Protector Forsikring ASA

Hello, and welcome to the presentation of the first quarter 2026 results for Protector. We always start with all the employees.

And just before we started now, there was a moment of silence, and that was the same when we started with the employees. And then I had a conversation with some people on the first row about -- and I said that I'm quite good at awkward silence.

And the reason why I'm good at awkward silence is because I'm bad at small talk. So I'm not uncomfortable when it's quiet for a couple of minutes right before we start.

But what we did focus on in that session is about our vision for 2030. In March, we met, it was about 550 out of 700 people in Oslo to discuss, have workshops on 3 elements that are part of our vision for 2030.

And the first one is about people. The second one is about data and third one is about innovation.

And it's about thinking differently. Back in 2021, we came out of a situation of poor profitability and that we needed more discipline in our underwriting and our profitability focus.

And then we decided that growth was something that had to come second. It still is.

Profitability is first. But we can now with a stronger basis, stronger profitability basis, have been more bold and have higher ambitions also when it comes to growth going forward.

So a lot about -- a lot of it is about being the challenger and redefining what the challenger is in 2030. It is something else than what it was before and what it is today.

The sector is developing. We're growing and the world around us is developing.

And in that technology and AI is very important. And we have 2 targets, and they are the same as they were in 2025 for 2026.

One is profitable growth. That will always be there.

The other one is data. Last year, we focused on measuring data points and following up.

So we have targets on data points. This year, we're shifting the focus to the value of that data.

So we need to get something out of the data. An example can be that we want more recourse on the claims handling side, then we need better data in order to get more recourse or on the underwriting side, we want more relevant and bigger inbox from the brokers, and we want to quote more of that volume.

The market history shows that's more about the market. So let's not target that, but we want to see more relevant business.

Then we need more data to provide to the brokers, and we need to be the best one at providing data to the brokers in order to get to that place. So -- and then obviously, using AI will not be any value if we don't have good data.

So that's a prerequisite for getting value out of all the projects we have. And we have solutions and functionality with AI technology in Protector today.

There are examples in claims handling and in underwriting and all employees use it on a daily basis to become more efficient, but we're yet to find the way of really changing the way we work. And one focus area we've had is that if you're good at something, when you've done a process many, many, many times and you are to improve that process, you do it with incremental improvements because you know how it's done.

But what's important when you have a technology that can support you in creating higher value is to think about where you want to go. And that's actually quite difficult if you're good at doing the process.

So I think that we are very good at -- we have good processes, and we are good at following those processes. But that makes us -- it's a big change to say this is where I want to go.

And that's where we need to be in order to make change. So we're focusing on the outcome and the target.

And then we start seeing some change, some different approaches to how we do things. But it's a big focus.

We're still investing and it hurts and it costs to increase data quality, quantity, structure and availability. And it costs resources and money to test and fail with AI solutions many times.

But it's very interesting, and it is a great opportunity to understand our culture in a new way and a better way. Okay.

That was this morning and some insight into the cultural part, which is extremely important in Protector. The first quarter is -- the growth has been basically announced previously after the quarter 4 when we talked about 1st of January.

And what you can see is that the number is lower, meaning that February and March are lower than the January figure was, and that's true for basically all countries, except for the U.K. Combined ratio is very strong.

I'll get back to that because you need to normalize it. There are very few large losses there.

And maybe the most important figure here is the one that comes from the U.K., and I'll get back to that when I talk about the volume and the growth later on. One information here, we always really -- since we only work with insurance brokers, we have defined quality together with the brokers, and we do broker satisfaction surveys.

And in new markets, we have always done it 18 months after the first policy in sets. And in France, we have now -- we're not 18 months in, but close to 18 months in.

We've conducted our first survey, and we have very good results from that survey, both on the general sales underwriting service and on claims handling, the brokers we work with because we only send it to the ones we work with. So the others don't really have a lot of feedback to us.

So that's 40-something brokers that have responded to this survey. So fairly small.

