Good morning everyone and welcome to the Sampo Group second quarter 2025 conference call. My name is Sami Taipalus and I'm Head of Investor Relations at Sampo Group. I'm joined on the call by Group CEO Torbjörn Magnusson, Group CFO Knut-Arne Alsaker, and CEO of If, Morten Thorsrud. The call will feature a short presentation f rom Torbjörn followed by Q&A. A recording of the call will later be available on sampo.com. With that, I h and over to Torbjörn. Please go ahead. Thanks Sami and welcome everyone. This quarter presents few changes to recent trends in our markets. We delivered another set of excellent results in the second quarter with an impressive 21% increase in the underwriting profits driven by premium growth of 8%, underlying margin expansion, and a better large claims outcome. The last year operating EPS grew by 16% to EUR 0.14 per share, despite the increased share count, and we're announcing launching a new EUR 200 million share buyback program. The balance sheet strength remains at roughly the same solvency margin level, and I'm happy to continue the tradition not to weaken technical reserves unnecessarily in this, my last Sampo quarter report. The fact that there have been few or no trend changes in the quarter is important in that it implies confidence for us to continue to reach the above 7% operating EPS target also for the remaining 18 months of the planned period. Although much has changed in the insurance world in the past two decades, our success continues to rest largely on the same principles now as when I became CEO of If P&C i n 2002. As this is my last report to present for Sampo, perhaps you will allow me a few broader perspectives than usual. We create value then and now through technical P&C insurance excellence, disciplined underwriting, and a total commitment to delivering constant productivity improvements. Now our focus in the early 2000s was very much on improving profitability in the then relatively newly formed If P&C, which was racking up large underwriting losses. Our challenging starting point meant that we could carry out major changes of the type only possible in a crisis, enabling the creation of the first Nordic financial services firm with a truly unified business model across the region. We are still capitalizing on these advantages that this unique position affords us and the investments that we have subsequently made across the Nordics and particularly so in the digital capabilities. With margins at attractive levels, our focus has increasingly turned to organic growth as evidenced by our performance over the past two or three years and now by the 9% gross written premium increase achieved in our Private Nordic business in the second quarter, for instance. The growth was broad based across geographies and across products and is underpinned by a fourth consecutive quarter of improving customer retention rates in the Private Nordic business and solid growth in digital sales. Again, this page depicts the half year performance for all four of our divisions and there's very little to complain about. I think we continue to meet and surpass our operational ambitions and as I referred to initially, recent trends give confidence for further growth in our focus areas. The only division not growing significantly more than GDP is Nordic Industrial where our de-risking was completed in Q2, giving us a much better position with reduced expected volatility in the results from here onwards. In Commercial, just a note, we saw a 30% increase in digital sales where the customer completed the full purchasing journey online, which combined with the strong development in Norway and continued high retention drove a 6% top line growth. Although digital sales represent a modest share of the total portfolio at this stage, it is very clear that SMEs are following retail customers online and, as you are aware, this is a strategic focus for us in this planning period. Combined ratios are at target levels or better and our underlying improvement keeps roughly the same pace or slightly better than the last few years, with a positive nudge from the Topdanmark synergies, which is what we expected, and we added to our reserve strength. This is now a separate slide on the Private Nordic business with the strong growth figures here on a quarterly basis, the extremely high and consistent retention figures, and let me point out that it was now years ago since we saw retention numbers below 89%. Finally, the broad picture of a growth of more than 5% is basically for all major product lines now, including motor, where car sales provide a more neutral backdrop for us this quarter and of course with more personal insurances continuing to grow fast. Turning to Hastings, we have been able to keep up the rapid customer growth mainly in new products or areas with new technology including home and telematics. So far this year we have added some 360,000 new policies and the underwriting result is up a stunning 40% in the first half. Allowing myself to take one step back here also and just to compare to the company we acquired in 2020, we have now doubled the premiums and added more than a million customers since then. I'm really impressed by the team and the culture of Hastings and the collaboration over these years has really been the most enjoyable and the learning experience both ways. I think the U.K. market changed more slowly and broadly stabilized in the past quarter, and