Sampo Oyj

Good morning everyone and welcome to the Sampo Group third quarter 2025 conference call. My name is Sami Taipulus and I am Head of Investor Relations at Sampo. I'm joined on the call by Group CEO Morten Torsrud and Group CFO Knut Daniel Saker. The call will feature a short presentation from Morten followed by Q&A. A recording of the call will later be available on sampo.com. With that I hand over to Morten. Please go ahead.

Thanks, Sami. Good morning and warmly welcome to the conference call on Sampo's third quarter results, also on my side. This is my first set of results as CEO. I'm going to spend a little bit of time on our strategy and how it's playing out in our results. But before I go into that, let me first comment briefly on the third quarter as such. Sampo delivered another excellent set of results in the third quarter. By large, we saw the same positive operating trends as earlier in the year, with strong premium growth, driven by private and SME, and solid margins. The claims environment has been favourable, with benign weather, large claims below budget, and frequency trends in line with expectations. Still, we have continued to be prudent in setting our loss ratio peaks, meaning the benign claims environment has not fully flowed to the bottom line. On our underwriting margin, we saw a roughly 50 basis points of improvements in the underlying Nordic combined ratio driven by both the cost and risk ratio. UK margins, on the other hand, continue to normalize from the elevated levels seen in the prior year, but remained within our target range. All in, year-to-date unwitting profit grew by 17%, driving a 14% increase in operating EPS to 38 euro cents. The result comes on the back of very strong performance through the strategic period so far, leading us to upgrade our operating EPS target from the period 2024 to 2026 to now above 9%. Outside of the operating result, we had a €355 million gain from our stake in NOBA, driven by successful IPO, followed by strong share price performance. We sold only one quarter of our holdings in the IPO, meaning we retain a 15% stake in NOBA, valued at €636 million at the end of September. The 150 million euro sales proceeds from the IPO will be returned to shareholders through a share buyback announced today. So that was an overview of the result. Now let me turn to strategy. I'd like to start with a short comment on where Sampo is as a company today. We are, of course, a pure play PNC insurer. large and well diversified with 10 billion euros of premiums spread across five markets of roughly equal portfolio size and then the three Baltic countries on top of this. However what really stands out is that Sampo is at the forefront of the industry in pretty much every area in which it operates. As mainly a direct insurer without material physical distribution, it has been essential for us to master the art of digital P&C insurance. In the Nordics, we've been at the helm of the industry digitalization, while the acquisition of Hastings in 2020 has catapulted us into a leading position in the UK price comparison website market. At the same time, our unparalleled partnership network with the Nordic Motor Industry bring wide customer reach and expertise in new car technology. We are a leader and digital frontrunner also in the Nordic commercial market, and we are the market leader and preferred partner in the Nordic large corporate market. Further, our pan-Nordic PI proposition has recently been strengthened by specialist insurer ONA. Our Baltic business is a profitable, low-cost direct writer in the market of brokers and agents. Indeed, even Denmark, which used to be our Achilles' heel, has been transformed into an attractive opportunity for us now through the acquisition of Top Denmark last year. In conclusion, we are in an enviable position to meet the future of our industry. So where do we go from here? I see the biggest opportunity in leveraging our unique set of operational capabilities to drive organic growth. As shown on this slide, we see structural growth opportunities in areas representing more than half of Group's premiums. These should be familiar. It's the digital UK market, PI in the Nordics, private property, SMEs. Our ambition in these areas are backed by structural trends as well as competitive advantages. For example, in PI, we are seeing increasing demand combined with our first-rate Nordic PI offering, which creates opportunities across customer segments. Similarly, UK consumers continue to shop more and more on price comparison websites, for which we have optimized our business. Taking a step back, we see growth opportunities in other parts of our portfolio as well. Right now, I would highlight Nordic Motor, where we are in a pole position to benefit from a normalization in new car sales. Now, I talked a lot about growth, so before we go further, let me be completely clear on one thing. We are only interested in growing, of course, at attractive margins. The underwriting discipline that Sampo is known for remains fully intact. Turning to the numbers, our results show that our strategy has traction. The growth that we've seen in the third quarter is a continuation of several