Earnings Call: Q4 2017

Feb 2, 2018

A warm welcome to everybody to the presentation of the 2017 figures of our Protector. I'm in pretty good mood this morning. We have started out with the State of the Union internally, as always, with, I'm not quite sure, 125 people present here some 50 meters away from where we are now. There is a good spirit and good mood in Protector. Always, when we start state of the union kind of speech 4 times a year, we would start with the DNA of the company. This is who we are. We are different. So when we recruit new people in Manchester nowadays, we do. We have 29 employees on board in Manchester, and we think we might double that number during the next 12 months. We always start the first interview with the sentence, we are different. This is the DNA. Everybody has to remember the 12 statements you see on this slide. Then gradually, we are educating ourselves to understand what's the meaning of quality leadership, target number 2. And then finally, we have to live these kind of statements. That's a never ending story, and nobody of us really fully understand the meaning of the 12 statement. But as long as we are targeting, defining, training and working towards these kind of targets, the company will continue to develop. I have pinpointed 2 words here on this slide today. That's on the main target because in particular, cost leadership is a no brainer. We are cost leader in the world. We will continue to have that position for the next 5 to 10 years. I think we will strengthen that position from 2020 onwards, not in 'eighteen or 'nineteen, but in 2020. But that's a no brainer. However, quality leadership is not a no brainer. It's hard work, smart work in order to deliver quality leadership. And as many of you know, we lost quality leadership in 2016 in Denmark. That's not a good story. And then we have to see how fast can we really fix that kind of problem not being the quality leader. So when the spirit in the company was rather strong this morning, that's a lot linked to the figures as such. We always share figures with all employees, but it's absolutely also linked to the quality statement here because we are we think it's rather easy to conquer new markets if you are a cost and quality leader. It will lead to profitable growth. And again, that will lead to a top 3 position in any segment. And the future test of Protector is whether that Nordic model, which has proven to be a good one, can be a success also outside the Nordic market, first in U. K, then later on in other countries. Although Nordic accumulated, so we have a long runway to go in U. K. In order to continue the growth of the company. So let's have a look at the quality leadership statement through the presentation and start at once. Some of you have followed the company for a large number of years, and some of you might remember that we, 4 years ago, stated that 18 months after starting to do business in U. K, We got the 1st client April 1, 2016. And 18 months after that is give or take now, it's around Christmas time, give or take, then we have an ambition to be quality leader. So 4 years ago, we gave that statement, but we also gave the statement that our ambition is to be far ahead on number 2, which we have never ever said in Scandinavia or in the Nordic countries. We have never given that statement because we haven't really had the idea that, that was possible in the Nordic market because the quality and insurance market generally in the Nordic market is pretty good. While in our opinion, 4 years ago, it's not on that level in U. K. So it's actually easier to take the quality leadership position in U. K. Because U. K. Insurance in some areas, even if it's considered the most sophisticated insurance market in the world, don't deliver high quality. That was based on 1,000 pages analysis and a lot of contact with major brokers in the U. K. Market 4 years ago. And here is the results. It's one of the best quality surveys we have seen in Protector ever. And as you can see, the distance to number 2 and 3 and 4 and 5 is huge. This is a very, very significant difference. And the story is even better because these no name companies, guess what, some of the biggest competitors of Protector, they are located here, down here, and at least one of them exactly there. This is a dramatic situation. This is basically the brokers saying, we hate that company, okay? If you score 28, it's basically, you are a mess and I hate you. Not really hate, but hate, okay? So this story is a strong story. It's a very important story. We couldn't know for sure 4 years ago that, that ambition was realistic at all. Big mouth, is it possible to deliver? And today we know that we have delivered. Remember, however, that this will be extremely difficult to repeat next year because when you grow, you go from a project kind of status with a few people on board and a few clients and only doing business with 50, 60, 70 brokers. And gradually, we will go to 29 people, which we are today, 55 people at Christmas time and soon 100 people in U. K. And we will multiply the number of relations we have with the brokers, and that is the next challenge. It's not an easy pick. But if you are consistent in what you're doing, if you educate and train your people, it's possible. I don't think actually that this kind of distance will be repeated the next 2 years. But if we are if we do continue to have the quality leadership, I will be happy. But again, we have an ambition to be far ahead of number 2 also going forward, but not really these 20 points you see here. That figure means that on a scale from 1 to 7, basically everybody scores you around 6, some around 7, very few