Protector Forsikring

Quarterly Report • Jul 8, 2016

Results Q2 2016

Investor presentation

Highlights Q2 2016

Very strong operating profit

• Operating profit of 255 MNOK in Q2
• GWP + 14% (12% local currency)
• • 22% year to date (17% local currency)
• Gross claims ratio 89.5% (73.5%)
• High level of larger claims
• Gross expense ratio 5.1% (6.7%)
• Net combined ratio 93.7% (87.0%)
• Very strong investment result
• Return Q2 221 MNOK, 3.0% (0.8%)
• Guiding unchanged

From Norwegian, to Scandinavian, to…

Our DNA

Vision The Challenger

Business Idea This will happen through unique relationships, best in class decision-making and cost effective solutions

Main targets Cost and quality leadership Profitable growth Top 3

Values Credible Open Bold Committed

Gross written premiums Q2 2016 - Continued growth

• GWP up 14% (22% YTD)
• Norway commercial and public up 7.4%
• COI up 7.1% in quarter
• Sweden 30.9%
• DK, UK and Finland volume is minor in Q2

• Further growth expected in Q3 and Q4

Claims Q2 2016 - Poor quarter

• Gross claims ratio of 89.5%
• Net claims ratio of 94.3%
• Norway with weak claims quarter
• Large number of medium and larger claims
• COI still high, but improved from Q1
• "Clean desk" influences negatively short term
• Run off gain of 0.6%
• Reserve losses COI as expected
• Gains WC and other products in Norway
• Sweden very good
• Denmark high (measures taken)
• Lower claims ratio expected in Q3/Q4

Q2 2012 Q2 2013 Q2 2014 Q2 2015 Q2 2016

0,0 %

Claims Q2 2016 - Higher level of larger claims in Q2

"Clean desk" project well underway

• No delays in claims handling
• Answer within…
• Handle within…
• Settle within…
• Never compromise on quality
• Right first time, on time, every time
• Some temporary effects in cost recognition
• Change of ownership and Sweden leading the way

Increased diversification and reduced risk

• True Nordic player with presence in Oslo, Stockholm, Copenhagen and Helsinki
• Sum of Sweden and Denmark now larger than Norway in commercial- and public lines of business
• Short tail from 38% in 2011, 58% in 2015 and further up to 62% in 2016
• Growth in Sweden and Denmark drives Property and Auto from 18% of GWP in 2011 to 43% in 2016

Cost development Q2 2016

• Gross cost ratio of 5.1%, down from 6.7%
• World leading
• FTE`s now 249, 35% outside Norway
• All costs booked with regards to establishing UK and Finland, volume to follow
• Net cost ratio 0.5%, down from 3.5%
• High level of reinsurance commissions

Highlights Q2 2016

• Norwegian public and commercial line

• Volume up 7.4%

• High activity level in commercial sector
• Very good hit-ratio
• Renewal rate 82%
• Rate pressure as always
• Focus on «clean desk» in claims handling
• Very large win in 2017 with volume Q1 and Q3 2017

Highlights Q2 2016 - Sweden

• Volume up 30.9% (20.7% in SEK)
• Claims ratio net of 76.3%
• All segments and products are very good
• Renewal rate 106%
• Facilities/affinity programs running very well
• Improved quality and efficiency in claims handling and broker service processes
• "Clean desk" project doing very well

Open for business - Finland

• Seven people on board
• Experienced underwriters, claims handlers and account managers
• 3 public and 1 commercial customers won (8 public and 4 commercial in H1)
• Insourcing of claims handling 95% done

Highlights Q2 2016 - Denmark

• Small Q2, volume of low interest
• Claims ratio net of 106.0%
• Some facilities and affinity programs not running well
• Some management changes implemented
• "Clean desk" project in Claims handling
• Improving response time

