Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — Q3 2019 Earnings Presentation
40 slides from Protector Forsikring ASA's earnings presentation, Oct 25, 2019
Slide 1: Q3 2019 Interim Results
Q3 2019 Interim Results Investor presentation Oslo, 25th October 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: Highlights Q3 2019
Highlights Q3 2019 17% growth, combined ratio 91,6% • GWP growth of 17% (16 % local currency) Guiding 2019 – unchanged from Q2 19 • Net Combined ratio 91,6% Net combined ratio 100 % • Run-off gains f.o.a amounted to 1,9% incl. Arbitration aftermath Volume growth 18 % • Profit before tax 54,1 MNOK •
Slide 4: Highlights Q3 2019 – incl. COI Norway
Highlights Q3 2019 – incl. COI Norway 9% growth, combined ratio 92,1% • GWP growth of 9% (8 % local currency) • Net Combined ratio 92,1% • Run-off gains f.o.a amounted to 1,2% incl. Arbitration aftermath • Profit before tax 18,6 MNOK • Investment return -41,4 MNOK or -0,4% • Solvency ratio of 164% (
Slide 5: Gross written premiums Q3 2019
Gross written premiums Q3 2019 Growth of 17 % (16 % LCY) – continued price increases Q3 GWP (NOK m) • GWP 732 MNOK up 17% 800 732 700 624 • YTD growth 19% 600 500 486 400 • UK 31 MNOK – low hit ratio (UW discipline) 300 275 237 • Denmark 31 MNOK – high level of new sales at new prices 200 • Finland
Slide 6: Protector's volume development
Protector’s volume development 2x volume October 1st 2015 to October 1st 2019 5 025 4 800 • 22 % CAGR last 10 years • 16 % CAGR from 2014 to 1st Oct. 2019 4 163 3 439 • Last billion NOK took 22 months 2 844 2 374 • Now price increases do support present growth • Profitability initiatives entering 20
Slide 7: Claims development Q3 2019
Claims development Q3 2019 Claims ratio 84,1%, one very large claim • Gross claims ratio 88,2%, down from 89,9% Gross large loss ratio* • Unaffected by Arbitration aftermath result 22% 21% 20% • Net claims ratio 84,1%, down from 88,9% 18% • 89,5 % excl. Arbitration aftermath 16% 14% 14% 12% 12% 12%
Slide 8: Cost development Q3 2019
Cost development Q3 2019 Cost leader in the world – improving competitive position • Cost the real way – this is what matters Cost the real way Fiscal year • Gross cost incl. Claims handling ex. Broker commissions 12,0 % F@lcon • Broker commission neutral seen from a competitive point of view 11,5 %
Slide 9: Combined Ratio development Q3 2019
Combined Ratio development Q3 2019 Net CR 91,6% - guiding unchanged Norway Sweden Denmark UK Finland Protector Excl. COI Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Net claims ratio 96,2 % 80,5 % 84,6 % 81,9 % 85,7 % 91,6 % 35,1 % 165,0 % 111,8 % 1
Slide 10: Pricing increases – YTD results
Pricing increases – YTD results Q3 Price increases according to guiding after Q2 Q3 YTD Q4 Continued high renewal rates following ≈12,1% ≈ 10,8% Higher than YTD acceptance of price increases. Q3 price increases heavily influenced by ≈15,7% ≈ 8,0% Higher than YTD significant price increases on unprof
Slide 11: Market Prices up in all Nordic countries
Market Prices up in all Nordic countries Protects cost advantage to our benefit Norway General; Price increases all over in line with market Motor/bus/long haul; Significant higher including uplift on high value vehicles and electrical cars Health; Significant higher Public property; Higher, unsusta
Slide 12: In-depth view into UK
In-depth view into UK Henrik Høye Director Public lines & UK
Slide 13: UK – on schedule…
UK – on schedule… …and we are here to stay • ~ 60 people in Manchester and London • GFT arbitration settled, focus on profitable growth • Strong mix of individuals in great offices • Embracing the culture and gradually living our DNA • Quality leader by far • Slightly ahead of schedule on profitabil
Slide 14: The four Grenfell Tower projects
Claims handling Reinsurance • Manage claim and client • Claims handling involvement/support • Keep legal cost at low level • Align reinsurance with Risk • Process is key Management, UW and renewal • Align with reinsurance season • Proactive and professional • UK Casualty Reinsurance contract communi
