Speaker 2
Hello and welcome to the presentation of second quarter 2026 results for Protektor. If you have any questions, please ask them through email address ir.protektorforsikring.no during the presentation and we will answer at the end. As always, we have started the day with all employees, which in the Oslo office were very few but what we then speak about is our culture related to targets and performance and with protector changing with the world changing we have been focusing on defining the challenge what the challenger means in 2030 for some time today one of the focus areas was to link our values to to that vision which is about data people and innovation and we have one value that is different from the others in that it is something we say we are and it is committed and one thing it is important that we are compete committed to and that will not change is our performance culture and our performance culture is something one of the reasons why we are different this goes every day but also in recruitment so if you don't like our performance culture then you probably shouldn't start in protector. So we've linked that especially to data and AI which will be a part of our performance support structure which is a monthly run-through in the teams where you look at results and performance on an individual and a team level and give each other feedback so that we can learn from what is done well and what mistakes we've done so it's a structure where we can add on elements that are changing around us and data is obviously a part of it but technology is a bit more difficult to quantify but we will add that to the structure for all employees. Then to the results. So quarter two is a very strong profitability quarter, 81.5% combined ratio. The growth is on the weaker side, but we have communicated most of the growth, which is related to the 1st of April inception date in the UK previously. previously and the strong insurance service result together with the investment result gives a nine kroner per share result the other highlights here is we have confirmed or ambest has confirmed our credit rating so with a stable outlook and the dividend I can get back to through the capital side when it comes to the growth so most of it is UK and most of it is first of April and we look at the local currency growth because that's that's what says something about what is going on in the different markets and we've always always done that so we grow in all markets in the UK we have a situation where public sector especially the local authorities municipalities are not out in the market due to a waiting game for the LGR the local government reorganization or reform so we don't see as much business there and in addition to that it is the softening market that I have talked about previously and that is well known so rates are going down and so it's a similar situation in the biggest markets in the quarter UK and Sweden where we lose some existing clients. And one part of it is about discipline. So we can even know what rate we need to go to. So get a chance to get to that rate. But competitors are too far below the price that we think is profitable. And then we have to let it go. So that's one part of it. On the rest of the portfolio, we managed to get price increases, at least to counter claims inflation. So the renewal process is running well. And obviously, there are some unprofitable clients that go out. So our renewal rate in the quarter is 88%. And it's mostly driven by the factors that I have mentioned in the UK and Sweden. On the new sales side, we have the reduced volume in UK public sector. We see more in the commercial sector. We have quoted quite a lot of real estate business, but not with inception dates in quarter two. so that's more for quarter four and potentially some quarter three clients and and we see quite a lot of volume in in the commercial sector in the Scandinavian countries Sweden has come further on the facilities with the brokers where brokers put together larger groups of clients and that has been longer in Sweden than it has in Norway and Denmark. So Sweden is having success especially on the motor side in these facilities and is back on a growth path and after being a slower growth in that market. In Norway and Denmark we are lagging on seeing the volume that we should see from the facilities that we already have access to and have won previously but that is also something that we believe will come but there is work to do in order to make it make it work both on our side and on the broker side and then we have won the biggest client that we have everyone in the UK it's a motor client it is one because it is large enough that it is difficult to be irrational most most competitors and us will come to the same conclusion when it comes to calculating the claims forecast so this is a margin game but mostly a cost game so a client like this should be protector territory and we should win it and especially when it is possible to have a good long-term agreement that is transparent always then the cost leader should should win so we were happy to to win that client and we will also use a client like this which is a large fleet of homogeneous drivers and cars to work on how we can reduce the average claim size and do make claims handling better it's easier when you have a large client like that so we have some good projects on making that client a success obviously we can be wrong in what we have calculated and there is risk in getting that type of a client on board but but we were very happy that we won that client that's quarter three effect when it comes to the claims as I said it is a very strong quarter but we have lower than a normal level of large losses in in the quarter so 4.6 is comparable to the 8% normalized level that we usually do in addition to that we have runoff gains in in the quarter at four percent so adjusting for those on the total level gives you a slightly improved loss ratio compared to quarter to 2025 and in a market that is softening rates are going down it is not necessarily an improvement that you're looking for more more like a stable situation. So we have a portfolio we are very comfortable with. It is property that it has