Protector Forsikring Ord

Hello everyone and thank you for joining the presentation of our quarter three results. Today I'm going to Remember to say that you should ask questions. You can ask questions during the presentation, also in the webcast. But if you have any questions during the presentation here for who you are physically present, please just raise your hands. We'll do that as well. I will start with saying a few words about our focus this morning, which I normally do. So we've met all the, the team, all the employees this morning, and we haven't talked about anything that is on the screen, but we've talked about what is around it. And that is what we call One Team. So it's, It's a well-used and not very valuable expression in itself. But the point is that the topics that we have talked about has been all employees requiring that they get something out of our leaders who are part of a leadership development program. Because when we have that program, We can have fun and we can be inspired, but that's only a sixth of the company, our leaders who are there. So what happens in between these events and in between the actual leadership development program is the most important. In order to make that work, the rest of the organization needs to require something from the leaders. So we've talked about that. That's about being one team and making each other good. And then we have talked about the broker satisfaction index. I'll get back to that here. We've talked about France and we've talked about cost leadership and increasing all teams, all individuals capacity to do more work by doing it smarter, not just by working harder. So that's been the inspiration this morning and the focus that we have set for developing our culture further. When it comes to the results, that team has delivered very solid results. So the most important number here is the combined ratio. As always, profitability comes first. And I'll get back to explaining why that number is slightly worse than what you see on the screen if you adjust it and normalize it like we normally do. But it is a strong number. And then also explain the composition of the growth figure here in a fairly small quarter, but there are some volatilities in that as well. If you include the investment return, the quarter delivers 7.1 Norwegian kroner per share, so a strong result in total if you combine those numbers. Of other highlights, I will get into the broker satisfaction index. We have quality leadership as one of our targets and then we need to define it and measure it. So I'll get back to that. And then I haven't brought any facts and figures for France but there is a small update here and the reason why I haven't brought any facts and figures is because there is nothing to show really but there is a big milestone and the big milestone is that we have written confirmation from a client or maybe more than one client but that's not the point. It is that we have a confirmation. That's a milestone that makes us understand that the brokers and the large professional clients, they have done the due diligence on Protektor and accepted Protektor into the market. That means that the probability of actually accessing that volume, that market, has increased. So when we have that signing, that written confirmation, the probability has increased. when that volume comes and how much it will be especially in the short short term that depends on whether the market allows profitable levels because that's what we will quote that So that's another highlight, which are not shown in the figures here, but is happening in the quarter. And due to that, and I'll explain that a bit more further, we think that it is wise to hold more capital because that probability has increased of tapping into the French market in addition to other growth opportunities that we have. So to go further into the profitability and the loss ratio, these figures are improved from quarter three last year. And quarter three last year was also affected by a storm, so there were some adjustments there and the underlying realities were slightly better but if you adjust the total number here and we've included the large losses and runoff there you can see that quarter 324 is slightly better on a company level than quarter 323 so that's also our view that the underlying realities are slightly better than what it was last year. And the number that really sticks out is Denmark, where we've had a high share of large losses. So the large loss share is 40% in Denmark. It's a couple of property losses there. And And at the time, just like I've said before, and you'll have to then hold me to it if it is wrong in the future, if this continues, but at the time, when a claim has happened, there is an opportunity to learn. both why did that large claim happen and is there anything we can do in order to prevent that type of claim from happening again, and also how can we ensure that that claim is as small as possible when we manage the claim and settle the claim. So it is an opportunity to learn. We can't really do anything about it when it has happened. But those few claims are still, in my opinion, considered volatility. And it is a coincidence that most of those have happened in Denmark in 24. That's the nature of the business we're in. completely done, and there are mistakes that we have made and that we have corrected. But half of those large claims, they're in the municipality sector. They could have happened in all the other countries as well, those type of things. That's why