Slide 15: Grenfell Tower
Grenfell Tower Property afterplay settled, releasing key resources for the right focus • Almost 2 years process • > 2 500 pages of documentation • Key resources tied up in process • Some internal lessons learned, but… • Ok final solution, more important; it is behind us • Focus is now on profitable
Slide 16: Creating Culture as one Team
Creating Culture as one Team Team embracing the cultural journey, Protector is different Protector Network • Cross team mentoring and meeting attendance. Lunch & Learn • Cross team knowledge share and social TIME Champion • Linked to values, monthly nomination of champions using @Workplace 16
Slide 17: The UK team
The UK team A strong composition, two locations, one team • Local experience and expertise in all major areas • Underwriting all classes of business Manchester & London • Claims all classes of business + engineer expertise Only Manchester • Risk management all major fields Manchester & London • Fina
Slide 18: Public Sector
Public Sector We are here for the long run, profitability comes first • ~ 100 public sector clients in the portfolio • Top 3 position reached • Underwriting of 250 tenders annually – avg of 2 products pr. tender • Evaluation of approximately 350 factors per product… • «Best in class» underwriting •
Slide 19: Housing Associations
Housing Associations Developing further competitive advantages • ~70 Housing Associations in portfolio • Underwriting based on Public Sector, but adjusted • High share of attritional losses makes cost advantage key • Value chain in claims handling possible to improve
Slide 20: Commercial Sector
Commercial Sector Gradual and focussed approach with selected brokers • ~150 clients in portfolio • 5 major broker houses, 30 offices • 2/3 motor, but gaining traction on Property & Liability • High average premium per client vs Scandinavia • New sub-segments considered continuously • Underwriting a
Slide 21: Profitable Growth Status
Profitable Growth Status Disciplined Growth, Good Profitability (but early) in MNOK FY 17 FY 18 YTD 19 Gross written 252,9 504,6 664,4 • Slow growth in public sector and housing Gross earned 154,7 380,4 521,4 • Good traction in commercial sector Net earned 74,6 184,7 334,3 Net ratios FY 17 FY 18 YTD
Slide 22: Claims Handling
Claims Handling Ahead of Sweden and Denmark at the same time • ~20 people and growing Claims Departments satisfaction 77 Competitor 1 72 68 • Clean Desk is culture Competitor 3 66 65 • Possibly only «clean» claims department in the UK Competitor 5 63 62 Competitor 7 62 61 Competitor 9 60 • Reduction
Slide 23: The Quality Leader, two years in a row
The Quality Leader, two years in a row Proud, but humble Protector 81 Competitor 09 70 Competitor 02 68 Competitor 01 66 Competitor 08 65 Competitor 07 63 Competitor 04 61 Competitor 05 58 Competitor 03 55 Competitor 11 55 Competitor 10 54 Competitor 06 51 Competitor 12 51 Competitor 13 45 0 10 20 3
Slide 24: Why will we fail or succeed?
Why will we fail or succeed? It is about people and culture • Recruit, develop and retain the right people • UK has started well • Learn, … • Understand and … • Live our DNA • UK is committed, we have a lot to learn 24
Slide 25: UK – on schedule…
UK – on schedule… …and we are here to stay • ~ 60 people in Manchester and London • GFT arbitration settled, focus on profitable growth • Strong mix of individuals in great offices • Embracing the culture and gradually living our DNA • Quality leader by far • Slightly ahead of schedule on profitabil
Slide 26: Financial result & balance sheet
Financial result & balance sheet
Slide 27: Investment performance Q3 2019
Investment performance Q3 2019 -0,4%, net investment result of NOK -41,4m • Equity return of -8,1% Q3 2019 investment performance 1% 0,5% 0% -1% -0,4% -2% • Bond portfolio; return of 0,5% -3% • In-line with the market -4% -8,1% • No default events -5% -6% -7% -8% -9% Equities Bond Total 27
