Protector Forsikring Asa · OSL:PROT
Protector Forsikring Asa — Investor Day (March 2021)
96 slides from Protector Forsikring Asa's investor day presentation, Mar 10, 2021
Slide 1: Disclaimer
Disclaimer This presentation and the information contained herein have been prepared by and is the sole responsibility of Protector Forsikring ASA (the "Company”). Such information is being provided to you solely for your information and may not be reproduced, retransmitted, further distributed to a
Slide 2: Capital Markets Day
Capital Markets Day March 10th 2021
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 Innovative/Open Bold Committed
Slide 4: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 5: New information released today
New information released today SCR-ratio up 19% points, YTD equity return > MNOK 350, 3-year CR 90-92% • New BNOK 1.9 reinsurance deal on WC Denmark/Norway signed March 9th • The deal confirm reserve quality • Protectors SCR-ratio increases with 19%-points, everything else equal • Very attractive co
Slide 6: Reinsurance deal reduces risk and increases SCR-ratio
Reinsurance deal reduces risk and increases SCR-ratio 70% of WC tail in Denmark and Norway sold • Reserves sized BNOK 1.9 sold to DARAG Germany (70% of reserves transferred) • Similar to our deal with DARAG on Change of Ownership reserves • SCR-ratio post dividend increases from 190% to 209% • Cut o
Slide 7: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 8: Claims handling – the moment of truth
Claims handling – the moment of truth
Slide 9: Claims handling in Protector
Claims handling in Protector Moment of truth Main targets in Claims Handling: • High customer quality • Correct, avoid leakage and follow up on any possibility • High efficiency (when critical mass is reached) Resources to deliver on Main Targets: Norway Sweden Denmark Finland PF Nordics UK PF Total
Slide 10: Project Falcon 2020
Project Falcon 2020 Our way to world leading Claims handling Rolls Royce Cost control through Recovery and Reduction Clean Desk No delays in Claims handling – without compromising on quality ICF Instant customer feedback. Customer satisfaction, follow up dissatisfied Pharaoh Counter fraud within Cla
Slide 11: Project Falcon 2020
Project Falcon 2020 Our way to world leading claims handling Rolls Royce 14 % improvement Clean Desk 91% clean. 26.000 of 28.500 working days ICF 88% satisfied (“Good” or “Very good”) Pharaoh 1% savings, OK result. Higher potential 11
Slide 12: Management reporting
Management reporting Control is key All relevant KPI’s available to managers 24/7 Large Loss follow-up tools to ensure perfect control Monthly reports –Top Down and Bottom Up – presented on 1 “page”. and learning loops • Protector level • Registration spreadsheet per claim • Protector level • Busine
Slide 13: Project Falcon 2021
Project Falcon 2021 IQ Falcon Rolls Royce Perfect cost control in every claim, incl. counter-fraud and “Negative RR” Clean Desk Improved SLA’s from cradle to grave, incl. perfect data quality (100%) Efficiency Balance is key, cost ratio in Nordics for own account at 6.6% in 2022 Broker Satisfaction
Slide 14: 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 Innovative/Open Bold Committed
Slide 15: Value creation in the long run
Value creation in the long run We have only just begun • Cost leader in the world – not good enough • Quality leader in Scandinavia & UK • Average CR last 10 years at 91.6 % • Price increases still higher than claims inflation entering 2021, churn back to normal in Nordics • Growing organically from
Slide 16: Cost Leadership – World leader, but…
Cost Leadership – World leader, but… Not good enough – new target 2023 Creating cost leadership Cost the real way1 • Define strategy, design value chains and implement 12% • In-house IT with cost ratio of ≈ 1% vs 3.2% for industry (Gartner Inc.) 11% • The real cost “secret” is a mix of culture and I
Slide 17: Quality leader in Scandinavia and UK
