Protector Forsikring ASA (OSL:PROT)

CMD 2018

← View all transcripts

Oct 26, 2018

Good morning, everybody. I would like to say a warm welcome to everybody. It's more than 80 people in the room now, and I know many of you are looking at the webcast presentation as well. There are some new faces here today, and I am Sveig Vierkle, the Chief Executive of the company. And I joined the company together with the Chairman, who also is present today as normally I would say. We started Justine some 15 years ago actually, running from January 1, 2014. From the very early beginning, we defined what we would call the DNA of the company, which is on this slide. And it's always a slide which I normally start with and why wouldn't I today as well. There are 12 statements on the slide. We do have a requirement that all employees in Protector should remember, gradually understand and then live. Obviously, when we do deliver poor results, it's even more important to reflect whether these words are words or realities. So I would like to be open with you today. I will discuss credibility today And I would like to start with the word challenger. We are the challenger. And obviously, today, we are challenged. So the first part of the presentation is about a challenge that has arrived recently. And their challenge is a small bug, less than 2 centimeters big, basically harmless. It doesn't harm people, nor does it harm animals or buildings. Unlike other pests you can find in Norway. So on this page here, you can see more dangerous small and dangerous in brackets, dangerous small animals living in Norway. This little chap here, he could actually eat a house, while the bug we have met recently, the gray silverfish in English, the guy here does not eat buildings, does not harm people, harm, how do you define harm? At least it's not dangerous to in any way. So why is it so that the district courts in Norway have concluded that this little animal eating paper is a basis for a payment to a buyer of a house. If this animal, who today is a very normal animal in Norway, arrived to your house? What are the consequences if that kind of practice will continue? That's the question which we will address towards the legal system in Norway in the following months years. However, we can't risk losing that fight. So obviously, we have taken a decision to exit that risk, obviously, because we can't wait for Supreme Court to arrive and to give a wrong conclusion at the later stage. We can't. So we will and we have excluded this little bug from the change of ownership product from November 1. I explain that further a bit later in the presentation. The question is, should we have seen it before? Have we should we have understood the problem earlier? Should we have communicated it earlier? Should we have taken losses earlier? Should we have taken other actions than what we have done recently? That is a reasonable question, obviously, which we discussed a lot together with the Board yesterday where we had a dialogue with the Board, should we exit this market or do we think it is profitable to continue in this market? And the conclusion yesterday evening is that we will continue in the change of ownership area. We will not walk away from the market. However, we might end up with 0 market share in that market depending on the feedback from the market on the kind of activities we implement now. But let's go back a little bit. This little bug arrived we think it arrived in Norway in 2013, this innocent little bug. We saw the first claim arrive in 2015. We think that this bug basically arrived from Africa many, many, many years ago. But today, it exists all over the world. It's in Sweden, it's in Denmark, in Germany, in U. K, in Europe, in Asia, in Australia, in Africa, in the States, it's everywhere. So it's not like a Norwegian kind of small bird. It's a little species, which creates no harm and do not have an attention in any other country than in Norway for some strange reasons. We got 3 claims reported from quarter 3 2015. We do get around 4,500 claims a year within this sector, 20 claims 2016 and then 38 in 2017. Pretty harmless, wouldn't you say? But then suddenly something changes. And that happens gradually through quarter 3 2018. So what we see is a gradually escalating situation where there are more claims reported to Protecto. However, there are no legal kind of conclusion at the moment. We can't really see why this should turn out to be a big issue. But we can see 208 claims accumulated in 2008, gradually growing through the year, with September as the worst month by far, by far. So we are getting more claims reported in September 2018 than the 2 1st years here. So 2 1st years, 1 month. It escalates, and it's moving faster and faster and faster. This sounds dangerous, doesn't it? But it's a harmless little bug. But we have to be correct. There is a fact now, which we fully understood in late July and through August with 3 district court decisions in a row from small district courts, I think, different places in Norway. For you that are not familiar with our legal system in Norway, I think we have 470 or 76 districts courts in Norway. It's the first instance. Then we go to appeal and then we go to Supreme Court like in most countries in Europe. So there are absolutely no appeal decisions taken so far. This is the 1st court level. And in late July through August, we saw that we might have a serious problem, not might, we have a serious problem. And then September escalated with more claims. The actor had to be do what he should do, go into it and try to find out what the potential reserve losses could be for the years previous to 2018, but also for quarter 1 and quarter 2 2018, where we didn't see the problem in those two quarters. So what's stated here is that gradually we understand. We go through alert status and then red alert status and then the actuary waits a week or 2 until figures are ready to be analyzed And a week later, and now we are in the beginning of October, it is what you could call a crisis, okay? It's a crisis. And this crisis rise from an innocent bug where Norway is the only country in the world which compensates buyers of properties for a property value decrease. It came as a surprise. Obviously, I apologize towards you investors that we had to present the kind of figures based on normal actuarial analysis. And obviously, it has been taken seriously internally in Protected to 1, try to understand 2, go back, what could we learn and 3, and the most important thing, obviously, we can't do anything with history, take any actions necessary and move forward in that area. Obviously, we will not kind of compensate new claims in that area now. We are of the opinion that the bug is normal. It will exist in Norway. It doesn't really harm. Harm is, again, a word which is difficult to define, but at least it doesn't destroy or hurt people, animals or buildings in that area. It's paper, books, wallpaper and things like that. So immediately after the actuary had done his analysis, a project called Grey Silverfish, the English word for the bug, was established. And 10, 12 people plus more have worked obviously 10, 12, 14 hours a day the last 14 days in order to meet you today, but also to conclude yesterday evening in a board meeting whether we should walk away from this segment or whether we should stay in this segment. So one project is about the silverfish himself. The other one is towards the real estate broker market and many other external parties, which we are working closely together in order to discuss with, influence on, if possible, agree on necessary action. So we have made hundreds of phone calls, had tens or 20 or 30 or 40 or 50 meetings with top management during these 14 days and being out there in the market in order to prepare for a potential situation where we would continue. But we will not continue if this bug could harm us in future. And I explained reserve setting and figures a bit more pretty soon. We have obviously had a lot of internal activities. We have considered to shut down this business unit, which next year will consist of 8% of the total business. So we have 92% to go. We could exit 8, obviously. We could do that. So we are not in a kind of difficult company position, not at all. The question is whether we think we can earn money in this segment going forward or not. And obviously, today, we think we can, and we will. That's our position today. Obviously, when you are in such a crisis situation in a segment, okay, a segment, 8% segment of our business, we have to consider to exit, but we should also consider to go to the other side. There is an other side product here, which do exist in the market, which is a mature product, which have some kind of profitability in today's market. I will not conclude on this one. I shouldn't really tell the competitors that we will never ever go there, but okay. I think that the situation is obviously like if we exit the change in ownership segment, we will actually not go on the other side, okay? So to the biggest player in that market, help. Now you know, that's okay. So we won't go to the other side. To real estate brokers, then you know we will not go to the other side. So we either stay with you here or we walk away. And then you have a monopoly situation on the oil side, which is the fact of the situation here now. So if we leave the market, there will be a monopoly situation in this market, which could be a challenge for these people here. So okay, kind of gray silverfish project, 1. Who is the bug? What kind of view do we have on the bug today and in future? External activities, a lot of internal activities and then consider to go to the other side and the conclusion on that one is not at all. Okay. So the kind of decision which we have taken and the first one is communicated to the market already is that we will exit this product from the terms and conditions in the product from November 1. The financial consequences of that, I'll be back in a second. We have changed the outstanding practices, and we have both before and after February 11, a large set of activities, which we have implemented. And we saw the bug. We had them in the courtroom. We have discussed internally, but we didn't have figures or an understanding before late in quarter 3. Some of you might ask the question, why did you do buyback in July if you knew? And the almost answer is that we didn't know, not at all. And these things could actually happen in an insurance market, very seldom that you see such a rapid development on a claim situation, extremely seldom. This is not at all closely upon the me. But seeing from a figure point of view, you could argue it acts like because it's escalating and it's escalating very quickly in that area. So your question now is whether there is reserve losses which we have taken in quarter 3, whether these reserve losses are prudent and if they are good enough. Are they conservative or on the other side? That's your question. And obviously, we understand that question very well. Our feedback to you is that we cannot give any guarantees. How can we? That's not possible. Again, open is a value in Protector. So we can't give guarantees when it's not possible to give them. So you have to consider the risk that it could go worse or it could go better. And you must remember that with an exclusion November 1, there is still a period of time around 3 months where more risks arrive into our books. That's the behavior of the product, okay? So I won't explain that in a detail. You can ask questions about it after presentation of Capital Market Day, which is the nature of the product. We exit November 1, basically it takes 3 months, which means that you should expect a pretty poor quarter 4, not because reserves will change, but because there will arrive new risks during quarter 4 related to the bug. So expectation, quarter 4, you must be aware of that fact. However, when you enter the new year, new risks will very quickly disappear basically beginning of February in that area. And then it's back to the reserve setting in that area. The drivers for claims ratio development and obviously also the underlying drivers for understanding whether reserves are good enough or not Is that can we do something with a basic problem? The Brexit isn't harmless, inhabited in Norway. If we win through with that kind of opinion, which I think common sense says it must be right, then we will have a reserve gain in future. Could we kill the little bug? There are a lot of resources also from protectors used now in order to kill the little bug. There has been some successes, and it has been some failures. During the last 18 months, we have been involved in some tests in the market. We have. And we have got the feedback from professionals doing these kind of things that now we got it, now we killed it. Oops, 6 months, he's back again. But there will be an effort to take them out, but it doesn't really matter in our opinion because it's a normal little harmless bag belonging to us here, get used to it in that area. It could be changes in quarter of view, in claims practice and in average claim size. So these are the kind of elements which we are looking now. We think that if reserves are not correct, they you could see a good scenario where we are getting around NOK52 1,000,000 on Norwegian from there reserves back again. That's a good scenario. You could see a bad scenario where we lose around SEK38 1,000,000 in Provenor. That's a bad scenario. And obviously, the question is what how do we define good and bad? And I think that's kind of a realistically interval. However, it could go worse and it could go better. And we neither of us can really know at the moment. This is the nature of insurance business and reserve setting. I will comment more on reserve setting seen from a company point of view in the Capital Market Day. So then you can be more competent to evaluate the kind of research discussion you have here in a bigger totality. And I think that what you will see is that you shouldn't really worry. That's my statement. You shouldn't really worry. But that's an agenda because that takes a bit time to explain for the Capital Market Day, where we have announced that we will go through the historical to date reserves in the company, including Great Silverfish, change of ownership, workers' comp, property, motor and many other products. So take a bigger picture, have a look, discuss with ourselves what's your opinion in that area. So we have taken a loss. It could go better. It could go worse. There is a kind of realistic area where we are looking into, but think it through is kind of your decision to take. I'm absolutely sure that these kind of people who this morning are very happy because they all were afraid that they lost their job today. They are extremely motivated to do as good as they can. And the KPIs in that business unit is on a historical good level. And we have strong signals from the market that they will accept exclusion of the bag. However, we can't be short. If they do not accept, we walk away, okay? Promise given. They don't accept, we walk away. There are strong signals that they will continue with us. Remember that we earlier have said that this segment have other profitability challenges as well. And we have left 25% of that volume going forward. So that's also an element of the totality. However, I am of the opinion the Board is of the opinion that we will earn money in this segment going forward. Historically to date, combined ratio is still on the profitable side even after gray silkyfish. So it has been profitable, and it's our opinion that it will be profitable going forward. So I prepared some 20 minutes on the little bug, and I spent 26, I guess. So should we move