Tryg A/S Ord New

Good morning, everybody. My name is Gianandrea Roberti. I'm a Head of Investor Relations at TREC. We published our Q2 results earlier this morning, and I have here with me Johan Kisten-Brammer, Group CEO, Barbara Pluckner-Jensen, Group CFO, and Michael Carsten, Group CTO, to present the report. I would like to remind you that each participant should ask one question at a time to give time to all participants to the call. With these words, over to you, Johan.

Thank you so much and welcome everybody. I will go straight to page 3, where TRYK is today reporting a satisfactory insurance service result of 1.759 billion DKK with a single large corporate claim hitting us for approximately 225 million, while a continuously adverse SEC and NOC currency development is impacting our figures with approximately 100 million in Q2. We see a positive development in the top line driven primarily by the private and commercial segments and improved underlying performance including the RSA synergies and high interest rates which support the insurance service result positively. The underlying claims ratio for the group improved by 60 basis points broadly in line with recent experience, with profitability initiatives in the commercial and corporate segment supporting the performance, while the private segment reported a small deterioration in line with recent quarters. The result of the investment activities was a positive of 53 million, primarily driven by positive performance from equities and fixed income asset classes. Trygg is, and I'm happy to announce that, paying a quarterly dividend per share of 1.85 at the same level of Q1 and in line with our quarterly dividend policy and reports a healthy solvency ratio of 199, supportive of future capital repatriation outlooks. Turning to page four on customer highlights, focus on customers are in times like this paramount to us and therefore we continue to work with all parts of the customer journey. This includes both touch points and the more process and relationship driven elements. In this quarter, we can see that the focus on onboarding processes for new customers has resulted in strong improvements for the KPIs in the private businesses in both Denmark and Norway. Turning to page 5 on the insurance service results, we show in this slide the insurance service result of Truks three business units being private, commercial and corporate versus the corresponding quarters of 2022. Please note that runoff movements may impact the reported results for the three different business units and additionally a large claim in the corporate segment is impacting the figures for approximately 225 million in Q2. The insurance service result walk is showing the main moving parts versus Q2 last year. Positives are the higher interest rates, the improved underlying performance and the business growth. Negatives are the higher large and weather claims, significantly adverse currency developments as well as lower runoff. The private insurance service result is reduced by 150 million with 75 million stemming from lower run-offs, 20 million stemming from deterioration in the underlying, and the remaining part coming primarily from the Norwegian Nature Apparel Pools claim in Halden in Norway. The commercial insurance service result is up 50 million, primarily driven by underlying improvement, while lower expenses added another approximately 20 million. The corporate insurance service result is down 160 million, primarily due to the single arts claim of 225 million, which is partly offset by an improved underlying performance. Importantly, following the acquisition of Codanoa and Trocanza, please note that our earnings are significantly more diversified, both in terms of geographies and products. Turning to page 6 on the RSA synergies, Troik is reporting 77 million in Q2, bringing the accumulated total synergies to 547 out of the targeted 900 by the end of next year. Approximately 30% of the quarterly synergies came from expenses, almost 50% came from claims and procurement, and 20% came from commercial activities. The most important activities on extracting cost synergies were the termination of KoldeNorway IT contracts during May, including a number of IT employees. A significant focus on procurement in Sweden has resulted in improved terms with many of our suppliers, and in addition to that an increased use of recycled parts are yielding good savings. In Sweden we have also consolidated claims teams allowing for the insourcing of services that were previously outsourced. On the more commercial side, we continue to increase prices, primarily in the corporate segment, whereas the pregnancy product in Denmark is experiencing very good customer interest in its premium product version. With that, I'll turn to the next section on page 8. TRYG is reporting a revenue growth of 3.9% or around 5% adjusted for customer conversions in Norway and Sweden as part of the RSA transaction. Growth was primarily seen in private and commercial areas and primarily driven by price increases to match ongoing claims inflation. We continue to have a strong focus on profitability and pricing accordingly. The private segment continues to have a fairly high growth of 4.4%, primarily driven by price adjustments. We have, as you know, been converting and repricing portfolios in Sweden from our original Swedish business Moderna to Trygg Hansa and in Norway from Kolde Norway to Trygg Norway. The growth would have been approximately 6% adjusting for this, which is in line with our expectations. The commercial segment had a growth of 4.9%, which adjusted for the reclassification of portfolio from commercial to corporate in Norway was approximately 6%. We saw the highest growth in Denmark driven by both price adjustments and also a net inflow of customers, while growth was more modest in Norway and Sweden. Turning to the corporate segment, it reported a negative growth of 2.4%, which adjusted for the reclassification of portfolio between commercial and corporate in Norway was approximately negative minus 4. We are repricing as well as reducing exposure to certain parts of the corporate business, in particular the international property and liability program, which was the main reason for the drop in premiums. Turning to page 9 on pricing, we continue to monitor inflation developments very closely and work in a disciplined manner with procurement to mitigate this development as well as with continued repricing to protect our book of business. Leaving aside the general macroeconomic situation, currency developments in Sweden and Norway have an impact particularly on imported automobile spare parts. Price adjustments are in general at a high level for both house and motor, reflecting the need we see in the different markets. Price adjustments are roughly between 4 and 11% for the different lines of business across geographies. It is worth highlighting that these graphs show the impact on earned premiums. This means that the full impact of price adjustments in general will take 12 to 24 months to fully show in the P&L. Turning to page 10 on customer retention, in line with more recent quarters, we generally see a broadly stable yet slightly sliding impact on the retention rates in both private and commercial. This shows our focus on mitigating inflation through pricing, and the development is in line with experiences in the past from periods where there was a need for adjusting prices similar to now. We see the highest impact of repricing within the second of one product customers, which in general is the most price sensitive and hence shop around more frequently between different insurance providers. In that context, it is worth noting that customers with one product only, in general, are the least profitable customers. And with that, I will pass it over to you, Barbara.

