Annual report
2019
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Contents
Management’s review
3 Highlights
4 Tryg at a glance
5 Business areas
21 Commercial
23 Corporate
25 Sweden
6
7
Income overview
27
Investment activities
Introduction by Chairman and Group CEO
30
Capital and risk management
8 Events 2019
9 Financial outlook
11 Targets and strategy
15 Tryg’s results
19 Private
32
Investor information
34 Corporate governance
39 Supervisory Board
42 Executive Board
43
Corporate Responsibility in Tryg
Financial statements
47 Financial statements
114 Group chart
115 Glossary
116 Product overview
Editor Investor Relations | Publication 22 January 2020 | Layout amo design | Proofreading Semantix
Highlights
Premium growth of 17.1% or 6.1% excluding Alka. Technical result of DKK 3,237m (DKK 2,766m)
impacted positively by the growth in the private segment driven, among other things, by the highest ever
customer satisfaction with a TNPS of 68 and an all-time high retention. The overall result was positively
impacted by the inclusion of Alka and related synergies, a continuous improvement in the underlying
claims ratio and a low level of large and weather claims. Investment income of DKK 579m (DKK -332m)
driven by higher equity market returns. Profit before tax of DKK 3,628m (DKK 2,262m). Quarterly
dividend of DKK 1.70 per share, supporting TryghedsGruppen’s member bonus. Extraordinary dividend
of DKK 1.65 per share. Solvency ratio of 162.
Financial highlights 2019
•
Premium growth of 17.1% or 6.1% (4.1%)
excluding Alka in local currencies
Technical result of DKK 3,237m (DKK 2,766m)
primarily driven by the inclusion of Alka
Expense ratio of 14.2 (14.4)
Combined ratio of 85.1 (85.1)
Return on free investments portfolio
of DKK 857m (DKK -33m)
Total investment return of DKK 579m
(DKK -332m)
Profit before tax of DKK 3,628m (DKK 2,262m)
A total annual dividend of DKK 6.80 per share
and extraordinary dividend of 1.65 per share
Solvency ratio of 162
•
•
•
•
•
•
•
•
Financial highlights Q4 2019
•
Premium growth of 10.4% or 5.6% (4.5%)
excluding Alka in local currencies
Technical result of DKK 762m (DKK 596m)
driven by a combined ratio of 86.1 (88.2)
Underlying claims ratio (Private and Group)
improved by 0.5 and 0.5 percentage points
Expense ratio of 14.6 (15.6)
Return on free investments portfolio
of DKK 226m (DKK -198m)
Total investment return of DKK 198m
(DKK -330m)
Profit before tax of DKK 940m (DKK 149m)
Q4 dividend of DKK 1.70 per share
•
•
•
•
•
•
•
Customer highlights Q4 2019
•
•
•
TNPS of 68 (67)
Number of products per customer 3.8 (3.8)
In Q4, awareness of TryghedsGruppen's
member bonus among non-customers
increased to 28%, up by 27% compared
with the same period prior year
2020 targets
DKK
Earnings
Technical result
DKK 3.3bn
Combined ratio
≤86
Expense ratio
~14
RoE
≥21
Customers
TNPS
70
Number of products
per customer
+10%
Contents – Management’s review
3
Annual report 2019 | Tryg A/S | Tryg at a glance
Purpose
As the world changes,
we make it easier to be tryg a).
Strong market
position
4 million
customers
Tryg is one of the largest
non-life insurance companies in
the Nordic region. We are the largest
player in Denmark and the
fourth-largest in Norway.
In Sweden, we are the fifth-largest
company in the market.
Our 4,151 employees
provide peace of mind
for 4 million customers and
handle approximately 1 million
claims on a yearly basis.
Attractive
dividend policy
Great diversity
of products
Trygheds-
Gruppen
We aim to distribute
a nominal, stable increase
in dividend and to pay out
60-90% of our profit.
We offer a broad range
of insurance products for
private individuals
as well as businesses.
TryghedsGruppen owns 60% of Tryg
and contributes to projects that
create peace of mind via TrygFonden.
In 2020, TrygFonden will contribute
with DKK 650m.
Employees
Employees
Employees
1
4
5
Market position
Market position
Market position
21.6 %
Market share
13.1 %
Market share
3.3 %
Market share
Copenhagen experiences
the largest fire in its history. The
fire heightened public awareness
of the need to insure oneself
1
7
3
1
Tryg was listed on OMX
Nordic Stock Exchange
Copenhagen on
14 October
2
0
0
9
TrygVesta simplified
its name to Tryg
2
0
1
1
New dividend policy stating
a nominal, stable increasing
dividend with an annual
distribution of 60-90% of
the profit after tax
2
0
1
4
Tryg spilts 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
2
0
1
6
• Tryg presented new financial
targets and customer targets for 2020
at Capital Market Day
• Tryg acquired Alka Forsikring
2
0
1
9
Kjøbenhavns Brand
(the oldest componens in Tryg's
history) was established by
Royal Decree as a result
of the Copenhagen fire in 1728
1
7
2
8
a) ‘Tryg’ means: Feeling protected and cared for.
Contents – Management’s review
Tryg acquired
Moderna Försäkringer
Morten Hübbe
appointed new
Group CEO of Tryg
Tryg presented new financial
targets and customer targets for 2017
at Capital Markets Day
For the first time, TryghedsGruppen decided
to pay out a bonus to its members: 8%
of premiums paid to Tryg for 2015
2
0
0
5
2
0
1
0
2
0
1
2
2
0
1
5
• For the fourth consecutive year,
TryghedsGruppen paid out member bonus:
8% premiums paid to Tryg for 2018
• Barbara Plucnar Jensen joined the Executive
Board as new Group CFO in Tryg
2
0
1
7
4
Annual report 2019 | Tryg A/S | 2,6501,083419 Business areas
Private
Commercial
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, pet and health.
Commercial provides insurance products including motor,
property, liability, workers' compensation, travel and health to
small and medium-sized business in Denmark and Norway.
55 %
Portfolio
Brands
Portfolio
Brands
20 %
1,317
Own sales agents • Call centres
Real estate agents • Internet • Car dealers
Franshises
495
Call centres • Internet
Own sales agents • Franchise offices
Employees
Distribution channels
Employees
Distribution channels
Corporate
Sweden
Corporate provides insurance products including property, liability,
workers' compensation, transport, group life etc. to corporate cus-
tomers under the brand Tryg in Denmark and Norway, and Moderna in
Sweden. Tryg is part of the global AXA Corporate solutions network.
Sweden provides insurance products to private individuals within car,
house, pet, child, boat and accident insurance etc.
18 %
Portfolio
Brands
290
Own sales agents
Insurance brokers
7 %
Portfolio
386
Brands
Own sales agents • Call centres • Internet
Employees
Distribution channels
Employees
Distribution channels
Contents – Management’s review
5
Annual report 2019 | 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)
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
Note: Tryg´s acquisition of Alka affects the Financial Statement from closing the 8 November 2018
Contents – Management’s review
Q4 2019
Q4 2018
5,479
-3,851
-798
829
-66
0
762
198
-20
940
-234
706
-1
705
256
5,053
-3,485
-787
781
-184
-1
596
-330
-117
149
-37
112
-2
110
207
12,085
23.0
301,700
2.33
11,334
3.9
301,743
0.37
1.70
10.4
70.3
1.2
71.5
14.6
86.1
-4.7
1.8
1.7
83.8
90.3
92.6
75.3
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
2019
21,741
-14,857
-3,081
3,803
-566
1
3,237
579
-188
3,628
-783
2,845
-2
2,843
1,194
12,085
24.6
301,700
9.42
40.05
6.80
1.65
17.1
68.3
2.6
70.9
14.2
85.1
-5.5
2.1
1.9
83.7
86.8
87.6
84.8
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
6
Annual report 2019 | Tryg A/S |
Good results
and increased customer loyalty
Contents – Management’s review
Good results and increased customer loyalty
2019 was characterised by a lot of changes, new
initiatives and satisfactory financial results. Customer
satisfaction reached record highs while customer
retention was also at the highest level ever recorded.
TryghedsGruppen paid out a member bonus for the
fourth year running – now including the 380,000 Alka
customers – meaning that 1.3 million customers
(or approximately every fourth Dane) received a
bonus equivalent to 8% of premiums paid in 2018.
First full year with Alka
Alka continued its positive development, producing
strong earnings and healthy top-line growth in 2019.
Alka is a leader in digital sales, which increased by a
further 14% in 2019, while customer use of Tryg’s
online claims handling solutions increased from 31%
to 44%. Tryg announced a DKK 300m synergies target
in 2021 following the acquisition of Alka. Synergies in
2019 were DKK 90m, which is higher than the target-
ed level of DKK 75m after the first year of integration.
Claims handling and prevention
There was a strong focus on combating insurance
fraud, primarily based on knowledge sharing with
Alka. Alka has historically been very efficient at
identifying insurance fraud at an early stage in the
claims process. Prevention is key for the well-being
of customers, products such as TrygDrive, a digital
device that record driving behaviour, Tryg Alarm and
a rat blocker, are all part of Tryg’s prevention strategy.
Digitalisation
Good progresses were made in 2019 when it comes
to liaising with customers via digital communica-
tion. Around 60% of all inquiries to Tryg were
through self-service, 45% of all claims were submit-
ted online, whereas 30% of claims were processed
without the involvement of Tryg employees.
Efficient distribution
Tryg is progressing well in reducing distribution costs
through the use of new channels such as independ-
ent insurance agents in Private and Commercial. In
addition, the partnership with Danske Bank in the
Private and Commercial segment started positively.
In Norway good results were achieved through a
deliberate focus on distribution through partner-
ships. Additionally, an increased level of online sales
supports the focus on lowering distribution costs.
New products and services
Tryg has an ambition of creating DKK 1bn in gross
premiums in 2020+ from profitable new products
and services. In 2019, Tryg reported gross premi-
ums of DKK 650m from new products, while the
number of prevention products sold increased. In
2019, the profitable credit and surety business Tryg
Garanti expanded to the Netherlands and Austria,
while increasing its presence in Germany.
Positive financial performance
The full-year technical result was DKK 3,237m with
a combined ratio of 85.1, which together with a
positive investment result yielded at a total pre-tax
result of DKK 3,628m, corresponding to a return on
equity of 24.6% after tax.
Stable and increasing dividend to shareholders
Tryg has a strong focus on securing that shareholders
receive a nominal and stable increase in dividends. A
total dividend of DKK 6.80 per share will be paid out
for 2019 (DKK 6.60 in 2018), additionally an extraor-
dinary dividend per share of DKK 1.65 (DKK 500m)
will also be paid, totalling a dividend of DKK 8.45 per
share or a dividend yield of approximately 4.5%.
Thanks to all employees
We are very pleased to see a high level of job satis-
faction in Tryg of 78 compared to 74 for Nordic
financial companies. This high level of job satisfac-
tion has been achieved in a year marked by a lot of
changes, new initiatives and satisfactory financial
results. The Supervisory Board and the Executive
Board would like to thank all employees, including
the new Alka employees, for their great efforts.
Jukka Pertola
Chairman
Morten Hübbe
Group CEO
7
Annual report 2019 | Tryg A/S | Events in 2019
Q1
Q2
New partnership with NITO
On 1 January, Tryg Norway initiated the partner
agreement with members of the Norwegian Society
of Engineers and Technology (NITO). NITO has
approximately 90,000 members.
Q3
Q4
Partner agreement between
Alka and DiBa
Alka entered into a new agreement with DiBa, an online
car loan company, which means that Alka now provides
car insurance products to DiBa customers. The partner-
ship is well in line with Tryg’s 2020 strategy and the
increased focus on improving distribution agreements.
New CFO in Tryg
On 1 March, Barbara Plucnar Jensen joined the
Executive Board as new Group CFO in Tryg.
New members of
Tryg’s Supervisory Board
At Tryg’s annual general meeting, two new mem-
bers, Karen Bladt and Klaus Wistoft, were elected
to join the Supervisory Board as representatives of
TryghedsGruppen.
New Vet hotline
Tryg Private launched its Vet hotline for Danish cat and
dog owners, who can get online advice from an author -
ised veterinarian for their pets via mobile or tablet.
The service was launched in Norway earlier this year
and has been available in Sweden for some time.
New agreements between Alka and HK
Alka and HK, Denmark's largest union for salaried
employees, entered into a new agreement about salary
insurance for HK's members. With the salary insurance
the members are guaranteed up to 80% of their current
salary after an unanticipated dismissal.
Digital insurance check-up
In October, Tryg launched an online insurance check-
up feature. With this tool, customers are now able
to compare their insurance cover and subsequently
receive a recommendation based on products taken
out by similar customers in Tryg.
New sales channel
in Commercial Denmark
In Q1, Commercial Denmark signed the first contracts
with independent agents selling Tryg products exclu-
sively. The sales agents include both customer and
telephone meetings.
TryghedsGruppen’s member bonus
For the fourth consecutive year, TryghedsGruppen,
Tryg’s majority shareholder, paid out a member bonus.
The total payout was DKK 925m, equivalent to 8%
of premiums paid for 2018. The bonus was paid
out to Tryg’s and Alka’s customers in Denmark on
12 June 2019.
Tryg Mobil
Commercial Denmark started testing a new initiative,
Tryg Mobil, with the aim of increasing safety and avoiding
accidents in traffic. When enabling Tryg Mobil, the driver’s
mobile phone will automatically block the display to
disable hand-held usage of the mobile by the driver.
Strategic partnership
with Danske Bank
Tryg started providing insurance solutions to Danske
Bank’s 3 million Nordic customers. The partnership
covers all the countries and markets in which Tryg
operates, i.e. both Private and Commercial in Denmark
and Norway, and Private in Sweden.
New Nordic agreement with SEB
On 1 December, Tryg and Moderna, Tryg's Swedish
brand, entered into a new agreement with SEB (Skan-
di naviska Enskilda Banken) regarding all credit card
insurance products in the Nordic region. The new con-
tract runs for three years with an option for renewal
and covers travel insurance on SEB's cards for private
customers, Private Banking customers and Commercial
customers in Denmark, Norway, Sweden and Finland.
Partnership with
Arbejdernes Landsbank
Commercial Denmark has signed an important
strategic agreement with Arbejdernes Landsbank
effective from 1 January 2020. Arbejdernes Lands-
bank already has a distribution agreement with Alka
regarding sales to the bank's private customers.
Contents – Management’s review
8
Annual report 2019 | Tryg A/S | Financial outlook
The trade war between the USA and China, Brexit
and a general climate of political uncertainty in
many European countries have dampened global
growth outlooks. The Scandinavian economies
remain relatively healthy, but small and open
economies are not immune from global uncertain-
ties. Expected GDP growth in 2020 (according to
Nordea macroeconomic outlook) is 2.3% in Nor-
way, 1.5% in Denmark and 1.0% in Sweden, and
unemployment rates are likely to remain below
4% in Denmark and Norway, but somewhat higher
in Sweden. Government indebtedness across the
region remains low compared to larger European
countries.
The Nordic non-life insurance markets remain
relatively stable in terms of top-line growth and
product offerings. The Nordic countries are
characterised by a high level of non-life insurance
penetration – ratios of non-life insurance premi-
ums as % of GDP are some of the highest in the
world. This is attributable to the fact that house-
holds are generally wealthy and tend to cover their
insurance needs relatively well.
Retention levels are very high in the Nordic region
compared to nearly everywhere else in the world.
This is a key profitability driver as it helps insurers
keep their overall expenses low. Retention rates
hover around 90% in the Private and Commercial
(SMEs) segments, which represent more than
80% of Tryg’s total business. A direct distribution
model also contributes importantly to the very ef-
ficient set-up. At the end of 2019, Tryg reported an
expense ratio of 14.2 (14.1 excluding Alka at the
end of 2018), while the target for 2020 remains
an expense ratio of ~14. In the 2017-2020 period,
the expense ratio will be impacted by increased
IT investments, which will be offset primarily by
improved distribution efficiency.
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.
Financial targets 2020
Technical result
DKK 3.3bn
Expense ratio
~14
Combined ratio
≤86
Return on equity
≥21%
after tax
TryghedsGruppen’s
member bonus
In June, Tryg’s majority shareholder,
TryghedsGruppen, paid out a member
bonus for the fourth year running. The
bonus corresponds to 8% of the premi-
ums paid to Tryg in 2018, or the payout of
DKK 925m in total to TryghedsGruppen’s
members, Tryg’s Danish customers and
for the very first time Alka’s customers.
Contents – Management’s review
9
Annual report 2019 | Tryg A/S | In 2020, weather claims net of reinsurance and
large claims are expected to total DKK 600m and
DKK 550m, respectively.
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 (slightly
above 60% 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 bench-
mark, 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, inter-
est 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 2020, while
it is 25% in Norway and 21% in Sweden. Capital
gains and losses on equities are not taxed in
Norway, which reduces the expected tax payable
for an average year to 22-23%.
The current three-year strategy period ends in
2020, and Tryg will therefore host a new CMD
towards the end of the year and launch new
financial targets. Financial targets for 2020 are
a technical result of 3.3bn (including DKK 150m
of synergies from the Alka acquisition), an
expense ratio of ~14, a combined ratio at or
below 86 and a return on equity at or above
21% after tax.
Digital insurance check-up
In October, Tryg launched an online insurance
check-up feature. With this tool, customers are
able to compare their insurance cover and subse-
quently receive a recommendation based on the
products taken out by similar customers in Tryg.
Weather claims, net of reinsurance
Expected level 2020 (including Alka): DKK 600m
Large claims, net of reinsurance
Expected level 2020: DKK 550m
DKKm
800
600
400
200
0
2015
2016
2017
2018
2019
DKKm
800
600
400
200
0
2015
2016
2017
2018
2019
Expected level 2020
Expected level 2020
Contents – Management’s review
10
Annual report 2019 | Tryg A/S | Targets and strategy
At the Capital Markets Day (CMD) held in Novem-
ber 2017 in London, Tryg announced new financial
and non-financial targets for 2020. The financial
targets were updated following the acquisition of
Alka. Along with a new strategy, a new purpose was
defined. ‘As the world changes, we make it easier
to be tryg’ is the overarching principle guiding the
realisation of our targets for 2020.
Tryg’s main financial target is a technical result of
DKK 3.3bn in 2020. The technical result target is
underpinned by a combined ratio at or below 86,
an expense ratio of ~14 and a return on equity at or
above 21. Tryg’s customer targets are a Transaction-
al Net Promoter Score (TNPS) level of 70 and a 10%
increase in the number of products per customer.
The targets are supported by four strategic
themes: claims excellence, digital empowerment
of customers, product & service innovation and
distribution efficiency as well as Alka synergies, all
of which are described in detail on pages 12-14.
These initiatives are at the core of Tryg’s 2020
strategy and should support both the financial and
non-financial initiatives.
Improving customer relations
Customer satisfaction is of paramount importance
for Tryg, and the organisation continually strives to
strengthen customer relations through advisory
services, products, concepts, claims handling pro-
cedures and claims prevention measures. Satisfied
customers support improved retention levels,
which in 2019 reached an all-time high in the
Danish Private and Commercial businesses, while
results in Norway were also positive.
Employees are a key resource
Tryg’s employees are the key to achieving the over -
arching purpose of making it easier to be ‘tryg’ and
to attaining the financial targets. All employees must
feel that they play an integral role in supporting this
overall purpose. Therefore, clear and ambitious
targets must be set for each individual employee
– and regular feedback must be provided.
Tryg is very pleased to see a historically high level
of employee satisfaction in 2019, surpassing
the general level of employee satisfaction in the
financial sector in the Nordic region. Tryg is aiming
for the highest level of employee satisfaction in
the financial sector in the Nordic region.
Value creation for our shareholders
Tryg’s shareholders must see Tryg as a company
with a key focus on profitability and efficiency,
which reflects the company’s core strategy and its
financial targets. Tryg’s performance can be meas-
ured by its long-term total shareholder return.
Tryg aims to pay a nominal, stable and increasing
ordinary dividend, while maintaining stable results
and a high level of return on capital employed.
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
processing
• Packaging of products
Increasing 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 stakeholders. 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.
s E m ployees
Distribution
Own sales force
and partners
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Prevention
Claims handling
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Processes
Combination of in-
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11
Contents – Management’s review
a) Tryg’ means: feeling protected and cared for.
a) Tryg’ means: feeling protected and cared for.
Annual report 2019 | Tryg A/S |
Strategic initiatives
Tryg has defined four initiatives in support
of its financial targets and customer tagets
Financial targets
Tryg’s main target for 2020 is a technical result of DKK
3.3bn. In 2019, Tryg reported a FY technical result of
DKK 3,237m. The combined ratio was 85.1, and the
expense ratio 14.2. The return on equity was 24.6.
Customer targets
Tryg maintains an intense focus on understanding
customer needs, and detailed customer targets
have been established, which are also important to
realising the financial targets. This is reflected in an
increased focus on customer satisfaction measured
through the TNPS score. The TNPS target for 2020 is
70, and in 2019 a level of 68 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, corres-
ponding to four products per customer. In 2019, the
number of products per customer was 3.8.
Strategic initiatives
Tryg has defined four strategic initiatives to support
both the financial targets and customer targets for
2020. KPIs have been defined for each initiative.
Furthermore, synergies ascribable to Alka will also
be part of the initiatives.
Claims excellence is the most important strategic
initiative for improving the technical result. The
target is to reduce claims costs by DKK 600m
in 2020, and in 2018 and 2019 accumulated
savings of DKK 350m were achieved. One of
the main initiatives is to further leverage Tryg’s
procurement power, and in 2019 cost savings of
more than DKK 200m were realised. Initiatives
in 2019 included the renewal of a contract for
windscreen services, a new five-year contract
with Recover Nordic (the largest Nordic claims
service group) and a claims agreement for elec-
tronic products in Norway and have helped to
lower average claim costs in Tryg.
The customer bonus, paid by Tryghedsgruppen to the
Danish customers, also supports customer loyalty, and
in 2019 we saw a continued positive development in
the awareness of the customer bonus. Awareness of
the customer bonus among Tryg customers increased
to 77% 2019 against 73% in 2018, and among non-
customers we saw an increase from 22% in 2018 to
28% in 2019, corresponding to an increase of 27%.
Fraud detection is another important initiative
to be realised in 2020. Tryg has realised an
increase in fraud detection, mainly due to
enhanced fraud detection training and the im-
plementation of Alka’s fraud detection method-
ologies. Increased benefits of DKK 30m has
been achieved from implementing the fraud
detection methodology in 2019.
Claims excellence
DKKm
Distribution efficiency
DKKm
800
600
400
200
0
600
350
200
150
Realised
Target
200
150
100
50
0
150
90
60
30
Realised
Target
2018
2019
2020
2018
2019
2020
Digital empowerment of customers
Product & service innovation
DKKm
120
90
60
30
0
100
60
40
20
Realised
Target
DKKm
1,200
900
600
300
0
1,000
650
375
275
Realised
Target
2018
2019
2020
2018
2019
2020
Contents – Management’s review
12
Annual report 2019 | Tryg A/S | Strategy 2018-2020
Strengthening the core, while embracing the future
Finally, Tryg’s claims handling process has been
improved through initiatives such as data and voice
analysis. A new claims handling system, Guidewire,
is being implemented in Tryg in both Denmark and
Norway to improve the claims handling process
further as well as customer satisfaction.
Digital empowerment of customers is another
important initiative in Tryg. Digital services, sim-
plification and efficient customer interaction are
becoming increasingly important for customers,
and Tryg is highly committed to meeting these
demands. Customers in general prefer speedy
processes, and therefore digital solutions also
support Tryg's focus on customer satisfaction. The
target for 2020 is 50% straight-through processing
(STP) of claims and a self-service level of 70% for
all contacts with Tryg. The focus on digital services
in Tryg is expected to contribute by DKK 100m to
the financial targets as well as improving customer
satisfaction. In 2019, this initiative realised DKK
60m. In general, there are an increasing number of
customer contacts as many customers acknowl-
edge the new digital solutions, but still prefer per-
sonal contact. Tryg believes that the total increase
in customer contact is positive and supports both
sales and customer loyalty.
Self-service levels continued to increase in 2019.
Login numbers to Tryg’s digital universe for our
Private customers, ‘My Page’, increased to
approxi mately 3.3m logins corresponding to an
increase of 30% compared to last year. New on-
line initiatives such as digital invoicing and online
insurance check-ups have also helped to further
improve self-service levels. In 2019, the level of
digital self-service increased to 60%.
The level of STP of claims is up thanks to the use
of robots in the claims handling process. As a
result 36% of claims were prossesed as STP in
2019. Additionally, Tryg’s new claims handling
system is now processing claims on selected
products, showing improved efficiency. In the
coming years, the new claims system is expected
to boost STP levels in both Denmark and Norway.
Product & service innovation is important for
Tryg to remain relevant to customers. The target
is to increase premiums by DKK 1,000m from
new products and services by 2020+. Tryg’s
primary focus is profitability, and this initiative
also supports Trygs overall profitability. In 2019,
the portfolio of products and services increased
to DKK 650m.
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
Contents – Management’s review
13
Annual report 2019 | Tryg A/S | One of the main drivers involves innovation of new
products such as the Health insurance package
(covers accidents, health, dental and sickness).
Other important contributions in 2019 were by
product such as cyber insurance, pet insurance
and child insurance.
Bundling of products is another important initia-
tive for Tryg to reach its 2020+ targets. Bundling
of products such as health and child insurance
generated DKK 150m in 2019. Prevention is key
for the well-being of customers and a key driver
of financial results. Products such as Tryg Drive, a
digital device that records driving behaviour, Tryg
Alarm and a rat blocker to prevent rats from enter-
ing drains are all part of Tryg's prevention strategy.
Finally, entering new markets and increasing the
profitable credit and surety business, Tryg Garanti,
is also considered an important initiative for reach-
ing Tryg’s 2020 targets. In 2019, Tryg Garanti ex-
panded to Germany, Austria and the Netherlands.
Increasing Distribution efficiency is a strategic
priority for Tryg. The target is to generate savings
of DKK 150m in 2020. In 2019, efficiency gains
corresponding to approximately DKK 90m were
realised.
One of the main drivers of this initiative is the
mix of distribution channels in the Private and
Commercial segments. Optimisation of the chan-
nel mix makes distribution to customers more
efficient, improves the customer experience and
lowers cost of sales. Another important element
involves the introduction of independent sales
agents in Private Denmark and Commercial Den-
mark, inspired by the franchise channel in Norway,
selling exclusively on behalf of Tryg. This initia-
tive generated positive results, resulting in a total
impact of DKK 60m in 2019.
Finally, an important component for improving dis-
tribution efficiency involves partner agreements.
