Earnings Call: Q1 2018

Apr 27, 2018

We go to the investor presentation. A warm welcome to everybody. As always, I would like to start with the DNA of the company. And as you know, we call ourselves the challenger. And if you are looking on the slide on the screen here, you can see that we have 4 main targets. Cost and quality leadership should lead to profitable growth, which again will protect oil. I'm fully aware that you today question the profitable growth statement here because of our profits in quarter 1, the technical result is obviously on the weaker side. I'm happy to share with you not only the figures, but also my thoughts around the figures. How much is underlying reality? How much is more like normal insurance volatility? That's the big question. And as always, when we discuss insurance matters, it could be difficult to give precise answers on all these kind of questions, but I try to do as good as I can. This is an underlying reality or a coincidence in the quarter. I'd be open about that as well. However, in my opinion, the long story is not at all changed. So that's kind of an opening statement from my side. There are absolutely no doubt in Protector that the underlying reality and the long story remains strong. So when we have had meetings this morning with all employees in ProtectAll, obviously, margin management is the key word. But the growth level is also kind of extremely important for Protecto. I would say that I do have a focused team of people on board in Protector understanding that this quarter is a 4 quarter. And we are, in my opinion, competent and committed to go forward and to fix those elements to our underlying realities. And then volatility, we can't do anything about it, but that will go in our favor and sometimes against us then. So to the highlights in quarter 1 2018, we are very satisfied with the growth level of the quarter, which is 15% in local currency in 2018, which is this is kind of twice the size of last year's Q1. It's slightly better than what I expected 2 months ago when we met last time. So Q1 volume extends about the guiding for the full year in my opinion, which is 20% growth. And you know that when entering new markets like U. K, this is new volume arrives during the different quarters. So U. K. Is different from Nordic. It's not about January 1st. It's about April 1st and the second quarter and the third quarter and the fourth quarter. So the visibility on volume guiding is not as good as in earlier years, but 18% growth the first quarter is fine. I'm happy. It's good. And the challenge here is the net combined ratio. And I'll come back to that because that's basically driven by a high claims ratio in that mirror. You have seen the investment result. It's 0 in the quarter. It doesn't really worry about it at all. There will be volatility. It is the long term return on investment, which you focus on and we focus on. And I will shut the window because there are some children outside having fun and they should continue doing that. Okay. These kind of figures don't invest in Protector or in anything else. So that's kind of we are rather relaxed about what we see here. Assets under management continues to grow, which is obviously a very important part of the future of our company. You can see here on the guiding and I think I will come back to that element of the guiding and the combined ratio. Last guiding we said a combined ratio size 92% to 94% and obviously higher than 94%. And I have discussed a little bit with myself whether I should say higher than 94% or a bit more precise. And to be very honest with you, I don't want to give a precise estimate at the moment because I'm not absolutely sure how much of the weakened technical result is linked to normal insurance volatility and how much is underlying realities. So instead of giving another fixed figure, I are only giving the kind of feedback at the moment that it will be higher than 94. So there is a slightly higher risk related to what type of figure where we actually will end. But I'll explain as good as I can when I'm discussing with you the claims ratio and the cost ratio of the company and then you can obviously ask questions at the later stage again. But you won't get a fixed figure from me during this presentation. The premium development, it's good. Here you can see the split between the different segments. You can see that U. K. Is not growing a lot in quarter 1, which is not unexpected. We have said to you that we would expect the volume in U. K. To double from €250,000,000 to €250,000,000 to around €500,000,000 or above €500,000,000 and that remains to be the target. And there are 3 more quarters to come. But on a company level, what we expect going forward is a quarter 2, which is slightly weaker than quarter 1, despite the fact that U. K. Normally is a good quarter 2. That is basically linked to Norway where we have one of the biggest client losses in history in Q2, which we knew a year ago, which we knew when we gave guiding to the market. So it doesn't really influence on the total company guiding towards the market, but it is a fact that there will be a negative growth in Norway in quarter 2 that will be offset by growth in U. K. And Sweden and some minor growth in the 2 other countries as well in quarter 2. But in my opinion, at the moment, we expect a lower growth rate than 2018 in quarter 2 than pick up and be