Sampo Oyj

Good afternoon, everyone, and welcome to the SAMPO Group fourth quarter 2023 conference call. My name is Sami Taipoulos, and I'm head of Invest Relations at SAMPO Group. I'm joined on the call by Group CEO Torbjörn Magnusson, Group CFO Knut-Anne Alsaker, and CEO YF 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. As you will have seen from our numbers, we maintain really strong momentum through the fourth quarter. I think we reap benefits from three different aspects of our business model. Firstly, we're big and have been able to invest in digitalization over a long time. This means we sell to and service our customers digitally more than ever, more than others in our markets, and very efficiently. Secondly, even in a year with a high number of large losses and nutcat events, our diversification reduces the effects of volatility. Now and then, we will have this kind of year, and we have a strong balance sheet with which to meet this. Finally, our exceptional underwriting culture has produced another year of improvement of the underwriting ratios adjusted for the volatile effects just mentioned. Just to list a few key achievements for the year, I think improving the underlying combined ratio again at a stable pace, as well as improving the cost ratio for the 14th consecutive year, belong up there. Having been able to use our digital proficiency to grow other lines, other lines than the motor business in the Nordics, in the face of low car sales is certainly another. And finally, I think Hastings agility in the challenging market in the UK combined with its underwriting discipline is also impressive to me. Finally, on this page, I think our investment returns compares well to the market. Given our low risk portfolio, .3% returns for the group certainly is a welcome addition to the insurance underwriting. Total profit before taxes for 2023 increased to just shy of 1.5 billion euros. That number summarizes all of this, of course, and the proposed dividend of 1.8 euros per share and the payout ratio of 86% of our operational EPS. On the next page, we outline the key general insurance developments. First of all, it has to be pointed out that the Nordic market has remained disciplined. And one observes there are the high combined ratios in part of the market compared to ourselves and a few of our listed peers. Prices have kept pace with claims inflation and retention numbers for us are by and large in the same place as a few years ago. We continue to see particularly attractive development in our target Nordic growth areas such as personal, home and SME insurance. In the UK, switching is much, much higher than a year ago as we predicted then and rate increases have been late but in the face of the cost of living crisis but rational. Riding this wave as best we can and capitalizing on the Jeep opportunity, we have been able to grow especially in home insurance. Total gross written premium for growth for Hastings last year was 32% and we have a very good starting position for 2024. However, the claims cost development has continued to follow the same pattern as earlier in the year in the Nordics. We have rather good visibility with our purchasing power and average claims inflation remains just over 4%. In the UK, even though claims inflation has moderated slightly towards the end of the year, it's still surprisingly high. We see no obvious reason for claims inflation to stay this high as consumer price inflation has dampened and the price for used cars is falling. So, let's see. Despite the claims inflation though, we were able to reach .8% operating ratio for 2023 and with roughly the same reserving levels as before. Finally, when it comes to weather, we have an early and long winter in the Nordics this year combined with some wind which costs some 3% to 4% on the combined ratio in Q4. This is more than the average of say 1% but not an extreme situation at all. We consider it to be maybe a five to eight year return period and it affected only two of the four countries significantly. Commenting on weather, let me also say that even if the return period for the Norwegian windstorm in January this year was very long in metrological terms, it mainly hit the northern parts of the country and it doesn't seem to have incurred a double digit euro loss for us. Looking then to the asset side of the balance sheet, Sampo enjoyed an excellent investment return in the fourth quarter on the back of broad-based gains across the portfolio. The full year return was 6.3%. As a group, we're comfortable taking measured investment risk in order to enhance earnings over the medium term. And since 2009, we have earned an average spread of some 290 basis points over the risk-free rate in FPNC, equivalent to roughly 300 million euros per annum. Before, we are very reluctant to conclude that interest rates will stay at these levels. The stock markets will keep climbing and that there will be continued sunshine everywhere. So last year's investment returns is not a solid basis for us making insurance rate decisions. And indeed, the stock markets in January have not supported, I think, eternal optimism. I thought I should give you a little bit more insight into our one-one renewals than I usually do this time of year, considering we are now in February and considering that more than 40% of our corporate book is renewed at the beginning of the year, in commercial and industrial. We have been able to renew most of the business with unchanged very high retention or renewal rates. The acceptance for adequate rate increases is still high, and especially for industrial, the changes include tighter terms, also equally important in reducing losses. We have also taken the opportunity to move away a little bit from some of the largest exposures in our constant efforts to reduce volatility in our results. This was done without much drama in the market, but of course, it supported rate increases in general. To conclude, I am pleased to have closed another good year. Our operational performance remains excellent and our competitive advantages are as strong as ever. I look forward to updating investors and analysts on our plans at our upcoming capital market stay on the 6th of March 2024. Over to you, Sami.