It's very early. So the first survey, you don't -- we haven't had the opportunities to make many mistakes.

But it is an indication that what we have delivered during those first 13, 14, 15 months is something that the brokers appreciate more than what the competitors have delivered. So it's a good start, but let's see when we do the next one, and it's even more important further down the line.

So to the volume. And I'll spend the time on 1st of April U.K.

because I think that's quite important here. 1st of April 2023, we won a lot of business in public sector and housing in the U.K.

The market was hard, meaning that the rates were higher. And some of that business has been out to tender, 1st of April 2026, but not a lot of it.

So we've kept a lot of that volume in our books. And what has been out to tender, we have rewon approximately 80%.

So that means that the portfolio that we have that has delivered and delivers very strong profitability is very stable in public sector and housing. And that could have been different.

I've previously said that we don't know when our business, when our portfolio goes to market, if the rates are too low, we won't win it back or then we will lose it. And what is for sure is that the rates will go down when it goes out to market because the rates have fallen in the market in general.

So we have a renewal rate in those sectors above 100%. That is that we're retaining most of the clients, and we have inflation and there is some exposure growth for those clients, and we even have some rate increases.

So the rate is above 0. The rate, if you adjust for inflation, is above 0 in public sector and housing in total for 1st of April 2026, which is a very strong result, and it could have been very different.

The new sales is another story. So the rates have been falling, and we have seen approximately half of the volume as we saw last year, which was similar to the year before.

And we have quoted slightly less. So there have been some clients that we don't like, that we don't have risk appetite for.

The hit ratio is slightly lower, very similar for local authorities, public sector and quite a lot lower on housing associations. So that's due to pricing.

Competition coming back into the market and pricing being lower. So the result on public sector and housing is -- it's a very strong result, and it's driven by that not a lot of volume has been out in the market and that we have had discipline in the underwriting.

And it's strong discipline to end up with this result. And then that's only the limited segment, public sector and housing.

Commercial sector is much bigger. We have a much smaller market share.

And so that's where the potential is large, and that's what's driving the growth. So that's where we have the new sales in 2026.

It's still a softening market in the U.K., especially on property, but it's flattening out somewhat. So we are able to convert some of our quotes to wins more than what we have done before, and we're also quoting -- seeing more and quoting more.

And then we have the real estate segment, which I have talked about before. We have opened that segment.

But I've also said that I don't expect us to quote a lot of business before the fourth quarter of 2026. We are quoting some business both some in the smaller segment of the real estate segment and also some of the larger clients.

What we see is that rates are low as in commercial sector for now, but we are converting some. So we have some hit ratio on what we are quoting.

But don't expect a lot to come from that segment before -- or we don't expect to quote a lot before fourth quarter inceptions. And then the market will be what it is.

So we may not win a lot in fourth quarter, but we are more confident today with more data and more knowledge about the real estate sector that this is a segment for us. So it's very similar to the housing sector where we have had very good success.

So low deductibles and cost advantage is very important. I forgot to say before I started that -- I see that they're speaking in the front here.

So I forgot to say that questions during the presentation are welcome and better during the presentation than keeping them all for after. So if you have any questions, the volume side.

[indiscernible] Just on the sort of lower-than-expected tenders out there, and I appreciate that being on the public sector and housing side. But do you have any reflections of why that is?

Because just intuitively, given the -- all of the comments on price pressure and a softening market, if I were to sort of renew my insurance, it feels like this is the time to do it. But now instead, customers are sort of exercising their options to automatically renew on what seems to be a bit old terms.

Why aren't more sort of using this opportunity? Is that a negative read to sort of expectations for the even better prices going forward?

Or what are sort of your reflections on that?

I mean we don't really know. But there are several reasons that drive it.

And one is that some of the capacity -- the public sector housing is in a way, a bit of a strange market because it's mostly when new capacity comes in, it comes in through the existing incumbent insurers, Zurich Municipal is one very large player or it comes through MGAs. And these MGAs are not really -- they don't really necessarily have the credibility and the trust from the brokers to be place business with.

