Good afternoon, everyone, welcome to the Sampo Group First Half 2021 Conference Call. My name is Sami Taipalus, and I am Head of Investor Relations at Sampo Group. I'm joined on the call today by Group CEO and President, Torbjörn Magnusson, Group CFO, Knut Arne Alsaker, Chief of Strategy, Ricard Wennerklint, CEO of If, Morten Thorsrud, and CEO of Hastings, Toby van der Meer. The call will feature a short presentation from Torbjörn, followed by Q&A. A recording of the call will later be available on sampo.com/results. With that, I hand over to Torbjörn. Please go ahead. Thank you, Sami, and good afternoon, everyone. In Sampo's board today, I said that I have never been more tempted to let the numbers speak for themselves. This was since we have an extremely high-quality result this time, with excellent Q2 numbers for every segment of business that we write, as well as a solid balance sheet. A very satisfactory development indeed. Let me anyway, as in Sampo's board, of course, give you a brief introduction to the numbers and developments. This summary page in front of us starts by a line about our most important business, P&C Insurance, where the results are truly outstanding. Maybe the most important number is not the headline 80.7 combined ratio, but rather the fact that in our largest business area, If P&C, we've been able to increase rates and improve risk selection a further 1.5% during the last 12 months. These premium levels will now stay with us for a period, as insurance contracts are normally, of course, for 12 months. As I stated also in Q1, there is no important segment in the Nordics where we find it difficult to raise rates, at least in line with claims inflation. Secondly, on this page, the observation about the performance of Nordea, in itself, strengthening our balance sheet and making our planned further reductions easier. Nordea's Q2 numbers were in many ways similar to our own now in that they delivered excellence in every possible way. In Q2, we sold another 162 million shares, giving us both a level of leverage within our target range and a solvency even exceeding our target. We had promised some synergy information on Hastings in the second half of this year, and we have now worked bottom up with this in the spring and can now confidently give you a first set of very positive numbers. I'll return to those in a minute. The next page here summarizes the total performance. Our six-month profit before tax exceeds EUR 1.3 billion, equivalent to an EPS of EUR 1.80. Underwriting profits, adjusted for things one should and can adjust for, grew by 12%, and combined ratios, well, are second to none again. If P&C, as already mentioned, the combined ratio for If P&C improved even further from the excellent starting point a year ago by as much as almost 1.5% both for the half year and for the quarter. This means that we have improved risk selection and increased rates more than claims inflation. Claims inflation for building materials have picked up a little bit recently, but this is a minor part of our total claim's costs, and it is dampened by long-term agreements and cash settlements, and also claims inflation as a whole has stayed low. Growth in If P&C is also worth saying two words about. In Q1, we had a number of technical effects that kept the number artificially low. I said then not to worry, and we now start getting that back, and the headline growth is 7% for the second quarter. The half year number is 4.5%, a continuation of last year's progress. Maybe that's a better number to use for the present situation. Turning to Hastings, I am pleased to be able to report excellent numbers also there, as for the rest of the group, but also in addition, a very fruitful collaboration on knowledge transfer and synergies. First of all, on the results, the rates in the U.K. motor market have been a bit volatile during COVID, and Hastings has maintained a very disciplined Sampo-like, if I may, attitude and relied on their own judgment. Market rates have been more stable in May and June, but the next period will, of course, depend on how the pandemic develops. Secondly, we have now identified on the next slide here concrete synergies of EUR 45 million per year between If P&C and Hastings. These are, as I said initially, bottom up, identified by the people who are going to deliver them. They are detailed in this slide and are partly about running our respective insurance operations and partly about capital management. My last slide today is just basically to report on meeting the targets we set in February, and we beat all of them by a margin. The one quarterly exception is If's cost ratio, which always varies quarter on quarter but is managed more carefully on an annual basis. We will meet the cost target also for this year for the 13th consecutive year. It only remains to address the question of the rising capital surplus. The proceeds from the Nordea sell downs up to now have largely been used to strengthen our balance sheet in preparation for a post Nordea situation. Of course, there has also been an additional effect of Nordea's improved share price. As our balance sheet is likely to continue to strengthen then over the coming 12 months, we will either find bolt-on targets in the Nordic insurance industry or return money to shareholders. Our appetite for M&A has not changed since the Capital Markets Day in February, and is indeed very limited. This will not consume anywhere near the total projected surplus and may even result in no acquisitions. The consequence of this is to expect some sort of extra capital distribution during 2022 at the latest. With that, Sami, we open up for questions and dialogue. That's the presentation finished. Operator, we're now ready for the Q&A. Thank you, if you do wish to ask a question, please press zero one on your telephone keypad. If you wish to withdraw your question, you may do so by pressing zero two to cancel. Our first question comes from the line of Jakob Brink from Nordea, p lease go ahead. Thanks, actually. The first one might be a bit detailed, but you write in the text there that you had some loss ratio support from prior year gains on bodily injury. Can you maybe give us a bit more flavor on how much and for how long time could we expect this to continue? Yes, h i, Jakob, Morten Thorsrud here. That is really the old story with the reserve situation in Motor Sweden, which is a situation that has lasted for a while now. Of course, we try to refrain from predicting about the future, but the reserve releases on bodily injury claims in Sweden has been developing more favorably than what the actuaries models have been assuming. It's been a situation going on for quite a long time now. That's the same story. Sorry, I