Thank you very much, Torbjörn. Operator, we are now ready for the Q&A.

Thank you, Sami. Ladies and gentlemen, if you would like to ask a question, please press star one on the telephone keypad. Thank you. We'll now take our first question from Freya Kull with Bank of America. Your line is open. Please go ahead.

Hi. Good afternoon. Thanks for taking the questions. Firstly, just on your remarks in the release about putting through significant rate increases, where are these rate increases targeted? I know you talked about commercial. What about the personal line segment? I guess I'm just trying to understand the need to drive significant rate increases from here if claims inflation is tracking in line with expectations. Do you expect to see an uptick inflation over the next year? Second question is on UK motor. It seems to have grown modestly in the fourth quarter, though a bit hard to tell. I know we will get financial targets at your CMT, but I just am looking for comments on how you see the UK market now after the rate increases have gone through. Do you expect claims inflation to moderate from here and how's the competitive backdrop looking?

Maybe I'll start with UK and then leave to Morten to comment on significant or at least rate increases in the Nordic's UK motor. I think we'll be entirely decided by the claims inflation going forward. As I just mentioned in the introduction, there are, as we see it, no reason to believe it will stay high, but I'm also a little bit surprised personally that it's still this high. The market has been rational towards the latter part of last year and increased rates a lot. Then we will see whether that's enough. How do we respond to that as SAMPA? Well, the same way as we always do. When we see an opportunity, because we can provide customers with a good proposition at a better rate than the market, then we take that opportunity. If there's no such opportunity, we will not grow as much as otherwise. We aim to increase the underwriting profits and the EPS, and that's paramount in SAMPA and has always been.

Then to the rate increases, we continue to have on average five to six percent premium increases throughout the Nordics. On private and commercial, we are mostly now pricing in line with inflation, as we see that margins and rate adequacy is really good in those segments. Then in the large corporate industrial segments, we do to continue pricing above inflation. That's the reason why we're still nearer to increasing rates somewhat.

Thank you. Thank you. We'll now take our next question from Alex Evans with CT. Your line is open. Please go ahead.

Hi, thanks. Firstly, just on the claims inflation both in the Nordics and the UK, it seems like a material drop in 2023 in the Nordics and marginal for motor in the second half of 2023. Just wondering if you're able to give any sort of color on numbers on your outlook for claims inflation in 2024 if you're expecting it to be below the four to five percent range? Likewise, in the UK, you sort of said modest decline in Q4, but compared to the same, seven to 10 percent, does that align with how you're thinking about it? Then secondly, just on the improvement in Hastings in the quarter, I'm aware there's some quite bad weather in Q4. Is it possible to give a bit of color on the magnitude of this? If I'm looking at industry estimate losses, that's 550 million. On a two percent market share, that's maybe about three points on your loss ratio. Is that the right thinking there? Just comments around the growth opportunity fading in home now as well? Is that just the strong growth that you've already put on or are there some new entrants and it's a little bit more challenged? Thanks.

When do we start with this?