the demands consequently for quotes fell as it's no longer easy to get a better quote than the price you already have. When it comes to the Topdanmark acquisition, it continues to develop more or less exactly as planned. The legal entity Topdanmark disappeared at the beginning of July, paving the way for more synergy work. The target synergies of some EUR 24 million for this year will mainly appear in the second half of the year, but they are of course planned and prepared already. Now IT and revenue synergies, most of them will come later. Naturally, following the strong result, we have raised our 2025 outlook for the underwriting result by EUR 25 million in both ends, representing an 8%- 16% growth in 2024 or on 2024. The premium growth prediction has also become a bit more precise, reflecting in a good way the strategic ambitions we outlined 18 months ago for a period of higher growth than our historic performance. Returning finally to strategy, the simplification of Sampo Group structure implemented in the past five years has laid a solid foundation for future value creation centered on operational excellence in non-life insurance. My successor as Group CEO, Morten Thorsrud, is ideally placed to ensure that the group capitalizes on this opportunity. While in charge of If P&C, he has not only delivered excellent financial performance, but also continued to increase investments in operational capabilities while very actively pursuing Nordic organic growth opportunities. In summary, I'm delighted to hand over the reins of Sampo on a high note and into the safe hands of excellent insurance professionals that I know will create even more value for me and all other shareholders. With that, Sami, we open up for questions. Thank you. Torbjörn, Operator, we're now ready for the Q&A. If you wish to ask a question, please dial pound key on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Hans Rettedal Christiansen from Danske Bank Markets. Please go ahead. Yes, good morning and thanks for taking my question. I have two. I guess the first one is on sort of pricing and then the second one on profitability. On the insurance revenue side, I guess I just wanted to understand how we should think about the premium growth in the Private portfolio, and especially regarding your comments around notable hardening in Norway, and specifically how long you see that hardening continuing. Secondly, in the Industrial portfolio, you've been very open about the de-risking taking place there. With regards to the reported premiums this quarter, how is that tapering versus your expectations in Q2? How much is lower new sales and competition affecting that number, which you also mentioned in the report? That's for you, Morten. It is. Good morning on pricing in Private. The Norwegian market, as you say, is clearly hardening and has been hardening for a while. We see that the market seems to have peaked a little bit, but pricing is still clearly on a higher level in Norway compared to the other countries. The development is a little bit different in other markets. If you take Denmark, we have a record high indexation this year. In Sweden, premium increases are coming up a little bit. It's a little bit different development in different markets. Obviously, Norway has been hardening for quite a while already and it probably has passed the peak as we speak. It should be noted that our profitability is excellent in all of the Nordic markets. When it comes to Industrial, the de-risking has been ongoing now for a year. It was concluded end of Q2 or in reality 1st of July, which technically is Q3. The development has been more or less exactly as expected. We are reducing our capacity towards certain types of industries, typically the more loss-prone industries, and consequently we did expect to lose some volume, in particular in terms of gross written premiums, less on the net side. The development that we've seen is very much in line with that plan. Okay, just on your comment around the lower new sales and competition, which has also affected that number. Yeah, I think new sales has been low in Industrial partially because we've been working quite a lot on the de-risking, and that has taken a lot of focus not only for us but also for other players in the market, brokers, and customers. I think that is more driving lower new sales levels. One should also add on that the amount of project insurances has been also quite low so far this year compared to earlier. That's more a little bit volatile type of item because it depends a lot on number of larger construction projects being started in the Nordics. My second question was on profitability and specifically on the risk ratio in the Private Nordic portfolio. Profitability is excellent. I was just trying to get my head around the reported risk ratio of 60% last year. In Q2 it was 59%. My guess would have been, given your comments around benign weather and the other parts, that this would have been down year-over-year. I just want to understand how you see this level versus a normalized basis in the Private portfolio. Also, if there's any variation across the countries that we should be aware of. This quarter and also so far this year, we have less runoff gains than what we saw last year. You will see that in the table where we sort of disclose prior development, risk adjustment, and other effects that is impacting both Private and Commercial. This year, the result