Gentlemen, welcome to the Topdanmark 2022 half year report. For the first part of this call, all participants are in a listen only mode. Afterwards, there'll be a question- and- answer session. To ask a question, please press five star on your telephone keypad. Speakers, please go ahead with your meeting. Thank you operator, and good afternoon, everybody, and good morning to the USA. Thank you for joining us at this conference call. My name is Peter Hermann, and I'm the Group CEO of Topdanmark, and with me is our Group CFO, Lars Kufall Beck, and Head of Investor Relations, Robin Hjelgaard Løfgren. We are hosting this conference call because earlier today we published our interim report for the first half of 2022. I would like to start with a few opening remarks before handing over to Lars for comments on the results in more detail. Can I get slide 2, please? Overall, we delivered a good set of results in light of the historically high macroeconomic uncertainty and volatility in the financial markets. Net profits in Q2 amounted to DKK 265 million, with a technical result of DKK 507 million, driven by a 70 basis point improvement in the underlying claims ratio. This is a testament to the solid ethics of our ongoing efficiency and pricing initiatives. However, the mentioned volatility in financial markets also meant that we reported a negative investment return of DKK 295 million in the quarter. Our life division reported profits of DKK 107 million in the quarter, also helped by a positive one-off tax adjustment of DKK 50 million. Premiums grew by 3.9% in the first half of the year and 3.7% in Q2 specifically. We're seeing continued growth across all business areas, partly driven by our pricing initiatives, but also by up and cross-selling to new and existing customers. Our partnership with Nordea continues to deliver strong results with a referral rate twice the size of the old Danske Bank agreement. In the first half of 2022, Nordea agreement has led to more than 34,000 referrals and have thus more than compensated for the outflow from the old Danske Bank agreement. We also expect this trend to continue throughout the rest of the year. An important topic these days is the continuously increasing inflation, which reached 8.2% in June, the highest level since 1983. Most notably, we see inflation within energy-consuming materials, tiles, cement, insulation. In the short term, we are in a good position, we think, to handle rising cost inflation through our procurement program, and our efforts within this area continue as part of the efficiency program. We also take note of the current volatility, and we continue to closely monitor the market situation. To that end, we may proceed with pricing initiatives across different product lines and all customer segments in the coming periods. Lastly, before turning over to you, Lars, I would like to briefly comment on the process of selling the life division to Nordea, and there's no news in this regard. We await approvals from relevant regulatory authorities, and we continue to expect the sale to close in the second half of 2022. We also continue to assume closing as of 31 December 2022 for the forecast purposes. We'll update the market as soon as we receive the final approval, of course. Lars, will you take us through the Q2 results in more detail please? Yes, thank you, Peter. If we take a closer look at our Q2 results, the profit after tax amounted to DKK 265 million, as Peter mentioned. The result is affected by three items that I would like to address. A sound development in our technical results, negative investment return following significant market volatility, and a positive one-off adjustment of the deferred tax asset within our life business. In terms of the technical results, we delivered a combined ratio of 79.4 and a growth in non-life of 3.7% in the quarter. The quarter was positively affected by benign weather and a positive impact stemming from the rising interest rates experienced last quarter. Please note that the rise in interest rates experienced in Q2 will also affect our claims ratio positively from Q3. The underlying claims ratio also trended downward by 70 basis points in the quarter. We continue to see improved profitability within house and property insurance, and our efforts to become more efficient continue to deliver strong results. Also, please note that the synergies between non-life and life of approximately DKK 80-DKK 100 million per annum continue to affect our profitability positively in non-life until closing of the sale of life. The investment return for the quarter was negative DKK 295 million, clearly impacted by volatility stemming from rising inflation and yield levels. These effects were further supplemented by increasing macroeconomic uncertainty and spread expansions on the financial markets. As a result, stock markets have underperformed substantially in the quarter. However, our performance is roughly on par with index for most asset classes. Furthermore, in Q2, our non-life business reduced its exposure towards CLOs, and we continue to reduce this exposure in the coming periods to simplify the investment structure in non-life as part of the carve-out of our existing asset management operations. Profit on the discontinued operations amounted to DKK 107 million after tax. The higher result was mainly driven by a one-off positive adjustment of approximately DKK 50 million in Q2, stemming from an increased deferred tax asset related to Topdanmark Ejendom, our property company. This is a result of the imposed higher corporate tax rate from 2023 onwards. However, please note that the net impact of group equity from this corporate tax rate is neutral as the higher corporate tax rate also caused a one-off negative adjustment of approximately DKK 50 