Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — Q4 2019 Earnings Presentation
37 slides from Protector Forsikring ASA's earnings presentation, Feb 6, 2020
Slide 1: Q4 2019 and preliminary year end results
Q4 2019 and preliminary year end results Investor presentation Oslo, February 6th 2020
Slide 2: Our DNA
«Olemme erilaisia» «Vi är annorlunda» 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 «Vi er annerledes» Values «Vi er forskellige» C
Slide 3: Result highlights Q4 '19
Result highlights Q4 ‘19 Combined ratio 111.1% - 16% growth • Net combined ratio 111.1% (105.9%) • Very poor profitability Finland and Norway • GWP growth of 16% (6% in local currency) • Net claims ratio 99.7% (97.4%) • Runoff losses -3.2% • Gross large losses of MNOK 116 – approx. 9% • Price increa
Slide 4: Result highlights Q4 '19
Result highlights Q4 ‘19 Combined ratio 111.9% - 9% growth • Net combined ratio 111.9% (115.0%) • Very poor profitability Finland and Norway • GWP growth of 9% (1% in local currency) • Net claims ratio 100.6% (102.2%) • Runoff losses -4.5% • Gross large losses of MNOK 116 – approx. 8% • Investment r
Slide 5: Result highlights Q4 '19
Result highlights Q4 ‘19 What happened? • Norway – 7.0% worse than expected on company level • SE/DK/UK – slightly better than expected • Runoff loss of MNOK 60 – Other Illness and WC • SE: Runoff of gain of MNOK 20 • Very high case reserve increase in one large Property claim • DK: Poor quarter on
Slide 6: Result highlights 2019
Result highlights 2019 Combined ratio 103.8% - 19% growth • Net combined ratio 103.8% (98.6%) • GWP growth of 19% (18% in local currency) • Net claims ratio 95.2% (94.3%) incl. runoff -1.2% • Gross large losses MNOK 504 – approx. 10% • Price increases Nordics ≈ 10.5% • Investment return (after costs
Slide 7: Result highlights 2019
Result highlights 2019 Combined ratio 101.4% - 14% growth • Net combined ratio 101.4% (106.9%) • GWP growth of 14% (13% in local currency) • Net claims ratio 95.2% (94.3%) incl. runoff -0.2% • Gross large losses MNOK 504 – approx. 10% • Investment return (after costs) MNOK 157, or 1.5% • Solvency ra
Slide 8: Operational highlights 2019
Operational highlights 2019 Poor 2019, actions taken entering 2020 • Rate pressure in the Nordics last 3-5 years has lead to poor overall market profitability • We have underestimated Motor claims inflation • Too little, too late • Very poor performance in Finland and Norway • Management replacement
Slide 9: Operational highlights entering 2020
Operational highlights entering 2020 Strong price increases supporting profitability • Rate pressure has turned into price increases within our markets • Will continue in 2020 • Nordic price increases January 1st 2020 ≈ 13.4% • January 1st volume BNOK 2.6 • AM Best BBB+ rating maintained • UK accord
Slide 10: Gross written premiums
Gross written premiums FY growth of 19% (18% LCY) – driven by UK and price increases • MNOK 466 (7%) growth in the Nordics • Whereof ≈ MNOK 330 came from price increases (incl. currency effects) • MNOK 348 (69%) growth in the UK • Renewal rate of 93.8% • Supported by price increases MNOK 6 000 +19.0
Slide 11: Claims development
Claims development Claims ratio 94.6% Gross large loss ratio* 28% • Gross claims ratio 94.6% (93.2%) 26% 24% 22% • Net claims ratio 95.2% (94.3%) 20% 19% 18% 16% • Runoff losses -1.2% 14% 13% 12% 11% 12% 10% 10% • Gross large losses MNOK 504 – 10% vs. 7% normalized 10% 8% 8% 9% 8% 7% 9% 6% 5% 5% • N
Slide 12: Reserve runoff -1.2%
