Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — FY2016 Earnings Presentation
41 slides from Protector Forsikring ASA's earnings presentation, January 2017
Slide 1: Preliminary year-end results 2016
Preliminary year-end results 2016 Investor presentation
Slide 2: Facts about Protector
Facts about Protector • Protector was established in 2004 Commercial Lines of Public Lines of Change of Ownership Business Business Insurance • Listed on Oslo Stock Exchange May 2007 (GWP MNOK) (GWP MNOK) (GWP MNOK) 2 086 829 509 526 524 • Entered Swedish market in 2011, Denmark in 730 426 451 1 587
Slide 3: Our DNA
Our DNA Vision The Challenger Business Idea This will happen through unique relationships, best in class decision-making and cost effective solutions Main targets Cost and quality leadership Profitable growth Top 3 Values Credible Open Bold Committed
Slide 4: Highlights 2016 results
Highlights 2016 results 21% growth, 21% ROE • Operating profit of NOK 541m (NOK 536m) From Norwegian, to Scandinavian, to… • GWP growth +21% (17% local currency) • GWP growth Q4 +20.6% (18.4% local currency) • Net Combined ratio 97.0% (88.7%) • Q4 109.4% (96.6%) • Gross expense ratio 6.8% (7.5%) • Q
Slide 5: Operational summary
Operational summary 2016 highlights 2017 guiding • Commercial and public line of business Norway • Commercial and public line of business Norway • Very profitable and single digit volume growth • Good profitability and single digit volume growth • Change of ownership (COI) • Change of ownership (COI
Slide 6: Gross written premiums 2016
Gross written premiums 2016 - Nordic growth leader • GWP total NOK 3 439m, +21% GWP total (MNOK) 4 000 • Commercial sector Scandinavia +26% 3 500 3 000 • Norway +6% 2 500 2 000 • Sweden +57% 1 500 3 439 • Denmark +52% 1 000 500 0 392 • COI GWP level in line with 2015 2012 2013 2014 2015 2016 Q4 Full
Slide 7: Protector Forsikring - A history of profitable growth
Protector Forsikring - A history of profitable growth Return on Equity* Gross written premium MNOK CAGR +20% 3 439 2 843 2 374 38% 38% 1 861 32% 26% 29% 1 517 25% 18% 1 011 1 203 21% 871 28% 28% 665 729 449 516 5% -1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • GWP has grown 3.7 ti
Slide 8: Reduced product risk
Reduced product risk • Short tail from 34% in 2008 to 55% in 2016 • Medium tail significantly reduced from 44% in 2008 to 24% in 2016 • Property and Auto from 26% of GWP in 2008 to 40% in 2016 2008 2012 2016 21% 22% 26% 34% 37% 55% 24% 44% 37% Short-tail (1 year) Medium-tail (2-5 years) Long-tail (>
Slide 9: Combined ratio 2016
Combined ratio 2016 - Poor claims year, underwriting reality not a problem • Gross claims ratio 92.5%, up from 81.8% in 2015 Net combined ratio (UW year) • Net run-off losses of 6.2% 100,0 % • Run-off gains in commercial/public sector NO/SE 95,0 % Avg. Net CR UW year 2013-2016 = 89% • Run-off losses
Slide 10: Cost ratio 2016
Cost ratio 2016 - Cost leader in the Nordic insurance market • Gross expense ratio 6.8%, down from 7.5% Gross Expense Ratio • 6.9% in Q4 16, down from 9.6% Q4 15 12% • Underlying expense ratio slightly higher than 6.8% 10% 8% • Net expense ratio 1.8%, down from 3.2% 6% 4% 6,8% • Cost on a normal, lo
Slide 11: Denmark results 2016
Denmark results 2016 - Perfect storm as expected in Q4, but we will ComeBack ’17 • Net combined ratio 113.2% • Very poor WC result in 2016 • Q4 delivered very poor profitability (as expected) • Influenced by reserve strengthening in WC • Good claims result for other products • Gross claims ratio 101
Slide 12: Denmark operations
Denmark operations - Executing ComeBack ‘17 • Change of Country Manager • Erik Sand appointed new country manager and will operate from Copenhagen office • Flemming Conrad will continue in new role at least until end of 2017 • Recruitment of new country manager will start at once, will probably take
Slide 13: Norwegian public and commercial line
Norwegian public and commercial line - Highlights 2016 • Volume +4.1% • No wins top 10 tenders • Renewal rate 88% • Significant rate pressure on personal lines of business • Rate increase started for 2017 GWP Commercial and Public Norway • High level of large property claims 1 600 1 400 1 200 • Incr
Slide 14: Change of ownership insurance (COI)
