Alm Brand A/S

call today. If you would like to ask a question during the Q&A session, please press star 1 on your telephone keypad. If you would like to withdraw from the queue, please press star 2. I will now hand the floor to Rasmus Werner Nielsen, CEO, to begin. Please go ahead.

Thank you. Good morning, and thank you for joining us on our conference call. I am Rasmus Werner Nielsen, as usual, I have with me today our CFO, Andreas Ropen Madsen, and the head of our IR team, Matt Tinkle. This morning, we published our interim report for the second quarter, and as usual, I will walk you through the operating highlights, and then Andreas will comment on the financials. Please turn to slide two. I'm pleased with the overall financial performance in the satisfactory Q2, with good cost control leading to a significant drop in the expected ratio year-on-year, while the underlying loss ratio is strongly improving helped by synergies and price adjustments. Our organic growth of about 8% in Q2 is very satisfactory as well. We reach an insurance revenue growth of 11% in the personal lines, which implies we're taking quite a bit of market share with our strong bank partnerships as a driver while price adjustments are kicking in as well. Synergies are materializing just as we planned and currently we see good momentum for claims as well as cost synergies. As justice for significantly lower discounting effect on claims, we reach an improvement in the underlying loss ratio of about five percentage points. And now I'll turn to slide three with our financial highlights. Insurance revenue grew to about 2.9 billion in the quarter with a very satisfactory growth in personal lines, as mentioned before. The technical result was 520 million compared to 312 million last year. We view this as a healthy improvement supported by a strong underlying development and good cost control. We see a clear path towards reaching our strategic target of a technical result in 25 of 1.85 billion. Investment income in Q2 was a very satisfactory profit of 102 million, which were primarily driven by a positive result in the free portfolio. And now I'll turn to slide four and five Both slides illustrate that we have had major claims below our normal level, nine out of the last 10 quarters, with Q2 last year being the one quarter above the normal level. On a group level, we had major claims of just 4.8% on average during the last 10 quarters compared to our normal expected level of 7%. Despite some volatility between the quarters, we feel we're in a better overall position in our continuing business following the divestment of energy and marine. However, we will continue to work with the further reduction of the volatility in major claims. And now, let us continue on slide seven. The group made a technical result of 520 million in the quarter, up from 312 million due to synergies, premium growth, and profitability improvements. Insurance service results from commercial lines was 234 million against 36 million last year, in which commercial lines was impacted by very large major claims, as well as underlying losses above normal. In personal lines, we had a small increase in insurance service results to 286 million from 276 million last year, with good underlying improvements countering much lower runoff gains. So even though the insurance service result was just a bit Higher this year, the quality was much better. Please turn to slide eight. Insurance revenue grew strongly by 8.3% in the quarter compared to 5.2% last quarter. I would say overall premium growth is very satisfactory with an accelerating strong momentum. In personal lines, we are clearly taking market share on top of indexation and the price increases we have implemented. We do consider eight 11% growth in personal lines, a very bright spot in our report. In commercial lines, we see a rebound in the premium growth to 5.3%, despite a drag from the repricing efforts we are undertaking among our largest clients, especially in relation to unprofitable standalone workers' compensation. And moving on to slide nine on the claims ratio. The Q2 claims ratio was down 490 basis points year-on-year, in a quarter with lower major claims, but also a bit higher with the related claims than Q2 last year, as well as lower runoff gains this year. A reinstatement premium paid to our reinsurance related to the Mexico case was a drag as well. The underlying claims ratio was 420 basis points better year-on-year, especially driven by commercial lines. Moving to an undiscounted basis, we see a 520 basis point improvement in the underlying claims year-on-year. Commercial lines stand out with around 750 basis points improvement in the underlying undiscounted claims year-on-year, while personal lines improved by around 300 basis points. And now please turn to slide 10. The combined ratio in personal lines increased to 81.6 from 80.2 last year, due to 160 basis point runoff gains in the quarter compared to runoff gains of 530 basis points last year, as well as higher weather-related claims this year. The cost ratio and underlying losses improved nicely. As I said before, the quality is getting much better as premium adjustments are helping the cost ratio as well as the underlying loss ratio. We're seeing motor frequencies starting to drop and a continuing increase in the average motor repair cost. In total, we see a bit of stabilization in the overall motor claims experience. Please turn to slide 11 and the commercial lines. Commercial lines, we see a significant decrease in the combined ratio to 83.2 this year from 97.3 last year. The massive drop is due to a combination of major claims coming down from a very high level last year while the underlying loss ratio is proving significantly as well. The cost ratio dropped 0.8 percentage points, while synergies and cost initiatives take in. On the other hand, lower discounting effects make a significant headwind for the combined ratio and conversion lines this year. And with these comments, I will now hand over the word to Andreas, who will walk us through the synergies, investments, and the guidance.

Thank you, Rasmus. Now please turn to slide 13 for an update on synergies. We had a nice jump in harvested synergies in Q2 2025 to 151 million from 106 million in Q2 2024. This implies a 45 million uptick in synergies year-on-year, improving our underlying claims ratio of 0.7 percentage points and our cost ratio with 0.8 percentage points year-on-year. The synergy uptake 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 we have stated. And now I move to slide 14 and the investment results. The investment result was very satisfactory, profit of 102 million, primarily driven by a positive return from our free portfolio in combination with a profit from our match portfolio, which was helped by the VA component, a component that we can't hedge. Return on bonds and equity was the key drivers for the strong results. Finally, please turn to slide 16 for the outlook for 2025, which we update today. We upgrade our guidance for the insurance service result in 2025 by 50 million to 1.6 to 1.8 billion. This is due to the realized run-up gains in Q2. The cost ratio is unchanged at 17% for 2025, while the combined ratio excluding the runoff result in the second half of 2025 is expected to be 84.5 to 86.5, an improvement of 50 basis points, again, due to the runoff gains in Q2. The guidance includes synergies of 600 million and the effect of implemented pricing efforts in commercial as well as personal lines. We upgrade the guidance for the investment result in 2025 by 50 million to 250 million, while the guidance for other income and expenses of minus 125 million remains unchanged for now. Consequently, group profit excluding special costs is expected to be 1.73 to 1.93 billion before tax, excluding runoff gains for the second half of 2025. In addition, with regard for unchanged restructuring costs of 175 million, of which 25 million relates to the separation of our energy and marine business, while we expect depreciation on intangible assets to affect the income statement by approximately 335 million for 2025. And with this, I conclude our presentation and hand over the word to our moderator. Thank you.