Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — Q1 2019 Earnings Presentation
32 slides from Protector Forsikring ASA's earnings presentation, Apr 26, 2019
Slide 1: Q1 2019 Interim Results
Q1 2019 Interim Results Investor presentation Oslo, 26th April 2019
Slide 2: Our DNA
«Olemme erilaisia» Our DNA Vision «Vi är annorlunda» 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 «Vi er annerledes» Top 3 Values «Vi er forskellige» C
Slide 3: 2019 – a transition year for Protector
2019 – a transition year for Protector Exit COI and change of Property Reinsurance program • Exit COI, however with 300 MNOK GWP and Gray silverfish appeal court decision in our favor • Change of Property reinsurance program with significant impact both on transition year earnings and earning distri
Slide 4: Highlights Q1 2019
Highlights Q1 2019 16% growth, combined ratio 105,9% and… • GWP growth of 16% (16 % local currency) Guiding 2019 – maintained • Net Combined ratio 105,9% Net combined ratio 96 % • Run-off gains f.o.a amounted to 6,9 % • Net CR 92 % “with old Reinsurance contract” Volume growth 14 % • Profit before t
Slide 5: Favorable Gray silverfish Court of Appeal decision
Change of Ownership in 2019 Favorable Gray silverfish Court of Appeal decision – reserve releases On the 9th of April, the Court of Appeal issued the first court ruling regarding the Gray silverfish issue “… after a comprehensive • Does not entail a property value reduction assessment of the informa
Slide 6: Highlights Q1 2019
Highlights Q1 2019 14% growth, combined ratio 96,9% and… • GWP growth of 14% (14 % local currency) • Net Combined ratio 96,9% • Run-off gains f.o.a amounted to 12,6 % • Net CR 83 % “with old Reinsurance contract” • Profit before tax 121,9 MNOK • Investment return 111,3 MNOK or 1,1% • Earnings per sh
Slide 7: Gross written premiums Q1 2019
Gross written premiums Q1 2019 Growth of 16 % (16 % LCY) –UK & Sweden in lead Q1 GWP (NOK m) • GWP 2713 MNOK up 16% 2 800 2 713 2 600 2 400 2 348 2 200 • 192 % growth in UK in a small quarter – auto main driver 2 000 1 814 1 963 1 800 • Largest client in Protectors history 1 600 1 392 1 400 1 200 •
Slide 8: Claims development Q1 2019
Claims development Q1 2019 Claims ratio 99,3% - poor Q1 result motor • Gross claims ratio 93,4%, up from 90,9% Gross large loss ratio* 22% 21% 20% • Net claims ratio 99,3%, up from 94,9% 18% 16% 14% 14% • Run-off gains f.o.a amounted to 61 MNOK or 6,9 % 12% 12% 10% 10% 10% • 3/4 Workers comp. Norway
Slide 9: Motor Summary
Motor Summary Poor Q1 claims ratio… • How strong is the seasonality effect in our motor portfolio? It is strong • Will old price increases initiatives and other actions improve 2019 profitability? Yes • Will new price increases initiatives and other actions improve 2019 profitability? To some extent
Slide 10: Motor portfolio growing 34% each year, last 10 years
Motor portfolio growing 34 % each year, last 10 years Makes Q1 more seasonal exposed Auto* 1,6 bn Other lines* 34% • Motor is Protector’s largest product ~34 % 34 % CAGR 30% • 14 % portfolio premium 2010 28% 24% 19% 18% • Protector’s Motor portfolio is changing 0,1 bn 11% 14% • From Public sector to
Slide 11: Cost development Q1 2019
Cost development Q1 2019 Cost leader in the world – improving competitive position • Cost the real way – this is what matters Cost the real way* FY • Gross cost incl. Claims handling ex. Broker commissions 12,0 % F@lcon • Broker commission neutral seen from a competitive point of view 11,5 % 11,0 %
Slide 12: Combined Ratio development Q1 2019
Combined Ratio development Q1 2019 Guiding maintained at 96% Norway Sweden Denmark UK Finland Protector Excl. COI Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Q1 2019 Q1 2018 Net claims ratio 95,1 % 100,4 % 93,0 % 77,6 % 112,4 % 99,4 % 107,1 % 96,4 % 100,2 % 134,7
Slide 13: Price increases Q1 19
Price increases Q1 19 More price increases to come, 10 % Nordic average going forward Q1 Rate increase Rate increase H2/2020 High renewal rate and acceptance of price ≈8% Higher increases. New sales at increasing rates. Higher churn than expected - Ok. ≈ 6% A lot higher Substantial increases based o
Slide 14: Let’s have a look at UK
Let’s have a look at UK New offices in Manchester & London Manchester London • ~60 employees Q4 19 • 6-8 employees Q4 19 • Spinningfields • Leadenhall building • UK HQ • Underwriting and sales 14
Slide 15: UK – Strong growth & good claims development
UK – Strong growth & good claims development But too high reinsurance cost… • GWP 505 2018 - Target of >850 MNOK in 2019 in NOK Q1 19 Q1 18 FY 18 • 119 public sector clients , 67 housing associations, 100 commercial clients Gross Written 175 60 505 Gross cost % 7,2% 13,9% 16,9% Cost the real way 9,6
Slide 16: UK – London is opened
