Protector Forsikring Ord

The presentation of first quarter results 25 for Protektor. In the beginning, I will, as always, if I make this work, say a few words of what we did this morning. And it had to do with this, our culture. and understanding that in relation to what I would call a crossroad that we're at. I mentioned data as a main focus in the quarter four presentation. So it's one of two targets we have for 2025. Profitable growth is one. You could say that's two, but normally we would have three or four if you say profitable growth is two. Now, data as currency, is what we call it, is number two. Understanding that in relation to who we are and what it means to recruit, develop, retain the right people. And I think the right people is important. And also what it means in order to develop how we understand what it means to be the challenger and what our values mean has been part of the presentation and discussion this morning. One central initiative that we have made has to do with technology. So when we say something, we mean it. And when data is one of the targets, then we mean it. We set targets, specific measurable targets, define what it means. But we have also launched, as an early starter, an AI tool for all employees in Protektor, which can help us in many ways, but maybe most importantly, will make it visible that data is extremely important, because without data, that doesn't work. So when 600 people have access to something that will make their everyday easier and more interesting, but it doesn't work if you don't have a good structure on your data and good quality on your data or enough data, then we can accelerate that culture of understanding what data means. So that's been the main topic this morning when releasing the results for quarter one. And the results, they are very strong. So the headlines of 85.9% combined ratio. I'll get back to that needs to be adjusted up because there is fewer large losses and some runoff gains in that figure. A strong growth in the first quarter, which is old news. We've talked about 1st of January previously. and a strong profit at the end with a strong investment result amounting to nine kroners per share. We've also mentioned a few other news during the quarter. The tier two bond, which I will come back to on the solvency side later was placed successfully. We have also signed an agreement of transferring the workers' comp portfolio in Denmark fully to Darragh, which we've had a loss portfolio transfer agreement with since 2021. So they've had 70% of their reserves up until October 21. And Now that's a full agreement, subject to some conditions and approvals. So that's in use. We don't do that kind of business anymore, so it would be good to get it out of our books and out of the Danish organization. It will have limited effect on both profit and loss and the capital situation. Other than that, the news in the quarter is about April 1st in the UK, where I'll get back to a bit more around it later, but where we've had a more normalized growth, but still strong growth on that quarter. And obviously the turbulence in the financial markets and the trade war, as we have named it. So I'll get back to all of that. So on the growth side, we've mentioned here a very small number. It's not very important, but when there are some specific technical elements to the growth numbers, we can mention it so that you understand that the very low figure in a fairly small quarter for UK is actually slightly higher than that. The running rate is more similar to what the 1st of April numbers are. and that's due to a change of inception dates of some volume, but it doesn't matter for Protektor as a whole, but then you understand more that the running rate is similar to 1st of April. Other than that, we have very strong growth in Norway, Denmark we mentioned that that's first of January mostly and the market situation is rational in Norway and Denmark is the way we see it whereas in Sweden there is some more competition and from our point of view also some irrational competition in particular on the on the motor sites we have a slightly higher turn on on on the Swedish portfolio and slightly lower heat ratios in new sales than we have in the other Scandinavian countries. So that's the situation for quarter one. the UK and public sector first. There is a normalised competitive environment, more back to where we were previously. We've expected this. I think it's good that it returns to some kind of a normal situation because it has not been normal, in particular 1st of April 2023. But what it means to us is that we don't win as many of the slightly higher risk clients with higher premiums and higher rates, but we still win a fairly large share of what we call the green risks, the green and white risks. So that's how that has turned out, 1st of April 2025. And in the commercial sector, UK, we have had some issues on motor profitability with increased prices and we have a slightly higher churn there and don't win as much business as we have done previously. So it's more of a normalized situation, a softening market in the UK, and then very much the same situation in Norway, Sweden, Denmark. We've talked about France, nothing large has happened there since the 1st of January wins that we released 20th of January, but it is a start. And that start also shows in the profitability figures. So I can start with the smallest country first, which is France, when Finland is included in Sweden, where obviously we have a high cost in the beginning in a new market, but we've also had one fire. one large loss in the French portfolio. I think that's good. We get to test how we handle a claim like that. We've had it in almost every country we've entered in the first quarter following first or second quarter. So I don't think that's statistically significant, but at least it has happened. So it's an observation. And so we don't know anything about the French profitability. That's the point. There's one large loss there. It's high cost. We don't know anything yet. What we know is that we've underwritten the French business at what we think will be profitable levels. So let's see when we get a bit further down the line. There is some lag on reporting since the brokers do claims handling up to 20,000 euros in France. That's the same for everyone in the market. So there's some lag in the reporting. a bit more in the blind in the short term. And then we'll get that going and we'll also challenge that process so we get better reporting. The other countries have improvements relative to 24. but basically no large losses on the UK with some, five and a half percentage points or something in the UK and the rest is basically zero. So that needs to be adjusted. When it comes to runoff gains, or runoff, there are gains in 25, and we have losses in 24, and the gains are mostly on the property side. We have some losses on motor in Scandinavia. If you do the simple adjustment or normalization of the results, you'll have approximately 1.6 percentage points worse combined ratio. So 1.5 or 7 on the claim side in 25 relative to 24. Parts of it, or a small part of it, is France, of course. Now that's included in the figures. So if you normalized France, you'd get a slightly lower loss ratio. But the rest of it is some volatility. And my view is that the underlying reality is better in 25 than what it was in 24. And it will be too complicated to go into all the smaller reasons for why that's the truth. But that's my view, at least. I forgot to say that questions during the presentation are welcome. So please ask questions during the presentation or wait till the end. It doesn't matter. Almen has a microphone.