million, stemming from an increased deferred tax liability relating to the securities funds in non-life. That flows through other comprehensive income. The life insurance had a profit of DKK 117 million, with a higher investment return affected by the de-risking of our investment profile carried out last year. The cost results also increased, but please note that this is affected by no amortization of IT intangibles being performed in the period from signing until closing of the sale of life according to the IFRS 5 standard. This has no impact on the expected implied goodwill of the transaction, as lower amortizations until closing will equally lower the gains will be realized upon closing. That is fully catered for in our forecast. The risk return in life decreased by DKK 10 million as the collective bonus potential in one of the interest rate groups was reduced to zero following weak financial markets in Q2. Lastly, let me comment on our solvency position, which increased to 255% solvency ratio in Q2 from 221% in Q1. This was mainly due to a decreasing solvency requirement caused by significantly lower stress on equity exposures and rising interest rates. In addition, the lower CLO exposure in non-life that I mentioned earlier on also lowered the solvency requirement. All else equal, the solvency requirement should therefore decrease further in the coming periods as we continue our efforts to reduce the CLO exposure in non-life. With that, Peter, will you comment on our updated profit forecast model, please? Yes. Thank you, Lars. Slide 3, please. Turning to the profit forecast model for 2022, we have improved the assumed combined ratio for 2022 from between 83%-86% to now between 82%-84.5%, excluding run-offs in the second half year. This is mainly due to the run-off and benign weather experienced in Q2, as well as the effect of the rising interest rates, which will have a positive impact on our claims ratio from Q3 onwards. Again, please note that synergies between non-life and life of approximately DKK 80-100 million per annum continue to affect our profitability positively until closing of the sale of life, which we assume is the 31st of December 2022 in this profit forecast model. The assumed premium growth for 2022 is unchanged at between 3%-4.5%, as the underlying business momentum remains solid in Q2 while the macroeconomic uncertainty remains at a historically high level. The assumed profit after tax from discontinued operation is unchanged at DKK 1.3 million-DKK 1.35 million. This, and the one-off tax gain in Q2 is offset by the mentioned lower risk return. Lower assets under management also due to weak financial markets and also a weaker outlook for our Illness and Accident business due to increasing inflation. Note that this expectation is still based on an assumed closure of the sale end of the year. In conclusion, the post-tax profit forecast model for 2022 is lowered to between DKK 2.1 billion-DKK 2.35 billion, excluding run-off in second half year, as the higher assumed technical result is more than offset by the negative investment return experience here in Q2. Slide 4, please. Because this concludes our opening remarks. We are now ready for questions. Keep your questions to one or two at a time. If you have more questions, feel free to enter the queue again for a second round. Operator, may we have the first question, please? Ladies and gentlemen, if you have a question for the speakers, please press five star on your telephone keypad. To withdraw your question, please press five star again. We will have a brief pause while questions are being registered. The first question is from the line of Asbjørn Mørk from Danske Bank. Please go ahead. Your line will now be unmuted. Yes, thank you very much. Good afternoon. A couple of questions from my side. One, I think it's gonna be a pretty long question, and sorry for that. Basically, just trying to understand the competitive environment you're seeing right now, the pricing dynamics. You raised prices quite significantly late 2020, early 2021. Now you're printing a private premium growth of 2.7%, which I guess adjusted for price hikes and indexation is more or less of a net customer outflow. You seem to be indicating now that there might be more price hikes on its way. Just wondering how exactly are you gonna play this for the clients that have already faced quite a lot of price hikes? Will they see another round? also considering sort of the micro-tariffing price adjustments that you've been doing during 2022, how does that play into all of this? Just trying really to understand what your pricing strategy will be going forward and how you will use that to sort of offset inflation. I can maybe start off then, you can fill it in, Lars, if you want. You can say, yes, we have seen that, we have increased prices, for example, especially in-house. You can also see if you look at our investment report on page 5, you can also see that if you look at the average premiums, it has actually gone up both within motor, content, and house. We've actually done this. We have tried to be a little in front of the curve, you can say, and that also is the reason why we think that our combined ratio of 79.4 in this quarter is quite decent here. Also considering the inflation levels. It's true that, if we're looking going forward, we are looking into whether inflation will stick. It seems that it will stick, at least according to the financial prognosis we are looking into. It says that the inflation will be higher this year, maybe also the next year. That is the reason why we are mentioning in the report that we are going to look into doing price increases. Yes, there will be some customers who have experienced price increase that could experience more price increases. We will also look into, you