Release Date: July 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tryg A/S (FRA:T2V1, Financial) reported an insurance revenue growth of 3.9%, driven by price adjustments across all business units.
- The combined ratio for the quarter was 76.8%, likely the best combined ratio for a quarter ever, driven by strong Swedish performance.
- The investment result was DKK347 million, supported by positive returns on most asset classes, especially equities and covered bonds.
- Tryg A/S (FRA:T2V1) is paying a quarterly dividend per share of DKK1.95 and reports a very healthy solvency ratio of 195%.
- Customer satisfaction score improved to 86 in Q2 2024, up from 85 in Q1, driven by efficient processes and customer communications.
Negative Points
- The corporate segment reported a revenue decline, in line with the strategy to reduce exposure to this segment.
- The underlying claims ratio for the private segment deteriorated by 40 basis points.
- Weather claims were DKK104 million in Q2, slightly above expectations of DKK80 million for the quarter.
- The Norwegian private lines segment still faces profitability challenges, despite some improvements.
- The growth in Sweden was slightly below expectations, impacted by inflation and macroeconomic conditions.
Q & A Highlights
Q: Can you discuss the underlying motor claim frequency dynamics in Norway and Denmark, and what you think the underlying drivers of this frequency are?
A: The frequency development in Q2 has been stable and in line with expectations. The price increases shown are on an earned basis, and we expect an improvement in the underlying loss ratio in private lines, particularly in Norway, as we continue to implement pricing actions and other initiatives. (Mikael Karrsten, CTO)
Q: Could you clarify the impact of weather-related claims on the frequency and pricing in Norway?
A: Weather effects in Q1 were significant, but Q2 has been more stable. The rate increases will continue to have a positive impact on earnings as the year progresses. Deductibles have also been adjusted, for example, in Sweden, where standard deductibles increased by 20%. (Mikael Karrsten, CTO)
Q: What is the competitive situation in Sweden, and should we expect any changes in growth levels?
A: The growth levels in Sweden are slightly below other regions, but we are focused on profitability. The competitive environment in the Nordic region remains stable, and we are confident in our brand and business strength in Sweden. (Johan Brammer, CEO)
Q: Can you comment on the significant improvement in the combined ratio in Sweden?
A: The 60.2% combined ratio in Sweden is driven by an absence of large claims, significant run-off, and strong performance in the PA book. Adjusting for these factors, the combined ratio is still mid-70%, which is strong. (Johan Brammer, CEO)
Q: How are customer retention levels affected by price hikes and changes in deductibles?
A: Retention levels have remained stable despite price increases and changes in deductibles. These changes are market-wide, not just specific to Tryg, and we do not expect significant impacts on retention. (Johan Brammer, CEO)
Q: What are the main factors behind the deterioration in the Norwegian business?
A: The main factor is the motor segment, with frequency and severity inflation impacting results. We are taking significant actions, including rate increases and deductible adjustments, to improve profitability. (Mikael Karrsten, CTO)
Q: Can you provide more details on the impact of deductible changes on the loss ratio?
A: Deductible changes support a reduction in claims frequency and average claims cost. While we do not guide on specific numbers, these changes are part of our broader profitability initiatives. (Mikael Karrsten, CTO)
Q: How do you view the severity inflation in motor claims, and is the worst behind us?
A: Severity inflation has been a factor, but we believe the worst is behind us. We are confident that our pricing models account for this, and we are seeing stabilization. (Mikael Karrsten, CTO)
Q: What are your thoughts on the customer behavior in private lines after price hikes and higher living costs?
A: Customer retention has remained stable, and we do not expect significant impacts from price hikes or deductible changes, as these are market-wide adjustments. (Johan Brammer, CEO)
Q: Can you elaborate on the improvement in the Norwegian combined ratio from Q1 to Q2?
A: The combined ratio improved from 102% in Q1 to 88.1% in Q2. While it's not yet at our desired level, the actions we are taking are working, and we expect continued improvement. (Johan Brammer, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
