Protector Forsikring ASA

OSE:PROT

Earnings Call Transcript 2019-Q3

[Sverre Bjerkeli, Chief Executive Officer]

Good morning, everybody. Welcome to this quarter 3 presentation. As you can see, we have another quarter with negative and poor investment return, and I'll come back and comment a little bit about that as well later in the presentation.The kind of possibly most important sentence on this slide is this one: Prices, they have gone up. We do expect to have some kind of profitability out from the market, and we will stay in the market. I would expect up until the date where the present law is changed with another one. That could be the summer of 2021, which means that we also do have a bit more time on reducing the number of employees in the claims handling area. So it'll kind of smoothen out the situation and slightly improve profitability going forward compared with the kind of communication we gave 0.5 year ago in that area.So that was kind of my -- a couple of comments to this area, but the rest of the presentation will focus on the business, which has been there for the last 15 years and that will be in our focus obviously in the coming years as well.So if you have a look at the volume development, and quarter 3 is not a very big quarter. It's not one of the big ones. Quarter 1 and quarter 2 are bigger. But what you can see is 17% growth, which is supported by 2 elements, a technical element relative to Finland. So the underlying reality is slightly less than 17%. And what you also can see is that the price increases, they do kick in and support the growth in the company here.So we are happy with the growth level. Obviously, we think that the kind of new volume you take onboard is to acceptable prices. So we do expect to take a profit out from new clients and price increases obviously help. They must obviously then improve profitability on the right side.So this morning, we celebrated slightly internally in the company one milestone. We -- October 1, we reached NOK 5 billion annual premium. And we will obviously add slightly more volume during quarter 4 as well. So this is 9 months' period, while the other here, they are full year figures. And what you can see and what you have seen during the last years is that we have exactly -- basically exactly doubled volume during the last 4 years.So if you go back to October 1, 2015, you would have seen a company with half the size today. We all do agree that an important element related to the growth is that it must and should be profitable. And I do know that the company had disappointed the market for the last 18 months on these areas. However, we are obviously of the opinion that what we're delivering at the moment will turn out to be technical, good profits for future and today than obviously from a bigger and stronger position than ever in the history of Protector. So we are happy with the kind of growth level we have at the moment. And in our opinion, the prices we get out from the market, they should be good enough to take out a margin gradually appearing during 2020 then.If you have a look at claims development in this quarter, the claims figures, they are supported by an arbitration afterplay. We updated the market that we lost the arbitration with our property insurer in quarter 2 and we had to take a loss in quarter 2 relative to the Grenfell Tower arbitration. However, a few weeks later, we signed a deal with our reinsurance broker that had kind of -- they had placed our contracts in the market and they had a professional liability situation related to that contractual situation. And we got 85% of what we lost in arbitration back from our reinsurance broker, which is booked in quarter 3. So that's kind of a one-off kind of a positive element in the quarter.And as you can see, there are some other runoff losses, which is on the negative side linked to personal lines of business, Workmen's Comp, other illness mainly in Norway, but also in -- slightly in Denmark. It Is kind of offsetting a significant part of this kind of runoff gain. So NOK 60 million on the one side, NOK 47 million on the other side, which adds up to NOK 13 million. So what you could think is that underlying reality is not far away from the combined ratio communicated around 92%. The underlying reality is slightly higher, you could argue.Obviously, when we do set reserves, we can't guarantee anything about the future. They are assumed to be correct. But what you have seen when it comes to these kind of reserve losses in the Norwegian market, they -- if you add up to a full year, these kind of reserve situations is basically 0. So you have a little bit on the positive side from quarter 1. You are slightly on the negative side in quarter 3. But in a full year, these kind of runoff situations is balancing out.And you visited our Capital Market Day a year ago. You saw that our reserve management during the last 5 to 10 years, they have been kind of prudent. So I wouldn't -- in the short run, I didn't have -- I wouldn't look too much into -- I close one window. I wouldn't look too much into the volatility per quarter when it comes to reserve development. I would take a longer view, on a full year view and on a 5-year view, and what we have delivered to the market is kind of a prudent totality in that area.The large loss ratio is slightly on the higher side. But as you know and what we do state every quarter is that what a normalized large loss ratio is for a company like Protector, growing quickly with a different product mix basically every year, it's not extremely easy to estimate what a normalized large loss level should be. So far, our estimation is around 7%. You might see a situation appearing next year where we could take that up to a somewhat higher level, but I wouldn't expect a significant increase in that. But as you can see, there are a number of quarters now where we are slightly on the higher side relative to a normalized large loss level. Then obviously after a full year, we will again consider whether this normalized figure is the right one or not.I wouldn't say it's very important. We have a 92% combined ratio this quarter with that kind of large loss level. So give or take, you could say that 9% is possibly okay. It could be 8%, it could be 9% as a normalized level here.As always, feel free to ask questions also during the presentation, and we will obviously pick up questions afterwards and answer those at the end of the presentation as well.

