Annual report
2018
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Contents
Management’s review
3
4
Tryg at a glance
Facts about Alka
5 Business areas
6
7
Income overview
Introduction by Chairman and Group CEO
8 Events in 2018
Financial outlook
9
11 Targets and strategy
15 Tryg’s results
20 Private
22 Commercial
24 Corporate
26
28
31
33
Sweden
Investment activities
Capital and risk management
Investor information
35 Corporate governance
Supervisory Board
40
43
44
Executive Board
Corporate Responsibility in Tryg
Financial statements
48 Financial statements
118 Group chart
119 Glossary
120 Product overview
Editor Investor Relations | Publication 22 January 2018 | Layout amo design | Proofreading TextMinded
Tryg at a glance
3
13.2%
Employees
Market position
Market share
402
Employees
5
Market position
3.0%
Market share
2,520
1
21.8%
Employees
Market position
Market share
Purpose
As the world changes, we make
it easier to be tryg a).
a) ‘Tryg’ means: feeling protected and cared for.
Attractive
dividend policy
We aim to distri b ute a nominal, stable
increase in dividend and to pay out
60-90% of our profit.
Great diversity
of products
We offer a broad range of insurance
products for private individuals
as well as businesses.
Trygheds-
Gruppen
Owns 60% of Tryg and annually contrib-
utes around DKK 600m to projects that
create peace of mind via TrygFonden.
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.
4 million
customers
Our 4,000 employees provide peace of
mind for 4 million customers and handle
approximately 1 million claims on a yearly
basis.
1731
2009
2011
2015
Copenhagen experienced the
largest fire in its history. The fire
heightened public awareness of
the need to insure oneself
Tryg was listed on
the OMX Nordic Stock
Exchange Copenhagen
on 14 October
TrygVesta
simplified its
name to Tryg
New dividend policy stating
a nominal, stable increasing
dividend with an annual
distribution of 60-90 per
cent of the profit after tax
Tryg presented new financial
targets and customer targets
for 2017 at Capital Markets Day
TryghedsGruppen decided
to pay out a bonus to its
members: 8 per cent of pre-
mium paid to Tryg for 2015
of the Supervisory Board
• Tryg received final approval of the Alka
acquisition from the Danish Competition
and Consumer Authority
2017
• TryghedsGruppen paid out member bonus:
8 per cent of premium paid to Tryg for 2017
• Jukka Pertola was elected new Chairman
Kjøbenhavns Brand (the oldest
component in Tryg’s history)
was established by Royal
Decree as a result of the
Copenhagen fire in 1728
Tryg acquired
Moderna
Försäkringar
Morten Hübbe
appointed new
Group CEO of Tryg
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
• Tryg presented new financial
targets and customer targets for
2020 at Capital Markets Day
• Tryg acquired Alka Forsikring
1728
2005
2010
2012
2014
2016
2018
3
1,105Annual report 2018 | Tryg A/S | Facts about Alka
Tryg received the final approval of the Alka
acquisition from the Danish Competition
and Consumer Authority in November
2018. The acquisition of Alka complements
Tryg’s position and distribution presence
in the Danish private market, Tryg’s core
market segment.
More than 100 years of experience
In 1903, a group of trade union managers
founded Arbejdernes Livsforsikring, which
became Alka Forsikring in 1944. Alka has
thus more than 100 years of experience of
insurance in Denmark.
Alka is very strong on customer satisfaction
with a score of 80.2 in the annual customer
satisfaction survey. A company with a
score above 75 holds a very strong position
amongst its customers according to EPSI*.
* EPSI Rating is a model used for measuring
customer satisfaction. Today, 12 European
countries are using this model.
Private
Commercial
Gross premium Non-life
(DKK 2.2bn in 2017)
100+ yrs
More than 100 years of experience
within the insurance industry
33%
33% of Alka's premiums sold
via digital channels
2200
1800
1400
1000
%
100
80
60
40
20
0
Combined ratio
82
84
83
91
85
2013
2014
2015
2016
2017
Gross premium income
2013
2014
2015
2016
2017
85%
Combined ratio 5 years
Tryg and Alka have the strongest brand
awareness in Denmark
Alka customers will benefit from
TryghedsGruppen’s member bonus
52%
37 %
80.2
21%
18 %
17 %
A score of 80.2 in the annual customer
satisfaction survey is a very strong
position amongst customers
Tryg
Alka
Codan
Topdanmark
Alm. Brand
400000
360000
+370,000
Customers
320000
~450
Employees
Number of customers
3
7
9
6
1
0
280000
2013
2014
2015
2016
2017
Contents – Management’s review
4
Annual report 2018 | Tryg A/S | Business areas
Private
Commercial
55%
Portfolio
Brands
1,329
Own sales agents • Call centres • Real estate agents
Internet • Nordea branches • Car dealers
20%
Portfolio
516
Brands
Call centres • Internet
Own sales agents • Franchise offices
Employees
Distribution channels
Employees
Distribution channels
Corporate
Sweden
18%
Portfolio
Brands
7%
Portfolio
Brands
265
Own sales agents
Insurance brokers
354
Own sales agents • Call centres
Internet
Employees
Distribution channels
Employees
Distribution channels
Contents – Management’s review
5
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 AXA Corporate solutions network. Annual report 2018 | 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)
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
Contents – Management’s review
Q4 2018
Q4 2017
5,053
-3,485
-787
781
-184
-1
596
-330
-117
149
-37
112
-2
110
207
4,488
-3,076
-616
796
-170
-4
622
86
-23
685
-158
527
0
527
219
11,334
3.9
301,743
0.37
12,616
22.1
301,945
1.87
1.65
13.0
69.0
3.6
72.6
15.6
88.2
-4.1
1.7
1.6
80.1
74.2
111.8
89.2
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
2018
18,740
-12,636
-2,704
3,400
-624
-10
2,766
-332
-172
2,262
-529
1,733
-2
1,731
1,221
11,334
14.9
301,743
5.73
37.56
6.60
6.3
67.4
3.3
70.7
14.4
85.1
-6.5
2.6
2.0
81.6
80.3
95.6
86.0
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
6
Annual report 2018 | Tryg A/S |
Improvements
in all areas
and approval of the Alka transaction
The year 2018 showed improvements in all import-
ant areas. Profitability improved, the number of
customers increased, and customer loyalty and
employee job satisfaction increased. We were also
pleased that the acquisition of Alka was approved
by the authorities in November 2018.
Excluding Alka one-offs and earnings, technical
result for 2018 was DKK 2,826m driven by a com-
bined ratio of 84.5%. The 2018 technical result,
as reported, was DKK 2,766m which together
with a negative investment return yielded a total
profit of DKK 1,731m, corresponding to a return
on equity of 14.9 per cent after tax.
First year with new targets and new purpose
At the capital markets day in November 2017,
Tryg announced new financial targets and
customer targets for the period up until 2020.
The acquisition of Alka increased the technical
result target from DKK 2,800m to DKK 3,300m.
In 2018, Tryg reported an improvement in the
under lying claims level with progress in all areas.
Earnings are still not satisfactory for Corporate,
and efforts to improve profitability will continue in
the coming years. Tryg saw a markedly improved
level of customer loyalty – in terms of the degree
of customer satisfaction (TNPS), which was 67,
and an improved renewal rate for all areas.
This also contributed to growth in premium
income of 6.3%.
Tryg’s new purpose “As the world changes, we
make it easier to be tryg” proved its worth and
served as a general guide in 2018 – from daily
customer contact to strategic decisions.
Dividend payments to shareholders
It is very important for Tryg that our share-
holders should receive a nominal, stable in-
crease in dividend. A total dividend per share
of DKK 6.60 will be paid out for FY 2018
(DKK 6.40 in 2017) including a Q4 dividend
per share of DKK 1.65.
Digitalisation and innovation
The insurance industry is confronted by rapid
changes in recent years. To maintain a leading
position in the future, Tryg focuses strongly on
digitalisation and innovation. The development of
digital solutions continues, and more than one third
of claims are reported online, while online sales of in-
surance products have shown a substantial increase.
The development of innovative auto motive products
continued in 2018, and we have now launched prod-
ucts where the driver’s behaviour determines the
insurance premium payable in all countries.
Claims management and prevention
Tryg continues to utilise its very large purchasing
power, which will benefit both shareholders and
customers. Prevention is very important, and it is
integrated into our products, for example by an
alarm in our contents product and through offering a
rat blocker as part of the house insurance product.
Efficient distribution and new products
Efficient distribution is important to maintain a low
expense ratio. In 2018, the development of online
solutions as well as new distribution channels
contributed to increasing efficiency. Tryg aims to
increase revenue from new products and services.
In 2018, we saw a significant increase in the
number of products including surety and credit
insurance, pet and child insurance policies.
Thanks to our employees
The good results and the many initiatives imple-
mented in 2018 have only been made possible
because of the Tryg employees. We are therefore
very pleased to note increasing job satisfaction in
2018, up from 76 to 78, compared with 72 for
Nordic finance companies as a whole. The Super-
visory Board and the Executive Board would like to
thank the employees for their great efforts.
Jukka Pertola
Chairman
Morten Hübbe
Group CEO
Contents – Management’s review
7
Annual report 2018 | Tryg A/S | Events in 2018
Q1
Q2
New member of Tryg’s Executive Board
Johan Kirstein Brammer was appointed Chief Com-
mercial Officer (CCO) and joined the Executive Board.
Johan remained responsible for Tryg’s Private business
concurrently with undertaking his responsibilities as
a member of Tryg’s Executive Board up until the Alka
acquisition was finally approved in November 2018.
Changes to the Supervisory board
At Tryg’s annual general meeting, Deputy Chairman
Jukka Pertola was appointed Chairman, succeeding
TryghedsGruppen’s Chairman Jørgen Huno Rasmussen.
Partner agreement with GoMore
Tryg entered into a partner agreement with GoMore,
the largest sharing-economy platform for car sharing
and ride sharing in the Nordics. GoMore is the 25th
platform for which Tryg has tailored an insurance
solution. Tryg is now the largest supplier of insur-
ance solutions for sharing-economy solutions
in the Nordics.
Claims track-and-trace feature
Private Denmark launched a claims track-and-trace
feature, which means that customers are now able
to follow the processing of claims online, which
supports a positive claims experience.
Partner agreement with NITO
Tryg Norway entered into a partner agreement with
the Norwegian Society of Engineers and Technolo-
gists (NITO). It is the largest partner agreement con-
cluded by Tryg Norge for 17 years. NITO has almost
90,000 members.
Tryg acquires Troll Forsikring
Tryg acquired Troll Forsikring in Norway with a port-
folio of NOK 120m and 12,000 private customers.
Tryg expects the portfolio to gradually produce profit-
ability in line with our Norwegian Private portfolio,
and the acquisition will have a negligible impact on
Tryg’s solvency ratio.
TryghedsGruppen’s member bonus
For the third year running, Tryg’s majority share-
holder TryghedsGruppen paid out a member bonus
correspond ing to 8% of the premiums paid to Tryg for
2017, equating to the payout of DKK 720m in total to
Trygheds Gruppen’s members who are Tryg’s Danish
customers.
Q3
Q4
New personal insurance
Private Denmark launched a new personal insurance
product which combines accident, health, dental and
sickness insurance under one insurance policy. This
means that customers will be covered from top to
toe. The new insurance is potentially relevant for up
to 800,000 public employees who are not covered by
company-paid health insurance plans.
‘Tryg Tilbage’ and ‘Tryg Health’
Corporate Denmark launched a training programme app
as part of the ‘Tryg Tilbage’ concept related to workers’
compensation. The concept includes quick diagnosis,
quick treatment and subsequent rehabilitation. Also, a
new health prevention concept was launched, involving
health screening and also an app, ‘Tryg Health’, giving
customers a quick overview of all the services that they
can access through ‘Tryg Health’.
Strategic partnership with Danske Bank
As part of Tryg’s 2020 strategy to strengthen the
company’s distribution, Tryg entered into a new Nordic
partnership with Danske Bank. In Spring 2019, Danske
Bank customers will be offered competitive insurance so-
lutions with unique benefits. This partnership will cover
all the countries and markets in which Tryg operates – i.e.
both private and commercial in Denmark and Norway,
and private in Sweden.
Alka acquisition completed
Tryg received approval of the Alka acquisition from the
Danish Competition and Consumer Authority and could
finally complete the transaction. Tryg firmly maintains its
guidance for synergies of DKK 300m related to the Alka
acquisition with a full run-rate impact in 2021.
Sidekick
Tryg launched a new motor insurance solution in
Norway, ‘Sidekick’. A similar product in Denmark, ’Tryg
Drive’, was extended from young drivers to include all
ages. Moderna in Sweden offers two similar products:
’Moderna Smart’ and ’Moderna Smart Flex’. Tryg now
offers motor insurance products where pricing is af-
fected by driving behaviour in all the Nordic countries.
Tryg appoints new CFO
Tryg appointed a new CFO. Barbara Plucnar Jensen
is a strong financial profile, who, in addition to her
experience from ISS’s UK and Irish markets, has solid
experience within investments and treasury. She will be
responsible for our continued strong financial manage-
ment through the digital transformation, which is well
advanced in the Tryg Group.
New house insurance
Private Denmark launched a new house insurance
product, which includes a rat blocker. The rat blocker
is another important claims prevention initiative
from Tryg. The rat blocker prevents rats from entering
private houses from the sewers and damaging
houses, pipes etc.
Contents – Management’s review
8
Annual report 2018 | Tryg A/S | Financial outlook
The Nordic countries are characterised by a
high level of non-life insurance penetration. For
example, ratios of non-life insurance premiums
to GDP are some of the highest in the world.
This is ascribable to the fact that households are
relatively wealthy and tend to cover their insurance
needs well.
Retention levels are also very high in the Nordic
region compared to nearly everywhere else in the
world. This is a key profitability driver as it helps
insurers to keep their overall expenses at a low
level. Retention rates hover around 90% in the
Private and Commercial (SMEs) segments, which
represent around 75% of Tryg’s total business. A
direct distribution model also contributes substan-
tially to the very efficient set-up. Close to 100% of
new sales in Denmark and Norway (Private and
Commercial segments) are generated through
Tryg’s direct multi-channel distribution set-up.
Tryg reported an expense ratio of 14.4 (14.1 ex-
cluding Alka) at the end of 2018, while the target
for 2020 is an expense ratio ~14%. In the 2017-2020
period, the expense ratio will be impacted by
increased IT investments, which will, for the most
part, be offset by improved distribution efficiency.
The Nordic non-life markets remain very stable
in terms of top-line growth (assumed to be in
line with GDP) and product offerings. Tryg sees
a future where personal insurance will become
more relevant compared to the current situation.
Health, child and accident insurance products
are all part of this development, while product
innovation is generally regarded as highly im-
portant in mature markets. Tryg wishes to quickly
adapt to a future that may be characterised by
different insurance needs in terms of product
offerings and coverages.
The general macroeconomic situation in Scan-
dinavia remains relatively positive, especially
compared to the Euro zone. Government indebt-
edness is low, unemployment rates are below
5% in both Denmark and Norway, while GDP
growth is expected to be close to 2%. Tryg expects
gross premium income to grow by 0-2% in local
currencies in 2019 (exclusive of M&As), which is
unchanged from 2018.
Financial targets 2020
Technical result
DKK 3.3bn
Expense ratio
~14
Combined ratio
≤86
Return on equity
≥21%
after tax
Alka acquisition completed
In November 2018, Tryg announced
that the acquisition of Alka was com-
pleted. Tryg has a target for synergies
of DKK 300m related to the acquisition
with a full run-rate impact in 2021.
Contents – Management’s review
9
Annual report 2018 | Tryg A/S | the amounts of DKK 75m in 2019, DKK 150m
in 2020 and DKK 300m in 2021. Following
the approval of the acquisition, Tryg will book
an annual depreciation charge of DKK 127m
pertaining to the DKK 1.4bn value of customer
relations and branding.
Tryg’s reserves position remains strong. At the
CMD in November 2017, it was disclosed that
run-off gains are expected to be between 3% and
5% in 2020. Tryg’s systematic claims reserving
approach still includes a margin of approximately
3% on best estimate.
In 2019, weather claims net of reinsurance and
large claims are expected to total DKK 600m and
DKK 550m, respectively. The weather claims as-
sumption now includes the Alka portfolio.
The interest rate used to discount Tryg’s technical
provisions is historically low. An interest rate in-
crease 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.
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 to be approximately
zero as capital gains and losses on the assets side
should be mirrored by corresponding develop-
ments on the liabilities side. The free portfolio is
invested in different asset classes with a view
to obtaining the best risk-adjusted return.
The return on bonds in the free portfolio (ap-
proximately 65% 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 investment return
in the income statement also includes the cost
of managing investments, the cost of currency
hedges, interest expenses on subordinated
loans and other minor items.
In the past few years, corporate tax rates have
been lowered throughout Scandinavia. In Den-
mark, the rate will remain at 22% in 2019, 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%.
Alka has produced an approximate DKK 300m
stand-alone technical result in the past few
years. Synergies are expected to be realised in
Weather claims, net of reinsurance
DKKm
Expected level 2019 (including Alka): DKK 600m
800
600
400
200
0
2014
2015
2016
2017
2018
Large claims, net of reinsurance
DKKm
Expected level 2019: DKK 550m
800
600
400
200
0
2014
2015
2016
2017
2018
Contents – Management’s review
10
Annual report 2018 | Tryg A/S | Targets and strategy
First year with a new purpose
2018 was the first year with Tryg’s new purpose
‘As the world changes, we make it easier to be
tryg’. The purpose has been very well received by
the employees in Tryg and serves as a guiding prin-
ciple that unites and motivates the organisation.
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.
Our employees – our most important resource
Our employees are our most important resource
and key to fulfilling our purpose of making it easier
to be ‘tryg’. All Tryg 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. Tryg was pleased to see an increased
level of employee satisfaction in 2018 and has now
surpassed the general level of employee satisfac-
tion in the financial sector in the Nordic region. Tryg
is aiming for the highest level of employee satisfac-
tion in the financial sector in the Nordic region.
Value creation for our shareholders
Tryg’s shareholders must see Tryg as a company
setting ambitious targets, and as an efficient and
profitable business. Tryg’s performance can be
measured by its total shareholder return over the
years. Tryg aims to increase the annual ordinary
dividend, while maintaining stable results and a
high level of return on capital employed.
Financial targets
On 20 November 2017, Tryg presented a set of
new targets for 2020. The targets were later up-
dated following the acquisition of Alka. Tryg’s main
target for 2020 is a technical result of DKK 3,300m.
Other targets are a combined ratio target at or
below 86, an expense ratio target of around 14 and
a return on equity target at or above 21% after tax.
The expense ratio will be improved through an
increase in distribution efficiency, 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 targets.
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.
The technical result for FY 2018, excluding one-
off costs related to Alka and Alka’s contribution
to the technical result, was DKK 2,826m, the
combined ratio 84.5 and the expense ratio 14.1.
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
Distribution
Own sales force
and partners
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Insurance
Prevention
Claims handling
p
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o
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Processes
Combination of
in-house & sourcing
Employe e s
E
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p
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s
11
Contents – Management’s review
a) Tryg’ means: feeling protected and cared for.
Annual report 2018 | Tryg A/S |
Partner agreement with NITO
In Q2, Tryg Norway entered into
a partnership with NITO – the
largest partner agreement in
Norway in 17 years. NITO has
almost 90,000 members.
Customer targets
Our customer targets remain highly relevant for
realising our financial targets. Tryg has decided
to focus on customer satisfaction for interact-
ing customers. This is measured through the
Transactional Net Promotor Score (TNPS). The
TNPS target for 2020 is 70, and in 2018 we saw
a continual increase throughout the year, and a
TNPS of 67 was achieved.
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 set,
corresponding to four products per customer.
In 2018, the number of products per customer
increased from 3.5 to 3.8.
Strategic initiatives
Tryg has defined four strategic initiatives that
support both our financial targets and our cus-
tomer targets for 2020. Furthermore, synergies
stemming from the Alka acquisition will also sup-
port Tryg's 2020 financial and customer targets.
Claims excellence is targeted at reducing
claims costs by DKK 600m. The strategic initia-
tive is on track, and in 2018 realised claims cost
savings of an estimated value of DKK 150m.
The drivers of the initiative are:
•
•
•
Further leverage of Tryg’s procurement power
which reduced claims costs by more than
DKK 100m in 2018. This has been achieved
by negotiating better contracts with suppliers
and ensuring a higher utilisation rate.
Increased fraud detection expertise, which
has been driving an approximately 25% higher
level of fraud discovery. The improvement
has been achieved through better automated
identification of fraudulent behaviour in
relation to online claims, and by improving
the fraud identification competencies of the
claim handlers.
Improvement of the claims handling pro-
cess. The claims handling process has been
improved through several initiatives, e.g.:
using data and speech analytics, more ac-
curate claim assessment and better recourse
management. In 2018, Tryg also initiated the
implementation of a new claims handling
system, which will further improve the claims
handling process.
Employee satisfaction
Employee satisfaction
Index
80
70
60
50
40
30
20
10
0
78 76
68 68
72
68
Tryg has an employee
satisfaction level above the
average of the Nordic sector.
Tryg
Nordic a)
Nordic
financial market a)
2018
2017
a) Source: Global Employee and
Leadership Index
Contents – Management’s review
12
Annual report 2018 | 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 2020
• 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
Alka acquisition
DKK 300m in synergies with full run-rate impact in 2021
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
•
Entering new markets. Tryg is planning
to develop its profitable credit and surety
business, Tryg Garanti, by introducing the
product in countries outside the Nordics.
Tryg is committed to the Digital empowerment
of customers. Tryg’s target for 2020 is 50%
straight-through processing (STP) of claims and
a self-service level of 70% for all contacts with
Tryg. The aim is to provide customers with seam-
less digital services that simplify their interaction
with Tryg. In 2018, Tryg achieved a STP level of
approximately 15% and a self-service level
above 50%. The focus on digital services is ex-
pected to support both the financial targets with
DKK 100m and the customer targets. The 2018
result within this strategic area amounts to ap-
proximately DKK 20m and has been achieved
through:
•
•
Increased use of robots in the claims handling
process. More than 17,000 claims were pro-
cessed as STP, and in 2019 and 2020 the new
claims handling system will further boost the
number of STP in Denmark and Norway.
In 2018, the number of digital self-service inter-
actions surpassed the number of ‘analogue’
interactions with Tryg. This has been achieved
by continuously introducing more digital self-
service solutions for customers. Specifically,
in Norway Tryg’s digital focus led to the launch
of the first online sales solution in the market
for the Commercial segment.
Tryg’s digital solutions also proved important
when entering into new partner agreements
with, e.g., the Norwegian Society of Engineers
and Technologists (NITO), the Federation of
Danish Motorists (FDM), OBOS in Norway and
Danske Bank.
Product and service innovation is targeted at
DKK 1,000m in 2020+. In 2018, the portfolio of
these innovative products and services grew to
approximately DKK 275m. Through this initiative
Tryg wishes to adapt to a future which may be
characterised by different insurance needs in
terms of products and coverages. The key focus
is profitability, and Tryg prefers not to define a
specific growth target for this strategic area.
The focus within this initiative are:
•
Developing products related to personal
insurance and technology which are not in
the market today. Examples of this are Tryg’s
new health insurance product which can be
customised to individual needs, a new cyber
insurance product for the Commercial and
Corporate segments, aimed at preventing and
helping companies under cyber attack, and
‘Tryg Drive’ in Denmark and ‘SideKick’ in Nor-
way, which reward customers for responsible
driving behaviour with lower premiums.
Contents – Management’s review
13
Annual report 2018 | Tryg A/S | Distribution efficiency is targeted to have an im-
pact of DKK 150m in 2020. In 2018, Tryg achieved
efficiency gains through improved distribution
corres ponding to an estimated value of approx-
imately DKK 30m. The financial impact of this
initiative is more back-end loaded as part of the
improvement is driven by increased sales. The
primary drivers for this strategic initiative are:
•
Changing the mix of distribution channels
in the Private and Commercial segments
(both in Denmark and Norway) to lower sales
costs. In the Danish Private business, Tryg
engages with independent sales agents selling
exclusively for Tryg. In Norway, the Commercial
business employs a similar franchise concept,
and in the Danish Commercial business, a new
type of sales agent was introduced in Q3 2018
that combines the traditional sales agent and
customer centre sales.
•
Partner agreements. The new partner agree-
ments with NITO, OBOS, FDM and Danske Bank
will contribute significantly to boosting distribu-
tion efficiency in 2019/2020, as good leads are
made available to the sales organisation.
Alka synergies
As part of the Alka acquisition, synergies in
the amount of DKK 300m are expected to be
achieved in 2021. Tryg has announced targets
of DKK 75m in 2019, DKK 150m in 2020 and
DKK 300m in 2021. Tryg will continuously report
on the synergies achieved throughout the year.
Corporate Responsibility
Corporate Responsibility (CR) is an integrated part
of Tryg’s core business and is closely linked to our
purpose ‘as the world changes, we make it easier
to be tryg’. Tryg means feeling protected and cared
for. We focus on activities related to human and
labour rights, climate and environment as well as
anti-corruption, and we are actively working to in -
tegrate CR into our insurance, claims handling and
prevention activities. CR plays a role in our decision-
making, our risk mitigation, the improvement and
development of our products and services, the
optimisation of our operations and business part-
ners, the development of our employees, and the
contributions we make to society at large through
our activities and strategic partnerships.
Contents – Management’s review
14
Annual report 2018 | Tryg A/S | Tryg’s results
Tryg reported a technical result of DKK 2,766m (DKK 2,789m), or DKK 2,826m (DKK 2,789) adjusted
for the Alka acquisition. The investment result was DKK -332m (DKK 527m) driven primarily by
negative development in the equity markets. The 2018 pre-tax result was DKK 2,262m (DKK 3,239m)
or DKK 2,398m (DKK 3,239m), adjusted for the Alka acquisition. Different returns in equity invest-
ments account for DKK 565m difference in the pre-tax result. Quarterly dividend of DKK 1.65 per
share supporting Trygheds Gruppen’s member bonus. Solvency ratio of 165 following approval of
the Alka transaction.
Results 2018
Tryg reported a technical result of DKK 2,766m
(DKK 2,789m), or DKK 2,826m (DKK 2,789)
adjusted for the Alka acquistion. The investment
result was DKK -332m (DKK 527m) driven primar-
ily by negative development in the equity markets.
Other income and expenses were DKK -172m
(DKK -77m). The 2018 results were impacted by
one-offs of DKK -200m in Q4 2018 as a result of
the Alka transaction, an amount of DKK -124m
of which was booked in the technical result and
DKK -76m in other income and expenses. Alka
contributed with DKK 63m (for November and
December) to the overall technical result.
