Preface

2008 – A challenging year
The year 2008 will go down in history as a year of financial crisis, a rapid slowdown in economic activity and difficult conditions for investors, borrowers and banks. Thanks to TrygVesta’s focus on profitable insurance operations, strong market positions, conservative investment initiatives, strong ownership structure and high competence level, our business model proved its worth in difficult times, thereby enabling TrygVesta to help provide peace of mind for customers, employees and shareholders alike.

Strategy
The performance of all TrygVesta’s four strategic themes – profitable growth, peace-of-mind provision, self-service and human competencies – continued to support a positive development. Growth in Finland and Sweden outperformed expectations. Product improvements such as the extended roadside assistance product Udvidet Tryg Vejhjælp and the new building policy Ny Villaforsikring in Denmark enhanced our peace-of-mind provision while the introduction of online sales of travel insurance provided new self-service options. The management and leadership development programmes we introduced in 2008 set the framework for even better qualifications and good business performance.

You can read more about TrygVesta’s strategy and strategic focus areas in the section on Strategy in this annual report.

TrygVesta’s performance in 2008
Earned premiums at DKK 17,323m were 4.9% higher in local currency terms, and the technical result was DKK 2,384m. Profit before tax was down from DKK 3,109m to DKK 1,347m due to sharp declines in equity returns. Profit for the year after tax was DKK 846m, which exceeded expectations by DKK 246m as set out in TrygVesta’s third quarter interim report. Based on our 2008 performance and the Group’s policy to distribute 50% of the profit for the year as cash dividend, the Supervisory Board recommends that dividends be paid at the rate of DKK 6.50 per share. No share buy backs are planned based on the 2008 results.

Growth in 2008 was strengthened by continuing solid performances in Finland and Sweden and the introduction of a new customer system to promote sales in Norway. Rising average prices indicate that growth and increasing profitability are in pipeline for the coming years. TrygVesta’s conservative investment policy and a reduced proportion of equities since mid-2007, our investment portfolio generated a positive return of 3.5% in 2008.

Like in 2007, claims expenses continued to increase in 2008, particularly with respect to buildings and health care. Consequently, we have implemented initiatives to ensure sustained profitability. Changed climate conditions impacted the 2008 performance less than had been expected. However, TrygVesta believes that the number of claims caused by changed precipitation and windstorm patterns will rise in the future.

TrygVesta shares
The OMX C20 index including dividends fell by 46% and the DJ Euro Insurance Index including dividends dropped 44% in 2008. Despite these strong price declines the TrygVesta share yielded a total return of -12% including dividends. A healthy insurance business and conservative investment strategy were contributory factors in the relatively good performance of TrygVesta shares. 

Strong Nordic organisation
TrygVesta s a Nordic insurance group addressing the entire Nordic market. That is why we implemented a new Nordic organisation on 1 January 2009 with clearly defined pan-Nordic responsibility and uniformity with respect to sales, product development, claims handling, IT systems and underwriting. Our intention is for the new structure to contribute increased efficiency, innovation and earnings, thereby enhancing our market position. At the same time, our new process-oriented organisation creates good environments for the professional and personal development of our 4,000 employees, and we intensify our in-house cooperation with a view to exploiting our competencies in the best possible manner. We call our new structure “The Living Organisation”. It reflects our corporate culture and to exploit it to the full, it ties in with “The Living House”, a change of our physical working environment designed to enhance innovation, development, knowledge-sharing and drive.

Peace-of-mind provider
“The Living Organisation” and “The Living House” create an environment for producing new ideas and developing them into profitable products and services supporting our pan-Nordic peace-of-mind provision and translatable into our handshake – Dynamic, Compassionate and Innovative.

Corporate Social Responsibility (CSR)
CSR represents good business ethics and common sense and supports our business model. That is why we urge all TrygVesta managers and employees to commit themselves to and familiarise themselves with the value of CSR. TrygVesta has drawn up a CSR declaration of intent, defining our commitment and describing our responsibility in relation to employees, customers and the external community. For example we have employed maladjusted young people with an immigrant background in an attempt to give them better opportunities and to meet customer requirements for a broader customer service interface. However, we are cautious about new recruitments in order to avoid subsequent dismissals. As far as climate issues are concerned, we have subscribed to the UN Global Compact and the Carbon Disclosure Project. Our target is to reduce our CO₂ emissions by 10% over two years.

Corporate governance
TrygVesta’s managers have a special duty to ensure that we continuously work towards our vision. In 2008 we continued to work with corporate governance and our management profile. Among other initiatives, 192 managers attended in-house development courses such as ‘Leading the Brand’ and ‘Managing with BSC’. We promote management behaviour supporting our corporate vision, strategy and handshake, and going forward the management profile will be implemented through “The Living House”, “The Living Organisation”, management recruitment and talent development.

TrygVesta’s general management is described in the section on Corporate governance in this annual report.

Outlook for 2009
For For 2009, we expect 4% premium growth in local currency terms as compared with the previous outlook of around 5% due to the adverse economic trends. On the earnings side, we expect a combined ratio of 92 before run-off, a profit after tax of DKK 1.3bn, and a return on equity of 14-16%.

We base this outlook on a number of assumptions with respect to equity returns and interest rate levels. Due to the volatile financial markets, the impact on profit of these fluctuations is subject to great uncertainty. The outlook for 2009 and the related assumptions are described in greater detail in the section on Financial outlook for 2009 on page 28 of this annual report.

Recent years’ favourable performance will not make us rest on our laurels. We have further potential for improvement in many areas, and we will face a wide variety of future challenges and opportunities to expand our peace-of- mind provision and value creation.

We hope you will enjoy reading our annual report.