
mates and requires management to exercise its judge-
ment in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judge-
ment 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
• Control of subsidiaries
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 management’s best estimate
based on actuarial and statistical projections of claims
and administration of claims including a margin in-
corporating the uncertainty related to the range of
actuarial scenarios and other short and long-term
risks not reflected in standard actuarial models. The
projections are based on Tryg’s knowledge of histori-
cal developments, payment patterns, reporting de-
lays, duration of the claims settlement process and
other factors that might influence future develop-
ments 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
| Menu – Financial statements
that arise from events that have occurred up to the
statement of financial position date even if they have
not yet been reported to Tryg.
The calculation of the claims provisions is therefore
inherently uncertain and, by necessity, relies upon the
making of certain assumptions as regards factors
such as court decisions, amendments to legislation,
social inflation and other economic trends, including
inflation. The Group’s actual liability for losses may
therefore be subject to material positive or negative
deviations relative to the initially estimated claims
provisions.
Claims provisions are discounted. As a result, initial
changes in discount rates or changes in the duration
of the claims provisions could have positive or nega-
tive effects on earnings. Discounting affects the mo-
tor third-party liability, general third-party liability,
workers’ compensation classes, including sickness
and personal accident, in particular.
The Financial Supervisory Authority’s discount curve,
which is based on Eiopa’s yield curves, is used to dis-
count Danish, Norwegian and Swedish claims provi-
sions in relation to the relevant functional currencies.
Several assumptions and estimates underlying the
calculation of the claims provisions are mutually de-
pendent. This has the greatest impact on assump-
tions regarding interest rates and inflation.
Fair value of financial assets and liabilities
Measurements of financial assets and liabilities for
which prices are quoted in an active market or which
are based on generally accepted models with observa-
ble market data are not subject to material estimates.
For securities that are not listed on a stock exchange,
or for which no stock exchange price is quoted that re-
flects the fair value of the instrument, the fair value is
determined using a current OTC price of a similar fi-
nancial instrument or using a model calculation. The
valuation models include the discounting of the instru-
ment 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 assessed at the reassessed value that is equivalent
to the fair value at the time of reassessment, with a
deduction 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, location
and maintenance standard, and based on a market-
determined rental income as well as operating ex-
penses in proportion to the property’s required rate
of return. Cf. note 12 and 13.
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.
Measurement of goodwill, Trademarks
and Customer relations
Goodwill, Trademarks and customer relations was
acquired in connection with acquisition of businesses.
Goodwill is allocated to the cash-generating units
under which management manages the investment.
The carrying amount is tested for impairment at least
annually. Impairment testing involves estimates of
future cash flows and is affected by a number of
factors, including discount rates and other circum-
stances dependent on economic trends, such as
customer behaviour and competition. Cf. note 11.
Control of subsidiaries
Control of subsidiaries is assessed yearly. Hence
whether a subsidiary should still be part of the consol-
idation on line by line basis or as a single line item in
the balance sheet.
Description of accounting policies
Recognition and measurement
The annual report has been prepared under the
historical cost convention, as modified by the revalua-
tion of owner-occupied property, where increases are
recognised in other comprehensive income, and re-
valuation of investment property, financial assets held
for trading and financial assets and financial liabilities
(including derivative instruments) at fair value in the
income statement.
Assets are recognised in the statement of financial
position when it is probable that future economic
benefits will flow to the Group, and the value of such
assets can be measured reliably. Liabilities are recog-
nised 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
income statement unless otherwise described below.
91
NotesAnnual report 2016 | Tryg A/S | All amounts in the notes are shown in millions of DKK,
unless otherwise stated.
Consolidation
Consolidated financial statements
The consolidated financial statements comprise the
financial statements of Tryg A/S (the parent company)
and the enterprises (subsidiaries) controlled by the
parent company. The parent company is regarded as
controlling an enterprise when it i) exercises a control-
ling influence over the relevant activities in the enter-
prise in question, ii) is exposed to or has the right to a
variable return on its investment, and iii) can exercise
its controlling influence to affect the variable return.
Enterprises in which the Group directly or indirectly
holds between 20% and 50% of the voting rights and
exercises significant influence but no controlling influ-
ence are classified as associates.
Basis of consolidation
The consolidated financial statements are prepared
on the basis of the financial statements of Tryg A/S
and its subsidiaries. The consolidated financial state-
ments are prepared by combining items of a uniform
nature. The financial statements used for the consoli-
dation are prepared in accordance with the Group’s
accounting policies.
On consolidation, intra-group income and costs, intra-
group accounts and dividends, and gains and losses
arising on transactions between the consolidated
enterprises are eliminated.
Items of subsidiaries are fully recognised in the
consolidated financial statements.
which control of the acquired enterprise actually
passes to Tryg. Divested or discontinued enterprises
are recognised in the consolidated statement of com-
prehensive income up to the date of disposal or the
settlement date. The date of disposal is the date
on which control of the divested enterprise actually
passes to a third party.
The purchase method is applied for new acquisitions
if the Group gains control of the acquired enterprise.
Subsequently, identifiable assets, liabilities and con-
tingent liabilities in the acquired enterprises are meas-
ured at fair value at the date of acquisition. Non-
current assets which are acquired with the intention
of selling them are, however, measured at fair value
less expected selling costs. Restructuring costs are
recognised in the pre-acquisition balance sheet only
if they constitute an obligation for the acquired enter-
prise. The tax effect of revaluations is taken into ac-
count. The acquisition price of an enterprise consists
of the fair value of the price paid for the acquired en-
terprise. If the final determination of the price is con-
ditional upon one or more future events, such events
are recognised at their fair values at the date of acqui-
sition. Costs relating to the acquisition are recognised
in the income statement as incurred.
