Protector Forsikring ASA

Hello, and welcome to the Second Quarter 2025 Presentation of Results for Protector Forsikring. We have started the day, as always, with the employees in Protector, who are the ones who have delivered the results and we have obviously discussed our targets, profitable growth and data as currency.

The status of where we are and how we understand those targets and results. But we have also talked about our culture and the important thing that we are focusing on is to understand our culture and the statements, our values and our targets in the context of that we have grown as a company.

So we are different. We are in different phases in different countries and in different areas of the business.

But also that the world around us is changing. So we need to redefine and reunderstand what it means to be credible in the different roles around and invest time in really continuing developing that culture in the company.

Because as I said, it is all of those 650 people who have created 84.9% combined ratio in the second quarter and a growth of 16% in local currencies. And together with the investment result that has become NOK 8.7 per share.

Other highlights in the quarter is the rating that we have released previously. So that is old news, but there are some effects of it.

We previously said that we get access to enough risks and enough volume without an A rating, but the upgrade gives us access to some more business, and in particular, in some of the newer segments that we are looking into in the U.K. and potentially also in France.

In addition to that, the -- some of the clients who have not come our way and not have a very strict requirement on rating, they don't really have an excuse anymore. So -- but mostly, this is about that we get what we think we deserve over time.

And in the larger markets, there are some clients who have assets that are financed by banks who require A-rated insurance companies. So then -- such as the real estate market in the U.K., and then we get access to larger parts of that real estate market.

In addition to that, in the U.K., we have a different timing on the broker satisfaction index, which is the quality defined together with brokers made into questions. And so the results from this broker satisfaction index is a snapshot of the perceived quality that we deliver to the brokers.

We have received that only a couple of days ago. We don't have all the details yet.

But it is a very strong result where the brokers ranking Protector ahead of the competition for the eighth year in a row, but also with an increasing distance, in particular to the major players who have most of the volume that we see as attractive. The important thing about the survey is to understand, to get the details and then use that in the dialogue with the brokers in order to find out where we should prioritize to improve what we do.

And then the dividend distribution here, I'll come back to when I'll go into the capital position later on in the presentation. As always, I forget to do what I'm told to do.

So Amund always helps me to say that you -- or remind you that you have to ask questions during the presentation. There is a lag on what we do.

So it's very good if we have those questions and can take them right away at the end of the presentation. So please do that if you have any questions.

On the volume side, the second quarter is a lot about 1st of April in the U.K. and 1st of April in public sector, U.K.

We've already said what that result was when we presented quarter 1 figures. And then something has obviously happened after that.

And it is slightly stronger than what the result was on 1st of April. For the U.K., in particular, we did say in quarter 1 that the volume was slightly lower than what the underlying reality was due to change of inception dates from quarter 1 to quarter 2 and quarter 3.

So some of that has come in, in quarter 2, obviously, and that increases the volume and is more of a technicality. It's not -- it didn't belong to quarter 2 previously.

So that's not growth in that sense. That's a small part of it.

We said that it was GBP 3.8 million that had moved and 2/3 of that has moved to quarter 2. So then you can figure it out yourself.

Other than that, in the U.K. business, we have gained some momentum in the mid-market, the smaller clients.

We have had the focus on larger clients from the beginning in commercial sector U.K. And then we have set up an initiative on the smaller clients.

We've gained some momentum there. And we still have a strong renewal situation in the U.K.

in spite of the continuous softening market, which we have talked about before, and there is no change in that. It continues to soften in particular on the property side, but also on motor and liability.

In the Nordic countries, there is some volatility with fairly small volumes for the quarter, but -- in the growth, but it is very strong in Denmark due to some momentum on new sales in particular on the motor side. Done with the same methodology as we have done in Sweden for many years and that we use in the company.

So analytical fact-based approach. So it's good to see that the market is more rational on the motor side in Denmark, but obviously, a very small quarter and small numbers.

And then in Sweden, we have good renewals and some new sales gaining some momentum there as well with, in particular, the motor market continuing to look fairly rational whereas the property market, we've even lost some of our existing clients. So we have some churn on the property side due to what at least we deem to be irrational pricing.

In Norway, there has been very little volume out in the market, but we have strong renewals, so very low churn in the quarter. So on the volume side, it is a continuous price increase gain on the portfolio to counter claims inflation, and we have low churn giving -- and that gives us a high renewal rate, as you can see.

The most important always is about the profitability and the claims development, and that is a strong result for quarter 2 and the first half year. And if you adjust for large losses and runoff and compare the 2, the underlying realities are stronger than what they were in '24.

So there is an improvement there of particular elements in the results. You can see that on the U.K.

result here, the gross figures are very different from the net figures, and that has to do with very few number of large claims from previous years that have been adjusted up on the liability side. So there is a runoff loss where the majority is with reinsurers and not for our own accounts.

And then on the net side, you see an improvement on the U.K. side.

And that is in spite of that the large losses come from U.K. and Norway in the quarter.

When -- so Sweden and Denmark have no or very little large losses. And when it comes to the runoff situation that is in all countries, except for Denmark.

And on the product side, it comes mainly from the property. And on motor, we have some reserve losses and motor is, in general, still the product where we have some need for price increases above inflation or corrections.

And that is in particular in Norway and the U.K. where there are 2 different situations.

In Norway, there is a frequency development and a higher claims inflation than the rest of the countries, which you have seen from some of our competitors as well. So you need to do more price increases in the Norwegian market.

And in the U.K., it is about a lag from previously in longer contracts that we wrote a while back. So it takes some time to get into where we want to be there.

If we look at the historical picture on large loss and runoff, it is important, I think, for me to say that even though the period we show here, which is IFRS numbers, so it's not a coincidental period. It's what we have restated or delivered on IFRS standard is at 6% large losses.