bigger in quarter 3 and quarter 4 like you saw last year in that area. Are there any feel free to ask any volume questions now. And obviously, there will be questions and answers at the end of the presentation as well. So here is the kind of the bad news today. We have a poor claims quarter, basically driven by Norway here. Motor claims are I think we have to go back to 2010 to see equally high figures on the motor claims side, which is obviously linked to the winter conditions in Norway. It doesn't influence a lot on our figures. So I won't kind of blame the figures on the winter in Norway because that's not correct. But obviously, it does influence. We have had some medium sized hits on liability side. In my opinion, that's normal volatility. However, on the health insurance side and loss of license areas, it's more like an underlying reality that these two products are performing poor and they will continue to do that for most of this year, 2018. So when we entered the health insurance market in Norway 2, 3 years ago, we didn't manage to get in as good as we should. The 1st year, we had under claims ratio size of 180,000,000 the 2nd year, £140,000,000 I would expect today that this year will end around SEK120 1,000,000 to SEK25 1,000,000. And my expectation for next year is that, that product, which is not at all a big product, will go below 100 in that area. So this is what you could call a not a significant volume product, than but an unsuccessful entry in a new product area in Norway. Welcome to the insurance world, okay? Sometimes when we enter new product segments, we go in, we are successful at once, we earn money very quickly and we continue to earn money. And sometimes when we enter certain segments, we are getting involved. It takes a bit time to learn. We educate ourselves, increase prices and or take other actions. And then gradually or quickly, you can see a claim structure improvement in these areas. When it comes to property hits in Denmark and in one of the segments in Norway, in my opinion, it's a volatility issue. We don't have an underlying problem with the property portfolio of protect oil. Changes of ownership, not very bad, but not profitable in this quarter. But there are bigger quarters to arrive. And my expectation is that we will be profitable in that area for the full year of 20 18. But there is a but it has been, as you know, and as we have communicated for 5, 6, 7 years that it has been rate pressure in the Norwegian market, the broker based market that we live in. So rates go down in group life, in other illness, in workers' comp, in property, basically in all areas. So we do have an underlying reality where the technical result going forward in commercial segment Norway will be worse than what you have seen in the last 2, 3, 4, 5 years. The question is how much worse in that area. And at the moment, I would prefer to have a look at 1 or 2 more quarters in order to give a firm statement on how that rate pressure have influenced on the underlying reality on these type of products. I'm absolutely sure that my competitors in the Norwegian market, they are bleeding at the moment because I think that it's difficult to evaluate who is the best underwriter. So let's assume that we are basically equally good or bad if you prefer, but let's say equally good. The environment that we have in that market segment in Norway today, they will lose more than what we do. I'm not saying we will lose money in this segment for the full year, but we do lose money in this segment for the Q1. They are worse out. I'm absolutely sure, but as you know, we do not have access to precise information from competitors in these areas. We only have indications when reading their annual reports. Denmark, slightly on the poor side. Sweden, on the good side. UK and Finland, too early to say when it comes to claims ratio and profitability. Finland, slightly high but very low volumes. U. K, okay when it comes to profitability in this Q1. So no issues in England. And I think that we agree that U. K. Profitability is 10 times more important than Finland because of the size of the market and future growth opportunities we do have in U. K. But I can't say that we can communicate anything about future profitability in U. K. It's far too early to say. Obviously, it is. But okay quarter, no real issues in U. K. So here's kind of the key element of today's weak point in Astoria. So feel free to ask questions. Yes? Regarding the workers' conflict in Denmark, Yes. What kind of problems are you seeing there in the quarter? Nothing in particular. So what we have said to you for the last kind of 18 months is that we have implemented significant price increases in workmen's comp in Denmark. That has reduced over number of clients and at the same time increased prices on those who have remained. And the accumulated price increases and the kind of getting some clients out of the portfolio has obviously improved the profitability of the product a lot. However, the difficulties in analyzing what's happening is linked to the fact that the public entity Arbeit Skaldisturison that do all the major difficult claims handling, that's by law. It's not we doing claims handling for the complex claims. It's a public entity. They are extremely late in what they are doing. So they have hardly started to work on claims from 2015, which basically blinds the market. And since we