Earnings Call: Q2 2017

Jul 7, 2017

Welcome everybody to quarter 2 presentation in Pultejktoiv. As you probably have guessed, we would like to spend a lot of the time in this quarterly presentation to focus on the tragedy in London and the Grenfell Tower fire. So I will spend half an hour, possibly slightly more, on the Grenfell Tower situation and give you an update on the tragedy we have seen in U. K. And Henrik Harje, the person in charge of establishing Protector in U. K. Will complement my presentation on parts of that presentation. So we will divide the time a little bit. And then finishing the Grenfell Tower update, I go to the kind of more normal presentation, but spend less time on the situation. Of course, it's a terrible tragedy we have seen in U. K. According to our colleagues in U. K, the worst event since the Second World War, and the environment around the claim is extremely special. So it is it's a difficult environment. At the same time, it's kind of an environment where we are reminded who we are and what we do and that we also as an insurance company is a part of the society and should work as hard as possible in order to do other small parts of this totality in a best possible way. The 14th June, the fire started, and we all saw the news early in the morning. And the communication inside of Protecto started to go rather early in the morning. We had to send a message to the stock exchange before opening. Henrik and myself talked a little bit on the phone in order to establish the necessary internal organization in order to handle this dramatic situation rapidly in as good way as possible. Of course, the first thing which is in our mind is to establish the claims handling part of the totality. How can we support our client in U. K. In the best possible way? So that's the first focus. And we had 3 meetings internally in the first day. We sent our claims director, Fredrik Messell, to London that first evening and our claims manager in U. K, Julia Kenny, down from Manchester in order to meet the client on day 2. So the first client meeting took place on our initiative in day 2. Here is some kind of a time event of some of the actions taken in the 1st 2, 3 weeks. And you can see that gradually, of course, we are involving a lot of external parties in order to handle the situation as good as possible. You will see no names on the reinsurance side given in this presentation. So they would like to be behind us and support protector and not be in the forefront in any presentation. So if you don't see any reinsurance names, it's because they have asked not to be a part of an explicit presentation in today's meeting. As we all know, it has been a tremendous involvement from authorities in U. K, many sorts of them. And at the same time, it has been protests in London and some anger and bitterness, which creates a situation which is even more difficult to handle for our clients. And the circumstances around this tragedy is some things that we haven't seen for decades. The last time we saw something which was kind of close to the same drama was in possibly in 1988 in Norway, where an oil platform out in the North Sea went upside down. And it was, I think, 188 dead people. The insurance company involved in that tragedy in 1988 was Steude Brand, my company, the company I was coming from, and I was working in that company at that time. I didn't I wasn't involved, of course, in any aspects of that kind of tragedy. But it's very, very seldom Europe sees such a situation arriving. And the kind of environment creates also an insurance settlement, which is a bit more difficult, not only a bit, but a lot more difficult than what you normally will see. And the one thing is what the contractual situation are, which is basically is rather clear, what does an insurance policy cover and what does it not cover. Normally, it's rather clear. In this kind of situation, there will be questions related to support the client slightly outside the explicit wording in a document. For good reasons, that's a possibility. And we will, of course, also kind of explore those kind of possibilities together with the client in that area. It's normal when it is very special situations arriving, and this is one of the most special situations Europe has seen in decades in that area. So it's a difficult environment. Of course, we as an insurance company is in the periphery of the totality, but we have to do over parts the best possible way. So what we do the first okay, the first 2 days is to establish a kind of a project plan and a project setup. So what we call Phase 1 project goals, they are established. And there are 4 projects up and running day 1. And we will not kind of distribute all detailed information, which could have been filled up this page here, basically because it's also some kind of confidential information in these kind of plans, which will not be disclosed to external parties. But the first day is about setting up our task force, claims handling, reinsurance, communication and fact fine. And in day 2, we are slightly reorganizing what we are doing and taking away the FactFine sub project and establishing then a risk management and underwriting project. Why? We have to analyze quickly whether we have done any mistakes from an underwriting point of view very quickly in order to communicate to the different involved parties, for instance, the reinsurance companies, whether we have done a proper job or not on the underwriting and risk management parts prior to the fire in Grenfell Tower in that area. So a very, very important exercise, which has to be done in a few days. And Henrik will explain a bit more about that