think if I'm not misunderstanding, I was actually referring to Hastings. Okay. You write here, sorry for that if I was unclear, but isn't that what you write for Hastings as well? That the favorable development on large bodily injury claims was the reason for the strong loss ratio, or am I misunderstanding something? Toby, maybe you could jump in on this one. Yes, h i, good afternoon, everybody. Toby van der Meer from Hastings. Just to, I guess, add a bit of color to say that the overall strong profit result from Hastings was due to a combination of factors, including underlying performance following from a lot of the investments we've made over the last two years. Of course, some of the benefits of the lower frequencies from COVID and good underlying performance in the underlying claims patterns, including bodily injury. I wouldn't draw too many conclusions from the bodily injury comment in isolation. The overall strong results are a combination of all of those things coming together. I guess similar to what Morten just said, is we would not typically provide commentary or guidance on future patterns in bodily injury. We are confident that the patterns on bodily injury are well understood and appropriately reserved for. Okay, fair enough. Just to come back on it, so you also mentioned COVID impact. How big was that in Hastings? As you can imagine, COVID has impacted almost everything in the business operationally in terms of premium and competitive dynamics and in terms of claims. I would say very difficult to pull out in isolation. It's fair to say that we've seen a reduction in driving behavior across the country last year and continuing into the first part of this year. Of course, more recently, driving behavior across the U.K. is returning nearly to normal levels. That benefit is receding but has led to lower claims frequencies during the first half of the year. That's been partly, but only partly offset by severity inflation. I guess the overall results reflect that total operating environment, including claims benefits, some downward pressure on premiums, but a loss ratio that we think is very good and we would expect based on our disciplined pricing, as Torbjörn's already said, to benefit from that disciplined pricing by having a loss ratio that continues to be at or below the target 76% range that we've guided to for the medium term. I'm not sure I heard the very last part. You said that you want to stay well below, or what did you say, the cost of the loss ratio guidance you have given? We previously indicated a target for Hastings of a loss ratio below 76%, and we are pricing to be consistent with that through the medium term. It's just coming back to the sort of, I understand there's a roughly four percentage points support this year due to the acquisition cost accounting. Even adjusting for that, the operating ratio in Hastings is almost 10 percentage points, 11 percentage points better than your target. I mean, compared to the trends or the volatility we typically see in the Nordics, that's a pretty big deviation. I'm just trying to get a bit closer to when and if we should get up to 88% or thereabout, or if this is sustainable or not. It's a bit tricky to follow the trends. Yeah, I think it's one we're able to take offline and unpick with you in a bit more detail if there are some technical questions about the way the ratios are calculated. I think at this point, the targets are set in stone. We're comfortable we are on track to meet or beat them. We'll have to leave you to do your own modeling to help you get back from the current results to those targets. I think you should assume from these results that although there are some benefits from COVID that are a bit more temporary, that overall, we are very pleased with the underlying results and feel confident about the outlook as we look ahead based on the disciplined pricing, coupled with the initiatives that are designed to both improve our growth in a competitive market, but also continue to improve our loss ratio over time. Okay, t hank you. Just two quick questions on slide 12 and 13 on your synergies, the EUR 45 million, and also the gray bar on slide 13. Just could you confirm that the synergy is the EUR 30 million, of which 2/3 is in If. Is that correctly understood, that that's mainly you taking lessons from or learnings from Hastings and applying it to If on IT and technology? Would that be a fair conclusion? Yes, that's a fair conclusion, i n addition to that, also on the claims side. When it comes to fraud detection, Hastings are clearly more sophisticated than what we traditionally have been at If. It's all of those three, both pricing, claims, and also on the digital area. Okay, t hen the gray bar to the far right on slide 13, what could be examples of additional synergies? Well, for instance, acceleration of strategic initiatives, of course, since Hastings is no longer a listed company, if there was a suitable portfolio in one area that we wanted that Hastings saw as an opportunity to acquire, we could support that easily from Sampo's side. Okay, t hanks a lot. That was all from me. The next question comes from the line of Michael Huttner from Berenberg. Please go ahead. Fantastic, t hank you so much. I had three questions, but the biggest one is, can you give more details of your thinking on the capital return, when you reduce the stake in Nordea? C, I suppose there are 3 points. One is what is the amount? B, what is the format with buybacks and dividends, special dividends? C, the Nordea is now free to return capital itself. The ECB is no longer going to continue the ban on buybacks and whether that has an implication? I suppose on the amount, the question I'm interested in is, you gave a figure or there is a figure in the Capital Markets Day presentation of EUR 5-EUR 6 a share. Then at the AGM, there's an additional figure of EUR 2 a share. Today, I think you kind of imply there may be an additional amount, but some of these additional amounts may be used to do acquisitions. I just wondered which of these go directly to shareholders and which would be indirectly via kind of growing the business, t hank you. That's the first question, t hen the second question, maybe you can say a little bit. I get really excited by little stuff, so apologies for that, but there's a slight discrepancy between the net earned premium growth and the gross written premium growth at If. The gross is growing faster than net. I just wondered how much of a profit potential that represents, how much more could we hope for in terms of underwriting profit and growth like that? That'd be lovely, t hank you. I'll give a few broad comments to the first question, and I'm sure that Knut will add a bit, and then we'll