can say, we'll also look into what is the level of price increases the individual customers has got to see when we do potential price increases, then we'll also look into whether we should exclude some of those or look into the adjustments, so we still have a competitive price level in South Denmark compared to peers and so on. This is of course both a trade-off between inflation levels and profitability, but also in the competitive environment. As we have said, yes, we have lost some customers due to our efforts on house, but we're not here only to grow, we are here to grow profitably. Yes, we will look into both what we have done, but we'll also see the prospect that customers can actually have a second round, yes. I guess if I look at slide number 5, that's mainly a reflection of the former price hikes that you have done, right? I guess that's the reason why your underlying combined ratio, it does improve nicely in Q2, but it's quite a lower improvement you can say than in previous quarters. I guess my question really is that you need to start up with some quite significant price hikes pretty soon. How does that play into the sort of the micro-tariffing price adjustments you've done in 2022, where at least my impression is that you have also lowered prices in quite a lot of areas. You can say that we're not done doing the price increases because that is a rolling process. Yes, we have gone through a lot of the portfolio in-house, for example, but there are still some customers in that round that are still to be price increased. Yes, a lot of it is of course, when we started up, because we're doing this continuously, but now we have to look into whether we have to do something more additional on top of that due to the inflation and the hikes we've seen at the moment. That's the answer. I don't know whether you are, what are you pointing to? No, that's fine. It's just, and maybe, of course, difficult for you to comment on what your peers are saying. I just heard from one of your peers earlier today, they're saying that we seem to be behind the peak when it comes to inflation. Maybe they're seeing something you're not seeing or you're seeing something they're not seeing. I don't know if you have any view on that. I will say that as we see it at the moment, we think that it was also written in the report. We think actually we have a good position looking in the short run here. Because we have, as you can see, our combined ratio here is also quite good, also compares to the competitors in Denmark at least. We can see that we still have some good procurement deals going on, and we have still some efforts in our previously, you could say, pricing initiatives. Now we are looking into whether we should do more to be on top of the inflation that keeps on being at the height it is now. It's true that, if we wanna keep away inflation with the levels they are now, yes, we also have to use price initiatives because, if they keep on at this level. Yes, but I think actually if you look at our combined ratio, I think actually we're also better off than, at least what we have seen from competitors until now. Okay. Fair enough. A final question from my side and a more nitty-gritty one on the solvency. Could you just help me here a bit? It sounded like Lars was saying that the SCR will continue down for the rest of the year on the back of a lower CLO exposure. What about all things equal without that exposure? How would the impacts we've seen in Q2 impact Q3? In addition to that, what should we expect of total intangibles year-end after the sale of Life? Also when I look at your subordinated debt already now, which seems to be exceeding your debt capacity, is there anything you can do with this outstanding debt that has call in 2025 and 2026? Yeah. Yeah. I think, that was more than one question in one, but we're happy to go. Good question. A very good question. Yes, you are absolutely right that all else being equal, we should expect the solvency capital requirement to go down. As I said, there are two moving parts here. One which is not in our hands, that is how we stress equity exposures. If you compare end of Q1 with end of Q2, the stress scenario is actually 7% better in Q2 from a solvency point of view than in Q1. In other words, we stress equity exposures with 7% less in Q2 than we did end of Q1. That is coming from EIOPA, so it's not really in our hands. That will of course change going forward. That is an uncertainty. The CLO exposure that goes out, net exposure approximately, DKK 200 million of underlying exposure going out of the books. In the solvency stress scenario, they are being stressed by 100%. Of course you could say, well, does that mean that if you take out the last DKK 400 million, then your SCR will go down by another DKK 400 million? The answer to that is no, because there are diversification impacts. The impact on the ultimate impact on the net solvency capital requirement will be less than the DKK 400 million. I don't have an updated forecast or guidance to you on that. There will be. There will be a lower SCR. Exactly. According to the Tier 1 and Tier 2, it's true that if you look at the solvency at the moment, then we are not able to use all our Tier 2 capital at the moment. That is what you've also seen, Asbjørn. That's the reason why we're also thinking, as we said the last time, that we will look into trying to optimize our capital situation, looking at both Tier 1 and Tier 2 capital going forward. Because at the moment, yes, we have too much at Tier 2, and after the sale of Life, it will be even more. We have a task ahead of us actually trying to optimize on the capital structure again, while as we've done the last couple of years with positive results. We're looking into that in the second half year. Okay. Just on the