Protector Forsikring ASA · OSL:PROT
Protector Forsikring ASA — Q1 2020 Earnings Presentation
39 slides from Protector Forsikring ASA's earnings presentation, Apr 30, 2020
Slide 1: Q1 2020 Interim Results
Q1 2020 Interim Results Investor presentation Oslo, April 30th 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 anderledes» Cr
Slide 3: Result highlights
Result highlights Combined ratio 98.3% – large unrealized loss on investments • Net combined ratio at 98.3% (105.9%) • GWP growth at 4% (0% in local currency) • Net claims ratio at 89.7% (99.3%) incl. 0.3% run-off gains (6.9%) • Price increases Nordics ≈ 13.5% • Investment return1 of MNOK -452, or -
Slide 4: Volume update
Volume update Gross written premium growing 4% – zero growth in local currencies • MNOK 115 (4%) gross written premium (GWP) growth in Q1 in MNOK NOK % LCY % • Adjusted for currency effects, overall GWP is flat Business unit Q1 '20 Q1 '19 Growth Growth Growth Norway 820 804 16 2% 2% • Renewal rate o
Slide 5: Claims development
Claims development Claims ratio 85.5% • Gross claims ratio at 85.5% (93.4%) Q1 ‘20 Q1 '19 Q1 '20 Q1 '19 Business unit Gross Gross Net Net Norway 94.3 % 88.5 % 96.1 % 95.1 % • Net claims ratio at 89.7% (99.3%) Sweden 80.3 % 94.3 % 78.8 % 93.0 % Denmark 105.0 % 107.2 % 112.7 % 112.4 % • Underlying imp
Slide 6: Large losses and run-off
Large losses and run-off Gross large losses1 of MNOK 123 (9.5%) • Gross large losses of MNOK 123, or 9.5%. 25% Gross large loss ratio2 • Including flood losses in UK of MNOK 30 (Storm Dennis & Ciara) 20.4% 20% • Gross large loss definition changed; > MNOK 10 (MNOK 7.5) 15% 14.0% • Very large claims
Slide 7: Cost development
Cost development Still number 1 • Cost the real way1 – this is what matters Cost the real way • Will trend somewhat upwards during 2020 12% 11% • Gross cost ratio 9.3% (7.6%) • Higher broker commission going forward due to growth coming from UK 10% 9.4% 9% • Net cost ratio 8.6% (6.6%) 8% 7% 2013 201
Slide 8: Protector Combined Ratio
Protector Combined Ratio Significant improvement in MNOK Norway Sweden Denmark UK Finland Protector Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Q1 2020 Q1 2019 Gross premium written 820 804 789 786 813 761 192 175 213 187 2.828 2.713 Gross premium earned 367 376 3
Slide 9: Price increases
Price increases - will support further profitability improvements 2019 Q1 2020 Significant price increases driving growth. ≈ 11.4% ≈ 13.6% Other Illness, Group Life and Motor – general uplift Most significant price increases on Property. ≈ 8.1% ≈ 12.4% Most significant price increases on Workmen's C
Slide 10: UK – One team
UK – One team Strengthened team and significant Q2 growth • 60 employees fully operative while working from home • Strengthened team in Claims Handling • Additional capacity, incl. Business Controller. Management group established • Strengthened renewal process in commercial sector • Implementation
Slide 11: Project Corona Momentum (CM)
Project Corona Momentum (CM)
Slide 12: CM HR, CM Product, CM Claims Handling
CM HR CM Product Goal: Goal: • Minimize effect of the Covid-19 disease for employees and society • 4-zero; zero loss surprises, zero new unwanted Covid-19 exposure, zero Project aim to: reinsurance uncertainty, and zero stakeholder uncertainty Project • Minimize spreading of the coronavirus disease
Slide 13: COVID-19 – Insurance Perspective
COVID-19 – Insurance Perspective 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
Slide 14: Investments
Investments Significant losses and opportunities
Slide 15: Investment summary – significant losses and opportunities
Investment summary – significant losses and opportunities Bond portfolio yielding ≈ 4.3% as of March 31st – significantly improved earnings base going forward • Reducing risk in bond portfolio last 3 years, • AAA from 10-15% allocation to 50%, with BBB risk removed • HY reduced from >30% to 15% • Si
Slide 16: Investments
Investments AUM, as well as float, is increasing. 12 152 7.0% 10 918 10.1% 9 373 9 535 9 191 9.9% 17.6% 7 545 6 637 22.1% 12.5% 93.0% 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 2
Slide 17: Investment performance
Investment performance Net loss of MNOK 452 on investments • Return on investment portfolio at -3.9%, net loss of MNOK 452 Q1 investment results -1.1% 0% • Equity return at -28.8% or MNOK -331, including hedging instruments -3.9% • Excl. of put options: -33.3% -10% -28.8% -20% • Bond portfolio retur
Slide 18: Equity portfolio statistics
Equity portfolio statistics No companies directly hit by COVID-19 or low oil price, but still a weak quarter • Good downside protection from put options if Cumulative TWR in % – Equity portfolio vs. benchmarks (08.10.2014 – 31.03.2020) market turns down again. (MNOK 610 secured at MNOK March 31st -l
Slide 19: Bond portfolio statistics