Quality leader in Scandinavia and UK Humble and proud Broker satisfaction index; not conducted in the Nordics in 2020 due to Covid-19 13 years in a row 7 years in a row #1 2 yrs consecutive #2 in 2018 Far ahead of #2 again 17
Slide 18: Profitability challenged
Profitability challenged 2020 - A turning point, CR 2021 expected at 90-92% Profitable 9 out the 10 last years Profitability improvements • Some challenges entering 2018 • Significant Nordic price increases • Poor UW discipline in Norway & Finland • Stronger UW discipline in some markets/segments •
Slide 19: Volume growth
Volume growth 17 % GWP CAGR last 5 years, 10% growth expected for 2021 Sustainable growth 5 516 • Profitability comes first, growth second 5 100 • No capex booked at balance sheet entering new markets • Geographical diversification increasing 4 286 • UK expected to be biggest geographical area in 20
Slide 20: Protector Nordic vs. Peers
Protector Nordic vs. Peers Growing to a nr. 3 position in the market Combined Ratio avg. ‘14-’201 • Protector vs. If Industrial and Tryg Corporate • Same product mix Tryg Corporate 90,1% • Same broker based sales channel • Same commission structure If Industrial 94,3% • Same average size of clients
Slide 21: Top 3 in any segment we enter
Top 3 in any segment we enter Brokered Insurance Nordics & Public sector UK P&C Nordic Nordic municipalities Public sector UK Bergen Göteborg København Helsinki Stavanger Malmö Bærum Aarhus Nr. 1 Motor fleet Nordic Nordic bus market Many others 21
Slide 22: Product mix development – towards short tail
Product mix development1 – towards short tail Reduced risk profile and reduced capital consumption • Short tail from 34% in 2008 to 80% in 2021 Geographical diversification as of 31.12.2020: • Long tail attractiveness decreasing as risk free interest rate decline or disappear. • Geographical diversi
Slide 23: Capital consumption going down quickly
Capital consumption going down quickly Increased ROE and shareholder distribution High WC all countries Medium COI, Liability, EL UK, Other Illness Low Property, Motor, Accident & Other Capital consumption pr. GWP 5 757 5 457 45% 4 799 4 163 3 439 2 843 2 375 31% 2014 2015 2016 2017 2018 2019 2020 2
Slide 24: Culture eats strategy for breakfast!
How did it happen? Our DNA Vision The Challenger Business Idea This will happen through unique relationships, best in class decision- making and cost effective solutions Main targets Culture eats Cost and quality leadership It’s our DNA - Profitable growth strategy for Top 3 We are breakfast! Values
Slide 25: The real secret
The real secret Know, understand and live our DNA – every day Our DNA G@W Vision Management training 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
Slide 26: Never ever compromise on our DNA (TIME)
Never ever compromise on our DNA (TIME) Values embedded in our every day work 26
Slide 27: Value creation in the long run
Value creation in the long run We have only just begun • Cost leader in the world – not good enough • Quality leader in Scandinavia & UK • Average CR last 10 years at 91.6 % • Price increases still higher than claims inflation entering 2021, churn back to normal in Nordics • Growing organically from
Slide 28: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 29: Executive summary
Executive summary Nordics – Back on track • Profitability entering 2021 Turn-around completed • Cost efficiency measures Cost ratio down 1.5%-points in 2022 • Quality towards market Measured monthly through ”Broker Instant Feedback”. • Price increases in 2021 4-5%-points higher than claims inflation
Slide 30: Our DNA
«We are different» Our DNA «Olemme erilaisia» 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 «Vi er annerledes» Profitable growth «Vi er anderle
Slide 31: Cost Leadership