In Norway, the partner agreement with NITO has
generated very good leads, and increased sales
and retention levels. The agreement with Danske
Bank also got off to a good start in 2019, generat-
ing very good leads and sales both for Private and
Commercial customers in Denmark and Norway.
Finally, Tryg’s Norwegian branch, Enter Forsikring,
recently launched ‘Enter Proff’ selling car insur-
ance to commercial customers.
Tryg's focus on digital empowerment of customers
also supports distribution efficiency through the
development of online solutions.
Alka synergies
In connection with the acquisition of Alka, Tryg
communicated a guidance of DKK 300m of syner-
gies which are expected to be achieved in 2021.
Tryg has announced synergies targets of
DKK 75m in 2019, DKK 150m in 2020 and
DKK 300m in 2021. Synergies of DKK 90m
were realised in 2019 (DKK 75m target), dem-
onstrating that Tryg is slightly ahead of the plan
for delivering synergies. Approximately half of
the achieved synergies relate to costs, while the
inclusion of the Alka business in the large Tryg's
procurement network has also helped.
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 a)’. We focus on activities related
to human and labour rights, climate and envi-
ronment as well as anti-corruption, and we are
actively working to integrate CR into our insur-
ance, claims handling and prevention activities.
CR plays a role in our decisionmaking, our risk
mitigation, the improvement and development of
our products and services, the optimisation of our
operations and business partners, the develop-
ment of our employees, and the contributions we
Employee satisfaction
78 78
71 68
74 72
Index
80
70
60
50
40
30
20
10
0
Tryg
Nordic
Nordic financial
market
2019
2018
Tryg has an employee satisfaction level above
the average of the Nordic sector.
Source: Global Employee and Leadership Index
make to society at large through our activities and
strategic partnerships. Read more about Tryg's CR
activities in the sextion Corporate Responsibility
on pages 23-24.
a) Tryg’ means: feeling protected and cared for.
Contents – Management’s review
14
Annual report 2019 | Tryg A/S | Tryg’s results
Premium growth of 17.1% or 6.1% excluding Alka. Technical result of DKK 3,237m (DKK 2,766m)
impacted positively by the growth in the private segment driven, among other things, by the highest
ever customer satisfaction with a TNPS of 68 and an all-time high retention. The overall result was
positively impacted by the inclusion of Alka and related synergies, a continuous improvement in
the underlying claims ratio and a low level of large and weather claims. Investment income of DKK
579m (DKK -332m) driven by higher equity market returns. Profit before tax of DKK 3,628m (DKK
2,262m). Quarterly dividend of DKK 1.70 per share, supporting TryghedsGruppen’s member bonus.
Extraordinary dividend of DKK 1.65 per share. Solvency ratio of 162.
Results 2019
Premium growth was 17.1%, or 6.1% excluding
Alka. The Private segment was up 7.8% exclud-
ing Alka, while Commercial (excluding Alka and
Troll) reported 4.4% growth, whereas Corporate
reported a lower growth of 2.0%.
Tryg reported a technical result of 3,237m
(DKK 2,826m excluding Alka). The higher techni-
cal result was impacted positively by the growth
in the private segment, the inclusion of Alka and
related synergies stemming from the acquisition
(DKK 90m in 2019). Weather and large claims
were more than DKK 250m lower than normal in
2019, it is important to keep this in mind when
looking at the technical result target of DKK 3.3bn
in 2020.
The Private segment reported an increased tech-
nical result, driven by an improved underlying
claims ratio and the inclusion of Alka, which offset
a lower run-off result. The Commercial segment
reported a lower technical result, driven primar-
ily by lower run-offs and higher large claims,
while the under lying profitability was broadly
unchanged. The Corporate segment reported a
highly improved technical result, driven by a high-
er run-off result and a decrease in large claims.
The underlying profitability is moving in the right
direction for Corporate but still not satisfactory
for the current underwriting year with normal-
ised assumptions for especially large claims and
run-off, while further profitability initiatives are
planned for 2020. The technical result for Private
Sweden is well above the corresponding year,
driven primarily by a high level of run-off reflecting
a strong reserving position in the motor third-party
liability segment. The underlying profitability for
the current underwriting year, especially with a
normalised run-off level, is not satisfactory and
initiatives, especially for the motor business, will
be implemented.
The combined ratio was 85.1 (84.5 excluding
Alka), driven by a claims ratio of 70.9 and an
expense ratio of 14.2. The sum of large and
weather claims (in per cent) was in line with
2018 (but lower than normal), while run-offs
(in per cent) were lower.
The investment result was DKK 579m (DKK -332m),
driven primarily by higher equity market returns.
Financial highlights 2019
(2018 excluding Alka)
Financial highlights 2019
(2018 as reported)
Technical result
DKK 3,237m
(DKK 2,826m)
Profit before tax
DKK 3,628m
(DKK 2,398m)
Claims ratio,
net of reinsurance
70.9 (70.4)
Gross expense ratio
14.2 (14.1)
Combined ratio
85.1 (84.5)
Technical result
DKK 3,237m
(DKK 2,766m)
Profit before tax
DKK 3,628m
(DKK 2,262m)
Claims ratio,
net of reinsurance
70.9 (70.7)
Gross expense ratio
14.2 (14.4)
Combined ratio
85.1 (85.1)
Equities return DKK 404m (20.5%) in 2019 vs
DKK -212m (-10.8%) in 2018.
Other income and expenses were DKK -188m
(DKK -172m).
In 2019, Danish customers received the fourth
member bonus payout from TryghedsGruppen
(Tryg’s 60% majority shareholder). The 8% bonus
is appreciated by customers and seen as an im-
portant competitive advantage through boosting
customer loyalty and supporting customer targets.
The pre-tax result was DKK 3,628m (DKK 2,398m
excluding Alka), while the return on equity after tax
was 24.6%.
Tryg will be implementing price adjustments of
around 3% in 2020 to mitigate claims inflation.
Customer targets
DKKm
Transactional Net Promoter Score (TNPS)
Number of products per customer
Q4 2019
Q4 2018
Target 2020
68
3.8
67
3.8
70
4 (+10%)
Contents – Management’s review
15
Annual report 2019 | Tryg A/S |
As flagged at Q3, more profitability actions will
be initiated in the Corporate segment.
Premiums
Premiums totalled DKK 21,741m (18,740m),
representing a growth in local currencies of 17.1%,
or 6.1% excluding Alka.
The Private segment reported growth of 7.8%
(excluding Alka), helped by partner agreement
sales, more product offerings, increased retention
rates and positive support from the Trygheds-
Gruppen member bonus. Private Denmark and
Private Norway are both contributing to the
positive top-line performance.
The Commercial segment reported premium
growth of 4.4% (excluding Alka) based on satis-
factory growth both in Denmark and Norway.
In Denmark, developments were positive with an
improved retention rate helped by the member
bonus from Tryghedsgruppen, but also by improved
sales compared to previous years. In Commercial
Norway, price initiatives of 7% supported growth
as customers largely accepted the higher prices.
The Corporate segment reported premium growth
of 2.0% in local currencies. In Corporate Denmark,
the development in premium income was helped
by the member bonus model. Corporate Norway
premium fell approximately 5% for the full year
following double-digit price increases. The surety
and credit business, Tryg Garanti, grew by 12%
in 2019. In 2020, more profitability actions will
be initiated to continuously improve the profit-
ability of the Corporate segment. In Denmark,
high single-digit price increases are being pushed
through. Tryg will continue to work to re-balance
its portfolio with the aim of increasing the Private
and Commercial portfolios, where profitability is
higher and capital requirements lower.
The segment Sweden increased 6.1%, helped by
healthy growth in the pet insurance segment and
also by positive developments in the motor and
accident lines of businesses.
Claims
The claims ratio, net of ceded business, was 70.9
(70.4 excluding Alka), while the underlying claims
ratio showed an improvement of 0.5 percentage
points, driven by price adjustments and claims
procurement initiatives. At the CMD in November
2017, Tryg launched a new target, which includes
a DKK 600m ‘claims excellence’ programme.
In 2019, savings of DKK 200m were achieved,
resulting in an accumulated total of DKK 350m for
the years 2018 and 2019. It is important to note
that part of the savings impacted the previous
year’s results (run-off gain), but not current year
figures.
Claims inflation is monitored continuously using
internal and external parameters, and price
adjustments are pushed through accordingly.
Motor insurance is one of the largest and most
profitable business segments for Tryg, and claims
developments are therefore carefully scrutinised.
Approximately half of all new cars sold in Norway
are electric/hybrid, and some of these carry differ-
ent risks compared to normal vehicles, making it
particularly important to monitor claims inflation
and adjust prices accordingly. More recently, the
building index in Norway has reported higher than
previously observed inflation, and prices have
been adjusted accordingly.
In 2019, large claims totalled DKK 455m
(DKK 490m), while weather claims totalled
DKK 416m (DKK 384m). Both the level of large
claims and the level of weather claims were
below normalised expectations of DKK 550m and
DKK 600m a year. The overall run-off result was
DKK 1,194m (DKK 1,221m), or 5.5% (6.5%) on
the combined ratio. The run-off result was driven
mainly by run-off gains in the long-tail segments.
Expenses
The expense ratio was 14.2 (14.1 adjusting
for Alka). At the CMD in 2017, Tryg announced
an expense ratio target of around 14 in 2020.
A number of initiatives to lower distribution costs
are being implemented, and some of the savings
from these initiatives are being invested in new
digital solutions. The expense ratio was impacted
by healthy growth in the Private segment, where
commissions to the various distribution channels
are often paid upfront.
Investments activities
The investment return totalled DKK 579m
(DKK -332m) and was boosted by positive equity
market developments in 2019 compared to 2018.
Almost two thirds of the difference in the invest-
ment result between 2019 and 2018 is attribut-
able to the performance of equities, which was
20.5% in 2019 and -10.8% in 2018. Additionally,
falling rates and narrowing credit spreads have
boosted the performance of Tryg’s fixed-income
portfolio. Market volatility remains high due to
high geopolitical risk levels although tensions
around a trade war between the US and China ap-
pear to be receding.
Contents – Management’s review
16
Annual report 2019 | Tryg A/S | Tryg pays a Q4 dividend per share of DKK 1.70 bringing the full-
year dividend per share to DKK 6.80. Additionally an extraordinary
dividend per share (for the FY 2019) of 1.65 will be paid.
The match portfolio reported an overall loss due
primarily to negative developments in Q3, while
other financial income and expenses ended at
DKK -236m, which is in line with expectations.
Other income and costs
Other income and costs were DKK -188m
(DKK -172m). The increase compared to 2018
was attributable primarily to the amortisation
of customer relations stemming from the Alka
acquisition, partly offset by a VAT compensation
of DKK 45m booked in the last quarter of the year.
Tax
Tryg paid a total tax bill of DKK 783m (DKK 529m),
or 21.5% of the profit before tax.
Capital position
The solvency ratio (based on Tryg’s partial internal
model) was 162 at year-end. Tryg will pay a Q4
dividend of DKK 1.70 per share on 27 January
2020, 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 stable quarterly dividend.
Additionally, Tryg will pay out an extra ordinary divi-
dend of DKK 1.65 per share, amounting to a total
payout of DKK 500m, also on 27 January 2020.
The solvency ratio of 162 includes the ordinary
and extraordinary dividend payments.
points. Sensitivities towards equity market falls
and interest rate movements are low.
Own funds totalled DKK 8,119m (DKK 8,058m). In
2019, own funds were positively impacted mainly
by the net profit, and negatively impacted by the
ordinary dividend and the extraordinary dividend
payment (due to be paid on 27 January 2020).
Tryg’s own funds comprise mainly shareholders’
equity, intangibles (fully deducted), Tier 2 instru-
ments (subordinated debt and the Norwgian
natural perils pool), Tier 1 instruments and
future profits. Most of Tryg’s own funds consist
of shareholders’ equity. Tier 2 capacity has been
fully utilised, while Tier 2 bonds in the amount of
DKK 142m are currently not included in the own
funds as they exceed the 50% solvency capital
requirement (SCR). Tier 1 capacity has also been
almost fully utilised, with DKK 17m remaining at
year-end 2019.
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
The Supervisory Board regularly assesses Tryg’s
capital position. Continuous assessments of
the company’s capital position are carried out,
projecting SCR on the basis of Tryg’s forecasts.
The projections include initiatives set out in the
company’s strategy for the coming years, and also
the most significant risks identified by the com-
pany. Adequacy is measured in relation to Tryg’s
strategic targets, including return on equity and
dividend policy.
Tryg calculates its SCR based on a partial internal
model in accordance with the Danish Financial
Supervisory Authority’s Executive Order on Sol-
vency and Operating Plans for Insurance Compa-
nies. The model is based on the structure of the
standard model. Tryg uses an internal model to
assess insurance risks, while other risks are cal-
culated using standard model components. Tryg’s
SCR, calculated using the partial internal model,
was DKK 5,021m at the end of 2019 compared
to DKK 4,892m at the end of 2018. The slight
SCR increase in 2019 was attributable primarily
to premium growth and to a modest increase in
market risk. Based on the standard formula, Tryg’s
SCR was DKK 6,293m compared to DKK 5,980m
at the end of 2018.
Dividend policy
Tryg’s dividend policy targets a nominal, stable
increase in dividend payments on a full-year basis.
Tryg introduced quarterly dividends in 2017. The
quarterly payment was DKK 1.70 per share, or a
total of DKK 6.80 (DKK 6.60) for 2019. This equates
to total dividend payments of DKK 2,056m, or 72%
of the profit for the year. Additionally, an extra-
ordinary dividend of DKK 1.65, amounting to a
total payout of DKK 500m, will also be paid out.
Events after the balance sheet date
On January 15, Tryg announced three new Direc-
tors in its business segments. The intensified focus
on improving risk selection and profitability has
led to management changes in Corporate Den-
mark and Corporate Norway while the managing
director of the business unit, Sweden, was also
changed. All the changes were effective as per 15
January 2020.
Contents – Management’s review
17
Annual report 2019 | Tryg A/S | The underlying claims ratio showed an
improvement of 0.5 percentage points
for the Group and of 0.5 percentage
points for the Private segment.
Results Q4 2019
The technical result was DKK 762m (DKK 656m
excluding Alka), driven by a positive development
in the underlying claims ratio, sound cost control
and the inclusion of Alka and related synergies.
Investment income was DKK 198m (DKK -330m),
driven primarily by positive equity market de-
velopments. The claims ratio (net) was 71.5, the
expense ratio was 14.6, and the combined ratio
was 86.1. The underlying claims ratio improved
0.5 percentage points both for Private and for the
Group. The pre-tax result was DKK 940m, and the
after-tax result was DKK 705m. Tryg pays a quar-
terly dividend of DKK 1.70 per share (DKK 514m)
and an extraordinary dividend of DKK 1.65 per
share (DKK 500m) and reports a solvency ratio of
162.
Premiums
Premium growth was 5.6% excluding Alka, driven
by good organic growth, higher retention levels
and satisfactory sales of new products. Premium
growth came mostly from the Private segment in
Denmark and Norway, but the Commercial busi-
ness also saw positive development. Corporate
growth was driven mainly by Tryg Garanti and by
price increases, mostly in the Norwegian part of
Corporate, designed to improve the underlying
profitability.
Claims
The claims ratio, net of ceded business, was 71.5
(71.5 excluding Alka). Large claims of DKK 98m
(DKK 84m) were higher than last year, but still
below a normal quarter, while weather claims
of DKK 94m (DKK 82m) were also higher than
last year, but also below a normal Q4 character-
ised by relatively harsh Scandinavian weather
conditions. The run-off result was DKK 256m
(DKK 207m). The underlying claims ratio im-
proved 0.5 percentage points both for the
Private segment and for the Group.
Expenses
The reported expense ratio was 14.6 (14.4
excluding Alka). Various initiatives aimed at lower-
ing distribution costs are being implemented, and
some of the savings from these initiatives are being
invested in new digital solutions. Tryg maintains its
expense ratio target of around 14.0 for FY 2020.
Investments
The investment return totalled DKK 198m
(DKK -330m) for Q4 2019, driven by a return of
Financial highlights Q4 2019
(Q4 2018 excluding Alka)
Financial highlights Q4 2019
(Q4 2018 as reported)
Technical result
DKK 762m
(DKK 656m)
Profit before tax
DKK 940m
(DKK 285m)
Claims ratio,
net of reinsurance
71.5 (71.5)
Gross expense ratio
14.6 (14.4)
Combined ratio
86.1 (85.9)
Technical result
DKK 762m
(DKK 596m)
Profit before tax
DKK 940m
(DKK 149m)
Claims ratio,
net of reinsurance
71.5 (72.6)
Gross expense ratio
14.6 (15.6)
Combined ratio
86.1 (88.2)
DKK 226m (DKK -198m) on the free portfolio,
a return of DKK 19m (DKK -42m) on the match
portfolio and other financial income and expenses
of DKK -47m (DKK -90m). The primary driver of
the strong investment return in Q4 is the perfor-
mance of equities, which were up 7.2% (-14.9%),
this swing explaining more than 80% of the
increased investment result.
Other income and costs
Other income and expenses totalled DKK -20m
(DKK -117m). In Q4 2018, DKK 76m of one-off
costs were booked in connection with the Alka
transaction. Other income and expenses consist
mainly of the amortisation of customer relations
stemming from the Alka acquisition. In Q4 2019,
a positive VAT compensation of DKK 45m was
booked.
Taxes
Tryg paid taxes of DKK 234m (DKK 37m) in Q4,
equating to an aggregate tax rate of 24.8%.
The slightly higher than normal tax rate is
attributable to expenses related to share-based
employee bonuses and the revaluation of
investment properties.
Contents – Management’s review
18
Annual report 2019 | Tryg A/S | Private
Results 2019
The technical result for 2019 was DKK 1,951m
(DKK 1,734m), with a combined ratio of 83.7
(81.6). The improved result was driven by the
inclusion of Alka (and related synergies) and by
an improved underlying claims ratio.
Premiums
Gross premium income was up 28.0% (8.9%) in
local currencies, which was ascribable primarily
to the Alka acquisition. Organic premium growth
excluding Alka was 7.8%. Growth was attributable
mainly to improved retention levels in the Danish
and Norwegian Private segments, strong partner
agreements and the cross-selling of new products
to existing customers in Denmark, helping to
increase customer loyalty further. The partner
agreements driving growth in Norway were
primarily OBOS (the largest housing developer
in Norway) and NITO. Growth was achieved
through relevant and innovative solutions and
products tailored especially to the members of
the various partner organisations.
The retention rate in Denmark increased from
91.2 to 91.6, while in Norway the retention rate
increased from 86.7 to 87.1. The positive develop-
ment in Denmark can be ascribed to a positive
impact from the member bonus model and a
consistently strong focus on customer loyalty, as
Contents – Management’s review
reflected in the TNPS score of 80. Private Norway
also had a strong focus on customer loyalty with
a TNPS score of 75.
Claims
The gross claims ratio totalled 68.1 (65.5), and
the claims ratio, net of ceded business, 70.0
(67.8). The underlying claims level improved by
0.6 percentage points, which was attributable to
the claims excellence programme and price ad-
justments aimed at mitigating increased claims
inflation. Weather-related claims were on a par
with 2018 levels and related primarily to Norway.
Expenses
The expense ratio for Private was 13.7 (13.8),
which was in line with the general guidance for
Tryg, reflecting investments in digital solutions
financed through distribution efficiency. Total
employee numbers decreased from 1,329 at the
end of 2018 to 1,317 in 2019, reflecting Tryg’s
focus on efficiency. In Denmark, sales agents
were recruited to target leads from the FDM port-
folio, and furthermore around 30 independent
sales agents were recruited in 2019. In Norway,
the primary distribution channel is franchise
agents, who are not directly employed by Tryg,
and therefore not included in the employee
numbers.
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 Alka (Denmark),
franchisees (Norway), interest organisations,
car dealers, estate agents and Danske Bank
branches.
The business area accounts for 55% of
the Group’s total premium income.
Financial highlights 2019
Technical result
DKK 1,951m
(DKK 1,734m)
Combined ratio
83.7
(81.6)
Premium growth
(local currencies)
28.0%
(8.9%)
Expense ratio
13.7
(13.8)
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 2019
Q4 2018
3,059
-2,075
-411
2,679
-1,719
-363
572
-77
-1
494
33
16.2
67.9
2.5
70.4
13.4
83.8
84.9
-1.1
0.0
2.4
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
2019
12,021
-8,185
-1,650
2,185
-231
-3
1,951
238
28.0
68.1
1.9
70.0
13.7
83.7
85.7
-2.0
0.1
2.0
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
19
Annual report 2019 | Tryg A/S |
Results Q4 2019
The technical result totalled DKK 494m (DKK 531m),
with a combined ratio of 83.8 (80.1). The lower
technical result is driven primarily by a lower run-
off result and somewhat higher weather-related
claims in Norway. The underlying claims ratio
improved by 0.5 percentage points, which is in line
with developments in the previous quarter and
positively impacted by Alka synergies.
Premiums
Gross premiums increased by 16.2% (21.2%)
in local currencies and were impacted by the
Alka acquisition. Excluding the Alka acquisition,
premium growth was 7.6%. The retention rate in
Denmark increased from 91.2 to 91.6, while in
Norway the retention rate increased from 86.7
to 87.1.
Claims
The gross claims ratio was 67.9 (64.2), and the
claims ratio, net of ceded business, was 70.4
(66.6). The underlying claims ratio improved by
0.5 percentage points. It was impacted by the
ongoing claims excellence programme, Alka syn-
ergies and price adjustments aimed primarily at
mitigating claims inflation. Weather claims were
higher than last year and were primarily related
to Norway.
Expenses
The expense ratio was 13.4 (13.5), approximately
on the same level as corresponding year.
Contents – Management’s review
Financial highlights Q4 2019
Technical result
DKK 494m
(DKK 531m)
Combined ratio
83.8
(80.1)
Claims ratio,
net of ceded business
70.4
(66.6)
Expense ratio
13.4
(13.5)
Health insurance
voted best in Norway
For the second year in a row, Tryg
has been named as ‘Best private
health insurance’ by the Norwegian
Consumer Council.
20
Annual report 2019 | Tryg A/S | Commercial
Results 2019
The technical result for 2019 was DKK 566m
(DKK 784m), with a combined ratio of 86.8 (80.3).
The combined ratio was affected by an increased
level of large claims and a lower level of run-off.
The development in premiums improved signifi-
cantly due to the Alka acquisition and strong sales
in Norway.
Premiums
The development in gross premium income was a
positive 8.3% (3.7%) in local currencies, impacted
by the acquisition of Alka as well as the OBOS and
Troll portfolios. An underlying improvement in
premium income was also seen for both the Dan-
ish and Norwegian Commercial business areas.
Commercial Denmark introduced a new and more
efficient sales channel inspired by the Norwegian
franchise set-up, while continuing to capitalise on
the TryghedsGruppen member bonus. In Norway,
premium development was positively impacted
by price adjustments, particularly for large com-
mercial customers, which were widely accepting
of the price increases.
The retention rate for Commercial Denmark
increased from 88.0 to 88.6, while in Norway the
retention rate increased from 87.7 to 89.0. The
positive developments in Denmark and Norway
can be ascribed to a strong customer focus, while
the customer bonus model also supported the
development in Denmark.
Claims
The gross claims ratio was 67.1 (58.6), with a
claims ratio, net of ceded business, of 69.3 (62.8).
The higher claims level was due to an increase in
large claims and a lower level of run-off. In general,
Tryg experienced an improved underlying claims
ratio, primarily due to price initiatives in Norway
for large customers in this segment.
Expenses
The expense ratio for Commercial was 17.5 (17.5).
Commercial Denmark has recruited a new type of
sales agents with the aim of lowering cost of sales,
which has already led to a lower expense level in
Denmark. The total number of employees was
down from 516 at the end of 2018 to 495 in 2019.
Contents – Management’s review
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, Alka (Denmark), franchisees
(Norway), customer centres as well as
group agreements.
The business area accounts for 20% of
the Group’s total premium income.
Financial highlights 2019
Technical result
DKK 566m
(DKK 784m)
Combined ratio
86.8
(80.3)
Premium growth
(local currencies)
8.3%
(3.7%)
Expense ratio
17.5
(17.5)
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 2019
Q4 2018
1,079
-746
-188
145
-41
1
105
36
4.8
69.1
3.8
72.8
17.4
90.3
93.6
-3.3
0.3
1.0
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
2019
4,274
-2,867
-749
658
-94
1
566
310
8.3
67.1
2.2
69.3
17.5
86.8
94.0
-7.2
3.3
2.2
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
21
Annual report 2019 | Tryg A/S |
Financial highlights Q4 2019
Technical result
DKK 105m
(DKK 270m)
Combined ratio
90.3
(74.2)
Claims ratio,
net of ceded business
72.8
(56.7)
Expense ratio
17.4
(17.5)
Claims
The gross claims ratio was 69.1 (52.2), with a
claims ratio, net of ceded business, of 72.8 (56.7).
The higher claims ratio was driven by a lower level
of run-off gains and a higher level of large claims.
Expenses
The expense ratio was 17.4 (17.5), which was
in line with the prior-year period. Going forward
Commercial will continue to focus on reducing
costs.
Results Q4 2019
The technical result was DKK 105m (DKK 270m),
with a combined ratio of 90.3 (74.2). The result
was negatively impacted by a lower run-off result
and a higher large claims level. Premium growth
was a positive 4.8% (6.8%), primarily due to the
Alka acquisition, but also due to price adjustments
in Norway.
Premiums
Gross premiums increased by 4.8% (6.8%) in local
currencies, impacted by the acquisition of Alka.
Growth was 4.3% excluding Alka. The retention
rate in Denmark increased to 88.6 (88.0), while the
retention rate in Norway increased significantly
to 89.0 (87.7) due to a strong focus on customer
loyalty.
Contents – Management’s review
22
Annual report 2019 | Tryg A/S | Corporate
Results 2019
The technical result was DKK 496m (DKK 173m),
with a combined ratio of 87.6 (95.6). The result
was positively affected by a significantly lower
level of large claims and a higher run-off level.
Premiums were up 2.0% (4.0%) and were im-
pacted by price hikes, especially in Norway, and a
high retention level driven by the customer bonus
model in Denmark. The underlying profitability
is increasing, but it is still not satisfactory, in par-
ticular when looking at current-year profitability
based on normalised asumptions for large claims
and run-offs. The corporate market is generally
challenging in all countries, even following signifi-
cant price hikes, especially in Norway. Tryg will
continue to implement profitability actions in all
countries in 2020, which might reduce premium
income. Tryg Garanti continued its expansion
to Germany, the Netherlands and Austria in line
with previous communication. The result for Tryg
Garanti was DKK 225m (DKK 204m).
