Protector Forsikring Ord

Hello and welcome to the presentation of second quarter 2026 results for Brotektøy. If you have any questions please ask them through email address ir at brotektøyforsikring.no during the presentation and we will answer at the end. As always we have started the day with all employees and which in the Oslo office were very few but what we then speak about is our culture related to targets and performance and with the picture changing with the world changing we have been focusing on defining the challenge what the challenger means in 2030 for some time today one of the focus areas was to link our values to that vision which is about data people and innovation and we have one value that is different from the others in that it is something we say we are and it is committed and one thing it is important that we are committed to and that will not change is our performance culture and our performance culture is something one of the reasons why we are different this goes every day but also in recruitment so if you don't like our performance culture then we probably shouldn't start in Protektor so we've linked that especially to data and AI which will be a part of our performance support structure, which is a monthly run-through in the teams where we look at results and performance on an individual and a team level and give each other feedback so that we can learn from what is done well and what mistakes were done. So it's a structure where we can add on elements that are changing around us and data is obviously a part of it, but technology is a bit more difficult to quantify, but we will add that to the structure for all employees. Then to the results, so it is quarter two is a very strong profitability quarter, 81.5% combined ratio. The growth is on the weaker side but we have communicated most of the growth which is related to the 1st of April inception date in the UK previously and the strong insurance service result together with the investment result gives a nine kroner per share result the other highlights there is we have confirmed or AMVEST has confirmed our credit rating with a stable outlook and the dividend I can get back to through the capital side when it comes to the growth so most of it is UK and most of it is 1st of April and we look at the local currency growth because that's what says something about what is going on in the different markets and we've always done that so we grow in all markets in the UK we have a situation where public sector especially the local authorities, municipalities are not out in the market due to a waiting game for the LGR, the local government reorganization or reform. So we don't see as much business there. and in addition to that it is the softening market that I have talked about previously and that is well known so rates are going down and so it's a similar situation in the biggest markets in the quarter UK and Sweden where we lose some existing clients and one part of it is about discipline So we can even know what rate we need to go to, so get a chance to get to that rate, but competitors are too far below the price that we think is possible, and then we have to let it go. So that's one part of it. On the rest of the portfolio, we managed to get price increases, at least to counter claims inflation. So the renewal process is running well, and obviously there are some unprofitable clients that go out. So our renewal rate in the quarter is 88%, and it's mostly driven by the factors that I have mentioned in the UK and Sweden. On the new sales side, we have the reduced volume in UK public sector. We see more in the commercial sector. We have quoted quite a lot of real estate business, but not with inception dates in quarter two. So that's more for quarter three. and potentially some quarter three clients and and we see quite a lot of volume in in the commercial sector in the Scandinavian countries Sweden has come further on the facilities with the brokers where brokers put together larger groups of clients and that has been longer in Sweden than it has in Norway and Denmark. So Sweden is having success, especially on the motor side, in these facilities and is back on a growth path and after being a slower growth in that market. in Norway and Denmark we are lagging on seeing the volume that we should see from the facilities that we already have access to and have one previously but that is also something that we believe will come but there is work to do in order to make it work both on our side and on the broker's side and then We have won the biggest client that we have ever won in the UK. It's a motor client. It is won because it is large enough that it is difficult to be irrational. Most competitors and us will come to the same conclusion when it comes to calculating the claims forecast. so this is a margin game but mostly a cost game so a client like this should be protector territory and we should win it and especially when it is possible to have a good long-term agreement that is transparent always then the cost leader should win So we're happy to win that client, and we will also use a client like this, which is a large fleet of homogenous drivers and cars, to work on how we can reduce the average claim size and make claims handling better. It's easier when you have a large client like that. So we have some good projects on making that client a success. Obviously, we can be wrong in what we have calculated, and there is risk in getting that type of a client on board, but we're very happy that we won that client. That's quarter three effect. When it comes to the claims, as I said, it is a very strong quarter, but we have lower than a normal level of large losses. in the quarter. So 4.6 is comparable to the 8% normalized level that we usually do. In addition to that, we have runoff gains in the quarter at 4%. So adjusting for those on the total level gives you a slightly improved loss ratio compared to quarter to 2025. And in a market that is softening, rates are going down. It is not necessarily an improvement that you're looking for, more like a stable situation. So we have a portfolio we are very comfortable with. it is property that it has the best loss ratio in all countries except for Denmark where we have some large losses and Malta where we have had some profitability issues previously is improving in Norway and Sweden where Denmark is still experiencing some issues we need to make adjustments are some medium-sized losses in in that portfolio as well but but there it is necessary to to make some price adjustments there and the same in Norway but not to the same no UK sorry so the same in UK where we have had poor profitability over some time on the motor product so we still need to increased prices and make adjustments to get back to profitability a good profitability level there On a longer level, you can see that we have not changed our view on what the normalized level of large losses is. 8% is still our view and runoff should be stable, but as I've mentioned previously, when there is more uncertainty in inflation and extraordinary inflation which we've had historically then uncertainty creates a bit more volatility and most likely on the side that we see now that there will be some runoff gains but it is best estimate always both for the case reserving and for our other reserving practice so we need to to to expect volatility on a quarterly level and even even on an annual level but the last thing that I haven't talked about this is cost is very stable and and this is a conscious choice that we use the excess capacity we have from efficiency improvements to develop and use that capacity in in projects to look at new markets and to make our work smarter so better processes and obviously data and technology that is our main focus going forward so because compared to last year is if you if you correct for or normalize for the long-term bonus plan which we have done for some time now which is connected to the share price there is a slight reduction for the second quarter on the cost side but it's very flat on the first half yeah on the investment side we there is not a lot going on there's a lot going on in the world but not not here so the bond portfolio is slightly down on yield due to spread tightening. And our companies in the equity portfolio have had a okay to good reporting quarter, quarter one. So, and no large changes there. for the income statement I think that there's one there's one figure here that that is can catch someone's eyes is the reinsurance ratio and as we've said previously that will be volatile we have some reinsurance that is Commission based and we don't book a commission in the first two quarters and if and if it continues to run well we will start booking that in quarter three and quarter four and then the other thing is that we have not had basically any recoveries from reinsurance in the quarter previous reinsurance contracts including workers Denmark have given some recoveries continues because they are more on a attritional basis than the excess or loss contracts we have now. So that's the reason. I should expect that to be lower in quarter three and quarter four, but this is normal practice and the right practice. and on the capital side obviously the capital increases with the result for the quarter and the requirement increases with the growth in the balance sheet and then we're back to the summary so it's a short run through of results now and the question is did we get any questions on the