is less supported by prior year gains. As Torbjörn alluded to, of course, we make sure that our reserves are prudent as always. It's very clear. Thank you very much. The next question comes from David Barma from Bank of America. Please go ahead. Thanks for taking my questions. Firstly, staying on the Nordics, the Commercial result was really good in 2Q. Can you talk a little bit about the underlying profitability there and what lines have been particularly profitable in this period? My second question is on the expense ratio in the U.K., which ticked up a little bit in 2Q, I guess driven by acquisition expenses as well. Can you give us a sense of what you see as a normal expense ratio had you not grown your top line by so much, or maybe how you think it can develop as top line growth normalizes? Lastly, on investments, as you've reduced a bit your exposure to cash-like assets in Q2 and increased credits, is this just normal quarterly actions or are you making some adjustments to asset allocation as short-term rates are starting to come down in the Nordics and Europe? Thank you. I'll start with the perspective on Commercial in the Nordics. I think three things to comment on there. First of all, it's been a benign year and also benign weather situation in the second quarter. It's more important for Private, but it has also of course a positive effect on Commercial. Secondly, large claims outcome both year to date and in the second quarter isolated clearly better than plan in Commercial. In Industrial it's also better than plan year to date, but in the second quarter more closer to plan. Commercial benefited from a benign situation on the large claim side. We have also been doing quite a lot of repricing on the health insurance portfolio where we see an improvement in line with our expectations and targets. I think those are the three main drivers of an excellent combined ratio in the Commercial book. When it comes to the expense ratio in the U.K., we have absolutely the same ambition and plans and work to improve the expense ratio as we have in the Nordics. If you exclude acquisition costs, we also have a positive development also there. I don't know if you want to give some numbers, Knut. Sure. If you exclude or basically set acquisition costs in the U.K. at the same level as it was last year, the group cost ratio would go down by about 20 basis points, and that's the reduction in the Nordic cost ratio, which means that the U.K. cost ratio obviously also is down 20 basis points based on such a calculation year-over-year. And then the investments. Investments. No significant changes to the asset allocation. We are working on some changes to integrate the Topdanmark investment portfolio into the Sampo investment mix where we on the fixed income side have somewhat different allocation than what Top used to have, which was very much towards Danish covered bonds, where we use corporate bonds to a larger degree but still high grade. Not significantly increasing the credit risk as I think was a part of your question. What has been good for us in the second quarter is the return on the equity side, which isn't really due to a change in allocation, but some of our international funds internationally, outside of the Nordics, we use funds for equity exposure. They performed very well. Also our Swedish equities did well compared to the Swedish benchmarks. In addition to that, what we benefited on, on the investment side and in the net finance result at large is a steepening rate curve which is not related to us taking a different investment risk. We have our exposure on the asset side in the short end of the rate curve, while we have our exposure on the liability side and our technical reserves mainly in the long end of the rate curve. That contributed also positively to the net finance result. Not due to any major reallocation of our asset portfolio. Understood, thank you. The next question comes from Nadia Claressa from JPMorgan. Please go ahead. First one is just on pricing. Appreciate the color you provided earlier, but any high level number you can provide there? Just trying to think about how pricing compares to that 4% clearance inflation number in the Nordics specifically. Second one, I think earlier you mentioned some reserve strengthening that was done in Q2. Was this across all the segments in general, and is it fair to assume that this was simply taking the opportunity from a benign quarter instead of any changes in underlying trends? Thank you. On the pricing, it's of course hard to answer that on an aggregated Nordic level, but we continue to communicate that inflation shy of 4% and pricing a little bit above this, and then obviously quite large differences between product groups and countries. Moto typically being above this, Norway being well above this. It's quite a different situation in the different countries, but inflation shy of 4% and pricing around 5%. I would say reserve strength, this is just a normal development. We always make sure to have prudent and strong reserves, and of course taking the opportunity now to make sure that that is also the case after the second quarter. Nothing really particular that stands out and sort of some improvements in different business areas and different countries. If I should just add one thing to Morten's comment on the reserving. There's nothing on our balance sheet that changes our view on what would be a normalized prior year gain