around 5. So that is kind of not 85 of the 100 people satisfied with what you are doing. It's everybody very, very satisfied with what you are doing, then you score 85. Methodology is equal to a similar kind of surveys done in many market segments in Norway and in the Nordic market. So it's nothing special with the survey. It's standard. It's the way it's done. 85 is equal to surveys. You can read them out in the paper. And high scores are normally around 70. So if you are around 70, that's high. If you are around 75, you are normally on top in your category in that area. So welcome to the quality leader in U. K. So big smiles in Protector this morning, important. The story is even better because I didn't really expect to back on the qualitative top ins in Denmark already in 2017 here. That's a surprise to me. We have a comeback kind of agenda in Denmark, but we are extremely satisfied. This is more expected though that the first survey in Finland leads Protector to the top because the broker association have earlier on pointed to Protector. They have said, you are warmly welcome, and we consider you to be the quality leader in the market. So the broker associations on survey in Finland have given the same result. So when we do ours, that's more like expected, but of course, very good as well. So the part of the DNA, which is related to quality leadership, is possibly the best year ever in Protectedory in 2017. So if you go then to the summary here, the highlights of this year, I am basically happy with everything except one figure, and that's the net combined ratio size 93.1. That is in the higher end after a poor quarter 4. I will get back to that and explain a little bit more. But outside that figure, I'm basically happy with everything. Not really worried at all about minor increases on the cost. You shouldn't worry at all. We do invest, and we are very leader, and this is not a worry. And obviously, the return on investment accumulated 4.8% this year after a very strong quarter 4 is a strong figure in that area and basically higher than most of you expected in quarter 4. It's driven by equities in quarter 4. So the summary, I'm happy. We are growing 21%. We are quality leader in all markets. The cost ratio is, as always, great. The return on investment are, I guess, top 2 in the Nordic Insurance market this year. I think one will maybe beat us this year. But see, in the last 10 years, we continue to deliver strong return on investments, one weak figure. And what you can see here is also, I guess, in line with kind of communication I gave in the last couple of quarters and the last 3, 4, 5 years. There is rate pressure in the market. You should expect the margins to be put on some more pressure, especially in the Norwegian market where we have seen that rate pressure for the last 5 years. And since we are delivering slightly higher than target, we guided on 92% at the beginning of the year. We think that it could be realistic that we're ending up somewhere in between 92 94. Haven't given up 92, percent, but are not giving guidance on a single figure like very often have done, not always in that area. And the reason why it's a slightly higher uncertainty about that kind of figure going forward is because the relative volume in 2 new countries is higher, is U. K. And Finland. And it's too early to say whether that profitability will be equal to the company's profitability. Obviously, we don't have critical mass today in these countries, meaning that the cost ratio is a lot higher than in the more mature markets we have in Norway, Sweden and to a certain extent, Denmark. So that kind of interval is linked to U. K. And Finland. We don't have critical mass at the moment. It will take a bit more time. We will have critical mass next year in U. K. You will see the cost ratio dropping extremely quickly next year in U. K, while it will take longer time in Finland because it's a smaller market, and we are growing with a slower pace in the Finnish market. However, that's not really important because the relative size of Finland is and will be very limited compared to the company here. So I'm happy. I'm not quite sure that you are, but then you will soon give me my feedback the feedback to me. This is kind of also a part of the communication our communication to the market. We have 2 core businesses in Protectoid, insurance investments. Many of our competitors have a statement close to we focus on insurance business. That's the core business of our company. And we have something called investments. In Protector, we have 2 core businesses, which is rather obvious if you are looking at the figure here. 75% of profit after tax the last 10 years is from the investment side. So building volume, building float, building balance sheet is not only equally important with a good combined ratio, It's more important. However, you have to balance. And having discussed this before, I would certainly be more happy as a significant shareholder in the company to see a combined HSI's 94% and 15% to 20% growth relative to go flat like the Nordic Insurance sector, 0 growth, buy something and grow 2.5 percentage points and deliver a combined ratio at a lower stage, like the 2, say, give or take or even lower because that will create a lot more value for the shareholders of Protecto. You can't go close to 100,000,000. That would be not at all good. But if you can manage to stay in that interval and combine that with 20% growth, which we have guided on this year, it will be a tremendous value development of the company. And it's more fun for the people to work in such a company globally. So there are more smiling people, more opportunities. The good