Facilities / Affinity DK - Insufficient Control

							4 of	unprofitable	11 programs								of	Insufficient	programs	control
							P&C						WC
	Broker	Volume	Clams-% HTD - P&C (inkl. IBNR*)					Claims-% HTD - P&C (incl IBNR*)		Volume	Duration # years claims stat	Claims ratio HTD - WC (Incl IBNR**)				Category	Category	Category	Category
Program			DKKm Liabillity		Motor		Property		All LoB	Total	DKKm	Years	Paid claims %		Est claims %*	Total	1 (1-5)	2 (1-5)	3 4 (1-5) (1-5)	Total
Program 1	Broker 1	3	X		Y		Z		SUM		2	3,5	X		Y		2	2	2	2
Program 2	Broker 2	2	X		Y		Z		SUM		1	2,5	X		Y		2	3	2	3
Program 3	Broker 3	2	X		Y		Z		SUM		2	3,5	X		Y		4	3	2	3
Program 4	Broker 4	2	X		Y		Z		SUM		1	2,5	X		Y		4	3	2	3
Program 5	Broker 5	1	X		Y		Z		SUM		1	2,5	X		Y		3	2	3	2
Program 6	Broker 6	1	X		Y		Z		SUM		1	1,5	X		Y		2	3	4	4
Program 7	Broker 7	2	X		Y		Z		SUM		2	3,5	X		Y		2	3	2	3
Program 8	Broker 8	3	X		Y		Z		SUM		1	3,5	X		Y		4	3	2	3
Program 9	Broker 9	1	X		Y		Z		SUM		1	1	X		Y		3	3	3	2
Program 10	Broker 10	1			Y				SUM								3	2	3	3
Program 11	Broker 11										3	3,5	X		Y		3	3	4	4
Program 12	Broker 12										3	1,8	X		Y		3	3	4	4
Program 13	Broker 13	1	X		Y		Z		SUM		1	3,5	X		Y		4	3	2	3
Grand Total		SUM								2	SUM					n/a

• Establishing an overview takes min. 18-24 months
• Actions taken, a few of them too late
• Results will show in 2017
• Success comes from low cost and tight administrative control

Volume categories: >20 MDKK = 3 10 MDKK to 20 MDKK = 2 <10 MDKK = 1

Highlights Q2 2016 - Change of ownership insurance (COI)

• Volume up 7.1%
• Driven by real-estate prices (up 5.5%)
• Recovery level slightly behind schedule
• Claim reduction on a very good level
• Court results slightly weaker
• 35% 19% 45% (Win, Draw, Loss)
• Sales & services delivered to real estate brokers and clients still on a very good level
• New technical report & IT solution based on NS3600 will be released early Q4

Change of ownership insurance – Broker KPI Survey*

Change of ownership insurance – actions taken

• "Clean desk" project speeding up claims handling, all new claims handled within 48hours
• Number of Open Claims on a very good level (historical low)
• Broker KPI survey 2016: Claims handling quality score historical high
• On schedule to "Best ever" claims handling in Q4 2016

Cultural development

• Protector academy (new employees)
• New Generation Leader (NGL) programme started
• Protector Profile established and all employees evaluated
• Management Balanced Scorecard implemented
• 8-12 local cultural programmes running in parallel

UK progressing according to Schedule - Entry point Public Sector; ahead of schedule

• 20 meetings with 100 Public Sector brokers across the UK
• Manchester, London, Bristol, Cardiff, Swindon, Leeds, Leicester
• 85% of all brokers in Public Sector
• Professional brokers, warm welcome
• In addition; attendance at individual client meetings and conferences
• Claims databases larger than NO, SE, DK
• ~ 1 000 000 reported claims
• Good data quality
• 2 clients on risk, 3 additional clients confirmed
• 20 quotes submitted, awaiting response from 5
• Hit ratio 33%
• Several tenders in process

UK progressing according to Schedule

• Expertise on board, culture is key

• Experienced and good team in Manchester (City Tower)

• 9 people operational per Q2 (covering all areas of expertise)
• 6-7 people (4 signed) in progress
• UK management will be present at Capital Market Day 18th August
• Protector culture systematically implemented
• Continuous process involving all employees incl Norwegian resources
  • The team has arrived at 4 definitions per value
  • One value changed by the team; «Brave» → «Bold»
• Culture is an opportunity and a key factor for success
• When will UK take «cultural lead» in Protector?
• 6 main projects with good quality and progress
• Commercial sector in starting phase
• Good response from brokers
• Niche segments will be approached
• Brexit
• Uncertainty? Yes
• Change of plans? Not at all