on? Any question to the bug? Yes. Just So the question is what's the potential consequences for seller and buyer of a property in that area. The consequences is that the buyer could put a claim on the seller and the seller is running a risk in future. So that's the consequence in that area. We don't see that risk as very big, but they should be aware of it. And the following consequences of that kind of thinking. If you are living in a building block with 100 apartments and if there is a bug in the cellar in that building, there is 100 apartments there, What happens yesterday, the day after you find that bag, is that the value of those 100 flats might go down with 10%. Do you think it's reasonable? I don't think so. It's a bag existing in that area. Don't be too scared about that story. I have given you figures, see from our point of view, but it's a rather stupid and silly situation we are discussing at the moment in that area. If the other side would have been something else than an insurance company, I'm pretty sure that even this recourse would have said something else. But insurance company, deep pockets, let's go and make the buyer happy, even if this is the only country in the world where you compensate for that. Okay. So we move forward and continue. No more questions about the Berg. We have spent almost half an hour about that. I'm here in the meeting through the day, so we will skip the bug now. The question is, do you still think we are credible as a company after delivering kind of results towards the market? Let's discuss. Be open in that area. I understand that we have disappointed you the last couple of years with some kind of bad news. That's obvious. Have a look, think through, and feel free to give feedback whether there are something here missing on the list. However, you might say that we have something on the positive side as well, couldn't we? We have a pretty good story in some areas, which might kind of make you think that we have some kind of credibility left, even if we have disappointed you, in 2018 and also on some occasions earlier on. And this thing is also something to have a look at when discussing credibility. For 10 years now, we have been pretty clear on our guiding on the volume side. And here is the jury. There are very few companies, at least as I am aware of, that are so very clear on guiding and that go back and track and backtrack what's happening here. So we are guided on volume. Basically, we have delivered according to guiding or better. We have guided on combined ratio. Have a look at this slide later on and conclude for yourself. Basically, what you will see is that we do not miss guiding very often. You could argue it's pretty credible to give guiding and to deliver according to. Yes, there are some disappointments here, 2 out of the 3 last years. But have a look, it's insurance. It's through a cycle. It's 10 years. So it's obviously up for you to decide on that area. At the same time, I think it's okay to summarize in figures what has happened in the last 10 years. We have had an average growth rate of 21, a combined ratio of 93, return on equity 21, we are cost within the world and quality leader in the market. So I would say it's pretty good. I do understand that going forward is what we all are waiting for. History doesn't really help. That's it. But when discussing whether you have faith in the company or not, have a look at the history, listen to the story and take your own decision whether you think this is credible or not. Then we are into the results for 43, which you have seen previously in statements given from the company already. The only thing to pinpoint here is that exclusive of change of ownership, the bug related area at the moment, we have a combined ratio size 96. It's not very good, but it's not very bad either. The question is whether that 92% of the business will improve from 96% going forward or at least not get worse. Because if you're growing 20% a year, we will not next year, by the way, but we have. Okay. If you're growing and delivering a combined ratio size 92, it will create a lot of value. 94, it will create a lot of value. 96, okay. Then we start to discuss. So 96,000,000 in long term is not a strong combined ratio, not at all in that area. But okay, it's 96%. It's not 104% or 117% or something like that. So that's the company level, but 98% of the business here, both year to date and in this quarter, is not too bad, I would say. If you see on the volume side, we are growing and U. K. Is the driver for growth. And here is kind of a bit of an update, which is a bit more detailed than what you normally see. So you can have a look here at, for instance, the big business area, Norway Commercial. And you can see the year to date claims ratio, which is not good. And we have been discussing with you so far what kind of actions to take in order to improve profitability in such a big area. So you will have a better update on different business segments in Protectedo in order to consider whether the big area, the 92% area, commercial Norway, Sweden, Denmark and then commercial U. K. We only have commercial. That includes the public sector and Finland, whether that will be healthy going forward or not. Remember that U. K. Is pretty early, so you shouldn't worry too much of that figure. The net claims ratio is €115,000,000 But what I say here, don't worry, there are small figures. Here is another figure. This is the gross grain freight show. It's EUR66.9 million. It's pretty good. It's better than pretty good. It's very good. But don't be too happy with small figures. So the gross figures are good. The net are bad and neither have any value to look into. That will be slightly more explained in Capital Market Day later. However, it's too early to say. Obviously, we have a plan to earn money in U. K. And Henrik will comment on that plan. But we are too small figures, too early in order to say anything with a strong voice about the figures in U. K. Today. That's not possible in that area. What we will do and have done and are receiving feedback from the market today is that since the other areas, the 92% of the business of ProtectAll is not doing as good as it should be, year to date combined ratio 96%, that's not good enough. And we have to prepare for a quarter 4, which normally and technically is somewhat worse. So it will be slightly higher than 96 at the end of the year. So let's say we fly from 98, just to give a figure, it's not a guiding. Let's say we start flying into next year. We start from 98 percent on these 92% of the business area. Be aware of the fact that we are increasing prices with more than 8% in Norway, 4 in Sweden, 12 in Denmark, which will lead to clients who live in Denmark, some in Norway, few in Sweden in that area. That's a pretty important statement. And the good thing is that the market communication in these areas are equal. So big competitors in the Nordic market in our segment say the same thing. Price has messed up in Norway And price was messed up in Denmark, in our segment, Bergman's comp, in like an example in that era. So price increases is implemented as we speak. We don't know the result of that, but we either will get them through or lose some clients. And what we are fighting for is to keep as many as possible, obviously. To get rid of clients is easy. It's difficult to convince them that they should accept a higher price, but we won't back out of the kind of activities we have here. So my question to you, is there any questions to the profit and loss statement as such for commercial sector or change of ownership. Yes? A quick question on the outlook because you say 2019, the fresh visit has acceptable combined ratio with the 19%. I'll come back to the outlook at a later slide. For customer outlook, I'll take it when we are there. You answer the question? The price increases in Norway, as you said, many of your competitors are doing it as well. Okay. When will price increases get through? Most of it will get through January 1, 2019. And some of these kind of price increases started July 1 this year. So I would typically say that at least 75% what we are talking about here, higher in Denmark because the renewal date January 1, Denmark is even bigger than in Norway. So a significant penetration from 2019, give or take 75% penetration for the full year. Thanks for the questions. Good one. Yes? That's correct. Yes. So what we have is reserve losses on the change of ownership area, and we have some kind of reserve losses now I'm sorry, gains on the commercial sector. And as you said, the accumulated combined ratio is around SEK 100,000,000 slightly above if you exclude all runoff losses. It's a poor quarter. So if you exclude runoff losses, the quarter 3 and change of ownership is very poor, like one example, and in some areas as well. As communicated earlier, we will not have a healthy combined ratio in quarter 3 and 4. We said before the great silverfish arrive that you would see gradually worsen situation for technical reasons during quarter 3 and 4 is exactly what we see today in that area. So yes, you are right, but still the quarter 3 results, exclusive of runoff totally, is not at all good, you could say. However, you should spend some time on the reserve setting in the capital market kind of walk through because what you will see is that in the commercial sector, it has been consistently run off gains the last 6 years in that area. And let's say that the runoff gains, give or take, has been around NOK 600,000,000 in commercial sector in total the last 6 years, which is not far from a correct figure. It could be I'm not exactly up to date, but give or take SEK 600 1,000,000 If you divide that with SEK 6,000,000, take a bigger picture, you're going to get to SEK 100 1,000,000 every year. And what you will see is that there are some run off losses, which has arrived on average every year the last 6 years in these kind of sectors, exclusive on change to ownership. And if you met me 6 years ago and we discussed reserves, commercial sector going forward, you would have remembered that I said something. I said that you might expect a run off gain in commercial sector going forward between 2% to 4%. That kind of statement has been given in writing to you around 6 years ago. Look back and you have a look. That's what's happening and has happened in the last 6 years. So I wouldn't worry too much about resources. You are too much focused on short term reserve changes, okay? So you are too narrow in your view in that area. And as an analyst, you should take a bigger picture in that area, and we talk more about that in the Capital Market Day. Okay. I have to move on, I think. One more question. Okay. Thank you. Then I move forward. Anders, you have potentially some questions coming up the end of the presentation, give back to you, we've got them because there are some questions coming in from the webcast here. Grenfell Tower property claim is settled. Reinsurance arbitration is postponed until May. For practical reasons, some illness on the other side, couldn't do anything about it. So that will be May. The worst case scenario has been reduced from €100,000,000 to €85,000,000 And we don't like it. And we would be careful with placing a lot of reinsurance with Munich Re going forward because we shouldn't have been in that kind of situation. But okay, you have to meet in May. So let's wait and see. We can't do anything now for now. Investment performance is 0.5% return this quarter. I talked about the results. The balance sheet is very strong. Our solvency capital ratio is 183. Another company in Norway gave a statement to the market yesterday. They had a solvency capital ratio based on the same methodologies, I think I remember right now, 181. What company? Come on, you'll be there. What company? Vensilia. So Vensilia, 181, dollars 1,000,000,000,000 based on the same model. I understand. Eensidia, based on a partial internal model, is a lot higher. I know Ncde is selling a bank. I know they will pass €250,000,000 I know they are extremely solid. However, yesterday, we had an equal solvency capital ratio. So we have a strong balance sheet despite the fact that we have delivered a 4th quarter 3 and despite the fact that we did buyback in July. And the stress test, we can stand up to anything that you might think of and slightly more. There is some kind of simulation on the stress test. There are some insiders buying more shares during summer, not perfect timing. Okay. So they bought in July August. So then for a fact that we at least couldn't see the gray silverfish. Here is my summary. So we had a poor quarter and a poor year to date. We have excluded the Gray Sigma Fish from terms and commissions terms and conditions. We are growing profitability actions, price increases and other initiatives in Norway, Denmark, Sweden is gradually kicking in because it started not today. It started half a year ago. And it will have a significant impact on the profit and loss account next year. And our 2019 expectation is that we will deliver on a company level a healthy combined ratio. And your question was? What is so the 92% is in the press release, that's acceptable, in this case, healthy. So would be a range that is healthy? So better than a 96%, I guess, for excluding the change from Good try. There is a reason why I say healthy and not give you a figure. So we have a history of being precise on guiding. We have been precise for 10 years. But this is a situation with some kind of uncertainty, obviously. We don't know how price increases will penetrate, how much volume we will lose and how great silverfish will develop during the next few months. We know how it will develop during the next quarters or years. That's not an issue. But we count now in a very short term in that area. So acceptable or healthy, are two phrases which we have used. They are pretty similar, but you'll find out. Yes? Okay. So how is the price initiatives we are taking relative to claims inflation. I guess that most companies in Norway, including the big consumer oriented companies, have taken slightly by surprise because claims inflation, especially in motor area, is higher than formal indexes, should say, because formal indexes are looking at the wrong parameters in that area. So what I would say is that absolutely all price increases we do, they are above expected claims inflation going forward. There is a margin to claims inflation. If not, combined ratio wouldn't improve in that area. That differs a lot between countries and product areas. Rebecca, we had questions from the webcast, I guess. Yes. So one question is, if you expect a bad underwriting quarter for Q4 related to the Great Silverfish, why don't you reserve more? Why don't we reserve quarter 4? It's not normal practice in the insurance world that you are taking potential future reserve losses for policies not sold or not put into effect. So that's a very different kind of story. So in our opinion, reserves are prudent, but we do expect a combined ratio above 100 in quarter 4 on the company level. Next question? There's a question if there is room to buy to do more share buybacks. Share buyback was not an issue in the board meeting last evening, no. More questions? With the equity market falling 10% to 15% in October so far, are you getting more opportunities to put money in equities? Well, do we have more opportunities on the equity side since market is down 8%, 10% now? The question will be answered by Doug Mardis in the Capital Market Day in 1.5 hour or so. Okay. Thanks a lot. Is there more questions from the audience here? In order to have a deeper look into who we are and how do we view the future. We will talk to you about the company development as such. We will talk to you about