people will always be challenged with new opportunities in a fast growing company. You can give them these kind of opportunities. The kind of older management like myself are not kind of blocking for development of the good people in the company in that area. So we deliver challenges and opportunities to young and well educated people in protect oil, and that's easy to do if you grow 20% a year, obviously, in that area. So to grow is fun and it creates value. And investments is core business in Protector. I'll be back slightly to some figures on the investment side here. So the growth is 21, percent coming out from Scandinavia, Sweden, Norway. And of course, gradually, you can see that U. K. Is coming with NOK 210,000,000 growth in 'seventeen versus 'sixteen, the percentage points is extremely high, but it doesn't really matter if you go from 0. That we all understand that's not an issue. But €200,000,000 that's okay. But we haven't kind of finished growing in Scandinavia. Even if we are slightly conservative on growth in Denmark still. You can see that Sweden is moving. You can see that Norway is moving slightly better than expected. And the sooner we'll see Finland in 2018 arrive with something which will influence on the company. And this is our guiding for the year, euros 4,996,000,000 That's a pretty stupid figure, isn't it? Because if we are close to that figure at the end of the year, around Christmas time, I think we might find another client size $4,000,000 so that we can pass €5,000,000,000 Please, you run companies. So give me a company for free then the €4,000,000 annual premium between Christmas and U. S. Eve if I you are friendly people. So please do that in order to help us to grow above €5,000,000,000 So my guess is obviously today that we will pass €5,000,000,000 annual premium, gross written premium in 2017. That's my guess. So I think that the risk of missing the guiding here is slightly north of the guiding, not south. And the reason saying that is because January 1 renewal is a lot better than last year. So the and U. K. Is moving. So two reasons why. But first, January 1 has been better than last year, significant better. So the speed we have entering is higher and that's not related to U. K. Because the January 1 renewal date in U. K. Is, as you know, kind of a normal month. It is April 1, which is the big one in U. K. July 1 is a big one and October 1 is a big one and even December is pretty sizable in the U. K. Market. It's not about January 1 in U. K, it is in the Nordic market in that area. What you see is that the different countries is kind of supporting the volume development of Protecto. We will not give a precise guiding on each country. Why would we? Because there will be volume volatility in certain countries still, but we will be a bit more specific on U. K, where does the growth derive from here. A bit more than €800,000,000 in growth, which is only slightly higher than previous year. And if we continue to grow 20% a year, 10 years from now, how big will we be then? Also, you can do your maths. 20% a year times 10. Let me give you a clue. Look at that figure and that figure, that's 10 years, divide that to that and then you can multiply. It's around 6x the size. So if you grow this we are not growing exactly 20% or slightly higher than 20% a year over the last 10 years. I'm not saying we are growing 20% a year over the next 10 years. I'm saying if we do, we will grow 4x in 10 years, meaning that we will be DKK 16,500,000,000 annual premium 10 years from now. How do you price such a company? Price earnings, 16,000,000? It's a joke, isn't it? So if you believe the growth story, I should never ever, of course, as the Chief Executive comment on the stock price of Protector, but I can, as a shareholder, can't buy because I'm on that list. So obviously, you have to run and buy ahead of a lot if you believe in the growth story. And that we can manage margins acceptably. Okay. A small piece of advice. At the same time, we are diversifying what we're doing. So we are going from a more long tail oriented portfolio to a bit heavier every year focus on not focus, but a short tail type of portfolio. This is not really planned. We do not have a target to go that direction. We will be happy with a lot of long tail volume in our books. It's slightly more risky with long tail, but it creates a bigger balance sheet, it creates more fluff, and it will support a higher future return on investment because the bag of money will be bigger. It's that easy. That's the mantra of Warren Buffett when he do write his annual letter to his shareholders every year in the section where he's talking about his insurance companies, which are, as you know, among the biggest in the world. So it's not really a target to grow 61 to be as high as possible. So we take on more the volume we think will deliver profit to protect oil, including slightly higher long tail risk like workmanscomp in Denmark. We are pretty close now to have workmanskomp reserves in Denmark size 1,000,000,000 And that will yield return on investment every year, obviously, and will support the Danish business profitability going forward. So I would argue that we are reducing risk profile gradually in the last 6, 7, 8 years. But then I will come back and comment on the company risk as such at a later stage in the presentation where I actually do will argue the opposite kind of view then. I'll come back and explain that a bit later. Claims development, that's kind of one of the poor messages today in this presentation is that the claims ratio in quarter 4 is in the higher end, both in Norway first and then in Denmark. It's nothing special. It's no significant