Good morning. I would like to welcome you to the investor presentation for VÍS in quarter two in year 2021. We start by looking at the highlights for the quarter. We had a very good investment results, one of the best since listing, and a return of 6% on the investment, and leading to the investment income of ISK 2.6 billion in the quarter. We are proud to be the first insurance company to be part of the UN PRI this quarter. On the insurance part, we see a strong turnover in earnings. We are strong underlying insurance business in the quarter. We have finalized the implementation of the new reserving process, and we go better through that in more details later in this presentation. We have a profit of ISK 2.8 billion before tax, which gives a 14.4% return on equity in the quarter.
The combined ratio is according to our plan, 95% or more. In our digital journey, we are very proud of the steps we have been taking, and as a reward for our work there, we are proud to have received the award for the Ökuvísir, the Pay As You Drive project, which we have been offering part of this year. We are still working hard on our digital journey, and we are now transforming and changing the process of purchasing life and critical illness insurance, an important part of our business. Also, we are proud to have implemented in this quarter huge changes in the comprehensive insurance for the car model, which now is the best protection available in the Icelandic market.
While looking at the highlights for the quarter, the premium ISK 5.6 billion, the profit, as said earlier, ISK 2.6 billion, combined ratio 95.3% comparing to 103.5% last year. Return on investment 6%, return on equity 14.4%, the solvency ratio strong, 1.58. Looking at the six month, we have a premium of ISK 11,169 in the period, profit of ISK 4.5, a turnover of ISK 5.5 billion quarter-to-quarter, combined ratio 101.6%, return on investment 11.8%, the return on equity over this period, 25.5%.
Looking at the income statement, the highlights there, to point out eventually, is the claims incurred. They are decreasing over the period, it's also worth mentioning that the reinsurance share there has increased due to one big claim of ISK 500 million reported in this quarter. That claim was fully reinsured, it has a limited effect on our bottom line, it increased the reinsurance share of claims in this quarter. Technical interest rates and the exchange rate change of technical provision has changed over the period.
This quarter, the investment has been increasing compared to a decrease on the same period last year. operating expense is on the same level according to our plans. The bottom line there, ISK 2.6 billion, and a change over the six-month, going from minus ISK 1 billion to plus ISK 4.5 billion, a change of ISK 5.5 billion. At the bottom, we see the ratios, return on equity 40.4%, combined ratio 95.3%, and the basic and diluted earnings per share ISK 1.4 this quarter. Well, looking at the premium in a quarter, we see an increase there. The discontinued business is smaller than compared to the last year according to our plan. It is a runoff of the foreign reinsurance business, which we have discussed earlier about. It's good to see the increase in the non-life and life insurance premium.
We see the increase in the non-life is driven by motor insurance, mainly two reasons we believe. The tourism has increased in Iceland and the rental cars, the premium from that business has increased, but also we have seen an increase in the motor due to our product Ökuvísir, the Pay As You Drive product. We have a increase more or less due to those two reasons. At the bottom right picture, we see a premium development over the period compared to the same quarter last year, where we see the discontinued business has a decrease of ISK 190 million. Tourism is rising in Iceland. It's not come to a full effect, but we see in our booked premium this quarter that we see a continued increase in that segment. We see a natural development in the premium according to our plan.
While looking at the development of claims, it's worth mentioning that the claim provisions have increased by ISK 3 billion over 18-month period. We stated here that the implementation of the new process has now been completed, which has been a journey for almost 18 months. It impacted this quarter by 4.8%, which is ISK 272 million. Without that, the combined ratio would have been 90.5%. We also see in this period, this quarter, the development of the claims in the bottom left picture, where we see the claims over ISK 50 million is zero. As said earlier, the ISK 500 million claims reported in this quarter was fully reinsured. It has a limited effect on the bottom line. Reserve methodology is 3.7%, taking in this quarter. The run-off of 4.8% is our estimate of the run-off for the year.
Of course, this can be comparing to this one quarter premium high. On the annual level, it is within our expectation. The outlook for the year is unchanged. We have stated that the combined ratio is estimated to be on the level 97%-99%. Looking at the operation, of course, the combined ratio of 12-months rolling increased the last year due to the work and effect of the claims reserves on the business, but now has started to decrease according to our plans. Operating expenses, we have been able to hold back on the same level in ISK, which is good, especially looking at the salary, which have increased almost 10% year-over-year in Iceland.
On the bottom, we see the operating segments, where we see it now, both the insurance part and the financial operation are on a positive level, which is according to our expectation. The balance sheet has seasonal changes more or less. Again, the reinsurers' assets have increased due to their part in these big claims. Other segments and parts are more or less due to some seasonal changes. Worth mentioning the equity ratio, which has increased due to the profit over the period. Well, as we see here, our assets have increased. The investment income was high in this period. I would like to give Arnar, the Head of Investment, to go in more detail in the investment return on this quarter. The floor is yours, Arnar.