we have a large loss share, and that's what we expect. Other than that, there is a runoff situation that is positive. So we have some gains in the quarter and also year to date. They are mainly present in Norway and Sweden as gains. And then there are some losses in the UK and Denmark. And that means that the very strong numbers you see in Norway and Sweden they need to be normalized upwards. But if you add the low cost ratios in those countries, you will see that even by normalizing, it is a good quarter. But I want to remind you that quarter three, especially in Norway, has a seasonality effect, so it should be better. Parts of the quarter is summer holiday, so there is not as much activity and the weather conditions are also better, both in general terms and this year. So you can adjust upwards also for that. In the UK, the large loss share is lower than normalized, but there is some losses, so you need to adjust it slightly upwards, but that gives basically the level that the underlying realities are at, and it's still very strong. And in Denmark, obviously normalizing there, you get to a profitable level, so you get below 100 if you normalize for those large losses, meaning that the underlying profitability of the property and motor products there is on a decent level or satisfactory level. And all the large losses are property driven. So it's not only Denmark, it's also UK, but the majority comes from Denmark. And yeah, as I said, the runoff gains, they are mainly from Norway and Sweden. Then to the growth, there are some figures here that stick out. The low growth in the UK at 5% is driven by loss of one large client. It is volatile in a fairly small volume quarter. That's a client that we think could have been profitable in the future with the price increases and the change of terms that we had made. but has not been profitable in the past. So that's life, that's what happens. Someone in the market took that client and that affects the growth in the quarter. And I don't really like adjusting for a loss and saying that everything else is equal, but just to show you the effect of it and the size of it, if you do that, the renewal rate is above 100, meaning that all countries, except for the UK, then has a renewal rate of above 100. And we do lose some clients. So we have some price increases and some inflation on top of that. They're single digit in the quarter. But so is the churn. And then we end up above 100. So growth is driven by very strong renewal rates. And then there's a very small number in Denmark. And then you get very big percentages on the growth side. But it comes from public housing type of business and very strong renewal rates. Sweden, we've talked about the negative growth in Sweden previously coming from exiting some previous initiatives. That is now done. And then you see that quarter three without a big hole in the bottom and that is closed. The underlying growth is stronger, which I also have communicated previously. So very strong in the Nordic countries. I wouldn't say that that's the growing, the growth rate, the underlying growth rate in Scandinavia, because there are some volatility in it. But a strong renewal rate is something we've seen over time and something we expect going forward as well. The main point on the growth is as always that we need to stay disciplined on only going for profitable growth, both in our renewals and in new sales. So then the only thing I haven't talked about is the cost side, which is reducing with the growth we have. So you can see if you correct for the difference in commission levels there that we're still going down on the cost side. There is not again, a lot of efficiency gains that we have, small steps improvements across the business units and some areas more. For example, in the UK, we get the effect of growth We don't manage to recruit enough people to keep up with that, but we don't need to either. So there is a scale in that business. But in the UK business unit, there is not a lot of efficiency improvement at the moment. We are focusing on keeping quality, delivering quality to the brokers and improving quality in claims handling. So we don't have a lot of efficiency initiatives there. In the Nordics, we have more efficiency improvements as we speak, and there is a lot of potential to increase our capacity to do the work and work smarter also in the Nordics. We've just brought this in. You have all these figures, so you could make that slide yourself. But instead of just saying volatility must be expected, and we say that every quarter, we're going to show you that these are the quarters. So there is volatility, and especially if you divide that volatility by the margin that is left and not the claims ratio. So look at it over the long run. It will go a bit up and down from quarter to quarter. This is an interesting area and something that we're obviously proud of. So one part of measuring our quality is to understand if we have delivered what we've told the brokers that we should deliver. And that's done in a better way than our competitors. We, following the cleanup in our portfolio with price increases and making some mistakes in how we did that, We are now back on top in all countries, except for Finland. That's a small market, very low broker share. We're not growing. So it's kind of not... It's not a country where we focus on gaining that position, but it's good to measure anyways. So in our main markets, in our large markets, the brokers... give us the feedback that we are delivering the