have a fresh and new portfolio and our competitors do also have a long portfolio, it is a competitive disadvantage for Protector because we can't read the figures properly because claims handling is delayed and it's outside of our control in that area. So it's very difficult today, like I said last quarter and the quarter before that, to evaluate what's happening in the market. As long as these kind of problems continues to grow, our risk appetite for that product goes down. And at the same time, when the risk free rate is on a historical low level, our appetite for that kind of long tail product. So we are carefully considering what to do in this segment. When we enter that segment in Norway back in 2007, the Wirtmanskomp market in Norway, we entered basically in the same situation. We didn't have the big database, but there are data available both in Northern Denmark. We have that one, but we don't have our own figures. We enter the market. We know today that was a risky, but a very successful entry. And figures showed to be a lot better than expecting during the years. We have had reserve gains in that product area, not on a high level very high level, but at least on an acceptably good level. So the but the difficulty in Denmark now is that we can't build our own experience as quickly as we did in Norway because that public entity is a disaster. And they haven't been capable of managing it so far. It's actually, it's even worse because we got a message from this entity a few weeks ago that they might close down our access to individual claims data linked to individual people because of GDPR. New rules coming up live May 25th this year. And they are saying to us and all competitors in Denmark that they have to go and ask over those who are under a claims handling process to get access, to ask for permission to get their insight in that kind of information. This is a insurance company problem related to Albeit Skatelsen in Denmark. That could create a situation where we are even more blinded on what's happening on the claims side that which we that's what we would prefer. So I don't think we will exit that market January 1, 2019, but we consider actually exiting it because if we stay blind for another 3 years, it creates a kind of reserve situation, which will grow to be more unpredictable. And as an insurance company, we don't like that. So to be honest, we have some challenges with evaluating these kind of figures, okay? How much, Vivek, of the reserves is late related to workers' comp in Denmark? There is another question here while waiting for I don't follow-up on the floor, you're ready. Okay. Will you also be willing to evaluate one step further exiting Denmark as a whole if Denmark doesn't turn out Not at all. So in our opinion, Denmark is an attractive market. It is acceptable or good profitability in the market. It's a big broker market and I can't understand why we shouldn't be profitable going forward in Denmark. And obviously, there are synergies between Denmark, Sweden and Norway. So we are a Nordic company. It is a profitable market. We will find our way. So this is a product specific statement linked to a consideration whether we should accept growing risk in Denmark at the same time when being blinded on claims development. So that's a tricky one. But we are leaning towards a more aggressive approach towards that market either stronger price increases or potentially exiting that market. That will not influence the growth story of protecto because basically that growth level today is 0. And if you take, let's say, SEK 150,000,000 to SEK 200,000,000 reduced volume in 2019 and or 2020, You will hardly see it if we continue to grow in the main markets. And we have opportunities in Denmark in other product areas, which are interesting and significant. So this kind of statement has absolutely obviously, it has something to do with volume going forward, but not really about the growth story of the company as such. It's not. We have now Sonavi Bekke on the reserve side. So either the computer or you are moving to Slovoje. Obviously, that's the computer Wiebeke. I know that. I could take in a guess on the reserves, but I area, if you think they have a different product. Is it sort of that the competition is increasing further? Okay. So the question is related to obviously, you didn't hear the question. The question is related to the change of ownership area. 1, how do we see the profitability going forward? 2, you can see that the market leader in all other consumer sector products in Norway have introduced another product that enters the same market. And what's my view on that entry. First, like we have told you before, the profitability and change of ownership is not as good as in history. So the profitability margin is going down. And there are 2 ways of solving that situation. 