Sampo Oyj

Good morning everyone and welcome to Sampo Group's conference call on second quarter 26 results. My name is Mirko Hurmerinta, the interim head of IR at Sampo. I'm joined on the call today by Group CEO Morten Torsrud and Group CFO Lars Kufalbek. The call will include a short presentation by Morten and Lars, followed by 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 good morning and a warm welcome to Sampo's second quarter result conference call on my behalf as well. So, Sampo delivered strong first half and second quarter results, driven by broad-based and durable top-line growth. and continued cost efficiency improvements across the group. Our first half like-for-like growth amounted to 3% and accelerated to 5% in the second quarter. This was supported by our private and SME lines in all markets, which I will cover in more detail shortly. Combined with stable strong margins in a favorable glimpse environment, the top-line growth translated into an underwriting result growth of 7% in the first half and 5% in the second quarter on a currency-adjusted basis. The operating EPS increased by 12% in the first half and by 6% in the second quarter. Meanwhile, our investment returns saw a healthy rebound during the second quarter, and our solvency coverage remained robust, of which Lars will elaborate on in a moment. Following the strong first half performance, we have adjusted our full-year outlook upwards, both when it comes to insurance revenues, as well as for the underwriting result. Now let's take a closer look at our key segments with a focus on second quarter development. Our largest business area private in the Nordics saw continued robust top-line growth of 5% in the quarter. While the growth rate has slowed down a tad from previous quarters, it has become increasingly more volume-driven. During the second quarter, we saw increase in customer count as well as in number of objects and object sales in all countries, while retention remained high and broadly stable. To me, this underlines the breadth and durability of our organic growth, which continues to be supported by our consistent efforts and initiatives to improve our digital customer journeys. To give a few examples of our digital initiatives during the second quarter, our IF mobile app reached 1.8 million downloads across the Nordics, meaning nearly half of our household customers now use the mobile app to manage their policies and report claims. In fact, during Q2, we reached our operational ambition of more than 70% of claims being reported digitally by the end of this year. We also expanded our AI-powered virtual agent IfGPT from Denmark into Sweden and Norway. And at the same time, we also launched an IfVet app in all Nordic countries, which allow pet owners to contact vets 24-7, free of charge. Turning to the UK. In the UK, the pricing environment has remained competitive and on the somewhat softer side. However, we've seen further stabilization in pricing trends and we remain well positioned to accelerate our growth when the cycle now turns. Nevertheless, I'm pleased to see that even in this somewhat softer market environment, we have continued to find carefully selected pockets of growth supported by our investments in data, pricing capabilities, as well as in product innovation. In the second quarter, we added around 180,000 customers representing 13% growth year on year and 4% over the quarter. This drove the like-for-like top-line growth in our UK business to 7.6% up from 1% in the first quarter. At the same time, we delivered strong margins within our target operating range, supported by continued operational efficiency. Moving to Nordic Commercial, which was our fastest growing segment in this second quarter. with an 8.6% like-for-like growth, another proof of our diversified and durable organic growth. The growth was supported by improved traction in our SME portfolio, which saw accelerated growth of more than 5% in a quarter and a good increase in number of customers. Further, the second quarter's performance was propelled by several larger customer wins, One of these was a major personal insurance agreement in Denmark that provides access to comprehensive health care for 40,000 pensioners. This is an exciting expansion into a new segment and not only demonstrates our strong position in the personal insurance market, but also underlines the sustained structural demand for complementary health care beyond also the working age segment. Given that there are over 1 million pensioners only in Denmark, we look forward to assessing this opportunity and open up this new market field. Now, Lars will continue with some reflections on the investment performance and on our balance sheet.

Thank you so much, Morten. It has been somewhat of a ride in the financial market in the first half of 2026. And following the very unsettled first quarter, we saw the second quarter saw a sharp rebound both in the equity and fixed income assets. And that, of course, also naturally reflected to our investment portfolio. On top of the continued stable interest and dividend income we see, our core portfolio saw net gains of 240 million euros. And that's roughly evenly split between fixed income and equities in the quarter. This was partly offset by a soft development in our two legacy assets, NOBA and NEXI. And just as a reminder, the market value of NEXI is reported with a one quarter delay, meaning the second quarter figures here reflect the assets actual performance in Q1. All in all, the total net investment income stood at 360 million euros, which more than offsets the market-driven net loss that we saw in Q1. If we turn to the solvency development in Q2, that remained strong and unchanged from the first quarter. This was of course driven by a strong operating performance, offsetting the slightly negative market FX, which ended up being smaller than we had initially anticipated. The main driver for the negative market effects was the symmetric adjustment, which increased to nearly 9% in the quarter, up from 5% last quarter. And hence, it is now almost maxed out under the current solvency regime, where it can maximum be 10%. This is an important figure to keep in mind when looking at our solvency. With a zero symmetric adjustment, all else equal, our solvency ratio would have been 180%. So I'm naturally very happy with the 174% solvency with the symmetric adjustment being where it is at the moment. And also, just as a reminder, we deduct 90% of our operating results from our own funds each quarter, so the solvency coverage fully reflects our distribution commitments to our shareholders. So with that, I leave it back to you, Morten.

