Protector Forsikring — Earnings Release 2014

May 9, 2014

Q1 results 2014 Investor presentation

9 May 2014

Facts about Protector

• A focused Norwegian non-life insurance company
• Established Jan.1, 2004. (Listed Oslo Stock Exchange May 2007)
• Entered the Swedish market in 2011 and Denmark 1 Jan. 2012
• Ownership; ODIN, Alfred Berg Norge/Gambak, Franklin Mutual, DnB NOR SMB, Nordea, Stenshagen Invest, Ojada employees etc.
• Strong results, average combined ratio 2004 2013, 89.5%
• GWP in 2013: MNOK 1.861
• Solvency capital of MNOK 1.462, investment portfolio ~ NOK 4.7 bn.
• Market cap. 30 April 2014, NOK 2,53 bn.

Outlook 2014:

GWP up 20 % CR ~ 88 %

Dividend policy:

30 – 50% of profit after tax Target solvency margin > 250%

• Vision: "The challenger"
• Main targets:
• Being top three in Protector's defined business segments
• Cost and quality leadership
• Being preferred by the brokers

Highlights Q1 2014

34 % growth and increased guiding

• GWP in NOK up 34%,
• Best ever growth quarter
• GWP up 30 % in local currencies
  • Sweden and Denmark 382 mill (219 mill) in volume
• Gross cost ratio down to 8,1% (9,1%)
• Net combined ratio 79,9% (77,4%)
• Reinsurance commissions driving CR down in Q1 as always
• 1,9 % return on the investment portfolio (2,2%)
• Net return on investments NOK 83.8m (77.9m)
• Operating profit of NOK 162,4m (143m)
• Best ever quarterly profit
• Guiding 2014 increased
• Operating profit NOK 430m, up from previously guided NOK 330m
• CR 88%, down from 90%
• 20 % growth in GWP, up from 16%

Gross written premium Q1 2014

GWP up 34%, from NOK 904m to NOK 1.208,6m

• GWP up 16% within the Norwegian commercial and public lines of business
• Good renewal rate, 93%, down from 94% in Q1 2013
• Very good access to quotations, but hit-ratio slowing down in commercial sector
• GWP in Sweden and Denmark 92% growth
• 21 percentage points of total growth
• 75% growth in local currencies and 18 percentage points of the total growth
• Good renewal rates, 96%
• Change of ownership insurance, 22% growth
• No. of policies sold up 17 %
• Strong growth supported by a late Easter (Easter in Q1 the year earlier period)

GWP Q1 2010 – Q1 2014 (NOKm)

Claims development Q1 2014

• Gross claims ratio 88.9%, up from 87.4% in Q1 2013
• − Strong development within change of ownership insurance
• − Motor, other illness and accident in Norway behind schedule, all other products within the commercial and public lines of business in Norway doing well.
• − Sweden and Denmark behind schedule, two large claims (> MNOK 5) in Sweden
• Net run-off-gains of 6,3% (3% in Q1 2013), higher than in a normal first quarter
• − Run-off-gains of MNOK 14,4 within change of ownership insurance
• Net claims ratio 85.2%, slightly up from 85.0%. Higher claims ratio than peers.

Net claims ratio Q1 2010 - Q1 2014

Claims development Q1 2014 – 4 large claims

Helicopter accident, personal injury 5 busses on fire

Fire in garage Destroyed fire truck

Cost ratio Q1 2014

• Gross cost ratio 8,1 %, down from 9,1 %
• Increased staffing in all 3 countries
  • Critical mass not reached in Sweden and Denmark
• Average no of employees Q1 2014 162, up from 131 in Q1 2013
• Cost program will reduce costs with 15 mill in 2014
• Net cost ratio 5,3 %, up from 7,6 %
• Negative costs due to high level of reinsurance commissions
• The relative share of reinsurance commissions down due to a higher retention rate
• Gross cost ratio will continue to decrease in 2014 and forwards