I can start with weather impacts in Q4 for Hastings, which I would call marginal. So not a driver of the result in a negative sense in Q4 to any material. Then Morten. Yeah, then I

can comment a little bit on claims inflation, which will be a bit of repetition of what I think we talked about during last year. But on average, between four to five percent inflation, more towards the lower end of that range on average. Motor is a little bit above that range and properties below that range. On motor, we've been seeing stabilizing inflation during 2023 and on property, we've seen falling inflation during 2023. We do expect inflation to be at whatever says a bit elevated levels also in 2024 compared to at least historical levels due to sort of the visibility we have now on the wage increases and repair costs. So I think now we have good visibility on inflation going forward and again in the range four to five percent.

Thank you. We'll now move on to our next question from Trifonaz with Derenberg. Your line is open. Please go ahead.

Hi there and well done for the strong end of the year. Have a question on Finland. It looks like it had a really good year overall in terms of profitability. Can you maybe share what the key drivers and what products are driving this? Whether we should expect this to continue and related to that, do you expect, how do you expect the behavior of the mutuals across Finland and Sweden to evolve next year or this year given the combined ratios do not look as serious to put it mildly. The second one is on and appreciate you don't like to give guidance on this, but maybe would it be fair to assume that inflation coming down pricing so strong the underlying improvement to the if risk ratio can continue to improve by 50 basis points or so a year. And then the last question maybe one for Kudarno, it's on the whole core liquidity and cash related to the source of the situation. Can you maybe share whether the 1.3 billion liquidity figure includes any of the cash upstream from E for Hastings for 2020 or it is becoming on top of this amount. Maybe you can please share what the numbers will be expecting from the two. Thank you.

Yeah, a set of questions there and I think I'll try to answer them the three first ones and then hand over to it to Kudarno on the last one. On Finland, yes, good profitability level, I think really represented by good underlying profitability, which is actually what we see in all countries. But then Finland has clearly had less events, weather events than what we see in the other countries during 2023. So I think whether and large claims sort of has been more benign for Finland. But again, good underlying profitability and good underlying profitability in all business areas in Finland. Then your questions about the mutuals. I think we want to avoid speculating too much about competitors. I think the only thing I can say is that it's quite clear that some players, including if has been early in pricing for inflation, and then we do see that some other players are perhaps lagging a little bit behind. But eventually, I think all players need to price for the inflation that we have seen. So I think that's a good position for us to having already implemented sort of the needed price increases due to the inflation that we've seen. In terms of underlying improvement, I think as I briefly also commented on a little bit earlier, in private and commercial now, we are more pricing in line with claims inflation that we expect going forward. And because the margins basically are really at good levels there. And then in industrial, we are pricing somewhat above claims inflation still. So I think that give you at least some insight into sort of potential underlying improvement going forward.

On the holding company liquidity, I didn't fully hear question. But with respect to whether or not we took up a dividend from the subsidiaries last year, we did. What you shouldn't expect is us to have the same kind of big announcement in November every year when we decide on a big dividend and talk about it in our quarterly reports. This will be a part of our group liquidity steering. And by that, that means that there are possibilities for us to add even more liquidity to the holding company before next November.

Thank you. And we'll now move on to our next question from Jacob Brinks, Britain Audio. The line is open. Please go ahead.

Thank you. Back to Hastings, please. So I was trying to play around with the growth numbers on live policies, and it looks slightly less than 10% year on year. Anti-growth crosswritten premiums, 34% to right. So is it fair to assume, roughly speaking, that I guess around 25% of the growth is coming from new customers, new policies, and the remaining part is from price hikes. And in consideration of that, those price hikes, I guess you started with them sort of fairly early in 2023. We saw fairly big increases month on month in the first two quarters of 23. So would that then be fair to assume a continued support from these price hikes on insurance income when we go into the first half of 2024? I guess that's the first two questions, and I have a follow up.

So your calculation is not wrong. Sort of as round numbers. And then we actually started the price hikes a bit earlier than you indicated. But your question was whether we will ride on those into 2024. And of course, that's true. We have continued to increase rates up to the very end of the year.

