Sampo Oyj

Good afternoon, everyone, and welcome to the Sampo Group second quarter 2024 conference call. My name is Sami Taipulus, and I am head of investor relations at Sampo. I'm joined on the call today by Group CEO Torbjörn Magnusson, Group CFO Knut Arne Ahlsaker, and CEO of Hastings, Toby van der Meer. 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 good afternoon, everyone. The most talked about Sampo topic from this quarter has naturally been our bid for the remaining half of Top Danmark, possibly one of the least surprising moves in the European insurance industry lately. We believe we have found a value-creative way forward in this last significant remaining issue in our group simplification process. However, in a way, this is both yesterday's and tomorrow's news as we discuss the details of the offer in June, and the offer period starting shortly will not end until September. In the meantime, then, we have another set of solid results on the same path we have followed for some time now, with strong profits, cost ratio reductions, and not least, good growth. Despite the harsh winter and some well-known large losses, our operating EPS increased by 2 euro cents on last year. I'll comment more on the individual factor movements, but let me already here point out two key positives. The underlying combined ratio, adjusted for volatile short-term effects, is still improving at roughly the same pace as before, half a percentage point per annum. This is not really a number that should vary quickly. Only under extreme circumstances would this number be much bigger than this. And that is exactly what we have in the other key positive, Hastings and the UK market. As expected, we seem to have overshot a bit with our rate increases in the latter part of last year, together with a large part of the market, I suspect. And consequently, the results this year have improved substantially. Perhaps also on this page, a brief comment on the recent volatility in the investment markets. Obviously, this is a situation we are quite well prepared for, with much lower market risk than a few years ago, and with higher running yields in the background. Our solvency is also cushioned by the Solvency II symmetric adjustment in case of more extreme developments than we have seen in the past few days in the financial markets. Let's look at the premium growth in some more detail then. For our private business in IF, retention rates remained unchanged for yet another quarter, giving evidence of the stable Nordic market situation. Growth in personal insurance and property, but still not in motor, as the new car market continued to contract. gave 6.2% growth in the quarter. For commercial, we saw very healthy growth in SMEs, giving north of 8% growth for this quarter. The UK premium growth is still off the chart after the unique 2023, but we continue also to grow home insurance in numbers and have returned to growth for numbers of policies in our core motor business as well. As Sami mentioned, Toby van der Meer is on the call and we'll be able to give more color and details from the UK market. The next slide is a lesson in underwriting. Apologies for the school book tone on the slide. The main message is very simple. We have in the Nordics about 4% claims inflation in the quarter, a bit higher in motor, a bit lower for property. Obviously, claims frequencies during this challenging winter were high. But apart from that, they are where they were last year and where we have priced for. Then we have diversification between countries. But on this slide, that's a bit of a red herring as we have roughly the same results in private lines for all three of our big Nordic markets, as you can see from the bottom of the slide. So in total, we are priced correctly based on the frequency projections and the information we had on claims inflation in all countries. Then in the UK, We have continued to benefit from the early reaction to the claims to inflation compared to much of the market. The increase in the underwriting result is quite extreme, as you see. We are, as always in any market, but particularly so in the UK, trying to be agile and balanced. Growth and rate increases wisely to optimize value creation. I'm pleased to see us return to policy growth in the motor book at the same time as the operating ratio has reached below 88% in Q2. The underlying claims severity inflation in the UK is slowly and gradually improving from the levels we saw last year, and weather and frequencies have been rather benign. As always, we spend a lot of time on projections of these factors and to try to make sure that we adjust rates in a timely fashion. Together with the improved returns, the profits have increased strongly to 71 million euros for Hastings' first six months. Finally, and this is only repetition and a summary from our June transaction call, on this slide, in addition to this slide, we have since then obtained all the necessary regulatory approvals as well as the support from Sampo's EGM to issue the corresponding new shares. This transaction would be the final significant step in our simplification journey, and one which creates values in a way we're used to, have practiced for 20 years, Nordic, national and cross-border synergies. And with that, Sami, we open up for questions.

That's right. Operator, we're now ready to take the Q&A.