part of the totality. The kind of information you don't see here is a structure which is well known internally in Protecto. It's about who, what, when, resource allocation, start time, end time on different actions in that area, how communication lines will go, critical success factors, etcetera. So we have a project standard for getting up and running as quickly as possible when these kind of or where special situations do arrive suddenly, this is obviously the most challenging situation we have seen since we started the company, obviously. To give you a short update then on the claims handling side before going to the risk management area, there are basically 2 different claims handling projects up and running at the moment. And the one here is the property as such. It's about the building, taking down the building, potentially building up a new one or do a cash settlement if that is a decision the client would like to go for. So the property side is one part of the totality. We have a single reinsurer covering that part. And many of you know who it is, but they will prefer like the other reinsurance companies to stay behind. But we have a close cooperation with the property reinsurance company. Obviously, they have expertise that are made available for Protector in that situation. We do have in U. K. And we have had a lot of communication with the property reinsurer. But first of all, it's about the communication with the client. And the first kind of decisions in the project has been taken and expertise has been appointed on both sides, on our side and on the claim side. And in my opinion, the communication between the client and ourselves has started out in a professional and good way. It's a good thing that we met the client first time 2 years ago. The person who is in charge in the Royal Borough of Kensington and Chelsea, Henrik and myself, we met him a couple of years ago. We established a good dialogue and have met many times since. And we feel that we do have a professional person and organization on the other side, the administrative part of the claims handling entity within Kensington and Chelsea. So I think that the dialogue between the client and ourselves is good. We have met before. It is important. And we hope that we together can avoid a situation where we have different opinions, but that we can cooperate closely on how to deliver what we should deliver in the best possible way. So the property side is one element of the claim standing process. The other element, which is probably far more complex, is the liability side. Is the client liable for anything, for something or a lot? There are questions related to it. Who others are to blame, if any? There are recourse opportunities. There could be other liable parties. And a number of them have been named in the press. So there are of course not only a lot of people who are suffering deeply from the situation we have here now, but there are many other involved parties, which could get kind of insurance payments out from this kind of situation we have, but also many ways to go in order to try to recover money from potential other organizations that either have money or are not kind of that strong, and you shouldn't expect too much in that area. So the liability part is more complex. There are lawyers seeking people in order to represent them in a fight towards Kensington and Chelsea and or the insurance company. So it is a complex situation, but we have picked over a legal advisory in U. K. We did that on day 1, which is a company we're not from before and had a relationship to before the Grenfell Tower fire started. And also the client have a well respected lawyer on his side. It should be possible to work closely together. That's at least our ambition in that area. When it comes to the recourse situation, the legal situation is that if a settlement here goes above the maximum limit on the insurance policy, if it goes, it's not at all obvious, but it might be such a situation. In such a situation, the recourse money goes first to the client and then to the insurance companies in that area. So a recourse settlement is not necessary anything that will influence on the economy for the insurance company and or the reinsurance companies in that area. So the UK law is pretty clear on that situation. If there is a large liability situation rising out from the tragedy, recourses will go to Kedssen and Chelsea and not the insurance companies. That's the way it works in that area, which makes sense in my opinion as well. So it's a property claims handling situation. It's a more complex situation on the liability side. But in my opinion, it's moving forward in a decent and proper way so far. There are outside the claims handling, which is a main focus, of course. We've got 3 other elements. 1 is the reinsurance side, where you understand very well that a very large proportion of what we have reserved on the claim this morning will be paid by the reinsurance panel, the 11 companies which are behind Protector in this situation. And again, we have a good communication. They have been updated in advance on the agenda today and on the reserve settings here. So they are kind of aligned with what we have to say to you today. Media wise, it's a we are, of course, in the periphery of the situation. There are not very many requests from media, which we feel is good. And our attitude towards media is reactive. We don't seek media, but open. So we will always answer any media approaching protectoid. BBC, The Times, Fox News, United States Media, Norwegian, Nordic, they have been there. They have approached Protektur. And as far as I know, all of them have been