Okay. Thank you. And then you mentioned also in your presentation that you had seen this small decline in inflation levels towards the end of the year. Would you say that these riding on these price increases you have already done, are they bigger than this slightly lower inflation? Or would you say that if these Q4 inflation levels stays, is there then need for more price increases?

That's to say that if we have another year or 12%, we will continue to increase rates. Okay.

Fair enough. Actually, one last thing on growth in Sweden. Sweden has been fairly low on top line growth in this for quite a while. It seems like it did accelerate both in written treatments and in insurance income in the fourth quarter. Is that price or did something underlying change?

I think on Sweden, the underlying growth actually has been fairly good in Sweden. But what has dampened the figure is the car damage warranty that we seems to always come back to. Low new car sales has given us quite some headwind on growth in Sweden. Now, we're starting at least to compare some years with equally low new car sales 2023 and 2022. So, I think again, sort of the underlying growth momentum is actually good in Sweden. And I think that's more what you now finally see in the Q4 numbers.

I see this as one of your successes actually over the past couple of years to replace the car damage warranty income with home insurance and personal insurance income. That is something the organization has done well.

Yes, absolutely. I think growth on property and personal risk products close to 10 percent on both of them offsetting quite well the somewhat lower growth that we seen on motor due to low new car sales in the Nordics.

Because I guess you're now looking at seven and a half percent growth in Q4 -on-year, which is quite an increase from six percent last of the full year. So, it does seem like it's accelerating.

I think sort of development from quarter to quarter is always a little bit. I mean, since we are reporting on gross written and not sort of earned, you always will see a little bit volatility sort of on the quarter to quarter. But of course, it gives you more visibility on the future development again, sort of looking at the written figures because that's what we will earn over the next year,

right? Okay, thank you very much.

Thank you. And we'll now take our next question from Fezzan Lekhani with HSBC. Please go ahead.

Hi, thank you very much for taking my questions and congratulations on a very good set of results. The first is coming back to the point that you're looking to maintain similar margins in private. At the same time, you mentioned some of your peers are still putting through claims inflation. So, can I take from that that you will be taking market share within private? My second question is coming back to liquidity. Now, if I deduct the DPS, that leaves me with around sort of 500 million euros worth of liquidity. Is that fair to say that liquidity becomes a constraint to your next dividend for further capital returns? And my final question is on the prior releases, you mentioned that it was due to sort of a reverse sort of certain inflation assumptions. Could you provide a bit more detail in terms of where that came from? Is that wage related? Is that claims frequency related? And which lines of business? Thank you.

Yeah, I'll start with sort of if related questions. Market share, let's see. I think we are of course very satisfied with having implemented price increases somewhat ahead of inflation. I think that leaves us in a good position in terms of competitive sort of positioning in the Nordics. But let's see then how the rest of the market reacts and what this kind of eventually how this plays out. And how many cars are sold next year. Yeah, it would be good if the Nordic people start buying cars again. Then to the prior releases in in if a fair part that came from extra inflation reserves that it put up in Q2 and Q3 in 2022. Basically both motor and property. And I think what we saw sort of during 23 was more a development according to our expectations. And then we see that we could really some of those reserves.

Was that better development on the claims frequency side or is that bodily injury? What was the A versus A on that front?

That was more sort of pure inflation. I think on the frequency side the development for us in the Nordics has been very close to what we predicted sort of returning to close to normal levels after COVID. So I think frequency has been quite sort of as expected. And then of course inflation was elevated in 22, 23.

But if you look up the Q4 2022 numbers, one could say that we were a bit conservative maybe with the inflation reserve.

On the liquidity we will obviously talk more about capital management and the capital position. At the CMD. But just in terms of the liquidity angle of that, it's not a constraint that 500 million. And one other simple reason for that is that balance will increase with sort of the cash management planning we have within the group over the next few months. So it's not a post-dividend number which will be fixed for the rest of the year.

All right. Okay. Okay. Look forward to that. Thank you.

