Protector Forsikring Asa · OSL:PROT
Protector Forsikring Asa — Debt Investor Presentation (March 2017)
44 slides from Protector Forsikring Asa's debt investor presentation, March 2017
Slide 1: Company presentation
Company presentation March 2017
Slide 2: Agenda
1 Introduction and executive summary 2 Cost and quality leader Company overview 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters a
Slide 3: Facts about Protector
Facts about Protector • Protector was established in 2004 Commercial Lines of Public Lines of Change of Ownership Business Business Insurance • Listed on Oslo Stock Exchange May 2007 (GWP MNOK) (GWP MNOK) (GWP MNOK) 2 086 829 509 526 524 • Entered the Swedish market in 2011, Denmark 730 426 451 1 58
Slide 4: Solid P&C insurance company in the Nordic region
Solid P&C insurance company in the Nordic region 12 years of profitable growth From Norwegian, to Scandinavian, to… • Half the cost of competitors 2004-2011 • Quality leader in the Nordic market • IT is key for cost and quality leadership • Board members and management own 16.4% of outstanding share
Slide 5: Long-term financial objectives
Long-term financial objectives Long term financial objectives • Net combined ratio: 92% • Solvency II capital ratio: 125%-160% • Return on Equity: >20% • GWP growth rate 2017-2019: 15% Net Combined Ratio (UW year) Return on Equity* GWP Growth 38% 38% 86,5% 86,7% 89,5% 86,9% 89,8% 90,2% 90,9% Target
Slide 6: 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 Open Bold Committed 6
Slide 7: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 8: Cost leader
Cost leader Less than half the cost of competitors Creating cost leadership In-house IT services • Well defined and consistent strategy, understand value • Cost ratio of 1.1% vs 3.2% for industry (Gartner Inc.) chains and competent people to implement • No legacy, modern platform, competent people •
Slide 9: Quality leader in the Nordic market
Quality leader in the Nordic market Broker Satisfaction Surveys • Consistently on top when brokers rank satisfaction with service and offerings. True for Norway and Sweden • Quality leader in Denmark three years in a row. Quality setback in Denmark in 2016. Still top three on quality • Voted Best tr
Slide 10: Volume growth
Volume growth Strong and prudent Sustainable growth • Profitability comes first volume growth second • Low capex and will exit new markets if unprofitable over time • Reduced risk appetite in Denmark for 2017 – single-digit growth expected • Growth potential for 2017 mainly in Sweden and UK – furthe
Slide 11: Profitability
Profitability Profitable insurance result every year since 2005 – Average combined ratio 2005-2016: 88.3% Key comments Net claims ratio - UW year vs reported year • Combined ratio in 2016 of 97.0% not satisfactory and 6% 100,0 % due to profitability issues in Denmark and cleanup in COI 95% 95,0 % 87
Slide 12: A history of profitable growth
Protector Forsikring A history of profitable growth Return on Equity* Gross written premium MNOK CAGR +20% 3 439 2 843 2 374 38% 38% 1 861 32% 26% 29% 1 517 1 203 25% 18% 1 011 21% 729 871 28% 28% 665 449 516 5% -1% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 • GWP has grown 6.7 time
Slide 13: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 14: Historical timeline
Historical timeline Enters Enter Expands Expands Expands Expands commercial municipality to to to to sector sector Sweden Denmark Finland UK 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Launches Listed on Insourced GWP GWP GWP GWP Change of Oslo Stock claims BNOK 1 BNOK 2 BN
Slide 15: Diversified product portfolio
Diversified product portfolio • Short tail from 34% in 2008 to 55% in 2016 • Medium tail significantly reduced from 44% in 2008 to 24% in 2016 • Property and Auto from 26% of GWP in 2008 to 40% in 2016 2008 2012 2016 21% 22% 26% 34% 37% 55% 24% 44% 37% Short-tail (1 year) Medium-tail (2-5 years) Lon