see who volunteers for the premium question, Morten. On capital return, and Nordea, of course, the target for us with the whole process is to maximize value, which is a reason why we don't tell in advance exactly what we'll do, and how we will reduce our holding in Nordea, and when capital will appear. Not having said that, it's very difficult to detail when it should be returned to shareholders. I said earlier in my introduction, of course, that we have set a balance sheet framework. We have an optimal range for our solvency ratio, and we will not hang on to capital for a long period. Before the end of 2022, we will have acted, or absolutely no later than that, on a surplus. Just to add to that, Michael, it is Knut-Arne here. You shouldn't interpret the original EUR 5-EUR 6 per Sampo share and the number we have as we speak of around EUR 9 per Sampo share. The difference between those numbers, you should not interpret As some kind of M&A budget or anything like that. It's a representation of the fact that our balance sheet has strengthened during the period, because of good results, but of course, primarily because a strong development in the Nordea share price. EUR 9 is the number that is currently valid. The EUR 5-EUR 6 was just a representation of how the world looked when we had the capital markets day. Just to repeat, we will not be drawn into poor M&A activities just because we have a capital surplus, that we are all shareholders sitting here in this room also. Your great question on the correlation between gross written premium and net earned premium. Over time, it is fair to say that those should correlate over time. From a quarter- to- quarter and year- to- year, there could be a bit of volatility. Both Q1 and Q2, we had an impact from a couple of large projects being written in Denmark last year, but will then be earned over time. Over time, you should expect those two figures more to reflect each other's. Can I be optimistic and say, well, can I interpret, say, they'll go up? Yeah, if you have growth of, like we have 4.4% now growth for the first six months, on gross written premium, of course, then you will expect that net earned also approaches that. Okay, s econd. Great, t hank you. Just to add to that, Michael, to also fulfill the models there, since we're talking about gross and net, there's no material changes in our reinsurance purchasing or anything like that, n o. That plays as well, t his is our direct business we're talking about. Fantastic, s ounds lovely. Great, t hank you. The next question comes from the line of Blair Stewart from Bank of America, p lease go ahead. Thank you very much. Good afternoon, c ongratulations on a good set of figures, guys. I've got two or three questions. Torbjörn, you mentioned that claims inflation was very limited. I just wonder how you could manage to get the tariff increases that you have managed to do through, given that claim inflation is very limited. Just on capital management, given you've got the liquidity and the balance sheet strength and the leverage headroom to manage capital now, why not just start the ball rolling rather than waiting for a big crescendo further down the line? Could you just confirm that you will consider revising your solvency range down when the balance sheet structure changes post your restructuring? My final question is just coming back to leverage. I notice the leverage chart on page 15. It talks about leverage in relation to IFRS shareholder equity. Of course, you've got about EUR 1 billion of gains, on the Nordea holding, which would boost the equity number. I just wonder if it's better to look at leverage as a portion of NAV. Yeah, how does that fit into your thoughts on leverage, given that I think if you include that extra EUR 1 billion, your leverage number is actually about 1.5 points lower than the 28.4 that you show on that slide. Thanks very much. A couple of comments on the first three claims inflation growth. Well, about half of the growth in Q2 was probably from rate increases, half from new customers. The rate increases mainly in commercial and industrial, were, for some segments, it's been needed. It's a well-consolidated market, as you know, and we're acting rationally. The large insurers are acting rationally in the markets still. Revising the solvency ratio, we've said that if the company structure changes, and this will likely be a rather different structure in 1 year's time from now, we will review the solvency ratio, or the solvency ratio optimal range. That's just natural, but there's no promise that it will be something completely different, but it will be natural to review it. Can take the leverage there, Blair. It's Knut Arne here. Obviously, there's different ways of calculating leverage. We've chosen one to have a target on. We could have had different leverage targets, and I don't know if that had sort of been clear. You would have asked which one we looked at, so to speak. We've chosen this one. It's for a few different reasons. It's for continuity. We reported leverage in this way. It's the way that rating agencies look at leverage, so it's harmonized in that dialogue. Obviously, also because of the fact that you mentioned, it does mean that we are comfortable with the leverage ratio we currently have of about 28 and a bit, and obviously even a little bit lower after the last buyback we did in July. Also, because if you measured leverage in other ways, it would be even lower. It's a confirmation that we're comfortable according to our current definition of the current leverage. You would broadly agree that if you want to do it on a mark-to-market basis, if you want to call it that, you should be adding in the EUR 1 billion of gain that you have on Nordea, which would take the leverage down by another point and a half. That's fair, right? As long as we have an IFRS equity, which doesn't represent that unrealized gain- Yeah. ... current principle, I would agree on that. That, of course, would be different if Nordea share price was the other way around, so to speak. Absolutely, w e look, of course, internally at different ways to look at our leverage as well, exactly like you say. Now we have a target. I think it's a good way of defining leverage and because of the strength in our balance sheet and including the unrealized gain, so to speak, on Nordea share price, we're comfortable with being at 28 and a bit or actually a little bit below 28 at the end of July given our current definition. Great, c ool. Torbjörn, why not get the ball rolling now, given you've got the cash, you've got the solvency, your shares are excellent value. I guess it's the same word that Knut used. It's comfortable to get the money first, sell the shares first, and then