Thank you. If you find that your questions have been answered, you may remove yourself from the queue by pressing star two. We'll now move on to our next question from Johan Straum with Carnegie.

Thank you. Most of my questions have already been answered. But I have one a little bit technical and that's coming back to the announcement you made in mid-January with a change of accounting treatments for discounting effects. So first I just want to confirm that the changes that you've made now will not have any impact on your pre-tax profit. And then to my question really, how should you think about the unwinding effects going forward? Looking at the Q4 unwinding level looks a little bit higher than before.

Yeah. It did not have a pre-tax profit effect as such other than the fact that there is a little bit of discounting effect in Q4 which we wouldn't have had because we need to adjust for the fact that we had a little bit too low discounting in Q2 and Q3 compared to the new model. Some way I think we disclosed that number in the release. Anyway, it's 9 million euros in Q4. Then of course what will happen going forward, Johan, exactly as you say is that the unwinding everything else equal, not thinking about interest rate moving up and down, will in the insurance, finance, income and expense be a little bit higher because we also will unwind current year which previously was a part of, more of a part of the insurance service result. And of course this makes the alignment between elements of the investment result and the insurance, finance, income and expense better because it brings more of the cost of liabilities from discounting into the net finance result and that's where it should meet coupons that we are generating from our fixed income portfolio.

Okay, great. That sounds really smart. And then just on the numbers there, so if you take one year of unwinding effect and divide it by four and add it to the quarter run rate, is that fair? Is that how you should calculate it?

That's how you should calculate it and we gave updated sensitivities in our investor presentation today. What we will need to do is just to, there will be updated sensitivities on a quarterly basis going forward because these numbers might change a little from quarter to quarter depending on how interest rates develop. So we will have a new sensitivity after Q1 which will give you a good indication for the Q2 unwinding. But you're exactly right. The numbers we've given you today based on where we are today, you could take that number and split into four and get the best possible sensitivity or estimate that we can give you today.

Much appreciated Knut-Anne. I'll hand it back.

Thank you. And we'll now take our next question from Jekko with EB. The line is open. Please go ahead.

Good afternoon gentlemen. I could follow up on the run-offs. And so what we, they were exceptionally high in 23 and could you elaborate or help us what should we expect for 24? How extraordinary the 23 number was?

Yeah, I think we're not really giving any sort of outlook on the run-off gains but yes they were a bit elevated in 2023 and as already explained larger part of that comes from the conservative inflation reserves that we put in place in 2022. So that was clearly kind of an extraordinary thing. Of course with IFRS 17 you do get some run-off gains sort of from the risk adjustment reserve sort of. But apart from that sort of we're not giving any guidance on run-off as such.

You could say possibly that we have roughly the same reserve strengths that we always had. If you look at our prior gains over time this is one of the higher numbers, probably not the highest but one of the higher numbers over the past 15 years if that's of any use to you.

Yeah and we like to have a conservative approach so we kind of have strong reserves. That's sort of the way that it's always been I think at IF.

Okay great thank you. Then on the customer behavior in IF private, are you seeing the private customers tendering their policies more actively now following the kind of a market-wide price hikes during 2023 in the Nordics?

No not really. To a very small extent you see sort of retention rates creeping down a little bit but it's very marginal and the retention rates are still at a record high level if you look sort of more at the longer history sort of. So I think the customers are sort of understanding that we need to price for this inflation that we see and again we see good retention rates throughout the Nordics.

Morten you're still above 89 percent compared that to any market in the world, any customer segments anywhere and that's your average. We're still

above 89 and it's still a very high level if you look at the more historical context so we continue to be satisfied with that.

Okay thanks. Then my final one perhaps continuing on the IF motor inflation. You mentioned that in UK you are expecting moderating inflows and are you seeing that also in the Nordics? At least the effects headwind have eased a bit and how should we think about the impact of the declining values of the electric cars? Will that have an impact on your on the inflation in the ETH or are you expecting that perhaps to result some pressure on premiums?