investments, about big changes in the reinsurance structure and about U. K. So I hope I see many of you in 11 minutes. Thanks a lot for your patience. Thank you. Okay. Welcome back to the Capital Markets Day. The first part has been kind of a more normal investor presentation, even if the time spent has not really been normal. So I'm very happy to see all of you again and potentially also a few new people on the webcast. The agenda we have today is that you won't get rid of me at once. So I will spend some time on a kind of total company view. And then we'll revert to Dan Marius on the investment side, on Fredrik here, on the reinsurance side and finally, U. K. So we say the U. K. At the end of the agenda to make sure that you are not leaving too early then. Many of you would like to have a look, a deeper look into the U. K. Type of agenda. So my agenda is the company kind of overall status and a special look at the historical to date reserves. Remember that kind of historical to date reserves has not been a topic because of the great single fish. It was actually a topic we would like to discuss with you before the quarter 3 three ended. Because in many quarterly presentations, I think it's too much focus on the quarterly level. So let's take a bigger view, a longer view, a higher view and update you on how at least we view the reserves the last 10 years. Let's not spend time on the DNA of the company. We talked about it later on. This is kind of a I won't obviously not walk through this again. But at the bottom of this kind of presentation here, you see a statement that we are a fast growing company with a healthy combined ratio or a good combined ratio with an average return on equity size 21 even in an interest rate level, which has been historically low for a few years now. It would have been easier to deliver return on equity size 20 or higher if interest levels has been better. I guess you agree with me on that one. So hopefully going forward, we won't see the same situation like the 3 last years. But I wouldn't know. And let's wait and see. So the question is, how is the present status when it comes to cost leadership, quality leadership, growth and other elements. So I'll talk a little bit about cost and quality and growth expectations here. But also, I will obviously go deeper down after reserve walkthrough on other important elements in protect oil. We are not spending the company resources at the moment on a bug. We do not. We spend resources on several other areas, which long term is much more important than the kind of thing we have discussed for 25 minutes in the investor presentation. We are cost leader in the world. What's my expectation for future? And then you should go here and see cost the real way, the real way, which is the company cost ratio inclusive of claims handling costs, less commission. That's the real cost ratio of an insurance company. There are 2 companies in the Nordic market who delivers basically these kind of figures every quarter. It's the market leader if and it's protected. The other ones do not. So it's a bit of a difficult situation to compare apple to apple, our cost ratio towards the other ones. However, I have challenged analysts the last 5 years in Norway, Sweden, Denmark, Finland, UK, Germany, France, States, Canada and other places in the world, have you ever seen a company with a lower cost ratio? And I have never ever been challenged, okay? My prospect for future is better. We will reduce costs going forward. It's a pretty easy statement. It's not that easy to do. It's easy to say. But it's a fact because it's happening when we speak. If you think about it, it's pretty obvious. We don't have critical mass in U. K. We have a cost ratio, which is very high in U. K. At the moment. Henrik will update you on the figures. When volume doubles, cost ratio will go down rapidly because we have scalability. In many claims handling areas, we have not critical mass at the moment. When we reach critical mass, cost ratio will go down. In some areas, we have just received critical mass and cost ratio is going down now as we speak. So pure logic says that this is true. While other companies struggling with cost ratios, not too many in the Nordic, they are very good on cost ratios in the Nordic market. It's one of the most efficient insurance markets in the world. So cost ratios in the Nordic market is very good. So they are good, the other ones as well, but they are not even close to Protecto. So it's obviously easier for Protecto to reduce cost rates when growing compared with other ones who have zero growth. And basically, everyone has zero growth except the sector. So my guiding to you on cost going forward is that the distance we have towards the others will at minimum be kept. I think it will slightly, slightly improve the next 2 to 3 years. And please come back. And some of you have followed the company here, here and even here. When it peaked up, I said at that time, don't worry, there are reasons why it will go down. And it has. So to predict cost ratios to protect us is pretty easy. We have cost for individuals in the world. We will keep or slightly improve. We are quality leader in all markets. We fight every day in order to stay at that position. It's challenging. It's a lot of work. We need to be better in order to serve that position going forward. I'll come back with a couple of initiatives, which might influence on the quality opinion on Protector going forward. We have been growing 20% a year. However, we have said now we will slow down in 2019. We will slow down in 2019. Profit is more important than growth if we are getting closer to SEK 100,000,000. We are either close to 200 or 100 or above 100 at the moment depending on how you view reserves and how you view segments and totality. So at the moment, combined ratio is too high. That's not only great single fish or change of ownership. And I've been through that kind of story in the investor presentation here. So growth will not be 20% a year going forward. I will be a bit more precise later in the presentation on my expectation on that area. We have had a and this is kind of I'm sorry, it's not updated after quarter 3. So this is at the end of 2017. This is worse today. You saw it in the investor presentation. This is 3 quarters more as of give or take. So it's they are not I think that both are correct. I'm pretty sure both are correct, but there are 2 different time periods into that. Return on investment has been better than peers. Also when you look into it, seen from a risk adjusted point of view. And again, Doug Marius will talk more about investments in the Capital Market Day. Okay. So let's go to the historic to date reserves. This is lagging. So if someone with more technical skills than me could help, that will I would appreciate that because it takes a few seconds every time I push the button. I don't I hate to wait seconds. Okay. So here is the people who are the most important people when it comes to the serving in Protector. Obviously, the actuary, the chief actuary here, we have external actuarial services because this is the kind of system we have in Norway. You have to have 2 parts involved in the process. It's the CFO. I've been working together with Akhtar since late '80s. The Chairman, who is present now, he is a reserve expert obviously, actor with background and with 30 to 35 years of experience from insurance and reinsurance sector in that area. So I would say that probably have acceptable good people on this side. The question is whether we do the figures right in that area. So how do we do it? I would say we do it the traditional way. There's nothing on the page which is very it's nothing special. Any company would give the same statement. There is one element which I could comment on is that no discounting is implied on reserves. Some companies do because they are allowed to, and they have a different accounting practice in their country. If you go to Denmark, you discount some of the products in the reserves, meaning that your claims ratio will be slightly lower. So in previous years, where risk free interest rate was higher, You could see a combined ratio in CDN Norway compared with TopoTrig in Denmark that it was a significant difference because discounting happens in Denmark not in Norway. However, today that difference is minimal. So it's close to 0 because interest rate level is what they are in that area. But then you know, because in Europe and in the States, it could be different practices and different ways of doing it. No discounting is done in the reserves here. But this is not special at all. It's normal. The process itself is it's not special. It's normal. So the actuary had a direct reporting line to the Board and to the FSA. That's normal. And the actuary talks to business, that's normal. And there are meetings because no model is perfect, and you have to combine model and prudent work with your figures with understanding what's happening in the business. I think all companies in the Nordic market have a pretty good type of dialogue between Aktoria and the business side. So no difference here. I think we are slightly closer to business now because we have an internal actuary. Some 3, 4 years ago, we had an external factory, okay? Both good, but one is sitting in the business, which normally is slightly better because you're closer to business, you understand what's going on. That's so that's good. Normal process. Is it difficult? Yes. It's not easy. Can you do it? Probably not. But some of you can, I know? So I guess 5 to 10 people in the room who are competent to do what we're talking about here. It's and you don't have to be an acquirer in order to be good at it, but you have to be very, very, very good on figures. So things that influence on the complexity of the reserve setting is history. Are you old or young? The older you are, the easier because you have more figures. What type of clients do you have? Commercial, slightly more difficult than consumer because there is more volatility. Products, we have normal products. That's not an issue. We have 5 countries. That's also normal. So I would say same sense. However, we are growing 20% a year. The other ones are not growing. So when you grow fast, it's more difficult than if you don't grow. And if you grow fast in a new country, it's likely more difficult. Okay. It's not a big issue. We do the same products in the same countries like most others, Norway companies. So it's not an issue. Tail, we actually don't have that much long tail. You think we have a hell of a lot of long tail. We do not. We are according to market other market. So it's not a big issue, but you talk a lot about it. I would prefer to talk less, but there is an issue in that area. Business to your relationship, closer. Process, talked about. Is it difficult? Okay. But I think we have competent people. They are committed. We have a good process. And the question is, what are the results? You might argue that with a company coming from 0 growing to something, which is us, go from 1, 2, 3, 4, 5 countries, It's pretty difficult to do the reserves right. Okay. So here is the jury. Is that we have historically to date, even after the bag arrived, a reserve gain size exactly 147,000,000 Norwegian Provener. So I there are a couple of analysts here who have done these kind of figures. Ulrik, I saw you there you are. Okay. So Erlurik, for instance, did an analysis a couple of years ago where I think you concluded that reserves are prudent. And right, Ulrik? I didn't know about that. Okay. Say again? I did not know about workers' comp in Denmark. But lucky you, that was not a big issue, was it? Because workers comp in Denmark didn't really destroy your conclusion with it. So and he said, no. Okay, thanks a lot. We hadn't we didn't really prepare this dialogue in that era. So but I know that if you are a competent analyst, you must find that answer because it's in the annual reports. So go back home and do the figures, you will find exactly the same figure. But we haven't released these kind of figures on like quarter to 3 basis. So you can't do it today. But the conclusion is that on some products, we have gains, some losses, some gains, large gains, very large losses, some gains. And this is the estimated written premium 2019 on the different product areas. The list is too long. It should be 24. This is only Alkaz, so there are at least 2 here and 2 here. That's right. So adds up to 24, which is good in that area. So what you see is that we have been prudent on reserves. There's one big reserve problem through history, and that's that one. So we have consistently been wrong. That's not good. There are many reasons why. And in the board meeting last evening, we discussed that very thoroughly because we had to because what we discussed yesterday was whether we should go out of change of ownership or not. So the Chairman, the actuary and the committee before the Board meeting and the actuary and the Board and CFO and myself and others, we were involved obviously in our research discussion on in change of ownership yesterday, which is not a kind of a new discussion in that area. So okay, that's not good. But all other products, commercial sector, 92% of business going forward, they have been on the prudent side. With a figure, give or take, I haven't really calculated it properly, give or take, SEK 600,000,000 on the right side last 6 years in that era. So that's okay. So even if we have been mistaken here, and I do not blame Lactoring, not the old one and not the new one because Han Kulde. This is not what an factory kudos should have seen. Grey silverfish, wow. Is this an actual problem? Not at all. When you have some figures and talk to the business, you take the losses in that area. So the results are pretty good. Questions to historical term date reserves? Yes? So if we could have some help in finding the reserve releases per product in the reports, if that would be very helpful. And also, I have struggled to find a separate line for the change of ownership insurance. So if you could also point us to where we could find the reserves and also the reserves strengthening or losses for that historically, that would be very helpful for us as well. Okay. So you're on the webcast here. I will repeat the questions and the comments. An analyst which has been following Protector for the last 10 years or something like that, Wigail, asking the questions. So first, I guess you said that this is very valuable and interesting information. Thanks a lot for the update. And he would like to see a more detailed walk through on the different business segments through history in order to understand more about it. And the feedback to that is that we will be slightly careful to release everything what you're asking for. We can discuss it a bit more after the meeting. But we should carefully consider your request for information when closing 2019 books. So we will obviously consider it. It's a pretty relevant and good question. And but there are, as you know, reasons why we shouldn't be too open on anything and everything in that area. So we have to balance investor information with other discussions at the same time. Good question. We can discuss more. It's obviously more than what you see here in our annual reports. It's obviously more. Other questions? So credible or not? I'm nodding. Oh, come on, nod a little bit. The new investor from the Netherlands is smiling at least. He nodded. I saw you. So thanks for introducing yourself to me. And we have a Dutch speaking person in our company as well. So is Leander Hela, Sohrer? No, okay. So yes, I apologize. You have to stay on English, though. Okay. So what about reserves going forward? They will be prudent. We have been good