Yes, we have some questions. You've talked a bit about some, answered some of them already, but could you kind of add some color on the expected profitability on this large new client in the UK?

So our target, long term target is 91% below 91% combined ratio and all clients should be there but what we have to do in a situation like this is to include the long term view meaning that the first year profitability is above the long-term target, but over time it should be close to the long-term target. Obviously, we can make mistakes here, and it's a large client.

So you're talking about the softening on soft UK market. What should kind of be a reasonable expectation on premium growth going forward in existing markets? I will set the question on real estate.

I think that the important thing that we work on is that we have enough opportunities so that we can see as much business in relevant segments as possible so we have the broker partners that are important to us that we have chosen and that have chosen us and we have our segments and to see as much as possible in them to quote as much as possible is what we can do anything about because the issue is that we don't know where that market will go and the market has been softening in the UK for a long time in certain segments we don't really see that it can do that forever because it's It's at unprofitable levels. And if it is for us, when we fault, then it must be for many others also with higher cost levels. But how long it takes, don't know. And then in the Scandinavian market, it's... It's about the facilities at the moment. That's the large opportunities and that's a partnership that needs to work before it comes. France is very stable from what we have seen before and it's a lot about 1st of January. Nothing we know about that date right now. Obviously it's very interesting to see if housing changes from last year where we didn't win any or very little. But we don't know. Can't really do anything about it. Thank you.

And then on the real estate in the UK, you mentioned that we have quoted some this quarter for Q3 and Q4. Can you say something more about the momentum there?