Net cost ratio Q1 2010 - Q1 2014

Highlights Q1 2014 – Norwegian Commercial/public lines

• Volume up 16 %
• 37 % growth in the public sector
  • 5 large and 1 very large wins, 0 large non-renewals
• 2 % growth in the commercial sector
  • 6 large wins and 1 large and 1 very large non-renewals
• Personal lines of business , 66% of total volume
• 9 % growth in Q1
• 30 % growth other lines
• Renewal rate 93 % , up from 90 %
• Renewal rate above 100 % in the municipality sector
• Renewal rate in the commercial sector 86 %
• Profitability measures within claims handling started
• Loss prevention and recourse, yearly claims reduction of NOK 40 50 mill
• Full effect of the measures expected in 2016
• Slow start on Q2
• 2 large non-renewals

Highlights Q1 2014 – Sweden and Denmark

• 92% growth, 21 percentage points of total company growth
• 75 % growth in local currencies, 18 % points of total company growth
• 3 large wins and 1 very large win in Sweden, no large non-renewals
• 2 large wins in Denmark, no large non-renewals
• Strong renewal rates, 96%
• Combined ratios above 100%
• High cost ratios due to lack of critical mass
  • Critical mass will gradually occur in 2014
  • Very high level of Motor business in Sweden, less cost effective
• 2 large claims in Sweden in Q1, no significantly profitability issues
• Combined Ratio < 100% expected in 2014
• Will support double digit growth on company level in 2014 and 2015
• Very good start on Q2
• 2 very large and one large wins

GWP Q1 2011 – Q1 2014 (NOKm)

Highlights Q1 2014 - Change of ownership insurance

• Volume up 22%
• No. of policies sold up 17%
• Strong growth supported by a late Easter (in Q1 last year)
• Real estate prices in Q1 unchanged (up 0,1%) relatively to Q1 2013¹
• Good profitability
• Run-off-gains of MNOK 14,4
• Profitability measures yields results
• Cost ratio on a high level due to seasonality
• The recovery level remains high, but is slightly behind the very strong Q1 2013
• Very good court results, but no. of lawsuits remains on a very high level
• Win draw losses: 56% 21% 24%
• The real-estate prices are expected to flatten or slightly increase in 2014
• 4 % volume growth expected in 2014

Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014

Results Q1 2014

NOKm	Q1 2014	Q1 2013	2013
Premiums written gross	1 208,6	904,0	1 860,6
Premiums earned gross	530,7	400,2	1 814,6
Claims incurred gross	(472,0)	(349,8)	(1 450,6)
Premiums earned for own account	403,2	300,4	1 373,6
Claims incurred for own account	(343,5)	(255,5)	(1 133,5)
Operating costs for own account	21,3	23,0	(56,9)
Other income/costs	(2,4)	(2,8)	(9,5)
Net financial income	83,8	77,9	256,7
Profit before change in security provision etc.	162,4	143,0	430,3
Change in security provision etc.	(28,5)	(40,9)	(54,8)
Profit after change in security provision etc.	133,9	102,1	375,5
Tax	(31,1)	(20,4)	(88,5)
Profit before comprehensive income	102,8	81,8	287,0
Comprehensive income inc. tax	(4,4)	2,5	5,7
Profit for the period	98,4	84,3	292,6
Gross claims ratio	88,9 %	87,4 %	79,9 %
Gross expense ratio	8,1 %	9,1 %	8,8 %
Gross combined ratio	97,0 %	96,5 %	88,7 %
Net claims ratio	85,2 %	85,0 %	82,5 %
Net expense ratio	-5,3 %	-7,6 %	4,1 %
Net combined ratio	79,9 %	77,4 %	86,7 %
Retention rate	76,0 %	75,1 %	75,7 %
Return on investment assets	1,9 %	2,2 %	7,0 %
Earnings per share	1,50	1,35	3,96

• GWP up 34% (35%)

• Best ever quarterly profit

• No. 1 Nordic?