You could probably repeat. How do you deal with the cost on claims handling in France? Is it on the commission side? Or do you pay directly to the brokers the claims handling cost on the frequency-based cost you just mentioned?

So the question is about the claims handling cost for the smaller claims in France. Is it booked on the commission side or on the claim side? And the answer is that it is part of the commission to a large extent, but then there are specific claims handling costs that are allocated to the claim. So most of it is in the commission. Jan-Erik, you can...

Just one outside on the motor side. There's no change to risk appetite, but you need some action within the motor pricing. So how much have you sort of changed your pricing during 2024, and how much more is needed in 2025, and in which countries is the most important? Is it Sweden, as you mentioned?

So we have, during 24, we have had profitability improvements, so price increases well above inflation. So we've had double digits. price increases on Malta during 2024. So some of that comes into effect obviously in 2025 as well. But there are still actions necessary and most of it is in Norway and UK. Inflation has been higher in Norway than the other countries, and in the UK we have some lag on our profitability improvement due to long-term agreements that have not counted for inflation in a good enough way. So it takes a bit longer to get those contracts up to profitability. But it's going in the right direction. And some of the poor development on the motors of the runoff losses are from medium-sized losses and not what we define as large losses here, but medium-sized losses. So there are few losses. It's not a structural problem with a lot of... So it's UK, Norway, and we've done most of what we thought we needed to do in 24, but there's still actions needed. And obviously in Norway, quarter one is, even though it was a mild winter, it's still a seasonality effect in the Norwegian figures.

What do you reckon is the most important long-term problem which Protector is facing?

That's a good, wide question. So we have processes where we have a productive paranoia process. We approach our strategy processes with risks. So all the risks we have in the company are what forms the basis for how we look at our future. And on top of it, in financial terms, we have natural catastrophes. That's basically where the changing environment, there's a lot of uncertainty on that. But in general, My clear view of what the biggest challenge we have is, is about staying who we are, the challenger, and not becoming like everyone else. So it has to do with people and our culture. Because as we grow, there are more requirements that come from the outside and that are very simple to set on the inside. And we need to break down those walls and ceilings and floors and really make sure that we continue transforming and developing and staying who we are. So that's by far the biggest challenge we are facing, in my opinion. I think it's good that we start new markets because that reminds us of who we are and we get immediate support from a French team who is hungry and needs to do absolutely everything themselves. And we get improvement from a new team looking at our processes and challenging them because it's not only about challenging the industry anymore. It's about challenging ourselves, asking the question, why do we do it this way? And we're not allowed to say because we always did it that way. There needs to be a reason for it or else we need to change it.

Could you give a bit more of a comment on the competitive situation in Sweden, which you said was kind of slightly irrational? Is that related to portfolios, to public sector, commercial sector, or all over the place?

