Protector Forsikring ASA Earnings Call: Profits With More Risk

Protector Forsikring ASA ((NO:PROT)) has held its Q4 earnings call. Read on for the main highlights of the call.

Protector Forsikring ASA Balances Strong 2025 Results With Higher Risk Appetite

Protector Forsikring ASA’s latest earnings call painted a broadly positive picture, with management underscoring a very strong full-year operating performance, solid investment returns and the successful resolution of a legacy issue in Denmark. While the tone was confident and upbeat around profitability, growth and capital moves, executives were candid about rising earnings volatility, tougher competition in some markets and slower traction in parts of the French portfolio. Overall, management argued that the benefits from improved underwriting, disciplined growth and reinsurance optimisation clearly outweigh the emerging pressure points.

Strong Profitability Well Ahead of Long-Term Targets

Protector delivered a full-year combined ratio of 84.7%, beating its long-term target of 91% by a wide margin and confirming another year of robust underwriting performance. Normalized large losses were around 7% in 2025, with the company generating earnings of NOK 31.7 per share. Management emphasized that this level of profitability is not driven by one-offs alone, but by sustained pricing discipline and portfolio quality, even as they prepare for slightly higher large-loss assumptions going into 2026. For investors, the result underlines Protector’s ability to convert premium growth into attractive bottom-line returns.

Healthy Top-Line Growth Across Core Markets

Premiums grew 14% for the year, supported by strong renewals and new sales, particularly across the Nordics and in France. Growth was led by Norway, with Denmark now positioned as the second-largest Nordic operation as of 1 January 2026. Management highlighted that volume gains are coming from a mix of new customer wins and retention of profitable business, rather than aggressive pricing. This sustained, double-digit growth profile provides a supportive backdrop for earnings, even as certain markets, like Sweden and parts of France, show more challenging competitive dynamics.

Strong Investment Returns and Long-Term Track Record

On the investment side, Protector posted an investment result of NOK 1.5 billion for the year, aided by solid performance in its equity portfolio. The company pointed to a 10-year annualized equity return of roughly 14%, reinforcing its view that active investment management is a key value driver. Management also noted that the discount to intrinsic value in the portfolio has narrowed compared with the previous year, suggesting that market pricing has moved closer to their own valuation assessments. This combination of strong current-year gains and a well-documented long-term track record remains a central part of the investment case.

Capital Optimisation and Balance Sheet Strengthening

Protector has been active on the capital and balance-sheet front, completing a successful placement of a Tier 1 bond on favorable terms, while previously issued Tier 2 capital has effectively been matched against expected dividends. The transfer of the Danish workers’ compensation portfolio reduced assets under management by about NOK 1 billion but simultaneously removed a capital-intensive legacy position. Overall, these moves aim to improve capital efficiency and support the company’s ability to fund growth, maintain attractive dividends over time and absorb higher retained risk from its updated reinsurance structure.

Legacy Danish Workers’ Compensation Issue Resolved

A central strategic milestone was the sale of the problematic Danish workers’ compensation portfolio to DARAG, which management described as the resolution of a “material legacy underwriting mistake.” By offloading this book, Protector has reduced complexity, capital drag and management distraction, and can now focus more fully on developing its core Danish commercial business. For shareholders, the clean-up removes a notable overhang and helps bring more transparency to the group’s underlying performance.

High Renewal Rates and Controlled Churn

Retention metrics remained strong, with an overall renewal rate of 95% across the company. In the UK, renewals and churn were described as “controlled” at slightly above 10%, a level management views as healthy in a competitive market. These figures suggest that Protector is keeping hold of the bulk of its profitable client base while still allowing room to drop underpriced or unattractive business. High renewal rates are especially important as the company increases its risk retention, since stable portfolios can help smooth loss outcomes over time.

Broker Recognition Reinforces Competitive Positioning

Protector’s quality reputation among brokers continues to be a key competitive asset. The company ranked #1 in broker surveys in both Norway and Sweden and reported improved perceptions across Scandinavian markets. Management stressed that strong broker relations drive better access to data, more collaboration and greater visibility on attractive new business opportunities. This recognition, in turn, supports Protector’s selective growth strategy, especially in markets where pricing is rational and aligned with its return targets.

