Sampo Oyj

Good afternoon, everyone, and welcome to the Sampo Group first quarter 2024 conference call. My name is Sami Taipulus, and I'm head of investor relations at Sampo. I'm joined on the call by Group CEO Torbjörn Magnusson, Group CFO Knut Arne Ahlsaker, 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 sanpo.com. With that, I hand over to Torbjörn. Please go ahead.

Thanks, Sami, and good afternoon, everyone. The first quarter results follow our recent capital markets day, and the messages from that day are confirmed. The momentum in our organization is excellent. The underlying combined ratio development continues to improve at roughly the same pace, and the increase in digital sales is very positive. Our Q1 growth is a strong 10% for the group, supported by positive development across all divisions. At the same time, we saw the most severe Nordic winter weather since 2010 in January and February. This is non-life insurance, and now and then we have events or unusually large individual losses. This quarter, the winter effect for FPNC was 8%, clearly much more than an average winter, whilst the large loss amount was some 3% below budget, so clearly less than normal. Definitions of winter losses vary between companies and markets, but we try to be as specific as we can, not excluding any line of business. We see no reason at all to believe short-term volatility, in this case some 100 million euros, 100 million euros from the winter, will have any long-term effects for us, while we certainly do see clear and continuous improvements in our operations. Furthermore, the Nordic market has stayed rational yet another quarter, and our hit rates, for instance, indicate no change in market behavior. Hence, we narrowed our combined ratio outlook for 2024 and now expect to land in the 83-85% range. Indeed, April weather has been rather normal in the Nordics, which gives us further confidence. At our Capital Markets Day on the 6th of March, we outlined an agenda that puts organic growth at the heart of our ambition to grow operating EPS by at least 7% per annum in 2024-2026. We have made an excellent start on this in the first quarter, with private and the UK growing premiums by 7% and 25% respectively. Our private divisions saw premiums increase by 14% in personal insurance and 7% in property insurance, both numbers clearly increasing Nordic market share in prioritized areas. Digital sales are up by 9% in the number of objects this quarter, again increasing its proportion of the total. In the UK, we continue to see the effect of the significant price increases taken during the second half of 2023 and a rise in customer count both in motor and in home. Technology continues to be a competitive advantage for us. For example, we are leading the development in telematics solutions with good profitability, now counting some 240,000 policies. Turning back to the Nordics, claims inflation remained below our prudent pricing assumptions. The adjusted risk ratio in FPNC improved by around 30 basis points, with private seeing the most positive momentum. We continue to cover estimated Nordic claims inflation of 4-5% with price increases, even as this appears to be trending toward the lower part of the range. And, as usual, we are reducing the cost ratio for FPNC, despite increasing the spend on digital developments. On profitability in the UK, the substantial price increases taken over 23 are now earning their way into the P&L. Our headline UK operating ratio improved by 2 percentage points to 91.4% in Q1, which is also typically the toughest quarter seasonally. Together with strong premium growth, this enables Hastings to deliver a very high increase in underwriting profits year on year, adding five percentage points to group level growth. Claims inflation in the UK has come down quite a bit since last autumn and looks set to continue to trend lower in 2024, which gives some reason to be optimistic for the UK market results in this segment. This final slide just gives all the numbers to the results for this quarter, boiling down, for me, to the improvement in the underlying combined ratio and the increased underwriting profit in the UK, I think. Let me instead comment on another piece of the jigsaw that finally found its place last week when we got the decision by the Swedish FSA to approve our internal model application, giving a reduction of the SCR by the expected 300 million euros or so. The process was delayed by the change of regulator after the mandatum demerger, but we are happy to have successfully completed it in less than a year. The board and the management will now consider all the relevant effects and provide an update once we see the balance sheet run with a new model for our second quarter directly after the summer. And with that, I turn back to you in questions, Sami.

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