do it. All right, v ery good. Thanks a lot, guys. The next question comes from the line of Jan Gjerland from ABG. Please go ahead. Good afternoon, t hank you for taking my questions. I have a couple of questions on the premium side. If you could shed some light into your multi-year project business in the industrial side. Is this the Denmark business you talked about? Because it seems to be some delays on something in that area. Secondly, could you give us some examples on the commercial side which have been positive in Sweden and Finland? Finally, on the If P&C side, why haven't you changed any reason to rate this on the private side? It looks like it's most in commercial and industrial. Is it no rate changes on the private side? In the Hastings, you seem to have a growing number of house policies. What is your targeted volume? Is it the same kind of clients you have in the motor as you target on the housing side, or is it a new kind of clients you try to attract? Finally, on Hastings, the reinsurance share, is that part of the EUR 15 million roughly synergies you painted in your synergy text? Thank you. Morten on If and Toby, please, then on Hastings. Starting with the multi-year contracts or project contracts, we have somewhere between SEK 200 million and SEK 400 million in project insurances in a normal year in our business area Industrial. In 2020, we were closer to the SEK 400 million figure. The country that then stood out positively was Denmark, where we had a couple of really big projects being insured in Denmark. That's roughly the magnitude of that business. Just a side comment, it means that if you adjust for this, our gross written premium, or rather net earned premium actually in Denmark, grows by some 3% for the first six months this year excluding that effect. If you could repeat your second question, Jan Erik, you asked about positive things in commercial Finland and Sweden, I didn't fully get your question. Could you give some examples of what kind of positive trends you see on the commercial side in Sweden and Finland in the second quarter you pointed to, especially in the commercial side on the premium trends? I think the thing that probably stands most out there is that rather that we had a special situation in the first quarter, actually, in commercial Finland, where we were losing a bit of volumes on the workers' comp side. Quite a bit of that even related to the current COVID situation, where there is an elevated number of unemployed, of course, in Finland, and that hits directly on the workers' comp premium in Finland. Since all of that is more or less renewed first to first, you have big impact in first quarter. The development underlying in commercial in Finland and also Sweden has been good in the second quarter. Do you have an example of typical business you do in the commercial side? Is it just motor and housing, or is there any special things we should be aware of? That's all, i t's everything from small companies to medium-sized companies. It's, of course, motor, property, liability, the whole sort of breadth of P&C products. Okay, i t's returning to normality is what you can say then? Yes, t hen you asked about rate increases on private. Yes, of course, we do rate increases on private as well. Of course, the private business is more a business where you constantly fine-tune. You might sort of slightly change prices from almost week to week. It's quite a different machinery than industrial, that is sort of really on the other side of it. We are definitely implementing rate increases also in private, but a more fine-tuned sort of machinery there. Just when I have you, Morten, could you shed some light into how different would your sort of pricing be today if there would not have been such a building inflation as we sort of talk about as such? What kind of price increases would you then have implemented? Would they be much lower or in line with? On a total, if it doesn't have a huge impact. Property is about 1/3 of our book. Material cost is about 1/3 of property claims cost. Of course, there are only certain building items where you see sort of an elevated inflation. In the totality, it's not having a huge impact. Of course, it means that expectations for property inflation is higher than what it has usually been, which we are, of course, pricing for and getting kind of fully through in the market. Okay, perfect, t hank you. In addition to that, claims inflation does not vary exactly, actually quite distinctly from normal consumer price inflation, w e all know that. Actually, Morten, you've seen much higher inflation on motor items in the past few years than you have now, so. Absolutely, I think in particular in motor Norway, as a result of weak Norwegian currency, sort of we've seen higher sort of inflation numbers than this in the past that we have been able to price for again. We always monitor this. It is important, but this is no extraordinary situation about claims inflation, if I put it this way for us. Toby. Quickly on the home insurance in the U.K., it is the same target market and a big opportunity. To remind you, we have just under 300,000 home insurance policies at Hastings at the moment. A fairly small part of what we do, albeit growing at 27% year-on-year. It's a very large marketplace with 21 million insured homes, EUR 5 billion of GWP. The reason I say it's the same target market is because over 60% of all new home insurance policies these days are sold through digital channels, in particular price comparison websites. We'll be going after that same mass market, digitally savvy customer group that is very similar in nature to the customers we have acquired over the years in car insurance. Of course, as a part of all of that, we'll also be looking to offer home insurance to the existing motor book, in addition to attracting new customers into the company. On your second question, yes, changes to the reinsurance structure at Hastings are included in the EUR 15 million at the bottom of page 12. To remind you, our reinsurance contracts at Hastings are on a calendar year basis, so we'll be talking to our reinsurance partners over the next few months in the run-up to the first of January renewal cycle, and then any changes we make to those contracts would then take effect from the 1st of January onwards for any policies written from that date onwards, and so would earn through over time. Okay, perfect. Thank you for your answers. The next question comes from the line of Marco Vivaldi from Jefferies. Please go ahead. Good afternoon, everybody. I've got three questions, please. First on slide 12, again, the slide on synergies, and in particular relating to capital management. Obviously Hastings had preexisting debt outstanding