Welcome to the presentation of Protector Forsikring Full Year 2025 Results. We will focus on the full year. A quarter is volatile. We say that all the time. Focus on the full year result that is more interesting and says more about the underlying realities of the business. Before I go into the results, I always spend a little bit of time on who we are. What we did this morning was to continue on looking at what the challenger should be in the future. One thing that we care about is that we, even when we are 700 people, even when we grow in number of countries, that we still act as one team, which is a bit contradictory to a performance culture where we compete against each other.
And also that we want local decisions, and also that we want each individual in the company to make decisions because they are where it happens and they should know what decisions to make. So that's what the challenger is. It is about making everything we do focused and simplistic. But when it comes to culture, we need to complicate it in order to spend time and really understand so that we're on the same platform and the same grounds for the future. Because I think that's extremely important in order to stay who we are, the challenger. And then to the highlights, other than that 84.7% combined ratio and a 14% growth with an investment result of a return of NOK 1.5 billion, leading to 31.7 kroner per share in earnings.
We have had some other activities in the quarter, one being the placement of a Tier 1 debt bond where the market was good, so with good terms on that. Maybe the biggest, other than the growth for 1st of January, which I come back to, news is that we have now been relieved of the maybe biggest mistake that we've made in Protector workers' compensation in Denmark, where we took on board a portfolio knowing that we didn't have the exact data we needed to underwrite it, but we underestimated the downside of that portfolio. And we have now sold that, so the agreement with DARAG is completed, and we can now focus on the lines of business and the business that we know how to do in Denmark. So that's very good. I'll get back to the reinsurance side and the growth later on.
Speaking about the growth, I think that it is important, in particular following 1st of January with high growth, it's important to remember how the portfolio is put together. What we see here is a development. The development is driven by disciplined underwriting. We underwrite in all these segments. Remember that the commercial segments, so if you look at the segment distribution on the left of the pie charts here, the commercial sector in all countries is bigger than the public and housing sectors. We have grown more in the public sector. That is due to mostly market conditions being, so it's been more rational pricing in the public and housing sectors than what it has been in the commercial sector. That's why public sector and housing has grown a lot also in the past five-year period.
Property and motor by far our biggest products, short-tail products. The U.K. is now close to half the business, or at least 42% of the business. But it's also important to remember that the 1st of January growth is related to the Scandinavian markets or the Nordic markets and France, not the U.K. The market conditions are different in those two geographies. So it's been easier to grow in the Nordics and France than what it has been in the U.K. the past year. So it's just a support so that you see what the inception structure in our portfolio was in the years from 2021 to 2025. Obviously, we don't know exactly how that will look in 2026, but at least you then see that distribution.
When it comes to 2025, what you have seen throughout the year is that from the U.K., we've had a good 1st of April in Public Sector and Housing. I've also said, and we've also experienced that the market has been softening. Rates have been going down, especially on the Property product in the Commercial Sector. It is slightly harder to achieve price increases. It's slightly harder to renew clients and also to get new sales. The churn in the U.K. during 2025 has been good. We've managed to keep the churn at a good level, around slightly above 10%, and been disciplined in the new sales side. We've had strong growth in the other territories or in Scandinavia. That is supported by good renewals, renewal rate of 95% in total for the company. It's basically the same in the Nordics.
But we've also had some new sales. So the markets there are, it's good on the Norwegian business, which has the highest growth out of the Scandinavian countries on 1st of January 2026. So a similar situation to what you see here. Denmark is number 2 on 1st of January 2026. But Sweden has a lower growth in 2026. So Sweden is the market where there is still more competition and more competition that we view as irrational. And then you have the French business, of course, where not a lot happens in quarter four. So most of it is old news of the start there. However, 1st of January is an interesting date because we communicated an estimated number of what we thought we would quote for 1st of January following quarter three. And that number was roughly right.
So what we have seen in the market for 1st of January in France is that we have won approximately 10% of what we have quoted in the commercial sector space, motor. And that's a lower figure than what we are used to in Scandinavia. It's more in line with what we are used to on the motor side in the U.K. And then on the housing sector, where most of the property volume from 2025 comes from, we have basically won nothing 1st of January 2026. So one of the big competitors, AXA, has come in and lowered prices a lot compared to what they did in 2025. So it's not a hat trick in France.