Premiums
Gross premium income was up 2.0% (4.0%) in
local currencies. An increase of 7.2% was seen in
Denmark due to a positive development for the
credit and surety business (Tryg Garanti) and a
high retention level. Corporate Norway premiums
decreased by 4.7%, primarily due to price hikes
of approximately 14% (excluding fronting and
captive agreements). In Sweden, which accounts
for only 20% of the total Corporate business, pre-
mium growth was 0.8% and was also impacted
by profitability initiatives resulting in a loss of
customers.
Claims
The gross claims ratio totalled 70.8 (79.9), and the
claims ratio, net of ceded business, 77.2 (85.7).
As mentioned before, the lower claims level was
due to a lower level of large claims and a higher
level of run-off. Profitability remains challenging in
the Corporate segment considering a combined
ratio of 97.8 excluding run-offs, and price hikes
will therefore be implemented. In the past two
years, Corporate Norway has introduced profit-
ability initiatives, but in 2020 these initiatives will
be implemented in all countries. Depending on
customer reactions, this may lead to a reduction
in premium income, but profitability is expected
to improve. Tryg expects further significant profit-
ability initiatives to be implemented in 2021.
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 18% of
the Group’s total premium income.
Financial highlights 2019
Technical result
DKK 496m
(DKK 173m)
Combined ratio
87.6
(95.6)
Premium growth
(local currencies)
2.0%
(4.0%)
Expense ratio
10.4
(9.9)
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 2019
Q4 2018
987
-850
-120
17
56
0
73
81
1.1
86.1
-5.7
80.4
12.1
92.6
100.7
-8.2
9.6
0.9
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
2019
3,979
-2,816
-415
748
-255
2
496
407
2.0
70.8
6.4
77.2
10.4
87.6
97.8
-10.2
7.7
1.8
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
23
Annual report 2019 | Tryg A/S |
Expenses
The expense ratio for Corporate was 10.4 (9.9),
and it was quite stable throughout the year. The
low expense ratio is driven by high average pre-
miums in the Corporate segment, relatively low
claims handling costs and the fact that brokers are
paid by customers. Employee numbers increased
from 265 at the end of 2018 to 290 in 2019,
primarily due to the expansion of the credit and
surety business.
Results Q4 2019
The technical result was DKK 73m (DKK -117m),
with a combined ratio of 92.6 (111.8). The results
were positively impacted by a higher level of
run-off gains, but also by an improved underlying
combined ratio due to the launch of profitability
initiatives, particularly in Norway. Premium growth
was a positive 1.1% (2.9%), primarily due to price
hikes as well as credit and surety business growth.
Premiums
Gross premiums were up 1.1% (2.9%) in local
currencies, primarily due to price hikes in Norway,
the credit and surety business in Denmark and
high retention levels, especially in the Danish
business.
Claims
The gross claims ratio was 86.1 (92.7), and the
claims ratio, net of ceded business, 80.4 (101.5).
The improved claims ratio was primarily due to a
much higher run-off level compared to last year.
Further initiatives aimed at improving profitability
were introduced in the quarter with price hikes
of 14% in Norway, which was the main reason for
the improved underlying profitability.
Expenses
The expense ratio was 12.1 (10.3) and somewhat
higher than for Q4 2018.
Financial highlights Q4 2019
Technical result
DKK 73m
(DKK -117m)
Combined ratio
92.6
(111.8)
Claims ratio,
net of ceded business
80.4
(101.5)
Expense ratio
12.1
(10.3)
Best workplace
according to employees
Tryg has been named ‘best work-
place’ in the insurance industry
according to employees in the
financial sector. The survey called
’Employee image 2019’ is con-
ducted by the research company
Wilke on behalf of FinansWatch,
where Tryg scores 75.4 out of
100 based on 3,500 replies.
Contents – Management’s review
24
Annual report 2019 | Tryg A/S | Sweden
Results 2019
Sweden reported a technical result of DKK 231m
(DKK 201m) and a combined ratio of 84.8 (86.0).
The improvement was driven by higher run-off
gains reflecting a strong reserving position in the
motor third-party liability segment. The underly-
ing profitability for the current underwriting year
with a normalised run-off level is not satisfactory.
and initiatives, especially for the motor segment,
will be implemented. Premium growth increased
in 2019, primarily as a result of growth in the
motor segment and double-digit growth for pet
insurance.
Premiums
Gross premium income totalled DKK 1,521m
(DKK 1,471m), equating to growth of 6.1% (4.9%)
in local currencies. Growth was attributable espe-
cially to motor insurance, accident insurance and
pet insurance. Double-digit growth was posted for
pet insurance in 2019. Tryg’s Swedish business,
Moderna, is a small player in the Swedish market
trying to grow in selected niches where it has a
strong brand or through innovative solutions such
as the driving app Moderna Smart Flex (a digital
device for recording driving behaviour).
Contents – Management’s review
Claims
The gross claims ratio was 66.6 (69.6), and the
claims ratio, net of ceded business was 67.3
(69.9). The lower claims level was primarily due to
a higher run-off level derived from a solid reserves
position in the long-tail motor segment. Motor
insurance, which accounts for approximately one
third of the private lines in Moderna, reported a
higher level of small claims in 2019, and initiatives
are therefore being implemented to reduce the
number of motor claims.
Expenses
The expense ratio was 17.5 (16.1), which is a
relatively stable level considering the size of the
Swedish business. Employee numbers in Sweden
were up 32 employees compared to the prior-year
period, totalling 386 at the end of 2019.
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 7% of
the Group’s total premium income.
Financial highlights 2019
Technical result
DKK 231m
(DKK 201m)
Combined ratio
84.8
(86.0)
Premium growth
(local currencies)
6.1%
(4.9%)
Expense ratio
17.5
(16.1)
Key figures – Sweden
DKKm
Gross premium income
Gross claims
Gross expenses
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Run-off gains/losses, net of reinsurance
Key ratios
Premium growth in local currencies
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Combined ratio exclusive of run-off
Run-off, net of reinsurance (%)
Weather claims, net of reinsurance (%)
Q4 2019
Q4 2018
364
-193
-78
93
-3
0
90
107
3.3
53.1
0.8
53.8
21.5
75.3
104.8
-29.5
0.1
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
2019
1,521
-1,014
-267
241
-10
0
231
246
6.1
66.6
0.7
67.3
17.5
84.8
101.0
-16.2
0.7
2018
1,471
-1,024
-237
210
-4
-5
201
122
4.9
69.6
0.3
69.9
16.1
86.0
94.3
-8.3
0.5
25
Annual report 2019 | Tryg A/S |
Financial highlights Q4 2019
Technical result
DKK 90m
(DKK 38m)
Combined ratio
75.3
(89.2)
Claims ratio,
net of ceded business
53.8
(72.0)
Expense ratio
21.5
(17.2)
Results Q4 2019
Gross premium income for Q4 2019 was
DKK 364m (DKK 361m). The technical result was
DKK 90m (DKK 38m), with an expense ratio of
21.5 (17.2) and a combined ratio of 75.3 (89.2).
Claims
The gross claims ratio was 53.1 (71.7) and net
of ceded business 53.8 (72.0). The much lower
claims level was due to a higher level of run-off
gains.
Premiums
Gross premium income was DKK 364m (DKK 361m),
or up 3.3% (7.7%) in local currencies. As men-
tioned before, the primary drivers of growth in
Sweden are motor insurance, accident insurance
and pet insurance. The key focus is on generating
profitable growth through niche products and
innovative solutions in Sweden.
Expenses
The expense ratio was 21.5 (17.2). The number
of employees decreased by 54 compared to
Q4 2018 underlining the efficiency initiatives
in Moderna.
Contents – Management’s review
26
Alka’s car insurance
is ’best in test’
For the third consecutive year, Alka’s
car insurance has been voted ‘best in
test’ by the Danish Consumer Council,
Tænk. The Consumer Council tested
car insurance products from 16 differ-
ent insurance companies.
Annual report 2019 | Tryg A/S | Investment activities
The investment return totalled DKK 579m
(DKK -332m) for the full year 2019, driven by
a return of DKK 857m (DKK -33m) on the free
portfolio, a return of DKK -42m (DKK -2m) on
the match portfolio, and other financial income
and expenses of DKK -236m (DKK -297m).
The total market value of Tryg’s investment portfolio
was DKK 40bn (DKK 40bn) at year-end 2019. The
investment portfolio consists of a match portfolio
of DKK 29bn (DKK 29bn) and a free portfolio of
DKK 11bn (DKK 11bn). The match portfolio is com-
posed of low-risk 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 reflects
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 positive
note, driven primarily by strong equity markets in
the last three months of 2019. Trades fear abated,
macroeconomic data were generally positive, and
central banks cut interest rates.
Tryg’s equity portfolio reported a return of DKK
404m (20.5%) in 2019 vs DKK -212m (-10.8%) in
2018. The large difference in the return on equi-
ties explains around 2/3 of the difference in the
Group’s investment return in 2019 vs 2018. The
fixed-income portfolio also produced a very good
return of DKK 294m (4.4%) vs DKK -93m (-1.4%)
in 2018, driven primarily by falling rates through-
out most of the year and tightening credit spreads.
The return on the investment property portfolio was
DKK 159m (DKK 272m in 2018 driven by revalu-
ations of DKK 155m), or 7.7%, helped by revalu-
ations of DKK 68m in the last quarter of the year.
Equity and property investments totalled DKK
4.3bn, while approximately DKK 2.1bn were invest-
ed in corporate bonds. The remaining DKK 5.0bn
were primarily invested in Nordic covered bonds
and Government bonds, including inflation-linked
bonds, where current yields remain negative, put-
ting downward pressure on the return on the free
portfolio and the overall investment income.
Match portfolio
The result of the match portfolio is the difference
between the return on the match portfolio and the
amount transferred to the technical result. The
result can be split into a ’regulatory deviation’ and
a ’performance result’. The regulatory deviation
was DKK -73m (DKK 31m) for the full year 2019,
driven primarily by negative developments in Q3 as
Contents – Management’s review
Financial highlights 2019
Investment return
DKK 579m
Free portfolio result
DKK 857m
Match portfolio
DKK -42m
Other financial income
and expenses
DKK -236m
Key figures – investments
DKKm
Q4 2019
Q4 2018
Free portfolio, gross return
Match portfolio, regulatory deviation
and performance
Other financial income and expenses
Total investment return
226
19
-47
198
-198
-42
-90
-330
Return – match portfolio
DKKm
Q4 2019
Q4 2018
Return, match portfolio
Value adjustments, changed discount rate
Transferred to insurance technical interest
Match, regulatory deviation and performance
Hereof:
Match, regulatory deviation
Match, performance
-268
322
-35
19
23
-4
138
-126
-54
-42
-19
-23
2019
857
-42
-236
579
2019
475
-351
-166
-42
-73
31
2018
-33
-2
-297
-332
2018
200
7
-209
-2
-2
0
27
Annual report 2019 | Tryg A/S |
a very high level of volatility at the long end of the
interest rate curve drove the negative development.
The performance result was DKK 31m (DKK 0m) as
Nordic covered bond spreads narrowed slightly.
Other financial income and expenses
The other financial income and expenses compo-
nent is primarily made up of interest expenses re-
lated to outstanding subordinated debt, the cost of
the currency hedges to protect shareholders’ equity
and the cost of running the investment operations.
Other financial income and expenses totalled
DKK -236m (DKK -297m). Tryg has previously
announced that this line should report a result of
approximately DKK -60m per quarter so the over-
all result for 2019 is in line with expectations.
Investment result in Q4 2019
The last quarter of 2019 was characterised by
positive developments, especially in the equity mar-
kets. Tryg’s equity portfolio returned DKK 152m
or 7.2%. The geo-political backdrop was positive,
due primarily to eased trade discussions between
China and the USA and generally positive macro-
economic data. Additionally, the UK parliamentary
elections returned a clear mandate, thus removing
some uncertainty. In general, the macro economic
picture and geo-political tensions generally remain
volatile and will drive most of the narrative in the
capital markets also in 2020.
The fixed-income portfolio returned a negative result
of DKK -19m (DKK -16m) or -0.3%, with most fixed-
income asset classes posting negative returns due
to increasing interest rates in Q4 with the noticeable
exception of emerging-market bonds and high-yield
bonds driven by narrowing credit spreads. Finally,
the property portfolio booked a return of DKK 93m
(DKK 102m) or 4.4% in the quarter, driven primarily
by a revaluation of DKK 68m. The overall result of
the free portfolio was DKK 226m (DKK -198m)
Return – free portfolio
DKKm
Q4 2019
Q4 2019 (%)
Q4 2018
Q4 2018 (%)
2019
2019 (%)
2018
2018 (%)
31.12.2019
31.12.2018
Government bonds
Covered bonds
Inflation-linked bonds
Investment-grade credit
Emerging-market bonds
High-yield bonds
Othera)
Interest rate and credit exposure
Equity exposureb)
Investment property
Total gross return
-1
-15
-19
-4
17
7
-4
-19
152
93
226
-1.8
-0.4
-3.7
-0.3
3.2
0.7
-0.3
7.2
4.4
2.0
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
4
22
23
106
48
72
19
294
404
159
857
1.9
0.7
4.6
11.9
8.6
7.6
4.4
20.5
7.7
8.0
-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
98
3,664
498
1,016
545
1,058
180
7,058
2,237
2,141
198
3,696
493
820
484
862
47
6,600
1,842
2,238
11,436
10,680
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 are derivatives contracts of DKK 168m.
Contents – Management’s review
28
Annual report 2019 | Tryg A/S |
Financial highlights Q4 2019
Investment return
DKK 198m
Free portfolio result
DKK 226m
Match portfolio
DKK 19m
Other financial income
and expenses
DKK -47m
The match portfolio reported an overall result
of DKK 19m (DKK -42m), driven primarily by a
regulatory deviation contribution of DKK 23m
(DKK -19m), while Nordic covered-bond spreads
were almost flat, explaining the DKK -4m
(DKK -23m) performance result.
Other financial income and expenses were
DKK -47m (DKK -90m), which is broadly in line
with the guidances. Q4 2018 was burdened by
the write-down of a couple of minor strategic
investments, as explained in the annual report
2018 (page 30).
The overall investment result in Q4 was
DKK 198m (DKK -330m) with more than 80%
of the performance swing being explained by
changes in equity markets performance, 7.2%
in Q4 2019 vs -14.9% in Q4 2018.
Contents – Management’s review
29
Annual report 2019 | 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 manage-
ment of Tryg’s aggregated risk and the associated
capital requirement therefore constitutes 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 capi-
tal which must be available to cover any losses.
Solvency II
The Solvency II regime (introduced at the beginning
of 2016) emphasises the need for sound risk
management and introduced additional require-
ments concerning risk governance, consistency
Solvency Capital Requirement
DKKm
6,000
5,000
4,000
3,000
2,000
1,000
0
4,892
5,021
Q4 2018
Q4 2019
across the Group and top management reporting
and involvement. Tryg has implemented a risk gov-
ernment structure in full compliance with Solvency II.
In addition to the requirements in Solvency II Tryg
has chosen to appoint a special Risk Committee
consisting of members from the Supervisory Board.
Tryg has chosen to implement a – approved by the
Danish FSA – partial internal model which models
insurance risk while all other modules are based on
the standard formula.
Insurance risk
The insurance risk is controlled by limiting the size
of single exposures and through the use of reinsur-
ance, thereby capping the cost of large and weather-
related claims. Additionally, 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, while
slightly more than 80% of premiums are in the
Private and Commercial (SMEs) segments. Quar-
terly fluctuations are driven mainly by large and
weather-related 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 portfolio (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 maxi-
mum risk-adjusted return. The investment risk as-
sociated with the free portfolio is managed through
limits on exposure within single asset classes.
Capital management
Capital management is a function of developments
in Tryg’s own funds and the capital requirement
(based on the approved partial internal model).
As mentioned previously, Tryg has modelled the
insurance risk internally, while all other modules
are based on the standard formula. 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 program-
me, investments mix and the overall level of profit-
ability. The solvency ratio is defined as own funds
divided by the solvency capital requirement (SCR).
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. The debt capacity has been fully utilised,
and at the end of 2019 some DKK 142m of Tier
2 instruments are not included in the own funds
as they exceed the 50% SCR limit. Own funds
totalled DKK 8,119m at the end of 2019 vs
DKK 8,058m at the end of 2018, the primary drivers
of the own funds being profits and dividends.
The solvency capital requirement is calculated in
such a way that Tryg should be able to honour its
obligations in 199 out of 200 years.
Own funds
DKKm
10,000
8,000
6,000
4,000
2,000
8,058
8,119
Q4 2018
Q4 2019
Contents – Management’s review
30
Annual report 2019 | Tryg A/S | DKK
Tryg will pay a Q4 dividend
and an extraordinary dividend
on January 27 2020
At the end of 2019, Tryg’s SCR was DKK 5,021m,
up approximately DKK 129m since the end of
2018. The slight SCR increase in 2019 was
attributable primarily to premium growth and to
a modest increase in the market risk. An applica-
tion, for an updated internal model, has been
submitted to the Danish FSA. The updated model
will include Tryg’s Swedish business and also
other adjustments.
Tryg’s solvency ratio displays low sensitivity to-
wards capital market movements. Fixed-income
securities represent some 90% of Tryg’s invested
assets, for which reason the highest solvency
sensitivity is towards spread risk, where a widen-
ing/tightening of 100 basis points will impact the
solvency ratio by 14 percentage points. Lower
sensitivity is displayed towards equity market falls
and interest rate fluctuations. Additional changes
in the UFR (Ultimate Forward Rate) will have a neg-
ligible impact due to the relatively short duration
of Tryg’s liabilities (below four years on average).
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
identified by the company. The adequacy is
measured in relation to Tryg’s strategic targets,
including return on equity and dividend policy.
Tryg will pay a Q4 dividend of DKK 1.70 per share
on 27 January 2020, which is in line with Tryg’s
policy of paying out a stable quarterly dividend.
The full-year dividend is therefore DKK 6.80
per share, equivalent to the total distribution
of just above DKK 2bn. In addition, Tryg will
pay an extraordinary dividend of DKK 1.65
per share, equivalent to DKK 500m also on
27 January 2020.
Moody’s rating
Tryg has an ‘A1’ (stable outlook) insurance finan-
cial 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 debt. The ratings were re-affirmed in
summer 2019.
Contents – Management’s review
31
Shareholder remunerationDKK per share1086420Extraordinary buy backExtraordinary dividendOrdinary dividend201720182019201620153.56.06.26.46.66.83.53.31.65Annual report 2019 | 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 can
form a true and fair view of developments, includ-
ing 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 the communication with equity in-
vestors, fixed-income investors and rating agencies.
See Tryg’s IR policy at tryg.com > Governance
> Policies
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 2019, 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-
lyst 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
Contents – Management’s review
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 164.8 and ended 2019 at DKK 197.5. The
total return (price and dividends) of the share was
24%. The positive share price development was
driven primarily by highly stable earnings 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, changes in solvency levels can be more
difficult to predict and often also difficult to under-
stand. 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. Daily turn-
over on NASDAQ averaged DKK 86m, and average
daily volume was 442,179.
Share capital and ownership
Tryg’s share capital totalled DKK 1,510,739,955 on
31 December 2019. It comprises one share class
(302,147,991 shares with a nominal value of DKK 5),
and all shares rank pari passu. The majority share-
holder, TryghedsGruppen smba, owns 60% of the
shares and is the only shareholder holding more
than 5% of the share capital. TryghedsGruppen in-
vests in peace-of-mind and healthcare providers in
the Nordic region and supports non-profit-making
activities.
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,
TrygFonden
TrygFonden is the leading and most well-known
peace-of-mind supporter in Denmark, supporting
around 800 activities that contribute to creating
peace of mind, 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 which con-
tributed DKK 600m to projects that create peace
of mind in all parts of Denmark in 2019.
TryghedsGruppen
In 2019 and for the fourth 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 2018.
32
Annual report 2019 | Tryg A/S | Financial calendar 2020
Shareholders
at 31 December 2019
23 Jan. 2020
Tryg shares are traded
ex-dividend
27 Jan. 2020
Payment of Q4 dividend
and extraordinary dividend
30 Mar. 2020
Annual general meeting
21 Apr. 2020
Interim report Q1
22 Apr. 2020
Tryg shares are traded
ex-dividend
24 Apr. 2020
Payment of Q1 dividend
09 July 2020
Interim report Q2 and H1
10 July 2020
Tryg shares are traded
ex-dividend
14 July 2020
Payment of Q2 dividend
09 Oct. 2020
Interim report Q1-Q3
12 Oct. 2020
Tryg shares are traded
ex-dividend
8
Per cent
60
20
12
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 2019
21
25
37
Per cent
17
Denmark
UK
USA
Others
14 Oct. 2020
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)
2019
2,056
6.8
72%
-
500
1.65
2018
1,994
6.6
115%
-
-
-
2017
1,827
6.4
73%
-
1,000
3.31
2016
1,770
6.2
72%
-
1,000
3.54
2015
1,759
6.0
89%
1,000
-
-
33
The notice will be advertised in the daily press in
February 2020 and will be sent to shareholders
upon request.
The annual general meeting will also be
announced at tryg.com
The company announcements published
in 2020 can be seen at tryg.com
> Announcements
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 steadily increasing
dividend in nominal terms on a full-year basis.
A general objective of creating long-term value
for the company’s shareholders.
A competitive dividend policy in comparison
with 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
extraordinary dividends.
Annual general meeting
Tryg’s annual general meeting will be held on
30 March 2020 at 15:00 CET at Tryg’s head office,
Klausdalsbrovej 601, 2750 Ballerup, Denmark.
Contents – Management’s review
Annual report 2019 | 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 re-
commendation. 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 2020.
Moreover, Tryg prepares quarterly investor pres-
entations, which are used in the 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 form for voting by post are available at
tryg.com prior to the AGM.
Share and capital structure
Tryg’s share capital comprises a single share class,
and all shares rank pari passu. The majority share-
holder, TryghedsGruppen smba, owns 60% of the
shares and is the only shareholder owning more
than 5% of the company’s shares. The Supervisory
Board ensures that Tryg’s capital structure is
aligned with the needs of the Group and the inter-
ests of its shareholders and that it complies with
the requirements applicable to Tryg as a financial
undertaking. Tryg has adopted a capital plan and
a contingency capital plan, which are reviewed
annually by the Supervisory Board.
Depending on the development in results, each
year the Supervisory Board proposes the distribu-
tion of quarterly dividends, and possibly an ex-
traordinary annual dividend if further adjustment
of the capital structure is required.
Duties, responsibilities and composition
of the Supervisory Board
The Supervisory Board is responsible for the cen-
tral strategic management and financial control of
Tryg and for ensuring that the business is organ-
ised 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 Super visory Board
on strategies and action plans, market develop-
ments 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
34
Annual report 2019 | 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.
The current eight members of the Supervisory
Board were elected by the annual general meet-
ing 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 Rec-
ommendations on Corporate Governance, while
the other three members are dependent persons as
they are appointed by Tryg’s majority shareholder,
TryghedsGruppen smba. See pages 39-41 for in-
formation on when the individual members joined
the Supervisory Board, were re-elected and when
their current election period ends. To ensure the
integration of new talent on the Supervisory Board,
members elected by the annual general meeting
may hold office for a maximum of twelve years.
The Supervisory Board has 12 members, with an
equal representation of men and women. There-
fore, women are not underrepresented on Tryg’s
Supervisory Board, thus complying with legislation
as well as Tryg’s policy. The Supervisory Board has
members from Denmark, Sweden and Norway.
and in accordance with sound governance princi-
ples. The Supervisory Board decided to arrange a
Board education day on relevant matters.
See details about the independent board
members in the section Supervisory Board on
pages 39-41 and at tryg.com > Governance
See CVs and descriptions of the skills in the
section Supervisory Board on pages 39-41
and at tryg.com > Governance
The Supervisory Board performs an annual evalu-
ation of its work and skills to ensure that it pos-
sesses the expertise required to perform its duties
in the best possible way. In addition to the annual
self-evaluation, an assessment is facilitated with
external assistance as a minimum every third year
to ensure objectivity in the evaluation process. The
Supervisory Board focuses primarily on the follow-
ing qualifications and skills: business judgement,
problem solving, networking, risk management,
succession management, general management,
CFO/audit, people and organisation, business de-
velopment, financial services, risk and regulatory,
insurance – commercial and product, insurance –
technical/financial modelling, digitalisation, value
chain optimisation and customer journey. In 2019
the evaluation was based on the Chairman’s inter-
views with the board members supplemented by
a questionnaire focusing on board competencies.
The overall conclusions from the evaluation was
that the Supervisory Board is working effectively
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 Supervisory
Board and report on compliance with limits de-
fined 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
2019, the share of women at management level
was 35% against 33% in 2018. The target for 2019
of 38% or more women at management level was
therefor not met. Tryg maintains the target of in-
creasing the total share of women at management
level to 41% or more in 2020.
See the action plan at tryg.com
Board committees
Tryg has an Audit Committee, a Risk Committee,
a Nomination Committee, a Remuneration Com-
mittee 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 members,
meeting frequency, responsibilities and activities
during the year
See the tasks of the board committees in 2019
at tryg.com > Governance > Management
> Supervisory Board > Board committees
Contents – Management’s review
35
Annual report 2019 | Tryg A/S |
All members of the Audit Committee and three
out of four members of the Risk Committee,
including the chairman of the committees, are
independent persons. Two out of the three mem-
bers of the Remuneration Committee elected by
the General Assembly are independent persons,
and the fourth member is employee representa-
tive. Two out of three members of the Nomina-
tion Committee are independent, including the
chairman of the committee. Two out of three
General Assembly elected member of the IT-Data
Committee are independent persons, including
the chairman of the committee, and the fourth
member is an employee representative. Board
committee members are elected primarily based
on special skills that are considered important by
the Supervisory Board.
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
Contents – Management’s review
employees in Tryg, whose activities have a material
impact on the risk profile of the company, so-called
risk takers. The remuneration policy for 2019 was
adopted by the Supervisory Board in January 2019
and approved by the annual general meeting on 15
March 2019.
The Chairman of the Supervisory Board reports on
Tryg’s remuneration policy each year in connection
with the review of the annual report at the annual
general meeting. The Supervisory Board's proposal
for the remuneration of the Supervisory Board for the
current financial year is also submitted for approval
by the shareholders at the annual general meeting.
See the remuneration policy at tryg.com
Remuneration of the Supervisory Board
Members of Tryg’s Supervisory Board receive a fixed
fee and are not comprised by any form of incentive
or severance programme or pension scheme. Their
remuneration is based on trends in peer companies,
taking into account the required skills, efforts and
the scope of the Supervisory Board’s work, includ-
ing the number of meetings held. The remuneration
received by the Chairman 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 Super-
visory Board.
