Swedish general insurance

Vesta Skadeförsäkring sells insurances to private individuals. Insurance policies are sold by Nordea’s branches, our own call centre and via the Internet. The Swedish branch has around 100 employees.
 
Further acceleration in Sweden
Gross earned premiums in Sweden were up by 146%, or DKK 131m, to stand at DKK 221m. The rapid growth was generated principally by strong sales through Nordea, but increasingly also by employees of the business unit’s own call centre, which now account for around 50% of sales. During 2008, a total of 122,000 policies were sold in Sweden, an increase of 35,000 policies relative to 2007. The overall portfolio amounted to DKK 259m (SEK 380m) at 31 December 2008 and was adversely impacted by the weakening of SEK relative to DKK. The number of customers totalled 107,000 at 31 December 2008 compared with 50,000 at 1 January 2008.

Claims
The claims ratio, net of ceded business was 96.8 compared with 88.9 in 2007. This level is considered satisfactory for such a relatively new portfolio. Moreover, the Swedish business was affected by a number of medium-sized fire claims on holiday and single-family houses in 2008, which had a relatively severe impact on ratios and generated significant fluctuations, as the size of the business is still relatively limited.

The Swedish business had not raised its premiums since being launched in mid-2006, and automatic annual premium indexation is not used in the Swedish market in the way it is done in Denmark. As a result, Vesta Skadeförsäkring is planning a number of premium related measures in 2009. The effects of these price increases will begin to materialise from the second half of 2009, but will not feed through fully until 2011.

Expenses
The increase in nominal costs by 9.5% to DKK 104m DKK should be seen in the light of the strong gross premium growth, which led to an overall reduction of the expense ratio from 105.6 to 47.1. Costs are primarily driven by selling commissions, but as the proportion of policies sold by the unit’s own call centre increases, the charge on the expense ratio will be gradually reduced for the benefit of future earnings.

In 2008, TrygVesta signed a new agreement with Nordea on settlement of commission regarding policies sold through Nordea. As a result of this agreement, it is now possible to accrue commission over the first year of the policy, as it is actually a prepayment to Nordea, as compared with the previous method of charging commission to the income statement at the time of writing the business.

The rapid growth entailed a need to strengthen human resources, and the number of full-time employees was just over 100 at 31 December 2008 relative to 60 at 1 January 2008.

Combined ratio
The combined ratio was 143.9 for 2008, as against 194.5 for 2007.