Yeah I think on motor we see that inflation sort of have stabilized during 2023 and we expect to gradually sort of move down. Then Norway and Sweden in particular have seen some effects from from weak currencies so but that's already something that we sort of seen throughout 2023. On the EVs we don't see any difference between sort of an electric car and fossil fuel car. New cars in general have more electronics and are kind of more expensive to repair but that's of course already priced in with me due to pricing. So for us I mean the shift towards EVs doesn't represent any claims inflation as such but again a new car is more expensive to repair than a five year old car for sure.

Okay but are you expecting the declining new new new car prices to result pressure on the premiums?

No no no and I don't think we see really reduced new sales prices of I mean some specific car producers have kind of cut down on pricing but but I think I mean that's that's not really affecting the repair cost.

Okay thank you very much all from me.

Thank you and we'll now take our next question from the Met, Lothra with Media Banker. Your line is open please go ahead.

Yes yeah good afternoon thank you so one quick follow-up please and two again very quick ones just to keep it brief from my side. The inflation led reserve releases you clearly you clearly explained that now I'm just curious is there not is there a base effect that you're thinking that okay last year the 23 was quite bad but maybe this year things are going to be just better just because it was you know the simple base effect is that part of the thinking of being more comfortable with sort of a lower inflation reserve when we go into 24? First question maybe to follow up. Second very quick one is the fixed income gained in if on 4Q standalone 255 million euros quite a big number. Isn't there a risk that you've made these gains and now maybe the interest rates are falling or is there some potential for it if it affects your future income and just if any comments on that very big number apologies for missing but I'll be curious on that and the last thing is the growth by in the industrial segment which you know 4Q22 was a quarter rather with 29 percent growth in a database and then this year again is a bit of growth 50.5 percent. Is that the pricing effect you said when you were saying you were pricing ahead of inflation in corporate and industrial? Please just comment a bit about how the customers or other competitors behaving in that market. Thank you.

Yeah I'll try to answer the first and last one and then leave the fixed income question to Knut Arne. On the inflation reserve side I think perhaps a little bit of insight on how this work when we get claims reported typically set a standard reserve and of course in times with a lot of inflation it's important that that standard reserve is following the inflation sort of in the market and to be certain that the standard reserves were adequate that's why we kind of put on our up an extra inflation reserve in 2022 when we saw sort of inflation really going up. In hindsight what we saw then was that the estimates that we put in on the standard reserves were very accurate and therefore we didn't really need that extra reserve that we put aside so that's really sort of how that that works. On industrial if I you correctly the growth is coming only from rate and value increases so we are not really growing in terms of number of customers and then the growth is a bit sort of volatile from quarter to quarter sort of also affected by the fact that some of our large clients have changed inception date on their programs but if you look at the total year all of the growth basically in industrial is coming from rate increases and value increases and value increases being then sort of that you adjust the property values that you ensure and the rate increases being sort of the rate level that we price with.

And on your fixed income question let's see if I heard exactly what you asked for but returns for fixed income is coming from three parts one is of course the coupons and they are sort of received and saved and accrued and the accrued is only at risk if our investments go bankrupt and that feels pretty safe given the investment grade portfolio we have. Then we have of course some sales gains which is realized gains and then fourth quarter we did of course have a significant positive effect in the fixed income portfolio from the fact that rates went down which then had a negative effect on the effect from change in discount rate in the insurance finance income and expense. That part can of if that was your question if it's a risk that that will be a lower number going forward it absolutely is a risk for that but then the sign on the cost of liability effect from change in discount rate will also be changed to a plus instead of a minus.

Sure thank you very much. Thank you.

Thank you and we'll take our next question from Jörn and Rick with ABJ. Jolani is open please go ahead.

Thank you for taking my questions as well. I just wanted to shed some light into the rate increases you have done so far and so if you think about this Morten when did you really see these rate hikes you know are benefiting been putting through so how much more margins you will expect you to have during the next couple of years or the next 18 months if you think about then the inflation now fading as I say that's my first question.

