Annual report
2017
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Contents
Management’s review
3
Tryg at a glance
4 Business areas
5
6
Income overview
Introduction by Chairman and Group CEO
7 Events in 2017
8
Financial outlook
10 Targets and strategy
14 Tryg’s results
18 Private
20 Commercial
Financial statements
44 Financial statements
113 Group chart
114 Glossary
Capital and risk management
1 15 Product overview
Investor information
22 Corporate
Sweden
Investment activities
24
26
28
30
32 Corporate governance
37
39
40
Supervisory Board
Executive Board
Corporate Social Responsibility in Tryg
Editor Investor Relations | Publication 23 January 2018 | Layout amo design | Proofreading TextMinded
1728
Copenhagen experienced the largest fire
in its history. The fire heightened public
awareness of the need to insure oneself
2005
Tryg was listed on the OMX Nordic Stock
Exchange Copenhagen on the 14 October
2010
TrygVesta simplified its name to Tryg
2012
New dividend policy stating a
nominal, steadily increasing divi-
dend with an annual distribution
of 60-90% of the profit after tax
2014
Tryg presented financial targets
and customer targets for 2017
at Capital Markets Day
2016
TryghedsGruppen decided to pay out a
bonus to its members: 8% (DKK 696m)
of premium paid to Tryg for 2015
Tryg’s timeline
1731
Kjøbenhavns Brand (the oldest com ponent in
Tryg’s history) was established by Royal Decree
as a result of the Copenhagen fire in 1728
1,042
3
13.3%
Employees
Market position
Market share
2009
Tryg acquired Moderna
Försäkringar
2011
Morten Hübbe appointed
new Group CEO of Tryg
2013
Jørgen Huno Rasmussen
appointed new Chairman
of the Supervisory Board
2015
Tryg split its share 1:5, meaning
each share with a nominal value of
DKK 25 was replaced by 5 shares
with a nominal value of DKK 5
2017
For the second year, running, Trygheds Gruppen
paid out its member bonus corres ponding to 8%
of the premium paid for 2016
Tryg presented new financial targets and customer
targets for 2020 at Capital Markets Day
Tryg acquired Alka
398
5
3.4%
Employees
Market position Market share
1,933
Employees
1
18.0%
Market position Market share
Purpose
As the world
changes,
we make
it easier
to be tryga).
Great diversity
of products
We offer a broad
range of insurance
products for private
individuals as well
as businesses.
Attractive
dividend policy
We aim to
distri b ute steadily
increas ing
dividends in
nominal terms
and to pay out
60-90% of our
profit.
TryghedsGruppen
Owns 60% of
Tryg and annually
contributes around
DKK 600m to
projects that create
peace of mind via
TrygFonden.
3 million
customers
Our 3,300
em ployees provide
peace of mind for
3 million custom-
ers and handle
approximately
950,000 claims
on a yearly basis.
Strong market
position
Tryg is one of
the largest non-life
insurance companies
in the Nordic region.
We are the largest
player in Denmark
and the third-largest
in Norway. In Sweden
we are the fifth-
largest company in
the market.
a) ‘Tryg’ means: feeling protected and cared for.
Contents – Management’s review
3
Annual report 2017 | Tryg A/S | Business areas
Private
Commercial
49 %
22 %
Total premium income
Brands
Total premium income
Brands
1,000
Own sales agents • Call centres • Real estate agents
Internet • Nordea’s branches • Car dealers
479
Call centres • Internet
Own sales agents • Franchise offices
Employees
Distribution channels
Employees
Distribution channels
Corporate
Sweden
21 %
8 %
Total premium income
Brands
Total premium income
Brands
250
Own sales agents
Insurance brokers
353
Own sales agents • Call centres
Internet
Employees
Distribution channels
Employees
Distribution channels
Contents – Management’s review
4
Commercial provides insurance products, including motor, property, liability, workers’ compensation, travel and health to small and medium-sized business in Denmark and Norway.Private provides insurance products to private customers in Denmark and Norway. Private offers a range of insurance products including car, contents, house, accident, travel, motorcycles, dog and health.Sweden provides insurance products to private individuals within car, house, dog, child, boat and accident insurance etc.Corporate provides insurance products including property, liability, workers’ compensation, transport, group life etc. to corporate customers under the brand Tryg in Denmark and Norway and Moderna in Sweden. Tryg is part of the global network AXA Corporate solutions. Annual report 2017 | Tryg A/S | Income overview
DKKm
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Investment return after insurance technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on continuing business
Profit/loss on discontinued and divested business after tax
Profit/loss
Run-off gains/losses, net of reinsurance
Key figures
Total equity
Return on equity after tax (%)
Number of shares 31 December (1,000)
Earnings per share (DKK)
Net asset value per share (DKK)
Ordinary dividend per share (DKK) a)
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 2017
Q4 2016
4,488
-3,076
-616
796
-170
-4
622
86
-23
685
-158
527
0
527
219
4,504
-3,245
-802
457
-140
-3
314
598
-112
800
-240
560
0
560
301
12,616
22.1
301,945
1.87
9,437
24.1
274,595
2.03
1.60
1.9
68.5
3.8
72.3
13.7
86.0
-4.9
1.8
2.8
82.0
85.9
93.8
91.3
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
2017
17,963
-11,865
-2,516
3,582
-779
-14
2,789
527
-77
3,239
-720
2,519
-2
2,517
972
12,616
28.8
301,945
9.12
41.78
6.40
3.31
1.7
66.1
4.3
70.4
14.0
84.4
-5.4
1.4
1.7
82.1
82.6
90.0
88.1
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
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
a) Ordinary dividend per share in 2017 includes dividends paid out in April, July and October of DKK 1.60 and proposed ordinary dividend of DKK 1.60 to be paid on 21 March 2018.
Contents – Management’s review
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
5
Annual report 2017 | Tryg A/S |
Targets for 2017
achieved
– New ambitious targets announced
2017 was an eventful year for Tryg. The targets for
2015-2017 were achieved, new targets for the period
up until 2020 were announced, a new strategy and
purpose were launched, and last but not least, Tryg
acquired Alka.
The 2017 technical result was DKK 2,789m, with a
combined ratio of 84.4, which together with a high
investment return yielded a total profit of DKK 2,517m,
corresponding to a return on equity of 28.8% after tax.
With an expense ratio of 14, Tryg realised all its ambi-
tious financial targets for 2017.
Our customer targets have played an increasingly import-
ant role in recent years, and we are therefore pleased
that our target of doubling our Net Promoter Score (NPS)
was realised. Our target for number of customers with
three or more products (3+ customers) and our reten-
tion rate target were met in Denmark. In Norway, there
was an increase in the number of 3+ customers, while
the retention rate was affected by an increasing outflow
of customers in the Norwegian market in general.
New targets
In November 2017, Tryg announced new ambitious
2020 targets, which were subsequently updated
following the acquisition of Alka: a technical result
of DKK 3,300m, a combined ratio of 86 or less,
an expense ratio of around 14 and a return on
equity of 21% or above after tax.
High customer satisfaction is important to achieving
our financial targets, and Tryg therefore presented a
new set of customer satisfaction targets. Tryg also
wants to increase awareness of TryghedsGruppen’s
member bonus, which was paid out to customers in
Denmark for the second year running.
Stable and increasing dividend for shareholders
Tryg's dividend policy seeks to distribute a steadily
increasing annual dividend. The Supervisory Board
therefore proposes a dividend of DKK 1.60 per share
for Q4 2017, meaning that a total of DKK 6.40
(DKK 6.20 in 2016) per share has been paid out for
2017. The Supervisory Board has also proposed an
extra ordinary dividend of DKK 1bn to be paid in 2018.
A new purpose for Tryg and a new strategy
In 2017, the Supervisory Board and the Executive Board
initiated a process aimed at defining a purpose for Tryg:
As the world changes, we make it easier to be tryg. For
many years to come, this will be our guiding principle,
and the strategy for 2018-2020 is the first step towards
fulfilling our purpose.
Focus on innovation and positive customer experience
A solid foundation has been created for further develop-
ing and strengthening Tryg. Tryg’s new strategy is based
on four themes. The development of new products
and services is key to maintaining and developing our
market position. This can be done through the use of
new technology, for example new types of car insurance
for which the premium is primarily determined by the
customer’s driving style. But innovation can also take
the form of new ways of selling insurance solutions,
and a good example was the launch of simple insurance
packages in 2017. Digitalisation remains important.
We have introduced the first fully digital claims handling
solutions, enabling simple claims to be processed in just
three seconds without involving any employees.
Efficient distribution and improved claims steering
As traditional insurance products come under pressure,
it is important for Tryg to streamline its distribution,
for example through more in-depth knowledge about
customers, close cooperation and cheaper distribu-
tion channels. Finally, it is important to focus on even
better claims steering through, for example, favourable
procurement agreements and prevention, thereby
ensuring that Tryg remains a financially sound company.
Thanks to our employees
The realisation of our targets for 2017 has only been
possible through the dedicated efforts of our employees,
and both the Supervisory Board and the Executive
Board would like to thank all our employees for their
commitment.
Jørgen Huno Rasmussen
Chairman
Morten Hübbe
Group CEO
Contents – Management’s review
6
Annual report 2017 | Tryg A/S |
Events in 2017
Q1
Q2
Q3
Q4
April
Medical hotline in Denmark and Norway
Tryg launched a medical hotline in Denmark and
Norway, offering access for customers to medical
advice/treatment 24/7. The hotline is contacted via
a video conferencing app and is manned by specialists
in general medicine. Experience shows that 70% of all
calls can be resolved through video conferencing by
offering treatment or counselling.
Quarterly dividend
Tryg paid out a quarterly dividend of DKK 1.60 per share
for the first time, moving from half-year distribution to
quarterly distribution as of Q1 2017.
January
Insurance package launched
Private Denmark launched a new customer concept,
an insurance package. The package includes Contents,
Accident and Travel insurance, and customers are
rewarded with an aggregate discount of up to 20%
and current Tryg Plus benefits.
Tryg acquired FDM
Tryg acquired FDM´s insurance portfolio, which com-
prises well over 20,000 members. In October 2017, Tryg
began selling insurance products to FDM’s customers,
and by 1 January 2018, all current customers had been
transferred to Tryg. Tryg sees a considerable potential for
selling insurance products to FDM’s 200,000 members.
February
Tryg acquired OBOS
Tryg acquired OBOS Forsikring in Norway with a port-
folio of approximately NOK 170m and 10,000 insurance
customers. Tryg sees a considerable potential for selling
insurance products to OBOS’s 416,800 members.
March
First fully digitalised claim processed
Tryg in Norway processed its first fully automated travel
insurance claim. A customer reported a claim online; the
claim was automatically assessed without the involve-
ment of any employees; and the money was transferred
to the customer’s account within a few seconds.
New, innovative car insurance in Sweden
Moderna, Tryg’s Swedish branch, launched a new and
innovative car insurance product. The insurance price
is based on type of car, mileage and driving style, and
independent of traditional parameters such as age and
years of holding a driver’s licence.
Jukka Pertola joined Tryg’s Supervisory Board
Chairman of the Supervisory Board Jørgen Huno
Rasmussen announced at Tryg’s AGM that he will
be stepping down in 2018. Former CEO of Siemens
Denmark Jukka Pertola joined the Supervisory
Board as Deputy Chairman and is expected to take
over as Chairman in 2018.
Contents – Management’s review
July
New car insurance for young drivers in Denmark
Private Denmark launched a new car insurance
product for young drivers under the age of 30.
Drivers may be entitled to a reduction in the price
of their insurance of up to 30% depending on their
driving style and conduct. Read more at tryg.dk
August
Tryg’s dog insurance – ‘best in test’
Tryg’s dog insurance was named ‘best in test’ by the
Danish Consumer Council’s magazine TÆNK. Tryg
won by offering some of the best coverage at the lowest
price and with the same excess as other companies.
Smart Flex digital car insurance
Moderna launched Smart Flex car insurance designed
for sensible drivers with below-average mileage needs.
With an app and a dongle installed in the car, drivers
are able to measure and influence their driving style
and thereby reduce the price of their insurance.
New websites tryg.dk and tryg.no
Tryg launched two new and improved customer
websites: tryg.dk and tryg.no. The design of the new
websites is more modern, user-friendly and simple,
making it easier for customers to buy insurance from
mobile phones, tablets and computers.
Online meetings with customers
Tryg in Denmark began offering online video meetings
with customers, which makes it possible for customers
to have face-to-face meetings with Tryg’s customer
advisers from home or work, from their cottage in the
country, or while on holiday.
September
TryghedsGruppen’s member bonus
For the second year running, Tryg’s majority share-
holder TryghedsGruppen paid out a member bonus
corresponding to 8% of the premium paid to Tryg for
2016, or the payout of DKK 700m in total to Trygheds-
Gruppen’s members who are Tryg’s Danish customers.
November
Capital Markets Day (CMD)
On 20 November, Tryg hosted its fifth CMD in London
attended by 75 analysts, shareholders, investors and
journalists. Group CEO Morten Hübbe, Group CFO
Christian Baltzer and Group COO Lars Bonde presented
Tryg’s new financial targets and customer targets for
the 2018-2020 period.
New updated insurance package
Private Denmark launched a new updated insurance
package which includes an app-controlled alarm. The
alarm helps customers detect and limit damage to their
property. The customers can choose between six differ-
ent alarm components related to preventing break-ins, fire,
indoor climate and water sensors. Read more at tryg.dk.
December
Tryg acquired Alka
On 4 December, Tryg concluded an agreement to acquire
Alka Forsikring, the eighth-largest non-life insurance
company in Denmark with a market share of approxi-
mately 6% of the private market. The transaction is
expected to be closed in H1 2018 following a period
of regulatory approval.
7
Annual report 2017 | Tryg A/S |
Financial targets 2020 a)
Technical result
DKK 3.3bn
Expense ratio
~14
Combined ratio
≤86
Return on equity
≥21%
after tax
a) The targets are conditional
upon the authorities’ approval
of the Alka acquisition
Financial outlook
At a Capital Markets Day (CMD) hosted in London
on 20 November 2017, Tryg launched new
financial targets. The new financial targets are
underpinned by four key strategic themes: claims
excellence, digital empowerment of customers,
product & service innovation and distribution
efficiency, which are all described in more detail
in the ‘Targets and strategy section’ on page 13.
The financial targets were updated in December
in connection with Tryg’s acquisition of Alka.
The Nordic non-life insurance market is character-
ised by a very high level of market penetration, and
non-life premiums in per cent of GDP are some of
the highest in the world, especially in Denmark
and Norway. Profitability in the industry is gener-
ally high as most companies are listed and have a
low expense level. Customers are generally loyal to
their insurance company based on good customer
service and claims handling processes, and reten-
tion rates close to 90% (especially in the retail seg -
ment) are not uncommon. Motor insurance repre-
sents approximately 35% of the non-life insurance
market, and insurance companies therefore closely
monitor how technical developments affect this
area. New technologies, improved safety systems
and increased governmental attention have
sharply reduced the number of people killed or
seriously injured on the roads. This could imply a
potential reduction in the risk pool for motor in-
surers, and the consequences of this continue to
be greatly debated. Recently, it has, however, be-
come clear that newer cars are also significantly
more expensive to repair due to the many built-in
new technologies; repairing a bumper with a radar
is significantly more expensive than just repairing
a bumper. New risks are also emerging, creating
various growth opportunities. This is particularly
true for the insurance of people, pets and tech -
nology. Tryg has been actively acquiring portfolios
in these areas and developing new child insurance,
pet insurance and cyber insurance products.
The general macroeconomic background in
Scandinavia remains relatively positive, especially
compared to the Euro-zone area. Government
indebtedness is low, unemployment rates are
below 5% both in Denmark and Norway, while
GDP growth is expected to be close to 2%.
Western Norway is still recovering from a pro-
longed period of low oil prices, but the general
outlook is becoming slightly more positive.
Contents – Management’s review
On 20 November, Tryg hosted its fifth
CMD in London. Group CEO Morten
Hübbe, Group CFO Christian Baltzer and
Group COO Lars Bonde presented Tryg’s
new financial targets and customer
targets for the 2018-2020 period.
8
Annual report 2017 | Tryg A/S | Tryg expects growth in gross premium income
of 0-2% in local currencies in 2018 (excluding
the acquisition of Alka), which is unchanged
from 2017. Starting 1 January 2018, the FDM
portfolio will be consolidated, while the OBOS
portfolio in Norway was consolidated starting
June 2017. The exposure to the Corporate
segment is likely to be reduced, driven by an
increased focus on profitability.
Tryg’s reserves position remains strong. At
the CMD in November 2017, it was revealed
that run-off gains are expected to be between
3% and 5% in 2020. Tryg’s systematic claims-
reserving approach continues to include a
margin of approximately 3.0% on best estimate.
In 2018, weather claims net of reinsurance and
large claims are expected to be DKK 500m and
DKK 550m, respectively, which is unchanged
compared to previous years.
The interest rate used to discount Tryg’s tech-
nical provisions is historically low. An interest
rate increase will have a positive effect on
Tryg’s results.
An interest rate increase of 1 percentage point
will increase the pre-tax result by around
DKK 300m, and vice versa.
Download IR team newsletter on impact
of rising interest rates at tryg.com.
The investment portfolio is divided into a match
portfolio corresponding to the technical provi-
sions, and a free portfolio. The objective is for
the return on the match portfolio and changes
in the technical provisions due to interest rate
changes to be close to zero.
The return on bonds in the free portfolio
(approximately 70% of the free portfolio) will
vary, but given current interest rate levels, a
very low return is expected. For shares, the
expected return is around 7% with the MSCI
World Index as benchmark, while the expected
return for property is around 5%. The invest-
ment return in the income statement also
includes the cost of managing investments,
the cost of currency hedges and interest
expenses on subordinated loans.
Download IR newsletter on modelling
investment income at tryg.com.
In the past few years, corporate tax rates have
been lowered throughout Scandinavia. In
Denmark, the rate will remain at 22% in 2018,
while it is 25% in Norway and 22% in Sweden.
Capital gains and losses on equities are not
taxed in Norway, which reduces the expected
tax payable for an average year to 22-23%.
The financial guidance does not include the
acquisition of Alka. Figures will be updated
once the acquisition has been approved by the
authorities. Preliminary estimates show that
the Alka acquisition will result in an annual
depreciation of approximately DKK 100-150m
(before tax) of customer relations within a 5 to
7 years period. This item will be booked under
the other income/costs line in the P&L. More
details will be released after closing.
As indicated at the time of the acquisition,
and assuming normal business and capital
markets development, an extraordinary
dividend should not be expected for the FY
2018. Tryg remains very focused on creating
shareholder value while the capital position
is continuously assessed. Tryg has been using
share buy backs between 2012 and 2015
to further adjust the capital structure while
switching to extraordinary dividend in 2016.
Weather claims, net of reinsurance
DKKm
Expected level 2018: DKK 500m
800
600
400
200
0
2013
2014
2015
2016
2017
Large claims, net of reinsurance
DKKm
Expected level 2018: DKK 550m
800
600
400
200
0
2013
2014
2015
2016
2017
Contents – Management’s review
9
Annual report 2017 | Tryg A/S | Targets and strategy
New purpose
Technological developments are impacting our
society at a speed that was unimaginable just a
few years ago. These sweeping changes impact
individuals and businesses and led Tryg to seek a
new purpose which could simplify our customer
offering. The new purpose ‘As the world changes,
we make it easier to be tryga)’ is aligned with
Tryg’s new strategy and is very meaningful to all
Tryg employees.
We believe that this purpose will clarify direction
and will unite and motivate Tryg’s employees,
while differentiating Tryg in the market. The word
‘tryg’ means feeling protected and cared for,
which is exactly what insurance is about.
Our customers – our most important asset
Our customers are our most important asset.
Tryg strives to continuously strengthen customer
relations through our advisory services, products,
concepts, claims handling procedures and claims
prevention measures. In 2017, we had a strong
focus on initiatives supporting the customer
targets for 2017.
Our employees – our most important resource
Our employees are our most important resource
and key to pursuing our purpose of making it
easier to be ‘tryg’. All our employees must feel
that they have an opportunity to be successful.
Clear and ambitious targets must be set for
each individual employee, and regular feedback
must be provided. Aiming for the highest level
of employee satisfaction in the financial sector
in the Nordic region, Tryg was pleased to note
an increased level of employee satisfaction in
2017, with Tryg surpassing the general level of
employee satisfaction in the financial sector in
the region. See figure on page 11.
Employee development is a key priority in Tryg.
We are committed to offering relevant career
paths and to constantly offering the right oppor-
tunities for professional and personal develop-
ment, for example in the form of special rotation
programmes, whereby selected employees are
moved to other departments and new challeng-
ing job functions as a way of developing their
competencies.
Value creation for our shareholders
Tryg’s shareholders must see Tryg as a com-
pany with ambitious targets, paying stable and
increasing dividends.
Tryg delivered a strong result in 2017 and
presented new ambitious financial targets for
2018-2020.
Contents – Management’s review
a) ‘Tryg’ means: feeling protected and cared for.
Purpose
As the world changes,
we make it easier to be tryg a)
Grasping opportunities
to develop rather than just
defending our business
• Digitalisation
• New products
• Analytics
Adjusting to customer
preferences and needs
• Self-service
• Straight-through
processes
• Packaging of products
Increase customer
relevance and share
of wallet
• Product innovation
• Prevention
• Add-on services
Tryg’s business model
Tryg makes it easier to be ‘tryg’a) for its
customers by offering them insurance
against risk, efficient claims handling, and
advice and services to prevent claims
from arising in the first place. By making it
easier for our customers to feel protected
and cared for, we benefit all of Tryg’s stake-
holders. Via TryghedsGruppen’s 60%
ownership of Tryg, part of the company’s
profit is returned to customers, who are
also members of TryghedsGruppen.
Tryg’s new purpose is valid for all stake-
holders – our customers, our employees
and our shareholders.
Segments: Private, Commercial and Corporate
Geography: Denmark, Norway and Sweden
s E m ployees
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and partners
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Claims handling
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10
Annual report 2017 | Tryg A/S |
Follow-up on 2017 targets
DKK
Earnings
Combined ratio
target 2017: ≤ 87
84.4
Expense ratio
target 2017: ≤ 14
14.0
RoE target
2017: ≥ 21%
28.8
Effiency programme
target 2017: DKK 750m
DKK 750m
Customers
NPS
target 2017: +100% (22)
22
Retention rate
target 2017: +1pp (88.9)
88.1
Denmark: 89.3
Norway: 86.0
≥3 products
target 2017: +5pp (61.3)
60.7
Denmark: 61.4
Norway: 59.6
Employee satisfaction
Employee satisfaction
Index
75
70
65
60
55
50
76
74
68 68
68 68
Tryg has an employee
satisfaction level above the
average of the Nordic sector.
Tryg
Nordic a)
Nordic
Financial market a)
2017
2016
a) Source: Global Employee and
Leadership Index
Follow-up on 2017 targets
In November 2014, Tryg communicated a set of
financial targets for 2017, which have been fulfilled.
Customer journey & success culture
The customer journey & success culture
strategic focus area has been key to improving
Tryg’s customer focus.
The customer targets, supporting the financial
targets, were delivered in the Danish part of the
business. In Norway, we saw a strong traction
in customers with three or more products in H2
2017, whereas the retention rate was challenged
by general market trends, but with Tryg develop-
ing more positively than the market in general.
The customer targets have been of paramount
importance for our strengthened customer focus
and have supported a more customer-centric
organisation in general.
Together with the CMD targets for 2015-2017,
a number of strategic initiatives were defined.
Next level pricing
Next level pricing was Tryg’s most important
initiative in the 2015-2017 period. The target was
to be ahead of the competition for at least 25% of
our products, and we estimate that the target has
been reached. In 2017, Tryg continued to develop
new products based on more advanced pricing
models, but the most important initiative was es-
pecially the conversion of our affinity agreements
to our newest products.
A very important initiative has been capturing
feedback from customers who have contacted
Tryg, whether in connection with customer service
or claims handling, as a way of further improving
the customer experience. Tryg has a strong focus
on aligning targets and KPIs to the performance of
individual employees and has a very strong system
for ensuring this alignment. One element in the
success culture is a systematic people review pro-
cess for providing feedback and acknowledging
the performance of every single employee.
Leading in efficiency
Tryg launched an efficiency programme for redu-
cing claims and direct costs by DKK 750m by the
end of 2017, with DKK 500m relating to claims
and DKK 250m to expenses. The programme
delivered DKK 750m and was very important for
realising an expense ratio of 14 and supporting
the improvement in the underlying claims ratio in
2017. In 2017, Norway made a significant contri-
bution to reducing expenses based on a number
of structural initiatives aimed at bringing down
the administrative expenses.
Contents – Management’s review
11
Annual report 2017 | Tryg A/S | CMD 2020 targets
Targets post ALKA aquisitiona)
DKK
Earnings
Technical result
DKK 2.8bn
Combined ratio
≤87
Expense ratio
~14
RoE
≥23
DKK
Earnings
Technical result
DKK 3.3bn
Combined ratio
≤86
Expense ratio
~14
RoE
≥21
Customers
Customers
TNPS
70
Number of products
per customer
+10 %
TNPS
70
Number of products
per customer
+10 %
a) The targets are conditional upon the authorities’
approval of the Alka acquisition
12
Digitalisation
The development of new digital solutions has been
very important in the three-year strategy CMD
period 2014-2017 and will be even more important
in the next three years. Focus has primarily been
on direct private customers through self-service
solutions for both customer service and claims
handling. In 2017, a straight-through process for
claims handling was developed in Norway, allowing
digital claims handling in three seconds and with-
out the involvement of employees.
Efficiency programme of DKK 750m 2015-2017
DKKm
800
600
400
200
0
250
250
500
500
125
250
60
105
65
145
2015
2016
2017
Target
2015-2017
Achieved
2015-2017
Claims
Expenses
Contents – Management’s review
New targets and strategic initiatives for 2018-2020
On 20 November 2017, Tryg presented a set of
new targets for 2020. The targets were later updated
following the acquisition of Alkaa). The targets for
2020 are supported by four strategic initiatives,
described on page 13.
Financial targets
Tryg has disclosed ambitious financial targets for
2018-2020. Tryg’s main target is a nominal technical
result of DKK 3,300m. The combined ratio target
is at or below 86, an expense ratio target is around
14 and a return on equity target at or above 21%
after tax. The expense ratio will be improved
through more effective distribution, but will also be
impacted by investments in IT, data and analytics.
Striking the right balance between efficiency and
the need to re-invest in the business is extremely
important. This underpins the new 2020 target.
To meet the financial targets and improve customer
experience, Tryg decided to invest an additional
DKK 500m in IT, which will be recognised as an
intangible asset.
Customer targets
Our customer targets remain extremely important
for realising our financial targets. Tryg has decided
to focus on customer satisfaction for customers
interacting with Tryg, which is measured through
Annual report 2017 | Tryg A/S |
Strategy 2018-2020
Strengthening the core, while embracing the future
Claims excellence
DKK 600m
in claims cost reduction
Product & service innovation
DKK 1bn
in new products by 2020+
Financial targets 2020a)
• Technical result: DKK 3.3bn
• Combined ratio: ≤ 86
• Expense ratio: ~14
• RoE: ≥21
Customer targets 2020
• TNPS :70
• Number of products
per customer +10 %
Dividend policy
• Targeting a nominal, stable increase in dividend
• Extraordinary dividend to further adjust the capital structure
Digital empowerment
of customers
DKK 100m
STP on claims: 50%
Self-service: 70%
Distribution effiency
DKK 150m
in technical result impact
Long-term profitable growth and attractive
shareholder value creation
a) The targets are conditional upon the authorities’ approval of the Alka acquisition
the Transactional Net Promotor Score (TNPS).
The target for 2020 is 70, which equates to a 13%
improvement from the current level.
There is a strong correlation between customer
loyalty and the number of products per customer,
and therefore a target of increasing the number of
products by 10% per customer has been defined.
Strategic initiatives
Tryg has defined four strategic initiatives that support
both our financial targets and our customer targets
for 2020 and has defined KPIs for each of them.
Claims excellence is targeted to reduce claims
costs by DKK 600m. The main initiatives relate to
procurement, fraud and claims steering through
continued focus on exploiting Tryg’s procurement
power and extending this to areas that have not been
targeted yet. Fraud is an important area, and through
the use of technology and improved competencies,
Tryg will be able to reduce the claims level. Tryg has
many agreements with third-party suppliers, and by
increasing the use of such agreements, it will be
possible to reduce claims costs.
a self-service level of 70% for all contacts to Tryg.
Realising these targets is expected to both support
the financial targets with DKK 100m and also the
customer targets through higher levels of conveni-
ence, transparency and empowerment for our
customers.
Product & service innovation is targeted at
DKK 1,000m in 2020+. Tryg does not want to de-
fine a specific growth target as profitability is our
key focus, but at the same time we want to adapt
to a future which is expected to be characterised
by reduced volumes in motor insurance. The main
focus will be on insuring people and technology.
Tryg is planning to expand its profitable guarantee
business, Tryg Garanti, as well as introducing other
insurance areas which are not in the market today.
Distribution efficiency is targeted to have an
impact of DKK 150m in 2020. Tryg has been
working intensively on reducing costs in the claims
and administration part of the business. Efficiency
increases through new technological solutions,
product simplification and packaging together
with a strong focus on digital channels will be the
main initiatives supporting this target.
Digital empowerment of customers will be of para-
mount importance in future, and Tryg is therefore
investing heavily in this area. Tryg’s target for 2020
is 50% straight-through processing for claims and
Impact of Alka acquisition
The Alka acquisition led to an increase in the
technical result target from DKK 2,800m presented
Corporate Social Responsibility
Corporate Social Responsibility (CSR) is an
integrated part of Tryg’s core business and
closely linked to our purpose. We focus on
at the CMD to DKK 3,300m after the acquisition.
The higher technical result relates to improve-
ments both in Tryg and in the Alka business for
claims, procurement, distribution and back-
office costs. These improvements have not been
included in the described strategic initiatives.
activities related to human and labour rights,
climate and the environment as well as anti-
corruption, and we are actively working to inte-
grate CSR into our insurance, claims handling
and prevention activities. CSR plays a role in
our decision-making, our mitigation of risks, the
improvement and development of our products
and services, the optimisation of our operations,
the development of our employees, and the
positive contributions we make to society at
large through our activities.
Contents – Management’s review
13
Annual report 2017 | Tryg A/S |
Tryg’s results
Tryg reported a profit before tax of DKK 3,239m (DKK 3,220m), driven primarily by a technical
result of DKK 2,789m (DKK 2,390m) and an investment return of DKK 527m (DKK 987m).
Proposed Q4 dividend of DKK 1.60 per share (FY 6.40 per share). Extraordinary dividend of
DKK 3.31 per share to be approved by the AGM. Solvency ratio of 196 adjusted for the capital
increase to fund the Alka acquisition.
Results 2017
A profit before tax of DKK 3,239m (DKK 3,220m)
was reported, driven primarily by a technical result
of DKK 2,789m (DKK 2,390m) and an investment
return of DKK 527m (DKK 987m). The combined
ratio was 84.4 (86.7), driven by a claims ratio of
70.4 and an expense ratio of 14.0. The overall
impact of large claims, weather claims and run-offs
was close to 2016. The return on equity (after tax)
was 28.8% (26.2%). Price adjustments of around
3% and the efficiency programme had a positive
impact on results, as shown by an improvement in
the underlying claims ratio for the full year, both for
the private segment and at group level. Premium
growth was 1.7%(0.1%), driven primarily by the
private business in Denmark and small bolt-on ac-
quisitions. The 2016 technical result was impacted
by a one-off of DKK 250m, related primarily to
write-downs of DKK 250m on intangibles and an
extraordinary capital gain of DKK 500m on the sale
of properties which boosted investment income.
in cars has increased the average cost of claim.
Tryg noticed a stabilisation in the motor claims
frequency in the last quarter of 2017. Motor
insurance remains a very important segment,
hence developments are scrutinised closely.
Capital markets developed positively in 2017.