So then they are waiting with bringing it out to market. the local authorities, they are looking to have a reform in the U.K.

to merge some of the local authorities and become more efficient or at least that's the ambition. So they are -- there is some uncertainty there, which makes them honor the long-term agreements or an optional year in the long-term agreements.

And then obviously, the insurers are doing a lot to keep the clients. So they're doing something on the renewal side in order to avoid competitions.

And that's -- we do that and our competitors do that. So I think there are several reasons why you see that type of lower tender volume in the market.

But at the same time, your last comment or assumption, that's an interesting one because we do have a -- we have higher uncertainty on inflation now, and it's a dangerous combo with softening rates and higher uncertainty, and it only goes one way, then on inflation. So to expect that the softening will continue in that type of an environment with post-COVID learnings not too far away, then at least I think that that's a way of discrediting the market and our competitors because the right thing to do would be to now change.

And just a quick follow-up on that. Let's just assume that those volumes are sort of rolled over to potentially coming out in 2027, both in terms of the market, but also your -- you mentioned sort of like the portfolio composition of a lot of volumes being won in '23 and '24.

And given the sort of dynamics with 3- to 5-year contracts, will then '27 be sort of like a very important year with a lot of volumes, both from volumes being basically postponed into '27, but also on your portfolio with a lot of tenders and a lot of sort of contracts having to be renewed then in '27?

So both '27, '28 and even '29 are important renewals of that portfolio. So it's -- in a way, we've talked about this before, and we have some estimates of how that volume will be tendered, but we don't know exactly.

So -- but let's say that we expose 20% in '27 and maybe a bit more in '28. And then the rest -- we've had some exposed now, obviously, than the rest in '29.

And then it depends on the market how that is. But -- but the rates we have from there, and this is also something I've said before, they are not something that we expect to be in the portfolio over time.

So that will normalize. And in a way, that market -- those market conditions are better if you have a cost advantage when there is a bit tighter margin than when the margin is very high because then everyone earns money.

We go to the claims side, and we like to focus on the risks and the opportunities for improvements. That's on motor this quarter.

Obviously, one quarter is short, we write and say that you need to understand that quarterly volatility must be expected both ways when it comes to growth and profitability in Protector to see it over time. But it is a fact that the underlying realities, if you correct or if you adjust the claims ratio for first quarter '26 and compare it to an adjusted figure for first quarter 2025, it is a worsening.

So that's a fact. The reason for it is motor.

Motor is poor profitability. Property has a very strong and stable profitability, and that's our largest product.

And there are not any other problem areas on the product side. So it's motor.

So good news is that motor is very short tailed, so you see it very quickly. And it's also easy to understand that if you have many claims, more claims than you had last year as a client and the broker understands this and it's unprofitable, you can adjust prices.

But what surprised us is that the claims inflation, which is not only prices, but also frequency increases was higher than what we have seen previously. So there is something that could be volatility.

But the way we see it is that we don't think of it as volatility and bad luck in the first place. We first try to find out if there is a reason, if we can find the reason and if there is a systematic problem.

So that's how we started. Parts of it, it's in particular from Norway and Denmark.

That's where the worsening is the worst or the biggest. And we also grew -- we had a strong growth.

1st of January in Norway, in particular. And parts of that portfolio, the new portfolio is not performing well.

So we need to understand if we've done mistakes there or if that also is some kind of coincident or volatility. So we're obviously already looking into it.

And so there is something there that we need to understand. And there are actions we need to make.

And in addition, you have more uncertainty on inflation going forward. So that's a focus area.

But as I said, the good thing is that this is something that we see, we can quickly understand it, and we know it's possible to do something about it. And we also know that we have very good processes of doing something about it on a client level, which gives good results on renewal pricing and adjustments.

But we're not very concerned about it. No change in risk appetite.

We still believe that motor is an area where we should continue growing. Any questions on claims development?