That depends a little bit on what segment and what country you look at. I mean if you take commercial Norway for instance we've had pretty strong price increases for a number of years now but also then rather big claims inflation sort of in in in Norway. Partially also true for sort of the private segment in in Norway. If you think more about sort of large corporate then I think it's been almost three years now that we clearly have increased the rates and then the last two years in particular sort of also increasing values a lot to to reflect sort of the underlying inflation and then sort of increased building values. I don't know if that gave you any insight into sort of future margin margin development that but

yeah yeah maybe is it any line of business that you feel you have been behind when it comes to to inflation or frequency or anything in the past few years or have you sort of always been able to get ahead of the inflation curve and actually price better than your peers and by that actually keeping your margin intact in a better fashion. If you've been luck good efforts or good underwriting or a combination of all of them.

Now but I think this this is our core discipline. I mean this is the most important thing that we do and this is sort of where we have of course our strength as an insurer and and not only in over the last few years but I mean understanding development on claims frequency, understanding development on on claim severity, making sure that the price for inflation that we understand the development, making sure that we understand sort of repair cost development for new cars versus old cars etc etc. I mean that's our core competence so I think we are I would say this is where we are kind of really excellent so I think it's it's not really luck it's this is the core skill of an insurance company I would say.

Very glad to hear. Could you just update us on the procurement as you said. How should we read your sort of agreements these days? Have you been sort of as efficient when it was about these contracts or how should we look at them into 2024 and 2025?

Of course I mean we benefit from being a large insurer, a large customer, getting them good agreements and perhaps even more importantly sort of we get agreements that give us visibility so of course now for 2024 we basically have good insight into sort of how the repair network will will do the pricing for instance. When that is said of course the inflation that you see in the market will also of course come into sort of the repair network I mean so it's nothing that gives you sort of something for free forever but I think for us it gives us good visibility, it gives us good terms.

Absolutely thank you. Kristian I have a question for you as well. When you see these bonds values now moving up and down quite heavily and you sort of move out from the curve a little bit, how should we think to the solvency effect out of this from potentially your bonds if they are coming over there or the bond? How is that affecting your solvency capital? Is it a positive that if the bond is sort of a value let's say 95 today and pull to power is 100, how will that affect your solvency if that is going to happen for the next two years if the bond portfolio goes from 95 to 100 in value and how will it affect your solvency position? Is that something you can answer?

Let me try to let's see but the interest rate risk we have is a very it's just a small capital commitment. It's less than a 100 million euros of the total SCR so it's not a significant driver of the solvency capital requirement.

But is it any of the funds that actually happens too or is that just the effect of a net in net financial as you said you will lose on your EF and gain on the other one?

Yeah okay you will of course have exactly as you say you will have an offsetting positive effect on the loan funds from a lower cost of the liabilities. We have solvency sensitivities in the investor presentation as well on this.

Okay thank you. Thank you

we'll have a follow-up question from Tristan Ars with Berenberg. Your line is open please go ahead. Tristan Ars your line is open would you want to check on your mute button please?

Oh yes hi sorry sorry there two quick follow-ups one is on Winsun maybe you can update us on renewal and how that went and whether you sort of increase any of the attachment points and anything to plug out on the renewal. The second is on disability. Sort of obviously we saw some negative commentary coming from Norwegian Care yesterday. I'm pretty sure what the answer would be but I just want to double check whether you have any exposure to that sort of business line and anything you can share on the transfer if you do have any thank you.

I can take the reinsurance just for the group and it was a successful one one renewal. Flatish in some lines and some price increases in others and price increases that were expected included in our plans and included in the pricing on the direct side. So no material effects from the one one renewals but successfully executed.

No change

to the net retention in the Nordics? No change to the net retention in the Nordics.

And then on the disability question you had I think that competitor is primarily a life and ensure so we do not have the same exposures in our book of business. We do sort of the personal risk products we do is sort of simple yearly risk products.

Good to hear. Thank you.

