Enskilda Securities 6. Oktober Værdiskabelse i Codan. Jens Erik Christensen PRÆSENTERET PÅ ENSKILDA SECURITIES 6.

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1 PRÆSENTERET PÅ ENSKILDA SECURITIES 6. OKTOBER 2004 Enskilda Securities 6. Oktober 2004 Værdiskabelse i Codan Jens Erik Christensen

2 Codan Scandinavia vision & strategy Commercial lines strategy Personal lines strategy Focus on prioritised small, mid-market and selected large commercial Multi-brand, multi-channel strategy targeting distinctive market segments Competitive distinctiveness Pricing expertise Segment-specific value propositions Strong links with brokers Global R&SA network for large commercial To be the leading and most successful P&C insurer in the wider Nordic region through operational excellence in claims, expenses and underwriting and differentiated branding to deliver sustainable performance in major personal and commercial lines and segments Competitive distinctiveness Brand strength Pricing expertise Segment-specific value propositions

3 Business thinking Service Kommunikation Kunder Medarbejdere Ejere Forsikring Afkast på risikokapital Innovation Disciplin

4 Implementing performance management in a Scandinavian consensus environment Keeping our promises with strong focus on; Delivery, execution, results & transparency Aligning performance for success

5 Optimising systems & processes Scandinavian operating model Back-end operations Value proposition and products Front-end sales & servicing Unified back-end operations: Nordic logic Synergies from competencies, costs and financial structure Separated front-end operations: National logic Multi-country, multi-brand and multi-channel approach Claims Finance IT HR

6 Clear value propositions Distinctiveness of value proposition Codan (Denmark) Full service motor and household for higher end 50+ segment Multi channel service and sales through high accessibility Alliance with DanAge Society Personal PrivatSikring (Denmark) Trekroner (Denmark) Personal Trygg Hansa (Sweden) Private Label local bank front-end and Codan back-end solution Building on customers banking relationships (convenience) Targeted at locally oriented customers No-frills personal lines brand targeting lower/middle end of market Middle of the road products Personal service proposition (own agents) Focus on families and 55+ segments through Unique child insurance proposition Emphasis on personal service and core customer bonus Aktsam (Sweden) No frills motor insurance Attractive pricing and packaged products Call centre distribution Commercial Codan (Denmark) Commercial Trygg Hansa (Sweden) Expertise from leadership in large and global customers Focus on prioritised SME sub-segments (e.g., transportation), with direct sales options being tested Segment-specific propositions backed by strong distribution Leveraging no.1 position among Swedish brokers Increasingly offer direct channel for SME products

7 Brands and value propositions Customer segments are targeted Customers are segmented according to size and risk profile Value proposition s cover in segment* Elderly Large Segments Family Segments Medium Small Singles Commodity Differentiated Low Medium High Value proposition Risk standardization *Not business volume

8 What is CMAT? (Customer Management Assessment Tool) An objective assessment of how a company manages prospects and customers Benchmarking Tool Includes over 400 companies Diagnostic Tool Facilitates knowledge sharing It provides a route map to world class performance Based around a framework of the CRM Model Based on 260 practical, not theoretical best practices from leading businesses globally

9 CMAT model

10 CMAT results CMAT score Codan overall The Top six high Performers All insurance average CMAT Global Average

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12 Pricing and underwriting Rate plans Impact from rating initiatives (%) Rate plan activities Low risk customer High risk customer and impact Built internal new risk database Old rate Iterated analysis to identify key variables and their weighting New rate Gap to market average Reallocated cost and capital between Personal and Commercial and between lines Market average rate INDEXED DANISH HOUSEHOLD EXAMPLE

13 Dynamic Pricing is a key component of world class pricing Dynamic pricing Allocation of operating and capital costs Pricing of risk Advanced pricing component to extract additional profit wherever market opportunities exist based on knowledge of competitor pricing Key fundament in insurance pricing to correctly understand production cost of an insurance policy

14 Prices are set to yield an optimal trade-off between profit and volume Margin A higher price yields a higher margin + Lapse rate However, a higher price also results in a higher lapse rate Price Price Profit (NPV) = Dynamic Pricing allows us to identify the price for each segment that yields the optimal trade-off between margin and volume Optimal price Price

15 Pricing and underwriting in Trygg-Hansa Dynamic pricing INDEXED PILOT EXAMPLE Impact from dynamic pricing pilot Dynamic pricing pilot Pilot run in Trygg-Hansa personal lines business (motor & household) Pilot run during H1 2004, with full roll-out across Trygg-Hansa personal lines by year-end 2005 Roll-out of dynamic pricing across Danish personal lines businesses in 2006 Volume loss 0% 1% 2% 3% 4% 5% Projecting up to 4% CoR impact, while sacrificing only 1% of volume Provides ability to manage customer price elasticity effectively 2% 4% 6% 8% Profit impact (improved CoR)

16 Claims innovative tools and operations Innovative Scalepoint claims tool Codan Scalepoint claims system (screen shot) Customer benefits Online skadesanmeldelse Items can be immediately repurchased online Fairer settling process Codan benefits Discounts of up to 39% of recommended supplier price Semi-automated settling process Afslut anmeldelse

17 Capital management in Codan Solvency II New capital regulations Incitament for improved risk management Focus on risk sensitive and precise calculation of capital Focus on individual assessments Level playing field In the future focus on approval of financial capital Internally developed capital models Continous process initiated several years ago

18 Risk management in Codan Credit, market, Liqudity risk Insurance risk (underwriting og reserves) Operational risk Strategic risk Corporate governance Capital modelling Group Capital management

19 Produktudvikling i fremtiden Hvilken rolle vil forsikringsselskaberne have i det fremtidige velfærdssamfund i Danmark & Sverige? Forsikringsselskaberne vil være leverandør af markant flere velfærdsydelser end i dag. Forsikringsselskabernes ydelser vil fortsat være et supplement (ej konkurrent) til de offentlige velfærdsydelser. I hvilken retning går udviklingen? Efterspørgslen på velfærdsydelser vil stige Udbuddet af service- og velfærdstilbud vil vokse Det offentliges mulighed for at finansiere udgifterne reduceres

20 Fremtiden Hvordan fungerer pensionsopsparing i dag? 1. søjle er skattefinansieret offentlig pension (Folkepension) 2. søjle er bidragsfinansieret virksomhedsbetalt (Arbejdsmarkedspension) 3. søjle er bidragsfinansieret privat betalt (Privat pensionsopsparing) Hvordan vil social- og sundhedsydelserne se ud i fremtiden? Gæt: Kopi af pensionssystemet 1. søjle: Skattefinansieret offentlig basisdækning 2. søjle: Virksomhedsbetalte ordninger, der supplerer basisdækningen 3. søjle: Privat betalte tillægsdækninger (forsikringsbaserede)

21 Codan Carekonceptet

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