answered. We will continue to do that. And there are only 2 people that will comment towards the media. It's myself and our regional manager in U. K, Maureen Alwyn. So those 2 are those who have the kind of authority to speak on Protector's behalf in that situation. Reactive, open. Many of you know the values of Protector, the DNA of the company. So we have four values. So one of those four values is open, and we can't close down openness in this kind of situation, then we kind of have to throw that value away. So we will always be there. Of course, many of the answers to media will be, this is client confidential information. It's too early to say, and investigation is ongoing. And it is inappropriate to answer that type of question. So many answers will not be kind of headlines, which is good. But if we can answer with concrete facts, If we can do that, we will do that. So to me, the author, we don't need too many questions, but if you would like to address them, we will respond to them. When it comes to then the underwriting and risk management part of the totality, first of all, we have an ambition to learn internally and protect oil. How good are we at underwriting risks in U. K? And have we done what we should have done? That's the number one question. And could we have prevented the tragedy with discovering something in advance and giving a feedback to the client? Or could we not? So that's kind of the internal questions we have, lesson learned from a very dramatic situation. The second element is then to share that kind of information with the client, with brokers and with the reinsurance panel to see whether Protectors still are considered to be a credible insurance partner in the U. K. Market and in the reinsurance world. So the risk management and underwriting part of the totality is very important in order to establish a view on it. So you are the expert, Henrik, so feel free. We have some problems with the presentation. Okay. Thank you. So local authorities or municipalities are fairly similar, have the same responsibilities, but they are different. And the underwriting or risk selection is about finding those differences and avoiding the ones that are bad, the red ones. In doing that, this is an example on the property side. We evaluate about 100 different factors on each client in order to assess if that client is red, yellow, white or green, where green is the best and red is bad. And this is one underwriter doing all that work. However, many people involving experts, risk engineers and other underwriters and management around the table in order to discuss both the details in those assessments, but also the totality in order to weigh those different factors. And some of the factors here are obvious. Claims history, we look at claims history in order to assess a client what has happened in the past. We assess publicly available information, and there's a lot of it for local authorities, demographics and financials and fire statistics, crime statistics and all of those factors are parts of the total evaluation. And on the property side, there is one thing that is obviously very important, understanding the property portfolio. And the property portfolio will be assessed both analytically and benchmarked towards a larger data set, which could be the whole U. K. Or Scandinavian local authorities, so similar clients. But we will also go into the property portfolio by visiting sites physically and using technology or the Internet, driving around in a well known car taking pictures of these properties. And I'll get back to that. The whole point in assessing the risk in this way is to both get discussions on the details by looking at this picture, which is well known for everyone involved, but also opening up what's underneath this picture and finding where to focus on the details. If a client is yellow on 100 different factors, that client is probably red. It has some problems on 100 different factors, that client is red. If it's white on all 100 factors, it is probably a green client. Triborough, which Kensington and Chelsea is a part of, was assessed as a white client. One factor is especially important, and I mentioned it. It has to do with the properties. And it's important also to understand that this is not object underwriting. We don't go into each building and find out exactly how the construction is and the fire protection and what type of tenants live in the or what kind of occupancy that building has. It's a portfolio. We insure 155,000 properties in London. So we don't have the level of detail in the information from the tender situation, and it is not possible to get into that detail. However, it is important enough that the most resources we spend in our underwriting process is visiting these properties. That's risk engineer driving to the different sites and logging different types of information. Some of it is the building class, the standard, which includes maintenance, and it has to do with security around the building, could be deviations from safety regulations such as waste containers mounted on walls, and also a subjective view on the neighborhood and the area the building is in. We have inspected 10,000 properties in public sector, Scandinavia and the UK, and have a good database. All of this information is logged, so we can benchmark each client towards that database of 10,000 different inspections. That gives us a view if it's better than average or worse than average on those different factors. Kensington and Chelsea was a situation where we actually managed to large portfolio, managed to inspect 30% of the sums insured in the portfolio. In addition to that, we did street