Any positive balances (goodwill) between the acquisi-
tion price of the acquired enterprise, the value of
minority 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
assets, liabilities and contingent liabilities, on the
other hand, are recognised as an asset under intangi-
ble assets, 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
recoverable amount.
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
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 information
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
| Menu – Financial statements
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 manage-
ment and internal financial reporting system and sup-
ports the management decisions on allocation of re-
sources and assessment of the Group’s results
divided into segments.
The operational business segments in the Tryg are
Private, Commercial, Corporate and Sweden. Private
encompasses the sale of insurances to private individu-
als in Denmark and Norway. Commercial encompasses
the sale of insurances to small and medium sized busi-
nesses, in Denmark and Norway. Corporate sells insur-
ances to industrial clients primarily in Denmark, Norway
and Sweden. In addition, Corporate handles all business
involving brokers. Sweden encompasses the sale of in-
surance products to private individuals in Sweden as
well as sale of Product insurances in the nordic region.
Geographical information is presented on the basis of
the economic environment in which the Tryg Group
operates. The geographical areas are Denmark, Nor-
way and Sweden.
Segment income and segment costs as well as seg-
ment assets and liabilities comprise those items that
can be directly attributed to each individual segment
and those items that can be allocated to the individual
segments on a reliable basis. Unallocated items
primarily 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
accordance with Recommendations and Ratios 2015
92
NotesAnnual report 2016 | Tryg A/S |
issued 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.
interest is applied according to the expected run-off
pattern of the provisions.
Insurance technical interest is reduced by the portion of
the increase in net provisions that relates to unwinding.
time of writing the business. Underwriting commission is
recognised when a legal obligation occurs. Administra-
tion expenses are all other expenses attributable to the
administration of the insurance portfolio. Administration
expenses are accrued to match the financial year.
Income statement
Premiums
Premium income represents gross premiums written
during the year, net of reinsurance premiums and
adjusted for changes in premium pro- visions, corre-
sponding to an accrual of premiums to the risk period
of the policies, and in the reinsurers’ share of the
premium provisions.
Premiums are calculated as premium income in
accordance 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 position
date is reported as the reinsurers’ share of premium
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
| Menu – Financial statements
Claims
Claims are claims paid during the year and adjusted
for changes in claims provisions less the reinsurers’
share. In addition, the item includes run-off gains/
losses in respect of previous years. The portion of the
increase in provisions which can be ascribed to un-
winding is transferred to insurance technical interest.
Leasing
Leases are classified either as operating or finance
leases. The assessment of the lease is based on criteria
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.
Claims are shown inclusive of direct and indirect
claims handling costs, including costs of inspecting
and assessing claims, costs to combat and mitigate
damage and other direct and indirect costs associated
with the handling of claims incurred.
Changes in claims provisions due to changes in yield
curve and exchange rates are recognised as a price
adjustment.
Tryg hedges the risk of changes in future pay and price
figures for provisions for workers’ compensation. Tryg
uses zero coupon inflation swaps acquired with a view
to hedging the inflation risk. Value adjustments of these
swaps are included in claims, thereby reducing the ef-
fect of changes to inflation expectations under claims.
Bonus and premium discounts
Bonuses and premium discounts represent antici-
pated and refunded premiums to policyholders,
where the amount refunded depends on the claims
record, and for which the criteria for payment have
been defined prior to the financial year or when the
insurance was taken out.
Insurance operating expenses
Insurance operating costs represent acquisition costs
and administration expenses less reinsurance commis-
sions received. Expenses relating to acquiring and re-
newing the insurance portfolio are recognised at the
Assets held under operating leases are not recognised
in the statement of financial position, but the lease pay-
ments are recognised in the income statement over the
term of the lease, corresponding to the economic life-
time of the asset. The Group has no assets held under
finance leases.
Sale and lease back of owner-occupied property
– operating lease
Sale and lease back transactions are carried out at fair
value and any gains or losses are recognised immedi-
ately either in the income statement or other compre-
hensive income.
Losses are recognised in the income statement unless it
is a reversal of a write up previously recognised in other
comprehensive income. Gains are recognised in other
comprehensive income unless it is a reversal of write
down previously recognise in the income statement.
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 and
the share option plan comprised no share options at
the end of 2016.
The value of services received as consideration for
options granted is measured at the fair value of the
options.
Equity-settled share options are measured at fair
value at the time of allocation and recognised under
staff expenses over the period from the time of alloca-
tion 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 settlement of the options allocated.
The fair value of the options granted is estimated us-
ing the Black & Scholes option model. The calculation
takes into account the terms and conditions of the
share options granted.
Employee shares
According to established rules, the Group’s employees
can be granted a bonus in the form of employee
shares. When the bonus is granted, employees can
choose between receiving shares or cash. The ex-
pected value of the shares will be expensed over the
vesting period. The scheme will be treated as a com-
plex financial instrument, consisting of the right to
93
NotesAnnual report 2016 | Tryg A/S |
cash settlement and the right to request delivery of
shares. The difference between the value of shares
and the cash payment is recognised in equity and is
not remeasured. The remainder is treated as a liability
and is remeasured until the time of exercise, such that
the total recognition is based on the actual number of
shares or the actual cash amount.
Matching shares
Members of Executive Board and other senior em-
ployees have been allocated shares in accordance
with the “Matching shares” scheme. Under Matching
shares, the individual Executive Board member or
other senior employee is allocated one share in Tryg
A/S for each share he or she acquires in Tryg A/S at
the market rate for certain liquid cash at a contractu-
ally agreed sum in connection with the Matching
share programme.
The holder acquires the shares in the open window fol-
lowing publication of the annual report for the previous
year. The shares (matching shares) are provided free of
charge, three or four years after the time of purchase of
the investment Shares. The holder may not sell the
shares until six months after the matching time.