best quality. So they perceive us as the highest quality provider. It is also supported by external surveys, such as broker associations and broker houses' own surveys. And that goes both for the definition, so what they ask for in their own surveys, it's similar to what we ask for, but also in the result of it. So that's a confirmation that there is some significance in the results that we get from this survey. So that's being proud of it. But it also gives us a unique opportunity because this needs to give business, profitable business. That's the point of it. We can't just be quality leader. I actually think it could be. Fairly simple to be a quality leader if you just do exactly what the brokers tell you. Give them the lowest price and pay out more in claims. You can be accommodative and too accommodative. But the point is that this should give us business. And then we really need to understand what matters to the brokers. And this gives us a great opportunity when they say you're delivering better than everyone else. It gives us a great opportunity not only to use those responses to understand where we should focus in improving, but also to require something from the brokers. Now we can require that they are part of improving our common value chain because we're one team with the brokers. We don't have distribution. This is the only distribution channel we have. So in the long run, we want this total value chain to be competitive and improve the competitiveness. And then we can require more from the broker in making their value chain more efficient and our common value chain. That can be done by obviously technology and technological development, but also in ensuring that we reduce double keying and double work, which is happening today. enter some information into a system, they do exactly the same. Let's not do that. So we need to require something from them and data quality is a part of that. So that's the important part about the survey. A great opportunity to prioritize what we should focus on improving both for our business but also our common business with the brokers. Then we're over to the investment side, where it's in a way kind of boring and coincidentally a bit similar to the year-to-date figures. But I guess the next slide is where I can spend a bit of time. The biggest change in the quarter is on the bond portfolio, which is the by far largest part, where there is a reduction in the running yield from 5.4 to 5.2 and it is mainly driven by the reduction in spread in the portfolio and also then a reduced risk in our portfolio. So we have a lower high yield share now than what we had in the beginning of the year. So it's a good bond market and the reward is slightly lower and doesn't match the risk in our opinion. On the equity side, there's not a lot of changes, but if you look at the result of our evaluation of the development of the companies that we own so the actual development of those companies we are positive so it's a good development of those holdings that we have meaning that even though that doesn't matter a lot to you we expect good returns in the future on So nothing special happening on the equity side, but we think we have a good set of companies there. And then we're over to the summary of everything. So you'll have this in the actual presentation. We've made this section of large losses and runoff and discount rate and risk adjustment in percentage so that it's easier for you instead of nominal values. Other than that, this looks the same and it's just a summary of the rest of the figures. And the balance sheet, we're growing, so the requirement increases, but our capital increases with the result. And one thing that decreases the requirement is the reduced risk in the bond portfolio, so the lower share of high yield. which is not necessarily a normal situation, it's just due to the market and the average high yield share has been higher than what we have today. So going forward we expect that over the long run that that should be higher, we hope. So the composition is fairly similar to us. There's not a lot of change there. Slightly lower market risk and higher insurance risk. But we have a solid capital position. When we presented this the first time, we said that we will continuously make assessments of all the risks in the company and our capital situation. So we do that continuously, but this is then both a short-term game in assessment, but it needs to be a long-term game in how we act. And this second bullet move towards pink. uh is not really relevant now and that's our main point that uh you we cannot say that there are limited growth opportunities going forward and as i said previously i don't want anyone to expect that all the sudden 2025 is is a uh huge french influence to our figures and that we today know that we're going to win a lot of volume relative to our portfolio in total but but what we have seen and what is confirmed is that the french brokers and a few clients they've said this looks like a good proposition and we believe in it so so now there is a big market that is opened And over time, we believe in it. We believe that we will succeed in France. There have been no red flags still. So then that probability has increased. Then it's right to think that we should keep that capital to deploy it in growth if that growth is profitable. And with that, we're back to the highlights, or the summary, as we call it, on the last slide. And then we can take some questions if you have any. And I think we have some at Håkon.

