Protector Forsikring Ord

All right, welcome to the presentation of Protectors full year 25 results. We will focus on the full year, a quarter is volatile, we say that all the time, focus on the full year result that is more interesting and says more about the underlying realities of the business. And before I go into the results, I always spend a little bit of time on who we are. And what we did this morning was to continue on looking at what the challenger should be in the future. And one thing that we care about is that we even when we are 700 people, even when we grow in a number of countries, that we still act as one team, which is a bit contradictory to a performance culture where we compete against each other and also that we want local decisions and also that we want each individual in the company to make decisions because they are where it happens and they should know what decisions to make so so that's what the challenger is it is about making everything we do focused and simplistic but when it comes to culture we need to complicate it in order to spend time and really understand so that we're on the same platform and the same grounds for the future because i think that's extremely important in order to stay who we are the challenger And then to the highlights, other than that 84.7% combined ratio and a 14% growth with an investment result of a return of 1.5 billion Norwegian kroner, leading to 31.7%. kroners per share in earnings. We have had some other activities in the quarter, one being the placement of a tier one bond where the market was good, so with good terms on that. Maybe the biggest, other than the growth for 1st of January, which I come back to, news is that we have now been relieved of the maybe biggest mistake that we've made in in protected workers compensation in in denmark where we took on board a portfolio knowing that we didn't have the exact data we needed to underwrite it but but we underestimated the downside of that portfolio and and we have now sold that, so the agreement with Darragh is completed and we can now focus on the lines of business and the business that we know how to do in Denmark. So that's very good. I'll get back to the reinsurance side and the growth later on. And speaking about the growth, I think that it is important, in particular following the 1st of January with high growth, it's important to remember how the portfolio is put together. And what we see here is a development. The development is driven by disciplined underwriting. So we underwrite in all these segments. And remember that the commercial segments, so if you look at the segment distribution on the left of the cake diagrams here, commercial sector in all countries is bigger than the public and housing sectors. But we have grown more in the public sector. That is due to mostly market conditions. It's been more rational pricing in the public and housing sectors than what it has been in the commercial sector. So that's why public sector and housing has grown a lot also in the past five-year period. And property and motor by far are biggest products, short tail products. And UK is now close to half the business or at least 42% of the business. But it's also important to remember that the 1st of January growth is related to the Scandinavian markets or the Nordic markets and France. Not UK. And the market conditions are different in those two geographies. So it's been easier to grow in the Nordics and France than what it has been in the UK the past year. So it's just a support so that you see what the inception structure in our portfolio was in the years from 21 to 25. Obviously, we don't know exactly how that will look in 26, but at least you then see that distribution. And when it comes to 2025, what you have seen throughout the year is that from the UK, we've had a good 1st of April in public sector and housing, but I've also said and we've also experienced that the market has been softening. So rates have been going down, especially on the property product in the commercial sector. So it is slightly harder to achieve price increases. It's slightly harder to renew clients and also to get new sales. But the churn in the UK during 2025 has been good. So we've managed to keep the churn at a good level, around slightly above 10%. and been disciplined in the new sales side. And then we've had strong growth in the other territories or in Scandinavia. And that is supported by good renewals, renewal rate of 95% in total for the company. It's basically the same in the Nordics. and but we've also had some new sales so so the markets there are it's good on the norwegian business which has the highest growth out of the scandinavian countries on 1st of january 26 So a similar situation to what you see here. Denmark is number two, 1st of January, 26. But Sweden has a lower growth in 26. So Sweden is the market where there is still more competition and more competition that we view as irrational. And then you have the French business, of course, where not a lot happens in quarter four. So most of it is old news of the start there. However, 1st of January is an interesting time. because we communicated an estimated number of what we thought we would quote for 1st of January following quarter 3. And that number was roughly right. So what we have... seen in the market for 1st of Jan in France is that we have won approximately 10% of what we have quoted in the commercial sector space, Malta. And that's a lower figure than what we are used to in Scandinavia. It's more in line with what we are used to on the motor side in the UK. And then on the housing sector, where most of the property volume from 25 comes from, we have basically won nothing. 1st of January, 26. So one of the big competitors, AXA, has come in and lowered prices a lot compared to what they did in 25. So it's not a hat trick in France. We have not one volume in all the segments we're in, but we've got some traction on the municipality side, the public sector side, where the market situation is very different from the housing sector. And the interesting thing is that the housing sector is quite similar to what we know in the UK, where there is low deductibles, lots of escape of water claims, and calculating the price is not... very difficult. So when we may make a mistake and the competitors, the price lower than us, they may know something we don't. Absolutely. It's new. We're new in France. But at the same time, it's difficult to see that it's very sustainable, those levels that we see in the housing sector now. So at some point, we believe that we can have a success there as well. Maybe not in the same way as 23 in the UK, but at least it's not on the public sector side, which is more about large loss and risk selection. Yeah? Sorry, I forgot to say that. So please ask questions during the presentation.

