Tryg A/S Ord New

Good morning, everybody. My name is Gianandrea Roberti. I'm Head of Investor Relations at TREC. We published our Q3 results earlier this morning, and I have here with me Johann Kirsten Brammer, Group CEO, Barbara Pluckner-Jensen, Group CFO, and Mikael Karsten, Group CTO, to present the report. I would just like to remind everybody to ask one question at a time to allow the highest number of questions from participants. With these words, over to you, Johann.

Thanks a lot, and I will kick straight into it on page 3. Tryggve is reporting a 1.513 billion insurance service result with significantly higher than normal weather and loss claims. Weather claims in particular were the highest on a net basis in the last 15 years, totaling 611 million, or around 450 million higher than an average expected Q3. The storm, called Hens, hit Scandinavia, causing damages for approximately 300 million. We had different cloudbursts, plus a smaller storm and other events impacting Scandinavian travelers in southern Europe, adding to a difficult summer. When normalizing the quarters for expected large-end weather claims, the Q3 2023 is indeed up around 150 million versus last year. While the headline combined ratio at 83.8 was impacted by the Q3 weather situation, the underlying claims ratio for the group continued to improve by 50 basis points broadly similar to the last quarters. Commercial and corporate profitability initiatives offset a small deterioration in the private segment in line with the previous quarters. The overall investment result was a positive of 265 million, held by a good result in the match portfolio in a difficult quarter. The market generally sold off risky assets after an additional rate hike from the ECB in September, and it is worthwhile to notice that TOEIC has cut a quarter of its equity exposure during Q3, reinforcing our low-risk approach to investment activities. We are paying a 1.85 dividend per share in Q3, in line with Q2, up 17% year-on-year. And on top, we are launching an extraordinary buyback supported by a healthy solvency ratio of 194 at the end of the quarter. The strong solvency and robust organic capital generation are supportive of the extraordinary buyback. Please note that the 194 solvency ratio already deducts the dividend and the buyback. And with that, I'm turning to page four on the customer highlights for the quarter. Focus on customers remain paramount and therefore we continue to work with all aspects of the customer journey. This regards touchpoints, processes and relationship driven elements. And in this particular quarter, customers did experience longer waiting time than usual due to extraordinary weather related events as mentioned. These events gave TRYK the opportunity to show our customers that we are there to help and guide them safely when the unexpected happens, which has contributed to a continued high level of customer satisfaction in the quarter. With that, I'm turning to page five. And in this slide, we show the group insurance service result walk from the reported level in Q3 last year. On the positives, we note the higher interest rates and improved underlying performance, good premiums growth and a slightly higher runoff result. And on the negatives, we note significantly higher weather claims and the impact from currencies in SEC and NOC, totaling approximately 100 million in Q3. We also show the reported ISR for the three business divisions, where the primary explanation of the differences in the segments are weather claims and runoffs. A comment previously made, yet important to reiterate, is the fact that the Group has a significantly more balanced earnings profile following the acquisition of RSA Scandinavia, with three very strong legs in the three Scandinavian markets. And with that, I move to the following page 6 on the RSA synergies. Troik reports 80 million of synergies in Q3. bringing the accumulated total to 627 million out of the targeted 650 in 2023 and 900 next year. Approximately 30% of this quarter's synergies stem from expenses, almost 50% from claims and procurement, and the remaining 20% from commercial activities. 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 actually yielding good savings. In claims, improved internal processes and further education of claims handling teams has resulted in increased efficiency in areas like fraud and recalls. The commercial synergies were driven by a strong performance on cross-selling of Moderna's niche products and upselling on TurkHansa's products and coverages, but was also indeed impacted by continued price increases, predominantly in the corporate segment. With that, we're changing gears and going into this insurance revenue and portfolio, and I'm turning to page 8. Troik reports a top-line growth of 4.4%, or around 5% adjusted for repricing and conversion in Norway and Sweden as part of the RSA transaction. Growth was predominantly driven by private and commercial segments, and mostly attributed to price increases to mitigate the ongoing claims inflation. We continue to have a strong focus on profitability, and we are pricing accordingly. The private segment reported a top-line growth of 5%, predominantly driven by price adjustments. We have, as you know, been converting the Moderna portfolio in Sweden into Trygg Hansa and converting Coda Norway's portfolio to Trygg in Norway. And adjusted for this, growth was approximately 6% in private. The commercial segment had a good top-line growth of 4.1%, predominantly driven by price adjustments. The reclassification of portfolio continued to have an impact on the growth figures and adjusted for this, the growth would have been approximately 5%. The corporate segment had a modest topline growth of 1% and somewhat impacted by reclassification also. Adjusted for this, growth was approximately negative 1%, which is in line with expectations. We are repricing as well as reducing exposures to certain parts of the corporate business, in particular international property and liability, which is the predominant reason for the lower growth. With that, I turn to page 9. We continue to monitor inflation developments very diligently, and we work with procurement to mitigate inflation as well as continuing to reprice to reach our targets. Leaving aside the general inflationary situation, adverse currency developments in Sweden and Norway have an impact, and in particular on imported mobile spare parts. Price adjustments are roughly between 4 and 6% for the different lines of business across countries, and it is worth highlighting that these graphs on these slides display the impact on earned premiums. This means that the full impact on price adjustments in general will take 12 to 24 months. When we go to page 10 on customer retention, the retention levels are in line with recent quarters. We generally see a slight drop in retention for private compared to the same period last year and a stable retention level in commercial. This follows our focus on mitigating inflation through price adjustments. The development is in line with expectations and in line with our experience from previous periods where there was a need for price adjustments. We see the highest impact of our price adjustments within the segment of one product customers, which are in general the more price sensitive and tend to change more often insurance provider. In that context, it is worth mentioning that customers with one product in general are the least profitable segments. With that, I turn to page 11, which is a more strategic overview of the rebalancing of the corporate portfolio. At the Capital Market Day in November 2021, we announced the rebalancing of the corporate portfolio with a target to reduce the exposure to properties outside the Nordics by 50% and to U.S. liability by 70%. It's important to remember that the exposure to U.S. liability was low as a starting point, but we are pleased to share that we have achieved these targets as per Q3 2023. Our overall ambition is to have a corporate business that is probably slightly smaller, but more long-term profitable, with less large claims of volatility, and we are moving in this direction. Despite CMD targets being achieved ahead of time, there's ample room to continue this journey. And as a reminder, we have a combined ratio target of 90% for the corporate segment, with much lower runoff contribution compared to the previous periods. And with that, I'll finalize this section. I'll hand it over to you, Mikki.