changes on the reserve side. It's insurance volatility, but obviously higher than what we expected a quarter ago. I wouldn't say weather. It has been some, but we are not that influenced by weather, so it's not really important in that area. It's Group Life Norway. It's Motor Norway. We have had one big liability claim for own account in Norway in this quarter. There are some claims coming out medium sized in Denmark. This is normal insurance volatility. Get used to it. But poorer in quarter 4 than expected and communicated to you. That's the reason why we are 93.1% and not around 92%. Even if we saw that to spot 92 exactly 3 months ago would be not very difficult, but I expected a bit higher than 92, but nothing of significance, no change of guiding, but a bit disappointing quarter 4 claims situation related to claims volatility in Norway first and then in Denmark. No kind of underlying worries except from the fact that rate has been under pressure in Norway for the last 5, 6 years. And you shouldn't expect equally good combined ratio going forward like we have seen the last 6, 8 years in the Norwegian market. But again, I would say, if you deliver combined ratio between 92% 94% and growing 20%, you are creating a tremendous value. When I breathe, please ask questions. Sometimes I breathe. I can talk a lot rather quickly as you probably have heard. Here, cost ratio, not really comments, slightly higher than expected. Who cares? We are very little on costs. But this is sort of very pretty important. I wouldn't expect any cost improvements on the cost side, even with 20% growth going forward now. We do invest in future growth. And in 2019, you will also see a change of possibly a change of reinsurance structure that will influence the cost ratio, especially than the net cost ratio of the company here. So I would say stable cost ratio, 2018, 2019 and then boom, 2020, it drops quickly with some significance in that area. So the visibility on the cost side in Protector is, I would say, extremely good. Stable, stable, boom, 2020, round up. Even if we possibly in 2020 are spending some money on setting up the next country, which I guess we do in 2020, but even including a new country that will not be cost on a level which will spoil my expectation of a significant cost improvement in 2020. Yes? Just to be specific on expectation of cost level, you're talking about the gross cost ratio? Yes, both. So basically, I'm talking about the gross cost ratio. But also, there will be changes on the reinsurance side is my expectation. And then the retention will increase a lot, and commissions from reinsurers will drop a lot, and that will influence on the net cost ratio. But the important thing with the cost dialogue with yourself is the gross. Don't care about the reinsurance side. There are no free lunch out there in the market. It's the gross cost ratio. So what I'm saying is that 7.5 will potentially be 7.5 percent in 'eighteen and 'nineteen and then drop a lot in 'twenty. There is another gross cost ratio hidden in any insurance company's book, and that is costs related to claims handling, which we have to book as claims costs. So when I'm talking about cost improvement 2020, I'm both talking about the cost that you see on the cost level of 7.5 but also the cost on the claims handling side, which will improve the claims ratio, not the cost ratio. If it's the only company in the Nordic market communicating both figures out to the market, And we are not very good on cost ratio within claims handling but have a target to improve that with 40% the next 2.5 years. And we have started to go that route 12 months ago. I talked a little bit about it. But cost improvements is gross, and we will come back and explain you a bit more the totality of the cost situation. We are world leader on cost. 7.5 percent is apple to apple compared with our competitors in the same segment with the same distribution channel. We will stay stable. The other ones might improve 0.5 next 2 years, so they will get slightly closer. And then we will start moving again in 2020, second half of 'nineteen, something like that. It's a big player, Wigand, or your question? Okay. So what about business units then? Commercial sector, Norway, doing well. This we said a year ago, single digit growth, and now we are in the higher end. So we are happy with that. And we have a challenging hunting season as always, but rather good one. So January 1, 2018, will be good volume wise in that area. And we do have good profitability, but we have done some price increases like other companies, January 1, 2018, because it's necessary, and that will continue to go on. And an example is that there are a couple of products now in the public sector where we are market leader together with KLP, where the rates are unsustainable. They are not high enough in order to make money in future. It's not possible even not for protectoid with a third of the cost level of the main competitors. So they are obviously losing money in the segment. That is a fact and has been for the last 5 years. And we have been profitable, but now that parts of that segment is moving towards a red territory, meaning being unprofitable. So here we have to do one out of 2 things, possibly a combination going forward, increase prices and or increased deductions or get out of some product areas in public sector. So we might leave. Could take the volume down, NOK 100,000,000 give or take, which is totally okay if needed because volume is okay if you earn money on it. If not, it's not. So then you should just walk away. We have a huge segment in Denmark. We have stayed away for the last 6 years, a segment which is perfect match for Protecto. Unprofitable rates stay away next year, unprofitable rates stay away next year, unprofitable rates stay away next year, unprofitable rates stay away next year. Wow, something happened. 