Tryg reported an improved technical result
(excluding Alka) for Private, Commercial and
Sweden while Corporate was impacted by a high
level of large claims. The combined ratio was
85.1% (84.4%) driven by a claims ratio of 70.7%
and an expense ratio of 14.4%. The combined ratio
was 84.5% adjusting for the one-offs related to
Alka split between a claims ratio of 70.4% and an
expense ratio of 14.1%.
of around 3% and the initiatives launched at the
Capital Markets Day (hereafter CMD) in November
2017 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 in local curren-
cies was 6.3%, or 2.3% exclusive of mergers and
acquisitions as well as portfolio acquisitions.
Capital markets developed negatively in 2018.
Equities and other ‘risky assets’ were impacted by
several geo-political turbulences and intensifying
talk of a trade war between the US and China.
Equities returned approximately -11% for 2018
(driven by a -14.9% return in Q4 2018), while
emerging market debt (a small asset class for Tryg)
returned -6.7%. The negative investment return for
2018 was due primarily to turbulence in the last
quarter of 2018, with equities seeing a particularly
negative development. The investment return
totalled DKK -332 (DKK 527m) for the FY where
approximately 2/3 of the difference compared to
2017 can be traced backed to vast differences in
equity market performance.
Large claims were substantially higher than in 2017
while weather claims were modestly higher, the
run-off result was also higher. The return on equity
(after tax) was 14.9% (28.8%). Price adjustments
In 2018, Danish customers received their third
member bonus from TryghedsGruppen (Tryg’s
60% majority shareholder). The 8% bonus is
appreciated by customers and is expected to
Contents – Management’s review
Financial highlights 2018
excluding ALKA
Financial highlights 2018
Technical result
DKK 2,826m
(DKK 2,789m)
Combined ratio
84.5
(84.4)
Expense ratio
14.1
(14.0)
Profit before tax
DKK 2,398m
(DKK 3,239m)
Technical result
DKK 2,766m
(DKK 2,789m)
Combined ratio
85.1
(84.4)
Expense ratio
14.4
(14.0)
Profit before tax
DKK 2,262m
(DKK 3,239m)
FY dividend per share
DKK 6.60
FY dividend per share
DKK 6.60
Customer targets
DKKm
Transactional Net Promoter Score (TNPS)
Number of products per customer
Q4 2018
Q4 2017
Target 2020
67
3.8
62
3.5
70
4 (+10%)
Tryg excluding one-off costs and earnings related to Alka
DKKm
Q4 2018
Q4 2017
Technical result
Profit before tax
Premium growth
Claims ratio, net of reinsurance
Gross expense ratio
Combined ratio
656
285
4.5
71.5
14.4
85.9
622
685
1.9
72.3
13.7
86.0
2018
2,826
2,398
4.1
70.4
14.1
84.5
2017
2,789
3,239
1.7
70.4
14.0
84.4
15
Annual report 2018 | Tryg A/S |
The underlying claims ratio showed an under lying improvement
of 0.4 percentage points for the Group and of 0.5 percentage
points for the Private segment.
become an important competitive advantage by
boosting customer loyalty and customer targets.
TryghedsGruppen has announced that the mem-
ber 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 2019 to continue improving the underlying level
of profitability.
Premiums
Premiums totalled DKK 18,740m (DKK 17,963m),
representing 6.3% growth in local currencies.
Premiums grew 4.1% in local currencies excluding
Alka. Developments were characterised by sat-
isfactory growth in Private Denmark and Private
Norway, price increases in the Corporate segment
and satisfactory growth in Sweden, driven mainly
by pet insurance. Alka contributed DKK 386m
to the Group premium as the business was con-
solidated for approximately two months.
Price adjustments and generally positive econom-
ic developments throughout Scandinavia are likely
to support top-line developments in 2019.
The Private segment reported growth of 5.1%
excluding Alka (DKK 338m), driven by positive
developments both in Private Denmark and Pri-
vate Norway and small bolt-on acquisitions.
Contents – Management’s review
Private Denmark continues to perform well,
supported by the member bonus from Trygheds-
Gruppen, price adjustments and an increase in
customer numbers. Private Norway is building
further on the good momentum seen during the
second half of 2018, showing top-line growth,
also adjusting for portfolio acquisitions.
The Commercial segment reported premium
income growth of 3.7% in local currencies, helped
by Alka (DKK 48m), portfolio acquisitions and a
positive portfolio development. The member bonus
continues to support the Danish part of Commercial,
which is currently showing very high retention levels.
The Corporate segment reported premium
income growth of 4.0% in local currencies, helped
by price increases and low-risk fronting agree-
ments. In Corporate Denmark, the development
in premium income was positively helped by the
member bonus model, a good development in
the surety and credit business (Tryg Garanti) and
price adjustments. Corporate Norway’s top-line
development was helped by the pricing initiatives
pushed through to improve profitability in a highly
competitive market.
The Swedish business grew by 4.9%, driven mostly
by the pet insurance segment (double-digit growth)
and the extended warranty business.
Additionally, the core private product portfolio
also developed favourably.
Claims
The claims ratio, net of ceded business, was
70.7% (70.4%), while the underlying claims ratio
(excluding Alka and related one-offs), showed an
underlying improvement of 0.4 percentage points
driven by price adjustments and claims excel-
lence initiatives. At the CMD in November 2017,
Tryg launched a new strategy, which includes a
DKK 600m ‘claims excellence’ programme, and
in 2018 savings of DKK 150m were achieved. It is
important to note that savings of approximately
DKK 50m were impacting previous year’s results
(run-off gain) and not current-year figures.
Claims inflation is monitored continuously, and
price adjustments are pushed through according-
ly. Motor insurance remains a very profitable seg-
ment, although an increase in claims frequency
was seen, especially in the Norwegian part of the
business, together with an increase in the average
cost of claims due to the gradual introduction of
more electronics. Additionally, in Norway approxi-
mately half of all new vehicles sold are electric/
hybrid, some of which are associated with dif-
ferent risk characteristics compared to normal
vehicles. As a result, pricing must be carefully
scrutinised.
In 2018, large claims totalled DKK 490m
(DKK 243m), while weather claims totalled
DKK 384m (DKK 298m). The level of large claims
was somewhat below normalised expectations
(DKK 550m), while the level of weather claims
was also below the normal level (DKK 600m
starting in 2019 including Alka). The overall run-
off result was DKK 1,221m (DKK 972m) or 6.5%
(5.4%) on the combined ratio. The higher level
was primarily driven by higher releases in Motor
TPL, Workers Compensation and Accident and
Health.
Expenses
The expense ratio was 14.4% (14.0%), with one-
off costs of DKK 75m relating to the Alka trans-
action being booked in Q4 2018; without these
the expense ratio would have been 14.1%. At the
CMD, Tryg announced an expense ratio target
around 14% in 2020. Tryg has already launched
many initiatives aimed at reducing distribution
costs, such as the use of new and cheaper distri-
bution channels and the optimisation of existing
channels. The benefits from these initiatives have,
to some degree, been invested in digital solutions.
Investment activities
The investment return totalled DKK -332m
(DKK 527m), impacted negatively by capital mar-
ket turbulence in the last three months of 2018.
16
Annual report 2018 | Tryg A/S | Tryg pays a Q4 dividend per share of DKK 1.65 bringing the
full-year dividend per share to DKK 6.60. 2018 was the seventh
year in a row with an increased dividend.
Equities and other risky assets posted negative
returns, driven by geo-political turbulence and
intensifying talk of a trade war between the US
and China. Equities returned approximately -11%
for 2018 (driven by a -14.9% return in Q4 2018),
while emerging market debt (a small asset class
for Tryg) returned -6.7%. The free portfolio posted
an overall result of DKK -33m (DKK 598m) for FY
2018, as positive developments in the first nine
months where erased by negative developments
in the last quarter of the year. The match portfolio
result was DKK -2m (DKK 227m) as interest rates
and credit spreads generally saw a flat develop-
ment for the full-year 2018. Other financial
income and expenses totalled DKK -297m
(DKK -298m).
Other income and costs
Other income and costs were DKK -172m
(DKK -77m). The much higher figure compared to
2017 was driven by the inclusion of one-off costs
of DKK 76m relating to Alka (transaction costs)
and also a DKK 19m depreciation charge relating
to customer relations and branding in connection
with the Alka transaction.
More details can be found here
in a newsletter at tryg.com
(Modelling the Alka integration)
Contents – Management’s review
Tax
Tryg paid a total tax bill of DKK 529m (DKK 720m),
or 23.3% of the profit before tax.
Capital position
The solvency ratio (based on Tryg’s partial internal
model) was 165 at year-end The solvency ratio was
slightly lower than expected, driven by a longer
(than initially estimated) period to obtain the Alka
approval and therefore higher interest payments to
the seller. Additionally negative investment returns
(not related to equities) in Q4 have also weighed
negatively on the solvency ratio. Tryg will pay a
Q4 dividend of DKK 1.65 per share on 25 January
2019, which is in line with the dividend paid for the
first three quarters of the year and also in line with
the policy of paying a flat quarterly dividend.
Tryg’s own funds comprise mainly shareholders’
equity, intangibles (fully deducted), Tier 2 instru-
ments (subordinated debt and natural perils
pool), Tier 1 instruments and future profits. The
vast majority of Tryg’s own funds are constituted
by shareholders’ equity. The Tier 2 capacity has
been fully utilised, while currently DKK 140m of
Tier 2 bonds are not included in the own funds
as they exceed the 50% solvency capital require-
ment (hereafter SCR). The Tier 1 capacity has also
been virtually fully utilised following the SEK 700m
spring issue to help fund the Alka acquisition.
The future profit item increased during 2018
from DKK 970m to DKK 1,408m. This follows the
integration of the highly profitable Alka business
and an initial conservative approach together with
improved profitability of the underlying business.
Own funds totalled DKK 8,058m (DKK 13,162m).
The comparative figure at the end of 2017 was
positively impacted by the raising of capital in the
amount of DKK 4bn to fund the Alka acquisition,
while the year-end 2018 figure was impacted by
intangibles of DKK 5.7bn relating to that acquisi-
tion. During 2018, own funds were positively im-
pacted by the net profit, and negatively impacted
by the ordinary dividend and the extraordinary
dividend paid in March 2018 (announced at the
CMD in November 2017) and the issuance of SEK
700m Tier 1 notes during the spring.
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
14 percentage points. Lower sensitivities are
displayed towards equity market falls and
interest rate movements.
The Supervisory Board regularly assesses Tryg’s
capital position. In 2018, Tryg announced the
payment of DKK 1bn in extraordinary dividend in
March following an announcement at the CMD
in November 2017. Continuous assessments of
the company’s capital position are carried out, in
which the SCR is projected based on Tryg’s fore-
casts. 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. Adequacy is measured in relation
to Tryg’s strategic targets, including return on
equity and dividend policy.
Tryg calculates its individual SCR based on a
partial internal model in accordance with the
Danish Financial Supervisory Authority’s Execu-
tive Order on Solvency and Operating Plans for
Insurance Companies. The model is based on
the structure of the standard model. Tryg uses an
internal model to evaluate insurance risks, while
other risks are calculated using standard model
components. The SCR, calculated using the par-
tial internal model, was DKK 4,892m compared
to DKK 4,684m at the end of 2017. The upward
move in the SCR during 2018 was primarily
driven by the inclusion of Alka, which increases
the SCR by DKK 397m. A re-balancing of Alka’s
investment portfolio will reduce this to approxi-
mately DKK 350m in the long term. The SCR,
based on the standard formula, was DKK 5,980m
compared to DKK 5,838m at the end of 2017.
17
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
excluding ALKA
Financial highlights Q4 2018
Technical result
DKK 656m
(DKK 622m)
Combined ratio
85.9
(86.0)
Expence ratio
14.4
(13.7)
Profit before tax
DKK 285m
(DKK 685m)
Technical result
DKK 596m
(DKK 622m)
Combined ratio
88.2
(86.0)
Expense ratio
15.6
(13.7)
Profit before tax
DKK 149m
(DKK 685m)
Q4 dividend per share
DKK 1.65
Q4 dividend per share
DKK 1.65
mark and Norway, but a positive development
was seen also in the Commercial business. Cor-
porate growth was driven mainly by Tryg Garanti
and price increases, mostly in the Norwegian part
of Corporate, to improve the underlying profitabil-
ity. Tryg will implement price adjustments of ap-
proximately 3% also in 2019 to offset the general
claims inflation and improve the profitability of
selected parts of the portfolio.
Claims
The claims ratio, net of ceded business, was
72.6% (72.3%), impacted negatively by one-
offs in the amount of DKK 49m relating to the
Alka acquisition. Large claims were DKK 84m
(DKK 79m), which is at a similar level compared
to Q4 2017 but below a normal level, while
weather claims were lower than normal at
DKK 83m (DKK 126m). The run-off result was
DKK 207m (DKK 219m). The underlying claims
ratio improved 0.4 percentage points for the
Group and 0.5 percentage points for Private.
Expenses
The reported expense ratio was 15.6% (13.7%),
impacted negatively by one-offs in the amount
of DKK 75m relating to the Alka acquisition. The
expense ratio would have been 14.4% excluding
the aforementioned one-offs.
Investments
The investment return totalled DKK -330m
(DKK 86m) for Q4 2018, driven by a return of
DKK -198m (DKK 138m) on the free portfolio,
Tryg has previously (at CMD in November 2017)
announced plans to reduce the SCR by up to 10%.
The plan included the introduction of a model
for Danish workers’ compensation, which was
adopted in 2018, and the inclusion of the Swedish
business in the partial internal model, while also
fine-tuning other parts of the model.
Dividend policy
Tryg’s dividend policy targets a nominal, stable
increase in the dividend on a full-year basis. Tryg
introduced quarterly dividends in 2017. The quar-
terly payment was DKK 1.65 per share, or a total
of DKK 6.60 (DKK 6.40) for 2018. This equates
to total dividend payments of DKK 1,994m, or
115% of the profit for the year.
Moody’s rating
Tryg has an ‘A1’ (stable outlook) insurance finan-
cial strength rating (IFSR) from Moody’s. The rat-
ing 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 assigned an ‘A3’ rating to Tryg’s sub-
ordinated debt and a ‘Baa3’ rating to the recent
Tier 1 issue. All ratings were confirmed following
the announcement of the Alka acquisition.
Results Q4 2018
The technical result was DKK 596m (DKK 622m),
impacted by one-off costs of DKK 124m while
the consolidation of Alka contributed a positive
DKK 63m. The tecnical result adjusted for the
Alka acquisition was DKK 656m. The profit be-
fore tax was DKK 149m (DKK 685m), impacted
negatively by one-off costs of DKK 200m relating
to the Alka transaction and a negative investment
result, driven by turbulence in the equity markets.
The reported combined ratio for the quarter was
88.2% based on a claims ratio of 72.6% and
an expense ratio of 15.6%. The combined ratio
excluding Alka and related one-offs was 85.9%,
driven by a claims ratio of 71.5% and an expense
ratio of 14.4%.
The underlying claims ratio (Tryg excluding Alka
and one-offs) improved by 0.4 percentage points
for the Group and 0.5 percentage points for the
Private segment, continuing the positive trend
seen in 2018. Tryg pays a quarterly dividend of
DKK 1.65 (DKK 499m) and reports a solvency
ratio of 165.
Premiums
Premiums grew 4.5% excluding Alka, impacted
by a good organic growth and helped by minor
portfolio acquisitions. Premium growth came
mostly from the Private segment in both Den-
Contents – Management’s review
18
Annual report 2018 | Tryg A/S | a return of DKK -42m (DKK 13m) on the match
portfolio and other financial income and expenses
of DKK -90m (DKK -65m).
strategic investments explain most of the differ-
ence compared to Q4 2017.
The free portfolio negative result was driven by
negative developments in equity markets. Tryg’s
equity portfolio returned approximately -15% in
the quarter. Additionally, fixed income returns
were also negative, driven by a poor perf ormance
of emerging markets debt in Q4 (-6.7% return).
The match portfolio produced a negative return
driven by both its components, regulatory devi-
ation and performance. The regulatory deviation
produced a DKK -19m (DKK 11m) result as
Danish swap rates widened vs the Euro swap
rates, while the performance component produced
a DKK -23m (DKK 2m) result as Nordic covered
bonds spreads widened.
Other financial income and expenses was
DKK -90m (DKK -65m), a somewhat higher level
than normalised expectations. Increased interest
expenses on the loans (Tier 1 & Tier 2 loans),
higher leasing costs (IFRS 16 accounting standard
on leasing) and a write-down of a couple of minor
Other income and expenses
Other income and expenses totalled DKK -117m
(DKK -23m). The negative development was
driven by one-off costs of DKK -76m in the form
of transaction costs in connection with the Alka
acquisition. Additionally, Tryg has started the
depreciation of customer relations and branding
from the Alka transaction. This had an additional
negative impact of DKK -19m in the quarter.
Tryg has announced that the depreciation of
customer relations and branding will have an
annual impact (booked on the other income
and expenses line) of DKK -127m.
Taxes
Tryg paid DKK 37m of taxes in Q4 or an overall tax
rate of just below 25%. The tax effect of losses on
the equities portfolio have been offset by adjust-
ments to taxes for previous quarters, resulting in
a total tax rate of 24.8 per cent for the quarter
and 23.4 per cent for the full year – in line with
the expectations of the beginning of the year.
Contents – Management’s review
19
Annual report 2018 | Tryg A/S | Private
Results 2018
The technical result for 2018 was DKK 1,734m
(DKK 1,565m) with a combined ratio of 81.6
(82.1). The development is attributable to the
combination of higher premium income relating
to the Alka portfolio and an improved level of
underlying claims. Organic premium growth,
excluding Alka and minor portfolio acquisitions,
increased compared to 2017, driven by both the
Danish and Norwegian part of the Private segment.
Premiums
Gross premium income increased by 8.9% (1.1%)
in local currencies, primarily due to the Alka acqui-
sition. Premiums increased by 12.6% in Denmark,
or 6.0% excluding of Alka. The increase was driven
by a number of factors, such as increased reten-
tion rates, package concepts and a strong interest
in Tryg’s claims prevention initiatives, including
alarms for home insurance policyholders, and rat
blockers for house insurance policyholders. Tryg
also registered a further increase in awareness of
the customer bonus from TryghedsGruppen.
In Norway, premium income increased by 3.8%
in local currencies, mainly due to the OBOS
and Troll acquisitions. The main driver related
to OBOS has been sales to members, and the
private portfolio is now three times bigger than
when Tryg acquired the portfolio.
The retention rate in Denmark increased from
90.2 to 91.2, while in Norway the retention rate
increased from 85.8 to 86.7. The positive devel-
opment in Denmark can be ascribed to a positive
impact from the member bonus model and a
strong focus on customer loyalty. In Private Nor-
way, there was also a strong focus on customer
loyalty, and the positive development was likely
impacted by a reduction in the number of small,
but very aggressive (and unprofitable) competi-
tors in Norway.
Claims
The gross claims ratio totalled 65.5 (66.0), and
the claims ratio, net of ceded business, 67.8
(68.4). The underlying claims level, excluding
Alka, improved by 0.5 percentage points, which
was attributable to the claims excellence
programme and price adjustments aimed at
mitigating increased claims inflation. The level
of weather-related claims was somewhat higher,
primarily due to winter weather in Norway in
Q1 2018.
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 51% of
the Group’s total premium income.
Financial highlights 2018
Technical result
DKK 1,734m
(DKK 1,565m)
Combined ratio
81.6
(82.1)
Premium growth
(local currencies)
8.9%
(1.1%)
Expense ratio
13.8
(13.7)
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 2018
Q4 2017
2,679
-1,719
-363
2,203
-1,448
-301
597
-65
-1
531
78
21.2
64.2
2.4
66.6
13.5
80.1
83.0
-2.9
0.0
1.3
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
2018
9,466
-6,198
-1,309
1,959
-220
-5
1,734
394
8.9
65.5
2.3
67.8
13.8
81.6
85.8
-4.2
0.0
2.4
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
20
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
Technical result
DKK 531m
(DKK 394m)
Combined ratio
80.1
(82.0)
Claims ratio,
net of ceded business
66.6
(68.3)
Expense ratio
13.5
(13.7)
New house insurance product
In September 2018, Private Denmark
launched a new house insurance product,
which includes a rat blocker. The rat
blocker is another important claims preven-
tion initiative from Tryg. The rat blocker
prevents rats from entering private houses
from the sewers and damaging houses,
pipes etc.
The retention rate in Denmark increased from
90.2 to 91.2, while in Norway the retention rate
increased from 85.8 to 86.7.
Claims
The gross claims ratio was 64.2 (65.7), and the
claims ratio, net of ceded business, was 66.6
(68.3). The underlying claims ratio excluding
Alka improved by 0.5 percentage points. It was
impacted by the ongoing claims excellence pro-
gramme and price adjustments aimed primarily
at mitigating claims inflation. Weather claims
were lower compared to an average fourth
quarter and also below prior-year quarter.
Expenses
The expense ratio was 13.5 (13.7) and was
impacted by the integration of Alka.
Expenses
The expense ratio for Private was 13.8 (13.7)
and was almost unchanged and in line with the
expectations for Tryg in general, reflecting invest-
ments in digital solutions financed by distribution
efficiency.
Total employee numbers increased from 1,000
at the end of 2017 to 1,329 in 2018, mainly due
to the acquisition of Alka and the upscaling of
distribution to include more efficient channels.
Results Q4 2018
The technical result totalled DKK 531m
(DKK 394m), with a combined ratio of 80.1 (82.0).
The higher technical result was due to the inclu-
sion of Alka for approximately two months. The
underlying claims ratio, excluding Alka, improved
by 0.5 percentage points, which is in line with
developments in previous quarters.
Premiums
Gross premiums increased by 21.2% (1.1%) in
local currencies and were impacted by the Alka
acquisition. Excluding the Alka acquisition,
premium growth was 6.1%.
Contents – Management’s review
21
Annual report 2018 | Tryg A/S | Financial highlights 2018
Technical result
DKK 784m
(DKK 667m)
Combined ratio
80.3
(82.6)
Premium growth
(local currencies)
3.7%
(-0.7%)
Expense ratio
17.5
(17.2)
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 21% of
the Group’s total premium income.
Results 2018
The technical result for 2018 was DKK 784m
(DKK 667m), with a combined ratio of 80.3 (82.6).
The combined ratio was affected by an aggregate
level of weather claims and large claims, lower
than the previous year, and a higher level of run-
off. The development in premiums improved sig-
nificantly due to the Alka and OBOS acquisitions.
Premiums
The development in gross premium income was
positive 3.7% (-0.7%) in local currencies, as men-
tioned impacted by the Alka and OBOS acquisi-
tions. There was also an underlying improvement
in premium income for both the Danish and
Norwegian Commercial business. Excluding
the acquisitions, growth in Commercial Denmark
was 1.1% and in Commercial Norway 1.4%.
To further improve this development, Commer-
cial Denmark will continue to capitalise on the
member bonus from TryghedsGruppen and has
already started to hire more efficient sales agents
to lower the cost of sales. The market position of
Commercial Norway was strengthened through
the acquisition of OBOS, which – in combination
with initiatives supporting greater distribution
power – fuelled a positive development in under-
lying premiums.
Contents – Management’s review
The retention rate for Commercial Denmark
increased from 87.7 to 88.0, while in Norway
the retention rate increased significantly from 86.9
to 87.7. The positive developments in Denmark
and Norway can be ascribed to a strong customer
focus, while in Denmark the customer bonus
model also supported the development.
Claims
The gross claims ratio was 58.6 (62.7), with a
claims ratio, net of ceded business, of 62.8 (65.4).
The lower claims level was due to a higher level
of run-offs, but the aggregate level of large claims
and weather claims was also at a lower level
compared to prior year.
Expenses
The expense ratio for Commercial was 17.5 (17.2).
The expense level is generally too high for Com-
mercial, especially for the distribution part, and
Commercial Denmark has therefore started to
recruit a new type of sales agents with the aim of
lowering cost of sales. In Denmark, Commercial
also decided to start working with independent
sales agents selling only for Tryg. This is a new
type of distribution channel in Denmark that has
proven to be very efficient for Private Denmark
in Q4.
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 2018
Q4 2017
1,044
-545
-183
316
-47
1
270
161
6.8
52.2
4.5
56.7
17.5
74.2
89.6
-15.4
-1.0
2.3
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
2018
3,971
-2,326
-696
949
-165
0
784
434
3.7
58.6
4.2
62.8
17.5
80.3
91.2
-10.9
1.6
2.3
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
22
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
Technical result
DKK 270m
(DKK 138m)
Combined ratio
74.2
(85.9)
Claims ratio,
net of ceded business
56.7
(70.0)
Expense ratio
17.5
(15.9)
The total number of employees increased from
479 at the end of 2017 to 516 in 2018. The
increase was ascribable to the new type of low-
cost sales agents in Denmark and the acquisition
of Alka.
Results Q4 2018
The technical result was DKK 270m (DKK 138m),
with a combined ratio of 74.2 (85.9). The result
was positively affected by a substantial decrease
in the level of large claims, but also a high level
of run-off gains. Premium growth was a positive
6.8% (2.3%), primarily due to the Alka and OBOS
acquisitions.
Claims
The gross claims ratio was 52.2 (66.3), with a
claims ratio, net of ceded business, of 56.7 (70.0).
The much lower level was due to a substantial
decrease in large claims and a higher level of run-
offs, but also an underlying improvement driven
by claims excellence initiatives.
Expenses
The expense ratio was 17.5 (15.9), which was
somewhat higher than for the prior-year period,
primarily due to an extraordinarily low level
last year. Going forward, Commercial will focus
strongly on reducing costs.
Premiums
Gross premiums increased by 6.8% (2.3%) in local
currencies, primarily due to the above-mentioned
acquisitions. Excluding the acquisitions premium,
growth was 1.9%. The retention rate in Denmark
increased to 88.0 (87.7), while the retention rate in
Norway increased significantly to 87.8 (86.9) due
to a strong focus on customer loyalty.
Contents – Management’s review
23
Track-and-Trace feature
In Q1 2018, Private Denmark launched
a claims track-and-trace feature, which
means that customers will be able to
follow the processing of claims online.
Annual report 2018 | Tryg A/S | Corporate
Results 2018
The technical result was DKK 173m (DKK 386m),
with a combined ratio of 95.6 (90.0). The result
was negatively affected by a significantly higher
level of large claims. Premiums were up 4.0%
(2.1%) and were impacted by price hikes, an
increased level of fronting business and in Den-
mark a high retention level driven by the customer
bonus model. The corporate market is generally
challenged in all countries, even following
significant price hikes, especially in Norway.
Tryg is determined to improve profitability and
will increase prices in 2019, which – depending
on the reaction from competitors – might
reduce premium income.
