Okay. A warm welcome to everybody to the presentation of the 2017 figures of Protector. I'm in pretty good mood this morning. We have started out with 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 four times a year, we would start with the DNA of the company. This is who we are. We are different. 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 the slide. 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. Nobody of us really fully understand-
the meaning of the 12 statement. As long as we are targeting, defining, and training, and working towards these kind of targets, the company will continue to develop. I have pinpointed two words here on this slide today. That's on the main target. In Protector, cost leadership is a no-brainer. We are cost leader in the world. We will continue to have that position for the next five to 10 years. I think we will strengthen that position from 2020 and onwards, not in 2018 or 2019, 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. As many of you know, we lost quality leadership in 2016 in Denmark. That's not a good story.
Then we have to see how fast can we really fix that kind of problem, not being the quality leader. When the spirit in the company was rather strong this morning, that is a lot linked to the figures as such. We always share figures with all employees. It is absolutely also linked to the quality statement here. We think it is rather easy to conquer new markets if you are cost and quality leader. It will lead to profitable growth. Again, that will lead to a top three position in any segment. 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. On the Nordic, accumulated, we have a long runway to go in U.K. in order to continue the growth of the company. Let us 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, four years ago, stated that 18 months after starting to do business in U.K., we got the first client April 1st, 2016, and 18 months after that is give or take now, it is around Christmas time.
Give or take. We have an ambition to be quality leader. Four years ago, we gave that statement, but we also gave the statement that our ambition is to be far ahead of number 2, which we have never, ever said in Scandinavia or in the Nordic countries. We have never given that statement because we have not really had an idea that that was possible in the Nordic market because the quality and assurance market generally in the Nordic market is pretty good. While in our opinion, four years ago, it is not on that level in U.K. It is actually easier to take the quality leadership position in U.K. because U.K. insurance in some areas, even if it is considered the most sophisticated insurance market in the world, do not deliver high quality.
That was based on 1,000 pages analysis and a lot of contact with major brokers in the U.K. market four years ago. Here is the results. It is one of the best quality surveys we have seen in Protector ever. As you can see, the distance to number 2 and 3 and 4 and 5 is huge. This is a very, very significant difference. 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 broker saying, "We hate that company." Okay? If you score 28, it is basically, you are a mess and I hate you. Not really hate, but hate. Okay? This story is a strong story. It is a very important story.
We couldn't know for sure four years ago that that ambition was realistic at all. Big mouth, it's impossible to deliver. 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, only doing business with 50, 60, 70 brokers. Gradually, we will go to 29 people, which we are today, 55 people at Christmas time, and soon 100 people in U.K. We will multiply the number of relations we have with the brokers, and that is the next challenge. It's not an easy pick. 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 two years. If we do continue to have the quality leadership, I will be happy. Again, we have an ambition to be far ahead of number two, also going forward. Not really these 20 points you see here. That figure means that on a scale from one to seven, basically everybody scores you around six. Some around seven, very few around five. That is not 85 out of 100 people satisfied with what you're doing. It's everybody very satisfied with what you're doing, then you score 85. Methodology is equal to similar kind of surveys done in many market segments in Norway and in the Nordic market. 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 about in the paper. High scores are normally around 70. If you are around 70, that's high. If you are around 75, you are normally on top in your category in that area. Welcome to the quality leader in U.K. Big smiles in Protector this morning. Important. The story is even better, because I didn't really expect to back on the quality top in Denmark already in 2017. Here, that's a surprise to me. We have a comeback agenda in Denmark. 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. We consider you to be the quality leader in the market." The broker association's own survey in Finland have given the same result. When we do ours, that's more expected, but of course, very good as well. The part of the DNA which is related to quality leadership is possibly the best year ever in Protector in 2017. If you go then to the summary here, the highlights of this year. I am basically happy with everything except 1 figure. That's the net combined ratio size 93.1. That is in the higher end after a poor quarter four. I will be back to that and explain a little bit more. 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. We are a world leader, this is not a worry. Obviously, the return on investment accumulated 4.8% this year. After a very strong Q4, it is a strong figure in that area, and basically higher than most of you expected in Q4. It is driven by equities in Q4. The summary, I am happy. We are growing 21%. We are quality leader in all markets. The cost ratio is, as always, great. The return on investment is, I guess, top two in the Nordic insurance market this year. I think one will maybe beat us this year. See in the last 10 years, we continue to deliver strong return on investment. One weak figure.