for a quarter or year of roughly 2%. Of course, that comes from natural movements in our claims liability as well as the risk adjustment. This quarter it was about 1%. That gives you an indication of the delta for this particular quarter and what we have done primarily in Private and Commercial. It also reflects our constant inclination to be conservative with the balance sheet. Thank you. The next question comes from Ulrik Zürcher from Nordea. Please go ahead. Yeah, thank you. Just one question for Torbjörn since the last time we have him, and just like you took the combined ratios in the Nordics down from 100% when you took over If to low 80s now. I was just wondering, are we at a point in a very long-term cycle where you think combined ratios sort of can't go much lower and we can, the next 10 years, start seeing some competition on market share or how will insurers the next 10 years grow earnings more than the market? It's difficult to predict, especially the future, isn't it now? Joking apart, we have for the past period, quite a few years, had an improvement pace of, say, 50 basis points per year. We're now up 60, a little bit on the back of the Topdanmark synergies. I see no obvious reason for this to change rapidly or dramatically in any direction. We'll see what happens further out. I think that's dangerous to try to predict. You can also say that in the first few years way back, we had bigger improvements on the combined ratio. With Morten at the helm and with Hastings, we now have several years of good growth supporting underwriting profits and focusing on underwriting profits in a different way. That is the real improvement that we're looking for now. In a way, you're right, it is a different focus and a different world we live in now. Thank you. It'll be interesting to see then also on the result. I think last quarter it was mentioned that the cost ratio for the Nordics could be 22.6% or something for this year, and it's already there. You have a lot of back end loaded synergies and stuff. Will the full year cost ratio, is that on track to go below what you reported this quarter? Now we keep our guidance on the cost ratio development as we already have communicated. Our starting point is really 23.0% when we include all the corporate center costs that previously were outside of Topdanmark's expense and cost ratio. When we include that into the If cost ratio, we have a starting point on 23%, and our target for this year is, as I say, 22.6%, 40 basis points improvement, and we are on track to reach that. That is very much the target for the full year. Great. If you can help me with one, a bit more technical thing, since you have this relatively new partial internal model, it's just like how much of your earnings do you need to retain per year given your growth plans? Just like roughly. We don't have a, it's reasonably new, the internal model, but of course we have sent an application for what is called a major model change to include also the Topdanmark business in our internal model. That's not included now as of Q2, just to be clear on that. When that is approved, that solvency ratio would look slightly different, slightly better than what we reported in Q2. Given our internal model, the retention for growth in the Nordics is very small with the current growth rate low single digits. It's more high single digits for the group as a whole because we still have a standard model in the U.K. and obviously grow significantly in the U.K., which Torbjörn gave you numbers on in his introduction. That adds disproportionately compared to the Nordics. Given the internal model, benefit is currently only for the Nordics, making the group profit retention for growth with the current growth rate high single digits. Yeah, it is reasonable that you, I know this is the future, but you could have a 90% payout ratio basically and still have enough capital to retain enough for growth. That would be the result of the numbers I just gave you. Yes. Yes, okay, thank you. Great. The next question comes from Jan Erik Gjerland from ABG. Please go ahead. Thank you for taking my call as well. I have two questions. The first one on the U.K. and that is the underlying change in the U.K. profitability, so to speak. How should we read you when it comes to the growth versus the profit you want to go there at 88%-90%? It looks like the growth was slightly lower than we expected at least, but the operating ratio was much better. Were there any run-off gains or anything inside those numbers? Or are you on a 88.2% level, which is sort of more clean this time around? Is this sort of the new number we should look for when it comes to where you hit your growth and have growth rates hit going forward? That's my first question. Maybe I shouldn't criticize, but you're very technical in the way that you describe this. The simple way to look at it is that we have growth ambitions and growth opportunities. In the U.K. last year they were extremely strong, and there was some resulting overpricing in the market that we exploited. We are going to lap those quarters now where we had those opportunities with a more rational and more stable, I hope, pricing levels. We cannot expect growth to be as easy as it was late last year. We are meeting our targets. We will not write business if we don't meet our targets. Did the 88.2% contain any runoff gains or losses, or any strengthening or releases? Nothing that affects the