Solid Försäkringsaktiebolag (publ)

Thank you very much for that and warm welcome to our presentation of the fourth quarter 2024. My name is Marcus Tillberg, CEO of Solid Insurance and with me today is our CFO Sofia Andersson. Together we will go through the development of the fourth quarter. I will start with some highlights from the quarter, which was a stable quarter, seen in the results in our insurance movement. If we start with the sales development, it will decrease by 9% in the period. For those who have followed us for a while, you will remember that during the same period last year, we did an deal with Amtrust, another insurance company, which meant that we handled a run-off that occurred after our acquisition of Car Protect in the Norwegian market. In this business, a positive one-time effect was created, correspondingly 14.5 million. If we adjust for that and the completed cooperation with Power, we will drive a underlying growth in the period by 10%. If we move to our premium income, it will increase by 2% in the period, where the income in our insurance and assistance segments increases by 5-10%, while we see a decrease in the product segment by 12%. I will return shortly to the development of more detail in our segment. Our insurance technical result decreases by 6% in the period and ends at 35.6 million in the period compared to 37.9 million in the same period last year. If we adjust for the part allocated by the Finance Department, the insurance technical result ends in line with last year. The result in the Finance Department increased to 7 million in the period, where we compare ourselves to a very strong Q4 during 2023. The total result in the period was 37.9 million in comparison with 64.4 million in the same period last year, where the difference in the quarter is led to the development of our finance department. Further, during the quarter, we have strengthened our partner base, three new partners in the form of Scandinavian Photos, Unologen and Moank Bank, and I will return to these a little later during the presentation. Our repurchase program has continued during the period and has, at the beginning of the fourth quarter, rendered in that we repurchased about 304,000 shares, which corresponds to 33% of the mandate that was given to the company in April 2024. Looking at the whole year, the result per share increased to 8.99 crowns, an increase of 11%. And against the background of the year's result, the Board of Directors has intended to suggest the annual rate, an increase of 5 crowns per share, which is an increase of 50 or 11% compared to last year's distribution. Further, a stable development in the insurance industry and also the joy that we are strengthening our partner base during the period. To summarize the quarter in the financial figures that Sofia will come to later, the premium income has decreased by 9%, while we see a underlying growth in our premium income of 10%, adjusted for Amp Trust and Power, as I mentioned. Our premium income increased by 2% during the period, and adjusted for that part of the financial system that is allocated to our technical results, the insurance industry's results are leveled with the same period last year. Our total cost per share combined ratio goes up to 89.2 during the period, which is our financial goal of 90%. We saw a positive result from the financial system during the period, which increased to 7 million, which is lower than Q4-23, which was a record quarter. Our total tax result increased to 37.9, and the result per share set in the whole year increased to 8.99 crowns for the whole year. If we move on and look a little more at our sales and how it develops, we can start by noting that the premium income decreased by 9% during the period. Adjusted for the one-time effect of Amp Trust, the premium income decreased by 4% during the period. If we then adjust for the completed collaboration with Power, we have a underlying growth of 10% during the period. Looking at the whole year, the premium income is largely at the same level as during 2023. If we also look at how sales develop between our segments, we are driving growth within the segment security and assistance, which then makes the weight of this segment increase, while we see a decrease in the weight of the segment product, which in the quarter stands for 21% of our total sales, which is also due to the completed collaboration with Power. Geographically, if we look at how sales are distributed, the Nordic market stands for 91% of the sales volume during the period, while the Swedish market stands for a slightly larger share compared to the corresponding period before. If we then look a little more in detail at the development within our segments, I will start with assistance, where the effect of Amp Trust is seen in our premium income, which in the period in total decreases by 1%. But if we then adjust for that one-time effect, we see a fine sales growth of 16% during the period, where the growth is driven by our insurance concept linked to car guarantees, driven both by the Swedish and Norwegian markets, as well as the insurance concept against the travel industry. The premium income for the quarter and the whole year increase by 10%, which is due to the development we have seen within the insurance concept aimed at car guarantees. Gross profit decreases in the period with 12%, which is explained by relatively high purchasing costs during the period. In the quarter, we see a slightly lower margin, which is driven by higher purchasing costs, and then based on a changed partner-product mix. In the meantime, we see a positive effect on this segment and expect an improved profitability development in the future. If we move to segment products, which decrease sales in the period with 40%, which is largely entirely due to lower sales of insurance linked to the home electronics industry in the Swedish, Norwegian and Danish markets, and where our final agreement with Power has an negative effect. Exclusive to Power, sales are reduced only by 3% in the period. The premium income in the quarter decreases by 12%, which leads to a lower sales of insurance linked to home electronics. Gross profit improves in the period, increases by 13%, driven by an improved margin, based on lower purchasing costs and slightly lower damage costs. During the period, we have signed two new partnership agreements within this segment in the form of Scandinavian Photo, which will offer their customers who buy photo equipment and insurance, and Synologen, which is an optical chain with about 100 optical devices. If we move to segment security today, we can see that premium income increases by 12% during the period, and is driven by a positive development in the Swedish, Finnish and Norwegian markets, where our new partnership agreements, with for example Noion Bank, contribute to growth. Premium income increases by 5% in the quarter, which is primarily explained by a better sales in the Swedish and Finnish markets, and accumulates the increased income by 19%, also driven by the Swedish and Finnish markets. Gross profit increases by 3% during the period, and is explained by growth in premium income, while the gross margin is reduced by a little, driven by relatively high damage costs and purchasing costs. Here we have also signed a new partnership agreement in the form of Moank Bank, which will pay our payment insurance with a planned launch during the summer of 2025. With that said, I will hand over the floor to Sofia.