Cost Leadership Turn trend around in the Nordics Creating cost leadership Cost the real way1 • Define strategy, design value chains and implement . 12% • High premium volume per employee when critical mass is reached. • Low overhead – Managers are operational. 11% • In-house IT with Cost ratio of ≈
Slide 32: Quality leader in Scandinavia
Quality leader in Scandinavia Elements of dissatisfaction following price increases Broker satisfaction index done annually through Protector, Broker houses and/or broker associations 13 years in a row 7 years in a row #1 2 yrs consecutive #2 in 2018 32
Slide 33: Claims results deteriorated
Claims results deteriorated 2021 – Profitability turn around completed Gradually worsening Profitability improvements • Average Return on Equity previous 10 years at 18%. • ROE focus makes long-tail less attractive. • Underlying realities worse in 2014-2016 and better 2018-2020. • Significant Nordic
Slide 34: Volume growth
Volume growth 12.5 % CAGR 2016-2020, single digit going forward 4 500 100% Sustainable growth 4 247 4 189 4 000 • Profitability comes first, growth second. 3 781 90% • Excitement about maintaining discipline. 3 500 3 359 80% • Opportunities in a disciplined Nordic market. 70% 3 000 2 893 60% 2 500 2
Slide 35: Cost efficiency
Cost efficiency Right-sizing to strengthen cost leadership. Earned premium / FTE 2018 2019 2020 2021 • Manning has increased while growth halted. NO 22.1 20.0 18.8 22.4 SE 12.5 14.8 16.1 18.4 • Efficiency has not been prioritized during 2018-2020. DK 19.4 20.2 16.5 17.2 FI 8.8 11.3 9.4 9.0 Nordics 1
Slide 36: Quality Leadership
Quality Leadership Broker Instant Feedback supports quality control. • Monthly pulse to all brokers based on activity level. • SMS for easy access and response, scale 1-4. • Immediate follow-up of all ”1” – very unhappy. • Individual follow-up on broker satisfaction too learn and train. Initial feed
Slide 37: Price increases
Price increases Will improve profitability 4-5% in 2021 2020 2021 Very low churn on P&C. ≈ 14.5% Slightly less than 2020 High churn on Workers Comp. Very large variation on products and segments. Less than 2020 in total. ≈ 13.0% Motor much lower. Real estate average +40%. Larger variation. Very high
Slide 38: Portfolio Quality
Portfolio Quality Further de-risking on a moderate level. • 80% of contract controlled for deviations. • All large exposures covered. • # 4106 deviations clarified before renewal. • Exposures controlled and pricing risk adjusted where relevant. • Policy data improved. #Contracts to Microscoping #Mic
Slide 39: Market position
Market position Market share at 12% – opportunities in Public Housing and Motor • Public sector is dominated by 2-3 insurers in each market. • Commercial and Affinity is dominated by 3-4 local insurers. • Mutual insurers are much more represented in all markets. • International subsidiaries are focu
Slide 40: Public Sector
Public Sector Consistent risk selection comes first, growth is secondary 15 years on consistent approach to risk selection Consistently beating the market on large loss frequency • One UW all lines, Director or Chief UW in all processes • Loyal to methodology – no «red» risk written. • > 400 factors
Slide 41: Executive summary
Executive summary Nordics – Back on Track • Profitability entering 2021 Turn-around completed • Cost efficiency measures Cost ratio down 1.5%-points in 2022 • Quality towards market Measured monthly through ”Broker Instant Feedback”. • Price increases in 2021 4-5%-points higher than claims inflation
Slide 42: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 43: 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 Innovative/Open Bold Committed
Slide 44: UK Summary 2016-2020
UK Summary 2016-2020 A disciplined Team Journey has just begun • £10bn market in scope, £3bn market in focus, many years of growth ahead • Three segments • Public UW & cost advantage # 3 today • Housing: UW & cost advantage # 3 today • Commercial: Careful entry, one team «on 2, soon 3, broker panels
Slide 45: Lessons learned from entering Sweden and Denmark