the best loss ratio in all countries except for Denmark where we have some large losses and Malta where we have had some profitability issues previously is improving in Norway and Sweden where Denmark is still experiencing some issues so we need to make adjustments or some medium-sized losses in in that portfolio as well but but there it is necessary to make some price adjustments there and the same in Norway but not to the same no UK sorry so the same in UK where we have had poor profitability over some time on the motor product. So we still need to increase prices and make adjustments to get back to profitability, a good profitability level there. On a longer level, you can see that we have not changed our view on what a normalized level of large losses is. 8% is still our view, and runoff should be stable. But as I've mentioned previously, when there is more uncertainty in inflation, and extraordinary inflation, which we've had historically, then uncertainty creates a bit more volatility. and most likely on the side that we see now that there will be some runoff gains. But it is best estimate always, both for the case reserving and for our other reserving practice. So we need to expect volatility on a quarterly level and even on an annual level. But the last thing that I haven't talked about is cost is very stable. And this is a conscious choice that we use the excess capacity we have from efficiency improvements to develop and use that capacity in projects to look at new markets and to make our work smarter, so better processes and obviously data and technology. That is our main focus going forward. So the cost compared to last year is, if you correct for or normalize for the long-term bonus plan, which we have done for some time now, which is connected to the share price there is a slight reduction for the second quarter on the cost side but it's very flat on the first half year on the investment side we there is not a lot going on there's a lot going on in the world but but not not here so the bond portfolio is slightly down on yield due to spread tightening and our companies in the equity portfolio have had a okay to good reporting quarter quarter one so and no large changes here for the income statement I think that there's one there's one figure here that that is can catch someone's eyes that is the reinsurance ratio and as we've said previously that will be volatile we have some reinsurance that is commission-based and we don't book a commission in the first two quarters and if and if it continues to run well we will start booking that in quarter three and quarter four and then the other thing is that we have not had basically any recoveries from reinsurance in the quarter previous reinsurance contracts including including workers come Denmark have given some recoveries continuous because they are more on a attritional basis than the excess or loss contracts we have now so that's the the reason should expect that to be lower in quarter three and quarter four but but this is normal practice and and the right practice and on the capital side obviously the capital increases with the result for the quarter and and the requirement increases with the growth in the balance sheet and then we're back to the summary so let's a short run-through of results now and and the question is did we get any questions common yes we have some questions um you've talked a bit about some answered some of them already but could you kind of add some color on the expected profitability on this large new client in uk So our long-term target is below 91% combined ratio, and all clients should be there. but what we what we have to do in a situation like this is to to include the long-term view meaning that the first-year profitability is above the long-term target but over time it should be should be close to to the long-term targets obviously we can make mistakes here and it's a large client so but yeah so you're talking about the softening on soft uk market what should kind of be a reasonable expectation on premium growth going forward in existing markets i have a separate question on on real estate i i think that's the important the important thing that we work on is that we have enough opportunities so that we can see as much business in relevant segments as possible. So we have the broker partners that are important to us, that we have chosen and that have chosen us. And we have our segments. And to see as much as possible in them, to quote as much as possible is is what we can do anything about because the the issue is that we don't know where that market will go and the market has been softening in the uk for a long time in certain segments we don't really see that it can do that forever because because it's it's at unprofitable levels and and if it is for us when we quote then then it must be for many others also with higher cost levels so but where how long it takes don't know and and then in in the scandinavian market it's it's about the facilities at the moment that's the large opportunities and that's a partnership that needs to work before it comes. France is very stable from what we have seen before and it's a lot about 1st of January, nothing we know about that date right now. Obviously it's very interesting to see if housing changes from last year where we didn't win any or very little but we don't know can't really do anything about it thank you and then on the real estate in in uk you mentioned that we have quoted some this quarter for q3 and q4 kind of can you say something more about the momentum there yeah um so so we did say that it would be uh towards the end of this year that we're ready to quote to to really quote we uh we obviously have recruited um some uh experience into to that team which will be in place after summer uh and uh and we have received a good amount of data we are not at all seeing everything from the brokers that we are working at the moment and we're not quoting all of what we're seeing but we are gradually working towards that situation So I expect that in quarter four we will see, maybe we will see 50% of what we, so then we'll start really getting some traction. And then we'll quote a share of that. What will win, we don't