Total remuneration of the Supervisory Board in 2019
DKK
Jukka Pertola
Torben Nielsen
Jesper Hjulmandb)
Lene Skole
Mari Thjømøe
Carl-Viggo Östlund
Ida Sofie Jensen
Tina Snejbjerg
Lone Hansen
Tom Eileng
Anders Hjulmandb)
Elias Bakk
Karen Bladtc)
Claus Wistoftc)
Audit
Fee Committee Committee
Risk Remuneration
IT-Data Nomination
Committee Committeea) Committee
Total
236,250
37,500
157,500
157,500
232,500
35,000
155,000
155,000
155,000
161,250
245,000
107,500
107,500
297,500
245,000
245,000
107,500
1,147,500
765,000
90,000
382,500
382,500
382,500
382,500
382,500
382,500
382,500
90,000
382,500
292,500
292,500
75,000
112,500 1,666,250
75,000 1,308,750
162,500
695,000
695,000
787,500
810,000
537,500
627,500
490,000
90,000
382,500
292,500
292,500
a) One-off fee of DKK 140,000 in 2018/2019. IT-Data Committee became permanent as of 1 April 2019.
b) Resigned from the Supervisory Board in March 2019
c) Joined the Supervisory Board in March 2019
36
Annual report 2019 | 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
salary must be competitive and appropriate for
the market and provide sufficient motivation for
all members of the Executive Board to do their
best to achieve the company’s defined targets.
The Supervisory Board can decide that the base
salary should be supplemented with a variable
pay element of up to 50% of the fixed salary
including pension.
In 2019, the variable pay element consisted of a
Matching Shares Programme. Using taxed funds,
the Executive Board may in 2020 buy shares
(so-called investment shares) in Tryg A/S at market
price for a predefined amount, which is dependent
on the member’s performance for the financial
year. Four years after the purchase, Tryg will grant
one matching share per investment share free of
charge.
Matching is conditional upon the 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
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 Ex-
ecutive Board and the company’s shareholders.
The targets for 2019 were based on Tryg’s tech-
nical result, Transactional Net Promoter Score,
employee satisfaction levels, the implementation
of Alka and the overall execution of the strategy.
Each year the Supervisory Board evaluates
the performance 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 offered to each member
of the Executive Board.
Read more about the Matching Shares
Programme in the remuneration policy at
tryg.com and in the remuneration rapport
for 2019, which will be available at the
annual general meeting.
Total remuneration of the Executive Board in 2019
DKK
Base salary
Pension
Car
allowance
Other
benefits
Total fixed
salary
Morten Hübbe
Lars Bonde
Johan Kirstein Brammer
Barbara Plucnar Jensen b)
11,330,000
5,385,056
5,175,000
4,166,667
2,832,500
1,346,264
1,293,750
1,041,667
255,000
255,000
255,000
212,500
26,000
26,000
26,000
21,667
14,443,500
7,012,320
6,749,750
5,442,500
One-off fee
0
0
0
1,000,000
Share-based
remuneration a)
Total fee
4,886,718
2,372,502
2,283,665
1,647,717
19,330,218
9,384,822
9,033,415
8,090,217
a) The value of Matching Shares (investment shares) at the time of allotment of the right to participate in the Matching Shares programme for the Executive Board
for the 2019 performance year.
b) Barbara Plucnar Jensen took up the position as CFO on 1 March 2019, i.e. salary calculated pro rata for 2019. Was granted a sign-on bonus vesting in 2020.
Contents – Management’s review
37
Annual report 2019 | Tryg A/S |
From 2021, based on the performance in the
financial year 2020, the variable pay is allotted
as conditional shares.
Financial reporting, risk management
and auditing
As an insurance business, Tryg is subject to the
risk management requirements of the Dan-
ish Financial Business Act and Solvency II. The
Supervisory Board defines Tryg’s risk management
framework as regards insurance risk, investment
risk, compliance risk and operational risk, as
well as IT security, in policies and guidelines for
the Executive Board. Risks associated with new
financial reporting rules and accounting policies
are monitored and considered by the Audit Com-
mittee, the finance management and the internal
auditors. Material legal and tax-related issues and
the financial reporting of such issues are assessed
on an ongoing basis.
Other risks associated with the financial
reporting are described in the section Capital
and risk management on pages 30-31 and in
Note 1 Risk management on page 58
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's Supervisory Board un-
dertook an Own Risk and Solvency Assessment
(ORSA) in 2019. The purpose of the ORSA is to
ensure and demonstrate a link between strategy,
risk management, risk appetite, solvency and
capital planning over the planning period.
The Supervisory Board and the Executive Board
approve and monitor the Group’s overall poli-
cies 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 Super-
visory Board checks that the company’s risk man-
agement and internal controls are effective. The
Board receives reports on non-compliance with
the frameworks and guidelines established by the
Supervisory Board. The Risk Committee monitors
the risk management on an ongoing basis and
reports quarterly to the Supervisory Board.
The Group’s internal control systems are based
on clear organisational structures and guidelines,
general IT controls and segregation of functions,
which are supervised by the internal auditors.
As part of the internal control system, Tryg has
established independent risk management,
compliance and actuarial functions. The functions
report to the Executive Board and the Supervisory
Board’s Risk Committee. Tryg has a decentralised
set-up whereby risk managers in the business
areas carry out controlling tasks for the risk man-
agement and compliance functions.
Risk management is an integral part of Tryg’s
business operations. The Group seeks at all times
to minimise the risk of unnecessary losses in order
to optimise returns on the company’s capital.
Read more about Tryg’s risk management
in the section Capital and risk management
on pages 30-31 and in Note 1 on page 58
Whistleblower line
Tryg has a whistleblower line, which allows
employees, customers and business partners
to report any serious wrongdoings or suspected
irregularities. Reporting takes place in confidence
to the chairman of the Audit Committee and the
Head of Compliance.
Read more about Tryg’s whistleblower line
at tryg.com
Independent and internal audit
The Supervisory Board ensures monitoring by
competent and independent auditors. The Group’s
internal auditor attends all board meetings. The
independent auditor attends the annual board
meeting at which the annual report is presented.
The annual general meeting annually appoints
an independent auditor on the recommendation
of the Supervisory Board. At least once a year, the
auditors meet with the Audit Committee without
the presence of the Executive Board. The chair-
man of the Audit Committee handles 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
committees, with which Tryg complies partially;
see recommendations 3.4.2. of the Recommen-
dations on Corporate Governance.
The deviations are explained in Tryg’s statutory
corporate governance report, which is available
at tryg.com > Download
Contents – Management’s review
38
Annual report 2019 | Tryg A/S |
Supervisory Board
Tina Snejbjerg (1962)
Employee representative
Officer of Tryg’s Personnel Depart-
ment. Employed since 1987.
Elias Bakk (1975)
Employee representative
Team Manager in Tryg.
Employed since 2006.
Jukka Pertola (1960)
Chairman
Has special skills in the fields of
management, insurance, IT and
digitalisation, communication
and finance. Jukka Pertola has
more than ten years of board
work 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.
Karen Bladt (1967)
Board member
Has 10 years of experience as a
member of various supervisory
boards. Karen Bladt has particular
skills in the fields of business devel-
opment and problem-solving.
Carl-Viggo Östlund (1955)
Board member
Has experience from insurance,
logistics, finance and banking,
from leading positions in listed and
non-listed companies. Carl-Viggo
Östlund has special knowledge of
Swedish market conditions.
Mari Thjømøe (1962)
Board member
Has special skills in the fields of
management, finance, investment
management and investor relations,
as well as experience from insur-
ance and Norwegian large caps.
Mari Thjømøe has special insights
into the Norwegian market.
Tom Eileng (1954)
Employee representative
Deputy Chairman of Finansforbundet
Tryg and Senior Commercial Adviser.
Employed since 1986.
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
risk management.
Lone Hansen (1966)
Employee representative
Chairman of the Association for
Tied Agents and Key Account Man-
agers in Tryg. Employed since 1990.
Claus Wistoft (1959)
Board member
Has special skills in the fields of
management, business develop-
ment and problem-solving, risk
management and succession. Claus
Wistoft has experience from politics.
Ida Sofie Jensen (1958)
Board member
Has experience from the healthcare
sector as well as top management,
strategy and communication.
Chairman of TryghedsGruppen.
Contents – Management’s review
39
Annual report 2019 | Tryg A/S | Supervisory Board
Jukka Pertolab)
Chairman
Born in 1960. Joined the Supervisory Board in 2017.
Finnish citizen.
Career: Professional board member.
Former CEO of Siemens Denmark.
Education: MSc in Electrical Engineering.
Board seats, Chairman: Danish Academy of Technical Sciences
(ATV), Gomspace Group AB and GomSpace A/S, Asetek 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: Remuneration Committee (Chairman),
Nomination Committee (Chairman) and IT-Data Committee
in Tryg. Nomination Committee in COWI and in GomSpace.
Remuneration Committee (Chairman) in Asetek.
Experience: More than 25 years of top management experience in the
IT and telecommunication industry and electrical engineering, the lat-
est position being the CEO of Siemens Denmark from 2002 to 2017.
Broad international experience with global and regional business
responsibilities in both BtC and BtB.
Competencies: Solid technological background in telecommunica-
tions, IT, digitalisation, business models, strategy and business
development. Understanding of risk management, M&A,
business know-how and judgement as well as insurance.
Number of shares held: 4,000
Change in portfolio 2019: 0
Torben Nielsenb)
Deputy Chairman
Born in 1947. Joined the Supervisory Board in 2011.
Danish citizen.
Career: Professional board member, Adjunct Professor at the
Copenhagen Business School. Former Governor of Danmarks
Nationalbank (Danish Central Bank).
Education: Savings bank training, Graduate Diplomas in
Organisation, Work Sociology, Credit and Financing.
Board seats, Chairman: Investeringsforeningen Sparinvest,
Vordingborg Borg Fund, Ny Holmegaard Værk Fund, Museum of
South East Denmark 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.
Committee memberships: Audit Committee (Chairman), Risk
Committee (Chairman) and Nomination Committee in Tryg
as well as Audit and Risk Committee of Sampension (Chairman).
Contents – Management’s review
Experience: General experience from executive level in banking.
Micro and macro knowledge from membership of the board of
governors in the Danish central bank. Knowledge of chairman-
ship from non-excecutive boards.
Competencies: General top management experience from the
financial sector as well as experience with risk management and
regulatory requirements, business know-how and judgement.
Number of shares held: 28,000
Change in portfolio 2019: +1,000
Elias Bakka)
Born in 1975. Employee representative. Joined the Supervisory
Board in 2017. Swedish citizen. Employed since 2006.
Career: Team Manager in Moderna SE.
Education: Norrea Real Gymnasium, financial services &
insurance at Företagsekonomiska institut Stockholm.
Education at ‘Forsikringsakademiet’ for new board members.
Experience: Team Manager in Moderna Affinity for 12 years,
Business development in Moderna and Affinity for 2 years
Competencies: Solid insurance knowledge from his years in the
industry, business know-how and judgement, experience with
organisation development, business development, customer-
handling and interaction.
Number of shares held: 818
Change in portfolio 2019: 0
Lone Hansena)
Born in 1966. Employee representative. Joined the Supervisory
Board in 2012. Danish citizen. Employed since 1990.
Career: 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. Chairman
of the Association for Tied Agents and Key Account
Managers in Tryg.
Committee memberships: IT-Data Committee in Tryg.
Experience: Many years of insurance experience as insurance
agent and Chairman of the Association for Tied Agents and
Key Account Managers.
Competencies: Business know-how and judgement, especially
within insurance, commercial and product and customer-
handling as well as interaction from many years of experience
in the industry. Problem-solving abilities and understanding of
HR-related issues.
Number of shares held: 1,037
Change in portfolio 2019: +139
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, Chairman: TryghedsGruppen smba.
Board member: Tryg A/S, Tryg Forsikring A/S.
Committee memberships: Remuneration Committee,
Nomination Committee and IT-Data Committee in Tryg.
Experience: General top management experience as CEO of Lif
since 2004 and former CEO of Herlev University Hospital. Rep-
resentative in TryghedsGruppen since 2010, Deputy Chairman
2014-2019 and Chairman since 2019.
Competencies: Solid business know-how and judgement,
analytical approach to problem-solving and strategy, networking
skills and the ability to evaluate succession scenarios as well as
understanding of digitalisation.
Number of shares held: 2,905
Change in portfolio 2018: +537
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 Committee, Nomination and Scientific Committee
in ALK-Abelló A/S, Scientific and Remuneration Committee in
H. Lundbeck A/S, Remuneration and Nomination Committee
in Falck A/S and Nomination and Remuneration Committee in
Ørsted A/S.
Competencies: Solid business know-how and judgement, risk
management, business development, finance, strategy, M&A and
understanding of business models.
Experience: Top management experience from various positions
in the AP Moller-Maersk Group, CFO in Coloplast and currently
CEO of Lundbeckfonden.
Number of shares held: 7,025
Change in portfolio 2019: 0
Committee meetings overview 2019
Supervisory
Audit
Name
Jukka Pertola
Torben Nielsen
Elias Bakk
Lone Hansen
Ida Sofie Jensen
Lene Skole
Board Committee Committee Committee
Risk Nomination Remuneration
IT-Data
Committee Committee
8/8
8/8
8/8
8/8
8/8
8/8
6/6
6/6
6/6
6/6
3/3
3/3
3/3
6/6
6/6
3/3
3/3
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.
40
Annual report 2019 | Tryg A/S |
Supervisory Board
Mari Thjømøeb)
Born in 1962. Joined the Supervisory Board in 2012.
Norwegian citizen.
Career: Professional board member and independent adviser.
Education: MSc in Economy and Business Administration, Char-
tered Financial Analyst (CFA), the Senior Executive Programme
from London Business School and Effective Board Management
from Harvard Business School.
Board seats, Chairman: TF Bank AB.
Board seats, Deputy Chairman: Norconsult A/S and Norconsult
Holding.
Board member: Tryg A/S, Tryg Forsikring A/S, Scatec Solar ASA,
ICE ASA and Hafslund E-CO AS.
Committee memberships: Audit Committee and Risk Committee
in Tryg, Audit Committee in Norconsult and ICE (Chairman),
Remuneration Committee in TF Bank (Chairman), the Audit
Committees in Scatec Solar, Hafslund E-CO and TF bank.
Experience: Senior management experience from large cap
companies, insurance and real estate. Extensive experience
from board of directors within finance, energy and renewables
and is engaged in developing sustainable businesses and good
governance. Headed the Norwegian IR associations for a number
of years and received the Womens Board Award for Norway.
Competencies: Business know-how from experience with the
financial sector and energy as well as risk management, strategy,
restructuring, business development, M&A, IR and financial com-
munication and working with regulatory authorities.
Number of shares held: 4,300
Change in portfolio 2018: +400
Claus Wistoftb+c)
Born in 1959. Joined the Supervisory Board in 2019. Danish citizen.
Career: 1st Deputy Mayor, Municipality of Syddjurs and member
of the finance committee. Agriculturalist, wind energy production,
tenanted properties and project development of building sites.
CEO in Demex Holding A/S and C.W. Holding A/S.
Education: Agricultural education at Bygholm Agricultural College
and various business courses.
Board seats, Chairman: Midttrafik I/S.
Board member: Tryg A/S, Tryg Forsikring A/S, Syddjurs ud-
viklingspark, Lyngfeldt A/S, Lyngfeldt Finansiering A/S, Lyngfeldt
Maskinudlejning ApS, K/S Prinz Carl Anlage l, Rosenfeldt Gods,
Sidelmann Holding ApS, Houmarken A/S, I/S Torntoft and
TryghedsGruppen smba.
Experience: Top management experience from operating an
own business for 35 years.
Competencies: Analytical approach to problem-solving, solid
business know-how and business development, understanding
of risk management and succession.
Number of shares held: 2,500
Change in portfolio 2019: +2,500
Karen Bladtb+c)
Born in 1967. Joined the Supervisory Board in 2019.
Danish citizen.
Career: Director/owner of HASLE Refractories A/S and
member of the regional labour market council in Bornholm.
Education: MSc.Eng in Operations and Supply Chain.
Management, Aalborg University and the CBS Executive course
for Supervisory Board members in the financial sector,
insurance and pension at CBS Executive.
Board member: Tryg A/S, Tryg Forsikring A/S, HASLE
Refractories A/S, Bornholmstrafikken Holding A/S and
TryghedsGruppen smba.
Experience: 10 years of experience as a member of various
Supervisory Boards and top management experience as the
owner of HASLE Refractories A/S since 2003.
Competencies: Business-knowhow and judgement, experienced
in business development with an analytical approach to problem-
solving.
Number of shares held: 0
Change in portfolio 2019: 0
Tom Eileng a)
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.
Experience: As senior advisor of commercial customers,
Tom Eileng is experienced in handling of and interaction with
customers. In the capacity of Deputy Chairman of Finans-
forbundet in Tryg, Tom Eileng is also experienced in
independent and auto nomous management.
Competencies: Solid business know-how and experienced in
handling customers and with interacting, understanding of risk
management, insurance, sales, underwriting and reinsurance.
Number of shares held: 607
Change in portfolio 2019: +139
Tina Snejbjerg a)
Born in 1962. Employee representative. Joined the Supervisory
Board in 2010. Danish citizen. Employed since 1987.
Career: Officer of Tryg’s Personnel Department.
Education: Insurance training.
Board member: Tryg A/S, Tryg Forsikring A/S and the Central
Board of Forsikringsforbundet.
Committee memberships: Risk Committee in Tryg.
Experience: From 1987 to 2001 Tina Snejbjerg has worked with
sale of insurance to both private and commercial customers as
well as providing insurance advice to customers.
Since 2001, Tina Snejbjerg has been the deputy chairmen of the
local department of Forsikringsforbundet and since 2009 Chairman
working with operations, strategy, negotiating agreements and
engaged in recruiting and retaining members.
Competencies: From the many years of experience, Tina Snejbjerg
has acquired solid business know-how and judgement, problem-
solving abilities working with management and HR-related issues
in the financial sector, specifically the insurance industry.
Number of shares held: 1,037
Change in portfolio 2019: +139
Carl-Viggo Östlundb)
Born in 1955. Joined the Supervisory Board in 2015.
Swedish citizen.
Career: CEO of Allert Östlund AB, professional board member
and investor. Former CEO of the Swedish banks SBAB and Nord-
net and the insurance company SalusAnsvar.
Education: BSc in International Business and Finance & Accounting.
Board seats, Chairman: FCG Fonder AB, Gladsheim Fastigheter
AB, Hypoteket Bolån AB, IQ Chef AB, Juvinum Food & Beverage
AB, Ponture AB, Wisory Group AB, Ywonn Media Group AB.
Board member: Tryg A/S, Tryg Forsikring A/S, DBT Capital AB.
Committee memberships: IT-Data Committee (Chairman) and
Remuneration Committee in Tryg.
Experience: More than 30 years as CEO and Managing Director
in local as well as in international environment in listed compa-
nies as well as banks. Experience from the following industries:
manufacturing, logistics, insurance, finance and banking.
Competencies: Solid background from the Insurance industry,
non-life as well as life. Business know-how and judgement, bank-
ing and finance know-how, understanding of digitalisation and
risk management.
Number of shares held: 2,630
Change in portfolio 2019: +820
Committee meetings overview 2019
Supervisory
Audit
Name
Board Committee Committee Committee
Mari Thjømøe
Claus Wistoft
Karen Bladt
Tom Eileng
Tina Snejbjerg
Carl-Viggo Östlund
8/8
7/8
7/8
8/8
8/8
8/8
6/6
6/6
6/6
Risk Nomination Remuneration
IT-Data
Committee Committee
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.
c) Joined the supervisory board March 2019
Contents – Management’s review
41
Annual report 2019 | Tryg A/S |
Executive Board
Contents – Management’s review
Read more about the Executive Board on tryg.com
42
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, Deputy Chairman: Kapitalforeningen Tryg Invest Funds and Simcorp A/S.Board member: KBC BV.Number of shares held: 196,289 Change in portfolio in 2019: +34,190Johan 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: Insurance & Pension Denmark (IPD).Number of shares held: 24,396Change in portfolio in 2019: +12,907Lars 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 and Forsikringsakademiet.Board member: Danish Employers’ Association for the Financial Sector and cphbusiness (Copenhagen Business Academy).Number of shares held: 70,408Change in portfolio in 2019: +11,434Barbara Plucnar JensenGroup CFOBorn in 1971. Joined Tryg in 2019. Joined the Executive Board in 2019. Education: MSc Economics, University of Copenhagen.Board member: J. Lauritzen.Committee memberships: Audit Committee in J. Lauritzen (Chairman).Number of shares held: 0Change in portfolio in 2019: 0Annual report 2019 | Tryg A/S | Corporate Responsibility in Tryg
Statutory Corporate Responsibility report
Tryg has been a signatory member to the UN
Global Compact since 2008. In addition to this
statutory section on Corporate Responsibility,
Tryg publishes its annual Corporate Responsibility
report on Tryg.com providing extensive Environ-
mental, Social Governance (ESG) data.
Download Corporate Responsibility report
Tryg’s 2020 Corporate Responsibility strategy is
focused on four elements: Actively creating peace
of mind, climate and environment, responsible
workplace and business ethics. The Corporate
Responsibility efforts are linked to Tryg’s business
model and core business (see page 10). As Tryg
provides a safety net across the Nordic countries
for the customers as insurance provider in case of
a claim, Tryg also offers prevention initiatives to re-
duce and limit claims. Tryg thereby creates peace
of mind before, during and after a claim.
The Corporate Responsibility Board, chaired by
the CFO, supervisees our Corporate Responsibility
efforts.
Download Corporate Responsibility policy
Actively creating peace of mind
Actively creating peace of mind is one of the
strategic elements of our Corporate Responsibility
strategy where Tryg can contribute to society
through creating peace of mind as well as offering
relevant products with a prevention element to
our customers. In 2019, Tryg launched the ‘Mobile
blocker’ currently offered to our Commercial
customers. The Mobile blocker prevents drivers
from using their mobile phone while driving,
which provides employers with a tool to ensure
the health and safety of their employees and other
road users.
The Nightravens and lifebuoys are two initiatives
that create peace of mind in society. The initiatives
prevent crimes from happening by being present
and making people feel safer in the night life or
along the coastlines, lakes or by the harbours,
which benefits customers, Tryg's business
and society.
Lifebuoys
Since 1952, Tryg’s iconic lifebuoys have provided
safety along the coastlines, lakes and rivers in Nor-
way. The lifebuoy is a vitally important rescue tool,
and for decades Tryg has provided lifebuoys to the
Norwegian society. Tryg has more than 47,000
lifebuoys, which are located from Lindesnes
at the very south of Norway to Svalbard, the
Norwegian archipelago in the Arctic Ocean.
Read more about the lifebuoys here
Climate and environment
Tryg has a direct impact on the climate and the
environment through its operations, and an indi-
rect impact through its business activities. Tryg
has focused its efforts on its internal operations
and initiatives to improve its footprint, while also
reducing costs. Although Tryg is not an energy-
intensive company since its carbon emissions
are mainly associated with heating and elec-
tricity use at the offices, car and air travel, Tryg
acknowledges that it is part of the solution when
it comes to minimising carbon emissions. Tryg
encourages its building owner to make resource
and efficiency improvements to the buildings
and invest in renovating buildings to keep them
energy-efficient.
Tryg’s materiality assessment showed that the
climate and the environment continue to be ma-
terial issues for Tryg and its stakeholders. Extreme
weather events such as flooding, cloudbursts and
storms present a risk to Tryg and are a cause for
concern for customers and society since envir -
onmental and climate-related events can increase
the frequency of climate-related claims. Therefore,
Tryg advises its customers on how to protect their
homes. Tryg’s Corporate Responsibility policy
further outlines Tryg's commitment minimising the
company's climate and environmental footprint.
Download Corporate Responsibility policy
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
2019
2018
The carbon emissions chart covers both Norway and
Denmark; air and train travel also include Sweden while
car only applies for Denmark.
Contents – Management’s review
43
Annual report 2019 | Tryg A/S |
Climate and environmental initiatives
Tryg has initiated a process which involves con-
tinuously installing more efficient and climate-
friendly LED lighting at its offices, as well as in-
stalling more screens for Skype meetings to reduce
air travel and offering electric cars for external
meetings. In Norway, four of the office areas were
moved to save energy and resource consumption
per employee in 2019. In Denmark, two offices
were merged as well. In Norway, Tryg removed the
oil boilers, and the heating and cooling systems
were connected to a heating pump system to
further reduce the environmental impact, while
a new ventilation system will be installed by 2020
with a higher degree of heating recovery.
One of the areas in which Tryg has a potential
adverse impact on the environment is waste
production, which is why Tryg is committed to
reducing waste and consumption. Tryg continu-
ously works on minimising and sorting waste at
local waste stations to bring down waste volumes.
In 2019, Tryg outsourced the canteen services at
the head office in Denmark. The new supplier was
selected due to its high food quality standards and
Corporate Responsibility efforts. With the arrival
of the new canteen provider, Tryg has established
a new sorting system in the canteen to ensure
easier sorting of food waste and ordinary waste.
In collaboration with the canteen staff, Tryg is
working to establish a waste target.
Eco-Lighthouse in Norway
Eco-Lighthouse is a climate and environmental
certification scheme in Norway. Eight of the Nor-
wegian sites are Eco-Lighthouse-certified. Tryg an-
nually reports on progress as well as documenting
the policies and procedures in place to manage
the impact on the climate and the environment.
Tryg’s carbon emissions
In 2019, Tryg’s carbon emissions decreased by
1% compared to 2018. The decrease is mainly
due to a new carbon emission calculation
method.
Responsible workplace
Providing a healthy and safe working environment
and ensuring the well-being of its employees is
vital to Tryg. The materiality assessment indicated
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, Tryg is continuously working to improve
the conditions for the employees.
Focus on diversity and women in management
In 2019, Tryg’s share of women in management
positions was 35% compared to 33% in 2018. This
indicates a stabilising tendency towards the share
of women in management. However, as the target
for women in management positions is 41% in
2020, further actions will be required.
Additionally, in 2019, Tryg increased diversity
on its Executive Board with with the appointment
of Barbara Plucnar Jensen as new CFO, thus in-
creasing diversity on the Executive Board to 25%.
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 is composed of six men
and six women, and under Danish law as well
as Tryg's own policy, there is equality among the
genders.
Steps of action on increasing diversity
Tryg has an action plan for diversity including
women in management which guides our actions
towards realising our 2020 target. In 2019, Tryg
focused on reducing unconscious bias in its re-
cruiting processes. Tryg raised awareness of why
unconscious biases may be formed, and of the
possible benefits of having a more diverse pool
of employees.
Tryg has taken specific steps to ensure approval
of all final candidates for managerial positions
from the CEO and HR director, as well as ensur-
ing that all management positions are advertised
both internally and externally. Furthermore, Tryg
is increasing awareness in the organisation of
unconscious bias in recruiting processes.