potential volume, and that your expected quotation rate would be around 70 to 75, but you're actually saying it's still growing.

So it continued to grow, not a lot from that, but the quotation rate went slightly down, both because of capacity, our own capacity. So we prepared as well as we could, but we didn't have enough manpower to do that with quality. So the The actual number is very similar to what you could derive out of the 370 to 75 in quotes. Any more questions on the volume side? And please ask questions in writing as well. Okay, again, when we look at the full year, we also bring out the longer picture here. And there is volatility in not only the runoff and the large losses, but also on the loss ratio below those large losses and without the runoff. The large loss situation in 2025 is lower than what we have said is normalized. And the comment on the top pair going from 7 to 8, I'll get back to when I speak about the reinsurance, but that goes for 26, not for 25. So for 25, it's still a normalized level at 7% approximately. So we're slightly lower than the normalized level in 2025. And we've had some runoff gains, even though it's best estimate. But I've also said previously that following a period with uncertain inflation, you should expect that there is a bit more uncertainty and then there could be some runoff gains from that situation if we have been on the conservative side. And then when it comes to claims, I think the important message here is to say that if we compare full year 25 to full year 24, and you normalise for run-off and large losses, all countries are slightly better. on the loss ratio side. So it's an improvement coming from the price increases where we have unprofitable products or clients. And that's the simple way of seeing it. The only country that is slightly up but very much the same is Sweden. And then there are some technicalities, one of which is related to the transfer of the Danish workers' comp portfolio. So the risk margin is... is reduced. It's a one-off of approximately 80 million for the quarter and the year due to lower risk in the remaining portfolio. I've changed that model. And then there is a a small between the countries has nothing to or no consequence on the total loss ratio but between the countries there is a we've changed the this from a standard very old model of of calculating the future claims handling costs and that changes the distribution with a slightly lower cost which is claims handling cost is on the loss ratio for UK so UK is slightly higher and then Norway and Sweden have had a bit more of that cost and that's a one-off again so they're slightly lower and with that information it's the conclusion is that all countries compared to 24 are slightly better normalized for all of that Any questions on the loss development side? You have all the figures on large loss in order to normalize on all these levels, so I won't go through each of them, but that's the total picture. So we have cost and quality leadership leading to profitable growth as our targets. The cost side is very flat. There is no or very limited efficiency improvements in what you see here. There are some effects that... make this 25 look higher than 24. But if you correct for the fact that the share price has increased, we've talked about that before, more than what it did in 24, and that is connected to an incentive-based share program for some employees, and France, then you'll get slightly lower than what we had in 24. on the cost side, but there is no or very limited efficiency improvement. And we do that consciously, but of course we do want to see the effects of that investment we make. I think it's more likely that we see that effect in new opportunities for growth, that we spend it on developing the company on the growth side to grow, then that we cut and slim down departments very quickly in order to get the low cost. And that takes some time, as you understand. So I think there's nothing very special to comment on here other than those comments I've already had, unless you have any questions on specific countries or the totality on cost. Continue to the quality leadership. Last time we brought this up, we had the UK survey with the brokers, where we got very strong feedback. We've also had the Scandinavian or the Nordic surveys out and had very strong feedback. And it's especially good to see that we are increasing the distance to our competitors in all the Scandinavian countries. And we are also winning more prices, external prices from the brokers. So the largest broker in Scandinavia, we are number one in Sweden and in Norway. And we've also won other external surveys that support our own survey. But at the same time, and as always, the most important thing about this survey is to understand that feedback, use it as a basis to discuss with the brokers, who are our best and only friends, how we can improve, what we should prioritize to improve in the future. So this is good news. It doesn't automatically mean that we will get more business from the brokers, but it means that we're in a position to require more from our best and only friends. And I think that's the important part, that the long-term... The long-term gain from this is that we can require better data, more data. We can require that they invest together with us in competing against the direct channels and that we can do those larger projects because you say that we are the best partner for you. So that's a good thing, but it doesn't mean that we win more clients tomorrow. Yeah, there is basically nothing I haven't touched upon here since we've talked about the cost previously as well. So I'll move forward to the investment side. And yeah, when you see this, it's per 31st of May. December and does not then include the reduction from the transfer of the workers' comp agreement which is for 26 and it does not include the new growth of course. So that's a change. But the results on the investment side are strong in absolute terms and relative, especially on the equity side, but also on the bond side in a very strong market. The yield is down due to the reference rate, if you compare it to last year. Other than that, on the bond side, it's a very similar portfolio. We steer interest rate towards our liabilities and we have a slightly shorter duration in our reserves, so that's down. And then you see the comment at the end that we have the assets under management are reduced by the transaction amount, so the reserves that we had on the Danish workers' comp portfolio, approximately 1 billion. Norwegian kronor. And on the equity side, I think it's right to say that it's a both absolute and relatively strong result. There is some changes in the portfolio. You've seen that the discount to intrinsic value has reduced significantly from last year. Some of it is obviously that we've had had the gain that we have so share prices have gone up but there are also some companies or some sectors that have performed worse than what we have expected so there have been some changes in the intrinsic value so we're open as a value and this year it has been some disappointments on certain segments and companies and some changes in that portfolio but even though it's the same number of holding there have been some changes in the portfolio during 2025, and you'll see that in the annual report, what we had at year-end 2025. Any questions to the investment side? We have a microphone.

