Sampo Oyj

Good afternoon, everyone, and welcome to the Sampo Group first quarter 2023 conference call. My name is Sami Taipulus, and I am head of investor relations at Sampo. I'm joined on the call by Group CEO Torbjörn Magnusson and Group CFO Knut Arne Alsaker and CEO of IF, Morten Torsrud. The call will feature a short presentation from Torbjörn, followed by Q&A. A recording of the call will later be available on Sampo.com. With that, I hand over to Torbjörn. Please go ahead.

Thanks Sami and welcome everyone. We have enjoyed a very good start to 2023 in all important ways with solid value creating results across all our operations. Profit before taxes increased by 30% to 359 million euros after adjusting for IFRS 9 in the comparison period. The very short summary of the quarter would be the one on this page I guess. With the underwriting engine of our group in the Nordic region creating a very positive backbone to our result. Then with our digital skills interacting with the underwriting to give satisfactory growth in premiums and underwriting profits, both in the Nordics and the UK. Then with good investment returns without excessive risk-taking and low exposures to, for instance, commercial real estate. Just to give you one number up front, the running yield for IFPNC was now 3.5% in the first quarter. And the consequence, of course, of these business results being a very strong development of the balance sheet KPIs, of course. You will also be aware of our structural AGM proposal to separate Mandatum from the rest of the group. Looking more in detail at the core of this, the P&C operations, we have another quarter with rate increases of 5 to 6% ahead of claims inflation in the Nordics, where we have 3 to 6% claims inflation in all lines and on average between 4 and 5. The market behavior in the Nordics continued to be competitive but rational. IFPNC's combined ratio improved by 1.5 percentage points to 82.4%, and premiums grew by a satisfactory 6% on a currency-adjusted basis, leading to underwriting profit growth of 10% year-on-year. The outlook for IFPNC's combined ratio has been improved to 82-84%, as we have renewed roughly half of the commercial and industrial books and built more comfort about claims inflation for the rest of the year. There are now quite a few trade union wage agreements just above 4% in the Nordics, several of them with the same number for a second year. Retention rates have also stayed very high in all segments. Then moving to the UK, the market is reacting to the poor profitability they reported in 2022. Market-wide price increases accelerated over the first quarter, allowing Hastings to deliver 39% premium growth, mainly as a result of higher average premiums. Rising prices are also translating into greater cross-customer chance, naturally, that create more opportunities to win new business for us. Meanwhile, the strong momentum continued in the Homebook as well, with 36% growth year-on-year to almost 450,000 customers. Having said that, however, loss cost trends in the UK remain challenging. The first quarter saw adverse weather driving spicing claims frequency and continued high claims inflation that weighed on Hastings' margins. I brought one slide on one of our growth segments, personal insurances, just to give some more flavor to our business developments. This covers health, accident and sickness in various forms. And as products with an important service element, digital integration is key. We have been able to grow this book by some 10% in one year, selling both to private customers and corporate ones. The growth is most pronounced in Sweden and Norway and covers a whole range of products which are often an addition to an existing relationship for property or motor before. This now is a summary slide of our performance versus targets and suffice it to say that if P&C is doing really well with a brief comment that quarterly cost ratios always vary a bit and that we will reach the full-year target for that. And then, Hastings has started the year above the full-year combined ratio target with more than normal winter losses and, of course, some underpricing from Q2 and early Q3 last year, even for us, earning its way into our results. We expect to reach the 88% target for the full year, but possibly not by a huge margin. Turning then to strategy, Sampo's board proposed on the 29th of March to separate Mandatum from the group. This would make Sampo a pure play insurance group in line with our strategy and enabling higher and more resilient returns on capital. However, I believe that the demerger will also benefit Mandatum by enabling it to pursue growth more vigorously. The proposal will be considered by the AGM next Wednesday. In the meantime, Mandatum saw almost 300 million euros of net inflows in the first quarter, up 16% year on year, despite the uncertain environment. And this follows a strong 2022, when it delivered positive net flows in each and every quarter, and Mandatum's unit-linked and third-party assets have now grown by another 5% to 10.8 billion euros. And with that, I return the word to you, Sami.