We have not won volume in all the segments we're in, but we've got some traction on the municipality side, the Public Sector side, where the market situation is very different from the Housing sector. The interesting thing is that the Housing sector is quite similar to what we know in the U.K., where there are low deductibles, lots of escape of water claims, and calculating the price is not very difficult. When we may make a mistake and the competitors that price lower than us, they may know something we don't. Absolutely, we're new in France. At the same time, it's difficult to see that it's very sustainable, those levels that we see in the Housing sector now. At some point, we believe that we can have success there as well.
Maybe not in the same way as 23 in the U.K, but at least it's not on the Public Sector side, which is more about Large Loss and risk selection.
Yeah. There are a lot of questions along the presentation.
Sorry, I forgot to say that. Please ask questions during the presentation.
If you go back to France after quarter three, you said that at that time you had been seeing around EUR 300 million in potential volume. And that your expected quotation rate would be around 70-75. But you also said it's still growing. So approximately where did you end when it comes to those two figures in France January 1st?
So it continued to grow, not a lot from that, but the quotation rate went slightly down, both because of capacity, our own capacity. So we prepared as well as we could, but we didn't have enough manpower to do that with quality. So the actual number is very similar to what you could derive out of the 370, 75 in quotes. Any more questions on the volume side? And please ask questions in writing as well. Okay. Again, when we look at the full year, we also bring out the longer picture here. And there is volatility in not only the runoff and the large losses, but also on the loss ratio below those large losses and without the runoff. The large loss situation in 2025 is lower than what we have said is normalized.
The comment on the top pair going from 7 to 8, I'll get back to when I speak about the reinsurance, but that goes for 2026, not for 2025. So for 2025, it's still a normalized level at 7% approximately. So we're slightly lower than a normalized level in 2025. We've had some runoff gains, even though it's best estimate. But I've also said previously that following a period with uncertain inflation, you should expect that there is a bit more uncertainty and then there could be some runoff gains from that situation if we have been on the conservative side. Then when it comes to claims, I think the important message here is to say that if we compare full year 2025 to full year 2024, and you normalize for runoff and large losses, all countries are slightly better on the loss ratio side.
So it's an improvement coming from the price increases where we have unprofitable products or clients. And that's the simple way of seeing it. The only country that is slightly up, but very much the same, is Sweden. And then there are some technicalities, one of which is related to the transfer of the Danish workers' comp portfolio. So the risk margin is reduced. It's a one-off of approximately NOK 80 million for the quarter and the year due to lower risk in the remaining portfolio. I've changed that model. And then there is a small between the countries.
It has nothing to or no consequence on the total loss ratio, but between the countries, we've changed from a standard, very old model of calculating the future claims handling costs. And that changes the distribution with slightly lower cost, which is claims handling cost is on the loss ratio for U.K.
So U.K. is slightly higher. And then Norway and Sweden have had a bit more of that cost. And that's a one-off again. So they're slightly lower. And with that information, the conclusion is that all countries compared to 2024 are slightly better normalized for all of that. Any questions on the loss development side? You have all the figures on large loss in order to normalize on all these levels. So I won't go through each of them, but that's the total picture. So we have cost and quality leadership leading to profitable growth as our targets. The cost side is very flat. There is no or very limited efficiency improvements in what you see here. There are some effects that make this 2025 look higher than 2024.
But if you correct for the fact that the share price has increased, we've talked about that before, more than what it did in 2024. That is connected to an incentive-based share program for some employees. In France, then you'll get slightly lower than what we had in 2024 on the cost side. There is no or very limited efficiency improvement. We do that consciously. Of course, we do want to see the effects of that investment we make. I think it's more likely that we see that effect in new opportunities for growth, that we spend it on developing the company on the growth side to grow, than that we cut and slim down departments very quickly in order to get the low cost. That takes some time, as you understand.
So I think there's nothing very special to comment on here other than those comments I've already had, unless you have any questions on specific countries or the totality on cost. Now continue to the quality leadership. Last time we brought this up, we had the U.K. survey with the brokers, where we got very strong feedback. We've also had the Scandinavian or the Nordic surveys out and had very strong feedback. It's especially good to see that we are increasing the distance to our competitors in all the Scandinavian countries. We are also winning more prizes, external prizes from the brokers. So the largest broker in Scandinavia, we are number one in Sweden and in Norway. We've also won other external surveys that support our own survey.