Thank you very much. If we start with a short summary of the development in premium income. Premium income increased by 2% in the quarter compared with the previous year, and rose to 273.1 million. This increase is related to the segment assistance and security, while the income decreased in segment product. In the whole year, premium income increased by 3% compared with the previous year, and this was driven by the segment security. The insurance-related results in the quarter decreased by 6% compared with the previous year, and rose to 35.6 million. Excluding the fact that a part of the capital administration that is allocated to the insurance movement was the insurance-related results in most cases in the previous year. Segment product and security contributed positively to the result in the quarter, while the segment assistance decreased compared with the previous year. For the whole year, the insurance-related results decreased by 8%, and rose to 148.8 million. Here was the segment security that contributed positively through a higher gross result, while both segment product and assistance showed lower gross result compared with the previous year. The total cost per cent in the fourth quarter rose to 89.2%, compared with .8% compared with the previous year. This increase was explained by a higher cost per cent, driven by relatively higher procurement costs within the assistance, as well as higher administrative costs, which were mainly due to higher personnel costs. The cost per cent of the drive was increased to 63.3%, compared with .9% in the previous year, and the damage per cent to 25.9%, which was in line with the previous year. The damage per cent was improved compared with the third quarter, and it rose to 26.4%. For the whole year, the total cost per cent was increased to 89.6%, compared with .8% in the previous year. The increase in the previous year was mainly driven by higher damage costs, when we see that the damage per cent increased in all segments compared with the previous year, and the total cost per cent was increased to .2% compared with .1% in the previous year. The cost per cent of the drive was increased to 64.4%, compared with .9% in the previous year. Primarily due to higher administrative costs, the cost per cent of the drive was increased to 11.1%, compared with .7% in the previous year. The cost increase is primarily related to the project we have been driving with implementing the Dora regulatory system and the new ERP system, as well as higher personnel costs. If we look at our placement portfolio, it rose to approximately 1.4 billion over the end of December. The share price has decreased slightly compared with the end of September and rose to 104 million, or 7% of the total portfolio. The rental portfolio decreased by 44 million compared with the end of September, and this is due to some deductions that have been made during the fourth quarter. In the fourth quarter, the net of the whole portfolio rose to 47 million and the whole year to 28 million. Repurchase of our own shares has increased to 38.6 million, and the share price of 2023 has been paid out with just under 83 million. In the third quarter of 2022, the financial sector's results have been positive, but in varying sizes. In the fourth quarter of last year, which was a record year, the positive result was 33.2 million. In this quarter of 2024, the financial sector's results rose to 7.1 million. Rental income from the rental portfolio and the investment rose to 16.4 million compared with 19.3 million last year. Realized profits from the deduced income rose to 16.5 million. Both the share and obligation portfolio decreased in value in the quarter, and the unrealized result was negative and rose to minus 14.2 million, where 11.6 million was added to the share portfolio and 2.6 million to the rental portfolio. Accumulated, the capital management's results rose to 90.7 million for the whole year compared with 85.6 million the previous year. The total cast went up to .6% compared with .2% last year. The average income in the obligation portfolio decreased to .75% from .4% at the beginning of September. This can be compared to the beginning of December last year, where it rose to 5.7%. The lower financial sector's results resulted in a lower tax of 37.9 million per quarter. For the whole year, we landed on a result before tax of 211.2 million, which is 4% lower than last year. The result after tax was in line with last year, rose to 164.7 million, and the result per share increased by 4% to 8.99 crowns compared with 8.67 crowns last year. The board of directors, as Marcus said earlier, suggested that the annual tax be paid in the amount of 5 crowns per share, which is an increase of 11% or 50 crowns. The company showed a stable and strong financial position, and the gross profit rose to 198 crowns at the beginning of December. This is an increase of 6% compared with the beginning of September and 28% compared with Q4 2023. It should be noted that in the SCR code for 2023, the share is included, which is not in the calculation for Q24. The capital of Soväls increases in Q4 compared with the beginning of September and rose to 987 million. This is a result of a positive result, while the cost of the repurchase of our own shares has decreased. Soväls's capital requirement is in line with the output of Q3. Our financial goal is that the SCR code should be at least 150%. I leave it to Marcus again.