What you can see here is also, I guess, in line with communication I gave in the last couple of quarters and the last three, four, five years. There is rate pressure in the market. You should expect the margins to be put under some more pressure, especially in the Norwegian market, where we have seen that rate pressure for the last five years. 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 are ending up somewhere in between 92 and 94. Have not given up 92, but are not giving guidance on a single figure like we have very often done, not always, in that area.
The reason why it is a slightly higher uncertainty about that kind of figure going forward is because the relative volume in two new countries is higher, is U.K. and Finland. It is too early to say whether that profitability will be equal to the company's profitability. Obviously, we do not 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. That kind of interval is linked to U.K. and Finland. We do not 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 a longer time in Finland because it is a smaller market and we are growing with a slower pace in the Finnish market. However, that is not really important because the relative size of Finland is, and will be very limited compared to the company here. I am happy. I am not quite sure whether you are, but then you will still give my feedback, the feedback to me. This is kind of also a part of our communication to the market. We have two core businesses in Protector: insurance, investments. Many of our competitors have a statement close to, we focus on insurance business. That is the core business of our company. We have something called investments. In Protector, we have two 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. 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. We haven't discussed this before. I would certainly be more happy as a significant shareholder in the company to see a combined ratio size 94 and 15%-20% growth relative to go flat like the Nordic insurance sector, zero growth, buy something and grow 2.5 percentage points and deliver a combined ratio at a lower stage 92, say, give or take, or even lower, because that will create a lot more value for the shareholders of Protector. You can't go close to 100. That would be not at all good.
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. It's more fun for the people to working in such a company, growing. 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 blocking for development of the good people in the company in that area. We deliver challenges and opportunities to young and well-educated people in Protector. That's easy to do if you grow 20% a year, obviously, in that area. To grow is fun, and it creates value. Investments is core business in Protector.
I'll be back slightly to some figures on the investment side here. The growth is 21 coming out from Scandinavia, Sweden, Norway, and of course, gradually now you can see that U.K. is coming. We are NOK 210 million growth in 2017 versus 2016. The percentage points is extremely high, but doesn't really matter if you go from zero. We all understand that's not an issue. NOK 200 million, that's okay. We haven't 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. Sooner, we see Finland in 2018 arrive with something which will influence on the company. This is our guiding for the year. NOK 4,996,000,000. That's a pretty stupid figure, isn't it?
If you are close to that figure at the end of the year around Christmas time, I think we might find another client size NOK 4 million so that we can pass NOK 5 billion. Please, you run companies. Give me a company for free then, a NOK 4 million annual premium between Christmas and New Year's Eve. You are friendly people, please do that in order to help us to grow above five. My guess is obviously today that we will pass NOK 5 billion annual premium or gross written premium in 2017. That's my guess. I think that the risk of missing the guiding here is slightly north of the guiding, not south. The reason saying that is because January 1st renewal is a lot better than last year, and U.K. is moving. Two reasons why.
First, January 1st has been significantly better than last year. The speed we have entering is higher, and that's not related to U.K. because the January 1st renewal date in U.K. is, as you know, kind of a normal month. It is April 1st, which is the big one in U.K. July 1st is a big one, and October 1st is a big one. Even December is pretty sizable in the U.K. market. It's not about January 1st 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 Protector. We will not give a precise guiding on each country. Why would we? Because there will be volume volatility in certain countries still.
We will be a bit more specific on U.K., where does the growth derive from here. A bit more than NOK 800 million in growth, which is only slightly higher than previous year. 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. No idea. No. Let me give you a clue. Look at that figure and that figure, that's 10 years. Divide that with that, and then you can multiply. It's around 6 times the size. We are not growing exactly 20. We are slightly higher than 20% a year over the last 10 years. I'm not saying we are growing 20% a year in the next 10 years. I'm saying if we do, adding up Protector, we will grow 4 times in 10 years.