See General action plan for diversity including
women in management
Contents – Management’s review
44
Annual report 2019 | Tryg A/S | Business ethics
Ethics can determine a company’s future and are
essential to conducting business responsibly. Tryg
is committed to running an ethical, transparent
and responsible business. The materiality assess-
ment showed that business ethics, GDPR and data
pro tection are material matters to Tryg. Building
knowledge and capacity in this field, for example
internally among the employees through e-learning,
requires continuous attention.
A commitment to ethics and strong corporate
govern ance is the foundation on which Tryg builds
its business. Tryg’s Code of Conduct defines the
rules which all employees and business partners
are required to adhere to. Tryg’s tax policy and
anti-corruption policy further outline Tryg's com-
mitment to conducting itself as a responsible
company at all times.
Download Code of Conduct
Data security and GDPR
Data security and GDPR are important issues for
Tryg in relation to personal data. In 2019, the online
learning platform ‘Safe Colleague’ was introduced
to educate employees and test their skills. Through
gamification, the employees learn about the basics
of data security. Tryg requires all new employees
to do a mandatory e-learning programme on
GDPR and IT security as part of their onboard-
ing programme. In the course of the year, all new
employees have completed the online training.
Download Personal data policy
Whistleblower cases
Tryg’s whistleblower hotline is available for all
stakeholders to report any violation of our Code
of Conduct or other issues and is reviewed by
the chairman of the Audit Committee, assisted
by Tryg’s Legal and Compliance Director. In 2019,
three cases were reported and investigated
compared to seven cases in 2018. No cases
led to further action being taken.
Read more about the Whistleblower hotline
Responsible Investments
Tryg’s responsible investment policy and policy
for execution of active ownership were updated in
2019 to ensure a continuous focus on responsible
investing. External portfolio managers are selected
on the basis of having a responsible mindset similar
to Tryg’s. However, a screening of the holdings is
carried out each year to ensure that individual hold-
ings do not deviate from expectations. The portfolio
holdings screening is carried out by an external
screening provider. Furthermore, in 2019 Tryg
launched its formal escalation process which guides
the process after a screening of investments.
Responsible investing is important to Tryg as it
ensures that investments are conducted in accord-
ance with our values. The materiality assessment
identified responsible investments as a material
issue to Tryg. Tryg is at risk of violating interna-
tional standards when investing and wants to be
transparent about its efforts to mitigate this risk.
See Responsible investment policy
See Policy for execution of active ownership
See Process for ethical screening
Active Source Management
Tryg’s initiatives on active ownership are pri marily
directed towards managing and monitoring Tryg’s
external managers’ responsible investment pro-
cesses. In 2019, Tryg launched a process related
to ensuring compliance by external managers with
Tryg’s responsible investment policy called Active
Source Management.
Tryg’s primary focus is selecting external manag-
ers who share the principles and have policies in
place to ensure that investments are managed
respon sibly. External asset managers are UN PRI
signatories or in the process of becoming signa-
tories. Tryg also ensures that external managers
carry out active ownership on individual holdings.
In 2019, Tryg further developed our external man-
ager selection process to include a separate due
diligence process on responsible investments. The
due diligence process evaluates all new external
managers on their commitment, processes and
execution of responsible investment.
New external screening provider
Tryg conducts an ethical screening each year
based on controversial behaviour and controver-
sial weapons. In 2019, the regular screening led
to one company being flagged for controversial
behaviour. In line with the escalation process, a
dialogue was initiated with the relevant external
managers, which has yielded satisfactory ex-
planations and actions.
Human rights and responsible supply
chain management
Tryg is committed to respecting human rights as
described in the Universal Declaration of Human
Rights. Tryg’s commitment is enforced through our
signatory membership to the UN Global Compact
and is outlined in the Corporate Responsibility
policy as well as Tryg’s Code of Conduct.
Contents – Management’s review
45
Annual report 2019 | Tryg A/S |
The materiality assessment indicated that there is
a risk of violating human and labour rights in Tryg’s
supply chain through our outsourcing activities.
To mitigate any violations, we actively monitor
our outsourcing suppliers regarding compliance
of our Code of Conduct and the principles out-
lined in the UN Global Compact. We work closely
with our suppliers to promote shared values.
In 2019, we updated our existing supply chain
management process to include a Corporate Re-
sponsibility pre-assessment as a way of strength-
ening the focus on high-risk suppliers. The imple-
mentation of the new process has been merged
with the existing compliance processes to include
Corporate Responsibility risks in order to assess
risks and how to work with high-risk suppliers.
Implementation of the Corporate Responsibility
audit process and supplier assessment continued
in 2019. The building of capacity and training
of internal auditors in Corporate Responsibility
audits is an ongoing effort, and during the year the
training continued. The trainings are held ad hoc
as needed before any audits.
In 2019, Tryg’s audit revealed no violations or red
flags among the audited high-risk outsourcing
suppliers. The process continues in 2020, and all
high-risk outsourcing suppliers are expected to
be audited by 2020.
Download Code of Conduct
Download Corporate Responsibility policy
Contents – Management’s review
46
Tryg has published an independent
Corporate Responsibility report
with extended Environmental,
Social and Governance (ESG) data.
Download the report
Annual report 2019 | Tryg A/S |
Contents – Financial statements 2019
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
48
59
52
53
54
55
56
57
58
67
69
71
73
73
73
73
6 Matching shares and conditional shares 75
76
7
76
8 Value adjustments
76
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 Other debt
24
25
Earnings per share
Contractual obligations, collateral
and contingent liabilities
26 Acquisition of activities
27 Related parties
Financial highlights
28
29 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 figures
Group chart
Glossary
Product overview
Disclaimer
104
105
106
107
111
113
114
115
116
117
118
76
77
80
81
81
82
85
86
86
86
86
88
89
90
90
90
90
93
93
94
95
Contents – Financial statements
47
Annual report 2019 | 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 2019 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 2019 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 2019.
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 2020
Executive Board
Morten Hübbe
Group CEO
Barbara Plucnar Jensen
Group CFO
Lars Bonde
Group COO
Johan Kirstein Brammer
Group CCO
Supervisory Board
Jukka Pertola
Chairman
Torben Nielsen
Deputy Chairman
Elias Bakk
Tom Eileng
Lone Hansen
Karen Bladt
Claus Wistoft
Ida Sofie Jensen
Lene Skole
Tina Snejbjerg
Mari Thjømøe
Carl-Viggo Östlund
Contents – Financial statements
48
Annual report 2019 | 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 2019, pages 52-110, which comprise
the income statement, statement of comprehen-
sive income, balance sheet, statement of changes
in equity and notes, including the summary of
significant accounting policies, for the Group as
well as the Parent and the consolidated cash flow
statement. The consolidated financial statements
are prepared in accordance with International
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
statements give a true and fair view of the Group’s
financial position at 31 December 2019 and of
its financial performance and cash flows for the
financial year 1 January to 31 December 2019 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 2019 and
of its financial performance for the financial year
1 January to 31 December 2019 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
Accountants and additional requirements
applicable in Denmark, and we have fulfilled
our other ethical responsibilities in accordance
with these requirements. 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 2019. 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 24,859m at
31 December 2019 (2018: DKK 24,847m).
Management has specified the risks etc. related
to the estimates of the claims provisions in note 1
’Risk and capital management’ on pages 58-66 and
in ’Accounting policies’, note 29 on pages 95-103.
The principles of estimating the claims provisions
have been specified in ’Accounting policies’, note 29
on pages 101-102, and further specified in note 1
on pages 61-64 and in note 19 on page 87.
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.
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
qualified actuaries, we have tested controls related
to the actuarial estimates of the claims provisions
of selected lines of business.
We have tested the accuracy and the complete-
ness of the data that are included in the actuarial
estimates of the claims provisions.
In cooperation with our own internationally
qualified 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.
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
Management’s estimate of the claims provisions
to address the uncertainty related to the actuarial
estimates.
Contents – Financial statements
49
Annual report 2019 | Tryg A/S | To the best of our knowledge and belief, we have
not provided any prohibited non-audit services
as referred to in Article 5(1) of Regulation (EU)
No 537/2014.
with the consolidated financial statements and
the parent financial statements or our knowledge
obtained in the audit or otherwise appears to be
materially misstated.
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 18 years up to and including the
financial year 2019.
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 management’s
review and, in doing so, consider whether the
management’s review is materially inconsistent
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.
in accordance with the Danish Financial Business
Act, and for such internal control as Management
determines is necessary to enable the preparation
of consolidated financial statements and parent
financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements
and the parent financial statements, Management
is responsible for assessing the Group’s and the
Parent’s ability to continue as a going concern, for
disclosing, as applicable, matters related to going
concern, and for using the going concern basis of
accounting in the preparation of the consolidated
financial statements and the parent financial
statements unless Management either intends to
liquidate the Group or the Parent or to cease op-
erations, or has no realistic alternative but to do so.
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
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 auditor’s report that includes our opinion.
Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit
conducted in accordance with ISAs and additional
requirements applicable in Denmark will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and
are considered material if, individually or in the
aggregate, they could reasonably be expected
to influence the economic decisions of users
taken on the basis of these consolidated financial
statements and these parent financial statements.
As part of an audit in accordance with ISAs and
additional requirements applicable in Denmark, we
exercise professional judgement and maintain pro-
fessional scepticism throughout the audit. We also:
•
Identify and assess the risks of material
misstatement of the consolidated financial
statements and the parent financial state-
ments, whether due to fraud or error, design
and perform audit procedures responsive to
those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a
material misstatement resulting from fraud
is higher than for one resulting from error, as
fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override
of internal control.
Contents – Financial statements
50
Annual report 2019 | Tryg A/S | •
•
•
Obtain an understanding of internal control
relevant to the audit in order to design audit
procedures that are appropriate in the
circumstances, 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 accounting
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
exists 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 parent 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 enti-
ties or business activities within the Group to
express an opinion on the consolidated finan-
cial 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.
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
disclosure 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 reasonably be expected to outweigh the
public interest benefits of such communication.
Copenhagen, 22 January 2020
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 – Financial statements
51
Annual report 2019 | Tryg A/S | Financial highlights
DKKm
2019
2018
2017
2016
2015
NOK/DKK, average rate for the period
SEK/DKK, average rate for the period
Gross premium income
Gross claims
Total insurance operating costs
Profit/loss on gross business
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
Technical result
Investment return after insurance technical interest
Other income and costs
Profit/loss before tax
Tax
Profit/loss on continuing business
Profit/loss on discontinued and divested business after tax a)
Profit/loss
Run-off gains/losses, net of reinsurance
Statement of financial position
Total provisions for insurance contracts
Total reinsurers' share of provisions for insurance contracts
Total equity
Total assets
Key ratios
Gross claims ratio
Net reinsurance ratio
Claims ratio, net of ceded business
Gross expense ratio
Combined ratio
Gross expense ratio without adjustment b)
Operating ratio
Relative run-off gains/losses
Return on equity after tax (%)
75.80
70.62
21,741
-14,857
-3,081
3,803
-566
1
3,237
579
-188
3,628
-783
2,845
-2
2,843
1,194
32,224
1,501
12,085
59,059
68.3
2.6
70.9
14.2
85.1
85.1
5.1
24.6
77.53
72.67
18,740
-12,636
-2,704
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
79.99
77.24
17,963
-11,865
-2,516
3,582
-779
-14
2,789
527
-77
3,239
-720
2,519
-2
2,517
972
30,018
1,366
12,616
51,367
66.1
4.3
70.4
14.0
84.4
84.5
4.1
28.8
80.09
78.93
17,707
-11,619
-2,737
3,351
-951
-10
2,390
987
-157
3,220
-748
2,472
-1
2,471
1,239
31,527
2,034
9,437
49,861
65.6
5.4
71.0
15.7
86.7
15.5
86.5
5.5
26.2
83.52
79.69
17,977
-13,562
-2,720
1,695
710
18
2,423
-22
-91
2,310
-390
1,920
49
1,969
1,212
31,814
3,176
9,644
51,281
75.4
-3.9
71.5
15.3
86.8
15.1
86.5
5.1
20.0
Note: Tryg´s acquisition of Alka affects the Financial
Statement from closing the 8 November 2018.
a) Profit/loss on discontinued and divested business
after tax includes mainly Marine Hull insurance.
b) Until the sale of the group occupied property in 2016,
the gross expense ratio without adjustment is calcu-
lated as the ratio of actual gross insurance operating
costs to gross premium income. Other key ratios are
calculated in accordance with ’Recommendations
& Financial Ratios’ issued by the Danish Finance
Society. The adjustment, which is made pursuant to
the Danish Financial Supervisory Authority’s and the
Danish Finance Societys’ 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
52
Annual report 2019 | 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
2019
2018
DKKm
2019
2018
22,563
-1,259
-143
38
21,198
18,999
-1,362
85
-47
17,675
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
-10
58
534
454
-178
-114
744
-166
579
168
-356
3,628
-783
2,845
-2
22
46
580
-537
-140
-94
-123
-209
-332
128
-300
2,262
-529
1,733
-2
4
Insurance technical interest, net of reinsurance
1
-10
Claims paid
Reinsurance cover received
Change in claims provisions
Change in the reinsurers' share of claims provisions
5
Claims, net of reinsurance
-15,419
388
562
40
-14,429
-13,294
466
658
125
-12,045
Total investment return
4
Return on insurance provisions
Total investment return after insurance technical interest
Bonus and premium discounts
-679
-344
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
-2,458
-623
-3,081
227
-2,854
-2,104
-600
-2,704
194
-2,510
Profit/loss before tax
Tax
10
Profit/loss on continuing business
Profit/loss on discontinued and divested business
2
Technical result
3,237
2,766
Profit/loss for the year
2,843
1,731
24
Earnings per share
9.42
5.73
Contents – Financial statements
53
Annual report 2019 | 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
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
2019
2,843
2018
1,731
-76
19
-57
32
-19
4
18
-39
-5
1
-4
-50
49
-11
-12
-16
2,804
1,715
Contents – Financial statements
54
Annual report 2019 | Tryg A/S |
Statement of financial position
DKKm
2019
2018
DKKm
2019
2018
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
Other lending
Derivative financial instruments
Total other financial investment assets
15
Total investment assets
Reinsurers' share of premium provisions
Reinsurers' share of claims provisions
19
16
Total reinsurers' share of provisions for insurance contracts
Receivables from policyholders
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Other receivables
15
Total receivables
17
Current tax assets
Cash at bank and in hand
Other
Total other assets
Interest and rent receivable
Other prepayments and accrued income
Total prepayments and accrued income
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
15
23
17
23
Total debt
Accruals and deferred income
Total equity and liabilities
1
25
26
27
28
29
Risk and capital management
Contractual obligations, collateral and contingent liabilities
Acquisition of activities
Related parties
Financial highlights
Accounting policies
7,364
155
730
885
1,151
0
0
1,798
2,424
38,814
75
1,128
44,239
45,390
216
1,285
1,501
1,727
1,727
240
588
2,555
52
868
1
921
147
296
443
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
0
627
0
627
169
400
569
Total assets
59,059
56,545
12,085
2,875
5,996
24,859
1,370
32,224
303
911
86
1,300
577
252
711
2,601
800
300
125
5,178
10,543
33
11,334
2,868
5,861
24,847
1,240
31,948
277
912
111
1,300
614
169
494
2,797
740
313
118
3,813
9,058
37
59,059
56,545
Contents – Financial statements
55
Annual report 2019 | Tryg A/S |
Statement of changes in equity
DKKm
Equity at 31 December 2018
2019
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Dividend own shares
Purchase and sale of own shares
Issue of conditional and matching shares
Non-controlling interest
Total changes in equity in 2019
Equity at 31 December 2019
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 share options and matching shares
Total changes in equity in 2018
Equity at 31 December 2018
Share
capital
1,511
0
0
1,511
1,511
0
0
1,511
Reserve for
exchange rate
adjustment
Other
reservesa)
Retained
earnings
Proposed Non-controlling
interest
dividend
Total
-41
1,617
7,748
499
0
11,334
18
18
18
-23
-29
-12
-12
-12
-41
60
60
60
1,677
230
-57
173
1
-43
27
158
7,906
2,553
2,553
-2,040
514
1,013
1,592
8,059
1,483
25
25
25
1,617
-290
-4
-294
-27
10
-311
7,748
1,996
1,996
-2,980
-984
499
2,843
-39
2,804
-2,040
1
-43
27
1
751
12,085
12,616
1,731
-16
1,715
-2,980
-27
10
-1,282
11,334
0
1
1
1
0
0
Proposed dividend per share is calculated as the total
dividend proposed by the Supervisory Board after the
end of the financial year divided by the total number of
shares at the end of the year (302,147,991 shares).
The possible payment of dividend from Tryg Forsikring
A/S to Tryg A/S is influenced by contingency fund provi-
sions of DKK 1,677m (DKK 1,617m in 2018). 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 and contingency fund provisions - The contin-
gency fund provisions DKK 809m have been reclas-
sified from retained earnings to reflect the possible
dividend is affected by the total amounts related to
Norwegian Natural Perils Pool and contingency fund
provisions .
Contents – Financial statements
56
Annual report 2019 | 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
Total cash flow from operating activities
Investments
Purchase and refurbishment of property
Sale of property
Purchase/sale of equity investments and unit trust units (net)
Purchase/sale of bonds (net)
Deposits with credit institutions
Purchase/sale of operating equipment (net)
Acquisition of intangble assets
Sale of associated
Hedging of currency risk
Total investments
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
Total financing
2019
2018
DKKm
2019
2018
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
241
0
-1
241
627
868
2019
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
2018
Carrying amount at 1 January
Exchange rate adjustments
Amortisation
Cash flow
Carrying amount at 31 December
Subordinated
loans
Amounts owed
to credit
institutions
2,868
6
2
0
2,875
2,412
-48
2
502
2,868
494
0
0
217
711
306
0
0
188
494
-69
186
1
118
509
627
Total
3,362
6
2
217
3,586
2,718
-48
2
690
3,362
21,736
-15,557
-651
-3,210
1,849
4,167
467
-169
24
-827
-31
3,631
0
357
49
-1,978
0
-69
0
246
18
-1,376
0
-43
0
-2,040
-147
217
-2,013
18,712
-13,473
-725
-3,165
1,927
3,276
546
-138
12
-639
-174
2,883
-2
117
1,540
3,268
250
-61
-5,671
0
49
-510
0
-17
502
-2,980
-135
188
-2,442
Contents – Financial statements
57
Annual report 2019 | 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.
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
Tryg’s risk management is organised into three levels of
control. The first level of control is handled in the busi-
ness where the company’s policies are implemented, and
day-to-day compliance is verified. The risk management
function is the second level of control, supported by
decentralised risk managers affiliated with the individual
business areas. The risk management function ensures a
consistent approach across the organisation, risk assess-
ment at Group level and reporting to the management
and the Supervisory Board. This involves an ongoing
identification and assessment of the most significant
risks in the company. Furthermore, the function prepares
specific recommendations in relation to capital manage-
ment, reinsurance, investment risk management and
more. Tryg’s risk management function is also respon-
sible for determining the company’s capital require-
ment. The third level consists of the internal audit which
performs independent assessments of the entire control
environment.
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 Commit-
tee is a specialist committee with intensive focus sepa-
rately on risk and capital management during the year.
What risk profile does Tryg want?
- Business model
- Strategy
- Policies
How is this supported?
Tactically
- Policies
- Capital plan
- Contingency plan
Operationally
- Frameworks
- Limitations
- Instructions
- Allocated capital
- Contingency plans
How is the actual risk profile measured?
Tactically
- Risk reports
- Internal controls
- Capital model
- Stress tests
- 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
and guidelines
Risk Committee
Risk reporting
recommen-
dations
Insurance
risk
Model
risk
Compliance
risk
Market
risk
Operational
risk
Systematic risk
assessment
reporting
• Contingency
• Control
• Risk
identification
• Risk
management
Contents – Financial statements
58
NotesAnnual report 2019 | Tryg A/S | Tryg’s capital base currently consist of Tier 1 and 2 capi-
tal, such as shareholders’ equity and subordinated loans.
Insurance risk
Insurance risk comprises two main types of risks: Un-
derwriting risk and provisioning risk.
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.
See table Subordinate loan capital on page 66.
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 fulfill 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 assess-
ment of whether the calculation of solvency capital
requirement is reasonable and is reflecting Tryg’s actual
risk profile. Moreover, the projected capital requirement
is also assessed over the company’s strategic planning
period.
Tryg’s risk activities are implemented via continuous risk
management 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. In case of major
events involving damage to buildings and contents,
Tryg’s reinsurance programme provides protection
for up to DKK 7.25bn, 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
been taken out as needed. The use of reinsurance cre-
Reserving risk
Reserving risk relates to the risk of Tryg’s insurance
provisions being inadequate. The Supervisory Board lays
down the overall framework for the handling of reserv-
ing risk in the insurance policy, while the overall risk is
measured in the capital model. The uncertainty associ-
ated with the calculation of claims reserves affects Tryg’s
results through the run-off on reserves.
Long-tailed reserves in particular are subject to interest
rate and 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 meth-
ods as well as individual assessments.
At the end of 2019, Tryg’s claims reserves net of reinsur-
ance totalled DKK 23,574m with an average duration of
approximately 4.5 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 com-
pany’s largest investment risk. The Property portfolio
comprises investment properties, the value of which
is adjusted based on the conditions on the property
market through internal valuations backed by external
valuations. At the end of 2019, investment properties
accounted for 5.5% (including property funds) and
Tryg’s equity portfolio accounted for 5.2% 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 kro-
ner 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
asset class on Tryg’s balance sheet, which by nature is
somewhat illiquid is the property portfolio.
Contents – Financial statements
59
NotesAnnual report 2019 | 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. Emerging risk is also
a part of the systematically implemented risk identifica-
tion process in Tryg.
Insurance risk
Effect of 1% change in:
Combined ratio (1 percentage point)
Major events
Catastrophe event up to DKK 7,250m
Reserving risk
1% change in inflation on person-related lines of businessb)
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 c)
Equity market
15% decline in equity market
Impact of derivatives and related thereto
Real estate market
15% decline in real estate markets
Currency market
Equity:
15% decline in exposed currency (exclusive of EUR) relative to DKK
Impact of derivatives
Net impact of exchange rate decline
Technical result per year:
Impact of 15% change in NOK and SEK exchange rates relative to DKK
a) Catastrophe event up to DKK 6,750m in 2018
b) Including the effect of the zero coupon inflation swap
c) Additional sensitivity information in note 20 'Pensions and similar obligations'
2019
2018
+/- 217
+/- 187
-100
-168
-100
-168 a)
+/- 412
+/- 402
+/- 1,755
+/- 1,696
-1,150
1,028
-122
189
-367
25
-1,079
991
-88
163
-288
36
-361
-372
-883
898
15
-1,316
1,242
-74
+/- 95
+/- 134
Contents – Financial statements
60
NotesAnnual report 2019 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Gross
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
2019 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
13,325
13,933
13,947
13,748
13,650
13,557
13,527
13,409
13,352
14,531
14,320
14,320
-13,694
15,476
15,570
15,523
15,443
15,355
15,280
15,257
15,166
16,379
16,202
15,810
16,190
16,247
16,200
16,026
16,060
15,926
17,398
17,467
13,365
13,438
13,396
13,211
12,947
12,859
14,049
13,977
13,764
14,026
13,686
13,518
13,498
14,802
14,591
12,609
12,929
12,747
12,659
13,970
13,813
14,610
14,550
14,503
15,873
15,810
12,801
12,656
14,119
14,090
12,658
14,323
14,230
15,454
15,439
16,170
16,202
-15,401
17,467
-16,357
13,977
-12,926
14,591
-13,407
13,813
-12,419
15,810
-14,423
14,090
-12,431
14,230
-12,001
15,439
-11,811
16,170
-8,377
166,109
-143,246
Provisions before discounting,
end of year
Discounting
Reserves from 2008 and prior years
Gross provisions for claims, end of year
626
-36
801
-46
1,110
-62
1,051
-54
1,184
-54
1,394
-63
1,387
-63
1,659
-65
2,230
-79
3,628
-103
7,793
-148
22,863
-774
2,770
24,859
a) The diagonal for 2018 and 2019 is affected by the Alka acquisition.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2019 to prevent the impact of exchange rate fluctuations.
Contents – Financial statements
61
NotesAnnual report 2019 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Ceded business
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
2019 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 2008 and prior years
Provisions for claims, end of year
275
339
318
277
281
286
275
274
273
303
302
302
-300
2
0
648
720
714
692
701
706
709
701
759
758
758
-756
1
0
1,452
2,135
2,255
2,294
2,241
2,235
2,241
2,625
2,619
2,619
-2,563
56
0
223
253
289
282
270
259
272
271
271
-268
3
0
1,133
1,479
1,261
1,255
1,271
1,303
1,352
1,352
-1,218
134
0
273
308
302
298
319
316
316
-292
24
0
2,077
1,883
1,915
1,890
1,920
1,920
-1,753
167
1
202
255
247
246
246
-233
14
0
287
394
388
388
-284
104
-1
632
677
371
677
-270
407
0
371
-127
243
-3
9,221
-8,064
1,156
-3
131
1,285
a) The diagonal for 2018 and 2019 is affected by the Alka acquisition.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2019 to prevent the impact of exchange rate fluctuations.
Contents – Financial statements
62
NotesAnnual report 2019 | Tryg A/S |
Claims provisions – estimated accumulated claims – DKKm
Net of reinsurance
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018 a)
2019 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
13,049
13,594
13,629
13,471
13,369
13,271
13,252
13,135
13,078
14,228
14,018
14,018
-13,394
Provisions before discounting,
end of year
Discounting
Reserves from 2008 and prior years
Provisions for claims, net of reinsurance, end of the year
624
-36
14,829
14,850
14,809
14,751
14,654
14,574
14,548
14,466
15,620
15,444
14,358
14,055
13,992
13,907
13,786
13,825
13,686
14,773
14,848
13,142
13,185
13,107
12,928
12,677
12,600
13,777
13,706
12,631
12,547
12,425
12,264
12,226
13,499
13,239
12,336
12,621
12,445
12,361
13,651
13,497
12,533
12,667
12,588
13,983
13,890
12,598
12,401
13,872
13,843
12,370
13,929
13,842
14,822
14,762
15,799
15,444
-14,645
14,848
-13,794
13,706
-12,658
13,239
-12,190
13,497
-12,127
13,890
-12,671
13,843
-12,198
13,842
-11,716
14,762
-11,541
15,799
-8,251
156,889
-135,182
800
-46
1,055
-63
1,048
-54
1,049
-55
1,370
-63
1,220
-63
1,645
-65
2,126
-78
3,221
-103
7,549
-146
21,707
-771
2,638
23,574
a) The diagonal for 2018 and 2019 is affected by the Alka acquisition.