The shares are recognised at market value and are ac-
crued over the four and tree year maturation period,
based on the market price at the time of acquisition.
Recognition is from the end of the month of acquisi-
tion under staff expenses with a balancing entry di-
rectly in equity. If the holder retires during the matura-
tion period but remains entitled to shares, the
remaining expense is recognised in the current ac-
counting 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.
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 contingent
liabilities at the time of acquisition. Goodwill is allocated
to the cash-generating units under which manage-
ment manages the investment and is recognised un-
der intangible assets. Goodwill is not amortised 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.
After completion of the development work, the asset
is amortised according to the straight-line method
over the assessed economic lifetime, though over a
maximum of 4 years. The amortisation basis is re-
duced by any impairment and write-downs.
Assets under construction
Group-developed intangibles are recorded under the
entry “Assets under construction” until they are put
into use, whereupon they are reclassified as software
and are amortized in accordance with the amortiza-
tion periods stated above.
Fixed assets
Operating equipment
Fixtures and operating equipment are measured
at cost less accumulated depreciation and any 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
expected economic lifetime, however maximally
the term of the lease.
Costs for group developed software that are directly
connected with the production of identifiable and
unique software products, where there is sufficient
certainty that future earnings will exceed the costs in
more than one year, are reported as intangible assets.
Direct costs include personnel costs for software
development and directly attributable relevant fixed
costs. All other costs connected with the development
or maintenance of software are continuously charged
as expenses.
Gains and losses on disposals and retired assets are
determined by comparing proceeds with carrying
amounts. Gains and losses are recognised in the
income statement. When revalued assets are sold,
the amounts included in the revaluation reserves
are transferred to retained earnings.
Land and buildings
Land and buildings are divided into owner-occupied
property and investment property. The Group’s
| Menu – Financial statements
94
NotesAnnual report 2016 | Tryg A/S | owner-occupied properties consist of the head office
buildings in Ballerup and Bergen and a small number
of holiday homes. The remaining properties are
classified as investment property.
Owner-occupied property
Owner-occupied property is property that is used in
the Group’s operations. Owner-occupied properties
are measured in the statement of financial position
at their revalued amounts, being the fair value at the
date of revaluation, less any subsequent accumulated
depreciation and impairment losses. Revaluations
are performed regularly to avoid material differences
between the carrying amounts and fair values of
owner-occupied property at the statement of financial
position date. The fair value is calculated on the basis
of market-specific rental income per property and
typical operating expenses for the coming year. The
resulting operating income is divided by the required
return on the property in per cent, which is adjusted
to reflect market interest rates and property charac-
teristics, corresponding to the present value of a
perpetual annuity.
Increases in the revalued carrying amounts of owner-
occupied property are recognised in the revaluation
reserve in equity. Decreases that offset previous re-
valuations of the same asset are charged against the
revaluation 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 associated
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 calculated
based on the straight-line method and using an esti-
mated economic lifetime of up to 50 years. Land is
not depreciated.
Assets under construction
In connection with the refurbishment of owner-occupied
property, costs to be capitalised are recognised at cost
under owner-occupied property. On completion of the
project, it is reclassified as owner-occupied property,
and depreciation is made on a straight-line basis over
the expected economic lifetime, up to the number of
years stated under the individual categories.
Investment property
Properties held for renting yields that are not occupied
by the Group are classified as investment properties.
Investment property is recognised at fair value.
Fair value is based on market prices, adjusted for any
differences in the nature, location or maintenance
condition of specific assets. If this information is not
available, the Group uses alternative valuation methods
such as discounted cash flow projections and recent
prices in the market.
The fair value is calculated on the basis of market-
specific rental income per property and typical oper-
ating expenses for the coming year. The resulting
operating income is divided by the required return on
the property in per cent, which is adjusted to reflect
market interest rates and property characteristics,
corresponding to the present value of a perpetual
annuity. The value is subsequently adjusted with the
value in use of the return on prepayments and deposits
and adjustments for specific property issues such as
vacant premises or special tenant terms and conditions.
Changes in fair values are recorded in the income
statement.
depreciation has been demonstrated. A continuous as-
sessment of owner-occupied property is performed.
Goodwill is tested annually for impairment, or more
often if there are indications of impairment, and
impairment testing is performed for each cash-
generating unit to which the asset belongs. The
present value is normally established using budgeted
cash flows based on business plans. The business
plans are based on past experience and expected
market developments.
Equity investments in Group undertakings
The parent company’s equity investments in 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
income 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.
Impairment test for intangible assets,
property and operating equipment
Operating equipment and intangible assets are assess-
ed at least once per year to ensure that the depreciation
method and the depreciation period that is used are
connected to the expected economic lifetime. This also
applies to the salvage value. Write-down is performed if
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
subsidiaries are translated using the exchange rates
applicable at the statement of financial position date.
When is it assessed that the parent company no
longer has control over the subsidiary, it will be trans-
ferred to either assets held for sale or unquoted
shares and when sold, it will be derecognised.
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
intra-group profits and losses.
Associates with a negative net asset value are measured
at zero value. If the Group has a legal or constructive
obligation to cover the associate’s negative balance,
such obligation is recognised under liabilities.
Investments
Investments include financial assets at fair value
which are recognised in the income statement. The
classification depends on the purpose for which the
investments were acquired. Management determines
the classification of its investments on initial recogni-
tion and re-evaluates this at every reporting date.
Financial assets measured at fair value with recognition
of value adjustments in the income statement com-
prise assets that form part of a trading portfolio and
financial assets designated at fair value with value
adjustment via the income statement.