Thank you, Torbjörn. Operator, we're now ready for the Q&A.

Thank you. Ladies and gentlemen, if you wish to ask a question at this time, please signal by pressing star 1. If you wish to cancel your request, please press star 2. Now, the first question comes from Alexander Evans from Citi. Please go ahead. Your line is open.

Hi, thanks for taking my questions. Firstly, when I just look at the risk ratios by segment, it looks like industrial is driving a lot of improvement here and private is seeing some deterioration. Is it possible to give a bit of colour on sort of what degree of that is large claims or lower large claims and what degree of that is underlying patterns that you're seeing by segment? And then just on your slides, you sort of highlighted the Nordic wage agreements that you're agreeing. Is it possible to give a little bit of disclosure of what sort of level you're at there and how that translates to expectations? And finally, just a little bit intrigued, if I look at your headcount, for example, 24% of employees are coming from Hastings, yet when you look to 2025 consensus PBT, the contribution of the group is only 9%. Obviously, this is a little bit of a simplistic way to look at it, What's sort of the reasoning between this big mismatch here, given that you're investing and sort of the returns that the market is expecting? Or, I mean, do you think consensus is not really in the right ballpark there?

I'll just take the last question. It's not possible to have a relationship between a number of employees and country. I mean, take for instance Norway versus Finland. Norway is much, much bigger for us than Finland in terms of premium volume, but Finland has more employees. It just depends on so many things, average premiums, what you write, how much is outsourced and not. So what is important is to follow the cost ratios for each and every market and line and business area.

Good, and then it's Morten here. I'll try to address the two first questions. When it comes to the underlying improvements, it is actually very much coming from the private segment as well. What is driving profitability in the large corporate segment is the fact that we have less large claims this quarter than what we assume being normal, and also compared to last year's outcome. So we are reporting, as you see, in 30 basis points risk ratio improvement. And I would say it's sort of quite even improvement in private and commercial of that 30 basis points. On top of that, of course, come our targets of some 20 basis points cost ratio reduction. And third, you could also say that In addition to this comes normalization after COVID that we have not included in the estimates. That's going to also come on top. When it comes to wage increases in the Nordics, there's been a number of big union negotiations where the increases are between 4.3 and 5.2, sort of between Sweden, Finland, Norway. It gives us now more visibility on wage increases in 2023, and also some of these have been two-year agreements, giving us also more visibility on wage increases in 2024. And that, of course, makes it easier for us to predict future inflation, in particular related to the wage element in the claims cost.

Just to avoid misunderstandings, these are agreements in general in the Nordic societies rather than just for our employees.

Okay, perfect, thanks. We will now take our next question from Yuri Chikori from Autonomous Research.

Please go ahead. Good afternoon, everyone. I've got just three questions, very quick questions, please. The first one is just on the underlying risk ratio. I think we've been used to seeing improvements of 50 basis points or higher in recent years. I was wondering whether, you know, going forward, should we be expecting a more flatless trajectory as you, for example, seek to grow or maintain your market share? That's my first question. And then secondly, just on claims frequency in motor, I understand there was some normalization in Q1. I was wondering whether you could tell us where motor claims frequency sits in your various markets compared to pre-pandemic levels and whether it's fully normal or whether there could be a drag going forward. And then finally, just on personal illness and accident, considering you have a slide in it, what is the growth potential there and what have you changed there so far that has driven the 10% growth so far? Thank you.

Let me comment on the first one and I'll leave the two others to you, Morten. The There's no specific target for us for the underlying risk ratio, and it's for each and every situation, segment, market is a balance between growth, of course, and improving profitability. It's also relatively difficult to try to have a yearly or quarterly pattern of this, so we're not predicting anything. And finally, I need to caution you a little bit comparing this number between companies depending on whether they include the current year or not and other differences in definitions. So this is what we do always, try to balance to increase the most value we can.