Premiums
Gross premium income was up 4.0% (2.1%) in
local currencies. An increase of around 5.4% was
seen in Denmark due to a positive development
for the Guarantee business (Tryg Garanti) and very
high retention levels, which is probably ascrib-
able to the customer bonus model. In Norway,
premium increased by 1.7%, primarily due to price
hikes. In Sweden, which accounts for only 20%
of the total Corporate business, premium
growth was 3.6%.
Claims
The gross claims ratio totalled 79.9 (67.7), and the
claims ratio, net of ceded business, 85.7 (79.8).
The higher claims level was primarily due to the
development in large claims in Norway. A higher
level of large claims is bound to happen from time
to time, and this is not a problem as such. The issue
for Corporate is that the underlying profitability is
not satisfactory, and price hikes will therefore be
implemented, especially in Norway, and have a
greater impact than the initiatives in 2018.
This year, Tryg has communicated very actively to
brokers in the Norwegian market that Tryg will im-
plement price hikes to improve profitability, 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 payments from Trygheds-
Gruppen.
In Sweden, more significant steps were taken to
improve profitability, especially for specific seg-
ments. Profitability still needs improving for
motor insurance and liability.
Contents – Management’s review
Corporate sells insurance products to cor-
porate customers under the brands ‘Tryg’ in
Denmark and Norway, ‘Moderna’ in Sweden
and ‘Tryg Garanti’. Sales are effected both
via Tryg’s own sales force and via insurance
brokers. Moreover, customers with interna-
tional insurance needs are served by Corporate
through its cooperation with the AXA Group.
The business area accounts for 20% of
the Group’s total premium income.
Financial highlights 2018
Technical result
DKK 173m
(DKK 386m)
Combined ratio
95.6
(90.0)
Premium growth
(local currencies)
4.0%
(2.1%)
Expense ratio
9.9
(10.2)
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 2018
Q4 2017
987
-915
-102
-30
-87
0
-117
-54
2.9
92.7
8.8
101.5
10.3
111.8
106.3
5.5
9.5
2.5
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
2018
3,897
-3,114
-385
398
-225
0
173
271
4.0
79.9
5.8
85.7
9.9
95.6
102.6
-7.0
11.0
1.4
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
24
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
Technical result
DKK -117m
(DKK 60m)
Combined ratio
111.8
(93.8)
Claims ratio,
net of ceded business
101.5
(83.7)
Expense ratio
10.3
(10.1)
TryghedsGruppen’s
member bonus
In June, Tryg’s majority shareholder
TryghedsGruppen, paid out a member
bonus for the third year running.
The bonus corresponds to 8% of the
premium paid to Tryg in 2017, or
the payout of DKK 720m in total to
TryghedsGruppen’s members and
Tryg’s Danish customers.
Expenses
The expense ratio for Corporate was 9.9 (10.2),
and it was quite stable throughout the year. As
the cost of handling large clients is relatively low
– when taking account of premium levels – and
as brokers are paid directly by the customers,
Corporate should have a much lower expense
ratio than Private and Commercial.
The number of employees increased from 250 at
the end of 2017 to 265 in 2018, primarily related
to the guarantee business.
Results Q4 2018
The technical result was a negative DKK -117m
(DKK 60m), with a combined ratio of 111.8 (93.8).
The results were negatively impacted by a higher
level of large claims and run-off losses on some
specific claims. Premium growth was a positive
2.9% (3.0%), primarily due to price hikes and
growth in the guarantee business.
Premiums
Gross premiums were up 2.9% (3.0%) in local
currencies, primarily due to guarantee business
in Denmark, price hikes in Norway and high reten-
tion levels, especially in the Danish business.
Claims
The gross claims ratio was 92.7 (74.6), and the
claims ratio, net of ceded business, 101.5 (83.7).
The much higher level was primarily due to the
high level of large claims and run-off loss on some
claims in the Swedish business, which led to a
total negative run-off for the quarter.
Expenses
The expense ratio was 10.3 (10.1) and in line
with the level in Q4 2017.
Contents – Management’s review
25
Annual report 2018 | Tryg A/S | Sweden
Results 2018
Sweden Private posted a result of DKK 201m
(DKK 171m), which represented a slight improve-
ment compared to the prior-year result primar-
ily ascribable to reduced expense levels. 2018
was not impacted by mergers and acquisitions,
and based on growth of approximately 5% and
improved profitability, was a good year for the
Swedish Private business.
Premiums
Premium income increased by 4.9% (12.5%) in
local currencies. In 2017, growth was driven
by the acquisition of Skandia’s child insurance
portfolio. In 2018, growth of 4.9% was achieved
through organic growth, especially from pet insur-
ance, motor insurance and accident insurance.
The inbound team performed strongly in 2018.
Changed legislation in Sweden has made out-
bound sales more challenging as companies can’t
close sales but must have customers accept after
the call, for example using text messaging.
Claims
The gross claims ratio totalled 69.6 (70.9) and was
affected by a somewhat higher run-off level. In
some product areas, we saw slightly higher claims
levels, and price adjustments will therefore be
implemented in 2019 together with an expected
higher level of identifying fraud.
Expenses
The expense ratio was much lower at 16.1 (16.9),
which can be ascribed to a continued focus on
effective distribution and the integration of the
Skandia portfolio. Employee numbers were almost
unchanged from 353 at the end of 2017 to 354
in 2018, reflecting a strong focus on efficiency.
Results Q4 2018
Sweden’s technical result totalled DKK 38m
(DKK 30m), with a combined ratio of 89.2 (91.3).
Premium growth was a positive 7.7% (5.1%).
The expense level improved to 17.2 (17.7).
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 2018
Technical result
DKK 201m
(DKK 171m)
Combined ratio
86.0
(88.1)
Premium growth
(local currencies)
4.9%
(12.5%)
Expense ratio
16.1
(16.9)
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 (%)
Large claims, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2018
Q4 2017
361
-259
-62
40
-1
-1
38
22
7.7
71.7
0.3
72.0
17.2
89.2
95.3
-6.1
0.0
0.0
355
-259
-63
33
-2
-1
30
21
5.1
73.0
0.6
73.6
17.7
91.3
97.2
-5.9
0.0
2.5
2018
1,471
-1,024
-237
2017
1,487
-1,055
-251
210
-4
-5
201
122
4.9
69.6
0.3
69.9
16.1
86.0
94.3
-8.3
0.0
0.5
181
-5
-5
171
98
12.5
70.9
0.3
71.2
16.9
88.1
94.7
-6.6
0.0
0.9
26
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
Technical result
DKK 38m
(DKK 30m)
Combined ratio
89.2
(91.3)
Claims ratio,
net of ceded business
72.0
(73.6)
Expense ratio
17.2
(17.7)
Premiums
Gross premiums were up 7.7% (5.1%) in local
currencies, driven by growth in motor, accident
and pet insurance.
Claims
The gross claims ratio was 71.7 (73.0), and net
of ceded business 72.0 (73.6). The decrease was
primarily due to a lower level of weather-related
claims. As mentioned before, we saw some claims
inflation for some products, which will be miti-
gated through minor price adjustments.
Expenses
The expense ratio was 17.2 (17.7), reflecting a
continued focus on efficiency. In the past two
years, the expense ratio has been reduced by
almost 3 percentage points.
Employee numbers were more or less un-
changed at 354 (353).
Contents – Management’s review
New strategic partnership
In November 2018, Tryg and Danske
Bank entered into a partnership. The
partnership covers all the countries
in which Tryg operates – both the
Private and Commercial segments
in Denmark and Norway, and Private,
in Sweden.
27
Annual report 2018 | Tryg A/S | Investment activities
Financial highlights 2018
Investment return
DKK -332m
Free portfolio result
DKK -33m
Equities
-11% return
Match portfolio
DKK -2m
The investment return totalled DKK -332m
(DKK 527m) for FY 2018, driven by a return of
DKK -33m (DKK 598m) on the free portfolio, a
return of DKK -2m (DKK 227m) on the match
portfolio, and other financial income and
expenses of DKK -297m (DKK -298m).
The total market value of Tryg’s investment port-
folio was DKK 41bn (DKK 43bn) at year-end 2018.
The investment portfolio consists of a match port-
folio of DKK 29bn (DKK 32bn) and a free portfolio
of DKK 11bn (DKK 11bn). The match portfolio is
composed of fixed-income assets that match the
Group’s insurance liabilities, so that fluctuations
resulting from interest rate changes are offset to
the greatest possible extent. The free portfolio
is the Group’s capital, which is predominantly
invested in fixed-income securities with a short
duration, but also in equities and properties.
Free portfolio
Financial markets ended the year on a turbulent
path driven by a sharp fall in equity markets in
the last three months of 2018. Continuous talk of
a trade war between the USA and China, public
criticism by the US President to the Chair of the
Federal Reserve on the direction of interest rates,
turbulence in France and Italy and a highly un-
certain situation around Brexit and overall growth
Contents – Management’s review
expectations revised downwards for 2019-2020,
this has been the difficult background of the
end of 2018.
Tryg’s equity portfolio returned DKK -212m
(approximately -11%) in 2018 vs DKK 353m
(approximately 16%) in 2017. The drastic differ-
ence in returns from equities explains around
2/3 of the difference in the Group’s investment
return in 2018 vs 2017. The fixed-income portfolio
also produced a negative return of DKK -93m
(DKK 153m), driven primarily by widening credit
spreads across virtually all fixed-income asset
classes. The return on the investment property
portfolio was DKK 272m (DKK 92m) or 13.0%.
The high return on the properties portfolio was
helped by a properties revaluation of DKK 80m
in Q1 and DKK 75m in Q4.
Equity and property investments totalled
DKK 4.1bn, while approximately DKK 2.2bn
were invested in credit bonds. The remaining
DKK 4.4bn were primarily invested in Nordic
covered bonds and Government bonds, including
inflation-linked bonds, where current yields
remain negative, putting downward pressure on
the return on the free portfolio and the overall
investment income.
Key figures – investments
DKKm
Q4 2018
Q4 2017
Free portfolio, gross return
Match portfolio, regulatory deviation
and performance
Other financial income and expenses
Total investment return
-198
-42
-90
-330
138
13
-65
86
Return – match portfolio
DKKm
Q4 2018
Q4 2017
Return, match portfolio
Value adjustments, changed discount rate
Transferred to insurance technical interest
Match, regulatory deviation and performance
Hereof:
Match, regulatory deviation
Match, performance
138
-126
-54
-42
-19
-23
83
-26
-44
13
11
2
2018
-33
-2
-297
-332
2018
200
7
-209
-2
-2
0
2017
598
227
-298
527
2017
289
122
-184
227
98
129
28
Annual report 2018 | Tryg A/S |
Match portfolio
The result of the match portfolio is the difference
between the return on the match portfolio and the
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 difference
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 slightly negative
contribution of DKK -2m (DKK 98m) as the yield
difference between Danish and Euro swap rates
was virtually unchanged. The regulatory deviation
is sensitive to the yield spread, but as the hedge
portfolio has switched to a higher degree of Euro
swaps, the sensitivity is lower.
The most important driver of the performance
result is the difference in yields between Danish,
Norwegian and Swedish covered bonds and
equivalent swap rates. If spreads narrow
(versus swap rates), the overall performance is
positive; otherwise the overall performance is
negative. The per formance made a contribu-
tion of DKK 0m (DKK 129m) as Nordic covered
bonds, were broadly flat against the swap curve,
looking at the full-year development. Tryg has
previously mentioned that normalised long-term
expectations for the match portfolio should be
around zero.
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 shareholders’
equity, the cost of running the investment oper-
ations and the new accounting standard related
to leasing (IFRS 16). Other financial income and
expenses totalled DKK -297m (DKK -298m) for
FY 2018. In a newsletter published in the summer
of 2016 (Modelling investment income), Tryg wrote
Return – free portfolio
DKKm
Q4 2018
Q4 2018 (%)
Q4 2017
Q4 2017 (%)
2018
2018 (%)
2017
2017 (%)
31.12.2018
31.12.2017
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/Total investment
4
5
1
-4
-8
-35
21
-16
-284
102
-198
0.1
0.1
0.2
-0.6
-1.7
-3.7
-0.3
-14.9
4.7
-1.9
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
-3
13
-10
-34
-33
-23
-3
-93
-212
272
-33
-2.9
0.3
-2.0
-4.4
-6.7
-2.5
-1.4
-10.8
13.0
-0.4
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
198
3,696
493
820
484
862
47
6,600
1,842
2,238
327
4,111
547
935
595
791
159
7,465
2,185
1,715
10,680
11,365
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 derivatives contracts of DKK 235m.
Contents – Management’s review
29
Annual report 2018 | Tryg A/S |
Financial highlights Q4 2018
Investment return of
DKK -330m
Free portfolio result
DKK -198m
Equities
-14.9% return
Match portfolio
DKK -42m
that the ‘other financial income and expenses’ line
should have a quarterly negative impact of ap-
proximately DKK -50m. In its Q3 2018 report, Tryg
added that considering the new lease accounting
standard and the increased interest expenses on
the subordinated loans, the overall ‘other financial
income and expenses’ result is now expected to
exceed DKK -60m on a quarterly basis.
Investment activities in Q4 2018
The last quarter of 2018 was characterised by very
volatile developments especially in equity markets.
Tryg’s equity portfolio returned DKK -284m
(DKK 112m) or -14.9% for the quarter, dominated
by a spike in the CBOE Volatility Index (VIX), a key
measure of market expectations of near-term
volatility in equity markets. The geo-political
backdrop was challenging driven by the continu-
ous talk of a trade war between the USA and China,
public criticism by the US President to the Chair of
the Federal Reserve about the direction of US inter-
est rates as well as more geo-political troubles in
France and Italy.
segments (small asset classes for Tryg). Finally, the
property portfolio made a positive contribution of
DKK 102m (DKK 25m) in the quarter, helped by a
property revaluation of DKK 75m in Q4.
The match portfolio had a negative result in
both its components, regulatory deviation and
performance. The regulatory deviation produced a
DKK -19m (DKK 11m) result as Danish swap rates
widened 4 basis points vs the Euro swap rates,
while the performance component produced a
DKK -23m (DKK 2m) result as Nordic covered-
bonds spreads also widened in the quarter,
primarily in Denmark and Norway.
Other financial income and expenses was
DKK -90m (DKK -65m), a somewhat higher level
than normalised expectations. Increased interest
expenses on loans (Tier 1 & Tier 2 loans), higher
leasing costs (IFRS 16 accounting standard on
leasing) and a write-down of a couple of minor stra-
tegic investments explain most of the difference
compared to Q4 2017.
Brexit uncertainty was at its peak as well during
the month of December, while a key parliamentary
vote is expected to the beginning of January 2019.
The fixed-income portfolio also returned a small
loss of DKK -16m (DKK 1m), driven primarily by
turbulence in the high-yield and emerging-markets
The overall investment result in Q4 was DKK -330m
(DKK 86m), where the vast majority of the large
swing (vs Q4 2017) can be explained by very differ-
ent developments in equity markets. Tryg’s equity
port folio returned -14.9% in Q4 2018 (DKK -284m)
against 4.3% in Q4 2017 (DKK 112m).
Contents – Management’s review
30
Annual report 2018 | 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 as-
sociated capital requirements therefore constitute 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.
(DKK 11bn). The objective is for the return on the
match portfolio to be as close as possible to zero as
capital gains and losses on the assets side should
be mirrored by corresponding developments on
the liabilities side. The free portfolio is intended to
produce the maximum risk-adjusted return. The
investment risk associated with the free portfolio is
managed through limits on exposures within each
asset class (bonds, shares, properties etc.).
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 relatively stable markets (Nordic
non-life markets), while almost 60% of premiums
(including the Alka book) are in the Private segment.
Quarterly fluctuations are driven mainly by large
claims and weather events, and reinsurance is used
extensively to stabilise the overall earnings level.
Investment risk
Invested assets are split into a match portfolio
(DKK 29bn) and a free investment portfolio
Contents – Management’s review
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, performed risk
identification routines, prepared 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 60.
Solvency Financial Condition Report (SFCR)
European insurers had to publish SFCR reports for
the first time in 2017, and Tryg was one of the first
companies to publish its SFCR report in May 2017.
Tryg is focused exclusively on non-life insur-
ance, it is mainly present in only three countries
(Denmark, Norway and Sweden), and it has a
fairly simple legal structure, which means that
the SFCR report contains very little additional
information compared to larger European peers,
which typically offer both life and non-life insur-
ance, which are present in many countries and
have more complex legal structures. The addition-
al information includes a geographical breakdown
of capital charges, a balance sheet according to
Solvency II as opposed to IFRS (statutory financial
statements), and SCR (Solvency Capital Require-
ment) components as per the end of 2017. The
publication of Tryg’s SFCR report attracted a lot of
attention in the insurance industry in 2017 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 these measures
as the company is a pure non-life insurer with
relatively short-term liabilities. In 2018, the report
attracted less focus as analysts/investors have
grown accustomed to the new solvency regime.
Capital management
Capital management is based on Tryg’s partial in-
ternal capital model, which was approved by the
Danish FSA in November 2015. Tryg has mod-
elled 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.
The solvency ratio is defined as own funds divided
by the Solvency Capital Requirement.
The key components of Tryg’s own funds are
shareholders’ equity, qualifying debt instruments
(both Tier 1 and Tier 2 debt) and future profit,
while all intangibles are deducted in the calcula-
tion. Both the Tier 2 and the Tier 1 capacity has
been virtually fully utilised; currently some
Solvency Capital Requirement
DKKm
6,000
5,000
4,000
3,000
2,000
1,000
0
4,684
4,892
Q4 2017
Q4 2018
31
Annual report 2018 | Tryg A/S | DKK
Tryg will pay a Q4 dividend
of DKK 1.65 per share
on January 25
DKK 140m of Tier 2 instruments are not included
in the own funds as they exceed the 50% SCR limit.
Tryg announced the Alka acquisition in December
2017 and raised DKK 4bn of ‘new’ equity right after
the transaction. In 2018, own funds have primar-
ily been impacted by the net profit and dividend
payments. The Alka acquisition was completed on
8 November 2018, hence in the last quarter of the
year intangibles were up by approximately
DKK 5.7bn. The future profit item has increased
from DKK 970m to DKK 1,408m following the in-
tegration of the highly profitable Alka business and
an initial conservative approach concurrently with
improved profitability of the underlying business.
Own funds totaled DKK 8,058m at the end of 2018
vs DKK 13,162m at the end of 2017.
The Solvency Capital Requirement (SCR) is calcu-
lated in such a way that Tryg statistically should
be able to honour its obligations in 199 out of 200
years. In other words, Tryg could have a negative
result greater than DKK 4,892m (the SCR) in 1 out
of 200 years. Tryg’s SCR was DKK 4,892m at the
end of 2018, up approximately DKK 200m from the
end of 2017. The consolidation of the Alka business
resulted in a stand-alone increase of the SCR of
just below DKK 400m, while a lower capital charge
on equities, following the negative markets in Q4,
reduced the SCR by approximately DKK 250m.
Contents – Management’s review
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’ compensa-
tion in the partial internal model reduced the SCR by
approximately DKK 100m in Q4 2017, 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 sensitivity towards
capital market movements. The highest sensitivity is
towards spread risk, where a widening/tightening of
100 basis points will impact the solvency ratio by 14
percentage points. A lower sensitivity is displayed
towards equity market falls and interest rate fluctua-
tions. A change in the UFR (Ultimate Forward Rate)
will have an insignificant impact. This is unsurpris-
ing, considering that Tryg underwrites only non-life
risks with a relatively short duration.
Tryg will pay a Q4 dividend of DKK 1.65 per
share on 25 January 2019, which is in line with
Q1, Q2 and Q3 levels, and also in line with Tryg’s
policy of paying out a stable quarterly dividend.
The full-year dividend is therefore DKK 6.60 per
share, equivalent to a total distribution of just
below DKK 2bn. In March 2018 Tryg also paid
an extraordinary dividend (announced at CMD in
November 2017) of DKK 1bn.
Capital planning and contingency plan
In conjunction with the capital planning, a contin-
gency plan is made. It describes specific meas-
ures that may be introduced in the near term,
should the company’s desired capital position
be threatened. Tryg’s Supervisory Board has ap-
proved both the capital plan and the contingency
plan. Read more about Tryg’s risk and capital
management in note 1 on page 60.
Ordinary and extraordinary dividend
The Supervisory Board regularly assesses the
capital structure of the company in light of future
internal earnings forecasts and balance sheet
needs. The projections include initiatives set out in
the company’s strategy for the coming years, and
are based also on the most significant risks identi-
fied by the company. The adequacy is measured in
relation to Tryg’s strategic targets, including return
on equity and dividend policy.
Moody’s rating
Tryg has an ‘A1’ (stable outlook) insurance
financial strength rating (IFSR) 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 assigned an ‘A3’ rating
to Tryg’s subordinated debt and a ‘Baa3’ rating
to Tryg’s Tier 1 transaction. The ratings were
affirmed following the Alka acquisitions.
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
6.6
2014
2015
2016
2017
2018
Ordinary dividend
Extraordinary buy back
Extraordinary dividend
Own funds
DKKm
15,000
12,000
9,000
6,000
3,000
0
13,162
8,058
Q4 2017
Q4 2018
32
Annual report 2018 | Tryg A/S | Investor information
Investor Relations (IR) is responsible for Tryg’s com-
munication 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 invest-
ors, fixed-income investors and rating agencies.
See Tryg’s IR policy at tryg.com > governance
After the publication of quarterly and annual
reports, Tryg’s management and IR team travel
extensively to meet with shareholders and potential
investors. Quarterly analyst presentations are held
in Copenhagen and London. Tryg also attends vari-
ous financial conferences. In 2018, we held around
300 investor meetings – mostly one-to-ones and
some group meetings in Europe, the USA, Canada
and Asia. The Tryg share is covered by 21 analysts,
who continuously update their recommendations
and earnings forecasts. Tryg hosts an annual ana-
lysts day, while more in-depth capital market days
are hosted every three years.
See a list of analysts and their recommendations
at tryg.com > investor > share > analysts
The Tryg share
The Tryg share is listed on NASDAQ Copenhagen.
Company announcements and transaction state-
ments 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
The Tryg share started the year at a price of
DKK 156.0 and ended 2018 at DKK 163.9. The
total return (price and dividends) of the share was
12.4%. The positive share price development was
driven primarily by high earnings stability and an
improved underlying financial performance. 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. Tryg has a relatively simple business
model and a transparent capital position, which is
highly appreciated by analysts and investors.
NASDAQ Copenhagen remains the primary
exchange for trading in the Tryg share. In 2018,
NASDAQ Copenhagen accounted for 65% of the
turnover of Tryg shares. This means that approxi-
mately 35% of all trading in 2018 took place
on alternative exchanges. Daily turnover on
NASDAQ averaged DKK 81m, and average daily
volume was 535,198.
Share capital and ownership
Tryg’s share capital totalled 1,510,739,955 on
31 December 2018. It comprises one share class
(302,147,991 shares with a nominal value of
DKK 5), and all shares rank pari passu. The num-
ber of shares was increased by 27,400,000 after
the Alka acquisition. 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, supporting
hundreds of activities that contribute to creating
peace of mind, such as coastal lifeguards, cuddle
bears for children in hospitals and defibrillators.
Behind TrygFonden is TryghedsGruppen, which
owns 60% of the shares in Tryg and which
contributed DKK 600m to projects that create
peace of mind in all parts of Denmark in 2018.
TryghedsGruppen
In 2018 and for the third year running, Tryg’s majority
shareholder, TryghedsGruppen, paid out a member
bonus to Tryg’s customers in Denmark corresponding
to 8% of the annual premiums paid for 2017.
TrygFonden
TrygFonden is the leading and most well-known
peace of mind supporter in Denmark, supporting
hundreds of 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 2018.
TryghedsGruppen
In 2018, for the third 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 2017.
Contents – Management’s review
33
Annual report 2018 | Tryg A/S | Financial calender 2019
Shareholders
at 31 December 2018
23 Jan. 2019
Tryg shares are traded
ex-dividend
25 Jan. 2019
Payment of Q4 dividend
15 Mar. 2019 Annual general meeting
10 Apr. 2019
Interim report Q1
11 Apr. 2019
Tryg shares are traded
ex-dividend
15 Apr. 2019
Payment of Q1 dividend
10 July 2019
Interim report Q2 and H1
11 July 2019
Tryg shares are traded
ex-dividend
15 July 2019 Payment of Q2 dividend
10 Oct. 2019
Interim report
Q3 and Q1-Q3
13
Per cent
60
16
11
TryghedsGruppen
Large Danish
shareholders a)
Large international
shareholders a)
Small shareholders
a) Shareholders holding more than 10,000 shares.
Free float – geographical distribution
at 31 December 2018
9
25
Per cent
41
Denmark
UK
USA
Others
11 Oct. 2019
Tryg shares are traded
ex-dividend
25
15 Oct. 2019 Payment of Q3 dividend
Free float is exclusive of TryghedsGruppen.
Shareholder distribution
DKKm
Dividend
Dividend per share (DKK)
Payout ratio
Extraordinary share buy back
Extraordinary dividend
Extraordinary dividend per share (DKK)
2018
1,994
6.6
115%
0
0
0
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
Quarterly dividends started in 2017
Tryg started paying quarterly dividends in 2017.
The Tryg share has a distinct income profile in that
the business generally grows in line with GDP,
producing high margins, which are mostly returned
to shareholders. 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 is 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:
• An aspiration to distribute a nominal, stable
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 those 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
15 March 2019 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 2019 and will be sent to shareholders
upon request.
The annual general meeting will also be
announced at tryg.com
The company announcements published
in 2018 can be seen at tryg.com >
announcements
Contents – Management’s review
34
Annual report 2018 | Tryg A/S |
Corporate governance
Tryg focuses on managing the company in ac-
cordance with the principles of good corporate
governance 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 meet-
ings, conference calls and participates in conferences
in Denmark and abroad. IR also communicates with
stakeholders on social media via Twitter@TrygIR.
The Supervisory Board is informed about the
dialogue with investors and other stakeholders on
a regular basis. Tryg has an IR policy, which states,
among other things, that all company announce-
ments 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 ad-
dressed to Tryg’s private shareholders, customers,
employees and other stakeholders and will be
published on 5 February 2019.
Moreover, Tryg prepares quarterly investor pres-
entations, which are used in our dialogue with
investors and analysts. Tryg also publishes IR news-
letters on relevant topics on a regular basis. All an-
nouncements, 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 number of
internal guidelines ensure that the disclosure of
price-sensitive information complies with legisla-
tion 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 > Governance >
Policies > IR 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 AGM, and may ask questions before and at the
meeting. Shareholders may vote in person at the
AGM, 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 the 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 Supervi-
sory 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.
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 Supervi-
sory Board on strategies and action plans, market
developments and Group performance, funding
issues, capital resources and special risks.
The Supervisory Board holds one annual strategy
seminar to decide on and/or adjust the Group’s
Contents – Management’s review
35
Annual report 2018 | Tryg A/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.