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95
NotesAnnual report 2016 | Tryg A/S |
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
expired, or if they have been transferred, and the
Group has also transferred substantially all risks and
rewards of ownership. Financial assets are recog-
nised 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,
including changes in share prices, foreign exchange
rates, interest rates and inflation. Forward exchange
contracts and currency swaps are used for currency
hedging of portfolios of shares, bonds, hedging of
foreign entities and insurance statement of financial
position items. Interest rate derivatives in the form of
futures, forward contracts, repos, swaps and FRAs
are used to manage cash flows and interest rate risks
related to the portfolio of bonds and insurance provi-
sions. Share derivatives in the form of futures and
options are used from time to time to adjust share
exposures.
Derivative financial instruments are reported from
the trading date and are measured in the statement
of financial position at fair value. Positive fair values
of derivatives are recognised as derivative financial
instruments 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.
Calculation of value is generally performed on the
basis of rates supplied by Danske Bank with relevant
information providers and is checked by the Group’s
valuation technicians. Discounting on the basis of
market interest rates is applied in the case of 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
instrument and, if so, the nature of the item being
hedged. The Group designates certain derivatives as
hedges of investments in foreign entities. Changes in
the fair value of derivatives that are designated and
qualify as net investment hedges in foreign entities
and which provide effective currency hedging of the
net investment are recognised directly in equity. The
net asset value of the foreign entities estimated at the
beginning of the financial year is hedged 90-100% by
entering into short-term forward exchange contracts
according to the requirements of hedge accounting.
Changes in the fair value relating to the ineffective
portion are recognised in the income statement.
Gains and losses accumulated in equity are included
in the income statement on disposal of the foreign
entity.
Reinsurers’ share of provisions for insurance contracts
Contracts entered into by the Group with reinsurers
under which the Group is compensated for losses on one
or more contracts issued by the Group and that meet the
classification requirements for insurance contracts are
classified as reinsurers’ share of provisions for insurance
contracts. Contracts that do not meet these classifica-
tion requirements are classified as financial assets.
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 asset 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.
The benefits to which the Group is entitled under its re-
insurance contracts held are recognised as assets and
reported as reinsurers’ share of provisions for insurance
contracts.
Amounts receivable from reinsurers are measured
consistently with the amounts associated with the
reinsured insurance contracts and in accordance
with the terms of each reinsurance contract.
Changes due to unwinding are recognised in insurance
technical interest. Changes due to changes in the yield
curve or foreign exchange rates are recognised as price
adjustments.
The Group continuously assesses its reinsurance assets
for impairment. If there is objective evidence that the
reinsurance asset is impaired, the Group reduces the
carrying amount of the reinsurance asset to its recover-
able amount. Impairment losses are recognised in the
income statement.
Receivables
Total receivables comprise accounts receivable from
policyholders and insurance companies as well as
other accounts receivable. Other receivables primarily
contain accounts receivable in connection with
property.
Receivables that arise as a result of insurance contracts
are classified in this category and are reviewed for
impairment as a part of the impairment test of
accounts receivable.
Other assets
Other assets include current tax assets and cash at
bank and in hand. Current tax assets are receivables
concerning tax for the year adjusted for on-account
payments and any prior-year adjustments. Cash at
bank and in hand is recognised at nominal value at
the statement of financial position date.
Prepayments and accrued income
Prepayments include expenses paid in respect of
subsequent financial years and interest receivable.
Accrued underwriting commission relating to the
sale of insurance products is also included.
Equity
Share capital
Shares are classified as equity when there is no obli-
gation to transfer cash or other assets. Costs directly
attributable to the issue of equity instruments are
shown in equity as a deduction from the proceeds,
net of tax.
Revaluation reserves
Revaluation of owner-occupied property is recognised
in other comprehensive income unless the revalua-
tion offsets a previous impairment loss.
Foreign currency translation reserve
Assets and liabilities of foreign entities are recognised
using the exchange rate applicable at the statement of
financial position date. Income and expense items are
recognised using the average monthly exchange rates
for the period. Any resulting differences are recog-
nised in Other comprehensive income.
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96
NotesAnnual report 2016 | Tryg A/S | When an entity is wound up, the balance is trans-
ferred to the income statement. The hedging of the
currency risk in respect of foreign entities is also off-
set in other comprehensive income in respect of the
part that concerns the hedge.
Contingency fund reserves
Contingency fund reserves are recognised as part of
retained earnings under equity. The reserves may only
be used when so permitted by the Danish Financial
Supervisory Authority and when it is for the benefit of
the policyholders. The Norwegian contingency fund
reserves include provisions for the Norwegian Natural
Perils Pool and security reserve. The Danish and
Swedish provisions comprise contingency fund provi-
sions. Deferred tax on the Norwegian and Swedish
contingency fund reserves is allocated.
Dividends
Proposed dividend is recognised as a liability at the
time of adoption by the shareholders at the annual
general meeting (date of declaration).
Own shares
The purchase and sale sums of own shares and
dividends thereon are taken directly to retained
earnings under equity. Own shares include shares
acquired for incentive programmes and share buy-
back 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
using the effective interest method.
Provisions for insurance contracts
Premiums written are recognised in the income
statement (premium income) proportionally over the
period of coverage and, where necessary, adjusted to
reflect any time variation of the risk. The portion of
premiums received on in-force contracts that relates
to unexpired risks at the statement of financial posi-
tion date is reported as premium provisions. Premium
provisions are generally calculated according to a
best estimate of expected payments throughout the
agreed risk period; however, as a minimum as the part
of the premium calculated using the pro rata temporis
principle until the next payment date. Adjustments
are made to reflect any risk variations. This applies to
gross as well as ceded business.
Claims and claims handling costs are expensed in the
income statement as incurred based on the estimated
liability for compensation owed to policyholders or
third parties sustaining losses at the hands of the pol-
icy- holders. They include direct and indirect claims
handling costs that arise from events that have oc-
curred up to the statement of financial position date
even if they have not yet been reported to the Group.