UK – London is opened Country Manager on board from June • Manchester HQ - Strong team of ~40 people • London office opened, 6-8 people ultimo 2019 – no hurry • Leadenhall Building – neighboring Brokers and Reinsurers • UW joined with Manchester • Stuart Winter from JLT (Marsh) is Country Manager UK
Slide 17: Investment performance Q1 2019
Investment performance Q1 2019 1,1%, net investment result of NOK 111,3m • Equity return of 6,3% Q1 2019 investment returns • Portfolio consist of 15 companies 7% 6% 5% 4% • Bond portfolio; return of 0,6% • In-line with the market 3% 6,3% • No default events 2% 1% 0,6% 1,1% 0% Equities Bond Total 17
Slide 18: Equity portfolio statistics
Equity portfolio statistics Increased equity share in Q1 19 Performance return in % – Equity portfolio vs. benchmarks (08.10.2014 – 31.03.2019) Key figures In-house Managed 170 Portfolio OSEBX Performance 121% 51% 150 Dividend yield 3,3% 4,5% P/E NTM 11,6 14,0 130 3 yr sales CAGR 15,5% 5,7% 121 3 yr
Slide 19: Portfolio statistics bonds
Portfolio statistics bonds Spread tightening in Q1 and satisfactory underlying development Portfolio data 31.12.18 31.03.19 • Avg. yield down to 1,9% at end of quarter (2,2% in Q4) Size bond & cash eq. (NOK m) 8 474 9 302 • Avg. underlying ref. rate +12bp Avg. ref. rate (NIBOR, STIBOR etc.) 0,8% 0,9
Slide 20: Profit & loss Q1 2019
Profit & loss Q1 2019 16% growth, Combined Ratio 105,9% in millions Q1 2019 Q1 2018 FY 2018 Gross premiums written 2 713,4 2 348,4 4 286,1 Sweden & UK Gross premiums earned 1 146,9 958,3 4 139,6 Gross claims incurred (1 071,7) (871,2) (3 859,3) Poor motor quarter Earned premiums, net of reinsurance
Slide 21: Profit & loss Q1 2019
Profit & loss Q1 2019 14% growth, Combined Ratio 96,9% in millions Q1 2019 Q1 2018 FY 2018 Gross premiums written 2 802,1 2 461,0 4 799,7 Sweden & UK Gross premiums earned 1 235,7 1 070,9 4 653,2 Gross claims incurred (1 073,0) (990,6) (4 608,8) Poor motor quarter Earned premiums, net of reinsurance
Slide 22: Balance sheet Q1 2019
Balance sheet Q1 2019 SCR-ratio 174,7 % based on standard formula In millions 31.03.2019 31.03.2018 31.12.2018 SCR-ratio composition Owner-occupied property 13,3 13,8 13,4 Financial assets 8.816,4 8.143,0 7.591,8 3500 SCR-ratio: Derivatives 14,6 17,6 25,7 174,7% Bank deposits 152,1 241,8 278,6 Other
Slide 23: Solvency II
Solvency II Composition of SCR: Eligible SII capital: • Net insurance risk 67% • No dividend • Net market risk 22% • Guarantee provision subtracted from own funds • Other risks 11% SCR composition Eligible SII capital 3 500 104 4 000 267 375 3 000 705 3 500 1 243 3 068 2 500 3 000 29 454 89 94 1 197
Slide 24: Shareholder’s matters
Shareholder’s matters Per 31.03.2019 SHAREHOLDER NAME # SHARES % Related parties shareholding STENSHAGEN INVEST AS 7 126 353 8,27 % • Management’s direct and indirect shareholding totals 3,7m shares or 4% of current AWILHELMSEN CAPITAL HOLDINGS AS 5 554 627 6,45 % outstanding shares CITIBANK EUROPE
Slide 25: Summary Q1 2019 & Q&A
Summary Q1 2019 & Q&A Poor motor claims quarter – Further profitability actions needed Protector excl. COI Protector incl. COI • Growth 16% 14 % • Net Combined ratio 105,9%* 96,8%* • Profit before tax 12,5 MNOK 121,8 MNOK • Investment return 81,2 MNOK or 0,9% 111,3 MNOK or 1,1% • Earnings per share
Slide 26: Value creation in the long run
Value creation in the long run 2019 - a transition year • Growing from 0 to 5 bnNOK in premiums and building a significant float • Growth story continues • A poor 2018 with COI exit • HTD Combined ratio 92,6 % • Present profitability issues will be solved • HTD Investment return higher than peers •
Slide 27: Our DNA
«Olemme erilaisia» Our DNA Vision «Vi är annorlunda» 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 «Vi er annerledes» Top 3 Values «Vi er forskellige» C
Slide 28: Appendix
Appendix Oslo, 26th April 2019 This appendix contains numbers inclusive of COI.
Slide 29: Gross written premiums Q1 2019
Gross written premiums Q1 2019 Growth of 14 % (14 % LCY) –UK & Sweden in lead Q1 GWP (NOK m) • GWP 2802 MNOK up 14% 3 000 2 802 2 500 2 461 2 087 2 000 1 912 • 192 % growth in UK in a small quarter – auto main driver 1 516 • Largest client in Protectors history 1 500 1 000 • Volume development in th
Slide 30: Claims development Q1 2019
Claims development Q1 2019 Claims ratio 91,2% - poor Q1 result motor • Gross claims ratio 86,8%, up from 92,5% • Net claims ratio 91,2%, down from 96,4% • Run-off gains f.o.a amounted to 122 MNOK or 12,6 % • 1/2 COI, 1/3 Workers comp. Norway • One large Property claim in Denmark in Q1 2019 • ~45 MNO
Slide 31: Cost development Q1 2019
Cost development Q1 2019 Cost leader in the world – improving competitive position • Cost the real way – this is what matters Cost the real way* FY 14,0 % • Gross cost incl. Claims handling ex. Broker commissions F@lcon • Broker commission neutral seen from a competitive point of view 13,0 % • Cost
Slide 32: 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 Ratio calculation (1) Claims incurr