1 is to deliver a new technical survey to the market with higher quality to reduce claims frequency and average claim size. That moves slowly, okay? And there are some challenges related to that. We are meeting in the market to implement that product. In my opinion, that new technical product will enter the market sooner or later, fortunately possibly slightly later than what we would have wanted to. I've given a message to all chief executives in the real estate broker market this morning to say that you have to support us on getting that product to the market. If not, our common clients, those who sell houses and flats in Norway will suffer from higher change of ownership prices in future. So either a better technical report or higher prices. It's not a set. It's a cooperation statement given in due time in order to go together with the real estate brokers to get that product to the market. We will. The technical survey type of it's not a product we sell, but we have handed out an IP solution, which will help the taxation kind of people in Norway to improve quality and efficiency on the technical side. That's one way to solve the problem. The second alternative is to get rid of certain parts of that segment to leave some volumes because there are different areas here which have an acceptable profitability and someone who is getting close to an unacceptable profitability. Obviously, general price increases could also occur. So there are 2, 3 ways to improve profitability going forward, and we are capable of navigating towards a future where that product remains profitable, possibly on a slightly lower volume level. When it comes to the second part of the question, Jens Siede, that product will fail. It's a stupid idea. It has been tested out in Norway before without success. It is de facto, the standard product in Denmark today. It's unprofitable. It's expensive. It doesn't reduce claims frequency, they will fail. So they got it wrong and good luck. So I don't really care. If they succeed 5 to 10 years from now, we follow in that area. And we will do that jointly with the real estate brokers. And Jensilia, as you probably haven't noticed, have given a statement that they are opening up as a real estate broker. So Gensilia is actually now a real estate broker. That's funny. They can't do it. And of course, I understand that it's something called technical solutions and web and Internet. I've heard about it for the last 20 years. But that's also been tested out in Norway for the last 5 to 10 years. It's not a reality in that area. So good luck, they will not succeed. Do you have the reserve figures? It's accumulated. Fotman's comp research in Denmark today is around What did you say now? The premium. You were talking about the premium, yes. So the premium is year to date, it's DKK222 1,000,000 out of DKK536 1,000,000. Basically, I think that this is a small question, rather deepened one. We can take it afterwards. Basically, the relative share of workers' comp is the same because number of clients is going down, price is going up, rest of the volume is stable, basically stable. So the relative share of workmanskomtehrmacht to other products relatively stable, possibly a slight decrease, but we have less risk because we have less clients in the segment. Just a follow-up on the certain segments that you mentioned on the cost change of ownership, which is sort of Okay. The question is, I'll say that there are some segments within change of ownership, which today is close to unprofitable and others who are profitable. Would I like to talk about it? And the answer is no. Why would I? So there are something called competitor solter and I won't talk about it. Here we have better databases than anyone else. So we can navigate that market better than other ones. So I would prefer my competitors to pick up the poor parts and stick to the better parts in that area. Yes, another question? Just on the change in ownership. As you know, you and CDS flagged strong ambitions They probably distribute that through their own direct sales channels in the consumer market. The problem they have lots of problems when entering that market, but the one is that insurance product is linked to a real estate broker services altogether. So they are actually fighting the real estate broker market in Norway. They won't succeed. So the market share in this market will be less than 1%, my guess. So if you can see the ports everything they have into that market, they will be back with the market share size 1. Good luck. Would you like to ask the question once more? We're also clear enough. Okay, another question. I understand that you don't want to blame the weather this quarter, but you mentioned motor Yes. So there is one element around the motor portfolio, which is valuable to comment on. It's one that obviously the winter was hard and it influenced our portfolio. The other element is that the relative size of the motor portfolio in Protector is increasing, okay? You have seen cakes dividing in long tail products and medium long and short tail products. And you have seen that the short term parts of our product portfolio has increased the last 5 years. So gradually our motor portfolio is increasing. And gradually our property portfolio is increasing. And both will be influenced by bad weather during winter. So one thing is that obviously we have a hit on the winter in the motor portfolio in quarter 1, but the relative size of the motor portfolio has gradually increased the last years. So we will be slightly closer to other companies since motor business increases. However, the seasonality in Norway and Sweden are different. So when weather hits Norway a lot, it does not in Sweden. And the reason why is because a new Volvo in Sweden is sold with an insurance package, which in Sweden is called Wang Skade Guarantee. So it's called Volvo Insurance. We don't insure that Volvo, but we have the liability insurance for that