But at the same time, and as always, the most important thing about this survey is to understand that feedback, use it as a basis to discuss with the brokers who are our best and only friends, how we can improve, what we should prioritize to improve in the future. So this is good news. It doesn't automatically mean that we will get more business from the brokers, but it means that we're in a position to require more from our best and only friends. And I think that's the important part, that the long-term gain from this is that we can require better data, more data. We can require that they invest together with us in competing against the direct channels and that we can do those larger projects because you say that we are the best partner for you.
So that's a good thing, but it doesn't mean that we win more clients tomorrow. Yeah, there is basically nothing I haven't touched upon here since we've talked about the cost previously as well. So I'll move forward to the investment side. And yeah, when you see this, it's per 31st of December and does not then include the reduction from the transfer of the workers' comp agreement, which is for 2026. And it does not include the new growth, of course. So that's a change. But the results on the investment side are strong in absolute terms and relative, especially on the equity side, but also on the bond side in a very strong market. And the yield is down due to the reference rate if you compare it to last year. Other than that, on the bond side, it's a very similar portfolio.
We steer interest rate towards our liabilities, and we have a slightly shorter duration in our reserves. So that's down. And then you see the comment at the end that we have the assets under management are reduced by the transaction amount. So the reserves that we had on the Danish workers' comp portfolio, approximately NOK 1 billion. And on the equity side, I think it's right to say that it's both absolute and relatively strong result. There are some changes in the portfolio. You've seen that discount to intrinsic value has reduced significantly from last year. Some of it is obviously that we've had the gain that we have. So share prices have gone up, but there are also some companies or some sectors that have performed worse than what we have expected. So there have been some changes in the intrinsic value.
We're open as a value. This year, it has been some disappointments on certain segments and companies and some changes in that portfolio. Even though it's the same number of holdings, there have been some changes in the portfolio during 2025. You'll see that in the annual report, what we had at year-end 2025. Any questions to the investment side? You can have a microphone.
You managed to earn an annual rate of return on investments of like 14% over the last 10 years, which is on the last slide. How did you do that? And are you going to keep on doing it, or is it going to be another number in the next 10 years?
Yeah. So Dag Marius is here, and he's in charge of that. But I can answer that question in at least a simple way. And that is that we believe in what we're doing, and we will continue believing in doing that. So investment is core business for Protector insurance. And we will continue to step by step have improvements in our processes. But what the future will give, that's very difficult to say. Our ambition is to beat the market over time. And we think that those processes are set to do so. So unless Dag Marius has anything to add. On the income statement here, we have a couple of comments. And I've touched upon one of them before, the change in risk adjustment. It's an IFRS element. So it's on top of the best estimate reserves. There is a risk adjustment in IFRS.
When a long-tailed reserve portfolio is out of our portfolio, then the risk in total for the rest of the portfolio is lower. That's why we've made that change. It's a one-off, and it should be a stable number or fairly stable number in the future, depending on where the growth comes from. Then it's the larger change that we've made on reinsurance. It's a bit complicated just because there are no figures that will exactly clarify what has happened on the reinsurance side in the accounts. But to make it simple, we see it from two sides. So I said that we increased the large loss, normalized large loss rate by one percentage point from 7% to approximately 8%. So we're taking a bit more risk ourselves, buying less reinsurance on certain programs. I'll get back to that.
And then on the other side, we pay less for that reinsurance. And we wouldn't have done that if we didn't think it was a good idea. And we've done that on the areas where we have a lot of data, so where we think that we're actually able to predict what those large losses will be over time. So one angle is that we have increased risk, and that will mean that it's the very large losses. And as you've seen the last five years, our large loss rate is lower than 7%. And so these are the very large losses. So it's not something that will happen every year. This is a volatile element. It's a volatile part. It's far out on the tail, that one percentage point that we're speaking about. And then the reduction in costs is then higher than what that increase is.
On the capital development side, on the own funds, we have the Tier 1 that we issued. And then as we're growing, we utilize more of the Tier 2 capital that we have issued previously. And then that's basically the same amount as the dividends that will be paid. So that's stable. And then on the requirement side, it's on the insurance side that there is a change, and it's related to reinsurance. And that's the other angle to that reinsurance exercise. So it's increased approximately NOK 300 million on the requirement side. And when we do that and we have a target or a requirement of 20% return on that capital we need to hold for NOK 300 million insurance risk, which is higher than 300, of course, then our view is that it has to be that it's much higher or higher than 20% return on that equity.