intangibles, year-end after the sale of Life. I don't have the exact number here, but we can get back to that. You're looking for what is the impact on the sale of Life? Is that what you're looking for? Yeah. Basically, yeah. Exactly. Yeah. I don't have the exact numbers here. The intangibles on Life is around DKK 500 million. Around DKK 500 million of the total comes from Life. We can look into it. Okay. Thanks. Over my side. Thanks a lot. Thank you. The next question comes from the line of Jakob Brink from Nordea. Please go ahead. Your line will now be unmuted. Thanks a lot, and good afternoon. Just continuing on solvency, see if I can squeeze in there as well. When you announced the sale of the Life business back in March, you were using the end of 2021 solvency own funds and the SCR. The SCR is now down almost DKK 700 million, and you're continuing to reduce the CLO exposure. I guess your group SCR after the sale of Life could be well below DKK 2 billion. What will that have implications to the special dividend you're going to pay after the sale? Two things. Just to restate the obvious here that any considerations and decisions regarding dividends is of course a board discussion and decision. Ultimately, because the SCR goes down does not, at least from our point of view, from management point of view, imply that we should have a higher buffer. Because nominal SCR goes down does not mean that the solvency, the target solvency ratio percentage should go up. All else being equal, if the SCR goes down, that should one to one improve our dividend capacity. Just so it's Yeah, sorry. If you look at slide 29 investor presentation, that's just showing by the end of the half-year result. If you take, one can say using a solvency, I'm not saying that it's the right number, but if you use the solvency cover of 190%, then we have DKK 1.8 billion excess capital at the moment. That's before calculating any gains from selling of Life. Before calculating any additional gain from the goodwill we received as part of Life. Yeah. Just to understand the sustainability of the SCR reduction. Obviously, as you said last, part of it comes from the stress on equities, which will gradually drift back over time, which is around DKK 150 million, as far as I can estimate, back to 39% weight. How much of the remaining, what is that then, DKK 550 million reduction is related to the continuing business, and how much is related to what you will be selling? I.e., what will be the level after the sale? I mean, now there are diversification effects here, so you should always be a little bit careful if you have not done the exact math of this. By far, the largest part of the reduction is sustainable also after closing. Because if you look at the Life in isolation, the solvency requirement is pretty much flat, from end of year last year to end of Q2. It's actually over 300 alone in the Life company at the moment. Sorry, I didn't get that. 300 what? The solvency is more than 300% in the Life company by the half year. Okay. Yeah. Yeah. Then, sorry, my question 2.5 then on Asbjørn's questions on house insurance or insurance prices and inflation. I was just checking the other day, and it seems like you have actually done fairly big price cuts, if you look through the cyclical guidance at least. How does that play into what we just discussed before? I have seen some analyses indicating that there has been quite significant price cuts. However, there must be some bias in there because at least the numbers we've seen out there does not replicate what we see in our numbers internally. I think the new tariff that we've introduced in-house is first and foremost an expression of us getting an even better understanding of risk versus reward, risk and price. Basically, getting even more granular in how we do our risk premium calculations. Now, for instance, using Google data and machine learning to estimate storm risk and weather risk in a more accurate way. Some of the pilots, I think we've mentioned earlier on, is now into production. Secondly, we have also been better at and simply more mature in our procurement efforts. Hence, we've been able to also calculate in a better way than we did before how procurement positively affects our cost levels. We have also, of course, been revisiting the price increases that we did last year and reevaluating them. Overall, it's not because we're going out and dumping prices, on the contrary. From our side, we are getting an even better, more granular approach to risk versus reward. Hence, that is how we look at the new prices on house. Okay. Fair enough. Thanks a lot. The next question will be from the line of Martin Gregers Birk from SEB. Please go ahead, your line will now be unmuted. Thank you so much. Just follow up on prices. I see, Peter, that you're also out in Danish press today talking about price increases. Now that it's almost certain that you will do product price increases, my question is, why haven't you done them already? I assume that there is another competitor out in battle that has already pushed through price increases. Why don't you just ride their slipstream? Actually, I would say that we have done price increases over a couple of some time here. You can discuss who came first. Maybe that's also not important. Just to say that we are doing our own price increases on different, as I mentioned before, on different products. Not only house, but also some of the others we have done looking at the prices as well. Now they have said that they will put up prices, and we are saying that we are already doing it and also looking into it. For me, well, it's we are just looking into our own process and what we're doing compared to what we will do within our customer segment. We are keeping track of it, and I think actually also