5/1/2025

speaker
Adam
Call Operator

Good morning or good afternoon and welcome to the Arm Brand Q1 2025 results call. My name is Adam and I'll be your operator today. If you'd like to ask a question at the Q&A portion of today's call, you can do so by pressing start or by one on your telephone keypad to enter the queue. I will now hand the floor to Rasmus Werner-Nielsen to begin. So Rasmus, please go ahead when you're ready.

speaker
Rasmus Werner-Nielsen
Group CEO

Good morning and thank you for joining us on our conference call. I'm Rasmus Werner-Nielsen as usual. I have with me today our CFO Andreas Ruben Madsen. and the head of our IIR team, Matt Zinkel. This morning, we published our interim report for the first quarter. And as usual, I will walk you through the operating highlights and then Andreas will comment on the financials. Let's now look at the highlights and please turn to slide two for some of the headlines regarding our business for the first month of the year. As mentioned before, I'm pleased with the overall financial performance. In a satisfactory Q1, we sustained strong organic growth and good cost control leading to a significant drop in the expense ratio year-on-year. We reach a premium growth of 8.2% in personal lines despite one day less than in the first quarter of 2024. This implies we are taking quite a bit of market share in personal lines with our strong bank partnership as a driver. Synergies are kicking in just as we planned and currently we see good momentum for claims as well as cost synergies. It justifies significantly lower discounting effect on claims, as well as an underlying one-off gain. In Q1 last year, we reached an improvement in the underlying loss ratio of around two percentage points. In Q1, we streamlined our group executive management from five to four members, with our CFO, Andreas Ruben Madsen, stepping up as a as a DPG CEO or executive board now consists of Andreas and myself. In the beginning of March, the divestment of Energy and Marine was finalized and soon thereafter a buyback program of 1.6 billion was launched. In April, a dividend of 0.6 Danish crowns per share linked to the 24 earnings was adopted by the AGM. Following the AGM or board pointed to the independent member as his new chairman did not stand for re-election. And now I turn to slide three with our financial highlights. Insurance revenue grew to about 2.8 billion in the quarter with a very satisfactory growth in personal lines as mentioned before. The technical result was 337 million compared to 291 million last year. as a good start to the year, also considering relatively low runoff gains and costs still being front-end loaded in Q1 to some extent. Investment income in Q1 was a satisfactory profit of 96 million. This relates to the feed portfolio as well as the interest hedging of our technical provisions. Discontinuing activities after tax made up 181 million which was driven by the gain booked in relation to the divestment of energy and marine in March with disposals of intangible assets countering the gain and a run-up loss in Q1-25 being a negative component in the quarter. Now I'll turn to slide four and five. Both slides illustrate that we have had major claims below our normal level in eight out of the last nine quarters. On a group level, we had major claims of just 4.8% on average during the last nine quarters compared to our normal expected level of 7%. Despite some volatility between the quarters, we feel we are in a better overall position in our continuing business following the divestment of Energy Marine. However, we will continue to work with a further reduction of the volatility in major claims. Now, let us continue on slide seven. The group made a technical result of 337 million in the quarter, up from 291 million primarily due to synergies kicking in and premium growth. The insurance service results from commercial lines was 146 million against 214 million last year, as major claims came from a very low level in Q1 last year, while still being below a normal level. In personal lines, we had an improvement in the insurance service result to 191 million from 77 million last year. This was primarily due to lower weather related claims, high premium growth in the quarter of about 8%, combined with lower nominal cost, but also higher runoff case than last year. Please turn to slide eight. Insurance revenue grew nicely by 5.2% in the quarter compared to 6.2% last quarter, considering a technicality of one day less in the quarter than compared to last quarter. I would say overall premium growth is very satisfactory with a continuing strong momentum. In personal lines, we are clearly taking market share on top of the and the price increases we do. We do consider 8.2% growth in personal lines as a bright quite a bright spot in our report. In commercial lines, we're seeing a lower permanent growth of 2.1%, but we view this as acceptable given the repricing efforts we are undertaking among our largest clients, especially in relation to unprofitable standalone workers' compensation. And moving on to slide nine and the claims ratio. The Q1 claims ratio was up 50 basis points year-on-year, in a quarter with higher major claims, but also lower weather-related claims than in Q1 last year, as well as higher runoff gains this year. The underlying claims ratio was 70 basis points, worse year-on-year, driven by 140 basis points lower discounting effects. This especially had an adverse effect in commercial lines. Moving to an undiscounted basis adjusted for a right back of a sector bankruptcy, helping 120 basis points, in Q124, we see 190 basis points improvement in the underlying claims year-on-year, a broadly symmetrical improvement in both commercial and personal lines. And now please turn to slide 10. The combined ratio in personal lines improved to 87.1 from 94.4 last year due to a steep decline in the cost ratio of 2.2 percentage points. low weather related claims, but also higher runoff gains. We're seeing a stabilization in motor frequency, while price increases are countering a continued increase in the average motor repair cost. And please turn to slide 11 and the commercial lines. In commercial lines, we see an increase in combined ratio to 89.3 from 84.1 last year, primarily due to major CLAIMS MOVING UP FROM A VERY LOW LEVEL OF JUST 3.5% IN Q1 LAST YEAR. MAJOR CLAIMS OF 8.7% IN COMMERCIAL LINES THIS QUARTER IS STILL BELOW THE NORMAL EXPECTED LEVEL OF AROUND 12%. THE COST RATIO DROPS 1.1% WHILE SYNERGIES AND COST IMMEDIATES TAKE IN. ON THE OTHER HAND, LOWER DISCOUNTING EFFECTS MAKE UP A SIGNIFICANT HEADWIND FOR THE COMBINED RATIO IN COMMERCIAL LINES IN THIS QUARTER. And with these comments, I will now hand over the word to Andreas, who will walk us through the synergies investment and the guidance.