Good. Then I'll follow on the motor claims frequencies. First of all, of course, we've seen a normalization now after COVID. Last year, first quarter, we had still some COVID effects, although we did not estimate them explicitly last year. But you will remember that we still had a bit of COVID effects in Q1 2022. So, of course, there we see a normalization now sort of into 2023. Then on top of that it's been a winter with quite a lot of snow and challenging driving conditions in Norway and Sweden. So frequencies are clearly up in Norway and Sweden compared to sort of last year and also compared to what we would assume being a normal winter. When that is said, one should also bear in mind that there has been less wind storms in the Nordics. So it's also kind of some positive, but not more than affecting property than motor. But again, I would say sort of motor frequencies normalizing now fully after COVID, but a bit of winter effects in Norway and Sweden. When it comes to personal insurances, This is sort of a natural part of our business, but these products are a little bit different compared to motor insurance, for instance. These are products that, to a certain degree, have to be sold. A car insurance you buy because you have a car, and it comes quite automatically, whilst a lot of the personal insurance products need to be actively sold. And there, of course, we benefit from having the largest customer base in the Nordics and a very efficient distribution setup. So we've seen in the material that growth quarter over quarter is 12%, and we've been extremely successful in cross-selling to our existing customer base. This is also a product area where penetration is still not extremely high, so you could say it's a fairly immature market where general penetration of these products will increase over the next five to ten years. So it's a market where we expect it to basically outgrow the other P&C insurance products.

Are you able to give us a rough idea of what profitability is like on this line?

We have similar profitability targets here as we have on motor and property.

All right, thank you. Okay, thank you. Thank you very much for your answers.

We will now take our next question from Saizen Lahani from HSBC. Please go ahead.

Good afternoon. Thank you for taking my questions. The first is on liquidity. So when I look at your current liquidity, it's at €2.5 billion, of which €1.7 billion is earmarked for the dividend as a buyback dividend. And then based on your disclosure on slide 13, it sounds like there's another sort of 250 million euros coming from Endartum. That leaves you liquidity around the 1.1, 1.2 billion euro mark. Does that leave you with further room to redeem debt simply based on liquidity that you have? So that's my first question. The second question is, again, on a mandatum demerger. If I look at the leverage position mandatum in your demerger plans, it's fairly modest at 15%. Can there be further actions taken to optimise that and de-lever? And my final question is on solvency. You still have NEXI and Nordax within... the Sampo group. How much of that could provide further solvency benefit or, from your example, how many euros are left that can be distributed for cap returns? Thank you.

All right. Thank you for your question. It's Putona here. In terms of the liquidity position of Sampo PLC, the liquidity position do leave room for further deleveraging if we decided to do so in terms of, for example, an upcoming maturity we have later this year and our decisions related to around that. So the answer is yes, it does. In terms of the leverage of mandatum, Not sure if I fully heard your question if it was related to further optimization on the mandatum balance sheet, but the lower leverage position on mandatum standalone is also coming from the fact that mandatum in connection with the demerger is repaying Sampo, an RT1, grandfathered RT1. which is currently a part of a mandatum stand-alone solvency position, doesn't change the solvency or leverage position of the remaining sample, but it increases the liquidity in the remaining sample when that loan is repaid. In terms of Ovexis Capital, Ovexis Capital is not right now an immediate investor. consideration for us in terms of additional distribution we have an ongoing buyback which we want to finish and then of course all the exact details of capital will return to when the demerger is actually happening. Obviously the numbers we have given you today are performance based on Q1 numbers. But what we've said before in terms of excess capital and the contribution of the PE portfolio, that still holds, which now in terms of the proposal of the transaction will both add to potential changes in mandatums, excess capital in the future, if, for example, Saxo is sold, and also holds for the remaining Sampo. where the two investments that remain in Sampo PLC will add, of course, to the liquidity, but also the excess capital when those investments are exited.