Meaning that we will be NOK 16.5 billion annual premium 10 years from now. How do you price such a company? Price-earnings 16? It's a joke, isn't it? 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 I? Because I'm on that list. Obviously, you have to run and buy a hell 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. We are going from a more long tail oriented portfolio to a bit heavier every year. 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 would 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 float, 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. It's not really a target to grow 61 to be as high as possible. We take on board the volume we think will deliver profit to Protector, including slightly higher long tail risk, like workers' comp in Denmark.
We are pretty close now to have workers' comp reserves in Denmark sized DKK 1 billion. That will yield return on investment every year, obviously, and will support the Danish business profitability going forward. I will argue that we are reducing risk profile gradually the last six, seven, eight years. I will come back and comment on the company risk as such at a later stage in the presentation, where I actually will argue the opposite kind of view then. I 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 four 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, 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. Poorer in quarter four 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 three months ago would be not very difficult, but I expected a bit higher than 92%, but nothing of significance, no change of guiding. A bit disappointing quarter four claims situation related to claims volatility in Norway first, then in Denmark.
No kind of underlying worries except from the fact that rate has been under pressure in Norway for the last five, six years. You shouldn't expect equally good combined ratio going forward like we have seen the last six, eight years in the Norwegian market. Again, I would say if you deliver combined ratio between 92% and 94% and are growing 20%, you are creating a tremendous value. When I breathe, please ask questions. Sometimes I breathe. Even if 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 world leader on cost. This is sort of 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. In 2019, you will also see possibly a change of reinsurance structure that will influence the cost ratio, especially than the net cost ratio of the company here. I would say stable cost ratio 2018, 2019, then boom, 2020, it drops quickly with some significance in that area. The visibility on the cost side in Protector is, I would say, extremely good. Stable, stable. Boom, 2020, gone down. Even if we possibly in 2020 are spending some money on setting up the next country, which I guess we do in 2020. 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. Yep?
Just to be specific on that point. When you were then talking about the expectation of cost level, you're talking about the gross cost ratio?
Yes, both. Basically, I'm talking about the gross cost ratio. Also, there will be changes on the reinsurance side is my expectation. Then the retention will increase a lot, and commissions from reinsurers will drop a lot, and that will influence on the net cost ratio. The important thing with the cost dialog 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. What I'm saying is that 7.5 will potentially be 7.5 in 2018 and 2019, and then drop a lot in 2020. 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.
When I'm talking about cost improvement 2020, I'm both talking about the cost that you see on the cost level as 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. Have a target to improve that with 40% the next two and a half years. We have started to go that route 12 months ago. I talked a little bit about it. Cost improvements is gross. We will come back and explain you a bit more the totality of the cost situation. We are world leader on cost. 7.5 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 two years, so they will get slightly closer, and then we will start moving again in 2020. Second half of 2019, something like that. Is it clear, Vegard, or your question?
Big clear.
Okay. What about the business units then? Commercial sector, Norway, doing well. We said a year ago, single-digit growth, now we are in the high realm, we are happy with that. We have a challenging hunting season as always, but rather good one. January 1, 2018 will be good volume wise in that area. We do have good profitability, but we have done some prices increases like other companies January 1, 2018 because it's necessary, that will continue to go on. 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 Protector. With a third of the cost level of the main competitor.