speaker
Andreas Ruben Madsen
CFO

Thank you, Asmus. Please turn to slide 13 for an update on synergies. We had a nice jump in harvest of synergies in Q1 25 to 145 million from 98 million in Q1 of 24. This implies a 47 million uptick in synergies year on year, improving our underlying claims ratio with 0.9 percentage points and our cost ratio by 0.8 percentage points year on year. The synergy uptick is currently quite balanced between the cost side and the claim side. We remain confident that the synergies for the full year will add up to the 600 million that we had previously stated. And now I move to slide 14 and the investment result. The investment result was a satisfactory profit of 96 million driven by a positive return from our free portfolio as well as the profit from our match portfolio, which was helped this time by the VA component, a component that we can't hedge. Please turn to slide 16 now for the outlook for 2025, which we update today. Today we upgrade our guidance for the insurance service results in 2025 by 50 million to 1.55 billion to 1.75 billion. This is primarily due to the realized runoff gains in Q1. The cost ratio is expected to be 17% for 2025 and the combined ratio excluding the run-offs for Q2 to Q4 is expected to be 85 to 87, an improvement of 50 basis points. Again, primarily due to the run-off gains we had in Q1. The guidance includes synergies of 600 million and the effect of implemented pricing efforts in commercial as well as personal lines. The guidance for 2025 investment results of 200 million and other income and expenses of minus 125 million remain unchanged following Q1. Consequently, group profit excluding special costs is expected to be 1.63 to 1.83 billion before tax, excluding the runoff gains for Q2 to Q4 of 25. In addition, we guide the restructuring costs of 175 million, of which 25 million relates to the separation of energy and marine, and while we still expect the depreciation on intangible assets to affect income by approximately 335 million in 2025. Lastly, the result after tax in discontinued activities was 181 million, with the divestment of energy and RIN now being finalized in Q1. And now finally, please turn to the slide 17. We're pleased to announce that on Tuesday, 18th of November, we will host the Capital Markets Day at our headquarters here at Mittermolen in Copenhagen. On the CMV, we will launch our strategy as well as our financial targets for the coming strategy period of 26 to 28. And we hope to see as many of you as possible. And with this, I conclude our presentation and hand over the word to our moderator. Thank you.