[Sverre Bjerkeli, Chief Executive Officer]

Then we continue. The cost level development is -- there's nothing much to say, actually. We are a world leader on costs. We are improving. The underlying reality is not that good. So you can see that because of poor technical profitability in this year, we do expect that bonus levels in the company will be very low at the end of the year, so -- and they are kicking in here. So hopefully, these kind of levels will pick up the next year. So the development is not that strong as you can see here, but the reality is that cost the real way is going down. Everything else equal, means that we can offer a slightly better price to market and still earn money on what we are doing. This is very important in frequency-based businesses, large clients, big, big motor fleets. The biggest motor client we have in the U.K. is about 3,500 vehicles driving around in the U.K. every day. And our competitive position in these market segments, they are very strong because the kind of cost level we have in Protector. So the cost level is good and it continues to improve slightly, not as much as what you can see here.So what you also can see from the combined ratio development in the company is that the Nordic market is not doing very well, and that's the reason why price increases are necessary and must be strong, while U.K. delivered pretty good at the moment. And Henrik will be back and explain a bit more about the U.K. development.I think this slide is possibly the most important one in the presentation. So when we met a quarter ago, we -- I guided that the quarter 3 figure in Norway will be higher than quarter 2. I guided on that Swedish figure in quarter 3 will be a lot higher than quarter 2. I said that in Denmark, for product mix reasons, quarter 3 will be lower. And I said on Finland, quarter 3 will be a lot higher. So what you can see here is that exactly what was said is delivered. The only figure I do not show is the Finnish ones. They are not applicable. It's not really interesting. The volume for renewal in this quarter is, what, EUR 600,000 or something like that, and the percentage price increase is much higher than anything else you can see here, but it's not really relevant. And it will be very volatile between the different quarters.So that's the reason why I just kind of took away the Finnish price development figures. January 1 then is more relevant because most of the Finnish volume is renewed exactly on that date here. But what you can see is that the 2 big markets, which is Norway and Sweden, is kicking in with 12 to 15 percentage points increased prices on exactly the same client last year compared with this year.Everything else equal, if you subtract average claims inflation, which is seen from our point of view, estimated to be around 7% in the motor business area, but around 4%, 3% or slightly lower in some other areas. Then you will have an estimated Nordic accumulated claims inflation around 4%. So if you say 12% or 13% less 4%, then you have a margin improvement relative to this quarter.And my guiding for the next quarter is that you will see a figure higher than year-to-date in Norway. You will see a figure at least higher than year-to-date, possibly a lot higher than year-to-date in Sweden. You will be lower for product mix reasons in Denmark, and Finland doesn't really matter because the renewal volume in quarter 4 is very, very limited this quarter as well.And there is one question related to the slide here, where I do not -- I don't have any information exactly on this slide. I think it is that how do market respond because 13 percentage points increase in prices doesn't really help if clients leave. But at the moment, the turnover is on a normal level, which means that the market is pricing up.If we had delivered these kind of price increases to market 2 years ago and we tried in some product areas, it would have been basically impossible or at least very, very difficult. So when we kicked smaller price increases out to the market 2 years ago, then we kind of withdraw. Seen in hindsight, we probably should not have done that. But -- then we withdraw, took a step back and reduced the level of price increases 2 years ago. And what's happening now is that we go harder into the market. And so far, the market is accepting the kind of level of price increases you see.My expectation for quarter 4 is that, that kind of acceptance rate will continue to be rather high. It's not the visibility for quarter 1 and for January 1. That's too early. We don't really know. Quarter 4, October 1 is history. Obviously, I do have an exact figure per country for October already. Basically, November is history because renewal date is more or less always November 1, and prices are altered in the market. And it's only 1 week to go and we have lost very few clients in November. We could lose some during the next week. But normally, we will have got that feedback already.So price increases are strong. They are according to guiding or slightly higher. And so far, it's accepted by the market. However, we do expect that the turnover in the portfolio in January 1 will be slightly higher than normal, but with increased rates. That means that we don't have any issues relative to volume development neither in quarter 1 next year or in the full year, but you won't see the kind of growth figures that you have seen in the last 2 to 3 years. Profitability comes first, then it is volume development.Okay. There's a question.