Equities and other ‘risky assets’ posted solid returns
despite some geo-political turbulence. The
pro longed period of very low interest rate levels
remains supportive of equities as an asset class.
Equities returned approximately 16%, emerging-
market debt (a small asset class for Tryg) returned
approximately 9%, while investment-grade bonds
returned 4%. Total investment income was
more than three times higher than the expected
normalised level.
At the Capital Markets Day in 2014, Tryg disclosed
customer targets linked to the financial targets.
The customer targets were to be reached by 2017.
In 2017, a slightly higher level of claims inflation
was observed in the motor insurance segment.
Tryg believes that this is driven by an increase in
the number of cars and the use of more expensive
spare parts, primarily for medium/high-end models.
At year-end 2017, the number of registered new
cars was up just under 7% relative to year-end
2016, while an increased level of technology
At the Capital Markets Day in 2014, Tryg disclosed
customer targets linked to the financial targets.
As communicated at the CMD in November 2017,
Tryg reached the NPS for the Group, while the
target for a 5 percentage point increase in the
number of customers with three or more products
was reached in Denmark, but not in Norway
although we also saw a strong improvement in the
Financial highlights 2017
Customer highlights 2017
• Profit before tax of DKK 3,239m
(DKK 3,070ma))
• NPS unchanged at 22
• Retention rate rose slightly from
• Technical result of DKK 2,789m
88.0 to 88.1
(DKK 2,640ma))
• Combined ratio of 84.4 (85.3a))
• Underlying claims ratio improved
in both Private and for the Group
• Expense ratio of 14.0 (14.8a))
• FY dividend of DKK 6.40 per share and
extraordinary dividend of DKK 3.31 per share
a) Adjusted for one-offs
• Number of customers with three or more
products up from 57.2% to 60.7%
• Second year with TryghedsGruppen’s
member bonus for Danish customers
Customer targets
Net Promoter Score (NPS)
Retention rate
Denmark
Norway
Customers with ≥3 products (%)
Denmark
Norway
2016
22
88.0
Target
2017
22
88.9
57.2
61.3
2017
22
88.1
89.3
86.0
60.7
61.4
59.6
second half year. The target for the retention rate
was 88.9, corresponding to an increase of 1 per-
centage point. In Denmark this target was fulfilled,
while Norway was challenged due to a general
higher churn level for the market as a whole.
In 2017, Danish customers received their second
member bonus from TryghedsGruppen (Tryg’s 60%
majority shareholder). The 8% bonus has been
welcomed by customers, and Tryg expects the
bonus to provide an important competitive advan-
tage by boosting customer loyalty and customer
targets. TryghedsGruppen has announced that the
member bonus is a recurring payment although
the level of bonus paid will be decided yearly.
Stability is also important from this point of view.
Tryg will be implementing price adjustments of
around 3% in 2018 to continue improving the
underlying level of profitability.
Premiums
Premium income totalled DKK 17,963m
(DKK 17,707m), representing 1.7% growth in local
currencies. The development was underpinned by
satisfactory growth in Private and Sweden, while
premiums fell, particularly in Commercial. An
improved macroeconomic situation in Norway
and the stabilisation of Danish motor prices will
be supportive also going forward.
Contents – Management’s review
14
Annual report 2017 | Tryg A/S |
The underlying claims ratio showed an under lying improve-
ment of 0.2 percentage points for the Group.
In 2017, Private reported premium growth of
1.1%, with Private Denmark reporting healthy
growth of 3.0%, while Private Norway reported
a decline in premium income of 1.5%, but based
on improved developments in the course of the
year. The member bonus from TryghedsGruppen
supported developments in Denmark, as did
product conversions and price adjustments. The
decline seen in Private Norway was attributable to
the competitive situation in the Norwegian market
and a weakened economic situation in western
Norway. It should be added that, Private Norway
has posted a growing number of customers in the
second half of 2017, hence a stabilisation, or a
modest top-line growth, is expected in 2018.
Premium income in Commercial was down 0.7%
(-1.3%) in local currencies; a slightly positive devel-
opment in Norway was offset by a more negative
development in the Danish part of Commercial.
The inclusion of the OBOS portfolio boosted the
top-line development in Norway, while Tryg is
strongly focused on improving retention levels
and striking a better balance between sales and
loss of business in the Danish part of Commercial.
The development in customer numbers in both
Denmark and Norway improved in the last part of
the year.
Corporate premium income was up 2.1% (-1.2%)
in local currencies, which is primarily ascribable
to fronting agreements in the Swedish part of our
Corporate business. In Corporate Denmark, the
development in premium income was flat due to
a generally competitive market, a positive impact
from the member bonus model, which has been
very positively received by this segment, and strong
developments for the guarantee business. In Nor-
way, premium income was roughly stable due to a
very competitive market, which among other things,
led to the loss of a number of large customers.
The Swedish business grew by 12.5% (3.4%) in
local currencies. Top line was clearly boosted by the
inclusion of the Skandia child insurance portfolio. In
general, the Swedish business developed favour-
ably based on a relatively stable top line despite the
loss of two important affinity agreements in 2016.
The situation was mitigated by increased efforts on
the part of Moderna’s own distribution channel.
The efficiency programme made a positive contri-
bution of DKK 250m to the overall claims level. A
consistent focus on procurement, a strong focus
on accelerating the recovery of injured policyhold-
ers in order to allow them to return to work as
quickly as possible and increased surveillance to
detect frauds are all contributory factors. Some
of these initiatives pertain to claims relating to
previous years, hence the savings support the
overall run-off result.
Motor insurance remains a very profitable seg-
ment, however, an increase in claims frequency
was observed during 2017 together with an
increase in the average cost of claims as more
electronics is gradually being introduced also in
mid-end cars. Claims frequencies developed more
favourably in the last quarter of the year showing
a stabilisation. As Motor insurance remains a very
important segment for Tryg, developments are
scrutinised closely.
Claims
The claims ratio, net of ceded business, was 70.4%
(70.5% adjusted for one-offs), while the underlying
claims ratio, adjusted for weather claims and large
claims, run-off and discount rate (to discount the
claims reserves), showed an underlying improve-
ment of 0.2 percentage points.
In 2017, large claims totalled DKK 243m, while
weather claims totalled DKK 298m. Both figures
were well below the normal levels of DKK 550m
and DKK 500m. The overall run-off result was
DKK 972m (1,239m) or 5.4% (7.0%) on the
combined ratio. The lower level was primarily
due to lower run-off for workers’ compensation.
Expenses
The expense ratio was 14.0 (14.8 adjusted for
one-offs), which was in line with the target an-
nounced at the Capital Markets Day in 2014.
Initiatives introduced in 2016 focused on cutting
down on back-office functions with the aim of
reducing expense levels and increasing distribution
power. In Denmark, there was an increased focus
on integrating the customer service and claims
handling functions. The most substantial improve-
ment was seen in Norway, where the expense ratio
dropped from 15.2 to 14.7 as a result of structural
initiatives, implemented primarily in 2016. These
initiatives contributed to improving the expense
ratio to the current level of 14. The efficiency
programme contributed to reducing expenses by
DKK 125m in 2017.
In 2017, the number of employees was 3,373
against 3,264 at the end of 2016. The acquisition
of OBOS added 24 employees to the Group, while
new trainees were taken on for the integrated
customer service and claims handling functions.
Investment return
The investment return totalled DKK 527m
(DKK 987m, or DKK 487m adjusted for the capital
gain on the sale of properties).
Contents – Management’s review
15
Annual report 2017 | Tryg A/S | Tryg’s solvency ratio was 281, or 196
when adjusted for the DKK 4bn raised
for the Alka acquisition.
Capital markets developed positively in 2017.
Equities and other ‘risky assets’ posted solid re-
turns despite some geo-political turbulence. The
prolonged period of very low interest rate levels
remains supportive of equities as an asset class.
The CBOE Volatility Index (VIX), a key measure
of market expectations of near-term volatility
in equity markets, remains at one of the lowest
levels seen in the past ten years. Equities returned
approximately 16%, emerging-market debt
(a small asset class for Tryg) returned just below
9%, while investment-grade bonds returned 4%.
Risky assets boosted the overall returns in the free
portfolio, while both components of the match
portfolio, – the ‘regulatory deviation’ and the
‘performance result’ – also posted strong re-
sults. The ‘regulatory deviation’ made a positive
contribution of DKK 98m (DKK 47m) as the yield
difference between Danish and Euro swap rates
decreased, boosting the total return. The ‘per-
formance result’ made a positive contribution of
DKK 129m (DKK 163m) as Nordic covered-bond
spreads narrowed against the swap curve.
The overall investment income was more
than three times higher than the expected
normalised level.
Other income and costs
Other income and costs were DKK -77m
(DKK -157m). The correspondent figure for 2016
was impacted by the Q4 2016 write-down of
goodwill of DKK 100m related to the acquisition
of Securator.
Tax
The overall tax item was DKK 720m (DKK 748m),
or 22% of the profit before tax. In 2017, Tryg paid
DKK 845m in income tax as well as various payroll
taxes totalling DKK 400m, resulting in total tax
payments of DKK 1,245m.
Capital position
At the end of 2017, Tryg’s solvency capital require-
ment (SCR) was DKK 4,684m (DKK 5,077m). The
reduction was driven primarily by a generally lower
market risk (including a lower property exposure),
the inclusion of Danish Workers’ Compensation in
the partial internal model and currency move-
ments. At the end of the year, own funds were
DKK 13,162m (DKK 9,850m). This includes
DKK 4bn raised for the acquisition of Alka, the
proposed Q4 dividend and the announced extra-
ordinary dividend of DKK 1bn. During the year,
own funds were mostly impacted positively by the
DKK 4bn raised for the Alka acquisition as well as
net profits, and negatively by ordinary and extra-
ordinary dividends. At year-end 2017, the solvency
ratio was 281, or 196 when adjusted for the
DKK 4bn raised for the Alka acquisition.
Tryg’s own funds comprise mainly shareholders’
equity, intangibles, Tier 2 instruments (subor-
dinated debt and natural perils pool), ATier 1
instruments (old subordinated debt which has
been grandfathered) and future profits. The vast
majority of Tryg’s own funds are constituted by
shareholders’ equity. The Tier 2 capacity has been
fully utilised after the SEK 1bn subordinated debt
issue in May 2016. Currently, Tier 2 instruments in
the amount of some DKK 250m are not included
in the own funds as they exceed the 50% SCR cap.
Tryg has disclosed an issue of Tier 1 debt of ap-
proximately DKK 500m to finance the acquisition
of Alka. This will take place in H1 2018 according
to market conditions.
Tryg’s solvency ratio displays low sensitivities to
capital market movements. The highest level of
sensitivity is towards spread risk, where a widening/
tightening of 100 basis points would impact the
solvency ratio by approximately 12 percentage
points. Lower sensitivities are displayed towards
equity market falls and interest rate movements.
The Supervisory Board regularly assesses the need
for capital adjustments. In 2017, Tryg decided to
announce the payment of DKK 1bn in extraordinary
dividend after assessing the company’s capital
plan, in which the SCR is projected on the basis of
Tryg’s forecasts. The projections include initiatives
set out in the company’s strategy for the coming
years, and also the most significant risks identified
by the company. The adequacy is measured in
relation to Tryg’s strategic targets, including return
on equity and dividend policy.
Dividend policy
According to Tryg’s dividend policy, the aim is for
the dividend to be steadily increasing in nominal
terms on a full-year basis. Tryg introduced quar-
terly dividends in 2017. The payment has been
DKK 1.60 per share per quarter, or a total of
DKK 6.40 (DKK 6.20) for the full year. This equates
to total dividend payments of DKK 1,827m, or
73% of the profit for the year. At the Capital Markets
Day in November 2017, Tryg announced an extra-
ordinary dividend of DKK 1bn to be paid after
the AGM in March 2018.
Moody’s rating
Following the acquisition of Alka in December
2017, Moody’s affirmed Tryg’s ‘A1’ insurance
financial strength rating (IFSR) with a stable
outlook. In its press release, Moody’s noted that
“the affirmation reflects the beneficial impact of
the Alka acquisition on Tryg’s market position in
the Danish non-life market.
Contents – Management’s review
16
Annual report 2017 | Tryg A/S | Furthermore, thanks to the good underwriting per-
formance of Alka in recent years, Moody’s expects
Tryg’s strong profitability to continue. Given the
funding mix of the transaction and that Alka has
no debt on its balance sheet, the pro-forma finan-
cial leverage of Tryg will decline. More negatively,
the acquisition will generate very large goodwill
and will meaningfully reduce Tryg’s solvency ratio
albeit from a relatively high level.”
Results Q4 2017
The profit before tax was DKK 685m, driven
primarily by a technical result of DKK 622m and an
investment return of DKK 86m. The combined ratio
for the quarter was 86.0, driven by a claims ratio of
72.3 and an expense ratio of 13.7%. The underlying
claims ratio improved 0.4 for the Group and 0.6 for
the Private segment, continuing the positive trend
seen in 2017. Tryg pays a quarterly dividend of
DKK 1.60 per share and reports a solvency ratio
of 281, or 196 adjusted for the DKK 4bn capital
increase to fund the Alka acquisition.
Premiums
Premium growth was 1.9% in local currencies,
driven primarily by satisfactory growth in the
Danish private segment, an improved top-line
development in Commercial helped by the OBOS
portfolio in Norway and continued growth in the
low-risk fronting business in Corporate Sweden.
Tryg will implement price adjustments of ap-
proximately 3% also in 2018 to offset the general
claims inflation and improve the profitability of
selected parts of the portfolio.
Claims
The claims ratio, net of ceded business, which
covers both claims and business ceded as a
percentage of gross premiums, was 72.3
(73.2 adjusted for one-offs). The lower claims
level after one-offs primarily represented an
improved underlying development. Weather
claims and large claims were below the Q4
2016 level but run-off gains were also well
below prior-year quarter.
The underlying claims ratio was 0.4 percentage
points lower for the Group, and 0.6 percentage
points lower for Private, reflecting the impact
of price adjustments and claims initiatives to
improve profitability. The claims-related part
of the efficiency programme went according to
plan, and Q4 saw the realisation of efficiency
increases of DKK 80m.
Expenses
The expense ratio was 13.7 (14.4 adjusted for
one-offs). The efficiency programme contributed
DKK 37m in the quarter, corresponding to an
impact of 0.8 percentage points on the expense
ratio. The reduction in the expense ratio was most
significant for the Norwegian business based on
the structural initiatives in this part of the business.
The number of employees increased in the
quarter, up 43, equating to 3,373 employees
at the end of the year.
Investments
In Q4, the positive sentiment in the financial
markets continued to help boost returns for the
full year 2017. The total investment return was
DKK 86m in Q4, split between a free portfolio
return of DKK 138m (DKK 541m or DKK 41m
adjusted for the sale of a property portfolio) and
a match portfolio return of DKK 13m (DKK 8m).
Other financial income and expenses totalled
DKK -65m (DKK 49m). The Q4 2016 figure was
impacted by a value adjustment of DKK 93m
on Tryg’s own domiciles in Ballerup and Bergen.
Equities returned more than 4% in Q4 and were the
leading asset class in Tryg’s free portfolio, returning
Financial highlights Q4 2017
Pre-tax result
DKK 685m
(DKK 650m adjusted for one-offs)
Technical result
DKK 622m
(DKK 564m adjusted for one-offs)
Combined ratio
86.0
(87.6 adjusted for one-offs)
Expense ratio
13.7
(14.4 adjusted for one-offs)
Q4 dividend per share
DKK 1.6
just above DKK 112m. Emerging-market debt and
inflation-linked bonds (small asset classes for Tryg)
also posted good returns. Properties posted a
quarterly return of 1.6%.
The regulatory deviation in the match portfolio
was DKK 11m (DKK 8m) as the yield difference
between Danish and Euro swap rates narrowed,
also in the last three months of the year. The per-
formance result was DKK 2m (DKK 0m). Danish
covered-bond spreads widened marginally, but
a higher yield on the Norwegian bonds helped to
drive a small positive performance.
Contents – Management’s review
17
Annual report 2017 | Tryg A/S | Private
Results 2017
The technical result for 2017 was DKK 1,565m
(DKK 1,404m) with a combined ratio of 82.1
(83.8). The development was attributable to
a combination of positive impacts from the
efficiency programme and price adjustments.
The development in premiums was positive and
improved compared to 2016 due to a positive
development in the Danish business.
Premiums
The gross premium income increased by 1.1%
(0.8%) in local currencies. Premiums increased by
3.0% in Denmark, which was very satisfactory and
was driven by price adjustments, the introduction
of a new package concept, the integration of cus-
tomer service and claims handling and the impact
of the member bonus from TryghedsGruppen.
In Norway, premium income declined by 1.5% in
local currencies, due mainly to the competitive
market situation and a general reduction in reten-
tion rates. However, we saw an increase in the
number of customer in the last quarter, due partly
to sales to OBOS members. Customer focus is
very important both in Denmark and in Norway, as
evidenced by our consistently high Net Promoter
Score (NPS), which reached 25 in 2017. Awareness
of the member bonus from TryghedsGruppen is
still increasing and reached 79% after the bonus
payments in September 2017. This also means
that there is a potential for increasing loyalty by
boosting awareness of the member bonus model.
The retention rate in Denmark increased from
89.7 to 90.2, while in Norway the retention rate
dropped from 86.4 to 85.8, notably below the gen-
eral decline in retention rates in the market. The
number of customers with three or more products
increased from 57.2% to 60.7%, with significant
increases seen in both Denmark and Norway.
The increase in customer numbers was strongly
supported by the new package concept and
digital solutions for partner agreements.
Claims
The gross claims ratio totalled 66.0 (67.8) with a
claims ratio, net of ceded business, of 68.4 (69.6).
The improvement was ascribable to the efficiency
programme and price adjustments to mitigate
increased claims inflation levels for motor insurance
due mainly to a higher frequency level. The claims
level for house insurance with increased claims
inflation was reduced partly through a strong focus
by our claims team focusing on pipe claims.
Expenses
The expense ratio for Private was 13.7 (14.2),
which was achieved through continued focus on
Contents – Management’s review
Private encompasses the sale of insurance
products to private individuals in Denmark
and Norway. Sales are effected via call centres,
the Internet, Tryg’s own agents, franchisees
(Norway), interest organisations, car dealers,
estate agents and Nordea branches.
The business area accounts for 49% of
the Group’s total premium income.
Financial highlights 2017
Technical result
DKK 1,565m
(DKK 1,404m)
Combined ratio
82.1
(83.8)
Premium growth
(local currencies)
1.1%
(0.8%)
Expense ratio
13.7
(14.2)
Key figures – Private
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2017
Q4 2016
2,203
-1,448
-301
2,235
-1,518
-310
454
-57
-3
394
48
1.1
65.7
2.6
68.3
13.7
82.0
84.2
-2.2
0.0
2.4
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
2017
8,798
-5,807
-1,208
1,783
-211
-7
1,565
306
1.1
66.0
2.4
68.4
13.7
82.1
85.6
-3.5
0.0
1.9
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
18
Annual report 2017 | Tryg A/S |
Financial highlights Q4 2017
Technical result
DKK 394m
(DKK 366m)
Combined ratio
82.0
(83.6)
Claims ratio,
net of ceded business
68.3
(69.7)
Expense ratio
13.7
(13.9)
In 2017, Private
Denmark launched
a new car insurance
product for young
drivers under the age
of 30. The driver may
be rewarded with a
cheaper insurance
price of up to 30%
depending on his/her
driving style and
behaviour.
efficiency. In 2017, the expense ratio was most
significantly reduced in the Norwegian part of
Private, where the impact from the structural
initiatives implemented in Norway led to a reduc-
tion in employee numbers. In both Denmark and
Norway, the integration of the customer service
and claims handling functions positively impacted
expense levels.
Total employee numbers increased from 929 at
the end of 2016 to 1,000 in 2017, due mainly to
the continued transfer of employees from the
claims department as part of the integration of the
customer service and claims handling functions
and increased distribution power for the FDM
portfolio. In Norway, the number of employees
was reduced by more than 8%.
Results Q4 2017
The technical result totalled DKK 394m
(DKK 366m), with a combined ratio of 82.0 (83.6),
and was affected by a lower underlying claims
ratio, a lower level of weather claims compared
to 2016 and also a lower level of run-off gains.
Premiums
Gross premiums increased by 1.1% (1.3%) in
local currencies. Continued premium growth at
a rate of 3.3% was seen in Denmark, whereas
premium income for Norway was down 1.7%
due to a competitive market situation.
The NPS score decreased slightly in Q4 by
2 percentage points to 33 in Denmark and
from 21 to 15 in Norway. The retention rate in
Denmark increased slightly from 89.7 to 90.2,
whereas the retention rate in Norway declined
from 86.4 to 85.8.
Claims
The gross claims ratio was 65.7 (67.9), and the
claims ratio, net of ceded business, was 68.3
(69.7). The lower level was primarily due to our
efficiency programme and price adjustments.
Weather was benign in Denmark, whereas
Norway was impacted by storms and flooding,
which combined to a drop in the weather claims.
Run-off gains were at a somewhat lower level.
Expenses
The expense ratio was 13.7 (13.9). Employee
numbers increased by 27 in Q4 2017 to 1,000
due to increased distribution power for the FDM
portfolio concurrently with a reduction in the
number of employees in the Norwegian part of
Private.
Contents – Management’s review
19
Annual report 2017 | Tryg A/S |
Financial highlights 2017
Technical result
DKK 667m
(DKK 695m)
Combined ratio
82.6
(82.1)
Premium growth
(local currencies)
-0.7%
(-1.3%)
Expense ratio
17.2
(17.0)
Commercial
Commercial encompasses the sale of
insurance products to small and medium-
sized businesses in Denmark and Norway.
Sales are effected via Tryg’s own sales force,
brokers, franchisees (Norway), customer
centres as well as group agreements.
The business area accounts for 22% of
the Group’s total premium income.
Results 2017
The technical result for 2017 was DKK 667m
(DKK 695m), with a combined ratio of 82.6 (82.1).
The combined ratio was affected by a higher level
of weather claims and large claims but also a high-
er level of run-off. The development in premiums
improved significantly due to the OBOS acquisition
in 2017, but was still not satisfactory even though
we saw an improved trend in Q4.
Premiums
The development in gross premium income was
negative by 0.7% (-1.3%) in local currencies,
which was a significant improvement compared
with 2016, but still unsatisfactory. The drop in
premiums was highest in Denmark, while the
Norwegian part of Commercial benefited from
the acquisition of OBOS. The development in the
Danish part is characterised by a sales level that is
too low to neutralise the churn in the portfolio. To
improve this development, Commercial in Den-
mark will strive to capitalise on the member bonus
from TryghedsGruppen, improved processes and
segmentation as well as copying the successful
package concept from Private and improving sales
via the broker channel. In Norway, the market is
competitive and has also been impacted by the
slowdown in the Norwegian economy. With the
acquisition of OBOS, Commercial improved the
Contents – Management’s review
business area’s market position, which in combin-
ation with structural initiatives supporting greater
distribution power will be the key initiatives to
improve the premium development.
The Net Promotor Score (NPS) improved signifi-
cantly from 6 to 13 in 2017. In Denmark, the NPS
score increased from 6 to 15, and in Norway a
slight decline from 9 to 7 was seen. The retention
rate for Commercial in Denmark increased from
87.1 to 87.7, and in Norway the retention rate
dropped from 87.5 to 86.9. The positive develop-
ment in Denmark can be ascribed to a positive im-
pact from the member bonus model, whereas the
negative development for Commercial in Norway
is ascribable to a more competitive market.
Claims
The gross claims ratio totalled 62.7 (61.1), with a
claims ratio, net of ceded business, of 65.4 (65.1).
The higher claims level was mainly due to a higher
level of large claims, but also a slightly higher
run-off result. Generally speaking, the claims level
for the Commercial area is acceptable, which has
been accomplished through selected price and
pruning initiatives as and when needed. In 2017,
selected price initiatives for especially property
were implemented.
Key figures – Commercial
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2017
Q4 2016
977
-648
-155
174
-36
0
138
88
2.3
66.3
3.7
70.0
15.9
85.9
94.9
-9.0
4.8
3.9
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
2017
3,862
-2,423
-665
774
-106
-1
667
329
-0.7
62.7
2.7
65.4
17.2
82.6
91.1
-8.5
3.1
1.8
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
20
Annual report 2017 | Tryg A/S |
Financial highlights Q4 2017
Technical result
DKK 138m
(DKK 166m)
Combined ratio
85.9
(82.8)
Claims ratio,
net of ceded business
70.0
(66.3)
Expense ratio
15.9
(16.5)
Tryg was among the first companies
to develop a cyber insurance for
small and medium- sized companies,
and there has been considerable
interest in Tryg’s eProtect product
(cyber insurance). In Q1, Tryg sold
approximately 700 insurance
policies and by end of Q4, Tryg had
sold approximately 5,250 in surance
policies.
Expenses
The expense ratio for Commercial was 17.2 (17.0).
The expense level is generally too high for Com-
mercial, and initiatives were therefore implement-
ed to improve this in 2017. The most significant
step was an improved IT set-up which allows
the front-office organisation in Denmark to effect
sales and changes in agreements directly without
involving back-office functions.
Total employee numbers were quite stable from
474 at the end of 2016 to 479 in 2017, which
could be ascribed to a slight increase in the
Danish part of Commercial.
Results Q4 2017
The technical result totalled DKK 138m
(DKK 166m), with a combined ratio of 85.9 (82.8).
The result was negatively affected by a much
higher level of weather claims and large claims,
but also a high level of run-off gains. Premium
growth was positive by 2.3% (-0.8%) due to
the OBOS acquisition, and the expense level
improved to 15.9 (16.5).
Premiums
Gross premiums increased by 2.3% (-0.8%) in
local currencies based on an increase in Norway
due to the OBOS acquisition, leading to premium
growth of 8.6%, while a flat development was
seen in the Danish part of Commercial. In Norway,
the NPS score was down from 9 to 7, whereas the
NPS score increased from 6 to 15 in Denmark.
The retention rate in Denmark increased to 87.7
(87.1), while the retention rate in Norway dropped
to 86.9 (87.5) due to increasing competition in
the market.
Claims
The gross claims ratio was 66.3 (58.3), with a
claims ratio, net of ceded business, of 70.0 (66.3).
The much higher level was due to a higher level of
weather claims and large claims. Weather claims
was higher mainly due to flooding and storms in
Norway, whereas the weather in Denmark was
benign.
Expenses
The expense ratio was 15.9 (16.5), and the
number of employees was reduced by 2 to
479 in Q4 2017.
Contents – Management’s review
21
Annual report 2017 | Tryg A/S | Corporate
Results 2017
The technical result was DKK 386m (DKK 421m),
with a combined ratio of 90.0 (88.8). The result
was positively affected by a lower level of large
claims, but also a much lower level of run-off
gains. The increase in premiums can be ascribed
especially to fronting business in the Swedish part
of Corporate. In general, the corporate market is
challenged in all countries, and Tryg has therefore
implemented initiatives to improve profitability.
Premiums
Gross premium income increased by 2.1% (-1.2%)
in local currencies. A slight increase of around
1.0% was seen in Denmark due to a positive
development for the Guarantee business Tryg
Garanti, whereas in Norway, premium income
declined by 3.6% in local currencies due to
the loss of a number of large customers and
a competitive market situation, especially for
the broker channel. In Sweden, which accounts
for only 20% of the total Corporate business,
premium growth was 20% due to fronting
agreements. Fronting business is low-risk as
it is ceded to other insurance companies.
Claims
The gross claims ratio totalled 67.7 (60.8), with a
claims ratio, net of ceded business, of 79.8 (77.8).
The higher claims level was primarily due to a
lower level of run-off gains as the total level of
large claims and weather claims were much lower.
The lower run-off level of DKK 239m (DKK 506m)
was due to lower run-off for workers’ compensa-
tion. The corporate market is very competitive,
which has led to unsatisfactory claims levels. As
Tryg has a strong focus on profitability, initiatives
have been implemented to improve profitability.
In Norway, where profitability is most challenged,
Tryg has communicated to the brokers that Tryg will
implement price adjustments to improve profit-
ability, and therefore a reduction in the portfolio is
expected.
In Denmark, profitability initiatives will also be
implemented, but Tryg’s position in the Corporate
market in Denmark is generally much better due to
the member bonus payment from TryghedsGrup-
pen. In Sweden, more significant steps were taken
to improve profitability, especially for some of
our large accounts. In the Swedish market, priority
will be given to initiatives targeting motor insur-
Contents – Management’s review
Corporate sells insurance products to corpo-
rate customers under the brands ‘Tryg’ in Den-
mark and Norway, ‘Moderna’ in Sweden and
‘Tryg Garanti’. Sales are effected both via Tryg’s
own sales force and via insurance brokers.
Moreover, customers with international insur-
ance needs are served by Corporate through its
cooperation with the AXA Group.
The business area accounts for 21% of
the Group’s total premium income.
Financial highlights 2017
Technical result
DKK 386m
(DKK 421m)
Combined ratio
90.0
(88.8)
Premium growth
(local currencies)
2.1%
(-1.2%)
Expense ratio
10.2
(11.0)
Key figures – Corporate
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2017
Q4 2016
965
-720
-97
148
-88
0
60
62
3.0
74.6
9.1
83.7
10.1
93.8
100.2
-6.4
3.3
2.7
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
2017
3,852
-2,606
-392
854
-467
-1
386
239
2.1
67.7
12.1
79.8
10.2
90.0
96.2
-6.2
3.2
1.2
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
8.0
1.0
22
Annual report 2017 | Tryg A/S |
Financial highlights Q4 2017
Technical result
DKK 60m
(DKK 9m)
Combined ratio
93.8
(99.1)
Claims ratio,
net of ceded business
83.7
(88.5)
Expense ratio
10.1
(10.6)
TryghedsGruppen’s member bonus
For the second year running, Tryg’s majority
shareholder TryghedsGruppen paid out a member
bonus in 2017. The bonus corresponded to 8%
of the premium paid to Tryg for 2016, or the pay-
out of DKK 700m in total to TryghedsGruppen’s
members who are Tryg’s Danish customers.
also communicated the need for improved profit-
ability, competition remains fierce and still more
pronounced in the broker channel.
Claims
The gross claims ratio was 74.6 (84.3), with a
claims ratio, net of ceded business, of 83.7 (88.5).
The much lower level was primarily due to a
much lower level of large claims. Also, the level of
weather claims was somewhat higher primarily
due to storms and flooding in Norway.
Expenses
The expense ratio was 10.1 (10.6) and somewhat
lower than last year. The number of employees
was 250, down 2 in Q4 2017.
ance and liability as these are the main areas with
excessive claims ratios.
Expenses
The expense ratio for Corporate was 10.2 (11.0),
and the drop was mainly due to commissions
from the fronting business in Sweden. Although
expense levels are quite low, Corporate also has
a strong focus on reducing expenses as a way of
improving our competitive position.
The number of employees was reduced from 257
at the end of 2016 to 250 in 2017.
Results Q4 2017
The technical result amounted to DKK 60m
(DKK 9m), with a combined ratio of 93.8 (99.1),
and was positively affected by a much lower level
of large claims. Premium growth was positive
by 3.0% (0.9%) due to fronting agreements in
Sweden.
Premiums
Gross premiums increased by 3.0% (0.9%) in local
currencies based on more or less unchanged port-
folios in Denmark and a drop in the Norwegian
business, but an increase in fronting business in
Sweden. Although some of the large players have
Contents – Management’s review
23
Annual report 2017 | Tryg A/S | Sweden
Results 2017
Sweden Private posted a result of DKK 171m
(DKK 120m), which represented a significant
improvement compared to the prior-year result.
The result for 2017 was impacted by profitability
initiatives to improve the extended warranty insur-
ance for electronic products and the integration
of the profitable Skandia child insurance portfolio.
We also saw a significant improvement in the
expense ratio supporting the result.
