Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — Q3 2020 Earnings Presentation
42 slides from Protector Forsikring ASA's earnings presentation, Oct 30, 2020
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: Q3 2020 Interim Results
Q3 2020 Interim Results Investor presentation Oslo, October 30th 2020 Sverre Bjerkeli Chief Executive Officer
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 Bold Committed
Slide 4: Result highlights Q3
Result highlights Q3 Combined ratio 93.4% - Profit after tax MNOK 344 • Net combined ratio at 93.4% (91.6% in Q3 2019) • GWP growth at -8% (-14% in local currency)1 • Price increases Nordics ≈ 14% • Investment return of MNOK 334, or 2.6% • Profit after tax of MNOK 344 (MNOK -8) • Solvency Capital Ra
Slide 5: Volume update
Volume update GWP down 8% in Q3 – up 5% YTD • MNOK 61 (-8%) GWP decline in Q3 (-14% in LCY) in MNOK • Biggest client ever (>MNOK 100) left for profitability reasons Business unit Q3 '20 Q3 '19 YTD '20 YTD '19 • Adj. for this client, GWP growth is at approx. 6% (in NOK) Norway 162 307 1 249 1 444 Swe
Slide 6: Claims development
Claims development Claims ratio at 83% • Gross claims ratio at 80.6% (88.2%) Q3 '20 Q3 '20 Q3 '19 Q3 '19 Business unit Gross Net Gross Net • Net claims ratio at 83.0% (84.1%) Norway 75 % 72 % 97 % 96 % Sweden 78 % 80 % 89 % 85 % Denmark 116 % 117 % 83 % 86 % • Run-off losses at 3.5% (gain at 1.9%) U
Slide 7: Large losses and run-off
Large losses and run-off Gross large losses1 of MNOK 173 (12.9%) 25% Gross large loss ratio2 • Gross large losses of MNOK 172.7 or 12.9%. 20,4 % 20% • Normalized large loss rate approx. 8% 14,0 % 15% 12,9 % 9,2 % 9,5 % 9,6 % 10% • Net run-off loss at 3.5% vs. run-off gain of 1.9% Q3 2019 6,0 % 7,4 %
Slide 8: Protector Combined Ratio
Protector Combined Ratio Net CR at 93.4% in Q3 – in line with long term target Quarter 3 MNOK Norway Sweden Denmark UK Finland Protector Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Q3 2020 Q3 2019 Gross premium written 162 307 207 170 58 67 238 178 7 11 671 732 Gr
Slide 9: A wider perspective
A wider perspective Volume development and combined ratio
Slide 10: Volume development in the longer run
Volume development in the longer run Future growth expected • Change of long-term volume guiding February 6th 2020 – from 10-15% to 5% annual volume growth • Our communication: Entering 2020 historical high price increases +5% ? will make Nordic client churn rise and reduce new sales, while UK 5 904
Slide 11: Underlying profitability
Underlying profitability Improved position entering 2021 • Nordic price increases at 14% YTD • Earned premium “tail” from Q2-Q4 2020 price increases supporting 2021 margin. • Nordic price increases > claims inflation in 2021 • Expect large losses and run-offs to normalize • Product mix changes towar
Slide 12: Product mix development
Product mix development Reduced risk profile and reduced capital consumption • Short tail from 34% in 2008 to 74% now 26% 28% 19% 5% 22% • Geographical diversification increased further • Motor increasing from 9% to 35% • Capital consumption per GWP at 32% in 2020, versus 46% in 2014 2008 – 100% in
Slide 13: Sweden
Sweden Biggest country in Protector Hans Didring Country Manager Sweden
Slide 14: Implementing a winning formula
Implementing a winning formula Respecting historical performance and working hard to be the best. 2018 • Implementing a winning formula through; 2015-16 • DNA: Vision, Business Idea, Targets and Values. 2014 • Recruit, develop and retain the right people • Cost leadership in four years • Quality lea
