Protector Post Q1 2024 flash
Another very strong year is easy to read out from Q1 and April 1st UK update 🔥
Growth at 12,3%, an impressive underlying claims results, pluss another very high growth UK April 1st renewal paves the way for yet another very strong year. We expect share price reaction to be positive, but if lower Q1 EPS year over year is the main focus you might get an opportunity to buy at a good price. UK is impressive and Nordics will improve a lot next 3 quarters on profitability...
Growth – UW disipline is key as always
The growth in GWP was 12,3%, underlying slightly stronger due to technicalities and run-off Sweden.
UK April 1st growth – Still going strong📈
We were optimistic and estimated a 23% growth in local currency in Q1. April 1st renewal date resulted in 28% growth even in a situation where 1/3 of last year's volume growth was on "one year's contracts" (remember?). This should make up for the "low growth" in Q1, and 2024 looks to be yet another very strong growth year for Protector. UK is moving towards 45% of total volume and the "runway" is still more than long enough.
Combined ratio – Strong vs peers and impressive underlying figures👏
CR in Q1 was 91,2% and UK is by far the best country at 82,3%(!). The Nordics all underperformed by a few %, mainly due to the motor product (weather and some cleanup portfolios possibly). All in all, the combined ratio is at a strong level despite challenging weather in the quarter.
The most interesting fact in the Q1 report is linked to the underlying net loss ratio. If you use normalized large losses (7%), 0% run-off, a reinsurance ratio of 2,3% and adding back the “discounting effect” you will find an underlying improvement of 20 p.p. y/y!!
We know, this is "rather" technical but trust us. The point is;
Last year Protector were “lucky” with reinsurance results and had almost no large losses
In Q1 2024 the reinsurance result was more on the “unlucky” side, while large loss were closer to normal levels.
This will lead to a very strong Combined ratio for the full year and seasonality effects in Motor Scandinavia will kick in
We'll be back later with a view on 2024 but for now - CR end year will be very good.
Cost ratio 10,6% – excellent as always 🥇
If you look at cost exclusive of commissions (which is what you should) it was another improvement (from 6,3% to 6,2%) from a world leading position.
Investment results – Strong performance again
Investment results came in at 350 MNOK, running yield in bond portfolio is still 5.8% .... 🙂
EPS – 5.5 NOK
Remember, increased swap rates lead to reduced investment result with 112 MNOK. This is a “temporary” effect that will go the other way when rates start to decline again.
Congrats to all of you in Protector! This was a strong quarter yet again, and you are well on your way to yet another strong year💪👏
All the best,
Sverre and David
25.04.2024