views of 30%. It's not 60% altogether because we did street view and inspections on some of the same properties, but around 50% of the portfolio has been seen and we have pictures of it. Very good results on Kensington and Chelsea. We actually knew that Grenfell Tower was refurbished in the underwriting process. That was seen as a positive element. And I think it's also fair to say that when you assess 30% of the portfolio, that is through an assessment of what properties we should look at. So that's the presumably worst part of the portfolio or most risky part of the portfolio. Liability is a different evaluation, of course, more complex and the area which is most different from Scandinavian public sector. However, we have a lot of publicly available information, which we collect and assess benchmark towards other clients in the U. K. The government does assessments of local authorities on health and safety, on education sector and how they follow the regulations. All of these scores are available, and we log them, we evaluate them, and if there are recommendations from the authorities, then we ask questions about how that has been addressed. So we have a good view of how an outside in assessment of the different local authorities is. Kensington in Chelsea was very green on these factors. And it also goes for other factors such as the ones I mentioned on the property side, demographics, crime, statistics and others. And on the liability side, some of the most frequent claims are highway claims and what they call slips and trips, so smaller high frequent claims. On highways, there is a body in the U. K. Who assess or does assessment of repudiation rates on highway, which means the number of claims that are stopped before they become any problem. And that's an indication of routines and processes within the local authority. Kensington and Chelsea is better than the U. K, 15% better than the U. K. On that area, which also indicates that they have their routines and processes in place and that they run their responsibilities in a good way. So in total, on the liability side, this client was assessed as a green and good client. And then when it comes to risk management post this incident, there's 2 things to say because there's an obvious question. Do you want to renew this client? And would you quote similarly if you knew of this incident? And our answer at the moment is yes and yes. However, we need to learn. We need to learn on an area which is unknown for very many people. Tower blocks, in general, have fires. And you've seen statements from a lot of fire experts in the media This should not happen. If you have a fire in the tower block, that's one flat, and then it takes 30 minutes before it moves over to the next flat. And by that time, that fire is stopped. And a tower block should be a good risk. Now we know that there are occasions of that not being a good risk. So we need to learn from that element. And we also see that there is a tremendous force from different parties now, strong parties, Sverdrup mentioned that earlier. And we cannot interfere with those processes any more than on areas where we know that we have the expertise and that we can make actions happen quickly. So we do know through facts that the U. K. Standard is better than what it is in Scandinavia. So they take care of their buildings in a better way in U. K. Than they do in Scandinavia. We've seen that from more than 10,000 inspections. In addition to that, after an incident like this, there will be actions, the risk will be better. But of course, we need to plan, we need to change our routines and processes when we underwrite and risk assess clients. And we have obviously already done that. So we look for tower blocks. We go closer in understanding how those tower blocks are built and maintained, but we believe the risk is better. We will have experts from the reinsurance world and other areas who will help in finding the right actions to take and to prioritize and not do everything at once. These local authorities in the U. K. Have enough pressure and requirements on them in this regard at the moment. So we have a preliminary plan on risk management post Grenfell ready today. We will discuss that with our partners in near future, and we will have a final plan mid August for risk management initiatives. And then it is about our situation in the U. K, where the most important thing to say is Kensington and Chelsea, yes, yes. U. K, yes. We still believe in our operations in the U. K, and we will stand firmly behind that. But of course, learn from this incident. And in a way, I think we are in a good position to get that information early and learn quickly. Thanks a lot, Henrik. The kind of final statement here, we are here to stay, has not really been discussed internally in Protector, neither with our Board. So we have had Board meetings, obviously, related to the situation here. It has been absolutely no question asked about our strategy in U. K. So I think Henrik's walkthrough is a strong one. It's a good client. The underwriting methodology is working. The client is better than London average. London is better than U. K. Average, and U. K. Is better than Norway and Scandinavia. And most of you didn't think that, I guess, because you thought that this might happen in U. K, but it cannot happen here in Norway. And then you are wrong in that area. And I think that's pretty early to pretty important to understand that we are up against a very, very special event in U. K. And it could happen basically anywhere. It could. I think that we could open up for Grenfell Tower questions, if you would like to, now, And then I go to quarter 