prior to the acquisition, and that debt provides very much the option for you at any time to effectively redeem that debt. You have to pay above par for it, but that option is immediately available to you. I'm just wondering how you're thinking about that. Secondly, in relation to broader debt and capital management, again, moving to the leverage chart on slide 15, just trying to understand, shall we say, what we should be expecting in terms of the stock of debt at the group going forward over the remainder of the year. You talk about obviously positive increases to debt from a recent issue, and you've highlighted also within that calls and maturities over the remainder of the year. Could you just help me understand a bit more, please, whether we should be expecting all of that future debt affecting September and towards the end of the year just to roll off, or whether you'd be thinking of replacing some of that? Again, that obviously drives where our ultimate leverage ratio ends up at the end of the year. Finally, just on M&A, just a bit slightly confused, so please help me out here. You talked about very much in your introductory comments about your core focus would be on Nordic insurance bolt-ons. A bit further on in the conversation today, you talked about maybe supporting Hastings if it wanted to do acquisitions of portfolios in the U.K. I'm just trying to understand and tally those two statements together, please. Just finally, if I may, what do you see in terms of appetite for assets that you may be looking to manage for value, particularly Mandatum Life? Thank you. Do you want to start, Knut? I'll take the lead. I can start, r egarding capital management, and you had a specific question around the debt in Hastings, and I would agree with you the way you described it. It is an option for us to refinance Hastings external debt and fund that through own means. Of course, some of that benefit is included, although it is an option, that's not something we have plans to materialize tomorrow. It's included as a change over time, over the next three years. That's an option. We have an obviously, just from a leverage perspective, that would reduce the group leverage ratio. In terms of more immediate changes to the gross debt, given the target we have on our leverage ratio and the significant liquidity we have currently, and we obviously would expect that to increase as well. We have no operational needs to refinance debt that matures this year. That goes for the remainder of the issue maturing in September. Of course, also on parts of the debt that matures in December, because If has already refinanced some of that debt, but we have no plans to refinance the rest of that net of the EUR 300 million or so maturing in December. From a calculation perspective, you could expect us to reduce our gross debt by the maturities that we have for the rest of 2021. On the M&A appetite, in the context of a surplus of billions of euros, we don't have any appetite for acquisitions outside of the insurance industry in the Nordics. Of course, you've got to remember that small changes to portfolios, partnerships in the insurance industry, we do that all the time without sending out press releases about that. If Hastings found a portfolio that would support the development in home insurance, I've used this example a number of times, there could be others, motor as well. This is negligible in comparison to that surplus. That makes sense. Yep. Thank you, I had a final question just in relation to other manage for value assets as well, and where you see market appetite for those sort of assets at the moment. Are you asking about the investments, the value investments we have in Sampo PLC? No, I was being more specific maybe about Mandatum Life in terms of how you describe it in the deck within the manage for value component of the portfolio. Oh, you mean if we're going to sell Mandatum, is that your question? Yeah, being maybe more explicit about it, yeah. Okay, n o, there's absolutely no such plan. Mandatum is, as you know, described as we manage it for value because of course it's a different type of business than the P&C. It's a higher market risk. That's where we currently generate the value, but it's an integrated part of our insurance dividend as we define it. We have made some small investments in Mandatum over the last few months in terms of tiny, but still important acquisitions to support their future new business growth. Mandatum and we are working hard to develop that business as we are with our P&C business. It's a smaller part, of course, of the group, but it's not the business that we work hard on to sell. Okay, thank you. Can I just come back on the comment around Hastings. Just could you help me understand the value of that debt to the group at the moment, why you wouldn't be looking to remove it sooner given the liquidity on balance sheet as you talked about? When I said sooner, it's because, first of all, it's a smallish part of the number we've come out with today. It's a very small part. We don't have an exact timetable for when we might do that. That's obviously a business case that need to be positive for us, for Arne, for Hastings. We'll look at that over the quarters to come. If it makes sense to do it, we'll do it, because it's obviously, like you said, an option we have given the size of the debt and the liquidity position we have in Sampo plc. Indeed, o kay. Thank you very much for your time. The next question comes from the line of Per Grønborg from SEB, p lease go ahead. Yes, thank you, g ood afternoon. Two questions from my side. The first one probably pretty simple. COVID and If still a pretty solid tailwind in Q2. How fast should we expect this to level off? A lot of your peers are talking about this most likely being leveled off already in the third quarter. Are you seeing the same picture? We are reporting a 3% positive impact in Q2 from COVID. We don't have any decimals on that, but it is a reduced impact. If I should have disclosed our decimals on our best estimates, you would see that it is being reduced from Q1 to Q2, and of course, we expect it to continue to have then a smaller impact in Q3. We still do believe to see some impact. It's already one month into the third quarter, and we still, of course, see that societies have not fully opened yet. We expect now during Q3 that this will normalize, but again, that will have some positive benefits also in Q3, but obviously much less than what we've seen so far. In the outlook. How much of the- Per, in the outlook. Yeah, sorry. How much of the current benefit is coming from travel? I assume I'm not the only one that has forgot to cancel my travel insurance. The larger part is coming from motor. Okay. Clearly, t