Thank you, Helgi. Looking at the results for second quarter, they were quite strong, with ISK 2.6 billion in investment income, 6% return, on the back of quite strong first quarter for the year. Mainly driven by listed equities, ISK 1.6 billion from that asset class, returning 14.4%, which is quite strong compared to the market. We are seeing positive results from government bonds, which have been quite negative over the past quarters. Perhaps the main news for this quarter were increase in assets on the other equity side. We're seeing a positive return from a few of our unlisted securities, for example, Controlant, Kerecis, and Ölgerðin. We had the negative results from one of the assets, Miðborg 105, which decreased by ISK 180 million. All in all, ISK 640 million from other equities.
The main changes in the quarter, we're decreasing our assets in listed equities and moving more into government bonds, and other equities are increasing because of increases in price. All in all, very strong quarter, 6% compared to 4.4% in 2020. Looking at the first six months of the year, the return on investments is 11.8%, which is really strong. Mainly driven again by listed equities. We've had really strong equity market in Iceland. Also looking at the return, 34.5% is quite strong compared to the benchmark and the market as a whole. Our strategy in that asset class has been returning quite nicely. Bond asset classes, government bonds and other bonds have been returning good results. Our focus on foreign credit in other bonds have been giving us positive results. As I stated before, return from other equities were quite strong, mainly in Q2.
On the year until end of June, we have 22.2% return from that asset class. We are giving investors a little bit insight into our portfolio there, what companies we own, and when we invested in them. We have seen a few of the names on the slide. This is 2/3 of our unlisted equity part. Many interesting names there. Few of them have actually gone public. We are looking to seeing perhaps more of them going public, both in Iceland or other markets in the near future. Really strong first six months of the year with ISK 5 billion in investment return. Looking at the assets as a whole, we split it up into fixed income and equities. Our portfolio is ISK 44 billion, never been bigger. ISK 27 billion is in fixed income.
The duration of the fixed income part is pretty much similar to end of Q1, 33.2 years. Main changes we are doing this in the second quarter, we were decreasing the indexation of the domestic bond part, taking it down from 52%- 42%. We can see that change in the 10 largest fixed income holdings. A little bit decreasing the indexation of the portfolio as a whole. Looking at the equity part, ISK 17 billion, 73% in listed shares. Mainly we have been decreasing some of our positions in second quarter, and we can see that, for example, in our Arion stake, Síminn, and Festi.
We are also given on the slide the value of our five biggest unlisted holdings, and there you can see Corip harma, Controlant, Hvatning which is a company that holds our Blue Lagoon shares, Kerecis and Ölgerðin. ISK 44 billion, our investment assets have never been bigger. With that, I will turn it back to Helgi. Thank you.
Thank you, Arnar. Well, looking at the solvency, it's quite strong, 1.58. The own funds increase due to profit, but it decreased due to the share buyback in Q2 and remaining at that point. It includes the whole share buyback of ISK 1.6 billion for the whole year. A very strong solvency ratio of 1.58. Looking at the shareholder slide, we see changes from 2020 to 2021, where we did not pay anything to the shareholders in 2020. This year we have paid dividend of ISK 1.6 billion and also the buybacks of ISK 1.6 billion, leading to the 11.6% number in the upper left picture. It's worth noting two things on this slide.
Our own shares are 5% seeing in the of the 10 largest shareholders list and also that we have foreign funds coming in even though it's a small part compared to what it was like over one year ago, but we have seen a little change there, and we have a 0.5% of foreign funds. A good development there. Well, looking at the sustainability, this is an important part of our business and we are working both internally and externally on implementing that in all of our processes and within the company and culture. Of course, the insurance business is mainly driven by two factors, the investment part and the insurance part. We are proud to be the first insurance company to be part of the UN PRI this quarter. Also we know our responsibility to work on preventions program and preventing claims.
The goals we have of these many goals working on in this area, we work specifically on the number three and three point six, where is to decrease number of accident and death accidents. We have put a lot of effort and work implementing the sustainability within our work, both investment part and the insurance part, but also within the culture of the company. We know our responsibility there, and we are aware of what we can do, and we like to be more efficient on that and hope to be able to show you more of this work in the near future. Looking ahead, we are on full swing. The investments in this quarter has started very good. We have interesting and challenging time ahead of us in the investment part. All the unlisted shares, which Arnar just recently talked about. We have a low investment environment.
We have a high equity share. We have a lot of interesting challenges ahead, but the third quarter starts very good. We have changes in our operation. New managing director of operation has started this quarter. We have put a lot of effort and work in the insurance, changes made in the health insurance, car insurance, which we have now, the best insurance in the market. On our digital platform, we are still taking huge steps, and always looking at the same thing. The observation and how our customers are taking this, looking at their experience and talking to them, but also to making our process more effective, which is, of course, one of the main reason why we are able to hold the salary on the same level year- to- year.
Also, as mentioned earlier, we are changing the life and critical illness insurance, and we will be proud and looking forward to announce that in the next couple of weeks. A lot of things going on, and we are looking promising on the next quarter and next year's in our business. The outlook for the year, this slide is unchanged from last quarter. We still aim to have the combined ratio of 97.99% for this year, but we stated that our goal, for the future is to be low under the 95% combined ratio level and the return on equity of at least 50%.
To summarize this up, strong quarter, good investment income, huge turnover on the insurance part and a lot of effective work and going on in company, giving us a huge project for the future, which we can build upon. Thank you for today. I hope you have a good day.