Slide 16: Public lines of business
Public lines of business 24% of revenues Summary Market drivers • Protector is the market leader in Scandinavia • Few players and tough market conditions • First municipality in 2005 – "Tønsberg kommune" • Tender process is governed by public procurement • Insuring more than 600 municipalities regul
Slide 17: Commercial Lines of Business
Commercial Lines of Business 61% of revenues Summary Market drivers • Corporate clients sized min NOK 0.2m • Cost and quality leadership • Standardized products; Workers Compensation, Group Life, • In Nordic Protector’s market appetite is > NOK 15bn Other Insurance, Accident, Health (2016), Property
Slide 18: Change of ownership insurance (COI)
Change of ownership insurance (COI) 15% of revenues The product Key market drivers • Insurance linked to the property • Market situation; few players & with critical mass • Covers substantial hidden defects for 5 years • High entry barriers; Reputation, distribution access and • Houses, apartments a
Slide 19: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 20: Denmark operations
Denmark operations Executing ComeBack ‘17 • Change of Country Manager • Erik Sand appointed new country manager and will operate from Copenhagen office • Flemming Conrad, former country manager will continue in new role • Recruitment of new country manager in process • Some other organizational chan
Slide 21: UK – Operational development
UK – Operational development Controlled growth in a segment with many opportunities • 16 people on board 40 clients on board • A good mix of experience and quickly developing talents • Creating unique relationships in UK (brokers and clients) • Joining forces with Scandinavian resources • Selected b
Slide 22: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 23: Investments
Investments Asset allocation Net financial assets (MNOK) 9 000 8 000 7 545 7 000 6 000 5 000 4 000 8 377 3 000 2 000 1 000 0 2010 2011 2012 2013 2014 2015 2016 feb.17 % Equity share % Bond and cash share 30,0 % 100,0 % 25,0 % 80,0 % 68,9 % 20,0 % 60,0 % 15,0 % 40,0 % 20,0 % 11,9 % 10,0 % 19,2 % 5,0
Slide 24: Bond portfolio allocation
Bond portfolio allocation Reduced risk in Fixed Income portfolio • Reduced High Yield exposure in 2016 and beginning of 2017 • Sale of Nordea Global HY fund • Average total bond portfolio rating from BBB at Q2 2016 to A- in Q1 2017 • Bond portfolio yield expectation of roughly 3.0% in 2017 24
Slide 25: Portfolio statistics – equity
Portfolio statistics – equity In-house managed equity portfolio vs. Nordic benchmarks In-house Managed Performance – In-house managed portfolio vs. OSEBX Key Figures Portfolio OSEBX (08.10.2014 – 31.12.2016) Performance 116 % 25 % Dividend yield 1.8 % 3.6% P/E NTM* 17.5 16.7 3 yr sales CAGR 24 % -2
Slide 26: Portfolio statistics – Fixed Income
Portfolio statistics – Fixed Income In-house managed bond portfolio vs. benchmark* Performance – In house managed portfolio vs. benchmark* Portfolio data 31.12.2016 (31.03.2015 – 31.12.2016) Size MNOK 4 781 8,0 % Yield 3.2 6,12% Duration 0.4 6,0 % Credit duration 2.8 Average rating BBB+ 4,0 % 3,13%
Slide 27: Strong investment result over the business cycle
Strong investment result over the business cycle Comparison with peers Overview • Risk management through; Operational routines, mandate given by board, FSA stress test quarterly, internal stress test • Investment portfolios in Norway, incl. Protector’s, have enjoyed avg. NIBOR roughly 1% above STIB
Slide 28: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 29: Balance sheet at year-end 2016