Claims provisions are estimated using the input of as-
sessments for individual cases reported to the Group
and statistical analyses for the claims incurred but not
reported and the expected ultimate cost of more
complex claims that may be affected by external fac-
tors (such as court decisions). The provisions include
claims handling costs.
Claims provisions are discounted. Discounting is
based on a yield curve reflecting duration applied to
the expected future payments from the provision.
Discounting affects the motor liability, professional
liability, workers’ compensation and personal acci-
dent and health insurance classes, in particular.
Provisions for bonuses and premium discounts
etc. represent amounts expected to be paid to policy-
holders in view of the claims experience during the
financial year.
Claims provisions are determined for each line of busi-
ness based on actuarial methods. Where such business
lines encompass more than one business area, short-
tailed claims provisions are distributed based on num-
ber of claims reported while long-tailed claims provi-
sions are distributed based on premiums earned. The
models currently used are Chain-Ladder, Bornhuetter-
Ferguson, the Loss Ratio method and De Vylder’s credi-
bility method. Chain-Ladder techniques are used for
lines of business with a stable run-off pattern. The
Bornhuetter-Ferguson method, and sometimes the
Loss Ratio method, are used for claims years in which
the previous run-off provides insufficient information
about the future run-off performance. De Vylder’s cred-
ibility method is used for areas that are somewhere in
between the Chain-Ladder and Bornhuetter-Ferguson/
Loss Ratio methods, and may also be used in situations
that call for the use of exposure targets other than pre-
mium volume, for example 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
determining 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
dependent. Most importantly, this can be expected
to be the case for assumptions relating to interest
rates and inflation.
Workers’ compensation is an area in which explicit
inflation assumptions are used, with annuities for
the insured being indexed based on the workers’
compensation index. An inflation curve that reflects
the market’s inflation expectations plus a real wage
spread is used as an 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
future losses when a change in inflation occurs. On
the other hand, the effect of discounting will show
immediately 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
adequacy 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
under 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
| Menu – Financial statements
97
NotesAnnual report 2016 | Tryg A/S |
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.
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.
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 recognised
in the statement of financial position as estimated
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.
best estimate by management of the expenditure
required to settle the present obligation.
Provisions for restructurings are recognised as
obligations when a detailed formal restructuring plan
has been announced prior to or at the statement of
financial position date at the latest to the persons
affected by the plan.
Own insurance is included under other provisions. The
provisions apply to the Group’s own insurance claims
and are reported when the damage occurs
according to the same principle as the Group’s other
claims provisions.
Deferred tax is measured according to the statement
of financial position liability method on all timing
differences between the tax and accounting value of
assets 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.
Debt
Debt comprises debt in connection with direct insur-
ance and reinsurance, amounts owed to credit institu-
tions, current tax obligations and other debt. Deriva-
tive financial instruments are assessed at fair value
according to the same practice that applies to financial
assets. Other liabilities are assessed at amortised cost
based on the effective interest method.
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.
Cash flow statement
The consolidated cash flow statement is presented us-
ing the direct method and shows cash flows from op-
erating, investing and financing activities as well as the
Group’s cash and cash equivalents at the beginning
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 finan-
cial assets and deposits with credit institutions.
Other employee benefits
Employees of the Group are entitled to a fixed payment
when they reach retirement and when they have been
employed with the Group for 25 and for 40 years. The
Group recognises this liability at the time of signing
the contract of employment.
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
| Menu – Financial statements
98
NotesAnnual report 2016 | 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
2,525
0
-6
2,519
-63
2,032
1
-7
2,026
-75
Profit/loss before tax
2,456
1,951
3
Tax
Profit/loss on continuing business
Profit/loss for the year
Proposed distribution for the year:
Dividend
Transferred to reserve for net revaluation according to the equity method
Transferred to retained earnings
15
2,471
2,471
2,770
-25
-274
2,471
18
1,969
1,969
1,759
-1,668
1,878
1,969
2016
2015
DKKm
2016
2015
Note
Statement of comprehensive income
Profit/loss for the year
2,471
1,969
Other comprehensive income
Other comprehensive income which cannot subsequently
be reclassified as profit or loss
Change in equalisation provision and other provisions
Change in taxrates on security provisions
Sale of owner-occupied property a)
Sale of owner-occupied property, revaluation from previous years a)
Tax on sale of owner-occupied property
Tax on revaluation of owner-occupied property from previous years
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
0
0
215
-115
-53
29
-95
24
5
51
-50
11
12
17
21
141
0
4
0
2
-12
3
159
-89
86
-21
-24
135
Comprehensive income
2,488
2,104
a) Please refer to note 26 Sale of properties in the Tryg Group.
| Menu – Financial statements
99
Annual report 2016 | Tryg A/S |
Statement of financial position for Tryg A/S (parent company)
DKKm
2016
2015
Note
4
Assets
Equity investments in Group undertakings
Total investments in Group undertakings
10,127
10,127
10,135
10,135
Total investment assets
10,127
10,135
Other receivables
Total receivables
5
Current tax assets
Cash at bank and in hand
Total other assets
1
1
15
0
15
0
0
18
1
19
Total assets
10,143
10,154
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
9,437
9,659
701
5
706
487
8
495
Total equity and liabilities
10,143
10,154
6
7
8
9
10
11
Deferred tax assets
Own funds
Contractual obligations, contingent liabilities and collateral
Related parties
Reconciliation of profit/loss and equity
Accounting policies
| Menu – Financial statements
100
Annual report 2016 | Tryg A/S |
Statement of changes in equity (parent company)
DKKm
Equity at 31 December 2015
2016
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 share options and matching shares
Total changes in equity in 2016
Equity at 31 December 2016
Equity at 31 December 2014
2015
Adjustment 1.1.2015
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
1,448
3,148
4,050
1,013
-25
17
-8
0
-35
-35
1,413
-8
3,140
-274
-274
35
52
-1,000
1
3
-1,183
2,867
2,770
2,770
-1,766
1,004
2,017
Total
9,659
2,471
17
2,488
0
-1,766
52
-1,000
1
3
-222
9,437
Dividend per share in 2016 includes ordinary
dividend paid out in July of DKK 2.60, proposed
ordinary dividend of DKK 3.60, totalling DKK 6.20
(DKK 6.00) and proposed extraordinary dividend
of DKK 3.54.