speaker
Adam
Call Operator

Thank you. As a reminder, if you'd like to ask a question on today's call, please press star followed by one on your telephone keypad now to enter the queue. And preparing to ask a question, please ensure you are unmuted locally. And our first question comes from Asbjorn Morg from Dansk Bank. Asbjorn, your line is open. Please go ahead.

speaker
Asbjørn Morg
Analyst, Dansk Bank

Yes. Hi, good morning and congratulations on the solid Q1 report. A couple of questions from my side. One, looking at synergies and the level you sort of realize in Q1 versus the full year target, you're almost there. I was just wondering when 31st of December becomes 1st of January, I guess synergy potential doesn't end there, but we could maybe shed some light on what kind of initiatives you think and what kind of potential you see for sort of further realization of synergies going forward. I guess there is still something to harvest there.

speaker
Andreas Ruben Madsen
CFO

Yeah, Asbjorn, Andreas here. Yeah, you're right that we are on a solid track for synergies. And in terms of run rate, we'll probably end up somewhere around 650 when we are done this year corresponding to the 600 we expect to realize in 2025. And I think to touch briefly on what we see going forward, I think that's something we'll dive into in more depth when we get back with the CMV at the end of the year. But I think we see definitely the potential to further improve our margins in a number of places in our business. And to name one, I think, which in magnitude, definitely still very relevant would be the claims area. We see a room for further improvement also in the years to come. But I think that would be it for now. And we'll dive more deeply into that when we get to the strategy for the next period.

speaker
Asbjørn Morg
Analyst, Dansk Bank

All right, that's fair enough. Then maybe if I may, on the growth and especially the private growth, the 8.2%, could you split that a bit into sort of what comes from your partnerships and what comes sort of from your own sales channels, own brand sales distribution? Any insight there?

speaker
Andreas Ruben Madsen
CFO

Yeah. I can try to add some clarity to that also, Asbjorn. And just keep in mind, these are sort of rough numbers and stylized to some extent. But I think from indexation, we would say roughly 3% of the 8%. Then we would say that roughly repricing initiatives would help with another 2 percentage points. And then we are approaching now that we are looking at something around three, four percentage points also coming from actual market share growth. And most of that is coming from our banking distribution partners. But we are also seeing some of the other partnerships develop quite well.

speaker
Asbjørn Morg
Analyst, Dansk Bank

um so so but most of it in terms of the total numbers would be from our banking partners okay so does that mean that basically your own sales uh channels they are sort of keeping your market share flattish so you're able to maintain your market share on your own distribution that is more or less true yes okay fair enough okay Then maybe on your guidance, you raised the guidance by 50 million. You have 34 million of runoffs in the quarter. But I guess if I look at weather and large claims, they're also something like 50 million better than I guess you would have expected for a normal Q1. And now you're also saying that synergies will be somewhat above the 600 million. So I was just wondering why are you only raising the guidance with 50 million? Is there sort of an underlying reason? and negative trend somewhere that we should be aware of?

speaker
Andreas Ruben Madsen
CFO

I can answer that also. Just one statement before I dive into these. What I said was that the full year run rate of synergies would be picking up. I think that's just a mathematical sort of... That's mathematically so also from us delivering realized 600 million. So that still stands. I think mechanically you have a point in the way you talk it through with the Q1 we've had. I think, to put it briefly, I think we feel this is sort of the prudent level to guide where we are now. We're comfortable, we have the right momentum, and we feel that this is sort of the right guidance for now. Mechanically, you do have a point.

speaker
Asbjørn Morg
Analyst, Dansk Bank

All right, that's fair. A final question from my side, then I'll move back in the queue. So now it's a month since we got the DCCA report on the competition in the private insurance market in Denmark. So what are your overall thoughts now, having had some time to digest the views from the report?