Thank you and we'll have another follow-up question from Freya Kong with Bank of America. Hi thanks

for taking the follow-up. Just quickly on the cost ratio I noticed improved 40 basis points for if were there any one-offs within that because it's a lot better than the 20 basis point improvement we usually expect. Thank you.

No we improved what we say kind of with 30 events of looking at all the decimals but a good improvement I think it's again continuation of just steady work on on costs and in particular sort of gradually becoming more and more digital and and reaping the benefits of that. So but nothing nothing special.

Okay thank you.

Thank you and we'll now take our next question from Anthony Yang with Goldman Sachs. Your line is open please go ahead.

Hi good afternoon and thank you for taking my question. Just one question on the breakdown of the combined ratio. So thank you for your comments on the reinsurance renewal. Just looking at slide 47 that we see a kind of higher rate of increase large loss and severe weather loss in the combined ratio. Should we expect that to be higher as well going into 2024 please? Thank you.

No I think it's in the nature that sort of severe weather and large losses are stochastic and we had quite a lot of severe weather in in particular during 2023. I think again these are stochastic by nature and normal level less I think also Torben commented on in his introductory words is more around one percent sort of on severe weather for if. So 2023 at least comparing to history sort of was a special year and then let's see what the future brings.

Can I just follow up thank you. Can I just follow up so does it mean in the in the budgeting going into 2024 the sample kind of kind of budgeting for higher flat cat losses versus history going forward?

No I think I mean these are developments that takes time. I mean it's more development over decades rather than years. So of course we always adjust our pricing and our assumptions. I mean we do that each and every year but there is no fundamental change from one year to another but rather so changes over decades on this. But again of course we have the privilege of being able to price and change our pricing each and every year. So of course if and when we see any development we can take that into account. Thank you.

Thank you and we'll have another follow-up question from Jena Rick Badebiji. Please go ahead.

Thank you for taking my follow-ups. It's about Hastings. I just want to follow up on the reinsurance part of the quarter share. What should we expect for that quarter share level for Hastings in 2024 if you can shed some light to that versus what you had in 2023? And secondly on Hastings would if you have lowered it does that mean that you will not take any capsules out of the Hastings book so it means that it will continue to fund its own growth with their own equity or how should you read your sort of taking capsules out of Hastings going forward when it comes to that matter?

Quarter share in Hastings remained at 30 percent. Successful renewal with broadly unchanged cost. Then we did some changes on the excess of loss for Hastings where we have a which we of course should have in terms of reinsurance also a group perspective on seeded risks in terms of what makes sense for the sample balance sheet to see to reinsurance and Hastings we hadn't done anything on the excess of loss before and the retention that Hastings and sample had on that program basically were too low. So it was costly for us to remain at that retention level so that we expect to be a benefit for the group going forward. In terms of capital Hastings is currently adequately capitalized and I see no reason why Hastings shouldn't be able to pay dividends going forward as well. Obviously as you can imagine 23 was an extremely special year where we grew premiums so significant and Hastings is currently on a standard model which simply means that the SCR increased quite a bit. So there we sort of made sure that the Hastings capital base was adequate and didn't take out any dividend for that particular year but that's not the same as saying that there's anything special with Hastings that should not make it possible to also use Hastings as a part of

the Thank you and we have another question from Azron with Danske Bang. Your line is open please go ahead.

Yes good afternoon just a question from my side on the on top Benmark. You didn't add to your position during Q4 and normally I guess you're quite long-term investors and look very sort of through the noise in the market and I guess you should see or do see the Danish market is quite attractive so just wondering with the current levels why you're not adding to the top Danmark position since you have been buying to Denmark shares at somewhat higher prices in the past. Any thoughts from your side or comments?

We've got absolutely nothing new to say about top Danmark I think.

As you know we have been buyers of blocks or shares in the past and no such blocks were offered to us in Q4.

All right thank you.

Thank you that was our last question today I will now hand it back to your host for closing remarks. Thank you.

All right well that that ends the call for the day thank you all for your attention.