[Sverre Bjerkeli, Chief Executive Officer]

Okay. So we go to U.K. in a second. Here are some more kind of detailed information about what kind of product level will be priced. And I gave a comment on the motor side, which is different from the average then.So have a look at Denmark. You have a challenging situation relative to Workmen's Comp because you have negative interest rates and very high capital requirement. That's a challenging mix. So what you will see in Denmark is that price increases in Workmen's Comp will increase a lot going forward. If not, everybody [ will lose ] on the kind of capital investment in the kind of product you see here, which is very clearly communicated through many years from Topdanmark and also from Tryg. And obviously, if you can promise me that interest rate level is picking up quickly, we will stay, but we don't bet our money on that one.So that's to Henrik. He's also in charge of setting up Protector in Sweden, then in Denmark and northern in U.K.

[Henrik Wold Høye]

Thank you. In November 2015, the U.K. project had a first milestone, getting 3 first employees onboard. And then we had a small service office with room for 4 people. Now we have moved into 2 offices and the headquarter office in Manchester has capacity for 100 people and it is the people working in Protector U.K.'s home. So they have made it themselves and it was a conscious decision to let that team create their own office. And I would say that the office we have in Manchester is more Protector than any of the offices we have in Protector in other countries now. So that's a milestone obviously together with having 2 offices, which U.K. is the first country to do.The status in U.K. is good and I will speak about some of the reasons why we think it is good. It is not only about some results. First, Sverre mentioned the arbitration parts. So I won't spend too much time on that other than that it is good to have it over. I have one slide for that. But what is happening on the claims handling side here is, most importantly, that we have added capacity and competence in the team. So that Stuart Winter, who is Country Manager, he has been following this claim since the beginning as Head of JLT, who is a broker for Kensington and Chelsea and will now ensure the settlement of the liability claims since the property is settled. So it's good to have Stuart onboard. It frees up some capacity for other resources, and Protector have spent a lot of time on it.So on the arbitration side, the story is the same. It has been a very challenging process with a lot of work and a lot of drainage of energy, and the solution is okay. It's good to have it behind us.I think this is the more important part of my message today because when I have said something about the U.K. before, culture is the most important part. And the people that we have recruited in the U.K., they need to have experience. So we need to have someone who knows something about the U.K. insurance market. And they have experienced, their own words, a shock culturally coming into Protector and to transfer that to an ambition in the whole team to take cultural lead in Protector. So we have a competition between the different business units where every year, the cultural lead is named. That is a big step and that is happening as we speak. It's not a lot of new initiatives. It's similar to what we have done in other countries, but the commitment to the culture as one team is very good in U.K. at the moment. One example is Clean Desk. That is a definition within claims handling, finishing all your tasks within a time line every day of the week, and that's measured. But it's also about moving into new offices and keeping everything. Clean Desk has something about to do with atmosphere and culture, and it is important.So the people who do this. We have recruited people on the competence side to cover all the different areas of expertise. So we are happy now with the people we have and the competence we have on the different areas, underwriting, claims handling, risk management, also on the finance and regulatory and in the management group. This is the management group in U.K.The interesting thing is to see the experience we have onboard, work together with the people that come straight from university. So young people coming in with -- well educated and challenging the experienced people. So that combination is proving in the U.K. to be better than we've managed to make it in other countries. And one of the biggest competitive advantages that we have is that we sit on the same floor, so all these people sit on the same floor and can speak with each other all the time. We have risk management and underwriting and claims handling in the same decision meeting. They're all used to looking at the same structures for decision and that gives a competitive advantage and, hopefully then, a team that is stronger in the sum of the individuals.We are in 3 different segments, speak about each one of