speaker
Rasmus Werner-Nielsen
Group CEO

Yeah, I can take that. First of all, we read the report, and of course, we're always open for a dialogue. But our view is very firm that we do not agree in the conclusions of the report. We see an argument where the competition is actually quite fierce. We need to be on our toes. We need to keep costs down. And if we don't have the right prices, right low prices, then the customers will go to other companies. And I think there's a broad variety of insurance companies in Denmark with different models. working models and i think that's enough to to pick between so we will take up the discussion with the with the authorities uh competition authorities in this matter but but we don't agree in the conclusions but do you see any any risk uh sort of like i think i guess there's been some discussion around indexation automatic indexation being at risk uh and stuff like that but what are you what would be sort of your your your outcome scenarios We don't know exactly the outcome of the scenario because we don't know what it will end in. But of course, we discussed internally what could happen. And indexation is, of course, I think it's the right way to do it in Denmark that we're able to increase prices nice. And I would say nice and slowly with the development in prices in the market. But if we're not able to do that, we would need to increase the prices no matter what. And then we would have to call the customer, so to say, in these matters anyway. So for the moment being, we don't see a major change in our underlying business or results in this matter.

speaker
Asbjørn Morg
Analyst, Dansk Bank

All right.

speaker
Adam
Call Operator

That was very clear. Thanks a lot. The next question comes from John Eric Gillen from ABG. John Eric, your line is open. Please go ahead.

speaker
John Eric Gillen
Analyst, ABG

Thank you for taking my questions as well. I can take some questions on the growth of the underlying for the corporate side, the commercial side. Since it seems like you have lost some business or unprofitable workers' compensation business, how is the underlying for the rest of the book then running? Is it so that Berger's Comp is minus five or minus two or minus zero or something. How should they read it and how should they think about the growth for the remaining of 2025 and then potentially into 2026?

speaker
Andreas Ruben Madsen
CFO

Hi, Jannik. I'll try to add some clarity to that. You're right that the overall growth number is not too impressive when you look at it at first glance in our corporate lines this time. Uh, and, and we have different effects, but all, and a lot of it is from, uh, the drag comes from our profitability focus. And the major part of that is that we, as we also mentioned the workers compensation, and we've chosen to exit some, uh, larger, uh, At least you can say that the customers have not chosen to accept the prices we felt were needed to continue, uh, with, uh, with some of the larger clients there. And that, in rough numbers, that could translate to around, let's say, two percentage points of the growth in commercial lines this time. Looking forward, I would, you know, we don't guide for growth, so I'm not going to give you sort of a specific item either for commercial lines, but... Putting it in this way, you might say that we do feel we have a very strong momentum in private lines I just touched upon. And we have a very good momentum there. You might see some drag also from this profitability focus in commercial lines. So I wouldn't put my hopes much above indexation or something around that level for commercial lines on average.

speaker
John Eric Gillen
Analyst, ABG

Okay. So more of the indexation and then not this minus on the top. Indication 3 and this minus 2, is that the one? Is that the conclusion or is 3 a better number?

speaker
Andreas Ruben Madsen
CFO

Going forward, I said if we didn't have, if we hadn't had these exits of customers, we would have been maybe close to, let's say, 5 percentage points in growth. Just rough numbers. Going forward, I'm just saying we might see some of the same drag. So on a normalized level, maybe 3 would be a better average. But again, we don't guide because there can be some volatility for that.

speaker
John Eric Gillen
Analyst, ABG

No problem. The run rate, you mentioned 190 basis points. To reach your sort of guidance on the insurance service results, you probably need to improve that. Is it a gradual improvement throughout the year, which you'd expect because of the the impact of the profitability as well as the synergies. Is that how we should read it?