Just to clarify, on the demerger plan on page 26, Is it correct to say that there's 83 million euros worth of long-term debt after you transferred the debt back to Sampo, the RT1? Is that the correct way to sort of understand that?

Yes.

On the page 26.

Yeah. That is a result of how the merger is structured, where basically the debt-to-equity ratio needs to be The same on both balance sheets. So there will be a synthetic debt in mandatum, which basically is related to the debt position that Sampo currently has. which uh with similar um and the reason it's struck is synthetic it's to make it similar in terms of currencies and maturities and will over time in in line with the related debts in sample be repaid to sample okay okay thank you super detail thank you very much

And our next question comes from Trifonas Spiro from Berenderk. Please go ahead.

Oh, hi. Good afternoon. I have two questions. The first one is on the rate increases of 5% to 6%. You said are running fairly ahead of claims inflation. I was wondering if you could help us understand if there are any pockets of business or geographies which you think are better priced in areas which are not adequately priced on a relative basis in the Nordics. And the second is on Hastings. The loss ratio is up 11 points year on year. I guess, can you help us unpack this a little bit in terms of what is the impact of the weather and what is the underlying movement? Did you claim inflation? Perhaps comment as to when do you think Hastings will get back to achieving greater adequacy in the UK? Thank you.

Okay, I'll try to answer the first one if I heard your question correctly. The five to six percent increases that we have, that's sort of a Nordic average. Commercial lines, so commercial and large corporate being slightly above this, and then private sort of being in the lower end of this. But we are seeing fairly large price increases throughout the board and in all Nordic markets. So it's not significant differences. Then in the Baltics, the price increases are well above this. So that's sort of a little bit of a separate market, but I have also seen inflation numbers, sort of consumer price inflation of about 20% historically. But again, commercial and industrial a bit above the 5 to 6 and private in the lower end.

It's a bit difficult to hear your question about Hastings. I think it relates to the high premium increase compared to last year. Loss ratio. The loss ratio? Yeah. Yeah, well, and in a way that they go hand in hand as, of course, the reason for the high premium increase is the high increase in renewal rates, the much higher new premiums, the higher sales this quarter. And those facts will, of course, drive down the loss ratios going forward, provided the claims inflation doesn't pick up again.

And if I should just add, Torbjörn, on the 11%, you alluded to the 4% impact of weather in Q1. Obviously, that impact in the loss ratio in terms of percentages is higher because it's all claims, while in the operating ratio for Hastings, we include the retail revenue. So that ratio impact becomes different.

Thank you. Is it fair to assume that the 4% is the weather and the remaining difference is due to climate change in terms of the increase in the loss ratio year-on-year?

Since we talk about the 4% increase in impact on the operating ratio, it's related to weather. That means that in 11% on... the insurance company's balance sheet a lot of that is weather. Then of course there are some of the pricing actions that we have taken which also shows in the top line that still has not earned through in terms of also the loss ratio when you compare to last year.

And finally just a reminder that of course even in the UK loss ratios are higher in Q1 and Q4, but that's not visible because people don't publish Q1 and Q3 full reports. Apart from us, of course. Okay.

Thank you. Thank you. And our next question comes from Stuart Blair from Bank of America. Please go ahead.

Thanks very much. Good afternoon, everyone. Two or three quick ones. On the prior year development, it's been quite bumpy quarter on quarter under the new disclosures. And we've seen about 2.3 points of PYD in Q1. I just wonder, you know, given the constituents that are in that number, if you can provide any rough guidance as to whether that's a reasonable base for going forwards, whether it's going to be a couple of points or higher or lower than that. I know you hate doing that, Torbjörn, so please bear with me there, but it's just an idea. And then on Hastings, your confidence of getting near that 88 operating ratio, is that really just as the price rises that you've put through, earned through, or is there more work to be done to get to that 88? And finally, just maybe for Knut Arne, the remaining PE assets within Sampo, are those around a billion, I think, just trying to deduct what you previously said they were worth, but I reckon about €1 billion? Yes. And I guess we throw in a final one. Would you expect any further transactions between the mandatum and the group before the merger, such as another dividend or such like? I suspect not. Thank you.