know. The first impression of the market is that rates are quite soft at the moment, just like the property segment in the UK in general, but not at unprofitable levels everywhere. So we are winning some clients. so we have had a couple of quarters with higher runoff gains could you say something about which vintages they come from our products so some more so it's they basically come from from our biggest largest our largest products property and motor and parts of it on property can be from from larger claims that that end up being smaller than than what we reserved them at from the beginning sometimes for for good solutions or cash settlements rather than rebuilding so this quarter there is some of that and and and the rest is is most likely more on that inflation comment that i mentioned previously that when you have high uncertainty on inflation then we need to add uncertainty and then it's it's a slightly higher probability that we're on the upside then on the downside in our best estimates a question on the cost ratio linked to the growth in Sweden seeing that the Commission share has trended upwards recent years in Sweden can you just say something about what's driving that so that's the facility growth in in Sweden where these facilities are also it's not necessarily a running commission rate that will be high on the facilities but to establish them and get the processes up and running that is higher so when we when we get those get traction there then the commission is higher so that's part of the facility setup and investment and on the improvement in Norway especially on seemingly motor you mentioned in Q1 that some of the new sales going into the year was poor is that performing better or are there other explanations for the improvement in Norway so we haven't had time to do a thorough analysis obviously short time since we're done with the quarter here so but but what I also mentioned after the first quarter is that the first thing is to confront the brutal facts and then we need to understand whether whether there are coincidences or or volatility that that drives a result as poor as it was in in the first quarter motor Norway and what it looks like is that parts of it was volatility and that it is better than we initially feared but as I said we we haven't had time to really run through frequency is normalized following uh quarter two and then it's more on the average claim size and and understanding inflation that we haven't done uh thorough analysis so i can't give a clear answer but
Speaker 1
we will see throughout the next quarters thank you and then i have a question on on motor it represents roughly one third of of the portfolio currently and And mainly from commercial and public, what's our assessment and how do we prepare for the long-term impact of technology and autonomous vehicles in the business, particularly risk of lower accident frequency, shrinking motor premium, liability shifting from fleet owners to vehicle manufacturers and software providers what do we do and how do we assess that we do
Speaker 2
we do the same as we we do for for all types of risks that are outside we we are listing everything we're afraid of and then prioritizing the the what we believe is are the biggest risks and then we act on them to reduce them. But in this case, it is so many of the elements that were mentioned in the questions are obviously risks that we can see and that we, to a certain degree, are seeing. But we can't really stop the development. So the development needs to happen. And then it's about what type of pricing do we do if the risks change in general. So if you have vehicles in commercial sector, I heard that the public sector was mentioned, but it could be public sector as well, that are utilized much more. so because you don't need drivers you can utilize the vehicle throughout the night and have a lot more miles on it then then that will have to be something that we implement in order to to price for it so so the same deliveries will be done for a transportation company well most likely it will have the same total premium and so and claims and and then we have tested technologies we've tested having portfolios with technology to learn from what that means and and how that can be be used that was in in Sweden an expensive learning but but it but we have learned something from that and and in general we follow our clients large clients closely and and work together with them in order to find out what are the biggest risks if the motor market disappears then then it disappears then we will have to find other ways of doing but but that's also a risk that we put up there not a very high probability in in our view but but that doesn't really matter it's what can we do in order to prepare prepare for it and we do we have lots of actions related to to that thank you one more questions one more question when will you enter a new country and what countries most likely and we are working on the projects with with new markets so we are speaking with brokers we are doing research we are seeing that we can do the research very efficiently using technology and also most likely managed to set up efficiently in more than one country at the time. But there is no change from what I had mentioned previously. We did start in Spain and then we stopped. So we have come the furthest in the Spanish market. So that's easier to pick up, that gives a higher probability that Spain will be the first one. Poland looks more like all the other markets we are in because public sector looks very accessible. So that's a reason why Poland could be an early country and Germany looks a bit more challenging to find the right partners and data and Italy is somewhere in between them and then we're looking we're also looking at some other countries including including continuing the the approach towards US excess markets which we are also have been looking into and I have mentioned before so nothing specific and no conclusions but we're working on it and it's it's fun and it's it's interesting to work on new markets and we're getting more confident with how France is developing of course thank you no further questions all right thank you very much wish you a good summer