Yes, thank you. To summarize the quarter, we can then state that the fourth quarter has delivered a stable development in the insurance industry. The premium income decreases by 9%, but the underlying business delivers an increase of 10% in our segment security and assistance. Our premium income increases by 2% during the period, and we have managed to strengthen our partner base with three new partners. We have a very strong capital situation in the company, where the SCR quota increases during the period and rises to 198% per the last December 24. Our repurchase program has continued during the period, is now being repurchased during the day, and has seen an increase in the result per share and rose to 8.99 kronor. And behind this, the board suggests a distribution of 5 kronor per share. An increase of 11% compared to last year's distribution. With that said, we thank you for your interest today and open up for any questions that may be available.

During the Q&A, the participants can ask questions by pressing the square 5 on their phone. If you want to return your question, kindly press square 6. The next question comes from Patrick Brattelius from ABG. Here you go. Hello, can you hear me?

Yes, we can hear you there, Patrick.

Great, I heard that line unmuted. So yes, we can go ahead. A few questions from my side. If we look at the Gross Written Premium, it is down by 9% year over year, driven by the power collaboration that has ended. But we know that the Gross Written Premium growth is a bit above the other top line in the results. So should we expect the premium growth to move towards similar growth in the coming quarter?

I suspect you are thinking about how it affects Net Earned. Yes, exactly. Yes, and then you know our financial goals. And if you look forward and look at the whole year that we are in, we take a look at our financial goals. Then we will probably not end up in the upper line, but if we end up in the upper line, then we can say that is what we are aiming at.

I understand, but does this not mean that we will see negative Net Earned Premium growth in the coming two quarters, given that it has not been such a big partner for you?

It will affect, but we also have other business of course, and drives growth in the other two segments. So we are hopeful that we can keep our noses above the water. And seen throughout the year, we are aiming to get into the tension on the financial goals.

Thank you. And these new partners that you signed in the quarter, what is your expectation about the impact for 2025 and perhaps if you look a little further out?

Not a very big impact in 2025. If we take a look at the month, I mentioned that they plan a launch in the summer. It takes time to build these portfolios, so you should not expect any bigger result effect of these during this year. The other business will be launched one at the beginning of Q2 and one that is also until the summer. So we simply have to have a little patience and maybe look a little further forward before we see a positive effect in the result of these business.

