Tryg Q3 2011

By reporting a technical result of DKK 491 million for the third quarter of 2011, Tryg continued improving its insurance operations during a period characterised by cloudbursts and volatile financial markets. Fewer large and medium-sized claims also had a positive impact on the result.

The technical result of DKK 491 million is a significant improvement compared to the result for the same period last year which was DKK 74 million. For the first nine months of the year, the result is DKK 1,263 million compared to DKK 114 million for the first three quarters of 2010.

The result before tax was DKK 274 million for the third quarter compared to DKK 369 million for the third quarter of 2010. The result for the first three quarters is DKK 1,122 before tax compared to DKK 429 million for the same period of 2010.

The key figure, the combined ratio, which is the sum of claims net of ceded business and expenses against net earned premiums, improved to 91.5 as against 99.2 for the third quarter of 2010. For the entire nine-month period, Tryg’s combined ratio moved from 99.9 in 2010 to 93.0 this year.

Positive trend is maintained
- The technical result for the third quarter confirms the progress we have seen during entire 2011, Tryg’s CEO Morten Hübbe says. It is satisfactory to see that we are able to maintain the positive trend also during a quarter in which the cloudburst event struck Copenhagen causing damage of historic dimensions.

- Moreover, the result was positively affected by fewer large and medium-sized claims. However, this trend is coincidental and it is not expected to continue.

- Tryg's medium-term target is to deliver a 20% return on equity after tax corresponding to a combined ratio of 90. The continued improvement of the result shows that we are moving in the right direction to reach this target, Morten Hübbe adds.

Focus on preventing damage caused by cloudbursts
The intense cloudburst over Copenhagen on 2 July resulted in claims expenses of approximately DKK 1.1 billion. As a result of reinsurance, Tryg’s expenses amounted to DKK 190 million of which DKK 90 million is the premium for reinstatement of the reinsurance cover.

- More than 22,000 reported claims have resulted in some unusually busy months for our employees. Right after the cloudburst, efforts were focused on limiting the scope of damage, ensuring alternative accommodation for the customers hardest hit and providing dehumidifiers and similar equipment. Following this, we focus on repairing the damage and preventing new damage, Morten Hübbe says.

Claims handling will take time
- The cloudburst in Copenhagen is unusual in the way that many commercial customers were hit this time. Claims caused by cloudburst are complex and the claims handling process may stretch over an extended period of time. By the end of the third quarter, half of the private customer claims and 30% of the commercial customer claims had been settled.

We would like to use this opportunity to thank those customers who have been subject to a long claims handling process for their patience. We do our best to give all our customers the fastest service we can possibly provide.

We expect that the current trend towards larger and more frequent claims due to cloudbursts will continue in the years ahead. Thus, this creates an extra need for prevention and advice and we are currently working on a number of initiatives to limit future claims caused by cloudburst. In addition to precautionary measures, we will also adjust the insurance terms and conditions by, for example, increasing deductibles and adding limitations on cover of contents placed in basements. Both our customers and we have a common interest in preventing future damage as far as possible.

We take the challenge of climate change very seriously and the problem can only be solved in joint cooperation with the municipalities, the state, insurance companies and citizens. We are ready to contribute with our knowledge and assist the involved authorities, Morten Hübbe says.

Premium growth of 6.7%
Tryg’s premium income rose in the third quarter to DKK 5.289 million corresponding to an increase of 8.2% in DKK and 6.7% in local currency terms. The growth is most significant in the business area Private which rose by 9.3% as a result of price hikes and continued growth in the business volume in Sweden and Finland.

All three business areas – Private, Commercial and Corporate – have contributed positively to the profitability improvement.

Private, which constitutes 54% of Tryg’s total premium income, succeeded in improving the technical result from DKK 211 million in the third quarter of 2010 to DKK 263 million despite the cloudburst in July. Combined ratio fell by 1.1 percentage points to 91.5. In addition, customer loyalty went up, delivering a retention rate of 90.5 in Denmark and 86 in Norway.

Commercial which serves small and medium-sized companies also reports a significantly improved result from a loss of DKK 57 million in the third quarter of 2010 to a positive result of DKK 44 million this year. The combined ratio also improved from 106.2 to 96.3 due to fewer large and medium-sized claims than expected. The level of costs is still too high and will be reduced additionally via, among other initiatives, streamlining of work processes.

Corporate turned a loss of DKK 82 million in the third quarter of 2010 into a positive result amounting to DKK 184 million. The combined ratio fell from 106.9 to 87.0. The positive trend is, among other reasons, due to a reduced number of large and medium-sized claims compared to normal years and a significantly higher level of run-off than in 2010.

Adverse investment result
The net investment result for the third quarter was negative with DKK 205 million, primarily due to negative yield on the share portfolio of DKK 260 million which was affected by the general negative trend on the equity markets.


For further details, please contact:
CCO Troels Rasmussen, phone +45 30 35 30 70, troels.rasmussen@tryg.dk or
IR Director Ulrik Andersson, phone +45 21 71 30 18, ulrik.andersson@tryg.dk