2 competitors are withdrawing from the market. The 2 market leaders, guess what? They understand they have lost money, they walk away. Now January 1, 2018, we take on board some money in that segment for the first time in 5 years. So I think that we have the necessary discipline in order to walk away from unprofitable volume. Obviously, to define what's profitable, it's not always very easy. So whether we have the competence to understand or not, that's a continued challenge, obviously, especially when entering new countries. But I think we are pretty good in balancing volume and margin, and it's slightly tougher in the Norwegian market as we speak here. And here's the quality story in Norway. Number 1, both in claims handling and on total. However, not really on a level where we are totally satisfied. We are number 1, but the distance to number 2 is too short. So obviously, we have an agenda for improving that. And the good thing is that we saw that coming. So a year ago, we knew that the quality survey will be slightly lower in 2017January 'eighteen then when this survey is done. So we have seen it and have taken actions in order to improve. And my expectation is that, that figure will go up next year in that area. So good story is that we are number 1. The challenge is that the distance to number 2 has been slightly smaller and shrinking. And let's make it go up park again in that area. Any questions to Norway? Commercial sector? Yes? We had a lot of luck in group life in quarter 2. We had a lot of luck in group life in quarter 3. We had bad luck in quarter 4. It's normal product volatility. Even our portfolio, which is rather sizable, will not have a predictable quarterly claims ratio. It will not. On an annual basis, the group life result is poor but not very poor. And some price increases has been done entering 2018 with an acceptable success already in that area. So normal volatility, underlying profitability, Group Life Norway, not according to where we would like to be. Have we done price increases? Yes. Do you lose market share? Yes. Do you take market share in other segments? Yes, in that area. But there's a constant kind of fight in order to balance volume and profitability. Next question? So the question is what's of a gross cost ratio in claims handling. And that's the kind of a figure that we haven't communicated to the market. But it's basically no secret either. So that figure is depending a little bit about kind of market we are talking about, Norway, Sweden, Denmark, Finland, there are differences and there are product differences. To simplify, slightly above 7. Slightly above 7, while if for instance on a company level, it's running 5.5. However, that is not necessary apple to apple because they have a huge consumer portfolio where claims handling is easier and more efficient relative to volume. So I don't know if figure when we are saying slightly above 7, whether their figure is 6, 6.5, 7 or 7.5, I don't really know. Our internal view on that is that we are slightly behind peers on claims handling gross cost level. The reason why, we have few products with critical mass in the Nordic market, but we have some. So you need critical mass in order to be efficient. We are building that efficiency product by product by product. Obviously, in Finland today, we do not have critical mass to do efficient claims handling. We don't. In some product areas in Denmark, we have not. So that's one reason. And the second reason is that we focus more on taking care of the clients' money and our hours, don't pay too much out. And we are caring more about clean desk and perceived customer quality. So we are above 7% on cost, slightly behind peers, which gives an opportunity to improve, and we will. You should expect that figure to go down to 5, not later than 2020, possibly in 2019. We are on our way. Efficiency increase, claims handling, Sweden, 2017, 16% as an example. The second question was linked to the fact that we have a good distance from ourselves to the market on the company totality while we are kind of only slightly better or equal to number 2 in the claims handling, We are not disappointed on that kind of statement. We are very proud that we are seem to be the quality leader also in claims handling, fighting with very good claims handling companies like if, for instance, who normally are very good in the claim handling area. So I would say that this is a big achievement, possibly bigger than in this area. We don't have particular mass in some product areas, but we are called delivery anyway. That's not bad, is it? And some of the competitors in Scandinavia, they have been very good for the last 15 years in claims sanding. So the level of quality in claims sanding in Scandinavia is probably the best in the world. And to take a lead position in that market, that's something. So we are very happy with being around or slightly better than some of the good competitors in that area, like IFF. So what do we do with Motor profitability? Because I said that the claim stage in quarter 4 on Motor side was high. However, on the full year, it's more like okay. So we do our money in the Motor segment in 2017 in Norway. It's not really an issue. However, claims inflation is slightly higher than normal inflation in the motor claims handling area because of more technical kind of equipment in the car. You have heard the story from the other companies. And we have lifted prices in the motor sector equally. So basically, all