The amounts in foreign currency in the table are translated to Danish kroner using the exchange rate at 31 December 2019 to prevent the impact of exchange rate fluctuations.
Contents – Financial statements
63
NotesAnnual report 2019 | Tryg A/S |
Claims provisions (continued)
DKKm
2019
Premium provisions, gross
Premium provisions, ceded
Claims provisions, gross
Claims provisions, ceded
2018
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
5,851
-216
8,207
-695
13,147
5,588
-180
8,025
-642
12,791
72
0
4,012
-226
3,859
118
0
3,936
-229
3,825
45
0
2,611
-172
2,485
81
0
2,643
-138
2,586
28
0
10,927
-201
10,755
74
0
11,542
-246
11,370
5,996
-216
25,758
-1,293
30,245
5,861
-180
26,146
-1,255
30,572
Contents – Financial statements
64
NotesAnnual report 2019 | Tryg A/S |
2019
34,281
261
692
1,023
547
604
37,408
1,242
89
1,331
%
91.6
0.7
1.8
2.7
1.5
1.6
100
93.3
6.7
100
2018
34,112
479
1,169
850
583
850
38,042
1,207
96
1,303
DKKm
2019
2018
DKKm
Investment risk
The notes below are based on Tryg's investment portfolio without the external customers share.
Bond portfolio including interest derivatives
Duration 1 year or less
Duration 1-5 years
Duration 5-10 years
Duration more than 10 years
13,067
15,747
5,975
2,856
Total
Duration
37,645
3.4
Credit risk
Bond portfolio by ratings
11,286
15,527
5,521
2,573
34,907
3.0
AAA
AA
A
BBB
BB
B or lower
Total
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.
Shares
Nordic countries
EU ex. Nordic countries
North America
Others
Total
250
566
2,674
213
3,702
154
446
1,995
217
2,812
The share portfolio includes property funds and exposure from share derivatives of DKK 167m
(DKK 240m in 2018). Unlisted equity investments are based on an estimated market price.
Exposure to exchange rate risk
2019
2018
Assets and
debt
Hedge
Exposure
Assets and
debt
Hedge
Exposure
3,762
2,872
262
1,403
133
324
-3,794
-1,543
-265
-1,446
-111
-370
32
1,328
4
43
22
46
1,476
3,453
2,159
208
3,028
1,408
274
-3,467
-519
-207
-2,942
-1,388
-274
-14
1,640
1
86
20
0
1,762
USD
EUR a)
GBP
NOK
SEK
Other
Total
Reinsurance balances
AAA to A
Not rated
Total
Liquidity risk
Maturity of the Group’s financial obligations including interest
2019
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
2018
Subordinate loan capital
Amounts owed to credit institutions
Debt relating to unsettled funds transactions and repos
Derivative financial instruments
Other debt
108
711
2,601
86
6,131
9,638
93
494
3,408
534
4,103
8,632
433
0
0
496
0
930
373
0
0
55
0
428
3,959
0
0
135
0
4,093
3,799
0
0
188
0
3,987
a) Due to correlation between DKK and EUR the exposure limit is DKK 3bn. All other currencies have a lower limit.
Interest on loans for a perpetual term has been recognised for the first fifteen years.
Contents – Financial statements
%
89.7
1.3
3.1
2.2
1.5
2.2
100
92.6
7.4
100
Total
4,500
711
2,601
717
6,131
14,661
4,265
494
3,408
777
4,103
13,047
65
NotesAnnual report 2019 | Tryg A/S |
Notes
Subordinate loan capital
DKKm
Amortised cost value of the loan recognised in
statement of financial position
The fair value of the loan at the statement
of financial position date
The fair value of the loan at the statement
of financial position date is based on a price of
Total capital losses and costs at the statement
of the financial position date
Interest expenses for the year
Effective interest rate
Loan terms:
Lender
Principal
Issue price
Issue date
Maturity year
Loan may be called by lender as from
Repayment profile
Interest structure
Bond loan
NOK 800m
Bond loan
NOK 1,400m
Bond loan
SEK 1,000m
2019
2018
2019
2018
2019
2018
605
642
106
2
32
5.3%
595
633
106
2
30
4.8%
Listed bonds
NOK 800m
100
March 2013
Perpetual
2023
1,059
1,108
104
3
45
4.3%
1,043
1,073
103
3
41
3.7%
Listed bonds
NOK 1,400m
100
November 2015
2045
2025
713
730
102
3
19
2.6%
723
747
103
3
17
2.3%
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 2,744m (DKK 2,740m in 2018).
The loans are initially recognised at fair value on the date
on which a loan is entered and subsequently measured
at amortised cost.
The loans are taken by Tryg Forsikring A/S. The creditors
have no option to call the loans before maturity or
otherwise terminate the loan agreements. The loans
are automatically accelerated upon the liquidation or
bankruptcy 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
2018
506
491
96
3
5
2.1%
2019
499
501
100
2
13
2.4%
Listed bonds
SEK 700m
100
April 2018
Perpetual
2023
Interest-only
2.5 % above STIBOR 3M
66
Annual report 2019 | Tryg A/S |
Notes
DKKm
Private
Commercial
Corporate
Sweden
Other a)
Group
2
Operating segments
2019
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
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
12,021
-8,185
-1,650
-231
-3
1,951
238
1,565
42
15
2,691
6,201
1,195
4,274
-2,867
-749
-94
1
566
310
67
4
149
1,351
6,844
114
3,979
-2,816
-415
-255
2
496
407
0
170
1,114
1,035
9,055
27
1,521
-1,014
-267
-10
0
231
246
539
0
7
919
2,758
34
-54
24
0
23
0
-6
-6
5,193
0
0
50,193
0
0
0
14,750
21,741
-14,857
-3,081
-566
1
3,237
-394
2,843
1,194
7,364
216
1,285
50,193
59,059
5,996
24,859
1,370
14,750
46,974
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.
Other assets and liabilities are managed at Group level
and are not allocated to the individual segments but are
included under 'Other'.
a) Amounts relating to eliminations and one-off
items. Please refer to note 2 'Geographical segments'
for details.
Contents – Financial statements
67
Annual report 2019 | 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
Other assets and liabilities are managed at Group level
and are not allocated to the individual segments but are
included under 'Other'.
a) Amounts relating to eliminations and one-off
items. Please refer to note 2 'Geographical segments'
for details.
Contents – Financial statements
68
Annual report 2019 | Tryg A/S |
a) Includes Danish general insurance and German,
Dutch, Austrian and Finnish guarantee insurance.
The gross premium income related those branches
amounts to DKK 78m (DKKm 54 in 2018).
Notes
DKKm
2019
2018
2017
2016
2015
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
13,204
2,606
712
64.7
1.7
66.4
13.7
80.1
-5.4
2,650
75.80
6,472
469
283
73.7
5.1
78.8
14.4
93.1
-4.4
1,083
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
Contents – Financial statements
69
Annual report 2019 | Tryg A/S |
b) Amounts relating to eliminations and one-off items.
In 2018 Cost, Claims and Other Costs were nega-
tively affected by DKK 75m, DKK 49m, DKK 76m.
The costs are related to integration and transaction
costs for the aquirement 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)
The adjustment in gross expense ratio is only
included in 'Tryg '. Please refer to a footnote in
Financial highlights.
Notes
DKKm
2019
2018
2017
2016
2015
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
70.62
2,120
169
205
74.0
2.0
75.9
16.1
92.0
-9.7
419
-54
-6
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
21,741
18,740
17,963
17,707
17,977
3,237
579
-188
3,628
1,194
68.3
2.6
70.9
14.2
85.1
-5.5
4,151
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
Contents – Financial statements
70
Annual report 2019 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
DKKm
Gross premiums written
2019
2,591
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
2,466
- 1,460
- 340
- 15
- 1
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
650
59.2
73.6
3.8%
22,950
73,735
Accident and
health
Health care
Workers’
compensation
Motor TPL
Motor comprehensive
insurance
Marine, aviation and
cargo insurance
2018
2,001
1,951
- 1,157
- 249
- 11
- 2
532
59.3
72.6
4.5%
24,634
53,060
2019
461
445
- 483
- 52
- 1
0
- 91
108.5
120.4
93.2%
5,390
84,348
2018
376
379
- 402
- 43
- 1
0
- 67
106.1
117.7
107.1%
5,595
58,510
2019
951
935
- 755
- 106
- 14
0
60
80.7
93.6
2018
884
884
- 438
- 105
- 13
0
328
49.5
62.9
21.9%
71,146
12,776
20.8%
63,754
11,779
2019
1,876
1,828
- 1,194
- 296
- 12
1
327
65.3
82.2
6.0%
18,794
87,595
2018
1,772
1,771
- 958
- 283
- 42
- 1
487
54.1
72.4
2019
4,823
4,617
- 3,127
- 652
- 44
1
795
67.7
82.8
2018
3,915
3,781
- 2,672
- 470
- 4
- 2
633
70.7
83.2
2019
231
222
- 153
- 33
4
0
40
68.9
82.0
2018
376
401
- 208
- 54
- 55
0
84
51.9
79.1
6.0%
15,763
76,710
21.8%
9,320
342,983
21.4%
9,605
283,335
18.9%
77,416
2,213
21.3%
68,061
2,492
Gross premiums written
2019
5,444
Gross premium income
Gross claims
Gross operating expenses
Profit/loss on ceded business
Insurance technical interest, net of reinsurance
5,330
- 3,562
- 751
- 216
- 4
Technical result
Gross claims ratio
Combined ratio
Claims frequency a)
Average claims DKK b)
Total claims
Fire and contents
(Private)
Fire and contents
(Commercial)
Change of ownership
Liability insurance
Credit and guarantee
insurance
Tourist assistance
insurance
2018
4,423
4,306
- 2,897
- 689
- 152
- 6
562
67.3
86.8
797
66.8
85.0
9.7%
8,743
427,228
9.9%
8,955
342,695
2019
2,758
2,656
- 1,894
- 413
- 129
3
223
71.3
91.7
16.9%
55,018
33,861
2018
2,426
2,434
- 1,736
- 391
- 167
- 1
139
71.3
94.2
15.5%
65,645
29,761
2019
2018
8
74
- 11
- 7
0
0
56
14.9
24.3
10.6%
22,639
2,689
79
65
- 63
- 9
0
- 1
- 8
96.9
110.8
14.3%
21,202
4,022
2019
1,100
1,088
- 828
- 168
8
0
100
76.1
90.8
12.5%
70,030
12,545
2018
1,094
1,071
- 1,027
- 155
28
- 1
- 84
95.9
107.7
12.2%
71,911
12,189
2019
527
527
- 95
- 69
- 131
0
232
18.0
56.0
2018
470
469
- 65
- 49
- 167
0
188
13.9
59.9
0.0%
1,872,000
49
0.0%
2,866,734
64
2019
941
886
- 775
- 119
- 1
1
- 8
87.5
101.0
17.5%
6,390
121,236
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
71
Annual report 2019 | Tryg A/S |
Notes
2 Technical result, net of reinsurance, by line of business
a) Group Life, one-year policies related to Norwegian
Group Life and Alka Group Life.
DKKm
Other
insurance
Total exclusive of
Group Life
Group Life
one-year policies a)
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
2019
2018
2019
2018
49
55
- 14
- 1
- 15
- 1
24
25.5
54.5
130
59
91
- 58
- 76
- 43
3
- 83
63.7
194.5
12
21,760
18,595
21,129
- 14,351
- 3,007
- 566
0
18,318
- 12,305
- 2,673
- 630
- 11
3,205
2,699
67.9
84.8
67.2
85.2
2019
803
612
- 506
- 74
0
1
33
82.7
94.8
2018
404
422
- 331
- 31
6
1
67
78.4
84.4
2019
22,563
21,741
- 14,857
- 3,081
- 566
1
3,237
68.3
85.1
2018
18,999
18,740
- 12,636
- 2,704
- 624
- 10
2,766
67.4
85.1
Contents – Financial statements
72
Annual report 2019 | Tryg A/S |
DKKm
3
Premium income, net of reinsurance
Direct insurance
Indirect insurance
Unexpired risk provision
Ceded direct insurance
Direct insurance, by location of risk
2019
2018
Denmark
Other EU countries
Other countries a)
a) Mainly Norway
Gross
13,649
2,172
6,547
22,368
Ceded
-524
-229
-468
-1,221
Gross
10,542
2,095
6,397
19,034
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
2019
2018
166
-165
1
-16,031
1,173
-14,857
408
20
-14,429
209
-219
-10
-13,872
1,236
-12,636
606
-15
-12,045
2019
2018
DKKm
2019
2018
22,353
52
22,405
15
22,420
-1,221
21,198
19,037
50
19,087
-3
19,084
-1,409
17,675
Ceded
-645
-186
-578
-1,409
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
-265
-2,193
-2,458
-623
-3,081
227
-2,854
-8
-8
-3
-1
-1
-3
-8
-227
-1,877
-2,104
-600
-2,704
194
-2,510
-24
-24
-3
-1
-1
-19
-24
-9
Expenses have been incurred for the Group´s Internal Audit Department.
-10
Fees for non-audit services provide by Deloitte Statsautoriseret Revisionspartnerselskab to the Group
amount to DKK 4m (DKK 20m in 2018) and consist of varius declaration tasks, mainly related to restruc-
turing of investment setup and review of interim balances, objective tax advice and consulting services
mainly related to GAP analysis and review, as well as other general accounting, consulting services and
tax advice.
Contents – Financial statements
73
NotesAnnual report 2019 | Tryg A/S |
DKKm
6
2019
2018
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
-265
-2,043
-187
-649
-255
-71
388
-3,081
Please refer to note 12 and 23 regarding lease recognised costs according to IFRS 16.
Insurance operating costs and claims include the following
staff expenses:
Salaries and wages
Commision
Allocated share options and matching shares
Pension plans a)
Other social security costs
Payroll tax
-2,747
-4
-27
-351
-6
-491
-3,625
-227
-1,740
-179
-612
-260
-69
383
-2,704
-2,227
-9
-10
-301
-6
-470
-3,023
a) In 2019 defined benefit plans were included with DKK 35m (DKK 35m in 2018).
Remuneration for the Supervisory Board and Executive Board is disclosed in note 27 'Related parties'.
Average number of full-time employees during the year
(continuing business)
4,148
3,914
Contents – Financial statements
74
NotesAnnual report 2019 | Tryg A/S |
Notes
DKKm
6 Matching shares and conditional shares
Total numbers
Fair value
Executive
Board
Risk-
takers
Other
Average per
matching share
at grant date
DKK
Total
Total value
Average per
at time of matching share
at 31.12
allocation
DKK
DKKm
Total fair
value at
31.12
DKKm
2019
Allocated in 2019
Matching shares allocated
in 2019 at 31.12.19
53,308
0
0
53,308
Allocated in 2011-2018
Category changes and addition
Cancelled
Exercised
189,745
0
-14,328
-90,826
89,473
-423
-7,476
-9,960
168,560
423
-40,525
-85,561
447,778
0
-62,329
-186,347
Matching shares allocated
in 2011-2018 at 31.12.19
Number of Matching shares
exercisable 31.12.19
2018
Allocated in 2018
Matching shares allocated
84,591
71,614
42,897
199,102
0
0
0
0
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 31.12.18
57,456
46,905
37,305
141,666
0
0
0
0
166
114
114
114
114
114
144
105
105
105
105
105
9
51
0
-7
-21
23
14
37
0
-3
-19
15
198
198
198
198
198
198
164
164
164
164
164
164
11
89
0
-12
-37
39
16
57
0
-4
-30
23
In 2019, Tryg entered into an agreement on matching
shares for the Executive Board, as a consequence of the
Group’s remuneration policy. Executive Board, are allo-
cated one share in Tryg A/S for each share they acquires
in Tryg A/S at market rate for liquid cash at a contractu-
ally agreed sum over the 4-year maturation period.
In 2019, the reported fair value of matching shares for
the Group amounted to DKK 11m (DKK 7m in 2018).
At 31 December 2019, a total amount of DKK 40m was
recognised for matching shares.
Conditional shares
In 2017-2019, 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 2019, the fair value of conditional shares is prorated
relative to the vesting period and recognised in the
income statement amounted to DKK 16m (DKK 3m
in 2018). The maximum obligation for Tryg is 188,551
shares in Tryg A/S.
Contents – Financial statements
75
Annual report 2019 | Tryg A/S |
DKKm
7
Interest and dividends
Interest income and dividends
Dividends
Interest income, cash at bank and in hand
Interest income, bonds
Interest expenses
Interest expenses subordinate loan capital, credit institutions and cash at bank
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
Bonds
Derivatives (Equity, Interest, Currency)
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
can not be stated at fair value total DKK -97m (DKK -17m in 2018)
Contents – Financial statements
2019
2018
DKKm
2019
2018
9
Other income and costs
In 2019 Other income encompasses a one-off allowance regarding
VAT of DKK 45m.
Other costs DKK -356m (DKK -300m in 2018). The increase can primarily
be attributed to depreciations related to trademarks, customer relationships
and write-down of an agricultural portfolio DKK 157m (DKK 34m).
10
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
24
1
509
534
-117
-61
-178
356
463
114
120
-103
594
62
-10
-351
159
-140
454
12
0
568
580
-88
-52
-140
440
-64
-224
-365
-149
-801
147
-1
5
113
264
-537
-798
-40
-45
100
0
0
-783
%
22.0
1.0
1.5
-3.0
0.0
21.5
-498
-19
4
-31
12
3
-529
%
22.0
0.8
-0.2
1.4
-0.5
23.4
76
NotesAnnual report 2019 | 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)
2019
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from assets
under construction
Additions for the year
Disposals for the year
4,881
-5
1,981
-2
0
0
0
0
0
0
1,576
2
459
174
-21
Cost at 31 December
4,876
1,979
2,190
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
Reversed amortisation
Amortisation and write-downs
at 31 December
-104
0
0
0
0
-199
2
-139
-18
0
-1,458
-2
-122
-7
16
Total
9,099
-3
1
418
-21
9,493
-1,863
0
-261
-24
19
661
2
-459
244
0
449
-102
0
0
0
3
2018
Cost
Cost at 1 January
Exchange rate adjustments
Transferred from asset
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
4,241
0
4,881
-104
0
0
0
300
-9
0
1,739
-49
1,981
1,528
-5
16
37
0
1,576
-171
6
-34
-1,364
5
-83
0
-16
352
-1
-16
326
0
661
-92
0
0
-10
Total
2,836
-31
0
6,343
-49
9,099
-1,731
11
-117
-26
-104
-354
-1,572
-100
-2,130
-104
-199
-1,458
-102
-1,863
Carrying amount at 31 December
4,772
1,625
618
349
7,364
Carrying amount at 31 December
4,777
1,782
118
559
7,236
a) Hereof proprietary software DKK 494m (DKK 524m at 31 December 2018)
b) Hereof Trademarks and customer relationships related to Alka DKK 1.4bn and the total goodwill
DKK 4,2bn
Contents – Financial statements
77
NotesAnnual report 2019 | Tryg A/S |
DKKm
11
Intangible assets (continued)
DKKm
11
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
portfolio adjusted to reflect the expected effect of business decisions and market development from past
experiences. The portfolio is indexed with the wage and salary index. Claims incurred are based on ex-
pected claims ratios, which corresponds to normalised large- and weather claims. 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
In 2018, Tryg acquired Forsikrings- Aktieselskabet Alka . The insurance activities were incorporated into
the Tryg Group's business structure from 8 November 2018.
Comprises the sale of insurance products to private and commercial customers under the ‘Alka’ brand.
At 31 December 2019, 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 cash flows appearing from the latest prognosis approved by management for the next 6 quarters
are used when calculating the value in use of Private DK. The cash flows in the latest prognosis period
have been extrapolated for financial years after the prognosis 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 26.4bn (DKK 8.5bn) relative to
a recognised goodwill of DKK 4.2bn (DKK 4.2bn) and does not indicate any impairment in 2019. 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. 4.5% will result in a write down of goodwill.
2019
2018
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 the calculated present value 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
The above changes have no impact on equity.
3%
2%
8%
81%
1.2bn
-1.0bn
-4.1bn
6.0bn
-1.2bn
1.2bn
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 2019, 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 cash flows appearing from the latest prognosis approved by management for the next 6 quarters are
used when calculating the value in use of Obos. The cash flows in the latest prognosis period have been
extrapolated for financial years after the prognosis 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 0.3bn (DKK 0.4bn) relative to
a recognised goodwill of DKK 49m (DKK 49m) and does not indicate any impairment in 2019. 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. 4.0% will result in a write down of goodwill.
Contents – Financial statements
78
NotesAnnual report 2019 | 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 the calculated present value 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
2019
2018
DKKm
2019
2018
4%
2%
13%
87%
14
-13
-48
58
-30
30
10%
2%
11%
90%
24
-22
-55
52
-37
37
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 the calculated present value 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
3%
2%
11%
91%
45
-42
-211
288
-177
177
3%
2%
11%
92%
34
-29
-280
384
-163
164
The above changes have no impact on equity.
The above changes have no impact on equity.
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 2019, 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 prognosis period have
been extrapolated for financial years after the prognosis 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 1.5bn (DKK 1.7bn) relative to a recognised goodwill of DKK 0.5bn (DKK 0.5bn) and
does not indicate any impairment in 2019. 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.
4.5% will result in a write down of goodwill.
Trademarks and customer relations
As at 31 December 2019 management performed a test of the carrying amounts of customer
relations as an integral part of the Moderna, Obos and Alka portfolio goodwill test.
An agricultural portfolio acquired in 2014 was impaired and written down DKK 18m.
Software and assets under construction
As at 31 December 2019 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 7m (DKK 26m) due to revaluation of the Groups IT-systems.
The write-down is due to related system development costs will be higher, while for some of the systems
benefits are also expected to be lower. The cost is recognised as write-downs under depreciations in the
income 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.
Amortised software is assessed for impairment at the balance sheet date or when there are indications
that the future cash flow cannot justify the carrying amount.
In the event that the recoverable amount is lower than the carrying amount, the difference is recognised in
the income statement. The recoverable amount is the higher of fair value less sales costs and value in use.
Contents – Financial statements
79
NotesAnnual report 2019 | Tryg A/S |
Notes
12
Property, plant and equipment
DKKm
2019
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
Depreciation for the year
Value adjustments for the year at revalued amount in income statement
Reversed depreciation and value adjustments
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
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
Depreciation for the year
Accumulated depreciation and value adjustments at 31 December
Carrying amount at 31 December
Operating
equipment
Leases ROU Owner-occupied
equipment a)
property
Leases ROU
’Group-occupied
property’ b)
332
1
69
-29
372
-231
-26
0
10
-247
125
273
-3
62
0
0
332
-206
-25
-231
101
64
0
29
-17
76
-20
-26
0
0
-46
30
50
0
14
0
0
64
0
-20
-20
44
112
0
0
-112
0
0
0
-10
10
0
0
0
0
0
112
0
112
0
0
0
112
762
2
175
-27
912
-84
-98
0
0
-182
730
739
-10
54
0
-21
762
0
-84
-84
678
Total
1,270
3
272
-185
1,360
-335
-150
-10
20
-475
885
1,062
-13
130
112
-21
1,270
-206
-129
-335
935
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) Lease assets (Right of use-assets), Group occupied
property concists of leases of offices buildings.
Contract terms are from 2 to 17 years and with yearly
rent adjustments. Tryg has no lease contracts with
variable lease payments based on sale or similar.
Contents – Financial statements
80
Annual report 2019 | Tryg A/S |
2019
2018
DKKm
2019
2018
1,345
6
9
-272
60
3
1,151
1,324
-5
19
-148
141
14
1,345
14
Equity investments in associates
Cost
Cost at 1 January
Additions for the year
Disposals for the year a)
Cost at 31 December
Revaluations at net asset value
Revaluations at 1 January
Reversed on sale
Value adjustments for the year
Revaluations at 31 December
Carrying amount at 31 December
226
10
-202
34
16
-40
-10
-34
0
215
13
-2
226
10
0
6
16
242
a) Ejendomsselskabet af 1. marts 2006 P/S, Denmark was sold in January 2019
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 2019 is DKK 74m (DKK 87m in 2018).
Total expenses for 2019 are DKK 12m (DKK 20m in 2018). External experts
were involved in valuing the majority of the investment properties.
Return percentages, weighted average
2019
2018
Business property
Office property
Residential property
Total
5.4
5.4
2.3
5.1
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%
2019
-37
39
-34
-8
5.0
6.9
3.2
5.7
2018
-46
49
-40
-8
Contents – Financial statements
81
NotesAnnual report 2019 | 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
2019
2018
44,239
41,694
0
3,476
47,715
Financial assets at amortised cost only deviate to a minor extent from fair value.
Financial liabilities
Derivative financial instruments at fair value with value
adjustments in the income statement
Derivative financial instruments at fair value used for hedge
accounting with value adjustment in other comprehensive income
Financial liabilities at amortised cost with value adjustment
in the income statement
Total financial liabilities
728
72
12,618
13,418
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.
59
3,050
44,803
740
0
11,186
11,926
15
Financial assets (Continued)
The Fair value hierarchy
’Quoted market prices and consolidated reference prices’ (level 1) consists of financial instruments that
are quoted and traded in a principal and active market (markets generally accessable and with substantial
volume and trade frequency).
Valuation based on observable input (level 2) consists of financial instruments that are valued substan-
tially on the basis of observable input other than quoted price or consolidated reference price for
the instrument itself. If a financial instrument is quoted in a market that is not active, Tryg bases its
measurement on the most recent transaction 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 considerations. 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) consist of certain financial instruments
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
between the categories. Some bonds have become illiquid and have been moved from ’Quoted prices
or consolidated reference prices’ to the ’Observable input’ category, while other bonds have become
liquid and have been moved from ’Observable input’ to the ’Quoted prices or consolidated reference
prices’ category.
Contents – Financial statements
82
NotesAnnual report 2019 | 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
DKKm
15
Quoted market prices
or consolidated
references price a)
Observable Non-observable
input
input
2019
Investment property
Equity investments
Unit trust units
Bonds
Other lendings
Derivative financial instruments, assets
Derivative financial instruments, debt
0
204
2,387
36,385
0
1
0
38,978
0
1,401
6
2,429
75
1,127
-800
4,237
a) Consolidated reference prices means Nasdaq consolidated reference prices
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
0
899
0
7,302
899
-740
8,360
1,151
194
31
0
0
0
0
1,375
1,345
115
0
62
0
0
1,522
Total
1,151
1,798
2,424
38,814
75
1,128
-800
44,590
1,345
1,149
1,663
38,042
899
-740
42,358
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 or consolidated reference prices based on
actual trades are available.
