Protector Forsikring (PSKRF) Q3 2026 Earnings Call Transcript

Welcome to a presentation of the third quarter 2026 results for Protektor. We'll start as always with who we are and a short summary of what we did this morning. So we've had all employees on one topic, obviously the results, but one topic when it comes to our culture. and as it has been for some time the focus is on the challenger and and what we have done is that we've worked on setting our vision for 2030 and I won't get into all of the details there with you but that vision has a requirement of change and the reason for the requirement is twofold One is that Protector is changing, we're growing a lot more people, more countries and more years, more experience that we need to challenge. And it's harder to challenge ourselves than to challenge everyone else. And the other element is that the world around us is changing and in particular technology. Those two things are actually giving us an opportunity to reduce the biggest risk in Protector. And the biggest risk in Protector is that we become like everyone else. And as long as we get to change, as long as we have means to make changes in order to create more value, we are reducing that risk. One mitigation has been and is to establish in new countries. That gives all employees an opportunity to be part of something else. We don't want the best people to butt their heads within areas where they don't get anywhere, where they don't get development. But when we open new opportunities, the best people can contribute either on those new opportunities or other people in existing areas will move to the new opportunities and then something opens up. But this change that is happening within Protektor and outside of Protektor is an opportunity to make further change, so another action to reduce that risk. And what we are doing is that we, for all employees, first all leaders, all employees, we are setting performance targets, so high ambitions on business value targets. we call them business commitments so that profitable growth is obviously a target for everyone in Protektor that's what we're paid to deliver but if when we measure an additional performance when we measure who should have performance pay in Protektor then that is linked to something that has an even higher ambition and what we will then do is I'll give you a couple of examples say to one broker in one country that has 200 million pounds in volume we will say that by 2030 we want to see 300 million pounds from that broker so more than the broker has within that segment that doesn't only require that we see everything that the broker has it also requires us to help the broker get more within that segment and it's an ambition that requires us to change because that will not happen if we do things the same way and we need to choose so it means we need select that broker we think is able to actually do something different and then we need to get together as a team today it's mostly underwriters and key account managers broker service who are out with the brokers but we need claims handling we need it we need compliance we need reporting and we need the whole team risk managers to go out to the brokers in order to increase their portfolio and make sure that we see all of that business because it needs to have the right data quality today a lot of what we don't quote is because it doesn't have data quality and this is possible to set ambitions where where we have to change it's possible because of technology and we see it today that we have several areas where we have already deployed technology that changes the way we do things and it's difficult to change especially when what we've done previously has produced very strong results so it's not necessarily our stars from history who are the best at challenging our existing processes i've mentioned that before but this is one way of doing that so that's type of ambitions and targets that we're setting we're taking some risk in in prioritizing some areas where we set high ambitions but there's a lot of energy and it is very much related to staying the challenger being bold and being committed to being that company that is always developing and always improving so that's what we are talking about at the moment we will have our targets for 2027 set a lot earlier than what we usually do in this process and and then we will focus on working on how to achieve achieve them but now we'll speak about history and the results for quarter three are strong in total I'll obviously go get back to profitability and growth and investment side and capital later on but just to put some words on the other highlights here as you know we have broker satisfaction surveys in all countries annually UK was conducted a while back we haven't communicated the result there in writing so that's old news but we were number one on claims handling and in total in the UK lots of interesting feedback that makes us understand where we can improve further in the UK broker market but as you see Norway number two so we have a target of being quality leader so when we're number two it hurts that's not quality leader and the brokers in Norway they have said that there is a company that is better than us in the deliveries that That is due to some deterioration in response times, that's important to the brokers. It is some feedback on that we are a bit too square, a bit not flexible enough. We have increased prices quite a lot on several areas, in particular on the health product, which has been a very poor profitability and then we have also started challenging the brokers on their value chain so we are seeing the brokers as an integrated part of our value chain so we're starting to challenge the brokers in particular delivering very good data to us if not we don't quote we need good quality data but also that we don't do too much double work and we're challenging them on use of technology on top of that so so there are some areas that we have delivered poorer on that and we get that feedback and then there are some conscious activities that we've done which we probably could have done better because we're getting this feedback but the totality is a good opportunity to have further discussions with the Norwegian brokers in order to improve that position. So in some ways I said it hurts and it hurts it really hurts for the whole Norwegian business unit as well but in some ways it is a bit of an advantage to be hit because I think that sometimes we can lean back and see that we're good and good is the enemy of great so so it's not to talk number two away but we are very motivated to change that. We have in Norway gotten feedback on claims handling as well and we're number one on claims handling so we have very good feedback on the claims handling but also there lots of room for improvement and as you know claims handling is the is the product we sell that's what the clients buy Denmark number one so we continue to be number one in Denmark good feedback there and it is both on claims handling and in total so that's a good result but I don't think the actions are any different from what they are in Norway. So it's just more important to focus on that let's not only celebrate number one position but understand what we can improve and really dig into what the brokers mean when they give us feedback because there are lots to improve there as well. Yeah we place the a tier one bond and then the dividend is written here. So I'll go straight into the volume. And I think that quarter three, 2026 is a good example of what we say every single quarter. Quarterly volatility must be expected. It's not only on the profitability side, it's also on the growth side because when I get into this and I'm going to remind me that please ask questions during the presentation that makes it a bit more dynamic that goes for everyone in the room but also also online when I when I get into this you'll understand what I mean because first of all we've mentioned the UK client. That is a very large client like we said and affects a small volume quarter like quarter three by a lot. If you take away that client the total growth in local currencies is 20% for Protektor. In UK the growth is 18% without that client. So we'd say there are very strong numbers excluding that client but those numbers don't tell the full story either so it's much better to look at year to date figures to understand what is actually going on on the growth side if i say some words and quarter three again back to that on uk so the market is still soft And softening. It is difficult to renew our commercial clients in particular at profitable levels. So on Malta, we have high churn in commercial sector, UK. Property, we don't have a lot of churns. We manage to retain the clients there, commercial sector. And then public sector and housing, we managed to have low churn and get price increases where we need it. So it's public sector that drives the 18% growth through renewal rate. The new sale figures in the UK are, except for the very large client, fairly low. And that's due to the markets. We're quoting a lot of business but it's a soft market and we're not winning as much as we have done before. At some point that will most likely change. We're obviously looking ourselves in the mirror to see if we're doing something wrong but it probably will change. And then it's on other countries there are some volatility in those growth figures as well. Where in Norway we have a very high renewal rate, we also have good new sales. So in Norway everything comes in at the same time and a bit more than what the running rate is. And then in Sweden we're picking up again on on the new sales side so it's coming back on the new sales in Sweden but we still have a fairly high churn because we are increasing prices in Sweden as well where needed so so I in my opinion the Swedish portfolio is improving profitability wise and we are now seeing that we actually are competitive again on especially motor but also on the property side which we have don't have a lot of in Sweden and and in Denmark very small numbers but France is worth giving a comment on even though there are very small numbers there we we see that public sector last court last year same quarter we had some clients in public sector this year there has been any anything to quote so this is commercial and on commercial we are we have strong renewal rates it's early of course but we retain the right clients and we also win some smaller clients in in France so when you look at the running rate and France is obviously early and special look at the year to date rather than the quarter three