Volvo. And seasonality is different when it comes to a normal crash in the market through cars crashing and the liability element of it. So it's just kind of my study to understand how Protectors portfolio is influenced by volatility and seasonality when it comes to motor business. Motor business is growing, more seasonality effects, but not as much as in Norway, because Sweden is less influenced by that kind of volatility because it's a 2 product market and we are only playing basically in 1. Because companies are buying new cars every 3rd or 5th year. And we are a lot out of that market. But you could say that motor weather winter, 2 percentage points, give or take, this quarter. Maybe 0.5 percentage points, 1 or the other way, in that area in total. And then kind of volatility, a couple of percentage points possibly. And then last year, we had a combined HSI 87. And now I'm more on the cost side. We have higher reinsurance profit commissions from previous years getting in, in quarter 1, 2 percentage points, difference with quarter 1 this year. So if we calculate a percent point or 2 or 1 or 2 and add up, you will see that this is my point when I come into the cost ratio for oil, but they are interlinked here. So it's not really about €87,000,000 €95,000,000 So the real underlying difference is not at all close to 8%. So you shouldn't take last year profitability combined with H of 93% and add 8%. That's a very wrong statement because it's not the fact, not at all in that area. Okay. So what I'm talking about now is this one. The seasonality gradually changes towards a less favorable quarter 1 in that and that has also something to do with the cost ratio here. So the net cost ratio is 4 percentage points forward than last year. You shouldn't really worry about that, because that is elements in the reinsurance contracts last year around SEK20 1,000,000 3 percentage points or something like that. And that commissions to brokers gradually increase in quarter 1, because we have more Swedish business on board, commissions are allowed more U. So the underlying reality here is not close to the 4 percentage point you see here. And I do apologize that understanding the counting in an insurance company is slightly difficult. I can't do too much about it. Just try to explain what's really happening here. So when you see a combined ratio 8 percentage points poorer than last year, it's 4% from the cost side and 4% from the claims side. That accumulates to 8%. It looks very bad. It's not at all that bad. But it is a reality that the claims ratio is high in Q1, obviously. It is. And the next question is, how do we improve? So okay, volatility and bad luck or whatever you would like to call it, that's an element of insurance. So what do we do? And the good thing is that there are a lot of actions already taken. So it's not like a big surprise, a 4 quarter, what we have to do. So there is a lot of activities that have been implemented already. In claims handling, I've told the story about the Rolls Royce project before. Yes, we do increase prices. Yes, we are working with the underwriting methodology. Yes, the rate increase problem in Norway continues. That's not a good story, okay? We have I told you once one time before that we lost 10 of the 10 biggest quotations in the Norwegian market. That I think that's 2 years ago or something like that. January 1, 2018, we did not lose 10 out of 10. We had 1st up until April 1st. We have lost 10 out of 10, which gives a story that we do have underwriting discipline. We do accept volume walks away if we think that prices are too low. There are someone else in my opinion that will bleed from those 10 clients, not necessarily all of them, obviously not. We could be wrong and too conservative in some areas. But there is a rate pressure still. They are non prudent in some areas. But at the same time, protect or communicates, volume growth for the full year of 20%. And welcome to the real world. This is what we see in certain segment for certain period of times, but we have many segments in many countries. So our job is to navigate the market. Never ever blame the market because we shouldn't. We should only concentrate on what we can do which is navigate in this kind of market. The whole steel sector in Denmark has had unsustainable rates for 6 years in a row every year. Too low, too low, too low, too low, too low, too low. January 1, 2018, acceptable. 1 player walked away, 1 increased rates. We are back taking on more property volume in that segment as we speak. So we stayed disciplined for 6 years and started to move. We've been there all the time. We have quoted and collected data and quoted and collected data and quoted and collected data because we know that that segment is our work. We will take that segment in future. Quality and claims handling does matter is our market. We will take that market in future. But we have 0 market share after 6 years. Now we start to move in that area. So this is how we should navigate. The question is that whether you kind of trust the underwriting competence in Protector after a poor quarter. In my opinion, you should. There are the same people who are on board who has delivered brilliant profitability for 10 years. So it's like kind of a good football manager, isn't it? So brilliant for 5 years and certainly his continuity and competent people. And I think we are capable of