the results that you also showed that we are at least pretty much on top of it. From my understanding it sounds like I mean, of course the issue was with house. That's well discussed by now, and that was something that came as far as I recollect late last year. Then there hasn't really been any sort of major rounds since then, while peers have been out repricing in the meantime. I think we have two comments to that. The housing portfolio reduces over a year's time, so it doesn't come in one go. This year as well, there has been increases relating to that as we also discussed last year. Secondly, on a second note, we work with prices all the time. It's not like we only do price increases when we come out and say we do it. We actually actively work with it on an ongoing basis. I think as Peter alluded to, I mean, we have been delivering a combined ratio of 79.4% here in Denmark for the quarter, which is a level that we're pleased with. Clearly we also look ahead and if the case is this, then we could be forced to do something else. Okay. Final question on discounting, the 100 basis points in the quarter. If interest rates from here on stay flat, what's the full year effect from discounting in the remaining year? The full year effect in the remaining year, you could say in the updated forecast we have done, we have taken approximately 50 basis points impact, positive impact from discounting for the remainder of the year. 50 basis points in H2? Yeah. Okay. All right. Thank you. That's it. As a reminder, please press five star on your telephone keypad to ask a question. The next question is from the line of Raman Singh from Citigroup. Please go ahead, your line will now be unmuted. Hi. Thanks for taking my question. You might have alluded to inflation in Denmark earlier in the presentation, but you can just repeat across the board in terms of property and wage inflation. What are the current trends in the wage inflation in short to medium term? If wage inflation keeps increasing, do you sort of use inflation hedge, inflation perhaps, to hedge it, particularly in Denmark? Yes, please. Well, thanks a lot, Raman for that question. If we start out by the latter, namely looking at the wage inflation, we do see indices being published on a quarterly basis by the Danmarks Nationalbank and Statistics Denmark. Right now, we're looking into a salary inflation or salary increase level of approximately just shy of 3% per annum. That's the latest updated. Of course, it varies a little bit across what do you call it? Lines of employment or types of employment. But the index that we look most to, it's just around 3% mark so far increase on an annual basis up until now for 2022. Can we- Yeah. -question? Yeah. In terms of the hedging, do you do inflation prep to hedge your wage inflation exposure or any sort of hedging that you do in Danish market? Because earlier probably you commented that the Danish market remains expensive for any sort of hedging activity. Any update on that? Thanks. Yeah. We do have swaps in place to hedge inflation both on workers' compensation and also in the illness and accident in Denmark. You are absolutely right that its Danish inflation is not a super liquid market. On the contrary, basically only swaps come up for sale whenever we do large infrastructure projects almost. We do have swaps both in the workers' compensation, but also in the illness and accident in the discontinued business. They're not working perfectly, but fine. Yeah. Just a third question in terms of, is there any impact on your long-term, inflation outlook? Any revision for that or can it stay the same as before? We don't have an updated view on that. When we look at wage inflation expectations here in Denmark, we do see a short-term hike, but then after that it comes down. We don't see anything different than the 2%-4% in the long term that we have talked about. We have this, you can say, the systematic indexation we do in Denmark, where we actually index our premiums every year with, you can say, an index where normally wage inflation also comes in. Of course, we'll not catch any inflation. For example, if you have a special inflation within building materials or the building industry, then we'll not maybe catch all of it, and that's the reason why we do other things as price increases. But we have this indexation each year that should actually capture at least the wage inflation. Okay. Yeah. Thanks. Just the last point, if I may. You're saying that the property price increases that had been for selected customers, but going forward we will be probably looking at more pricing increases across the spectrum or maybe more sort of aggressive movements that we can see in coming quarters. Is that what you're alluding to? No, no. Actually, I actually think that what we were alluding to is that, yes, inflation is high right now. Over time, we see 2%-4% inflation in general. Yeah. In general. No, no. Sorry. Sorry. Normal inflation should be. Sorry for price increases. The property price increases. From the previous sort of discussion, I understood that the price increases have been very selective for property customers, be it private or commercial. Going forward you might be more aggressive in terms of price increases across the spectrum, mainly the property line. Is that what you are thinking? You can say yes and no, but you can say we would also like to look into this product that are actually affected by inflation. That could be for, as you mentioned, the house, but it would also be content insurance or, summer vacation homes and so on. We've also seen the inflation within car insurance, for example. We're looking into, you would say a broad spectrum of products actually and the business lines. That is also actually what we have done. If you look at the average