Protector Forsikring Asa · OSL:PROT

Protector Forsikring Asa — Q2 2020 Earnings Presentation

31 slides from Protector Forsikring Asa's earnings presentation, Jul 10, 2020

  1. Slide 1: Q2 2020 Interim Results

    Q2 2020 Interim Results Investor presentation Oslo, July 10th 2020

  2. Slide 2: 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 Bold Committed

  3. Slide 3: Result highlights Q2

    Result highlights Q2 Combined ratio 92.1% • Net combined ratio at 92.1% (99.8% adjusted1 in Q2 2019) • GWP growth at 16% (3% in local currency) • Price increases Nordics ≈ 13.6% • Investment return of MNOK 639, or 5.2% • Profit after tax of MNOK 580 (MNOK -126) • Solvency Capital Ratio at 161% 1 Adj

  4. Slide 4: Volume update

    Volume update Gross written premium growing 16% • MNOK 182 (16%) GWP growth in Q2 in MNOK • 3% growth in local currency Business unit Q2 '20 Q2 '19 H1 '20 H1 '19 Norway 266 334 1 087 1 138 Sweden 362 403 1 151 1 189 • Renewal rate of 85.6% Denmark 41 40 855 802 • Supported by price increases in the

  5. Slide 5: Claims development

    Claims development Claims ratio at 81.9% • Gross claims ratio at 80.7% (92.6%) Business unit Q2 '20 Q2 '20 Q2 '19 Q2 '19 Gross Net Gross Net • Net claims ratio at 81.9% (91.4% adj.1) Norway 80 % 80 % 85 % 89 % Sweden 90 % 90 % 100 % 85 % Denmark 98 % 98 % 103 % 103 % • Run-off losses at 1.9% (-2.3%

  6. Slide 6: Large losses and run-off

    Large losses and run-off Gross large losses1 of MNOK 129 (9.6%) Gross large loss ratio2 25% • Gross large losses of MNOK 129, or 9.6%. 20.4% • Normalized large loss rate approx. 8% 20% 15% 14.0% • Net run-off loss at 1.9% vs. run-off loss at 2.3% Q2 ‘193 10% 9.2% 7.4% 7.6% 9.5% 9.6% 7.1% • Denmark:

  7. Slide 7: Protector Combined Ratio

    Protector Combined Ratio Net CR at 92.1% in Q2, 95.1% YTD Quarter 2 MNOK Norway Sweden Denmark UK Finland Protector Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Q2 2020 Q2 2019 Gross premium written 266 334 362 403 41 40 621 311 - 3 18 1 288 1 106 Gross premium ear

  8. Slide 8: COVID-19 Insurance implications

    COVID-19 Insurance implications Neutral expected impact on Combined Ratio longer term Line of business Potential directly related Claims Indirect impact Descending premium NO SE (incl. FI) DK UK Total Motor Illustration of our internal Property summarized follow-up WC / EL Other products structure o

  9. Slide 9: Nordic update

    Nordic update 13.5% price increases realized first half year • Nordic price increases at 13.6% in Q2, 13.5% in H1 • Price increases will continue • Renewal rate at 74.4% • Some very big clients priced out for profitability reasons • Client churn somewhat high • Will see reduction through Q4 ’20 and

  10. Slide 10: UK continue delivering

    UK continue delivering One team from “60 different locations” • 80% growth in local currency • Public • New sales hit-ratio increased • Stable margins in new sales (i.e. changed market dynamics) • Very low client churn, some rate strength achieved • Commercial • High (virtual) meeting activity with

  11. Slide 11: Investments

    Investments Investment is core

  12. Slide 12: Investment performance

    Investment performance Gain of MNOK 639 in quarter • Return on investment portfolio at 5.2%, a gain of MNOK 639 Q2 investment results 30% • Equity return at 25.6%, or MNOK 225 • Incl. put options: 22.4%, or MNOK 198 20% 25.6% 10% 5.2% 3.9% • Bond portfolio return at 3.9%, or MNOK 441 0% Equities1 Bo

  13. Slide 13: Bond portfolio – quarterly statistics

    Bond portfolio – quarterly statistics Yield at 2.5% and avg. IG-rated portfolio • Bond portfolio returning 3.9%, or MNOK 441 in quarter Portfolio data 31.03.20 30.06.20 Size bond & cash eq. (MNOK)1 11 091 11 857 Avg. ref. rate (NIBOR, STIBOR, etc.) 0.6% 0.2% • Yield down to 2.5% (4.3% in Q1 ’20), be

  14. Slide 14: Equity portfolio – quarterly statistics

    Equity portfolio – quarterly statistics Portfolio returning 25.6% in quarter • Equities gaining 25.6% in Q2, following a weak Q1. Cumulative TWR in % – Equity portfolio vs. benchmarks (08.10.2014 – 30.06.2020) NOK m 2 000 180% • Equity share at 8.6%, up from 6.7% in Q1 ‘20 1 800 160% 1 600 140% 1 40

