TrygVesta Forsikring's financial performance in first half of 2009

Premium growth of 8.6% in local currency
The Group's gross premium income grew 8.6% in local currency (2.9% in DKK) to
DKK 8,820m in the first half of 2009. The premium growth is higher than
expected and among other due to a continued high growth in New Markets (Sweden
and Finland). 

In the Norwegian private and commercial (P&C) market growth was 4.8% due to
strong sales in 2008 and premium increases, which gradually have been
implemented since mid-2007. In the Danish P&C market growth was 3.4% and driven
by higher average premiums. 

In Finland gross premium income grew 33.5% to DKK 219m, hence the Finnish
branch continues the positive performance from previous quarters. 

In Sweden gross premium income was DKK 388m in the first half of 2009,
positively impacted by the acqui-sition of Moderna against DKK 99m in the same
period of 2008. Excluding Moderna premiums grew by 63% in local currency (40%
in DKK) to DKK 139m. The establishment of TrygVesta Forsikring Group's
businesses in Sweden began in June 2006, and the acquisition of Moderna has
strengthened the Swedish business sig-nificantly in 2009. 

In the Corporate segment gross premium income grew by 4.4% in local currency
(-1.0% in DKK) to DKK 2,681m. The Norwegian part of the Corporate business grew
8.4%. 

Sweden and Finland yielded a strong growth in the second quarter, however, the
premium increases in Nor-way are also starting to be visible. Gross premiums
increased by 5.2% in local currency in the Norwegian private and commercial
market. In the private and commercial market in Denmark gross premiums rose
3.0% including bonus/ premium reduction, while Corporate reported a growth of
4.4%. 

Claims expenses
Claims ratio was 71.8 in the first half of 2009 and cost of claims amounted to
DKK 6,332m, DKK 633m higher than the same period of 2008. DKK 172m was due to
the consolidation of Moderna. Evaluating the claims level in the first half of
2009, two factors are worth mentioning. Partly, the claims ratio is negatively
impacted by the lower interest rates due to discounting of reserves, and partly
the claims ratio at 66.5 was unusually low for the comparison half year of
2008. 

A breakdown of the claims development from the first half of 2008 to the first
half of 2009 shows a lift of 1.3 percentage points from more large claims, 1.7
percentage points from the lower interest rate level and 0.9 percentage points
from a lower run-off result. All in all, the underlying claims increased by 1.3
percent-age points on the claims ratio. 

Expenses impacted by the integration of Moderna 
Expenses for sales, marketing and administration amounted to DKK 1,521m
compared with DKK 1,459m. DKK 56m of the increase relates to the consolidation
of Moderna. The expense ratio totalled 17.2 compared with 17.0. As earlier
communicated, in the short term, costs will be adversely impacted by the higher
ex-pense level in Moderna which over time will be reduced as synergies are
realised. Therefore, the develop-ment is in line with the expectations. 

Furthermore, the financial crisis has caused a larger loss of customers not
paying their policies. 

Technical performance
The technical result was DKK 803m compared with DKK 1,321m. The development was
impacted by the previous mentioned developments in claims and positively
impacted by the increase in reinsurance cost of net DKK 255m compared with DKK
353m, and negatively impacted by a decline in transferred technical interest
from DKK 261m to DKK 91m. The lower technical interest rate is due to lower
interest rate levels in the first half of 2009 compared with the same period of
2008. 

Combined ratio
Combined ratio was 91.9 in the first half of 2009 compared with 87.6. Adjusted
for large claims, storm re-lated claims, run-off and change in the level of
interest rates, the underlying combined ratio showed a minor lift as explained
above. 

Investment return
The total investment portfolio was DKK 38.3bn at 30 June 2009, and the gross
investment result on average invested capital was DKK 1,242m or equivalent to a
3.3% return (6.7% annualised) compared with the ex-pected 2.2%. The investment
result after transfer of technical interest and other financial income and
ex-penses was DKK 559m compared with a loss of DKK 491m in the first half of
2008. The investment result in the first half of 2009 was impacted by a gain of
DKK 136m in the equity portfolio as well as interest and value gains on bonds
of DKK 984m. 

TrygVesta Forsikring discounts claims provisions and as a consequence, gains on
bonds are neutralised by almost similar decline in value discounted claims
provisions. 

Pre-tax profit 
The pre-tax result increased by 64% to DKK 1,365m in the first half of 2009
compared with DKK 833m. The result is a combination of the technical result of
DKK 803m and the investment result of DKK 559m. The improvement is caused by a
significant improvement in the investment result of more than DKK 1bn. 

Tax
Taxes in the first half of 2009 amounted to DKK 302m compared with DKK 276m.
The efficient tax rate was 22% in the period and impacted by gains on equities
and the acquisition of Moderna. The acquisition yields a reduction of the tax
expenses of DKK 51m as the acquisition has made it possible to use the tax loss
carried forward in Sweden, which has been capitalised. 

Profit after tax
The after tax result for the first half of 2009 was consequently DKK 1,064m
compared with DKK 557m. 


Read the full report at www.trygvesta.com/investor/results&data