Our estimation is that it is much higher than that. If not, we wouldn't have done it. So what we have done is to say that on what we call the risk program, that's basically fires that can be that large on the risk program, we have increased from NOK 100 million or GBP 10 million or EUR 10 million to NOK 300 million or GBP 30 million or EUR 30 million. And that's because we have very solid data sets to document and to calculate losses between or up to 300, and the price is too high. So let's not buy it. We can take that volatility. But obviously, there will be slightly more volatility in our results. But the economic realities of it is that it's the right thing to do. The cat is different. So natural catastrophes, that's different.
Just like predicting the interest rate, I don't think we should believe that we are best in the world at predicting what the weather will look like and what climate changes will do. So to increase too much on that side, obviously, we have a view of both how we select risks when it comes to natural catastrophes. We have processes and data that aim to avoid the worst ones, where there will be the most flood or the most windstorm damage. But to predict the consequence of weather-related damage to our portfolio is difficult. So we have increased retention on the traditional program to the same level, or actually higher, since it is in Danish kroner as on the risk side. But that's only for the first loss. Then we've bought more reinsurance that reduces that to DKK 100 million on the second loss.
The reason is basically that we don't think we know exactly how to calculate that. On the U.K. liability, it's just too high price. So then we say that you pay this price, or we take it ourselves to the reinsurers. And some wanted to pay that price or take that price, and some didn't. So then we took a higher share of the layer between GBP 10 million and GBP 25 million on U.K. liability. And we are much more comfortable with that portfolio today than what we were when we entered the U.K. So that's yeah. Any questions on the reinsurance side? Schwarzenberg.
Thank you for the walkthrough, Henrik. One, I think that what you're doing sounds reasonable. Absolutely. So we like it. What's your estimated or guesstimated increase in retention rate after this one? Because when we do our calculation, we end up that you estimate the large loss ratio to go up from 7 to 8. And our estimation is that the retention rate will increase with around 2.0 percentage points. Is that a fair assumption, would you say?
Yeah, I think that's a fair assumption. Obviously, it depends on how the portfolio develops. But with a 25 portfolio, it's a fair assumption. The distribution policy, it is very similar to what we have had previously. What you do see is, for the one who has studied it next to each other, is that the arrow is slightly taller. The green starts slightly higher up, and the blue box above NOK 200 is slightly higher than the one below. And that is to reflect the process that we have, where it's not really about these numbers. NOK 200 or NOK 150 is important. That's a bottom. And then there are activities. But it's about the risks that we look at and evaluate every quarter on the different areas, mainly the insurance side and the investment side, but all the underlying risks from them.
And then the stress scenarios and what we have in a stress situation, because what we always want to be sure of is that we are ready to act on profitable growth and good investment opportunities in a crisis situation, but at the same time, not to get lazy, obviously, and make sure that we don't think that we can make a lot more than you if we don't see those opportunities right in front of us. But it's a quarterly process or a continuous process with a quarterly decision. And it happens after we know what the results are, not before. Our long-term financial targets, no change in them. And it may seem a bit conservative to say 91% combined ratio with the history of the past five years and the underlying realities. When I say that they look good and we deliver 85, they still look good.
It is something about the growth. Protector has the growth company. Profitability is extremely important, but we also have to face the fact that in order to find new markets, there is a bit more uncertainty, and price is the deciding factor. 91 is long-term a very good return on equity. The same there, conservative relative to those numbers, but I think that it is a good steering to have. Then we're back to the summary. Any questions on the totality or the last part?
Hello, my name is Per Halmer Alst . I have a question. If I remember correctly, at the last quarterly presentation, you talked about the possibility of entering a new market in the U.K. within real estate. Could you say something about are you quoting for the first of April already, or is it too soon? And could you say something about your volume expectations in this market?
Yep. Good question. I should probably have said something about it on the volume side. So we have quoted very selectively so far in the real estate market. We have won a handful of clients in that market. But the selectiveness is due to the fact that we basically only quote what looks like what we have from before, housing, for instance, in the real estate sector. And in that part of the real estate segment, and especially for the large clients, it seems like the rates are a bit too low. So we haven't won many of the larger clients there yet. But we have quoted very little so far, so it's a bit unsure if the market intelligence is significant. But we're building those databases with data from the brokers. We're actually getting large databases from the brokers.