speaker
Andreas Ruben Madsen
CFO

Yeah, Jannick, you're right. I think just to start there, we're very happy that we do see this improvement now. And I think especially in commercial lines, it's good to show that we have turned it around. So we're going from year-on-year increases to now at least a handsome improvement also there. But you're right that this is sort of the minimum, and we should see this increase gradually as we go through the year. That would be our base expectation.

speaker
John Eric Gillen
Analyst, ABG

Okay. Then on the capital side, the 4.9 billion you're now having capital, that is deducted with the full buyback of 1.6%. as well as 80% of your dividend. Is that fair to assume? Because we don't have been given sort of the full disclosure on that number. And on the requirement, we should now assume that the marine energy book is fully out. Is there anything else that has happened on the requirement side that we should be aware of in the quarter?

speaker
Andreas Ruben Madsen
CFO

I'm not sure I heard you correctly. Just to be clear, I mean, the 4.9 is after we've committed to pay out the buybacks. So that's sort of where we cleanly are at now in terms of our own funds. And the SCR that we have in the numbers is also after divestment of energy and marine. So this should be a more or less, yeah, it is a clean picture of where we are at this point in time after the full divestment and after the capital we've already committed to pay out to shareholders following that.

speaker
John Eric Gillen
Analyst, ABG

And any news on the cold and standard book?

speaker
Andreas Ruben Madsen
CFO

The internal model?

speaker
John Eric Gillen
Analyst, ABG

Yes, towards the internal model.

speaker
Andreas Ruben Madsen
CFO

Well, I think the good news there is that things are progressing as we have communicated and have planned. So for now we still would have an expectation that we can get a model approval in Q3 of this year. But we are still not at a point in time where we can communicate actual numbers for that expectation.

speaker
John Eric Gillen
Analyst, ABG

Okay. Finally, Dan, from my side, the DCA report, since I'm not living in Denmark, is it so that they have now finalized the sort of hearing period for what they should like to investigate? Have they formally started the investigation that then has to take at least or minimum or maximum two years, I'm sorry?

speaker
Rasmus Werner-Nielsen
Group CEO

I think it was two days ago they finalized the gathering of hearings and then they had to conclude on that and see if they actually will move into this market investigation. We actually don't know. If they come out with that, then they will also see what will it cover, how broad will it be, and then we need to take our actions from that. It will run at mostly two years plus maybe six months, so we can take it on time.

speaker
John Eric Gillen
Analyst, ABG

Okay.

speaker
Rasmus Werner-Nielsen
Group CEO

Yeah, so that's how it is.

speaker
John Eric Gillen
Analyst, ABG

Okay, so do you think they will actually tell the market if they start an investigation or not?

speaker
Rasmus Werner-Nielsen
Group CEO

Yeah, I definitely expect them to come out with some kind of conclusion on what they intend to do. I think I know they actually have to do that.

speaker
John Eric Gillen
Analyst, ABG

Okay, thank you. All from our side.

speaker
Adam
Call Operator

Next question comes from Matthias Nielsen from Lodea. Matthias, your line is open. Please go ahead. Thank you very much.

speaker
Matthias Nielsen
Analyst, Lodea

And thank you for taking my questions as well. And also nice to see that even though it looks like a small miss on the numbers, it's less volatile than it used to be back in history. So well done on that. So if you start on the cost line, maybe I have one question. It seems like it's a bit better this quarter. Is that a reflection of the new run rate that is actually running a bit ahead on or a bit better on the cost line, or how should we think about that?

speaker
Andreas Ruben Madsen
CFO

I think now it's one quarter, but I can put it this way. I think we're very comfortable on our cost guidance for now.

speaker
Matthias Nielsen
Analyst, Lodea

That was clear. And then maybe moving on to the underlying claims ratio. That was this last year, the thing that one of your competitors talked quite a lot about of the Easter effect, the claims moving into Q2 instead of Q1. How should we think about the How do you think about this for you going into Q2? You're improving the underlying on this card by 190 basis points. Is that a fair baseline to use for Q2 as well? Or is there anything that we should be aware of there that it should be even higher because of disease effect? How do you think about that? I think if you could say anything on last year, what you saw last year, and then making the baseline even clearer to us, that would be nice.

