Tryg A/S Ord New

Good morning, everybody. My name is Gianandrea Roberti. I'm Head of Investor Relations at TREC. We published our full year results earlier this morning, and I have here with me Johan Brammer, Group CEO, Allan Theysen, Group CFO, and Michael Carsten, Group CTO, to present the figures. 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, Johan.

Thanks a lot, Gian, and I will dive directly into slide three with the financial highlights. TRYG is today reporting an insurance service result for Q4 of 1.654 billion versus 1.472 billion last year, primarily driven by an improved underlying performance and tight cost control. The insurance service result was impacted by higher than normal weather claims and a substantial drop in interest rates in the quarter. Premiums growth was 6.3% for the group, once again driven by a good development in the private and commercial segments. In this context, price increases play a significant role and remain key to continue to fight off inflation. The group underlying claims ratio improved by 50 basis points while private deteriorated modestly in line with previous quarters. The private performance is impacted by an increase in repair costs for auto spare parts in Norway and Sweden, driven by currencies, but also a slight increase in motor frequencies flagged previously and as expected in a post-COVID normalization. This has been taken care of with price increases and tightening conditions, and we'll get back to that later on in the presentation. The investment result ended up at 146 million, with positive developments in the free and match portfolio, somewhat offset by a negative value adjustment in the inflation swap in a quarter characterized by a substantial drop in inflation expectations. The asset mix has remained largely unchanged. The pre-tax result is just below 1.4 billion for the quarter and around 5 billion for the full year, and this drives a return on owned funds, the so-called roof, of just about 30% in the quarter and approximately 25% for the full year. Implicitly, Troik pays a Q4 DPS of 1.85, and by the end of January, we expect to complete the 1 billion buyback launched after the Q3 results. The solvency ratio ended at 197 at the end of 2023, a comfortable level supportive of additional future capital repatriations. We're pleased to note that the ordinary dividend per share for 2023 is around 6% higher than before the acquisition of RSA and subsequent capital raise. And with that, I'm turning to page 4, where we zoom in on the customer satisfaction for the quarter. Customer satisfaction improved from 85 to 86 Q&Q, despite a year with numerous weather-related events and a difficult situation for many of our customers. The improvement in the customer satisfaction in a challenging year reflects Truex's dedication and persistent effort to keep our customers at the center of everything we do. We continue to work with all aspects of the customer journey, And especially our focus on customer touchpoints and processes was the driving elements for the uplift. And with that, I turn to page 5, where we unfold the growth in the ISR for the quarter. The group insurance service result totaled 1.654 in Q4, almost 200 million higher than the corresponding quarter last year. On this slide, we're showing the reported ISR for our three main segments, be it private, commercial, and corporate. And as always, there are a number of moving parts impacting the reported ISAs. In general, the higher insurance service result is driven by an improved underlying performance and tight control on cost. Looking at the main moving parts in the quarter, we highlight on the positive side an improved underlying performance, a good and predominantly price-driven growth, a higher runoff result, and lower large-end weather claims in total, and finally lower costs. And on the negative side, we need to highlight the lower interest rates and the unfavorable currency movements in the quarter. On page 6, we revisit the progress on the synergies as always. And TRYG is for the quarter reporting 84 million of synergies, bringing the accumulated total to 711 million, out of the targeted 6.50 in 2023. It is clear from that that we are well on track towards the targeted 900 million in 2024, despite headwinds from currencies. Approximately 30% of this quarter's synergies stem from expenses, more than 45% stem from claims and procurement, and around 25% from commercial activities. Many of the initiatives in this quarter are actually a continuation and essentially full-run impact of what we've mentioned already in previous quarters. We, as you can see, find the synergy realization for admin and distribution. And in this quarter, we continue to benefit from the previously mentioned termination of marketing spend and contracts primarily in Sweden. Procurement continues to benefit from better contracts and is also positively impacted from sales of items related to large claims through an online auction, which also has a positive ESG angle. This approach stems from Sweden and is now being fully implemented across the TRYK group. In claims, we also continue to further benefit from improved processes for fraud and recourse. And the commercial synergies are positively impacted by price increases in Norway and Sweden, but also by increased cross-setting of Moderna's niche products into the Trocansa customer base. An adverse currency development in both the SEC and NOC has, as mentioned previously, created some headwinds in the last couple of years when it comes to the synergy realization, but our commitment to the communicated targets remains very firm. And with that... I'm turning to the next section on insurance revenue and I'll move to slide 8 in the presentation. TRK is reporting a top line growth of 6.3% or around 6% when adjusted for the customer conversion in Sweden as part of the RSA transaction and a technical adjustment of a partner agreement. The conversion in Norway is now finalized and did not have any impact this quarter. Likewise, we expect that the conversion in Sweden will not have any impact in 2024. Growth was predominantly driven by the private and commercial segments and continued to be driven mostly by price increases to mitigate claims inflation. Profitability continues to be our key priority and we are pricing accordingly. The private segments reported a top-line growth of 7.7%, predominantly driven by price adjustments. And as mentioned, we've been converting the Moderna portfolio in Sweden into Trygghensas and also saw regulation for a big partner agreement. Adjusted for these two factors, the growth was approximately 7% for the private segment. The commercial segment had a good top-line growth of 4.2%, also predominantly driven by price adjustments, and the corporate segment had a modest top-line growth in line with expectations of around 2.5%. The growth in the corporate segment was primarily impacted by the continued rebalancing of the portfolio and further pricing initiatives. With that, I turn to page 9 on average prices. Average insurance prices are continuing to increase across products and countries as a consequence of our focus on rates to mitigate inflation. It is important to stress that the numbers in this slide relate to average prices and not to rate increases, as it does not include any risk-mix changes. For instance, housing content insurance in Sweden increased by 2.6% only, and the low increase comes as a result of a risk mix change to more content insurance, which has a significantly lower average price. Average premium increases are in particular high in Norway to mitigate inflation and drive profitability improvements as needed. It is worth highlighting that these charts display the impact on earned premiums. This means that the full impact of price adjustments in general will take 12 to 24 months before they will be reflected fully in these charts. With that, I turn to page 10, where we see that the retention levels are in line with recent quarters. We generally see a slight drop in retention for selected areas compared to the same period last year. This follows our focus on mitigating inflation through firm price adjustments. The development is in line with our expectation and in line with our experience from the past periods in time where there's been similar needs for price adjustments. We do see the highest impact on retention within the segments of customers with short duration. And in that context, it's important to remember that customers with short durations in general are the least profitable customers. And with that, I turn it over to you, Mikke.