DKKm
2019
2018
Financial instruments transferred from ’Quoted market prices
or consolidated reference prices’ to ’Observable input’
Financial instruments transferred from ’Observable input’ or
’Non-observable input’ to ’Quoted market prices
or consolidated reference prices’
0
3,114
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 of Alka
Gains/losses in the income statement a)
Purchases
Sales
Carrying amount at 31 December
Gains/losses in the income statement for assets held at the statement
of financial position date recognised in value adjustments
2019
2018
1,522
5
0
66
192
-410
1,375
-1
1,504
-5
138
210
18
-343
1,522
75
a) Hereof realised DKK 5m
Inflation derivatives are measured at fair value on the basis of non-observable input and are included un-
der claims provisions at a fair value of DKK -723m (DKK -521m in 2018).
Derivative financial instruments
Derivatives with value adjustments in the income statement at fair value:
Interest derivatives
Share derivatives
Exchange rate derivatives
Derivatives according to statement
of financial position
Inflation derivatives, recognised
in claims provisions
Total derivative financial instruments
Due after less than 1 year
Due within 1 to 5 years
Due after more than 5 years
2019
Fair value
in statement
of financial
position
304
3
20
Nominal
17,163
167
7,531
Nominal
23,415
235
4,127
24,861
328
27,777
7,741
32,602
7,833
20,323
4,445
-724
-396
-26
2,572
-2,942
7,346
35,123
8,108
15,187
11,828
2018
Fair value
in statement
of financial
position
138
10
11
159
-521
-362
-1,158
254
542
3,559
11,115
Derivatives, repos and reverses are used continuously as part of the cash and risk management carried
out by Tryg and its portfolio managers.
Contents – Financial statements
83
NotesAnnual report 2019 | Tryg A/S |
15
Financial assets (continued)
Reconciliation of Tryg's Investment portfolio
DKKm
2019
Bond
Equity and
unit trust units
Investment
property
Derivatives and
other items
Other lending
Total
Investment assets according to balance sheet
38,814
4,222
1,151
1,128
Investment assets according to investment activities
Other, hereof financial instrument in liabilities
Classified according to investment strategy
External customers a)
Tryg's investment portfolio a)
Match portfolio
Free portfolio
2018
-2,458
9
-1,407
34,959
-27,901
7,058
0
-1,444
-520
2,258
-21
2,237
0
1,756
-766
2,141
0
2,141
-800
-246
200
282
-282
0
Investment assets according to balance sheet
38,042
3,054
1,345
899
Investment assets according to investment activities
Other, hereof financial instrument in liabilities
Classified according to investment strategy
External customers a)
Tryg's investment portfolio a)
Match portfolio
Free portfolio
-2,523
-223
-337
34,959
-28,359
6,600
0
-1,013
-199
1,842
0
1,842
0
1,376
-482
2,238
0
2,238
-740
-140
176
196
-196
0
75
0
-75
0
0
0
0
0
0
0
0
0
0
0
45,390
-3,257
0
-2,493
39,639
-28,203
11,436
43,340
-3,263
0
-842
39,235
-28,554
10,680
a) The setup of Tryg invest is impacting Tryg’s balance sheet as external customers investments are booked under “total other financial investments” with opposing
liabilities entries such as “debt to group undertakings” and “other debt”.
Contents – Financial statements
84
Annual report 2019 | 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:
2019
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
2018
Gains and losses at 1 January
Value adjustments for the year
Gains and losses at 31 December
Gains
3,100
191
3,291
Gains
2,903
197
3,100
Losses
-2,890
-209
-3,099
Losses
-2,742
-148
-2,890
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
2019
-202
32
-170
DKKm
15
Financial assets (Continued)
Receivables
Total receivables in connection with direct insurance contracts
Receivables from insurance enterprises
Unsettled transactions
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 39m (DKK 52m in 2018).
Other receivables do not contain overdue receivables
2019
2018
1,727
240
401
187
2,555
139
1
-3
136
1,476
144
611
192
2,423
115
-1
25
139
16
Reinsurer's share
Impairment test
As at 31 December 2019, 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 2018). 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
210
-19
191
Net
161
49
210
2018
-152
-50
-202
Contents – Financial statements
85
NotesAnnual report 2019 | Tryg A/S |
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 regarding previous year
Tax paid for the year
Net current tax at 31 December
Current tax is recognised in the statement of financial position as follows:
Under assets, current tax
Under liabilities, current tax
Net current tax
18
Equity
Number of shares
2019
2018
DKKm
2019
2018
-118
-2
0
-734
4
-50
-3
830
-73
52
-125
-73
18
19
-194
2
-7
-583
-12
37
0
639
-118
0
-118
-118
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
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
12,085
-1,013
-7,364
1,408
260
2,744
8,119
5,861
0
2
22,660
-22,530
4
5,996
11,334
-499
-7,236
1,408
311
2,740
8,058
5,559
454
-59
18,820
-18,921
8
5,861
Number of shares of DKK 5 (1,000)
Number of shares at 1 January
Bought during the year
Used in connection with exercise
of incentive programme
Shares outstanding
2018
2019
301,743
-500
301,945
-382
457
180
Number of shares at 31 December
301,700
301,743
Number of shares as a percentage
of issued shares at 31 December
Nominal value at 31 december (DKKm)
99.85
1,509
99.87
1,509
Own shares
2019
405
500
-457
448
0.15
2
2018
203
382
-180
405
0.13
2
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 2020. Own shares are acquired for use in the
Group's incentive programme.
Contents – Financial statements
86
NotesAnnual report 2019 | Tryg A/S |
DKKm
19
Claims provisions
DKKm
19
Claims provisions (continued)
Gross
Ceded
Net of
reinsurance
Gross
Ceded
Net of
reinsurance
2019
Claims provisions at 1 January
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
24,847
65
24,912
-8,414
-7,082
-15,496
16,050
-1,117
14,933
510
24,859
-1,234
-7
-1,241
158
262
420
-397
-65
-462
-1
-1,285
23,613
58
23,671
-8,255
-6,820
-15,076
15,653
-1,182
14,471
509
23,574
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 adjustment
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
Contents – Financial statements
87
NotesAnnual report 2019 | Tryg A/S |
DKKm
2019
2018
DKKm
2019
2018
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
21
-17
5
35
35
407
581
6.29
%
10
75
13
2
1.9
13
%
1.6
1.6
2.3
0.7
2.0
7.0
19.1
K2013
53
53
51
1,139
1,190
940
250
1,105
16
31
22
73
-57
1,190
875
13
72
18
0
-37
940
250
303
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
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
88
NotesAnnual report 2019 | 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
Capitalised tax loss
2019
2018
DKKm
2019
2018
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
57
-61
-83
74
38
-45
49
-52
-76
66
30
-36
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 guaran-
teed level of pension benefits throughout their lives. The pension benefits are determined by the employ-
ees' 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, pen-
sions 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 legisla-
tion 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 (DKK 12m in 2018), which is about 2,2 % of the an-
nual premium in FPK(2018). FPK writes in its interim report for 2019 that it had a solvency ratio of 132 at
30 June 2019 (Solvency ratio of 141 at 30 June 2018). The Solvency Ratio is defined as the own funds rel-
ativ to the solvency capital requirement.
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
Change in deferred tax taken to equity
Deferred tax at 31 December
Tax value of non-capitalised tax loss
Denmark
14
65
1
80
429
77
-59
544
991
911
912
5
0
34
5
-1
-26
-18
911
17
9
77
0
86
389
105
-61
565
998
912
656
-9
-3
33
288
38
-91
0
912
16
The loss in Tryg A/S cannot be utilised in the Danish joint taxation scheme. The loss can be carried forward
indefinitely. Loss determined according to Swedish and Finnish rules can be carried forward indefinitely.
The losses are not recognised as tax assets until it has been substantiated that the company can 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 22m
(DKK 13m at 31 December 2018).
Contents – Financial statements
89
NotesAnnual report 2019 | Tryg A/S |
DKKm
22
Other provisions
Other provisions at 1 January
Exchange rate adjustment
Change in provisions
Other provisions 31 December
2019
2018
DKKm
2019
2018
111
0
-26
86
111
-1
1
111
24
Earnings per share
Profit/loss from continuing business
Profit/loss on discontinued and divested business
Profit/loss for the year
2,845
-2
2,843
1,733
-2
1,731
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 0m and use of existing
restructuring provisions amounts to DKK 26m. The balance as at 31 December 2019 excluding own
insurances amounts to DKK 80m (DKK 102m at 31 December 2018).
Average number of shares (1,000)
301,954
302,043
Diluted number of shares (1,000)
Earnings per share, continuing business
Diluted earnings per share, continuing business
Earnings per share
Diluted earnings per share
301,954
9.42
9.42
9.42
9.42
302,043
5.74
5.74
5.73
5.73
23
Other debt and debt to group undertakings
Debt related to external customers investments amounts to DKK 2,493m
please refer to note 15 Reconciliation of Tryg´s Investment portfolio.
25
Contractual obligations, collateral and contingent liabilities
Contractual obligations
Other debt
Maturity of undiscounted lease liabilities
Due 1 year or less
Due 1-5 years
Due more than 5 years
Total Lease liabilities 31 December
Lease liabilities included in the statement of financial position
Hereof future cashflow options
Amounts recognised in statement of cash flow
Total cash out-flow for leases
Amounts recognised in income statement
Interest on lease liabilities
There are no short team-leases recognised in the financial statement.
Debt related to leasing are included in Other debt. Please refer to note 12
for specification of ROU assets.
155
489
476
1,121
64
147
-39
131
346
496
973
4
135
-38
2019
Other contractual obligations a)
2018
Other contractual obligations a)
<1 year
616
616
335
335
Obligations due by period
1-3 years
3-5 years
> 5 years
497
497
210
210
141
141
45
45
4
4
4
4
Total
1,258
1,258
594
594
a) Other contractual obligations mainly consists of investment commitments, IT and outsourcing
agreements. Please refer to note 12 for lease agreements recognised as ROU.
2019
Tryg has signed the following contracts with amounts above DKK 50m:
Tryg is comitted to invest in some investment funds. The commitment amounts to DKK 1,015m.
DKK 399m are expected called during 2020 and DKK 616m within 5 years.
2018
Tryg is comitted to investments in some Investment funds. The commitment amounts to DKK 263m
and are expected called during 2019.
Contents – Financial statements
90
NotesAnnual report 2019 | Tryg A/S |
DKKm
25
2019
2018a)
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 Livsforsikring A/S and Forsikings-Aktieselskabet Alka Liv II have
registered the following assets as having been held as security for
the insurance provisions:
Equity investments
Bonds
Interest and rent receivable
Equity investments in and receivables from Group undertakings
which have been eliminated in the consolidated financial statements
Total
0
1,096
5
0
1,101
413
27,011
144
8,388
35,956
a) Registered assets included Tryg Forsikring A/S in 2018. As of 1 July 2019
non-life insurance companies are no longer required to have registred assets.
Contents – Financial statements
91
NotesAnnual report 2019 | 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 2019.
Notes
DKKm
25
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
2019
Assets
Derivative financial instruments
Liabilities
Repo debt
Derivative financial instruments
Inflation derivatives, recognised in claims provisions
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
1,128
1,128
2,601
800
724
4,125
0
899
3
902
2,797
740
525
4,062
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1,128
1,128
2,601
800
724
4,125
0
899
3
902
2,797
740
525
4,062
0
0
-2,602
0
0
-2,602
0
0
0
0
-2,797
0
0
-2,797
-1,247
-1,247
-1
-676
-656
-1,332
-4
-874
-3
-881
-2
-740
-525
-1,267
-119
-119
-2
124
68
190
-4
25
0
21
-2
0
0
-2
Contents – Financial statements
92
Annual report 2019 | Tryg A/S |
DKKm
26
Acquisition of activities
2019
There have been no acquisions in 2019.
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
2019
2018
DKKm
2019
2018
0
0
0
0
0
0
0
0
0
0
0
0
1,429
112
5,680
83
360
2,470
906
4,288
187
8,532
8,345
4,244
27
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.
Premium income
- Parent company (TryghedsGruppen smba)
- Key management
- Other related parties
Claims payments
- Key management
- Other related parties
0.5
0.4
3.1
0.2
0.5
0.5
0.0
4.5
0.0
0.4
Specification of remuneration
2019
Number of
persons
Share-based
Variable
salarya)
Base
salary
Cash
Variable
salary
Pension
Total
14
4
Supervisory Board
Executive Board b)
Risk-takers investment
functions
Risk-takers staff functions
Risk-takers independent
control functions
5
Risk-takers other functions 19
7
20
9
27
10
31
8
43
0
5
0
4
0
4
0
0
1
4
0
6
0
7
1
6
1
7
9
39
12
45
9
60
69
127
14
11
22
175
a) Total expenses recognised in 2019 for matching shares and conditional shares allocated in 2019
and previous year.
For matching shares and conditional shares allocated to Executive Board in 2019 please refer to
’Corporate governance’ in Management review.
b) Barbara Plucnar Jensen took up the position as CFO on 1 March 2019.
Of which retired:
Supervisory Board
Executive Board
Risk-takers
Number
of persons
Severance
pay
2
0
4
6
0
0
0
0
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 resultat 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 insur-
ances sold to Troll's policyholders. The agreements was signed in February 2018 and the acquisition was
approved by the Danish and Norwegian FSA in March 2018.
Contents – Financial statements
93
NotesAnnual report 2019 | Tryg A/S |
DKKm
27
Related parties (continued)
2018
Number of
persons
Share-based
Variable
salarya)
Base
salary
Cash
Variable
salary
Pension
Total
DKKm
27
Related parties (continued)
Parent company
TryghedsGruppen smba
TryghedsGruppen smba controls 60% of the shares in Tryg A/S.
13
4
Supervisory Board
Executive Board
Risk-takers investment
functions
Risk-takers staff functions
Risk-takers independent
4
control functions
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
0
6
0
6
1
3
1
4
8
37
10
30
7
48
13
15
140
a) Total expenses in 2018 for matching shares programs allocated in 2018 and previous year.
Of which retired:
Number
of persons
Severance
pay
Supervisory Board
Executive Management
Risk-takers
1
1
5
7
0
0
0
0
Base salary 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 members of the Executive Board is paid a fixed remuneration, car allowance
and pension. The variable salary is awarded in the form of share-based remuneration. Please refer to
'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 except Group CEO who is entitled to severance pay equal
to 18 months' salary. If a change of control clause is actioned CEO and COO are entitled to severance
pay equal to 36 months´salary.
Risk-takers are defined as employees whose activities have a significant influence on the company’s
risk profile. The Supervisory Board decides which employees should be considered as risk-takers.
2019
In 2019 Tryg Forsikring A/S paid Tryg A/S DKK 2,039m and Tryg A/S paid TryghedsGruppen smba
DKK 1,224m in dividends.
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. Furthermore Tryg A/S made a capital contribution of DKK 2,000m to
Tryg Forsikring A/S.
In 2018, TryghedsGruppen smba has invested DKK 313m in ’Kapitalforeningen Tryg Invest’.
The amount is recognised under Other financial investment assets and Debt to Group undertakings.
The transactions between TryghedsGruppen smba and Tryg A/S is conducted on an arm's length basis.
Intra-group transactions
Administration fee, etc. is fixed on a cost-recovery basis. Intra-group accounts are offset and carry interest
on market terms.
The companies in the Tryg Group have entered into reinsurance contracts on market terms.
Transactions with Group undertakings have been eliminated in the consolidated financial statements
in accordance with the accounting policies.
28
Financial highlights
Please refer to page 52.
Contents – Financial statements
94
NotesAnnual report 2019 | Tryg A/S |
29 Accounting policies
The consolidated financial statements are prepared in
accordance with the International Financial Reporting
Standards (IFRS) as per adopted by the EU on
31 December 2019 and in accordance with the
Danish Statutory Order on adoption of IFRS.
Interpretations Committee (IFRIC) has also issued a
number of interpretations. No standards have been
implemented for the first time for the accounting year
that began on 1 January 2019 that will have a significant
impact on the Group. See below regarding IFRS 9
‘Financial instruments’.
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 following interpretations have been implemented
for the first time for the accounting year that began on
1 January 2019:
•
IFRIC 23 ‘Uncertainty over Income Tax Treatments’
There has not been implemented any other new or
amended standards and interpretations that have
affected the Group significantly.
Future orders, standards and interpretations that
the Group has not implemented, and which have
still not entered into force but could 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) Expected to enter into force for the accounting year
commencing 1 January 2022.
•
The Danish FSA’s executive order does not allow
provisions for deferred tax of contingency reserves
allocated from untaxed funds. Deferred tax and the
other comprehensive income of the parent company
have been adjusted accordingly on the transition to
IFRS.
Change in accounting policies
Tryg has not implemented any new significant
accounting policies or IFRS standards in 2019.
Other
Software is amortised according to the straight-line
method over the assessed economic lifetime. Going
forward from 1 June 2019 certain intangible assets, such
as core system software will have a depreciation period
of up to 8 years. It has no bearings on prior periods,
hence comparative figures have not been restated.
Except as noted above, the accounting policies have
been applied consistently with last year.
Accounting regulation
Implementation of changes to accounting
standards and interpretation in 2019
The International Accounting Standards Board (IASB) has
issued several changes to the international accounting
standards, and the International Financial Reporting
and loss. The implementation of IFRS 9 will not affect
Tryg’s recognition and measurement. Tryg has post-
poned the implementation 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 activi-
ties are predominantly 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 currently 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.
Significant accounting estimates
and assessments
The preparation of financial statements under IFRS
requires the use of certain critical accounting estimates
and requires management to exercise its judgement in
the process of applying the Group’s accounting policies.
The areas involving more judgement or complexity, or
areas where assumptions and estimates are significant
to the consolidated financial statements are:
• Liabilities under insurance contracts
• Valuation of defined benefit plans
• Fair value of financial assets and liabilities
• Valuation of property
• Business Combinations
•
Measurement of Goodwill, Trademarks
and Customer relations
• Control of subsidiaries
administration of claims including a margin incorporating
the uncertainty related to the range of actuarial scenarios
and other short and long-term risks not reflected in
standard actuarial models. The projections are based on
Tryg’s knowledge of historical developments, payment
patterns, reporting delays, duration of the claims set-
tlement process and other factors that might influence
future developments in the liabilities.
The Group makes claims provisions, in addition to
provisions for known claims, which cover estimated
compensation for losses that has incurred, but are not
yet reported to the Group (known as IBNR reserves) and
future developments in claims which are known to the
Group but are not finally settled. Claims provisions also
include direct and indirect claims settlement costs or
loss adjustment expenses that arise from events that
have occurred up to the statement of financial position
date even if they have not yet been reported to Tryg.
The calculation of the claims provisions is therefore
inherently uncertain and, by necessity, relies upon the
making of certain assumptions about factors such as
court decisions, amendments to legislation, social
inflation and other economic trends, including inflation.
The Group’s actual liability for losses may be subject to
material positive or negative deviations relative to the
initially estimated claims provisions.
Claims provisions are discounted. As a result, initial
changes in discount rates or changes in the duration of
the claims provisions could have positive or 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.
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
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
Contents – Financial statements
95
NotesAnnual report 2019 | Tryg A/S |
Several assumptions and estimates underlying the calcu-
lation of the claims provisions are mutually dependent.
This has the greatest impact on assumptions regarding
interest rates and inflation.
Defined benefit pension schemes
The Group operates a defined-benefit plan in Norway.
A defined-benefit plan is a pension plan that defines
an amount of pension benefit an employee will
receive on retirement, depending on age, years of
service and salary.
The net obligation with respect to the defined benefit
plan is based on actuarial calculations involving several
assumptions. The assumptions include discount interest
rate, expected future salary and pension adjustments,
turnover, mortality and disability.
Fair value of financial assets and liabilities
Measurements of financial assets and liabilities for
which prices are quoted in an active market or which are
based on generally accepted models with 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 determined
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 investment 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 market prices, taking into consideration the
type of property, location and maintenance standard,
and based on a market- determined rental income as well
Contents – Financial statements
as operating expenses in proportion to the property’s
required rate of return. Cf. note 12, 13 and 15.
Business Combinations
In Business combinations, significant assessments
are made when considering the fair value of the assets
required and liabilities assumed and when identifying
intangible assets, such as trademarks, customer rela-
tions and goodwill as part of the transactions.
Measurement of Goodwill, Trademarks
and Customer relations
Goodwill, Trademarks and customer relations were
acquired in connection with acquisition of businesses.
Goodwill is allocated to the cash-generating units
under which management manages the investment.
The carrying amount is tested for impairment at least
annually. Impairment testing involves estimates of future
cash flows and is affected by 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
consolidation 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 are recognised in the
income statement.
Assets are recognised in the statement of financial posi-
tion when it is probable that future economic benefits
will flow to the Group, and the value of such assets can
be measured reliably. Liabilities are recognised in the
statement of financial position when the Group has a le-
gal or constructive obligation as a result of a prior event,
and it is probable that future economic benefits will flow
out of the Group, and the value of such liabilities can be
measured reliably.
On initial recognition, assets and liabilities are measured
at cost, with the exception of financial assets, which
are recognised at fair value. Measurement after initial
recognition is affected as described below for each item.
Anticipated risks and losses that arise before the time
of presentation of the annual report and that confirm or
invalidate affairs and conditions existing at the statement
of financial position date are considered at recognition
and measurement.
Income is recognised in the income statement as
earned, whereas costs are recognised by the amounts
attributable to this financial year. Value adjustments
of financial assets and liabilities are recognised in the
income statement unless otherwise described below.
All amounts in the notes are shown in millions of DKK,
unless otherwise stated.
Consolidation
Consolidated financial statements
The consolidated financial statements comprise the
financial statements of Tryg A/S (the parent company)
and the enterprises (subsidiaries) controlled by the
parent company. The parent company is regarded as
controlling an enterprise when it
•
•
•
exercises a controlling influence over the relevant
activities in the enterprise in question,
is exposed to or has the right to a variable return
on its investment, and
can exercise its controlling influence to affect
the variable return.
Enterprises in which the Group directly or indirectly
holds between 20% and 50% of the voting rights and ex-
ercises significant influence but no controlling influence
are classified as associates.
Basis of consolidation
The consolidated financial statements are prepared
based on the financial statements of Tryg A/S and its
subsidiaries. The consolidated financial statements are
prepared by combining items of a uniform nature.
The financial statements used for the consolidation are
prepared in accordance with the Group’s accounting
policies.
On consolidation, intra-group income and costs, intra-
group accounts and dividends, and gains and losses
arising on transactions between the consolidated
enterprises are eliminated.
Items of subsidiaries are fully recognised in the
consolidated financial statements.
Business combinations
Newly acquired or newly established enterprises are
recognised in the consolidated financial statements
from the date of acquisition and the date of formation,
respectively. The date of acquisition is the date on which
control of the acquired enterprise actually passes to Tryg.
Divested or discontinued enterprises are recognised in
the consolidated statement of 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 the acquisition. Non-current assets
which are acquired with the intention of selling them are,
however, measured at fair value less cost to sell.
96
NotesAnnual report 2019 | Tryg A/S |
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 impaired
to the lower recoverable amount.
In the event of negative balances (badwill), the calcu-
lated 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.
Generally, subsequent changes in estimates of
conditional acquisition prices are recognised directly
in the income statement.
Segment reporting
Segment information is based on the Group’s
management and internal financial reporting system and
supports the management decisions on allocation of
resources and assessment of the Group’s results divided
into segments.
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
environment in which the reporting entity operates.
Transactions 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
differences are recognised in the income statement
under price adjustments.
On consolidation, the assets and liabilities of the Group’s
foreign operations are translated using the exchange
rates applicable at the statement of financial position
date. Income and expense items are translated using
the average exchange rates for the period. Exchange
rate differences arising on translation are classified as
other comprehensive income and transferred to the
Group’s translation reserve. Such translation differences
are recognised as income or as expenses in the period
in which the activities are divested. All other foreign
currency translation gains and losses are recognised in
the income statement.
The presentation currency in the annual report
is DKK.
The operational business segments in the Tryg are
Private, Commercial, Corporate and Sweden. Private
encompasses the sale of insurances to private individuals
in Denmark and Norway. Commercial encompasses the
sale of insurances to small and medium sized businesses,
in Denmark and Norway. Corporate sells insurances
to industrial clients primarily in Denmark, Norway and
Sweden. In addition, Corporate handles all business
involving brokers. Sweden encompasses the sale of
insurance products to private individuals in Sweden as
well as sale of Product insurances in the Nordic region.
Geographical information is presented based on
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
managed 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 adjusted for changes in premium provisions,
corresponding to an accrual of premiums to the risk
period of the policies, and in the reinsurers’ share of the
premium provisions.
Premiums are calculated as premium income in
accordance with the risk exposure over the cover period,
calculated separately for each individual insurance
contract. The calculation is generally based on the pro
rata method, although this is adjusted for an unevenly
divided risk between lines of business with strong
seasonal variations or for policies lasting many years.
The portion of premiums received on contracts that
relate to unexpired risks at the statement of financial
position date is reported under premium provisions.
The portion of premiums paid to reinsurers that relates
to unexpired risks at the statement of financial position
date is reported as the reinsurers’ share of premium
provisions.
Technical interest
According to the Danish FSA’s executive order, technical
interest is presented as a calculated return on the year’s
average insurance liability provisions, net of reinsurance.
The calculated interest return for grouped classes of
risks is calculated as the monthly average provision plus
an actual interest from the present yield curve for each
individual group of risks. The interest is applied according
to the expected run-off pattern of the provisions.
Insurance technical interest is reduced by the portion of
the increase in net provisions that relates to unwinding.
Contents – Financial statements
97
NotesAnnual report 2019 | Tryg A/S |
Claims
Claims consists of claims paid during the year 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
assessing claims, costs to combat and mitigate damage
and other direct and indirect costs associated with the
handling of claims incurred.
Changes in claims provisions due to changes in yield
curve and exchange rates are recognised as a price
adjustment.
Tryg hedges the risk of changes in future pay and price
figures for provisions for workers’ compensation. Tryg
uses zero coupon inflation swaps acquired with a view
to hedging the inflation risk. Value adjustments of these
swaps are included in claims, thereby reducing the effect
of changes to inflation expectations under claims.
Bonus and premium discounts
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 costs
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.
Contents – Financial statements
Share-based payment
The Tryg Group’s incentive programmes comprise
conditional share 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 recognised in eq-
uity and is not remeasured. The remainder is treated as a
liability and is remeasured until the time of exercise, such
that the total recognition is based on the actual number
of shares or the actual cash amount.
Conditional shares
Some senior employees have been allocated shares
in accordance with the conditional shares scheme.
Equity-settled ’Conditional shares’ are measured at the
fair value at the grant date and recognised under staff
costs over the period from the grant date until vesting
fulfilment of certain conditions.