It's not -- that's not a normalized situation necessarily. So I would say that in this period, we have had lower than normalized large loss share.

If this continues for a very long time, then you can come back and ask me that question again, but I would say it is higher than what you see here. And on the runoff side, I think it shows that the best estimate is what we are looking at.

And you can see that even though there is volatility between the quarter and that is absolutely true when we look at country-by-country overview. And the only thing I haven't commented on as per normal on the profitability side is the cost.

And you can see the cost here. And it is increasing from -- relative to '24, but there are some elements that you could argue are one-off.

So we have talked about a long-term bonus scheme, which is connected to the share price, and the share price has increased a lot. And for both quarter 2 and the first half year, if you adjust for that, you get close to the figure in '24.

So it's a very similar cost ratio, excluding of commission. We also see some noise on the commission side where, in particular, Norway has a much lower commission, which is commission to agents where we have agent agreements.

And that's a technicality from quarter 2, which we mentioned then. But the running rate is more correct with the figure from '25 to the figure we have now.

And in U.K., you also see that it is decreasing. It's about the product mix and segment mix.

There are different commission levels and different products and segments depending on how much the broker can take, but also how much work they do. So that's what you see there.

And commenting on the French business, it's obviously interesting to see that it's possible to show some black figures in a quarter in France. But as you understand, this is just coincidental and says nothing about what's going on other than that we have not had a lot of large losses or any large losses in the French business, but this will be volatile.

We don't know anything about that business other than that we have done our underwriting at what we think will be profitable levels. But the claims development, the cost situation is absolutely not critical mass.

And let's follow the French profitability now, but not to conclude on anything until we have some volume out in 2026, I would say. So that's the totality for the countries.

And I have mentioned the broker satisfaction index earlier and in the introduction, the numbers are here. So you can see the increase of 4 points from last year's survey and we always say that the more interaction we have with the brokers, the -- in a new country, the bigger the probability of that they will find some mistakes, and we will make mistakes.

But it seems like the U.K. team has been concerned enough and looked at and really prioritized what matters with the brokers in the U.K.

And I think that when we are looking at new segments and subsegments in the U.K. market, it is very important to continue to have this type of feedback with the brokers so that we can understand where we can improve.

And also the position, of course, will help us. The smaller clients that I mentioned earlier, they -- the brokers have a larger placing power for those than for the larger clients where the client is in the decision process to a larger extent.

So if the brokers are satisfied and more efficient when they work with Protector than the other ones, it is a bigger chance that we will both see volume and also win volume. On the investment side, we have a quarter that, in a way, looks a bit boring with a good return, both absolute and relative.

But there has been a lot of volatility in the beginning of the quarter. So this lies a little bit.

But I think the important element here is on the running yield. It is down.

That is due to interest rate changes because we have some spread increase, and that is due to some increase in the high-risk side, where most of that increase is from the volatility in the market where there were some opportunities that we saw. So that's approximately 2/3 of it, some bond funds, some single high-yield papers where we saw that opportunity in the turbulence.

And then the rest of it is secured real estate, which is classified in that. So the assets under management grew by 9% since end of quarter 1.

And the equity side has delivered good absolute and relative return. And there is -- has been some changes in that portfolio, but end of quarter, end of quarter, not a lot of change and still a portfolio, we believe, in the future return on.

The income statement is basically nothing in particular to point on here, and we've been through the key figures. So on the capital position, what happens during this quarter is that the capital increases with profit for the quarter, and then there is a dividend there that is subtracted.

But on the requirement side, it is about insurance growth. And then growth of the investment portfolio and some increase in risk on the bond side.

And then there are some currency effects that were on the positive side or reducing the requirement in quarter 1 where the Norwegian kroner was increasing and then the opposite in quarter 2. And the composition of both capital and risks is fairly similar relatively from earlier.

So then it is back to why these results are what they are. It's about the people in Protector.

And then we are ready for some questions potentially before I say I wish everyone a good summer.

Yes, a couple of questions. Can you grow more in France in the second half year of '25 than you did in Q2?

Or it's all about 1st of Jan '26?

Well, our data, which we have collected a lot of shows that it basically is all about 1st of January. But what we're learning is that there are some opportunities in the French market between 1st of January and -- so there are some that change their inception dates or something happening in the market.

And then there are some clients that, obviously, we don't have the data from before. So there will be some growth in the French market most likely more so on the commercial side than on public, which is a little bit different from what we thought before.

It doesn't necessarily represent how the market works, but it's -- that's the short term. But we've also lost some opportunities that we have looked at in the French market in quarter 4 or quarter 3.

So amongst them, a large one, where we see that there is -- it's not irrational competition, but there is competition, and we did not -- we have the opportunity to win, but we stopped because we came too far down on the margin. So there, you may see some growth in the third and fourth quarter.

But the absolute large one is 1st of January, that's what we should focus on. And we know that there is a large pipeline and many opportunities for 1st of January.

What comes out of it is a different question because I don't think we have a -- any accurate view on the competitive situation in France at the moment.

Denmark, will you expect more stable combined ratios when workers' compensation is out of the books?

Yes. It is also this quarter, some reserve losses from the workers' comp book.

And so you will see more stable combined ratios.

And then underlying claims ratio in Sweden, it's flat year-over-year. Do you think that could improve going forward?

I think that it is strong profitability in the Swedish book, and we have good processes for both renewals and new sales. I would -- with growth, I would expect it to slightly increase because our long-term target on combined ratio is higher than what we are at the moment.

So I would expect that to increase somewhat in a situation where we grow more. And then it could improve if we don't grow so much.

Thank you. There's no further questions.

Thank you for listening in and for the questions. And with that, at least for the ones who are watching now, I wish you a great summer.

Thank you.