them briefly. The public sector side has had slower growth than what we expected. That's a lower hit ratio. So we're winning less than we would have expected. Our competitors are reacting to Protector coming into the market. That does not really matter. We are patient and it's about profitability.Meanwhile, we have reached the top 3 position. We have 100 clients in the sector. So it's not that we don't grow. It's not that we don't win any clients, but we just don't win as many as we had hoped for in the beginning. But we're here for the long run, and that's good. Very good development on the underwriting side.The housing sector is -- could be a subsector of the public sector, but it is a separate segment, different. Very low deductible levels. Like Sverre said, motor is one example of where cost advantage is key. Housing sector in the U.K. is another example of that. Low deductibles, lots of escape of water claims, which gives us a cost advantage on the cost -- competitive advantage on the cost, but it also gives an opportunity to improve value chains in claims handling. So if we have 400 escape of water claims at an average of GBP 3,000 every year in our portfolio and we can reduce that by -- the cost of those by 10%. And that's easy. That's to cut one part of the value chain. Then we have a competitive advantage, and it's a big part of the margin that we have there.So this is our segment. It's also slower growth than expected, but we are patient. And the big commercial market is where we are gaining traction now. We had an office launch last week with brokers and most of those brokers are in commercial sector. They like the challenger, and they start to understand that we are different and that we actually deliver on our service promises. And the feedback that the team got during that office launch event was fantastic and it has to do with service. So you say that you deliver something and you deliver.So we have 150 clients. They are twice or 3x the size of what we have and depending on how you calculate it, the clients we have in Scandinavia. And we, as I said, have one team making the decisions. Risk management is always involved in underwriting.So to the results, you have seen them. And this figure is on the gross level. Combined ratio in '19 is obviously very good, but it is early. I would have said the same if the figure was above 100 and we had large losses, but this is early. We have been lucky in 2019. So that's one of the reasons why that figure is so good, whereas on the net side it's higher. We have communicated earlier that we are not happy with the reinsurance cost on the casualty side. It is too high. That is one reason there, and cost ratio will drop. These figures are influenced by reinsurance and the treaty we had on property before. So it's not easy to read year by year.So -- and slower growth is basically public sector and housing, as I've mentioned. And that is for profitability reasons. I think that we also learned something from the Nordic markets and what has happened in the Nordic markets, but it's actually more probable that we learn too much and that we go to -- become too afraid and risk-averse. So we're working on that balance in the U.K.Claims handling is very important. We're ahead of where Sweden and Denmark were at the same point in time. And the interesting thing was 2018, the Clean Desk element, being on top of all the tasks that the claims handlers have every day was not at all good. We delivered what we said to the brokers, but we were not on top of our tasks. In 2019, we are. It's becoming culture and -- or it has become culture. And when we speak with our competitors, when we speak with people we meet in recruitment settings or brokers, they will say that no other company can document that they are at that level of Clean Desk.Focus on that first, then we have time and energy to start focusing on quality, which we have done. So that's progressing well, including counter fraud actions where we have recruited external competence. And efficiency, let's wait. It's not important at this point in time.We send out a new survey. This is 2018 results on the quality survey with brokers. We send out a new survey Monday next week. So unfortunately, we didn't have the results to show you now, but that's something that is very important to us especially on the service level and learning what we can do better.And when we started the U.K., we got the question what will -- why will you fail or why will you succeed. And I think the question -- the answer was exactly the same as what I have on the screen here. And it still is. We need to ask ourself this question all the time. The answer, it has to do with people. Status now is that we have a good team onboard, both in Manchester and in London and it is about making that team better through living -- understanding our DNA and living it. We've had a good start in the U.K., but we still have to learn.So the summary is exactly like the introduction.Any questions?