Bond portfolio statistics Yield at 4.3% and avg. IG-rated portfolio – Added BNOK 1.7 to HY in quarter Portfolio data 31.12.19 31.03.2020 • Yield up to 4.3% (2.1% in Q4 ‘19), before cost of risk Size bond & cash eq. (MNOK)1 9 757 11 091 • Spread up 277bps, underlying ref. rate -59bps Avg. ref. rate (
Slide 20: In-house bond portfolio statistics
In-house bond portfolio statistics1 >50% covered and bank deposit. Low real estate and oil & oil service HY exposure • Covered bonds and bank deposits make up >50% of total bond portfolio • HY portfolio heavily weighted towards BB-segment / higher graded bonds • 5 largest HY investments in March: Bo
Slide 21: Bond portfolio reallocation last 3 years
Bond portfolio reallocation last 3 years Wait for distressed markets Development in the bond portfolio last couple of years 1 2 3 1 • Increased AAA portfolio, with shorter credit duration (4yrs in 2017 to 2.2yrs today) • Bank deposit used frequently as alternative to AAA-rated bonds for liquidity po
Slide 22: Protector vs. «peers» until February 2020
Protector vs. «peers» until February 2020 Stable, with lower capital consumption Protector Total bond portfolio return vs. benchmarks1,2 – March 2015 to February 2020 • Consistent positive returns for both total- and HY portfolio • Significantly lower risk and capital consumption Protector HY portfo
Slide 23: Protector vs. «peers» today
Protector vs. «peers» today MNOK 968 in “outperformance” in 1 month Protector total bond portfolio return vs. benchmarks1,2 – March 2015 to March 31th 2020 «Outperformance» of MNOK 968 in March on ≈ BNOK 11.4 avg. value-weighted total bond portfolio • Protector return: -1.4% • Crossover return: -9.9
Slide 24: Market turmoil – COVID-19 and oil collapse
Market turmoil – COVID-19 and oil collapse Daily meeting structure established – monitor risk and act on opportunities Daily CM capital meetings - CEO, CFO, CRO, CIO and team • Increased buying, very good prices and possibly a narrow • Slower market – many funds have closed • Flow driven forced sell
Slide 25: Investment summary – significant losses and opportunities
Investment summary – significant losses and opportunities Bond portfolio yielding ≈ 4.3% as of March 31st – significantly improved earnings base going forward • Reducing risk in bond portfolio last 3 years, • AAA from 10-15% allocation to 50%, with BBB risk removed • HY reduced from >30% to 15% • Si
Slide 26: 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 anderledes» Cr
Slide 27: Profit & loss excl. COI
Profit & loss excl. COI Profit before tax of MNOK -320 (MNOK 13) in MNOK Q1 2020 Q1 2019 FY 2019 Gross premiums written 2828 2713 5100 Gross premiums earned 1293 1147 4996 Gross claims incurred (1106) (1072) (4724) Earned premiums, net of reinsurance 1122 891 4148 Other insurance related income 4 3
Slide 28: Balance sheet
Balance sheet SCR-ratio 142% based on standard formula In millions 31.03.2020 31.03.2019 31.12.2019 SCR-ratio composition Owner-occupied property 12.7 13.3 12.8 Financial assets 10,337.6 8,816.4 9,219.8 Derivatives 300.9 14.6 32.6 Bank deposits 182.9 152.1 343.3 3000 SCR-ratio: Other assets 3,480.4
Slide 29: Solvency II
Solvency II Composition of SCR: Eligible SII capital: • Net insurance risk 73% • No dividend • Net market risk 15% • Guarantee provision subtracted from own funds • Other risks 12% SCR composition Eligible SII capital 4 000 3 500 421 3 500 326 62 1 243 3 000 529 45 2 583 3 000 524 2 500 81 62 1 303
Slide 30: Shareholder's matters
Shareholder’s matters Per 28.04.2020 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
Slide 31: Long term financial objectives
Long term financial objectives Looking 3 year ahead – Continued disciplined growth Old As of February 6th 2020 Net Combined Ratio 94 % 94 % Solvency 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)1 GW
Slide 32: Summary and Q&A
Summary and Q&A Improved combined ratio and responsive capital allocation • Net combined ratio at 98.3% (105.9%) • Price increases Nordics ≈ 13.5% • Double digit price increases in H2 expected • Investment return of MNOK -452, or -3.9% in Q1. April investment result so far amounting to ≈ MNOK 324 •
Slide 33: 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 anderledes» Cr
Slide 34: PROTECTOR insurance
PROTECTOR insurance
Slide 35: Appendix
Appendix PROTECTOR
Slide 36: COI results
COI results CR 92.9% – discontinuation progressing in a good way in MNOK COI1 Protector incl. COI • Volume somewhat higher than expected – could Q1 2020 Q1 2019 Q1 2020 Q1 2019 reach MNOK 150 in 2020 Gross premium written 63 89 2.891 2.802 Gross premium earned 63 89 1.356 1.236 • CR 92.9% Net premiu
Slide 37: Profit & loss – including COI
Profit & loss – including COI Profit before tax of MNOK -451 (MNOK 122) in MNOK Q1 2020 Q1 2019 FY 2019 Gross premiums written 2891 2802 5457 Gross premiums earned 1356 1236 5352 Gross claims incurred (1164) (1073) (4994) Earned premiums, net of reinsurance 1156 971 4372 Other insurance related inco
Slide 38: 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 39: 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