So it's mainly two competitors that we experience taking a lot of volume at lower prices than what we see as profitable. A lot of it has come in portfolios with some of the larger brokers amongst those Sødeberg and partners. And the other competitor is in public sector and in commercial, LF. That's unpredictable because it's not one company, it's 23 or something. But both of them have had fairly poor results following the increased inflation. So I don't really understand how they can price the way they do. So it's mainly two competitors. It's very large clients, portfolios, less in public sector. Okay. Thank you for the questions. This is more just to continue showing that when it comes to large losses, look at the long picture. Same with the runoff. Approximately 7% on large losses. It's not a trend, Q4 and Q1 here. That's just a coincidence that they are fairly similar and lower than normalized. And the best estimate on the runoff side should be approximately neutral over time. And then it's the overview of all these figures, including the cost. And I did mention cost as the weak side of our Q4 or full year 24 figures. And you can say that this is also on the weak side. A slight improvement there. There is not a lot of effect from the long-term bonus scheme that we have. It's fairly similar effect on 24 Q1 as 25. Obviously, you have France included here, but the cost position is not improving significantly. with the entry level we had, as I mentioned in the last presentation, it was not expected that this was going to quickly fall either. So we're helped by the volume growth. The new element on the cost side is that we have obviously worked in understanding the cost side better during 24 when we had that as one of the targets and really focused on it. We're more confident in the efficiency improvements that we have been able to make, but we're also more certain about the investments that we can make with the additional capacity we have. And it has to do with data, and it has to do with developing new technology or utilizing new technology to take advantage of that data. So we will continue to invest in competence and capacity that can drive that improvement going forward. The efficiency gains will come. Quality first.

just a quick question on the Danish cost ratio it's reduced quite a bit and even more when you exclude the commissions is there anything that's changed in Denmark or is that yeah

So last we've had a high very high turnover and a double cost of certain teams in Denmark in 24, 23, 24. So if you read our annual report carefully I think you can find figures that are above 30% turnover in the Danish teams. So you see some of that coming into those Danish figures. Other than that, it's not anything special. Jan-Erik?

Thank you, Jan-Erik from ABG again. On the UK side here, the 58.8 here on the loss ratio, gross error 69.4, looks fantastic in that sense. You mentioned that you had low or large losses in some markets. Is UK one of them? Because you said also that UK and France was where you actually had losses. So how should we read your sort of normalization here if you could just mention it? France, of course, on the worse side. But if you could just shed some light into UK, Sweden, Norway, and Denmark in terms of your normalization, please.

The simple way to see it is that you'd have to have slightly lower large loss rate in Norway, Denmark, Sweden, and slightly higher in the UK. That has to do with the personal injury side on the liability and motor. So let's say that it's eight or something in the UK and six in the other countries, then you need to increase Sweden, Norway, Denmark by six, basically, and then you have to increase UK by two and a half or three. Okay, so then we're over to investment side, and at some point this felt like very old news. Now it's not that different again. But the important points there is that during the quarter one, we had further spread tightening on the bond portfolio, which has reduced the running yield by 0.1 percentage points. and we've had a strong return on the equity portfolio. That's volatile, as you know, a quarter is nothing, but obviously you could argue, and I get back to that, that when we had our trade war momentum meetings, obviously map the portfolio and we have a low direct exposure to the tariffs in the companies that we own, that could be one of the reasons. So there's nothing special here other than that the investment portfolio obviously grows a lot with the growth in the insurance side and also the bond that we have placed. Any questions here? Yep, I can do that. I can come to that when I just qualitatively say something about the crisis handling we've had to inform you about that. There is one figure on here that you So Jan-Erik mentioned it on the gross side, a very low figure for UK loss ratio. And you also see that the net result from reinsurance contracts held is a lot higher than what it was in quarter 1.24. The main reason for it, or at least a bit more than half of the reason, is because we've had a reduction of a claim that has only affected the gross side, so only the reinsurance. It's a very large claim in the UK that has been reduced. The Ogden rate was changed, and that's part of the reason. So that's more than half of that. And the other part of it is that when we grow, when the share of portfolio in markets with higher reinsurance cover needed or higher reinsurance cost, then that figure goes up. So in Denmark, UK and France, there is more CAT insurance. Cost on the property side, property is a large product for us. And in UK and France, personal injury, the liability reinsurance is a lot more expensive than what it is in the Nordic countries. When we grow more there, that figure is higher and rightfully so. So part of it is just a natural risk element and parts of it is a one-off. And that's what you should expect because it is difficult to normalize this figure. It's built up by some areas where the reinsurers should over time have 20-30% margin. Other areas such as solvency protection, capital protection, where there is a different margin type of view. And the weighted average of that needs to be looked at. You need to simulate this a lot of times and over a very long period of time to find the normalised. It will be volatile. It will reduce somewhat during 2025 due to an action we have done. where we have implemented loss limits on a large part of our portfolio, giving us less need for CAT reinsurance. So we'll reduce it slightly. At the end of the year, it will be approximately 60 million Danish kroner less in reinsurance premium. Thomas?