When we have a more granular model that can separate the different types of risks within real estate, we are very ready to make that a quoting machine. There we have the model, the people, and the setup. We're feeding that with data. Then we've said that it's approximately GBP 1 billion in that market for what we have risk appetite for. Over time, and I don't know what that is, let's say it could be three years if it's a hard market and a rational market, it could be seven years if it's a bit up and down. But we should have a large share of that market, meaning at least double-digit % or higher than that is quite obvious because there is a lot of attritional losses, and cost will matter in that segment. It's very similar to what we do.
Nothing in the figures for now, no good understanding of the market situation, but we're preparing, still preparing. 1st of April is not necessarily a very large date. It's more spread out on the real estate sector.
Good morning. Thomas Svensson from SEB. So a question to your U.K. business, just to help us to try to calculate sort of that trajectory or the combined ratio there. So the business you have today, that's the backbook, and then you have the frontbook. So how many years do you think it will take before you have replaced the favorable business with a new, maybe softer business?
So I've commented on this before, and we haven't changed the view on it. Other than that, the parts of the portfolio that should be out in 1st of April 2026 is going to be smaller than what we estimated. So it's not coming out for tender. But basically, what you can say is that for all the business we wrote in 2023, which is the big inflow as 1st of April 2023, it will be some clients with then three-year, but I'm saying that that's a smaller share than what is the normal. And then some clients with a four-year before they go to market. And then so let's say that it's approximately, I think I said that before, 40% on four years and 40% on five years, and then 20% on three years. And then maybe it's 42 and 42.
Okay, thank you.
16.
Okay, good. And just on your, if you look away from France, but just on your combined ratio, so are you thinking, are you prepared to go materially above or somewhat above 91% in certain of your established markets? If some are below, and you think about the average on your existing business looking away from France?
I think on existing business, we are prepared to write contracts over time that can be slightly above 91 on short-tailed business, if it makes sense. And that can mean first year not to do a two-price system, but that it is necessary to come in on a higher combined ratio than or significantly higher than 91 on the first year with mechanisms and risk management initiatives that make it profitable over time. But maybe more interesting, I think, is that we then were more interested in looking at new segments or going into business that we find data for, but that are new to us, which there's a bit more uncertainty around, but we have a strong book in the bottom.
Okay, thank you. Hello, David Valderhaug. A question regarding volume in Sweden going forward. You mentioned that it's still somewhat irrational pricing there, and as such, a bit harder to gain volume. Should we expect the coming years, 2026, 2027, to be at approximately 25 levels, or do you expect that to decrease or increase based on the market situation?
I think that it's very hard to predict what the competitors will do over the next 2-3 years. But what we see now is that it is still more difficult in Sweden, and that probably doesn't change tomorrow. But there are a couple of market movements in Sweden that can give us more opportunities. So one of the largest players in Sweden is not, they haven't officially gone out with it, but they are not very interested in brokers. And that can give some better opportunities, more opportunities. There are also some large initiatives on facilities in the Swedish market that goes for the whole Scandinavian market, where we have a very strong position with the brokers to do that cooperation.
And then we're in a game where it's more about finding an efficient way of dealing with clients that are slightly smaller and give them a good product through a broker. And that can grow the broker market share, the broker's market share. And that's since the largest Scandinavian broker is headquartered in Sweden, they are furthest ahead there. So there are some market opportunities that can be bigger, but the competitive landscape is a bit volatile in Sweden.
You've probably been asked this question many times before, but why did you really choose France?
Yeah. So the short version of that is that we looked at many countries on a high level. Do the brokers have a good market share? And is the market large enough that it is interesting to us? Is data available in that market? And public sector has been important for us. That is a market that has the same dynamics as we're used to with public procurement regulations and a similar type of insurance purchase. And then we, through the high-level analysis, we started in Spain. We didn't get data in Spain. Then we went to France, which was number two. And then we met the brokers, got data in France. And then we can go to the table and at least have a similar starting point as competitors when it comes to competence and understanding of the history. No more questions. Thanks for meeting or listening in.
Wish you a good.