Eight members of the Supervisory Board were
elected by the annual general meeting for a term
of one year. Of the eight members elected at the
annual general meeting, five, and thus the majority,
are independent persons, thus complying with
recommendation 3.2.1. in the Recommendations
on Corporate Governance, while the other three
members are dependent persons as they are ap-
pointed by Tryg’s majority shareholder, Trygheds-
Gruppen. See pages 41-42 for information on
when the individual members joined the Supervi-
sory Board, were re-elected and when their current
election period ends. To ensure continuity and
integration of new talent on the Supervisory Board,
members elected by the annual general meeting
may hold office for a maximum of 12 years. The
Supervisory Board has 12 members, seven men
and five women (currently including two male and
two female employee representatives).
The representation of women in Tryg’s Supervi-
sory Board is thus compliant with legislation as
well as Tryg’s policy. The Supervisory Board has
members from Denmark, Sweden and Norway.
See details about the independent board mem-
bers in the section Supervisory Board on pages
40-42 and at tryg.com > Governance
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: Intellectual approach, independ-
ent mindedness, interpersonal competencies,
integrity, inclination to engage, business under-
standing and judgement, problem-solving skills,
networking skills, risk management understanding,
ability to assess succession management, general
top management experience, finance and/or audit
experience, HR/management/talent/organisation-
al experience, business development experience,
financial sector experience, risk management and
regulatory requirement experience, insurance –
commercial and product, insurance – technical
(underwriting, provisions, reinsurance), digital
experience, experience with new business models
and customer relations and interaction experience.
See CVs and descriptions of the skills in the
section Supervisory Board on pages 40-42
and at tryg.com > Governance
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 comprising relevant
policies, guidelines and instructions describing
reporting requirements and requirements for com-
munication with the Executive Board. Financial
legislation also requires the Executive Board to
disclose all relevant information to the Supervi-
sory Board and report on compliance with limits
defined by the Supervisory Board and in legislation.
The Supervisory Board considers the composi-
tion, 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
ascribes great importance to diversity at all man-
agement 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 2018, the share of women at management
level was 33% against 37% in 2017. The target
for 2018 of 38% or more women at management
level was therefore not met. Compared to 2017,
the number of women in management positions
decreased by three. In 2018, Tryg increased the
total number of management positions and the
decrease in share of women in management po-
sitions is mainly due to organisational changes.
See the action plan at tryg.com
Board committees
Tryg has an Audit Committee, a Risk Committee,
a Nomination Committee, a Remuneration
Committee and an IT-Data Committee. The
frameworks for the committees’ work are
defined in their terms of reference.
See The board committees’ terms of reference
can be found at tryg.com > Governance >
Management > Supervisory Board > Board
committees, including descriptions of mem-
bers, meeting frequency, responsibilities and
activities during the year
See the tasks of the board committees in 2018
at tryg.com > Governance > Management >
Supervisory Board > Board committees
Contents – Management’s review
36
Annual report 2018 | Tryg A/S |
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 com-
mittees, are independent persons. Two out of the
four members of the IT-Data Committee, including
the chairman of the committee, are independent.
Of the four members of the Remuneration Com-
mittee, two members are independent persons,
and both 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.
for 2018 was adopted by the Supervisory Board
in January 2018, and approved by the annual
general meeting on 15 March 2018.
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 ap-
proval by the shareholders at the annual general
meeting.
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
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 Supervisory 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.
Total remuneration of the Supervisory Board in 2018
Audit
Risk
DKK
Fee Committee Committee Committee
IT-Data Remuneration
Committee
Total
Jukka Pertola
Torben Henning Nielsen
Jesper Hjulmand
Lene Skole
Mari Thjømøe
Carl-Viggo Östlund
Ida Sofie Jensen
Tina Snejbjerg
Lone Hansen
Tom Eileng
Anders Hjulmand
Elias Bakk
Jørgen Huno Rasmussen a)
1,033,548
720,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
360,000
226,452
225,000
150,000
150,000
150,000
210,000
140,000
140,000
140,000
140,000
140,000
140,000
140,000
140,000
a) Resigned from the Supervisory Board in March 2018
100,000
100,000
143,549 1,317,097
1,155,000
650,000
650,000
650,000
600,000
600,000
500,000
500,000
460,000
360,000
360,000
257,903
100,000
31,451
Contents – Management’s review
37
Annual report 2018 | Tryg A/S |
Remuneration of the Executive Board
Members of the Executive Board are employed
on a contractual basis, and all terms of their
remuneration are established by the Supervisory
Board within the framework of the approved
remuneration policy.
Tryg wants to strike an appropriate balance
between management remuneration, predictable
risk and value creation for the company’s share-
holders in the short and long term.
The Executive Board’s remuneration consists of
a base salary, a pension contribution of 25% of
the base salary and other benefits. The base sal-
ary 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.
Total remuneration of the Executive Board in 2018
DKK
Base salary
Pension
Car
allowance
Other
benefits
Total fixed
salary
Morten Hübbe
Lars Bonde
Johan Kirstein Brammer a)
Christian Baltzer b)
10,750,000
5,253,713
4,704,301
3,780,645
2,687,500
1,313,428
1,176,075
945,161
255,000
255,000
239,234
200,847
26,000
26,000
24,392
20,478
13,718,500
6,848,141
6,144,003
4,947,132
One-off fee
600,000 d)
600,000 d)
1,925,000 e)
240,000 d)
Share-based
remuneration c)
Total fee
4,481,377
2,237,059
2,133,460
-
18,799,877
9,685,200
10,202,463
5,187,132
a) Joined the Executive Board on 23 January 2018
b) Resigned from the Executive Board on 14 October 2018. One-off fee is a severence payment.
c) The maximum investment opportunity offered under the Matching Shares Programme at the beginning of 2019 (performance year 2018)
d) One-off fee related to the Alka acquisition
e) 1 January-8 November, Johan Brammer received a pay supplement of DKK 150,000 per month plus pension for managing two positions
as Head of Private Denmark and CCO.
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.
is based are still met at the time of matching). The
purpose of the Matching Shares Programme is to
ensure alignment of the interests of the Executive
Board and the company’s shareholders.
Each year the Supervisory Board evaluates the per-
formance of the Executive Board against the targets
defined by the Supervisory Board for the financial
year. The overall fulfilment of the weighted targets
determines the number of investment shares of-
fered to each member of the Executive Board.
The targets for 2018 were based on Tryg’s tech-
nical result, Transactional Net Promoter Score,
employee satisfaction levels, the incorporation
of Alka and the implementation of the strategy.
Read more about the Matching Shares
Programme in the remuneration policy
at tryg.com
The variable pay element consists of a Matching
Shares Programme. The Executive Board may buy
shares (so-called investment shares) in Tryg A/S
Matching is conditional upon fulfilment of ad-
ditional conditions such as continued employment
and back testing (testing prior to matching, to en-
sure that the criteria on which the variable salary
Contents – Management’s review
38
Annual report 2018 | Tryg A/S |
Financial reporting,
risk management and auditing
As an insurance business, Tryg is subject to the risk
management requirements of the Danish Financial
Business Act and Solvency II. The Supervisory
Board defines Tryg’s risk management framework
as regards insurance risk, investment risk, compli-
ance 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 consid-
ered by the Audit Committee, the finance manage-
ment 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 31-32 and in
Note 1 Risk management on page 60
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 2018. The purpose of the ORSA is to ensure
Contents – Management’s review
and demonstrate a link between strategy, risk
management, risk appetite, solvency and capital
planning over the planning period.
ers in the business areas carry out controlling
tasks for the risk management and compliance
functions.
The Supervisory Board and the Executive
Board approve and monitor the Group’s overall
policies and guidelines, procedures and controls
in important risk areas. They receive reports
about developments in these areas and about
the ways in which the frameworks are applied.
The Supervisory Board checks that the com-
pany’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.
Risk management is an integral part of Tryg’s busi-
ness 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 31-32 and in Note 1 on page 60
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
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 manag-
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. At least once a year, the audi-
tors meet with the Audit Committee without the
presence 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
planning, 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
number of independent members of board com-
mittees, with which Tryg complies partially, and
agreements on termination payments; see recom-
mendations 3.4.2. and 4.1.5. of the Recommenda-
tions on Corporate Governance.
The deviations are explained in Tryg’s statutory
corporate governance report, which is available
at tryg.com > Download
39
Annual report 2018 | Tryg A/S |
Supervisory Board
Lone Hansen (1966)
Employee representative
Chairman of the Association for
Tied Agents and Key Account Man-
agers in Tryg. Employed since 1990.
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. Chairman of
the Board of TryghedsGruppen.
Jukka Pertola (1960)
Chairman
Jukka Pertola has special skills in
the fields of management, insur-
ance, IT and digitalisation, commu-
nication and finance. Jukka Pertola
has more than ten years of board
work experience from companies,
foundations and organisations.
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.
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
Team Manager in Tryg.
Employed since 2006.
Tom Eileng (1954)
Employee representative
Deputy chairman of Finansforbundet
Tryg and Senior Commercial Adviser.
Employed since 1986.
Ida Sofie Jensen (1958)
Board member
Has experience from business
operations and the healthcare sec-
tor as well as management, strategy,
politics and finance. Deputy Chair-
man of TryghedsGruppen.
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. Deputy Chairman of
TryghedsGruppen.
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.
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.
40
Annual report 2018 | Tryg A/S | Supervisory Board
Jukka Pertola
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, Tryg A/S and Tryg
Forsikring A/S, IoT Denmark A/S, Monsenso ApS.
Board seats, Deputy Chairman: Cowi Holding A/S.
Board member: Industriens Pensionsforsikring A/S.
Committee membership: IT-Data Committee in Tryg A/S. chair-
man in nomination committee and remuneration committee,
Remuneration and Nomination Committee (Chairman) in LEO
Pharma A/S.
Number of shares held: 4,000
Change in portfolio 2018: +2,800
Torben Nielsenb)
Deputy Chairman
Born in 1947. Joined the Supervisory Board in 2011.
Danish citizen.
Career: Professional board member, Adjunct Professor at
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, Ny Holmegaard Fonden, Ny
Holmegaard Værk, Investeringsforeningen Sparinvest, Vording-
borg Borg Fund and KTIF (Kapitalforeningen Tryg Invest Funds).
Board seats, Deputy Chairman: Tryg A/S and Tryg Forsikring A/S.
Board member: Sampension AKP Livsforsikring A/S and member
of the Executive Management of Bombebøssen (pension fund).
Committee memberships: Audit Committee (Chairman), Risk
Committee (Chairman) and Nomination Committee in Tryg,
Risk Committee (Chairman) in Sydbank and Remuneration and
nomination committee at Sampension (Chairman).
Number of shares held: 27,000
Change in portfolio 2018: +6,000
Contents – Management’s review
Elias Bakk
Born in 1975. Employee representative. Joined the Supervisory
Board in 2017. Swedish citizen. Employed since 2006.
Career: Team Manager Elkjöp Claims NO.
Education: Norrea Real Gymnasium.
Education at ‘Forsikringsakademiet’ for new board members.
Number of shares held: 670
Change in portfolio 2018: 0
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.
Committee memberships: IT-Data Committee in Tryg A/S.
Number of shares held: 898
Change in portfolio 2018: +148
Jesper Hjulmanda)
Born in 1963. Joined the Supervisory Board in 2010.
Danish citizen.
Career: CEO of SEAS-NVE A.m.b.A.
Education: MSc (Economic and Business Administration),
Lieutenant-Colonel Royal Danish Air Force Reserve, Pathfinder
and MBA module ’Strategic business understanding’ (SDU).
Board seats, Chairman: Cerius A/S, Energy Denmark A/S,
Fibia P/S and TryghedsGruppen smba.
Board member: Tryg A/S, Tryg Forsikring A/S, SEAS-NVE Holding
A/S and Central Board of the Confederation of Danish Industry.
Committee memberships: Audit Committee, Nomination
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 2018: 0
Ida Sofie Jensena)
Born in 1958. Joined the Supervisory Board in 2013.
Danish citizen.
Career: Group Managing Director of Lif (Medicine and Health-
care 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 (cand.scient.pol.), European
Health Leadership Programme INSEAD, Executive Management
Programme INSEAD, Executive Program Columbia Business
School, Executive Program Singularity University.
Board seats, Deputy Chairman: Hans Knudsen Instituttet
(business trust).
Board member: Tryg A/S, Tryg Forsikring A/S and Trygheds-
Gruppen Smba.
Committee memberships: Remuneration Committee and
IT-Data Committee in Tryg A/S.
Number of shares held: 2,368
Change in portfolio 2018: 0
Committee meetings overview 2018
Name
Jukka Pertola
Torben Nielsen
Elias Bakk
Lone Hansen
Jesper Hjulmand
Ida Sofie Jensen
Supervisory
Audit Nomination
Board Committee Committee Committee
Risk Remuneration
IT-Data
Committee Committee
9/9
9/9
9/9
9/9
9/9
8/9
6/6
4/6
2/2
2/2
6/6
4/6
6/6
6/6
3/3
3/3
2/3
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.
41
Annual report 2018 | Tryg A/S |
Supervisory Board
Lene Skoleb)
Born in 1959. Joined the Supervisory Board in 2010. Danish citizen.
Career: CEO of Lundbeckfonden (+ Lundbeckfond Invest A/S).
Education: The A.P. Møller Group International Shipping Educa-
tion, 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 and Falck A/S.
Board member: Tryg A/S and Tryg Forsikring A/S.
Committee memberships: Audit Committee and Risk Committee
in Tryg, Audit, Scientific & Nomination Committee in ALK-Abelló
A/S, Scientific and Remuneration Committee in H. Lundbeck A/S,
Remuneration Committee in Falck A/S and Nomination
and Remuneration Committee in Ørsted A/S.
Number of shares held: 7,025
Change in portfolio 2018: 0
Tom Eileng
Born in 1954. Employee representative. Joined the Supervisory
Board in 2016. Norwegian citizen. Employed since 1986.
Career: 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 A/S.
Number of shares held: 468
Change in portfolio 2018: +148
Tina Snejbjerg
Born in 1962. Employee representative. Employed since 1987.
Joined the Supervisory Board in 2010. Danish citizen.
Career: Officer of Tryg’s Personnel Department.
Education: Insurance training.
Board member: Tryg A/S and Tryg Forsikring A/S.
Committee memberships: Audit Committee in Tryg and
the Central Board of Forsikringsforbundet.
Number of shares held: 898
Change in portfolio 2018: +148
Contents – Management’s review
Anders Hjulmanda)
Born in 1951. Joined the Supervisory Board in 2016. Danish citizen.
Career: 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, Danish Label Coating A/S, Friis & Moltke A/S,
Nordjyske Jernbaner A/S, Palle Mørch A/S, Pava Produkter A/S,
Seafood Danmark A/S, Scan Fish Danmark A/S, Thor Fisk A/S,
Lerøy Schlie A/S, PSC A/S, P. Taabell & Co., Hanstholm A/S, GF
Inveco A/S, PM Holding ApS and a number of subsidiaries.
Board seats, Deputy Chairman: TryghedsGruppen Smba,
CPS A/S and Utzon Foundation.
Board member: Tryg A/S and Tryg Forsikring A/S, FDE Fonden,
Effer Krancenter A/S, Sawo A/S and TryghedsGruppen smba.
Number of shares held: 3,622
Change in portfolio 2018: 0
Carl-Viggo Östlundb)
Born in 1955. Joined the Supervisory Board in 2015. Swedish citizen.
Career: CEO of Allert Östlund AB, 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, Irisande Care
Group AB, Hypoteket AB, Papilly AB, Ponture AB, Juvinum Food &
Beverage AB, Ywonn Media Group AB.
Board member: DBT Capital AB, Havsgaard AB, Holmö Fastigheter
AB, Tryg A/S, Tryg Forsikring A/S, Wonderbox AB.
Committee memberships: Remuneration Committee and
IT-Data Committee in Tryg.
Number of shares held: 1,810
Change in portfolio 2018: +580
Mari Thjømøeb)
Born in 1962. Joined the Supervisory Board in 2012.
Norwegian citizen.
Career: Professional board member and independent adviser.
Education: MSc in Economics and Business Administration,
Chartered Financial Analyst (CFA) as well as Senior Executive
Programme from London Business School and Effective Board
Management from Harvard Business School.
Board seats, Chairman: Seilsport Maritimt Forlag AS, TF Bank AB
and ThjømøeKranen AS.
Board seats, Deputy Chairman: Norconsult A/S and Norconsult
Holding.
Board member: Tryg A/S, Tryg Forsikring A/S, Norconsult as,
Nordic Mining ASA, Forskningskonsernet Sintef, Sintef AS,
Scatec Solar ASA, Hafslund E-CO AS and Ice ASA.
Committee memberships: Chairman of the Audit Committee in
Norconsult and the Remuneration Committee in TF Bank AB.
Member of Tryg's Audit Committee and Risk Committee, the Audit
Committees in Scatec Solar ASA, TF Bank AB, Hafslund E-CO and
Ice ASA.
Number of shares held: 3,900
Change in portfolio 2018: +600
Committee meetings overview 2018
Name
Lene Skole
Tom Eileng
Tina Snejbjerg
Anders Hjulmand
Mari Thjømøe
Carl-Viggo Östlund
Supervisory
Audit Nomination
Board Committee Committee Committee
Risk Remuneration
IT-Data
Committee Committee
9/9
9/9
8/9
9/9
9/9
9/9
6/6
6/6
6/6
6/6
6/6
6/6
6/6
3/3
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.
42
Annual report 2018 | Tryg A/S |
Executive Board
Contents – Management’s review
43
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 seats, Chairman: Alka.Board seats, Deputy Chairman: Kapitalforeningen Tryg Invest Funds.Board member: Simcorp A/S and KBC BV.Number of shares held: 162,099 Change in portfolio in 2018: +25,895Johan Kirstein Brammer Group CCOBorn in 1976. Joined Tryg in 2015. Joined the Executive Board in 2018.Education: LL.M., MBA, Graduate Diploma in Finance.Board member: TJM Forsikring and Alka.Number of shares held: 11,489Change in portfolio in 2018: +4,361Lars BondeGroup COOBorn in 1965. Joined Tryg in 1998. Joined the Executive Board in 2006.Education: Insurance training, LL.M.Board seats, Chairman: P/F Betri Trygging, Tryg Livsforsikringsselskab A/S.Board seats, Deputy Chairman: Alka.Board member: Danish Employers’ Association for the Financial Sector, TJM, Forsikringsakademiet, the Danish Insurance Association and cphbusiness (Copenhagen Business Academy).Number of shares held: 58,974Change in portfolio in 2018: +9,007Annual report 2018 | Tryg A/S | Corporate Responsibility in Tryg
Statutory Corporate Responsibility report
Tryg has been a signatory member to the UN
Global Compact since 2008. Our 2020 Corporate
Responsibility strategy focuses on three areas –
Peace of mind in society, Responsible workplace
and Customer relations – and is closely linked to
our business model (see page 11). In 2018, Tryg’s
Corporate Responsibility policy was updated to
further clarify its alignment with our purpose ‘As
the world changes, we make it easier to be tryg’a)
and to establish a closer link to our Corporate
Responsibility strategy.
Claims prevention is a central part of Tryg’s 2020
corporate strategy and our Corporate Responsibil-
ity efforts. Our ambition is to minimise and prevent
the number of claims by integrating prevention
initiatives into our insurance products.
In addition to this Corporate Responsibility sec-
tion, we have published an independent Corporate
Responsibility report with extended Environmen-
tal, Social and Governance (ESG) data.
Download the Corporate Responsibility
report
Peace of mind in society
Nightravens
As part of our efforts to create peace of mind in so-
ciety, we are committed to running the Nightravens
secretariat in Norway. The Nightravens are local
groups of volunteers who walk the streets at night
offering help and preventing unwanted incidents.
There are more than 300 groups of Nightravens
in Norway made up of a diverse mix of volunteers
in terms of their nationality, gender and age.
Lifebuoys
Since 1952, Tryg’s iconic lifebuoys have contrib-
uted to safety along the coastline, lakes and rivers
in Norway. The lifebuoy is a vitally important piece
of rescue equipment, and for decades, Tryg has
provided lifebuoys to Norwegian society. Tryg’s
43,000 lifebuoys are located from Lindesnes in
southern Norway to Svalbard, the Norwegian
archipelago in the Arctic Ocean.
and give the children a chance to experience being
in the cold water wearing wetsuits and life jackets,
while being supervised by skilled instructors. The
courses focus on understanding the risks associ-
ated with water, on practising first aid and learning
the key principles of self-rescue and lifesaving.
Learning to throw Tryg lifebuoys is also an import-
ant part of the course.
Responsible workplace
In 2018, Tryg conducted an internal assessment
of the 17 UN Sustainable Development Goals
(SDGs) and the assosiated169 targets. As one of
the largest non-insurance companies in the Nordic
region, we have a responsibility and an opportu-
nity of making an impact on the SDGs and use our
expertise to help realise the goals. See our 2018
independent Corporate Responsibility report for
further information on methodology and selected
targets.
Safe in water
In 2018, Tryg partnered with the Norwegian
Society for Sea Rescue, Region West, to offer a
course called ‘Safe in water’. The course is aimed
at 12 to 14-year-old schoolchildren. The courses
are run eight times a year, in autumn and winter,
Workplace responsibility
Our employees are our most valuable resources
and key to providing competent and high-quality
services to our customers. The well-being of
our employees is vital to Tryg, as is protecting their
right to a healthy and safe working environment.
Through our materiality assessment, it has
become clear that there is a risk that Tryg can
have adverse impacts on its employees through,
for example, dissatisfaction, discrimination or the
physical or psychosocial working environment.
To mitigate this risk, we are continuously working
to improve conditions for our employees.
Tryg has collective bargaining agreements in the
Scandinavian countries where more than 99% of
our employees are employed. The majority of our
Scandinavian employees are covered by these
agreements, and the remaining employees are on
individual contracts. All Tryg employees are covered
according to national standards and requirements.
Acknowledging that our business must evolve
and develop in the digital age, we realise that this
may potentially have an adverse impact on our
employees. Tryg mitigates the adverse impact
through external outplacement programmes,
while ensuring that many reductions in employee
numbers take the form of natural departures.
Employee satisfaction
The annual employee satisfaction survey
measures employee satisfaction and monitors
a) ’Tryg’ means feeling protected and cared for.
Contents – Management’s review
44
Annual report 2018 | Tryg A/S |
the development in employee satisfaction levels.
Processes are in place to ensure that low-scoring
departments receive clear guidance and support,
and that action plans are made. In 2018, the over-
all employee satisfaction score was 78, up from 76
in 2017. It proofs that our efforts are working, and
we will continue this focus going forward.
positions is mainly due to organisational changes.
When recruiting, we focus on getting the best
competencies for the job. Going forward, we will
continue our efforts on attracting women for
management positions.
General action plan for Women in Management
A diverse company and a driver of change
Women in management positions remain a con-
tinuous focus area in Tryg. To support our target,
we focus specifically on our recruitment process,
while an internal rotation programme is in place
to improve conditions and career opportunities
for talented women and men.
Tryg remains a committed member of the Danish
Diversity Council to help inspire and grow the num-
ber of women in management positions. To inspire
positive role models in Tryg, our LeadThe Future
programme encourages female managers to act
as role models by sharing their experiences and
knowledge about their own career choices.
To further boost and encourage women in
management positions, Tryg has an action plan,
which is revised annually, outlining actions to
support our target of increasing the number of
women in management positions. In 2018,
we raised our target from 38% to 41% in 2020.
In 2018, the share of women in management
positions was 33%, a decrease of 4 percentage
points compared to 2017 hence we did not
meet our target of 38%. Compared to 2017, the
number of women in management positions
decreased by three. In 2018, Tryg increased the
total number of management positions and the
declining in share of women in management
Contents – Management’s review
Employee mix
%
60
50
40
30
20
10
0
Men
Women
Age
<30
years
Age
30-49
years
Age
>50
years
Flexi job
Tryg's Supervisory Board has an equal gender
distribution. Read more in the Corporate
Governance section on page 35-36.
In Tryg, we do not accept discrimination based on
gender, age, ethnicity etc., and work actively to
nourish an open-minded culture. Tryg additionally
has a diverse workforce representing the society
we are part of.
See Tryg’s Competency and diversity policy
Strengthening our employees
Tryg offers training, e-learning and education to
our employees as well as identifying career op-
portunities through our People Review to ensure
development and capacity building.
It is important to maintain a healthy work-life bal-
ance, and we aim to be a flexible workplace where
it is possible to balance your career and family life.
Human rights and responsible
supply chain management
Tryg respects human rights as described in the
Universal Declaration of Human Rights. Our
commitment is enforced through our signatory
membership of the UN Global Compact and is
outlined in our Corporate Responsibility policy
as well as Tryg’s Code of Conduct.
Our materiality assessment indicated that there is
a risk of violating human and labour rights in our
supply chain through our outsourcing activities.
To mitigate any violations, we actively monitor
our outsourcing suppliers and seek constructive
dialogue. Prior to signing a supplier contract, all
suppliers undergo a preapproval process. Our
suppliers are required to sign our Code of Conduct
which outlines our expectations for our business
relations.
Tryg has established a process for auditing our
outsourcing suppliers to ensure that any potential
or actual adverse impacts and risks in our supply
chain are handled. All outsourcing suppliers are
asked to fill out a self-assessment questionnaire
prior to a scheduled on-site audit. If the on-site
audit reveals any potential red flags, it will lead to
an action plan and follow-up dialogue. If a supplier
does not comply with the requirements imposed
by Tryg, we will engage in dialogue to ensure
improvement. In case of repeated failed attempts
at collaboration, Tryg can terminate the contract as
a final resort.
In 2018, our audits revealed no violations or red
flags among our audited high-risk outsourcing
suppliers.
45
Annual report 2018 | Tryg A/S | The process continues in 2019, and all outsourcing
suppliers are expected to be audited by 2020.
To support the new audit process, Tryg launched a
training programme for procurement employees
and auditors in 2018, to build capacity for identify-
ing actual or potential violations on site. The train-
ing sessions are held annually.
See Tryg’s Corporate Responsibility policy
and Code of Conduct
Carbon emissions
Tonnes
6,000
5,000
4,000
3,000
2,000
1,000
0
Electricity
Heating
oil
Air and
train travel
Car
District
heating
Total
2018
2017
The carbon emissions chart covers both Norway and
Denmark; air and train travel also include Sweden while
car only applies for Denmark.
Climate and environmental responsibility
Tryg has a direct impact on the climate and
the environment through our operations, and
indirectly through our business activities. We have
focused our efforts on our internal operations and
on initiatives aimed at improving our footprint,
while also reducing costs. Although Tryg is not
an energy-intensive company since our carbon
emissions are mainly associated with heating and
electricity use at our offices, car and air travel, we
acknowledge that we are part of the solution to
minimising carbon emissions. One of the areas in
which Tryg has a potential adverse impact on the
environment is waste production, which is why
we are committed to reducing waste.