Yes, Thomas Svensson from SEB. Question on this reinsurance percentage. So if you look back in time, several years back in time, it was at a much lower level, and now we are at a higher level. Is it fair to say that the new level, I understand it's difficult, but it's around these levels that we are at now, or you expect it to come somewhat down, but... You still expect it to be below the historical levels?

Above, you mean? Yeah, above, yeah. Yeah, still is expected to be above. And the reason is that we have exposure. First of all, we have more exposure in products that require more reinsurance. And then it is about the new markets then, or UK, France, growing on the liability side, which has a higher cost on reinsurance. And then we will always, which is relevant to the capital area, always look at optimizing this situation where we will look at what kind of retention level, how much should we retain of the risk when we are more comfortable and have more data, and we are solid, we can retain more risk, especially if we see that the reinsurance market is pricing it wrong, in our opinion.

So how do you think the reinsurance market is now? Is it sort of in balance? So you are in a position where we can optimize or is it any changes?

Well, it has been very volatile lately, the reinsurance market. So it has been coming from most likely to low prices. So they've had some problems. and they reacted late on the increased inflation. But then following that, they managed to increase prices and be very aligned for some time. So now they're back in profitability. And I would say that the market in general is balanced now. Our programs are, we think we have a very balanced and good situation on the largest product property. And then we think we have two poor terms on the liability, UK and France.

Thank you.

So it is slightly special, the solvency situation in the quarter. Obviously, the profit for the quarter is added to own funds, but also the annuity or two bond. So that increases significantly at the same time as in spite of growth on the insurance side, the requirements are fairly stable. And that's due to some currency, some reinsurance and diversification, so the change in the composition of our risks. But that means that the total situation, and we We don't really look too much at this number because that's as is today a situation. It's about stressing the portfolio and seeing how much excess capital we have in such a situation because that's when we really need to know what it is. And that's also a very solid situation. So then the composition here is fairly similar, but a lower share of insurance risk than in the quarter. But the own funds have increased with the two elements that I mentioned. And then that is the main focus and the first part of what we do when something happens in the market and when we put additional effort into understanding what risks we are facing and also what opportunities we're facing. So the first thing we did following the launch of the tariffs and the market turbulence was that we looked at where are we from a capital perspective. How solid are we? And we have a fairly good idea of where we are in general every day, but then you have a new situation, so you add some new elements into it. And how does that affect our situation? That is mostly in the short term important for the investment portfolio, but obviously there could be something on the insurance portfolio. So we also did exposure mapping on the insurance portfolio. And following that, it's a little bit like COVID, but less risk, obviously, than what we had then. You had the business interruption element then. That was very uncertain. It's about inflation. So now, again, the uncertainty on what the inflation will be in the future is higher. So we need to address that. go out to the brokers, speak about it and do something about it. Not necessarily on the general level, but at least where we on the products we believe that will have the biggest effect and the trades. But then following that mapping is about updating and really focusing our efforts in seeing what opportunities do we have in the market. The watch lists are updated and looked at again, gone further into on the investment side. We have had good success previously on the bond side in turbulent times and to see when does something happen really follow closely what is happening in the market there coming from a very low-spread environment. Are there opportunities coming in? And then let's get together every morning with facts on the table. What has happened? What have we done? And what is the plan? So there is a lot of energy in these processes and it's not... We're not... in a bad mood when we go into this. And the point of showing it is more to just show you that this is what we do, to assess risk all the time. And when something like this happens, whether it is tariffs or a virus or something else going on in the world, then we test our ability to quickly get an overview of what exposures we have, what risks we have, sit down and discuss with different people. So then it is about the distribution this quarter. And as I've said before, we are, in spite of turbulence and good market opportunities on the insurance side, we are in a very solid position. And the board has decided to distribute some of that capital because we don't really have that many ideas. Then it's back to who we are and a summary. Any more questions? Thomas.