2, the rest of the presentation. There are also kind of potential questions popping in through the webcast. They could be taken out as well if they are related to Grenfell Tower. So feel free if you have any other questions to the Grenfell Tower situation, then we move on. Is the safety in Ukraine interest that is as you say, how can you explain that this place on the building? It's great that it was the interest profile. Just some comments around that. And is it all these assumptions correct? Or are they wrong? Or what's the case around this? Why does it really happen then if the U. K. Situation is better than the Scandinavian situation? And it's far too early to respond to that question. There are many investigations going on in U. K. Now with a lot of competent resources involved. So I think that we have to wait for the final conclusions in order to evaluate this fire in a prudent way. And the second part of the question is how can we know that the situation in U. K. Is better in public sector than in Norway and Scandinavia because we have systemized our information with no claims frequencies, with no consequences. We have inspected 10,000 buildings. No one else have done that in Scandinavia, no one And in U. K, so our information is structured and systemized and available, including available for authorities in Norway if they ask for it in that area. So our opinion is that when we are saying what we are saying, it's not a statement, it's fact. We can document with figures. We knew it before the fire, and we have looked into it after the fire. And we haven't really changed opinion on that. But there's another question here. Yes? Yes. Just from the media reports for this subject, it seems to be a huge discrepancy between Not really. So the kind of the standards which are in place in U. K, in other parts of Europe and in Norway. We are not really experts on the different formal standards in that area. We have kind of an acceptable competence in the area, but it's not really up to us to kind of respond to these kind of questions. Others have to do. But we are there on the spot. We see these kind of buildings. We systemize information, and we can evaluate real world. And then others have to evaluate the standards, whether the standards in Norway are better or worse. That's not what we are commenting on. It's what we actually can see from claims statistics for many, many years with large portfolios and what we see on the street when our risk engineers are alter and systemizing the kind of information we have. Other questions? Yes? When it comes to the gross claims level of 50 £1,000,000 what kind of assurance is that, that this is enough? Or what kind of because it's a lot of legal claims coming up, it's a lot of uncertainties, etcetera, etcetera. So is this the best guess at the moment or is it so that this is a very good estimate? Okay. So it's a question about the reserve setting. I'll come back to that. I do have a foil on that, so I will comment there. I'll first take other potential questions on Grenfell Tower before going to the reserve step. So are there any other? Is it any one coming from the webcast of it now? No more comments. Okay. I can add one. This is a big portion is the reinsurance. And if same situation happens again, do you still have the same reinsurance and as covered as good as you are now? Okay. So then I respond to the first question on reserve side. And the next question is that if it happens again, do we have the same kind of cover behind us? So I'll take the first one first. We are not at all sure about the £50,000,000 reserve level here, not at all. There is a lot of uncertainty related to that figure. And it must not be seen as a figure that we do not expect will change. It will change. But this is what we have estimated as a fair gross reserve setting at the moment. Both the client, the broker and our insurance panel is aware of that kind of settlement, which we are communicating now. And they have had the opportunity to give feedback even if it's our job to set the reserves, no one else. We haven't received any significant feedback from any of the parties. They do respect that it's our job to set this kind of reserves and it is a lot of uncertainty on these kind of figures. Some of the press coverage in U. K. On the matter is on the stupid side. They are extremely high and much, much higher than what is even theoretically possible to calculate out. Some others have had kind of more fair comments, which differs from what we are saying now, but then we kind of understand what they are saying in that area. Preliminary statement, a lot of uncertainty. Since from a protective point of view, the net claim SEK 2,500,000 will not change. That will basically be the same figure whether the reserve estimate is too high or too low in that area. So see from a protectorate point of view, the situation is clear. And the answer to the second question, whether we have reinsurance in place today for a potential similar situation arriving tomorrow, And that answer is yes. Any more questions about Grenfell Tower? Yes? Going forward? It's kind of speculation, which is too early to comment on in that area. I think you have heard one statement from Henrik is that we consider the client to be prudent, okay? Good risk. Still it is. That says something about the kind of renewal terms we will give to that client. If the reinsurance world considered Protectorate to be prudent and credible, I trust that they are professional people. We'll judge the situation kind of equally. That's how we judge the client. So the relationship is rather equal, client, protector, protector reinsurance world. But to give a