Lessons learned from entering Sweden and Denmark Making mistakes is ok – if they are shared and not repeated Significant long tail business early (DK) Start in Public Clients before Sector, then Lost money, takes people time to fix Commercial Vertical Build strong integration in Protector culture cl
Slide 46: Our Segments and brokers
Our Segments and brokers Selected Brokers, search for Competitive Edge, do it well Public Sector Housing Associations Commercial Sector PRFs main brokers: PRFs main brokers: PRFs main brokers: • Marsh • Marsh • Marsh • Aon • Aon • AJG > £600m market > £300m market Large clients (£250k avg.) UW Excel
Slide 47: Public Sector & Housing Association
Public Sector & Housing Association Top 3, disciplined UW, risk selection & cost advantage Public Sector Housing Associations • Market leader with > 50 % share • Clients selection through consistent UW methodology • One UW, all products • Focused RM approach PRFs main brokers: PRFs main brokers: • M
Slide 48: Commercial Sector
Commercial Sector Large Clients, focused distribution, Risk Management focus Commercial Sector • Core Products – Property, Casualty & Motor • Gradually expanding distribution • Wide risk appetite – Narrow customer focus • Strong analytical bias PRFs main brokers: • Marsh • Aon • Major customer propo
Slide 49: Disciplined growth in a large market
Disciplined growth in a large market 61% avg. annual growth since 2017 with lots more potential UK GWP Growth £m 2017 2018 2019 2020 120 110,64 100 80 75,91 59,63 60 47,06 40,50 40 31,01 21,59 20,00 22,50 17,14 18,71 20 10,65 11,21 13,82 5,64 6,21 0 Public Housing Commercial Total COR: 110% 97% 73%
Slide 50: The UK Market
The UK Market £10bn+ – Growing despite Brexit & Covid 19 The Market Segments Distribution Broker 1: £2,000m Broker 2: £1,280m Commercial Broker 3: £ 960m £9,000m Broker 4: £1,200m Broker 5: £ 400m London Market Specialist: £1,640m Regional: £1,520m £2.9bn Public 3 Major Brokers Sector ZM Direct £600
Slide 51: The UK Market
The UK Market Huge opportunity, targeted focus – Underwrite the client • In scope UK Market GWP £10 bn + Current Risk High Medium Low Appetite Manufacturing Real Estate Financial Institutions Retail & Wholesale Specialist Areas / Professional • In Focus GWP £2.9bn + Public Services Administration •
Slide 52: UK 'One Team' Development
UK ‘One Team’ Development Prepared for the future, committed to the culture and curious • Protector Cultural Lead – 2019 & 2020 • 80+ employees (33 on-boarded in 2020) • Seamless transition to WFH • Advancing training & Development – through internal & external programs • Two locations – One team –
Slide 53: Broker Satisfaction
Broker Satisfaction Perception is reality, strong results in 2020, never compromise on quality BSI UK 2020 - Totality Protector 80 Avg ex Protector 59 Competitor 1 65 Competitor 2 64 Competitor 3 63 Competitor 4 60 Competitor 5 60 Competitor 6 60 Competitor 7 56 Competitor 8 56 Competitor 9 55 Compe
Slide 54: UK Summary 2016-2020
UK Summary 2016-2020 A disciplined Team Journey has just begun • £10bn market in scope, £3bn market in focus, many years of growth ahead • Three segments • Public UW & cost advantage # 3 today • Housing: UW & cost advantage # 3 today • Commercial: Careful entry, one team «on 2, soon 3, broker panels
Slide 55: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 56: Investment is core
Investment is core CAGR AUM last 5 years of 15.2% 13 492 • Equity share between 8.9 and 25.1% historically 13.5% • Direct equity investments under consideration 10 925 • High Yield (HY) share between 15% and 34% historically 10.1% • Equity and HY share will vary according to assessed attractiveness
Slide 57: Protector's financial underwriting method
Protector’s financial underwriting method Overall investment hurdle rate at 20% company RoE Protector’s analysis process Stress test Risk allocation New ideas and watchlist • Portfolio allocation based on risk/reward considerations/ high hurdle rate (min. 20% RoE) • Stress test to ensure that we wit