Note:

Retention rate = NPE in % of GPE

Earnings per share = (Profit before comp. income + Change in security provision - 27% tax on Change in security provision)/

Balance Sheet Q1 2014

NOKm	31.03.2014	31.03.2013	31.12.2013
Financial assets	4 674,0	3 780,7	3 999,8
Bank deposits	214,0	130,4	153,3
Other assets	909,5	733,2	590,9
Total assets	5 797,5	4 644,2	4 744,1
Total equity	875,5	667,9	777,2
Subordinated loan capital	148,1	148,1	148,1
Total reserves	4 225,5	3 441,9	3 368,8
Other liabilities	548,4	386,3	450,0
Total equity and liabilities	5 797,5	4 644,2	4 744,1
Solvency capital	1 462,2	1 212,1	1 335,3
Return on solvency capital, after tax	9 %	13 %	28 %
Solvency capital per share, end of period	17,7	14,7	16,2
Solvency ratio	159 %	185 %	93 %
Solvency margin	348 %	338 %	315 %
Capital adequacy ratio (risk weighted)	17 %	19 %	20 %
NAV	1 303,8	1 065,2	1 184,6
NAV per share, end of period	15,8	12,9	14,3

• 24% growth in investment portfolio

• Solvency margin 348 %, NOK 771 mill above the minimum requirement

Note:

Solvency Capital = shareholder's funds + security provision etc.

Return on solvency capital: Operating profit after tax /average solvency capital

Solvency ratio = solvency capital / NPW

Solvency margin calculated according to regulations from the FSA of Norway.

NAV = total equity pluss 73% of the total security provision etc.

No. of shares = total outstanding shares ex own shares

Asset allocation

• End of Q1 2014; Bonds 88,3% of portfolio, Norwegian equities 11,7%
• Increased exposure in equities
• DKK 50 mill invested in Danish equities in Q1
• Discretionary bond portfolio significantly reduced and re-allocated to funds
• Improved risk adjusted return

Money-weighted allocation of investments 31.12.2013

Portfolio structure and quality bond portfolio

• No currency risk
• Duration 0,76 years (0,86), average maturity is 3,45 years (3,23 years)

Bond portfolio 31 March 2014

Quality bond portfolio 31 March 2014

Split of fixed income portfolio	NOK mill	%
Bonds	424	10 %
Bond funds	3 700	90 %
Bank deposits	5	0 %
Total	4 129	100 %
Rating including internal rating by Norwegian financial institutions
Investmentgrade	2 789	68 %
BB	25	1 %
B	-	0 %
Non rated (funds)	1 314	32 %

Investment performance Q1 2014

1,9% return on the investment portfolio

• Net investment result of NOK 83.8m, 1.9% return (NOK 77.9m, 2.2%)
• Equities, return of 2.9% (6.8%), OSEBX 2.4%, OSEFX 1.8%
• Bond portfolio, return of 1.8% (1.7%) - Yield end of Q1; 4,8 %
• Investment portfolio of NOK 4,674 m (NOK 3,781m), 24% growth

Shareholder matters 30 April 2014

Shareholder	No. shares	Percent
ODIN NORDEN	6 611 211	7,67 %
STENSHAGEN INVEST AS	4 610 180	5,35 %
PROTECTOR FORSIKRING ASA	3 570 661	4,14 %
OJADA AS	3 563 116	4,14 %
HANSARD EUROPE LTD	3 475 930	4,03 %
MSF-MUTUAL FINANC IAL SERVI FD	3 261 596	3,79 %
TJONGSFJORD INVEST AS ¹	2 811 809	3,26 %
MP PENSJON PK	2 375 706	2,76 %
AVANZA BANK AB	2 347 538	2,72 %
VERDIPAPIRFONDET HANDELSBANKEN	2 284 453	2,65 %
HANDELSBANKENS NORDISKA SMABOLAGSF	1 900 000	2,21 %
ARTEL HOLDING A/S	1 873 451	2,17 %
GABLER RÅDGIVNING AS ²	1 702 751	1,98 %
VERDIPAPIRFONDET ALFRED BERG GAMBA	1 689 791	1,96 %
FROGNES AS	1 649 916	1,92 %
VARMA MUTUAL PENSION INSURANCE	1 642 329	1,91 %
VPF NORDEA NORGE VERDI	1 638 468	1,90 %
VERDIPAPIRFONDET ALFRED BERG NORGE	1 451 944	1,69 %
JOHAN VINJE AS	1 437 841	1,67 %
PETROSERVICE AS	1 343 815	1,56 %
TOTAL 20 LARGEST	51 242 506	59,48 %
OTHERS	34 913 099	40,52 %
TOTAL SHARES	86 155 605	100,00 %