[Sverre Bjerkeli, Chief Executive Officer]

Okay. When it comes to the investment results, what you have seen is a poor quarter 3. That is driven by the equity side. So what you, as investors, has seen is that 5 quarters in a row, we have delivered worse investment result relative to peers. And the question is what do we think about that. We think that is obviously not what we had targeted, but you must expect volatility. Obviously, we do investment mistakes, like all of you do. The question is whether we learn from them and whether our people and structure and methodology is good enough in order to deliver a good return in the long run.As you can see on the slide and as you who have followed us properly the last 5 years have seen is that we have had better periods obviously, 8 quarters in a row, doing better than benchmark. These things can happen in that area. So our position at the moment is to continue with the kind of investment philosophy and strategy we do have. Our expectation is obviously that result will come back again.The accumulated result after we in-sourced the investment department in quarter 4 2014 is still that we are ahead of in kind of Nordic benchmark in that area. And 20 percentage points here. It is, as you know, a lot of money in that area. So our expectation for the equity side is that it will be back again. And as you can see, obviously we will deliver more volatile results also going forward compared with the different indexes you do have in the market.When it comes to the bond portfolio, we have taken money off the table for a 3 years period of time now. We are pretty happy about that kind of development. I think that we have kind of delivered again an acceptable good result in the bond market obviously also supported by the fact that we have a lot of our money invested in the Norwegian market, where interest rate levels are higher than in Denmark or Sweden or Europe or elsewhere in the world. So a stable and good portfolio, well managed and what we could call good results or even better than good if you are considering the capital consumption on the bond side.The results is driven by a technical result, which is kind of improving a poor investment result. And that gives a kind of bottom line, which is around 0, which obviously is not at all good. However, it's -- that's history. And the question is whether the kind of price increases kicking in, if that continue and if the clients stick. At the moment, it looks like that's kind of happening.When it comes to the balance sheet, our solvency capital ratio is equal to quarter 2, which is 164%, which is a kind of strong capital base. So there are absolutely no issues on the solvency capital ratio side, basically kind of equal to, give or take, many other Nordic companies.No big changes, I would say, on the shareholder side. And the summary is, as you have seen in the beginning of the presentation, a strong growth. Combined ratio around 92%. And 2 important messages to the market today: a strong price increase development also in quarter 3 that will continue in quarter 4 and in quarter 1. And at the moment, market do accept this kind of price increases, even if the number of clients in the Scandinavian market is going down slightly. The acceptance from the market is on the positive side in that area. And at least, even if the period we are looking at in the U.K. is too short, our message to the market is that we are happy and satisfied with the development in the U.K. market as well.So then we have another 6 minutes to go. Yes. Questions?

[Sverre Bjerkeli, Chief Executive Officer]

So an analyst kicking out [ claims, ] obviously. Thomas, you go first.

[Unknown Analyst]

Question to the guidance for the full year combined ratio guidance. So we have 101.1% as of Q3.

[Sverre Bjerkeli, Chief Executive Officer]

Yes.

[Unknown Analyst]

[ And the guide for ] 100%.

[Sverre Bjerkeli, Chief Executive Officer]

Yes.

[Unknown Analyst]

It means 97% for Q4 or something, which is up from, what we consider a underlying level of 92% in Q3. So that's -- is it seasonal?

[Sverre Bjerkeli, Chief Executive Officer]

Seasonal effects. So quarter 4 is always slightly worse than quarter 3 in that area. So we do expect a slightly worse combined ratio in quarter 4 relative to quarter 3 insurance business. It is elements of volatility in it. But yes, we do expect a slightly higher claims ratio in quarter 4 relative to quarter 3 in our portfolio as always. So you have quarter 4 and quarter 1, which are slightly on the bad side, while quarter 2 and quarter 3 is slightly on the better side.Other questions? Okay.

[Unknown Analyst]

[ indiscernible ]What is the significant [ private claims ] inflation? Is it 7%, 8%, 9% or is it below 10%? Or why is it so high?

[Sverre Bjerkeli, Chief Executive Officer]

So the question is why is -- what's your estimate for the price inflation on the motor side. We say it's around 7%. Why is that? It's because technical repair of old cars are more expensive because there are more electronic components in the cars, which you can't really see exactly the same thing to be changed with -- you would not have seen the claims inflation [ Slide 7 ]. But because the kind of components today are more integrated and are linked to more technology than you inflate a [ normal ] claim in the motor area. It's difficult to estimate exactly what it is. We say around 7%. In the Norwegian market, our -- the club of insurance companies that have exactly the same position, so the kind of official Norwegian position is around 7%. And it differs slightly in the different markets. So we think that, that claims inflation will go forward, which means that price increases must be a lot north of 7% in order to improve profitability.When we deliver 12% and 15% here, if you take a look into the motor product as such in Scandinavia, I would say that our average price increase in motor area is more like 20%. Claims inflation 7%. Price increase is around 20%. Margin improvement in motor around 13%, everything else equal.So we are driving prices very hard, while other product -- that's the reason why the Swedish figure is very, very high, 15.7%, because a large proportion of that volume is motor-based, while in Norway, it is kind of group life, Workmen's Comp, other illness, property. So the relative proportion of these kind of products are very different from Norway and Sweden. And that's the reason why you see 15.7% here and in brackets only 12.1% in Norway.Yes.

