Sampo Oyj

Good morning, everyone, and welcome to the Sampo Group first quarter 2025 conference call. My name is Sami Taipulus, and I'm head of IR 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 Sampo.com. With that, I hand over to Torbjörn. Please go ahead.

Thanks, Sami, and welcome, everyone. Our business is non-life insurance, which means that some quarters are exceptional with large losses or a lack thereof or harsh winters or the absence of winter conditions. With our focus on mass markets, underwriting, and a strong balance sheet, we have been able to keep volatility also in such quarters low. However, most quarters have quite normal business conditions when we develop our tools, do customer work, and try to exploit whatever market opportunities we find with them. This is such a quarter. So, the main items for this quarter are thus, firstly, continued strong growth, both in the Nordics and the UK, capitalizing on the digital tools that we have, and the corresponding increase in the full-year growth outlook by 100 million euros. Secondly, good underwriting performance in a slightly easier winter than average, continued improvement of the underlying risk ratio at roughly the same pace as for a long time, and a corresponding increase of the outlook for the underwriting result by 50 million euros. And finally, a detailed synergy evaluation from the top Denmark integration. Not surprisingly, finding more synergies than the quick one from the transaction and a corresponding increasing of the cost ratio target to cut 40 basis points per year rather than the earlier 20. Turning to private Nordic business, as we have talked quite a lot about our digital capabilities in the past year, it's, of course, encouraging to see growth of 8.5% in private Nordic. Any concerns about market or customer behaviors changing for the negative with more remote distribution are completely allayed by our now increasing retention. Yes, increasing from 89%. And yes, digital sales increased by some 20% since last year, so we also increase this operational ambition for 2026 to 175 million euros per year rather than the previous 160. We clearly benefit from this shift in the market and continue the strong growth momentum we've now had for some three years. Our strongest growth comes from Norway, where the unusual situation with our peers seemingly needing higher rate increases than us persists. The results for our Norwegian business still indicate to us that no such need exists for our business. In the private business in the UK, at this point in time, I almost indicated in the late autumn that our UK growth was likely to moderate. Rates have indeed continued to decline slowly, but still in a quite rational way, with claims inflation also moderating now to a mid-single-digit percent number, now close to the Nordics, actually, or to numbers from before the cost-of-living crisis. However, we are still able to write home insurance as well as bike and van profitably. We were helped by the JIP reform to get a growth push in home, but we are careful not to grow into sub-segments before we know how to price them properly. We now have some 777,000 home policies after Q1. Hastings has a long tradition as a company that exploits new technology skilfully, and telematics is a more recent proof of this. You will see from the graph on the right-hand side on this page that an important part of our growth in the past 12 months has come from this product. Our way of doing telematics is a bit different than many others in the market. We benefit from low-cost technology, but we have also designed a product so that loss-prone drivers are weeded out quickly, normally in less than 90 days from inception. Turning then to the synergies with Top Danmark, Let me just first say that the integration work with Top Danmark has progressed very rapidly and smoothly. And during the summer, the coming summer, the company will cease to exist as a legal entity. The new integrated organization has already now been in place for some time, and the management reports are no longer separate. Turning to synergies... It was pointed out by many that they seem to be on the low side when they were presented last summer. I said then that we present what we know, and when we know more, we present that. This, I think you will recognize, is what we have always done in the past. Now, as promised, we have gone through a much more detailed exercise with the people that are to deliver these synergies, and we have laid out integration plans for IT for the next few years. We have also found more fast and simple synergies, like reducing broker costs for reinsurance or office integration, as illustrated by the left-hand and middle graphs here. Notable is that all the improvements are cost synergies, so the new synergies are cost synergies, not revenue ones. To get the full picture of our cost targets, I need to mention that we moved Top Denmark to IF standards with full costing of IT expenses from now on, rather than capitalizing developments on the balance sheet and with inclusion of all Holco costs in the cost ratio. We prefer to have the full downward pressure on costs by including all of them in our various ratios, as we have always done. Synergies, as you will know, sometimes have a tendency to live a life of their own outside the P&L. And to avoid that, we also raise our annual cost ratio target corresponding to this increase. Thus, for the next few years, our ambition will be to reduce the Nordic cost ratio not by 20 basis points per year, but rather 40 basis points per year. Then my final slide is a reminder of the first, but with numbers, as it were. We have produced top-down market synergies faster than originally planned. Digital sales have increased rapidly, and the competitive situations both in the Nordics and the UK have played out in our favor. Furthermore, we had an okay winter, and we have had a good large-laden outcome in the first quarter. The impact on the outlook for 2025 is detailed on the slide. We now expect the net insurance revenue to increase to 8.8 to 9.1 billion euros, at the same time as the underwriting result expectation is now 1.4 to 1.5 billion euros, with both lower and upper end increased by 50 millions. Reflecting this, we now have a new AGM mandate for buybacks, and we'll return to this question in our Q2 report, hopefully also with some clarity on the future of NOBA. It's been a really strong beginning of the year, and I'm certainly excited about what we will be able to achieve for the rest of the year. And with that, Sami, we open up for questions.

Yes, operator, we're now ready for the Q&A.