Premiums
Premium income increased by 12.5% (3.4%)
in local currencies. This was mainly due to the
acquisition of Skandia’s child insurance portfolio,
which is highly profitable and characterised by
high retention levels. At the same time, Tryg’s pri-
vate business in Sweden has mitigated the loss of
a number of large affinity agreements and grown
the portfolio at the end of the year, when adjusting
for the Skandia acquisition. Moderna continues to
focus strongly on developing innovative products,
especially for the motor insurance segment, and
launched a number of new products in 2017.
Claims
The gross claims ratio totalled 70.9 (71.5) and was
affected by a somewhat lower run-off level and a
positive impact from the Skandia child insurance
portfolio. The underlying claims development
improved through price adjustments and also due
to the acquisition of the child insurance portfolio
from Skandia.
Expenses
The expense ratio was much lower at 16.9 (19.0),
which can be ascribed to a continued focus on
effective distribution and the integration of the
Skandia portfolio.
The number of employees was 353 (337) at the
end of 2017, which reflects the focus on substitut-
ing distribution from lost partner agreements with
own distribution.
Contents – Management’s review
Sweden 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,
partners and online.
The business area accounts for 8% of
the Group’s total premium income.
Financial highlights 2017
Technical result
DKK 171m
(DKK 120m)
Combined ratio
88.1
(90.7)
Premium growth
(local currencies)
12.5%
(3.4%)
Expense ratio
16.9
(19.0)
Key figures – Sweden
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2017
Q4 2016
355
-259
-63
33
-2
-1
30
21
5.1
73.0
0.6
73.6
17.7
91.3
97.2
-5.9
2.5
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
2017
1,487
-1,055
-251
181
-5
-5
171
98
12.5
70.9
0.3
71.2
16.9
88.1
94.7
-6.6
0.9
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
24
Annual report 2017 | Tryg A/S |
Financial highlights Q4 2017
Technical result
DKK 30m
(DKK 23m)
Combined ratio
91.3
(92.9)
Claims ratio,
net of ceded business
73.6
(72.7)
Expense ratio
17.7
(20.2)
Results Q4 2017
Sweden’s technical result totalled DKK 30m
(DKK 23m), with a combined ratio of 91.3 (92.9).
Weather claims were at a slightly higher level,
while run-off gains were much lower at 5.9 (8.3).
Premium growth was positive by 5.1% (12.2%).
The expense level improved significantly to 17.7
(20.2), primarily as a result of the acquisition of the
Skandia business and a strong focus on effective
distribution.
Premiums
Gross premiums increased by 5.1% (12.2%) in
local currencies. The increase was not affected by
the Skandia acquisition as Skandia was included
from September 2016, but resulted from a strong
focus on effective distribution channels.
Claims
The gross claims ratio was 73.0 (72.7) and net
of ceded business 73.6 (72.7). The increase
was primarily due to a lower run-off level.
Expenses
The expense ratio was 17.7 (20.2), reflecting the
fact that the Skandia child insurance portfolio is
now part of the business and with a low expense
level, but also Private Sweden’s strong focus on
more effective distribution.
The number of employees was 353, equating
to an increase of 4 employees in Q4 2017
to strengthen distribution.
Contents – Management’s review
25
In 2017, Moderna, Tryg’s Swedish branch,
launched a new and innovative car insur-
ance product together with Greater Than.
The insurance price is based on type of car,
mileage and driving style, and independent
of traditional parameters such as age and
years of holding a driver’s licence.
Annual report 2017 | Tryg A/S | Investment activities
Financial highlights 2017
Investment return
DKK 527m
Free portfolio result
DKK 598m
Equities
16% return
Match portfolio
DKK 227m
2017 was another eventful year characterised by
high levels of geo-political volatility, which has been
largely discounted by equity investors. Elections in
France and Germany, ongoing negotiations between
the EU and the UK on Brexit and tension surround-
ing the situation in North Korea were the most sig-
nificant political events of the year. These resulted in
only short-term pressure on equity indexes, which
had another impressive year with gains of approxi-
mately 17% (MSCI All Country), benefiting also
from global economic expansion and the adoption
of the US tax reform before Christmas. Interest
rates remain at a very low level despite some initial
tightening by the Federal Reserve and the Bank of
England supporting equities as an asset class.
Tryg’s investment activities reported an overall
result of DKK 527m (DKK 987m). The result for the
full year 2016 was positively impacted by a capital
gain of DKK 500m on the sale of a property port-
folio. The overall result for the investment activities
in 2017 was more than three times higher than
the expected normalised level. The purpose of our
investment strategy is to support a high and stable
technical result and thus reduce overall volatility
to the greatest possible extent. Since 2010, this
purpose has been supported by the strategic split
of the investment portfolio into a match portfolio
(assets matching the insurance reserves) and a
free portfolio (the capital of the company). Tryg
reported a DKK 598m (DKK 939m) return on the
free portfolio, a DKK 227m (DKK 210m) result on
the match portfolio and other financial income
and expenses of DKK -298m (DKK -162m).
Free portfolio result
The free portfolio produced an overall result of
DKK 598m (DKK 939m). The corresponding result
in 2016 was boosted by a capital gain on the sale
of a property portfolio of DKK 500m. Equities had
another good year returning just below 16% for a
total amount of DKK 353m. The CBOE Volatility
Index (VIX), a key measure of market expectations
of near-term volatility in equity markets, remains at
one of the lowest levels seen in the past ten years.
Several fixed-income asset classes posted very
strong returns, emerging-market debt (a small
asset class for Tryg) returned more than 9%, while
investment-grade bonds and high-yields returned
4.0% and 2.8%. The return on the investment
property portfolio was DKK 92m (5.6%). Tryg is
still in the process of re-investing the proceeds
from the property sales announced in December
2016. The property allocation target is likely to
be met during the first part of 2018.
Match result
The result of the match portfolio is the difference
between the return on the match portfolio and the
Contents – Management’s review
Key figures – investments
DKKm
Q4 2017
Q4 2016
Free portfolio, gross return
Match portfolio, regulatory deviation
and performance
Other financial income and expenses
Total investment return
138
13
-65
86
541
8
49
598
Return – match portfolio
DKKm
Q4 2017
Q4 2016
Return, match portfolio
Value adjustments, changed discount rate
Transferred to insurance technical interest
Match, regulatory deviation and performance
Hereof:
Match, regulatory deviation
Match, performance
83
-26
-44
13
11
2
-275
323
-40
8
8
0
2017
598
227
-298
527
2017
289
122
-184
227
98
129
2016
939
210
-162
987
2016
547
-188
-149
210
47
163
26
Annual report 2017 | Tryg A/S |
amount transferred to the insurance business. The
result can be split into a ‘regulatory deviation’ and
a ‘performance result’. The most important driver
of the ‘regulatory deviation’ is the yield differ-
ence between Euro swap rates and Danish swap
rates. In Norway and Sweden, Tryg hedges using
local swaps corresponding to the EIOPA curve;
hence only the Danish exposure is relevant. The
regulatory deviation made a positive contribution
of DKK 98m (DKK 47m) as the yield difference
between Danish and Euro swap rates decreased.
As an example, looking at the 10-year interest rate
level, the difference decreased by 11 basis points,
boosting the total return. The most important
driver of the performance result is the difference
in yields between Danish, Norwegian and Swed-
ish covered bonds and equivalent swap rates. If
spreads narrow (versus swap rates), the overall
performance is positive; otherwise the overall
performance is negative. The performance result
made a positive contribution of DKK 129m
(DKK 163m) as Nordic covered-bond spreads
narrowed against the swap curve.
2017. Since the prior bear market ended in
March 2009, the current advance in equities is
now the second-longest on record without at
least a 20% drop in leading indexes.
Other financial income and expenses
The other financial income and expenses com-
ponent is primarily made up of interest expenses
related to outstanding subordinated debt, the
cost of the currency hedge to protect the share-
holders’ equity and the cost of running the invest-
ment operations. These are the main elements
included in other financial income and expenses.
Other financial income and expenses totalled
DKK -298m (-162m).
The total investment return was DKK 86m in Q4,
split between a free portfolio return of DKK 138m
(DKK 541m or DKK 41m adjusting for the sale
of a property portfolio) and a match portfolio
return of DKK 13m (DKK 8m). Other financial
income and expenses amounted to DKK -65m
(DKK 49m). The Q4 2016 figure was impacted by
a write-up of DKK 93m on Tryg’s own domiciles
in Ballerup and Bergen.
Investment activities in Q4 2017
In Q4, the positive sentiment in the financial mar-
kets continued to help boost returns for the full year
Equities returned more than 4% in Q4 and were
the leading asset class in Tryg’s free portfolio,
returning DKK 112m. Emerging-market debt and
inflation-linked bonds (small asset classes for Tryg)
Financial highlights Q4 2017
Investment return of
DKK 86m
Free portfolio result
DKK 138m
Equities
4.3% return
Match portfolio
DKK 13m
also posted good returns. Properties posted a quar-
terly return of 1.6%.The regulatory deviation in the
match portfolio was DKK 11m (DKK 8m) as the yield
difference between Danish and Euro swap rates nar-
rowed, also in the last three months of the year. The
performance result was DKK 2m (DKK 0m). Danish
covered-bond spreads widened marginally, but a
higher yield on the Norwegian bonds helped to drive
a small positive performance.
Return – free portfolio
DKKm
Q4 2017
Q4 2017 (%)
Q4 2016
Q4 2016 (%)
2017
2017 (%)
2016
2016 (%)
31.12.2017
31.12.2016
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
3
-23
10
2
4
2
3
1
112
25
138
0.3
-0.1
1.8
0.2
0.8
0.2
0.2
4.3
1.6
1.3
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
5
30
8
29
47
22
12
153
353
92
598
1.3
0.4
1.5
4.0
9.1
2.8
1.8
15.9
5.6
5.0
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
327
4,111
547
935
595
791
159
7,465
2,185
1,715
322
4,464
539
546
447
730
220
7,268
2,187
2,540
11,365
11,995
Investment assets
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 derivative contracts of DKK -135m.
Contents – Management’s review
27
Annual report 2017 | Tryg A/S |
Capital and risk management
Risk management is based on Tryg’s targets and
strategies and the risk exposure limits decided
by the Supervisory Board. The assessment and
management of Tryg’s aggregated risk and the
associated capital requirements therefore consti-
tute a central element in the management of the
company. Tryg’s Supervisory Board defines the
framework for the company’s target risk appetite
and thereby the capital which must be available
to cover any losses.
Insurance risk
The insurance risk is managed by limiting the size
of single large commitments and through the use
of reinsurance, thus reducing the maximum cost
of large claims. Furthermore, the insurance risk is
managed through geographical limitations and by
refraining from offering certain types of insurance
such as aviation and marine hull insurance. Operat-
ing within these boundaries, Tryg’s risk depends on
the company’s choice of exposure within different
segments and industries in the insurance market.
Tryg operates in a relatively stable line of business.
Quarterly fluctuations are driven mainly by large
claims and weather events, and reinsurance is
used extensively to smooth impacts on earnings.
Investment risk
The amount of assets invested is divided between
the match portfolio and the free investment portfolio.
Contents – Management’s review
The match portfolio, representing approximately
75% of invested assets, consists of bonds and a
swap overlay designed in such a way that sensibil-
ity towards change in the interest rate curve at any
point matches the corresponding sensibility of the
discounted claims reserves. This matching strategy
means that the net effect on the balance sheet of
any change in the interest rate curve for practical
purposes is zero. The free portfolio (approximately
25%) is intended to produce the maximum return
on risk. The investment risk for the free portfolio is
managed through limits on exposures within each
asset class (bonds, shares, properties etc.).
Solvency II
The Solvency II regime emphasises the need for
sound risk management and introduces additional
requirements concerning risk governance, consist-
ency across the group and top management report-
ing and involvement. Tryg has been working towards
implementing the principles of Solvency II for years
and has, among other things, carried out risk identi-
fication routines, ORSA (Own Risk and Solvency
Assessment) reports, acted in a setup comprising
three lines of defence and appointed a special Risk
Committee under the Supervisory Board. Tryg’s
partial internal model was approved by the Danish
FSA in November 2015. Read more about Tryg’s
risk management in Note 1 on page 55.
SFCR
Tryg was one of the first European insurers to
publish its Solvency Financial Condition Report
(SFCR) on 16 May 2017. SFCR contained only
limited additional information, including capital
charges by geography, balance sheet according to
Solvency II against IFRS (statutory financial state-
ments) and SCR components as per Q4 2016.
The publication of SFCR attracted a lot of attention
in the insurance industry, with a clear focus on
capital quality, including the use of transitional
measures and the impact of long-term guarantee
measures. Tryg’s solvency position does not
factor in any benefits from the measures above
as the company is a pure non-life insurer with
relatively short-term liabilities.
The Solvency Capital Requirement (SCR) is calcu-
lated in such a way that Tryg would statistically be
able to honour its obligations in 199 out of 200
years. In other words, Tryg could have a negative
result greater than DKK 4,684m (the SCR) in 1 out
of 200 years. Tryg’s SCR was DKK 4,684m at the
end of 2017, down approximately DKK 400m
from the end of 2016. The reduction was driven
primarily by a generally lower market risk (includ-
ing a lower property exposure), the inclusion of
Danish Workers’ Compensation in the partial
internal model and currencies movements. At the
end of 2017, Tryg’s own funds were DKK 13,162m
(after deducting the proposed Q4 dividend and
the proposed extraordinary dividend of DKK 1bn)
against DKK 9,850m at the end of 2016.
Capital management
Capital management is based on Tryg’s partial
internal capital model, which was approved by
the Danish FSA in November 2015. Tryg has
modelled the insurance risk internally, while using
the standard formula for all other risks. The capital
model is based on Tryg’s risk profile, and therefore
takes into consideration the composition of Tryg’s
insurance portfolio, geographical diversification,
its claims reserves profile, reinsurance programme,
investment mix and Tryg’s profitability in general.
Solvency capital requirement
DKKm
6,000
5,000
4,000
3,000
2,000
1,000
0
5,077
4,684
Q4 2016
Q4 2017
28
Annual report 2017 | Tryg A/S | DKK
Tryg’s Supervisory Board has proposed an extraordinary dividend
of DKK 1bn, corresponding to DKK 3.31 per share and a Q4
dividend of DKK 1.60 per share to be approved by the AGM.
Own funds during the year were mostly impacted
positively by the DKK 4bn raised for the Alka
acquisition as well as net profits and negatively by
ordinary and extraordinary dividends. The solvency
ratio was 281 or 196 when adjusted for the DKK
4bn raised for the Alka acquisition at year-end 2017.
The key components of Tryg’s own funds are
shareholders’ equity, intangibles, Tier 2 instru-
ments (subordinated debt and Norwegian natural
perils pool), ATier 1 instruments (old subordinated
debt which has been grandfathered) and future
profits. The vast majority of Tryg’s own funds are
constituted by shareholders’ equity. The Tier 2
capacity has been fully utilised; currently some
DKK 250m of Tier 2 instruments are not in cluded
Own funds
DKKm
15,000
12,000
9,000
6,000
3,000
0
9,850
13,162
Q4 2016
Q4 2017
in the own funds as they exceed the 50% SCR cap.
Tryg has an additional ATier 1 capacity of
DKK 1.9bn at the end of 2017.
At the Capital Markets Day on 20 November 2017,
Tryg announced measures to reduce the SCR
by up to 10%. The inclusion of Danish Workers’
Compensation in the partial internal model has
lowered the SCR by approximately DKK 100m,
while further work to include Sweden in the
internal model and other minor adjustments
will reduce the SCR further. All changes are
subject to approval by the Danish FSA.
Tryg’s solvency ratio displays low sensitivities
towards capital market movements. The highest
sensitivity is towards spread risk, where a widening/
tightening of 100 basis points would impact the
solvency ratio by 12 percentage points. Lower sen-
sitivities are displayed towards equity market falls
and interest rate fluctuations. A change in the UFR
(Ultimate Forward Rate) would have an insignificant
impact. This is unsurprising, considering that Tryg
underwrites only non-life risks with low duration.
Ordinary and extraordinary dividend
The Supervisory Board regularly assesses the need
for capital adjustments. In November 2017, Tryg
announced the distribution of extra ordinary divi-
dends of DKK 1bn, corresponding to DKK 3.31 per
share, after assessing the company’s capital plan,
in which the solvency ratio is projected based on
Tryg’s forecasts. The projections include initiatives
set out in the company’s strategy for the coming
years, and are based also on the most significant
risks identified by the company. The adequacy is
measured in relation to Tryg’s strategic targets,
including return on equity and dividend policy.
At the annual general meeting to be held on
16 March 2018, Tryg’s Supervisory Board will
propose a Q4 dividend of DKK 1.60 per share.
In 2017, Tryg also paid Q1-Q3 dividends of
DKK 4.80 per share in total. The full-year dividend
is thus DKK 6.40 per share, equivalent to the total
distribution of DKK 1,827m.
Capital plan and contingency plan
In conjunction with the capital plan, a contingency
plan is made. It describes specific measures that
may be introduced in the near term, should the
company’s desired capital position be threatened.
Tryg’s Supervisory Board has approved both the
capital plan and the contingency plan. Read more
about Tryg’s risk management and Solvency II in
note 1 on page 55.
The Alka acquisition
Tryg announced the acquisition of Alka on
4 December 2017. Alka will add approximately
Shareholder remuneration
DKK
10
8
6
4
2
0
3.4
5.8
3.5
6.0
3.5
3.3
6.2
6.4
3.2
5.4
2013
2014
2015
2016
2017
Ordinary dividend
Extraordinary buy back
Extraordinary dividend
4% market share and approximately DKK 2bn of
non-life premiums. The acquisition is expected to be
closed in Q2 2018 upon approval by the authorities.
Tryg has disclosed a solvency ratio of approximately
170 when the Alka acquisition is finalised.
Moody’s rating
Tryg has an ‘A1’ (stable outlook) insurance financial
strength (IFSR) rating from Moody’s. The rating agency
highlights Tryg’s strong position in the Nordic P&C
market, robust profitability, very good asset quality
and relatively low financial leverage. Moody’s also as-
signed an ‘A3’ rating to Tryg’s subordinated debt. The
rating was reaffirmed following the Alka acquisition.
Contents – Management’s review
29
Annual report 2017 | Tryg A/S | Investor information
Investor Relations (IR) is responsible for Tryg’s
communication with the capital markets. It is
important that investors, analysts and other
stakeholders are able to form a true and fair view
of developments, including Tryg’s financial results.
For this reason, Tryg’s IR team strives to be as
open and transparent as possible to ensure that
stakeholders’ information requirements are met
at the highest possible level. IR is in charge of
communication with equity investors, fixed-
income investors and rating agencies.
See Tryg’s IR policy at tryg.com/investor.
After the publication of quarterly and annual
reports, Tryg’s management and IR team travel
extensively to meet with shareholders and poten-
tial investors. Quarterly analyst presentations are
held in Copenhagen and London. Tryg also attends
various financial conferences. In 2017, we held
almost 300 investor meetings – mostly one-to-
ones but also some group meetings in Europe,
the USA, Canada and Asia. The Tryg share is
covered by 23 analysts, who continuously update
their recommendations and earnings forecasts.
See a list of analysts and their
recommendations at tryg.com/investor.
Tryg hosted its CMD on 20 November 2017 in
London. At the CMD, new financial targets were
published and updated following the Alka acquisi-
tion: A technical result of DKK 3.3bn is targeted for
2020, driven by a combined ratio of 86 or lower
and an expense ratio of around 14 and a return
on equity target of 21% after tax.
The Tryg share
The Tryg share is listed on NASDAQ Copenhagen.
From the last day of the reporting quarter (31
De cember, 31 March, 30 June and 30 Septem-
ber), Tryg refrains from dialogue with analysts/
investors until the release of the interim/annual
reports. Company announcements, press releases
and transaction statements are published in both
Danish and English, whereas interim reports and
annual reports are published in English.
Subscribe to all financial information at
tryg.com. Follow @TrygIR on Twitter.
and started to improve in the following quarters.
Additionally, capital markets continued to develop
positively, boosting the company’s investment
income. The insurance sector’s key attraction is its
dividend yield. Therefore, earnings and solvency
are always carefully scrutinised by investors. In the
world of Solvency II, movements in solvency levels
can be more difficult to predict and often also
difficult to understand. A relatively simple business
model and a trans parent capital position are there-
fore key competitive advantages.
NASDAQ Copenhagen remains the primary
exchange for trading in the Tryg share. In 2017,
NASDAQ Copenhagen accounted for 65 of the
turnover of the Tryg shares. This means that ap-
proximately 35 of all trading in 2017 was carried
out on alternative exchanges. Average daily turn-
over on NASDAQ was DKK 65m, and average
daily volume was 1,700.
The Tryg share started the year at a price of
DKK 127.7 and ended 2017 at DKK 155.2. The
total return (price and dividends) of the share was
33%. The positive share price development was
driven primarily by an improved underlying financial
performance. After a period of deterioration, Tryg’s
underlying claims ratio flattened out in Q1 2017
Share capital and ownership
Tryg’s share capital totalled 1,510,739,955 on
31 December 2017. It comprises one share class
(302,147,991 with a nominal value of DKK 5), and
all shares rank pari passu. The number of shares
was increased by 27,400,000 after the Alka acqui-
sition. The majority shareholder, TryghedsGruppen
smba, owns 60% of the shares and is the only
shareholder holding more than 5% of the share
capital. TryghedsGruppen invests in peace of mind
and healthcare providers in the Nordic region, and
supports non-profit-making activities.
TrygFonden
TrygFonden is the leading and most well-known
peace of mind supporter in Denmark, support-
ing around 800 activities that contribute to this,
such as coastal lifeguards, cuddle bears for
children at hospitals and defibrillators. Behind
TrygFonden is TryghedsGruppen, which owns
60% of the shares in Tryg and contributed
DKK 600m to projects that create peace of
mind throughout Denmark in 2017.
TryghedsGruppen
In 2017, for the second year running, Tryg’s
majority shareholder, TryghedsGruppen, paid
out a member bonus to Tryg’s customers in
Denmark corresponding to 8% of the annual
premium paid for 2016.
Contents – Management’s review
30
Annual report 2017 | Tryg A/S | Financial calender 2018
Shareholders
at 31 December 2017
16 Mar. 2018 Annual general meeting
19 Mar. 2018 Tryg shares are traded
ex-dividend
15
15
Per cent
60
21 Mar. 2018 Payment of Q4 dividend
10
and extraordinary dividend
TryghedsGruppen
Large Danish
shareholders a)
Large international
shareholders a)
Small shareholders
11 Apr. 2018
Interim report Q1
12 Apr. 2018
Tryg shares are traded
ex-dividend
16 Apr. 2018
Payment of Q1 dividend
10 July 2018
Interim report Q2 and H1
11 July 2018 Tryg shares are traded
ex-dividend
13 July 2018 Payment of Q2 dividend
11 Oct. 2018
Interim report Q1-Q3
12 Oct. 2018
Tryg shares are traded
ex-dividend
a) Shareholders holding more than 10,000 shares.
Free float – geographical distribution
at 31 December 2017
10
25
Per cent
46
19
Denmark
UK
USA
Others
16 Oct. 2018 Payment of Q3 dividend
Free float is exclusive of TryghedsGruppen.
Shareholder distribution
DKKm
Dividend
Dividend per share (DKK) a)
Payout ratio
Extraordinary share buy back
Extraordinary dividend b)
Extraordinary dividend per share (DKK)
2017
1,827
6.4
73%
0
1,000
3.31
2016
1,770
6.2
72%
0
1,000
3.54
2015
1,759
6.0
89%
1,000
2014
1,731
5.8
68%
1,000
2013
1,656
5.4
70%
1,000
a) Dividend per share includes dividend for Q1-Q3 of DKK 1.60 per quarter paid out in April, July and October
2017 and dividend of DKK 1.60 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.
Quarterly dividends started in 2017
Tryg started paying quarterly dividends in 2017.
Tryg’s share has a distinct income profile; the busi-
ness generally grows in line with GDP, producing
high margins, which are mostly returned to share-
holders. The prolonged period of very low interest
rates in the wake of the financial crisis means that
investors, all else being equal, attach even greater
importance to dividends than in a more normal
environment. This is particularly true for insurance
investors as insurance is one of the sectors offering
the highest dividend yield. From an investment
perspective, a quarterly dividend will be a clear
reminder of the high profitability of our business
and our focus on returning capital to shareholders.
Tryg’s dividend policy is based on the following
assumptions:
Based on Tryg’s dividend policy and the satisfactory
2017 results, the Supervisory Board will propose
a Q4 dividend of DKK 1.60 per share at the annual
general meeting on 16 March 2018. The full-year
dividend corresponds to a payout ratio of 73.
Extraordinary dividend for 2017
At the time of publication of the 2016 annual re-
port, Tryg decided to move from extraordinary buy
backs to extraordinary dividends when the capital
position allows such extraordinary payments. At the
CMD on 20 November 2017, Tryg announced an
extraordinary dividend of DKK 1bn, corresponding
to a dividend of DKK 3.31 per share to be approved
by the AGM. The extraordinary dividend per share
is lower compared to 2016 as Tryg has issued 27.4
million new shares to fund the acquisition of Alka.
• An aspiration to distribute a steadily increasing
dividend in nominal terms on a full-year basis.
• A general objective of creating long-term value
for the company’s shareholders.
• A competitive dividend policy in comparison
with the policies of our Nordic competitors
• Annual distribution of 60-90% of our profit after tax.
• The capital level must at all times reflect our
return on equity targets and statutory capital
requirements.
• The capital level may be adjusted via extra-
ordinary dividends.
Annual general meeting
Tryg’s annual general meeting will be held on
16 March 2018 at 15:00 CET at Tryg’s head office,
Klausdalsbrovej 601, 2750 Ballerup, Denmark.
The notice will be advertised in the daily press in
February 2018 and will be sent to shareholders
upon request.
The annual general meeting will also
be announced at tryg.com.
The company announcements published in
2017 can be seen at tryg.com/investor/news.
Contents – Management’s review
31
Annual report 2017 | Tryg A/S |
Corporate governance
Tryg focuses on managing the company in accord-
ance with the principles of good corporate gov-
ernance and generally complies with the Danish
recommendations prepared by the Committee on
Corporate Governance. The Recommendations on
Corporate Governance are available at corporate-
governance.dk. At tryg.com, Tryg has published its
statutory corporate governance report based on the
‘comply-or-explain’ principle for each individual rec-
ommendation. This section on corporate governance
is an excerpt of the corporate governance report.
Download Tryg’s statutory corporate governance
report at tryg.com > Investor > Download.
Dialogue between Tryg, shareholders
and other stakeholders
Tryg’s Investor Relations (IR) department maintains
regular contact with analysts and investors.
Together with the Executive Board, IR organises
investor meetings, conference calls and participates
in conferences in Denmark and abroad. In 2017,
Tryg held a Capital Markets Day in London present-
ing its new financial targets and customer targets
for 2020. IR also communicates with stakeholders
on social media via Twitter@TrygIR. The Supervisory
Board is informed about the dialogue with invest-
ors and other stakeholders on a regular basis. Tryg
has an IR policy, which states, among other things,
that all company announcements are published
in Danish and English. Tryg publishes quarterly
interim reports in English. Furthermore, Tryg
publishes an annual profile in Danish, English
and Norwegian. The profile is addressed to Tryg’s
private shareholders, customers, employees and
other stakeholders and is published on 29 January
2018. Moreover, Tryg prepares quarterly investor
presentations, which are used in our dialogue
with investors and analysts. Tryg also publishes
IR newsletters on relevant subjects on a regular
basis. All announcements, financial reports,
presentations and newsletters are available at
tryg.com. This material provides all stakeholders
with a comprehensive picture of Tryg’s position
and performance. The consolidated financial
statements are presented in accordance with IFRS.
At tryg.com, stakeholders are invited to subscribe
to press releases, company announcements as
well as trading announcements by insiders. A num-
ber of internal guidelines ensure that the disclo-
sure of price-sensitive information complies with
legislation and stock exchange codes of conduct.
Tryg has adopted a number of policies describing
the relationship between different stakeholders.
See the IR policy at tryg.com > Investor >
IR contacts > IR policy, and the CSR policy at
tryg.com > CSR > CSR strategy > CSR policy.
Annual general meeting
Tryg holds an annual general meeting (AGM) every
year. As required by the Danish Companies Act and
the Articles of Association, the AGM is convened
via a company announcement and at tryg.com
subject to at least three weeks’ notice. Sharehold-
ers may also opt to receive the notice by post or
email. The notice contains information about time
and venue as well as an agenda for the meeting.
All shareholders are encouraged to attend the
AGM. The AGM is held by personal attendance as
the Supervisory Board values personal contact
with the Group’s shareholders. Shareholders may
propose items to be included on the agenda for
the annual general meeting, and may ask ques-
tions before and at the meeting. Shareholders may
vote in person at the annual general meeting, by
post or appoint the Supervisory Board or a third
party as their proxy. Shareholders may consider
each item on the agenda. The proxy form and
form for voting by post are available at tryg.com
prior to the AGM.
Share and capital structure
Tryg’s share capital comprises a single share class,
and all shares rank pari passu. The majority share-
holder, TryghedsGruppen smba, owns 60% of the
shares and is the only shareholder owning more
than 5% of the company’s shares. The Supervisory
Board ensures that Tryg’s capital structure is
aligned with the needs of the Group and the inter-
ests of its shareholders and that it complies with
the requirements applicable to Tryg as a financial
undertaking. Tryg has adopted a capital plan and
a contingency capital plan, which are reviewed
annually by the Supervisory Board.
Depending on the development in results, each
year the Supervisory Board proposes the distribu-
tion of quarterly dividends, and possibly an ex-
traordinary annual dividend if further adjustment
of the capital structure is required. The proposed
extraordinary dividend is DKK 1bn in 2018 to be
paid after the AGM.
Duties, responsibilities and
composition of the Supervisory Board
The Supervisory Board is responsible for the
central strategic management and financial
control of Tryg and for ensuring that the business
is organised in a sound way. This is achieved by
monitoring targets and frameworks on the basis
of regular and systematic reviews of the strategy
and risks. The Executive Board reports to the
Supervisory Board on strategies and action plans,
market developments and Group performance,
funding issues, capital resources and special risks.
Contents – Management’s review
32
Annual report 2017 | Tryg A/S | The Supervisory Board holds one annual strategy
seminar to decide on and/or adjust the Group’s
strategy with a view to sustaining value creation
in the company. The Executive Board works with
the Supervisory Board to ensure that the Group’s
strategy is developed and monitored. The Super-
visory Board ensures that the necessary skills and
financial resources are available for Tryg to achieve
its strategic targets. The Supervisory Board speci-
fies its activities in a set of rules of procedure and
an annual cycle for its work.
Nine members of the Supervisory Board are elected
by the annual general meeting for a term of one
year. Of the nine members elected at the annual
general meeting, five, and thus the majority, are
independent persons, thus complying with recom-
mendation 3.2.1. in Recommendations on Corpo-
rate Governance, while the other four members are
dependent persons as they are appointed by Tryg’s
majority shareholder, TryghedsGruppen. See page
38 for information on when the individual members
joined the Supervisory Board, were re-elected and
when their current election period ends. To ensure
the integration of new talent on the Supervisory
Board, members elected by the annual general
meeting may hold office for a maximum of nine
years. The Supervisory Board has 13 members,
eight men and five women (currently including two
male and two female employee representatives).
Women are thus not underrepresented on Tryg’s
Supervisory Board, thus complying with legislation
as well as Tryg’s policy. The Supervisory Board has
members from Denmark, Sweden and Norway.
See details about the independent board
members in the section Supervisory Board
on pages 37-38 and at tryg.com.
The Supervisory Board performs an annual
evaluation of its work and skills to ensure that it
possesses the expertise required to perform its
duties in the best possible way. The Supervisory
Board focuses primarily on the following qualifica-
tions and skills: management experience, financial
insight, organisation, IT and digitalisation, product
development, communication, market insight,
international experience, knowledge of insurance,
reinsurance, capital requirements, general ac-
counting insight and accounting principles (GAAP),
including regulations and principles designed for
the insurance industry and M&A experience.
See CV’s and descriptions of the skills in the
section Supervisory Board on pages 37-38
and at tryg.com.
