Sampo Oyj

Welcome to today's presentation where we have the pleasure to present a sample group to help us through and answer questions and give a short introduction and then we will run a Q&A afterwards. I think we will focus on the Q&A as head of Investor Relations Semitambulist. As always. Of course, this event is covering the Q2 half year report out this morning. Do feel free to ask questions in the box down below. We have had a couple of questions in, but do feel free to put in more questions in the box down there. Do feel free to do it in Danish and I will try and translate to the best of my ability. But I think for now I will hand the call over to you, Sami.

Thank you, Michael. I'll start with a few remarks on the quarter and then we'll go to Q&A. I'll try to keep it reasonably brief. Overall, a very solid quarter, a sort of continuation of what we saw in the first quarter with very strong growth, some of benign weather, but also strong underlying development on the margin. If you've followed the numbers in detail today, you'll see I've seen that we beat the consensus by quite a lot. Most of that comes from investment income, which was partly a little bit fortunate. But if you look through the detail of the numbers, you can also see that actually the operational story is coming through very, very strongly. So we'll go more into that detail in that in a second. But strong organic growth, strong underlying margin development, which has allowed us to upgrade our guidance by a smidgen for the underwriting result. To arrange now of 1.425 to 1.525 billion euros for this year. And that was 25 million euro upgrade on both ends. In total, then we have delivered an operating EPS growth of 16% year on year in the second quarter, which is a solid result and compares very well with the more than 7% target that we have for the current strategic period from 24 to 26. And in addition to this result, then, and I should have changed the slide already so you can see a lovely summary of all this. And in addition to the strong results, we've also launched another share buyback program, so 200 million announced today. And we continue to have a very solid balance sheet with a solvency ratio of 174%, which is slightly above the midpoint of our target range of 150 to 109%. So sort of in a very comfortable position. Let's go through a few details then. And I'll just start with this slide here. We're really, and without going through all the numbers here, really the main point is that the breadth of the strength in the results. So we're growing top line in all divisions except one, and I'll tell you why in a second. And more importantly, we're growing underwriting profit by significant amounts in all of our division across the business. So it's not like we're lucky in one area and just have momentum there and you'll fade there, but the whole business is very well positioned. And I'll come back to talk about the private businesses in a second. But if we look at the, our corporate units, so commercial and industrial, we have a little bit of headwind on the revenue in industrial and that comes from a de-risking program that we've undertaken over the last year or so, where we had a little bit more exposure to large corporate risk, large corporate property risks, and then we would ideally like it. What we've done now is we've cut back that exposure. We've had very good pricing quality on that business and that will ensure that we deliver results that are also very stable as well as with strong margins. That's that on corporate. Let's look a little bit more in detail then on the private segments. And let me start with the Nordic business, which had another really excellent quarter. In fact, it was so excellent that it was the third consecutive quarter where we had record gross within premiums of effective gross revenue growth in the quarter. Where's that coming from then? Well, first of all, and very pleasingly, we have a high so-called retention rate. So a very large share of our customers, more than 89%, renew their insurance with us every year, which we're very pleased with because it always reflects our strong competitive position. We're giving good service at a good price to our customers. So they're choosing to stay. Then again, if you drill into the details of the private segments, so the segment where we sell insurance to our retail customers, the growth is very broadly based here as well. Both in terms of countries. So we're above at or above 5% in all the countries in the retail segment, but also in all the products. So we're at or above 5% in all the major products across retail. Norway stands out as being particularly strong. That's because there's been some quite significant claims cost increases in Norway over the last few years for different reasons. Inflation, weak Norwegian Krona, etc. And then by product, it's personal insurance and motor insurance actually that are developing very nicely in the Nordic region right now. That's the Nordics. Let's look at the UK. And a small reminder first, in the UK, we have a very clear focus. We're in the digital channel. The price comparison websites. We have a business that's set up to operate in those and it doesn't compete outside of those channels. So we don't do any corporate business or any business traditional brokers or anything like that in the UK. The story here really is we entered the UK through the acquisition of Hastings in 2020. And since then, we've managed to almost or more than actually double the premium volume in that business to 2024 and continue to grow in 2025. We've added more than a million customers during that period in the UK. And we've done all this whilst delivering very, very solid results. So the UK market has tended to be known for having high cyclicality of margins. But actually our margins have been very stable. And the reason for that is that we've been very disciplined in underwriting. We've been growing when the market has been giving us an opportunity to do so, as it has been doing this half year. So policy count, the number of customers that we have is up 19% year on year. To the end of the first half. And then we've been very much more cautious when the market hasn't allowed us to grow. So this hasn't come true in a straight line. But rather it's been we've been taking the opportunities when we've been able to. And that's what we expect to continue to do in the second half. We will play market conditions in every single quarter. We have really excellent pricing capabilities. That mean that we can select risk really well. And when we see that the market isn't there, we'll hold back on growth when we see that we can hit our target margins will continue to grow. And what about those margins then? Well, we've delivered a return on capital in this quarter of 24%, which is fully in line with the returns on capital that we're achieving in the Nordic region. So we sometimes get questions about whether the UK dilutes our returns or not. And the answer is no, it's just as profitable as the Nordics. Then we did an interesting transaction last year with the acquisition of the minority in Top Danmark. And now we have in earnest started the integration of the Top Danmark business into IF, which is the big brand that we have in the Nordics. And so far, everything is delivering and developing exactly according to plan. The synergies to date have been very much sort of hard cost synergies across central functions primarily. And then we obviously expect these to accelerate as we continue to implement our plans. So really this first half has been the half where we've had the least amount of synergies of any period now over the next couple of years. And then it's going to accelerate in the second quarter, which will help our particularly our cost ratio. And then over time, we'll get more into more complex synergies like the IT transformation, for example, which will deliver even bigger values. Remember, we upgraded our cost ratio target on the back of these synergies last quarter. So instead of improving the cost ratio by 20 bps year on year, we expect to improve it by 40 bps year on year now until 2028, which is when we plan to hit these 140 million pre-tax synergies that we've announced. And then finally, a slightly closer look at the outlook range. I mentioned the numbers already, so I won't go into them too much in detail. But basically, we're looking at 8 to 16 percent underwriting profit growth in 2025 versus 2024. 8 percent, that's more of a, you know, if we have a bit of bad luck in the second half, which is always possible in PNC insurance, whereas 16 percent would represent neutral luck, but good continued execution against our targets. Two more things to add that aren't strictly related to the outlook. First of all, and as I mentioned, we've announced a new 200 million euro buyback program this quarter. That is funded out of profits we made already in 2024. But as I'm sure a lot of you know, we've been waiting for this NOVA IPO to happen this year, and it didn't happen before the summer. We're hoping that it's going to happen in the second half. And if it does indeed happen, then we'll, the board will look to top up the buyback program to return the proceeds from that IPO, because we don't have any need to retain them. And then finally, worth mention, a brief mention as well is that this was the last quarter of our current CEO, Torbjörn Mangelsson, who will be replaced with the current CEO of IF, Morten Torsrud, from the third quarter onwards, or from the first of October onwards to be exact, but he will be presenting the third quarter result. And that is all I had to say.

Let's jump into the question. The first one, your combined ratio is well below your long term ambitions. You also showed here 85, and I guess, and I know it's only the first half year and you are an insurance company. But the question here is 2025, just a good year. And I think it's a wise way to ask, are you actually looking to look at your long term ambitions or is this just a good year with very low large claims and very low 29 weather claims?