ravel insurance is, after all, a fairly small product. I think we have about a little bit less than SEK 1 billion before COVID started on travel insurance. It's not typically that big product, whilst motor, of course, is really the big line of business. I think Torbjörn was trying to chip in saying that in our outlook of 81.5%-83.5% for the full year, we have included what we know, of course, in terms of development up to date when it comes to the COVID. Yeah, m y second question relates to the Hastings synergies benefits you are addressing today. When I look at the historical Hastings numbers, looks like they have spent a bit more than half of the written premiums on reinsurance. These EUR 15 million, how much does that reflect that the use of reinsurance will come down? I assume writing short-tailed motor insurance, if this had been an if balance sheet, you wouldn't reinsure at all. We've reviewed it, w e have made clear that it would make sense to reduce the reliance on reinsurance as part of the new context. We have a plan for how to do that now. In the interest of good talks with our insurers, we don't go into that more in detail. Okay, fair enough, t hank you. The next question comes from the line of Darryl Goh from Citigroup, p lease go ahead. Hi, a fternoon, everyone. I've got a few questions, please. The first one is on the trend in new car sales. I'm just quite keen to hear your thoughts. Firstly, it's around the kind of the sustainability of the growth trend, obviously 25% year-on-year, that's really strong. What have you seen so far in July? The second question relating to that is, it just seems as though, I know your market share is still really strong at 26%, 1 point drop from 27% is probably immaterial, but is there a sense that the market is becoming a lot more competitive there? Thanks, w hen it comes to new car sales, it is of course increasing a lot year-over-year. On a total Nordic level, we are roughly back to the level that we had pre-COVID. In that respect, you could say that the new car sales levels that we're experiencing now for the first half year, all in all, is a fairly normal level, I would say, historically. There are, of course, some differences between countries. We have a very strong market position when it comes to insuring new cars, and that's what we kind of indicate with now disclosing the figure that we're sort of around 26%-27% market shares on new cars. That drop is insignificant. I think, again, the important part there is that this is significantly higher than our overall market share when it comes to motor insurance in the Nordics. We are strong in the new car sales segment, y eah. Are you seeing kind of new entrants into the new car channel? No, not really. It is the same competitors in all countries, really. No change in that respect. Of course, our strength in this area is based on really tight collaboration with the car industry and the car dealers, and we have a huge proportion of the car industry, various ways contracted in collaborations over the long term. It is difficult for a competitor to come into this field. Yep, got it, t hanks. If we can now move to Hastings. You've commented on earlier about how If P&C might benefit from the synergies. Could you maybe also talk a bit about how Hastings benefiting, somewhere along the lines of the three buckets that you've outlined? I guess I'm just trying to understand how you're making Hastings even more efficient than it already is That one's for you, Toby. Yeah, w e've been spending a lot of great time with Morten and his team, looking in detail at what they do in pricing claims and IT and digital capabilities. It's fair to say that, as Morten has already highlighted, in some areas, we do some things very differently and may be a step ahead, but it is also true that the reverse is true in a number of other areas. For example, Hastings has traditionally not been very good at underwriting profitably new and electric vehicles. If has built up some very strong experience there, including some interesting data sets. As we referenced earlier, as another example, in claims, Hastings historically has not been very big in home insurance, but we do intend to grow very significantly. As a part of that, we are just about starting the build-out of our own internal home claims management capabilities, having historically outsourced a lot of that work. Again, the learning and experience at scale from If will be very useful to us in setting up and scaling our own home claims capabilities with, we think, some good shared learnings, maybe even some shared technology. On an IT and digital, the capabilities that If has developed in Riga are very interesting and may be a great way for us to access a very high quality, relatively low cost technology pool that Hastings has not historically been able to access. Hopefully with a bit of color, you can sense why a third of the EUR 30 million benefits arising to Hastings from some combination of those things, which we've already started to detail but we'll do more work on over the coming months, feels very achievable. Yep, n o, that's really interesting. Just a quick couple of follow-ups, if I may. I guess, as all these synergies come through, do you think that will give you more scope to expand your pricing advantage? It's understood from the outside that the U.K. market is really competitive. It's really price elastic. As some benefits come through, do you think you'll be able to compete even more aggressively than you did before? The second question, which is a smaller one, is just around the trajectory of the run rate synergies in 2021 and 2022 because I understand that the EUR 45 million is expected to be achieved over three years. Yeah, I'll take your first question. For sure, we believe that the combination of joint work on pricing and claims will mean that we become even better at risk selection and claims management than we have been in the past. The combination of knowledge and data sharing across those areas will be great. Now, I think you described it as competing aggressively. I probably wouldn't put it that way. We will just become more sophisticated in risk selection. That should help grow our market share, our policy count, our premiums, and our loss ratio. That's what we're setting out to do. We've got a good track record of doing that before, with the benefit of If's experience, I think we can go even harder. Morten, shall I pass the timing of the synergies over to you? When it comes to the timing and the pace of the realization, I think we've come quite a long way in building this concrete list of synergies and we have outlined the sort of overall timeline, but not given the details today. Okay. Fair enough. Just in