Proposed dividend per share of DKK 3.60 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
(282,541,204 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 provi-
sions of DKK 1,774m (DKK 2,516m in 2015). The con-
tingency fund provisions can be used to cover losses in
connection with the settlement of insurance provisions
or otherwise for the benefit of the insured.
1,492
4,856
3,055
1,731
11,134
-175
-1,668
135
-1,533
1,878
1,759
1,878
1,759
0
-44
44
97
-1,044
13
2
5
995
4,050
-2,477
-718
1,013
-44
1,448
-1,708
3,148
-175
1,969
135
2,104
0
-2,477
97
-1,044
13
2
5
-1,475
9,659
| Menu – Financial statements
101
Annual report 2016 | Tryg A/S |
Notes
DKKm
1
Income from Group undertakings
Tryg Forsikring A/S
2
Other expenses
Administration expenses
2016
2015
DKKm
2016
2015
2,525
2,525
-63
-63
2,032
2,032
-75
-75
4
Equity investments in Group undertakings
Cost
Cost at 1 January
Cost at 31 December
Revaluation and impairment to net asset value
Revaluation and impairment at 1 January
Revaluations for the year
Dividend paid
Revaluation and impairment at 31 December
6,987
6,987
3,148
2,542
-2,550
3,140
6,987
6,987
4,681
2,167
-3,700
3,148
Carrying amount at 31 December
10,127
10,135
Name and registered office
Ownership share in %
Equity
Remuneration for the Executive Board 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 Board and risk-takers can be seen from note
29 concerning related parties of the Tryg Group. Refer to Note 6 for the Tryg Group for a specification
of the audit fee.
Average number of full-time employees for the year
3
Tax
Reconciliation of tax costs
Tax on profit/loss for the year
Tax adjustments, previous years
Effective tax rate
Tax on profit/loss for the year
Tax adjustment, previous years
15
15
0
15
%
22.0
0.0
22.0
15
19
-1
18
%
23.5
-1.0
22.5
2016
Tryg Forsikring A/S, Ballerup
2015
Tryg Forsikring A/S, Ballerup
DKKm
5
Current tax assets
Tax receivable at 1 January
Current tax for the year
Tax paid for the year
Tax receivable at 31 December
100
10,127
100
10,135
2016
2015
18
15
-18
15
14
18
-14
18
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102
Annual report 2016 | Tryg A/S |
Notes
DKKm
6
Deferred tax assets
Capitalised tax losses
Tryg A/S
Non-capitalised tax losses
Tryg A/S
The loss in Tryg A/S can only be utilised in Tryg A/S.
The loss can be carried forward indefinitely.
2016
2015
DKKm
2016
2015
0
16
0
16
8
Contractual 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 posi-
tion over and above the receivables and liabilities recognised in the statement of financial position at
31 December 2016.
The losses are not recognised as tax assets until it has been substantiated that the company can
generate sufficient future taxable income to offset the tax losses.
7
Own funds
2016
Please refer to note 18 in the Tryg Group on Solvency II own funds.
2015
Capital adequacy
Equity according to annual report 2015
Proposed dividend
Solvency requirements of subsidiaries – 50%
Tier 1 capital
Subordinate loan capital
Solvency requirements of subsidiaries – 50%
Capital base
Weighted items
Solvency ratio (Solvency I – ratio between capital base and weighted assets)
9,846
-1,013
-3,868
4,965
1,707
-3,868
2,804
2,586
108
The calculation of the 2015 Solvency I – ratio has not been adjusted for the FSA executive order on
yield curves from 1 January 2016.
9
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company, Trygheds-
Gruppen smba. Related parties with a significant influence include the Supervisory Board, the Execu-
tive Board and their members’ related family. Related parties are the same as for the Tryg Group;
please see note 29 in the Tryg Group.
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
16
-701
13
-487
Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.
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103
Annual report 2016 | Tryg A/S |
Notes
DKKm
10
2016
2015
Reconciliation of profit/loss and equity
The executive order on application of International Financial Reporting Standards for companies
subject to the Danish Financial Business Act issued by the Danish FSA requires disclosure of differ-
ences between the format of the annual report under International Financial Reporting Standards
(IFRS) and the rules issued by the Danish FSA, however, there are no differences on profit/loss.
The following is a reconciliation of equity.
Reconciliation of equity
Equity – IFRS
Deferred tax provisions for contingency funds
Change during the year of deferred tax provisions for contingency funds
Equity – Danish FSA executive order
9,437
15
-15
9,437
9,644
15
0
9,659
11
Accounting policies
Please refer to Tryg Group’s accounting policies.