on 92. Bad on €8, we will be prudent. Questions? Okay. Thanks a lot. Any questions on the reserve side, Ivek, from the webcast? Well, no questions on the reserve side. Okay. So let's move on then. Let's have a company look going forward. Not talking about U. K, not talking about reinsurance, not talking about investments. And obviously, I will not go into details on other countries either because when we go into details in Sweden, the country manager of Sweden will be here or Denmark, the country manager will be there. So it will not be an in-depth presentation or walk through of the different business units. So this is more like a company story. And 3 subjects will be kind of on the agenda for the rest of the meeting. Here with the people, we are fit for fight. And Doug Marius, he says, I love what I do even higher than Liverpool Football Club, which is okay. So Henrik, you will have a presentation later on. I started Sweden and Denmark, finally something big. So Henrik, where are you? Okay. So finally, I look forward to listen to your presentation. So kind of don't be too serious always. So let's have a little bit of fun even if results in quarterly is not that good. So real clear, most of these people have been around for many, many years. So we have been a part of the history and the story and some are new. So Lars Hogla is pretty new here. Leonhard is pretty new a year. And Thomas, the new country manager in Denmark is 14 months old in the company. But the other ones have a pretty long run back from Plutectur. We are a rather young company, but okay, they have been there for a while. So what's our strategy? It starts with the DNA of the company and it ends with the people. So when discussing strategy in ProtectAll, it's culture and people. In between, there is strategy. Culture and people is more important, okay? It's more important. However, we need a strategy and we don't like to change. If you change too often, it doesn't sound good. Investments are core. Balance sheet is important. Profitability comes before growth and claims handling. And top 8 is the 8 most important strategy projects in Protector, okay? So this is the perspective when we and the Board of Directors discuss strategy. So let's have a look at the 8. That is claims handling, profitable growth in Nordic, U. K, return on investment, plug modius, PE knockout And peers are not new. That's difficult, okay? And peers are the other insurance companies. I know we have an ambition to do better than everyone in the room as well, bug Marius. But we hope you do extremely well. If you are better than other insurance companies, risk adjusted, we are happy. Protective University, I'll come back to it. IT, world class headquarter and management matrix organization perfectly. So this is the top kind of agenda for Protector going forward. And I talk about Falcon. Henrik will talk about U. K. I have talked about Prostelmer Group Nordic already. Dagmarjes will talk about return on investments. Reinsurance is a part of the totality and important and will be covered. That has implications both for the Nordic and U. K. Market. Okay. So that's the slow moving technical thing. Okay. So let's talk about the Falcon. So the Falcon is the symbol for improvements in claims handling. 40% to 45% of all people in Protector work in claims handling. It is the moment of truth. This is who we are. This is what we do. Whether it is a car accident, a personal injury, a workers' compensation claim or Grenfell Tower. This is who we are. We should be good. The symbols here means clean dust, efficiency. The Falconer is a symbol for efficiency. Rolls Royce is for take care of your money and the client's money, recourse and reduce RR quality Rolls Royce. And perceived customer quality of the robot here is kind of altering the market and checking out quality every day. So here are the results on the most important strategy project we started 18 months ago in protectoil and will continue basically forever, but with a reasonable focus at least at the end of 2020. It takes time. The Rolls Royce level is €420,000,000 versus target €375,000,000 We are not known as a company to set small targets. We are ahead. Clean vest, we are the most clean company in the Nordic market. We are not delayed in clean sanding. And 20,042 out of 20,861 Mondays so far this year we have been clean. So the kind of figures you see here, you have never ever seen any insurance company update you on, right? Hand in the air. You analysts that talk about claims handling with competitors, have you ever seen it? No, you have not. How often can we see it? Every day. Do we have a management information system? Yes. It's set up and running? Yes. Can I have a look every day? Yes. Do we look every day? Yes. However, we didn't have a management information system sniffing out the gray silverfish. We have to figure out a better management information system then. Okay. I'll take that. Very pleased. Clean desk, we are pretty good. Not pretty good. We are very good. Instant customer feedback. Wow. The robot tells us that client is very, very happy. That's good, isn't it? When you increase prices, it's a good idea that claims handling is good because if claims handling is viewed as poor, you lose a hell of a lot of clients. If claims handling is looked upon as either prudent or good or very good, it helps because it matters for the client. And what matters for the client matters for the broker. So instant customer feedback is very good. We are 13.4 percent, I'm afraid not percentage points, percent better this year. Sorry about that. Compared with last year. Okay. That's pretty good, isn't it? Why? Because finally, we have put claims handling efficiency on the serious agenda because finally, we have critical mass in many product areas in at least 3 countries. Obviously, we're not even close to critical mass in U. K. So claims handling cost in U. K. Is obviously very, very high, and it will be next year as well. However, in 2020, it will not in that era. But now efficiency is 13.4 versus a target of 14.7. Percent. So behind targets, I don't really care. It's about what it should be. So the Falconer project, the number one strategy project in Protector, is doing very well. So I'm happy. So why struggling with a little bug or rate pressure in the Norwegian market the last 5 years, which has ended up in a combined ratio which is too high? Obviously, we do other investments and initiatives and we train and educate people. We improve systems and we release new systems 800x a year in order to improve what we do. So the speed of innovation in Propektoin is pretty good. It sounds like a nice story. What we all are looking for is to see that transferred into figures. My opinion is that, yes, it will. Yes, we are delivering port figures now. Our history has been good. You will, in my opinion, see a good future as well. So we do other things than look at what was good or bad and the quarterly reserves or not or Norway or Sweden or whatever. We have a top picture. This is important. Okay. Written by Norwegian. We have Ibsen, Henne Gibson and others. You know the author, Henrik Ibsen. But I won't say names on the kind of authors in Norway, I don't like. But okay. Great network will start in February. And the opening speaker is one of the top managers from Hannoverde, which Vielstein, Chairman of myself, had a dinner with in Monte Carlo a couple of months ago. He has never ever been in Norway. He has been a top manager in Hanoveria, one of the biggest reinsurance companies in the world for 20, 25, 30 years has been in business in 37 years, I guess. So he will be the opening speaker in February. And he could he should either go to London to do investor presentations like always or be the opening speaker in our management training program. And he actually decided to go to the Oslo, which is very good. So he has confirmed. We discussed it when we met him last Ilstag. We invest a lot of money, time and resources in management development. And I look forward to great at work starting in February. We think we can do more developing our own people. I think that since we are quality leader in all markets, you could argue other people are have the right attitude and good skills and we train. But we train too little, so we must train more. And one way of training is to do e learning, obviously. We have been pretty bad on e learning up until 2019. But when we decided to move around 9 months ago, we are moving quickly as always. So today, we have around 250 e learning modules supporting new employees and people who have been here for a year or 3. And gradually, this will be developed also to support some of the best people we have in protectors. So it's a project which has been up and running for 9 months. And the IT supplier of the tool here are giving the kind of feedback to Protector that they never ever have seen such a rapid development on such a quality level. So they would say, I've never ever seen anyone produce 25 modules in 6 months, never ever. And we are talking about big organizations buying a kind of tool here. So we move quickly. When we decide to move, the e learning platform on Protektoy is improving a lot at the moment. The challenge is to get it closer to on the job kind of situation in that area. So we invest in more education and training in order to prepare for future. So my final comment to my kind of opening presentation is that together with struggling with short term issues, which we will and shall, we obviously have ice in the future, feet on the ground, and we're trying to combine using resources both short and long term in that area. So thanks a lot for your attention on the kind of opening session. I guess I've saved a couple of minutes of what we were behind because we were 10, 12 minutes late and now we are only 5. Is it any kind of questions to me before leaving the word to Doug Marius? And then there will be a break half an hour from now. Any questions? Okay. Thanks a lot. And applaud to Doug Marienstern. Okay? Thank you. Zare, first slide. This is our asset fund management development for the last 10 years, rapidly growing company. This is SEK 2,300,000,000 in equity, SEK1.25 billion in subordinated debt and the rest is float, that is prepayments from customers. So it's about SEK10 1,000,000,000 now. And the seasonality you can see in the last quarters there. We get the prepayments in the Q1 from Norway and Denmark and in the second quarter from the UK. Another point to highlight here is the equity share that is down to 11.1%. That is not us being very smart that we foresee the correction in the stock market the last week. It's just due to us not having good enough investment ideas on the equity side the last couple of years. Spoke a little bit about it last year also that I didn't have any ideas. I got one suggestion that was a good suggestion. We didn't take it. But more suggestions, please. We have a low share now. And you can see that it's only in 2012 we added so low equity share of our portfolio. And on the bond side also that we'll come into later on, it's more than 50% AAA rated bonds. This is due to the very low credit spreads and the bond terms also are worsening. So then we are prudent. We'll wait for an opportunity. Hopefully the market will fall more. And it was a question earlier on today that I should answer. If the stock market correction of 10% made us invest more. And I would say that that's helpful. But we hope for more. We've been praying for this for so long many times, but maybe have an in on God now. So hopefully. Yeah, 1, 2 seconds late. Yeah. You had already seen this, good results historically. This is due to some skill, some luck. The interest rate in Norway being 1% higher than in Sweden and Denmark the last 8 years And some of our competitors are based in Sweden and Denmark. And also we have a slightly higher market risk than the average in the period. The investment process went through in-depth last year. We always try to improve it. We have made some changes the last year and I'll come back to them. What I will talk most about today is our capital allocation, how we'll approach it in Protektur. This is our main alternatives. The main one, insurance underwriting. And then we have investments, mainly equities and bonds. We can do buybacks and we have done it. We can pay back debt. We can give you back the money doing dividends. But first, when we do this, we first have to determine our minimum hurdle rate. Then we have to individually calculate returns and risk on every alternative. Then we deploy the capital where we get the best returns that reaches our hurdle rate. And we release underperforming capital and then we repeat. So this is our target on the return of equity. And as you can see, we have reached it in the last years. But when it comes to solvency capital, we don't only have the equity. So we also have a subordinated debt. So one third of our solvency capital is subordinated debt that we pay less than 5% for. So to get a return on equity of 20%, That equals a return on solvency capital of 15% just above 15%. So every insurance product has different or ties up different amounts of capital. So you have a long tail product, it ties up a lot of capital and then we need a low combined ratio for it to reach our hurdle rate. And the short tail product will tie up less capital. And we can also see that if the interest rate are increasing that will help us, then we can tolerate higher combined ratio and still get the same returns. And overall, the insurance business has been very good. Almost all products have very high returns. And that's a bit challenged now, but the history has been very good. But one thing that I need to comment is that we have a target of 100 above 150% solvencycapital ratio. So So when you look at how much we tie up in every insurance product that's multiplied by 1.5 or else we won't reach the target. Looking at investments, that's been challenging in the last years due to the low credit spreads and all time high stock markets. This is a bit technical, but I think it's important for you to understand how we think about it. And it's very dynamic also, so it changes all the time. But we will never be forced sellers of our equities. That's so important. If we ever will be that we have failed. Selling at the worst possible time, that's not a good idea. So we have to have enough capital. So we have to withstand that the financial crisis will come tomorrow or the next years. So that's what we planned for. So it ties up 50% to 6% especially that I use this 50% to 60% equities, a share price collapse of that magnitude. And if the stock markets fall that much, the use of our subordinated debt also falls. So that means that we have even less solvency capital that we can use. So it ties up even more. And the Norwegian FSA says that after a market crash of 50% to 60%, we have to prepare for another 29% fall. So that also ties up capital. But then again, the equity market has already fallen 50% in that scenario. So that will only be 14.5%. And we have a positive diversification effect. So when we look at equities, we can only use and the flow for us is free, but we can only use like 20% to 30% when we invest in the stock market. But the Tier 1, Tier 2 capital is cheap and we have to get a 20% return on the equities due to the return on equity target that we have. But when you translate this then, that means that every equity investment we do when the market is at all time high levels as it has been for the last 3 years, we have to at least get above 11% yearly return. That is a return on solvency capital of 15% and that will translate into our return on equity of about 20%. But of course, our forecastability on the stock market is not that good. And every company, we have