Slide 58: Investment strategy – equities
Investment strategy – equities Focus on level of difficulty and risk/ reward Protector • Long term ownership returns “Do not buy a farm just because you Horizon expect a lot of rain this summer” • Good long term ownership returns “There are no extra points for level Type of investments • Easy/predic
Slide 59: Equity portfolio statistics
Equity portfolio statistics Good performance since inception in 2014 • Equity share of total portfolio varies depending on Cumulative TWR in % – Equity portfolio vs. benchmarks (08.10.2014 – 31.12.2020) available investment opportunities reaching hurdle 170 164 150 • Discount to estimated intrinsic
Slide 60: Equity portfolio - top 10 holdings
Equity portfolio - top 10 holdings 5 are new from CMD in 2018 Top 10 holdings per 02.03.2021 1. Multiconsult, 4.043.344 shares 2. Elanders, 2.150.520 shares 3. Jyske Bank, 757.645 shares, new 2019 4. BankNordik, 1.060.644 shares, new 2019 5. eWork, 1.720.499 shares 6. Columbus, 5.132.389 shares, new
Slide 61: Investment strategy – Bonds
Investment strategy – Bonds Invest in riskier assets if RoE > 20%. Higher risk requires higher margin of safety • Bottom-up analysis (underwriting) and quarterly follow up • Bond market often slow to react to deteriorating fundamentals Analysis/Underwriting strategy • Continuous development of proce
Slide 62: Bond portfolio statistics
Bond portfolio statistics Immaterial losses the last 5 years. Higher risk in 2020 and start of 2021 • Low losses, -0.11% or less, every year since insourcing in 2015 Portfolio data 31.12.20 30.09.20 31.12.19 Size bond & cash eq. (MNOK) 1 11 603 11 788 9 757 • Higher risk in 2020 than avg. last 5 yea
Slide 63: HY bond transactions January to June 2020
HY bond transactions January to June 2020 Protector will invest aggressively in rare situations when our assessment is outstanding risk/reward BPS MNOK 1800 1200 • Severe stress tests avoids forced selling 1017 1600 1000 • No “customer” will withdraw money 1400 800 • We hedge all currency and have n
Slide 64: Bond portfolio – return and capital consumption
Bond portfolio – return and capital consumption Focus on return on capital consumed Protector return ex investments in HY bond funds from March ’15 Capital consumption NOK bn2 Alternative 1 Protector in-house bond 1.2 portfolio 2.4x Protector HY return ex investments in HY bond funds from March ’15
Slide 65: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 66: Earlier communicated long-term financial objectives
Earlier communicated long-term financial objectives Profitability first. A balance sheet that can handle the unexpected Long-term financial objectives (looking 3 years ahead from Feb. ‘20) Net Combined Ratio: 94 % Return on Equity (ROE): > 20 % Gross Written Premium (GWP) growth: 5% Solvency II Capi
Slide 67: Combined ratio considerations 2021
Combined ratio considerations 2021 Improvements on it’s way 2020 net combined ratio at 94.8 % + Covid-19 effects 1 %-points + Some negative surprises normally occur – “safety margin” 2-4 %-points 0 Quality of customer portfolio slightly better, but what about new clients? 0 %-points - Earned premium
Slide 68: The situation entering March
The situation entering March Combined ratio probably on budget – very good start on investments • Volume In line with budget assumptions • Price increases January 1st 5.8% increase above claims inflation on BNOK 2 premium • Large losses Slightly lower than normalized (volatility expected) • Motor Go
Slide 69: Protectors competitive position
Protectors competitive position Strong 2021 entry, significant identified upsides • Nordic business back on track after trouble. • Sweden and Norway looks strong • Denmark about to recover, but still need more work • Public Nordics look strong with limited competition and significant competitive edg
Slide 70: Market background
