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Protector Insurance Stock Analysis: Do Those Who Dare Win?

Protector Insurance Stock Analysis: What We'll Cover Here Is What They Do, Finances, and See If We Can Find Any Strengths, Weaknesses, and What to Look For in the Future


I own a small part of Protector Insurance.


What Does Protector Do?

Protector prefers to be seen as the attacker or perhaps the challenger. This is something that has lingered for a while. Protector Insurance deals with insurance and has a product mix similar to Tryg.

They have a clear focus on customer satisfaction. The owner seems to be very competent, and they are now stronger than ever in the Nordic segment.

Generally Protector Insurance offers common types of insurance related to cars, health and safety, businesses, and home seller insurance.


Strategy

This is where I find Protector most interesting. While Norwegian insurance companies tend to stay within their comfort zones, Protector has the ambition to challenge the status quo and expand globally.

They have ties to England and are working on growth. They are not satisfied with the markets they are currently in and are not afraid to venture further. This indicates a potentially global company that earns money and distributes dividends.

Currently, they are looking into the French market and are definitely a company to keep an eye on.

Their business idea is based on building unique connections, offering cost-effective solutions, and being seen as best in class. Based on past performance, they seem to be doing this quite well today.


Financials

After a couple of tough years, Protector has risen to become a profitable company. They have tripled their growth without creating serious debt problems and often have enough liquidity to distribute to us investors.


One warning sign is that they perform significantly worse in certain years. For example, this year, Norway has not been convincing in terms of loss ratio.


Protector is focusing on bulding up a strong balance.

And the current interest rates are benefitial


Statement

In short, one can say that the revenue has increased rapidly. Here we're talking about more than a tripling in three years and a strong conviction that they have something to offer.

If you notice, 2018 and 2019 are the problematic years, but their continued focus on inexpensive products has ensured good margins and good results over a longer period.

In 2023, the figures are shown in millions of kroner.



Income

Result

Margin

2014

2611299

358780

13.74%

2015

3147655

481729

15.30%

2016

3749633

452681

12.07%

2017

4224998

476717

11.28%

2018

4119810

-20731

-0.50%

2019

5137193

-76079

-1.48%

2020

6244761

884860

14.17%

2021

6624401

1164682

17.58%

2022

7018029

842788

12.01%

2023

10713.5

1509.3

14.09%


Balance

After a significant increase in interest-bearing debt, they have been working over the past few years to reduce the debt somewhat. This speaks positively, although personally, I wish they would remove more. Otherwise, they have built up their assets considerably and have a robust bond portfolio, providing good security in the background.

For me, I perceive insurance companies a bit like bond funds, but perhaps it's just me being a bit odd here.



Interestbearing debt

Debt

Equity

Total Assets

Obligations

2014

148125

4961295

991433

5952728

3754657

2015

148125

6161473

1574392

7735865

5362463

2016

645875

6589830

2268200

8858030

5224987

2017

1243285

9680864

2591263

12272127

7519860

2018

1243285

10798980

2033073

12832053

6386593

2019

1243285

12722870

2019335

14742205

6773506

2020

1473035

13719778

3030473

16750251

8574739

2021

1384664

15664146

3582130

19246276

9179328

2022

1244711

16504643

3444732

19949375

10832101

2023

1244.7

15302.3

3822.7

19125

13896.5


Cash flow

Here I can see the weaknesses in operations, with several negative years. However, with strong years covering for the weak ones, it leads to the company having a positive growth, which can be seen on the balance sheet.


I feel it's crucial to be aware of the cash flow here since it doesn't appear even on the bottom line, where the cash flow directly goes to payment of securities.


Operations

Investment

Finance flow

Dividend

2014

623911

-11720

-156205

-144524

2015

-423170

233585

-176469

-165170

2016

297782

-13955

281104

-193850

2017

-640518

-25137

347247

-193825

2018

684882

-39040

-320453

0

2019

1412548

-47797

-66616

0

2020

-41733

-15804

168085

0

2021

969945

-52815

-809524

-659536

2022

-121377

-43754

-1153881

-947280

2023

467.3

-37.6

-892

-823.9



Key Ratios

A summary of key ratios for those that want it.



Debt-to-EBIT Ratio

ROE

ROA

CR brutto

Solvency

Margin

EBIT margin

2014

0.49

36.19%

6.03%

84.5


13.74%

12.79%

2015

0.54

30.60%

6.23%

88.7


15.30%

9.70%

2016

9.27

19.96%

5.11%

97

163

12.07%

2.14%

2017

6.26

18.40%

3.88%

93.1

199

11.28%

5.22%

2018

27.47

-1.02%

-0.16%

101.7

175

-0.50%

1.09%

2019

-7.63

-3.77%

-0.52%

102.8

168

-1.48%

-3.26%

2020

5.97

29.20%

5.28%

92.5

190

14.17%

4.58%

2021

2.33

32.51%

6.05%

88.5

206

17.58%

10.34%

2022

2.08

24.47%

4.22%

89.2

195

12.01%

9.17%

2023

1.15

39.48%

7.89%

88.5

187

14.09%

11.51%



Strengths in the stock:

  • New insurance company advertises lower costs than competitors like IF and Tryg.

  • Willingness to go beyond the comfort zone (England, France, etc.)

  • Good customer relations

  • Good dividends

  • Historically good growth.



Weaknesses in the stock:

  • Higher market risk in the investment portfolio

  • A larger number of corporate clients result in greater fluctuations

  • Possibly weaker insurance plans as the Combined Ratio (CR) is often high. (Indicates that they pay out more premium than other companies)

  • A stronger currency will weaken England, bonds (I haven't checked currency for bonds), and Finland compared to the present.


What to keep an eye on:

  • CR ratio at Protector and competitors. You can use this to gauge the level of competition for customers.

  • Aggressive competition (Tryg has actively stated they will be more aggressive towards the corporate segments).

  • Lower interest rates - large amounts of bonds mean Protector experiences a positive position based on current interest rates.


Brief Summary:

Protector Insurance is a growth-based insurance company focusing on its customer relationships.

They have experienced significant growth and offer something entirely different from what other Scandinavian insurance companies provide in terms of potential.

This is a more risk-tolerant stock that provides exposure to bonds and one of the few areas one must pay for regardless of the economic climate.


They usually make profits, and a large portion of the cash flow has been used to increase bond holdings.

They distribute dividends quarterly at times, but this depends on the solvency margin and the growth opportunities Protector sees.


In Q3, Protector interrupted dividends as they believed they could use the money better.

Overall, I am positive towards Protector, but there is some risk regarding the bonds, and their competitors specialize in specific areas, which can provide an edge over time.




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