Our materiality assessment showed that the
climate and the environment are material issues
for Tryg and for our stakeholders. Extreme weather
events such as flooding, cloudbursts and storms
present a risk to Tryg and are causing harm and
concern to our customers and to society in gen-
eral. Tryg’s Corporate Responsibility policy further
outlines our commitment to minimising our own
environmental footprint.
to reduce air travel and offering electric cars for
external meetings.
In 2018, we installed more electric chargers at
our offices in Ballerup, Denmark and Bergen,
Norway to encourage our employees to switch
to electric cars. Tryg additionally participates in a
mobility network with the Municipality of Ballerup
to discuss solutions aimed at improving public
transport.
We continuously work to minimise and sort our
waste at local waste stations to reduce waste
volumes. In 2018, several new initiatives to reduce
waste at the offices in Norway, resulted in gathering
and sorting of large volumes of glass and plastic.
In 2018, Tryg’s estimated carbon emissions in-
creased by 3% compared to 2017. The increase is
mainly due to an ongoing renovation of our office
buildings, extended opening hours and an update
of our calculation method for carbon emissions.
Thus, we have not achieved our target of a 1%
reduction in 2018 compared to 2017. Our target
for 2020 is a 2% reduction compared to 2018.
Climate and environmental initiatives
Tryg has initiated a process to install more efficient
and climate-friendly LED lighting at our offices, as
well as installing more screens for Skype meetings
In 2019, Tryg will develop a climate and environ-
mental action plan and focus on a waste reduction
initiative at our canteen facilities to grow under-
standing of waste reduction.
Eco-lighthouse in Norway
The Eco-lighthouse is a climate and environ-
mental certification scheme in Norway. Eight of
our Norwegian offices are Eco-lighthouse-certified.
We annually produce an Eco-lighthouse report to
describe progress and document the policies and
procedures in place to manage our impact on the
climate and the environment.
Business ethics and compliance
Tryg is committed to running an ethical, transparent
and responsible business. Our materiality assess-
ment showed that anti-corruption, business ethics
and data protection are material matters to Tryg.
Tryg’s Code of Conduct defines the rules, which all
employees and business partners are required to
adhere to. Our Tax policy and Anti-corruption policy
further outlines our commitment to acting as a
responsible company.
See Anti-corruption policy and Tax policy
Data security and GDPR
In 2018, the EU’s General Data Protection Regula-
tion (GDPR) came into force. Tryg is a data-driven
company, and we need data to assess our customers’
claims risk. This is the foundation of providing our
core product: insurance. Implementing the GDPR
regulation means increasing transparency on how we
handle customer data and what types of data we use.
Contents – Management’s review
46
Annual report 2018 | Tryg A/S | Tryg has implemented a GDPR compliance plan and
appointed a Data Protection Officer (DPO) to ensure
that the necessary systems and processes are in
place. Our internal data breach process enables all
employees to report any data breaches and all Tryg
employees have completed mandatory e-learning
on GDPR.
See our Personal data policy
Whistleblower hotline
Tryg’s whistleblower hotline is available for all our
stakeholders to report any violation of our Code of
Conduct or any other concerns and is handled by
the chairman of the Audit Committee, assisted by
Tryg’s Legal and Compliance Department. In 2018,
seven whistleblower cases were reported and in-
vestigated, and the necessary actions were taken.
Tryg’s whisteblower hotline
Responsible investments
Our materiality assessment identified responsible
investments as a material issue for Tryg. We are
at risk of violating international standards when
investing, and we want to be transparent about our
efforts to mitigate this risk. In 2017, we published
our Responsible investment policy, which illus-
trates our belief in the importance of not violating
international conventions or principles
when investing.
In 2018, we updated our process for ethical
screenings for potential violations of the conven-
tions in our investment portfolio, including not
only our portfolio holdings, but also the ultimate
parents. We established an internal procedure
for handling any such violations. We perform
an ethical screening annually, and will continue
our screening practice in 2019.
Download Tryg’s responsible investment
policy and Policy for execution of active
ownership
Customer relations
Ensuring competent and responsible customer
relations is at the core of our business model
and our ability to retain our customers year
after year.
To measure satisfaction levels among our
customers and to help us improve, we ask our
customers to rate our performance when having
been in contact with Tryg.
In 2018, our Transactional Net Promotor Score
(TNPS) was 67. Our target is a score of 70 by 2020.
Contents – Management’s review
Tryg has published an independent
Corporate Responsibility report
with extended Environmental,
Social and Governance (ESG) data.
Download the report
47
Annual report 2018 | Tryg A/S |
Contents – Financial statements 2018
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
49
50
54
55
56
57
58
59
60
69
71
73
75
75
75
75
6 Matching shares and conditional shares 77
78
7
78
8 Value adjustments
78
9 Other costs
Interest and dividends
Intangible assets
Investment property
Equity investments in associates
Financial assets
Note
10 Tax
11
12 Property, plant and equipment
13
14
15
16 Reinsurers’ share
17 Current tax
18
Equity
19 Premium provisions
19 Claims provisions
20 Pensions and similar liabilities
21 Deferred tax
22 Other provisions
23
24
Amounts owed to credit institutions
Debt relating to unsettled funds
transactions and repos
Earnings per share
Contractual obligations, collateral
and contingent liabilities
25
26
27 Acquisition of activities
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
107
108
109
110
114
116
117
118
119
120
121
78
79
82
83
83
85
87
88
88
88
89
90
91
92
92
92
93
93
95
96
97
98
Contents – Financial statements
48
Annual report 2018 | 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 2018 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 require-
ments of NASDAQ Copenhagen for the presenta-
tion of the financial statements of listed com-
panies. 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 2018 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 2018.
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, 22 January 2019
Executive Board
Morten Hübbe
Group CEO
Lars Bonde
Group COO
Johan Kirstein Brammer
Group CCO
Supervisory Board
Jukka Pertola
Chairman
Torben Nielsen
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
49
Annual report 2018 | 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 2018, pages 54-113, which com prise
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
Financial 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 2018 and of
its financial performance and cash flows for the
financial year 1 January to 31 December 2018 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 2018 and
of its financial performance for the financial year
1 January to 31 December 2018 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 2018. These matters
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 24,847m
at 31 December 2018 (2017: DKK 23,925m).
Management has specified the risks etc. related to
the estimates of the claims provisions in note 1
’Risk and capital management’ on pages 61-62 and
in ’Accounting policies’, note 30 on pages 98-99.
The principles of estimating the claims provisions
have been specified in ’Accounting policies’, note 30
on pages 104-105, and further specified in note 1
on pages 63-66 and in note 19 on page 89.
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 factors.
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
50
Annual report 2018 | Tryg A/S | Accounting for business
combinations – Acquisition of
Forsikrings-Aktieselskabet Alka
On 8 November 2018, Tryg Forsikring A/S has
taken over Forsikrings-Aktieselskabet Alka at a
total purchase price of DKK 8,477m, resulting in
the recognition of goodwill of DKK 4,241m and
other intangible assets of DKK 1,429m.
The allocation of the purchase price to assets
and liabilities acquired relies on assumptions
and estimates made by Management. Due to the
significance of these assumptions and estimates
and the size of the acquired business, the audit of
the acquisition of Forsikrings-Aktieselskabet Alka is
considered a key audit matter.
Management has specified the purchase price al-
location in ’Acquisition of subsidiaries’, note 27 on
page 95 and the risks etc. related to the assump-
tions and judgements in ’Accounting policies’,
note 30 on page 99. The principles of accounting
for business combinations have been specified in
’Accounting policies’, note 30 on page 100.
In accordance with the requirements of IFRS 3
’Business Combinations’, Management has
prepared a purchase price allocation where they
have valued the identified acquired assets and
liabilities at fair value.
How the matter was addressed
in the audit
•
•
•
•
•
•
•
We have tested the purchase price allocation
prepared by Management and the identification
of acquired assets and liabilities.
We have assessed and challenged Management’s
assumptions and estimates used in its fair value
models for identifying and measuring customer
relationship and brand value.
We have assessed and challenged Management’s
assumptions and estimates for future cash flow
projections.
We have consulted with Deloitte’s subject matter
experts regarding the valuation methodologies
and assumptions applied.
We have obtained supporting documentation of
Management’s estimates and key assumptions and
corroborated certain information – including the
applied discount rates – with third party sources.
We have tested the mathematical accuracy of the
calculations in the models.
We have considered the impact of reasonably pos-
sible changes in key assumptions and performed
sensitivity calculations to quantify the impact of
potential downside changes to Management’s
models.
The most important assumptions and
estimates relate to:
•
•
Identification of acquired assets and liabilities.
Future cash flow anticipated from the acquired
customer relationship and brand value.
Discount rate applied.
•
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 under-
lying subsidiaries since before 1995. We have been
reappointed annually by decision of the general
meeting for a total contiguous engagement period
of more than 17 years up to and including the
financial year 2018.
Statement on the management’s review
Management is responsible for the management’s
review.
Our opinion on the consolidated financial state-
ments and the parent financial statements does
not cover the management’s 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’s review and, in doing so, consider whether
the management’s 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’s review provides the
information required under the Danish Financial
Business Act.
Based on the work we have performed, we con-
clude that the management’s 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 manage-
ment’s review.
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 Finan-
cial Reporting Standards as adopted by the EU and
additional Danish disclosure requirements for listed
financial companies, and for the preparation of par-
ent financial statements that give a true and fair view
in accordance with the Danish Financial Business
Act, and for such internal control as Management
Contents – Financial statements
51
Annual report 2018 | Tryg A/S | 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 op-
erations, 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 assur-
ance 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 audi-
tor’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 misstate-
ment when it exists. Misstatements can arise from
fraud or error and are considered material if, indi-
vidually 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.
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 omis-
sions, misrepresentations, 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.
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.
Contents – Financial statements
52
Annual report 2018 | Tryg A/S | 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
matters that were of most significance in the
audit of the consolidated financial statements
and the parent financial statements of the current
period and are therefore the key audit matters.
We describe these matters in our auditor’s report
unless law or regulation precludes public disclo-
sure about the matter or when, in extremely rare
circumstances, we determine that a matter should
not be communicated in our report because the
adverse consequences of doing so would reason-
ably be expected to outweigh the public interest
benefits of such communication.
Ballerup, 22 January 2019
Deloitte
Statsautoriseret Revisionspartnerselskab
Business Registration No 33 96 35 56
Jens Ringbæk
State Authorised Public Accountant,
MNE no 27735
Kasper Bruhn Udam
State Authorised Public Accountant,
MNE no 29421
Contents – Management’s review
53
Annual report 2018 | Tryg A/S | Financial highlights
DKKm
2018
2017
2016
2015
2014
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 (%)
18,740
-12,636
-2,704
17,963
-11,865
-2,516
17,707
-11,619
-2,737
17,977
-13,562
-2,720
18,652
-12,650
-2,689
3,400
-624
-10
2,766
-332
-172
2,262
-529
1,733
-2
1,731
1,221
31,948
1,415
11,334
56,545
67.4
3.3
70.7
14.4
85.1
85.2
5.4
14.9
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
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
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
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
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 oper-
ating 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 Supervisory Authority’s and the
Danish Finance Society’s definitions of expense ratio
and combined ratio, involves the addition of a calcu-
lated 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.
Contents – Financial statements
54
Annual report 2018 | 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
2018
2017
DKKm
2018
2017
18,999
-1,362
85
-47
17,675
18,358
-1,255
-145
16
16,974
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
22
46
580
-537
-140
-94
-123
-209
-332
128
-300
2,262
-529
1,733
-2
3
69
624
224
-107
-102
711
-184
527
117
-194
3,239
-720
2,519
-2
4
Insurance technical interest, net of reinsurance
-10
-14
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers' share of claims provisions
5
Claims, net of reinsurance
-13,294
466
658
125
-12,045
-12,807
1,029
942
-729
-11,565
Total investment return
4
Return on insurance provisions
Total investment return after insurance technical interest
Bonus and premium discounts
-344
-250
9
Other income
Other costs
Acquisition costs
Administration expenses
Acquisition costs and administration expenses
Reinsurance commissions and profit participation from reinsurers
6
Insurance operating costs, net of reinsurance
-2,104
-600
-2,704
194
-2,510
-1,902
-614
-2,516
160
-2,356
Profit/loss before tax
Tax
10
Profit/loss on continuing business
Profit/loss on discontinued and divested business
2
Technical result
2,766
2,789
Profit/loss for the year
1,731
2,517
25
Earnings per share
5.73
9.12
Contents – Financial statements
55
Annual report 2018 | 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
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
2018
1,731
0
-5
1
-4
-50
49
-11
-12
-16
1,715
2017
2,517
4
-7
2
-1
-137
135
-30
-32
-33
2,484
Contents – Financial statements
56
Annual report 2018 | Tryg A/S |
Statement of financial position
DKKm
2018
2017
DKKm
2018
2017
Note
11
Assets
Intangible assets
Operating equipment
Owner-occupied property
12
Total property, plant and equipment
13
Investment property
14
Equity investments in associates
Total investments in associates
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments
Total other financial investment assets
15
Total investment assets
Reinsurers' share of premium provisions
Reinsurers' share of claims provisions
19
16
Total reinsurers' share of provisions for insurance contracts
Receivables from policyholders
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Other receivables
15
Total receivables
Cash at bank and in hand
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
7,236
145
790
935
1,345
242
242
1,149
1,663
38,042
0
899
41,753
43,340
181
1,234
1,415
1,476
1,476
144
803
2,423
627
627
169
400
569
1,105
67
0
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
18
Equity and liabilities
Equity
1
Subordinate loan capital
19
19
Premium provisions
Claims provisions
Provisions for bonuses and premium discounts
Total provisions for insurance contracts
20
21
22
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
Debt to group undertakings
Current tax liabilities
Other debt
23
24
15
17
24
Total debt
Accruals and deferred income
Total equity and liabilities
1
26
27
28
29
30
Risk and capital management
Contractual obligations, collateral and contingent liabilities
Acquisition of activities
Related parties
Financial highlights
Accounting policies
Total assets
56,545
51,367
11,334
12,616
2,868
5,861
24,847
1,240
31,948
277
912
111
1,300
614
169
494
3,408
740
313
118
3,202
9,058
37
2,412
5,559
23,925
534
30,018
290
656
111
1,057
498
454
306
1,711
746
0
194
1,312
5,221
43
56,545
51,367
Contents – Financial statements
57
Annual report 2018 | Tryg A/S |
Statement of changes in equity
DKKm
Equity at 31 December 2017
2018
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Purchase and sale of own shares
Issue of conditional and matching shares
Total changes in equity in 2018
Equity at 31 December 2018
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 b)
Issue of employee shares
Issue of share options and matching shares
Total changes in equity in 2017
Equity at 31 December 2017
Share
capital
1,511
0
0
1,511
Reserve for
exchange rate
adjustment
Other
reservesa)
Retained
earnings
Proposed
dividend
Total
-29
783
8,868
1,483
12,616
-12
-12
-12
-41
18
18
18
801
-283
-4
-287
-27
10
-304
8,564
1,996
1,996
-2,980
-984
499
1,731
-16
1,715
-2,980
-27
10
-1,282
11,334
The total number of shares at the end of the year
(302,147,991 shares).
The possible payment of dividend from Tryg Forsikring
A/S to Tryg A/S is influenced by contingency fund provi-
sions of DKK 1,617m (DKK 1,592m in 2017). The con-
tingency fund provisions can be used to cover losses in
connection with the settlement of insurance provisions
or otherwise for the benefit of the insured.
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.
1,413
3
822
5,182
2,017
9,437
-32
-32
-39
-39
-32
-29
-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
2,517
-33
2,484
0
-3,361
82
-20
3,978
10
6
3,179
12,616
0
-39
137
98
1,511
Contents – Financial statements
58
Annual report 2018 | 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
2018
2017
DKKm
2018
2017
18,712
-13,473
-725
-3,165
1,927
3,276
546
-138
12
-639
-174
2,883
0
2,883
-2
117
1,540
3,268
250
-61
-5,671
49
-510
-510
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
Note
Financing
Issue of new shares
Exercise of share options/purchase of own shares (net)
Subordinate loan capital
Dividend paid
Change in lease liabilities
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
0
-17
502
-2,980
-135
188
-2,442
-2,442
-69
186
1
118
509
627
2018
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
2017
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
Subordinated
loans
Amounts owed
to credit
institutions
2,412
-48
2
502
2,868
2,567
-156
1
0
2,412
306
0
0
188
494
178
0
0
128
306
3,978
-4
0
-3,279
0
128
823
823
29
13
-8
34
475
509
Total
2,718
-48
2
690
3,362
2,745
-156
1
128
2,718
59
Annual report 2018 | Tryg A/S |
1 Risk and capital management
Risk management in Tryg
The Supervisory Board defines the basis for the risk
appetite through the business model and the current
strategy. The Supervisory Board has regulated the
management of risk activities through policies and
guidelines to the business supported by underlying
business processes and a power of attorney structure.
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.
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 rela-
tion to capital management, reinsurance, investment risk
management and more. Tryg’s risk management function
is also responsible for determining the company’s capital
requirement. The third level consists of the internal audit
which performs independent assessments of the entire
control environment.
The risk management is organised systematically in the
company’s committee structure via the Executive Board’s
own risk committee and the Supervisory Board’s own risk
committee. The Supervisory Board’s risk committee is a
specialist committee with intensive focus separately on
risk and capital management during the year.
Contents – Financial statements
The Supervisory Board’s Risk Committee meets mini-
mum 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.
Capital management
Tryg’s capital management is based on the key
business objectives:
•
•
•
A solid capital base, supporting both the statutory
requirements and a single ‘A’ rating from Moody’s.
Support of a dividend per share, with a payout ratio
in the interval 60-90%.
Return on the average equity of at least 21% after tax.
Lines of defence
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
What risk profile does Tryg want?
- Business model
- Strategy
- Policies
How is this supported?
Tactically
- Policies
- Capital plan
- Contingency plan
Operationally
- Frameworks
- Limitations
- Instructions
- Allocated capital
- Contingency plans
How is the actual risk profile measured?
Tactically
- Risk reports
- Intern al controls
- Capital model
- Stress tests
- Reassurance
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
60
NotesAnnual report 2018 | Tryg A/S | Tryg’s capital base currently consist of Tier 1 and 2 capital,
such as shareholders’ equity and subordinated loans.
Insurance risk
Insurance risk comprises two main types of risks:
Underwriting risk and provisioning risk.
See table Subordinate loan capital on page 68.
been taken out as needed. The use of reinsurance cre-
ates 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.
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.
Monitoring of the capital base also involves capital
projections based on expected business plans within
the strategic planning period and stress on selected
scenarios.
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 assessment
of whether the calculation of solvency capital requirement
is reasonable and is reflecting Tryg’s actual risk profile.
Moreover, the projected capital requirement is also as-
sessed over the company’s strategic planning period.
Tryg’s risk activities are implemented via continuous risk
management processes, where the main results are re-
ported to the Supervisory Board and its Risk Committee
during the year. Therefore, the ORSA report is an annual
summary document assessing all these processes.
Underwriting risk
Underwriting risk is the risk that insurance premiums
will not be sufficient to cover the compensations and
other costs associated with the insurance business.
Underwriting risk is managed primarily through the
company’s insurance policy defined by the Supervisory
Board, and administered through business procedures,
underwriting guidelines etc. Underwriting risk is as-
sessed 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. Tryg’s reinsurance
program covers both Tryg and Alka. In case of major
events involving damage to buildings and contents,
Tryg’s reinsurance programme provides protection
for up to DKK 6.75bn, which statistically is sufficient
to cover at least a 250-year event. Retention for such
events is DKK 168m.
In the event of a frequency of natural 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
Reserving risk
Reserving risk relates to the risk of Tryg’s insurance
provisions being inadequate. The Supervisory Board
lays down the overall framework for the handling of
reserving risk in the insurance policy, while the overall
risk is measured in the capital model. The uncertainty
associated with the calculation of claims reserves
affects Tryg’s results through the run-off on reserves.
Long-tailed reserves in particular are subject to interest
rate and inflation risk. Interest rate risk is hedged by
means of Tryg’s match portfolio which corresponds to
the discounted claims reserves. In order to manage the
inflation risk of Danish workers’ compensation claims
reserves, Tryg has bought zero coupon inflation swaps.
Tryg determines the claims reserves via statistical
methods as well as individual assessments.
At the end of 2018, Tryg’s claims reserves net of reinsur-
ance totalled DKK 23,585m with an average duration of
approximately 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
discounted 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 man-
agement 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 property portfolio constitutes the
company’s largest investment risk. The Property portfo-
lio 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 2018, investment properties
accounted for 5.7% (including property funds) and
Tryg’s equity portfolio accounted for 4.7% of the total
investment assets.
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.
Contents – Financial statements
61
NotesAnnual report 2018 | Tryg A/S |
Operational risk
Operational risk relates to errors or failures in internal
procedures, fraud, breakdown of infrastructure, IT secu-
rity and similar factors. As operational risks are mainly
internal, Tryg focuses on an adequate control environ-
ment for its operations. In practice, this work is organ-
ised by means of procedures, controls and guidelines
covering the various aspects of the Group’s operations.
The Supervisory Board defines the overall framework
for managing operational risk in Tryg’s Operational risk
policy and in the Information Security Policy.
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 teams in the individual areas. Tryg
has prepared contingency plans to address the most im-
portant 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
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 is handled in the individual business areas, which
monitor the market and adapt the products as the
conditions change. In the event of a change in insurance
terms, it is ensured that Tryg’s reinsurance cover is
consistent with the new conditions.
Insurance risk
Effect of 1% change in:
Combined ratio (1 percentage point)
Major events
Catastrophe event up to DKK 6.75bn
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 and related thereto
Emerging risk is also a part of the systematically imple-
mented risk identification process in Tryg.
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
2018
2017
+/- 187
+/- 180
-100
-168
- 100
- 160
+/- 402
+/- 408
+/- 1.696
+/- 1,706
-1,079
991
-88
163
-288
36
-372
-1,316
1,242
-74
-1,118
1,014
-104
153
-285
20
-257
-975
946
-29
Technical result per year:
Impact of 15% change in NOK and SEK exchange rates relative to DKK
+/- 134
+/- 151
a) Including the effect of the zero coupon inflation swap
b) additional sensitivity information in note 20 'Pensions and similar obligations'
Contents – Financial statements
62
NotesAnnual report 2018 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Gross
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
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
11,985
13,248
13,112
13,126
13,089
13,018
12,982
12,727
12,606
12,514
13,630
13,630
-12,957
13,264
13,877
13,890
13,693
13,596
13,504
13,474
13,355
13,298
14,477
15,421
15,516
15,469
15,391
15,303
15,229
15,205
15,115
16,328
15,758
16,137
16,196
16,149
15,975
16,007
15,874
17,347
13,316
13,394
13,351
13,166
12,904
12,817
14,007
13,722
13,984
13,644
13,478
13,457
14,763
12,564
12,884
12,703
12,616
13,927
14,558
14,498
14,452
15,823
12,755
12,609
14,073
12,615
14,283
15,405
14,477
-13,591
16,328
-15,284
17,347
-16,217
14,007
-12,759
14,763
-13,112
13,927
-12,137
15,823
-14,061
14,073
-11,894
14,283
-10,686
15,405
-7,910
164,062
-140,609
Provisions before discounting,
end of year
Discounting
Reserves from 2007 and prior years
Gross provisions for claims, end of year
673
-55
885
-73
1,043
-85
1,129
-79
1,248
-91
1,651
-100
1,790
-109
1,762
-101
2,180
-104
3,597
-138
7,494
-180
23,453
-1,115
2,509
24,847
a) The diagonal for 2018 is affected by the Alka acquisition, please see below.
Estimated accumulated
claims regarding
Alka
1,233
1,265
1,353
1,655
1,294
1,435
1,412
1,450
1,546
1,590
1,780
16,013
Contents – Financial statements
63
NotesAnnual report 2018 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Ceded business
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
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 2007 and prior years
Provisions for claims, end of year
151
212
180
171
171
159
164
155
155
155
161
161
-157
4
0
275
339
318
277
281
286
275
274
273
304
304
-297
7
0
647
720
713
691
700
705
707
699
760
760
-745
15
0
1,448
2,129
2,249
2,287
2,235
2,229
2,234
2,623
2,623
-2,555
67
0
220
250
286
279
267
256
275
275
-265
9
0
1,132
1,477
1,259
1,253
1,270
1,305
1,305
-1,216
88
0
270
305
299
295
318
318
-289
30
-1
2,072
1,878
1,910
1,908
1,908
-1,699
209
-2
201
253
251
251
-213
37
0
286
395
617
395
-249
146
-2
617
-149
468
-9
8,916
-7,834
1,082
-14
167
1,234
a) The diagonal for 2018 is affected by the Alka acquisition, please see below.
Estimated accumulated
claims regarding
Alka
8
28
60
386
20
129
15
18
4
5
3
676
Contents – Financial statements
64
NotesAnnual report 2018 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Net of reinsurance
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
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 2007 and prior years
Provisions for claims,
net of reinsurance, end of the year
11,834
13,037
12,932
12,955
12,918
12,858
12,817
12,572
12,451
12,360
13,469
13,469
-12,799
669
-54
12,989
13,538
13,572
13,416
13,315
13,218
13,199
13,081
13,024
14,173
14,774
14,796
14,756
14,700
14,603
14,524
14,498
14,416
15,568
14,311
14,008
13,947
13,862
13,741
13,778
13,640
14,724
13,096
13,144
13,065
12,887
12,637
12,561
13,732
12,590
12,507
12,385
12,225
12,188
13,459
12,294
12,579
12,403
12,320
13,609
12,486
12,620
12,542
13,914
12,554
12,356
13,823
12,329
13,888
14,788
14,173
-13,295
15,568
-14,540
14,724
-13,662
13,732
-12,494
13,459
-11,896
13,609
-11,848
13,914
-12,362
13,823
-11,680
13,888
-10,437
14,788
-7,762
155,146
-132,775
879
-73
1,028
-85
1,062
-79
1,239
-91
1,563
-100
1,760
-108
1,552
-100
2,142
-104
3,451
-136
7,026
-171
22,371
-1,100
2,342
23,613
a) The diagonal for 2018 is affected by the Alka acquisition, please see below.
Estimated accumulated
claims regarding
Alka
1,225
1,237
1,293
1,268
1,275
1,305
1,397
1,432
1,542
1,586
1,777
15,337
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2018 to prevent the impact of exchange rate fluctuations.