Duties and composition of the Executive Board
Each year, the Supervisory Board reviews and
adopts the rules of procedure of the Supervisory
Board and the Executive Board with relevant
policies, guidelines and instructions describ-
ing reporting requirements and requirements
for communication with the Executive Board.
Financial legislation also requires the Executive
Board to disclose all relevant information to the
Supervisory Board and report on compliance
with limits defined by the Supervisory Board and
in legislation.
The Supervisory Board considers the compos-
ition, development, risk and succession plans of
the Executive Board in connection with the annual
evaluation of the Executive Board, and regularly
in connection with board meetings. Each year, the
Supervisory Board discusses Tryg’s activities to
guarantee diversity at management levels. Tryg
attaches importance to diversity at all manage-
ment levels. Tryg has prepared an action plan,
which sets out specific targets to ensure diversity
and equal opportunities and access to manage-
ment positions for qualified men and women. In
2017, the proportion of women at management
level was 37% against 36.4% in 2016. The target
for 2017 of 38% or more women at management
level was therefore not met. Tryg maintains the
target to increase the total proportion of women
at management level to 38% or more in 2018.
See the action plan at tryg.com.
Board committees
Tryg has an Audit Committee, a Risk Committee,
a Nomination Committee and a Remuneration
Committee. In 2016, Tryg set up a temporary IT
Committee to allow the Board to work more closely
with Tryg’s IT strategy. The framework of the com-
mittees’ work is defined in their terms of reference.
The board committees’ terms of reference
can be found at tryg.com > Governance >
Management > Supervisory Board > Board
committees, including descriptions of
members, meeting frequency, responsibilities
and activities during the year.
See the tasks of the board committees in 2017
at tryg.com > Governance > Management >
Supervisory Board > Board committees.
Three out of four members of the Audit Com-
mittee and three out of five members of the
Risk Committee, including the chairman of the
committees, are independent persons. Of the five
members of the Remuneration Committee, two
members are independent persons, and two out
of three members of the Nomination Committee
are independent. Board committee members are
elected primarily based on special skills that are
considered important by the Supervisory Board.
Contents – Management’s review
33
Annual report 2017 | Tryg A/S |
Involvement of the employee representatives
in the committees is also considered important.
The committees exclusively prepare matters for
decision by the entire Supervisory Board.
The special skills of all members are
also described at tryg.com.
Remuneration of Management
Tryg has adopted a remuneration policy for Tryg
in general which contains specific schemes for
the Supervisory Board, the Executive Board and
other employees in Tryg, whose activities have a
material impact on the risk profile of the company,
so-called risk takers. The remuneration policy for
2017 was adopted by the Supervisory Board in
January 2017 and approved by the annual general
meeting on 8 March 2017.
The Chairman of the Supervisory Board reports
on Tryg’s remuneration policy each year in con-
nection with the review of the annual report at
the annual general meeting. The Board’s proposal
for the remuneration of the Supervisory Board
for the current financial year is also submitted
for approval by the shareholders at the annual
general meeting.
See the remuneration policy at tryg.com.
Remuneration of the Supervisory Board
Members of Tryg’s Supervisory Board receive a
fixed fee and are not comprised by any form of
incentive or severance programme or pension
scheme. Their remuneration is based on trends in
peer companies, taking into account the required
skills, efforts and the scope of the Supervisory
Board’s work, including the number of meetings
held. The remuneration received by the Chair-
man of the Board is three times that received by
ordinary members, while the Deputy Chairman’s
remuneration is twice that received by ordinary
members of the Supervisory Board.
Remuneration of the Executive Board
Members of the Executive Board are employed on
a contractual basis, and all terms of their remuner-
ation are established by the Supervisory Board within
the framework of the approved remuneration policy.
Total remuneration of the Supervisory Board in 2017
DKK
Jørgen Huno Rasmussen
Torben Nielsen
Jukka Pertola a)
Elias Bakk a)
Tom Eileng
Lone Hansen
Anders Hjulmand
Jesper Hjulmand
Ida Sofie Jensen
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
Bill-Owe Johansson b)
Audit
Fee Committee Committee
Risk One-off Remuneration
committee
IT fee
1,080,000
720,000
584,516
292,258
360,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
67,742
225,000
210,000
150,000
81,183
100,000
140,000
150,000
140,000
140,000
100,000
150,000
150,000
140,000
140,000
140,000
140,000
100,000
Total
1,230,000
1,155,000
665,699
292,258
460,000
500,000
360,000
650,000
600,000
650,000
500,000
650,000
600,000
67,742
a) Joined the Supervisory Board in March 2017
b) Resigned from the Supervisory Board in March 2017
Total remuneration of the Executive Board in 2017
DKK
Morten Hübbe
Lars Bonde
Christian Baltzer
Base salary
Pension
10,000,000
5,003,536
4,000,000
2,500,000
1,250,884
1,000,000
Car
allowance
255,000
255,000
255,000
Other
benefits
26,000
26,000
26,000
Total fixed
salary
Share-based
remunerationb)
Total
fee
12,781,000
6,535,420
5,281,000
2,600,000
1,250,000
1,000,000
15,381,000
7,785,420
6,281,000
a) The maximum investment opportunity offered under the Matching Shares Programme at the beginning of 2018 (performance year 2017)
Contents – Management’s review
34
Annual report 2017 | Tryg A/S |
Tryg wants to strike an appropriate balance
between management remuneration, predictable
risk and value creation for the shareholders in the
short and long term.
matching). The purpose of the Matching Shares
Programme is to ensure alignment of interests
between the Executive Board and the company’s
shareholders.
The Executive Board’s remuneration consists
of a base salary, a pension contribution of 25%
of the base salary and other benefits. The base
salary must be competitive and appropriate for
the market and provide sufficient motivation for
all members of the Executive Board to do their
best to achieve the company’s defined targets.
The Supervisory Board can decide that the base
salary should be supplemented with a variable
pay element of up to 50% of the fixed salary
including pension.
The variable pay element consists of a Matching
Shares Programme. The Executive Board may,
using taxed funds, buy shares (so-called investment
shares) in Tryg A/S at market price for a predefined
amount, which is dependent on the member’s
performance for the fiscal year. Four years after
the purchase, Tryg will grant one matching share
per investment share free of charge. Matching is
conditional upon fulfilment of additional condi-
tions such as continued employment and back
testing (a testing prior to matching, to ensure that
the criteria forming the basis of the calculation
of the variable salary are still met at the time of
Each year the Supervisory Board evaluates the
performance of the Executive Board against the
targets set by the Supervisory Board for the finan-
cial year. The overall fulfilment of the weighted
targets determines the number of investment
shares offered to each member of the Executive
Board. The targets for 2017 were a combination
of corporate KPIs and developmental targets.
The corporate KPIs were linked to Tryg’s technical
result and the year’s fulfilment of Tryg’s CMD 2017
targets, which were specified as expense ratio,
retention rate, premium growth and employee sat-
isfaction. The development targets included targets
such as implementation and anchoring of Tryg’s
new long-term strategy and development of the
management-level reporting to Executive Board.
Read more about the Matching Shares
Programme in the remuneration policy
at tryg.com.
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. The Super-
visory Board defines Tryg’s risk management
framework as regards insurance risk, investment
risk, compliance risk and operational risk, as well
as IT security, in policies and guidelines for the
Executive Board. Risks associated with new
financial reporting rules and accounting policies
are monitored and considered by the Audit Com-
mittee, the finance management and the internal
auditors. Material legal and tax-related issues
and the financial reporting of such issues are
assessed on an ongoing basis.
Other risks associated with the financial
reporting are described in the section Capital
and risk management on pages 28-29 and in
Note 1 Risk management on page 55.
Tryg engages in ongoing risk identification, map-
ping insurance risks and other risks which may
endanger the realisation of Tryg’s strategy or
which may potentially have a substantial impact
on Tryg’s financial position. The process involves
identifying and continually monitoring the risks
identified. As in previous years, Tryg undertook
an Own Risk and Solvency Assessment (ORSA) in
2017. The purpose of the ORSA is to ensure and
demonstrate a link between strategy, risk manage-
ment, risk appetite, solvency and capital planning
over the planning period.
The Supervisory Board and the Executive Board
approve and monitor the Group’s overall policies
and guidelines, procedures and controls in import-
ant risk areas. They receive reports about develop-
ments in these areas and about the ways in which
the frameworks are applied. The Supervisory Board
checks that the company’s risk management and
internal controls are effective. The Board receives
reports on non-compliance with the frameworks
and guidelines established by the Supervisory
Board. The Risk Committee monitors the risk
management on an ongoing basis and reports
quarterly to the Supervisory Board.
The Group’s internal control systems are based
on clear organisational structures and guidelines,
general IT controls and segregation of functions,
which are supervised by the internal auditors.
As part of the internal control system, Tryg has
established independent risk management,
compliance and actuarial functions. The functions
report to the Executive Board and the Supervisory
Board’s Risk Committee. Tryg has a decentralised
set-up whereby risk managers in the business
areas carry out controlling tasks for the risk
management and compliance functions.
Contents – Management’s review
35
Annual report 2017 | Tryg A/S |
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.
Risk management is an integral part of Tryg’s
business operations. The Group seeks at all times
to minimise the risk of unnecessary losses in order
to optimise returns on the company’s capital.
Read more about Tryg’s risk management
in the section Capital and risk management
on pages 28-29 and in Note 1 on page 55.
Whistleblower line
Tryg has a whistleblower line, which allows
employees, customers and business partners
to report any serious wrongdoings or suspected
irregularities. Reporting takes place in confidence
to the Chairman of the Audit Committee and
the Head of Compliance.
Read more about Tryg’s whistleblower line
at tryg.com.
Independent and internal audit
The Supervisory Board ensures monitoring by
competent and independent auditors. The Group’s
internal auditor attends all Board meetings. The
independent auditor attends the annual Board
meeting at which the annual report is presented.
The annual general meeting annually appoints
an independent auditor recommended by the
Supervisory Board. The internal and independent
auditors attend the Audit and Risk Committee
meetings, and at least once a year the auditors
meet with the Audit Committee without the pres-
ence of the Executive Board. The Chairman of the
Audit Committee deals with any matters that need
to be reported to the Supervisory Board.
Tryg’s internal audit department regularly reviews
the quality of the Group’s internal control systems
and business procedures. It is responsible for plan-
ning, performing and reporting on the audit work
to the Supervisory Board.
Deviations and explanations
Tryg complies with the Recommendations on
Corporate Governance with the exception of the
recommendations concerning the retirement age
for members of the Supervisory Board, with which
Tryg complies partially, the number of independent
members of the board committees, with which
Tryg complies partially and agreements on termina-
tion payments, with which Tryg complies partially;
see recommendations 3.1.4., 3.4.2. and 4.1.5. of
the Recommendations on Corporate Governance.
The deviations are explained in Tryg’s statutory
corporate governance report, which is available
at tryg.com > Investor > Download.
Contents – Management’s review
36
Annual report 2017 | Tryg A/S |
Supervisory Board
Carl-Viggo Östlund (1955)
Board member
Has experience from the packag-
ing industry, logistics, insurance,
finance and banking, from leading
positions in listed and private
companies. Carl-Viggo Östlund
has special knowledge of Swedish
market conditions.
Elias Bakk (1975)
Employee representative
Project Manager in Tryg.
Employed since 2006.
Jukka Pertola (1960)
Deputy Chairman
Has special skills in the fields of
management, insurance, IT and
digitalisation, communication and
finance. Jukka Pertola has more
than ten years of board work experi-
ence from companies, foundations
and organisations.
Jørgen Huno Rasmussen (1952)
Chairman
As former CEO of FLSmidth, Jørgen
Huno Rasmussen has experience in
international management of listed
companies and special skills within
strategy, business development,
communication, risk management
and finance.
Torben Nielsen (1947)
Deputy Chairman
Has special skills in the fields of
management, finance, financial
services and risk management
as former Governor of Danmarks
Nationalbank.
Tina Snejbjerg (1962)
Employee representative
Officer of Tryg’s Personnel Depart-
ment. Employed since 1987.
Jesper Hjulmand (1963)
Board member
From positions with SEAS-NVE,
Jesper Hjulmand has experience
in the fields of M&A, strategy,
organisational and management
development, communication and
business development.
Lone Hansen (1966)
Employee representative
Chairman of the Association for
Tied Agents and Key Account Man-
agers in Tryg. Employed since 1990.
Tom Eileng (1954)
Employee representative
Deputy chairman of Finansforbundet
Tryg and Senior Commercial Adviser.
Employed since 1986.
Contents – Management’s review
Mari Thjømøe (1962)
Board member
Has special skills in the fields of
financial planning and control,
restructuring/financing, investment
analysis, investor relations, asset
management, strategic planning,
branding as well as special know-
ledge of the insurance market.
Mari Thjømøe has special insights
into the Norwegian market.
Anders Hjulmand (1951)
Board member
Is experienced in the counselling
of a number of Danish and inter-
national, privately and publicly
owned companies and foundations,
and experienced in the areas of law,
management, strategy and business
development.
Ida Sofie Jensen (1958)
Board member
Has experience from business
operations and the healthcare sec-
tor as well as management, strategy,
politics and finance.
Lene Skole (1959)
Board member
Has experience from international
companies, among other things
through previous positions with Colo-
plast and Maersk Company Limited,
UK. Lene Skole has particular skills in
the fields of strategy, financing and
communication.
37
Annual report 2017 | Tryg A/S | Jørgen Huno Rasmussena)
Chairman
Born in 1952. Joined the Supervisory Board in 2012. Danish Citizen.
Career: Professional board member. Adjunct professor at the
Copenhagen Business School. Former CEO of the FLSmidth Group.
Education: B.Com. (Organisation), MSc (Civ. Eng.),
PhD (Constr. Man.).
Board seats, Chairman: Tryg A/S, Tryg Forsikring A/S, Trygheds-
Gruppen smba, Lundbeckfonden and LundbeckFond Invest A/S.
Board seats, 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: Remuneration Committee (Chairman)
and Nomination Committee (Chairman) in Tryg; Remuneration
Committee (Chairman) in Haldor Topsøe A/S.
Number of shares held: 1,830
Change in portfolio 2017: 0
Torben Nielsenb)
Deputy Chairman
Born in 1947. Joined the Supervisory Board in 2011. Danish citizen.
Career: Professional board member, Adjunct Professor at the
Copenhagen Business School. Former Governor of Danmarks
Nationalbank (Danish Central Bank).
Education: Savings bank training, Graduate Diplomas in
Organisation, Work Sociology, Credit and Financing.
Board seats, Chairman: Sydbank A/S, Investeringsforeningen
Sparinvest, Vordingborg Borg Fund and Museum South East
Denmark.
Board seats, 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: Audit Committee (Chairman),
Risk Committee (Chairman) and Nomination Committee in Tryg,
Risk Committee (Chairman) in Sydbank, and Dansk Landbrugs
Realkredit’s Audit Committee (Chairman).
Number of shares held: 21,000
Change in portfolio 2017: +1,000
Jukka Pertolab)
Deputy Chairman
Born in 1960.Joined the Supervisory Board in 2017. Finnish citizen.
Career: Professional board member. Former CEO of Siemens.
Education: MSc in Engineering.
Board seats, Chairman: Danish Academy of Technical Sciences
(ATV), Gomspace Group AB / GomSpace A/S, Leo Pharma A/S,
Siemens Gamesa Renewable Energy A/S.
Board seats, Deputy Chairman: Tryg A/S and Tryg Forsikring A/S.
Board member: Baltic Development Forum, Industriens
Pensionsforsikring A/S, Cowi Holding A/S.
Committee memberships: Remuneration Committee and
Nomination Committee in Tryg.
Number of shares held: 1,200
Change in portfolio 2017: +1,200
Elias Bakk
Born in 1975. Employee representative. Joined the Supervisory
Board in 2017. Danish citizen. Employed since 2006.
Career: Project Manager at Tryg.
Education: Norrea Real Gymnasium.
Education at ‘Forsikringsakademiet’ for new board members.
Number of shares held: 670
Change in portfolio 2017: +100
Tom Eileng
Born in 1954. Employee representative. Joined the Supervisory
Board in 2016. Norwegian citizen. Employed since 1986.
Deputy chairman of Finansforbundet Tryg and Senior
Commercial Adviser.
Education: Business Economist. Authorised adviser in life
and non-life insurance.
Board member: Tryg A/S, Tryg Forsikring A/S and Vesta Støttefond.
Committee memberships: Remuneration Committee in Tryg.
Number of shares held: 320
Change in portfolio 2017: +55
Lone Hansen
Born in 1966. Employee representative. Employee since 1990.
Joined the Supervisory Board in 2012. Danish citizen. Chairman
of the Association for Tied Agents and Key Account Managers
in Tryg.
Education: Certified commercial insurance agent. Various
insurance and sales courses and negotiation training.
Board member: Tryg A/S and Tryg Forsikring A/S. Member
of the Tied Agents’ District Board of Finansforbundet.
Number of shares held: 750
Change in portfolio 2017: +55
Anders Hjulmanda)
Born in 1951. Joined the Supervisory Board in 2016. Danish
citizen. Lawyer and partner at HjulmandKaptajn.
Education: LL.M.
Board seats, 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 Danmark
A/S, Scan Fish Danmark A/S, Utzon Center A/S, Kunsten –
Museum of Modern Art, Thor Fisk A/S, Lerøy Schlie A/S, PSC A/S,
GF Inveco A/S and a number of subsidiaries.
Board seats, Deputy Chairman: 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 the Utzon Foundation.
Number of shares held: 3,622
Change in portfolio 2017: +2,454
Jesper Hjulmanda)
Born in 1963. Joined the Supervisory Board in 2010. Danish citizen.
Career: CEO of SEAS-NVE A.m.b.A.
Education: MSc (Economics and Business Administration),
Lieutenant-Colonel Royal Danish Air Force Reserve, Pathfinder.
Board seats, Chairman: SEAS-NVE Net A/S, Energy Denmark A/S,
Fibia P/S, Danish Energy Association and Danish Utilities (DEA).
Board seats, Deputy Chairman: TryghedsGruppen smba.
Board member: Tryg A/S, Tryg Forsikring A/S, Danish Industry.
Committee memberships: Audit Committee and Risk Committee
of Tryg, Representatives of Danish Energy, Representatives of
TryghedsGruppen smba and Representatives of Forenet Kredit.
Number of shares held: 8,750
Change in portfolio 2017: 0
Ida Sofie Jensena)
Born in 1958. Joined the Supervisory Board in 2013. Danish citizen.
Career: Group Managing Director of Lif (Danish Association of
the Pharmaceutical Industry), CEO of the subsidiary 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.
Deputy Chairman: TryghedsGruppen smba and Hans Knudsen
Instituttet (business trust).
Board member: Tryg A/S, Tryg Forsikring A/S and Plougmann
& Vingtoft A/S.
Committee memberships: Remuneration Committee in Tryg.
Number of shares held: 2,368
Change in portfolio 2017: +1,193
Lene Skoleb)
Born in 1959. Joined the Supervisory Board in 2010. Danish citizen.
Career: CEO of Lundbeckfonden (+ Lundbeckfond Invest A/S).
Education: Maersk International Shipping Education, Graduate
Diploma in Finance and various international management
programmes.
Board seats, Chairman: LFI Equity A/S.
Board seats, Deputy Chairman: Ørsted A/S, H. Lundbeck A/S,
ALK-Abelló A/S, Falck A/S and TDC A/S.
Board member: Tryg A/S and Tryg Forsikring A/S.
Committee memberships: Audit Committee and Risk Committee
in Tryg, Audit & Nomination Committee in ALK-Abelló A/S,
Scientific and Remuneration Committee in H. Lundbeck A/S,
and Remuneration Committee in Falck A/S.
Number of shares held: 7,025
Change in portfolio 2017: +1,500
Tina Snejbjerg
Born in 1962. Employee representative. 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: Risk Committee in Tryg,
and Central Board of Forsikringsforbundet.
Number of shares held: 750
Change in portfolio 2017: +55
Mari Thjømøeb)
Born in 1962. Joined the Supervisory Board in 2012.
Norwegian citizen.
Education: MSc in Economics and Business Administration,
Chartered Financial Analyst (CFA) as well as Senior Executive
Programme from London Business School and Harvard
Business School.
Board seats, Chairman: Seilsport Maritimt Forlag AS,
Færder Nasjonalparksenter IKS, ThjømøeKranen AS.
Board member: Tryg A/S, Tryg Forsikring A/S, Nordic Mining ASA,
Forskningskonsernet Sintef, E-CO Energi AS (Vice Chairman),
Scatec Solar ASA, Norconsult A/S (Vice Chairman), TF Bank AB
and Teodin Acquico AS (Helly Hansen).
Committee memberships: Audit Committee and Risk Committee
in Tryg; member of the Audit Committee of E-CO (Chairman),
Scatec Solar ASA, Norconsult (Chairman), TF Bank and Helly
Hansen (Chairman).
Number of shares held: 3,300
Change in portfolio 2017: 0
Carl-Viggo Östlundb)
Born in 1955. Joined the Supervisory Board in 2015.
Swedish citizen.
Career: Professional board member and independent adviser.
Former CEO of the Swedish banks SBAB and Nordnet as well as
the insurance company SalusAnsvar.
Education: BSc in International Business and Finance & Accounting.
Board seats, Chairman: Bridge Scandinavia Ventures AB, Creador
AB, FCG Fonder AB, HappyX AB, Insiderfonder AB, Investment-
aktiebolaget QV, Irisande Care Group AB, Hypoteket AB, Papilly
AB, Ponture AB.
Board member: Allert Östlund AB, DBT Capital AB, Havsgaard AB,
Holmö Fastigheter AB, Tryg A/S, Tryg Forsikring A/S, Wonderbox AB.
Committee memberships: Remuneration Committee in Tryg.
Number of shares held: 1,230
Change in portfolio 2017: +1,060
Members of the Supervisory Board are elected for a term
of one year. Employee representatives are, however,
elected for a term of four years.
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
38
Annual report 2017 | Tryg A/S | Executive Board
Contents – Management’s review
39
Morten Hübbe Group CEOBorn in 1972. Joined Tryg in 2002. Joined the Executive Board in 2003.Education: BSc (International Business Administration and Modern Languages), MSc (Finance and Accounting), management programme at Wharton. Board member: KMD A/S, KMD Holding A/S and KBC.Number of shares held: 136,204 Change in portfolio in 2017: +24,694Christian Baltzer Group CFOBorn 1978. Joined Tryg in 2009. Joined the Executive Board in 2016.Education: Masters in Insurance Science. Number of shares held: 7,470Change in portfolio in 2017: +4,235Lars BondeGroup COOBorn in 1965. Joined Tryg in 1998. Joined the Executive Board in 2006.Education: Insurance training, LL.M.Chairman: P/F Betri Trygging, Tryg Livsforsikringsselskab A/S.Board member: Danish Employers’ Association for the Financial Sector, Tjenestemændenes Forsikring, Forsikringsakademiet, the Danish Insurance Association and cphbusiness.Number of shares held: 49,967Change in portfolio in 2017: +7,367Annual report 2017 | Tryg A/S | Corporate Social Responsibility in Tryg
Statutory Corporate Social Responsibility report
In 2017, Tryg intensified its Corporate Social
Responsibility (CSR) work by initiating an in-depth
analysis of our existing CSR initiatives while also
working on prioritising new potential initiatives
and focus areas for 2018. As part of our analysis,
both internal stakeholders and customers were
involved in creating a materiality analysis mapping
the importance of various CSR-related areas. Based
on the analysis, a new strategy was decided. The
strategy is closely linked to our business model
(see page 10) and our purpose – ‘As the world
changes, we make it easier to be tryg’.a) Our CSR
strategy focuses on Tryg’s contribution to peace of
mind in society, Tryg as a responsible workplace
with responsible management, and competent and
responsible customer relations.
Peace of mind in society
The essence of Tryg’s purpose is to ensure peace
of mind in a world that is changing. We believe a
changing world represents a great opportunity
to improve peace of mind in society, while also
representing a risk of diminishing peace of mind if
the right actions are not put in place. To increase
and ensure peace of mind, we are actively working
to develop and offer insurance products that meet
demands in a changing world and ensure that
people do not experience unnecessary challenges
or insecurities if they experience an injury or
damage to their belongings. Besides contributing
to our customers’ peace of mind, we also want
to contribute to peace of mind in society. For
example, we share our knowledge and contribute
to peace of mind in local communities. In 2018, we
will continue to examine new ways of contribut-
ing to peace of mind by exploring the possibilities
of expanding our CSR efforts in new areas and
thereby increase peace of mind in society.
Conference with focus on concussions
In January 2017, Tryg and Hjerneskadeforeningen
welcomed 300 doctors, colleagues and individuals
who have previously been affected by concussion
to a conference focusing on the late effects of
concussions on the brain. The conference was ini-
tiated because the late effects of concussions are
not always handled correctly since practices are
diverse and sometimes contradictory. This might
lead to a longer course of illness, higher costs for
companies, and larger compensation sums from
Tryg. By knowing how to handle the late effects, it
might be possible to minimise the uncertainty and
malaise that some experience after a concussion,
thereby increasing their peace of mind.
Lifebuoys
Since 1952, Tryg’s iconic lifebuoys have provided
safety along the coastline of Norway. The lifebuoy
is a vitally important rescue tool and one of our
most important CSR initiatives when it comes to
ensuring peace of mind. In 2017, we increased
our commitment by providing more than 3,000
lifebuoys compared to a little over 2,000 in 2016.
To increase safety along the coastline, Tryg has
also participated in several large events offering
the public a chance to practise their life-saving
skills with a lifebuoy and thereby prepare them
for preventing drownings in future. Each year, the
lifebuoy plays a crucial role in preventing people
from drowning, and since 1952 it has prevented
more than 1,000 deaths.
Watch Tryg’s new commercial with
a grand father and grandson who were
saved by a lifebuoy on youtube.com
Read more about lifebuoys at tryg.no
Cooperation with the Norwegian
Society for Sea Rescue
The Norwegian Society for Sea Rescue (Rednings-
selskapet) is a nationwide humanitarian association
with the purpose of saving lives and increase safety
and peace of mind at sea and along the coastline.
Tryg has sponsored an ‘Elias boat’, which is known
from children’s TV and is a well-known, popular
concept targeting smaller children. During the UCI
Road World Championships in Bergen in Septem-
ber 2017, more than 1,100 children and their par-
ents queued up and were welcomed onboard the
‘Tryg-Elias’ for a boat trip. This was one of several
events in 2017 where Tryg and Redningsselskapet
actively worked together for the common cause of
preventing drownings and sharing knowledge about
this issue. In 2018, we are planning more events
together to raise awareness and teach people how
to react in order to prevent drownings.
The Nightravens
The Nightravens are local groups of volunteers who
walk the streets at night, providing safety, offering
help, and preventing unwanted incidents, especially
among young people. Tryg is the main partner of
the Nightravens in Norway and hosts a national
Nightravens Conference every other year. There are
a total of about 350 Nightravens groups, which are
highly respected, and Tryg is honoured to support
their important efforts to create safety and peace of
mind in local communities all over Norway.
Read more about the Nightravens at natteravn.no
Tryg as a responsible workplace
with responsible management
In order to fulfil our purpose and ensure peace of
mind, we believe it is necessary to focus on Tryg as
a responsible workplace with responsible manage-
a) The word ‘tryg’ is a unique Scandinavian word, which is best directly translated as peace of mind, but the essence of the word is about feeling protected and cared for.
Contents – Management’s review
40
Annual report 2017 | Tryg A/S | ment. As part of our materiality and risk assess-
ments, it has become clear that our em ployees are
a very valuable resource and also key to providing
competent and high-quality services to our
customers, which is also illustrated in our busi-
ness model on page 10. Our employees therefore
represent an important resource when it comes to
further improving our service and customer care
standards. However, there is also a risk that Tryg
can negatively impact its employees through, for
example, dissatisfaction, discrimination, and the
physical as well as the psychosocial working
environment. To mitigate this risk, we are actively
working to improve the conditions for our employ-
ees. At the same time, we want to take a holistic
approach to our operations, hence we do not only
focus on our employees in the Nordic region, but
also on activities involving other companies. How-
ever, we believe that responsible management is
more than this, which is why we also focus on our
impact on the climate and the environment.
Employee satisfaction
We focus on the well-being of our employees
and their right to a healthy and safe workplace.
To monitor the development in employee satisfac-
tion, we take our annual employee satisfaction
survey very seriously and use it actively to improve
working conditions and minimise the risk of dis-
satisfaction, discrimination and stress among
Contents – Management’s review
our employees. As part of this work, we have a
clearly defined process for supporting and guiding
departments with a low level of employee satisfac-
tion. Such focused efforts are key to increasing
employee satisfaction, and our analyses show that
our efforts are having a positive effect. In 2017, 34
departments received extra support and guidance
compared to 49 departments in 2016. Overall
employee satisfaction increased from 74 in 2016
to 76 in 2017.
Read more about employee satisfaction
on page 11.
Equal opportunities
In Tryg, we want to promote diversity at management
level to ensure a strong and resilient organisation.
As part of our focus on diversity, the first five female
managers completed the Women’s Leadership
Programme in 2017. The programme is run by the
Danish Diversity Council, of which Tryg is a founding
partner, and the aim is to strengthen the participants’
competencies, so they are better equipped to
pursue top management positions. In 2018, we will
continue to work with the Danish Diversity Council,
and another five female leaders will be taking part in
the Women’s Leadership Programme.
In 2017, Tryg also introduced a rotation programme
for internal talents with the aim of developing their
profile by letting them work in different functions
and departments in Tryg. We believe this initiative
is necessary since we can see that, during their
careers, women often stay with the same depart-
ment for a long time. Such loyalty leads to in-
depth knowledge of a certain area, but by increas-
ing talents’ knowledge about other departments,
we believe they will become more attractive in
connection with recruitments for top manage-
ment positions. In this way, we want to increase
our pool of potential managers, while mitigating
the risk of a shortage of qualified managers in the
future. The rotation programme is for both men
and women, but in 2018 at least 70% of the 25
participants should be women. Tryg’s target for
women at management level is still 38% in 2018.
In 2017, we achieved 37% women at manage-
ment level compared to 36.4% in 2016.
See the composition of the Supervisory
Board on page 33.
In addition to our work on equal opportunities
at management level, we also ensure that
employees have equal opportunities as regards
pay levels and career opportunities, for example
by ensuring an equal distribution of men and
women in recruitment processes. At the same
time, we also promote paternity leave while
having a general focus on the importance of a
good work-life balance, which can include
flexible or reduced working hours.
Read more about equal opportunities at tryg.com
Employees and business ethics
It is important that our employees comply with
our Code of Conduct at all times since it covers
a number of areas that are key to Tryg’s values,
including good practices for marketing, handling
of personal data, anti-discrimination, diversity
and anti-corruption, including gifts. Even though
Employee mix
No.
2,000
1,600
1,200
800
400
0
Men
Women
Age
<30
years
Age
30-49
years
Age
>50
years
Flexi job
Non-
Western
back-
ground a)
a) Non-Western background has been compiled
by Statistics Denmark.
41
Annual report 2017 | Tryg A/S |
all employees must comply with the Code of
Conduct, some departments and positions are
more exposed to risks of improper conduct than
others, for example when it comes to handling
personal data or anti-corruption, including gifts.
In order to mitigate the risk of employees violating
the Code of Conduct, we continued to educate our
employees in the guidelines in 2017. At the same
time, we do also accept that some departments
need stricter procedures than the ones stated in
the Code of Conduct in order to mitigate the
risks associated with certain positions.
Download part of Tryg’s Code of Conduct
We encourage our employees and external part-
ners to report any activities that do not comply with
our Code of Conduct or applicable legislation. This
can be done to Tryg’s whistle-blower line, which can
be used in confidentiality. All incidents are evaluated
by the Chairman of the Audit Committee with assist-
ance from Tryg’s Legal & Compliance Department,
which decides if further action is necessary. In 2017,
the whistle-blower line was used seven times.