You managed to earn annual rate of return on investments of like 14% over the last 10 years, which is on the last slide. How did you do that? And are you going to keep on doing it? Or is it going to be another number in the next 10 years?

Yeah. Dag Marius is here and he's in charge of that but I can answer that question in at least a simple way and that is that we believe in what we're doing and we will continue believing in doing that so Investment is core business for Protektor, as insurance is. And we will continue to, step by step, have improvements in our processes. But what the future will give, that's very difficult to say. Our ambition is to beat the market over time. And we think that those processes are set to do so. So unless Dagmaris has anything to add. On the income statement here, we have a couple of comments, and I've touched upon one of them before, the change in risk adjustment. It's an IFRS element, so it's on top of the best estimate reserves. There is a risk adjustment in IFRS, and when a long-tailed reserve portfolio is out of our portfolio, then the risk in total for the rest of the portfolio is lower. So that's why we've made that change. It's a one-off and it should be a stable number or fairly stable number in the future, depending on where the growth comes from. And then it's the larger change that we've made on reinsurance. And it's a bit complicated just because there are no figures that will exactly clarify what has happened on the reinsurance side in the accounts. But to make it simple, we see it from two sides. So I said that we increased the large loss, normalized large loss rates by one percentage point from seven to approximately eight. So we're taking a bit more risk ourselves, buying less reinsurance on certain programs. I'll get back to that. And then on the other side, we pay less for that reinsurance. And we wouldn't have done that if we didn't think it was a good idea. And we've done that on the areas where we have a lot of data. So where we think that we're actually able to predict returns. what those large losses will be over time. So one angle is that we have increased risk, and that will mean that it's the very large losses. And as you've seen, the last five years, our large loss rate is lower than 7%. And so these are the very large losses. So it's not something that will happen every year. This is a volatile element. It's a volatile part. It's far out on the tail, that one percentage point that we're speaking about. And then the reduction in cost is then higher than what that increase is. On the capital development side, on the home funds, we have the tier one that we issued. And then as we're growing, we utilize more of the tier two capital that we have issued previously. And then that's basically the same amount as the dividends that will be paid. So that's stable. And then on the requirement side, it's on the insurance side that there is a change and it's related to reinsurance and that's the other angle to that reinsurance exercise that we so it's increased approximately 300 million Norwegian kroner in the requirement side and When we do that and we have a target or a requirement of 20% return on that capital we need to hold for 300 million insurance risk, which is higher than 300, of course, then our view is that has to be that it's much higher or higher than 20% return on that equity. And our estimation is that it is much higher than that. If not, we wouldn't have done it. So what we have done is to say that on what we call risk, the risk program, that's basically fires that can be that large on the risk program, we have increased from 100 million Scandinavian kroners or 10 million pounds or euros to 300 or 30 and that's because we have very solid data sets to document and to calculate losses between or up to 300 and the price is too high. So let's not buy it. We can take that volatility. But obviously there will be slightly more volatility in our results. But the economic realities of it is that it's the right thing to do. The cut is different, so natural catastrophes, that's different. Just like predicting the interest rate, I don't think we should believe that we are best in the world at predicting what the weather will look like and what climate changes will do. So to increase too much on that side, obviously we have a view of both how we select risks when it comes to natural catastrophes. We have processes and data that aim to avoid the worst ones, where there will be the most flood or the most windstorm damage. But to predict the consequence of weather-related damage to our portfolio is difficult. So we have increased the retention on the traditional programme to the same level, or actually higher since it is in Danish kroner, as on the risk side, but that's only for the first loss. Then we bought more reinsurance that reduces that to 100 million Danish on the second loss. And the reason is basically that we don't think we know exactly how to calculate that. On the UK liability, it's just a too high price, so then we say that you pay this price, or we take it ourselves to the reinsurers, and some wanted to pay that price, or take that price, and some didn't, so then we took a higher share of the layer between 10 million and 25 million pounds on UK liability. And we are much more comfortable with that portfolio today than what we were when we entered the UK. Any questions on the reinsurance side? Sorry.