figures any questions to volume just two questions on volumes the first and I appreciate the comments on on sort of new sales versus price hikes but is there any way to decompose those 18 percent in what is sort of price driven and what is volume driven um and the second question is on the visibility in the uk going into 2027 um you have you talked about last well maybe not this summer but in in april um that you saw sort of more limited tenders out there there was less volumes for you to sort of quote on some customers chose to to use an option to sort of roll the contracts for another year um can you elaborate somewhat or give help us understand sort of the dynamics into 2027 in the uk in particular yeah again i do the first question first the decomposing

of the renewal rate and i can also say that this renewal rate in local currencies is higher than 89 percent there's a lot has happened on the currency and it's not only the currency of the volume in the quarter but it's also the starting point that changes with with the currency changes so it's the renewal rate is closer to 95 percent in local currencies but the the difference there between prices and retention is that or the composition of those is that we have we get inflation on average for all clients in in all segments and then we get some price increases on the clients that need it but that's much smaller than inflation so it's lower numbers than what you've seen previously when we had a need of more profitability actions. So that's the proximate figure, and you can figure out what that is yourself, on the price increases. And then the churn is, as I said, so we have very little churn in UK, very little in Norway, and then we have churn of slightly above 15% in Sweden and similar in Denmark. France is also very close to 100% or no churn. And the rest, so the question you asked is not for the UK market in total. That's public sector that the comment came from. So that's the public sector. And there's also been one change in, so I mentioned the local government reform that was planned in the UK, that made the local authorities wait with marketing their insurance programs because they were waiting to be merged with other local authorities. That is now cancelled, postponed, or it happened to one or two local authorities that they and then they gave up. So that's not happening. So next year we will see slightly more but I think that first of April 2028 we will see quite a lot of volume out and then it will be you know a lot of our clients but also new opportunities then because our market share in the local and we're speaking local authorities not housing so much on this market share there is probably around 30% depending on exactly how we define that market so we will see some of that the good thing there in that sector is that we have had time to prepare so we have renewed many of these clients on new long-term agreements so so not all of them will come out in 28 it will be a more along the lines that i have mentioned previously two questions on the uk could you say something about your expectations in q4 on the commercial real estate segment.