to have a safety margin on that as well. So we have done some changes this year. Earlier on, now we have about 16% hurdle rate before we invest. And earlier on, it was a bit lower and we didn't think that was enough for us because we didn't have that foresight into the companies that we looked at. And the framework when we look at the bond side is just the same. In the financial crisis in 2,008, there was a severe spread widening all across the different rating classes as well. And this example on the high yield, the BB rated bond, it fell for a 2 year duration. The spread widened with about 1,000 basis points, meaning that the price decline was 20% to 25%. We have to hold that capital. But on the interest, we pay tax. So we get that back. And the same happens when we lose money on the bond side. We can use less of our subordinated debt accounts as sold as capital. And the Norwegian FSA after market crash will still say that it will fall more, so they have to hold that capital as well and we have positive diversification effects. And on this example then, a BB rated bond yielding 5%. We have to try to calculate the cost of risk. In this example, it's 2%. The cost of risk is the probability of default multiplied by the loss given default. And in this example, it yielded our expected return of 3%. If that ties up 20% solvency capital, it will return a return on solvency capital of 15%. That will transfer into a return on equity of 20%. So that's how we think about this. And if the spread levels increases, then we don't stress it that much. And it's probably a much better investment also. So this is the reason for us being kind of prudent the last years and taking down the risks. And now we really hope for more volatility. Buybacks, Zaida, that's your slide. Okay. So we kind of agree that when it comes to buybacks, it's kind of my comment, not the Chief Investment Officer. And I think that the story is pretty easy. We have a lot of capital ending quarter 2. So a very, very solid company. And we can see that the share price, in our opinion, is below intrinsic value. So why shouldn't we invest? Some of the excess capital we have in a buyback situation. At the same time, we have fewer investment IDs. And we are taking money off the table, both on the bond side and on the equity side. So we can kind of invest more in our own equities if we would like to. At the same time, we have a situation where we have profitability is issues on the insurance underwriting side, and we can see that we will grow slower going forward. So the position in the company and in the Board changed during quarter 1 and quarter 2. We saw that the growth rate, everything else equal, going forward would be lower. So let's consider buyback and then we decide it. Some of you have asked whether we do buyback in order to protect the share price. Come on. We never do that. Why would we? We are long term investors. We would never ever think to ID. That's too silly, isn't it? So at the moment, we thought and we still think that it was a prudent investment to do with excess capital expecting lower kind of growth going forward in that area. So it's that simple. It's that simple. Any questions to the buyback situation? You have already answered questions, whether we consider it now, not yesterday. We didn't have that on the agenda at all. So we did not. And I think you guess the reason why in that era. So we didn't have it on the agenda. We did what we did during the summer. It's not on the agenda, and you shouldn't expect anything going forward in that area. Okay. Thanks a lot. So overall third is for us, giving back to Bonnie to you. For us, it might be easier, you might think, because we can with the money we can use the float as well to invest and then get the gearing effect. And we can pay back our subordinated debt, but that's cheap solvency capital for us. So that's not a good idea. Holding too much excess capital, that's a significant headwind for returns. So a problem for us. But then again, we rather be prudent and we will not invest if investment don't reach our hurdle rates. This is an update on the equity portfolio. This is our large 10 largest holdings. And we say that we always look like 5 years ahead at least. And at the end of quarter 3, we had 15 companies in the portfolio. So it's a concentrated portfolio. So you should expect volatility in it. And with 15 companies, every year you should expect us to sell 3 companies and buy 3 companies. And we have sold 5, and that's a high turnover in the portfolio. And the problem is that in 3 of those companies, these 3, the investment case changed. So we had to do something. So we sold them. And when the investment case changed, we usually lose a lot of money. So we lost money in XXL and Ullapturum, but in Zooplus, the kind of the market disagrees with us. They still believe the investment case is intact. So that was a very profitable investment. In dust and the medicine, we reached our intrinsic value estimate and then we exit the position. History to date, the results have been good, only 4 years, so a short period to evaluate and a flattish development to last year. Some of the reason for the flattish development is this one. I will come back to it. But this is our optimistic approach to our investment today. So we believe that we will get 16% return on the 10 companies that we saw on the last slide plus the 4 that we didn't show you And that's optimistic. And given what has happened the year, we're not that good in forecasting. It doesn't look like that way because if this one is not balanced, if it's not fifty-fifty, then we won't ever reach that return. So far this year, we have had to downgrade our intrinsic value with more than 10% in 6 cases and only one upgrade. So that's not too good. So what do we do then? We expand the 2 hard pile. We have made investments that's probably too hard for us. We're not smart enough to invest in every company. You have to understand it and where the company is in 5 years at least. And we have obviously been too positive. It's a short time period and hopefully it's better. And as I told you earlier on, we have increased our hurdle rate, so more margin of safety. And we're also not satisfied with not utilizing all the risk capital that we have. So don't deliver on this point. We don't deliver on this point. And this one is seemingly good, but with our history now today, we downgrade more than an upgrade. So hopefully that will change. These are the companies. And when they are red, then we sell the position. One of them is a medicine that we have sold in October. And you can probably guess that 2 other ones are not on the top ten list. Might be, I won't tell you. But some positive here is that we have done this for 3 years and this is the highest number that we ever had. So we're more optimistic now on the portfolio. It's the half the size that we want it to be, but we're more optimistic on the portfolio that we hold than we've ever been so far. And that's after these disappointments this year. On the bond side, we try to do the same comprehensive analysis. We'll have a lot of time going through this. But unless on the equity side, we also have to look at the bond terms. And that's very important before we invest. And some comments here when we take a stress rating because we do our own analysis of what is the cost of risk. So in most high yield cases we invest in, we feel that the spread level is wrong. We believe it's too high The cost of risk is lower. But when we stress the company or the investment, If it's a BB rated bond, we stress it out or expect it to behave like BB rated bond if the financial crisis hits once more. We don't believe that the markets will agree with us when the financial crisis will hit again. So if you believe it's a BBB rated fund, market says it's a BBB, we'll expect it to behave like a BBB rated fund. So we allocate capital. It ties up a lot more capital. So we don't we're not optimistic in that respect. We have a marginal safety. This is the development of the fixed income portfolio, about SEK9 1,000,000,000, yield of 1.8%, not that much. Interest duration is only 0.3 years. That's because in the Nordics there are floating rates in the bond market. The credit duration is 2.3 years. And here we can see the change in the rating buckets. It's a very high increase in the AAA and tuned down to the BBB portfolio Because our analysis is that during a financial crisis, these companies will spread out a lot. And then it ties up a lot of capital in our books and the returns are not good enough. That might change. And then we will invest. This is a well diversified portfolio and this is the sector distribution. The commentary is that the largest part of the Norwegian high yield market is oil services and we have no oil services exposure. And the highest market share in the Swedish market is the real estate market and we have a 2% position there. So we kind of doesn't mind what the mark what is the market cap of each do our own analysis and invest in what we think is the best. The performance has been good so far. But when you look at a bond portfolio, you have to look at it through a credit cycle because it's kind of when the trouble hits, that's when you can see how good it is. So far we have our outperformance has been during more volatile times. So that's what we expect in the future, but let's see. To sum up, investments are core in Protectedur. Historical to date return on investment has been good. And we have patience. We are willing to wait. We will only invest if investment is above our hurdle rates. Questions? Or is it later on or yes? Questions? Yes. So the question on the yield of the bonds portfolio. How does that translate into return on equity or return solvency capital? It maybe depends on how much capital. Yes. So you can say that Repeat the question. Okay. Yes. That's how does the yield on the bond portfolio translate in the return on solvency capital and the return on equity. And if you have excess capital we invested in AAA rated bonds. So that part kind of ties up not it doesn't tie up a lot of capital, but we get a lot of excess capital that we don't get a return on. So it's I can say to you that our investments that carries capital in the bond portfolio, they reach our targets or else we will sell them. But we have a lot of excess capital at the moment. We have a very strong balance sheet and we're looking for investment opportunities and that's dragging down the results. Questions, Cindy Beke from the web for me? It's more about the share buyback, but I don't know if we should do it later maybe. It's more forced by the share buybacks. So that's a question about share buyback. What kind of question? So how do you define intrinsic value for Protector? And what would trigger a share buyback? Do you have any ratio in mind sort of what Buffett had with Berkshire until this spring? Okay. I think how do you define intrinsic value where the values you are more capable than to answer the question than me. And I think that popped up question to our IR department. And we send you some kind of information back instead of making a simple answer now. Is that okay? Share part in 2,009 was nearly 25%. How much share can you have or equities can you have, so percentage of the portfolio? Okay. I can answer that one. That depends on how much risk we have in the bond portfolio and how much equity. So when we bought back shares, then we have less excess capital. And as I already told you, that was something that we appreciated because we have very much idle capital at the moment. Now we have a bit less and but it depends. If you tie up a lot of capital in the bond portfolio, then we have less for equities. But normally it has been no problem for us to have 20% equity share. It might be higher, but then we have to take down on the bond side. And it depends on what we do on the buyback side and what kind of profits we get from the insurance business and the growth in the insurance business. So it varies all the time. So that one is the comment on the maximum equity position, which is a demand driven by the Board. And that's 20%. That could grow into 25%. If you have return on the kind of investment you have in that area. So there's a mandate given by the board. However, at the moment, as Todd Martin says, we are taking money off the table. And today, we are slightly lower on the equity side that compared with the end of the quarter, slightly lower today compared with the end of the quarter. More questions, Wiebeke? The ownership related question. And that would be, what would you expect the combined ratio for this sector being going forward? And what will the other players do? Okay. So the question is related to change of ownership. What's your expected combination going forward? Obviously, as you have understood by the walk through with Doug Marius, we are looking into what kind how much capital will that product consume. And obviously, we will walk away from that segment if we didn't think that the combined ratio delivers 20% return on equity. Exactly where that borrower is, that hurdle rate is, we will not comment on because we won't give that information away for the market, at least not at the moment. At least not at the moment. So any other question? No, thank you. Hopefully, I think I hope you appreciate that the kind of that Marius leaves the value of Protecto call open when walking through the investment philosophy of Protecto. And I'm not trying to hide bad stories either. So 1 out of 6 is on the right side. It's a pretty open statement, isn't it? So I think that again, New Zealand will see that kind of openness from other companies. Hope you appreciate it. Don't be afraid. We will continue to be open with you. Through that openness, hopefully then to build credibility. So now it's a break. It's half an hour. So quarter past 8, we will be back possibly 5 minutes later, quarter past 10, 2. So thanks a lot and there is something to eat outside. Hello again. Welcome back to the rest of our Capital Market Presentations. I would like to introduce now Frederik Kreyjan, who is not only in charge of reinsurance in Protektur, but has also held the position as a director in charge of property and cash of the products in the company. He is 1 out of the 2 people working now setting up a protector in the U. K. Markets. His competencies is not only on product or insurance, but also on risk management. And he's actually one of the very few people who many, many years ago educated himself as a risk manager at the University in London. So I think your English is slightly better than mine, Frederic. So Rory, welcome to the very last. Thank you. Yes, it's gradually, gradually improving, this English of mine. So as Sade said, I'm a bit of an all rounder, but my focus very much is on the reinsurance and particularly the U. K. P and C business at the moment. And perhaps by way of introduction, I should perhaps also mention I've been with Protective for the past 10 years. It's actually coming up to 10 years on the 2nd November, so only a few days away. And together with Henrik and Suddo and many others, I participated quite a lot in our entry in Sweden and Denmark. And now primary focus is on the U. K. And the point that Henrik will touch on a bit later. Can you hear me okay in the back? Brilliant. A lot of thumbs up. That's great. So I thought when it comes to reinsurance, there are a few things that we'd like to touch on today. One is the purpose, sort of why and how we buy reinsurance. We'd like take you on a bit of a journey as to where we come from in terms of reinsurance arrangements and sort of purchasing patterns and where we are today. We thought we'd give you a bit of a current status of the treaties, look a little bit at the ratings