Yes, Thomas from SEB again. So if you look several years back and look at the SCR, we see that normally it's a big material jump from Q4 to Q1. Well, this year we had a 2% decline in the SCR. So how much is that geographical diversification with France? Or could you give some more details on this? Because it was quite an unusual move there.

I'm not sure. First of all, there is no geographical diversification in the countries we're in. So that's a simple answer to that. But I'm not sure if I understood the facts you presented, because you said that there is two percentage points.

Or largely unchanged SCR Q over Q. Yeah, the requirement. Yeah. While usually it jumps in Q1 versus Q4.

That is, so there's some currency in it. I'm not sure exactly how large that effect is, but maybe... We can get back to that if you ask the question in writing. The diversification is about the portfolio, so the mix of equities, bonds, and the insurance products, the different insurance products. And then the last part is Yeah. So increased profitability in the portfolio. So that's a 12-month forward-looking view on the requirements. So then the requirement goes down and the profitability is better.

OK, just one final overall question. So you said the underlying combined was somewhat up year on year. But in your view, it's actually better. But looking one year ahead, what trajectory do you see on the underlying combined? Should we expect it to stay here or should we expect it to increase?

I think that we have that one slide every time for a reason where we say that expect volatility on a quarterly level and even on an annual level for the company. Our target is unchanged. We'll have less than 91% combined ratio and Depending on the market opportunities, so the existing portfolio is improving. That's that's what I'm saying so that the existing portfolio is at a better level than it was in 24, but then we sell new business and depending on The opportunities there and how much so if you have a large share of new sales going forward in markets with with a high competition, then we'll sell at slightly higher combined ratios than what the running rate is on our portfolio. But the portfolio now is improved from 24 and continues to be improved with price increases that at least counters inflation. The same goes for quarter one.

Thank you.

Just two more from my side, from ABG. The first one on the financial side, did you mention anything on the status as of now? And second is the Liability side, or the product liability in UK and France, what kind of products are they sold as? Is it a long-term sale product, a short one-year product, or how should we understand the sort of increased reinsurance cost of that product due to this, and how long is it? So these two questions, thank you.

Okay, first the answer on the investment portfolio. The most updated on the investment portfolio is slightly down since quarter one, but we're speaking some, I don't know today. I'm sure Dagmar just doesn't know exactly today either. We don't follow this on a daily basis. Right now we've paused that process, but some tens of millions. down, but nothing. When it comes to the liability side in UK and France, the majority is motor third-party liability, so that's where most of the premium is. We don't sell liability in France yet. So there's no normal general liability, so it's only motor third-party liability. In the UK, we do sell liability, and then you have two products which are medium-tailed employee liability and general liability, product liability. That's a very small share of our portfolio, the liabilities.

I was just wondering, what do you reckon is the biggest thing you have learned in the last 12 months while driving Protector?

Again, a question I need to think a little bit about. I think it's related to what I started out with. So my opinion is that we have good data. We are fairly good at utilizing data and we have a fairly good structure on our data. Once we have really started focusing on it, my opinion is that we have a lot more potential for improvement on the data side than I thought. So I think maybe that's the biggest learning from 2024.

Herman from Pareto Securities. Just trying to understand back to the underlying profitability in the UK. Because you have 5% large losses and net reinsurance seems a bit high because you have some negative recoveries, right? So you think that's a good representation of where the portfolio is at the moment? Or not far from it at least because it's obviously very strong.

It is very strong. So I would say it is a fair representation of it. But it's not something you should expect it to be going forward. And I also mentioned when we had very high growth in the UK public sector, we had the opportunity to price those clients with higher margin than what we normally have. And this is a result of that. Some of those contracts were three, four year contracts, some five, so maybe four on average. And then they will roll out to the market. And when the market is back, the margin will gradually then reduce.

And you're now writing more, as you say, green and white risks. Have your pricing changed anything since the last couple of 1st of April in these areas?

Yes, I would say that it is slightly sharper pricing also on the green and white risks.

On further expansions, in terms of resources in the organization, do you think, would it be, are you able to enter new markets while you're at sort of subscale in France or next couple of years, just thinking around that?

But I think that there is a comprehensive process in collecting the data and preparing for a new market, and we have resources to do that part of the job. And by the time we have that data and we have prepared, then I think we have enough capacity and that it is good timing to a new market again. But right now, we wouldn't start a new market with France being where it is right now. But we're starting to look. Thank you. All right, no more questions. Thank you for coming. Thanks for the questions.