Protector Forsikring Asa · OSL:PROT
Protector Forsikring Asa — SEB conference (March 2021)
28 slides from Protector Forsikring Asa's conference presentation, Mar 15, 2021
Slide 1: Mid-quarter update
Mid-quarter update March 15th 2021
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/Open Bold Committed
Slide 3: New information
New information 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 cost of capital •
Slide 4: 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 5: 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 6: Nordics – Back on track
Nordics – Back on track Profitability improvements continuing • 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 t
Slide 7: 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 8: 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 9: 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 10: 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 11: 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 12: 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 13: 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 14: 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 15: 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 16: 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 17: 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 18: 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 19: 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 Dividends Buy-backs Equities & Bonds 1 Allocation towards profitable growth is preferre
Slide 20: 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 21: 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 22: 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 As of 31.12.20 • Capital over 180% in SCR ratio distributed over time = 209%* 180% • Shareholder distribution normally 20%-80% of net pr
Slide 23: 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 24: Succession: McKinsey on “Last 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 25: 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 25
Slide 26: 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 ? 26
Slide 27: PROTECTOR
PROTECTOR insurance
Slide 28: 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