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Tryg to begin quarterly dividends as FY'16 profit rises

Danish insurer Tryg A/S will begin making quarterly dividend payments in 2017 after reporting a year-over-year rise in full-year profit in 2016.

Quarterly dividend payments will start from the first quarter, with the annual payout spread evenly across the year. Tryg proposed a dividend of 3.60 Danish kroner per share for the second half of 2016, taking the full-year payout to 6.20 kroner per share.

It will also pay an extraordinary dividend of 1 billion kroner, equivalent to 3.54 kroner per share, and said any future extraordinary payments will be in the form of dividends, rather than share buybacks such as the 1 billion kroner of repurchases it carried out in 2016.

"The prolonged period of very low interest rates means that investors, all else being equal, attach even greater importance to dividends than in more normal environments," Tryg said in its annual report. "From an investment perspective, a quarterly dividend will be a clear reminder of the high profitability of the business and its focus on returning capital to shareholders."

The company's dividend policy will operate under assumptions including an annual distribution of 60% to 90% of after-tax profit and an aim to steadily increase the dividend in nominal terms on a full-year basis. The full-year 2016 dividend corresponds to 72% of after-tax profit.

For the year, Tryg recorded a profit after tax of 2.47 billion kroner, up from 1.97 billion kroner in 2015. After-tax ROE stood at 26.2%, compared to 20.0% in 2015, while the combined ratio, a measurement of claims and costs as a share of premiums, stood at 86.7%, compared to 86.8% a year earlier.

CEO Morten Hübbe said a combined ratio of 85.3% and an expense ratio of 14.8%, adjusted for one-offs, "show that Tryg is on track to meet its financial targets for 2017," which include a combined ratio at or below 87% and an expense ratio at or below 14%, as well as after-tax ROE of at least 21%.

The company reported fourth-quarter 2016 profit after tax of 560 million Danish kroner, down from 754 million kroner in the year-ago period. EPS for the quarter stood at 2.03 kroner, compared to 2.19 kroner a year earlier.

The result included an extraordinary capital gain of 500 million kroner on the sale of a property portfolio and a write-down of intangible assets of approximately 250 million kroner.

Gross premium income for the quarter rose on a yearly basis to 4.50 billion kroner from 4.39 billion kroner. Gross claims rose to 3.25 billion kroner from 2.99 billion kroner, while total insurance operating costs stood at 802 million kroner, compared to the year-ago 615 million kroner.

The technical result fell year over year to 314 million kroner from 522 million kroner, while the investment return after insurance technical interest increased to 598 million kroner from 242 million kroner, boosted by the property sale gain.

After the second-half and extraordinary dividend payments, the company's Solvency II ratio will stand at 194%. It noted that its solvency capital requirement remained unchanged from the beginning of the year at 5.1 billion kroner, with own funds at the end of 2016 amounting to 9.85 billion kroner, compared to 10.3 billion kroner at the start of the year.

The second-half and extraordinary dividends will be paid March 13, subject to approval at the March 8 annual general meeting.

As of Jan. 19, US$1 was equivalent to 7.00 Danish kroner.