very concrete answer on it, it's not really possible. It's speculation. And if you have any significant information on the matter, we'll come back and update you. We do not expect anything very special to arrive in that area, but this is kind of judgment that the reinsurance panels will take. We have different renewal days on the different programs. So these kind of price issues will be discussed not at the same time, but at different timings. In different yes. So someone in a reasonable time frame are the ones more into the future. Any more questions on Grenfell Tower? Yes. Just on the annual dates, is your lock in summary insurance when you enter the U. K? Say again, please? When is the reinsurance up for renewal? A bit more like specifically in the U. K. Or is it I don't want to go into details on the different reinsurance structures and panels and the different reinsurance new opportunities. So there are many ways you can build your total reinsurance program. You can build it exactly the way we have it today or you can restructure the type of programs. So there are different renewal dates, and we will not comment in detail, neither on the dates nor on the process, except from saying that we obviously have started that kind of communication, building the credibility through risk management walkthroughs and through handling the claim. We have offered the reinsurance board to increase our retention if they would like to, which is a situation that likely will happen anyway. And pre Grenfell, our position is that our retention level is far too low. We haven't really changed reinsurance programs the last 5, 6, 7, 8 years, and we have quadrupled in volume since early days. So same retention level, 4 times the volume. So prior to Grenfell Tower, we have kind of decided gradually or to go upwards then on the retention side. This could be a good timing on that. It's not obvious that the reinsurance world would like to because that means reduced volume and reduced presumed profitability on their side. So that's kind of dialogue we obviously have and have had with the reinsurers the last few years. So far the feedback from the reinsurers is that they would prefer to have us on lower retentions because it gives them more volume and more expected profitability. Whether that changes or not now, we have to see. Okay. Is it the final question on Grenfell Torben? And I think we have to continue. We will finish at 11 as planned. Okay. So I go to the figures then. The kind of summary you see here is basically the same that Henrik gave. It's a terrible tragedy, diverse in decades. The claims handling part, which is the most important part, is up and running. We have good partners on our side. We have been in the underwriting process. And U. K. Is not an extremely risky area. It's better in public sector than Norway, and we do support the company. It is not a discussion. So the summary for the quarter 2 is that profitable growth story of Protecto continues. We have in the quarter 23% growth, which is kind of in line with what we would have expected and in line with what we have guided. It is a good net combined ratio despite the claim in U. K. The investment results is possibly on the better side then depending on what you expected. At least, I guess, it's better than the market. So it's a good financial quarter for Protectoid. And the guiding is changed. Volume wise, it's about U. K, which is delivering a very significant growth in the quarter. And to a certain extent, it's about Sweden. So it's U. K. And Sweden growing in volume. On the change of ownership sector, there is a negative growth. We did cut the figure slightly early. So you should argue that the volume here should be slightly higher, but it's not really important. It's quite we are following the market. And could that be in CHF 15,000,000 to CHF 20,000,000 more on the volume side, but that's not really a significant issue. The claims development is, I would like I would say on the stronger side, except from Grenfell Tower. So the underlying reality of Protecto is that it is a good quarter, and we feel that the underlying trend is good. There are small reserve gains on the portfolio, but it's rather limited and it's not really significant, not at all. The cost position is, as always, very good. It's higher than last year. But I also told you last year that underlying reality was higher. You shouldn't expect that long kind of figures. There are some technicalities, which is moving a bit up and down. So we don't really have any comment on the cost side. It's very, very strong. In the commercial and public sector in Norway, it is a very good quarter with strong profitability, stable volume, but the biggest client signed ever is signed in quarter 2 and will arrive in the quarterly three figures. So a very, very big client. You possibly remember last time we met after quarter 1, I said that we have lost all the 10 to 15 biggest quotations around January 1 renewal, but also quarter 1 in that area. So this is really the first big one that's on the right side. Of course, it's always difficult to judge whether we will earn money or not. But as always, in Protector, our opinion is that we will be some margins left for Protector signing that kind of contract. The very important element here is about the kind of true prices we have got from the broker association in Norway stating that you are best claims handler in Norway together with 1 other company, and you are best overall company in U. K. Alone on the top position. So cost and quality leadership leads to profitable growth, and this is another evidence that we are delivering on a high level when it comes to quality. The