of our insurers and also try and shed a little bit of light on what the future holds. So please feel free to ask questions as we go along, and I'll try to be as clear as possible. I think we'll start with the DNA and sort of our power of ideas. And when it comes to reinsurance, it's very much to do with relationships. So today, we've got something like 44 reinsurers reinsurers, reinsuring different parts of our portfolio with whom we've got long standing and strong relationships. It's very much a mutual trusting relationship that we need to build on a number of programs. And some of the other programs, we'll touch on a bit later, are more like commodity, some of the cap programs, particularly on the employee benefits side. But relationships are key, and that's why we invest a lot of time and people in spending time in whether it's Munich or Hanover or Cologne or London, and we travel around and we explain to people what we do on the direct side in order to generate that reciprocal trusting relationship. So I think that's quite important. And I think also what you'll see today on the coming slides that we want to be very open with you in terms of the structures. We'll go into detail as far as the various reinsurance structures are concerned. And please feel free to ask questions as we go along. I guess we all understand the purpose of reinsurance, but perhaps more to the tune of what we think about it. When we say why, it has to do with appropriate protection. That has to do with protection that really sits with the risk profiles that the different portfolios represent. And certainly, it has to do with reducing volatility. It has to do with capping potential larger losses or looking at portfolio wide, more proportional treaties as we've had historically. In other words, it functions as an alternative to capital. Historically, we've had proportional treaties. We've had excess of loss treaties. We've had alternative risk transfer structures. And we've had quota share treaties. And what you'll see later on today is a bit of a shift. I think touching on unique relationships has a lot to do with engagement. It has to do with a tremendous amount of meetings. But it all has to do with analysis and how well can we present our portfolio, how in detail can we analyze this and communicate that clearly to reinsurers, make sure that we have 100% transparency in terms of the inherent exposure that sits in our portfolios. And how can we position that to get us favorable outcomes of renewal negotiations and reinsurance placements as we can. We also use a professional intermediary, in other words, a reinsurance broker, to broker all our existing placements. And we certainly draw value from that relationship. If we go back a few years, I've split this into a few epochs, as it were. And we go back to the very start in 2,004 from our sort of cradle. Back then, which we could term the early days in Norway, we had an alternative risk transfer program, effectively smoothing out results, a quota share treaty across all products. We even had excess of loss protection. So we had a very, very low retention. We also had a rather low limit in terms of the type of we could write and effectively on an estimated maximum loss basis for property of about DKK 150,000,000. We'll touch on what these limits are a bit later today. Gradually, we are moving into the 2,007, 2010, where we've got a significant surplus treaty on the property side and we've got excess of loss treaties covering employee benefits and casualty. And this is very much a continued growth. At this point in time, we're still solely in Norway, So geographical complexity or other product lines have not yet been introduced. Again, very strong development and expansion in terms of capacity of the reinsurance program. But then something happens in 2,009, and that is that we have we are not successful in renegotiating the renewal terms on the Property Surplus Treaty. What then happens is that, that opens up space for another rather large reinsurer mentioned earlier today, steps into that place and has effectively had that position, a strong position on our Property Surplus Treaty over the past 8 years since 2010. During that time, we expand to Sweden in 'eleven, Denmark in 'twelve, Finland and U. K. A few years later, so thereby expanding our reinsurance programs. And it's not necessarily as straightforward because what we require, particularly on the property side, but also on the U. K. Casualty side, in order to function, operate and maneuver properly in a market, we require rather significant limits. But as we enter the U. K. Market, we don't really have any business. So effectively, that trust that we've built up in the Nordics was thankfully transferable to the U. K. And that goes for really all the treaties that we have in place. There's also a solvency based quota share structure in place, which we'll touch on a little bit later. But I think, as I mentioned, on the property side, we are expanding capacity quite significantly from 250,000,000 to 800,000,000 over this period. It's very much a gradual expansion. I think that's the word that needs emphasized. And we feel at the moment that the treaties we have in place effectively facilitate the business we want to write and helps us maneuver as efficiently as we desire in the market. Now if we look at 2019, and this will be the focus towards the end of the presentation, what we will have from the 1st January 2019, instead of a property surplus treaty, we'll have a property risk and a property cat on excess of loss basis. In other words, a non proportional structure, whereas we've historically had proportional structures on the property side. For all other products, that is to say, employee benefits and casualty, both in the Nordics and in the U. K, which are separate treaties due to the nature of the markets, are pretty much unchanged. But we'll have a very brief look at that. I think it's perhaps a little premature to speculate on what the future holds when it comes to reinsurance, but we are certainly discussing solutions associated with aggregate covers, possibly cross class of business or cross product line. And this is something we'll again engage with a few of our reinsurance partners in looking at what can be sensible solutions going forward. Okay. So that's a little bit of the backdrop. Now to the existing reinsurance structures. And please, again, raise your hand and ask if there are questions. I'm trying to illustrate this as simply as is possible. On the pillar to the right, we've effectively got our Nordic surplus treaties. They carry capacity of €800,000,000 consisting of a treaty capacity of 775,000,000 and a retention of 70 of 25,000,000. In the U. K, which is the pillar in the middle, it's a very comparable and pretty much identical structure, just with a little bit higher capacity of £100,000,000 within the treaty and for up to SEK 4,000,000 retention. That's in pounds. So just, yes, between SEK 40,000,000 and SEK 50,000,000. So a little bit higher capacity and a little bit higher retention. On the very left, we've got our our CAS Treaty that covers natural catastrophes. And natural catastrophe as apparel is singled out or excluded in its entirety from our surplus treaty in Denmark. That's why we have to buy that separately. And on the cat events, we would have a retention of DKK 50,000,000 at Danish kroners and with a significant capacity relative to the portfolio structure and portfolio profile our current portfolio represents. So I think already here you've got 2 different structures. The ones on the right are proportional in nature And dependent on the size of an individual risk, we see it either more or less. So for the larger risks, we will have a greater degree of cession to the treaty. And for the smaller risk, we'll retain a greater share. So every single individual risk underwritten, forming part of our portfolio, will be ceded individually to these treaties. For both of those treaties, we have a facultative facility, which sits quite effectively on top or above the treaty. And this facility is in place. It's pre priced and it's in place to cater for primarily individual buildings exceeding the 3 to capacity. Like hospitals in Norway, like large town halls in the U. K, like large warehouses in Sweden. So it's effectively a structure, a combination there of a treaty and a factored facility, which allows us to write risks with estimated maximum loss levels up to DKK 2,000,000,000 or GBP 204,000,000 So it's rather big step from where we were back in 2007, I'll say 10 years ago, when we had under a quarter of a DKK 1,000,000,000 in terms of what we could write. So that's developed and very much a gradual development. Any questions to property? I'll go to the next one because here we are illustrating how this program will change. So the proportional surplus treaty that we've had in place for a number of years, there are individual treaties in the individual markets that we find ourselves, has been a very good structure. It's been an excellent reinsurance contract from commercial point of view and also from a capacity point of view. Now over time, we have certainly discussed and evaluated and moved towards an excess of loss structure. Again, it follows a natural expansion of a rather vast, vast portfolio that we currently hold and will effectively allow us to retain more of the written premium but also consequently retain more of the claims that will incur going forward. The new structure will have a capacity of DKK 1,000,000,000 or GBP 100,000,000 in the U. K. The placement has been completed. So main treaty, as it were, our main property treaty covering all our property portfolios in all countries, including public segment, commercial segment, housing associations, all the Nordic countries in the U. K, is in place. It was a placement that was completed 2 days ago. And that is a placement that will come into effect 1st January 2019 with a 12 month duration. We are very pleased with both the markets participating on this treaty. We are pleased with the terms. And I think, again, we are very pleased that it's finally placed after having worked in preparatory mode for the past half a year, really. In addition to that, there will be a separate catastrophe, excess of loss treaties in place, effectively very much along the same lines as the one currently in force. Can you just give us an example of the different layers to the right there, Right. Absolutely. So if you were to say that the property loss for Grenfell Tower, just for sake of argument, would take a round figure, so let's say DKK 250,000,000 effectively, we would, on a single loss like that, a single large fire, we would retain the first DKK100 1,000,000 of a loss. The first layer, which is DKK100 1,000,000 excess DKK100 1,000,000 would be entirely exhausted. And it would go SEK 50,000,000 into the second layer, effectively exhaust the bottom part of the second layer. So as I just understand, you did EBIT200, and you will then be covered by the next €200,000,000 And then on top of that, you will need to take some more on your own book. Is that fair? No. So we will not sit anywhere higher up in the structure. We will only represent the retention of DKK100 1,000,000. And Layer 1, 2 and 3 are all placed to the tune of 100% with a group of 8 reinsurers, all of whom we have long standing and existing relationships with, all of whom understand our book of business. So would you typically take a syndicated in each of the layers or do they So and whether certain reinsurers sit low down in the hierarchy or higher up. For Nordic typically for Nordic property, that is not the case. The reinsurers would tend to write an equal share across all layers. If you look to U. K. Casualty, for instance, in other words, liability in motor, you will find very, very clear preferences where some marine insurers would prefer to attach at a much, much higher level. In other words, being far removed from the sort of normalized loss run, whereas others want to be much more hands on and even take part in what you could almost deem to be attritional losses. So the structure and the participation that we'll look at on the next slide when it comes to U. K. Cash flow, I haven't included who sits where. But again, it's more much more fragmented structure. Yes. Good. And we'll come back and touch on property, I think. Say again. Sorry. Yes. How would this change the ceded level you have for property from 1st January, yes? And also, is there any changes to the profitability of those ceded figures? Yes. So I think so two questions. How will this change at session level as at 1st January? And will the profitability be expected to change going forward? Yes? Okay. We do have a later slide. Yes. Should we hold on to that? Yes. Let's do that. It's a good question, of course. So I thought just to bring you up to speed as far as the current casualty in the Nordics and employee benefit structures are concerned. So here we've got 2 excessive loss programs. Both excessive loss programs cover operations in the Nordics. On the left, we've got Nordic casualty, which effectively covers all classes of liability business, whether it's products liability, public liability or financial lines related to PI, DNO, etcetera, our directors and officers, all sorts of liability products are covered within the structure as well as motor third party liability. And the structure affords a capacity of DKK 200,000,000 for liability products and an unlimited cover for motor third party liability, which of course is in line with what we offer on the direct side. This structure has been led by one reinsurer for the past 8 years, knows us well, followed the book for a long time and has been a program characterized by relative stability, both in terms of our retention and over the past couple of years also in terms of the limits. When it comes to the employee benefits products treaty rather, I think it's fair to categorize this very much as a catastrophe treaty. We carry a retention of €100,000,000 and the €400,000,000 excess of €100,000,000 is catered for by the treaty. So this has to do with huge tragedies triggering either 1 or a combination of employee benefits products. Neither of these two programs have historically sustained any sizable losses. So the profitability to reinsurers in these 2 programs has just been very good. And of course, like and as per normal, the reinstatement level, and I thought I'd just mention that, is between 24 reinstatements in the event of a claim, and it varies a little bit layer to layer. Did you explain reinstatement? Right. So if we have a loss which exceeds our retention and goes into a program and exhausts a certain share, a certain part of the program, For instance, if we have a loss of £60,000,000 when it comes to a casualty claim, we will represent the first £20,000,000 and then the treaty reinsurers will pick up the subsequent £40,000,000 Upon that loss incurring and upon that being advised to our which we do immediately to our treaty reinsurers, the capacity will not have been eroded, but it will have been reinstated. So it's an automatic reinstatement of the capacity exhausted within 1 or more layers. You pay once more? You effectively pay adjusted for the amount exhausted, not for the time remaining of the reinsurance treaty or the amount of Alaya exhausted. But again, at 100%. Yes? Pay whatever it is for that 6 days or 7 days. To pay 100% of that cost of the layer adjusted for the amount exhausted, and it only represents 4 or 5 days left of the year. That's what you do. Would you take that risk on your own? There is an automatic structure associated with most reinstatement clauses. And in a way, it is to give something back to a reinsurer who has sustained a substantial loss. You