Slide 28: Equity portfolio statistics
Equity portfolio statistics Volatility outside benchmark must be expected Performance return Performance return inin%%––Equity Equityportfolio vs. vs. portfolio benchmarks (08.10.2014 benchmarks – 30.09.2019) (08.10.2014 – 30.09.2019) • 5th Quarter in a row behind benchmark 170 • 8 quarters in a row
Slide 29: Portfolio statistics bonds
Portfolio statistics bonds 3 years with reduced risk Portfolio data 30.06.19 30.09.19 • Very strong performance relative to capital consumption Size bond & cash eq. (NOK m) 9 694 10 045 Avg. ref. rate (NIBOR, STIBOR etc.) 1,0% 1,1% • Bond portfolio 91% Avg. spread/risk premium (bp) 97 95 Yield 2,0%
Slide 30: Profit & loss Q3 2019
Profit & loss Q3 2019 17% growth, Combined Ratio 91,6% Q3 2019 Q3 2018 YTD 2019 YTD 2018 FY 2018 Gross premiums written 732,4 624,3 4 551,6 3 811,0 4 286,1 16 % LCY growth, Price incr. YTD 10,3 % Gross premiums earned 1 291,3 1 042,4 3 680,2 3 016,4 4 139,6 Gross claims incurred (1 139,0) (937,1) (3
Slide 31: Profit & loss Q3 2019
Profit & loss Q3 2019 9% growth, Combined Ratio 92,1% Q3 2019 Q3 2018 YTD 2019 YTD 2018 FY 2018 Gross premiums written 820,9 754,6 4 838,8 4 233,1 4 799,7 8 % LCY growth Gross premiums earned 1 379,8 1 172,7 3 967,3 3 438,5 4 653,2 Gross claims incurred (1 233,4) (1257,2) (3 533,3) (3 312,5) (4 608,
Slide 32: Balance sheet Q3 2019
Balance sheet Q3 2019 SCR-ratio 164% based on standard formula In millions 30.09.2019 30.09.2018 31.12.2018 SCR-ratio composition Owner-occupied property 13,0 13,6 13,4 Financial assets 9.318,4 8.158,1 7.591,8 SCR-ratio: Derivatives 21,2 9,2 25,7 164% Bank deposits 103,5 89,7 278,6 3000 Other assets
Slide 33: Solvency II
Solvency II Composition of SCR: Eligible SII capital: • Net insurance risk 73% • No dividend • Net market risk 16% • Guarantee provision subtracted from own funds • Other risks 11% SCR composition Eligible SII capital 3 500 4 000 268 99 514 335 3 000 3 500 1 243 2 841 2 500 3 000 34 1 279 469 89 123
Slide 34: Shareholder's matters
Shareholder’s matters Per 30.09.2019 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 outstanding AWILHELMSEN CAPITAL HOLDINGS AS 6 535 816 7,59 % shares CITIBANK EUROPE
Slide 35: Summary & QA Q3 2019
Summary & QA Q3 2019 17% growth, combined ratio 91,6% • GWP growth of 17% (16 % local currency) • Net Combined ratio 91,6% • Run-off gains f.o.a amounted to 1,9% incl. Arbitration aftermath • Price increases continues in Nordics • Market acceptance good so far • Profitability priority Number 1 - Low
Slide 36: Appendix
Appendix Oslo, 25th October 2019 This appendix contains numbers inclusive of COI
Slide 37: Gross written premiums Q3 2019 - incl. COI Norway
Gross written premiums Q3 2019 - incl. COI Norway Growth of 9 % (8 % LCY) – continued price increases Q3 GWP (NOK m) 900 • GWP 821,9 MNOK up 9% 821 800 755 700 645 • YTD growth 14,3% of annual premium 600 500 413 400 367 • UK 31 MNOK – low hit ratio (UW discipline) 300 • Denmark 31 MNOK – high level
Slide 38: Claims development Q3 2019 - incl. COI Norway
Claims development Q3 2019 - incl. COI Norway Claims ratio 84,9%, one very large claim • Gross claims ratio 90,8%, up from 89,1% • Unaffected by Grenfell Tower • Net claims ratio 84,9%, down from 111,7% • 90,1% excl. Grenfell Tower • Clean up in case reserves in Finland • Run-off gains f.o.a amounte
Slide 39: Cost development Q3 2019 - incl. COI Norway
Cost development Q3 2019 - incl. COI Norway Cost leader in the world – improving competitive position • Cost the real way – this is what matters Cost the real way Fiscal year • Gross cost incl. Claims handling ex. Broker commissions 14,0 % F@lcon • Broker commission neutral seen from a competitive p
Slide 40: 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 Ratio calculation (1) Claims incurred, net of reinsurance