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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