could, but normally it's priced very low. So you normally wouldn't. It's not prudent normally. You could, but you wouldn't. Yes. Right. Okay. And lastly, this is the last slide in terms of the current structures. This is our U. K. Casualty program. In the illustration on the left hand side, we have liability. Again, employers' liability, public liability, products liability and any liability extensions that we offer in either housing associations, public segment or the commercial segment. That has a retention of £1,500,000 On the right hand side, we've got motor, where we have considered it preferable from a commercial and pricing point of view to retain a little bit more exposure and have, therefore, a differentiated retention between the 2 product classes covered by the treaty. So our motor excess loss retention is €3,000,000 The capacity within the treaty is £25,000,000 and we have a facultative facility which sits on top of the treaty, representing another £25,000,000 Again, motor in the U. K. Is also on an unlimited basis. I thought I'd just mention a couple of things because this is a rather new treaty. We were first placed 1st March 2016. And the first renewal of the treaty was to take place shortly after Grenfell. Tragedy happened. And shortly after the Ogden discount rates, which is effectively related to an assessment of bodily injury claims and lump sum payouts. So we find ourselves in a very difficult environment. It's also the fact that U. K. Casualty and perhaps particularly U. K. Motor is not a reinsurance market that is sort of overflowing with capacity. It's a rather tight number of reinsurers willing and keen to write this type of business. So it's not as easy to maneuver as it would be for instance when it comes to Nordic casualty. So a challenging renewal, we the first renewal. And we have now just completed on the 1st September of this year our second renewal for a 14 month period, taking us up to 31st December of 2019. I think our view is the work put in by the team in order to prepare for this renewal has been phenomenal. The marketing efforts have been phenomenal. The result is a rate, a reinsurance rate, which is higher than we would hope for. It's certainly at a level where we can maneuver on the direct side in the U. K. Cash to market, but we do expect going forward to see that reduce. It's absorbing or taking out too much of our gross written premium at the moment. But we're in early phases in the U. K. And of course, the portfolio as the portfolio grows, we'd expect significant improvements there. The majority of the markets writing this reinsurers, that is, writing this treaty are also reinsurers that we've worked with for a number of years. But they are located in typically in London. So they are not necessarily the people that we have the closest relationships with. We have with their organizations. But over the past 3 years, a lot of work has gone into forging those relationships, which are some of which are new. And just perhaps to instance, the type of risk that we'd be looking to cover here. For instance, if we look at the ambulance trusts in the U. K. Consisting of 10,000 vehicles, that would be catered for by this treaty. If we look at large employers and liability programs for large retail chains in the U. K. That would be covered by this treaty. So just to instance a couple. And just one word really or a couple of words on reinsurance ratings. Our panel sits between A- and AA- and the average rating, if you weigh it by signed line, sits somewhere between A+ and AA- So we have strong reinsurers with us. I've just instanced this through the various programs, so the excess loss cat, employee benefits, Nordic casualty, property surplus and U. K. Casualty. And on the very right hand side, the composition from a rating point of view that our reinsurers for the property excess of loss program as at Oneonetwenty 19 holds. So as you see, there's a lot of sort of purple and pink and to a lesser extent, A- rated companies. This is important to us, of course, something we monitor continuously. And we'll most certainly continue to do so. I thought also just to bring into play a couple of comments associated with the renewal of 1onenineteen. As I mentioned, a lot of work on the analytical side goes into this. And we furnish reinsurers with a very substantial renewal submission. It's a huge document and it's our way of explaining as thoroughly and in as much detail to reinsurers what our portfolio consists of and where we expect to go forward. So to instance a few, when it comes to the property submission, again, a very analytical and data driven process, where we if I were to list some of the high the sort of key takeouts, as it were, has to do with low exposure and low risk, has to do with a healthy property portfolio over time having produced very, very good results. Our pricing being based on a highly significant database is on the property side, we've got more than DKK80,000,000,000 worth of insured values or exposure, to say another way. So that allows us to have a rather significant and rather high degree of clarity view on large loss loadings, large loss provisions, attritional losses for different types of trade. So it's valuable. Yes. Strong results again and a well defined underwriting strategy. So this is what we provide, and then we have subsequent discussions. And it should arrive and has arrived with a very sound program for 2019. Similarly, on the U. K. Casualty, slightly different angle, of course. We are looking at reduced risk and return to normal. I mean early days when building a portfolio, the portfolio composition, it's not necessarily as balanced as one would have liked. I mean, we can grow a little bit here and then perhaps a bit less there. But over time, this will balance out. And so we are more in a normalized portfolio composition at the moment. Continued Nordic support, certainly, and a reduced risk profile, both in terms of the class of business and where we're growing and what products and also the, again, type of trade and vehicle compositions of our portfolio. So we say pricing is too high relative to portfolio, and we expect improved terms going forward. When it comes to the other 2, I guess we've touched on this. Relative stability expected, no change to the lead reinsurer of either program. And as I mentioned, ample capacity in the market. So smaller programs and stable programs over time. One slide on to highlight a few faces, and I've been as humble as doing food myself here as well. We work in sort of preparations for renewals very closely between risk engineers and underwriting. That is absolutely key, that collaboration. And it also includes, when presenting to reinforcers, we always bring our best risk engineers and underwriters. So it's not just the analytical side, but it's very much the visual and visible parts, which is represented not by a reinsurance department, but by the people actually writing the business and making the decisions. It's extremely well received. And of course, there is an element to negotiations where we've got, again, very hands on involvement, both as a discussion partner throughout the process, but also in decision making when it comes to the final placements of the programs. Right. Solvency based reinsurance solution is in place and covers all lines of business. This was actually gone through last year. Similarly, there is a minimum session of 10% and a session on a whole portfolio basis, which can increase up to 50% given a need for that. So effectively, it's a shock absorber and can provide also capital relief. Then I think this might be the last slide we've got. So just a couple of comments on the property side. With the change from surplus to an excess of loss structure, our net earned premium, obviously, will go up dramatically as we're not ceding to the surplus treaty anymore. Claims will go up in terms of claims volume. Commissions will evaporate. They don't exist from an excess of loss structure. And the net result or the contribution that the property portfolio has when it comes to our operating profit or bottom line is expected to increase. Now a few figures on the right. But it's as a final comment here, perhaps I should mention that the surplus treaty is on a risk attaching basis. So every single risk in our portfolio that is either currently in force or renews or in sets between now and the New Year will, for the duration of that policy period, be covered by the Serpus Treaty. And every account, every policy that incepts or renews from 1st January onwards will be covered by our new excessive loss treaty. So this is yes. We're open for a final question. Obviously, this is a kind of rather thorough walk through of the reinsurance programs and changes. And we will be back after quarter 4, after full year result and talk a bit more about practical consequences kind of the slide you saw before this one. Your question, Vegard, So there will be more quantitative feedback a quarter from now, but this is kind of a pre update on what's happening entering 2019. Okay. Thanks a lot to you, Fredrik. Thank you. We are not really running late because my summary is not really 15 minutes. It's more like 2 minutes. So it means that the next speaker, Henrik, will have his half an hour in order to go through the U. K. And then let me introduce to you the kind of country manager in U. K, also the person working very closely with myself and very small group of other people, the key person setting up Sweden back in 2011, setting up Denmark back in 2012. Like a few other people in Protectedo, he is also a sportsman As a his background is cross country, like any Norwegian, you could say, educated in the States. You are, as far as I remember and do remember, you are the national champion for universities in the States. You have been celebrated in the White House. That was with one of the Bush Presidents then. So we'll welcome to Henrik. Cross country competitions in the U. S. Is not that difficult. All right. U. K, the flag we can skip, I guess, if this works. And not to tire you with these slides again. I think it is extremely important. First question we got when we introduced the U. K. Was what's the biggest risk? The biggest risk in the U. K. Is getting the wrong people on board and or not being able to align them to live our culture. And I think when we meet new employees in the UK, we say we are different. And this slide is not different. The words on it are not very different, but it is the fact that we spend a lot of time understanding it and then trying to live it. There are a couple of things that are different and I'll get back to some of them when I speak about the people. One thing has to do with best in class decision making, because in the UK the hierarchy is stricter and stronger than what it is in Norway. And when we speak about best in class decision making, that is not the management making decisions. It's about empowering people, making sure that everyone makes decisions. That's difficult for people who have experience from working in the insurance industry in the U. K. So that's a big difference. The summary here is that we are on schedule in the U. K. We've met some speed bumps, I've illustrated the speed bumps in the middle here. And one is Grenfell. Another one is reinsurance, and then we've had a financial rating requirement in one of our segments. Some of the speed bumps are related to market access. So the financial rating has been a requirement in the housing association market. So that means that we have not had access to all clients. Reinsurance has not really been a speed bump in terms of access to market. Frederic mentioned it's a bit too expensive, which means that over time, we believe that we will be able to be more competitive because we will have better reinsurance prices. Grenfell has more to do with something that reinsurance also is related to, and that is the capacity it takes to deal with a large claim and an event like Grenfell and the fact that we need to present our portfolio, which is basically nothing in the UK, 2 reinsurers at the same time as we have one of the largest claims and you have a change in the Ogden discount rate. So of course, it has to do with the capacity of key people working towards this market. And just I'll get back to this slide at the end, but and you have read it. But one thing that is extremely important for us to understand is that there is an order in our 4 main targets. Cost and quality leadership will lead to profitable growth. So those are our main competitive advantages. That's extremely important to get right first time. And then that will lead to a top 3 position. Okay. Grenfell first, an update there. Public sector is a segment that we know very well. We're the market leader in the Nordics. We have a very consistent way of doing our risk assessment in the segment. Municipalities or local authorities are fairly similar. So our job is to select the ones that are not bad out of all those similar clients. And in order to do that, we systemize a lot of information. So we systemize obviously claims history, exposure histories, but also publicly available statistics and our own inspections. So we have seen more than 12,500 properties or buildings in the public sector, Nordic and UK. We have systemized all the findings, all the pictures and can benchmark one local authority or municipality against everything else on building class, on the standard of buildings, on deviations like waste containers placed outside the properties. So we have experience in the sector and our key role is to find those details that separate these types of risks. And we believe that after doing that type of a risk assessment on Kensington and Chelsea, where Grenfell Tower is, we have done that. First of all, the first time we did it a very thorough way because it is a large client in the new market. So we had more meetings, we did more inspections than what is normal. And secondly, we've done that underwriting at least 3 times now because we had to do it again in order to see if we did something wrong. Then we did it again when we renewed the client. And we are still of the opinion that this risk is a good risk. They just happen to have Grenfell Tower. On 14th June 2017, we established these 4 projects. Been through them before. You've seen it before. In order to focus our efforts in or after the Grenfell tragedy. And one of the issues was to find out what is our role in such a tragic event. And that is for two reasons. 