Superstrong quarter, Scandinavia strikes back

First the facts:

Volume: Growth 41% in LCY driven by UK and Norway. Wow

CR: 82.7% with Norway and Sweden around 70% and UK with a "high" 90% for once

ROI: 1.4% despite bond return at 0.2%. Running yield at 5.7% is 70 bp up from last year despite reduced risk 

EPS/dividend: 10.2 NOK EPS and dividend at 5.0 NOK

SCR: 231% (which is too high)

Conclusion: another superstrong quarter.

The perspective is even more interesting.

Volume:
Every country is growing, ranging from 15% (Sweden) to 55% (UK) at the same time. Yes, the quarter is a small one, but it tells a story about competitiveness in all markets. First 9 months' growth at 18% with the UK real estate market and France only in the very early beginning. Wow, 18% is close to 20% again 🙂. And look at Norway which is growing as much in nominal value in Q3 as the UK without the huge client win. Growth estimates will probably increase slightly among analysts, gradually.

CR:
Run-off has delivered a gain above 3% three quarters in a row. What's your bet for Q4? YTD CR is at 83%, that's a fact. UK ended higher than normal at 90% in Q3, but Scandinavia strikes back with a superstrong CR. It's exactly what we had hoped for when UK gradually moves towards more normalised levels. If you look at the first 9 months' growth and CR combination in Scandinavia,  you can argue "Scandinavia is striking back". Norway and Sweden are below UK on CR YTD, you did not see that coming 🙂. Remember to always expect some volatility in the figures, especially on a quarterly level. This is a quite "normal" quarter in our view. CR estimates will probably increase slightly, but it's not important. The two other factors are more important.

 ROI perspective:
Protector has outperformed since 2007, even more since insourcing in 2014 and will continue. Remember, investment return has been 70% of profit HTD and now we have a running yield at 5.7% with an AA- rated portfolio. When you include the fact that medium- and long-term interest rates have moved up, you understand that ROI will continue north. It's important. 

You are looking at a compounder.

Superstrong growth, a very strong combined ratio, investments continue to deliver and the balance sheet is more than strong enough to support growth and increased risk-taking in investments when appropriate. 

Best regards,
David and Sverre

Lillestrøm, Norway

22.10.26

Disclaimer:
Hvaler Invest is a significant shareholder so you cannot trust us (or perhaps you can?)