First, one question on France. I know it's very early days, but can you say something on hit ratio? How is that compared to the same stage in the UK? First question.

So in the UK we had a very low hit ratio in the beginning. So the first large inception date was 1st of April 2016 and we won, I think we won three clients on that day. And the market is slightly different in France. So what we see is that the competition is not as fierce at the moment. So I'd say that we have access to a lot of volume and we will most likely see a slightly higher iteration than what we had in UK the first year in public sector.

My last question on renewal. You have a strong renewal ratio and you said that you expect that also going forward. Is this driven by the discussions with your clients up to January 1st or what is this expectation driven from?

Basically, we don't really know too much about the public sector. It's a bit different because we send out those renewal terms earlier than in the commercial sector. But it is based on the facts we have, the history we have, that the market is disciplined. meaning that the clients stick and the brokers know that. And that can change, of course. So there could be someone changing. In the Nordics, I don't see that happening. There are even competitors who are saying what they do in the future in terms of price increases, which is a bit special. But it is a disciplined market. Makes sense. Thank you. I think Jan-Erik was first.

Thank you. Jan-Erik Erland from ABG. Three questions, if I may. The first one follows up on France. What type of risks are you writing there? Is it sort of a shorter-term risk, like in the UK of motor and property, or is it also a long-tail risk? I don't know the French market that well, so if you can shed some light to that. Yes.

It's motor and property. But we are slightly more focused, I think I mentioned that previously, but we do public housing, that's one segment, and then municipalities, and it's property and motor there, property first. And then we do commercial motor fleets, but no other products there from the beginning. But I also want to say that the Molto product, personal injuries in France, is more similar to personal injuries in the UK, meaning that that part of the product is longer tailed, like it is in the UK, than Scandinavia.

And the competition in France, who is the usual suspects, the big ones, or is it any special niche players in the municipality market and in these commercial markets?

In the commercial motor then it's usual suspects and obviously AXA is big in France. In the public sector there's a niche player so it's a bit the same as it is in all other countries there is the mutual smackle that is there and then some of the larger players that we also see in the UK are present in the public sector, but more in parts of the segment. So it's one big one. They have a large market share.

Then just on premiums, you said that you will continue to do disciplined pricing. Should we read you out that you are sort of pricing above the current claims inflation or more in line as you sort of have an overhang of your previous price increases still with you? So how should we read your competitive situation today?

Well, we price the profitable products in line with inflation or to counter inflation. But then we have some products that need further correction. So they will be priced above inflation. In total, that will be a bit above.

Thank you.

Got a mic? Two questions. Very broad, but given the claims inflation trends you are seeing in the Nordics, is this 25? Will that be another 10% repricing year or has that dropped? Are we talking like low single digits as...

Very, very broad. I'd say that due to the decreased inflation expectation, it will be lower than what it was in 24. But not on a low level single digit, more medium to slightly higher, I would say.

Five to max 10. Yeah. Okay, yeah. Thank you. And then one on the UK. On the retail side, a lot of the companies are saying that claims frequency on motor didn't go up as much as was expected. So now they're overshooting on retail, on the premiums. And I'm just wondering, is... Have you seen the same on your motor exposures in the UK? And then the follow-up is like now that all the, some of your competitors are doing much better on the retail side, does that have an impact on SMEs like your business?

Motor side, we see that in Q3, it's the only area where we have a bit higher churn due to price increases. So they were probably touching some kind of price increase ceiling. But what we also see is that the cycles in the UK motor market, they are fairly short. So in my opinion, this is about staying disciplined over time and not be part of that cycle, at least not going down. So you'll see more volatility in the growth then. And we still have some profitability actions to go through with on the motor UK, especially commercial sector. But commercial market is different from public market on motor as well. So motor, now we're winning a bit more business, commercial not.

Then in general, you see, we'll get good growth in the Nordics and then you win or lose some business. But in the UK, maybe it's the repricing will be a bit less like on the whole market than it is in the Nordics.

Yeah, that could be. There is also more competition and a higher probability of irrational competition coming in and out of that market. So yes, that cycle is short. Thank you. Thomas?