They are obviously losing money in the segment. That is a fact and has been for the last five years. We have been profitable, but know that parts of that segment is moving towards a red territory, meaning being unprofitable. Here we have to do one of the two things, possibly a combination going forward. Increase prices and/or increase deductions, or get out of some product areas in public sector. We might leave. Could take the volume down, NOK 100 million, give or take, which is totally okay, if needed, because volume is okay, if you earn money on it. If not, it's not. You should just walk away. We have a huge segment in Denmark. We have stayed away for the last six years. A segment which is perfect match for Protector. 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. Two competitors are withdrawing from the market. The two market leaders, guess what? They understand they have lost money. They walk away. Now January 1, 2018, we take on board someone in that segment for the first time in five years. I think that we have the necessary discipline in order to walk away from unprofitable volume. Obviously, to define what's profitable is not always very easy. Whether we have the competence to understand or not, that's a continued challenge, obviously, especially when entering new countries. I think we are pretty good in balancing volume and margin. It's slightly tougher in the Norwegian market as we speak here. Here's the quality story in Norway. Number one, 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. Obviously we have an agenda for improving that. The good thing is that we saw that coming. A year ago, we knew that the quality survey will be slightly lower in 2017/January 2018 then, when the survey is done. 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. The good story is that we are number 1. The challenge is that the distance to number 2 has been slightly smaller and shrinking. Let's make it go apart again in that area. Any questions to Norway? Commercial sector? Yes.
The Group Life you talked about earlier.
Yep.
What type of reason is why you lost the money or have some ratio combined ratio of that?
We had a lot of luck in Group Life in quarter two. We had a lot of luck in Group Life in quarter three. We had bad luck in quarter four. 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. Some price increases has been done entering 2018 with an acceptable success already in that area. Normal volatility, underlying profitability, Group Life Norway, not according to where we would like to be. Have we done price increases? Yes. Do we lose market share? Yes. Do we take market share in other segments? Yes, in that area. There's a constant kind of fight in order to balance volume and profitability. Next question.
A couple of question on claims handling. First, to link it to the last question on costs. How much of your gross claims ratio is costs?
Secondly, compared to your competitors in Norway, you don't have that much lead on claims handling.
No.
What is, from your perspective, the main issue?
The question is, what's our gross cost ratio in claims handling? That's the kind of figure that we haven't communicated to the market. It's basically not secret either. That figure is, depending a little bit about the 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, is 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. I don't know if figure, when we are saying slightly above 7, whether their figure is 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. 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. That's one reason. The second reason is that we focus more on taking care of the client's money and our hours. Don't pay too much out. We are caring more about clean desk and perceived customer quality. 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 only slightly better or equal to number 2 in claims handling, we are not disappointed on that kind of statement. We are very proud that we are seen 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 claims handling area. I would say that this is a big achievement, possibly bigger than in this area. We don't have critical mass in some product areas, but we are called the leader anyway. That's not bad, is it?
Some of the competitors in Scandinavia, they have been very good for the last 15 years in claims handling. The level of quality in claims handling in Scandinavia is probably the best in the world. To take a lead position in that market, that's something. We are very happy with being around or slightly better than some of the good competitors in that area, like If.
On the Motor side, you said in Norway it was some kind of high combined ratio. What have you done on pricing in what this year and pricing inflation or claims inflation on Motor since in last year?
Yeah.
The forex exchange has been quite against us.
What do we do with Motor profitability? I said that the claims ratio in quarter four on Motor side was high. However, on the full year, it's more okay. We do earn 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. We have lifted prices in the Motor sector equally. Basically, all Motor clients got a price hike January 1st, 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. The price increase penetration in Motor business is accepted in the market.
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. 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 north of 100. We are more increasing prices with 50% each and every client in these days, which is okay. 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.
The product is normally not bundled into a package, which is good. I think that more companies than Protector is losing money in that area. Only one, I guess, is on the healthy side in that market. I won't name that one. 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. Historically high KPIs. The cultural lead entity in Protector 2017, which has a tremendous status internally in Protector. Very strong corporate results.
Extremely strong in quarter four. A challenging market. As you know, real estate prices are probably going down slightly going forward. That will put pressure on the profitability going forward. We need to take actions. We need to get new technology out to the market. If not, we have to exit some clients, significant size clients. Which, again, is not a worry in that area. The relative size of the niche product you see here is going towards 10% of the total volume. The importance of the area is relatively shrinking. A big product in history, but a more limited area going forward. A very strong delivery from the people in this area internally in Protector. Quality surveys sky high in the high 80s and 90s. We have never, ever seen such a score before. Sweden, the story continues. Very strong growth. Good profitability.