change to ownership area, we still have focus on the technical surveys. The profitability is okay at the moment after, as you know, a poor year in 2016 with a combined ratio far above 100. Now we are on the right side in the change of ownership area. Sweden, a bit on the poor side in quarter 2. And this is what you should expect, normal volatility on certain product areas or market segments. We had a very, very good quarter 1 in Sweden. And my comment 3 months ago was that the underlying reality is not that good. And here we are slightly on the other side. The underlying reality is slightly better or somewhat better than what you see in this quarter. On an accumulated level, Sweden is very good in the first half year. When it comes to Finland, it's seen from a kind of a company point of view. It's rather small. It's a small quarter. We really have nothing to say except from the fact that we still are warmly received by the brokers in the market and that digitalization of the company moves forward also in Finland. I'll talk more about the IT opportunities for future in the Capital Markets Day in August. You are warmly welcome to provide that. We will not cover that topic today. Denmark has kind of a quarter which is on the weak side. And as I also said in quarter 1, a very, very good quarter 1, but the underlying reality, not that good. And now we are kind of on an accumulated level, I would say, on track. And remember that we are reserving the workers' comp product with a ratio slightly above 100, which makes it rather difficult to get an accumulated combined ratio below 100, let's say, 99.9. So it will not be a very good year in Denmark, as we have stated. But obviously, the profitability improvements is going on. And it's nothing special with the quarter here, except from technicalities and normal volatility between the quarters. If you have a look at that figure, it might say something that we have a profit operating profit before tax in the first half year, which is sized NOK 8,000,000,000, NOK 9,000,000. The work is done well in Denmark at the moment, and we look forward to welcoming the new content manager August 1. U. K. Is about volume and Grenfell Tower. It's far too early to say anything about the profitability, of course. The accounting figures in U. K. And Finland, they are linked together with Norway and will not be separated in 2017. So it's too small business, too many products, too much volatility. It will not give too much value to Farwa, Finland and our U. K. As an independent entity so far. We will probably open up for volume and profitability presentations in 2018 U. K, not on Finland. That's my expectation at the moment. So in my opinion, the cost and quality leadership of Protectoy continues to lead to profitable growth. Here are the figures. It's in your presentation. It's out there in the market. And on the investment side, the quarterly result is 1.3 percent driven by return on equities, which is, I guess, somewhat above quarterly benchmark and a bond portfolio return, which we feel is good in the kind of running yield situation we have in the bond market in Norway, Europe and in the world. So kind of a good quarter, but as you know, it will always be a lot of volatility when it comes to the return on investment. Our solvency situation is still among the strongest in the Nordic market, very, very solid and also above company targets. I think especially on the shareholders' side, we would like to close with reminding you that profitable growth, seen from a technical point of view, plus return on investment driven by a growing float and a growing balance sheet should hopefully continue to deliver good return on equity for the company. And the final point is about the totality. It's a good quarter. We are growing. We are profitable. Grenfell Tower is a challenge. And obviously, it is in our focus. And there are no question about the strategy in the U. K. Market. And then we have a minute or 2 to questions then. Yes? Question to the combined As always. And the reason why is that the reinsurance commissions are booked to a large extent in quarter 1 and quarter 2. They will not arrive in quarter 3 and quarter 4, which means that net cost ratio is much higher in quarter 34 compared with quarter 12. So from 89 percent today, as you well indirectly have pointed that, we think 92% is likely to happen. And yes, you will see a combined ratio above 92% in quarter 3 and slightly higher than that again in quarter 4 for technical reasons. Yes? So it's only technical reasons you're not accounted for any worsening of environment? No, no. Another question? Just on the underlying reality. How is the underlying reality on the claims cyber and tighter company? Because if you remove the reserve release, run off gain, you're at this 93 point something claims ratio in 1Q and 2Q. Any competitive pressure like underlying here? Or is it let's say, a 3% net expense ratio or 2% next year. What will your combined ratio be then? So far, it's a bit too early than to comment on the next year. Our formal statement on that is that we expect 92% going forward. We don't have any other opinion. If we would like to change that mind, we will communicate that properly. Of course, we have communicated rate pressure for the last 3, 4 years, especially in a Norwegian market, which still plays an important role in our accountings. But I don't it's not really increased the last 3 months since we met last time. And a lot of that pressure is already inside the last year's figures. And if you extract the Norwegian kind of combined ratio figures the last 3, 4, 5 years, they are very good. Next question? You mentioned on the