Yes, good morning. Thomas Hansen from SEB. First, back to France again. So what is the planning for staffing over the, let's say, next six months? And will we see a head of France?

Yes, the plan for staffing is that at current we have... Very soon, four French underwriters sitting in Manchester working on French cases and UK cases and learning how we do things. The first employee has now been there for a year and will soon move to the Paris office. So that's the most experienced person we have, at least Protector experience, that will move to to paris at least before the summer and then we have two people in copenhagen underwriters sitting there doing commercial motor together with the team that or at least the person that built the swedish motor business from the beginning So learning how we did that. And then we have two people in the French office today. That will in total increase, so at the moment we need two or three more for exactly what we're doing now. And then obviously we will add people on the underwriting side and also on the claims handling side. But we have the competence we need. So we have the competence on the formalities through a finance compliance type of resource that we have on board already that is working in the Paris office. We have some claims handling competence. We need more. on different products. And the underwriter side is covered both by the resources that are dedicated to France, but also from the people who we use, especially in the UK market, but also some from the Swedish. So we'll be in 2025, maybe we'll be 15, 20 people in France. depending on if we find the right people. And then the second question was now, I forgot the second question, was?

Just, when will you say, ahead of France?

So like in the UK where we said that we will spend some time before we have a head of UK and we don't believe in bringing an external head of France in, we will see whether it's possible to recruit that person from internally so some of the people who are in our training could be candidates for being head of France in the meantime we have Hans as head of France our deputy CEO so he's he's heading up that together with a few other resources from the existing countries thank you No more questions here. But then did we have some written questions?

Yeah. So further on, Frans, I think you have a microphone on me. Could you say something about the market opportunity, the size of the market relative to, for example, UK?

So the public sector market is similar to the UK market, slightly smaller. And where we start is approximately half of the UK market because we have selected some brokers and some parts of that segment. but going forward that market can be the UK size. But there is a lot of municipalities in number, so many, many small ones. There is a small share of the, so it's 80-20, but they comprise 20% of the market. So 80% of the market are the large ones that we will target from the beginning, and we target housing sector first. On the commercial motor, it depends very much how you define that market, because that market in total is a bit smaller than the UK market, but the target that we have now is more similar to what we have targeted in the UK from the beginning. Market size, price.

You've touched a bit on it, on the high frequency of large losses recently in Denmark. But are you comfortable with the current pricing?

We are doing corrections on our pricing in certain segments in Denmark, and that is both due to better understanding of large losses, but also inflation and the opportunity to do that. but in general I'm comfortable with the pricing level following those short-term actions that we will make.

Last question is what is the timeline for further geographical expansions?

Obviously we don't know, but I think that we're learning a lot from France. We learned a lot from UK. We've learned a lot from Denmark and Sweden when we've done and Finland. So continuing to explore new opportunities is something that we will do, that we are doing, and we're not in a rush at all, but it is an opportunity for Hungary and smart people in the company, up and coming stars, to look into further markets. So we look into, again, the other European markets in order to understand them better, follow up on what was the reason for why we didn't change it last time. Has anything changed? We look across the Atlantic as well to understand what opportunities are there. Now we're focusing on the existing markets. That's number one priority. And then France is number two priority and we will not enter a new market in the short medium term, but we will prepare because that teaches us something and we learn something from it and it gives our people development opportunities, which is what we're about.

Thank you. More for questions from here?

No dividend right on the slide here, is that just for Q3 or should it not expect anything for Q4 as well because of the growth you expect in France?

Well we will be wiser as we go on those growth opportunities but of course it's not only a short-term comment when we say that the probability has increased. And France is not a short term. We're not just dipping our toes and then leaving that market. So preparing for that is also related to a bit longer term. But what that will be is something I can't tell you now. But we'll be doing exactly what we do on the capital side, continuous evaluation of the risks and opportunities, and then we'll act accordingly on the capital side. Adjust that. Okay, it looks like we are done with the questions, so thank you everyone for joining both physically and online. See you again in February.