Morten, I'm hoping that you will.

Let's start to talk a little bit about priors and let's see where it takes us. First of all of course IFRS 17 doesn't change at all our reserving practice as such. What changes though is that a certain part of the prudence that we have is now explicitly modeled through the risk adjustment reserve. And you see that sort of we build up on the current basis 1.6% this quarter. And of course that risk adjustment reserve will also be run off sort of over time. So that will sort of give us a certain runoff gain sort of But it's basically sort of the same effect that we've had previously. We've been prudent in the way that we've been reserving, and that's kind of giving us some reserve releases. Again, now some of this is more explicitly modeled through the risk adjustment reserve. Then, of course, over the last few years, we've had some more special effects. Of course, prior to implementing IFRS 17, interest rate movement has given us back in time losses and then in more recent history sort of gains on the run of gain. Of course, that's not going to be the situation under IFRS 17. And we also had a history of releases in particularly in the Swedish motor, the third party claims sort of, and that's also sort of more part of the history. But again, you should expect us to be continually to be prudent in our reserving and then Over time, that should give us a certain runoff gain.

Then on Hastings, no, I guess, rocket science. The winter, I hope, will not repeat itself during the year. Pricing versus claims. will be the major decisive factor for the combined ratio going forward during the year, and of course also choosing the right balance between writing new business and profits. So business as usual, in other words, Blair.

And Blair, the remaining PE assets has a balance sheet value of roughly 600 million euros. as of the end of Q1. And in terms of additional transactions between Sampo and Mandatum, given that we published the prospectus today with the details of the decision made, there's no other planned transaction of any materiality as we speak between Mandatum and the rest of of the group. There could of course be smaller transactions if you like or adjustments as a part of the separation planning but not material for neither of the companies.

Thanks very much. And the 600 million, is that just book value that hasn't been written up?

That hasn't been written up, no. We didn't write up those assets in Q1. Obviously, it is mark-to-market, but particularly Nordax, of course, it's according to our own valuation model. So it's mark-to-market by using mark-to-model. We had two adjustments in the PE portfolio in Q1, as you will have seen from the holding segment in our formal report. One related to NEXE, which remains in sample. That was a negative adjustment. And one related to Enento. in which is proposed to go over to Mandaten. That was also a negative adjustment in Q1. We did not write up anything in Q1.

Cool. Thank you very much, guys.

Appreciate it. We'll now take our next question from Vinit Malhotra from Mediobanka. Please go ahead.

Yes, good afternoon. Thank you very much. I hope you can hear me clearly. So really two questions. One is linked to growth and one is linked to mandatory strategies. On growth, if I can ask, you know, the industrial line number, though still single high digit, is quite much lower than recent quarters and what the market is telling us about how pricing is very strong. So I just want to just check with you whether you actually slowed down some of the exposures such as volume growth in industrial, maybe in Denmark, the slide seven has a comment about Denmark. I just wanted to check if anything remarkable is to point out there. Also on private lines, thanks for the slide on the new car sales, but I'm just wondering how much of, I know it's important in Sweden and also in all Nordics of But how much is it clearly? Because, you know, if you think of versus the 1Q20, that's the 1Q17, for example, it's 30% or lower even now. And I was just surprised that it's still so poor because at least in recent quarterly calls, we've seen that the pressure was easing a bit. So I'm just curious if there is actually an impact and how do you see yourself changing anything or anything like that? And then on the mandatum piece, I mean, one of the things that caught people's eye in the DMRTD was, you know, the inorganic plant kind of a hint. And today you said mandatum should be free to have vigorous growth. Could you just comment a bit about there is an inorganic approach by mandatum you think you could comment on? I just wanted to understand that. Thank you.