1 is in the communication externally and internally, but another one is to prioritize where we spend our time. And this is has so many aspects to it. There is a public inquiry involving all types of experts from around the world following this event. And we are just an insurance company who happen to ensure that risk. So what do we do? Should we be involved in all different parts of this? Or should we find out what we are good at and where we need to do something? That's what we've done and we formulated some sentences around it, where correct settlements, it's not to the injured parties. It's not about it's about doing the correct claims handling, not about settling with too high figure or too low figure, but what's correct. So understand what we're doing, professional claims handling. And then there are other events similar to this where the total payments from the event have been 70% to 80% to 3rd party, mostly lawyers, and not to the injured parties. So the challenger, that's who we are. And how do we deal with that challenge? Is to work with the broker and the client in order to set up schemes where we can minimize those payments to the 3rd parties and make sure that the injured parties get most of it. So I'll get a little bit back to it. And lastly, has to do with risk management and understanding what went wrong in the Grenfell situation. So learn and then contribute in preventing this from happening again. And that is also about being open towards our competitors, for instance, and everyone. So we're not hiding findings that we make in this process. We will share it. So I spoke about the property claim, which is settled. So it's good to have that behind us. The liability is obviously far away from settled and liability is not concluded at all. But a couple of the actions that were done together with the client and the broker in order to minimize payments to 3rd parties is to set up schemes. For example, a rehabilitation program for the survivors, where instead of having 600 lawyers for 600 people, there is one person making a decision that everyone trusts, made a bit simple. And that should make sure that that money goes to the injured parties and not the lawyers. There is since liability is not established, there's obviously opportunities here for recovery. We are at the moment together with our reinsurers paying out money without prejudice, so without the liability being established. But we will meet with potential part liable parties in order to see if it is possible to get a solution there. And that is also a way of avoiding too much lawyer costs. We've had feedback from the insurance Chief of Insurance from Ken Sinkman in Chelsea and CEO for the broker in this case, very good feedback after the property claim has been settled. So we're satisfied with that and it gives us time to work with the liability claim going forward. This is about sharing risk management report. So we have a report about 40 pages where we go through in a simple way the claims handling process, but spend a lot of time on our findings from inspections of 400 tower blocks in the U. K. And we also put this in a context with 12,500 other properties that we have seen in public sector. So I think that this document is should be interesting for players in the U. K. Public sector, so the local authorities, the brokers and our competitors. And it should also be interesting for the Nordic countries. We can learn something from this. This is some examples of what we've done on the risk management side. We have categorized all the tower blocks in our portfolio, all the tower blocks we have in our databases, and we've made assessments of those tower blocks and are starting to understand how we can register using an online tool where the people on the ground can log information so that we can collect information about the fire security in these properties and then we can share it with the relevant parties later on. And then I just wanted to mention that it comes to people in the U. K, we have the biggest risk management team in the whole company is in the U. K. And they are important in many ways, not only when we have an incident like Grenfell, but when we look at new risks, they're an active part and an important part of our risk assessment process. They are also the most very often the most credible party when we meet the broker and the client. And they are extremely important in making the risks better, which is the normal way of looking at risk management. So improving the risks that we already have on board. A transportation fleet who is poor at registering claims and learning from the mistakes they do or is poor at understanding what kind of training their drivers need. That's a client that we can take on board and actually believe that we can improve. Okay. When we started U. K. Analysis, we knew the market was big. And now we have with the help from the same consultant that we used in our initial analysis, some more figures on how large the market in scope for us in the U. K. Is. So I'll go quickly through these. You have the sorry. So basically, by looking at the total market, we see £10,000,000,000 as in scope for us. If you adjust for the broke part, then that figure is €8,000,000,000 The largest brokers, the national brokers, they have by far the biggest share. But if you multiply these percentages with the market size, fair you understand that there also the smaller regional brokers could be much bigger than any broker in the Nordic market. So we need to look into also some of the other brokers here. They're very large companies, very large brokers. They could fit our culture and way of working even better than some of the larger ones, but we don't know yet. So there's a job to do in order to find out where to go. Geographically, we need to understand how the U. K. Market works. All these geographical circles, they are more than big enough for us to establish an office. Question is more when do we establish an office? We are in this region with the Manchester office now. London will be the next and that will happen in the beginning of 2019. We need to be in London. We probably need to be other places because the competitive situation shows us that the larger companies, they are located in the different location. And that means that the brokers in those regions, they have access to a big market. They don't need to go to Manchester or to London in order to find insurance companies. So we will then be basically outside their scope. Therefore, we will have to look into establishing in other parts of the U. K. As well. And when we entered the U. K, before we entered the U. K, what people said was, it's a very big market and we understand that and now we know a bit more. They also said it's highly competitive and very different from the Nordic market. But what you see here is that the larger players in the market, they have a large share of the market and that is better for us. It's they we can challenge the big ones just like we have done in the Nordic markets. Okay. Then over to the team. So there are some pictures. That's the team now. Some of them are so new, we don't have pictures. And I think an important element here is, I started out with saying that best in class decision making is different than what they are used to, so our understanding of that phrase. Another important element for us is that all business is local business. You see that there are some faces that all of these are Norwegian faces in the middle here. It's probably a poor way of illustrating it, but we're not sitting on top of the U. K. Team. It is not a controlling the U. K. Team. They know what they're doing. Many of these people have been 30, 35 years in the market. And of course, they know what they're doing in terms of insurance. But what our job is, is to support that team with our strength where they are weak. In some ways, for the more experienced people here, it has to do with structure and analytical capacity. And that's something we have from Norway and we can support with. But most importantly, it has to do with helping this team understand our culture and make sure that we live that every day. So we have an experienced team. We're starting to cover all the key roles, And then we fill up with capacity of highly educated graduates who do well on our tests and are committed to living our culture. People are obviously important in the perceived quality and you've seen this result before. It is our broker survey from 2017, where we received very good feedback. But this is early. We did not have a lot of time to make mistakes at this time. But at least the brokers believe that we will deliver quality when we sent out this survey. And we are probably today sending out the survey for this year. So it's very exciting to see what the brokers think after we've had one more year of operations. I think the ambition of ending up at the same nominal score as 2017 is very high. But the most important element about these surveys is that it is a great basis for discussions with the brokers on where to improve. So to prioritize either strong sides of Protector continue being good or where we have done something poorly and need to improve. So it's a very good basis for those discussions. It's between 60 80 questions depending on how you define a question. Okay. Segments. Just go quickly through a status on the different segments here. So starting out with Public Sector where we started, we have communicated previously that we had a poor April 1, which is by far the biggest renewal date in this segment. And the main reason for not winning a lot of this volume had to do with price. So we were too high. In many cases, a lot too high compared to our competitors. And then the question is, well, if you could do it again, would you go down and win it? And the answer is yes and no. So mostly yes. We if we knew where the market was, we could have gone there. So we believed in the opportunity for very high margins. We didn't understand where the market was. In some cases, we, right or wrong, think that the market is pricing the risks too low, for instance, on some liability products. So we have 80 public sector clients in the portfolio spread in the green areas here and a consistent way of selecting risks. And I don't think we should be in a hurry to win volume in this segment. That will happen. So this is a big market. The clients are out for tender every 4 or 5 years. They're in deals and they have to tender because of public procurement. So we will see the market. And when we get the clients on board, it's not really that important. So that's public sector. Commercial sector, that's where the real potential is and we are gaining traction. The way we gain traction is to be out with the brokers, get to know them or use existing relationships from our employees in Manchester. And we've seen 500 tenders, only 60% quoted. In the Nordic countries, we are more at 80%, 85% of what we see, quotation rate. And the reason is that we have not clarified our risk appetite in a good enough way with the brokers. They're testing us to a certain extent. So they send us what we see as poor risks, and then we say no. So it's a process of learning, them understanding who we are and we understanding who they are. We're a bit careful on the liability side because we don't have enough data to understand where this ends. So we're a bit on the cautious side when it comes to liability. A lot of the volume is on the motor side. And I think it's a simple reason for it. It has to do with cost leadership. So on the motor side with frequency of claims, that's where cost advantage is most important. The brokers understand that. Clients understand that. And when we say that you cannot find someone who will give you a better price over time than us, then they believe us because they see that we have a large cost advantage and it is the truth. So but we are increasing the inbox for property and liability. Ten broker houses right now that are in focus, but only some geographical locations from them naturally around us in Manchester. And we are in the process of systemizing all the brokers, not only offices, but also names, their portfolios and finding out where to focus our efforts going forward in the market. And then the last segment is housing associations. It's as or like motor, a home turf area for a protector. Its cost advantage is extremely important. It's a data driven risk assessment, lots of data. These clients have very low deductibles. So we see a lot of claims. And the relative share of large loss provisions is small compared to a lot of other segments. So volatility is smaller. And we have a good relationship with the broker. So we've had some, as mentioned in the beginning, some speed bumps, especially on the rating side. So some of these housing associations, fairly small, it could be 500 units in They require A rating from their insurer. But Kensington, Chelsea and large local authorities, they don't require A rating. So it is about to disappear. And we've had a lot of engagement with the people in the market here in order to make that happen. So in summary, it's on schedule where 2018 has been some positives. I'd say the biggest positive is that we're gaining traction in commercial sector and some negatives on the volume side, on the growth side. And you've seen this. So the estimates, it's a bit difficult to estimate something when the opportunities are so big. But these are our best estimates at the moment. And to comment a little bit on costs and the key figures here. A little bit. A little bit. Cost is high in the beginning. We have not reached critical mass. And so around 20% in 2018. 20% is when we believe we will reach critical mass. Frederic spoke about the reinsurance. So you'll see that on the net figures that it is expensive. And then on the loss ratio side, it has to do with reinsurance and the fact that we have some clients with high deductible levels. So claims will be volatile in with a small portfolio. And that's the summary. Questions for Henrik? I mean, I think that it could be a long comment. But in general, we target a broad part of the market. Remember, one of our targets is top 3. And in order to find where to go, we need to understand what's out there. And we are in the process of understanding what the brokers have and what our risk appetite should be. So it's not a clear answer to it other than that. The housing sector is a good segment. Public sector is a good segment. And motor is easy to say that is a good general segment for us. There's one more question and then we'll go to I. How many employees have you got in the UK? 35. 35 employees. Okay. Thanks a lot, Henrik. So my summary is rather short. I think it's fair to say, if you compare ProtectAll with Nordic Companies, we are different. The first statement from Protektoy, which is very different from any other Nordic player, is that we consider insurance and its investment to be core business, both of them. While most competitors are basically all say we do insurance. So I think you should more compare Protecco with other players in the world with the same two statements. Investment and insurance is what we do. If you believe in that, that leads to a second statement, growth is good. As long as your combined ratio is healthy or good. The 2 most successful insurance companies in the world, the last 30 to 50 years is probably Berkshire Hathaway and Mike Kell. And that's kind of more companies with which we would like to look at, not really the Nordic competitors. Not saying anything wrong about the Nordic competitors. They're very good at what they do. They are good. But they have a different approach, which is not bad. It's different. But our approach is an alternative. Insurance and investment is core business. That means growth is good. If you can manage that with an acceptable profitability, then you will create a lot of value going forward. Remember, our history so far is cost and quality leader has led to profitable growth. We have demonstrated the last 10 years combined with HSI is 93, which in this kind of perspective is good. And we have delivered return on investment, which is good and return on equity size 21. Every insurance company, also Berkshire Hathaway, Warren Buffett, his company and GEICO, the daughter company of Berkshire Hathaway and Michael. They have through their history, have a look. They have met years where they have been unprofitable on a technical level. Go through history and see. It will happen. Even with Berkshire Hathaway, GEICO or with Michael or Ripotector. This is our 1st year where combined ratio is above 100. Apologize for the poor result of this year. We will be back. The strategy remains. And if I should may add at the end of this walk through, we are a bit ahead of Berkshire Hathaway and Markel after 14 years. So thanks a lot for your attention and for spending either 3 or 4 hours together with us today. We are kind of 3 minutes off the schedule. We won't take any more questions now. So thanks a lot. Have a nice

• Slides