terms of thinking a third, a third, a third is not far from it. Maybe be a little bit more this year on parts of the capital management synergies, because we obviously will talk to reinsurers already with the 1/1 renewal. Yes, g ot it, v ery clear, t hank you very much all. The next question comes from the line of Faizan Lakhani from HSBC. Please go ahead. Thank you for taking my questions. Firstly, congratulations on a very good set of results. I wanted to come back to leverage. You're only able to retain a small portion of the 2023 and 2025 bond, and you have some further options on bonds in 2028, 2030. Could you provide some color on what the appetite note holders would have to accept any potential proposals or what the note holder mix is relative to the 2023 and 2025 bonds? Also it seems that these will be more expensive to retain. Could you provide any indication what that cost could be? My next questions are on Hastings. For Hastings, it's a strong result. Given the significant benefit from COVID to your bodily injury benefits and the benefit from the multiplier impact from the reinsurance structure, I'd assumed a better operating ratio, even though it's very strong. Is there anything I'm missing there? My last question is a two-part question on the reinsurance structure. I just wanted to understand the rationale of changing your reliance on reinsurance, given that it tends to be quite ROE boosting and as you can see with peers like Admiral, it tends to be highly valued by the market. Also given the fact that 1/1 renewals are set to be quite tough for most insurers, does that limit your ability to negotiate with reinsurers? Thank you. On the tender, I'm not sure I got the whole part of your question. I think now we've done some work on the 2023 and 2025 issue. We have bought back what our debt investors are willing to sell at the current moment. That could, of course, change if rates change or market change, but we will not continue to work on those issues for the time being. We are in the process of looking into potential smaller buybacks on the longer bonds. You shouldn't expect us to do significant buybacks of those bonds. Neither is that necessary to remain within our target leverage ratios to do significant buybacks of those bonds, even if we would have a balance sheet where we hypothetically would have then distributed all proceeds from the rest of our Nordea shares and our private equity portfolio. This is, of course, also just to remind what I said on Blair's question, that we are comfortable with our current leverage ratio level at the 28 and a bit. Did I read you correctly that you thought that the Hastings result was poor? No, no, it means excellent. It's been a case, the motor insurance in general performed very well. It appears that Direct Line and Admiral profit warning has been very good. It's just I would have expected, given the sort of multiplier impact of the reinsurance structure, it could have been even stronger given that we've seen 20%, 25% improvement through frequency. Just want to ask if there's anything, an additional bit I missed. I think not much more we can say on that. The only thing I think we can give you color on is that, of course, the COVID effect has been twofold, as I highlighted earlier. One is a frequency reduction, and that you can assume is reflected in the numbers because, of course, that data comes through in real time or pretty close to it. Of course, there is also a greater level of uncertainty than normal about the ultimate severities of the claims that have happened during COVID, both last year and in this 6-month period. In line with our normal reserving philosophy, if we see greater uncertainty in any period, then we would prudently reserve for that increased uncertainty. You can assume that that has been done as per our normal reserving policy through this half year as it was last year. To the extent that ultimate experience is better than those assumptions, then of course, that would flow through over time. Sorry, just a quick follow-up on that. What's your assumption on claim severity right now within the month? We've assumed for the period impacted by COVID, the severities would be higher than normal as a result of the delays to the repair processes and due to the uncertainty in the types of accidents that might drive bodily injury. That's our assumption and a prudent one in our reserving, recognizing it is uncertain. Then as we look ahead, we have historically talked about 3%-5% underlying severity claims inflation, and we've seen nothing over the recent period that would make us believe that those numbers are not directionally correct. Okay. Did you have an additional question on the reinsurance? Yes, j ust trying to understand the strategic rationale given that the reinsurance sort of structures similar to Hastings have tends to be quite sort of well-liked by the market, given they tend to be quite ROE-boosting. Just wanted to understand the rationale of reducing your reliance on reinsurance. Like Torbjörn said, we can't be specific about exact changes. We obviously should have a discussion with reinsurers first. What we have disclosed today in terms of capital management benefits as a result of careful analysis, obviously, that Hastings have done together with us and represents more of an optimization, further optimization of the reinsurance structure, also part of the new group structure, where we get a profitability benefit without in any way deteriorating the return on capital or equity that we have in Hastings. It's more of an optimization exercise than choosing one against the other. The return on equity that we are primarily focused on is, of course, Sampo's return on equity in this context. Right, o kay. Sorry, just my final bit, g iven that reinsurance rates are rising, is this the right time to negotiate at the 1/1 renewals? Well, theoretically, if renewal rates are increasing, it would be quite common to reduce your reliance on reinsurance at that time, but that was a theoretical answer. We wouldn't do it unless it was good for the group. Okay, t hank you very much. I think just also for the benefit of the good reinsurance relationships that we have across the group. We have long-term relationships with reinsurers, and I think we will have long-term relationships with reinsurers also when we make some changes in our reinsurance structure from time to time. It's not an optimization game that we try to do on an annual basis where we exactly play rate levels against individual reinsurers. Great, t hank you very much. We have one follow-up question from the line of Jakob Brink from Nordea. Please go ahead. Thank you, s orry, Knut, just coming back to the leverage ratio on the debt side. Now you