Leading on efficiency development and claims handling. We continue to roll at the moment. This morning, we nominated employees of the year in Protector. They will have a trip 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 the 8th. That special date is not only the women's date, but this is the date when the sun returns to Longyearbyen. That's the day you should be there, and we will be there at that date. For the first time in months, they can see the sun. It's a party time up there. The manager of the year this year again is the country manager in Sweden.
He and his wife will be invited to Svalbard together with 29 other internal winners and their spouses, to do bear hunting and possibly not allowed. At least go to Barentsburg, hopefully see the northern lights and do dig into an ice cave or go into an ice cave and see an underworld 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 zero. 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 down very much and gave a return on investment, which was in the higher end.
We are actually That I was pretty good when I was guiding DKK 1 profit in Denmark last year. I was missing. That's more related to return on investment, actually, than that the combined ratio is slightly above 100. Because with the claims ratio workers' comp size 100, exclusive of claims handling cost, it's pretty difficult to get below 100 in total. It is not impossible, but that's half the volume. It's pretty difficult. 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 gross and 109 net. There are obviously, as always when you have problems, slightly more surprises than you anticipated, and the cleanup takes a bit time. I would say we are at least halfway in the turnaround process.
We are on top of quality again. 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. He's more qualified than I am to support Denmark to improve in that area. I do believe in Denmark still. NOK 30 million is nothing. The reserves is growing close to NOK 1 billion now. It is at the end of last year around Vibeke NOK 900 million, I guess. You don't have to look. It's NOK 900. The reserves is getting closer to NOK 1 billion. Today it's around NOK 1 billion, give or take. It is because the premium has arrived from January the 1st. You are getting a mature balance sheet in Denmark. 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. 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 premium is higher. Why? Because the average rate has increased. I've increased prices. We have less risk to a better premium. Everything else equal, we'll continue to improve. 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. I wouldn't worry too much about Denmark. It's fun to talk about Denmark because Norwegians never earn money in Denmark.
I know that story, but we are different. We will. Even if you have warned me, Eilert, a lot of times that we will not. I'm older than you, I know better, you have said. Then you are older than me. That's right. Okay. In the insurance business, I'm better than you. We still believe the story in Denmark. Do you? Now the tricky question coming. Ole Petter, do you have a difficult question for me now? Smiling. I've covered Denmark for some time. In Denmark, they have lost billions and billions in Denmark. Yeah. I'm kind of skeptical of that country. Yeah. I don't know what it is. Yeah. I hope you're right. Yeah. Telia has always also lost NOK 1 billion or NOK 3 billion in Denmark. In Denmark, yeah. Yes. Some kind of retail chains from Norway have tried.
The CFO of that company was kind of a friend of mine from school, I talked to him as well. Okay, let's wait and see. We will be back in black. Good that you are different. Say again. Good that you are 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. It's not at all brilliant. In our standards, it's slightly behind, okay. We are number one. That's at least good then. Finland. It will be some volume in 2018. It is on board already, January 1st. Good date.
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 one in claims handling. Already number one on totality. Poor guys down here. U.K., ahead of schedule. Nothing new about the Grenfell Tower situation, actually. The total accumulated reserves are equal. The claims handling is challenging as always. 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 uprated. 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, price pressure in other sectors. 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 it on side. Don't expect that to arrive. There will be no solution before at earliest at the end of quarter three this year. The great quality survey in U.K., and also a rather surprising number one position in the claims handling area. The reason why I'm a bit surprised here is because we have hardly started to in-source claims handling. It's meaning it's a third party doing most of the work.