Market background A hardening market, slightly reduced competition • Interest rate level at 0 for a long time leads to increased UW discipline + • Reinsurance trouble supports UW discipline + • Very disciplined Nordic market will continue + • Industry consolidation reduces competition and supports d
Slide 71: Risk Level in Protector
Risk Level in Protector Risk level slightly down in 2021-2023 • Higher volatility due to some Property volume and (motor) Liability in UK Increased risk • Higher Nat Cat risk due to increased Housing portfolio in UK Increased risk • Four countries with (close to) critical mass is a new situation for
Slide 72: New long-term financial objectives – 3Y perspective
New long-term financial objectives – 3Y perspective Profitable growth with a Combined Ratio 90-92% Long-term financial objectives Old New Guiding 2021 Net Combined Ratio: 94 % 90-92% 90-92% Return on Equity (ROE): > 20 % > 20% Gross Written Premium (GWP) growth: 5% Disciplined 10% Solvency II Capita
Slide 73: Capital Allocation
Capital Allocation Maximise shareholder return
Slide 74: Capital allocation – maximize shareholder return
Capital allocation – maximize shareholder return Priority 1: Always profitable growth in insurance, if possible Main capital allocation alternatives: 1 2 3 4 5 Investments Insurance underwriting Cash as an option Buy backs Dividends Equities & Bonds 1 Allocation towards profitable growth is preferre
Slide 75: Capital allocation alternatives – what have we done?
Capital allocation alternatives – what have we done? Maximizing shareholder return 1 Changing product mix – capital light1 2 Lowered risk in bond portfolio – enabled capacity in March Capital consumption NOK bn2 Alternative 1 Protector bond portfolio 1.20 2.4x Alternative 2 2.90 Crossover bond fund1
Slide 76: Other capital allocation initiatives
Other capital allocation initiatives Optimize sources and cost of capital • T1 and T2 issuances • Buying additional Large Loss Reinsurance with ”0 risk” for capital reasons • Solvency based Reinsurance, incl. retroactive option in financial turmoil • Sale of COI reserves • Sale of WC reserves • Put
Slide 77: Capital allocation – maximize shareholder return
Capital allocation – maximize shareholder return Priority 1: Always profitable growth in insurance, if possible Main capital allocation alternatives: 1 2 3 4 5 Investments Insurance underwriting Cash as an option Buy backs Dividends Equities & Bonds 1 Allocation towards profitable growth is preferre
Slide 78: Profitable insurance growth the preferred alternative
Profitable insurance growth the preferred alternative Significant growth opportunities also in future – profitability before growth Step by step growth But with discipline to release underperforming capital • Exit COI • Exit WC Denmark 5 516 • Exit WC within health and welfare in Norway (Covid-19 ex
Slide 79: Capital allocation alternatives
Capital allocation alternatives Excess capital has value, but is also a headwind for returns Illustration of excess capital Risk tolerance / Stress levels Deploy capital Available excess capital Excess capital Do we have attractive allocation ideas Retain capital meeting internally set high hurdle r
Slide 80: New dividend policy in Protector decided March 4th
New dividend policy in Protector decided March 4th Flexible Shareholder distribution policy – profitable growth in insurance always priority nr 1 Solvency II ratio Current level • Capital over 180% in SCR ratio distributed over time = 203% 180% • Shareholder distribution normally 20%-80% of net prof
Slide 81: Capital allocation – maximize shareholder return
Capital allocation – maximize shareholder return We are good at it and both management and board members are significant sharehoders Main capital allocation alternatives: 1 2 3 4 5 Investments Insurance underwriting Cash as an option Buy backs Dividends Equities & Bonds 1 Allocation towards profitab