try to repurchase around EUR 900 million and got around EUR 180 million, I believe. Is it really so that rating agencies and bond owners only look at the gross debt? You have almost EUR 2 billion of cash. You have shown you're willing to buy back, bond owners are not willing to sell. Isn't it a bit simplistic to only look at the 30% and using only the gross debt level? I guess my question is, could you maybe be less strict on only looking at gross since you have the cash? Sure, j ust one comment to your introduction, what we tried to do, we structured a certain structure to sort of get back as much as we could of those two issues. Did we believe initially that it would be EUR 900 million? If it would be EUR 900 million, that would be okay, maybe we didn't believe that. It was a good way to get access to what was available of the 2023 and the 2025. That wasn't your question. I think you're absolutely right that it's too simplistic to look at rating agency metrics and even leverage from just one metric. I appreciate that comment, I would totally agree. We also recognize that we do have significant liquidity, which makes our net debt position different than the gross debt position. I'm pretty sure that will be the case also going forward, since we want to have a solid liquidity position in Sampo plc at any time. When it comes to rating agency, we obviously look at completely a wide range of additional metrics than just leverage. The S&P model is an example, Moody's scorecard, another one. I think you're right. This is one of the target. We had this one specific target to communicate with the market, the direction of where we were traveling in terms of our plans for reducing debt. It is just one of several metrics we should discuss, and we discuss with rating agencies when considering financial strength. Just to follow up, looking at the two sort of constraints for excess capital solvency and the leverage ratio, clearly the leverage ratio is the most binding one right now due to the very high of debt level in absolute terms. Does what you're saying now actually mean that you could actually go above 30% shorter term in connection with paying out cash or excess capital, as long as you have sort of a net debt level that is in line with your sort of gross debt level ratio target? Yes, we could. I'm not changing the target. We still have a target to be below 30%, and I'm not saying we will be above 30%, but obviously the exact timing when we have a strong liquidity position for the opportunity that would arise to buy back some debt doesn't necessarily have to be in the same quarter where it makes sense to hypothetically distribute excess capital. Right? It's not that much of an exact science, but we certainly stick with our long-term target to be below 30%, also with this leverage definition. The situation you describe, we would also be comfortable with, yes. Thanks a lot. We have another follow-up from Michael Huttner from Berenberg, p lease go ahead. Thank you very much. Just two questions, o ne, hypothetical, if you were to completely exit Nordea, what is the benefit in terms of the solvency ratios? I was estimating 60 points because the first sale was 20, maybe I'm wrong. The other, you talked about reinsurance, and I just wondered if you could remind us what your reinsurance cover is if we had a really bad storm or, I don't know, whatever big event, what would be the worst case? Thank you. Reinsurance net retention, EUR 25 million, thereabouts, both for large losses and catastrophes. Knut. Michael, Knut here, I think you could, for simplicity, basically use the same number. We had shy of 20% benefit when we exited Nordea, selling, or when we sold 4% of Nordea. It would depend, of course, on things like where we are on the symmetric adjustment, and some other factors, which doesn't necessarily make it. Then, of course, as we reduce gradually Nordea potentially, there wouldn't be necessarily a linear effect since SCR would continuously decrease during that journey. For simplicity, it's the same shares at the same price, right? You could use roughly that number as an estimate. Brilliant, t hank you very much. We have another follow-up from Blair Stewart from Bank of America, p lease go ahead. Yeah, thanks very much. Sorry, it's been a long call, j ust one final follow-up from me. Just based on excess capital deployment, and you touched a little bit on M&A, Torbjörn, but I suppose the obvious question is how you weigh up the value proposition of buying the part of Topdanmark that you don't already own versus buying your own shares. What's your current thoughts on that, please? Buying the rest of Topdanmark, I don't have a lot of new things to say. It's an attractive company that is fully valued. You've heard that many times before. The question comes from the obvious situation that we might sit on several billion euros of capital and think that would necessitate then using it for an acquisition, which it won't. We will evaluate all possibilities as neutrally as we have in the past. Okay, i t sounds like buying your own shares back would seem to be a bit more value creating than paying up for Topdanmark then, if I read your comments correctly. No further comments to that. I'll take that as a no comment, y eah, great, t hank you. Thanks very much, guys, a ppreciate it. We have one follow-up question from the line of Jan Erik Gjerland from ABG, p lease go ahead. Yes, thank you. The cost ratio, you said that was from a write-down on an IT system. Is it then an expense type system or is it something recurring or how should you read that one IT system? Finally, could you shed some light to the large claims in the quarter? Was it a fire in Sweden or what kind of typically large loss was it? On the cost ratio, I think the only sensible is to look at sort of full-year numbers and full-year type of outlook. Again, we remain committed in continuing the journey of reducing cost ratios. When it comes to IT, what I can comment is that we actually don't have any IT systems with any on the balance sheet at all actually now after second quarter. What was the last part of your question? The large-. The large claims. Yeah, t hat's actually a couple of larger claims that we've had. It's not only one single large claim. We've had a couple of larger claims in the quarter, t hat's on that situation. Several countries, longstanding customers. Yeah. Normal buyers- Traditional claims, sort of what we see from time to time. Okay, t hank you. As there are no further questions, I'll hand it back to the speakers for closing remarks. Thank you, operator. This concludes our call for today. Thank you everyone for participating, and we look forward to speaking to you again soon in the future, t hank you.