Change of ownership insurance (COI) - Highlights 2016 • Volume in 2016 in line with 2015 • Real-estate prices high (+8.3%) • Lower turnover (-6.0%) • Court results improved • 45% - 20% - 35% (Win, Draw, Loss) • Sales & services delivered to real estate brokers and clients still on a very good level
Slide 15: Change of ownership insurance (COI)
Change of ownership insurance (COI) - Best ever Claims Handling in Q4 2016 • “Clean desk” project speeding up claims handling, all new claims handled within 48hours • Number of Open Claims on a very good level (historical low) • Broker KPI survey 2016: Claims handling quality score historical high •
Slide 16: Sweden
Sweden - Highlights 2016 • Volume +57% (+47% in SEK) • High hit-ratio in Q4, 39% on number • Claims ratio net of 75.5% (75.7%) • All segments and products are very good • Low level of property claims • Q4 net claims ratio of 94.5% (69.6%) • affected by one large claim • change of accounting principl
Slide 17: Claims service Sweden
Claims service Sweden - Solid foundation to reach Next Level • Increased efficiency for all lines of business High scores on internal quality measures • 38% of claims reported online • Further digitalisation of value chains started • All-time high on recourses and claims cost reductions • In-house s
Slide 18: Finland
Finland - Open for business in all segments • Low tender volume but good hit-ratio, 29% • Few municipalities on public tender • In-house claims service for Motor and WC • 95% first response within 24h in Q4 • Claims online registration operational • 24% of claims reported online in Q4 • Next step is
Slide 19: Entering UK
Operational update Entering UK 19
Slide 20: UK – Public Sector Breakthrough
UK – Public Sector Breakthrough - Good start to 2017 • People and processes - very good progression UW process at level with Scandinavia • Good people on board in Manchester • Utilizing local product expertise and Scandinavian UW expertise • Extensive database built – bigger than Scandinavia Team hi
Slide 21: UK – Building relationships in Commercial sector
UK – Building relationships in Commercial sector - First panel arrangement signed, opportunities increasing • Manchester team building existing and new relationships 4 clients on board • Joining forces with Scandinavian resources • Selected broker approach (5x20) • Good market activity • Approaching
Slide 22: UK opportunity – Housing Associations
UK opportunity – Housing Associations - £300m market with small existing margins and little competition Cost leadership Quality leadership Competitors: ~ 25 % (incl claims) Market: Good claims handling, poor service Broker & PRF: < 20 % over time Broker & PRF: Preferred partner for HA’s from start?
Slide 23: UK – Insuring parts of London
UK – Insuring parts of London - An example of traction in Public Sector UK • Insurance London Consortium (ILC) – 9 London Boroughs • Camden, Croydon, Haringey, Harrow, Islington, Kingston upon Thames, Lambeth, Sutton and Tower Hamlets • ~ 2,5 million inhabitants • 3 year contract incepting 1st April
Slide 24: Volume estimates UK
Volume estimates UK Volume full year 2016 Estimate 2017 Preliminary estimate 2018 Volume 25 MNOK 150 - 200 MNOK 400 – 500 MNOK 24
Slide 25: Profit & loss 2016
Profit & loss 2016 - Best “profit ever”, but poor technical result [1.000.000 NOK] Q4 2016 Q4 2015 FY 2016 FY 2015 Gross premiums written 392,3 325,3 3 439,0 2 843,4 GWP growth 21% in 2016, 21% in Q4 2016 Gross premiums earned 768,6 698,7 3 250,4 2 791,1 Gross claims incurred (740,3) (617,0) (3 005,
Slide 26: Investments
Investments - Asset allocation Net financial assets (MNOK) 9 000 8 000 7 000 6 000 5 000 4 000 7 989 3 000 2 000 1 000 0 2010 2011 2012 2013 2014 2015 2016 jan.17 % Equity share % Bond and cash share 30,0 % 100,0 % 25,0 % 80,0 % 74,0 % 20,0 % 60,0 % 15,0 % 40,0 % 10,0 % 21,0 % 20,0 % 5,0 % 5,0 % 0,0
Slide 27: Bond portfolio allocation
Bond portfolio allocation - Reduced risk in Fixed Income portfolio • Reduced High-Yield exposure in 2016 and beginning of 2017 • Sale of Nordea Global HY • Average total bond portfolio rating from BBB at Q2 2016 to A- in Q1 2017 • Bond portfolio yield expectation of roughly 3.0% in 2017 27
Slide 28: Portfolio statistics