speaker
Andreas Ruben Madsen
CFO

I think you're touching on one effect out of, there's a lot of sort of moving parts and Easter should provide a slight tailwind because we've had Easter this time in April, so in Q2, for some lines that would all else equal mean that there might be a bit less claims in that quarter. But I think you're touching on one of many parts. Overall, I think I stick to what I also commented with Jan-Jak. I think it's fair to say that Now we are happy to show that we do see improvements, especially the turnaround in commercial lines in terms of the track we had there. And we should see also naturally, as we see the pricing initiatives that we're doing move through the full book, we should see a further momentum gain as we go forward. I think that's the sort of important trend to say.

speaker
Mads
Actuary

Yes, I just have an additional comment because we also want to highlight that that our actuarians actually work with the Easter effect. So they are trying to kind of possess the right picture of claims also during Easter. So we don't really have, in that sense, some very big volatility. Of course, their assessment could deviate from reality, but we don't have a picture that that has been a very big effect.

speaker
Matthias Nielsen
Analyst, Lodea

And when you say not very big, is that below 50 basis points or below 10 basis points or something like that?

speaker
Mads
Actuary

Yeah, I mean, the kind of report we got was it would be kind of a significant, insignificant effect that we would have from the master.

speaker
Matthias Nielsen
Analyst, Lodea

Okay, thanks a lot for that. And then the last question, I had a drop-off at some point, so sorry for that. So maybe you already said that once, but just for my understanding as well. On the investment result, it seems like you're reiterating the guidance of 200 million, even though that Q1 was quite a lot better. Is that because of something you have seen so far in Q2, or how should we think about that? Sorry if you already said I had a small drop-off.

speaker
Andreas Ruben Madsen
CFO

Yeah, Mathias, I think that's more or less right. I think we have seen some headwind through April, nothing major, but that meant that on the balancing point, I think also given all the uncertainties on the financial markets, we felt the 200 was the right guidance for now. But it has partly to do with the fluctuations we've seen since the end of the quarter.

speaker
Matthias Nielsen
Analyst, Lodea

Thanks a lot. I'll jump back in the queue and let others ask. Thank you.

speaker
Adam
Call Operator

The next question comes from Martin Burke from SEB. Martin, please go ahead. Your line is open.

speaker
Matthias Nielsen
Analyst, Lodea

Thanks a lot. Just coming back to the question and answers that we've basically been dancing around. So you said to reach the 1850 by year end, which basically gives you a quarterly run rate of 504 million for the remaining three quarters. And given everything that is happening and given that the improvements are that will be gradually coming through over the year. How would you divide sort of those, that quarterly run rate of 504 million out over the remaining quarters? Thanks.

speaker
Andreas Ruben Madsen
CFO

I don't think we are. I'm not going to start sort of a practice of guiding for each quarter. I think that's too much.

speaker
Matthias Nielsen
Analyst, Lodea

It's perhaps more giving us a sense of how you see it, because I mean, basically, it's quite a big step up already.

speaker
Andreas Ruben Madsen
CFO

I was on my way to try to do that, given the statement that I won't give exact numbers for each quarter. I think you already know that Q1 is also by nature quite heavy because of our crossload and we have the partnerships and other things that is a drag in that quarter, all else equal. And then we can also see some fluctuations across, as you know, the quarters, especially from the weather component, there will be variations and where typically a Q2 would be a good quarter in terms of weather. to name something. But I think the important thing is that if you look at the underlying, and that's the one I've been commenting on so far, that's the one that we're following and we should see a pickup in that as we progress uh naturally and that's at least on average over the quarters we should see a pickup coming from the fact that more of these initiatives are translating into the books so i think that's the effect i would mainly focus on for now and and also as i mentioned costs i think we're confident there and i think we have a good tracking also to at least also maintain uh some of the improvements we've seen so far so i think that's i hope that's okay for now i mean i i it's but

