Sampo Oyj

Good morning, everyone, and welcome to Sampo Group's conference call on first quarter 26 results. My name is Mirko Hurmerinta, and I am the interim head of investor relations at Sampo. I'm joined on the call today by Group CEO Morten Torsrud and Group CFO Lars Kufal-Pek. The call will include a short presentation by Morten and Lars, followed by a Q&A. A recording of the call will later be available at Sampo.com. With that, I hand over to you, Marten. Please go ahead.

Thanks, Mirko, and very good morning, and welcome to the Sampo Q1 conference call on my behalf as well. Sampo had an excellent start to 2026 with continued strong operational momentum in all our segments, both in the Nordics as well as in the UK. We delivered strong underwriting results, supported both by cost ratio improvements and favorable underlying risk ratio development. Our balance sheet remains robust in a somewhat volatile financial market, and we are increasing our full-year guidance for the underwriting result, as well as launching a new €350 million buyback program. But starting with the top line, our insurance revenue increased with 8%, fueled by excellent GDP growth over the last 12 months. Reported GDP for Q1 isolated is a bit softer, however largely affected by a mix of different factors, which I will cover more in detail shortly, while the underlying trends continue to be highly supportive. On the claims side, the Nordic saw a wintry start of the year, followed by an early spring and markedly more than nine conditions towards end of the quarter. This led to weather claims outcome being more favorable than we had anticipated at the beginning of the year. Driven by robust operational momentum, favorable claims experience, and continued positive underlying development, our underlying results increased by 9% on a like-for-like basis. Our operating EPS strengthened by 19%. This was driven by higher underwriting results, but also supported by certain technical factors related to currency hedging. Over time, you should expect an operating EPS that is more in line with the underwriting results growth. I also would like to highlight the resilience of our balance sheet amid elevated market volatility. which Lars will elaborate on later in this call. On top of this, I would like to emphasize our resource length, where our prudent approach allows us to expect that we could cover the negative effects from the Danish vertical comp case within our existing reserves. Following the favorable start of the year, we have raised our financial outlook for 2026, and at the same time, enabled by our strong balance sheet, we have announced a new €350 million buyback program. Let's take a closer look then at our different segments. Starting with the largest business area, Private Nordic, where we saw a continued strong top line growth of 6%, supported by positive development in all countries and product lines. Norway continued to stand out with 13% growth, largely driven by weight increases. We also saw strong development in Finland, driven by increasing customer count and new sales growth. In Sweden, the soft new car sales continued to be a drag on our white label motor insurance. However, our IF branded motor portfolio continued to develop well, and we saw 10% growth in the quarter. In the UK, the motor insurance market saw a modest increase in prices during the quarter. However, overall the market remained competitive, but rational. We continue to find pockets of growth, which translated to 3% policy growth over the quarter, and helped to offset the effect from lower average payments. And we say that market in the UK is still in a vape and see mode, and our focus remains on underwriting discipline and securing the portfolio quality, which has translated into our stable and strong margins during this somewhat softer part of the pricing cycle. Moving to corporate business lines, where the competition landscape is a bit more mixed. The SME portfolio, which represent the majority of Nordic commercial, continue to see good top-line growth of 4%, fell in line with Q1 last year and supported by digital sales and increase in the number of customers. On the large corporate side, on the other hand, the market environment is more price sensitive. This affected Nordic Industrial as well as the upper part of Nordic Commercial where we did lose a few larger clients. However, both corporate segments reported strong underlying margins and we saw an other quarter of favorable large claim outcome, partly supported by the de-risking actions that we've done to reduce the large property exposure. Here, we also benefited from lower reinsurance prices after the first of first reinsurance renewal. Moving to Top Denmark and the integration, After faster than expected synergy realization in 2025, we have now opted the defacing of the top Denmark synergies. We have almost doubled the expected outcome for 2026, and now expect to achieve a run rate of 105 million euros for this year, and correspondingly, 175 million euros in 2027. We remain firmly committed to reaching at least the 140 million euro target by end of 2028. Going forward after 2026, we expect synergy realisation pace to be more stable as we shift from more corporate centre synergies towards more operational benefits. Before letting Lars dive into the financial results and the balance sheet, let me make some few remarks on the inflationary risks related to higher oil prices caused by the disruptions in the Strait of Hormuz. Firstly, our operational exposure to the Persian Gulf region is, of course, very limited and zero exposure to Iran. In the Nordics, claims inflation continue to come down over the last 10 months, but it's still a bit elevated in some countries and with notable variations between the countries. In particular, Norway continued to see higher claims inflation. We naturally carefully monitor any potential uptick in claims inflation and remain disciplined in pricing. In the short term, inflationary risk from this situation primarily affect motor insurance to a higher freight cost for spare parts. The property sector, on the other hand, is more labor-intensive and less affected short-term. Our scale and diversified profile with long-term agreements with suppliers, repair shops and other partners help us control costs and to take early actions on the pricing side whenever needed. In the UK, the inflation risk is somewhat higher, both as a result of our business mix as well as a result of larger exposure to total losses and bodily injury losses. Consequently, our pricing in the UK already factor in an expected uptick in inflation. So with that, over to Lars.