Contents – Financial statements
65
NotesAnnual report 2018 | Tryg A/S |
Claims provisions (continued)
DKKm
2018
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2017
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
5,588
-180
8,025
-642
12,791
5,381
-245
7,670
-546
12,260
118
0
3,936
-229
3,825
85
0
3,791
-240
3,636
81
0
2,643
-138
2,586
57
0
2,576
-126
2,507
74
0
11,542
-246
11,370
37
0
11,278
-204
11,111
5,861
-180
26,146
-1,255
30,572
5,560
-245
25,315
-1,116
29,514
Contents – Financial statements
66
NotesAnnual report 2018 | Tryg A/S |
DKKm
2018
2017
DKKm
Investment risk
Bond portfolio including interest derivatives
Duration 1 year or less
Duration 1 year-5 years
Duration 5-10 years
Duration more than 10 years
Total
Duration
11,286
15,527
5,521
2,573
34,907
1.3
17,509
14,770
5,015
2,353
39,647
1.3
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.
Credit risk
Bond portfolio by ratings
AAA to A
Other
Not rated
Total
Reinsurance balances
AAA to A
Other
Not rated
Total
2018
35,760
1,831
451
38,042
1,207
0
96
1,303
%
94.0
4.8
1.2
2017
36,831
208
112
%
99.1
0.6
0.3
100.0
37,151
100.0
92.6
0.0
7.4
953
0
80
92.3
0.0
7.7
100.0
1,033
100.0
Listed shares
Nordic countries
United Kingdom
Rest of Europe
United States
Asia etc.
Total
The portfolio of unlisted shares totals. Please refer to note 15 fair value hierarchy
23
71
318
1,049
203
1,664
1,014
51
90
274
1,196
435
2,046
179
The share portfolio includes exposure from share derivatives of DKK 240m (DKK -135m in 2017)
Unlisted equity investments are based on an estimated market price.
Exposure to exchange rate risk
USD
EUR
GBP
NOK
SEK
Other
Total
Assets and
debt
Hedge
Exposure
Assets and
debt
Hedge
Exposure
3,453
2,159
208
3,028
1,408
274
-3,467
-519
-207
-2,942
-1,388
-274
-14
1,641
1
86
20
0
1,762
3,205
1,413
267
2,924
1,324
529
-3,149
-1,174
-262
-2,836
-1,228
-473
56
239
5
88
96
56
540
Contents – Financial statements
2018
2017
2017
Liquidity risk
Maturity of the Group’s financial obligations including interest
2018
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
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
93
494
3,408
534
4,103
8,632
92
306
1,711
576
2,458
5,143
373
0
0
55
0
428
369
0
0
49
0
418
3,799
0
0
188
0
3,987
3,334
0
0
153
0
3,487
Interest on loans for a perpetual term has been recognised for the first fifteen years.
Total
4,265
494
3,408
777
4,103
13,047
3,795
306
1,711
778
2,458
9,048
67
NotesAnnual report 2018 | 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
2018
2017
2018
1,043
1,073
103
3
41
3.7%
595
633
106
2
30
4.8%
603
659
109
3
29
4.6%
Listed bonds
NOK 800m
100
March 2013
Perpetual
2023
2017
1,056
1,080
102
4
43
3.6%
Listed bonds
NOK 1,400m
100
November 2015
2045
2025
Bond loan
SEK 1,000m
2018
2017
723
747
103
3
17
2.3%
753
796
105
4
20
2.2%
Listed bonds
SEK 1,000m
100
May 2016
2046
2021
Interest-only
3.75 % above NIBOR 3M (until 2023)
4.75 % above NIBOR 3M (from 2023)
Interest-only
2.75 % above NIBOR 3M (until 2025) 2.75 % above STIBOR 3M (until 2026)
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 2,739m (DKK 2,164m in 2017).
The loans are initially recognised at fair value on the date
on which a loan is entered and subsequently measured
at amortised cost.
The loans are taken by Tryg Forsikring A/S. The creditors
have no option to call the loans before maturity or other-
wise terminate the loan agreements. The loans are
automatically accelerated upon the liquidation or bank-
ruptcy of Tryg Forsikring A/S.
Prices used for determination of fair value in respect
of the loans are based on actual traded prices from
Bloomberg.
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
Contents – Financial statements
Bond loan SEK 700m
2017
2018
506
491
96
3
5
2.1%
Listed bonds
SEK 700m
100
April 2018
Perpetual
2023
Interest-only
2.5 % above STIBOR 3M
68
Annual report 2018 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
2
Operating segments
2018
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
9,466
-6,198
-1,309
-220
-5
1,734
394
1,694
47
53
2,672
6,259
1,036
3,971
-2,326
-696
-165
0
784
434
89
3
118
1,326
6,425
164
3,897
-3,114
-385
-225
0
173
271
0
131
1,036
947
9,352
26
1,471
-1,024
-237
-4
-5
201
122
534
0
27
916
2,811
14
-65
26
-77
-10
0
-126
0
4,919
242
0
0
47,652
0
0
0
13,263
18,740
-12,636
-2,704
-624
-10
2,766
-1,035
1,731
1,221
7,236
242
181
1,234
47,652
56,545
5,861
24,847
1,240
13,263
45,211
Description of segments
Please refer to the accounting principles for a
description of operating segments.
Costs are allocated according to specific keys, which
are believed to provide the best estimate of assessed
resource consumption.
a) Amounts relating to eliminations and one-off items.
Details of amounts in note 2 Geographical segments.
Other assets and liabilities are managed at Group
level and are not allocated to the individual segments
but are included under 'Other'.
Contents – Financial statements
69
Annual report 2018 | 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
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
70
Annual report 2018 | Tryg A/S |
a) Includes Danish general insurance and German and
Finnish guarantee insurance. The gross premium
income related to German and Finnish guarantee
insurance amount to DKK 54m.
Notes
DKKm
2018
2017
2016
2015
2014
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
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
10,430
2,007
710
61.2
5.5
66.7
13.9
80.6
-6.8
2,520
77.53
6,302
791
520
72.6
1.2
73.8
13.9
87.7
-8.3
1,105
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
9,346
1,371
512
80.5
-9.2
71.3
13.9
85.2
-5.5
1,859
83.52
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
89.42
7,337
1,478
501
66.5
1.4
67.9
12.5
80.4
-6.8
1,167
Contents – Financial statements
71
Annual report 2018 | Tryg A/S |
b) Amounts relating to eliminations and one-off items.
In 2018 cost, claims and other costs were negatively
affected by DKK 75m, DKK 49m and DKK 76m.
The costs are related to integration and transaction
costs for the acquirement of Alka. In 2016 costs and
claims were negatively affected by DKK 162m and
DKK 88m respectively, mainly due to impairment of
software. In 2015 costs and claims were negatively
affected by DKK 80m and DKK 40m respectively due
to provisioning for the efficiency programme.
c)
Adjustment of gross expense ratio included only in
'Tryg '. The adjustment is explained in a footnote to
Financial highlights.
Notes
DKKm
2018
2017
2016
2015
2014
2
Geographical segments
Swedish general insurance
SEK/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
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
72.67
2,073
94
-9
82.3
-1.7
80.6
14.6
95.2
0.4
402
-65
-126
77.24
2,121
236
101
69.0
5.0
74.0
14.5
88.5
-4.8
398
-36
0
78.93
1,888
40
52
76.4
3.3
79.7
17.8
97.5
-2.8
385
-19
-250
79.69
1,894
328
208
63.5
1.7
65.2
17.5
82.7
-11.0
387
-29
-120
82.16
1,975
44
66
77.6
2.2
79.8
18.4
98.2
-3.3
425
-21
0
18,740
17,963
17,707
17,977
18,652
2,766
-332
-172
2,262
1,221
67.4
3.3
70.7
14.4
85.1
-6.5
4,027
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
Contents – Financial statements
72
Annual report 2018 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2018
2,001
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
1,951
- 1,157
- 249
- 11
- 2
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
532
59.3
72.6
4.5%
24,634
53,060
Accident and
health
Health care
Workers’
compensation
Motor TPL
Motor comprehensive
insurance
Marine, aviation and
cargo insurance
2017
1,918
1,848
- 1,199
- 257
- 7
- 2
383
64.9
79.2
5.2%
23,874
55,434
2018
376
379
- 402
- 43
- 1
0
- 67
106.1
117.7
107.1%
5,595
58,510
2017
359
348
- 307
- 41
- 1
0
- 1
88.2
100.3
113.4%
4,797
57,785
2018
884
884
- 438
- 105
- 13
0
328
49.5
62.9
2017
846
850
- 612
- 99
- 21
0
118
72.0
86.1
20.8%
63,754
11,779
19.8%
75,265
11,116
2018
1,772
1,771
- 958
- 283
- 42
- 1
487
54.1
72.4
6.0%
15,763
76,710
2017
1,778
1,750
- 1,063
- 289
- 35
- 1
362
60.7
79.3
5.9%
17,513
74,872
2018
3,915
3,781
- 2,672
- 470
- 4
- 2
633
70.7
83.2
2017
3,691
3,557
- 2,413
- 512
- 30
- 3
599
67.8
83.1
2018
376
401
- 208
- 54
- 55
0
84
51.9
79.1
21.4%
9,605
283,335
21.2%
9,537
260,926
21.3%
68,061
2,492
2017
283
281
- 261
- 34
- 15
0
- 29
92.9
110.3
27.8%
82,852
3,208
Fire and contents
(Private)
Fire and contents
(Commercial)
Change of ownership
Liability insurance
Credit and guarantee
insurance
Tourist assistance
insurance
Gross premiums written
2018
4,423
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
4,306
- 2,897
- 689
- 152
- 6
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
2017
4,342
4,196
- 2,895
- 591
- 157
- 7
546
69.0
86.8
562
67.3
86.8
9.9%
8,955
342,695
9.1%
8,911
345,325
2018
2,426
2,434
- 1,736
- 391
- 167
- 1
139
71.3
94.2
15.5%
65,645
29,761
2017
2,427
2,455
- 1,262
- 363
- 318
- 2
510
51.4
79.1
15.9%
43,226
29,599
2018
2017
79
65
- 63
- 9
0
- 1
- 8
96.9
110.8
14.3%
21,202
4,022
66
62
- 60
- 9
0
- 1
- 8
96.8
111.3
13.1%
20,475
4,036
2018
1,094
1,071
- 1,027
- 155
28
- 1
- 84
95.9
107.7
12.2%
71,911
12,189
2017
1,032
1,025
- 843
- 148
- 68
- 1
- 35
82.2
103.3
2018
470
469
- 65
- 49
- 167
0
188
13.9
59.9
2017
445
437
- 136
- 44
- 77
0
180
31.1
58.8
11.2%
74,485
11,013
0.0%
2,866,734
64
0.2%
367,332
443
2018
720
715
- 624
- 100
- 3
0
- 12
87.3
101.7
19.3%
5,723
105,877
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
2017
692
679
- 494
- 88
- 1
0
96
72.8
85.9
17.2%
6,174
86,645
73
Annual report 2018 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Other
insurance
Total exclusive of
Group Life
Group Life
one-year policies b)
Total
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
Total claims
2018
2017
2018
2017
59
91
- 58
- 76
- 43
3
- 83
63.7
194.5
12
59
57
- 10
2
- 49
2
2
17.5
100.0
44
18,595
17,938
18,318
- 12,305
- 2,673
- 630
- 11
17,545
- 11,555
- 2,473
- 779
- 15
2,699
2,723
67.2
85.2
65.9
84.4
2018
404
422
- 331
- 31
6
1
67
78.4
84.4
2017
420
418
- 310
- 43
0
1
66
74.2
84.4
2018
18,999
18,740
- 12,636
- 2,704
- 624
- 10
2,766
67,4
85,1
2017
18,358
17,963
- 11,865
- 2,516
- 779
- 14
2,789
66.1
84.4
b) Group Life, one-year policies related to Norwegian
Group Life and Alka Group Life. Result of Alka Life is
included from 8 November 2018.
Contents – Financial statements
74
Annual report 2018 | 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
2018
2017
Denmark
Other EU countries
Other countries a)
a) Mainly Norway
Gross
10,542
2,095
6,397
19,034
Ceded
-645
-186
-578
Gross
9,622
2,161
6,385
-1,409
18,168
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
2018
2017
209
-219
-10
-13,872
1,236
-12,636
606
-15
-12,045
184
-198
-14
-12,804
939
-11,865
267
33
-11,565
2018
2017
DKKm
2018
2017
19,037
50
19,087
-3
19,084
-1,409
0
17,675
18,168
45
18,213
0
18,213
-1,229
-10
16,974
Ceded
-537
-187
-505
-1,229
6
Insurance operating costs, net of reinsurance
Commissions regarding direct insurance contracts
Other acquisition costs
Total acquisition costs
Administration expenses
Insurance operating costs, gross
Commission from reinsurers
Administrative expenses include fee to the auditors appointed
by the annual general meeting:
Deloitte
The fee is divided into:
Statutory audit
Other audit assignments
Tax advice
Other services
-227
-1,877
-2,104
-600
-2,704
194
-2,510
-24
-24
-3
-1
-1
-19
-24
-9
-259
-1,643
-1,902
-614
-2,516
160
-2,356
-6
-6
-3
-1
-1
-1
-6
-9
Expenses have been incurred for the Group´s Internal Audit Department.
Fees for non-audit services provide by Deloitte Statsautoriseret Revisionspartnerselskab to the Group
amount to DKK 19m and consist of declaration tasks, including review of interim balances, objective tax
advice in relation to the investment area and consulting services mainly related to strategies, claim system
and data centre, as well as other general accounting, consulting services and tax advice.
Contents – Financial statements
75
NotesAnnual report 2018 | 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 0m (DKK 26m in 2017). Please refer
to note 12 and 24 regarding lease recognised costs according to IFRS 16.
Insurance operating costs and claims include the following
staff expenses:
staff expenses:
Salaries and wages
Commission
Allocated share options and matching shares
Pension plans a)
Other social security costs
Payroll tax
2018
2017
-227
-1,740
-179
-612
-260
-69
383
-2,704
-2,227
-9
-10
-301
-6
-470
-3,023
-249
-1,509
-166
-500
-222
-98
228
-2,516
-1,926
-7
-6
-280
-5
-410
-2,634
a) In 2018 defined benefit plans were included with DKK 35m (DKK 49m in 2017).
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)
3,914
3,315
Contents – Financial statements
76
NotesAnnual report 2018 | Tryg A/S |
Notes
DKKm
6 Matching shares and conditional shares
Total numbers
Fair value
2018
Allocated in 2018
Matching shares allocated
Executive
Board
30,444
Risk-
takers
29,835
Other
37,321
97,600
in 2018 at 31.12.18
30,444
29,835
37,321
97,600
Allocated in 2011-2017
Category changes and addition
Cancelled
Exercised
150,338
8,963
-14,205
-87,640
180,944
-121,306
-3,788
-8,945
18,896
112,343
-9,449
-84,485
350,178
0
-27,442
-181,070
Matching shares allocated
in 2011-2017 at 31.12.18
Number of Matching shares
exercisable 31 Dec. 2018
57,456
46,905
37,305
141,666
0
0
0
0
2017
Allocated in 2017
27,060
39,747
18,896
85,703
Matching shares allocated
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
41,478
24,895
41,647
108,020
0
0
0
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
144
144
105
105
105
105
105
127
127
98
98
98
98
98
14
14
37
0
-3
-19
15
11
11
26
0
-2
-13
11
164
164
164
164
164
164
164
155
155
155
155
155
155
155
16
16
57
0
-4
-30
23
13
13
41
0
-3
-21
17
In 2011-2018, Tryg entered into an agreement on
matching shares for the Executive Board, Risk-takers
and Other employees 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 2018, the reported fair value of matching shares
for the Group amounted to DKK 7m (DKK 5m in 2017).
At 31 December 2018, a total amount of DKK 29m was
recognised for matching shares.
Conditional shares
In 2017 and 2018, 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 2018, the fair value of Conditional shares is
prorated relative to the vesting period and recognised
in the income statement amounted to DKK 3m
(DKK 1m in 2017). The maximum obligation for
Tryg is 100,776 shares in Tryg A/S.
Contents – Financial statements
77
Annual report 2018 | Tryg A/S |
DKKm
7
Interest and dividends
Interest income and dividends
Dividends
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
Discounting
Other statement of financial position items
Exchange rate adjustments concerning financial assets or liabilities which
cannot be stated at fair value total DKK -17m (DKK 127m in 2017).
2018
2017
DKKm
2018
2017
Other costs
Other costs DKK -300m (DKK -194m in 2017). The increase can be attributed to one-off costs related to
the acquisition of Alka DKK 76m and depreciations related to trademarks, customer relationships and
agricultural portfolio DKK 34m.
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
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
-498
-19
4
-31
12
3
-529
%
22
1
0
1
-1
23
-712
-42
-47
80
0
1
-720
%
22
1
2
-3
0
22
12
568
0
580
-88
-52
-140
440
-64
-224
12
-364
-38
-678
147
-1
5
-10
141
-537
9
10
19
601
4
624
-89
-18
-107
517
-35
460
-8
-148
-96
173
9
0
123
-81
51
224
Contents – Financial statements
78
NotesAnnual report 2018 | Tryg A/S |
DKKm
11
Intangible assets
Trademarks
and customer
relations
Goodwill
Software a)
Assets
under con-
struction a)
DKKm
11
Intangible assets (continued)
Trademarks
and customer
relations
Goodwill
Software a)
Assets
under con-
struction a)
2018
Cost
Cost at 1 January
Exchange rate adjustments
Transferred to assets held for sale
Transferred from assets
under construction
Additions for the year b)
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
656
-16
0
0
4,241
0
4,881
-104
0
0
0
300
-9
0
0
1,739
-49
1,981
1,528
-5
0
16
37
0
1,576
-171
6
-34
-1,364
5
-83
0
-16
352
-1
0
-16
326
0
661
-92
0
0
-10
Total
2,836
-31
0
0
6,343
-49
9,099
-1,731
11
-117
-26
2017
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from asset
under construction
Additions for the year
Disposals for the year
Cost at 31 December
Amortisation and write-downs
Amortisation and write-downs
at 1 January
Exchange rate adjustments
Amortisation for the year
Impairment losses and write-downs f
or 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
-104
-199
-1,458
-102
-1,863
-104
-171
-1,364
-92
-1,731
Carrying amount at 31 December
4,777
1,782
118
559
7,236
Carrying amount at 31 December
552
129
164
260
1,105
a) Hereof proprietary software DKK 524m (DKK 336m at 31 December 2017).
b) Hereof trademarks and customer relationships related to Alka DKK 1.4bn and total goodwill.
Contents – Financial statements
79
NotesAnnual report 2018 | Tryg A/S |
DKKm
11
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 ex-
pected 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.
Alka
The impairment test at year-end for Alka is based on the valuation at the time of acquisition due to
the short period of ownership, and lack of indications of impairment since closing. Goodwill recognised
DKK 4,241m. Please refer to note 27.
Obos
In 2017, Tryg acquired OBOS' insurance portfolio. The insurance activities were incorporated into the
Tryg Group's business structure from 1 June 2017.
Comprises the sale of insurance products to private and commercial customers under the ‘Obos’ brand.
At 31 December 2018, 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.
The asset 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.
The impairment test shows a calculated value in use of approximately DKK 0.4bn (0.3bn) relative to
a recognised goodwill of DKK 49m (51m) and Equity of DKK 0.2bn (0.2bn) and does not indicate any
impairment in 2018. According to the sensitivity informations below a change in the required return
rate will have the highst effect on the equity. An increase in the required return of approx. 7% will result
in a write down of goodwill.
DKKm
11
Intangible assets (continued)
- 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
2018
2017
10%
2%
9%
90%
24
-22
-55
52
-37
37
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.
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.
At 31 December 2018, 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’.
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 1.7bn (1.2bn) relative to a recog-
nised goodwill of DKK 0.5bn (0.5bn) and Equity of DKK 0.7bn (0.8bn) and does not indicate any impairment in
2018. According to the sensitivity informations below a change in the required return rate will have the highest
effect on the equity. A increase in the required return of approx. 6% will result in a write down of goodwill.
Contents – Financial statements
80
NotesAnnual report 2018 | Tryg A/S |
DKKm
11
Intangible assets (continued)
- 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
2018
2017
DKKm
3%
2%
11%
92%
34
-29
-280
384
-163
164
2%
1%
13%
92%
18
-17
-147
185
-107
107
11
Intangible assets (continued)
Software and assets under construction
As at 31 December 2018 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 26m (DKK 38m) due to revaluation of the groups it-systems.
The write-down is due to the IT development cost being higher than the future cash flows. 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.
Trademarks and customer relations
As at 31 December 2018 management performed a test of the carrying amounts of customer relations as
an integral part of the 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.
Contents – Financial statements
81
NotesAnnual report 2018 | Tryg A/S |
Notes
12
Property, plant and equipment
DKKm
2018
Cost
Cost at 1 January
Exchange rate adjustments
Additions for the year
Addition, purchase of Alka
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
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
Operating
equipment
Leases ROU Owner-occupied
property b)
equipment a)
Leases ROU
'Group-occupied
property c)
273
-3
62
0
0
332
-206
0
-25
-231
101
239
-4
40
-2
273
-190
2
-18
-206
67
50
0
14
0
0
64
0
0
-20
-20
44
0
0
0
0
0
0
0
0
0
0
0
0
0
112
0
112
0
0
0
0
112
0
0
0
0
0
0
0
0
0
0
739
-10
54
0
-21
762
0
0
-84
-84
678
0
0
0
0
0
0
0
0
0
0
Total
1,062
-13
130
112
-21
1,270
-206
0
-129
-335
935
239
-4
40
-2
273
-190
2
-18
-206
67
a)
Lease assets (Right of use-assets(ROU)) equipment
only consists of leases of vehicles with a lease term
of three to four years. The monthly amounts are fixed
and there are no option for purchase or extension.
Short term leases are not recognised as Right of
use-assets.
b) A valuation of the owner-occupied property has been
carried out. The impairment test did not indicate any
impairment.
c)
Lease assets (Right of use-assets), Group occupied
property consists of leases of offices buildings.
Contract terms are from 2 to 18 years and with yearly
rent adjustments. Tryg has no lease contracts with
variable lease payments based on sale or similar.
Contents – Financial statements
82
Annual report 2018 | Tryg A/S |
2018
2017
DKKm
2018
2017
1,324
-5
19
-148
141
14
1,345
2,323
-27
10
-1,015
33
0
1,324
14
Equity investments in associates
Cost
Cost at 1 January
Additions for the year
Disposals for the year
Cost at 31 December
Revaluations at net asset value
Revaluations at 1 January
Dividend received, this year
Value adjustments for the year
Revaluations at 31 December
Carrying amount at 31 December
215
13
-2
226
10
0
6
16
242
201
14
0
215
17
-10
3
10
225
DKKm
13
Investment property
Fair value at 1 January
Exchange rate adjustments
Additions for the year
Disposals for the year
Value adjustments for the year
Reversed on sale
Fair value at 31 December
Total rental income for 2018 is DKK 87m (DKK 88m in 2017).
Total expenses for 2018 are DKK 20m (DKK 20m in 2017). Of this amount, expenses for non-let property
total DKK 0m (DKK 0m in 2017), total expenses for the income-generating investment property are
DKK 20m (DKK 20m in 2017). External experts were involved in valuing the majority of the investment
properties.
Return percentages, weighted average
2018
2017
Business property
Office property
Residential property
Total
5.0
6.9
3.2
5.7
6.4
7.9
6.0
7.0
Sensitivity
Tryg’s property valuations are based on the market-based rental income and operating expenses of
the individual property, relative to the required rate of return. The most important factors impacting the
valuations are the applied rates of return, annual net rental income and occupancy rates. The average
rates of return applied are stated above.
Impacts on the fair value of properties:
Increase in applied rate of return of 0.25%
Decrease in applied rate of return of 0.25%
Decrease in net rental income of 3%
Decrease in occupancy rate of 3%
2018
-46
49
-40
-8
2017
-58
63
-41
-8
Contents – Financial statements
83
NotesAnnual report 2018 | Tryg A/S |
Notes
DKKm
14
Equity investments in associates (continued)
Shares in associates according to the latest annual report:
Name and registered office
Assets
Liabilities
Equity
Revenue
Profit/loss
for the year
Ownership
share in %
2018
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
2017
Ejendomsselskabet af 1. marts 2006 P/S, Denmark
1,190
1,121
224
222
966
899
68
67
150
68
25
25
Individual estimates are made of the degree of influence
under the contracts made.
Ejendomsselskabet af 1. marts 2006 P/S, Denmark is
sold in January 2019
Contents – Financial statements
84
Annual report 2018 | Tryg A/S |
DKKm
15
Financial assets
Financial assets at fair value with value adjustments in
the income statement
Derivative financial instruments at fair value used for hedge
accounting with value adjustment in other comprehensive income
Receivables measured at amortised cost with value adjustment
in the income statement
Total financial assets
2018
2017
41,694
43,434
59
3,050
44,803
77
3,237
46,748
Financial assets at amortised cost only deviate to a minor extent from fair value.
Financial liabilities
Derivative financial instruments at fair value with value
adjustments in the income statement
Financial liabilities at amortised cost with value
adjustment in the income statement
Total financial liabilities
740
11,186
11,926
746
6,887
7,633
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.
15
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
instruments 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 13 and accounting policies section Investment property.
If, at the balance sheet date, a financial instrument’s classification differs from its classification at the
beginning 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
85
NotesAnnual report 2018 | Tryg A/S |
DKKm
15
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 Non-observable
input
input
2018
Investment property
Equity investments
Unit trust units
Bonds
Derivative financial instruments, assets
Derivative financial instruments, debt
0
135
1,663
30,678
0
0
32,476
2017
Investment property
Equity investments
Unit trust units
Bonds
Deposits with credit institutions
Derivative financial instruments, assets
Derivative financial instruments, debt
0
0
4,622
18,343
0
0
0
22,965
0
899
0
7,302
899
-740
8,360
0
0
229
18,808
250
1,079
-746
19,620
1,345
115
0
62
0
0
1,522
1,324
179
1
0
0
0
0
1,504
Total
1,345
1,149
1,663
38,042
899
-740
42,358
1,324
179
4,852
37,151
250
1,079
-746
44,089
DKKm
15
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
Addition purchase Alka
Gains/losses in the income statement a)
Purchases
Sales
Carrying amount at 31 December
2018
2017
1,504
-5
138
210
18
-343
1,522
2,381
-31
0
-8
178
-1,016
1,504
Gains/losses in the income statement for assets held at the statement
of financial position date recognised in value adjustments
75
-39
a) Hereof realised DKK 41m.
Inflation derivatives are measured at fair value on the basis of non-observable input and are included
under claims provisions at a fair value of DKK -521m (DKK -386m in 2017).
Derivative financial instruments
Derivatives with value adjustments in the income statement at fair value:
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.