motor clients got a price hike January 1, 2018, based on the fact that real life claims average increase is higher than normal inflation in the society as such. That's basically accepted by the clients. So the price increase penetration in motor business is accepted in the market. And at the same time, we do like we always do. If we do have some big clients with a lot of claims, we increase prices every year. That's kind of a never ending story. So I'm not worried about motor profitability. I'm not worried about property profitability in Norway in general, not liability, but a bit more on group life. Health is in Protector, extremely poor with a claims ratio far, far north of 100. So we are more increasing prices with 50%. Each and every client in these days, which is okay. And that product is normally separated from the other ones. If you lose it, you earn money. If you are getting through with the price increase, you earn money. The only stupid thing is to stay cool because then you continue to lose money in that area. And the product is normally not bundled into a package, which is good. So I think that more than more companies than Protected is losing money in that area. Only one, I guess, is on the healthy side in that market. I won't name that one. So there are, as always, good areas of all product profitability, poor areas of product profitability. Sometimes you can act on a product basis. Sometimes you will have a customer view. If your client have 5 products, then you take a customer view on the profitability, not a product view. I wouldn't worry about margins in Norway going forward. They will be acceptable, but not as good as in history. Change of ownership. Back in black after a very poor year 2016, historical high KPIs, the cultural lead entity in Protecto 2017, which has a tremendous status internally in Protecto, very strong corporate results, extremely strong in quarter 4, so but a challenging market. And as you know, real estate prices are probably going down slightly going forward. That will put pressure on the profitability going forward. So we need to take actions. We need to get new technology out to the market. If not, we have to exit some clients, significant sized clients, which again is not a worry in that area. But the relative size of the niche product we see here is going towards 10% of the total volume. So the importance of the area is relatively shrinking. A big product in history but a more limited area going forward. But a very strong delivery from the people in this area internally in Protected. Quality surveys, sky high in the high 80s 90s. You have never ever seen such a score before. Sweden, the story continues. Very strong growth, good profitability, leading on efficiency development in claims handling. We'll continue to grow at the moment. This morning, we nominated employees of the area in Protektoll. They will have a treat to Svalbard. The island, 78 degrees north. If you haven't been there, go there. It's a beautiful place to go. Spectacular to be there around March 8. And that special date is not only the women's date, but it's the day for the sun returns to Longyearbyen. That's the day you should be there. We will be there at that date. So for the first time in months, they can see the sun. It's a party time up there. And the manager of the year this year again is the country manager in Sweden. So Jens and his wife will be invited to Svalbard together with other with 29 other internal winners and their spouses to do beer hunting and possibly not allowed, but at least go to Bergensburg, hope to see the Northern Lights and dig into an ice cave or go into ice cave and see an underwater ice cave, which is a beautiful view there. Sweden is doing very well. Any questions to Sweden? I would say, When I met you a year ago, I said that this figure here will be around 0, okay? What I didn't catch totally, I apologize, is that we had some very good return on investment last year in Denmark because some bonds spread it down very much and gave a return on investment, which was in the higher end. So we are accurate that I was pretty good when I was guiding a SEK1 profit in Denmark last year, but I was missing. But that's more related to return on investment actually than that the combined ratio is slightly above SEK100 because with the claims ratio, Workbench comp sized 100, exclusive of claims handling cost, it's pretty difficult to get below 100 in total. It's not impossible, but that's half the volume is pretty difficult. So I'm not totally satisfied with the speed of the turnaround. And I had expected slightly better combined ratio than what you see here, €102,000,000 gross and 109 net. So there are obviously, as always when you have problems, slightly more surprises than you anticipated, and the cleanup takes a bit time. But I would say we are at least halfway in the turnaround process. We are on top of quality again, and the new management looks professional and competent and is guided by the country manager in Sweden, not by myself because he is better than me, coaching Denmark to the right direction. And he's more qualified than I am to support Denmark to improve in that area. So I do believe in Denmark still. NOK 30,000,000 is nothing. The reserves is growing close to $1,000,000,000 now. It is, at the end of last year, around, we will get $900,000,000 I guess. You don't have to look. It's $900,000,000 So the reserves is getting closer to $1,000,000,000 So today, it's around $1,000,000,000 give or take. It is because the premium has arrived from January 1. And you are getting kind of a mature balance sheet in Denmark, and my expectation is that Denmark will continue to improve. However, there