I'll start, Mortnir, I'll start commenting a little bit on the growth. The large corporate segment had about 8% growth in the first quarter. Yes, it's a little bit lower than last year, but I would say that last year was quite exceptional with both growth in rates, significant growth in insured values, and also some growth in number of clients. Now this growth that we have in large corporate segment is... more is purely driven by rate increases. So I think we're very happy about the situation and the growth that we see in the large corporate segment. Then if I understood the other part of the growth question correctly, those related to motor and private lines, we are still seeing a negative effect of the low new car sales in Sweden, where we have the car damage warranty construction, that is a three-year contract in essence. If you adjust for that, the growth in private would be 7.5%. So it has a fairly significant impact on the private growth. So excluding the Swedish mobility business, then the Nordic growth in private is 7.5%. And it would push the growth of, if in total, up to 6.7%. So I think all in all, very strong start of the year with really strong growth in all business segments.

And on mandatum, I think it was a bit difficult to hear you, I'm afraid, but If it was about the growth and the word vigorously that I used for growth, Mandatum is, of course, a lot of growth business. The Unilink business is growing, even with us. The asset management is certainly so, also expanding a little bit into other Nordic countries. And were there to be an opportunity for non-organic growth, that would make a lot more sense, of course, for them to pursue that outside of our non-life strategy as a constraint.

Thank you.

Thank you. As a reminder, to ask a question, please signal by pressing star 1. My next question comes from Michelle Balotra from KBW. Please go ahead.

Yes. Thank you for taking my question. Sorry for stressing again on the investments, but can you maybe give us some details about what stage are the investment in Nexi and Nordax, let's say, in terms of... And also, I know that this question is more for mandatum management, but even the Saxo Bank and the Nento have been transferred to mandatum. Does this change the investment horizon for these two investments? And the other question is about the cooperation that you mentioned in the past in terms of the application of the listings know-how to the rest of the group. Thank you.

Well, let's see. And Nordax, there's no change to their horizon there. And of course, in the case of Nexi, we're a co-investor and we are not able to decide or even be party to the discussions necessarily about the exit point. is a little bit closer to us but again we are a co-investor and we don't decide about when there's a chance to exit those and if you would think about a consumer credit business in 2023 whether that's a likely exit year well your guess is as good as mine but maybe not extremely positive and then the horizon for exit doesn't change as such when assets move to mandatum that they are still in the same constructions as they are with us.

Thank you.

And we'll now take our next question from Jan-Erik Gelland from ABG. Please go ahead.

Thank you for taking my question. It's regarding mandatum and sort of the profit before taxes, which is 32 on a standalone basis and 37 million on a group level in Sampo. How should we think about this relates to cash earnings and the capital that they can actually distribute at the end of the day? Of course, the change in ending the guaranteed business is still the same, even being a separate company. So just understanding more about the 32 versus sort of the dividend capacity this new company is being granted. I'm sorry I haven't been reading the new prospectus today.

All right, Jan-Erik. In terms of the Q1 result as such and the 32, there's really no change in how I would think about the sort of dividend capacity for mandatum over the next few years. As you know, part of the dividend capacity for mandatum, which will not change after the merger, is coming from an annual earnings and part of the dividend capacity is coming from capital release from the with profit, which absolutely still holds. We've had the dividend from mandatum of 150 million euros in the last few years. And in the prospectus, you will find some comments about indicative targets for mandatums dividend for the next three years, which will not change to the downside, the number I just mentioned to you. meaning that following this quarter's result and the demerger, the total dividend capacity for the group has absolutely not changed. It just also, of course, will be split into shares.

Perfect. Second question is about the sort of the underlying normalization in the Nordics from as Morten mentioned. How has this looked in Finland and also the weather in Finland versus sort of the Q1, which is a winter quarter? It seems like both Finland and Denmark probably have a less severe outcome than we probably thought. So how was actually those two markets looking, if you can shed some light to that, Morten?

