ubs – nordic financial services conference 10 september...

UBS Nordic Financials Conference1

UBS – Nordic Financial Services Conference 10 September 2009 - Christine Bosse, CEO


Agenda

The strength of the top line

The search for growth

'Normalised' capital needs

Looking to the 'post-crisis' landscape


Strength of the top line - TrygVesta versus market

TrygVesta The market

Premium growth in %

if…

Codan

TrygVesta

GjensidigeTrygVesta in

local currency

-4

0

4

8

12

2004 2005 2006 2007 2008 H1 09

Gross premium incomeDKKm

16,021

16,606

17,323

15,705

2005 2006 2007 2008


New Markets add growth

New and old markets contribution to premium growth 2005 - 2009

SE+FI

DK+NO

DK+NO SE+FI

Growth contribution

3.6 3.5 4.00.3 2.0

0.8 1.3

4.0

1.62.6

0

2

4

6

8

10

2005 2006 2007 2008 2009e

Denmark & Norway New Markets Moderna


Moderna adds growth and creates break-even

Combined ratio Sweden (incl. Moderna in Q2 09)

0

50

100

150

200

250

300

Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09

Gross premiums (incl. Moderna)DKKm

67

5864

5445

3727

179

31

Q3 06 Q4 06 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09

322

ModernaDistribution channel Sweden

Customer centre

Call centre

Bancassurance

Car/boat dealers

Insurance brokers

Affinity groups

Real estate agents

Nordea online bank

E-business/self-service

Franchise

Moderna =

http://www.modernaforsakringar.se/default.asp?LID=2

6

2.1%

6.2%

12.4%

7.5%

8.0%9.6%

17.3%

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

1,000,000

2001 2002 2003 2004 2005 2006 2007 2008

Number of insured in Danmark TrygVesta's market share

Health Care insurances add growth

Development in number of health care insured in Denmark


Self-service – adds growth

• Target to sell 10,000 policies in Denmark in 2009

• 1.7m visitors to home page January to July

• 142,000 visitors to ”My-Page” in January to July. Increased by over 150% this year

• Branding campaign not launched yet

• 180,000 signed up for electronic communication (DK+NO)

• Web solution (“Bedrifts-net”) launched for commercial and corporate customers. 25% penetration target by end 2009

No commissions or compensation in the sales process

No expenses in back-office and mailing

0

50

100

150

200

250

300

350

January February March April May June July0

200

400

600

800

1,000

1,200

1,400

1,600

Monthly sale (LHS) Accumulated sale (RHS)

No. ofpolicies

No. ofpolicies


and new dimensions….

From the customers’ point of view From the employees’ point of view

SM

S

My-page


3.03.53.6

5.0

1.30.8

-2

0

2

4

6

8

10

2007 2008 outlook2009

E-2010 E-2011 E-2012

Denmark & Norway Sweden & Finland

4.4%4.8%

8.0%

E2010-2012

3-5%

Growth outlook 2010-2012

Full year effect from Moderna

adds 1%

Macro uncertainty will reduce growth outlook

• volume decline within workers’ compensation

due to unemployment

• fewer new cars sold, retention increase

• fewer new houses

Growth in local currency

Number of unemployed in Denmark and Norway

0

40,000

80,000

120,000

160,000

2003 2004 2005 2006 2007 2008 2009

Denmark Norway

%


Recently implemented price increases add growth

DenmarkJan 09 Apr 09 Jul 09

House building New product

Health Care 15% 10%

Accident 15%

Travel 20%

Agriculture 10%

Norway Jul 07 Jan 08 Jul 08 Jan 09

House building 2% 6% 1.8% 7.4%

Motor 4.8% 1.6% 1% 5.0%

SwedenApr 09 Jun 09

Motor 15%

House building 8%

House content 5%

Accident 5%

Finland Apr 09

Motor 9%

House content 11%

Accident 11%

Holiday house 10%

Travel 10%

Motorcycle 13%

TrygVestaTotal effect of price increases*

2009 2010

DKK 245m DKK 360m

*Including effect of price increases from 2008


and the reason behind the price increases

Claims ratio

71.370.5

70.170.6

74.7

H1 05 H1 06 H1 07 H1 08 H1 09

Combined ratio

88.587.6

91.9

87.487.1

H1 05 H1 06 H1 07 H1 08 H1 09

Expense ratio

16.7 16.4 15.8 15.3 15.0

0.5 0.5 1.2 1.7 2.2

H1 05 H1 06 H1 07 H1 08 H1 09

17.2 16.9 17.0 17.0 17.2

Denmark & Norway Finland & Sweden

The marketCombined ratio

if…

Codan Operating

ratio

TrygVesta

Gjensidige

Codan "CR"