[Unknown Analyst]

It appears still looking at just the quarterly figures that you are then gaining a lot of volume, but at the expense of the number of customers or number of insured [indiscernible]. You're seeing that the volume of insurance is down in all regions except U.K. Is that correct interpretation of the quarter numbers?

[Sverre Bjerkeli, Chief Executive Officer]

Basically correct. So what we do accept is that the number of clients can and will go down, but you support growth level with the price increases. It varies a little bit between the different quarters here. So you lose some clients. You get some new ones. And that is in some of the markets now, as you say, slightly on the negative side and then you add on price increases. And then you have a small volume development like in the Norwegian market here. It varies a little bit. But see, from our point of view, that's kind of acceptable to have a slightly reduced number of clients because we must kind of restore our profitability and then kind of play the market and see what kind of client development we may have in future in that area.

[Unknown Analyst]

It seems like the right thing to do. On the previous slide as well and just slightly also [ on that ] discussion, you show the claims ratio for Norway, which we haven't got the statistics for the whole sector yet, but it seems to be on the high side compared to what other have reported. Is that due to the type of products you have? Or is it due to higher claims within the products that you have?

[Sverre Bjerkeli, Chief Executive Officer]

Okay. So why do we have or potentially have then higher claims rates on the same -- in our portfolio relative to the other ones? I think that as a general statement, I think that if you listen to our competitors, they say that it is unsustainable rate levels, too low prices. In the broker-based commercial sector, prices must go up. So I think that basically all or most competitors have the kind of same issues as we have. We have higher claims ratio and that is slightly linked to product mix, but also linked to the fact that we kind of -- potentially can afford it because our cost ratio is lower there. So we give away a part of our cost ratio strong position to the market and accept a higher claims ratio.So we have never ever had an ambition to be equal or better on the claims ratio compared with competitors. Then we would like to continue to grow with the kind of combined ratio size 92% or 94%, because that adds value for the shareholder both in the shorter and the longer run in that area. We have missed on the profitability on the last 18 months. Too late, too little. As we have said, that's kind of improving as we speak. And what you should expect is that our claims ratio will continue to be higher than competitors in that area. And that's okay as; long as it's supported by a good enough combined ratio and either a stable volume or a slightly growing volume again. But the volume development in different markets will vary, obviously.

[Sverre Bjerkeli, Chief Executive Officer]

Yes. Go ahead.

[Unknown Analyst]

In the competition side, you mentioned that you had stronger competition on the municipality side than expected, so to speak. Has that sort of abated or is it still strong as you [ started to see ] after a while?

[Henrik Wold Høye]

So the question is about the competition in public sector, that that is stronger than expected. What is the development?It is similar to what we have seen lately, but it is not the same across all type of clients and products, which is -- which gives us an opportunity to actually find pockets where we think we can get profitability in that market. It is the only market where we actually say that we are better on underwriting. It's the only market where we actually can document that we have better claims ratios than at least one competitor that we can see, exact claims ratios. That's in the Norwegian market. So we think we can maneuver in that situation, and we're there for the long run. It doesn't matter if we get that growth early or a little bit later.

[Unknown Executive]

So a question from the webcast. On your previous slide, succeed or fail in the U.K. isn't it always about the underwriting discipline.

[Henrik Wold Høye]

It's about -- so the question is previous slide, which was why will we succeed or fail and isn't it always about underwriting discipline.Underwriting discipline is within this, but it's not only about that. So that's an important part of it, but there are many of the statements in our DNA that are translated into underwriting discipline in that department, so obviously. And I think that the growth we see in the U.K., it proves some kind of underwriting discipline. We could have had a much higher growth.