Slide 15: The largest country in the Nordics and in Protector
The largest country in the Nordics and in Protector Ready for profitable growth in 2021. in MNOK 2012 2013 2014 2015 2016 2017 2018 2019 2020 GWP share YTD 2020 GWP 69 147 325 521 815 1078 1350 1550 1358 9% Motor % of PRF portfolio 6% 10 % 17 % 22 % 28 % 30 % 32 % 30 % 28 % Property 14% Oth. P&C % M
Slide 16: Motor back on track
Motor back on track Some issues left on property 160% • Great improvement on Motor. Stable volume. 140% • Real price increases YTD 2020 at 8.2% • Index corresponding to high claims inflation. 120% • Good renewal selection – keeping the right customers. 100% 80% 79% 75% 72% 73% 80% • Very poor claims
Slide 17: UK and COVID-19
UK and COVID-19 1st billion in GWP reached Henrik Høye Director Commercial & Public lines Stuart Winter Country Manager UK
Slide 18: Update UK
Update UK Disciplined growth in a very large market In MNOK 2016 2017 2018 2019 2020* • Established as a top 3 carrier in Public sector Public 18 128 177 237 342 • Reduction in tenders ‘20 and ‘21 due to C-19 Housing 0 60 123 155 167 • Procurement regulation ensures balance in future Commercial 7 65
Slide 19: UK Public Sector & Commercial Landscape
UK Public Sector & Commercial Landscape A disciplined total market, but with variations • Rates increasing • Capacity reducing • Markets exit (MS Amlin / TFM) The Challenger • Reinsurance restrictions and price increases • Re-emergence of co-insurance • Commercial sector: • Maintain discipline, but
Slide 20: UK Fiscal Outlook
UK Fiscal Outlook Insurance risk is counter-cyclical Key factors ➢ Impact of Covid 19 estimated @ £210bn (YTD) – Total cost of Furlough and Business recovery schemes increasing ➢ Covid restrictions (Tier 1-3) anticipated until spring ➢ Interest rates remain at 0.1% - Negative outlook ➢ Economy slowi
Slide 21: COVID-19 FCA Test Case
COVID-19 FCA Test Case PROTECTOR
Slide 22: COVID – Coverage position
COVID 19 – Coverage position Pandemic cover was not intended, but maybe not excluded… Property Damage / Business Interruption • Not a ‘Damage’ event (ex clean up) so no BI Trigger • Non Damage wordings with sub limited cover for: - Infectious and contagious disease - Action of competent authority (g
Slide 23: FCA Test Case
FCA Test Case The need for clarity? The action: • FCA represented multiple claimants, including groups (000’s) • 8 Specimen cases (specific wording examples) • 8 Insurer Defendants • 14 Insurers (including Protector – coinsurance basis) Key areas considered: • Infectious disease – Proximity / Vicini
Slide 24: FCA Test Case – provisional judgement
FCA Test Case The provisional judgement – subsequent to appeal Complex judgement (162 pages) which is wrong to summarise, but in general: 1. COVID 19 was prevalent in the UK – Therefore vicinity defence on Infectious Disease cover fails. 2. Government Lockdown = Enforced Closure 3. COVID 19 = Emerge
Slide 25: Protector Position
Protector Position Some exposure, certainly unintended but well managed Policy cover: • Legal guidance taken at early stage • COVID 19 Exclusions drafted • Applied to all renewals (PDBI) to ensure clarity (ex LTA) • PL Exclusions being applied Claims: • Low exposure relative to market share • Case-b
Slide 26: COVID – Preventative measures