Profit & loss Q2 2016

[1.000.000 NOK]		Q2 2016	Q2 2015	H1 2016	H1 2015	FY 2015
Gross premiums written		721,8	635,8	2 634,0	2 151,6	2 843,4	GWP growth 14% in Q2, 22% YTD
Gross premiums earned		873,0	706,1	1 655,9	1 372,5	2 791,1
Gross claims incurred		(781,4)	(518,7)	(1 489,1)	(1 081,4)	(2 283,6)
Earned premiums, net of reinsurance		720,4	560,5	1 352,0	1 078,5	2 176,0
Claims incurred, net of reinsurance		(679,0)	(467,9)	(1 289,0)	(923,8)	(1 861,0)	eo. high in Q2 2016, eo. low in Q2 2015
Net commission income		34,3	20,5	119,6	96,6	112,9
Operating expenses		(30,7)	(40,4)	(63,9)	(87,2)	(182,0)
Other income/costs		(10,6)	(3,0)	(7,2)	(6,0)	(13,5)
Net financial income		220,5	48,7	188,6	170,9	303,8	3.0% return in Q2, 2.6% return YTD
Operating profit before security provision etc		254,9	118,4	300,1	328,9	536,1
Tax		(31,1)	(19,5)	(59,7)	(42,1)	(71,9)	Low tax due to zero tax on equity gains
Profit before comprehensive income		223,8	98,9	240,4	286,8	464,2
Comprehensive income inc. tax		(1,1)	12,2	(8,0)	4,4	17,5
Profit for the period		222,7	111,1	232,4	291,2	481,7
Claims ratio, net of ceded business	(1)	94,3 %	83,5 %	95,3 %	85,7 %	85,5 %
Expense ratio, net of ceded business	(2)	-0,5 %	3,5 %	-4,1 %	-0,9 %	3,2 %
Combined ratio, net of ceded business	(3)	93,7 %	87,0 %	91,2 %	84,8 %	88,7 %	Slightly behind target of 90%
Gross claims ratio	(4)	89,5 %	73,5 %	89,9 %	78,8 %	81,8 %
Gross expense ratio	(5)	5,1 %	6,7 %	5,6 %	7,1 %	7,5 %	"World leading" expense ratio
Gross combined ratio	(6)	94,6 %	80,2 %	95,5 %	85,9 %	89,4 %
Retention rate	(7)	82,5 %	79,4 %	81,6 %	78,6 %	78,0 %
Earnings per share	(8)	2,96	1,18	3,15	3,44	5,48

1) Claims incurred, net of reinsurance in % of earned premiums, net of reinsurance

2) Operating expenses in % of earned premiums, net of reinsurance

3) Net claims ratio + net expense ratio

4) Gross claims incurred in % of gross premiums earned

5) Sales and administration costs in % of gross premiums earned

6) Gross claims ratio + gross expense ratio

7) Earned premiums, net of reinsurance in % of gross earned premiums

8) Profit before other comprehensive income divided by weighted number of shares

Balance sheet Q2 2016

[1.000.000 NOK]	30.06.2016	30.06.2015	31.12.2015
Ow ner-occupied property	13,6	-	13,6
Financial assets	8.261,5	6.191,4	6.623,1
Bank deposits	45,9	85,1	144,0
Other assets	1.372,1	1.184,7	924,4
Total assets	9.693,1	7.461,2	7.705,0
Total equity	2.051,3	1.790,4	2.012,7
Subordinated loan capital	648,1	148,1	148,1
Total reserves	5.551,4	4.624,2	4.306,5
Other liabilities	1.442,3	898,4	1.237,7
Total equity and liabilities	9.693,1	7.461,2	7.705,0

• Balance sheet strengthened with subordinated loan of 500 MNOK in the second quarter.
• Reported "Day-1" Solvency II ratio 146.4 % (Standard formula, and ex sub.loan Q2)
• "Day-1" Solvency II ratio including the subordinated loan is 176.1%

Asset allocation

• Increased exposure in equities, reduced in high yield
• Sold out US High Yield
  • Yields no longer in favour of US High Yield
  • Risk/Reward in Scandinavia ex. oil and oil service sector better
  • Reduce capital requirement
• No exposure to Norwegian oil and oil service sector for in-house managed portfolios
• Continued build-up of in-house portfolio
• Net investment portfolio of 7,448 MNOK at June 30th up 21.4% from Q2 2015.