Slide 82: Capital Markets Day 2021
Capital Markets Day 2021 Virtual Webcast| March 10th | From 10:00 10:00 – 10:30 Protector – We have only just begun 10:30 – 10:45 Nordics – Back on Track 10:45 – 11:00 UK – A Disciplined Team Journey 11:00 – 11:15 Investments – Core business 11:15 – 11:40 Long-term target and shareholder distributio
Slide 83: New information released today
New information released today SCR-ratio up 19% points, YTD equity return > MNOK 350, 3-year CR 90-92% • New BNOK 1.9 reinsurance deal on WC Denmark/Norway signed March 9th • YTD equity portfolio return > MNOK 350 • Long-term (3 years) combined ratio target changed from 94% to 90-92% • New flexible
Slide 84: Summary of today – we have only just begun
Summary of today – we have only just begun HTD ROE is 19% - new target is Combined ratio 90-92% and ROE 20% • Thank you for listening • HTD CAGR share price at 27% - what’s your call ? 84
Slide 85: Succession: McKinsey on "Last 100 days of an CEO"
Succession: McKinsey on “Last 100 days of an CEO” We started succession many years ago • Fight the intuitive feeling of “a need to step back” to leave the floor to next CEO • Continue acting as a CEO and leave the company stronger • Do not postpone strategy development • Act on prioritized improveme
Slide 86: Succession is about 'The Team'
Succession is about ‘The Team’ Involve management in a transparent structured transfer of roles and responsibilities Henrik Høye CEO in September, Hans Didring nr. 2 – One Team approach is what matters 86
Slide 87: PROTECTOR
PROTECTOR insurance
Slide 88: Appendix
Appendix PROTECTOR
Slide 89: Strategy – Well defined and consistent
Strategy – Well defined and consistent Like most international companies in the Nordics • All Property & Casualty products • Competitive prices (supported by cost leadership) Strategy remains unchanged, priorities are updated annually • Broker distribution only with a 3 year perspective • USP: Easy
Slide 90: Nordic
Nordic Segments – Public & Commercial 2004 2011 2012 2016 25% 29% 18% 4% Exit COI 2020 (2025) But we killed a bug 90
Slide 91: Commercial sector
Commercial sector 72 % of Nordic revenues Summary Market drivers • Corporate clients minimum size NOK 0.2m • Cost and quality leadership • Standardized products; Workers Compensation, Group Life, Other • Protector’s market appetite in Nordics is > NOK 30bn Insurance, Accident, Health , Property, Mot
Slide 92: Public sector
Public sector 28 % of Nordic revenues Summary Market drivers • Protector is the market leader in the Nordics • Few players and tough market conditions • Insuring more than 600 municipalities • Tender processes are governed by public procurement regulation • 280 Norwegian, 240 Swedish and 80 Danish c
Slide 93: Reserve history
Reserve history Prudent • Protector does not expect run-off gains nor losses in our reserving • Reserves are volatile in some products, but HTD Protector has run-off gains of ~190 MNOK • Property & Motor Large gains • COI Large losses • Long tail (NOR) Some gains • WC Denmark Some losses Reserve out
Slide 94: Normalized Large Losses
Normalized Large Losses Gross large losses1 of MNOK 156 (11.1%) • Gross large loss definition: • Reserve changes > MNOK 10 included, excluding Workers’ Comp claims (they are normally run-offs) • Normalized level at ≈ 7%. • Gross large losses at 8.8% in 2020 20,4% Gross large loss ratio excl. WC2 12,
Slide 95: Prepared for continued growth
Prepared for continued growth It’s not about digitalization Broker desktops - Policy admin - Claims Develop user handling Rebalance professionalism, resources and discipline - From 70/30 to Educate users to 30/70 prevent cyber attacks Internal Smaller Comply or die Automatisation innovations: 67 - M
Slide 96: The Challenger in the Nordics
The Challenger in the Nordics Cross-border control will take us from Good to Great Profitability Claims handling Cost efficiency UW excellence Structure & Technology Competence development 96