Thank you for the walkthrough, Henrik. One, I think that what you're doing sounds reasonable, absolutely, so we like it. What's your estimated or guesstimated increase in retention rate after this one? Because when we do our calculation, we end up at... you estimate a large loss ratio to go up from seven to eight, and our estimation is that the retention rate will increase with around 2.0 percentage points. Is that a fair assumption, would you say?

Yeah, I think that's a fair assumption. And obviously, it depends on how the portfolio develops, but with a 25 portfolio, it's a fair assumption. The distribution policy, it is very similar to what we have had previously. What you do see is, for the one who has studied it next to each other, is that the arrow is slightly taller, the green starts slightly higher up, and the blue box above 200 is slightly higher than the one below. And that is to reflect the process that we have, where it's not really about these numbers, 200 or 150 is important, that's a bottom, and then there are activities but it's about the risks that we look at and evaluate every quarter on the different areas mainly the insurance side and the investment side but but all the the underlying risks from from them and and then the stress scenarios and what we have in a stress situation because what we always want to be sure of is that we are ready to act on profitable growth and good investment opportunities in a crisis situation but at the same time not to get lazy obviously and make sure that we don't think that we can make a lot more than you if we don't see those opportunities right in front of us. But it's a quarterly process or a continuous process with a quarterly decision. And it happens after we know what the results are, not before. Our long-term financial targets, no change in them. And it may seem a bit conservative to say 91% combined ratio with the history of the past five years and the underlying realities. When I say that they look good and we deliver 85, they still look good. But But it is something about the growth, the protector as the growth company. Profitability is extremely important, but we also have to face the fact that in order to find new markets, there is a bit more uncertainty and we need price is the deciding factor. So 91 is long term, a very good return on equity. and the same there, conservative relative to those numbers, but I think that it is a good steering to have. And then we're back to the summary, and any questions on the totality or the last part?

Hello, my name is Per Halmerald. I have a question if I remember correctly at the last quarterly presentation, you talked about the possibility of entering a new market in the UK within real estate. Could you say something about, are you quoting for the first of April already or is it too soon? And could you say something about your volume expectations in this market?