navigating. But it is a fact that a significant part of the Norwegian market have had a very pressure for a number of years and we have to stay disciplined. That could mean reduced volume growth, not volume, but volume growth in future. But we would prefer that kind of volume to be profitable, not only prefer, but it's a requirement in that area. Of course, after a poor quarter, we will use that quarter to learn and took in certain segments. We could walk away from some areas, which is not a new story. We constantly consider where to go. And since margins are under pressure and since risk free rate is historically low, obviously, we have to look more carefully into capital allocation and where to go in the market. And we also have many segments to go. So to optimizing where we put capital in an environment where margins are in a pressure and where risk free interest rate is low is obviously something that we always have done, but it's more important as we speak, which again goes against Wirtgenscomptonmark. High capital allocation, blinded by authorities and low risk free interest rates, it's kind of not really tick, tick, tick, is it? At the same time, we are greedy. It could be a very profitable market like workers' comp in Norway demonstrated to be. So it's fear and greed at the same time. You have heard about the 2, have you? That's what we are valuing at the moment. But I my expectation now is that there will be consequences in that market with either further price hikes or limited volume going forward. That's kind of prudent, I would say. Okay. Can I continue? No? Just one question. Is there are there just a few players who are causing these unsustainable rates in Norway? Or is it the market in general Yes. So the question is whether that rate pressure in the Norwegian market is 1, 2 companies or whether it's a full market. So I would say that the discipline here are maybe improving as we speak. There are some indications that Trigganif strengthen the discipline in that area, protectors as well. We I'm not saying that we are the only nice guy here, not at all. We have been driving these prices down because we could and we have earned a hell of a lot of money on that. So obviously, we are a part of that game. So my expectation is that this is kind of rational organizations. And we see signs that price hikes do enter the market and both Frigg and Iff have clearly communicated that at least towards the brokers, which we talk with every day in that area. So I wouldn't be in that area. But again, seeing from a kind of a company point of view, okay, Are we capable to navigate in this market? Yes, we are. Do we have many segments to go to? Yes, we have. Is it all segments here? No, it's not. So we are talking about personal lines of business here. But at the same time, I think that with rational pricing, we can continue to take on more large clients in that area and earn money. That's still possible. It's not impossible to do that. And in property and casualty area, we win business. It's prudent. And I think we'll be our money on these kind of areas. That's kind of the 40% part of the totality. The rate pressure element is to the 60% part of the totality. Fortunately, not all the way around, but okay. More questions? Okay. So cost ratio, don't worry, we are world leading and that is maintained. I have a second slide a bit later, come back to that here. I think we have been through a lot of comments towards the different countries. We have changed kind of structure on the presentation as you can see. So we have talked about countries on volume, on claims and on cost, not cost really, but the 2 first. And this is more like, do you have any questions to any country now, which we haven't clarified already, so feel free. Okay. So I guess that I have given some comments to the different markets. When it comes to the investment side, 18% of our investment portfolio is linked to equities, which is basically same size as we had a quarter ago. A slightly poorer result than benchmark, but not a lot. And we are not really worried. I think that underlying reality of the companies we are invested in is rather good. We didn't have any shares in Norwegian Airlines. Could have been good to be there, of course, the last couple of weeks, but we did not have any of these ones. We underperformed a couple of quarters in the longer run. We think we know what we are doing. On the bond side, 0.5% return is good with an A plus average portfolio. The comment here is different from what you see what you saw 1, 2, 3, 4, 5, 6, 7 quarters ago. So I basically said the same thing many quarters in a row. Now we changed communication and we're saying we are not expecting further yield reduction or risk reduction going forward. So I think you will not see A plus go to AA minus And you will not see yield falling. You will see yield picking up. And eboi, as you know, is about 30 basis points higher than January 1, a bit higher at the end of March in that area. That will gradually influence on the running yield in our bond portfolio here. So any question to the investment side? Normally, we don't on a quarterly basis. So when we released the full year report, we gave our review on what we think is the 10 biggest holdings on the equity side or was it all, all of them? All. All. Okay. So we gave that nice information about all equity holdings. And there are no major changes as