Tryg’s whistle-blower line
Supply chain management
One area that stood out in our materiality and risk
assessments was our outsourcing activities and
the risk of Tryg violating human and labour rights.
In Tryg, we respect the internationally recognised
human rights, which is why the area is also an inte-
grated part of our Code of Conduct that suppliers
must follow. We actively monitor our suppliers with
reference to our supplier Code of Conduct. Based
on our experience from 2016, we refined and
developed our monitoring approach in 2017. To
determine how our monitoring efforts should be
organised in the future, we did a trial with one of our
largest outsourcing partners. Prior to our on-site
visit, our partner filled out a report, which was then
used as a starting point for our dialogue. We believe
that using the report as a dialogue tool increased
the quality of our monitoring, thereby minimising
the risk of violations of our Code of Conduct. As a
result of this trial, we have decided to use the same
approach in 2018, including further systematisation
of our monitoring process of outsourcing partners.
Responsible investments
As part of Tryg’s CSR strategy, we want to increase
the transparency of our CSR initiatives. We are at
risk of violating international standards when in-
vesting and want to be transparent about our efforts
to mitigate this risk. In 2017, we published our re-
sponsible investment policy, which illustrates our
belief in the importance of not violating interna-
tional conventions when investing. Even though it
provides no guarantees, in 2017, we established
a process for conducting negative screenings for
conventional breaks in our investment portfolio
including not only our portfolio holdings, but also
the ultimate parents. As part of this process, we
have established an internal procedure for handling
any conventional breaks identified through our
negative screening. The first negative screening
was completed in 2017, and our target is to do a
screening in 2018 as well.
Download Tryg’s responsible investment policy
Climate initiatives
Tryg’s business is to a large degree affected by
extreme weather events, which also represents
a risk to Tryg, since these events can increase the
number and frequency of climate-related claims.
At the same time, such weather-related claims can
also have serious consequences for the people
affected and for society as a whole. This is why we
believe the climate and the environment should be
of concern for everyone. We therefore work actively
to minimise our own carbon emissions while also
finding solutions which can help people prevent
claims from happening in the first place, thereby
increasing peace of mind.
Since extreme weather represents a risk to Tryg,
we believe it is important to take part in the global
community’s endeavours to minimise greenhouse
gas emissions. Although we want to take responsibil-
ity, Tryg is not an energy-intensive company, since our
carbon emissions are mainly associated with heating
and electricity use at our leased offices and with car,
rail and air travel. However, we are actively working
to minimise our environmental impact and our
carbon emissions. In 2017, we continued our work
to optimise ventilation as well as heating and cooling
pumps serving our leased facilities in Ballerup, while
also being certified as an Eco-Lighthouse (Miljøfyrtårn)
in Norway. As a result of our initiatives, we reduced
our carbon emissions by an estimated 0.96% in 2017
compared to our actual emissions in 2016. Thus,
we have not achieved our 1% target reduction com-
pared to 2017. This is mainly associated with a slight
increase in the use of electricity, which might be
related to an increase of activities at our offices. Since
both our buildings in Ballerup and Bergen were sold
and leased back in 2017, in future it will not be pos-
sible for us to influence the environmental footprint
of our buildings to the same extent, which might have
a bearing on our climate-friendly initiatives. However,
in 2018, we will continue to introduce more climate-
friendly activities, while retaining our Eco-Lighthouse
certificate in Norway and focusing on energy ef-
ficiency in connection with the renovation of parts of
our leased building in Ballerup. Due to our continuous
work with climate-friendly initiatives, our 2018 target
is to maintain the 2017 level of carbon emissions
even though the activities at our offices are increasing
Contents – Management’s review
42
Annual report 2017 | Tryg A/S | due to e.g. an increase in the opening hours in our
contact centres. Due to an increase in activities, we
therefore believe that maintaining the 2017 level is
an ambitious target for 2018.
sorting waste at centralised waste stations, which
also helps to minimise waste in general. At the
same time, we try to minimise food waste in our
canteens by highlighting the issue and selling
left-over food in Ballerup.
obtain the Eco-Lighthouse certification in Norway.
As part of the Eco-Lighthouse certification, we will
prepare a report on Tryg's environmental initiatives
in spring 2018. Based on the report, we will adopt
an action plan for the rest of 2018.
Read more about our environment and
climate-friendly activities at tryg.com
Tryg’s environmental initiatives
Tryg is at risk of impacting the environment nega-
tively if the right actions are not taken. In Tryg, we
strive to minimise our environmental footprint by
Carbon emissions
Tonnes
5,000
4,000
3,000
2,000
1,000
0
Electricity
Heating
oil
Air and
train travel
Motor
Total
2017
2016
The carbon emissions chart covers both Norway and
Denmark; air and train travel also include Sweden while
motor only applies for Denmark.
In 2017, we primarily focused on the environ-
mental footprint of our own operations related
to our office buildings. We have systematised our
environmental management, and as a result Tryg
was certified as an Eco-Lighthouse in Norway in
2017. The certification is evidence that we are
actively working with our impact on the environ-
ment and the climate as certification is granted
only to enterprises which satisfy certain require-
ments and implement environmental measures
to create more environment and climate-friendly
operations. In 2017, we continued our efforts to
minimise energy use for heating in Bergen, while
also installing new LED lightning. In 2017, we also
continued to sort our waste and actively worked
to minimise waste volumes, including paper and
food. Besides our own environmental initiatives,
we have also focused on how our customers can
become more climate and environment-friendly in
their operations. This work is important, since we
believe that a greater impact can be achieved
if more people and enterprises are working respon-
sibly with climate and environmental issues. There-
fore, we offer guidance to customers who wish to
Competent and responsible
customer relations
Our materiality assessment clearly showed that
the most important topic for Tryg is our customers,
since they represent an opportunity to improve
our business. At the same time, our customers
also represent a major risk as they may decide to
leave Tryg for another insurance company if we
do not meet their requirements. To ensure that we
meet customer needs and offer highly competent
customer service, we continuously work to explore
possible improvements in the way we handle our
customer dialogue. Since customers are key to our
business, it is natural for our customer relations to
also be an integrated part of our CSR strategy.
The Tryg experience
In Tryg, we focus on equal treatment of our
customers and on their satisfaction with Tryg. To
ensure that all our customers are offered the same
highly competent consultancy regarding their
insurance needs, we implemented a new approach
to our daily customer dialogue in 2017. The new
approach describes five valuable steps in our cus-
tomer dialogue. We still recognise that different
customers have different needs, and there fore
we are also working to ensure that individual
dialogues are based on the exact needs of the
individual customer. In addition to working with
our direct customer dialogue, we also improved
our websites in 2017 in order to make it easier for
customers to find information and to ensure faster
and more efficient claims handling online. We be-
lieve that a combination of personal dialogue and
digital solutions is the best way to ensure satisfied
customers, and we continuously work to improve
our solutions to suit customer needs. In 2017, our
Net Promoter Score (NPS) was 22, meaning that
we met our target of an NPS of 22 in 2017.
Complaints are taken seriously
Even though we work hard to ensure responsible
customer relations and focus on customer
satisfaction, sometimes customers do not agree
with the settlement of their claims. In these situ-
ations, customers should contact the department
responsible for handling their claim, and if a solu-
tion cannot be found, it is possible to contact our
complaints department. Every complaint is taken
very seriously, and all complaints are analysed
in order to establish whether any procedures or
business processes need changing.
See Tryg’s complaint process at tryg.dk
Contents – Management’s review
43
Annual report 2017 | Tryg A/S | Contents – Financial statements 2017
Tryg’s Group consolidated financial statements are prepared in accordance with IFRS
Tryg Group
Note
Statement by the Supervisory Board
and the Executive Board
Independent auditor’s reports
Financial highlights
Income statement
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Cash flow statement
1 Risk and capital management
2 Operating segments
2 Geographical segments
2
Technical result, net of reinsurance,
by line of business
Premium income, net of reinsurance
Insurance technical interest,
net of reinsurance
5 Claims, net of reinsurance
Insurance operating costs,
6
net of reinsurance
3
4
45
46
49
50
51
52
53
54
55
65
67
69
71
71
71
71
6 Matching shares and conditional shares 73
74
7
74
8 Value adjustments
74
9 Tax
Interest income and dividends etc.
Intangible assets
Investment property
Equity investments in associates
Financial assets
Note
10
11 Property, plant and equipment
12
13
14
15 Reinsurers’ share
16 Current tax
17
Equity
18 Premium provisions
18 Claims provisions
19 Pensions and similar liabilities
20 Deferred tax
21 Other provisions
22
23
Amounts owed to credit institutions
Debt relating to unsettled funds
transactions and repos
Earnings per share
Sale of properties
Contractual obligations, collateral
and contingent liabilities
24
25
26
27 Acquisition of subsidiaries
28 Related parties
29
Financial highlights
30 Accounting policies
Tryg A/S (parent company)
Income statement
Statement of financial position
Statement of changes in equity
Notes
Reporting for Q4
Quarterly outline
Geographical segments
Information
Other key ratios
Group chart
Glossary
Product overview
Disclaimer
103
104
105
106
109
111
112
113
114
115
116
75
78
79
79
81
84
84
85
85
85
86
88
88
88
88
89
89
89
92
93
94
95
Contents – Financial statements
44
Annual report 2017 | Tryg A/S |
Statement by the Supervisory Board
and the Executive Board
The Supervisory Board and the Executive Board
have today considered and adopted the annual
report for 2017 of Tryg A/S and the Tryg Group.
The consolidated financial statements have been
prepared in accordance with the International
Financial Reporting Standards as adopted by the
EU, and the financial statements of the parent
company have been prepared in accordance
with the Danish Financial Business Act and the
requirements of the NASDAQ Copenhagen for
the presentation of financial statement of listed
companies. In addition, the annual report has
been presented in accordance with additional
Danish disclosure requirements for the annual
reports of listed financial enterprises.
assets, liabilities and financial position at
31 December 2017 and of the results of the
Group’s and the parent company’s operations
and the cash flows of the Group for the financial
year 1 January-31 December 2017.
In our opinion, the accounting policies applied are
appropriate, and the annual report gives a true and
fair view of the Group’s and the parent company’s
Furthermore, in our opinion the Management’s
review gives a true and fair view of developments
in the activities and financial position of the Group
and the parent company, the results for the year
and of the Group’s and the parent company’s
financial position in general and describes signifi-
cant risk and uncertainty factors that may affect
the Group and the parent company.
We recommend that the annual report be adopted
by the shareholders at the annual general meeting.
Ballerup, 23 January 2018
Executive Board
Morten Hübbe
Group CEO
Christian Baltzer
Group CFO
Lars Bonde
Group COO
Supervisory Board
Jørgen Huno Rasmussen
Chairman
Torben Nielsen
Deputy Chairman
Jukka Pertola
Deputy Chairman
Elias Bakk
Tom Eileng
Lone Hansen
Anders Hjulmand
Jesper Hjulmand
Ida Sofie Jensen
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
Contents – Financial statements
45
Annual report 2017 | Tryg A/S |
Independent
auditor’s report
To the shareholders of Tryg A/S
Opinion
We have audited the consolidated financial
statements and the parent financial statements
of Tryg A/S for the financial year 1 January to 31
December 2017, pages 44-108, which comprise
the income statement, statement of comprehen-
sive income, balance sheet, statement of changes
in equity and notes, including the summary of
significant accounting policies, for the Group as
well as the Parent and the consolidated cash flow
statement. The consolidated financial statements
are prepared in accordance with International Fi-
nancial Reporting Standards as adopted by the EU
and additional Danish disclosure requirements for
listed financial companies, and the parent financial
statements are prepared in accordance with the
Danish Financial Business Act.
In our opinion, the consolidated financial state-
ments give a true and fair view of the Group’s
financial position at 31 December 2017 and of
its financial performance and cash flows for the
financial year 1 January to 31 December 2017 in
accordance with International Financial Reporting
Standards as adopted by the EU and additional
Danish disclosure requirements for financial
companies.
Also, in our opinion, the parent financial state-
ments give a true and fair view of the financial
position of the Parent at 31 December 2017 and
of its financial performance for the financial year 1
January to 31 December 2017 in accordance with
the Danish Financial Business Act.
Our opinion is consistent with our audit book
comments issued to the Audit Committee and the
Board of Directors.
Basis for opinion
We conducted our audit in accordance with
International Standards on Auditing (ISAs) and
additional requirements applicable in Denmark.
Our responsibilities under those standards and re-
quirements are further described in the Auditor’s
responsibilities for the audit of the consolidated
financial statements and the parent financial
statements section of this auditor’s report. We are
independent of the Group in accordance with the
IESBA Code of Ethics for Professional Account-
ants and additional requirements applicable in
Denmark, and we have fulfilled our other ethical
responsibilities in accordance with these require-
ments. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a
basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance
in our audit of the consolidated financial statements
and the parent financial statements for the financial
year 1 January to 31 December 2017. These mat-
ters were addressed in the context of our audit of the
consolidated financial statements and the parent
financial statements as a whole, and in forming our
opinion thereon, and we do not provide a separate
opinion on these matters.
Claims provisions
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 23,925m
at 31 December 2017 (2016: DKK 25,452m).
Management has specified the risks etc. related to
the estimates of the claims provisions in note 1
‘Risk and capital management’ on pages 56-57 and
in ‘Accounting policies’, note 30 on pages 95-96.
The principles of estimating the claims provisions
have been specified in ‘Accounting policies’, note
30 on page 101, and further specified in note 1 on
pages 58-61 and in note 18.
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.
The most important assessments and assumptions of
future events relate to:
•
Estimated future claims payments, which are 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 Manage-
ment’s estimate of the claims provisions to address
the uncertainty related to the actuarial estimates.
How the matter was addressed
in the audit
•
•
•
•
•
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 quali-
fied 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 quali-
fied actuaries and based on our knowledge of the
industry, experience and historical observations,
we have assessed the statistical models applied to
estimate the claims provisions and we have tested
significant estimates and assumptions 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.
Contents – Financial statements
46
Annual report 2017 | Tryg A/S | To the best of our knowledge and belief, we have
not provided any prohibited non-audit services
as referred to in Article 5(1) of Regulation (EU) No
537/2014.
We were appointed auditors of Tryg A/S on 28
January 2002 for the financial year 2002 as part
of the formation of the Company. However, we
have been the appointed auditors of the underlying
subsidiaries since before 1995. We have been reap-
pointed annually by decision of the general meeting
for a total contiguous engagement period of more
than 16 years up to and including the financial year
2017.
Statement on the management review
Management is responsible for the management
review.
Our opinion on the consolidated financial state-
ments and the parent financial statements does
not cover the management review, and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated
financial statements and the parent financial state-
ments, our responsibility is to read the manage-
ment review and, in doing so, consider whether
the management review is materially inconsistent
with the consolidated financial statements and the
parent financial statements or our knowledge
obtained in the audit or otherwise appears to be
materially misstated.
Moreover, it is our responsibility to consider
whether the management review provides the
information required under the Danish Financial
Business Act.
Based on the work we have performed, we con-
clude that the management review is in accord-
ance with the consolidated financial statements
and the parent financial statements and has been
prepared in accordance with the requirements
of the Danish Financial Business Act. We did not
identify any material misstatement of the man-
agement review.
Solvency ratio
Management is responsible for the solvency ratio
evident from the statement of financial highlights
and key figures on page 49 of the annual report.
As disclosed in the statement of financial high-
lights and key figures, the solvency ratio is exempt
from the requirement to be audited. Consequently,
our opinion on the consolidated financial state-
ments and the parent financial statements does
not cover the solvency ratio, and we do not express
any form of assurance conclusion thereon.
In connection with our audit of the consolidated
financial statements and the parent financial state-
ments, our responsibility is to consider whether the
solvency ratio is materially inconsistent with the
financial statements or our knowledge obtained
in the audit or otherwise appears to be materially
misstated. If, based on this, we conclude that the sol-
vency ratio is materially misstated, we are required
to report on this. We have nothing to report in this
respect.
Management’s responsibilities for
the consolidated financial statements
and the parent financial statements
Management is responsible for the preparation
of consolidated financial statements that give a
true and fair view in accordance with International
Financial Reporting Standards as adopted by the EU
and additional Danish disclosure requirements for
listed financial companies, and for the preparation
of parent financial statements that give a true and
fair view in accordance with the Danish Financial
Business Act, and for such internal control as
Management determines is necessary to enable the
preparation of consolidated financial statements
and parent financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements
and the parent financial statements, Management
is responsible for assessing the Group’s and the
Parent’s ability to continue as a going concern, for
disclosing, as applicable, matters related to going
concern, and for using the going concern basis of
accounting in the preparation of the consolidated
financial statements and the parent financial
statements unless Management either intends to
liquidate the Group or the Parent or to cease opera-
tions, or has no realistic alternative but to do so.
Auditor’s responsibilities for the audit of
the consolidated financial statements and
the parent financial statements
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements
and the parent financial statements as a whole are
free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs and
additional requirements applicable in Denmark
will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the
aggregate, they could reasonably be expected to
influence the economic decisions of users taken on
the basis of these consolidated financial statements
and these parent financial statements.
Contents – Financial statements
47
Annual report 2017 | Tryg A/S | As part of an audit in accordance with ISAs and
additional requirements applicable in Denmark, we
exercise professional judgement and maintain pro-
fessional scepticism throughout the audit. We also:
•
•
•
•
Identify and assess the risks of material
misstatement of the consolidated financial
statements and the parent financial state-
ments, whether due to fraud or error, design
and perform audit procedures responsive to
those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for
our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrep-
resentations, or the override of internal control.
Obtain an understanding of internal control
relevant to the audit in order to design audit
procedures that are appropriate in the circum-
stances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s
and the Parent’s internal control.
Evaluate the appropriateness of account-
ing policies used and the reasonableness of
accounting estimates and related disclosures
made by Management.
•
Conclude on the appropriateness of Manage-
ment’s use of the going concern basis of ac-
counting in the preparation of the consolidated
financial statements and the parent financial
statements, and, based on the audit evidence
obtained, whether a material uncertainty ex-
ists related to events or conditions that may
cast significant doubt on the Group’s and the
Parent’s ability to continue as a going concern.
If we conclude that a material uncertainty
exists, we are required to draw attention in our
auditor’s report to the related disclosures in the
consolidated financial statements and the par-
ent financial statements or, if such disclosures
are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence
obtained up to the date of our auditor’s report.
However, future events or conditions may
cause the Group and the Entity to cease to
continue as a going concern.
Evaluate the overall presentation, structure and
content of the consolidated financial state-
ments and the parent financial statements,
including the disclosures in the notes, and
whether the consolidated financial statements
and the parent financial statements represent
the underlying transactions and events in a
manner that gives a true and fair view.
•
Obtain sufficient appropriate audit evidence
regarding the financial information of the
entities or business activities within the Group
to express an opinion on the consolidated
financial statements. We are responsible for
the direction, supervision and performance of
the group audit. We remain solely responsible
for our audit opinion.
therefore the key audit matters. We describe these
matters in our auditor’s report unless law or regula-
tion precludes public disclosure about the matter or
when, in extremely rare circumstances, we deter-
mine that a matter should not be communicated in
our report because the adverse consequences of
doing so would reasonably be expected to outweigh
the public interest benefits of such communication.
We communicate with those charged with govern-
ance regarding, among other matters, the planned
scope and timing of the audit and significant audit
findings, including any significant deficiencies in
internal control that we identify during our audit.
Ballerup, 23 January 2018
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
We also provide those charged with governance
with a statement that we have complied with
relevant ethical requirements regarding independ-
ence, and to communicate with them all relation-
ships and other matters that may reasonably be
thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with those
charged with governance, we determine those mat-
ters that were of most significance in the audit of the
consolidated financial statements and the parent
financial statements of the current period and are
Jens Ringbæk
State Authorised Public Accountant, MNE no 27735
Kasper Bruhn Udam
State Authorised Public Accountant, MNE no 29421
Contents – Financial statements
48
Annual report 2017 | Tryg A/S | Financial highlights
DKKm
NOK/DKK, average rate for the period
SEK/DKK, average rate for the period
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 b)
Operating ratio
Relative run-off gains/losses
Return on equity after tax (%)
Solvency ratio c)
2017
79.99
77.24
17,963
-11,865
-2,516
3,582
-779
-14
2,789
527
-77
3,239
-720
2,519
-2
2,517
972
30,018
1,366
12,616
51,367
66.1
4.3
70.4
14.0
84.4
84.5
4.1
28.8
281
2016
80.09
78.93
17,707
-11,619
-2,737
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
2015
83.52
79.69
17,977
-13,562
-2,720
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
2014
89.42
82.16
18,652
-12,650
-2,689
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
2013
96.04
86.35
19,504
-14,411
-3,008
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
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) Up until the sale of the group occupied property in 2016,
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’
issued by the Danish Finance Society. The adjustment,
which is made pursuant to the Danish Financial Super-
visory Authority’s and the Danish Finance Society’s
definitions of expense ratio and combined ratio, involves
the addition of a calculated expense (rent) in respect of
owner-occupied property based on a calculated market
rent and the deduction of actual depreciation and
operating costs on owner-occupied property. The sale of
owner-occupied property in December 2016 does not
affect the calculation.
c) Solvency I ratios in 2013-2015 are the ratio between
base capital and weighted assets and are audited.
Solvency II ratio in 2016 and 2017 are the ratios be-
tween own funds and the solvency capital requirement
and is exempt from the requirement for auditing and
thus not audited.
Contents – Financial statements
49
Annual report 2017 | Tryg A/S |
Income statement
DKKm
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
2017
2016
DKKm
2017
2016
18,358
-1,255
-145
16
16,974
17,842
-1,210
151
13
16,796
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
3
69
624
224
-107
-102
711
-184
527
117
-194
3,239
-720
2,519
-2
42
105
671
518
-113
-87
1,136
-149
987
104
-261
3,220
-748
2,472
-1
4
Insurance technical interest, net of reinsurance
-14
-10
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers’ share of claims provisions
5
Claims, net of reinsurance
-12,807
1,029
942
-729
-11,565
-13,947
1,260
2,328
-1,164
-11,523
Bonus and premium discounts
-250
-286
Acquisition costs
Administration expenses
Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers
6
Insurance operating costs, net of reinsurance
-1,902
-614
-2,516
160
-2,356
-2,029
-708
-2,737
150
-2,587
2
Technical result
2,789
2,390
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
Profit/loss on discontinued and divested business
Profit/loss for the year
2,517
2,471
24
Earnings per share
9.12
8.84
Contents – Financial statements
50
Annual report 2017 | 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
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 25 Sale of properties
2017
2,517
4
0
0
0
0
-7
2
-1
-137
135
-30
-32
-33
2,484
2016
2,471
15
215
-115
-53
29
-95
24
20
51
-50
11
12
32
2,503
Contents – Financial statements
51
Annual report 2017 | Tryg A/S |
Statement of financial position
DKKm
Note
10
Assets
Intangible assets
Operating equipment
11
Total property, plant and equipment
12
Investment property
13
Equity investments in associates
Total investments in associates
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments
Total other financial investment assets
14
Total investment assets
Reinsurers’ share of premium provisions
Reinsurers’ share of claims provisions
18
15
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
14
Total receivables
Cash at bank and in hand
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
2017
2016
DKKm
2017
2016
1,105
67
67
1,324
225
225
179
4,852
37,151
250
1,079
43,511
45,060
245
1,121
1,366
1,471
1,471
300
957
2,728
509
509
197
335
532
Note
17
Equity and liabilities
Equity
1
Subordinate loan capital
18
18
Premium provisions
Claims provisions
Provisions for bonuses and premium discounts
Total provisions for insurance contracts
19
20
21
Pensions and similar obligations
Deferred tax liability
Other provisions
Total provisions
Debt relating to direct insurance
Debt relating to reinsurance
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Current tax liabilities
Other debt
22
23
14
16
Total debt
Accruals and deferred income
Total equity and liabilities
1
25
26
27
28
29
30
Risk and capital management
Sale of properties
Contractual obligations, collateral and contingent liabilities
Acquisition of activities
Related parties
Financial highlights
Accounting policies
884
49
49
2,323
218
218
48
3,950
35,254
0
1,000
40,252
42,793
214
1,820
2,034
1,108
1,108
183
1,646
2,937
475
475
224
465
689
12,616
9,437
2,412
5,559
23,925
534
30,018
290
656
111
1,057
498
454
306
1,711
746
194
1,312
5,221
43
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
51,367
49,861
Total assets
51,367
49,861
Contents – Financial statements
52
Annual report 2017 | Tryg A/S |
Statement of changes in equity
DKKm
Share
capital
Revaluation-
reserves
Reserve for
exchange rate
adjustment
Equalisation-
reserve
Other
reservesa)
Retained
earnings
Proposed
dividend
Equity at 31 December 2016
1,413
2017
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
Issue of new shares b)
Issue of employee shares
Issue of conditional shares
and matching shares
Total changes in equity in 2017
Equity at 31 December 2017
0
-39
137
98
1,511
0
0
0
0
0
3
-32
-32
-32
-29
0
0
0
0
822
5,182
2,017
-39
-39
-39
783
-271
-1
-272
39
82
-20
3,841
10
6
3,686
8,868
2,827
2,827
-3,361
-534
1,483
Total
9,437
2,517
-33
2,484
0
-3,361
82
-20
3,978
10
6
3,179
12,616
Equity at 31 December 2015
1,448
86
-9
127
766
6,213
1,013
9,644
2016
Adjustment 1.1.2016 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 share options and matching shares
-86
-86
0
-35
Total changes in equity in 2016
Equity at 31 December 2016
-35
1,413
-86
0
-127
-127
56
56
-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
0
2,471
32
2,503
0
-1,766
52
-1,000
1
3
-207
9,437
12
12
12
3
Dividend per share in 2017 includes ordinary divi-
dend paid out in April, July and October of DKK 1.60,
proposed ordinary dividend of DKK 1.60, totalling DKK
6.40 (DKK 6.20 in 2016 ) and proposed extraordinary
dividend of DKK 3.31. (DKK 3.54 in 2016). Proposed
dividend per share is calculated as the total dividend
proposed by the Supervisory Board after the end of the
financial year divided by the total number of shares at
the end of the year (302,147,991 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 1,592m (DKK 1,774m in 2016).
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) Cost related to the issue of new shares are deducted
in proceeds recognised in retained earnings with
DKK 50.3m.
c) A new executive order from the Danish FSA from
1 January 2016 has abolished the requirements
of equalisation reserves in credit and guarantee
insurance.
Contents – Financial statements
53
Annual report 2017 | Tryg A/S |
Cash flow statement
DKKm
Note
Cash from operating activities
Premiums
Claims
Ceded business
Costs
Change in other debt and other amounts receivable
Cash flow from insurance activities
Interest income
Interest expenses
Dividend received
Taxes
Other income and costs
Cash from operating activities, continuing business
Cash from operating activities, discontinued and divested business
Total cash flow from operating activities
Investments
Purchase and refurbishment of property
Sale of property
Purchase/sale of equity investments and unit trust units (net)
Purchase/sale of bonds (net)
Deposits with credit institutions
Purchase/sale of operating equipment (net)
Acquisition of intangible assets
Hedging of currency risk
Investments, continuing business
Total investments
Contents – Financial statements
2017
2016
DKKm
2017
2016
17,600
-13,205
-139
-2,642
495
2,109
622
-107
19
-845
-77
1,721
-1
1,720
-10
2,307
-978
-3,578
-250
-38
-102
135
-2,514
-2,514
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
258
Note
Financing
Issue of new shares
Exercise of share options/purchase of own shares (net)
Subordinate loan capital
Dividend paid
Change in amounts owed to credit institutions
Financing, continuing business
Total financing
Change in cash and cash equivalents, net
Additions relating to purchase of subsidiaries
Exchange rate adjustment of cash and cash equivalents, 1 January
Change in cash and cash equivalents, gross
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Liabilities arising from financing activities
3,978
-4
0
-3,279
128
823
823
29
13
-8
34
475
509
2017
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
2016
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
Subordinated
loans
Amounts owed
to credit
institutions
2,567
-156
1
0
2,412
1,698
68
1
800
2,567
178
0
0
128
306
64
-1
0
115
178
0
-999
800
-1,714
115
-1,798
-1,798
6
0
-2
4
471
475
Total
2,745
-156
1
128
2,718
1,762
67
1
915
2,745
54
Annual report 2017 | 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 opera-
tionalised through the company’s policies. The company’s
risk management forms the basis for the risk profile being
in line with the specified risk appetite at all times.
Tryg’s risk profile is continuously measured, quantified
and reported to the management and the Supervisory
Board. Given the extensive requirements for the Super-
visory Board’s involvement in capital and risk manage-
ment, Tryg’s Supervisory Board has a special Supervisory
Board Risk Committee to address these topics separately
during the year.
Capital management
Tryg’s capital management is based on the key business
objectives:
Lines of defence
•
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.
•
Tryg’s capital base currently consist of Tier 1 and 2 capital,
such as shareholders’ equity and subordinated loans.
See table Subordinate loan capital on page 64.
Executive Board
Supervisory Board
Supervisory Board’s
Risk Committee
Supervisory Board’s
Audit Committee
Reporting
Right to be heard,
cf. draft for
Executive order
on Management
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.
What risk profile does Tryg want?
- Business model
- Strategy
- Policies
Tryg’s risk management is organised into three levels of
control. The first level of control is handled in the busi-
ness where the company’s policies are implemented, and
day-to-day compliance is verified. The risk management
function is the second level of control, supported by
decentralised risk managers affiliated with the individual
business areas. The risk management function ensures a
consistent approach across the organisation, risk assess-
ment at group level and reporting to the management
and the Supervisory Board. This involves an ongoing
identification and assessment of the most significant
risks in the company. Furthermore, the function prepares
specific recommendations in relation to capital manage-
ment, reinsurance, investment risk management and
more. Tryg’s risk management function is also respon-
sible for determining the company’s capital require-
ment. The third level consists of the internal audit which
performs independent assessments of the entire control
environment.
How is this supported?
Tactically
- Policies
- Capital plan
- Contingency plan
Operationally
- Frameworks
- Limitations
- Instructions
- Allocated capital
- Contingency plans
How is the actual risk profile measured?
Tactically
- Risk reports
- Internal controls
- Capital model
- Stress tests
1st line of defence
2nd line of defence
3rd line of defence
External audit
• Business Management
• Compliance
• Actuarial function
• Risk management
• Internal audit
• Internal audit function
Tryg’s risk management environment
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
Contents – Financial statements
55
NotesAnnual report 2017 | Tryg A/S |
The capital base is continuously measured against the
capital requirement calculated on the basis of Tryg’s par-
tial internal model, where insurance risks are modelled
using an internal model, while other risks are described
using the standard formula.
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.
Company’s Own Risk
and Solvency Assessment (ORSA)
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 assess-
ment of whether the calculation of solvency capital re-
quirement is reasonable and is reflecting Tryg’s actual
risk profile. Moreover, the projected capital requirement
is also assessed over the company’s strategic planning
period. Tryg’s risk activities are implemented via continu-
ous risk management processes, where the main results
are reported to the Supervisory Board and the Risk Com-
mittee during the year. 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.
ing risk is managed primarily through the company’s
insurance policy defined by the Supervisory Board, and
administered through business procedures, underwrit-
ing guidelines etc. Underwriting risk is assessed in Tryg’s
capital model, determining the capital impact from
insurance products.
Reinsurance is used to reduce the underwriting risk in
situations where this can not be achieved to a 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 160m. In the event of a frequency of natu-
ral disasters, Tryg is covered for up to DKK 600m, 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 sectors
into a joint cover with retention of DKK 100m for the
first claim and DKK 25m for subsequent claims. For the
individual sectors, individual cover has subsequently
been taken out as needed. The use of reinsurance
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.
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. Underwrit-
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 reserv-
ing risk in the insurance policy, while the overall risk is
measured in the capital model. The uncertainty associ-
ated with the calculation of claims reserves affects Tryg’s
results through the run-off on reserves. Long-tailed
reserves in particular are subject to interest rate and in-
flation 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 statistical methods as well as
individual assessments.
