Tryg result still improving

The result before tax for the second quarter was DKK 487 million compared to DKK 173 million for the second quarter of 2010. The result before tax for the first six months of 2011 was DKK 848 million compared to DKK 60 million for 2010.

The technical result for the second quarter of 2011 was DKK 496 million compared to DKK 394 million in 2010. The second quarter is often the best quarter of the year for Nordic insurance providers - and this was also the case for Tryg in the second quarter of 2010.

The combined ratio – claims expenses and costs divided by premium income – was 91.5 for the second quarter of 2011 compared to 92.5 for the same period in 2010. The corresponding ratios for the first six months were 93.7 against 100.4 for 2010.

The expense ratio for the second quarter was 17.0 compared to 17.3 in 2010. For the first half of 2011, the corresponding ratios were 16.8 against 17.3.

We are on right track
- We are very pleased to see that the initiatives we have implemented have the intended effect, CEO Morten Hübbe says. Even though the first six months were impacted by many winter claims in 2010, the second quarter clearly shows that we are heading in the right direction.

- Our continued strive to reduce claims costs by improving procurement and giving our customers better advice on loss prevention has started to pay off. In addition, we also see the impact of the price increases decided in 2009 and 2010. 90% of the affected customers have been notified. This resulted in a minor decline in private customer renewals in the first quarter. However, the renewal rates started to increase again in the second quarter. We can see that the ones who have terminated their insurances are mainly the most unprofitable ones. So far, 60% of the implemented price increases have had a positive impact on the accounts. The remaining 40% will be earned during 2011 and 2012, Morten Hübbe says.

- Among our three business areas, Commercial has clearly improved its combined ratio from 105.2 in the second quarter of 2010 to 96.5 in the second quarter of 2011. The level is still too high and the work on improving profitability, including streamlining work processes, continues.

The Corporate market is still characterised by fierce competition, and the combined ratio of our Corporate business increased from 84.5 to 87.4. Although Tryg has avoided participating in an unsustainable price competition, the competition has had an impact on the level of earnings.

The combined ratio of our Private business area is 91.4; which is almost similar to the equivalent quarter last year. In Private, it is particularly travel insurance and Danish house insurance that must be monitored closely. However, major wage increases within the Norwegian labour market and general claims inflation are also followed closely, Morten Hübbe emphasises.

Third quarter starts with heavy rainfall
Extremely intense rainfall over Copenhagen of historic proportions gave the worst possible start to the third quarter.

By mid-August, approximately 18,500 claims had been reported to Tryg and it is assessed that Tryg’s total costs before reinsurance will be approximately one billion Danish kroner. However, Tryg still receives claim reports, and therefore the final number of claims and claims costs may be even higher. Consequently, it is the most expensive insurance event caused by heavy rainfall in Tryg’s history. Tryg’s retention for own account is DKK 100 million, while the rest is covered by Tryg’s reinsurance programme. The price of reinstatement of the reinsurance programme will depend on the final claims costs; however, it is expected to be approximately DKK 90 million. This means that Tryg's total costs are expected to be approximately DKK 190 million which will show in the accounts for the third quarter.

However, we expect that the improvement of the underlying business will have an influence on the third quarter despite the claims caused by the heavy rainfall.

Tryg suggests dialogue
- The extent of damage and the frequency of extreme weather conditions seem to be a good starting point for the entire insurance industry to initiate a dialogue with the responsible public authorities concerning general measures to get Denmark equipped for the new, extreme weather conditions. We are ready to contribute with our knowledge within that field.

There are probably several players who would be interested in participating in the financing of infrastructure improvements. On the other hand, this would require political will to find solutions to repay this type of investment. It is a political issue; however, the scope and frequency of weather related damage do necessitate an untraditional approach, Morten Hübbe says.

The tragedy in Norway
The horrible and unbelievable terror attack in Norway on 22 July – which was the worst event in Norwegian history since the Second World War – has also affected Tryg’s customers. It is very important for Tryg to provide the most flexible and empathic service to the customers and families affected by the tragedy to help them through these difficult times.

Specialised employees – many of them with experience from the tsunami disaster in 2004 – have done their utmost to give our customers their best support. Tryg has employed psychologists who have helped our employees and supported each employee in their work.

For further information, please contact:
CCO Troels Rasmussen, mobile +45 30 35 30 70 or
Investor Relations Director Ulrik Andersson, mobile +45 21 71 30 18