[Sverre Bjerkeli, Chief Executive Officer]

Okay. So let's continue then. My comment also to the underwriting question is that if I look at the DNA, so it's best-in-class decision-making. It's kind of one of the 12 statements we have in the DNA. Obviously, it has a lot to do with underwriting. If you are an underwriter, you should be credible and that kind of credibility must be linked to prudent underwriting.So even if our statement is not clearly on underwriting as a word or as a phrase, which is an extremely relevant word and phrase, it is built into the understanding in many of the DNA statements we have on the slide, best-in-class decision-making and credibility is the important one. And obviously, the definition of bold for an underwriter is slightly different from other areas then. But again, Henrik gave an example.Many underwriters are risk-averse and they are not good underwriters. They must balance risk with terms and conditions. That's a good underwriter. So there are many, many risk-averse underwriters out there in the market. And there are someone who are too bold or basically stupid, who take onboard volume at any price. That's wrong as well. So we have tried to balance the 2.

[Unknown Analyst]

Coming back to this discussion about runoff gains. If I understood you correctly, now you expect roughly 0 going forward. Has that changed or -- because I seem to remember you talking about that it should be somewhat positive before [ indiscernible ]

[Sverre Bjerkeli, Chief Executive Officer]

Okay. If you go -- so the question is related to runoff development on the reserve side. And previously, communication going, let's say, 3, 4 years back, we would normally say in an investor presentation. That since we are following the FSA minimum requirement for reserve setting on certain type of products, you should assume that to be slightly on the conservative side and you should expect some kind of reserve releases in the coming years. That happened. And we had walked through a year ago on the Capital Markets Day. However, during the last 2 to 3 years, that communication has gradually changed. And you haven't heard, I think, me say or give that kind of statement to the market the last 2 years or something like that, give or take. So our expectation on the reserve side is that they are -- we are correct on the reserve side and you shouldn't really expect anything neither on the positive nor on the negative side in the coming years obviously with some kind of volatility from one quarter to another one.

[Unknown Analyst]

Vienna Insurance Group has announced that they want to enter the Nordic market for broker, corporate business. Do you think it will have a meaningful impact on the competitor landscape?

[Sverre Bjerkeli, Chief Executive Officer]

Okay. So the question is related to a company, Vienna Insurance company who have announced that they will enter the Nordic market for broker business. They will do a small office setup with a handful of people in the market. And the question is whether I think it will influence on our position in the market, and the answer is no. There are 2 reasons why. One, they will kick in on a very -- my expectation, on a very high end of the market, basically part of the market where we hardly exist. So they will go above where Protector is on some kind of international clients, for instance. And secondly, they are a small player, and we are used to international players in the market, AIG [indiscernible], Chubb, AmTrust, Allianz, whoever they are. They have been in the Nordic market for the last 30 to 40 years. And as you know, our market share in the Nordic market is a lot higher than any of the big international player. So I don't think it will influence. So they are warmly welcome to the market.

[Unknown Analyst]

[ They are always talking ] about the size [ indiscernible ]

[Sverre Bjerkeli, Chief Executive Officer]

Size and complexity then. Big international clients high up on the liability side, things that we basically do not do, my expectation. I'm not an expert on them, but that's what my assumption on when they do arrive. It doesn't really matter.I noticed that they're more cost kind of questions.

[Unknown Executive]

Yes. I have one. First of all, we apologize for the technical issue, and we will be uploading the video with sound on our homepage later today.To the question from Patrick, looking back at the last few years, what have you learned about electric vehicles that you wish you knew in 2015.

[Sverre Bjerkeli, Chief Executive Officer]

Okay. So first, we have had some technical issues today. We apologize for that.And Patrick do have a question related to electrical cars and whether we have kind of learned something from the time period 2015 and up until today. I would say, yes, probably. I think we all have. We know that frequency on electrical cars are a lot higher than on other cars. We know that average claim size is a lot higher. If you accumulate those 2 in our portfolio, electrical cars, they have twice as high claims ratio as any other car. That's a fact in that area. So I think that we and others have learned it's not very important to protect at the moment. Still, the level of electrical cars in the portfolio is pretty limited. We are learning together with the market. So it has been kind of a minor issue, and we have kind of basically doubled the prices in the last 6 months that do continue, but double on small volume doesn't mean too much. It's a growing issue, obviously. We have to follow up together with all the players in the market.There's another question? No.Okay. So thanks a lot for joining. And obviously, you know what to do when you take your own investment decision. Thanks a lot.