Investment performance Q2 2016

• 3.0% return on investment portfolio, net investment result of 220.5 MNOK
• Equity portfolio; return of 8.9% (OSEBX 4,4%)
• Equities 5.2% YTD
• Bond portfolio; return of 1.6%
• Bonds 2.0% YTD
• Financial underwriting model introduced
• Model and market update on CMD in August

Shareholder matters 05.07.2016

Shareholder	No. Shares	Percent	Related parties shareholding
STENSHAGEN INVEST AS	6.550.000	7,60 %	 Management's direct and indirect shareholding totals 3,2 m
SWEDBANK ROBUR SMABOLAGSFOND	6.175.308	7,17 %	shares or 3,7% of current outstanding shares
ODIN NORDEN	4.485.857	5,21 %	 Board members directly and indirectly own a total of 11,6m
OJADA AS	3.563.116	4,14 %	shares or 13,5 % of current outstanding shares
VERDIPAPIRFONDET HANDELSBANKEN	2.871.000	3,33 %	
TJONGSFJORD INVEST AS ¹	2.811.809	3,26 %	On May 11th Chairman of the Board sold 700,000 of his shares through his company Alsøy Invest AS. After the
ALFRED BERG	2.089.323	2,43 %	transaction Alsøy Invest AS holds 1,002,751 shares in
MP PENSJON PK	1.945.379	2,26 %	Protector Forsikring ASA.
ARTEL HOLDING A/S	1.873.451	2,17 %	 24 employees own directly a total of 3.5 m shares or
J.P.MORGAN SECURITIES PLC	1.662.619	1,93 %	4,1% of current outstanding shares (incl. management)
FROGNES AS	1.649.916	1,92 %	 Protector owns zero own shares or zero % of current
JOHAN VINJE AS	1.437.841	1,67 %	outstanding shares
ODIN NORGE	1.431.201	1,66 %
GENERALI PANEUROPE LTD -GP11940006	1.422.250	1,65 %	Protector share - Quarterly volume and share price end of quarter¹
VEVLEN GÅRD AS	1.400.000	1,62 %	25.000
PETROSERVICE AS	1.283.815	1,49 %
BNP PARIBAS SEC. SERVICES S.C.A	1.248.142	1,45 %	20.000
NORDNET BANK AB	1.102.831	1,28 %
AVANZA BANK AB	1.085.410	1,26 %	me (1.000) 15.000
JP MORGAN CHASE BANK, NA	1.048.835	1,22 %
20 LARGEST	47.138.103	54,71 %	10.000 Volu
OTHERS	39.017.502	45,29 %	5.000
TOTAL SHARES	86.155.605	100,00 %
¹ CEO, Sverre Bjerkeli			0 4

Related parties shareholding

• Management's direct and indirect shareholding totals 3,2 m shares or 3,7% of current outstanding shares
• Board members directly and indirectly own a total of 11,6m shares or 13,5 % of current outstanding shares
• On May 11th Chairman of the Board sold 700,000 of his shares through his company Alsøy Invest AS. After the transaction Alsøy Invest AS holds 1,002,751 shares in Protector Forsikring ASA.
• 24 employees own directly a total of 3.5 m shares or 4,1% of current outstanding shares (incl. management)
• Protector owns zero own shares or zero % of current outstanding shares

¹ Share buy back/ sale not included in the volume figures Share price adjusted for dividends Data pr. 01.07.2016

Capital Market Day – Agenda

	Welcome and snack
10:00
	Company update
	In depth Swe & Fin
	In depth UK
	The investment challenger
	- Financial Underwriting

Guiding 2016

April 2016	Status	July 2016
Volume up 22 %	22 %, on target	22 %
Gross cost ratio < 7.5 %	5.6 %, ahead	< 7.5 %
Net Combined ratio 90%	91.2 %, slightly behind	90 %

-> Guiding maintained from last update

Highlights Q2 2016

Very strong operating profit

• Operating profit of 255 MNOK in Q2
• GWP + 14% (12% local currency)
• • 22% year to date (17% local currency)
• Gross claims ratio 89.5% (73.5%)
• High level of larger claims
• Gross expense ratio 5.1% (6.7%)
• Net combined ratio 93.7% (87.0%)
• Very strong investment result
• Return Q2 221 MNOK, 3.0% (0.8%)
• Guiding unchanged

From Norwegian, to Scandinavian, to…

Wish you all a great summer…

• and look forward to seeing you again on our CMD August 18th