Yeah, that's it's very correct. Exactly what to say. And I think that Finland has had what we would consider a very normal winter. So the only thing we see in there is sort of the expected normalization of the COVID. But but apart from that, a normal winter and then Denmark has had rather on the positive side, sort of a quite benign better this winter. So perhaps even a bit better than than a normal winter in in Denmark. So I'm It's a little bit mixed picture throughout the Nordics.

And finally, on the snow in the mountains of Norway, would you be worried about any flooding coming through this year, or is the sort of civilian authorities more prepared this time around than what we have seen historically?

Let's see. I'm, I think, refraining from speculating, but there is a lot of snow still left, so... Still good skiing conditions for us Norwegians. Indeed. I'm not too worried, but I mean, it's impossible to predict, of course.

Thank you for taking my questions.

We'll now take our next question from Jakob Tirbanen from SCB. Please go ahead.

Yes, good afternoon. It's Jakob from SCB. I would like to ask about the Nordic PNC and the improved visibility for 23 wage inflation. Do you see need to further continue pushing the rate hikes and perhaps a follow-up on that one? Have you seen any market participants yet to become more active or aggressive in their pricing or campaigning?

Yes. I think the effect of what we see is that, first of all, we have now, as I said, more visibility. But at the same time, it means that we are expecting a situation with somewhat elevated inflation throughout 2023 and into 2024. So it's probably sort of a situation that is a little bit prolonged where we continue then to expect inflation around the figures that we see now, which is sort of quite okay and something that we're fully able to price for. Then I think of course this type of inflation is something that all players need to price for. And I think we see that basically most players have been doing that or will need to do it sort of because, you know, With 5% to 6% claims inflation, you simply need to price for it. So we do see that the market continues to be irrational and that competitors are pushing through the needed price increases.

Okay, good, thanks. Then my second one on the investment return. was it negatively impacted by the financial sector turbulence we saw during the quarter or would you call that mandate performed according to your own expectations versus the market perhaps I would say they performed according to our expectations absolutely then of course in the net finance result there are

a positive from the performance on the asset side. And then there is a negative from the fact that rates went somewhat down across mandatums rate curve, which to a large degree, not fully, but to a large degree, offset the positive investment income from the asset side.

Okay, thanks. The final one, regarding the group solvency after mandatory merger, you indicate that the group could be perhaps paired with the lower solvency buffers. Could you talk a bit on your thinking there? Are you going to stick into your current range of solvency buffers, or how should we think that going forward?

We haven't published a new capital management framework today. We will do that later this year. But the merger in itself does make it possible to reduce that range and meet the midpoint of a range downwards. Then, of course, on the side, I think I mentioned this before, on the side of ratios, the demerger in itself is reducing the group SCR. So just the capital commitment as such without any ratio goes down. And it, of course, also can go further down if we get an approved internal model on the P&C business. An internal model would never have covered a live business in the group.

Okay, good, thanks. That's all from my side.

Thank you. And we'll now take our next question from Jakob Brink from Nordea. Please go ahead.

Two questions, please. Maybe I missed it in all the disclosure, but I was looking for the leverage ratio of the sample group post-de-merger. Could you help with that? Just what debt level should we deduct in equity as well? And then my second question on the dividend capacity of Mandatum that we talked about before or you talked about before. I noticed that the with profit or legacy liabilities are down 18% year on year, which I think must be a record. Is there anything special going on this Q1? And in that sense, if sort of this elevated reduction level could continue, what kind of implications could that maybe have for dividend capacity? Thank you.

Jakob, we haven't published a pro forma leverage for the sample post the demerger, but Mandatum has a lower leverage. The impact on the leverage ratio would, as of Q1, have been somewhat negative, pushing the leverage ratio upwards, but still not above our target. which is below 30%. So it's not a leverage concern, but it would be a slight increase in the leverage ratio. And we will, of course, return to that when we have all the financial details exactly of the demerger, because this might of course change and be different numbers which since things will develop in terms of financial markets and profits and what have you up until the demerger date. The dividend capacity of mandatum related to the with profit, there's really nothing special that has changed over the last few quarter in terms of the pace of of the release of the with profit liabilities, meaning the runoff of the with profit liabilities. The sort of run rate of that have been completely according to plan of some 150 to 200 million euros per year. Nothing special neither in Q1.