Portfolio statistics - In-house managed equity portfolio vs. OSEBX year-end 2016 In-house Managed Performance – In-house managed portfolio vs. OSEBX Key Figures Portfolio OSEBX (08.10.2014 – 31.12.2016) Performance 116 % 25 % Dividend yield 1.8 % 3.6% P/E NTM* 17.5 16.7 3 yr sales CAGR 24 % -2 % 3 y
Slide 29: Portfolio statistics
Portfolio statistics - In-house managed portfolio vs. benchmark year-end 2016* Performance – In house managed portfolio vs. benchmark* Portfolio data 31.12.2016 (31.03.2015 – 31.12.2016) Size MNOK 4 781 8,0 % Yield 3.2 6,12% Duration 0.4 6,0 % Credit duration 2.8 Average rating BBB+ 4,0 % 3,13% 2,0
Slide 30: Investment performance 2016
Investment performance 2016 - Very strong investment result • 7.0% return on investment portfolio, Return 2016 20,0 % net investment result of 499 MNOK 18,0 % 16,0 % 14,0 % • 2.0% Q4 result, net investment result 12,0 % 10,0 % of 150 MNOK 8,0 % 14,3 % 6,0 % 4,0 % 7,0 % 5,7 % • Equities 14.3% (OSEBX
Slide 31: Shareholder matters 31.12.2016
Shareholder matters 31.12.2016 Shareholder No. Shares Percent Related parties shareholding SWEDBANK ROBUR NORDEN AND EUROPA 7 898 936 9.17 % Management’s direct and indirect shareholding totals STENSHAGEN INVEST AS 6 500 000 7.54 % 3.0m shares or 3.5% of current outstanding shares ODIN NORGE AND N
Slide 32: Long-term financial objectives
Long-term financial objectives Long term financial objectives • GWP growth rate 2017-2019: 15% • Net combined ratio: 92% (new up from 90%) • Solvency II capital ratio: 125%-160% • Return on Equity: >20% GWP Growth Net Combined Ratio (UW year) Return on Equity* 38% 38% 26,1% 27,6% 86,5% 86,7% 89,5% 8
Slide 33: Balance sheet Q4 2016
Balance sheet Q4 2016 - Strong & growing fast [1.000.000 NOK] 31.12.2016 31.12.2015 Owner-occupied property 13,7 13,6 SCR ratio composition Financial assets 8 537,6 6 623,1 Financial derivatives* 990,7 252,6 3,0 154 % Bank deposits 204,3 144,0 Other assets 1 091,7 924,4 2,5 Total assets 9 847,4 7 70
Slide 34: Solvency II
Solvency II Composition of SCR: Available SII capital: • Net insurance risk 57 % • Assumed suggested dividend for 2016 • Net market risk 36 % • Guarantee provision subtracted from own • Other risks 7 % funds SCR composition Available SII capital 3 500 3 500 344 138 59 3 000 646 3 000 1 048 2 500 180
Slide 35: CEO summary of risk outlook 2016
CEO summary of risk outlook 2016 Risk Result + Sweden/Denmark deliver better than guided volume Medium ✓ + Upside volume UK relative to guiding Low ✓ + Balance sheet growing leads to increased financial income No ✓ + Cost ratio Gross & Net going down No ✓ - Rate pressure driving claims ratio above g
Slide 36: CEO summary of risk outlook 2017
CEO summary of risk outlook 2017 - Slightly reduced risk due to a more diversified portfolio and reserve strengthening in 2016 Risk 1. Volume (GWP up 16% (18 local) • Upside and downside in UK Medium • Downside in Denmark Low 2. Cost (gross cost ratio <7.0%) • Cost outside guiding No 3. Profitabilit
Slide 37: Result 2016 and guiding 2017
Result 2016 and guiding 2017 Guiding for full year 2016 Result 2016 Guiding 2017 Volume up 22 % 21 % 16 % (18 % local) Gross expense ratio < 7.5 % 6.8 % < 7.0 % Net Combined ratio 90 % 97 % 92 % No guiding will be given on investment income ROE 2016 is 21.1 % > LT ROE target of 20.0% Profitable grow
Slide 38: Combined ratio guiding 2017 – 92%
Combined ratio guiding 2017 – 92% - 2016 underwriting year with combined ratio 91% Net combined ratio (UW year) 100,0 % 95,0 % Avg. Net CR UW year 2013-2016 = 89% 90,0 % 85,0 % 80,0 % 90% 90% 91% 87% 75,0 % 70,0 % 2013 2014 2015 2016 Net combined ratio (UW year) 38
Slide 39: Summary 2016
Summary 2016 21% growth, 21% ROE • Operating profit of NOK 541m (NOK 536m) • GWP growth +21% (17% local currency) • Net Combined ratio 97.0% (88.7%), underlying reality is 91% (UW year 2016) • Gross expense ratio 6.8% (7.5%) • Very strong investment result of NOK 499m, 7.0% • ROE of 21.1% • Dividend
Slide 40: Q&A Preliminary year-end result 2016
Q&A Preliminary year-end result 2016
Slide 41: Key ratio description
Key ratio description Ratio (1) Claims ratio, net of ceded business (2) Expense ratio, net of ceded business (3) Combined ratio, net of ceded business (4) Gross claims ratio (5) Gross expense ratio (6) Gross combined ratio (7) Retention rate (8) Earnings per share (9) Return on Equity (ROE) (10) Ret