Tryg Stock Analysis: What we will go through here is what they do, finances, and see if we can identify any strengths, weaknesses, and what to look for in the future.
What does Tryg AS do?
Tryg is a Danish insurance company operating in Scandinavia with a long history dating back to its establishment in 1731.
The company is structured into three branches: Private Insurance, Commercial, and Corporate.
Private Insurance: In the private insurance sector, Tryg focuses on coverage for items such as cars, motorcycles, pets, homes, damage, and health. This is the largest branch of Tryg, contributing to approximately 65% of their revenue.
Commercial: This segment targets small and medium-sized businesses, emphasizing products like insurance for cars, properties, employee compensation, travel, and health. Tryg derives around 25% of its revenue from this sector.
Corporate: With a focus on larger enterprises, Tryg again offers products covering areas such as cars, properties, employee compensation, travel, and health. Only 10% of Tryg's revenue comes from larger corporate clients.
Strategy
They have a strategy based on staying put. They prefer to maintain control in the Scandinavian market, and it seems they are not eager to start the engine and explore new ports.
That being said, Tryg has focused on acquisitions in recent years, aiming for increased income in the B2B market, and this is one of the things currently receiving strong emphasis.
They try to retain customers by giving back profits directly to them.
A bit about finances:
Generally, I appreciate Tryg's financial standing. They exhibit strong key figures in solvency margin and the combined ratio (CR) and maintain a robust portfolio with government bonds.
In general, there are two things I would like to see from Tryg - a more consistent financial performance and a greater willingness to explore new markets.
Statement
Tryg has experienced significant revenue growth, but a slight shock in 2022 led to some write-downs on their bond portfolio. While the top-line growth is commendable, the bottom-line results have shown inconsistency. This may present an opportunity for investors to enter at a more favorable point, given that the stock price typically fluctuates.
Although they have disappointed a bit on margins, the current situation seems relatively favorable for now.
Insurance income | Investment income | Results | Margin | |
2014 | 18652 | 360 | 2557 | 13.45% |
2015 | 17977 | -5 | 1981 | 11.02% |
2016 | 17707 | 987 | 2472 | 13.22% |
2017 | 17963 | 527 | 2519 | 13.62% |
2018 | 18999 | -123 | 1733 | 9.18% |
2019 | 22563 | 744 | 2845 | 12.21% |
2020 | 23652 | 348 | 2773 | 11.55% |
2021 | 25413 | 1070 | 3158 | 11.92% |
2022 | 38365 | -3028 | 2247 | 6.36% |
2023 | 39126 | 2738 | 3851 | 9.20% |
Balance
This is my favorite aspect when it comes to this analysis of Tryg:
A significant portion of their debt is based on compensation claims, which, in turn, stands as less than their bond portfolio alone. Tryg is very secure in this area when I look at the balance sheet, and it is one of the reasons why Tryg is the stock in which I have invested the most.
Equity | Total Assets | Bonds | Stocks | Claims | |
2014 | 11119 | 52224 | 37175 | 128 | 25272 |
2015 | 9831 | 51281 | 35705 | 138 | 25427 |
2016 | 9437 | 49861 | 35254 | 48 | 25452 |
2017 | 12616 | 51367 | 37151 | 179 | 23925 |
2018 | 11334 | 56545 | 38042 | 1149 | 24847 |
2019 | 12085 | 59059 | 38814 | 1798 | 24859 |
2020 | 12264 | 60916 | 34339 | 2611 | 24957 |
2021 | 49008 | 100580 | 35611 | 3625 | 25587 |
2022 | 42504 | 113387 | 55800 | 4647 | 49063 |
2023 | 40351 | 112940 | 57065 | 3939 | 49463 |
Cash flow
In short, when it comes to cash flow, Tryg is performing quite well. They have good control over their incoming cash and allocate a significant portion of it directly to shareholders. They engage in dividends and share buybacks.
They are also open to using share issuances to fund acquisitions, which have been shareholder-friendly as well.