Reserve runoff -1.2% HTD accumulated reserves have been prudent • Historical runoffs have ranged from -6.9% (2006) to +8.2% (2013) Aggregated runoff • Last three years we have seen runoffs of 2.3%, 2.1% and -1.2%, respectively. • Some volatility in reserves must be expected within certain products/s
Slide 13: Cost development
Cost development Still number 1 • Cost the real way – this is what matters – 9.4% (9.4%) Cost the real way fiscal year • Gross cost incl. claims handling ex. broker commissions1 12% • Gross cost ratio 8.3% (8.4%) 11% • Will increase due to higher broker commission going forward 10% • Net cost ratio
Slide 14: Protector totality
Protector totality Profitability focus entering 2020 Norway Sweden Denmark UK Finland Protector Protector incl. COI 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 2019 2018 Net premium earned 1,367 1,162 1,265 820 786 513 505 185 225 138 4,148 2,818 4,372 3,280 Gross premium earned 1,58
Slide 15: Pricing increases – GWP BNOK 2.6, January 1st
Pricing increases – GWP BNOK 2.6, January 1st 13.4% price increases January 1 2020 – will continue st YTD Q3 Q4 2019 Jan 1st 2020 Strong price increases driving growth. Other Illness, Group Life and Motor. ≈ 10.8% ≈ 16.2% ≈ 11.4% ≈ 13.4% General uplift and some clean-up initiatives. Property portfol
Slide 16: MM Results pr. January
MM Results pr. January 20 Very strong price increases in January (13.4%) Norge Q1 Q2 H1 Q3 Q4 H2 2019 Jan Feb Mar Q1 Volume to renewal 756,1 301,7 1 057,8 301,4 155,4 456,7 1 514,5 753,4 13,4 % realized price increase Volume to renewal ex. lost -Non renewals (prof. Clients) Efficiency • Auto Affinit
Slide 17: MM Results pr. January 2020
MM Results pr. January 2020 Some clients with «extremely» high individual conditions Efficiency increase Top 20 clients by volume Vol ex. exit Index Gen. Ind. Deduct. Other MM Com. Real. Real Impr. Δcom.-Real Acc. Count Acc. Vol Acc. Real. Customer 1 11,4 10,8 % Customer 2 8,3 10,3 % Customer 3 7,8
Slide 18: MM Results pr. January
MM Results pr. January 20 Tightening the grip on price increases from 2020 Top 20 clients by volume Vol ex. exit Index Gen. Ind. Deduct. Other MM Com. Real. Real Impr. Δcom.-Real Acc. Count Acc. Vol Acc. Real. Customer 1 17,0 9,7 % Customer 2 14,6 13,9 % Customer 3 9,1 42,1 % Customer 4 8,6 29,4 % C
Slide 19: Pricing increases
Pricing increases - will support future profitability 2019 Jan 1st 2020 Net CR 2019 Strong price increases driving growth. Other Illness, Group Life and Motor. ≈ 11.4% ≈ 13.4% 105.3% General uplift and some clean-up initiatives. Property portfolio clean-up and strong price increases in Motor. ≈ 8.1%
Slide 20: Investments
Investments AUM is increasing 10 918 10.1% 9 373 9 535 9.9% 17.6% 7 545 7 635 6 637 22.1% 12.5% 4 958 89.9% 11.6% 4 000 90.1% 13.2% 82.4% 3 193 8.9% 87.5% 77.9% 2 355 2 022 17.8% 88.4% 1 635 24.6% 86.8% 1 222 25.1% 91.1% 16.8% 82.2% 74.9% 75.4% 83.2% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Slide 21: Investment performance
Investment performance After costs investment return of 1.5% 2019 investment results 3% • 1.5% return on investment portfolio – MNOK 157.2 2% 2.1% 1.5% • Q4: 1.4%, or MNOK 156.6 1% 0% • Equity return1 of -1%, or MNOK -11 -1% • Q4: 12.1%, or MNOK 124 -1.0% Equities Bond Total • Bond portfolio return
Slide 22: Equity portfolio statistics
Equity portfolio statistics FY return of -1.0% – Q4 return of 12.1% • Target long-term market outperformance TWR in % – Equity portfolio vs. benchmarks (08.10.2014 – 31.12.2019) 170 • Return of 102% after insourcing 150 • OMX Stockholm All-share: 81% in same period 130 • OSEBX: 63% in same period 11
Slide 23: Portfolio statistics bonds
