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.