reasoning that I just gave. Okay, on the second question I have is the gaining the clients in the Private Nordics, where do you see the best opportunities still and where do you still see that you are lagging behind when it comes to growing the volume, as you also mentioned that this is the new growth, good growth in the Nordics as well. Where should we expect it to grow, continue to grow and in which markets, which products. We see a fairly good development in all countries, growth in number of customers, both in Private and Commercial actually, and also growth in customers in all countries. Also see a growth in terms of number of objects. Obviously, a little bit more benign situation I would say still in Norway compared to the other markets. The growth in terms of number of customers is stronger in Norway than in the other countries. Do you still expect it to have market share gains in all these countries, or do you expect you to sort of grow in line with the market? Let's see. It's hard to predict. We have seen market share gains in some countries, some lines of businesses, whilst we have seen a reduction in others. I think overall now the market share on the Nordic level has been fairly stable over the last three, four years actually. Hard to speculate about market share growth in the future, but I think we continue to see a strong development and very benign development in terms of number of customers, of course, that should support growth also going forward. Thank you. I just want to thank Torbjörn for his 23 years of excellence in Sampo. Thank you for all your advice, and I am looking forward to seeing you in the future. Good luck to you, Morten, as well. It's always been a pleasure. Jan Erik, thank you. Thanks. The next question comes from Vash Gosalia from Goldman Sachs. Please go ahead. Hi. Thank you for taking my questions. I have a couple of them. One is in the U.K. market. You obviously have been growing far well in the home insurance market, but just trying to understand what is the combined ratio differential between home and motor and potentially is there a limit as to how much home insurance versus how much motor insurance would you like to have? That's the first one. The second one was just going back to the investments. I see your reinvestment yield is basically now below your running yield. Just trying to think about what would the investment income going forward look like and potentially once at some of this. Can we expect you to probably move some of your government into credit and get the yield back up? Thank you. On home insurance and what we want. Home insurance in the U.K. has much, much lower average premiums than motor. Despite the fact that we have some 800,000 policies, it's relatively small compared to motor. You could rightly say that there's more volatility to this book because it's exposed to natural event, but again, we are a small home insurance writer compared to motor, and there's a long, long way before that question that you put would arise and mean any serious thinking about stopping the growth in home. On the investment side, as you may have seen in the investor presentation, our running yield has been very stable now over the last couple of years. That's because we were quite active in our fixed income portfolio when mark-to-market yields were clearly higher than they currently are. It is correct that the mark-to-market reinvestment yield is slightly lower than our running yield, which, everything else equal, would mean that there would be some pressure on our running yield at some point in the future. As we talked about in the CMD as well, the sensitivity on the running yield during this strategic period is very low. What we are doing, which will be supportive for the running yield, is what I talked about earlier in terms of reinvesting the Topdanmark portfolio into a fixed income portfolio, which looks like the rest of the fixed income portfolio in Sampo. That will be supportive for the running yield. It's more using high grade instruments than a significant change in our investment in high yield or credit. Got it. Thank you so much. Please state your name and company, please go ahead. Yes, good morning, this is Vinit from Mediobanca. First of all, congratulations to Torbjörn on a great career. It's been wonderful and very successful. Thank you. Thank you. From the result side, I was just curious, you know we heard that BYD wasn't that big this quarter, but on slide 34 I see actually a one point worsening, a one point negative contribution from those lines. Could you just comment? Is it just more conservative accounting given the lower benign quarter? Any clarity there, please? Second question is on the buyback and driver there for the second half. I know it's tricky to predict these future sales or events, but are you happy to provide some color on where things are? Just a reminder maybe which can help us understand what are probabilities of these future buybacks. Lastly, just a little bit follow up on Industrial de-risking, please. Could you elaborate a bit more? It seems like it's coming more from property, large property book. Is there anything more you could share? I know you said it's done now, but obviously affect a little bit the gross written premiums. Is it done because you think that the mix is right or any other comments on this Industrial de-risking would be useful. Yeah, I could start on first the prior year development. What