We manage the third party, obviously we can do better in the major product areas in future here. This is a bit of a surprise. Some of the big competitors, they are down here. One of them there, as I said a bit earlier. This is the way it's done. You could argue that 51 responses is not a very high figure. No, it's not. 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 product area. It's a tremendously big market, this market. Possibly equally big as the public market Scandinavia. With it hundreds of thousands 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 Protector in such a segment. 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 five years in Denmark. Okay? Suppose a rational market, we will take 50% market share in that market during the next five years. My expectation. Big market. This is a really big one. It will take time. What I'm saying is that we are ahead of schedule, quality is great, cost is obviously not great at the moment, volume is higher than I communicated last year. Investment side, is core. Float is growing.
After insourcing Q4 to 14, we do well. Our companies are decent price. They continue to grow, and earnings per share in the underlying portfolio is strong. We expect further return on equity to arrive in future, even if we haven't been equally good as Oslo Stock Exchange in 2017. We don't worry about that. The bond portfolio should expect lower return on investment in the bond area here. Return on investment 4.8%, 12% from equities after a very strong Q4. Delivered a lot more than the market in Q4, but behind in Q1, Q2, and Q3, in that area. One element I should explain here, because the retention rate here is 77%. Remember that we have kind of signed a solvency base reinsurance contract that has no cash implication. The float is better than what you see here.
We are not throwing cash away. We keep the cash on the solvency agreement. That's kind of five percentage points on this figure. You should say 82% is equal to last year. Retention rate is basically not going down. What you should expect is that retention rate will go up in 2019 and 2020. We expect a change of reinsurance structure. We will be back talk to you in Q3 about that kind of expectation in a Capital Markets Day. Retention rate is, in my opinion, expected to go up in 2019 and 2020, and gradually move towards 95%. If you should update your spreadsheet, I would recommend you to put a retention rate sized more like 85% in 2019, and at least above 90%, possibly up to 95%, in 2020 here.
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%. The balance sheet has never, ever been stronger, 200% based on the standard formula. A lot stronger than [Gjensidige] . 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. Now the size of U.K. and Finland is growing towards 15%, so it will be kind of visible in the books of Protector in 2018. Slightly increased risk. If you are 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. A modest summary is that we are happy with everything. Expect the net combined ratio, which is in the higher end. Then we have some questions.
Yes.
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.?
Product mix question about U.K. and long versus short tail. We will be slightly heavier on short tail in the U.K. compared with company. 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. More short tail because I guess we will have more Motor business and property business compared with liability business in the first three to five years. Higher than 61% short tail business U.K.
There was a four point reserve release in Q4. What product area generated this, and is there a further release assumed in the 2018 guidance?
It was a 4%, what I would call a minor reserve release in quarter four, basically linked to workers' 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.
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. 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. Pretty good view and pretty good position. We are an attractive partner towards reinsurance world. Any more questions from the audience? Yes, Thomas.
What retention rate should we expect during 2018?
What kind of retention rate in 2018? Basically, slightly higher than what you see in 2017. One, two percentage points, something like that. Thanks for the question. I comment on 2019 and 2020, not on 2018. That's good. 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 92-94? I didn't get what your last comment on the slide was.
I don't think I said anything about higher end in 2018, did I? We have guided on 92-94. At the moment, I'm not sure whether we are on the lower side or higher side in that area. Take a pick.
I heard wrong. Apologies.
I think you did, yeah.
Do you have any reinstatement premium when it comes to reinsurance program? As you can see, they can normally give some kind of figure when they have a big fire or something, which they have to have some reinstatement premiums.
Yeah.
Do you have that kind of levels or have you given any information about that in Protector?
Not really. We're talking about reinstatement premiums, which means, for those of you don't know the phrase, that after a Grenfell Tower, you are basically out of reinsurance for that type of risk. Immediately there is a reinstatement. There is a new contract up and running in the same second, basically. 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 extremely limited interest. 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. It's other elements influencing more on the volatility of the profitability of the company than that one. There is. If you have a big hit, you pay more at once. That's right. Reinstatement premium. Cool.
You pay twice. It's kind of deductible. Could be seen as an increased deductible. You call it something different. Bit technical, not very big. Yep. Okay. My summary after the summary is that have a look at this one, and think 5-10 years ahead. Go home and do what you should do then. Thanks a lot for your attention. Thank you