Thank you so much, Morten. And talking about our investment returns, as you know, the first quarter was very volatile in the capital markets. And it was actually somewhat unfortunate that uncertainty peaked right at quarter end. Of course, our investment portfolio is not immune to market volatility. And in particular, the flattening of the yield curve where the short end increased more than the longer end impacted our results negatively. However, if you take a closer look at the drivers behind the investment returns, you will see that our negative investment income was primarily driven by our legacy assets, NOBA and NEXI. Excluding these, our investment return was broadly flat in a quarter of significant uncertainty and volatility. Meanwhile, our portfolio continued to provide a stable interest and dividend income, and thanks to our relatively short duration on the fixed income side, we are now able to benefit from the increase in interest rates by reinvesting at the higher rates. Turning to our balance sheet, I'm very, very pleased that amid all of this volatility, our solvency remained robust, underscoring the strength and resilience of our balance sheet, with low sensitivity to various market shocks. Excluding NOBA, which had a net positive effect on solemnity, market movements had only 4 percentage points negative effect on our solemnity for the quarter, more than offset by the continued strong operational performance. In late March, we received the approval from the Swedish FSA to extend the partial internal model to cover our Danish operations that formerly were on the top Denmark. This had around a six percentage points positive effect on solvency in Q1. And yes, including our UK operations is the next phase from an internal model point of view, but that will be a longer project as it means extending the model into a new market. It does require more data, use case experience, et cetera, et cetera. Our strong solvency and balance sheet, of course, allows us to continue delivering attractive capital returns. As you can see, there's two accrual bars in the chart. The first one is the regular distribution accrual. And starting from Q1 this year, we are deducting a full 90% of our quarterly operating results as distribution accrual following the update of our distribution policy. This reflects the commitment to return around 90% of our operating results through regular dividend and buybacks to shareholders in a typical year. The second bar is the new buyback program, €350 million that we announced today. Of this, €250 million is approximately €250 million is based on the 2025 operating result and €100 million on the proceeds from the NOBA sale we did in February. With the latter, We have now delivered half of the up to €500 million communicated at last CMD in terms of distribution from legacy assets, and we are of course committed to remain committed to deliver the other half, but timing of course depends on the NOBA sell-down process. Then finally, before I hand back to Morten, some words on the Danish Supreme Court ruling on workers' compensation last week. I'm sure that you're all well aware of the ruling by now, so I will not recap the background of the case. Firstly, this is of course an adverse outcome, not only for the Danish insurance industry, but also for the state and municipalities in Denmark which are self-insured. Sampo, in line with the industry, expects the state of Denmark to take responsibility for the retrospective financial consequences. Regarding the potential impact on SAMBO, disciplined risk management is in our DNA, and this applies also, of course, to our reserving practices. For many years, a significant part of our research for Danish Workers' Comp has been allocated to what we call our INIT reserve, which stands for events not in data, to cover for exactly this type of risk and exposure. We have established a number of scenarios for the impact of the ruling and continue to analyze it. Our current best estimate based on our conservative assumptions is that the potential impact on SAMBO is expected to be covered within our existing reserves. And hence, we do not need to book an additional provision for this, meaning the effect on net profit and solvency is naturally expected to be limited. And our financial outlook, which was raised today, remains unaffected from the ruling as well. So with that, I hand back to you, Morten.