Thank you, Johan. And we now turn to slide 12 and the underlying claims development. The group underlying claims ratio improved 50 basis points broadly in line with previous experience. Commercial and corporate segment improvements offset a modest deterioration in the private segment. The private underlying claims ratio deteriorated 30 basis points, which is primarily driven by selected claims trends, which I will come back to in the next slide. 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 results and a combined ratio at or below 82. Turning to slide 13 and the inflation development. Starting on the left-hand side, there are no big changes in our view of inflation and no changes in our commitment to increase prices to offset the inflation development. It's important to stress that although inflation pressure has slowed down, in particular in Denmark, and trends are going in the right direction, inflation remains a major focus area for us. On the right hand side, we add some more nuance to the situation in motor. First of all, it's important to note that motor inflation comes from three different sources. First, normal inflation, which gives us higher average claims. Second, currency effects in Sweden and Norway, as mentioned previously, has an effect on average cost of spare parts from weak currencies. And third, claims frequency increases. Year-on-year, claims frequencies have increased between 5 and 9 percent depending on country, somewhat tilted to low-cost claims. We expect claims frequencies to increase in short-tailed motor comprehensive as an effect of higher traffic density and vehicle risk mix changes, for instance higher share of electrical cars. In the latter parts of 2023 we can see that claims frequency increase is in the high end of our expected range, not least for glass claims. The total claims inflation is dealt with through price increases and changes in deductibles, and our overall commitment to handle inflation remains firmly unchanged. Turning to slide 14, and here we show the development of large claims, weather claims, runoffs and interest rates used to discount the claims reserves. Weather claims were higher than normal in Q4, while large claims were below normal. The full year 2023 has been challenging in volatile items where both large and weather claims ended up above our long-term normal levels. We maintain our guidance of 800 million net annual expectations for reasons I will come back to in the next slide. The runoff result was 3% both for Q4 and the full year. which is at the low end of our 3% to 5% range, guided for in the 2024 strategy. As usual, the runoff result is impacted by many things, including the inflation spike in 2022. In Q4, we saw a drop in interest rates following the reduced forward-looking inflation expectations, and this drives a lower discount rate of 2.6%, nearly a percentage point lower than at the level in Q3. Turning to slide 15 and the long-term development in volatile items of large and weather claims, which are illustrated on a net basis. As it is evident from the slide, 2022 and 2023 has been unusual in terms of large claims, and this has been driven by specific claims that make up a high share of the total. and we continue to believe in our guided 800 million net level. Weather claims has been a major focus area for us, in particular during the second half of 2023. We expect most years to be below the guided level and specific years to be above. In 2023, we were affected by several events and we can also note that the pattern of events gave little reinsurance relief. And we continue to believe that a level of 800 million Danish is to be expected. It's important to stress that we will always monitor development in large and weather claims, scrutinized trends and patterns. It should be remembered that we run a relatively short tail business and therefore if we need to adjust something, we will push it through our pricing and can therefore adjust things relatively quickly. Turning to reinsurance on slide 16. The reinsurance renewal can be divided into two stories, one for property and one for other programs. For the CAT program and all other smaller programs, renewal was done at largely unchanged conditions and unchanged premiums. For property reinsurance, the market continues to be hard with premium increases as a consequence. The hardening was in line with our expectations and the price increases are passed on fully to our commercial customers. We have also chosen to increase our property retention to 200 million Danish, following our larger size from the Treganza acquisition. Finally, our reinsurance panels continue to be at a very high credit quality. And with that, I pass over to you, Gian.