Thank you, Johan. And we move on to slide number 13. And as Johan mentioned, the group underlying claims ratio improved by 50 basis points, broadly in line with previous experience. The improvement is driven by commercial and corporate segments, while there is a modest worsening in the private segment of 30 basis points. The deterioration in private is mainly coming from increased claims costs for automobile spare parts, in particular in Norway and Sweden, where negative currency development have added to inflation. We continue to expect an improved underlying claims ratio moving into 2024, which will support the profitability targets of 7.2 to 7.6 billion insurance service result and a combined ratio at or below 82. Moving on to slide 14. Q3 has been an extraordinary quarter when it comes to both weather claims cost but also the number of weather events we have experienced. In addition to the financial consequences, this has caused a lot of operational pressure to our claims departments where they have been handled in a great way and helping customers in difficult times. The main weather event was storm Hans that hit Scandinavia in August, resulting in total claims cost of approximately 300 million. In addition, several cloudburst storms and storms were recorded during the quarter and Scandinavian travelers were hit by hail storms in southern Europe. In total, our weather event claims cost in Q3 is 611 million, which is roughly 450 million more than expected. Moving on to slide 15. Having experienced a quarter like this, it's natural to ask ourselves, is this a new novel when it comes to weather? But this is an area where we need to look at the development over a longer time series. We expect 800 million of weather claims annually, and we should remind ourselves that weather claims are not normally distributed, but rather the typical year would be below the forecast and some of the observations would be clearly higher. Looking at our weather claims during the last 15 years on a quarterly basis, first from a gross perspective which is the graph on top, we can see that Q3 is the third most expensive quarter during this period. However, when looking at the net development, i.e. after reinsurance, which is the bottom graph, this quarter is clearly the most expensive that we have experienced. This is partly due to our own choice of increasing the CAT reinsurance retention for a single event, which we've done over time as we've become a bigger group. but it's mainly due to the fact of having such high number of weather events in a single quarter. All in all, we continue to be comfortable with our weather claims expectation, but obviously this is something that we follow closely, not only looking at historical numbers, but also factoring in future development using both internal models and external input. It's also important to stress that we run a relatively short tail business in terms of cat exposure and if needed we can adjust prices relatively quickly to factor in those changes. Turning to slide 16. Mitigating claims inflation continues to be a top priority for us. We can see official statistics of inflation coming down but from high levels and it's too early to draw any conclusions and we continue to mitigate inflation with price increases. We introduced this slide in the previous quarter to particularly illustrate the impact from currency on the automobile spare parts. In last quarter, the average claims cost for windshields and spare parts increased by 9% in Sweden and Denmark. And in this quarter, we see an increase of 11%. We continue to benefit from our procurement agreements and reprice to mitigate the inflation driven by adverse claims and currency development. Turning to slide 17. In this slide, we comment as usual on the overall level of large and weather claims, the runoff result and the level of the discount rate. As stated before, it's been a quarter with weather claims way above our expected level of 160 million, instead totaling over 600 million. Large claims were also higher than normal at 292 million, driven from normal volatility and no particular large claims standing out. For both large and weather claims that means that this is a challenging year for us in our volatile items where we now have exceeded our annual expected levels. Having said this we stand firm on our annual guidance for weather and large claims at 800 million for the respective items but needless to say we stress our customer pricing from these events and run full re-underwriting processes where needed. The runoff result was 3.3% in the quarter, slightly higher than the comparison quarter in 2022, and in line with the guidance of runoff between 3 and 5%. Finally, the discount rate was 3.4%, a move upwards of 60 basis points from Q2, partly driven by slightly higher interest rates, but also by a change in the expected cash flow for claims payments. And by that, I turn over to you, Barbara.