Do you expect any meaningful contributions there? And secondly, just understand how the different segments in the UK varies.

Can you say something about your current hit rates in commercial motor, for instance, versus public housing? is it like 10% in motor UK can you say something about that so on the on the real estate side I've said previously that we will we expected to really start voting in quarter four this year and we have some volumes we've won some clients in real estate but but not not any significant volume we are starting to see more volume now and it will be quarter four will be a quarter when we quote significantly more whether we will win a lot of that is a different question because the market there also seems to be soft so so let's see we will at least be able to collect a lot of data and learn that segment get closer to the brokers at some point that will also turn around that is based on the data we have no doubt because there you have low deductibles and lots of escape of water claims it needs to turnaround at some point. So let's see, we'll win some business, we'll quote quite a lot. When it comes to hit ratios, motor, commercial, as an example, in quarter three, we have approximately 10% hit ratio on what we quote. We also don't quote everything, because some, especially some of the larger normal fleets, they are priced at too low levels. And we know that before we start.

Hi, Thomas Svensson from SCB. So yeah, back to the UK and the commercial segment, very difficult to get, you said, business at profitable level.

So what combined ratios are we talking about that you don't accept just to get a feeling with the softness in the markets combined ratios above 100% with our cost ratio so so that's history we have also talked about that we are working on new markets and and we are still working on new markets they very good news is that as I mentioned last time Spain is ahead of the other countries due to obvious reasons we started there before we know the brokers we have had already understood some of the some of the market there we now have actual data good data in spain for commercial motor so so that looks very good the two broker houses we are working closely with now they have real clients that we have seen and that they want us to be competing on and we expect that during 2027 we will be quoting Spanish business and then Germany has always looked or we've had no on the data side from Germany and coming into Germany now speaking with the brokers there we are already seeing data on motor and real estate and even public sector but public sector is dominated by the incumbents and the mutual companies so the brokers don't have a very large position in public sector but the brokers are very strong in commercial sector and real estate where we are getting data and then we are speaking with some polish brokers public sector only for the time being and it looks promising with data there as well we haven't started italy yet but we are still looking into the us where we have data that's public sector excess type of business and when and what that will be is is not very important it sounds very big because it's u.s but but but it's it's very related the type of business is very related to parts of the commercial sector in the uk property and parts of the real estate sector. It's more excessive loss type of business, but with the data we have and with the understanding we have of that type of underwriting, we see that we can have some competitive advantages there as well. So it's very exciting to work on new markets and we are having progress, but we will be disciplined in what we do and wait until we have data before we quote anything and then to the profitability again a very good example of volatility between quarters because obviously many of you will have heard me say that UK is softening will normalize on the loss ratio side and now all of a sudden you get a jump from last quarter. So now it normalized in one quarter. No it didn't. It's much more relevant to look at the year-to-date figures there as well. The quarter three figures are influenced by large loss. There's one very large loss in the UK in quarter three on the property side and run off. So that's what drives the big change and the underlying realities have not changed that much. But the underlying realities have never been what they were quarter three 2025 either. So then we said you need to adjust that upwards because there were no large losses then. So the underlying realities are more similar between 2025 and 2026 but with some deterioration which is natural when rates uh go gradually down but it takes time before rates go down but the not all clients go go out we we manage to keep clients uh our retention uh is or our churn rate is is uh closer to 10 percent than more than that and then you can calculate how many years we have these clients on average and and we get to correct profitability on the ones that are unprofitable along the way so it will happen gradually but but that's the uk example here and the same with norway it's not norway has not turned from from 79 percent to 58 percent so all the sudden Norway is that much better that's also no large losses in quarter three for Norway and eight percent runoff gains so adjust for that and you still have a very strong profitability or loss ratio in Norway so it's improving especially motor is improving but actually all products improving in norway and we have done measures for some time when we've had problems in norway and it takes some time before you get the result now you get a little bit of a catch-up effect with with some volatility on top of that but it is improving also underlying as you can see if you adjust and normalize that and sweden is fairly stable even though the figures don't show that underlying profitability and Denmark is actually very very similar as well when you normalize. On the French side we've had some large losses so it's slightly better in France but still it's very early and with some long tail products motor is our biggest product in in france and motor third party liability has personal injury claims that has a long tail that takes time before we know what that is it's not that we've had many of those losses but we could get and some of those losses can be larger personal and that's something we're reserved for obviously so so there is a lot of uncertainty in in the French figures but the underwriting view meaning the view that we see client by client when we do renewals so when we look at our portfolio and we say each client is now going to renew with either an inflationary increase or because everything's okay or a price increase because it is unprofitable is very similar to the view we had when we did the underwriting which is a good thing because it doesn't look like it's anything different from what we so the data looks good and it seems like we have done basically the right thing at least in total and then everyone has read about France we have some public sector clients and you've read about riots in in France that was also the case when we entered the French market which was one of the reasons why we got, we were welcomed in public sector France at that time and we got data from those brokers because they didn't have a lot of competitors. Everyone was scared about riots and when we entered it was possible to impose cover reductions and high deductibles on riot events and we have that on all our clients so we have a very small exposure per client and we don't really have that many clients and we don't have that many clients in the cities so the exposure is not very large we haven't had any claims from the recent riots in france yeah two questions on one on norway

