Alm Brand A/S

Good morning, everyone, and welcome to the AlmBrand Q1 2024 earnings call. After today's presentation, we will begin the Q&A session. To register a question, please press Start, followed by 1 on your telephone keypad. To withdraw your question, please press Start, followed by 2. With that, I'll hand over to Rasmus Werner Nielsen, CEO. Please go ahead.

Thank you. Good morning and welcome. I'm Rasmus Werner Nielsen, a social I have with me today our CFO, Andreas Roben Madsen, and our head of IR, Mads Tengor. This morning, we published our interim report for the third quarter, and as usual, I will walk you through the operating highlights, and then Andreas will comment on the financials. Overall, I'm quite pleased with our results for Q1, where we delivered a solid improvement in our insurance service results, despite higher weather-related claims, and with an underlying improvement kicking in as a result of harvested synergies and repricing initiatives. Please turn to slide two and some of the headlines for our business in the first month of the year. As mentioned before, I'm pleased with the overall financial performance in a satisfactory Q1, where we continue to build on the improvements we made in commercial lines during 2023, while turning the personalized profitability around with price increases to battle increases in motor frequency. Overall, we improve underlying claims by one percentage point due to the profitability initiatives. Our growth is standing out in the quarter and especially I see a bright spot on our growth in personal lines of almost 9% year on year. We do take quite a bit of market shares in personal lines with our strong bank partnerships as a driver. Synergies are kicking in just as we planned and currently receive good momentum for claims synergies. Overall synergies throw our underlying loss ratio one percentage point down in Q1, 24 year-on-year while helping the cost ratio a bit as well. We keep a strong cost focus these days to safeguard the synergies are not eaten by general increases in costs. And now I'll turn to slide three with our financial highlights. Insurance revenue grew above $3 billion in the quarter, with a very satisfactory growth in the quarter, driven by personal lines, as mentioned before. The technical result was $295 million compared to $205 last year. We view this as a good start to the year, also considering high weather-related claims and costs still being funded and loaded in Q1 to some extent. Investment income in Q1 was a satisfactory profit of $167 million. This relates to the fee for produce as well as the interest hedging of our technical provisions. And now, let us continue on slide five. As said, the group made a technical result of 295 million in the quarter. The insurance service result from commercial lines was 218 million against 94 last year, as underlying claim improvements continued to kick in and large claims dropped significantly. Our energy business had a new strong quarter as well, and are now counting five strong quarters in a row. In personal lines, we had a drop in the insurance service results to 77 million from 111 million last year, despite underlying improvements. This was primarily due to high weather related case and lower runoff gains. And now please turn to slide six. Insurance revenue grew by almost 6% in the quarter compared to 3% last quarter, and we are very pleased with the growth acceleration. In personal lines, we are clearly taking market share on top of indexation and the price increases we do. We do consider an almost 9% growth in personal lines a quite bright spot in our report. In commercial lines, we are seeing an acceptable premium growth of 3%. Now moving on to slide seven and the claims ratio. The Q1 claims ratio was down 170 basis point year-on-year in the quarter with higher weather-related claims, but also much lower last claims than in Q1 last year. Runoff gains this year was low as well. The underlying claims ratio improved by 300 basis point year-on-year driven by commercial lines, but also with underlying claim improvements in personal lines. Moving to an undiscounted basis adjust basis adjusted for a right back of a sector bankruptcy helping 110 basis point in Q1. This year we see 119 basis point improvement in underlying claims year on year. And now please turn to slide eight. Despite a significant drop in the cost ratio in personal lines in Q1, as well as a drop in underlying claims, the combined ratio in personal lines increased to 94.4 due to higher weather related claims and lower runoff gains this year. Increases in motor frequency is playing into the development in the segment as well, while we are handling this with price increases. Please turn to slide 9 and the commercial line. We continue to see strong underlying improvements in our commercial segment related to better underwriting, change, exposure and profitability initiatives. At the same time, large claims took a huge drop in Q1, helping an improvement in combined ratio to 86.6 from 94.1 last year. We had a flattish development in our cost ratio this quarter, not that different from our plans. And with these comments, I will now hand over the word to Andreas, who will walk us through the synergies investments and guidance.

Thank you, Rasmus. Please turn now to slide 11 for an update on synergies. We had a nice jump up in harvest of synergies in Q1-24 of 98 million from 75 million in Q4-23. This implies a 41 million uptick in synergies year-on-year, improving our underlying claims ratio with one percentage point and our cost ratios with 0.2 percentage points year-on-year. The synergy uptick is currently concentrated around the claim side. We remain confident that the synergies for the full year the 450 million that we had previously stated. And now I turn to slide 12 and our investment results. We made a net investment result of 167 million, with the largest part coming from our free portfolio. Financial markets were in general positive in Q1, also leaving us with a nice return on our listed shares. We maintained a conservative approach regarding our investments. And now finally, Please turn to slide 14 for the outlook for 2024. Our guidance for the year is an insurance service result excluding run-offs for the remaining quarters of 1.4 to 1.6 billion, including expected synergies of a total of 450 million. The expectation is based on continued growth in the group's insurance revenue across the various customer segments, supported by the annual indexation of the premium level and individual premium adjustments. The cost ratio is expected to be in the range of 17 to 17.5% and combined ratio excluding the runoff result for the remainder of the year is expected to be 87 to 89. We now guide for an investment result of around 350 million compared to 250 million previously. For other activities, we still guide a deficit of around 125 million. As such, group profit excluding special costs is now expected to be 1.63 billion to 1.83 billion before tax. This is an upgrade of 100 million due to the strong investment result in the first quarter of this year. In addition, we guide for special costs in the range of 200 to 250 million for the integration of CODAN and realization of synergies. And lastly, depreciation on intangible assets is expected to affect the income statement by approximately 360 million. With this, I conclude our presentation and hand over the word to our moderator. Thank you.