Operations | Investments | Financing | Dividend | Share buyback/emission | |
2014 | 1991 | 474 | -2502 | -1656 | -956 |
2015 | 1211 | 2204 | -3452 | -2380 | -1031 |
2016 | 1546 | 258 | -1798 | -1714 | -999 |
2017 | 1720 | -2514 | 823 | -3279 | 3974 |
2018 | 2883 | -510 | -2442 | -2980 | 0 |
2019 | 3631 | -1376 | -2013 | -2040 | 0 |
2020 | 3932 | -1139 | -2271 | -2599 | |
2021 | 3670 | -39647 | 35357 | -2630 | 36320 |
2022 | 243 | 8375 | -6747 | -3771 | -3253 |
2023 | 6067 | 1087 | -6672 | -4607 | -2531 |
ROE
Here is a comparison of Return on Equity (ROE) between Tryg, Gjensidige, and Protector for the period 2014 to 2022.
Tryg | Gjensidige | Protector | |
2014 | 23.00% | 19.35% | 36.19% |
2015 | 20.15% | 16.22% | 30.60% |
2016 | 26.19% | 20.90% | 19.96% |
2017 | 19.97% | 19.07% | 18.40% |
2018 | 15.29% | 14.18% | -1.02% |
2019 | 23.54% | 25.03% | -3.77% |
2020 | 22.61% | 19.59% | 29.20% |
2021 | 6.44% | 28.33% | 32.51% |
2022 | 5.29% | 17.66% | 24.47% |
2023 | 9.54% |
ROA
Here is a comparison of Return on Assets (ROA) between Tryg, Gjensidige, and Protector for the period 2014 to 2022.
Tryg | Gjensidige | Protector | |
2014 | 4.90% | 3.68% | 6.03% |
2015 | 3.86% | 2.93% | 6.23% |
2016 | 4.96% | 3.43% | 5.11% |
2017 | 4.90% | 3.03% | 3.88% |
2018 | 3.06% | 2.16% | -0.16% |
2019 | 4.82% | 5.83% | -0.52% |
2020 | 4.55% | 4.19% | 5.28% |
2021 | 3.14% | 5.50% | 6.05% |
2022 | 1.98% | 3.38% | 4.22% |
2023 | 3.41% |
CR
Here is a comparison of the combined ratio between Tryg, Gjensidige, and Protector for the period 2014 to 2022.
Tryg | Gjensidige | Protector | |
2014 | 84.2 | 86 | 84.5 |
2015 | 86.8 | 83.7 | 88.7 |
2016 | 86.7 | 83.4 | 97 |
2017 | 84.4 | 85.4 | 93.1 |
2018 | 85.1 | 85 | 101.7 |
2019 | 85.1 | 83.6 | 102.8 |
2020 | 84.5 | 81.3 | 92.5 |
2021 | 84.5 | 80.4 | 88.5 |
2022 | 83.8 | 81.4 | 89.2 |
2023 | 82.8 |
Strenghts
Strong balance sheet
Shareholder-friendly
Decent key figures
Robust top-line growth
Stable quarterly dividends
Weaknesses
Concerns (reluctant/wary of going outside Scandinavia)
Danish company (often need to contact Danish authorities for tax refunds)
2022 revealed that bonds were not as secure as expected.
Risk of cost pressures.
What to look out for
Competition in the Scandinavian market may impact revenue.
Can they attract more insurance through B2B?
Can they maintain a good Combined Ratio (CR)?
Can they better control the bottom line?
Persisting natural disasters.
Their new insurance based on a lack of trust in state pensions and assistance.
Brief summary
Tryg is a solid and shareholder-friendly company that regularly provides stable dividends, typically around 4-5%. They have a strong focus on the Scandinavian market and are currently content with this strategy. Their financial situation seems acceptable, and they appear transparent about their goals and efforts.
As a Tryg shareholder, I find it disappointing that they do not aspire to further growth, and I view potential future competition, especially with cost pressures from European insurance companies, as a significant warning signal.
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