are still profitability challenges in some product areas, especially in the workers' comp area. So we might continue to increase prices and or leave more clients. The number of clients we have in workers' comp today is lower than last year. The volume on freemium is higher. Why? Because average rate has increased and increased prices. So we have less risk to a better premium. Everything else equal, we'll continue to improve. So the balance in Denmark is not to walk away from a lot of float and an unsecure profitability situation. Do not walk away too early to go the safe route. You have to balance that. It's not a big issue. It's not a big volume. It's not a big reserve situation. So I wouldn't worry too much about Denmark, but it's fun to talk about Denmark because Norwegians never earn money on Denmark. I know that story, but we are different. So we will, even if you have warned me I let a lot of times, that we have not. And I'm older than you, so I know better, you have said. And you are older than me. That's right. But okay. But in the insurance business, I'm better than you. So we still believe the story in Denmark. Do you? So no other treaty questions coming. Well, Peter, do you have a difficult question for me now? Yes. And Telia has always also lost NOK1 1,000,000,000 or 3 in Denmark. Yes. And some kind of retail change from Norway, I've tried because the CFO of that company, kind of a friend of mine from school. So I've talked to him as well. So okay, let's wait and see. We will be back in black. Say again? You said you're different. We are different. We are. We are growing 20% a year, creating tremendous value for shareholders so far. Same management, we continue to deliver that. Trust me. This is a surprise on the positive side. I didn't expect that to be so good already. It's not brilliant. That figure is rather low. You can see that. So it's not at all brilliant in our standards. It's slightly behind. But, Okay, you're number 1. That's at least good then. Finland, it's it will be some volume in 2018, and it is onboard already, January 1. Good days, a lot of new sales, especially in the public sector in Finland. Loved by the brokers in Finland. Good quality. We'll soon be number 1 in claims handling, already number 1 in totality. Poor guys, none here. U. K, ahead of schedule. Nothing new about the Brentford tower situation, actually. The total accumulated reserves are equal. The claims handling is challenging as always. But yes, we have a dispute on the reinsurance side with the property reinsurer. That will probably go to arbitration. No formal letter has been sent so far. Risk management and underwriting, credibility has been rebuilt. All tower blocks in our portfolio has been upgraded. There are no tower blocks in our portfolio with an equal cladding to Grenfell Tower now. That's done extremely quickly, obviously supported by nervous owners and authorities in U. K. In that area. Prices is going up in some sectors, but price pressure in other sectors. So that's a mix in that area. Price increases, more aggressive rates. At the same time, it's not unusual to see that. No scandals so far in the communication side here. The dispute, nothing new compared with what we said last time. We have a downside, don't expect that to arrive. And there will be no solution before at earliest at the end of quarter 3 this year. The great quality survey in U. K. And also a rather surprising number one position in the claims handling area. And the reason why I'm a bit surprised here is because we have hardly started to in source claims handling. So it's meaning as a 3rd party doing most of the work. We managed as a third party, but obviously, we can do better in the major product areas in future here. So this is a bit of a surprise. And some of the big competitors, they have done here, one of them there, as I said a bit earlier. This is the way it's done. You could argue that 51 response is not a very high figure. No, it's not. But give me a break. We are doing business with 109 brokers. Those are the people we invite to respond to. We don't do business with more than 109. We can't ask the other ones because then they can't have an opinion on the quality of that area. So tremendously big market, this market, possibly equally big as the public market Scandinavia with 100 of 1000 of flats either managed or owned by the public sector. This is a beautiful area for protector because it's a large number of claims where frequency is an issue, meaning that the cost leader will take the market in future. It's impossible to fight protectors in such a segment. So at the end of the day, our market share here will be 50 at the end of the day unless market is irrational, which it has been for the last 5 years in Denmark, okay? But suppose a rational market, we will take 50% market share in that market during the next 5 years. My expectation, big market. This is a real big one. It will take time. So what I'm saying is that we are ahead of schedule. Quality is great. Cost is obviously not great at the moment, but volume is higher than I communicated last year. Investment side is core. Float is growing. After in sourcing quarter 4 to 'fourteen, we do well. Our companies are decent price. They continue to grow, and earnings per share in the underlying portfolio is strong. So we expect further return on equity to arrive in future even if we haven't been equally good as offshore stock exchange in 2017. We don't worry about that. And the bond portfolio should expect a lot of return on investment in the bond area here. Return on investment, 4.8%, 12% from equities after a very strong quarter 4. Delivered a lot more than the market in quarter 