years of strong development, as we can see on the left-hand side on this slide. Partly, this is the result of elevated inflation, particularly in the UK, but at the same time, our growth is broadly based, as we illustrate on the right-hand side. I would even argue that this understates the breadth of our growth momentum. In the third quarter, we achieved growth of 5% or more in all countries in both business area private and commercial in the Nordics. Let's take a closer look at operating trends by segment. I'll start with Private Nordic, which delivered a fourth consecutive quarter of record high GDP growth. What's behind this? Well, let's focus at least on three things. First, good underwriting through the inflation spike means that we have not had to do corrective price actions in the same way as some of our competitors. This supports retention and increasingly allows us to attract new customers. Second, we have strong momentum in our target growth areas. PI in particular is strong, which is why we also have raised our guidance and outlook on GDP growth with an ambition of more than 10% for the strategic period. Third, we are benefiting from higher new car sales, with strong motor GDP growth of 13% in the quarter. Put simply, the investments we have made into underwriting, pricing and service are paying off as a customer attraction. Let me turn to the UK. The last few quarters have truly illustrated the skills we have in trading on price comparison websites. By actively shifting the mix and leveraging our innovative Telematics product, we have sustained attractive policy account growth and solid margins, while market pricing has fallen. This comes on the back of a strong 2024, allowing us to raise our UK underwriting profit growth target to now 20 to 25%. Looking ahead, we are always adapting growth to market conditions. The start of 2025 saw attractive motor market conditions, but as pricing declined, we have responded by slowing our growth rates. At the end of Q3, market pricing has fallen to a level where we see fewer opportunities for growth, while larger parts of the portfolio begin to hit up against target margins. As we are committed to being a disciplined underwriter, this means that we need to see increasing motor market pricing to be able to continue to grow. Like in the Nordics, we have a great track record in delivering solid margins through the cycle also in the UK, and we very much intend to keep this. The good news is that due to diversification, we are not too reliant on any one market or strategy for profit growth. Next, I will make a few short comments on commercial. Our portfolio is dominated by SMEs that tend to act in a similar way to private customers. Here we can leverage the same skill set that we have in private, particularly as the market is becoming more digital. Outside of SME, a material part of the book is what one could call local specialty business that requires specific skills and a strong market presence. This includes our market leading agriculture business in Denmark and personal insurance. Only some 20% of commercial sales are done via brokers and retention are almost as high as in private. Turning to performance, we continue to deliver solid growth driven by our target areas, SME, PI and online sales. So we can again see that our strategy has traction. Then to the Top Denmark integration. Q3 saw a critical step in the Top Denmark integration process in the form of the legal merger of Top Denmark into IF. Following this, we have seen a surge in synergies as we've been able to move to IF's Nordic operating model and start also to restructure our reinsurance programs. We have now delivered run rate synergies of 24 million euros year to date, meaning we have reached our target for 2025 one quarter early. You should take this with a pinch of salt. Synergy emergence can be a bit lumpy, so we stick to our target of 140 million euros of ultimate synergies in 2028. Nonetheless, the strong execution to date increases our confidence in being able to achieve this figure. Longer term, the most important thing about the top Denmark deal is that it transforms our competitive position in Denmark. Since it's still early days, we are not yet fully benefiting from our combined strength in the Danish market, and thus there is a clear opportunity to improve performance going forward. Final slide. Let me try to tie it all together. We are in a great position as a group. Our results show that we have an organic growth strategy that is working and that we continue to deliver attractive and stable margins. The third quarter performance brings year-to-date underwriting profit growth to 17%, driving a 14% increase in nine-month operating EPS. This follows a 13% operating EPS growth in 2024. On back of these strong results, we have increased our operating EPS target for 2024 to 2026 to above 9%, up from the previous target of above 7%. The increase in the target showed that we are going into 2026 with confidence and with ambition. We have great momentum and we will not let up on pace. That concludes my opening remarks. Back to you, Sami, for Q&A.

Thank you, Morten. Operator, we're now ready to begin the question and answer session.