COVID 19 – Preventative measures Support the customers, manage the risk, reduce the exposure • Unoccupied Property – special acceptance • Risk Management Bulletins • Change of use guidance (Leisure and health) • Underwriting guidance • H&S at work guidance • Return to work planning • Coronavirus Act
Slide 27: Investments
Investments Investment is core
Slide 28: Investment performance
Investment performance Gain of MNOK 334 in quarter • Return on investment portfolio at 2.6%, a gain of MNOK 334 Q3 investment results 20% • Equity return at 17.6%, or MNOK 195 15% • Incl. put options: 16%, or MNOK 176 10% 17.6% 5% 2.6% 1.3% • Bond portfolio return at 1.3%, or MNOK 158 0% Equities1 B
Slide 29: Bond portfolio – quarterly statistics
Bond portfolio – quarterly statistics Yield at 2.1% and avg. IG-rated portfolio • Bond portfolio returning 1.3%, or MNOK 158 in quarter Portfolio data 30.06.20 30.09.20 Size bond & cash eq. (MNOK)1 11 857 11 788 Avg. ref. rate (NIBOR, STIBOR, etc.) 0.2% 0.1% • Yield down to 2.1% (2.5% in Q2 ’20), be
Slide 30: Equity portfolio – quarterly statistics
Equity portfolio – quarterly statistics Portfolio returning 17.6% in quarter • Equities gaining 17.6% in Q3, following a strong Q2. Cumulative TWR in % – Equity portfolio vs. benchmarks (08.10.2014 – 30.09.2020) NOK m 2 000 180% • Equity share at 9.8%, up from 8.6% in Q2 ’20 1 800 160% 1 600 140% 1
Slide 31: 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
Slide 32: Profit & loss
Profit & loss After-tax profit at MNOK 344 – YTD result historically high in MNOK Q3 2020 Q3 2019 Q1-Q3 2020 Q1-Q3 2019 FY ’19 Gross premiums written 671,4 732,4 4 787,4 4 551,6 5 100,5 Gross premiums earned 1 339,6 1 291,3 3 975,1 3 680,2 4 995,8 Earned premium effect from previous price increases
Slide 33: Balance sheet
Balance sheet SCR-ratio at 171% In millions 30.09.2020 30.09.2019 31.12.2019 Owner-occupied property 0.0 13.0 12.8 SCR-ratio composition Financial assets 11,757.0 9,318.4 9,219.8 4000 Derivatives 99.3 21.2 32.6 SCR-ratio: Bank deposits 65.5 103.5 343.3 171% Other assets 2,679.3 2,812.8 2,705.2 3500
Slide 34: 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 4 500 309 62 259 3 500 707 4 000 1 243 3 500 53 3 418 3 000 527 1 410 79 3 0
Slide 35: Shareholders’ matters
Shareholders’ matters As of 30.09.2020 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 member
Slide 36: Summary Q3
Summary Q3 Best ever 9 months result – profit after tax NOK 539m • Competitive position remaining very strong • Short- and medium tale products continuing to dominate our portfolio • Lower risk – lower capital consumption • Float less important in current interest rate situation • Underlying profita
Slide 37: 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
Slide 38: PROTECTOR
PROTECTOR insurance
Slide 39: Appendix
Appendix PROTECTOR
Slide 40: Discontinued business
Discontinued business Protector incl. COI CR at 93% in MNOK COI Protector incl. COI Q3 2020 Q3 2019 Q3 2020 Q3 2019 Gross premium written 64 89 735 821 • Volume somewhat higher than expected – will exceed MNOK 200 in 2020 Gross premium earned 64 89 1 404 1 380 Net premium earned 56 48 1 203 1 160 Gr
Slide 41: Profit & loss – incl. discontinued business
Profit & loss – incl. discontinued business After-tax profit at MNOK 344 – YTD result historically high in MNOK Q3 2020 Q3 2019 Q1-Q3 2020 Q1-Q3 2019 FY ’19 Gross premiums written 735.4 820.9 4 978.5 4 838.8 5 456.6 Gross premiums earned 1 403.5 1 379.8 4 166.2 3 967.3 5 351.9 Gross claims incurred
Slide 42: 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)Earning per share Ratio calculation (1) Claims incurred, net o