4 but behind in quarter 1, 2 and 3 in that area. There is one element I should explain here because the retention rate here is 77. Remember that we have kind of signed a solvency based reinsurance contract that has no cash implication. So the float is better than what you see here. So we are not throwing cash away. We keep the cash on the Solvency agreement. That's kind of 5 percentage points on this figure. So you should say 82 is equal to last year. So retention rate is basically not going down. And what you should expect is that retention rate will go up in 'nineteen and 'twenty. We expect a change of reinsurance structure. We will be back to you in quarter 3 about that kind of expectation in the Capital Market Day. And retention rate is, in my opinion, expected to go up in 2019 and 2020 and gradually move towards 95%. So if you should update your spreadsheet, I would recommend you to put a retention rate sized more like 85% in 20 19 and at least above 90, possibly up to 95 in 2020 here. So don't worry, we are not giving float away, and we are not giving profitability away here. Profit for the full year up 17.2%. And the balance sheet has never ever been stronger, 200,000,000 based on the standard formula, a lot stronger than ENSEDIA. Build up, shareholders, risk, I missed on Denmark, slightly and U. K, Grenfell Tower in 2017. This is my expectation now. And my guiding is slightly increased risk since U. K. And Finland portfolio is growing. We can't say for sure that we will be profitable in U. K. In 2018. It's too early to say. And now the size of U. K. And Finland is growing towards 15%. So it will be kind of visible in the books of the Protector in 2018. So slightly increased risk. If you're afraid of it, walk away. If you believe in it, there is a tremendous growth story coming, then you should buy. Long term guiding, not changed. And a modest summary is that we are happy with everything. Expect the net combined ratio, which is in the higher F. And then I have some questions. We are running a bit late. I apologize for that. What is the mix between long and short tail in the U. K? And what is the trend development in this recent trend? And the expectation going forward, what will be the key product growth areas in the U. K? So product mix question about U. K. And long versus short tail. We will be slightly heavier on short tail in U. K. Compared with company. And it's too early to say what kind of product mix we will end up with because we are testing out all products in the market. But more short tail because I guess we will have more motor business and property business compared with liability business in the 1st 3 to 5 years. So 100 and 61 percent short tail business, U. K. There was a 4 point reserve release in Q4. What product area generated this? And is there a further release assumed in the 2018 guidance? So it was a 4%, what I would call a minor reserve release in quarter 4, basically linked to Workman's Comp Norway, but also a mix of other products in that area. No, we don't expect any further releases to arrive in the coming couple of years. And what is the reinsurance situation in 2018, price and committed volume in the U. K? The reinsurance situation is acceptable in the liability area, good in all other areas. So we are satisfied with the total reinsurance package, U. K. 2018, and we are not at all worried about 2019, neither in U. K. Nor in the Nordic market reinsurance wise. So pretty good view and pretty good position. We are an attractive partner towards the reinsurance world. Any more questions from the audience? Yes, Thomas? So what kind of retention rate in 2018? Basically, in slightly higher than what you see in 'seventeen, 1, 2 percentage points, something like that. So thanks for the question. I comment on 'nineteen and 'twenty, not on 'eighteen. So that's good. And then there is another question here. On the net combined ratio, you said something about in the higher end. Did you mean in the higher end of latitude to the I don't think I said anything about higher end in 2018, did I? So we have guided on 92% to 94%. And at the moment, I'm not sure whether we are on the lower side or higher side in that area. So take a peek. Then I heard wrong. Apologies. I think you did, yes. Do you have any risk installment premium when it comes to insurance program? As you can see, again, normally give some kind of figure where they have a big fire or something, which they have some Not really. So we're talking about reinstatement premiums, which means, for those of you who don't know the phrase, that after a Grenfell Tower, you are basically auto reinsurance for that type of risk. And then immediately, there is a reinstatement. There is a new contract up and running in the same second basically. And then you typically pay one additional year premium or something like that. Normally, that kind of figures are rather limited. So you shouldn't worry. They are kind of extremely limited interest. So even in the Grenfell Tower situation, the reinstatement premiums were not significant. They had some size. You pay once more, but it's not a big issue. So it's other elements improving not improving influencing more on the volatility or the profitability of the company than that one. But there is if you have a big hit, you pay more at once. That's right. Reinstatement premium call. You pay twice. It's kind of deductible. It could be seen as an increased deductible, but call it something different. A bit technical, not very big. Yes? Okay. So my summary after the summary is that have a look at this one. And I think 5 to 10 years ahead, go home and do what you should do then. Thanks a lot for your attention. Thank you.