speaker
Matthias Nielsen
Analyst, Lodea

But Andreas, I hope to get you a little bit closer to an answer here because if you're looking at your underlying and if you're looking, keeping the 504 as a quarterly run rate in mind and the seasonality and the improvements that you are guiding for, I mean, you're sort of putting in normalized last claims and normalized runoffs and also keeping discounting in mind sort of your undiscounted underlying claims ratio is set to see a quite substantial improvement from next quarter already. Isn't that, isn't that a fair assumption?

speaker
Andreas Ruben Madsen
CFO

It's a fair assumption.

speaker
Matthias Nielsen
Analyst, Lodea

In the four or 500 base points.

speaker
Andreas Ruben Madsen
CFO

But I'm just, I'm just trying to say, I think, you know, and I, I know I realized this, we've been through this sometimes. I think, you know, we, It's hard for, you know, in a base case assumption, I think you're right. And that being said, we can see fluctuations year on year from quarters to quarters and other effects also. But on average, you're right. We should see this start to pick up also from the next quarter.

speaker
Matthias Nielsen
Analyst, Lodea

Okay. Okay. All right. I mean, it could be very nice if you could shed a little bit more clarity on this. Perhaps on Monday. Thanks.

speaker
Adam
Call Operator

That was it from my side. The next question comes from Marvin Rutherford from HSBC. Your line is now open. Please go ahead.

speaker
Marvin Rutherford
Analyst, HSBC

Hi, thank you for taking my questions. The first one would be on your commercial line reserve strengthening. Can you provide more colors on what's driving that sort of strengthening and how should we think about that reserve strengthening for the full year? Should we expect more strengthening for the remainder of the quarter or would you say the more or less of the strengthening

speaker
Andreas Ruben Madsen
CFO

already during please uh if i hear correctly uh you're asking about the underlying improvements in in commercial lines and how we would expect that to progress also going forward and what it's coming from i it is from the repricing and profitability initiatives we have We are going through. So obviously we have had some business renew. It's one of the bigger renewals. The biggest is 1.1. That being said, we still have quite a lot of profitability initiatives also running through the book, which are not in effect yet for commercial lines. So I think it would be more or less the same answer I've had in general, that we should see the improvement that we have shown now begin to pick up momentum in terms of underlying improvements for commercial lines also when we go ahead. I hope that answers the question.

speaker
Marvin Rutherford
Analyst, HSBC

Yes, partly, yes. I was just more looking at the runoff for the commercial lines, which came in a bit at worth at 0.7%. We could provide more colors on what's driving that and how should we think about that evolving for the remainder of the quarter. Okay, the runoff result.

speaker
Andreas Ruben Madsen
CFO

Well, the runoff result this time is below what we would consider a normal long-term average, which we sort of expect to be around the two percentage points of premiums. This time it has been, regrettably so, it's been so for... We've had the same effects in also some of the previous quarters. When we see these runoffs, there's been a tendency that workers' compensation is one of the main culprits, and that's also the fact this time. So in the quarter as such, there are moving parts, but what's dragging the numbers down in commercial lines and also for the group in terms of run-offs comes from a few single workers' compensation claims being upgraded. uh in the quarter a single uh workers comp claim could in some instances be around 10 million chrome's just to give you a feel so it doesn't take that much to to to to to come into the books to put some adverse developments but the main point is that these are normal fluctuations on average we would not expect anything else than what we expect on a long-term basis also for commercial lines going forward, which would be the two percentage points in a long-term average for commercial lines.

speaker
Marvin Rutherford
Analyst, HSBC

That's very helpful. The other one that I had was, again, on the DCCA report and on the findings. Would you be able to provide any sort of colors in terms of what's the average duration of your customers And what's the kind of data between the new and renewing customer for the group? And do you see that being any different versus the other players in the market in terms of margin between the new and the renewing customers?