premium going up, that's not only within the house, also most other examples have gone up and also, content insurance. Yes, we'll look, you can say across the range of products, but we will probably look more into the business lines that are actually affected and where there's a clear explanation between the claims frequency and the sort of claim inflation driven by the inflation within that business line. That would be also most, you can say, understandable for our customers. I think it all comes down to understanding the risk and charging the right price for the right risk. The devil is truly in the details here. Even just saying that car or auto would go up would actually be wrong because when you look into it and dig into the details and look over like a two-year horizon, for instance, if you take a headlight and see how the price development has been on that as a headlight as a spare part, there's a huge difference in the price development for a headlight coming from the Volkswagen Group and a headlight coming from the Mercedes-Benz Group, for instance. The devil is truly in the detail here. It's all about understanding and charging the right price for the right risk. Yeah. Thanks. Thanks. Thank you. The next question is from Jan Erik Gjerland from ABG Sundal Collier. Please go ahead. Your line will now be unmuted. Good afternoon. It's Jan Erik from ABG Sundal Collier here. Thank you for taking my questions as well. I had two ones. The first one on the cost ratio. It seems like it has trended a little bit upwards. You say it's about these intangibles as well as the potentially lower level of synergies going forward that could make it a little bit higher. Just shed some light into the development on what we should expect for next year is potentially the first question. The second question is the competition situation and how your pricing. I think it was one of the first participants today that talked about the low growth in private while you have a very steep price increase. How much volume have you really lost in this segment over the last year from volume versus what you have been raising on the price side? And who is the competitors here today? Because we also heard that the MC that you talked about, that they also lost ground in Denmark because of tough competition. Could you shed some light on the competition on volume and price in private and SME? That would be great. Thank you. Thanks, maybe, Jan Erik. Maybe I can start with the cost part, and then Peter can talk about the competitive environment. There is a little bit of fluctuation in our cost, yes. If you look over the quarters, compared to last year, we have remained our guidance to say that cost for this year will be in line with what it was last year. In terms of cost ratio for next year, we will not tell anything around that on this call, but we will revert later in the year with our initial thoughts on 2023 numbers as we normally do. I do believe that when you look at our cost ratio and look at our cost ratio development over the quarters, it is important to put a little bit of perspective on it and look at what our total cost base is and see, okay, if we have a variation quarter-over-quarter of 10 basis points when, for instance, well, that means that there is a phasing difference between the quarters of DKK 2.5 million. Quite small variations and phasing will impact our ratios, and we do not massage the numbers. We show them as they are. Hence you will, and you should expect to see fluctuations quarter-over-quarter in our cost. Hence the important point from our side, and what we are steering towards is the full year guidance. Okay. Clear. On private, you can say you talked about the private growth. It's true that a lot of the growth is also driven by price increases and the base and so on. We, of course, also see some new customers and done that. It's true that we have a higher churn than we've seen previously. That has to do with the things we have done on prices, not only on house, but actually also on some of the other products. You can say in terms of competitors, I think it's you can say it is. There's actually quite hard competition out there. I can't point to a certain player taking where we lose the most. I would think it's we both take and give some. Here we have lost a little more than we used to in terms of churn. I think it's broad. It's both some of the mutuals, more local companies, but actually has gained some ground in some places. Of course that sometimes we also lose a little on, for example, the Danske Bank old portfolio. That would mainly be Tryg taking those as we are taking some of theirs in return. You can say then we have the old Sydbank portfolio. We're still keeping actually a quite good part of that. But if we lose some there, and we do, of course, because it's a portfolio not growing now, but also losing them there, then it's something important, trying to take those. We can't point to a specific player. Okay. In the SME side? SME side, actually we have, as you can see the growth on the half-year is 0.1%. That is also working across with prices and so on. That is to a high degree also new customers. There we actually also taking customers across the board. That in that sense, we're growing in terms of numbers and customers. That's also not only from one competitor. There we're actually pretty successful in terms of both the way we do things and also the pricing level. Again, it's we cannot point to a specific peer. In the SME side, you're gaining customers, you say, and so you're advancing on your market share in that sense. You're growing your share, so to speak. Although in private you may lose a little bit, a little as you allude to. Yeah. That's a fair way of saying it. Thank you. Thank you. The next question is from Faizan