The TrygVesta insurance group reported growth in excess of expectations in 2009. Gross earned premiums in the four Nordic countries increased by 9.6% in local currency terms (5.5% in DKK terms) to stand at DKK 18.3bn as against DKK 17.3bn in 2008. The pre-tax profit also exceeded the company’s expectations, standing at DKK 2.6bn compared with DKK 1.35bn in 2008, thanks to strong investment returns.
High customer loyalty
“Against the backdrop of a recession, we regard both our growth rates and our profit as satisfactory. We reported growth in excess of the industry generally,” said Group CEO Stine Bosse.
“We can look back at a year of premium growth and good customer retention rates in all four markets. The acquisition of Moderna in Sweden in the spring of 2009 contributed significantly to growth and profitability alike, but even excluding Moderna, premium income was up by 4.7% in local currency terms.
The profit for the year was composed of a greatly improved investment return and a lower technical result due to higher claims expenses compared with 2008. A large part of the increased claims expenses was attributable to higher claims for Danish house and contents insurances because of an increased number of break-ins and policyholders having much more expensive household effects following the consumer spending boom in 2004-2007.
Costs kept steady
During two years of economic turmoil we have focused on maintaining TrygVesta’s financial robustness and resources. During the past eighteen months, we have shown restraint with respect to new appointments, focusing on in-house rotation instead. We have not had to make major cost adjustments. Our focus on process enhancements and Lean has enabled us to lower our expense ratio from 17.3 in 2008 to 16.9, and by a full percentage point to 15.4 in the mature markets of Denmark and Norway.
Healthy operations and strong capital resources are the foundation for sustained profitable growth. We have the necessary financial versatility should new opportunities arise in the market, Stine Bosse emphasised.
Profit of DKK 2bn after tax
The technical result of DKK 1.55bn was lower than the DKK 2.38bn earned in 2008. The gross investment result for 2009 was DKK 2.5bn, which was attributable to rising equity prices and higher prices of mortgage bonds and corporate bonds. The return was 6.6% as against 3.5% in 2008. Investment income after transfer of technical interest amounted to DKK 1.1bn against a loss on investment activities of DKK 1.0bn in 2008 due to the financial crisis.
The profit before tax increased to DKK 2.6bn in 2009 from DKK 1.35bn in 2008. The effective tax rate was lower in 2009 than in 2008, and the profit after tax was DKK 2.0bn in 2009 compared with DKK 0.85bn in 2008.
The combined ratio (the sum of claims and gross expenses) was 92.3 against 89.1 in 2008.
The combined ratio was strongly impacted by the lower level of interest rates and rising claims expenses under house and contents insurances in Denmark.
Distribution of 90%
Based on the profit for the year the Supervisory Board proposes that TrygVesta pays cash dividends of DKK 1.0bn, equal to DKK 15.50 per share (DKK 6.50 in 2008). To this should be added a share buy back programme of approximately DKK 0.8bn scheduled to start after the 2010 annual general meeting and to continue until the announcement of the full-year financial statements for 2010. This brings the total distribution to about 90% of the profit for the year.
Outlook for 2010
For 2010, TrygVesta expects premium growth of 3-4% in local currency terms. The technical result is expected to be DKK 1.3–1.7bn before run-off (reversed provisions) compared with DKK 841m in 2009. The investment result is expected to be DKK 0.2–0.3bn, bringing the profit before tax to DKK 1.5–1.9bn.
Satisfied customers
Customers’ views of TrygVesta were characterised by great loyalty again in 2009. The renewal rate for private customers in Denmark was stable at around 91, which means that customers stay with TrygVesta for an average of 11 years. In Norway, the total market share was increased from 17.9% to 18.1% despite intensified competition. The renewal rate dropped by 1.8 percentage points to 85.1.
TrygVesta seeks to enhance claims handling on an ongoing basis, aiming continuously to expand the peace-of-mind delivery to customers and provide high quality at competitive prices. In 2009, a market and satisfaction survey by Enalyzer asked Danish insurance customers how satisfied they were with the claims handling of their insurance company. TrygVesta topped the survey among the four biggest companies in Denmark.
Being a Nordic peace-of-mind provider, TrygVesta will in 2010 strengthen its marketing activities by the establishment of a shared brand platform.
Detailed information relating to our 2009 performance is set out in the profit announcement released earlier today.
Further information:
Please contact Troels Rasmussen, Chief Communications Officer, tel. +45 30 35 30 70 or
Ole Søeberg, IRO, tel. +45 40 30 00 04.
About TrygVesta
TrygVesta wants to be perceived as the leading peace-of–mind provider of the Nordic region. We aim to prevent concerns from overshadowing the everyday lives of our customers. In 2009, our more than 4,300 employees ensured peace of mind for more than 2.7 million private customers and more than 140,000 businesses. Generating gross earned premiums of DKK 18.3bn in 2009, we are the second-largest general insurer in the Nordic region. We are the largest player in Denmark and Norway’s third largest player. We have operated our rapidly growing activities in Finland and Sweden since 2002 and 2006, respectively. You can also visit us at www.trygvesta.com