No. Shareholders 2.690

¹ CEO Sverre Bjerkeli

Related parties shareholding

•	Management's direct and indirect shareholding totals 3,1m shares or 3,6% of current outstanding shares
•	Board members directly and indirectly own a total of 9,9m shares or 11,5%
	of current outstanding shares
•	33 employees own directly a total of 4.8 m shares or 5.5% of current outstanding shares (incl. management)
•	Protector own 3.570.661 own shares or 4,14% of current outstanding shares

Notifications of trade in Q1

• Chairman of the Board Jostein Sørvoll has 20 March. through his company Gabler Rådgivning sold 800.000 shares in Protector at a price of NOK 29,00 per share
• Merete C Bernau, Dir. Change of Ownership Insurance, has 25 March sold 10,000 shares in Protector at a price of NOK 29,00 per share
• Jørgen Stang Heffermehl (member of the Board of Directors until 30 April) and his family have 26-27 March sold 238,818 shares in Protector at an average price of NOK 28,6317 per share

Outlook 2014

Guiding 26 February 2014 Guiding 9 May 2014

• GWP up 16% GWP up 20%
• Status per Q1, ahead of schedule
• Combined ratio 90% Combined ratio 88 %
• Status per Q1, ahead of schedule
• Gross claims ratio slightly behind schedule
• Gross cost ratio < 8 %, on schedule Gross cost ratio < 8 %
• Operating profit NOK 330m Operating profit NOK 430m
• Status per Q1, ahead of schedule
• Return on solvency capital 20% Return on solvency 24%
• Status per Q1, ahead of schedule

Outlook 2014, increased

	Res 2013	Old 2014e	New 2014e
Premium growth in NOK (%)	23	16	20
Investment Income (NOKm)	257	190	250
Operating profit (NOKm)	430	330	430
Gross cost ratio (%)	8.8	< 8	< 8
Net combined ratio (%)	86.7	90	88
Change in Security prov. (NOKm)	54.8	N/A	58
Return on solvency capital (%)	28	20	24
Earnings per share (NOK)	3,96	N/A	4

Return assumptions 2014¹:
Equity allocation approx. 12% (10%)
Return equities: 8% p.a. (8% p.a.)
Return bonds: 5,4% p.a. (4,0% p.a.)
Average inv. capital: NOK 4.400m (4.300'')
¹Figures in brackets; Guiding 26 February 2014

CEO Summary, Risk outlook 2014

• Slightly reduced risk relatively to the risk outlook 26 Feb.

	26 Feb.	9 May
+ Volume up in commercial & public sector Norway	Risk Low	Risk No
+ Sweden and Denmark support double digit growth	No	No
+ Balance sheet growing leads to increased financial income	No	No
+ Cost ratio Gross & Net going down	Low	Low
0 Unchanged volume in Change of Ownership sector	Medium	Low
- Price inflation lower than claims inflation in Change of Ownership	High	Medium
- Rate pressure driving claims ratio upwards	Medium	Medium
- One or two negative surprises will occur	Medium	Medium
- Sweden and/or Denmark develops worse than guided	Low	Low

Summary Q1 2014

• GWP in NOK up 34%,
• Best ever growth quarter
• GWP up 30 % in local currencies
  • Sweden and Denmark 382 mill (219 mill) in volume
• Gross cost ratio down to 8,1% (9,1%)
• Net combined ratio 79,9% (77,4%)
• Reinsurance commissions driving CR down in Q1 as always
• 1,9 % return on the investment portfolio (2,2%)
• Net return on investments NOK 83.8m (77.9m)
• Operating profit of NOK 162,4m (143m)
• Best ever quarterly profit
• Guiding 2014 increased
• Operating profit NOK 430m, up from previously guided NOK 330m
• CR 88%, down from 90%
• 20 % growth in GWP, up from 16%
• Strong Q2 expected