Thank you, Lars. As mentioned in the beginning, following the strong first half-year performance, we have adjusted our full-year outlook upwards. We now expect to achieve 7-9% insurance revenue growth and to deliver 4-9% underwriting result growth. The underwriting result range reflects the strong first half-year performance and also includes what we know about July claims development, particularly regarding the big residential fire in Drammen in Norway. Our preliminary claims estimate from this fire is around 15 million euros, primarily affecting our private Nordic segment. To conclude, the second quarter represented another extension to our track record of delivering durable and broad-based organic growth at resilient and strong margins, in line with our promises to our shareholders. And with that, I leave it back to you, Mirko.

Thank you, Morten and Lars. Operator, we are now ready for questions.

If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Vashka Salya from Goldman Sachs. Please go ahead.

Hi, thank you for the opportunity. I have two questions, please. One is on UK motor. So it feels like the messaging that's coming out of Sampo is somewhat different from the other players in the UK market who are already alluding to price increases, whereas you're suggesting that the price is still stabilizing and relatively soft. So I was trying to sort of understand the comment there and what is it that you're seeing in the market. If you could give us a little bit more color as to how do you expect the UK motor market to develop, that would be quite helpful. The second one is on basically your commercial insurance segment, not a commercial, wherein I just wanted to get a sense of one Your growth in second quarter is definitely very good, but it's driven by these one-off large deals that you have. Can we sort of extrapolate that into 3Q, 4Q, or should we again expect a bit of a normalization going forward? That said, the other question or more broader question I have on the commercial insurance space is basically, can you give us a little bit more color on the competitive landscape there? And the reason I ask this is basically, Thank you.

Good. I think I'll try to answer to these questions. First, UK motor market, the market situation and pricing is clearly improving. Just be clear on that. So you could sort of say that Q1 was definitely an improvement compared to Q4 and Q2 being an improvement compared to Q1. We still would like to see further price increases in the UK market. And we're not sort of saying that the cycle has turned fully yet, but clearly improvement. And we are implementing price increases and also pricing for slightly higher inflation expectation and getting that through in the market. So an improvement, but I think it's a little bit too early to say that the cycle fully has turned. But we're super happy about the development, and again, we're able to write and grow our business focusing on the 88% to 90% operating ratio target. When it comes to Nordic Commercial, I think in a way you could say that the growth that we reported after Q1 was probably more of an a normal situation than the growth that we report in Q2 so I see that we have strong growth momentum and I think you see that with more than 5% growth in the SME segment good growth in number of customers so I I Oyj competitive landscape first of all we are not stepping away from the large corporate segment we are sort of still committed to that it's a segment where we expect to make similar returns and similar profitability as we have in private and commercial in the Nordics so we are still committed to that market and Then competition in the large corporate and upper commercial market is, of course, a little bit affected by the international reinsurance market. But of course, the reinsurance market is a bit softening and part of that benefit is passed on to the large corporate customers. But apart from that, no new competition situation on sort of the more SME market side. So a stable competition there, I would say.

So can I just actually follow up on that one? So is it fair to then say like assuming that in the reinsurance market stabilizes from here on, you should then see probably slightly higher growth in the commercial segment because your headwinds are sort of gone?

I think I would sort of distinguish between what we call commercial and what we call industrial large corporate. So what we call commercial is really sort of predominantly SME and very, you know, the international reinsurance trends are not really that visible. It's more similar to the private market. So the impact from the international reinsurance market and those trends are more visible in our industrial segment. So the large commercial segment. And again, I mean, it's hard to say anything about the future, but again, it's been, from our perspective, very favorable reinsurance terms. That, of course, is a benefit that we partly can pass on to customers and particularly in the property area.

Got it. That's very clear. Thank you so much.

The next question comes from Daniel Wilson-Omordia from Morgan Stanley. Please go ahead.

hi morning thank you for taking my questions um i've got a couple here um mainly around i guess costs both on the nordic side and the uk side um so your cost ratio in q2 improved um 10 to 20 bits uh this quarter just wondering what still gives you confidence in the 40 bps cost ratio improvement um that you guide for in the year um so yeah what gives you confidence around that number and secondly um in the private uk the cost ratio has improved now quite strongly for the last two quarters um just wondering if you see this as sort of a trend that we can continue to expect what's driven this um and and brought more broadly i guess do you do you think that the expense efficiency around the UK can be can be better from here in a general sense. Just curious on your thoughts on that. Thank you very much.