slide that you've exited 2 names on the equity portfolio as they reached the economic crisis. Could you tell us which company that are? No. We don't want to comment on single type of companies in a quarterly presentation. This is more like in the annual report and on the Capital Market Day where we will be back and give an update on the investment side of the company then. Next question? The run off gains, can you say where which country and mortgage product is related? And secondly, the CHF 2.5 million have as a maximum loss on the debt balance. This is so that the reinsurance takes everything else, which means that future labor handling costs, future expense costs, all those charges, etcetera? Is everything related to the reinsurance? Or is it so that you could have costs coming your way? So the first question is about the reserves. Where do they come from? The answer is Norway. And the second is that do we think that our reserve net SEK 2,500,000 will increase in future based on certain circumstances, and our expectation today is that they will not. Another question? Is it possible to say how much of the costs that you are now using in U. K? The cost ratio? I just don't know how much costs have you invested in U. K. During the quarter. This quarter? Not at all much. We had 20 people and some other costs, rather limited earned premium. So 20 people times an annual salary plus 50% plus overhead cost, it's rather a small figure. So it's not really kind of U. K. Driving costs higher than quarter 2 last year. Last year, the long term bonus and incentive plan for management was on the negative side. This quarter is on the positive side. So those two deviations is kind of influencing on the cost ratio. And then that's one of the significant reasons why we are slightly on the higher side now compared with the year ago. I think you were on the limit compared to my expectations. The question is more, are we seeing the cost in U. K. Now? Or are they coming on next quarter? No, no. We have all costs in U. K. You have seen them. So there are nothing related to Grenfell Tower, which is not booked in the quarter. And we do not activate anything on the balance sheet, which we don't have to. Some IT smaller investments in that area. So all costs have been taken and all net reserves have been settled. And we don't expect SEK 2,500,000 to increase. So I'm happy that you are happy with the cost ratio then, even if it's slightly higher than Q2. Yes, another question? I don't I wouldn't say so. As some of you might know, there is kind of a in the parliament, it has been a kind of a decision in order to look further into the real estate process legislation in Norway. To a certain extent, we feel that's on the positive side because it could come something out which is good. It could be some different legislation related to the product. Theoretically, that could be on the negative side. It will take 5, 6, 7, 8 years before you see a new law, if arriving at all. One company have announced that they will come up with some kind of an alternative product towards the market. Feel free. That has been tried before without no success at all. Another company tried a similar kind of activity, withdraw after a year. So we feel that the competitive situation and change the ownership is unchanged. Indirectly, I said that, yes, because the claims ratio on Wurkin's Compas Search is largely above 100. If you have the cost ratio of the company on that product area, you have a combined around €110,000,000 That's correct, on workmen's comp, half of the product portfolio. That's nothing new. That's something it has only changed very, very minor, not at all actually. So it's nothing new about it. Then on the other hand, we expect that the rest of the portfolio will perform better than in this year. And as you know, the reserve setting on Wirtgen's container takes years before we really know the answer. There are upsides and downsides. We have to adjust to move forward. And in the meantime, our risk appetite is slightly lower, but not at all in a walk away situation from the market. It's a question here. You had a growth of 53% in Q2. What is about the growth rate going forward if you had something about that? Okay. So the question is we had 23% growth in quarter 2. What is going forward? We expect higher growth in quarter 3 and 4 because mechanically we are behind 20 because we were lower on quarter 1. So quarter 3 and 4, especially quarter 3, you should expect higher than 23% growth. And our expectation today is that we will end the year accumulated on 'twenty. So we will say we are on track even if we haven't taken on more half of the growth so far, even if 2 quarters are past. Quarter 3, we'll be very, very strong on volume. Yes? On workers' compensation in Denmark, what did you find this quarter which you didn't find in last quarter, so to speak, because then the mileage was pretty low in Denmark. So what has changed between the quarters? Is it so that the new management there has No, no, we have to shorten now and close very soon now. So nothing has changed when it comes to Wirtgen's comp in Denmark. New management is not even on board, and the Aker will be the same. So we have changed absolutely nothing. So the changes on the combined ratio is linked to very good performance on other products in quarter 1 and worse results, volatility, normal on all other products in Q2. We have changed no new use on Werkvens container, Mark, not at all. A final question. We are a bit after and the music has started to play. So we have paid for 1 hour only. We are the cost leader, you know, in the world. So we wrap up now I think then. Thanks a lot everybody.