Lakhani from HSBC. Please go ahead. Your line will now be unmuted. Hi there. This is Faizan Lakhani from HSBC. My first question is on the CLOs, the action you're taking there. What is the sort of the run rate profitability on the CLO book? And if you are selling down, are you seeing realized losses on that portfolio given the sort of mark-to-market movement currently? The second question is on the expense ratio. I know you're not really giving guidance right now for future years, but just sort of thinking this through, where if you're growing at sort of 2 or 3% wage inflations, you know, sort of 4%, I know you've got some synergies and so on, but it feels like there'll be upward pressure on the expense ratio given the fact that inflation is elevated. How do you sort of see that shape going forward and the sort of moving parts in that front be useful? Thank you. I'll start by the CLO question. You are right that when we are selling off in this environment, yes, we are experiencing and we are realizing losses in that book. I mean, that's a compromise from our side in terms of the governance and the effort that we should otherwise put up to be able to have CLOs on our books after the closing of life in terms of our new asset management function, as I would call it. You could say over time and on average, I believe over the last 12 years, CLOs has given an annualized return of just shy of 15%, I believe it is. It has been an attractive asset for us, but it's also been that because we've been able to weather out the storm whenever there's been a storm in the market. I think that's what I have on CLO part. In terms of expense ratio, as you said, yes, higher wage inflation will also on our side put a pressure on our cost ratio, and hence will just further fuel the need for working with efficiencies and all the efforts we have. That we have also said is that the synergies we have right now as a result of both having life and non-life in- In one company, and we will not be able to realize or even offset them in the short term post the closing of the Life scheme. All else being equal, our expense ratio will go up to then come down again to a certain level. Short term, yes, it would go up naturally after the sale of Life. That is totally expected, and also part, you can say, of the decision we took when we actually made the decision of selling the Life business. We knew that we'll miss some synergies, the DKK 80-100 million per year, but we're also getting this goodwill about DKK 1.5 billion. You can say that that has been part of the calculation. Yes, that will move up the cost ratio in the short term. Then of course we will, on the other side of the separation, which will not be at closing, but you can say 1.5 or 1 year well after that maybe, that will be in the process. We'll of course look to optimize the existing pure non-life player, so then move the cost ratio down again. I mean, just try and find how you move it down again. Just try and find, you know, the buildup of intangibles versus sort of efficiency gains versus something we can see to do. I mean, how do I see that shape of the expense ratio going? Short term, yes, it's high, but then should we see it come back to the same level in a couple years' time? I mean, how should I be thinking about that figure? We are not giving long-term guidance in that sense. Clearly, our long-term ambition should not be to be in a worse place than what we are today. All we are saying is that it doesn't come by itself, something that you spent 50 years' time together, and then unleashing it makes it also harder to realize the synergy or offset the synergies afterwards. It will take a while for us. There are a number of initiatives and things we can look at. Some of them we can do at closing or just short after closing, and some of them we have to wait until after the separation before we can start to work and implement on those initiatives. Clearly, as any responsible management, we have a catalog of initiatives that we are looking to implement and work on. Also remember, one thing was the synergies. The other thing is that if you look at the elephants and excellence portfolio, that was a portfolio around DKK 600 million that had a lower cost percentage. You can say by moving that out to the life company, you have a lower premium volume, and also that had actually a lower cost percentage, meaning that the rest of it will be a little higher. So, there's some different things moving up and down here, the transactions, the synergies. Of course you're mentioning the intangibles, the depreciations on our IT investments that will. We said in the beginning, at one stage we said it would peak in 2023, 2024. Now when we take out the, let's say the amortizations on the life book, then it will probably peak in 2025, 2026 or something. The process is looking a little differently than it did before. As Lars is saying, we of course need some time after the sale of life to say, to find, you could say, ways to come down again with the cost level. I think it's also important for me to say we are not only focusing on cost level. We can do all kinds of things to make the cost level go down. We could use brokers more, we could take on industry, we could take different products, but that wouldn't maybe be beneficial to the combined ratio. We are very much focusing on the combined ratio level, just to be clear on that. Great. Thank you very much. Thank you. As a reminder, please press five star on your telephone keypad to ask a question. The next question comes from the line of Youdish Chicooree from Autonomous Research. Please go ahead. Your line will now be unmuted. Good afternoon, everyone. I've got a couple of questions for you. The first one, if I could go back on the topic of inflation. I understand very clearly that