When it comes to the Nordic region and the Nordic cost ratio, we remain committed and strongly believe in the 40 basis points improvements, which is partially then fueled by synergies from the top Denmark integration, reaching 73 million now after Q2. um so uh and then you know quarterly development on cost is is something that we don't really focus that much on uh could be differences in in when some expenses are being invoiced and stuff like that that you know uh affects the the the quarterly ratio so we more focus on on the full year development and again strongly committed to the 40 basis points improvements that we expect to see for the next few years in the Nordic cost ratio. when it comes to UK also their sort of cost ratio can always be a little bit volatile from quarter to quarter but it's correct to assume that we have an efficiency potential that we are gradually taking out in our UK operation so we have a positive outlook for sort of the development of the cost ratio there over time of course we are And with scale comes, of course, potential efficiency improvements. And although we grow a number of live customer policies with 13%, of course, we're not growing manning in a similar manner. So we do see sort of underlying efficiency improvements in the UK business.

Thank you.

The next question comes from Vinit Malhotra from Mediobanka. Please go ahead.

Good morning. Thank you. So I have two questions that I can raise here. One is Swedish new business, new car sales, sorry. It seems that when we were tracking this data in July, we saw a much better print. um i'm surprised it's not been noted by you but i'm curious if you have also seen it and you agree with that data and then so that could mean some kind of a slightly more positive effect or at least less drag from this line second question is on the underlying 30 basis points would you say that Why would you say this is a little better than you would have expected? Because I think you were indicating a little more conservatively or cautiously with the 1Q results. If anything interesting here, we are very grateful. Thank you.

I haven't really seen the July new car sales figures in Sweden, if that's what you were pointing out. I think the Q2 new car sales was just slightly positive. So limited development really in the Swedish market in that respect. So the story still is that, you know, when the new car sales... will pick up in Sweden. It should support us on growth. And it's still a little bit of a headwind to us. So when we report around 5% growth on private, it will be 6% when excluding the Swedish mobility. then when it comes to the 30 bps underlying improvement I think we've been sort of improving risk ratio with around 20 to 30 basis points for quite a while now and And I think we were starting to say that there is, of course, a limit to how long this will last. Otherwise, the combined ratio will be extremely low. So, yeah, perhaps slightly better than expected, but not a big change yet.

Thank you very much.

Hi, good morning both. I have two questions, please. The first is just on private UK. I think the message that underwriting margins remain in line with your target level is clear, but could you perhaps elaborate on this? And is this driven more by the cost efficiencies as you discussed previously, Morten? The reason I'm asking is because if we look at the loss ratio standalone, it has increased 3.8 points at H1. So just keep to understand where the new business written now sits. And second, going back to commercial, in particular SMEs, I think growth has improved there as mentioned quarter on quarter, but it is still below the 6% ambition as of H1. So should we be expecting a pickup closer to this target rate over the next few quarters or Based on your current view, do you think that the market dynamics are just too competitive and therefore it's not really supportive of this ambition at the moment? Thank you.

Yeah, thanks. I think when it comes to the UK, it's all about pricing and price sophistication. So the support that we get on the cost ratio side is helpful. But it's much more important efforts that we put into, you know, improving on the data side, improving our pricing models. And we've done quite some investment in this area also in this year, perhaps in particularly on the data side. And with that, of course, we find new segments where we then expect to reach the 88 to 90% operating ratio. So I think it's more that sort of that is driving, again, price sophistication. And then, of course, a slightly more positive market, slight increases in premium levels, of course, is starting to help as well. When it comes to commercial and SME, I think 5% is not too far from 6%. We've been up and around the 6% figure for a few quarters. I think first quarter, as I mentioned, was a little bit special in that respect, and I think we see a little bit of more normalization now in the second quarter. Yeah. And we believe that we have a very strong position in the SME market. That market is becoming more digital. And customer behavior is starting, of course, to mimic the behavior that we see in the private market. So gradually, we expect to see that all of the investments we made in digitalization start to pay off also in the SME market.

And I think lastly, I think on the UK part, UK private, just to make sure I mean, the worsening in the loss ratio that we have seen in Q2 is exactly as expected because it's just a natural consequence of the lower rate levels that we saw from Q2 onwards last year now fully earning through in the book. So that's what's driving that deterioration. Combined with seasonal, of course, patterns.

Great. Thank you. The next question comes from Emil Eminen from DNB Carnegie. Please go ahead.