Yeah, good question. I should probably have said something about it on the volume side. So we have quoted very selectively so far in the real estate market. We have won a handful of clients in that market. But the selectiveness is due to the fact that we... We basically only quote what looks like what we have from before. Housing, for instance, in the real estate sector. And in that part of the real estate segment, and especially for the large clients, it seems like the rates are a bit too low. So we haven't won many of the larger clients there yet. But we have quoted very little so far, so it's a bit unsure if the market intelligence is significant. But we're building those databases with data from the brokers. We're actually getting large databases from the brokers. And when we have a more granular model that can separate the different types of risks within real estate, we are very ready to make that a quoting machine. So there we have the model, people and the setup. So we're feeding that with data. And then we've said that it's approximately one billion pounds in that market for what we have risk appetite for. And over time, and I don't know what that is, let's say it could be three years if it's a hard market and a rational market, it could be seven years if it's a bit up and down, but we should have a... large share of that market meaning at least double digit percent or higher than that is is quite obvious because there is a lot of attrition attritional losses and cost will matter in in that segment it's very similar to what we do so nothing in the figures for now no no good understanding of the market situation, but we're preparing, still preparing. First of April is not necessarily a very large date. It's more spread out on the real estate sector.

Good morning. Thomas Svensson from SCB. So question to your UK business, just to help us to try to calculate sort of that trajectory or the combined ratio there. So the business you have today, that's the back book, and then you have the front book. So how many years do you think it will take before you have replaced the favorable business with a new, maybe softer business?

So I've commented on this before and we haven't changed the view on it other than that the parts of the portfolio that should be out in 1st of April 26 is going to be smaller than what we estimated. So it's not coming out for tender but basically what you can can say is that for all the business we wrote in 23 which is the big inflow as first of April 23 it will be some clients with then three year but I'm saying that that's a smaller share than what is the normal and then some clients with a four-year before they go to market. And then, so let's say that it's approximately, I think I said that before, 40% on four years and 40% on five years and then 20% on three years. And then maybe it's 42 and 42. Okay, thank you. 16.

Okay, good. Just on your, if you look away from France, but just on your combined ratio, so are you thinking, are you prepared to go materially above or somewhat above 91% in certain of your established markets, if some are below, and you think about the average on your existing business, looking away from France? Yes.

I think on existing business we are prepared to write contracts over time that can be slightly above 91 on short-tailed business, if it makes sense, and that can mean first year, not to do a two-price system, but that it is necessary to come in on a higher combined ratio than, or significantly higher than 91 on the first year, with mechanisms and risk management initiatives that make it profitable over time. But maybe more interesting, I think, is that we're more interested in looking at new segments or going into business that we find data for, but that are new to us, which there is a bit more uncertainty. but we have a strong book in the bottom.

Hello, David Wallimest. A question regarding volume in Sweden going forward. You mentioned that it's still somewhat irrational pricing there and such a bit harder to gain volume. Should we expect the coming years, 26, 27, to be at approximately 25 levels or do you expect that to decrease or increase based on the market situation?

I think that it's very hard to predict what the competitors will do over the next two, three years. But what we see now is that it is still more difficult in Sweden, and that probably doesn't change tomorrow. But there are a couple of market movements in Sweden that can give us more opportunities. So one of the largest players in Sweden is not They haven't officially gone out with it, but they are not very interested in brokers. And that can give some better opportunities, more opportunities. There are also some large initiatives on facilities in the Swedish market, that goes for the whole Scandinavian market, where we have a very strong position with the brokers to do that cooperation. And then we're in a game where it's more about finding an efficient way of dealing with clients that are slightly smaller and give them a good product through a broker. And that can grow the broker significantly. market share, the broker's market share, and that's since the largest Scandinavian broker is headquartered in Sweden, they are furthest ahead there. So there are some market opportunities that can be bigger, but the competitive landscape is a bit volatile in Sweden.

You've probably been asked this question many times before, but why did you really choose France?

So the short version of that is that we looked at many countries on a high level. Do the brokers have a good market share? And is the market large enough that it is interesting to us? Is data available? in that market and public sector has been important for us. That is a market that has the same dynamics as we're used to with public procurement regulations and a similar type of insurance purchase. And then we, through the high level analysis, we started in Spain. We didn't get data in Spain. Then we went to France, which was number two. And then we met the brokers, got data in France, and then we can go to the table and at least have a similar starting point as competitors when it comes to competence and understanding of the history. No more questions. Thanks for meeting or listening in. We wish you a good day.