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104
Annual report 2016 | Tryg A/S |
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
Q1
2015
Q4
2014
A further detailed version of the presentation
can be downloaded from tryg.com/uk > investor
> Downloads > tables
2,235
366
2,190
447
2,148
393
2,137
198
2,172
285
2,211
398
2,226
434
2,194
181
2,249
400
Q4 2016 | 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
111.6
67.9
1.8
69.7
13.9
83.6
86.3
972
166
58.3
8.0
66.3
16.5
82.8
92.2
966
9
84.3
4.2
88.5
10.6
99.1
63.2
2.1
65.3
14.3
79.6
84.5
977
142
65.5
3.4
68.9
16.6
85.5
92.8
968
117
42.9
34.0
76.9
11.1
88.0
98.3
65.9
1.2
67.1
14.5
81.6
84.9
977
172
64.1
0.7
64.8
17.6
82.4
84.7
921
156
60.6
11.6
72.2
10.9
83.1
98.0
74.2
2.2
76.4
14.3
90.7
94.1
967
215
56.6
3.7
60.3
17.5
77.8
90.2
920
139
55.2
18.0
73.2
11.6
84.8
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
5
69.2
20.5
89.7
9.7
99.4
100.9
106.2
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
99
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
1,003
155
1,050
270
66.3
0.9
67.2
17.4
84.6
98.9
968
70
67.6
13.4
81.0
11.9
92.9
55.2
3.7
58.9
15.6
74.5
86.5
1,015
98
67.2
12.6
79.8
10.6
90.4
100.1
106.4
| Menu – Financial statements
105
Annual report 2016 | Tryg A/S |
a) Amounts relating to eliminations and one-off items
are included under 'Other'. Please refer to note 2
Geographical segments.
A further detailed version of the presentation
can be downloaded from tryg.com/uk > investor >
Downloads > tables
Q4 2016 | Quarterly outline
Combined ratio exclusive of run-off
101.2
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
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
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Q3
2015
Q2
2015
Q1
2015
Q4
2014
337
23
72.7
0.0
72.7
20.2
92.9
-6
-250
384
38
72.9
0.5
73.4
16.1
89.5
92.1
-5
0
338
49
65.7
0.3
66.0
19.2
85.2
289
10
75.1
0.0
75.1
21.1
96.2
100.3
105.9
-5
0
-3
0
313
85
51.8
0.3
52.1
21.1
73.2
94.3
-11
0
373
38
73.2
0.5
73.7
15.8
89.5
92.4
-7
-120
342
72
61.1
0.0
61.1
17.8
78.9
93.2
-8
0
289
23
72.0
-0.7
71.3
20.8
92.1
100.1
-3
0
338
7
74.6
1.5
76.1
22.2
98.3
99.2
-6
0
4,504
4,514
4,379
4,310
4,393
4,583
4,550
4,451
4,646
314
598
-112
800
560
72.0
3.1
75.1
18.0
93.1
99.8
744
191
-12
923
732
59.7
9.5
69.2
14.5
83.7
90.1
770
181
-17
934
734
64.5
3.1
67.6
15.0
82.6
89.0
562
17
-16
563
445
66.3
5.7
72.0
15.1
87.1
95.7
522
242
-19
745
754
68.0
6.2
74.2
14.2
88.4
93.9
647
-441
-20
186
110
76.6
-6.8
69.8
16.3
86.1
94.9
825
-84
-27
714
580
84.8
-17.8
67.0
15.2
82.2
87.1
429
261
-25
665
525
72.0
3.1
75.1
15.6
90.7
98.5
775
13
-20
768
640
64.1
4.7
68.8
14.9
83.7
91.0
| Menu – Financial statements
106
Annual report 2016 | Tryg A/S |
Q4 2016 | Geographical segments
Q4
2016
2,407
441
144
66.4
2.6
69.0
12.5
81.5
-6.0
1,640
149
164
70.0
5.6
75.6
15.5
91.1
-10.0
463
-26
-7
85.7
0.9
86.6
18.6
105.2
1.5
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
Run-off, net of reinsurance (%)
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
Run-off, net of reinsurance (%)
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
Run-off, net of reinsurance (%)
Number of full-time employees 31 Dec.
| Menu – Financial statements
Q4
2015
2,330
289
116
65.2
9.3
74.5
13.1
87.6
-5.0
1,611
124
44
74.4
4.3
78.7
13.8
92.5
-2.7
463
109
81
54.6
3.0
57.6
19.0
76.6
-17.5
2016
2015
DKKm
9,467
1,587
509
63.7
6.0
69.7
13.4
83.1
-5.4
1,839
6,371
1,013
678
63.9
5.1
69.0
15.2
84.2
-10.6
1,040
1,888
40
52
76.4
3.3
79.7
17.8
97.5
-2.8
385
9,346
1,371
512
80.5
-9.2
71.3
13.9
85.2
-5.5
1,859
6,766
844
492
70.9
2.1
73.0
14.9
87.9
-7.3
1,113
1,894
328
208
63.5
1.7
65.2
17.5
82.7
-11.0
387
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
Run-off, net of reinsurance (%)
Q4
2016
-6
-250
4,504
314
598
-112
800
301
72.0
3.1
75.1
18.0
93.1
-6.7
Q4
2015
-11
0
2016
2015
-19
-250
-29
-120
4,393
17,707
17,977
522
242
-19
745
241
68.0
6.2
74.2
14.2
88.4
-5.5
2,390
987
-157
3,220
1,239
65.6
5.4
71.0
15.7
86.7
-7.0
2,423
-22
-91
2,310
1,212
75.4
-3.9
71.5
15.3
86.8
-6.7
Number of full-time employees, continuing business at 31 Dec.
3,264
3,359
a) Includes Danish general insurance and Finnish guarantee insurance.
b) Amounts relating to eliminations and one-off items. Details of amounts in note 2 Geographical segments.
c) Adjustment of gross expense ratio included only in ‘Tryg ‘. The adjustment is explained in a footnote
to Financial highlights.
107
Annual report 2016 | Tryg A/S |
Other key figures
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
Ordinary dividend per share (DKK)
Extraordinary dividend per share (DKK)
Price/Earnings
Number of full-time employess,
continued business, at 31 December
Number of full-time employess,
discontinued and divested business, at 31 December
2016
2015
2014
2013
2012
Key ratios are calculated in accordance with
’Recommendations & Financial Ratios 2015’
issued by the Danish Society of Financial Analysts.