  15. Slide 15: Investments in COVID-19 crisis

    Investments in COVID-19 crisis

  16. Slide 16: Bond Portfolio reallocation last 4.5 years

    Bond Portfolio reallocation last 4.5 years Wait for distressed markets Development in the bond portfolio last couple of years 1 3 2 1 • Increased AAA-rated portfolio, with shorter credit duration (4yrs in 2017, 1.9yrs today) • Bank deposits used as alternative to AAA-rated bonds for liquidity portfo

  17. Slide 17: Fixed income investments in Protector vs. «peers»

    Fixed income investments in Protector vs. «peers» Strong performance with low risk and capital consumption Protector bond port. return (ex bond funds) vs. benchmarks1,2 – March ‘15 to June ‘20 • Return must be evaluated over a credit cycle • Historically performed well during volatile periods • Q1 2

  18. Slide 18: High yield share of total investment portfolio

    High yield share of total investment portfolio Lower spread levels leads to lower risk appetite Bps 35% 1 800 HY % share (lhs) HY Spread (rhs)1 • HY allocation down from 35% YE 2015 to 15% in 2019 1 600 to 27% now 30% 1 400 • Credit duration on internally managed HY portfolio 25% 1 200 reduced from

  19. Slide 19: HY transactions since week 11

    HY transactions since week 11 Actions yielding MNOK 318 BPS MNOK 1800 1200 • Extreme spread widening due to COVID-19, sharp weakening 1017 of the NOK and withdrawals from HY funds. 1600 1000 • Announcement of BNOK 50 rescue package from the 1400 800 Norwegian government in week 11 1200 600 498 • Pro

  20. Slide 20: 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 Bold Committed

  21. Slide 21: Profit & loss – incl. discontinued business

    Profit & loss – incl. discontinued business After-tax profit of MNOK 580 (MNOK -126) in MNOK Q2 ‘20 Q2 ‘19 H1 ‘20 H1 ‘19 FY ’19 Gross premiums written 1 352,2 1 215,7 4 243,1 4 017,8 5 456,6 Gross premiums earned 1 406,5 1 351,8 2 762,6 2 587,5 5 351,9 Gross claims incurred (1 133,0) (1 227,0) (2 29

  22. Slide 22: Profit & loss – ex. discontinued business

    Profit & loss – ex. discontinued business Pre-tax profit of MNOK 585 (MNOK -117) in MNOK Q2 ‘20 Q2 ‘19 H1 ‘20 H1 ‘19 FY ’19 Gross premiums written 1 288,0 1 105,9 4 116,0 3 819,2 5 100,5 Gross premiums earned 1 342,3 1 241,9 2 635,6 2 388,8 4 995,8 Gross claims incurred (1 083,3) (1 150,0) (2 189,1)

  23. Slide 23: Balance sheet

    Balance sheet SCR-ratio at 161% In millions 30.06.2020 30.06.2019 31.12.2019 Owner-occupied property 12.6 13.1 12.8 SCR-ratio composition Financial assets 11,168.1 8,899.5 9,219.8 3500 SCR-ratio: Derivatives 25.9 16.7 32.6 161% Bank deposits 274.2 151.4 343.3 Other assets 3,296.1 3,101.0 2,705.2 300

  24. Slide 24: Solvency II

    Solvency II Composition of SCR: Eligible SII capital: • Net insurance risk 71% • No dividend • Net market risk 19% • Guarantee provision subtracted from own funds • Other risks 10% SCR composition Eligible SII capital 4 000 4 000 318 318 67 3 500 1 243 3 500 680 49 3 120 3 000 3 000 519 81 25 1 363

  25. Slide 25: Shareholder’s matters

    Shareholder’s matters As of 30.06.2020 SHAREHOLDER NAME # SHARES % Related parties shareholding AWILHELMSEN CAPITAL HOLDINGS AS 7 435 437 8.63% • Management’s direct and indirect shareholding totals 3.7m shares or 4 % of current outstanding shares STENSHAGEN INVEST AS 7 126 353 8.27% • Board members

  26. Slide 26: Summary

    Summary Combined Ratio 92.1% • Net combined ratio at 92.1% (99.8% adjusted1 in Q2 2019) • GWP growth at 16% (3% in local currency) • Price increases Nordics ≈ 13.6% • Investment return of MNOK 639, or 5.2% • Profit after tax of MNOK 580 (MNOK -126) • Solvency Capital Ratio at 161% 1 Adjustment relat

  27. Slide 27: 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 Bold Committed

  28. Slide 28: Appendix

    Appendix PROTECTOR

  29. Slide 29: Discontinued business

    Discontinued business Protector incl. COI CR 91.3% in MNOK COI Protector incl. COI • Volume somewhat higher than expected – could reach MNOK Q2 2020 Q2 2019 Q2 2020 Q2 2019 Gross premium written 64 110 1 352 1 216 150 in 2020 Gross premium earned 64 110 1 407 1 352 Net premium earned 35 59 1 189 1 0

  30. Slide 30: 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 in % of

  31. Slide 31: 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

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