So we did say that it would be towards the end of this year that we're ready to quote, to really quote. We obviously have recruited some experience into that team which will be in place after summer and we have received a good amount of data. We are not at all seeing everything from the brokers that we are working at the moment and we're not quoting all of what we're seeing. but we are gradually working towards that situation so I expect that in quarter four we will see maybe we will see 50% of what we so then we'll start really getting some traction and then we'll quote a share of that what will win we don't know The first impression of the market is that rates are quite soft at the moment, just like the property segment in the UK in general, but not at unprofitable levels everywhere. So we are winning some clients. we have had a couple of quarters with higher runoff gains could you say something about which vintages they come from our products some more so they basically come from from our biggest largest our largest products property and motor and parts of it on property can be from larger claims that end up being smaller than what we reserved them at from the beginning. Sometimes for good solutions or cash settlements rather than rebuilding. So this quarter there is some of that and the rest is most likely more on that inflation comment that I mentioned previously, that when you have high uncertainty on inflation, then we need to add uncertainty, and then it's a slightly higher probability that we're on the upside than on the downside in our best estimates.

A question on the cost ratio linked to the growth in Sweden, seeing that the commission share has trended upwards in recent years in Sweden. Can you just say something about what's driving that?

So that's the facility growth in Sweden, where these facilities are also It's not necessarily a running commission rate that will be high on the facilities, but to establish them and get the processes up and running, that is higher. So when we get traction there, then the commission is higher as part of the facility setup and investments.

And on the improvement in Norway, especially on seemingly motor, you mentioned in Q1 that some of the new sales going into the year was poor. Is that performing better, or are there other explanations for the improvement in Norway?

We haven't had time to do a thorough analysis, obviously, a short time since we're done with the quarter here. but what I also mentioned after the first quarter is that the first thing is to confront the brutal facts and then we need to understand whether whether there are coincidences or volatility that drives a result as poor as it was in in the first quarter motor Norway and what it looks like is that parts of it was volatility and that it is better than we initially feared but as I said we we haven't had time to really run through frequency is normalized following Q2, and then it's more on the average claim size and understanding inflation that we haven't done thorough analysis of. I can't give a clear answer, but we will see throughout the next quarters.

Thank you. Then I have a question on motor. It represents roughly one-third of the portfolio currently. and mainly from commercial and public. What's our assessment and how do we prepare for the long-term impact of technology and autonomous vehicles in the business, particularly risk of lower accident frequency, shrinking motor premium, liability shifting from fleet owners to vehicle manufacturers and software providers. What do we do and how do we assess that?

We do the same as we do for all types of risks that are outside. We are listing everything we're afraid of and then prioritizing what we believe are the biggest risks. and then we we act on them to reduce them but but in this case it is so many of the elements that were mentioned in the in the questions are obviously risks that we can see and and that we to a certain degree are seeing but but we can't really stop the development so the development needs to happen and then it's about what type of pricing do we do if the risks change in general so if you have if you have the vehicles in in commercial sector I heard that the public sector was mentioned but that could be public sector as well that are utilized much more So because you don't need drivers, you can utilize the vehicle throughout the night and have a lot more miles on it. then that will have to be something that we implement in order to price for it so the same deliveries will be done for a transportation company most likely it will have the same total premium and claims and then we have tested technologies which tested having portfolios with technology to learn from what that means and how that can be used that was in Sweden an extensive learning but we have learned something from that and in general we follow our clients large clients closely and work together with in order to find out what are the biggest risks. If the motor market disappears, then it disappears, then we will have to find other ways of doing, but that's also a risk that we put up there. Not a very high probability in our view, but that doesn't really matter. It's what can we do in order to prepare for it. We have lots of actions.

Thank you. One more question. When will we enter a new country and what country is most likely?

We are working on the projects with new markets. We are speaking with brokers. We are doing research. We are seeing that we can do the research very efficiently using technology and and also most likely managed to set up efficiently in more than one country at the time. there's no change from what I had mentioned previously we did start in Spain and then we stopped so we have come the furthest in the Spanish market so that's easier to pick up that gives a higher probability that Spain will be the first one we Poland looks more like all the other markets we are in because public sector looks very accessible. So that's the reason why Poland could be an early country. And Germany looks a bit more challenging to find the right partners and data. And Italy is somewhere in between. And then we're also looking at some other countries, including continuing the soft approach towards U.S. excess markets, which we also have been looking into and I have mentioned before. Nothing specific and no conclusions, but we're working on it, and it's fun, and it's interesting to work on new markets. And we're getting more confident with how France is developing, of course. Thank you. No further questions. All right. Thank you very much. Wish you a good summer.