DKKm
2018
2017
Financial instruments transferred from quoted market prices
to observable input
Financial instruments transferred from observables or
non-observables input to quoted market prices
Financial instruments transferred from non-observables
to observable prices
3,114
11,115
0
950
1,379
0
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
Contents – Financial statements
Derivatives, repos and reverses are used continuously as part of the cash and risk management
carried out by Tryg and its portfolio managers.
2018
Fair value
in statement
of financial
position
138
10
11
Nominal
23,415
235
4,127
Nominal
28,037
-135
9,121
27,777
159
37,023
7,346
35,123
8,108
15,187
11,828
-521
-362
-1,158
254
542
3,311
40,334
13,455
10,498
16,381
2017
Fair value
in statement
of financial
position
184
10
139
333
-386
-53
134
-26
-161
86
NotesAnnual report 2018 | Tryg A/S |
DKKm
15
Financial assets (Continued)
Derivative financial instruments used in connection with
hedging of foreign entities for accounting purposes
Gains and losses on hedges charged to other comprehensive income:
2018
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
2017
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
Gains
2,903
197
3,100
Gains
2,652
251
2,903
Losses
-2,742
-148
-2,890
Losses
-2,626
-116
-2,742
Value adjustments
Value adjustments of foreign entities recognised in other comprehensive income in the amount of:
Value adjustments at 1 January
Value adjustment for the year
Value adjustments at 31 December
2018
-152
-50
-202
DKKm
15
Financial assets (Continued)
Receivables
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Unsettled transactions
Reverse repos
Other receivables
Specification of write-downs on receivables from insurance contracts:
Write-downs at 1 January
Exchange rate adjustments
Write-downs and reversed write-downs for the year
Write-downs at 31 December
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 52m (DKK 42m in 2017).
Other receivables do not contain overdue receivables
2018
2017
1,476
144
611
0
192
2,423
115
-1
25
139
1,471
300
0
602
355
2,728
117
-5
3
115
16
Reinsurer's share
Impairment test
As at 31 December 2018, 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 0m in 2017). The use of reinsurance creates a natural counterparty risk. The Risk
will be handled by applying a wide range of reinsurers with at least an 'A' rating.
Net
161
49
210
Net
26
135
161
2017
-15
-137
-152
Contents – Financial statements
87
NotesAnnual report 2018 | Tryg A/S |
2018
2017
DKKm
2018
2017
Solvency II – Own funds
Equity according to annual report
Proposed dividend
Intangible assets
Profit margin, solvency purpose
Taxes
Subordinate loan capital
Solvency II – Own funds
Premium provisions
Premium provision at 1 January
Addition on acquisition of Alka and Troll portfolio (2017 Obos)
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
11,334
-499
-7,236
1,408
311
2,740
8,058
5,559
454
-59
18,820
-18,921
8
5,861
12,616
-1,483
-1,105
970
0
2,164
13,162
5,487
79
-132
17,991
-17,868
2
5,559
DKKm
17
Current tax
Net current tax at 1 January
Exchange rate adjustments
Purchase or sale of activity
Current tax for the year
Current tax on equity entries
Adjustment of current tax in respect of previous years
Tax paid for the year
Net current tax at 31 December
Current tax is recognised in the statement of finansiel position as follows:
Under liabilities, current tax
Net current tax
-194
2
-7
-583
-12
37
639
-118
-118
-118
18
19
-317
6
0
-666
-30
-32
845
-194
-194
-194
18
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
2017
2018
301,945
-382
0
274,595
-211
27,400
0
180
0
161
Number of shares at 31 December
301,743
301,945
Number of shares as a percentage
of issued shares at 31 December
Nominal value at 31 december (DKKm)
99.87
1,509
99.93
1,510
Own shares
2018
203
382
0
2017
7,946
211
0
0
-7,793
-180
405
0.13
2
-161
203
0.07
1
Pursuant to the authorisation granted by the shareholders, Tryg may acquire up to a total face value 151m
DKK of the share capital in the period up until 31 December 2019. Own shares are acquired for use in the
Group's incentive programme.
Contents – Financial statements
88
NotesAnnual report 2018 | Tryg A/S |
DKKm
19
Claims provisions
DKKm
19
Claims provisions (continued)
Gross
Ceded
Net of
reinsurance
Gross
Ceded
Net of
reinsurance
2018
Claims provisions at 1 January
Addition, purchase of Alka and Troll 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
23,925
1,626
-209
25,342
-7,132
-6,125
-13,257
13,678
-1,105
12,573
189
24,847
-1,121
-37
10
-1,148
250
310
560
-664
18
-646
0
-1,234
22,804
1,589
-199
24,194
-6,882
-5,815
-12,697
13,014
-1,087
11,927
189
23,613
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 adjustment
Claims provisions at 31 December
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
Contents – Financial statements
89
NotesAnnual report 2018 | Tryg A/S |
DKKm
2018
2017
DKKm
2018
2017
20
Pensions and similar obligations
Jubilees
Recognised liability
Defined-benefit pension plans:
Present value of pension obligations funded through operations
Present value of pension obligations funded through establishment of funds
Pension obligation, gross
Fair value of plan assets
Pension obligation, net
Specification of change in recognised pension obligations:
Recognised pension obligation at 1 January
Exchange rate adjustments
Present value of pensions earned during the year
Capital cost of previously earned pensions
Actuarial gains/losses
Paid during the period
Recognised pension obligation at 31 December
Change in carrying amount of plan assets:
Carrying amount of plan assets at 1 January
Exchange rate adjustments
Investments in the year
Estimated return on pension funds
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
Contents – Financial statements
20
Pensions and similar obligations (continued)
Specification of pension cost for the year:
Present value of pensions earned during the year
Interest expense on accrued pension obligation
Expected return on plan assets
Accrued employer contributions
Total year's cost of defined-benefit plans
The premium for the following financial years is estimated at
Number of active persons
Number of pensioners
Average expected remaining service time (years)
Estimated distribution of plan assets:
Shares
Bonds
Property
Other
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
26
18
-14
5
35
35
442
588
7.00
%
10
77
12
1
1.7
13
%
2.0
2.0
2.8
0.8
2.5
7.0
19.1
K2013
47
47
40
1,065
1,105
875
230
1,133
-16
30
19
-4
-57
1,105
885
-10
31
14
-8
-37
875
230
277
42
42
65
1,068
1,133
885
248
1,268
-95
33
16
-39
-50
1,133
960
-73
83
2
-50
-37
885
248
290
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
90
NotesAnnual report 2018 | Tryg A/S |
DKKm
20
Sensitivity information
The sensitivity analysis is based on a change in one of the assumptions, assuming that all other assump-
tions 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 calcu-
lation of the pension provisions in the statement of financial position.
21
Deferred tax
Tax asset
Operating equipment
Debt and provisions
2018
2017
DKKm
2018
2017
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
49
-52
-76
66
30
-36
46
-49
-92
78
22
-26
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 Livsforsikringsselskapet Nordea Liv AS 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 12m, which is about 1,9 % of the annual premium in FPK
(2017). FPK writes in its interim report for 2018 that it had a collective consolidation ratio of 141 at 30
June 2018 (consolidation ratio of 140 at 30 June 2017). The collective consolidation ratio is defined as
the fair value of the plan assets relative to the total collective pension obligations.
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
Purchase or sale of activity
Change in capitalised tax loss
Change in deferred tax recognised in income statement
Deferred tax at 31 December
Tax value of non-capitalised tax loss
Denmark
9
77
86
389
105
-61
565
998
912
656
-9
-3
33
288
38
-91
912
16
8
51
59
25
130
15
545
715
656
702
-48
-1
13
0
0
-10
656
16
The loss in Tryg A/S cannot be utilised in the Danish joint taxation scheme. The loss can be carried forward
indefinitely.
The losses are not recognised as tax assets until it has been substantiated that the company can generate
sufficient future taxable income to offset the tax 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 13m
(DKK 25m at 31 December 2017).
Contents – Financial statements
91
NotesAnnual report 2018 | Tryg A/S |
DKKm
22
Other provisions
Other provisions at 1 January
Exchange rate adjustment
Change in provisions
Other provisions 31 December
2018
2017
DKKm
111
-1
1
111
125
-4
-10
111
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 22m and use of existing
restructuring provisions amounts to DKK 24m. The balance as at 31 December 2018 amounts to DKK
102m (DKK 104m at 31 December 2017).
23
Amounts owed to credit institutions
Overdraft facilities
24
Debt relating to unsettled funds transactions and repos
Unsettled fund transactions
Repo debt
494
494
611
2,797
3,408
306
306
1,611
100
1,711
24
Other Debt
Debt related to Leasing are included in Other Debt.
Please refer to note 12 for specification of ROU assets.
Maturity of undiscounted lease liabilities
Due 1 year or less
Due 1 year-5 years
Due more than 5 years
Total Lease liabilities 31 December
Hereof future cash flow options
Amounts recognised in statement of cash flow
Total cash out-flow for leases
Amounts recognised in income statement
Interest on lease liabilities
Expenses relating to short team-leases
Implementation of IFRS 16 1 January 2018 a)
Lease liabilities at 31 December 2017 b)
Adjustment at initial application of IFRS 16
Initial application at 1 January 2018
Discounting
Unsettled fund transactions include debt for bonds purchased in 2017 and 2018, however, with settle-
ment in 2018 and 2019, respectively. Financial instruments comprised by repo agreements, meaning fi-
nancial instruments sold before the balance sheet date and repurchased after the balancesheet date, re-
mains recognised in the balance sheet, while the received amount is recognised as Repo debt.
Lease liabilities recognised in statement of financial position at 1 January
Weighted average incremental borrowing rate at initial application
a) Please refer to Note 30 Accounting policies for further description
b) Please refer to Note 26 Contractual obligations
2018
131
346
496
973
4
135
-38
0
1,003
71
1,074
-285
789
5.2%
Contents – Financial statements
92
NotesAnnual report 2018 | Tryg A/S |
2018
2017
DKKm
2018
2017
26
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, Tryg Livsforsikring A/S, Forsikrings-Aktieselskabet Alka
and Forsikings-Aktieselskabet Alka Liv II 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
413
0
27,011
0
144
8,388
35,956
14
1,759
36,000
250
197
2,529
40,749
2,519
-2
2,517
276,080
279,080
9.12
9.12
9.12
9.12
Total
594
594
1,003
913
1,916
DKKm
25
Earnings per share
Profit/loss from continuing business
Profit/loss on discontinued and divested business
Profit/loss for the year
Average number of shares (1,000)
Diluted number of shares (1,000)
Earnings per share, continuing business
Diluted earnings per share, continuing business
Earnings per share
Diluted earnings per share
1,733
-2
1,731
302,043
302,043
5.74
5.74
5.73
5.73
26
Contractual obligations, collateral and contingent liabilities
Contractual obligations
2018
Other contractual obligations a)
2017
Operating leases
Other contractual obligations
<1 year
335
335
120
867
987
Obligations due by period
1-3 years
3-5 years
> 5 years
210
210
197
40
237
45
45
134
6
140
4
4
552
0
552
a) Other contractual obligations mainly consists of IT and outsourcing agreements
Please refer to note 12 for lease agreements recognised as ROU.
2018
Tryg has signed the following contracts with amounts above DKK 50m:
Tryg is committed to invest in some Investmentfunds. The commitment amounts to
DKK 263m and are expected called during 2019.
2017
Tryg is committed to Investments in some Propertyfunds. The commitment amounts
to DKK 674m and are expected called during 2018.
Contents – Financial statements
93
NotesAnnual report 2018 | Tryg A/S |
Contingent liabilities
Companies in the Tryg Group are party to a number
of disputes.
Management believes that the outcome of these
disputes will not affect the Group's financial position
significantly beyond the obligations recognized in the
statement of financial position at 31 December 2018.
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
2018
Assets
Reverse repos
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
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
0
899
3
902
2,797
740
525
4,062
602
1,079
19
1,700
100
746
405
1,251
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
899
3
902
2,797
740
525
4,062
602
1,079
19
1,700
100
746
405
1,251
0
0
0
0
-2,797
0
0
-2,797
-602
0
0
-602
-100
0
0
-100
-4
-874
-3
-881
-2
-740
-525
-1,267
0
-1,058
-15
-1,073
-1
-718
-411
-1,130
-4
25
0
21
-2
0
0
-2
0
21
4
25
-1
28
-6
21
Contents – Financial statements
94
Annual report 2018 | Tryg A/S |
DKKm
27
Acquisition of activities
2018
Alka
In December 2017 Tryg agreed to acquire Forsikrings-Aktieselskabet Alka (Alka). The transaction was
approved as per 5 November 2018 with closing 8 November 2018, whereby Tryg acquired 100% of the
shares in Alka and its subsidiaries. The acquisition affects the Financial statement from 8 November 2018.
The result will be recognised under Private Denmark and Commercial Denmark.
FDM
Tryg acquired FDM's insurance portfolio at 1 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.
The result will be recognised under Private Denmark.
Troll
In February 2018 Tryg and Troll Forsikring made a declaration of intent whereby Tryg would acquire
Troll Forsikring AS. The agreement meant that Tryg would acquire the production and distribution of the
insurances sold to Troll's policyholders. The agreements was signed in February and the acquisition was
approved by the Danish and Norwegian FSA in March 2018.
Net assets acquired
Alka
Troll
2018
Assets
Intangible assets
Tangible 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
1,429
112
5,638
19
277
2,387
852
4,236
145
8,477
8,332
4,241
0
0
42
64
83
83
54
52
42
55
13
3
1,429
112
5,680
83
360
2,470
906
4,288
187
8,532
8,345
4,244
OBOS
2017
51
0
121
49
113
143
74
117
13
168
155
51
27
Acquisition of subsidiaries
The Group has incurred transaction and advisory costs of DKK 76m in connection with the acquisition.
The purchase price is final. In connection with the acquisition, a sum was paid which exceeds the fair
value of the identifiable acquired assets and total provisions for insurance contracts. This positive balance
is mainly attributable to Brands, Customer relations and to expected synergies between the portfolios in
the acquired activities and the Group’s existing activities, which are not separately identifiable.
The Goodwill acquired is not tax deductible. Alka is included going forward from 8 November 2018,
with a premium of approx. DKK 385m and a technical result of approx. DKK 60m. If the activities were
included with a full year, the premium income would amount to approx. DKK 2.300m and the technical
result would be approx. DKK 300m.
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.
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 Norwegian business.
The acquisition affects the Financial statement from 1 June 2017:
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
in line with other Tryg activities in Norway.
Contents – Financial statements
95
NotesAnnual report 2018 | Tryg A/S |
DKKm
28
Related parties
The group has no related parties with a decisive influence other than the parent company, TryghedsGruppen
smba and the subsidiaries of TryghedsGruppen smba (other related parties). Related parties with significant
influence include the Supervisory Board, the Executive Management and their members’ family.
28
Related parties (continued)
2017
Number of
persons
Share-based
Variable
salarya)
Base
salary
Cash
Variable
salary
Pension
Total
2018
2017
DKKm
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Key management
- Other related parties
0.5
0.0
4.5
0.0
0.4
0.4
0.3
2.2
0.1
1.0
Specification of remuneration
2018
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
3
control functions
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.
13
4
Supervisory Board
Executive Board
Risk-takers investment
functions
Risk-takers staff functions
Risk-takers independent
control functions
4
Risk-takers other functions 18
6
17
8
25
8
23
6
35
62
105
0
3
0
1
0
3
7
0
3
1
3
1
6
0
6
1
3
1
4
8
37
10
30
7
48
13
15
140
Of which retired:
Number
of persons
Severance
pay
Supervisory Board
Executive Management
Risk-takers
1
0
1
2
0
0
0
0
a) Total expenses in 2018 for matching shares and conditional shares allocated in 2018 and previous year.
For matching shares and conditional shares allocated to Executive Board in 2019 for fiscal year 2018,
see Section ’Corporate governance’ in Management review.
Of which retired:
Supervisory Board
Executive Board
Risk-takers
Number
of persons
Severance
pay
1
1
5
7
0
0
0
0
Contents – Financial statements
96
NotesAnnual report 2018 | Tryg A/S |
DKKm
29
Financial highlights
Please refer to page 54.
DKKm
28
Related parties (continued)
Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares and conditional shares, which are recognised over 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, car allowance and pension. The variable salary is
awarded in the form of share based remuneration and cash, see 'Corporate governance'.
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.
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
2018
In 2018 Tryg Forsikring A/S paid Tryg A/S DKK 1,437m and Tryg A/S paid TryghedsGruppen smba DKK
1,788m in dividends. Further Tryg A/S also made a capital contribution of DKK 2,000m to Tryg Forsikring.
In 2018, TryghedsGruppen smba has invested DKKm 313 in ’Kapitalforeningen Tryg Invest’. The amount is
recognised under Other Financial investment assets and Debt to Group undertakings.
2017
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 state-
ments in accordance with the accounting policies.
Contents – Financial statements
97
NotesAnnual report 2018 | 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 2018 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.
Change in accounting policies
IFRS 16, Leases
Tryg has implemented IFRS 16 one year ahead of its ef-
fective date and will consequently recognise lease assets
(Right of Use-asset) and lease liabilities in the balance
sheet. The implementation of IFRS 16 has no significant
impact on either profit or loss or equity. Lease assets
recognised comprise ' Group-occupied property' and
'Operating equipment'. Lease liabilities are recognised in
the line item 'Other debt'. Early application of IFRS 16 is
only possible because 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 the fact that our
income is primarily related to premiums accounted for
under IFRS 4. Tryg has elected not to implement regard-
ing intangibles, short term and low value lease contracts.
The total impact on the balance sheet 1 January 2018,
using the modified retrospective approach was;
Assets
Total property, plant and equipment
Total assets
Equity and liabilities
Total debt
Total equity and liabilities
In addition please see note 24.
789
789
789
789
As a consequence of applying the modified retrospective
approach comparative figures has not been restated.
Other
Going forward from 01.01.2018 Tryg has classified
depreciation related to some intangible assets, such as
customer relationship and distribution. The reclassifica-
tion has not affected Profit and Loss or Equity but de-
preciation related to said items will be presented in the
line item ’other costs’ instead of the line item ’Acquisition
costs and administration expenses’ where they were
previously presented.
Comparative figures have not been restated due to im-
materiality.
Except as noted above, the accounting policies have
been applied consistently with last year.
Accounting regulation
Implementation of changes to accounting
standard and interpretation in 2018
The International Accounting Standards Board (IASB) has
issued several changes to the international accounting
standards, and the International Financial Reporting
Interpretations Committee (IFRIC) has also issued a
number of interpretations.
No standards or interpretations have been implemented
for the first time for the accounting year that began on 1st
January 2018 that will have a significant impact on the
group. See below regarding IFRS 9 ‘Financial instruments’
There has not been implemented any new or amended
standards and interpretations that have affected the
group significantly.
Significant accounting estimates
and assessments
Future orders, standards and interpretations that the
group has not implemented and which have still not en-
tered into force but could affect the group significantly:
•
•
IFRS 9 ‘Financial Instruments’ a)
IFRS 17 ‘Insurance Contracts’ b)
a) enters into force for the accounting year commencing
1 January 2018 – Insurance companies are allowed
to postpone the implementation to 1 January 2022 if
certain criteria are met.
b) enters into force for the accounting year commencing
1 January 2022.
The implementation of IFRS 9 ‘financial instruments’ is
not expected to significantly change the group’s financial
position.
Regarding IFRS 9 the assessment of no significant impact
on the statement of financial position or profit and loss
is based on the assumption that Tryg already carry all
financial instruments at fair value through profit and loss.
The implementation of IFRS 9, will not effect Tryg’s rec-
ognition and measurement. Tryg has postponed the im-
plementation of IFRS 9 to 1 January 2022 when IFRS 17
Insurance Contracts will be applicable. Tryg can postpone
IFRS 9 due to the fact that our activities are predomi-
nantly connected with insurance and that our liabilities
connected 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.
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
• Valuation of defined benefit plans
• Fair value of financial assets and liabilities
• Valuation of property
• Business Combinations
•
Measurement of goodwill, Trademarks
and Customer relations
• Control of subsidiaries
Liabilities under insurance contracts
Estimates of provisions for insurance contracts represent
the Group’s most critical accounting estimates, as these
provisions involve several 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
Contents – Financial statements
98
NotesAnnual report 2018 | Tryg A/S |
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 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.
The calculation of the claims provisions is therefore
inherently uncertain and, by necessity, relies upon the
making of certain assumptions as regards factors such
as court decisions, amendments to legislation, social
inflation and other economic trends, including inflation.
The Group’s actual liability for losses may therefore be
subject to material positive or negative deviations rela-
tive to the initially estimated claims provisions.
Claims provisions are discounted. As a result, initial
changes in discount rates or changes in the duration of
the claims provisions could have positive or negative
effects on earnings. Discounting affects the motor
third-party liability, general third-party liability, workers’
compensation classes, including sickness and personal
accidents, 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.
Fair value of financial assets and liabilities
Measurements of financial assets and liabilities for
which prices are quoted in an active market or which are
based on generally accepted models with observable
market data are not subject to material 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 deter-
mined using a current OTC price of a similar financial
instrument or using a model calculation. The valuation
models include the discounting of the instrument cash
flow using an appropriate market interest rate with due
consideration for credit and liquidity premiums.
Valuation of property
Property is divided into owner-occupied property and in-
vestment property. The fair value is calculated based on
a market-determined rental income, as well as operating
expenses in proportion to the property’s required rate of
return in per cent. Investment property is recognised at
fair value. The calculation of fair value is based on mar-
ket prices, taking into consideration the type of property,
location and maintenance standard, and based on a
market- determined rental income as well as operating
expenses in proportion to the property’s required rate of
return. Cf. note 12, 13 and 15.
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.
Business Combinations
In Business Combinations, significant assessments
are made when considering the fair value of the assets
required and liabilities assumed and when identifying in-
tangible assets, such as Trademarks, Customer relations
and goodwill as part of the transactions.
Measurement of goodwill, Trademarks
and Customer relations
Goodwill, Trademarks and customer relations was
acquired in connection with acquisition of businesses.
Goodwill is allocated to the cash-generating units under
which management manages the investment. The
carrying amount is tested for impairment at least an-
nually. Impairment testing involves estimates of future
cash flows and is affected by several factors, including
discount rates and other circumstances dependent
on economic trends, such as customer behaviour and
competition. Cf. note 11.
Control of subsidiaries
Control of subsidiaries is assessed yearly. Hence
whether a subsidiary should still be part of the consoli-
dation on line by line basis or as a single line item in the
balance sheet.
Description of accounting policies
Recognition and measurement
The annual report has been prepared under the 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 (including
derivative instruments) at fair value in the income state-
ment.
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 meas-
ured at cost, with the exception of financial assets,
which are recognised at fair value. Measurement sub-
sequent to initial recognition is effected as described
below for each item. Anticipated risks and losses that
arise before the time of presentation of the annual
report and that confirm or invalidate affairs and condi-
tions existing at the statement of financial position date
are considered at recognition and measurement.
Income is recognised in the income statement as
earned, whereas costs are recognised by the amounts
attributable to this financial year. Value adjustments
of financial assets and liabilities are recognised in the
income statement unless otherwise described below.
All amounts in the notes are shown in millions of DKK,
unless otherwise stated.
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
exercises significant influence but no controlling influ-
ence are classified as associates.
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NotesAnnual report 2018 | Tryg A/S |
Basis of consolidation
The consolidated financial statements are prepared on
the basis of the financial statements of Tryg A/S and its
subsidiaries. The consolidated financial statements are
prepared by combining items of a uniform nature. The
financial statements used for the consolidation are pre-
pared 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
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 recog-
nised 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 determination of the price is con-
ditional upon one or more future events, such events are
recognised at their fair values at the date of 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.
In the event of negative balances (negative goodwill),
the calculated fair values, the calculated acquisition
price of the enterprise, the value of minority interests in
the acquired enterprise and the fair value of 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,
liabilities or contingent liabilities or the determination
of the acquisition 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 acquisi-
tion which would have affected the determination of the
values at the date of acquisition, had such information
been known.
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.
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. In-
come and expense items are translated using the average
exchange rates for the period. Exchange rate differences
arising on translation are classified as other comprehen-
sive income and transferred to the Group’s translation
reserve. Such translation differences are recognised as
income or as expenses in the period in which the activities
are divested. All other foreign currency translation gains
and losses are recognised in the income statement.
The presentation currency in the annual report is DKK.
Segment reporting
Segment information is based on the Group’s man-
agement and internal financial reporting system and
supports the management decisions on allocation of
resources and assessment of the Group’s results divided
into segments.
Denmark and Norway. Commercial encompasses the
sale of insurances to small and medium sized business-
es, in Denmark and Norway. Corporate sells insurances
to industrial clients primarily in Denmark, Norway and
Sweden. In addition, Corporate handles all business
involving brokers. Sweden encompasses the sale of
insurance products to private individuals in Sweden as
well as sale of Product insurances in the Nordic region.
Geographical information is presented on the basis of the
economic environment in which the Tryg Group operates.
The geographical areas are Denmark, 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.
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.
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.
Generally, subsequent changes in estimates of condi-
tional acquisition prices are recognised directly in the
income statement.
The operational business segments in Tryg are Private,
Commercial, Corporate and Sweden. Private encom-
passes the sale of insurances to private individuals in
Premiums are calculated as premium income in ac-
cordance with the risk exposure over the cover period,
calculated separately for each individual insurance
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100
NotesAnnual report 2018 | Tryg A/S |
contract. The calculation is generally based on the pro
rata method, although this is adjusted for an unevenly
divided risk between lines of business with strong
seasonal variations or for policies lasting many years.
The portion of premiums received on contracts that
relate to unexpired risks at the statement of financial
position date is reported under premium provisions.
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.
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 accord-
ing to the expected run-off pattern of the provisions.
Insurance technical interest is reduced by the portion of
the increase in net provisions that relates to unwinding.
Claims
Claims are claims paid during the year and adjusted for
changes in claims provisions less the reinsurers’ share.
In addition, the item 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.
Bonus and premium discounts
Bonus 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-
tion expenses are all other expenses attributable to the
administration of the insurance portfolio. Administration
expenses are accrued to match the financial year.
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
instrument, consisting of the right to cash settlement
and the right to request delivery of shares. The difference
between the value of shares and the cash payment is 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
connection with the Matching share programme.
The holder acquires the shares in the open window fol-
lowing publication of the annual report for the previous
year. The shares (matching shares) are provided free of
charge, three or four years after the time of purchase
of the investment Shares. The holder may not sell the
shares until six months after the matching time.
The shares are recognised at market value and are
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.
Interest and dividends represent interest earned and
dividends received during the financial year. Realised and
unrealised investment gains and losses, including gains
and losses on derivative financial instruments, value
adjustment of investment property, foreign currency
translation adjustments and the effect of movements in
the yield curve used for discounting, are recognised as
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 insur-
ance portfolio or investment assets, including the sale
of products for Velliv, Pension & Livsforsikring A/S and
depreciations of intangibles assets identified in Business
combinations.