Reinsurance Optimisation: Lower Cost, Higher Self-Retention

The company has significantly adjusted its reinsurance program, choosing to bear more predictable tail risk in-house while cutting back on reinsurance spend. Retention was raised on key programs, with management expecting the reduction in reinsurance costs to more than offset the financial impact of higher retained risk over time. This shift should support earnings in “normal” years, but it also increases sensitivity to large losses. The move reflects Protector’s confidence in its underwriting and capital position, though investors should be prepared for more volatile quarterly results.

France: Uneven Traction and Aggressive Market Pricing

In France, Protector reported modest commercial success and clear headwinds in housing. For 1 January 2026, the company won only around 10% of the quoted volume in commercial and motor, and virtually none in housing, largely because a major competitor, AXA, has cut prices aggressively. Management suggested that pricing in French housing may not be sustainable and indicated a willingness to lose volume rather than participate in what they view as uneconomic terms. While this means slower growth in the near term, it also demonstrates adherence to disciplined pricing and return criteria.

Higher Retention and Increased Earnings Volatility

Looking ahead, Protector is deliberately increasing its risk appetite. For 2026 planning, the normalized large-loss assumption has been raised from around 7% to about 8%, reflecting higher retention levels on several programs. Notably, the first-loss retention on the risk program has been moved from roughly NOK 100 million to about NOK 300 million. Management warned that this will increase volatility and tail exposure, with more pronounced swings in results from year to year. The trade-off is a higher expected economic return in average conditions, provided underwriting discipline holds.

Higher Capital Requirement Following Reinsurance Changes

The changes to the reinsurance structure also come with a regulatory capital cost. Protector estimates that required capital has risen by around NOK 300 million due to the higher retention. The company has set an internal target of achieving roughly a 20% return on this additional capital, underscoring the need for continued strong underwriting and investment performance. Shareholders should view this as a conscious capital allocation decision: taking on more risk with the aim of delivering better long-term returns, though with less predictable short-term outcomes.

Limited Cost Efficiency Gains as Growth Takes Priority

On the cost side, Protector signaled only limited efficiency improvements in 2025. Reported costs were largely flat, with some upward pressure coming from a higher share price and related incentive programs. Management is prioritizing growth and capability-building over immediate cost-cutting, implying that the cost ratio is unlikely to be a major driver of short-term margin expansion. For now, the company’s profitability story rests more on underwriting discipline, reinsurance optimisation and investment returns than on aggressive cost reduction.

Sweden: Challenging Competitive Landscape and Slower Expansion

Sweden remains a tougher market for Protector, with management describing a more competitive and at times irrational pricing environment. Growth here is slower than in other Nordic markets, as the company resists the temptation to chase volumes at unattractive prices. While the broker perception is strong, Swedish pricing dynamics limit the near-term potential for significant volume expansion. Investors should therefore expect Sweden to be a smaller contributor to growth relative to Norway and Denmark, at least until market conditions normalize.

Selective Equity Portfolio Adjustments After Mixed Outcomes

Despite an excellent overall investment year, management acknowledged some disappointments within parts of the equity portfolio and certain individual holdings that did not deliver as expected relative to intrinsic value assessments. These missteps prompted portfolio adjustments and reallocations. The candid commentary underscores Protector’s active, valuation-driven approach to investing, but also the inherent risk that not all positions will play out as planned, even in a strong market year.

Forward-Looking Guidance: Strong Core, Higher Risk and Volatility

Management reiterated its long-term combined-ratio target of 91% despite the recent outperformance, signaling a conservative stance on normalized profitability. With the 2025 combined ratio at 84.7%, 14% premium growth and NOK 1.5 billion in investment returns, the company believes it has room to absorb the planned step-up in risk. For 2026, Protector is modeling normalized large losses at around 8% in light of higher retention, including the move in the risk-program first-loss layer from about NOK 100 million to NOK 300 million and the related NOK 300 million increase in capital requirements. The team continues to target strong investment outperformance, building on the approximate 14% annual equity return over the past decade, while maintaining high renewal rates and disciplined underwriting as the foundations of its strategy.

Protector Forsikring ASA’s earnings call confirmed a company in strong operational shape, willing to accept higher volatility in pursuit of better long-term economics. Underwriting and investment performance were both robust, growth remained solid in core markets, and the Danish legacy issue has been successfully removed. While competitive pressure in Sweden, uneven traction in France and higher retained risk add complexity to the outlook, management’s overall message combined confidence with caution: profitability is strong, capital is being actively optimised, and the company is deliberately positioning itself for higher, albeit more volatile, returns.