we speak. But obviously, we are looking at the portfolio, but we don't have a strategy to change very quickly. So yes, some changes, but not very significant. Other questions to the investment side? Okay. So that gave us basically a share of result then. You haven't heard about the very strong growth in the quarter and a profit after tax size to basically 0 and the poor claims ratio. Our solvency capital ratio remains very strong. We are one of the most solid companies in the Nordic market. Slightly since 0 profit and increased volume consumes a bit more capital. Compared with history, obviously, our balance structure is very good, where a certain part of our balance sheet is Tier 1 and Tier 2 debt, which supports protectors' return on equity going forward in that area. So you know that we have delivered an average return on equity slightly above 20 the last 14 years. And we have guided on return on equity around 20 going forward, which indicates that return on solvency capital will be lower, but return on equity will stay high in that area. So the balance sheet structure is in favor of us shareholders in that area. So that's kind of a point we shouldn't forget when we are putting our eyes into the future and looking 3, 5 years ahead. So a solid balance sheet. It remains very strong. The structure is good. We cannot take on more and more Tier 1 or Tier 2 because we are fully utilized. And in a stress situation, we have slightly too much Tier 1 and Tier 2. So it will take a couple of years possibly before we're asking for more capital from the T1 and our T2 market. That's what you should expect going forward. So this one new shareholder arriving after the full quarter is a Spanish one, which will enter top 5 list has entered the top 5 list here. So that's kind of and there is a small insider by one of the new managers, which you will meet not later than in our Capital Market Day after the summer. And no major changes outside that. The question is starting with the DNA of the company, this is who we are. Cost and quality leadership should lead to profitable growth. And we are questioning now together the profitable part of the growth story in quarter 1. And my kind of feedback to you is that you shouldn't worry too much. 1st, if you look at cost and quality, let's start there and see that we are very lean on cost. This is a further kind of communication and education on how to look at cost, okay? So the kind of cost you should pinpoint and what we pinpoint every quarter internally in Protector is gross cost ratio, including claims handling expenses, ex commissions. Okay. Why? Because real cost includes claims handling cost, that's for sure. While in our formal book, those are integrated in claims handling sorry, in the claims ratio, right? But the real cost story is about all the costs, not only those who authorities have said that you should show to the market, if we're showing both all the time. And I think we should kind of come back and start showing both at all time in that. So you can follow the really important part of it here. Commissions doesn't really matter. Why? It's neutral seen from a competitive point of view because if we pay 5 or 10 percentage points commissions to a U. K. Broker, which is allowed in U. K, not in Norway or Denmark, that is neutral seen from a competitive point of view, because we pay the same. If not, they will use their license, okay? So if AIG pay $5,000,000 we pay $5,000,000 RSA pay $5,000,000 We pay $5,000,000 So it's seen from a competitive point of view is neutral. And when we calculate prices, we take those money away. So we say take it away. That's rather simple, okay? So it's neutral seen from a competitive point of view and it's neutral seen from a profit point of view. And then you should look at all costs. And what's happening as we speak is that the real cost figure of Protector is going down from around 13 to today's level around 11, and it will end lower than 10. So the competitive position of Protector is improving despite the fact that we invest in new countries, right? That's a good story. That's a very good story. And that's kind of half the story. Obviously constantly working on balancing quality with efficiency and cost ratios. Normally in a world can match protectors on the totality. Yes, it's correct that on the claim sending side, we are not the best guy in town or in an org when it comes to efficiency because lack of critical mass, new countries, we focus first on quality, Kleandex, Rolls Royce and then we take efficiency. So we are about to take that. That's the Falconer project in that area. So cost leadership is strong, remains strong, and the real reality is that we do improve. At the same time, we are quality leader in all markets. Not perfect. We can improve in certain areas, not at all. So when you kind of take your long glasses on and have a look at future, cost and quality leadership is strengthening when we speak. And if you think that Protector is capable to navigating in a lower margin market, you should stay with Protector and not sell your shares today. You should see this as a buying opportunity, obviously. So thanks a lot, and I look forward to questions. And there are some questions from the webcast here. Yes, some of them we already answered. So but one of them is, does Protected plan to keep increase the buyback programs? To increase the buyback program? Okay. Okay. They