you see on the table on page 34 is both prior development risk adjustment and also other technical effects. It's not prior year development alone. However, as this table indicates, we clearly have much lower prior gains this quarter and year to date compared to the same periods last year. As we already had talked about, this has been a natural situation where we have made sure that we still are prudent on the reserving. I think that's the comment to the table on page 34. More importantly, on page 34, the 1% is not a negative effect, it still is a positive effect. That's why we add it back when calculating the underlying risk ratio. There is a small positive contribution from prior year gains and these technical effects, but it's lower than what I would call a normalized level. That number would be a positive 2% on a normalized level. Oh yeah, thank you. Buybacks industry. B uybacks, w e just announced that we started the EUR 200 million buyback, and that will sort of take its time to complete as buybacks usually do. There is absolutely no change in how we have talked about our possibility to add to or to add to our deployable capital, and then also a possibility to add to a buyback if we exit the two private equity investments we have back from seven, eight years ago in Sampo plc. There is absolutely no change in that. It's just that that hasn't happened, but it makes us still very well positioned for starting a buyback of EUR 200 million, which we are doing today. No change in our capital management strategy or possibility to generate deployable capital out of exiting new by an exit. To the de-risking on Industrial. It's purely a property initiative, so it only affects the property book within Industrial. We started this process more or less exactly a year ago, so it is now concluded as of 1st of July. What we have done is that we grouped all of our customers into four different categories depending on the risk level of those industries that the customers represent. In the more risk-prone segments, we have reduced our capacity. This is more a volatility type of initiative than a profitability initiative. This should give us less volatility on the Industrial book going forward. I think this is also quite a natural thing to do because we have seen very strong growth in the property book in Industrial. Balancing the volumes and balancing the volatility I think is natural for us to do. We continue to be the market leader and I think a preferred choice for customers, also on the large corpus side still in the Nordics. S orry to follow up, but these Industrial measures could also lead to lower capital targets, less volatile. Yeah, that's not the big effect on the capital. Okay, thank you very much. The next question comes from Jan Erik Gjerland from ABG, please go ahead. Thank you. I just have one follow-up on your last comment, Martin. When it comes to lowering the risks in the Industrials and potentially lowering down the impacts from large losses, will this impact your budget? Meaning that as we have been used to, your budget is zero, which means, or a number which we haven't been given, and then you give us a deviation from that number. Will it then mean that your underlying risks are improving and that the budget we will see will be lower so that we will sort of have an underlying improvement benefit but no change to the budget number? Just so we understand what you are doing with the figures. The budget will still be zero. Now, Of course. Will you change your budget level? Yeah, I'll try to explain a little bit of this. I mean, the reason why we never actually have disclosed a nominal Kronos or Euro budget is actually the fact that the portfolio is changing every month as we get new customers or lose customers. Therefore, we always have a normalized level of large claims, that is our budget at any time. The deviation that we disclose is compared to that normalized level. That level is actually changing almost every month because we do get new customers and we lose customers. In Industrial, they are large, so they can represent quite large change. Therefore, we thought that it's better to talk about the deviation compared to our plan than to talk about the budget that will change every quarter when we report. This will also be the practice going forward. We will still keep on reporting deviation compared to a budget. That budget is now of course adjusted downward because we expect less large claims from Industrial. In theory, this should give less volatility on that deviation compared to the budget on Industrial. Hope that was. Yeah, of course with lower risk, you should also have improvements on your underlying risk ratio. Of course that's what you're seeking, at least. There's no material changes in the budget year-over-year, which you should think about when thinking about the underlying improvement which we reported this morning. The changes in the budget which Morten is alluding to is, from that perspective, small. Thank you. Underlying for us doesn't really work on large corporate. In principle, we always try to price accurately. I think the whole concept of underlying improvement for us is something that works for Private and Commercial, not really for large corporate. Perfect. Okay, thank you. There are no more questions at this time, so I hand the conference back to the speakers. All right, thank you all for your a ttention, and we look forward to seeing you soon.