8.84
8.84
8.84
274,595
279,399
279,399
127.20
34.37
3.7
6.20
3.54
14.4
6.91
6.91
6.74
282,316
285,073
285,101
137.40
34.16
4.0
6.00
8.74
8.73
8.70
289,120
292,521
292,788
137.80
38.46
3.6
5.80
7.88
7.86
7.89
296,870
300,777
301,295
104.90
37.41
2.8
5.40
7.30
7.27
7.21
303,474
302,455
303,571
85.30
36.18
2.4
5.20
20.4
15.8
13.3
11.8
3,264
3,359
3,599
3,703
0
0
0
0
3,913
189
| Menu – Financial statements
108
Annual report 2016 | Tryg A/S |
Group chart
Tryg A/S
(Denmark)
Tryg Forsikring A/S
(Denmark)
Tryg Forsikring
(Branch Finland)
Moderna
Försäkringar
(Branch Sweden)
Tryg Forsikring
incl. Enter
(Branch Norway)
Tryg
Livsforsikring A/S
(Denmark)
Tryg
Ejendomme A/S
(Denmark)
Respons
Inkasso AS
(Norway)
Thunesvei 2 AS
(Norway)
ANS Grensen 3
(99%)
(Norway)
Group chart at 1 January 2017. Companies and branches are wholly owned
by Danish owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
| Contents – Management’s review
109
Annual report 2016 | 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.
Claims ratio, net of ceded business
Gross claims ratio + net reinsurance ratio
Earnings per share of continuing business
Net asset value per share
Diluted earnings from continuing business after tax
Year-end equity
Diluted average number of shares
Number of shares at year-end
Gross claims ratio
Net reinsurance ratio
Gross claims x 100
Gross premium income
Profit or loss from reinsurance x 100
Gross premium income
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
(including Finnish guarantee branch and Tryg
Livsforsikring A/S and excluding the Norwegian
and Swedish branches).
Diluted average number of shares
Average number of shares adjusted for number of
share options which may potentially dilute.
Discounting
Expresses recognition in the financial statements of
expected future 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
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.
Gross insurance operating costs with adjustment x 100
Gross premium income
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.
Profit or loss for the year x 100
Market price/net asset value
Average number of shares
Share price
Net asset value per share
Norwegian general insurance
Comprises Tryg Forsikring A/S, Norwegian branch..
Operating ratio
Calculated as the combined ratio plus insurance
technical interest in the denominator.
Claims + insurance operating costs +
profit or loss from reinsurance x 100
Gross premium income + insurance technical interest
Own funds
Equity plus share of subordinate loan capital and
profit margin (solvency purpose), less intangible
assets, tax asset and proposed dividend.
Price/Earnings
Share price
Earnings per share
Relative run-off gains/losses
Run-off gains/losses net of reinsurance relative to
claims provisions net of reinsurance, beginning of year.
Return on equity after tax (%)
Profit for the year after tax x 100
Average equity
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.
Solvency II
New solvency requirements for insurance companies
issued by the EU Commission. The new rules came
into force at 1 January 2016.
Solvency ratio
Ratio between own funds and the capital require-
ment.
Swedish general insurance
Comprises Tryg Forsikring A/S, Swedish branch.
Tier 1 capital
Equity less proposed dividend and share of capital
claims in subsidiaries.
Total reserve ratio
Reserve ratio, claims provisions + premium provisions
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.
| Contents – Management’s review
110
Annual report 2016 | 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 30% 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.
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
premium income and includes, for example, house and contents insurance.
House insurance covers damage to properties caused by, for example, fire, storm
or water, legal assistance and the customer’s liability as owner of the property. The
contents insurance covers loss of or damage to private household contents and
covers in and outside of the home. Moreover, the insurance includes liability and
legal assistance, to which can be added a number of supplementary covers, for
example cover of sudden damage and damage to electronic equipment.
Personal accident insurance
Personal accident insurance accounts for 9% of total premium income and covers
accidental bodily injury and death resulting from accidents.
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.
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
occupational diseases). Workers’ compensation insurance is mandatory and
covers a company’s employees (except for public sector employees and
persons working for sole proprietors).
General third-party liability insurance
General third-party liability insurance represents 6% 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
111
Annual report 2016 | Tryg A/S | Disclaimer
Certain statements in this annual report are based
financial markets, extraordinary events such as
on the beliefs of our management as well as
natural disasters or terrorist attacks, changes in
assumptions made by and information currently
legislation or case law and reinsurance. Should
available to management. Statements regarding
one or more of these risks or uncertainties
Tryg’s future operating results, financial position,
materialise, or should any underlying assumptions
cash flows, business strategy, plans and future
prove to be incorrect, Tryg’s actual financial
objectives other than statements of historical fact
condition or results of operations could
can generally be identified by the use of words
materially differ from that described herein as
such as ‘targets’, ‘believes’, ‘expects’, ‘aims’,
anticipated, believed, estimated or expected.
‘intends’, ‘plans’, ‘seeks’, ‘will’, ‘may’, ‘anticipates’,
Tryg is not under any duty to update any of the
‘would’, ‘could’, ‘continues’ or similar expressions.
forward-looking statements or to conform such
statements to actual results, except as may be
A number of different factors may cause the
required by law.
Read more in the chapter
actual performance to deviate significantly
Capital and risk management on page 25-26,
from the forward-looking statements in this
and
in Note 1 on page 50, for a description
annual report, including but not limited to
of some of the factors which may affect the
general economic developments, changes in the
Group’s performance or the insurance industry.
competitive environ ment, developments in the
| Contents – Management’s review
112
Annual report 2016 | Tryg A/S |