When you look at the time lines here, you see on the large loss side that it's -- we're not at the 8% that we now have as a normalized level, but we still believe that, that's a sensible normalized level. And on the runoff side, I have mentioned previously that best estimate is important for us, both on the case reserving and on the actuarial reserving.

But coming from a period with more uncertainty, you can expect that, that uncertainty ends up on the conservative side. It could obviously go both ways, but that's some of what you're seeing now.

On the cost side, which we haven't talked about, we talked about the growth and the claims development. On the cost side, there is a reduction.

You'll see that broker commission is higher. That's because we grow in France where broker commission is higher.

But if you adjust for that, it's a slightly bigger decrease from last year, but most of it is due to the share price reduction and the long-term bonus plan that we have talked about before that has gone the opposite way. So there's no real reduction in cost quarter-over-quarter.

And again, that's investing in data and in AI. But obviously, at some point, we need to see that in the cost ratio.

And I think there are good -- we have good solutions and good process improvements that have -- that will drive a reduction and scalability in -- on the cost ratio going forward. Investments, that's volatile, as you all know.

And on the equity side, we had a big loss in the quarter. Most important thing -- or the 2 most important things to mention is the increased yield.

So the yield has gone up due to the interest rate increase. And the other thing is that in the equity portfolio, there was a mistake in the presentation that we sent out on estimated intrinsic value discounts, not that, that necessarily is something everyone believe in, but that said 30%, it is -- the correct figure is 37%, which makes more sense when the equity portfolio has had a loss.

So -- but the point is on the equity side is that the underlying performance of the companies has been good. So it's been okay for some time.

We've had some poorer performing companies. Now it is -- has turned around.

So that's on a good trend. And so that's positive.

And just as an example of the volatility, if you look at the equity portfolio today or a couple of days ago, year-to-date, we're plus, and you could figure that out because we have the list of equities. And so the loss is gone and there is a positive return.

As of today, but tomorrow could be different. Any questions on the investment side?

Yes. Profit and loss, the only thing that you see is that the tax rate is high.

That's obviously due to the profit coming from insurance side and there's tax on that and that the reduction of the profit comes from equities where there's no tax. Capital position.

So in the quarter, the largest reduction in the requirement on the capital side that comes from a reduced equity portfolio. So that has some effect.

There is also some reducing effects on the requirement from the exchange rates, the Norwegian kroner strengthening in the quarter. And then when it comes to the dividend here, the most important factors for that dividend is obviously that we have a faster stress strong capital position.

But we also have the U.K. portfolio, we have a high earnings capacity going forward.

There's an increased yield in the bond portfolio, but the insurance portfolio is stable. So we know the earnings capacity from that portfolio and more transparency in that following 1st of January and 1st of April in the U.K.

And then the French market now has 5 quarters, and we don't see any signs of that being mispriced or that we've had wrong clients coming in. So we're more confident in the French portfolio, even though it will be volatile, but we see some good development in the French portfolio.

And we -- even though we see lots of opportunities for the future, we don't have in the short term, i.e., a year, we won't have many new markets started within 1 year. And during that time, we have a high earnings capacity.

So that's -- those are the reasons for the dividend. Obviously, we would have liked to have opportunities to use that capital for -- at any time, but this is more a time element.

And in the meantime, we will earn some more capital. So that's it on the summary.

Any more questions?

Just a bit more big picture, the developments in the different markets, and I appreciate maybe U.K. being sort of like the main focus more than concern maybe.

But just in terms of your competition, I appreciate that more in general, the underlying claims ratio is up, but some of it is due to frequency, but in some way, I guess, pricing also has an impact on that. Where do you see your competition in terms of their profitability amid a market softening.

Is this sort of like a timing issue that the industry will, on a relative basis, bleed out for a few years and then we'll back -- we're back to the '22, '23 situation in the U.K. where you had pretty much the market for yourself?

Or is it a change in your competition as -- are there more efficient players out there now versus before? Just any comments to sort of ease our nerves that this is not, in fact, a structural issue.