At the end of 2017, Tryg’s claims reserves totalled
DKK 22,804m 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 portfolio is
subject to the framework defined by the Supervisory
Board through the investment policy. The purpose of
the free portfolio is to achieve the highest possible
return relative to risk. Tryg’s equity portfolio consti-
tutes the company’s largest investment risk. At the end
of 2017, the equity portfolio accounted for 5.0% 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 2017, investment properties
accounted for 3.9% (including property funds).
Tryg does not wish to speculate in foreign currency,
but since Tryg invests and operates its insurance busi-
ness in other currencies than Danish kroner, Tryg is
exposed to currency risk. Tryg is primarily exposed to
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 currencies than Danish
kroner will be exposed to currency risk. This risk is
hedged on an ongoing basis using currency swaps.
In addition to the above-mentioned risks, Tryg is
exposed to credit, counterparty and concentration risk.
These risks primarily relate to 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 frame-
work for reinsurance defined in the insurance policy.
For a non-life insurance 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.
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
Contents – Financial statements
56
NotesAnnual report 2017 | 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 insur-
ance terms, it is ensured that Tryg’s reinsurance cover is
consistent with the new conditions.
environment for its operations. In practice, this work is
organised by means of procedures, controls and guide-
lines covering the various aspects of the Group’s opera-
tions. The Supervisory Board defines the overall frame-
work for managing operational risk in Tryg’s Operational
risk policy. These risks are controlled via the Operational
Risk Committee. A special crisis management structure
is set up to deal with the eventuality that Tryg is hit by
major crises. This comprises a Crisis Management Team
at Group level, national contingency teams at country
level and finally business contingency in the individual
areas. Tryg has prepared contingency plans to address
the most important areas. In addition, comprehensive
IT contingency plans have been established, primarily
focusing on the business-critical systems.
Other risks
Strategic risk
The strategic risk is the risk of loss as a result of Tryg’s
chosen strategic position. The strategic position covers
both business transactions, IT strategy, choice of busi-
ness 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
DKKm
Insurance risk
Effect of 1% change in:
Combined ratio (1 percentage point)
Major events
Catastrophe event up to DKK 5.75bn
Reserving 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 related thereto
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
a) Including the effect of the zero coupon inflation swap.
b) Additional sensitivity information in note 19 ‘Pensions and similar obligations’.
2017
2016
+/- 180
+/- 175
- 100
- 160
- 100
- 150
+/- 408
+/- 436
+/- 1,706
+/- 1,800
-1,118
1,014
-104
153
-285
20
-257
-975
946
-29
-1,131
1,061
-70
173
-365
-15
-229
-763
728
-35
+/- 151
+/- 158
Contents – Financial statements
57
NotesAnnual report 2017 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Gross
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
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
11,527
12,092
12,631
12,605
12,608
12,516
12,400
12,394
12,319
12,271
12,088
12,088
-11,548
12,045
13,334
13,205
13,220
13,182
13,106
13,070
12,815
12,692
12,600
13,356
13,984
13,998
13,799
13,701
13,607
13,576
13,458
13,400
15,546
15,643
15,596
15,518
15,430
15,354
15,330
15,239
15,885
16,268
16,325
16,277
16,102
16,134
15,999
13,434
13,521
13,475
13,289
13,024
12,936
13,842
14,103
13,763
13,593
13,573
12,681
13,003
12,820
12,732
14,673
14,615
14,568
12,869
12,725
12,733
12,600
-11,762
13,400
-12,378
15,239
-13,988
15,999
-14,582
12,936
-11,436
13,573
-11,730
12,732
-10,588
14,568
-12,121
Provisions before discounting,
end of year
Discounting
Reserves from 2006 and prior years
Gross provisions for claims, end of year
540
-52
838
-80
1,022
-94
1,251
-108
1,417
-103
1,500
-106
1,843
-112
2,144
-125
2,447
-115
12,725
-9,658
3,067
-125
12,733
-6,221
148,593
-126,012
6,512
-180
22,581
-1,200
2,544
23,925
Contents – Financial statements
58
NotesAnnual report 2017 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Ceded business
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
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 2006 and prior years
Provisions for claims, end of year
496
463
477
482
501
473
501
492
489
488
488
488
-476
12
-1
152
214
184
174
174
162
167
158
157
157
157
-151
6
0
278
344
323
282
285
290
278
277
276
276
-268
8
0
654
730
722
699
709
712
715
708
708
-692
16
0
1,449
2,134
2,257
2,293
2,241
2,235
2,241
2,241
-2,158
83
-1
222
253
288
283
269
259
259
-248
11
0
1,088
1,476
1,260
1,254
1,269
1,269
-1,167
102
0
273
309
303
297
297
-257
40
-1
2,077
1,884
1,917
202
254
314
1,917
-1,559
358
-2
254
-162
92
-2
314
-77
237
-2
8,180
-7,215
965
-9
165
1,121
Contents – Financial statements
59
NotesAnnual report 2017 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Net of reinsurance
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
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 2006 and prior years
Provisions for claims,
net of reinsurance, end of the year
11,031
11,629
12,154
12,123
12,107
12,043
11,899
11,902
11,830
11,783
11,600
11,600
-11,072
528
-51
11,893
13,120
13,021
13,046
13,008
12,944
12,903
12,657
12,535
12,443
13,078
13,640
13,675
13,517
13,416
13,317
13,298
13,181
13,124
14,892
14,913
14,874
14,819
14,721
14,642
14,615
14,531
14,436
14,134
14,068
13,984
13,861
13,899
13,758
13,212
13,268
13,187
13,006
12,755
12,677
12,754
12,627
12,503
12,339
12,304
12,408
12,694
12,517
12,435
12,596
12,731
12,651
12,667
12,471
12,419
12,443
-11,611
13,124
-12,110
14,531
-13,296
13,758
-12,424
12,677
-11,188
12,304
-10,563
12,435
-10,331
12,651
-10,562
832
-80
1,014
-94
1,235
-108
1,334
-102
1,489
-106
1,741
-112
2,104
-124
2,089
-113
12,471
-9,496
2,975
-123
12,419
-6,145
140,413
-118,798
6,275
-178
21,616
-1,191
2,379
22,804
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2017 to prevent the impact of exchange rate fluctuations.
Contents – Financial statements
60
NotesAnnual report 2017 | Tryg A/S |
Claims provisions (continued)
DKKm
2017
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2016
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
0-1 year
1-2 years
2-3 years
> 3 years
Total
Expected cash flow, not discounted
5,381
-245
7,670
-546
12,260
5,296
-214
8,201
-880
12,403
85
0
3,791
-240
3,636
114
0
4,110
-416
3,808
57
0
2,576
-126
2,507
56
0
2,749
-235
2,570
37
0
11,278
-204
11,111
21
0
11,697
-303
11,415
5,560
-245
25,315
-1,116
29,514
5,487
-214
26,757
-1,834
30,196
Contents – Financial statements
61
NotesAnnual report 2017 | Tryg A/S |
DKKm
2017
2016
Impact of exchange rate fluctuations in SEK and NOK on technical result
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest,
net of reinsurance
Technical result
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
2017
17,963
-11,865
-2,516
3,582
-779
-14
2,789
2016
17,707
-11,619
-2,737
3,351
-951
-10
2,390
2016
Change
Currency
effect
Change excl.
currency
effect
17,707
-11,619
-2,737
3,351
-951
-10
2,390
256
-246
221
231
172
-4
399
20
-13
-3
4
-1
0
3
236
-233
224
227
173
-4
396
2015
Change
Currency
effect
Change excl.
currency
effect
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
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
17,509
14,770
5,015
2,353
39,647
2.8
14,758
13,692
5,373
2,369
36,192
2.9
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
51
90
274
1,196
435
2,046
179
47
95
259
1,377
368
2,146
48
The share portfolio includes exposure from share derivatives of DKK -135m (DKK 97m in 2016).
Unlisted equity investments are based on an estimated market price.
Exposure to exchange rate risk
2017
2016
Assets and
debt
Hedge
Exposure
Assets and
debt
Hedge
Exposure
3,205
1,413
267
2,924
1,324
529
-3,149
-1,174
-262
-2,836
-1,228
-473
2,960
1,231
263
2,808
346
525
-2,872
-1,203
-254
-2,623
-314
-469
56
239
5
88
96
56
540
88
28
9
185
32
56
398
USD
EUR
GBP
NOK
SEK
Other
Total
Contents – Financial statements
62
NotesAnnual report 2017 | Tryg A/S |
Impact of exchange rate fluctuations in SEK and NOK on the statement of financial position
Credit risk
DKKm
2017
2016
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
1,105
67
1,324
225
43,511
1,366
2,728
509
532
884
49
2,323
218
40,252
2,034
2,937
475
689
221
18
-999
7
3,259
-668
-209
34
-157
-30
-1
-29
0
-1,215
-54
-81
-4
-9
251
19
-970
7
4,474
-614
-128
38
-148
AAA to A
Other
Not rated
Total
Reinsurance balances
AAA to A
Other
Not rated
Total
Total assets
51,367
49,861
1,506
-1,423
2,929
2017
DKKm
36,831
208
112
37,151
%
99.1
0.6
0.3
2016
DKKm
35,233
20
1
%
99.9
0.1
0.0
100.0
35,254
100.0
953
0
80
92.3
0.0
7.7
1,033
100.0
1,536
0
157
1,693
Equity and liabilities
Equity
Subordinate loan capital
Provisions for insurance contracts
Other provisions
Other debt
Accruals and deferred income
Total equity and liabilities
12,616
2,412
30,018
1,057
5,221
43
51,367
9,437
2,567
31,527
1,172
5,113
45
49,861
3,179
-155
-1,509
-115
108
-2
1,506
0
-156
-833
-64
-369
-1
-1,423
3,179
1
-676
-51
477
-1
2,929
Liquidity risk
Maturity of the Group’s financial obligations including interest
2017
0-1 years
1-5 years
> 5 years
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
2016
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
92
306
1,711
576
2,458
5,143
98
178
1,732
650
2,501
5,159
369
0
0
49
0
418
392
0
0
112
0
504
3,334
0
0
153
0
3,487
3,547
0
0
-53
0
3,494
Interest on loans for a perpetual term has been recognised for the first fifteen years.
Contents – Financial statements
90.7
0.0
9.3
100.0
Total
3,795
306
1,711
778
2,458
9,048
4,037
178
1,732
709
2,501
9,157
63
NotesAnnual report 2017 | Tryg A/S |
Notes
Subordinate loan capital
DKKm
Amortised cost value of the loan recognised in
statement of financial position
The fair value of the loan at the statement
of financial position date
The fair value of the loan at the statement
of financial position date is based on a price of
Total capital losses and costs at the statement
of the financial position date
Interest expenses for the year
Effective interest rate
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
2017
2016
2017
2016
2017
2016
603
659
109
3
29
4.6%
651
685
105
3
32
4.9%
1,056
1,080
102
4
43
3.6%
1,142
1,124
98
4
46
3.8%
753
796
105
4
20
2.2%
774
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
Interest-only
3.75 % above NIBOR 3M (until 2023)
2.75 % above NIBOR 3M (until 2025) 2.75 % above STIBOR 3M (until 2026)
4.75 % above NIBOR 3M (from 2023) 3.75 % above NIBOR 3M (from 2025) 3.75 % above STIBOR 3M (from 2026
Interest-only
The share of capital included in the calculation of the
capital base totals DKK 2,164m (DKK 2,371m in 2016)
The loans are initially recognised at fair value on the date
on which a loan is entered and subsequently measured
at amortised cost.
The loans are taken by Tryg Forsikring A/S. The credi-
tors have no option to call the loans before maturity or
otherwise terminate the loan agreements. The loans
are automatically accelerated upon the liquidation or
bankruptcy of Tryg Forsikring A/S.
Prices used for determination of fair value in respect
of both loans are based on actual traded prices from
Bloomberg.
Contents – Financial statements
64
Annual report 2017 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
2
Operating segments
2017
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
Run-off gains/losses, net of reinsurance
Intangible assets
Equity investments in associates
Reinsurers’ share of premium provisions
Reinsurers’ share of claims provisions
Other assets
Total assets
Premium provisions
Claims provisions
Provisions for bonuses and premium discounts
Other liabilities
Total liabilities
8,798
-5,807
-1,208
-211
-7
1,565
306
14
47
53
2,358
5,197
432
3,862
-2,423
-665
-106
-1
667
329
106
22
172
1,277
6,527
60
3,852
-2,606
-392
-467
-1
386
239
0
176
867
1,008
9,317
35
1,487
-1,055
-251
-5
-5
171
98
575
0
29
916
2,884
7
-36
26
0
10
0
0
0
410
225
0
0
48,671
0
0
0
8,733
17,963
-11,865
-2,516
-779
-14
2,789
-272
2,517
972
1,105
225
245
1,121
48,671
51,367
5,559
23,925
534
8,733
38,751
Description of segments
Please refer to the accounting principles for a descrip-
tion 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’.
Contents – Financial statements
65
Annual report 2017 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
2
Operating segments
2016
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’.
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
218
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
214
1,820
46,725
49,861
5,487
25,452
588
8,897
40,424
Contents – Financial statements
66
Annual report 2017 | Tryg A/S |
Notes
DKKm
2017
2016
2015
2014
2013
a) Includes Danish general insurance and
Finnish guarantee insurance.
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
9,606
1,783
449
64.2
3.7
67.9
13.4
81.3
-4.7
1,933
6,272
770
422
67.9
5.3
73.2
14.7
87.9
-6.7
1,042
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
Contents – Financial statements
67
Annual report 2017 | Tryg A/S |
b) Amounts relating to eliminations and one-off items.
In 2015 costs and claims were negatively affected by
DKK 80m and DKK 40m respectively due to provi-
sioning for the efficiency programme. In 2016 costs
and claims were negatively affected by DKK 162m
and DKK 88m respectively, mainly due to impairment
af software.
c)
Adjustment of gross expense ratio included only in
‘Tryg ’. The adjustment is explained in a footnote to
Financial highlights.
Notes
DKKm
2017
2016
2015
2014
2013
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 December
Other b)
Gross premium income
Technical result
Tryg
Gross premium income
Technical result
Investment return
Other income and costs
Profit/loss before tax
Run-off gains/losses, net of reinsurance
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio c)
Combined ratio
Run-off, net of reinsurance (%)
Number of full-time employees, continuing business at 31 December
2,121
236
101
69.0
5.0
74.0
14.5
88.5
-4.8
398
-36
0
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
17,963
17,707
17,977
18,652
19,504
2,789
527
-77
3,239
972
66.1
4.3
70.4
14.0
84.4
-5.4
3,373
2,390
987
-157
3,220
1,239
65.6
5.4
71.0
15.7
86.7
-7.0
3,264
2,423
-22
-91
2,310
1,212
75.4
-3.9
71.5
15.3
86.8
-6.7
3,359
3,032
360
-90
3,302
1,131
67.8
1.8
69.6
14.6
84.2
-6.1
3,599
2,496
588
-91
2,993
970
73.9
-1.8
72.1
15.6
87.7
-5.0
3,703
Contents – Financial statements
68
Annual report 2017 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2017
1,918
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
1,848
- 1,199
- 257
- 7
- 2
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
383
64.9
79.2
5.2%
23,874
55,434
Accident and
health
Health care
Workers’
compensation
Motor TPL
Motor comprehensive
insurance
Marine, aviation and
cargo insurance
2016
1,741
1,666
- 960
- 223
- 7
- 1
475
57.6
71.4
4.7%
25,091
46,883
2017
359
348
- 307
- 41
- 1
0
- 1
88.2
100.3
113.4%
4,797
57,785
2016
338
332
- 308
- 41
- 1
0
- 18
92.8
105.4
115.2%
4,558
57,186
2017
846
850
- 612
- 99
- 21
0
118
72.0
86.1
2016
860
858
- 191
- 98
- 8
0
561
22.3
34.6
19.8%
75,265
11,116
19.8%
72,474
11,008
2017
1,778
1,750
- 1,063
- 289
- 35
- 1
362
60.7
79.3
5.9%
17,513
74,872
2016
1,779
1,839
- 1,167
- 321
- 44
- 1
306
63.5
83.3
6.0%
17,913
77,441
2017
3,691
3,557
- 2,413
- 512
- 30
- 3
599
67.8
83.1
2016
3,545
3,537
- 2,407
- 532
- 24
- 2
572
68.1
83.8
21.2%
9,537
260,926
20.2%
9,837
250,450
2017
283
281
- 261
- 34
- 15
0
- 29
92.9
110.3
27.8%
82,852
3,208
2016
275
274
- 113
- 39
- 130
0
- 8
41.2
102.9
24.7%
57,384
2,896
Gross premiums written
2017
4,342
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
4,196
- 2,895
- 591
- 157
- 7
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Fire and contents
(Private)
Fire and contents
(Commercial)
Change of ownership
Liability insurance
Credit and guarantee
insurance
Tourist assistance
insurance
2016
4,266
4,221
- 3,250
- 617
- 129
- 6
219
77.0
94.7
546
69.0
86.8
9.1%
8,911
345,325
8.9%
9,036
363,113
2017
2,427
2,455
- 1,262
- 363
- 318
- 2
510
51.4
79.1
15.9%
43,226
29,599
2016
2,426
2,408
- 1,474
- 365
- 439
- 1
129
61.2
94.6
16.2%
53,344
30,020
2017
2016
66
62
- 60
- 9
0
- 1
- 8
96.8
111.3
13.1%
20,475
4,036
55
61
- 55
- 8
0
- 1
- 3
90.2
103.3
11.3%
21,846
3,807
2017
1,032
1,025
- 843
- 148
- 68
- 1
- 35
82.2
103.3
11.2%
74,485
11,013
2016
1,025
1,000
- 658
- 148
- 47
- 1
146
65.8
85.3
2017
445
437
- 136
- 44
- 77
0
180
31.1
58.8
2016
398
390
- 82
- 31
- 96
0
181
21.0
53.6
2017
692
679
- 494
- 88
- 1
0
96
72.8
85.9
2016
655
650
- 497
- 90
- 2
0
61
76.5
90.6
11.6%
64,807
10,917
0.2%
367,332
443
0.1%
765,692
120
17.2%
6,174
86,645
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.
Contents – Financial statements
69
Annual report 2017 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Other
insurance c)
Gross premiums written
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Gross claims ratio
Combined ratio
Average claims DKK b)
Total claims
2017
59
57
- 10
2
- 49
2
2
17.5
100.0
2016
57
55
- 95
- 179
- 23
2
- 240
172.7
540.0
301,159
44
958,750
12
b) Average claims are total claims before run-off in the
year relative to the number of claims in the year.
c)
Other insurance, gross claims and gross operating
expenses are negatively affected by DKK 88m and
DKK 162m, mainly by impairment of software, in
2016.
Total exclusive of
Norwegian Group Life
2017
2016
17,938
17,420
17,545
- 11,555
- 2,473
- 779
- 15
17,291
- 11,257
- 2,692
- 950
- 11
2,723
2,381
65.9
84.4
65.1
86.2
Norwegian Group Life
one-year policies
Total
2017
420
418
- 310
- 43
0
1
66
74.2
84.4
2016
422
416
- 362
- 45
- 1
1
9
87.0
98.1
2017
18,358
17,963
- 11,865
- 2,516
- 779
- 14
2,789
66.1
84.4
2016
17,842
17,707
- 11,619
- 2,737
- 951
- 10
2,390
65.6
86.7
Contents – Financial statements
70
Annual report 2017 | Tryg A/S |
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
2017
2016
Denmark
Other EU countries
Other countries a)
a) Mainly Norway
Gross
9,622
2,161
6,385
Ceded
-537
-187
-505
Gross
9,533
1,928
6,489
18,168
-1,229
17,950
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
2017
2016
184
-198
-14
-12,804
939
-11,865
267
33
-11,565
149
-159
-10
-13,048
1,429
-11,619
286
-190
-11,523
2017
2016
DKKm
2017
2016
18,168
45
18,213
0
18,213
-1,229
-10
16,974
17,949
43
17,992
1
17,993
-1,178
-19
16,796
Ceded
-613
-110
-455
-1,178
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
-259
-1,643
-1,902
-614
-2,516
160
-2,356
-296
-1,733
-2,029
-708
-2,737
150
-2,587
In the calculation of the expense ratio, costs were in 2016 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 in 2016.
Administative 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
Expenses have been incurred for the Group´s Internal Audit Department.
-6
-6
-3
-1
-1
-1
-6
-9
-7
-7
-3
-1
-1
-2
-7
-9
Fees for non-audit services provided by Deloitte Statsautoriserede Revisionspartnerselskab to the Group
amount to DKK 2m and consists of various declaration tasks, including review of interim balances, tax
advice in relation to the investment area, as well as other general accounting and tax advice.
Contents – Financial statements
71
NotesAnnual report 2017 | 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 26m in 2016)
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
2017
2016
-249
-1,509
-166
-500
-222
-98
228
-2,516
-1,926
-7
-6
-280
-5
-410
-2,634
-296
-1,615
-164
-416
-249
-223
226
-2,737
-2,036
-8
-3
-286
-4
-354
-2,691
a) In 2017 defined benefit plans were included with DKK 49m (DKK 33m in 2016).
Remuneration for the Supervisory Board and Executive Board
is disclosed in note 28 ‘Related parties’.
Average number of full-time employees during the year
(continuing business)
3,315
3,306
Contents – Financial statements
72
NotesAnnual report 2017 | Tryg A/S |
Notes
DKKm
6 Matching shares and conditional shares
Total numbers
Fair value
2017
Allocated in 2017
Matching shares allocated
Executive
Board
27,060
Risk-
takers
39,747
Other
18,896
85,703
in 2017 at 31.12.17
27,060
39,747
18,896
85,703
Allocated in 2011-2016
Category changes and addition
Cancelled
Exercised
123,278
1,835
-9,360
-74,275
141,197
-113,257
-3,045
0
0
112,343
-8,856
-61,840
264,475
921
-21,261
-136,115
Matching shares allocated
in 2011-2016 at 31.12.17
Number of Matching shares
exercisable 31 Dec. 2017
0
0
41,478
24,895
41,647
108,020
2016
Allocated in 2016
17,233
15,562
Matching shares allocated
in 2016 at 31.12.16
17,233
15,562
Allocated in 2011-2015
Category changes
Cancelled
Exercised
Matching shares allocated
in 2011-2015 at 31.12.16
Number of Matching shares
exercisable 31 Dec. 2016
106,045
1,835
-15,355
-54,635
125,635
-1,835
-17,130
-39,245
37,890
67,425
0
0
0
0
0
0
0
0
0
0
0
0
32,795
32,795
231,680
0
-32,485
-93,880
105,315
0
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
127
127
98
98
98
98
98
128
128
94
94
94
94
94
11
11
26
0
-2
-13
11
4
4
22
0
-3
-9
10
155
155
155
155
155
155
155
127
127
127
127
127
127
127
13
13
41
0
-3
-21
17
4
4
29
0
-4
-12
13
In 2011-2017, Tryg entered into an agreement on
matching shares for the Executive Board, Risk-takers
and Other employes as a consequence of the Group’s
remuneration policy. Executive Board, Risk-takers and
Other employees are allocated one share in Tryg A/S
for each share they acquires in Tryg A/S at market rate
for liquid cash at a contractually agreed sum over the
3- or 4-year maturation period.
In 2017, the reported fair value of matching shares
for the Group amounted to DKK 5m (DKK 3m in 2016).
At 31 December 2017, a total amount of DKK 21m
was recognised for matching shares.
Conditional shares
In 2017, Tryg allocated conditional shares in accordance
with the Group’s remuneration policy. The beneficiaries
will receive shares in Tryg A/S if certain conditions are
fulfilled over a 2 to 3 year vesting period. In 2017, the
fair value of Conditional shares is prorated relative to the
vesting period and recognised in the income statement
amounted to DKK 1m (DKK 0m in 2016). The maximum
obligation for Tryg is 25,910 shares in Tryg A/S.
Contents – Financial statements
73
Annual report 2017 | 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
Exchange rate adjustments concerning financial assets or liabilities which
cannot be stated at fair value total DKK 127m (DKK 1m in 2016)
a) Please refer to note 25 Sale of properties.
2017
2016
DKKm
2017
2016
9
Tax
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Tax adjustment, previous years
Adjustment of non-taxable income and costs
Change in valuation of tax assets
Change in tax rate
Other taxes
Effective tax rate
Tax on accounting profit/loss
Difference between Danish and foreign tax rates
Tax adjustment, previous years
Adjustment of non-taxable income and costs
Change in valuation of tax assets
-712
-42
-47
80
0
1
0
-720
%
22
1
2
-3
0
22
-708
-40
8
-24
17
0
-1
-748
%
22
1
0
1
-1
23
19
0
601
4
624
-89
-18
-107
517
-35
460
-8
-148
-96
173
9
0
123
-81
51
224
25
1
642
3
671
-88
-25
-113
558
78
190
-19
-83
81
247
431
93
-188
-65
271
518
Contents – Financial statements
74
NotesAnnual report 2017 | Tryg A/S |
DKKm
10
Intangible assets
DKKm
10
Intangible assets
Trademarks
and customer
relations
Goodwill
Software a)
Assets
under con-
struction a)
Trademarks
and customer
relations
Goodwill
Software a)
Assets
under con-
struction a)
2017
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from assets
under construction
Additions for the year
Disposals for the year
Cost at 31 December
Amortisation and write-downs
Amortisation and write-downs
at 1 January
Exchange rate adjustments
Amortisation for the year
Impairment losses and write-downs
for the year
Amortisation and write-downs
at 31 December
619
-12
0
49
0
656
-104
0
0
0
257
-6
0
49
0
1,418
-19
107
24
-2
300
1,528
-147
4
-28
-1,252
18
-92
0
-38
185
-1
-107
275
0
352
-92
0
0
0
Total
2,479
-38
0
397
-2
2,836
-1,595
22
-120
-38
2016
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
Impairment losses and write-downs
for the year
Amortisation and write-downs
at 31 December
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
-104
-171
-1,364
-92
-1,731
-104
-147
-1,252
-92
-1,595
Carrying amount at 31 December
552
129
164
260
1,105
Carrying amount at 31 December
515
110
166
93
884
a) Hereof proprietary software DKK 336m (DKK 203m at 31 December 2016)
Contents – Financial statements
75
NotesAnnual report 2017 | Tryg A/S |
DKKm
10 Intangible assets (continued)
Impairment test
Goodwill
The Value-in-use method is used when testing the Goodwill for impairment.
Primary assumptions for impairment test:
When assessing the cash flow, management has based its estimates of premiums earned on the insurance port-
folio 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.
OBOS
In 2017, Tryg acquired OBOS’ insurance portfolio. The insurance activities were incorporated into the Tryg Group’s
business structure from 1 June 2017.
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
2017
10%
2%
15%
91%
15
-14
-153
193
-142
143
Moderna
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.
Comprises the sale of insurance products to private and commercial customers under the ‘Obos’ brand.
In 2014, Tryg acquired Securator A/S, Optimal Djurförsäkring i Norr AB. The insurance activities were incorporated
into the Tryg Group’s business structure and merged into Tryg in 2015.
The impairment test at year-end for the Obos 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 51m. Please refer to note 27. The assets and liabilities have not changed significantly since the acquisition
and the recoverable amount calculated would exceed the carrying amount with the same margin or very close to
that margin.
At 31 December 2017, 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. Moderna portfolio consists from 1 January 2017
of Moderna, Securator and Skandia, which was prior to this date three separate cash-generating units. The reasons
behind the merger of Securator and Skandia into Moderna, is that they are managed together as part of the Swedish
business and reported under the segment ‘Sweden’.
The impairment test shows a calculated value in use of approximately DKK 0.3bn relative to a recognised
goodwill of DKK 51m and Equity of DKK 0.2bn and does not indicate any impairment in 2017.
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 (1.2bn) relative to a recognised
goodwill of DKK 0.5bn (0.5bn) and Equity of DKK 0.8bn (0.7bn) and does not indicate any impairment in 2017.
Contents – Financial statements
76
NotesAnnual report 2017 | Tryg A/S |
DKKm
2017
2016
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
2%
1%
13%
92%
18
-17
-147
185
-107
107
2%
1%
13%
93%
22
-21
-172
219
-157
157
Trademarks and customer relations
As at 31 December 2017 management performed a test of the carrying amounts of trademarks and customer
relations as an integral part of the Moderna portfolio goodwill test and OBOS 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.
Software and assets under construction
As at 31 December 2017 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 38m due to revaluation of the groups it-systems. The write-down
is due to specific outdated IT systems. The cost is recognised as write-downs under depreciations in the
income statement.
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.
Contents – Financial statements
77
NotesAnnual report 2017 | Tryg A/S |
The owner-occupied properties were sold in December
2016. Please refer to note 25 Sale of properties.
Notes
11
Property, plant and equipment
DKKm
2017
Cost
Cost at 1 January
Exchange rate adjustments
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
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
2016
Cost
Cost at 1 January
Exchange rate adjustments
Additions for the year
Disposals for the year
Cost at 31 December
Accumulated depreciation and value adjustments
Accumulated depreciation and value adjustments at 1 January
Exchange rate adjustments
Depreciation for the year
Value adjustments for the year at revalued amount in income statement
Value adjustments for the year at revalued amount in other comprehensive income
Reversed depreciation
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
Operating Owner-occupied
property
equipment
Assets under
construction
239
-4
40
-2
273
-190
2
-18
-206
67
235
3
1
0
239
-173
-2
-15
0
0
0
-190
49
0
0
0
0
0
0
0
0
0
0
1,715
20
75
-1,810
0
-571
3
-17
53
100
432
0
0
0
0
0
0
0
0
0
0
0
0
83
2
12
-97
0
-81
-2
0
0
0
83
0
0
Total
239
-4
40
-2
273
-190
2
-18
-206
67
2,033
25
88
-1,907
239
-825
-1
-32
53
100
515
-190
49
Contents – Financial statements
78
Annual report 2017 | Tryg A/S |
2017
2016
DKKm
2017
2016
2,323
-27
10
-1,015
33
0
1,324
1,838
16
47
-6
431
-3
2,323
13
Equity investments in associates
Cost
Cost at 1 January
Additions for the year
Cost at 31 December
Revaluations at net asset value
Revaluations at 1 January
Dividend received, this year
Reversed on sale
Value adjustments for the year
Revaluations at 31 December
Carrying amount at 31 December
201
14
215
17
-10
0
3
10
225
201
0
201
28
-10
-14
13
17
218
DKKm
12
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
Total rental income for 2017 is DKK 88m (DKK 129m in 2016).
Total expenses for 2017 are DKK 20m (DKK 24m in 2016). Of this amount, expenses for non-let
property total DKK 0m (DKK 0m in 2016), total expenses for the income-generating investment
property are DKK 20m (DKK 24m in 2016).
Value adjustments of DKK 420m and a fair value as at 31 December 2016 of DKK 1,015m relates to sale
of property based on sales contracts. External experts were involved in valuing the majority of the other in-
vestment properties.
Return percentages, weighted average
2017
2016
Business property
Office property
Residential property
Total
6.4
7.9
6.0
7.0
6.9
6.9
6.0
6.8
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.
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%
2017
-58
63
-41
-8
2016
-51
57
-37
-9
Contents – Financial statements
79
NotesAnnual report 2017 | Tryg A/S |
Notes
DKKm
13
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 %
2017
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
1,121
222
899
2016
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
1,106
234
872
67
66
68
54
25
25
Individual estimates are made of the degree of influence
under the contracts made.
Contents – Financial statements
80
Annual report 2017 | Tryg A/S |
DKKm
14
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
2017
2016
43,434
40,252
77
3,237
46,748
0
3,412
43,664
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
746
0
6,887
7,633
681
21
6,978
7,680
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.
14
Financial assets (Continued)
The Fair value hierarchy
Quoted market prices (level 1) consists of financial instruments that are quoted in an active market. Tryg
uses the price quoted in the principal market.