and then one on the UK, on Norway, looking at the underlying figures, I appreciate that it has been seemingly a very benign quarter for most insurers and that the underlying claims ratio is to some extent benefiting from some stochastic variations. but is it also fair to assume that you have successfully repriced sort of a group of underperforming customers and that is also playing into better underwriting and underlying improvements and that we should expect that to continue also benefiting for the coming quarters? And then secondly on the UK, and I appreciate sort of a 1% change year to date on the loss ratio, but on the underlying loss ratio it's more four percentage points up on the underlying combined ratio year to date is that reflecting the softer market and how should we think of of 27 will we see a similar deterioration or is this level sort of where you expect it to flatten out So for the Norwegian business, I think I wouldn't look at quarter three to meet your or to calculate your expectations for the coming quarters.

But yes, we have successfully increased prices on underperforming clients during 2026 and especially on the large 1st of January date. so that's a while back we don't see the effect before now or the year-to-date figures more than than quarter one and quarter two where it was poor and and then there's still work to do in in Norway to improve profitability on certain parts of the motor market so so there could be more to come but but but I think that the seasonality is obviously one thing. Yes, you have quarter three last year as well, I know, but seasonality when the volatility is then larger also with seasonality. So that's part of it. And then you have group life is a decent sized product in Norway. There's a lot of volatility in group life when people die and how many die that's volatile in a fairly small portfolio but that's still significant. When it comes to UK so I think that it's the deterioration is slightly less than than the four percent normalized and and the reason is that there are some medium-sized losses especially on motor that have some they give some volatility on on that so motor looks better than what it's reported that frequency is actually going down in our portfolio and we're managing to get price increases on some of the larger clients. And then on the property side, there is not a lot of effect from the price decreases yet and we will continue to see some effects of those through 2027. And the estimate I will give you is that we underwrite for a combined ratio below 91 that's that's how we do it and that should be over time so over time but it will take longer than 2027 UK should be going towards 91 percent okay so then we will go fairly quickly through the rest so the historical figures on on runoff you know that there has been some runoff here I previously also mentioned that in times with uncertain inflation and changing circumstances then uncertainty can give an effect of some runoff gains conservatism and that's what you're seeing here and the large losses are in this period lower than the eight percent that we communicate but it is volatile and you will see that at some point and the only thing we haven't talked about this is the cost side which is adjusted for the long-term bonus plan and the share price effect on that very similar so you see if you exclude commissions here it looks lower in quarter three and also year to date but it is very stable the cost ratio and we do expect that the investments we have done and that we are doing will lead to us being able to approach new markets and enter new markets with very little extra growth in FTEs and the same with new segments such as real estate and and other segments that we approach especially in the UK market but also in Scandinavian markets where we're really working on the facilities with with brokers and that's also an investment that hasn't given us a lot of volume yet but that we've spent some time questions here now we'll move over to investments I think the the largest takeaway here is is that a lot has happened on the interest rate side. So the running yield is from 5.2 to 5.7. So that's the biggest point. That's a lot of money when you see what the denominator is. So that's the largest change and you also see that we steer interest risk from a solvency perspective towards our liabilities. When the interest rate goes up we have a loss here on the swaps that we use that is then countered on the insurance side. So it's basically on the P&L you don't see any movement there. There's a small loss, I think, but on the solvency side, there is a gain. That gain comes from that we are not steering interest rates 100% against liabilities in markets, France and the UK, Sweden, with interest rates below 3%. So then we're not 100% matched there, and then you get the small gain on the solvences. Yeah, and you see some of those effects in profit and loss here. When it comes to capital, there is one small temporary element here, six percent from that we have two or we have a double the tier one since we issued the one we have and the other one is to be or planned to be paid back in December so that's just temporary six percentage points there but other than that it's the requirement increases from a larger investment portfolio the capital increases from the earnings minus the dividend and other than that very small movements here obviously we are in a very solid position here and as you have heard and as i have said the both the uncertainties in in the world and the in in general but but more the opportunities going forward in particular on the insurance side is a good reason for seeing over time how we and how we allocate our capital. So we're obviously very solid at the moment and have a lot of excess capital after stress that we can use if the opportunities arise. And then back to the summary.