Balance sheet at year-end 2016 Strong & growing fast [1.000.000 NOK] 31.12.2016 31.12.2015 Financial assets 8 537.6 6 623.1 SCR ratio composition 3,0 Financial derivatives* 990.7 252.6 163 % Bank deposits 204.3 144.0 Other assets 1 105.4 938.0 2,5 Total assets 9 847.4 7 705.1 Tier 2 Total equity 2 2
Slide 30: Solvency II
Solvency II Composition of SCR: Available Solvency II capital: • Net insurance risk 55 % • Assumed dividend NOK 2.25/share for 2016 • Net market risk 38 % • Guarantee provision subtracted from own • Other risks 7 % funds SCR composition Available Solvency II capital 3 000 139 60 3 500 646 338 1 027
Slide 31: Solvency II sensitivities
Solvency II sensitivities 200% 180% 172% 170% 170% 163% 160% 152% 156% 156% 140% 120% 100% 80% 60% 40% 20% 0% SCR coverage Equities Equities Interest rates Interest rates Spreads Spreads -20% +20% -100bp +100bp +100bp -100bp 31
Slide 32: Risk reduction through reinsurance
Risk reduction through reinsurance Low retention reduces volatility Overview of Reinsurance programme 2017 Key comments • Exposure for own account per risk and per event not to exceed NOK 50m • Normally limited to NOK 20-30m • Reinsurance placements are consistent over time • Long standing partnersh
Slide 33: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 34: CEO summary of risk outlook 2017
CEO summary of risk outlook 2017 Slightly reduced risk due to a more diversified portfolio and reserve strengthening in 2016 Risk 1. Volume (GWP up 16% (18% local) • Upside and downside in UK Medium • Downside in Denmark Low 2. Cost (gross cost ratio <7.0%) • Cost outside guiding No 3. Profitability
Slide 35: Protector
PROTECTOR
Slide 36: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 37: Profit & loss 2016
Profit & loss 2016 Best “profit ever”, but poor technical result [1.000.000 NOK] Q4 2016 Q4 2015 FY 2016 FY 2015 Gross premiums written 392.3 325.3 3 439.0 2 843.4 GWP growth 21% in 2016, 21% in Q4 2016 Gross premiums earned 768.6 698.7 3 250.4 2 791.1 Gross claims incurred (740.3) (617.0) (3 005.0)
Slide 38: Balance sheet Q4 2016
Balance sheet Q4 2016 = 7 AS [1.000.000 NOK] 34.12.2016 31.12.2015 [1.000.000 NOK] 34.12.2016 31.12.2015 ‘Assets Equity and liabilities Intangible fixed assets ‘Shareholders’ equity Other intangible fixed assets 158 158 Share capital [86.155.605 shares] 86,2 86,2 Total intangible fixed assets 15,8 1
Slide 39: Cash flow statement Q4 2016
Cash flow statement Q4 2016 39
Slide 40: ComeBack '17 in Denmark and expansion to UK
1 Introduction and executive summary 2 Cost and quality leader 3 History & current position 4 ComeBack ’17 in Denmark and expansion to UK 5 Investments 6 Capitalization and reinsurance 7 CEO summary of risk outlook 2017 Appendix I Company financials Appendix II Shareholder matters and management inf
Slide 41: Shareholder matters 28.02.2017
Shareholder matters 28.02.2017 Shareholder No. Shares Percent Related parties shareholding SWEDBANK ROBUR NORDEN AND EUROPA 7 820 328 9.08 % Management’s direct and indirect shareholding STENSHAGEN INVEST AS 6 500 000 7.54 % totals 3.1m shares or 3.6% of current outstanding ODIN NORGE AND NORDEN 5
Slide 42: Management
Management Sverre Bjerkeli – Chief Executive Officer Vibeke Krane – CFO Bjerkeli has worked for Protector since 2004 and Krane has been an employee since December 1, 2015 as CEO since 2006. Bjerkeli has more than 20 and CFO since August 1st 2016. Krane is a State years of experience from the finance
Slide 43: Board
Board Jostein Sørvoll – Chairman of the Board Erik G. Braathen – Board Member. Deputy Chairman of the Board Mr. Sørvoll has been the Chairman of the Mr. Braathen has been a member of the Board at Board since 2006. He is also Chairman of Protector since 2009. He is the Chairman of the the Board at Ga
Slide 44: 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 (8) Earnings per share (9) Return on Equity (ROE) (10) Ret
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