Good morning and thanks for taking my questions. I was a little bit surprised maybe by the mention of if GPT in the report, so maybe you could help me understand What is the tool really used for? What is the goal of using that tool? Do you have any metrics supporting efficiency improvements or something along those lines?

It's a customer service tool where again the customers can ask any question about their insurance matters, coverages and so forth. It gives really tailor-made answers and of course then this is part of our service setup in particular in the private segment. It's too early of course to see real benefits, even though we see very high usage of it. It's still too early to see that this is reducing number of calls to the customer center, but that's of course the logic that with more of these tools, we should be able to reduce the number of calls to the customer centers and continue to improve efficiency on the customer service side.

Can you say any early metrics? Is this liked by customers? What is the reception overall?

It's been really appreciated by customers. This was initially developed and launched in top Denmark. And then we have sort of exported it to other countries. And it was a big success when it was launched. And therefore, we were very confident that this was something that we should also launch in the rest of our portfolio. So... So good response from the customers on this.

Okay, thank you. That's clear.

The next question comes from Carl Lofthagen from Barenburg. Please go ahead.

Hi, thank you for taking my question. I just had a follow-up on UK Motor. I'm just wondering, what is the quantum of rate increases that you are putting through right now? I know some of your peers have highlighted kind of mid to high single digits. Is that what you're doing as well? And then just on claims inflation, where you're kind of highlighting a little bit of increased inflationary pressure, just wondering where is that coming from? Thank you.

We typically don't disclose too much about our exact price increases and it varies a little bit from segment to segment, product to product. But of course we operate in the same market as competitors and you could expect us to see broadly the same market trends that competitors allude to. And then your second question on claims inflation. What we sort of are a little bit sort of focused on is of course inflation related to spare parts. O'Reilly. We also set aside a little bit stronger reserves to cater for higher inflation, both in the UK and the Nordics, actually. It's not a big change, but I think in this environment, it's prudent, I think, to focus a little bit more on inflation and expect to see some effects in the sort of short, medium term.

Great. Thank you.

The next question comes from Nimrat Kaur from Bank of America. Please go ahead.

Hi, thank you for taking my questions. I was wondering if you can give us any information on how the seeding commission on the quota share has moved in private UK at the most recent renewals. And then on the new deal in Nordics Commercial, anything you can give us on the margins or the returns where it is priced?

Will you take the photo, Farah?

Yeah, on C.U.K. It's flattish, so there are no significant movements on that that has any meaningful impact on our numbers.

And the new deal in Nordic Commercial, are you alluding to the new health insurance?

Yeah, with the 40,000 pensioners.

Yeah, that's underwritten with the same sort of profitability targets that we have for the rest of the business.

Okay, thank you. The next question comes from Jako Tijervainen from SEB. Please go ahead.

Good morning and thanks for having my questions. A good follow-up on the UK situation and the accelerated growth over there. Was the growth basically or virtually coming only from those mentioned selected segments Oyj. Oyj.

Yeah, I mean, we have been growing quite steadily in the UK, as you know, for a quite long time. And it's quite broad base growth in motor. The growth is mainly coming from motor, so a little bit less less in home and again it's quite broad based in the difference of product solutions that we have in the UK market so nothing really special there but again supported by all of the investments that we do in data and data analytics and pricing pricing sophistication okay thanks

And then on the rather uncertain or volatile inflation outlook, are you seeing the market participants overall being enough cautious with the current outlook for 27 inflation pressure, meaning that are they putting enough price hikes to offset the upcoming inflation?

I don't think we should answer too much on behalf of competitors we focus on pricing for inflation that we expect to see and we see that we get those price increases through in the market so and that perhaps indicate that all the competitors are having a somewhat similar outlook but I think again we rather focus on what we are doing and I understand I understand and then finally

Could you provide a kind of update on the Danish court ruling early in the spring? Do you still consider the reserves sufficient? Has there been any kind of a new info around this case?

Yeah, I'll leave that to Lars. Yeah, no, thanks for the question. I think when it comes to the ruling from the Supreme Court, we still believe that the past is the past, so to speak. And as we announced in our Q1 release, the impact on old claims are expected to be covered by our And I think as a side note, of course, we are monitoring and following this up extremely closely. And when we spoke to our claims colleagues earlier this week, we have so far registered around 10 cases, one zero cases. Oyj fully included in our outlook for the year and then final comment I think when it comes to future pricing we have finalized our analysis of the expected impact and we have a clear view of the pricing actions that we need to take however it's important to remember that the majority of our workers compensation book in Denmark that renews on January 1st I hope that answers and gives an update on the Danish workers cop case sort of broadly

Very good. Thanks for the update. That's all from my side.

There are no more questions at this time, so I hand the conference back to the speakers for any closing comments.

All right. Thank you very much. That concludes the call today. Thank you for listening in.