you're saying that, okay, you haven't changed your view of medium to long term inflation of 2%-4%, and that you will price, you know, at least in line with that. But I'm more interested in what's happening right now and how your pricing compares with inflation levels. So I was wondering if you could just give us a sense of the inflation you're seeing in motor and on average across your portfolio, motor portfolio, what rates you're pushing through. And the same for property, please. That's my first question. And then the second one on the CLOs. Is that correctly understood that you will fully divest this portfolio now? Because you've had that for a long time, I mean, even throughout the financial crisis. Yeah. I was very curious on how you're gonna deploy the funds as well going forward. Maybe just one thing about the 2-4 percentage point. We're not saying that we see inflation on the short term or next year something between 2 and 4. At the moment, we see higher wage, higher inflation for this year and maybe also next year. When we are mentioning the 2-4% is that we are over time seeing across different product lines an inflation between 2-4. That is also if you look at the guidance for inflation over the long run, then you can say that is also still the aim for also for both European and US as I remember it. That's just to make that clear. Just to say motor. Yes, we are seeing that, inflation. Lars mentioned some examples on bumpers and headlights and so on. Yes, we are seeing maybe I've recently said that, we saw inflation in motor around 4%, whatever, 5%, maybe it's around 8% now. Again, it's very different when you look at the different brands and spare parts and so on. So it's difficult to just give a number, but it's higher now. It has moved up in total, and that's also the reason why we've also done price increases on motor, as you can see on the average- Please remember it's live. Your rate rises are ahead of whatever you're seeing in inflation currently, you're right? Sorry. Your price increases currently that you're putting through is above what you're seeing on inflation, correct? Yes, you can say in terms of what we see in our numbers due to our price. Yeah. We are working with procurement and so on, and our risk selection and so on. I'm just mentioning what we are seeing. You can say if you look at the market, then you can see this kind of inflation. When we are looking at our books and the way we do work with risk and procurement and so on, then, at the moment, we have actually priced more than we are seeing in inflation. Meaning that we have a better combined ratio when we compare it also the underlying. Then on property it's actually the same. We have seen in a couple of that we have priced over inflation. We had another problem back in 2020, and then afterwards we have done increases that has been more than we've seen inflation. Again, if inflation keeps on building materials and salaries within the building industry, then yes, we need to look into whether we should do more. All right. Okay. All right, got it. Thank you. Hello. Yeah, on the CLOs, you're absolutely right. We have had CLOs on our balance sheet for a long time. As part of both de-risking process, but also a focus process, being a pure non-life player, and an efficient non-life player, we will not have the governance set up and the people needed afterward to run and have CLO exposures on our balance sheet. Hence we have made a choice to get out of that exposure, from basically signing and then up until closing. We are selling it off, but we're selling it off. We're not having a final sale, we're selling it off as and when we see sufficient equity in the market. Sorry, can I ask, are there any other, let's say, asset allocation changes you are envisioning in the coming quarters? Not that we are foreseeing, no. All right. Okay. All right. Thank you very much. Okay. We have a follow-up question from Jakob Brink from Nordea. Please go ahead. Your line will all be unmuted. Thanks a lot. Just on the CLOs and the impact on your guidance for investment return. Looking at, after Q1, I think the your expectation for the last nine months of the year was DKK 30 million on investment income, if I just took the midpoint of your investment income guidance and subtracted the loss in Q1. Now it's still DKK 30 million for the second half of the year, and you've reduced your CLOs. I'm just wondering, I guess it's something to do with higher rates that is pulling the other way, but could you just give us the the building blocks, please? Yes. Yeah, two things. Higher rates, of course, pulling the other way, but also in the way we do our forecast, as you know, it is what we call the model forecast built on solvency assumptions. In there we actually have the same assumption on return on equities as we have in CLOs. From a model forecast point of view, exchanging DKK 1 of CLO exposure to DKK 1 of equity exposure would give us the same expected return. Yeah. Okay. Fair enough. What is the assumption for? I guess you're using or you used to use, was it a 3 months forward rate plus something? What is the sort of the rule of thumb today? It's 7% equity on an annualized basis, 7% return on equities. 1.14 on the bonds outside matching. Yeah. 1 point how much? 14. Yeah. 1.14. Yeah. Yeah, 1.14 on the- On the outside matching. Outside the matching. Yes. And the matching we- Okay. have at zero in the forecast. Yeah. Yes. Yeah. Makes sense. Thank you. Okay. Thank you. As there are no further questions at this moment, I will now hand the word back to the speakers. Thank you for taking the time to attend our conference. As you know, you're always welcome to reach out to Robin if you have any further questions. We all wish you a pleasant rest of the day and a good summer. See you again. Bye.