Valuation based on observable input (level 2) consists of financial instruments that are valued substan-
tially on the basis of observable input other than a quoted price for the instrument itself. If a financial in-
strument is quoted in a market that is not active, Tryg bases its measurement on the most recent transac-
tion price. Adjustment is made for subsequent changes to market conditions, for instance, by including
transactions in similar financial instruments that are assumed to be motivated by normal business consid-
erations. For a number of financial assets and liabilities, no market exists. In such cases, Tryg uses recent
transactions in similar instruments and discounted cash flows or other generally accepted estimation and
valuation techniques based on market conditions at the balance sheet date to calculate an estimated
value. This category covers instruments such as derivatives valued on the basis of observable yield curves
and exchange rates and illiquid mortgage bonds valued by reference to the value of similar liquid bonds.
Valuation based on significant non-observable input (level 3): The valuation of certain financial instru-
ments is based substantially on non-observable input. Such instruments include unlisted shares, unit trust
investments and some unlisted bonds. The fair value of Investment property is also based on non-
observable input. Please refer to note 12 and accounting policies section Investment property.
If, at the balance sheet date, a financial instrument’s classification differs from its classification at the be-
ginning of the year, the classification of the instrument changes. Changes are considered to have taken
place at the balance sheet date. Developments in the financial markets can result in reclassifications be-
tween the categories. Some bonds have become illiquid and have therefore been moved from the Quoted
prices to the Observable input category, while other bonds have become liquid and have been moved
from the Observable input to the Quoted prices category.
Contents – Financial statements
81
NotesAnnual report 2017 | Tryg A/S |
DKKm
14
Financial assets (Continued)
Fair value hierarchy for financial instruments and investment property
measured at fair value in the statement of financial position
Quoted
market price
Observable
input
Non-
observable
input
2017
Investment property
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments, assets
Derivative financial instruments, debt
2016
Investment property
Equity investments
Unit trust units
Bonds
Derivative financial instruments, assets
Derivative financial instruments, debt
0
0
4,622
18,343
0
0
0
22,965
0
0
2,999
17,555
0
0
20,554
0
0
229
18,808
250
1,079
-746
19,620
0
0
942
17,698
1,000
-702
18,938
1,324
179
1
0
0
0
0
1,504
2,323
48
9
1
0
0
2,381
DKKm
14
Financial assets (Continued)
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
2017
2016
2,381
-31
-8
178
-1,016
1,504
-39
1,977
19
464
79
-158
2,381
381
Inflation derivatives are measured at fair value on the basis of non-observable input and are included un-
der claims provisions at a fair value of DKK -386m (DKK -398m in 2016).
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 counter parties of 8 %
-169
169
-231
-137
-12
-343
-199
-150
-275
-104
-14
-466
Total
1,324
179
4,852
37,151
250
1,079
-746
44,089
2,323
48
3,950
35,254
1,000
-702
41,873
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.
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.
DKKm
2017
2016
Financial instruments transferred from quoted market prices
to observable input
Financial instruments transferred from observable input
to quoted market prices
950
1,379
837
388
In 2017 no unit trust units was transferred to category Observable input.
Contents – Financial statements
82
NotesAnnual report 2017 | Tryg A/S |
DKKm
14
Financial assets (Continued)
Derivative financial instruments
Derivatives with value adjustments in the income statement at fair value:
DKKm
14
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:
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
2017
Fair value
in statement
of financial
position
184
10
139
Nominal
28,037
-135
9,121
Nominal
32,889
607
7,735
37,023
333
41,231
3,311
40,334
13,455
10,498
16,381
-386
-53
134
-26
-161
3,143
44,374
18,508
10,754
15,112
2016
Fair value
in statement
of financial
position
347
7
-56
298
-398
-100
-91
-16
7
Derivatives, repos and reverses are used continuously as part of the cash and risk management carried
out by Tryg and its portfolio managers.
2017
Gains and losses at 1 January
Reversed hedges in profit/loss
Value adjustments for the year
Gains and losses at 31 December
2016
Gains and losses at 1 January
Reversed hedges in profit/loss
Value adjustments for the year
Gains and losses at 31 December
Gains
2,652
0
251
2,903
Gains
2,496
0
156
2,652
Losses
-2,626
0
-116
-2,742
Losses
-2,420
-23
-183
-2,626
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
2017
-15
-137
0
-152
Contents – Financial statements
Net
26
0
135
161
Net
76
-23
-27
26
2016
-66
26
25
-15
83
NotesAnnual report 2017 | Tryg A/S |
DKKm
14
Financial assets (Continued)
Receivables
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Reverse repos
Other receivables
Specification of write-downs on receivables from insurance contracts:
Write-downs at 1 January
Exchange rate adjustments
Write-downs and reversed write-downs for the year
Write-downs at 31 December
Receivables are written down in full when submitted for debt collection.
The write-down is reversed if payment is subsequently received from debt
collection and amounts to DKK 42m (DKK 50m in 2016).
Other receivables do not contain overdue receivables
2017
2016
DKKm
2017
2016
15
16
1,108
183
0
1,646
2,937
116
3
-2
117
1,471
300
602
355
2,728
117
-5
3
115
Reinsurer’s share
Impairment test
As at 31 December 2017, 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 0m (DKK 2m in 2016). The use of reinsurance creates a natural counter party risk. The Risk
will be handled by applying a wide range of reinsurers with at least an ‘A’ rating.
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
Net current tax
-317
6
-666
-30
-32
845
-194
0
-194
-194
-239
-9
-636
0
38
529
-317
0
-317
-317
Contents – Financial statements
84
NotesAnnual report 2017 | Tryg A/S |
DKKm
18
DKKm
17
Equity
Number of shares
Number of shares of DKK 5 (1,000)
Number of shares at 1 January
Bought during the year
Sold during the year
Cancellation in connection with
buyback programme
Used in connection with exercise
of incentive programme
Shares outstanding
2016
2017
274,595
-211
27,400
282,316
-7,793
0
0
161
0
72
Number of shares at 31 December
301,945
274,595
Number of shares as a percentage
of issued shares at 31 December
Nominal value at 31 december (DKKm)
99.93
1,510
97.19
1,373
Own shares
2017
7,946
211
0
2016
7,243
7,793
0
-7,793
-7,018
-161
203
0.07
1
-72
7,946
2.81
40
DKKm
2017
2016
Solvency II - Own funds
From 1 January 2016 Solvency II rules are effective:
Equity according to annual report
Proposed dividend
Intangible assets
Profit margin, solvency purpose
Taxes
Subordinate loan capital
Solvency II - Own funds
12,616
-1,483
-1,105
970
0
2,164
13,162
9,437
-2,017
-884
970
-27
2,371
9,850
Premium provisions
Premium provision at 1 January
Addition on acquisition of Obos portfolio (2016 Skandia)
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
Claims provisions
2017
Claims provisions at 1 January
Addition, purchase of Obos 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
Claims provisions at 31 December
Contents – Financial statements
2017
2016
5,487
79
-132
17,991
-17,868
2
5,559
5,571
35
32
17,967
-18,131
13
5,487
Gross
Ceded
Net of
reinsurance
25,452
70
-726
24,796
-6,283
-6,259
-12,542
12,550
-913
11,637
34
23,925
-1,820
-21
44
-1,797
80
959
1,039
-286
-31
-317
-46
-1,121
23,632
49
-682
22,999
-6,203
-5,300
-11,503
12,264
-944
11,320
-12
22,804
85
NotesAnnual report 2017 | Tryg A/S |
DKKm
2017
2016
Gross
Ceded
Net of
reinsurance
19
Pensions and similar obligations
Jubilees
Recognised liability
25,670
1,362
392
27,424
-6,839
-7,105
-13,944
13,053
-1,439
11,614
358
25,452
-3,004
0
-34
-3,038
44
1,143
1,187
-210
189
-21
52
-1,820
22,666
1,362
358
24,386
-6,795
-5,962
-12,757
12,843
-1,250
11,593
410
23,632
DKKm
18
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 adjustment
Claims provisions at 31 December
Contents – Financial statements
Defined-benefit pension plans:
Present value of pension obligations funded through operations
Present value of pension obligations funded through establishment of funds
Pension obligation, gross
Fair value of plan assets
Pension obligation, net
Specification of change in recognised pension obligations:
Recognised pension obligation at 1 January
Adjustment regarding plan changes not recognised in
the income statement and expected estimate deviation
Exchange rate adjustments
Present value of pensions earned during the year
Capital cost of previously earned pensions
Actuarial gains/losses
Paid during the period
42
42
65
1,068
1,133
885
248
37
37
70
1,198
1,268
960
308
1,268
1,192
0
-95
33
16
-39
-50
37
64
18
22
-8
-57
Recognised pension obligation at 31 December
1,133
1,268
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
Actuarial 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
960
-73
83
2
-50
-37
885
248
290
978
51
34
7
-66
-44
960
308
345
86
NotesAnnual report 2017 | Tryg A/S |
DKKm
19
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
Average return on plan assets
Weighted average duration of the defined benefit obligation (years)
Assumptions used
Discount rate
Estimated return on pension funds
Salary adjustments
Pension adjustments
G adjustments
Turnover
Employer contributions
Mortality table
2017
2016
DKKm
2017
2016
28
17
-2
6
49
36
450
605
8.00
%
10
79
10
1
0.2
13
%
1.7
1.7
2.5
0.4
2.3
7.0
19.1
K2013
11
22
-6
6
33
49
517
637
8.00
%
8
76
12
3
0.7
13
%
1.4
1.4
2.3
0.0
2.0
7.0
14.0
K2013
19
Sensitivity information
The sensitivity analysis is based on a change in one of the assumptions, assuming that all other assumptions
remain constant. In reality, this is rarely the case, and changes to some assumptions may be subject to
covariance. The sensitivity analysis has been carried out using the same method as the actuarial calculation
of the pension provisions in the statement of financial position.
Impact on equity from the following changes:
Interest rate increase of 0.3 percentage point
Interest rate decrease of 0.3 percentage point
Pay increase rate, increase of 1 percentage point
Pay increase rate, decrease of 1 percentage point
Turnover, increase of 2 percentage point
Turnover, decrease of 2 percentage point
46
-49
-92
78
22
-26
52
-55
-103
88
31
-33
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.
Description of the Swedish plan
Moderna Försäkringar, a branch of Tryg Forsikring A/S, complies with the Swedish industry pension agree-
ment, 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 col-
laboration, 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 14m, which is about 2,5 % of the annual premium in FPK
(2016). FPK writes in its interim report for 2017 that it had a collective consolidation ratio of 140 at 30
June 2017 (consolidation ratio of 137 at 31 December 2016). The collective consolidation ratio is defined
as the fair value of the plan assets relative to the total collective pension obligations.
Contents – Financial statements
87
NotesAnnual report 2017 | Tryg A/S |
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20
Deferred tax
Tax asset
Operating equipment
Debt and provisions
Capitalised tax loss
Tax liability
Intangible rights
Land and buildings
Bonds
Contingency funds
Deferred tax
Development in deferred tax
Deferred tax at 1 January
Exchange rate adjustments
Change in deferred tax relating to change in tax rate
Change in deferred tax previous years
Change in deferred tax recognised in 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
2017
2016
DKKm
2017
2016
8
51
0
59
25
130
15
545
715
656
702
-48
-1
13
-10
0
0
656
16
21
Other provisions
Other provisions at 1 January
Exchange rate adjustment
Change in provisions
Other provisions 31 December
125
-4
-10
111
132
0
-7
125
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 30m and reassessment
of the beginning of year balance amounts to DKK 24m. The balance as at 31 December 2017 amounts to
DKK 104m (DKK 123m at 31 December 2016).
22
Amounts owed to credit institutions
Overdraft facilities
23
Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt
306
306
1,611
100
1,711
178
178
258
1,474
1,732
Unsettled fund transactions include debt for bonds purchased in 2016 and 2017, however, with settle-
ment in 2017 and 2018, respectively. Financial instruments comprised by repo agreements, meaning
financial instruments sold before the balance sheet date and repurchased after the balancesheet date,
remains recognised in the balance sheet, while the received amount is recognised as Repo debt.
8
30
1
39
33
70
38
600
741
702
645
24
0
31
60
-17
-41
702
16
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 generate
sufficient future taxable income to offset the tax loss. The total current and deferred tax relating to items
recognised in equity is recognised in the statement of financial position in the amount of DKK 25m
(DKK -30m at 31 December 2016).
Contents – Financial statements
88
NotesAnnual report 2017 | Tryg A/S |
2017
2016
DKKm
DKKm
24
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 average number of shares (1,000)
Earnings per share, continuing business
Diluted earnings per share, continuing business
Earnings per share
Diluted earnings per share
2,519
-2
2,517
276,080
276,080
9.12
9.12
9.12
9.12
25
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:
Investment property, sold
Owner-occupied property, sold *
Total property sold
Other estimated costs concerning the sales
Total impact in 2016
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
2,472
-1
2,471
279,399
279,399
8.84
8.84
8.84
8.84
Carrying
amount
31 Dec.
2016
1,017
0
1,017
26
Contractual obligations, collateral and contingent liabilities
Contractual obligations
2017
Operating leases
Other contractual obligations
2016
Operating leases
Other contractual obligations
<1 year
120
867
987
140
202
342
Obligations due by period
1-3 years
3-5 years
> 5 years
197
40
237
246
0
246
134
6
140
299
0
299
552
0
552
260
0
260
Total
1,003
913
1,916
945
202
1,147
2017
Tryg has signed the following contracts with amounts above DKK 50m:
Tryg is comitted to Investments in some Property funds. The commitment amount to DKK 674m
and are expected called during 2018.
2016
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 25 Sale of properties.
Outsourcing agreement with TCS for DKK 64m for a 4 year period, which expires in 2017.
.
a) Carrying amount is recognised in Other receivables
New lease contracts for the continued rental of both owner-occupied properties have been signed in 2016.
Contents – Financial statements
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NotesAnnual report 2017 | Tryg A/S |
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26
2017
2016
Contractual obligations, collateral and contingent liabilities (continued)
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
Unit trust units
Bonds
Deposits with credit institutions
Interest and rent receivable
Equity investments in and receivables from Group undertakings
which have been eliminated in the consolidated financial statements
Total
14
1,759
36,000
250
197
2,529
40,749
36
3,950
33,534
0
224
3,172
40,916
Contents – Financial statements
90
NotesAnnual report 2017 | Tryg A/S |
Notes
DKKm
26
Contractual obligations, collateral and contingent liabilities (continued)
Offsetting and collateral in relation to financial assets and obligations
Gross amount
before offsetting
According to the
statement of
financial position
Offsetting
Bonds as colla-
teral for repos/
reverse repos
Collateral
in cash
Net amount
Collateral which is not offset in
the statement of financial position
2017
Assets
Reverse repos
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
2016
Assets
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
602
1,079
19
1,700
100
746
405
1,251
1,000
16
1,016
1,474
702
414
2,590
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
602
1,079
19
1,700
100
746
405
1,251
1,000
16
1,016
1,474
702
414
2,590
-602
0
0
-602
-100
0
0
-100
0
0
0
-1,474
0
0
-1,474
0
-1,058
-15
-1,073
-1
-718
-411
-1,130
-1,004
-13
-1,017
-4
-727
-425
-1,156
0
21
4
25
-1
28
-6
21
-4
3
-1
-4
-25
-11
-40
Contingent liabilities
In May 2016, Tryg received notice of an action from
Finansforbundet in Norway (the Finance Sector Union of
Norway) on behalf of a group of pensioners. The action
concerned the adjustment in the pension schemes of
Norwegian employees made in 2014.
Tryg has now received the actual lawsuit. According to
Tryg’s preliminary calculations, the claim will not exceed
a maximum of approximately DKK 300m after tax for the
persons affected by the adjustment.
Tryg and its legal advisor do not agree that the adjust-
ment was wrongful and consider the claim uncertain.
Consequently, Tryg expects an action to be resolved in
court and does not expect a ruling to be made for the
next 2 years.
Therefore the claim is not recognised as a liability in
the financial statement, but recognised as contingent
liability.
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
2017.
Contents – Financial statements
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Annual report 2017 | Tryg A/S |
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27
Acquisition of subsidiaries
2017
OBOS
In February 2017 Tryg and OBOS BLL signed an agreement whereby Tryg acquired OBOS’ insurance
activities and shares in OBOS Forsikring AS and integrated them into its Norwegean business.
The acquisition affects the Financial statement from 1 June 2017:
27
Acquisition of subsidiaries
The Group has not incurred any significant acquisition costs in connection with the closed acquisitions.
The purchase prices are final. In connection with the acquisitions, 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 140m
and the technical result would be slightly negative. Management believes that through various actions,
the earnings-level after the acquisition of the activities will be significantly increased, to a level more inline
with other Tryg activities in Norway.
FDM
Tryg acquired FDM's insurance portfolio at 1st January 2018. In October 2017, Tryg began selling
insurance products to FDM’s customers, and by 1 January 2018, all current customers had been
transferred to Tryg. Please refer to management's review for further information.
Alka
In December 2017 Tryg agreed to acquire Alka Forsikring A/S. The transaction is expected to close during
H1 2018, following a period of regulatory approval. The acquisition did not have any impact on the financial
statements 2017. Please refer to management’s review for further information.
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 acquisition
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.
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 af-
fects the Financial statement from 1 September 2016.
Net assets acquired
Assets
Intangible assets
Financial assets
Total reinsurance of provisions
Receivables, other assets and accrued income
Liabilities
Total provisions for insurance contracts
Debt and accruals and deferred income
Net assets acquired
Hereof cash
Purchase price
Purchase price in cash
Goodwill
OBOS
2017
Skandia
2016
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 fig-
ures 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.
51
121
49
113
143
74
117
13
168
155
51
58
1,471
0
0
1,389
0
140
0
217
217
77
Contents – Financial statements
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NotesAnnual report 2017 | Tryg A/S |
DKKm
28
2017
2016
DKKm
Related parties
The group has no related parties with a decisive influence other than the parent company, TryghedsGruppen
smba and the subsidiaries of TryghedsGruppen smba (other related parties). Related parties with significant
influence include the Supervisory Board, the Executive Board and their members’ family.
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Key management
- Other related parties
0.4
0.3
2.2
0.1
1.0
0.5
0.4
3.7
0.1
1.8
Specification of remuneration
2017
Number of
persons
Share-based
Variable
salarya)
Base
salary
Cash
Variable
salary
Pension
Total
14
3
Supervisory Board
Executive Board
Risk-takers investment
functions
Risk-takers staff functions
Risk-takers independent
control functions
3
Risk-takers other functions 19
6
15
8
20
9
23
4
41
60
105
0
3
1
1
0
4
9
0
0
2
2
0
7
0
5
1
3
1
6
8
28
13
29
5
58
11
16
141
a) Total expenses in 2017 for matching shares programs allocated in 2017 and previous year.
For matching shares allocated to Executive Board in 2018 for fiscal year 2017,
see Section ‘Corporate governance’ in Management review.
Of which retired:
Supervisory Board
Executive Board
Risk-takers
Number
of persons
Severance
pay
1
0
1
2
0
0
0
0
28
Related parties (continued)
2016
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Share-based
Variable
salarya)
Base
salary
Cash
Variable
salary
14
4
8
26
7
19
15
41
0
2
0
2
0
0
0
0
Pension
Total
0
5
2
7
7
26
17
50
a) Exclusive of severance pay
Of which retired:
Number
of persons
Severance
pay
Supervisory Board
Executive Management
Risk-takers
2
1
1
4
0
0
0
0
Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares, which are recognised over 3-4 years. Reference is made to section ‘Corporate governance’ of the
management’s review on the corresponding disbursements. The Executive Board and risk-takers are in-
cluded 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). If a change of
control clause is actioned CEO and COO are instead entitled to Severance pay equal to 36 months’ salary
and CFO to 24 months’ salary and a notice period of 6 months.
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.
Contents – Financial statements
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NotesAnnual report 2017 | Tryg A/S |
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28
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
Tryg transferred DKK 40m to TryghedsGruppen regarding commitment fee related to capital increase
in december 2017. The transactions between TryghedsGruppen smba and Tryg A/S is 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 interest on market terms.
The companies in the Tryg Group have entered into reinsurance contracts on market terms.
Transactions with Group undertakings have been eliminated in the consolidated financial
statements in accordance with the accounting policies.
29
Financial highlights
Please refer to page 49.
Contents – Financial statements
94
NotesAnnual report 2017 | Tryg A/S |
30 Accounting policies
The consolidated financial statements are prepared in
accordance with the International Financial Reporting
Standards (IFRS) as per adopted by the EU on 31 Decem-
ber 2017 and in accordance with the Danish Statutory
Order on Adoption of IFRS.
The annual report of the parent company is prepared in
accordance with the executive order on financial reports
presented by insurance companies and lateral pension
funds issued by the Danish FSA. The deviations from the
recognition and measurement requirements of IFRS are:
•
The Danish FSA’s executive order does not allow
provisions for deferred tax of contingency reserves al-
located from untaxed funds. Deferred tax and the other
comprehensive income of the parent company have
been adjusted accordingly on the transition to IFRS.
The accounting policies have been applied consistently
with last year.
Accounting regulation
Implementation of changes to accounting
standards and interpretation in 2017
The International Accounting Standards Board (IASB) has
issued a number of changes to the international account-
ing 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 2017 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:
Assets
Total property, plant and equipment
Total assets
•
•
•
IFRS 16 ‘Leases’ a)
IFRS 9 ‘Financial Instruments’ b)
IFRS 17 ‘Insurance Contracts’ c)
Equity and liabilities
Total debt
Total equity and liabilities
674
674
674
674
• 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
a) enters into force for the accounting year commencing
1 January 2019, but will be applied from 1 January
2018.
b) enters into force for the accounting year commencing
1 January 2018 But insurance companies are allowed
to postpone the implementation to 1 January 2021 if
certain criteria are met.
c) enters into force for the accounting year commencing
1 January 2021.
The implementation of IFRS 9 ‘financial instruments’ and
IFRS 16 ‘leases’ is not expected to significantly change
the group’s financial position.
However, IFRS 16 will change the composition of the
statement of financial position, but without adding new
risks. Implementing IFRS 16 Tryg will recognise assets
and liabilities in the balance sheet but it is not expected
to have a significant impact on either profit or loss or
equity. Earlier application of IFRS 16 is only possible be-
cause Tryg also applies IFRS 15 ‘Revenue from Contracts
with Customers’, however applying IFRS 15 have no
significant impact on the statement of financial position
or profit or loss due to our income is primarily related to
premiums accounted for under IFRS 4.
Tryg will primarily be effected by lease agreements relat-
ed to cars and premises. The total impact on the balance
sheet 1 January 2018, using the modified retrospective
approach is expected to be;
Regarding IFRS 9 the assessment of no significant im-
pact 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. Tryg expects to postpone
the implementation of IFRS 9 to 1 January 2021 when
IFRS 17 Insurance Contracts will be applicable. Tryg can
postpone IFRS 9 due to our activities are predominantly
connected with insurance and that our liabilities con-
nected with insurance is relatively greater than 80 per
cent of the total liabilities. The impact of IFRS 17 is cur-
rently being assessed and is expected to be concluded in
due course in time of the implementation date.
The changes will be implemented going forward from
the effective date.
Changes to accounting estimates
There have been no changes to the accounting estimates
in 2017.
Significant accounting estimates and assessments
The preparation of financial statements under IFRS
requires the use of certain critical accounting estimates
and requires management to exercise its judgement in
the process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or com-
plexity, or areas where assumptions and estimates are
significant to the consolidated financial statements are:
Liabilities under insurance contracts
Estimates of provisions for insurance contracts represent
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 incor-
porating the uncertainty related to the range of actuarial
scenarios and other short and long-term risks not re-
flected in standard actuarial models. The projections are
based on Tryg’s knowledge of historical developments,
payment patterns, reporting delays, duration of the
claims settlement process and other factors that might
influence future developments in the liabilities.
The Group makes claims provisions, in addition to
provisions for known claims, which cover estimated
compensation for losses that has incurred, but are not
yet reported to the Group (known as IBNR reserves) and
future developments in claims which are known to the
Group but are not finally settled. Claims provisions also
include direct and indirect claims settlement costs or
loss adjustment expenses that arise from events that
have occurred up to the statement of financial position
date even if they have not yet been reported to Tryg.
The calculation of the claims provisions is therefore
inherently uncertain and, by necessity, relies upon the
making of certain assumptions as regards factors such
as court decisions, amendments to legislation, social
inflation and other economic trends, including inflation.
Contents – Financial statements
95
NotesAnnual report 2017 | Tryg A/S | The Group’s actual liability for losses may therefore be
subject to material positive or negative deviations rela-
tive to the initially estimated claims provisions.
Claims provisions are discounted. As a result, initial
changes in discount rates or changes in the duration of
the claims provisions could have positive or negative
effects on earnings. Discounting affects the motor
third-party liability, general third-party liability, workers’
compensation classes, including sickness and personal
accident, in particular.
The Financial Supervisory Authority’s discount curve,
which is based on Eiopa’s yield curves, is used to dis-
count Danish, Norwegian and Swedish claims provisions
in relation to the relevant functional currencies.
Several assumptions and estimates underlying the calcu-
lation of the claims provisions are mutually dependent.
This has the greatest impact on assumptions regarding
interest rates and inflation.
Defined benefit pension schemes
The Group operates a defined-benefit plan in Norway.
A defined-benefit plan is a pension plan that defines an
amount of pension benefit that an employee will receive
on retirement, depending on age, years of service and
salary.
The net obligation with respect to the defined- benefit
plan is based on actuarial calculations involving a num-
ber of assumptions. The assumptions include discount
interest rate, expected future salary and pension adjust-
ments, turnover, mortality and disability.
Fair value of financial assets and liabilities
Measurements of financial assets and liabilities for
which prices are quoted in an active market or which
are based on generally accepted models with observ-
able market data are not subject to material estimates.
For securities that are not listed on a stock exchange,
or for which no stock exchange price is quoted that
reflects the fair value of the instrument, the fair value
is determined using a current OTC price of a similar
financial instrument or using a model calculation. The
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.
Description of accounting policies
Recognition and measurement
The annual report has been prepared under the histori-
cal cost convention, as modified by the revaluation of
owner-occupied property, where increases are recog-
nised in other comprehensive income, and revaluation
of investment property, financial assets held for trading
and financial assets and financial liabilities (includ-
ing derivative instruments) at fair value in the income
statement.
Valuation of property
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- deter-
mined rental income as well as operating expenses in
proportion to the property’s required rate of return.
Cf. note 12.
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 car-
rying 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 circumstances dependent
on economic trends, such as customer behaviour and
competition. Cf. note 10.
Control of subsidiaries
Control of subsidiaries is assessed yearly. Hence
whether a subsidiary should still be part of the consoli-
dation on line by line basis or as a single line item in the
balance sheet.
Assets are recognised in the statement of financial posi-
tion when it is probable that future economic benefits
will flow to the Group, and the value of such assets can
be measured reliably. Liabilities are recognised in the
statement of financial position when the Group has a le-
gal or constructive obligation as a result of a prior event,
and it is probable that future economic benefits will flow
out of the Group, and the value of such liabilities can be
measured reliably.
On initial recognition, assets and liabilities are measured
at cost, with the exception of financial assets, which
are recognised at fair value. Measurement subsequent
to initial recognition is effected as described below for
each item. Anticipated risks and losses that arise before
the time of presentation of the annual report and that
confirm or invalidate affairs and conditions existing at
the statement of financial position date are considered
at recognition and measurement.
Income is recognised in the income statement as
earned, whereas costs are recognised by the amounts
attributable to this financial year. Value adjustments
of financial assets and liabilities are recognised in the
income statement unless otherwise described below.
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
•
exercises a controlling influence over the relevant
activities in the enterprise in question
is exposed to or has the right to a variable return
on its investment, and
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 ex-
ercises significant influence but no controlling influence
are classified as associates.
Basis of consolidation
The consolidated financial statements are prepared on
the basis of the financial statements of Tryg A/S and its
subsidiaries. The consolidated financial statements are
prepared by combining items of a uniform nature.
The financial statements used for the consolidation are
prepared in accordance with the Group’s accounting
policies.
On consolidation, intra-group income and costs, intra-
group accounts and dividends, and gains and losses
arising on transactions between the consolidated enter-
prises are eliminated.
Items of subsidiaries are fully recognised in the consoli-
dated financial statements.
Business combinations
Newly acquired or newly established enterprises are
recognised in the consolidated financial statements
Contents – Financial statements
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NotesAnnual report 2017 | Tryg A/S | from the date of acquisition and the date of formation,
respectively. The date of acquisition is the date on which
control of the acquired enterprise actually passes to Tryg.
Divested or discontinued enterprises are recognised in
the consolidated statement of comprehensive 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. Sub-
sequently, identifiable assets, liabilities and contingent
liabilities in the acquired enterprises are measured 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 enterprise. The tax effect of
revaluations is taken into account. The acquisition price
of an enterprise consists of the fair value of the price
paid for the acquired enterprise. If the final determina-
tion of the price is conditional upon one or more future
events, such events are recognised at their fair values at
the date of acquisition. Costs relating to the acquisition
are recognised in the income statement as incurred.
Any positive balances (goodwill) between the acquisition
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 intangible assets, and are tested for
impairment at least once a year. If the carrying amount
of the asset exceeds its recoverable amount, it is im-
paired to the lower recoverable amount.
the acquired enterprise and the fair value of previously
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, liabili-
ties or contingent liabilities or the determination of the ac-
quisition price, initial recognition is based on a preliminary
determination of values. The preliminarily 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
reporting 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 currencies
are translated into the functional currency using the
exchange rate applicable at the transaction date. Assets
and liabilities denominated in foreign currencies are
translated using the exchange rates applicable at the
statement of financial position date. Translation differ-
ences are recognised in the income statement under
price adjustments.
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
On consolidation, the assets and liabilities of the Group’s
foreign operations are translated using the exchange
rates applicable at the statement of financial position
date. Income and expense items are translated using the
average exchange rates for the period. Exchange rate
differences arising on translation are classified as other
comprehensive income and transferred to the Group’s
translation reserve. Such translation differences are
recognised as income or as expenses in the period in
which the activities are divested. All other foreign cur-
rency translation gains and losses are recognised in the
income statement.
Key ratios
Earnings per share (EPS) are calculated according to IAS
33. This and other key ratios are calculated in accord-
ance with Recommendations and Ratios issued by the
The Danish Finance Society and the Executive Order on
Financial Reports for Insurance Companies and Multi-
Employer Occupational Pension Funds issued by the
Danish Financial Supervisory Authority.
The presentation currency in the annual report is DKK.
Segment reporting
Segment information is based on the Group’s man-
agement and internal financial reporting system and
supports the management decisions on allocation of
resources and assessment of the Group’s results 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, Norway
and Sweden.
Segment income and segment costs as well as segment
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 investment activity man-
aged at Group level.
Income statement
Premiums
Premium income represents gross premiums written
during the year, net of reinsurance premiums and adjust-
ed for changes in premium provisions, corresponding to
an accrual of premiums to the risk period of the policies,
and in the reinsurers’ share of the premium provisions.
Premiums are calculated as premium income in ac-
cordance with the risk exposure over the cover period,
calculated separately for each individual insurance con-
tract. 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 varia-
tions 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, technical
interest is presented as a calculated return on the year’s
average insurance liability provisions, net of reinsurance.
The calculated interest return for grouped classes of risks
is calculated as the monthly average provision plus an
actual interest from the present yield curve for each
individual group of risks. The interest is applied according
to the expected run-off pattern of the provisions.
Contents – Financial statements
97
NotesAnnual report 2017 | Tryg A/S |
Insurance technical interest is reduced by the portion of
the increase in net provisions that relates to unwinding.
tion expenses are all other expenses attributable to the
administration of the insurance portfolio. Administration
expenses are accrued to match the financial year.
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 unwinding is
transferred to insurance technical interest.
Claims are shown inclusive of direct and indirect claims
handling costs, including costs of inspecting and as-
sessing claims, costs to combat and mitigate damage
and other direct and indirect costs associated with the
handling of claims incurred.
Changes in claims provisions due to changes in yield
curve and exchange rates are recognised as a price
adjustment.