84

88

92

96

2004 2005 2006 2007 2008 H1 09

TrygVesta

TrygVesta TrygVesta

Lower interest

impacts 2%


Behind the curve but catching up

Houses Denmark

90

100

110

120

130

140

150

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Average premium Average risk

Private cars Norway

90

95

100

105

110

Q105

Q205

Q305

Q405

Q106

Q206

Q306

Q406

Q107

Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

2005 2006 2007 2008 2009

Premium increases:

Houses Denmark:

New product Q4 2008

up 11%

Privat cars Norway:

1 Jul 07: 4.8%

1 Jan 08: 1.6%

1 Jul 08: 1.0%

1 Jan 09: 5.0%

1 Jul 09: 6.6%

Development since 2005…… …… and more recently

2005 2006 2007 2008 2009

Private cars Norway

90

100

110

2008 2009

Houses Denmark

90

100

110

2008 2009


Search for growth in the Nordic region

NorwayEUR 4.4bn

TrygVesta, 18.0%

If, 28.9%

Other, 13.9%

Sparebank1, 9.9%

Gjensidige,29.3%

FinlandEUR 3.4bn

TrygVesta, 1.5%Pohjola,

23.4%

If, 25.3%Other, 20.6%

Fennia, 10.6%

Tapiola, 18.6%

DenmarkEUR 6.1bn

TrygVesta, 20.8%

If, 5.0%

Alm. Brand, 10.5%

Topdanmark, 19.6%

Other, 26.8%

Codan, 13.8%

Alka, 3.5%

Sweden EUR 5.5bn

Vesta (incl. Moderna),

2.6%

Länsforsk., 29.2%

If, 19.7%

Other, 17.2%

Codan, 17.1%

Folksam, 14.2%

Top 4

86%

Top 4

65%

Top 4

80%

Top 4

78%

Source: FNH.no

Source: F&P and company figures Source: forsakringsforbundet.com

Source: FKL.fi


'Normalised' capital needs Looking to the 'post-crisis' landscape


Solvency II and political changes

Political changes

Future

2012-14


Capitalisation

Buffer

Financial crisis creates upward pressure

Individual solvency

Rating Capital

Capital strategyConsiderations

1970’s 2005 2007 2012

• S&P RBC model

• Individual capital assessment

• QIS models

Capital planning instruments

Regulatory Capital

• S&P RBC model

• Internal model (ALM)

• Solvency II standardised model

• Solvency I • S&P CAR model

TAC S&P

Dividend policy:

• 50% of net earnings

• share buy backs in addition

Self-imposed buffer

Capital needed to

obtain target rating

Capital needed to

fulfill strategy

Regulatory

requirements


Financial crisis

Operational risk

Capital add-ons

Quantitative impact Solvency II impact

Solvency II issues

Modeling and data

Modeling and dataLarge vs.

small companies

Large vs. small

companies

Tier capital structure

Tier capital structure

Capital planning – a moving target

Internal modeling

Diversifica-

tion

S&P RBC “A” model: 52 - 56% of premiums

QIS 4 TrygVesta: 38% of premiums

Solvency I : 16% of premiums


Strong capital base

6,000

7,000

8,000

9,000

10,000

11,000

12,000

2006

Q1 07

Q2 07

Q3 07

2007

bef

ore

payo

ut

2007

afte

r pay

out

Q1 08

Q2 08

Q3 08

2008

bef

ore

payo

ut

2008

afte

r pay

out

Q1 09

Q2 09

Target capital (A- level) Buffer (5%) Surplus capital

DKKm


Post crisis landscape

Fewer players

Fewer players

Increased capital

requirements

Increased capital

requirements

Underwriting discipline

Underwriting discipline

Try to stay at the cutting

edge…

Try to stay at the cutting

edge…


Summary

Strong growth outlook for the coming years

Strong take on improving profitability in all markets

Solid capital position and prepared for the future

Peace of mind for investors


Questions please

ubs – nordic financial services conference 10 september...

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