Over to you, Micke, sorry. Thank you, Johan. And we turn to slide 12 and the underlying development. The group underlying claims ratio improved by 60 basis points broadly in line with recent experience and the trend of the last three years. Profitability actions including both pricing and portfolio initiatives in the commercial and corporate businesses are supporting the performance while the private segment deteriorated modestly by 30 basis points also in line with recent experience. In private, we can note a negative profitability impact from travel insurance, an area where we are driving price adjustments, as well as increased inflation from motor spare parts in Sweden and Norway, significantly above Danish experience following weak currencies. Turning to slide 13, we give a little bit more nuance to inflation, pricing and our currency movements impact. Needless to say, claims inflation has moved upwards since the start of 2022, driven by a turbulent geopolitical and macroeconomic environment. Recently, inflation numbers are starting to come down in Denmark but remain high in Norway and Sweden. Regardless, inflation and actions against inflation remain a top priority for us. We continue to work hard with pricing and procurement agreements to mitigate the impact of this development. And it's important to remember that wage inflation generally is a better impact indicator than just headline consumer price index development. On the left hand side of this slide we show an overview of the price adjustments for the two main product categories measured against expected claims inflation. And going to the right hand side, here we show an example of the interlink between inflation and currency development, where we notice a sharp increase in car repair costs in Sweden and Denmark, clearly driven by the weak currencies. This is an area where we spend around 1.7 billion Danish annually, and where prices are up 9% from a year ago. Naturally, portfolio actions are being taken to mitigate the development. Turning to slide 14, large and weather claims was unfavorable in Q2 2023 versus Q2 2022 and also versus normalized expectations. As previously announced, in this quarter we experienced a single large claim in the corporate business that hit our full retention of 150 million Danish and had a total expected cost of approximately 225 million Danish, including reinstatement premium. As previously communicated, we note here as well that we increased our retention level for single large claims exposure at start of 2022 from 100 to 150 million Danish, linked to now being a significantly larger entity post the acquisition of Trygghansa and Koda Norway. In Norway, a landslide hit the town of Halden, resulting in a large claim under the Norwegian Natural Perids Pool. The total cost for the pool is estimated at approximately 900 million Norwegian, and Trygg has a market share just below 11% of the pool. The discount rate in Q2 is significantly higher than Q2 2022, but close to the Q1 level as interest rates did not move much this quarter. Finally, our runoff was 3.2%, in line with previous runoff guidance. And turning to slide 15, the expense ratio was 13.3% and at a slightly lower level than the updated target of 13.5% under IFRS 17. As a reminder, the 13.5% target compared to 14% previously is driven by educational and development costs moved from insurance operating expenses to the line other income and costs. The positive development was supported by RSA synergies of approximately 25 million Danish related to admin and distribution and we continue to have a strong focus on the expense level as this is a competitive advantage for us supporting our market position. And by that I hand over to you Barbara.