7/11/2024

speaker
John Smith
CEO

Hello and welcome to the presentation of Q2 results for Protektor Forsike. I will start with our culture and what we focus on. So today, this morning, we have focused on unique relationships. When we have an ambition of being a cost and quality leader, that needs to be reflected in what we follow up, the quality side. External has to do with the brokers who are our only partners. So we have talked about unique relationships and how we improve that sustainable over time. And to the results for the second quarter, the weak part of the actual number is on the combined ratio side at 94.5%. I'll come back to adjusting that and showing you our view of what the underlying realities is on the claim side later. And then on the growth side, we have a large quarter, especially in the UK, with 16% growth. And the result in total gives an earnings per share at 3.1 Norwegian kroner. In addition to the actual results, we will pay out a dividend of 2 kroners based on last year's results. But the more interesting and important other highlight here is on the France project, where we have an ambition and an outlook to quote business in quarter three. So it's becoming more and more specific and concrete what we are doing in the French markets. We'll continue to give you updates on that side, but no red flags so far. Then to the claims update and as I started out with there is something underneath these figures and the biggest thing is the amount of large losses or the share of large losses in the quarter. where that number is 12.5%, whereas the same number in quarter two 2023 was 4.7%, so 7.8 percentage points difference. Under these claims numbers, the motor side is what is weak. But as we have said previously, we have been late in correcting for a high inflation and a high increase in inflation. When we do the right actions to improve profitability as well, it takes some time to earn the premium with the higher rates which is the lagged effect that we mentioned in writing here. When it comes to the numbers on country level, you have Norway with very few large losses, so underlying slightly worse than what we show here in quarter two. Sweden is slightly worse but not a lot and Denmark a lot better because two of the largest losses happened in Denmark. One we mentioned in the beginning of the quarter but there was another one of similar size during the quarter and in UK we've had approximately what we should have of large losses. So, and on the run-off side, comparing last year to this year is very similar. I'll get back to an adjustment of the first half year when we look at the combined ratio in a couple of slides. So if you look at then what drives that large loss result, it is those two very large losses in Denmark and then one in UK. So three large losses. It's volatile on a quarterly basis, as we always say, also when we have less than the normalized level at approximately 7%. So three of them really make up the majority of that 12.5%. And then when you look at the runoff, as I mentioned, very similar to what we had last year, again on that side, that is from the Scandinavian countries, whereas UK has a loss in the quarter. And as always, there is volatility on a quarterly basis, not only on a country level, but also on a company level. And the growth side can spend a bit more time so you understand the underlying realities, which are also related to profitability. So all growth needs to be profitable. That's how it works in Protektor. This growth is built up by a strong renewal. So we have a renewal rate above 100, 101% in the quarter. That is obviously again built up by some churn, but fairly low churn compared to history. And then price increases on top of that. In addition to that, we have good new sales, obviously in the UK, 1st of April, which we mentioned in the quarter one report, and public sector, 1st of April in the UK is a very large date. So that was a strong result, but we have reported it before we have also have strong new sales in Norway and even underlying in the Swedish market because the negative growth in the quarter from Sweden is due to exit of the consumer schemes, which we have mentioned previously and Following quarter two there will be very limited effect from the last part of that exit. So now it's basically done. There are some technicalities in Denmark that give us a negative growth there, but it's a very small volume quarter. So underlying the market conditions allow us to correct for inflation and correct for poor profitability in the markets and products where that is needed. And we also have opportunities to win business at what we think is profitable levels in most countries. If we go to the less volatile part of the figures you see here, which is the first half year, and adjust for large losses between 2023 and 2024, you will see and and runoff results you will see that the 2024 results is two percentage points better than what it was in 2023 So if we normalize the large losses down to 7% for the 24 results, up to 7% for the 2023 results, and then do the small difference in runoff, then you will get two percentage points better underlying realities for first half of 24 compared to 23. So that's what we believe, and I have mentioned some of the actions that we are doing, then the renewal situation we have in our book. We also managed to get out of some unprofitable clients, so in that 101%, part of the churn is related to some larger unprofitable clients. So we are comfortable with the profitability situation and the outlook at the moment. Then over to the investment side, which on the results side, as we always say, a quarter is very short, even a half year is short. But the results here are relatively poor on the equity side, if you compare to the general indices. and on the bond side it is relatively strong, but there is also a strong market on the high yield side. The more important part here is that due to the reduction in spreads, the running yield is down 0.4 percentage points. And that obviously also, as you see in the presentation, is a decreased risk on the bond side. So nothing large happening on the equity side, other than that when we perform relatively poor, then the discount to intrinsic value increases, so the future in our eyes looks even brighter then. So no other real changes. Those results give you this profit and loss overview and the capital situation is solid. We have a positive result that contributes on the equity side and then we have growth that drives the requirement up. but a very unchanged and solid situation which including the risk evaluations of all different risks in the company makes us believe that it's right to pay out the dividend according to the dividend policy that we have at two kroner this quarter. So with that, we are back to who we are and the unique relationships that we are focusing on now. We will have the annual broker survey in UK during the summer and then early autumn in the Nordic countries and have the results either for the quarter three report or the quarter four report. We will obviously update you on the situation there. The important thing is that we do the actions that we need to do in order to improve the relationship we have with our brokers. The summary is the same as the beginning, and then I did forget to mention that you would have to send in questions during the presentation, but I assume that those who have questions have done so, and I'll ask in a short while here. but just to repeat the summary of the quarter it is a relatively high combined ratio you need to look under the numbers in order to understand what it really is and there are a lot of large losses in the quarter even when you look at the first half year relative to a normalized situation and and the capital situation is solid. Project France is progressing according to plan and we expect to quote in quarter three. Are there any questions, Elisabeth? No. No questions. So then for me, it's just left to wish you all an inspiring summer. And I will take off to Sardinia tomorrow to see my family there. Looking forward to that. But even more to come back to an energized team and a second half here in Protektor. Thank you very much.

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