Portfolio statistics bonds FY return of 2.1% – Strong marked conditions and very limited losses Portfolio data 30.09.19 31.12.19 • Yield up to 2.11% at end of quarter (2.04% in Q3) Size bond & cash eq. (MNOK) 10 045 9 757 Avg. ref. rate (NIBOR, STIBOR etc.) 1.1% 1.2% • Spread up 2bp Avg. spread/risk
Slide 24: Profit & loss
Profit & loss Combined Ratio 103.8% – 19% growth in millions Q4 2019 Q4 2018 FY 2019 FY 2018 Gross premiums written 548.8 475.1 5,100.5 4,286.1 Q4: 16% growth Gross premiums earned 1,315.6 1,123.2 4,995.8 4,139.6 Gross claims incurred (1,363.2) (1,161.7) (4,723.9) (3,859.3) Earned premiums, net of r
Slide 25: Profit & loss
Profit & loss CR 101.4%, 14% growth in millions Q4 2019 Q4 2018 FY 2019 FY 2018 Gross premiums written 617.8 566.6 5,456.6 4,799.7 Q4: 16% growth Gross premiums earned 1,384.6 1,214.8 5,351.9 4,653.2 Gross claims incurred (1,460.4) (1,296.3) (4,993.7) (4,608.8) Earned premiums, net of reinsurance 1,
Slide 26: Balance sheet
Balance sheet SCR-ratio 168% based on standard formula In millions 31.12.2019 31.12.2018 31.12.2018 SCR-ratio composition Owner-occupied property 12.8 13.4 13.4 Financial assets 9,090.1 7,591.8 7,591.8 SCR-ratio: Derivatives 32.2 25.7 25.7 168% Bank deposits 343.3 278.6 278.6 3000 Other assets 2,694
Slide 27: Solvency II
Solvency II Composition of SCR: Eligible SII capital: • Net insurance risk 73% • No dividend • Net market risk 17% • Guarantee provision subtracted from own funds • Other risks 10% SCR composition Eligible SII capital 3 500 62 4 000 261 354 3 000 539 3 500 1 243 2 500 1 250 3 000 39 2 911 455 89 122
Slide 28: Shareholder's matters
Shareholder’s matters Per 31.12.2019 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 STENSHAGEN INVEST AS 7 126 353 8,27 % outstanding shares CITIBANK EUROPE
Slide 29: Long term financial objectives
Long term financial objectives Looking 3 year ahead – More disciplined growth going forward Old New Net Combined Ratio 94 % 94 % Solvency II Capital Ratio >150 % >150 % Return of Equity (excl. COI) > 20 % > 20 % GWP Growth Rate 10 – 15 % 5% Net Combined Ratio Return on Equity (incl. COI)* GWP Growth
Slide 30: AM Best rating update
AM Best rating update BBB+ rating affirmed
Slide 31: Summary & Q&A
Summary & Q&A Profitability first • Rate pressure in the Nordic market turned to price increases • Will continue in 2020 • Management changes, portfolio clean-up and process development • Still more work to be done • A poor 2018 and 2019 lead to 10.5% price increases in 2019 and 13.4% January 1st 20
Slide 32: Appendix
Appendix Oslo, February 6th 2019 This appendix contains numbers inclusive of COI
Slide 33: Gross written premiums – incl. COI
Gross written premiums – incl. COI FY growth of 14% (13% LCY) – driven by UK and price increases • MNOK 309 (7%) growth in the Nordics • MNOK 348 (69%) growth in the UK • Higher than normal churn in the Nordics due to price increases. MNOK +13.7% • January 1st 2020 premium growth of 4.2% 6 000 +15.3
Slide 34: Claims development
Claims development Claims ratio 93.3% Gross large loss ratio* 28% • Gross claims ratio 93.3% (99.0%) 26% 24% 22% • Net claims ratio 93.3% (101.6%) 20% 19% 18% 16% • Runoff -0.2% 14% 13% 12% 11% 12% 10% 10% • Gross large losses MNOK 504 10% 8% 8% 9% 8% 7% 9% 6% 5% 5% • Normalized large loss ratio wil
Slide 35: Cost development – incl. COI
Cost development – incl. COI Still number 1 • Cost the real way – this is what matters – 10.0% (10.7%) Cost the real way fiscal year • Gross cost incl. claims handling ex. broker commissions4 14% • Gross cost ratio 7.8% (8.1%) 13% • Will increase due to higher broker commission going forward 12% • N
Slide 36: 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
Slide 37: 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