speaker
Andreas Ruben Madsen
CFO

I can try. If you ask for the average duration of a personalized customer, I guess it is if we're talking this report, It depends a bit on how you measure it, but if you look at the customer as such, I think most of us have a duration of something like we lose around 10% of customers a year or maybe a little bit above that now. That's if you look at the full customer engagement as such. And then if you measure in terms of how much business actually leaves, the number becomes higher in the sector. If I answer, to answer what do we expect from the report as such, if, and as Rasmus said, we'll have to see, we don't agree with the report as it stands today. We see the main theme for now being around indexation. Eventually, after the investigation is done, just to say that we are not in the sector in Denmark allowed to index our premiums, we would not expect that to structurally do anything for retention levels or lifetime expectations for personal line customers in the Danish sector.

speaker
Marvin Rutherford
Analyst, HSBC

That's very helpful.

speaker
Adam
Call Operator

Thank you so much. As a reminder, that's star followed by one to ask a question today. We have a follow up from Matthias from Nordea. Matthias, please go ahead.

speaker
Matthias Nielsen
Analyst, Lodea

Thank you very much. So maybe coming a bit back to Martin's question and maybe asking in a bit different way. So can you maybe give a bit of numbers on your renewal flow? When does the higher prices tick in for the clients? How many renew in Q1, Q2, Q3, Q4? Maybe a bit of a split on those things. I think the majority sounded early on like the majority was on 1st of January on the commercial side. But maybe you can give a bit of flavor on that to be able to quantify the price impact on the underlying price. If you know that, that could help a lot, I guess.

speaker
Mads
Actuary

Yeah. Hi, Mathias. Mads here. you are right that we have been pointing, I think, to the bulk of our clients having 1st of January renewals, so we did, I mean, the 200 basis, almost 200 basis points in improvement in here in Q1 was also driven by these price increases, but we are probably, we are still having some clients where it's not fully rolled into a to the numbers and thus being earned yet. And I think there could perhaps be around an overhang of 10 to 20% still that could kind of lift the underlying effects.

speaker
Matthias Nielsen
Analyst, Lodea

So 10 to 20% of clients in commercial only or is that in the total?

speaker
Mads
Actuary

I'm talking about a token for... for the total book.

speaker
Matthias Nielsen
Analyst, Lodea

Since 20% of the overall clients you have has not seen the price hike yet, and they will see it when?

speaker
Mads
Actuary

I think they will see it gradually throughout the year. And remember, this is a very rough estimate from the top of my head.

speaker
Matthias Nielsen
Analyst, Lodea

Okay. So... That means you have around 10% each quarter besides 1st of January, where we have the remaining part. Is that a fair thinking of that?

speaker
Andreas Ruben Madsen
CFO

Is that okay? I think it's a bit conservatively put, if you look at the total. Our personal alliance is quite evenly distributed. If you look outside the banking partnership, it is more evenly distributed there. If it's primarily in commercial lines, we have that very strong tilt in the 1-1 renewal. And the second largest renewal in commercial lines is 1-10. Okay. Okay. Maybe we can get back to this topic also on Monday.

speaker
Matthias Nielsen
Analyst, Lodea

I think that would be great. I guess put on that, that would be very helpful, just on the actual data, maybe that would be very nice. Then the last follow-up question I have for now is on the discounting. Have you seen any material changes to the discounting in Q2 so far?

speaker
Andreas Ruben Madsen
CFO

Not significant.

speaker
Matthias Nielsen
Analyst, Lodea

Not significant, okay.

speaker
Adam
Call Operator

Please find a call for questions at star followed by one. We have no further questions, so I'll hand the call back to Rasmus and the team for some closing comments.

speaker
Matt Zinkel
Head of Investor Relations

Thank you for all your questions. We hope you have a nice day. Thank you.

speaker
Adam
Call Operator

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.

Disclaimer

This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.

-

-