Corporate

Corporate is a Nordic business area which provides insurances to corporate customers under the TrygVesta brand. The Corporate business area serves customers with our own sales force and through brokers. We define corporate customers as customers paying annual premiums of more than DKK 500,000 or having more than 50 employees. The Corporate business area has some 10,000 customers. The number would be around 50 customers by international standards, which define corporate customers as customers paying annual premiums of more than DKK 10m. Corporate has around 500 employees, and contributes some 30% of the Group’s total earned premiums. TrygVesta Garantiforsikring, the leading provider of guarantee insurance in the Nordic region, is included in the Corporate business area.

Performance in 2007 at sustained high level

The Corporate business area recorded a technical result of DKK 842m in 2007, which was in line with the 2006 level despite a significantly higher level of large claims. We also continued the positive trend in gross earned premiums.

Premium growth

Gross earned premiums in Corporate were 7.4% higher than in 2006, and the portfolio passed the DKK 5bn mark in 2007. The Norwegian part of the Corporate business was a major growth driver, contributing 9.3% in local currency. The Danish business also generated strong growth of 6.1% over 2006.

Corporate outperformed the market substantially in terms of growth, driven by dedicated risk consultancy efforts with corporate customers being served by cross-disciplinary customer teams. In 2007, more than 250 employees completed our pan-Nordic risk consultancy training, a major contributor to the improvement of our service and consultancy standards.

As far as our insurance lines are concerned, the personal lines in particular recorded strong growth, supported by the new act on workers’ compensation insurance in Denmark which took effect on 1 July 2007. The new act triggered extraordinary premium increases of 12.5%, equivalent to premiums of around DKK 60m in 2007 and a similar amount in 2008. After a few years with a deliberate reduction of market shares in unprofitable segments of workers’ compensation insurance in Norway, we once again increased our market share in 2007 within the personallines of the Norwegian part of the Corporate business. We did this as recent years’ price increases in the Norwegian market made it attractive to increase the market share again in selected segments.
 

Large inflow of customers and high renewal rates

Corporate recorded a large inflow of new customers in 2007, while also continuing to record high renewal rates. Nine out of 10 corporate customers renewed their policies in 2007. Generally, customer renewals at 1 January 2008 were satisfactory. As marine had negative earnings in 2007, we increased prices by about 15% at the beginning of 2008, causing a few marine customers to leave the Group. However, the marine business continued to be slightly unsatisfactory.

Combined ratio of 86.7 despite many large claims

Combined ratio for 2007 was 86.7 compared to 84.9 in 2006. Large claims had a negative impact of 8.3 percentage points in 2007 compared to 6.0 percentage points the year before. Weather-related claims also rose but to a lesser extent, which had a negative impact of 1.1  percentage points compared to 1.0 percentage points in 2006. Large losses amounted to DKK 843m and had a significant negative impact on the financial results.

The higher level of large claims resulted in a gross claims ratio of 73.9 in 2007 against 67.5 in 2006. There were seven marine claims with a gross expense of DKK 453m and a net expense of DKK 133m, the difference being that reinsurers contribute a much greater  proportion of large marine claims. This is also reflected in the net reinsurance ratio of 3.3, which was much lower than the ratio of 6.4 recorded in 2006. Thus, the overall claims ratio, net of ceded business was 77.2 in 2007 against 73.9 in 2006.

The result was favourably impacted by gross run-off gains of DKK 102m with motor and liability insurance being the major contributors, while we continued to strengthen provisions for prior-year claims in workers’ compensation during 2007.

 

Continued fall in expenses

The Corporate business was able to reduce expenses despite strong premium growth in  2007. Expenses were some DKK 35m lower, equivalent to a 1.5 percentage points reduction of the gross expense ratio to 9.5.

The positive performance was partly attributable to our continued focus on making the business more efficient, and partly to a greater proportion of insurances being sold through brokers in 2007. We do not incur costs to any considerable extent from sales through brokers because brokers charge their fees directly to the customers.

Focus areas in 2008

Setting up a Swedish corporate business is a focus area for 2008, and we expect to start sales to Swedish corporate customers in late 2008.

In order to ensure sustained growth, we also intend to specialise further in relation to international customers, and we intend to develop our products further to create an even better match to customer requirements.