Thank you. And you are writing new partners that you sign, but have you lost any partners here except Power, if you say the last six months?

No, we have not.

Thank you. If we go in a little bit on the investment portfolio, it was down year after year, but we saw that it was partly due to unrealized losses. But we see that the interest rates continue to drop. And should one expect earlier, we have talked about a return portfolio of about 2%, I do not remember. How should one think about a normalized run rate level for the portfolio when we look into 2025, given the new pension situation we are in?

If we just look at the interest rates, as I said, the average interest rate now at the beginning of December is 4.75, and then it is a little lower as you understand on the interest rates. So a run rate on the interest rate should be around 11-12 million in the next quarter.

Thank you. But if you look at the portfolio, it is 17% plus 7% in cash. That sounds like a very large part from my perspective, but why do not you invest a larger part in obligations or shares compared to the current

split? You have the right idea. Sometimes it is nice to have some breadcrumbs, but it is clear that we want to activate these resources in greater extent than what we have right now. So we see that ahead of us that it will happen.

What is a reasonable level, or a rough target level, on how big the cash should be in a asset management split?

Somewhere around 100 million in cash.

Okay, because you are on a straight line, it is a decrease compared to the current level. I understand. If we then slide over to... I have to add

that the expected division will also go out in May, which will require cash.

Yes, of course. If we are on the division, the solvency quota, which is now the X division, what would the solvency quota be, including the suggested division, so we can compare apples with apples compared to last year?

That would

be immediately below 180, including the estimated division. Everything else is the same?

Thank you. My last question is about the repurchase. You have so far only used 33 percent, it was said. How will it be then that you have not used this mandate any more? Is it something that has kept you back? Can we expect an acceleration here in the beginning of 2025? Do you have a goal to reach 100 percent, or do you have a much lower goal, how much of the mandate will be used?

We would have liked it to be a little more trade in our share, so the pace is a little bit of how big the trade is. We will not come out in the full mandate of 100 percent until the vote. We will also have a quiet period in March. We have a little pain in time to get the whole way forward.

If I understand correctly, if you yourself are in charge of the mandate, then you are included in the quiet period, but if you put out the mandate on an external part, then you can continue to buy back shares in the quiet period. Is there something you have looked at and find interesting to change strategy?

Yes, we have done that when we launched our third return program. Then we did that and then we made the judgment that the variant we have now was the best for us then. How it will go forward, I repeat to say, but I can not answer that here and now if we want to change the current model.

My last question is on the same topic. You are very strongly capitalized with this solvent quota, also adjusted for the distribution that will go. Should one expect a new return mandate proposal when we look into later this year?

I would be very surprised if the board does not ask for a new mandate from the district. Then it is up to the board to activate this after such a decision. But I would be surprised if we do not keep such a mandate from the district.

Thank you. And a final question when we are still in a bit of capitalization and the like. Do you see anyone in the competitive landscape that does it well and some interesting bidders? How do you see the competition and has it changed anything in the last six months? And maybe a little if you think that the competitive landscape will change given the new pension situation that we are facing and that the competition will increase because these products may be more interesting. You can talk a little about that.

I think if you look at the competitive landscape, we have always been exposed to competition. And then it is clear that there are some changes in which actors who are in the market. But I would say that the competition situation is constant and I do not see any change in that in the future. I am quite convinced that Solids value-based bidders are strong in the market. As for the acquisition, as you talked a little about, we have done an acquisition every year in the last few years. And it is always the case that we look in the market and assess and evaluate any possibilities that may arise. You mentioned that we have a strong capital situation and we want to make it as valuable an initiative as possible for our shareholder. And we do not end up with an

acquisition. Thank you. That was all from me. No more questions.

Thank you, Patrik.

There are no more questions right now, so I leave the floor to the speakers for any closing comments.

Then we ask you to thank you so much for showing interest and see you in April.

Thank you.