Okay, just coming back to the first question or your answer on the first question, sort of a rough sort of ballpark, would that be, so I see Mandatum Holding has had an equity at the end of last year of around 1.3 billion euros. Is that the one we should deduct or is there any other sort of major changes we should do to that? And secondly, on the debt level, there's of course the 250 million. a remaining debt and then I guess the 80 million or 80 to 85 that you leave with mandatum. I guess I should take that out of a sample remaining group as well. Would that be the main changes to do when calculating leverage?

The debt in Sampo as such, the external debt in Sampo will be unchanged, remaining Sampo unchanged from the demerger. That 84 is a synthetic debt with, of course, can be used. to repay our external debt. So you could net that out as you alluded to, but it's not a, we will still report a gross debt, which is unchanged, everything equal. Then of course, on the side of the merger, as you will see in our disclosures in terms of when certain debt stacks mature, we have an upcoming maturity also later this year which is not included in any of the considerations I gave you or in the actual or pro forma numbers we reported today and a sort of payback of that is not included that's included at its full balance sheet value as of Q1. In terms of what equity you should adjust, you could use that number. That of course will be impacted by how profit in mandatum is developing throughout the year. Any addition to a profit in mandatum throughout the year will be added to the sample group equity up until the time of the merger and we have not today announced an extra dividend from mandatum prior to the demerger so the more profit mandato makes throughout the year will actually make the leverage impact in percentage terms higher

Yeah, of course, relative to whatever it might be before the demerger.

Relative to what it would be in the demerger, so that's true.

Okay, that's clear. Thanks a lot.

Thank you. And we have a follow-up question from Stuart Blair from Bank of America. Please go ahead. Thank you.

Two quick ones. I notice the NOC has been very weak against the Euro. I just wonder if there's implications for inflation flowing through your Norwegian business. I'm guessing not a lot of spare parts and materials are manufactured in the country. So you comment on that, please. I know you have agreements that will protect you short term, but if that doesn't change, will there be an additional inflationary impact from the weak NOC? Just on the internal model, since you brought it up, any idea on a timeframe for that? Thank you.

I'll start with the Norwegian coroner situation. Yes, the Norwegian coroner is on an almost historically weak level. And of course, that can have a spillover effect into increased spare part prices in motor in particular. However, this is sort of not really a new situation. We've seen really weak Norwegian Krona for quite some time now. And again, that has been one of the drivers behind the inflation that we've seen in Norway. So I think we're not sort of particularly concerned about this, but of course, something that we monitor. And of course, this will be included when we sort of estimate the claims inflation related to spare parts in Norway. But Let's see how this develops.

In terms of the internal model, Blair, I'm afraid I need to stick to what I said before. I can't give you an exact time frame. In terms of the work done, I'm very comfortable. There's lots of regulators involved in terms of evaluating an internal model, for example, a group. So that process will take some more time. I'll come back to a more exact timetable when we have this ability, which makes sense to give you.

Okay, I'll take it from that. This is something that you've been working with regulators across the region for some time.

Yes.

Thank you. Superb. Thank you. And since we have another follow-up question from Vineet Malhotra from Mediobanca. Please go ahead.

Yes, thank you, Ritipa. Very quick. Just on slide 11, please, the one where you talk about the UK, the Hastings claims from Weather. I'm just curious, is this somewhat linked to the push in the housing market? market, the home insurance market, because what is it still mainly a motor issue, this weather impact? I think you mentioned four points in operating ratio. Just a quick clarification. Thank you.

It's mainly a motor issue, not home insurance.

Okay. Thank you, sir. Thank you. And it appears there are no further questions in the queue at this time. But Liz, I'd like to hand the call back over to our host for any additional or closing remarks.

Thank you everyone for your attention today and we look forward to see you on the road soon. Thank you and goodbye.