are buying back a few shares, which is linked to employees picking out their bonuses in shares. So that's the reason why we have bought a few handful of shares every year and we do. So I guess that the question is, will we consider in future to buy back shares if prices is favorable? At present, the answer is probably not because we have stopped paying dividend and saying that we would prefer to stay very solid in order to prepare for 15% to 20% growth in future, basically U. K, but also in the Nordic market. However, obviously, it could be put on the table. And we will discuss with the board that alternative obviously going forward. And when we discuss strategy in June, as we always do with the Board in that area. And we all know about some companies who have been rather successful with kind of having a buyback program on contrary to dividend. But we grow 20% a year and we do expect that growth to continue, so not at present. Yes, another question? If you go 2 months back, so what kind of risk do we have when it comes to the technical result there? So what I said to you 2 months ago is that I think I said we have slightly increased risk on the company level when it comes to profitability since the relative share of the new business is higher than the business we know from before. The problem we are talking about now is linked to Norway, which is not linked to the new business. That's kind of a new element. A bit of a surprise in the Q1. And what we need a couple of more quarters to wait and see is that how much volatility and how much underlying reality. So it's a difficult question in that area. So but I but it's a fair question whether we would expect an increased combined ratio going forward than what we have communicated so far. So no statements given, it will be considered and discussed in that area. And I think that some of the new investors arriving to protect they asked me the question, why do you have such a good combined ratio? Why don't you take a more aggressive growth approach? Okay? Because they have put some figures into their spreadsheets. These are competent people and saying that why do you not accept a combined ratio size 96% and grow more because that will create a stronger earnings per share going forward. Because we all know and they have seen the new investors from Europe or the States arriving in the last few months that investment return profit from investment return after tax the last 10 years is 70% of the total profitability of the company. So why fight too much on the margin for the 30% compared with making sure that we are getting more back on the 70% of the totality. You must stay prudent on the writing side. So I will, as a big shareholder in Protectoid, obviously, have my eye on earning per share in future. And that is more linked to return on investment than return on technical result. Personally, I would accept a lot higher combined ratio than 92% because I will benefit from it as a shareholder in that area. But as long as we haven't given any formal statements, we haven't given any formal statements. But the question is extremely important if you have a long term view on Protecto, extremely important. Why not double the 70% going forward and allow the 30% to be reduced to half. It's a very easy mathematics, very easy in that area. It only becomes a problem if your combined ratio starts moving north of 100 in that area. So capital consumption, profitability per product area, how do we balance Because it's not really one answer, is it? Because Workmans' Comp Denmark and Norway consumes 10 times as much capital as Group Life Norway, 10 times. There are 2 ends of the capital conception scale, okay? 10x capital, 10% of capital. Do we have equal targets on these two products? Obviously not. Obviously not in that area. So good question, no formal comment, but we can increase earnings per share a lot allowing a higher combined ratio than 92%. More questions? I think the time has run out, but I can do one more. And it's a question about the retention rate, why it has declined so much from Okay. The retention rate, yes. So a part of the retention rate decline is related to the Hanover Re solvency based reinsurance contract. Remember, which is around 7 percentage points or something like that. Remember, we are not sending cash to Hanover. We are sending risk and solvency release and pay a price. So parts of the decrease in retention rate is linked to a solvency based reinsurance contract, obviously with some risk transfer. If not, it would have been legal, but not a lot in that area. The other element is that because the property portfolio is increasing, we deliver more to our reinsurer, Munich Re, that in the reinsurance world. So we have started to negotiate potential new contracts with effect from January 1, 2019. A final question and then we have to close down. We are 3 minutes late. I apologize for that. The final question would then be the reasons for the run of losses in change of ownership. Minor losses, don't worry. We have been spot on reserve setting in the history of Protector. So we can't go spot on, on all products every quarter. So I wouldn't worry too much. However, the underlying reality of the claims on the product as such is more challenging than in previous years, and I've kind of commented on that already. So thanks a lot for your patience, and have a great day and a great weekend.