It's more of an irrational behavior type of thing?

I think it's interesting. But first, predicting where the market will go is very -- we don't spend a lot of energy on that because that's difficult.

But we don't see any competition that is different, rather on the opposite where we see MGAs with high cost structures. So there, you know that one element is their commission level.

And that commission level is in many cases, almost all cases, double of our cost ratio. And then there is a carrier behind and there's other cost elements to it.

So that's -- and those are the ones that drives price in the U.K. market, if we focused on that.

In the Scandinavian market, we don't see any large changes or the Nordic market. The French market is a bit early to say, but we don't see -- so if there is a difference between the French market and the U.K.

market because there are large markets, there are many players, many of the same players. So if there is a difference, it is that the brokers have a larger part of the value chain in France, which gives the relevant part of the cost ratio that where we have an advantage, a smaller part to play.

But at the same time, we see a change in that, that there will be -- it's not sustainable that the brokers have that large part of the value chain over time. So we don't see any signs of that.

But obviously, we're paranoid about our cost position in the areas where -- that we need to improve that. because someone could come or competitors can improve.

So we need to continue that journey of improvement, and we are focusing on that. So that's important.

But we don't see any signs of it. And how the market cycle goes.

The historical facts are that the market cycles are long in the Nordics. They're shorter in the U.K.

U.K. motor, the market cycles are -- they can be almost quarterly.

And that's driven by the consumer sector, but it is contagious to the sectors we are in. So -- and in a way that it's it must be a good place to be if you have a consistent approach and a disciplined approach to underwriting.

And there are quick market cycles. You don't need to be part of the cycle that is unprofitable.

So if you stop there and then you can be part of something that goes up, that must be a good thing. And it is, in many ways, irrational.

And some of the segments we're in, we see irrational behavior now. So there is no way we would -- and maybe we're wrong, but some of those segments where you know that they're not excluding escape of water claims from their cover, our competitors because then they wouldn't be able to win clients.

Those escape of water claims, they won't change a lot. They cost GBP 3,500 per claim and the frequency of them, in general, you can predict fairly easily.

And when insurance is priced on the level of those claims, then you don't have anything for cost margin and large losses. So then at some point, it will stop.

So in some of those segments, we think -- Thank you.

Could you please elaborate on what are the main opportunities and what are the main trends you see, when are they coming?

So it's elaboration on AI and main opportunities, main threats. And I think I said some words previously.

But what we -- so one example of a threat is that we have one distribution channel and thinking about whether that distribution channel is present sometime in the future and how that broker part of the value chain will be when you can use agents for parts of that work as a client. That is an interesting exercise, not because we necessarily -- we could argue against or for that scenario that brokers have a smaller role and that we lose that distribution.

So it's not necessarily believing or not believing in the scenario, but it's a very interesting exercise to do both together with the brokers, but also for ourselves. And I think the outcome of that is that we will deliver -- as we go, we would deliver better to the brokers.

And if that scenario ends up being, then we're prepared for them not being there. So that -- and that's agentic wording, marketing and pricing that can be done.

But for the type of clients we have, remember that the average size of our clients is probably something like EUR 150,000. So -- and U.K.

has very large clients. That -- to use an agent to quote that is a bit more complex because the data is it's not available like it is in the consumer sector where you have exactly the same cover and exactly the same exposure.

So here, there are very many tailor-made solutions. So that -- but what we believe is that we can obviously get efficiency gains from AI solutions, we already do.

So we can do more quotes, we can do more claims per person. And in parts of the processes, we have HQ wise, we can do a lot more on HR and compliance and all the requirements that come from the outside, much more efficient.

But that's kind of obvious that you can get efficiency gains from large language models. What we focus on is to increase the decision-making ability for Protector that we are more precise in our decisions.

And that's more dependent on data than technology because the technology is there. So that's -- and I don't know if it's answered your question exactly, but some words on that.

No more questions? Thank you.