The shares are recognised at market value and are
accrued from one to four years.
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 three and four year maturation period,
based on the market price at the time of acquisition.
Recognition is from the end of the month of acquisition
under staff expenses with a balancing entry directly in
equity. If the holder retires during the maturation period
but remains entitled to shares, the remaining expense is
recognised in the current accounting year.
Investment activities
Income from associates includes the Group’s share of
the associates’ net profit.
Income from investment properties before fair value
adjustment represents the profit from property
operations less property management expenses.
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 sal-
ary and management fees on the investment area.
Other income and costs
Other income and costs include income and expenses
which cannot be ascribed to the Group´s insurance port-
folio or investment assets, including the sale of products
for Velliv, Pension & Livsforsikring A/S, Danske Bank 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
discontinued activities are reported unchanged under
the respective entries whereas assets and liabilities
concerning divested activities are consolidated under
one item as assets held for sale and liabilities held for
sale.
The comparative figures, including five-year financial
highlights and key ratios, have been restated to reflect
discontinued business. Discontinued and divested
business in the income statement includes the
profit/loss after tax of the run-off for the marine hull
business and the divested activities in the Finnish
branch. Discontinued business also comprises the
Tryg Forsikring A/S run-off business.
Statement of financial position
Intangible assets
Goodwill
Goodwill is 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.
98
NotesAnnual report 2019 | Tryg A/S | 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.
price and costs directly attributable to the acquisition of
the relevant assets until the time when such assets are
ready to be brought into use.
Depreciation of operating equipment is calculated using
the straight-line method over its estimated economic
lifetime as follows:
IT, 4-8 years
•
• Vehicles, 5 years
• Furniture, fittings and equipment, 5-10 years
Leasehold improvements are depreciated over the
expected economic lifetime, however maximally the
term of the lease.
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.
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
impairment and write-downs.
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:
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
• 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 (ROU asset) and
a corresponding 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
contains lease components, Tryg allocates the
consideration in the contract to each lease component
based on their relative stand-alone prices.
Right-of-use 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 prop-
erty and investment property. The Group’s owner-occupied
properties consist of an office building in Høje Taastrup
and a small number of holiday homes. The remaining
properties are classified as Investment property.
are measured in the statement of financial position
at their revalued amounts, being the fair value at the
date of revaluation, less any subsequent accumulated
depreciation and impairment losses. Revaluations
are performed regularly to avoid material differences
between the carrying amounts and fair values of owner-
occupied property at the statement of financial position
date. The fair value is calculated based on 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.
Increases in the revalued carrying amounts of owner-
occupied property are recognised in the revaluation
reserve in equity. Decreases that offset previous
revaluations of the same asset are charged against
the revaluation reserves directly in equity; all other
decreases are charged to the income statement.
Costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, when
it is probable that future economic benefits associated
with the item will flow to the Group, and the cost of
the item can be measured reliably. Ordinary repair
and maintenance costs are expensed in the income
statement when incurred.
Depreciation on owner-occupied property is calculated
based on the straight-line method and using an
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.
Owner-occupied property
Owner-occupied property is property that is used in
the Group’s operations. Owner-occupied properties
Investment property is recognised at fair value. Fair value
is based on market prices, adjusted for any differences in
Contents – Financial statements
99
NotesAnnual report 2019 | Tryg A/S | 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 model and recent prices in the market.
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.
ured using the equity method so the carrying amount
of the investment represents the Group’s proportionate
share of the enterprises’ net assets.
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 subsequently adjusted with the value in use of the
return on prepayments and deposits and adjustments
for specific property issues such as vacant premises or
special tenant terms and conditions. Cf. note 15.
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
applies to the salvage value. Write-down is performed if
impairment has been demonstrated.
Goodwill is tested annually for impairment, or more
often if there are indications of impairment, and
impairment testing is performed for each cash-
generating unit to which the asset belongs. The present
value is normally established using budgeted cash flows
based on business plans. The business plans are based
on past experience and expected market developments.
Subsidiaries with a negative net asset value are
recognised at zero value. Any receivables from these
enterprises 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
translation of the items in the income statement using
average exchange rates for the period unless they
deviate significantly from the transaction day exchange
rates. Income and costs in domestic enterprises
denominated in foreign currencies are translated using
the exchange rates applicable on the transaction date.
Statement of financial position items of foreign subsidi-
aries are translated using the exchange rates applicable
at the statement of financial position date.
When 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 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
Equity investments in associates
Associates are enterprises in which the Group has sig-
nificant influence but not control, generally in the form
of an ownership interest of between 20% and 50% of the
voting rights. Equity investments in associates are meas-
Profit after tax from equity investments in associates
is included as a separate line in the income statement.
Income is made up after elimination of unrealised intra-
group profits and losses.
Associates with a negative net asset value are measured
at zero value. If the Group has a legal or constructive
obligation to cover the associate’s negative balance,
such obligation is recognised under liabilities.
Investments
Investments include financial assets at fair value which
are recognised in the income statement. The classification
depends on the purpose for which the investments were
acquired. Management determines the classification of
its investments on initial 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
managed 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 ownership. Financial assets are recognised and
derecognised on a trade date basis, the date on which
the Group commits to purchase or sell the asset.
The fair values of quoted securities are based on stock
exchange prices at the statement of financial position
date. For securities that are not listed on a stock
exchange, or for which no stock exchange price is quoted
that reflects the fair value of the instrument, the fair value
is determined using valuation techniques. These include
the use of similar recent arm’s length transactions,
reference to other similar instruments or discounted
cash flow analysis.
Derivative financial instruments and hedge accounting
The Group’s activities expose it to financial risks, includ-
ing changes in share prices, foreign exchange rates,
interest rates and inflation. Forward exchange contracts
and currency swaps are used for currency hedging of
portfolios of shares, bonds, hedging of foreign entities
and insurance statement of financial position items.
Interest rate derivatives in the form of futures, forward
contracts, repos, swaps and FRAs are used to manage
cash flows and interest rate risks related to the portfolio
of bonds and insurance provisions. Share derivatives in
the form of futures and options are used from time to
time to adjust share exposures.
Derivative financial instruments are reported from
the trading date and are measured in the statement of
financial position at fair value. Positive fair values of
derivatives are recognised as derivative financial instru-
ments under assets. Negative fair values of derivatives
are recognised under derivative financial instruments
under liabilities. Positive and negative values are only
offset when the company is entitled or intends to make
net settlement of more financial instruments.
Contents – Financial statements
100
NotesAnnual report 2019 | Tryg A/S |
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
instrument and, if so, the nature of the item being
hedged. The Group designates certain derivatives as
hedges of investments in foreign entities. Changes in
the fair value of derivatives that are designated and
qualify as net investment hedges in foreign entities
and which provide effective currency hedging of the
net investment are recognised in other comprehensive
income. The net asset value of the foreign entities
estimated at the beginning of the financial year is
hedged 90-100% by entering into short-term forward
exchange contracts according to the requirements of
hedge accounting. Changes in the fair value relating to
the ineffective portion are recognised in the income
statement. Gains and losses accumulated in equity are
included in the income statement on disposal of the
foreign entity.
Reinsurers’ share of provisions for insurance contracts
Contracts entered into by the Group with reinsurers under
which the Group is compensated for losses on one or more
contracts issued by the Group and that meet the classifica-
tion requirements for insurance contracts are classified as
reinsurers’ share of provisions for insurance contracts. Con-
tracts 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 carrying amount of the reinsurance asset to its
recoverable amount. Impairment losses are recognised
in the income statement.
Receivables
Total receivables comprise accounts receivable from
policyholders and insurance companies as well as other
accounts receivable. Other receivables primarily contains
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 a clear indication of asset impair-
ment is observated. The reservation entered is assessed as
the difference between the carrying amount of an asset and
the present value of expected future cash flows.
Other assets
Other assets include current tax assets and cash at bank
and in hand. Current tax assets are receivables concerning
tax for the year adjusted for on-account payments and
any prior-year adjustments. Cash at bank and in hand is
recognised at nominal value at the statement of financial
position date.
Prepayments and accrued income
Prepayments include expenses paid in respect of
subsequent financial years and interest receivable.
Accrued underwriting commission relating to the sale
of insurance products is also included.
Equity
Share capital
Shares are classified as equity when there is no obligation
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 rec-
ognised using the average monthly exchange rates for the
period. Any resulting differences are recognised in Other
comprehensive income. When an entity is wound up, the
balance is transferred to the income statement.
The hedging of the currency risk in respect of foreign
entities is also offset in other comprehensive income in
respect of the part that concerns the hedge.
Contingency fund reserves
Contingency fund reserves are recognised as part of retained
earnings under equity. The reserves may only be used when
so permitted by the Danish Financial Supervisory Author-
ity and when it is for the benefit of the policyholders. The
Norwegian contingency fund reserves include provisions
for the Norwegian Natural Perils Pool and security reserve.
The Danish and Swedish provisions comprise contingency
fund provisions. Deferred tax on the Norwegian and Swedish
contingency fund reserves is allocated.
Dividends
Proposed dividend is recognised as a liability at the time of
adoption by the shareholders at the annual general meet-
ing (date of declaration).
Own shares
The purchase and sale sums of own shares and dividends
thereon are taken directly to retained earnings under
equity. Own shares include shares acquired for incentive
programmes and share buyback programme.
Proceeds from the sale of own shares in connection with
the exercise of share options or matching shares are taken
directly to equity.
Subordinate loan capital
Subordinate loan capital is recognised initially at fair value,
net of transaction costs incurred. Subordinate loan capital
is subsequently stated at amortised cost; any difference
between the proceeds (net of transaction costs) and the
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
risks at the statement of financial position date is reported
as premium provisions. Premium provisions are gener-
ally calculated according to a best estimate of expected
payments throughout the agreed risk period; however, as a
minimum as the part of the premium calculated using the
pro rata temporis principle until the next payment date.
Adjustments are made to reflect any risk variations. This
applies to gross as well as ceded business.
Contents – Financial statements
101
NotesAnnual report 2019 | Tryg A/S | Claims and claims handling costs are expensed in the
income statement as incurred based on the estimated
liability for compensation owed to policyholders or third
parties sustaining losses at the hands of the 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’
com-pensation 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
currently 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’ compensation
insurance is calculated on the basis of a mortality corres-
ponding to the G82 calculation basis (official mortality table).
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.
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 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
increase 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 inflation
assumptions are used, with annuities for the insured
being indexed based on the workers’ compensation
index. An inflation curve that reflects the market’s
inflation expectations plus a real wage spread is used as
an approximation to the workers’ compensation index.
For other lines of business, the inflation assumptions,
because present only implicitly in the actuarial 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
Employee benefits
Pension obligations
The Group operates various pension schemes. The
schemes are funded through contributions to insurance
companies or trustee-administered funds. In Norway,
the Group operates a defined-benefit plan. In Denmark,
the Group operates a defined-contribution plan.
A defined-contribution plan is a pension plan under
which the Group pays fixed contributions into a separate
entity (a fund) and will have no legal or constructive
obligation to pay further contributions. In Sweden, the
Group complies with the industry pension agreement,
FTP-Planen. FTP-Planen is primarily a defined-benefit
plan regards the future pension benefits. Försäkrings-
branschens 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 are based on
input Cf. note 20.
The capital value of the pension obligations less the fair
value of any plan assets is recognised in the statement
of financial position under pension assets and pension
obligations, respectively, depending on whether the net
amount is an asset or a liability.
In case of changes to assumptions concerning the
discounting factor, inflation, mortality and disability or
In case of changes to the benefits stemming from the
employees’ employment with the Group so far,
a change is seen in the actuarially calculated capital
value which is considered as pension costs for previous
financial years. The change is recognised in the
results 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.
In special instances, the employee can enter into a
contract with the Group to receive compensation for loss
of pension benefits caused by reduced working hours.
The Group recognises this liability based on statistical
models.
Income tax and deferred tax
The Group expenses current tax according to the tax
laws of the jurisdictions in which it operates. Current tax
liabilities and current tax receivables are recognised in
the statement of financial position as estimated tax on
the taxable income for the year, adjusted for change in
tax on prior years’ taxable income and for tax paid under
the on-account tax scheme.
Deferred tax is measured according to the statement
of financial position liability method on all timing
differences between the tax and accounting value of
assets and liabilities. Deferred income tax is measured
Contents – Financial statements
102
NotesAnnual report 2019 | Tryg A/S |
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 the statement of financial position date, and it is
probable that future economic benefits will flow out of
the Group. Provisions are measured at the best estimate
by management of the expenditure required to settle
the present obligation. Provisions for restructurings
are recognised as obligations when a detailed formal
restructuring plan has been announced prior to or at the
statement of financial position date at the latest to the
persons affected by the plan.
Own insurance is included under Other provisions. The
provisions apply to the Group’s own insurance claims
and are reported when the damage occurs according
to the same principle as the Group’s other claims
provisions.
Debt
Debt comprises debt in connection with direct insurance
and reinsurance, amounts owed to credit institutions,
current tax obligations, debt to group undertakings and
other debt. Derivative financial instruments are assessed
at fair value according to the same practice that applies
to financial assets. Other liabilities are assessed at
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. The External investors share of Kapitalforeningen
Tryg Invest relates to shares, bonds and investment
properties.
Cash flow statement
The consolidated cash flow statement is presented using
the direct method and shows cash flows from operating,
investing and financing activities as well as the Group’s
cash and cash equivalents at the beginning and end of
the financial year. No separate cash flow statement has
been prepared for the parent company because it is
included in the consolidated cash flow statement.
Cash flows from operating activities are calculated
whereby major classes of gross cash receipts and gross
cash payments are disclosed.
Cash flows from investing activities comprise payments
in connection with the purchase and sale of intangible
assets, property, plant and equipment as well as finan-
cial 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.
Other
The amounts in the report are disclosed in whole num-
bers of DKKm, unless otherwise stated. The amounts
have been rounded and consequently the sum of the
rounded amounts and totals may differ slightly.
Contents – Financial statements
103
NotesAnnual report 2019 | Tryg A/S |
Income statement for Tryg A/S
(parent company)
2019
2018
DKKm
2019
2018
DKKm
Note
1
Investment activities
Income from Group undertakings
Administration expenses in connection with investment activities
Total investment return
2
Other expenses
2,903
-5
2,899
-74
1,783
-1
1,782
-65
Profit/loss before tax
2,825
1,717
3
Tax
18
14
Profit/loss for the year
2,843
1,731
Proposed distribution for the year:
Dividend
Transferred to reserve for net revaluation according to the equity method
Transferred to retained earnings
2,553
865
-575
2,843
1,996
347
-612
1,731
Note
Statement of comprehensive income
Profit/loss for the year
Other comprehensive income
2,843
1,731
Other comprehensive income which cannot subsequently
be reclassified as profit or loss
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
-76
19
-57
32
-19
4
18
-39
-5
1
-4
-50
49
-11
-12
-16
2,804
1,715
Contents – Financial statements
104
Annual report 2019 | Tryg A/S |
Statement of financial position for Tryg A/S
(parent company)
DKKm
2019
2018
DKKm
2019
2018
Note
4
5
Assets
Intangible assets
Equity investments in Group undertakings
Total investments in Group undertakings
1
12,234
12,234
1
11,407
11,407
Total investment assets
12,234
11,407
Note
Equity and liabilities
Equity
Debt to Group undertakings
Other debt
Total debt
12,085
11,334
163
7
170
76
12
88
6
Current tax assets
Other
Total other assets
Total prepayments and accrued income
17
1
18
2
14
0
14
1
Total assets
12,255
11,422
Total equity and liabilities
12,255
11,422
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
Contents – Financial statements
105
Annual report 2019 | 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).
Statement of changes in equity
(parent company)
DKKm
Share
capital
Revaluation
reserves
Retained
earnings
Proposed
dividend
Non-controlling
interest
Equity at 31 December 2018
1,511
2,412
6,912
499
2019
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
Non-controlling interest
Total changes in equity in 2019
Equity at 31 December 2019
865
-39
826
0
0
1,511
826
3,238
-575
-575
1
-42
27
-589
6,323
2,553
2,553
-2,040
514
1,013
Equity at 31 December 2017
1,511
2,081
7,541
1,483
2018
Profit/loss for the year
Other comprehensive income
Total comprehensive income
Dividend paid
Purchase and sale of own shares
Issue of share options and matching shares
Total changes in equity in 2018
Equity at 31 December 2018
347
-16
331
331
2,412
-612
-612
-27
10
-629
6,912
1,996
1,996
-2,980
-984
499
0
0
1,511
0
0
0
1
1
1
0
0
0
Total
11,334
2,843
-39
2,804
-2,040
1
-42
27
1
751
12,085
12,616
1,731
-16
1,715
-2,980
-27
10
-1,282
11,334
Contents – Financial statements
106
Annual report 2019 | Tryg A/S |
Notes
DKKm
1
Income from Group undertakings
Tryg Invest A/S
Tryg Forsikring A/S
2
Other expenses
Administration expenses
Remuneration for the Executive Board is paid partly by Tryg A/S and partly
by Tryg Forsikring A/S and is charged to Tryg A/S via the cost allocation.
Refer to Note 6 for the Tryg Group for a specification of the audit fee.
Average number of full-time employees for the year
3
Tax
Reconciliation of tax costs
Tax on profit/loss for the year
Tax adjustments, previous years
Effective tax rate
Tax on profit/loss for the year
Adjustment of non-taxable income and costs
2019
2018
DKKm
2019
2018
9
2,895
2,903
-74
-74
9
17
1
18
%
22
1
23
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
1
1,782
1,783
-65
-65
13
14
0
14
%
22
0
22
1
0
1
0
0
0
1
8,995
0
8,995
2,412
2,866
-2,039
3,238
0
1
1
0
0
0
1
6,995
2,000
8,995
2,081
1,768
-1,437
2,412
Carrying amount at 31 December
12,234
11,407
Contents – Financial statements
107
Annual report 2019 | Tryg A/S |
Notes
DKKm
5
Equity investments in Group undertakings (continued)
Name, registered office and activity
Ownership
share in %
Profit/loss
Equity
2019
Tryg Invest A/S, Ballerup
Tryg Forsikring A/S, Ballerup
2018
Tryg Invest A/S, Ballerup
Tryg Forsikring A/S, Ballerup
100
100
100
100
9
2,895
1
1,782
20
12,214
11
11,395
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
2019
2018
14
17
1
-14
17
0
16
17
14
0
-17
14
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
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 2019.
Contents – Financial statements
108
Annual report 2019 | Tryg A/S |
DKKm
10
Related parties
Tryg A/S has no related parties with a controlling influence other than the parent company, Trygheds-
Gruppen smba. Related parties with a significant influence include the Supervisory Board, the Executive
Board and their members’ related family.
Specification of remuneration
2019
Supervisory Board
Executive Board b)
Risk-takers c)
Base salary Share-based
variable
Number of
persons
incl. car
allowance
salary a)
14
4
1
19
9
27
0
36
0
5
0
5
Cash
variable
salary
0
0
0
0
Pension
Total
0
7
0
7
9
39
0
48
a) Total expenses recognised in 2019 for matching shares and conditional shares allocated in 2019
and previous year.
For matching shares and conditional shares allocated to Executive Board in 2019 see Section
’Corporate governance’ in Management review.
b) Barbara Plucnar Jensen took up the position as CFO on 1 March 2019.
c) Risk-takers in Tryg A/S includes only one employee, wherefore salary and pension is not presented.
The amounts are included in note 27 for the Group.
Of which retired
Supervisory Board
Executive Board
Risk-takers
Number of
persons
Severance
pay
2
0
0
2
0
0
0
0
DKKm
10
Related parties (continued)
2018
Supervisory Board
Executive Board b)
Risk-takers
Number of
persons
Base salary
incl. car
allowance
Share-based
variable
salary a)
Cash
variable
salary
13
4
4
21
8
25
6
39
0
3
0
3
0
3
0
3
Pension
Total
0
6
1
7
8
37
7
52
a) Total expenses recognised in 2018 for matching shares and conditional shares allocated in 2018
and previous year.
Of which retired
Number of
persons
Severance
pay
Supervisory Board
Executive Management
Risk-takers
1
1
0
2
0
0
0
0
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 the Tryg Group 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.
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
109
Annual report 2019 | Tryg A/S |
Notes
2019
2018
DKKm
10
Related parties (continued)
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 2019 Tryg Forsikring A/S paid Tryg A/S DKK 2,039m and Tryg A/S paid
TryghedsGruppen smba DKK 1,224m in dividends.
Intra-group trading involved
- Providing and receiving services
- Intra-group accounts
18
163
13
76
The intra-group trading is primarily against Tryg Forsikring A/S.
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
110
Annual report 2019 | Tryg A/S |
Q4 2019 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
2019
Q3
2019
Q2
2019
Q1
2019
Q4
2018
Q3
2018
Q2
2018
Q1
2018
Q4
2017
Download a further detailed version of the presenta-
tion at tryg.com/uk > investor > Downloads > tables
3,059
494
3,055
458
3,010
593
2,897
406
2,679
531
2,309
467
2,257
483
2,221
253
2,203
394
67.9
2.5
70.4
13.4
83.8
84.9
69.2
1.8
71.0
13.9
84.9
85.4
64.8
1.8
66.5
13.8
80.3
83.1
70.7
1.6
72.3
13.8
86.1
89.8
64.2
2.4
66.6
13.5
80.1
83.0
1,079
105
1,083
154
1,062
196
1,050
111
1,044
270
69.1
3.8
72.8
17.4
90.3
93.6
987
73
86.1
-5.7
80.4
12.1
92.6
100.7
70.6
-2.3
68.3
17.4
85.7
94.3
1,032
204
59.7
11.6
71.3
8.9
80.2
92.1
60.8
3.4
64.2
17.5
81.7
89.7
994
130
62.0
14.2
76.2
11.1
87.2
93.5
67.6
4.0
71.6
17.8
89.4
98.4
966
89
76.0
5.2
81.2
9.6
90.8
105.3
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
79.2
9.6
88.9
95.0
72.4
2.2
74.6
14.0
88.6
92.4
955
171
61.9
3.6
65.4
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
111
Annual report 2019 | 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 2019 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
2019
Q3
2019
Q2
2019
Q1
2019
Q4
2018
Q3
2018
Q2
2018
Q1
2018
Q4
2017
364
90
53.1
0.8
53.8
21.5
75.3
104.8
-11
0
422
54
70.5
0.3
70.8
16.5
87.3
98.8
-9
0
392
61
66.5
1.3
67.8
16.6
84.4
98.2
-6
0
343
26
76.4
0.3
76.7
15.7
92.4
102.9
-28
-6
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
5,479
5,583
5,451
5,228
5,053
4,696
4,571
4,420
4,488
762
198
-20
940
705
70.3
1.2
71.5
14.6
86.1
90.7
870
-29
-62
779
599
67.8
2.7
70.5
13.9
84.4
89.4
979
57
-57
979
782
63.6
4.3
67.9
14.2
82.1
87.4
626
353
-49
930
757
71.8
2.2
74.0
14.0
88.0
95.1
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
Contents – Financial statements
112
Annual report 2019 | Tryg A/S |
Q4 2019 Geographical segments
DKKm
Q4 2019
Q4 2018
2019
2018
DKKm
Q4 2019
Q4 2018
2019
2018
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
3,341
544
118
69.2
1.6
70.8
12.7
83.5
-3.5
74.07
1,636
153
44
70.0
4.2
74.2
16.8
91.0
-2.7
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
13,204
2,606
712
10,430
2,007
710
64.7
1.7
66.4
13.7
80.1
-5.4
2,650
75.80
6,472
469
283
73.7
5.1
78.8
14.4
93.1
-4.4
1,083
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
a) Includes Danish general insurance and German, Dutch, Austrian and Finnish guarantee insurance.
The gross premium income related to those branches amounts to DKK 78m (DKK 54m in 2018).
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
70.14
512
66
93
79.2
-11.2
68.0
19.2
87.2
-18.2
-10
1
Gross premium income
5,479
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
Combined ratio
Run-off, net of reinsurance (%)
Number of full-time employees,
continuing business at 31 December
762
198
-20
940
256
70.3
1.2
71.5
14.6
86.1
-4.7
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
70.62
2,120
169
205
74.0
2.0
75.9
16.1
92.0
-9.7
419
-54
-6
21,741
3,237
579
-188
3,628
1,194
68.3
2.6
70.9
14.2
85.1
-5.5
72.67
2,073
94
-9
82.3
-1.7
80.6
14.6
95.2
0.4
402
-65
-126
18,740
2,766
-332
-172
2,262
1,221
67.4
3.3
70.7
14.4
85.1
-6.5
4,151
4,027
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 transaction costs
for the aquirement of Alka.
Contents – Financial statements
113
Annual report 2019 | Tryg A/S |
Other key figures
2019
2018
2017
2016
2015
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
9.42
9.42
9.42
301,700
301,954
301,954
197.50
40.05
4.9
6.80
1.65
21.0
4,151
5.73
5.73
5.74
301,743
302,043
302,043
163.90
37.56
4.4
6.60
28.6
4,027
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
3,373
3,264
6.91
6.91
6.74
282,316
285,073
285,101
137.40
34.16
4.0
6.00
20.4
3,359
Contents – Financial statements
114
Annual report 2019 | 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
(80%)
(Denmark)
TI Real Estate KL
(73%)
(Denmark)
TI Short Term
Placement KL
(Denmark)
Tryg Forsikring
(Branch Austria)
Tryg Forsikring
(Branch Netherland)
Tryg Real Estate
Invest Norway AS
(Norway)
Respons
Inkasso AS
(Norway)
Tryg Real Estate
Invest Holding A/S
(Denmark)
Tryg Real Estate
Fund 2 A/S
(Denmark)
Tryg Real Estate
Fund 1 A/S
(Denmark)
Tryg Real Estate
Invest Denmark A/S
(Denmark)
Group chart at 1 January 2020. Companies and branches are wholly owned
by Danish owners and domiciled in Denmark, unless otherwise stated.
Company
Branch
Contents – Management’s review
Forsikrings-
Aktieselskabet
Alka Liv II A/S
(Denmark)
Tryg
Ejendomme A/S
(Denmark)
115
Annual report 2019 | 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 CFA Society Denmark.
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, Netherlands, Austria 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
assets, tax asset and proposed dividend.
Price/Earnings
Share price
Earnings per share
Relative run-off result
Run-off gains/losses net of reinsurance divided by
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
Solvency requirements for insurance companies is-
sued 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
116
Annual report 2019 | 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 25% 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 12% 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 4% 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 5% of total premium income
and covers various types of liability, including claims incurred by a company
arising from the conduct of its business or in connection with its products,
and third-party liability for professionals.
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
117
Annual report 2019 | 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 30-31, and in Note 1 on page
58-66, 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
118
Annual report 2019 | Tryg A/S |