Any more questions?

Can you take a microphone?

If you look long, sorry.

But we have a webcast as well, so they need it. okay if you look long term at least two to five years what are the two things you see as them the most threats and what are the two things you see as the biggest opportunities so very very many times I think that the threats become opportunity so they may be the same ones um the uh so the one i've mentioned before the by far biggest threat to protector i think and i i'm pretty sure that i have most people in protector with me uh on that is that we become like everyone else and at the moment there are signs that we become like that we generate silos that we don't work as one team uh that we that we are not the challenger anymore uh in in established markets so so there are symptoms of that we work on breaking that down all the time but but that's the biggest threat and the reason why it's the biggest threat is and the biggest risk is that all the best people in Protector they work in Protector because they like being the challenger they like performance they like to always improve and do something new and be different and we'll lose those people if we are not that I don't want to work in protector if if that happens so we need opportunities to develop and we can't just develop to develop we need to develop and create value so it needs to be a value creation therefore it's a risk and an opportunity I think it's our edge I think it's the reason why we are very comfortable with our cost position Cost is extremely important, will be in the future. We need to be a cost leader by far. And we're comfortable with the position we have now because we know that we can go a lot leaner with the business we have today. But we are spending resources on developing new opportunities at the moment, meaning that we can consume those new opportunities with a similar workforce. So that's number one. Number two is probably so far down the list that we have a long list of elements. And obviously in number one, there's a lot of elements like technology is in there. But if I were to list one, I think that technology is a threat. how to deal with so we think about will will there be someone who can come in and and kill protector with a completely new model because we need to be protect productively paranoid we think about things like the brokers will they disappear we only sell insurance through brokers so we need to think about that and we shouldn't spend too much time arguing against or arguing why that will not happen. We should rather say what should we do in order to reduce that risk. And when it comes to technology that is, so we are in many ways developing many small companies that can compete with the Protector. That's what I talked about in the beginning. So let's do it in a different way. let's see if Jonas in Danmark who has his North Star which is doing all the underwriting that his team on motor insurance or motor underwriting does in one year with one person in one week and and he can basically do that so it's possible to do that today it's possible to we have quoted local authorities that have a very structured process for we evaluate 400 factors every time manually or with with at least people using models we've quoted now the first three municipalities in norway without any people being part of it and we did the underwriting at the same time in a normal normal way to check and the interesting thing is that when when we see differences and there are not too many differences. When we see differences, then it's actually much easier to explain why the model has the answer it has than why the human has the answer it has. So then it's based on some feelings and some experience or something that is not data. The model is only data. So I think technology is a threat, but it's more a threat in terms of citizen development. We have lots of IT developers now. So previously we had 70 IT developers. Now we have 250, 300 IT developers in Protector, because underwriters especially, not so much claims handlers, but underwriters especially. They develop functionality, they code, and that is a risk in terms of data, so we need to do the impossible of making data available, all the data we have, at the same time keeping it secure. And the same thing with new functionality. Our infrastructure needs to be, we need to encourage development and innovation at the same time as we have control of it, that we know that it's documented and not dependent on that person. So, but I could speak about this for a very long time, but that's two risks that are also, I think, our biggest opportunities. Any more questions?

I think last year you gave us a figure on how much you expected to quote in the French market. Do you have a similar figure for us now?

It will be slightly higher than last year, but it's uncertain, that's why I don't want to say too much. Okay, thank you everyone.