Tryg hedges the risk of changes in future pay and price
figures for provisions for workers’ compensation. Tryg
uses zero coupon inflation swaps acquired with a view
to hedging the inflation risk. Value adjustments of these
swaps are included in claims, thereby reducing the effect
of changes to inflation expectations under claims.
Bonus and premium discounts
Bonuses and premium discounts represent anticipated
and refunded premiums to policyholders, where the
amount refunded depends on the claims record, and for
which the criteria for payment have been defined prior to
the financial year or when the insurance was taken out.
Insurance operating expenses
Insurance operating costs represent acquisition costs
and administration expenses less reinsurance com-
missions received. Expenses relating to acquiring and
renewing the insurance portfolio are recognised at the
time of writing the business. Underwriting commission
is recognised when a legal obligation occurs. Administra-
Contents – Financial statements
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.
Assets held under operating leases are not recognised in
the statement of financial position, but the lease payments
are recognised in the income statement over the term of
the lease, corresponding to the economic lifetime 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 immediately
either in the income statement or other comprehensive
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.
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 expected value of
the shares will be expensed over the vesting period. The
scheme will be treated as a complex financial instru-
ment, consisting of the right to cash settlement and
the right to request delivery of shares. The difference
between the value of shares and the cash payment is rec-
ognised 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 employ-
ees 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 contractually agreed sum in con-
nection 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
accrued 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 acquisition
under staff expenses with a balancing entry directly in
equity. If the holder retires during the maturation period
but remains entitled to shares, the remaining expense is
recognised in the current accounting year.
Investment activities
Income from associates includes the Group’s share of the
associates’ net profit. Income from investment properties
before fair value adjustment represents the profit from
property operations less property management expenses.
and losses on derivative financial instruments, value
adjustment of investment property, foreign currency
translation adjustments and the effect of movements in
the yield curve used for discounting, are recognised as
value 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
expenses which cannot be ascribed to the Group´s
insurance portfolio or investment assets, including the
sale of products for Nordea Liv & Pension.
Discontinued and divested business
Discontinued and divested business is consolidated
in one item in the income statement. Discontinued
and divested business includes gross premiums, gross
claims, gross costs, profit/loss on ceded business, insur-
ance technical interest net of reinsurance, investment
return after insurance technical interest, other income
and costs and tax in respect of the discontinued busi-
ness. Any reversal of earlier impairment is recognised
under other income and costs.
The statement of financial position items concerning dis-
continued activities are reported unchanged under the
respective entries whereas assets and liabilities concern-
ing 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 busi-
ness in the income statement includes the profit/loss
after tax of the run-off for the marine hull business and
the divested activities in the Finnish branch.
Interest and dividends represent interest earned and
dividends received during the financial year. Realised and
unrealised investment gains and losses, including gains
Discontinued business also comprises the Tryg
Forsikring A/S run-off business.
98
NotesAnnual report 2017 | Tryg A/S | 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.
and losses is recognised in the income statement. In the
statement of financial position, equity investments are
measured at the pro rata share of the enterprises’ equity.
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 management
manages the investment and is recognised under intan-
gible assets. Goodwill is not amortised but is tested for
impairment at least once per year.
Trademarks and customer relations
Trademarks and customer relations have been identified
as intangible assets on acquisition. The intangible assets
are recognised at fair value at the time of acquisition
and amortised on a straight-line basis over the expected
economic lifetime of 5-15 years.
Software
Acquired computer software licences are capitalised on
the basis of the costs incidental to acquiring and bringing
to use the specific software. The costs are amortised
based on an estimated economic lifetime of up to 4 years.
Costs for group developed software that are directly
connected with the production of identifiable and unique
software products, where there is sufficient certainty
that future earnings will exceed the costs in more than
one year, are reported as intangible assets. Direct costs
include personnel costs for software development and
directly attributable relevant fixed costs. All other costs
connected with the development or maintenance of
software are continuously charged as expenses.
After completion of the development work, the asset is
amortised according to the straight-line method over the
assessed economic lifetime, though over a maximum of
4 years. The amortisation basis is reduced by any impair-
ment 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 amortization periods
stated above.
Fixed assets
Operating equipment
Fixtures and operating equipment are measured at cost
less accumulated depreciation and any accumulated
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.
The fair value is calculated on the basis of market-
specific rental income per property and typical operating
expenses for the coming year. The resulting operating
income is divided by the required return on the property
in per cent, which is adjusted to reflect market interest
rates and property characteristics, corresponding to the
present value of a perpetual annuity. The value is subse-
quently 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 ten-
ant terms and conditions. Cf. note 12.
Depreciation of operating equipment is calculated using
the straight-line method over its estimated economic
lifetime as follows:
Changes in fair values are recorded in the income
statement.
•
IT, 4-8 years
• Vehicles, 5 years
• Furniture, fittings and equipment, 5-10 years
Leasehold improvements are depreciated over the ex-
pected economic lifetime, however maximally the term
of the lease.
Gains and losses on disposals and retired assets are
determined by comparing proceeds with carrying
amounts. Gains and losses are recognised in the income
statement. When revalued assets are sold, the amounts
included in the revaluation reserves are transferred to
retained earnings.
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
Impairment test for intangible assets,
property and operating equipment
Operating equipment and intangible assets are assessed
at least once per year to ensure that the depreciation
method and the depreciation period that is used are
connected to the expected economic lifetime. This also
applies to the salvage value. Write-down is performed if
impairment has been demonstrated.
Goodwill is tested annually for impairment, or more
often if there are indications of impairment, and impair-
ment testing is performed for each cash-generating
unit to which the asset belongs. The present value is
normally established using budgeted cash flows based
on business plans. The business plans are based on past
experience and expected market developments.
Equity investments in Group undertakings
The parent company’s equity investments in subsidiaries
are recognised and measured using the equity method.
The parent company’s share of the enterprises’ profits or
losses after elimination of unrealised intra-group profits
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 receivables
are deemed irrecoverable. If the negative net asset value
exceeds the amount receivable, the remaining amount is
recognised under provisions if the parent company has a
legal or constructive obligation to cover the liabilities of
the relevant enterprise.
Net revaluation of equity investments in subsidiaries is
taken to reserve for net revaluation under equity if the
carrying amount exceeds cost.
The results of foreign subsidiaries are based on transla-
tion of the items in the income statement using average
exchange rates for the period unless they deviate
significantly from the transaction day exchange rates.
Income and costs in domestic enterprises denominated
in foreign currencies are translated using the exchange
rates applicable on the transaction date.
Statement of financial position items of foreign subsidi-
aries 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 transferred 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
significant influence but not control, generally in the
form of an ownership interest of between 20% and 50%
of the voting rights. Equity investments in associates are
measured using the equity method so that the carrying
Contents – Financial statements
99
NotesAnnual report 2017 | Tryg A/S |
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.
Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired,
or if they have been transferred, and the Group has also
transferred substantially all risks and rewards of owner-
ship. Financial assets are recognised and derecognised
on a trade date basis, the date on which the Group com-
mits to purchase or sell the asset.
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 classifica-
tion depends on the purpose for which the investments
were acquired. Management determines the classification
of its investments on initial recognition and re-evaluates
this at every reporting date.
Financial assets measured at fair value with recognition
of value adjustments in the income statement comprise
assets that form part of a trading portfolio and financial
assets designated at fair value with value adjustment via
the income statement.
Financial assets at fair value recognised
in income statement
Financial assets are recognised at fair value on initial
recognition if they are entered in a portfolio that is man-
aged in accordance with fair value. Derivative financial
instruments are similarly classified as financial assets
held for sale, unless they are classified as security.
Realised and unrealised profits and losses that may arise
as a result of changes in the fair value for the category
financial assets at fair value are recognised in the income
statement in the period in which they arise.
The fair values of quoted securities are based on stock
exchange prices at the statement of financial position
date. For securities that are not listed on a stock
exchange, or for which no stock exchange price is
quoted that reflects the fair value of the instrument,
the fair value is determined using valuation techniques.
These include the use of similar recent arm’s length
transactions, reference to other similar instruments or
discounted cash flow analysis.
Derivative financial instruments
and hedge accounting
The Group’s activities expose it to financial risks, includ-
ing 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 provisions. Share derivatives in
the form of futures and options are used from time to
time to adjust share exposures.
Derivative financial instruments are reported from
the trading date and are measured in the statement of
financial position at fair value. Positive fair values of
derivatives are recognised as derivative financial instru-
ments under assets. Negative fair values of derivatives
are recognised under derivative financial instruments
under liabilities. Positive and negative values are only
offset when the company is entitled or intends to make
net settlement of more financial instruments.
Calculation of value is generally performed on the basis
of rates supplied by Danske Bank with relevant informa-
tion providers and is checked by the Group’s valuation
technicians. Discounting on the basis of market interest
rates is applied in the case of derivative financial instru-
ments involving an expected future cash flow.
Amounts receivable from reinsurers are measured con-
sistently 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.
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 in other
comprehensive income. 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 ex-
change contracts according to the requirements of hedge
accounting. Changes in the fair value relating to the inef-
fective 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 classification
requirements are classified as financial assets.
The Group continuously assesses its reinsurance assets
for impairment. If there is objective evidence that the
reinsurance asset is impaired, the Group reduces the car-
rying amount of the reinsurance asset to its recoverable
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.
Receivables are recognised initially at fair value and are
subsequently assessed at amortised cost. The income
statement includes an estimated reservation for expect-
ed 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
reinsurance contracts held are recognised as assets and
reported as reinsurers’ share of provisions for insurance
contracts.
Other assets
Other assets include current tax assets and cash at bank
and in hand. Current tax assets are receivables concern-
ing tax for the year adjusted for on-account payments
Contents – Financial statements
100
NotesAnnual report 2017 | Tryg A/S | and any prior-year adjustments. Cash at bank and in
hand is recognised at nominal value at the statement of
financial position date.
Prepayments and accrued income
Prepayments include expenses paid in respect of sub-
sequent financial years and interest receivable. Accrued
underwriting commission relating to the sale of insur-
ance products is also included.
Equity
Share capital
Shares are classified as equity when there is no obliga-
tion 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.
Foreign currency translation reserve
Assets and liabilities of foreign entities are recognised
using the exchange rate applicable at the statement of
financial position date. Income and expense items are
recognised using the average monthly exchange rates for
the period. Any resulting differences are recognised in
Other comprehensive income. When an entity is wound
up, the balance is transferred to the income statement.
The hedging of the currency risk in respect of foreign
entities is also offset in other comprehensive 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 provisions. Deferred tax on
the Norwegian and Swedish contingency fund reserves is
allocated.
Dividends
Proposed dividend is recognised as a liability at the time
of adoption by the shareholders at the annual general
meeting (date of declaration).
Own shares
The purchase and sale sums of own shares and dividends
thereon are taken directly to retained earnings under
equity. Own shares include shares acquired for incentive
programmes and share buyback programme.
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 transaction costs) and the re-
demption 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 state-
ment (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 position date is reported
as premium provisions. Premium provisions are gener-
ally 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.
parties sustaining losses at the hands of the policyhold-
ers. They include direct and indirect claims handling
costs that arise from events that have occurred up to the
statement of financial position date even if they have not
yet been reported to the Group. Claims provisions are
estimated using the input of assessments for individual
cases reported to the Group and statistical analyses for
the claims incurred but not reported and the expected
ultimate cost of more complex claims that may be af-
fected by external factors (such as court decisions). The
provisions include claims handling costs.
Claims provisions are discounted. Discounting is based
on a yield curve reflecting duration applied to the ex-
pected future payments from the provision. Discounting
affects the motor liability, professional liability, workers’
compensation and personal accident and health insur-
ance classes, in particular.
Provisions for bonuses and premium discounts etc.
represent amounts expected to be paid to policyholders
in view of the claims experience during the financial year.
Claims provisions are determined for each line of busi-
ness based on actuarial methods. Where such business
lines encompass more than one business area, short-
tailed claims provisions are distributed based on number
of claims reported while long-tailed claims provisions are
distributed based on premiums earned. The models cur-
rently used are Chain-Ladder, Bornhuetter-Ferguson, the
Loss Ratio 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.
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
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 actuarial
models is not necessarily predictive of the expected
future development of claims. For example, this is the
case with legislative changes where an a priori estimate
is used for premium increases related to the expected in-
crease in claims. In connection with legislative changes,
the same estimate is used for determining the change
in the level of claims. Subsequently, this estimate is
maintained until new loss history materialises which can
be used for re-estimation.
Several assumptions and estimates underlying the calcu-
lation 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 infla-
tion assumptions are used, with annuities for the insured
being indexed based on the workers’ compensation
index. An inflation curve that reflects the market’s infla-
tion 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 models,
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.
Contents – Financial statements
101
NotesAnnual report 2017 | Tryg A/S |
Employee benefits
Pension obligations
The Group operates various pension schemes. The
schemes are funded through contributions to insurance
companies or trustee-administered funds. In Norway, the
Group operates a defined-benefit plan. In 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 constructive obligation to
pay further contributions. In Sweden, the Group complies
with the industry pension agreement, FTP-Planen. FTP-
Planen is primarily a defined-benefit plan as regards the
future pension benefits. Försäkringsbranschens Pension-
skassa (FPK) is unable to provide sufficient information
for the Group to use defined-benefit accounting. The plan
is therefore accounted for as a defined-contribution plan.
For the defined-benefit plan recognised in the statement of
financial position, an annual actuarial calculation is made
of the capital value of the future benefits to which employ-
ees 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 statement
of financial position under pension assets and pension
obligations, respectively, depending on whether the net
amount is an asset or a liability.
In case of changes to assumptions concerning the
discounting factor, inflation, mortality and disability or
in case of differences between expected and realised
returns on pension assets, actuarial gains or losses en-
sue. 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 previous financial
years. The change is recognised in the results immedi-
ately. Net finance costs for the year are recognised in the
investment return. All other costs are recognised under
insurance operating costs. The plan is closed for new
business.
Other employee benefits
Employees of the Group are entitled to a fixed payment
when they reach retirement and when they have been
employed with the Group for 25 and for 40 years. The
Group recognises this liability at the time of signing the
contract of employment.
In special instances, the employee can enter into a
contract with the Group to receive compensation for loss
of pension benefits caused by reduced working hours.
The Group recognises this liability based on statistical
models.
Income tax and deferred tax
The Group expenses current tax according to the tax
laws of the 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.
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 dif-
ferences concerning investments, except where Tryg
controls when the temporary difference will be realised,
and it is probable that the temporary difference will
not be realised in the foreseeable future.
Other provisions
Provisions are recognised when the Group has a legal
or constructive obligation as a result of an event prior
to or at the statement of financial position date, and it is
probable that future economic benefits will flow out of
the Group. Provisions are measured at the best estimate
by management of the expenditure required to settle the
present obligation.
Provisions for restructurings are recognised as obliga-
tions when a detailed formal restructuring plan has
been announced prior to or at the statement of 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 differ-
ences 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 relevant 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. Derivative
financial instruments are assessed at fair value accord-
ing to the same practice that applies to financial assets.
Other liabilities are assessed at amortised cost based on
the effective interest method.
Cash flow statement
The consolidated cash flow statement is presented using
the direct method and shows cash flows from operating,
investing and financing activities as well as the Group’s
cash and cash equivalents at the 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 financial
assets and deposits with credit institutions.
Cash flows from financing activities comprise changes
in the size or composition of Tryg’s share capital and
related costs as well as the raising of loans, repayments
of interest-bearing debt and the payment of dividends.
Cash and cash equivalents comprise cash and demand
deposits.
Contents – Financial statements
102
NotesAnnual report 2017 | Tryg A/S |
Income statement for Tryg A/S
(parent company)
2017
2016
DKKm
2017
2016
DKKm
Note
1
Investment activities
Income from Group undertakings
Interest income
Administration expenses in connection with investment activities
Total investment return
2
Other expenses
2,577
1
-6
2,572
-71
2,525
0
-6
2,519
-63
Profit/loss before tax
2,501
2,456
3
Tax
16
15
Profit/loss for the year
2,517
2,471
Proposed distribution for the year:
Dividend
Transferred to reserve for net revaluation according to the equity method
Transferred to retained earnings
2,827
-1,026
716
2,517
2,770
-25
-274
2,471
Note
Statement of comprehensive income
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
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 25 Sale of properties in the Tryg Group.
2,517
2,471
4
0
0
0
0
-7
2
-1
-137
135
-30
-32
-33
2,484
0
215
-115
-53
29
-95
24
5
51
-50
11
12
17
2,488
Contents – Financial statements
103
Annual report 2017 | Tryg A/S |
Statement of financial position for Tryg A/S
(parent company)
DKKm
2017
2016
DKKm
2017
2016
Note
4
Assets
Equity investments in Group undertakings
Total investments in Group undertakings
9,076
9,076
10,127
10,127
Total investment assets
9,076
10,127
Receivables from Group undertakings
Other receivables
Total receivables
5
Current tax assets
Total other assets
3,532
0
3,532
17
17
0
1
1
15
15
Total assets
12,625
10,143
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
12,616
9,437
0
9
9
701
5
706
Total equity and liabilities
12,625
10,143
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
Contents – Financial statements
104
Annual report 2017 | Tryg A/S |
Statement of changes in equity
(parent company)
DKKm
Equity at 31 December 2016
2017
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
Issue of new shares a)
Issue of employee shares
Issue of share options and matching shares
Total changes in equity in 2017
Equity at 31 December 2017
Share
capital
Revaluation
reserves
Retained
earnings
Proposed
dividend
1,413
3,140
2,867
2,017
-1,026
-33
-1,059
0
-39
137
98
1,511
-1,059
2,081
716
716
39
82
-20
3,841
10
6
4,674
7,541
2,827
2,827
-3,361
-534
1,483
Total
9,437
2,517
-33
2,484
0
-3,361
82
-20
3,978
10
6
3,179
12,616
Dividend per share in 2017 includes ordinary divi-
dend paid out in April, July and October of DKK 1.60,
proposed ordinary dividend of DKK 1.60, totalling DKK
6.40 (DKK 6.20 in 2016 ) and proposed extraordinary
dividend of DKK 3.31. (DKK 3.54 in 2016).
Proposed dividend per share is calculated as the total
dividend proposed by the Supervisory Board after the
end of the financial year divided by the total number of
shares at the end of the year (302,147,991 shares). The
dividend is not paid until approved by the shareholders
at the annual general meeting.
a)
Cost related to the issue of new shares are deducted
in proceeds recognised in retained earnings with
DKK 50.3m.
Equity at 31 December 2015
1,448
3,148
4,050
1,013
9,659
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
-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
2,471
17
2,488
0
-1,766
52
-1,000
1
3
-222
9,437
Contents – Financial statements
105
Annual report 2017 | Tryg A/S |
Notes
DKKm
1
Income from Group undertakings
Tryg Invest A/S
Tryg Forsikring A/S
2
Other expenses
Administration expenses
Remuneration for the Executive Board is paid partly by Tryg A/S and partly
by Tryg Forsikring A/S and is charged to Tryg A/S via the cost allocation.
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
Contents – Financial statements
2017
2016
DKKm
2017
2016
2
2,575
2,577
-71
-71
17
17
-1
16
%
22
-1
21
0
2,525
2,525
-63
-63
15
15
0
15
%
22
0
22
4
Equity investments in Group undertakings
Cost
Cost at 1 January
Additions for the year
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
8
6,995
3,140
2,545
-3,604
2,081
6,987
0
6,987
3,148
2,542
-2,550
3,140
Carrying amount at 31 December
9,076
10,127
Name and registered office
2017
Tryg Invest A/S, Ballerup
(alternative investment fund management)
Tryg Forsikring A/S, Ballerup (non-life insurance)
Ownership
share in %
Profit/loss
Equity
100
100
2
2,575
10
9,066
DKKm
5
2016
Tryg Forsikring A/S, Ballerup
(non-life insurance)
100
2,525
10,127
2017
2016
Current tax assets
Tax receivable at 1 January
Current tax for the year
Adjustment of current tax in respect of previous years
Tax paid for the year
Tax receivable at 31 December
15
17
-1
-14
17
18
15
0
-18
15
106
Annual report 2017 | Tryg A/S |
Notes
DKKm
6
Deferred tax assets
Capitalised tax losses
Tryg A/S
Tax on 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.
2017
2016
DKKm
0
16
0
16
9
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company, TryghedsGruppen
smba. Related parties with a significant influence include the Supervisory Board, the Executive Board and
their members’ related family.
Specification of remuneration
2017
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Share-based
variable
salary a)
Base
salary
Cash
variable
salary
14
3
4
21
8
20
6
34
0
3
0
3
0
0
0
0
Pension
Total
0
5
1
6
8
28
7
43
a) Total expenses in 2017 for matching shares progams allocated in 2017 and previous year.
For matching shares allocated to Executive Board in 2018 for fiscal year 2017, see Section
‘Corporate governance’ in Management review.
Of which retired
Supervisory Board
Executive Board
Number of
persons
Severance
pay
1
0
1
0
0
0
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
From 2016, Tryg A/S calculates solvency ratio and own funds on Group level according to Solvency II rules.
Please refer to note 17 in the Tryg Group on Solvency II own funds.
8
Contractual obligations, contingent liabilities and 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.
Companies in the Tryg Group are party to a number of disputes in Denmark, Norway and Sweden.
Management believes that the outcome of these disputes will not affect the Group’s financial position
over and above the receivables and liabilities recognised in the statement of financial position
at 31 December 2017.
Contents – Financial statements
107
Annual report 2017 | Tryg A/S |
Notes
DKKm
9
Related parties (continued)
2016
Total
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Base
salary
Share-based
variable
salary
Cash
variable
salary
Pension
Total a)
14
4
4
22
7
19
6
32
0
2
0
2
0
0
0
0
0
5
1
6
7
26
7
40
a) Exclusive of severance pay
Of which retired
Number of
persons
Severance
pay
Supervisory Board
Executive Management
Risk-takers
2
1
0
3
0
0
0
0
Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares, which are recognised over 3-4 years. Reference is made to section ‘Corporate governance’ of
the management’s review on the corresponding 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). If a change of control clause is actioned CEO and COO are instead entitled to Severance pay
equal to 36 months’ salary and CFO to 24 months’ salary and a notice period of 6 months.
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.
DKKm
9
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
Tryg transferred DKK 40m to TryghedsGruppen regarding commitment fee
related to capital increase in december 2017.
Transactions with Group undertakings and associates
Tryg A/S exercises full control over Tryg Forsikring A/S.
Intra-group trading involved
- Providing and receiving services
- Intra-group accounts
Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.
2017
2016
14
3,530
16
-701
10
Reconciliation of profit/loss and equity
The executive order on application of International Financial Reporting Standards for companies subject
to the Danish Financial Business Act issued by the Danish FSA requires disclosure of differences
between the format of the annual report under International Financial Reporting Standards and the
rules issued by the Danish FSA.
There is no difference in profit/loss or equity recognised after Danish FSA and IFRS.
11
Accounting policies
Please refer to Tryg Group’s accounting policies.
Contents – Financial statements
108
Annual report 2017 | Tryg A/S |
Q4 2017 - 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
Contents – Financial statements
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
Download a further detailed version of the presenta-
tion at tryg.com/uk > investor > Downloads > tables
2,203
394
2,211
463
2,178
440
2,206
268
2,235
366
2,190
447
2,148
393
2,137
198
2,172
285
65.7
2.6
68.3
13.7
82.0
84.2
977
138
66.3
3.7
70.0
15.9
85.9
94.9
965
60
74.6
9.1
83.7
10.1
93.8
100.2
62.7
3.1
65.8
13.2
79.0
82.6
971
175
61.1
3.2
64.3
17.7
82.0
92.4
975
91
69.3
11.1
80.4
10.1
90.5
94.1
63.8
2.0
65.8
13.9
79.7
83.3
949
171
62.9
1.4
64.3
17.6
81.9
88.0
942
156
59.2
13.9
73.1
10.5
83.6
91.5
71.8
1.9
73.7
14.2
87.9
92.4
965
183
60.6
2.7
63.3
17.7
81.0
89.5
970
79
67.2
14.4
81.6
10.1
91.7
98.7
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
111.6
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
109
Annual report 2017 | Tryg A/S |
a) Amounts relating to eliminations and one-off items
are included under ‘Other’. Please refer to note 2
Geographical segments.
Download a further detailed version of the presenta-
tion at tryg.com/uk > investor > Downloads > tables
Q4 2017 - Quarterly outline
DKKm
Sweden
Gross premium income
Technical result
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of reinsurance
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Other a)
Gross premium income
Technical result
Tryg
Gross premium income
Technical result
Investment return
Other income and costs
Profit/loss before tax
Profit/loss
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of reinsurance
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Q3
2016
Q2
2016
Q1
2016
Q4
2015
355
30
73.0
0.6
73.6
17.7
91.3
97.2
-12
0
420
60
70.7
0.0
70.7
14.8
85.5
92.9
-1
0
383
43
70.5
0.8
71.3
17.0
88.3
90.6
-11
0
329
38
69.6
0.0
69.6
18.5
88.1
99.3
-12
0
337
23
72.7
0.0
72.7
20.2
92.9
101.2
-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
4,488
4,576
4,441
4,458
4,504
4,514
4,379
4,310
4,393
622
86
-23
685
527
68.5
3.8
72.3
13.7
86.0
90.9
789
87
-16
860
671
64.4
4.6
69.0
13.6
82.6
88.0
810
131
-26
915
714
63.4
4.0
67.4
14.3
81.7
86.7
568
223
-12
779
605
67.9
5.0
72.9
14.4
87.3
93.7
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
Contents – Financial statements
110
Annual report 2017 | Tryg A/S |
Q4 2017 - Geographical segments
DKKm
Q4 2017
Q4 2016
2017
2016
DKKm
Q4 2017
Q4 2016
2017
2016
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
NOK/DKK, average rate for the period
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
2,448
495
134
64.3
2.8
67.1
12.5
79.6
-5.5
77.65
1,535
140
123
72.2
3.6
75.8
15.2
91.0
-8.0
2,407
441
144
66.4
2.6
69.0
12.5
81.5
-6.0
82.67
1,640
149
164
70.0
5.6
75.6
15.5
91.1
-10.0
9,606
1,783
449
64.2
3.7
67.9
13.4
81.3
-4.7
1,933
79.99
6,272
770
422
67.9
5.3
73.2
14.7
87.9
-6.7
1,042
9,467
1,587
509
63.7
6.0
69.7
13.4
83.1
-5.4
1,839
80.09
6,371
1,013
678
63.9
5.1
69.0
15.2
84.2
-10.6
1,040
Swedish general insurance
SEK/DKK, average rate for the period
76.17
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
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 December
517
-13
-38
76.0
11.2
87.2
15.1
102.3
7.4
-12
0
4,488
622
86
-23
685
219
68.5
3.8
72.3
13.7
86.0
-4.9
76.40
463
-26
-7
85.7
0.9
86.6
18.6
105.2
1.5
-6
-250
4,504
314
598
-112
800
301
72.0
3.1
75.1
18.0
93.1
-6.7
77.24
2,121
236
101
69.0
5.0
74.0
14.5
88.5
-4.8
398
-36
0
17,963
2,789
527
-77
3,239
972
66.1
4.3
70.4
14.0
84.4
-5.4
78.93
1,888
40
52
76.4
3.3
79.7
17.8
97.5
-2.8
385
-19
-250
17,707
2,390
987
-157
3,220
1,239
65.6
5.4
71.0
15.7
86.7
-7.0
3,373
3,264
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.
Contents – Financial statements
111
Annual report 2017 | Tryg A/S |
Other key figures
2017
2016
2015
2014
2013
Key ratios are calculated in accordance with
‘Recommendations & Financial Ratios’ issued by
the Danish Society of Financial Analysts.
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
9.12
9.12
9.12
301,945
276,080
276,080
155.20
41.78
3.7
6.40
3.31
17.0
8.84
8.84
8.84
274,595
279,399
279,399
127.70
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
20.4
15.8
13.3
3,373
3,264
3,359
3,599
3,703
Contents – Financial statements
112
Annual report 2017 | Tryg A/S |
Group chart
Tryg A/S
(Denmark)
Tryg Forsikring A/S
(Denmark)
Tryg
Invest A/S
(Denmark)
Tryg Forsikring
(Branch Germany)
Tryg Forsikring
(Branch Finland)
Moderna
Försäkringar
(Branch Sweden)
Tryg Forsikring
incl. Enter
(Branch Norway)
Tryg
Livsforsikring A/S
(Denmark)
Tryg
Ejendomme A/S
(Denmark)
Thunesvei 2 AS
(Norway)
Respons
Inkasso AS
(Norway)
ANS Grensen 3
(99%)
(Norway)
Avviklingsselskabet
av 16. juni 2016 AS
(former OBOS Forsikring)
(Norway)
Group chart at 1 January 2018. Companies and branches are wholly owned
by Danish owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
Contents – Management’s review
113
Annual report 2017 | 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 & Ratios’ issued by the Danish Finance Society.
Earnings per share of continuing business
Diluted earnings from continuing business after tax
Diluted average number of shares
Operating ratio
Calculated as the combined ratio plus insurance
technical interest in the denominator.
Solvency II
New solvency requirements for insurance companies
issued by the EU Commission. The new rules came
into force at 1 January 2016.
Claims ratio, net of ceded business
Gross claims ratio + net reinsurance ratio
Combined ratio
The sum of the gross claims ratio, the net reinsurance
ratio and the gross expense ratio.
Danish general insurance
Comprises the legal entities Tryg Forsikring A/S
(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 nominal
amount, as the recognised amount carries interest
until payment. The size of the discount depends on
the market-based discount rate applied and the
expected time to payment.
Dividend per share
Proposed dividend
Gross claims ratio
Gross claims 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.
Market price/net asset value
Share price
Net asset value per share
Net asset value per share
Year-end equity
Number of shares at year-end
Number of shares at year-end
Net reinsurance ratio
Earnings per share
Profit or loss for the year x 100
Average number of shares
Profit or loss from reinsurance x 100
Gross premium income
Norwegian general insurance
Comprises Tryg Forsikring A/S, Norwegian branch.
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 result
Run-off gains/losses net of reinsurance divided by
premium income.
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
effects) and the sum of the claims paid during the
financial year and that part of the claims provisions
at the end of the financial year pertaining to injuries
and damage occurring in earlier financial years.
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
divided by premium income.
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
114
Annual report 2017 | 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
distribution takes place via the company’s own
sales channels.
Motor insurance
Fire and contents – Commercial
Motor insurance accounts for 27% 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 11% of total premium income and
covers accidental bodily injury and death resulting from accidents.
Commercial fire and contents insurance, which includes building insurance,
represents 13% of total premium income and covers the loss of or damage to
the buildings, stock or equipment of commercial customers. Moreover, Tryg
provides cover for operating losses in connection with covered claims.
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
115
Annual report 2017 | Tryg A/S | Disclaimer
lying assumptions prove to be incorrect, Tryg’s
actual financial condition or results of operations
could materially differ from that described herein
as anticipated, believed, estimated or expected.
Tryg is not under any duty to update any of the
forward-looking statements or to conform such
statements to actual results, except as may be
required by law.
Read more in the chapter Capital and risk
management on page 28-29, and in Note 1 on
page 55, for a description of some of the factors
which may affect the Group’s performance or
the insurance industry.
Certain statements in this annual report are based
on the beliefs of our management as well as
assumptions made by and information currently
available to management. Statements regarding
Tryg’s future operating results, financial position,
cash flows, business strategy, plans and future
objectives other than statements of historical fact
can generally be identified by the use of words
such as ‘targets’, ‘believes’, ‘expects’, ‘aims’,
‘intends’, ‘plans’, ‘seeks’, ‘will’, ‘may’, ‘anticipates’,
‘would’, ‘could’, ‘continues’ or similar expressions.
A number of different factors may cause the actual
performance to deviate significantly from the
forward-looking statements in this annual report,
including but not limited to general economic de-
velopments, changes in the competitive environ-
ment, developments in the financial markets,
extraordinary events such as natural disasters or
terrorist attacks, changes in legislation or case law
and reinsurance. Should one or more of these risks
or uncertainties materialise, or should any under-
Contents – Management’s review
116
Annual report 2017 | Tryg A/S |