Discontinued and divested business
Discontinued and divested business is consolidated in
one item in the income statement. Discontinued and di-
vested business includes gross premiums, gross claims,
gross costs, profit/loss on ceded business, insurance
technical interest net of reinsurance, investment return
after insurance technical interest, other income and
costs and tax in respect of the discontinued business.
Any reversal of earlier impairment is recognised under
other income and costs.
The statement of financial position items concerning 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.
Income from investment properties before fair value ad-
justment represents the profit from property operations
less property management expenses.
The comparative figures, including five-year financial high-
lights and key ratios, have been restated to reflect discon-
Contents – Financial statements
101
NotesAnnual report 2018 | Tryg A/S | tinued business. Discontinued and divested business 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. Discontinued business
also comprises the Tryg Forsikring A/S run-off business.
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.
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.
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.
Depreciation of operating equipment is calculated using
the straight-line method over its estimated economic
lifetime as follows:
•
IT, 4-8 years
• Vehicles, 5 years
• Furniture, fittings and equipment, 5-10 years
Leasehold improvements are depreciated over the ex-
pected economic lifetime, however maximally the term
of the lease.
Gains and losses on disposals and retired assets are
determined by comparing proceeds with carrying
amounts. Gains and losses are recognised in the income
statement. When revalued assets are sold, the amounts
included in the revaluation reserves are transferred to
retained earnings.
Leasing
Right-of-use assets
At inception of a contract, Tryg assesses whether a
contract is, or contains, a lease. It has the following
prerequisites:
• The underlying asset is identifiable
•
The group has the right to obtain substantially all the
economic benefits from use of the asset throughout
the period of use
• The group has the right to direct the use of the asset
Tryg recognises a right-of-use asset and a correspond-
ing lease liability with respect to all lease agreements
in which it is the lessee, excluding short-term leases
(defined as leases with a lease term of 12 months or
less) and leases of low value assets.
At inception or on reassessment of a contract that con-
tains lease components, Tryg allocates the consideration
in the contract to each lease component based on their
relative stand-alone prices.
Right-of-use asset (ROU asset) and lease liability are
recognised at the lease commencement date. The ROU
asset is initially measured the cost, which comprises the
initial amount of the lease liability adjusted for
•
lease payments made at or before
the commencement date
• any initial direct cost incurred
•
estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset
lease incentives received
•
ROU assets are tested for impairment.
Lease liability
The lease liability is initially measured at the present
value of the lease payments that are not paid at the com-
mencement date, discounted by using the rate implicit in
the lease. If this rate cannot be readily determined, Tryg
uses its incremental borrowing rate. Subsequently, the
lease liability is measured at amortised cost using the ef-
fective interest method and is presented as part of other
debt. It is remeasured when there is a change in future
lease payments. A corresponding adjustment is made to
the carrying amount of the ROU asset.
Land and buildings
Land and buildings are divided into owner-occupied
property and investment property. The Group’s owner-
occupied properties consist of an office building in Høje
Taastrup and a small number of summer house. The re-
maining properties are classified as investment property.
Owner-occupied property
Owner-occupied property is property that is used in
the Group’s operations. Owner-occupied properties are
measured in the statement of financial position at their
revalued amounts, being the fair value at the date of
revaluation, less any subsequent accumulated deprecia-
tion and impairment losses. Revaluations are performed
regularly to avoid material differences between the
carrying amounts and fair values of owner-occupied
property at the statement of financial position date. The
fair value is calculated based on market-specific rental
income per property and typical operating expenses for
the coming year. The resulting operating income is di-
vided 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.
Increases in the revalued carrying amounts of owner-oc-
cupied property are recognised in the revaluation reserve
in equity. Decreases that offset previous revaluations of
the same asset are charged against the revaluation re-
serves directly in equity; all other decreases are charged
to the income statement.
Costs are included in the asset’s carrying amount or recog-
nised as a separate asset, as appropriate, when it is prob-
able that future economic benefits associated with the
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102
NotesAnnual report 2018 | Tryg A/S | item will flow to the Group, and the cost of the item can be
measured reliably. Ordinary repair and maintenance costs
are expensed in the income statement when incurred.
applies to the salvage value. Write-down is performed
if impairment has been demonstrated.
Statement of financial position items of foreign subsidiar-
ies are translated using the exchange rates applicable at
the statement of financial position date.
Depreciation on owner-occupied property is calcu-
lated based on the straight-line method and using an
estimated economic lifetime of up to 50 years. Land is
not depreciated.
Investment property
Properties held for renting yields that are not occupied
by the Group are classified as investment properties.
Investment property is recognised at fair value. Fair value
is based on market prices, adjusted for any differences in
the nature, location or maintenance condition of specific
assets. If this information is not available, the Group uses
alternative valuation methods such as discounted cash
flow projections and recent prices in the market.
The fair value is calculated on the basis of market-
specific rental income per property and typical 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
tenant terms and conditions. Cf. note 15 and 13.
Changes in fair values are recorded in the income
statement.
Impairment test for intangible assets, property
and operating equipment
Operating equipment and intangible assets are 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
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
and losses is recognised in the income statement. In the
statement of financial position, equity investments are
measured at the pro rata share of the enterprises’ equity.
Subsidiaries with a negative net asset value are 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.
When it is 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 signifi-
cant influence but not control, generally in the form of an
ownership interest of between 20% and 50% of the vot-
ing rights. Equity investments in associates are measured
using the equity method so that the carrying amount of
the investment represents the Group’s proportionate
share of the enterprises’ net assets.
Profit after tax from equity investments in associates
is included as a separate line in the income statement.
Income is made up after elimination of unrealised intra-
group profits and losses.
Associates with a negative net asset value are measured
at zero value. If the Group has a legal or constructive
obligation to cover the associate’s negative balance,
such obligation is recognised under liabilities.
Investments
Investments include financial assets at fair value which
are recognised in the income statement. The classifica-
tion depends on the purpose for which the investments
were acquired. Management determines the clas-
sification of it's 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
because of changes in the fair value for the category
financial assets at fair value are recognised in the income
statement in the period in which they arise.
Financial assets are derecognised when the rights to
receive cash flows from the financial assets have expired,
or if they have been transferred, and the Group has also
transferred substantially all risks and rewards of owner-
ship. Financial assets are recognised and derecognised
on a trade date basis, the date on which the Group com-
mits to purchase or sell the asset.
The fair values of quoted securities are based on stock
exchange prices at the statement of financial posi-
tion 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
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103
NotesAnnual report 2018 | Tryg A/S |
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 based on
rates supplied by Danske Bank with relevant informa-
tion providers and is checked by the Group’s valuation
technicians. Discounting based on market interest rates
is applied in the case of derivative financial instruments
involving an expected future cash flow.
Recognition of the resulting gain or loss depends on
whether the derivative is designated as a hedging instru-
ment 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 rec-
ognised 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 exchange contracts according to the
requirements of hedge accounting. Changes in the fair
value relating to the ineffective portion are recognised in
the income statement. Gains and losses accumulated in
equity are included in the income statement on disposal
of the foreign entity.
Reinsurers’ share of provisions for insurance contracts
Contracts entered into by the Group with reinsurers
under which the Group is compensated for losses on
Contents – Financial statements
one or more contracts issued by the Group and that meet
the classification requirements for insurance contracts are
classified as reinsurers’ share of provisions for insurance
contracts. Contracts that do not meet these classification
requirements are classified as financial assets.
The benefits to which the Group is entitled under its
reinsurance contracts held are recognised as assets and
reported as reinsurers’ share of provisions for insurance
contracts.
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.
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 it's 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 because 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 expected
unobtainable sums when there is a clear indication of as-
set impairment. The reservation entered is assessed as
the difference between the carrying amount of an asset
and the present value of expected future cash flows.
Other assets
Other assets include current tax assets and cash at bank
and in hand. Current tax assets are receivables concern-
ing tax for the year adjusted for on-account payments
and any prior-year adjustments. Cash at bank and in
hand is recognised at nominal value at the statement of
financial position date.
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 Su-
pervisory 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.
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.
Revaluation reserves
Revaluation of owner-occupied property is recognised
in other comprehensive income unless the revaluation
offsets a previous impairment loss.
Foreign currency translation reserve
Assets and liabilities of foreign entities are recognised
using the exchange rate applicable at the statement of
financial position date. Income and expense items are
recognised using the average monthly exchange rates for
the period. Any resulting differences are recognised in
Other comprehensive income. When an entity is wound
up, the balance is transferred to the income statement.
The hedging of the currency risk in respect of foreign
entities is also offset in other comprehensive income in
respect of the part that concerns the hedge.
Dividends
Proposed dividend is recognised as a liability at the time
of adoption by the shareholders at the annual general
meeting (date of declaration).
Own shares
The purchase and sale sums of own shares and divi-
dends thereon are taken directly to retained earnings
under equity. Own shares include shares acquired for
incentive programmes and share buyback 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 dif-
ference between the proceeds (net of transaction costs)
and the redemption value is recognised in the income
statement over the borrowing period using the effective
interest method.
Provisions for insurance contracts
Premiums written are recognised in the income 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
104
NotesAnnual report 2018 | Tryg A/S | risks at the statement of financial position date is
reported as premium provisions. Premium provisions
are generally calculated according to a best estimate of
expected payments throughout the agreed risk period;
however, as a minimum as the part of the premium
calculated using the pro rata temporis principle until
the next payment date. Adjustments are made to reflect
any risk variations. This applies to gross as well as ceded
business.
Claims and claims handling costs are expensed in the
income statement as incurred based on the estimated
liability for compensation owed to policyholders or third
parties sustaining losses at the hands of the 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.
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.
Employee benefits
Pension obligations
The Group operates various pension schemes. The
schemes are funded through contributions to insur-
ance companies or trustee-administered funds. In
Norway, the Group operates a defined-benefit plan. In
Denmark, the Group operates a defined-contribution
plan. A defined-contribution plan is a pension plan
under which the Group pays fixed contributions into
a separate entity (a fund) and will have no legal or
constructive obligation to pay further contributions.
In Sweden, the Group complies with the industry pen-
sion agreement, FTP-Planen. FTP-Planen is primarily
a defined-benefit plan as regards the future pension
benefits. Försäkringsbranschens Pensionskassa (FPK)
is unable to provide sufficient information for the Group
to use defined-benefit accounting. The plan is therefore
accounted for as a defined-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
employees are entitled as a result of their employment
with the group so far and which must be disbursed ac-
cording to the plan. The capital value is calculated using
the Projected Unit Credit Method, which is 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 previ-
ous financial years. The change is recognised in the
results immediately. Net finance costs for the year are
recognised in the investment return. All other costs are
recognised under insurance operating costs. The plan is
closed for new business.
Other employee benefits
Employees of the Group are entitled to a fixed 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.
Contents – Financial statements
105
NotesAnnual report 2018 | Tryg A/S |
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.
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.
the statement of financial position date, and it is prob-
able 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.
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 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.
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 because of an event prior to or at
Provisions for restructurings are recognised as obliga-
tions when a detailed formal restructuring plan has
been announced prior to or at the statement of finan-
cial position date at the latest to the persons affected
by the plan.
Own insurance is included under other provisions. The
provisions apply to the Group’s own insurance claims
and are reported when the damage occurs accord-
ing to the same principle as the Group’s other claims
provisions.
Debt
Debt comprises debt in connection with direct insur-
ance and reinsurance, amounts owed to credit institu-
tions, current tax obligations and other debt. 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.
Debt related to leasing and the external investors
share of Kapitalforeningen Tryg invest are included in
Other debt.
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
Contents – Management’s review
106
Annual report 2018 | Tryg A/S |
Income statement for Tryg A/S
(parent company)
2018
2017
DKKm
2018
2017
DKKm
Note
1
Investment activities
Income from Group undertakings
Interest income
Administration expenses in connection with investment activities
Total investment return
2
Other expenses
1,783
0
-1
1,782
-65
2,577
1
-6
2,572
-71
Profit/loss before tax
1,717
2,501
3
Tax
14
16
Profit/loss for the year
1,731
2,517
Proposed distribution for the year:
Dividend
Transferred to reserve for net revaluation according to the equity method
Transferred to retained earnings
1,996
347
-612
1,731
2,827
-1,026
716
2,517
Note
Statement of comprehensive income
Profit/loss for the year
Other comprehensive income
1,731
2,517
Other comprehensive income which cannot subsequently
be reclassified as profit or loss
Change in equalisation provision and other provisions
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
0
-5
1
-4
-50
49
-11
-12
-16
1,715
4
-7
2
-1
-137
135
-30
-32
-33
2,484
Contents – Financial statements
107
Annual report 2018 | Tryg A/S |
Statement of financial position for Tryg A/S
(parent company)
DKKm
Note
4
Assets
Intangible assets
5
Equity investments in Group undertakings
Total investments in Group undertakings
Total investment assets
Receivables from Group undertakings
Total receivables
6
Current tax assets
Total other assets
Total prepayments and accrued income
2018
2017
DKKm
2018
2017
1
11,407
11,407
11,407
0
0
14
14
1
0
9,076
9,076
9,076
3,532
3,532
17
17
0
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
11,334
12,616
76
12
88
0
9
9
Total equity and liabilities
11,422
12,625
7
8
9
10
11
12
Deferred tax assets
Own funds
Contractual obligations, contingent liabilities and collateral
Related parties
Reconciliation of profit/loss and equity
Accounting policies
Total assets
11,422
12,625
Contents – Financial statements
108
Annual report 2018 | Tryg A/S |
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).
a)
Cost related to the issue of new shares are
deducted in proceeds recognised in retained
earnings with DKK 50,3m.
Statement of changes in equity
(parent company)
DKKm
Equity at 31 December 2017
2018
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Dividend own shares
Purchase and sale of own shares
Issue of share options and matching shares
Total changes in equity in 2018
Equity at 31 December 2018
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
Total
1,511
2,081
7,541
1,483
12,616
347
-16
331
0
0
1,511
331
2,412
-612
-612
0
-27
10
-629
6,912
1,996
1,996
-2,980
-984
499
1,731
-16
1,715
-2,980
0
-27
10
-1,282
11,334
1,413
3,140
2,867
2,017
9,437
-1,026
-33
-1,059
39
0
-39
137
98
1,511
-1,059
2,081
716
716
82
-20
3,841
10
6
4,674
7,541
2,827
2,827
-3,361
-534
1,483
2,517
-33
2,484
0
-3,361
82
-20
3,978
10
6
3,179
12,616
Contents – Financial statements
109
Annual report 2018 | Tryg A/S |
Notes
DKKm
1
Income from Group undertakings
Tryg Invest A/S
Tryg Forsikring A/S
2
Other expenses
Administration expenses
2018
2017
DKKm
2018
2017
1
1,782
1,783
-65
-65
2
2,575
2,577
-71
-71
4
Intangible assets
Assets under construction
Cost
Cost at 1 January
Additions for the year
Cost at 31 December
Amortisation and write-downs
Amortisation and write-downs at 1 January
Amortisation for the year
Amortisation and write-downs at 31 December
Carrying amount at 31 December
5
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
0
1
1
0
0
0
1
6,995
2,000
8,995
2,081
1,768
-1,437
2,412
0
0
0
0
0
0
0
6,987
8
6,995
3,140
2,545
-3,604
2,081
Carrying amount at 31 December
11,407
9,076
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
13
14
0
14
%
22
0
22
17
17
-1
16
%
22
-1
21
Contents – Financial statements
110
Annual report 2018 | Tryg A/S |
Notes
DKKm
5
Equity investments in Group undertakings
Name, registered office and activity
Ownership
share in %
Profit/loss
Equity
2018
Tryg Invest A/S, Ballerup
Tryg Forsikring A/S, Ballerup
2017
Tryg Invest A/S, Ballerup
Tryg Forsikring A/S, Ballerup
100
100
100
100
1
1,782
2
2,575
11
11,395
10
9,066
DKKm
6
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
7
Deferred tax assets
Capitalised tax losses
Tryg A/S
Tax value of non-capitalised tax losses
Tryg A/S
2018
2017
17
14
0
-17
14
0
16
15
17
-1
-14
17
0
16
The loss in Tryg A/S can only be utilised in Tryg A/S. The loss can be carried forward indefinitely.
The losses are not recognised as tax assets until it has been substantiated that the company can generate
sufficient future taxable income to offset the tax losses.
8
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 18 in the Tryg Group on Solvency II own funds.
9
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. Manage-
ment 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 2018.
Contents – Financial statements
111
Annual report 2018 | Tryg A/S |
DKKm
10
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company, TryghedsGrup-
pen smba. Related parties with a significant influence include the Supervisory Board, the Executive Board
and their members’ related family.
Specification of remuneration
2018
Supervisory Board
Executive Board
Risk-takers
Number of
persons
13
4
4
21
Share-based
variable
salary a)
Base
salary
8
25
6
39
0
3
0
3
Cash
variable
salary
0
3
0
3
Pension
Total
0
6
1
7
8
37
7
52
a) Total expenses in 2018 for matching shares progams allocated in 2018 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
1
2
0
0
0
DKKm
10
Related parties (continued)
2017
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Base
salary
Share-based
variable
salary a)
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 programs allocated in 2017 and previous year.
Of which retired
Supervisory Board
Executive Board
Number of
persons
Severance
pay
1
0
1
0
0
0
Fees are charges incurred during the financial year. Variable salary includes the charges for matching
shares, which are recognised over 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 the Tryg Group.
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, car allowance and pension. The variable salary is
awarded in the form of share based remuneration and cash, see 'Corporate governance'.
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
112
Annual report 2018 | Tryg A/S |
Notes
2018
2017
DKKm
10
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
Transactions with Group undertakings and associates
Tryg A/S exercises full control over Tryg Forsikring A/S and Tryg Invest A/S.
In 2018 Tryg Forsikring A/S paid Tryg A/S DKK 1,437m and Tryg A/S paid
TryghedsGruppen smba DKK 1,788m in dividends. Further Tryg A/S also
made a capital contribution of DKK 2,000m to Tryg Forsikring.
Intra-group trading involved
- Providing and receiving services
- Intra-group accounts
13
76
14
3,530
Administration fee, etc. is settled on a cost-recovery basis.
Intra-group accounts are offset and carry interest on market terms.
11
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.
12
Accounting policies
Please refer to Tryg Group's accounting policies.
Contents – Financial statements
113
Annual report 2018 | Tryg A/S |
Q4 2018 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
2018
Q3
2018
Q2
2018
Q1
2018
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
Download a further detailed version of the presenta-
tion at tryg.com/uk > investor > Downloads > tables
2,679
531
2,309
467
2,257
483
2,221
253
2,203
394
2,211
463
2,178
440
2,206
268
2,235
366
64.2
2.4
66.6
13.5
80.1
83.0
1,044
270
52.2
4.5
56.7
17.5
74.2
89.6
987
-117
92.7
8.8
101.5
10.3
111.8
106.3
63.5
2.2
65.7
13.9
79.6
84.9
994
174
61.0
4.3
65.3
17.2
82.5
93.3
991
63
96.8
-12.3
84.5
9.3
93.8
108.2
62.2
2.5
64.7
13.9
78.6
83.5
978
169
59.7
4.2
63.9
18.8
82.7
92.3
977
109
58.8
20.5
79.3
9.6
88.9
95.0
72.4
2.2
74.6
14.0
88.6
92.4
955
171
61.9
3.6
65.5
16.5
82.0
89.5
942
118
70.7
6.4
77.1
10.3
87.4
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
100.4
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
114
Annual report 2018 | 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 2018 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
2018
Q3
2018
Q2
2018
Q1
2018
Q4
2017
Q3
2017
Q2
2017
Q1
2017
Q4
2016
361
38
71.7
0.3
72.0
17.2
89.2
95.3
-18
-126
411
57
69.6
0.2
69.8
16.1
85.9
94.7
-9
0
375
85
61.6
0.3
61.9
14.7
76.6
89.7
-16
0
324
21
76.5
0.3
76.8
16.7
93.5
98.1
-22
0
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
5,053
4,696
4,571
4,420
4,488
4,576
4,441
4,458
4,504
596
-330
-117
149
110
69.0
3.6
72.6
15.6
88.2
92.3
761
79
-15
825
627
69.9
0.0
69.9
13.9
83.8
92.5
846
-90
-21
735
568
61.3
6.0
67.3
14.1
81.4
88.2
563
9
-19
553
426
69.4
3.7
73.1
14.0
87.1
93.7
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
Contents – Financial statements
115
Annual report 2018 | Tryg A/S |
Q4 2018 Geographical segments
DKKm
Q4 2018
Q4 2017
2018
2017
DKKm
Q4 2018
Q4 2017
2018
2017
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
2,931
555
178
63.7
3.7
67.4
13.6
81.0
-6.1
77.84
1,629
242
98
66.0
5.3
71.3
14.0
85.3
-6.0
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
10,430
2,007
710
61.2
5.5
66.7
13.9
80.6
-6.8
2,520
77.53
6,302
791
520
72.6
1.2
73.8
13.9
87.7
-8.3
1,105
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
a) Includes Danish general insurance and German and Finnish guarantee insurance. The gross premium income
related to German and finnish guarantee insurance amount to DKK 54m
Swedish general insurance
SEK/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
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
72.12
511
-75
-69
96.9
1.2
98.1
16.4
114.5
13.5
-18
-126
5,053
596
-330
-117
149
207
69.0
3.6
72.6
15.6
88.2
-4.1
76.17
517
-13
-38
76.0
11.2
87.2
15.1
102.3
7.4
-12
0
72.67
2,073
94
-9
82.3
-1.7
80.6
14.6
95.2
0.4
402
-65
-126
4,488
18,740
622
86
-23
685
219
68.5
3.8
72.3
13.7
86.0
-4.9
2,766
-332
-172
2,262
1,221
67.4
3.3
70.7
14.4
85.1
-6.5
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
4,027
3,373
b) Amounts relating to eliminations and one-off items. In 2018 Cost, Claims and Other Costs were negatively
affected by DKK 75m, DKK 49m, DKK 76m. The costs are related to integration and transactions costs for
the acquirement of Alka. In 2016 costs and claims were negatively affected by DKK 162m and DKK 88m
respectively, mainly due to impairment of software.
c) Adjustment of gross expense ratio included only in 'Tryg '. The adjustment is explained in a footnote to
Financial highlights.
Contents – Financial statements
116
Annual report 2018 | Tryg A/S |
Other key figures
2018
2017
2016
2015
2014
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 employees,
continued business, at 31 December
5.73
5.73
5.74
301,743
302,043
302,043
163.90
37.56
4.4
6.60
28.6
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
20.4
15.8
4,027
3,373
3,264
3,359
3,599
Contents – Financial statements
117
Annual report 2018 | 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)
Kapitalforeningen
Tryg Invest
(91%)
(Denmark)
Tryg
Ejendomme A/S
(Denmark)
Forsikrings-
Aktieselskabet
Alka
(Denmark)
Thunesvei 2 AS
(Norway)
Respons
Inkasso AS
(Norway)
Tryg Real Estate
Fund A/S
(Denmark)
Forsikrings-
Aktieselskabet
Alka Liv II A/S
(Denmark)
Alka
Ejendomme A/S
(Denmark)
ANS Grensen 3
(99%)
(Norway)
Avviklingsselskabet
av 16. juni 2016 AS
(former OBOS Forsikring)
(Norway)
Troll
Avviklingsselskabet
av 9. juni 2018 AS
(Norway)
Group chart at 1 January 2019. Companies and branches are wholly owned
by Danish owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
Contents – Management’s review
118
Annual report 2018 | 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.
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 and German guarantee branch and
Tryg Livsforsikring A/S and excluding the Norwegian
and Swedish branches).
Diluted average number of shares
Average number of shares adjusted for number of
share options which may potentially dilute.
Discounting
Expresses recognition in the financial statements of
expected future payments at a value below the nomi-
nal amount, as the recognised amount carries interest
until payment. The size of the discount depends on
the market-based discount rate applied and the ex-
pected time to payment.
Dividend per share
Proposed dividend
Number of shares at year-end
Earnings per share
Profit or loss for the year x 100
Average number of shares
Earnings per share of continuing business
Diluted earnings from continuing business after tax
Diluted average number of shares
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
Equity at year-end
Number of shares at year-end
Net reinsurance ratio
Profit or loss from reinsurance x 100
Gross premium income
Norwegian general insurance
Comprises Tryg Forsikring A/S, Norwegian branch.
Operating ratio
Calculated as the combined ratio plus insurance tech-
nical interest in the denominator.
Claims + insurance operating costs +
profit or loss from reinsurance x 100
Gross premium income + insurance technical interest
Own funds
Equity plus share of qualifying solvency debt and
profit margin (solvency purpose), less intangible as-
sets, 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
claims provisions net of reinsurance beginning of year.
Return on equity after tax (%)
Profit for the year after tax x 100
Average equity
Run-off gains/losses
The difference between the claims provisions at the
beginning of the financial year (adjusted for foreign
currency translation adjustments and discounting ef-
fects) and the sum of the claims paid during the finan-
cial year and the part of the claims provisions at the
end of the financial year pertaining to injuries and
damage occurring in earlier financial years.
Solvency II
New solvency requirements for insurance companies
issued by the EU Commission. The new rules came
into force at 1 January 2016.
Solvency ratio
Ratio between own funds and capital requirement.
Swedish general insurance
Comprises Tryg Forsikring A/S, Swedish branch.
Total reserve ratio
Reserve ratio, claims provisions + premium provisions
divided by premium income.
Unwinding
Unwinding of discounting takes place with the pas-
sage of time as the expected time to payment is re-
duced. The closer the time of payment, the smaller
the discount. This gradual increase of the provision is
not recognised under claims, but under technical in-
terest in the income statement.
Contents – Management’s review
119
Annual report 2018 | 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 30% of total premium income and comprises
mandatory third-party liability insurance providing cover for injuries to a third
party or damage to a third party’s property, and a voluntary comprehensive
insurance policy that provides cover for damage to the customer’s own vehicle
from collision, fire or theft.
In Denmark, motor insurance taken out by concept customers includes
Tryg’s roadside assistance, such as towing and battery jump-start.
Fire and contents – Private
Fire and contents insurance for private customers represents 23% 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.
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.
Personal accident insurance
Personal accident insurance accounts for 11% of total premium income and
covers accidental bodily injury and death resulting from accidents.
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.
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.
Contents – Management’s review
120
Annual report 2018 | Tryg A/S | Disclaimer
Should one or more of these risks or uncertainties
materialise, or should any underlying assump-
tions 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 man-
agement on pages 31-32, and in Note 1 on page
60-68, 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
developments, changes in the competitive envi-
ronment, developments in the financial markets,
extraordinary events such as natural disasters or
terrorist attacks, changes in legislation or case law
and reinsurance.
Contents – Management’s review
121
Annual report 2018 | Tryg A/S |