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, Torbjorn Magnusson; Group CFO, Knut-Arne Alsaker; and CEO of If, Morten Thorsrud. The call will feature a short presentation from Torbjorn, followed by Q&A. A recording of the call will later be available on sampo.com. With that, I hand over to Torbjorn. Please go ahead.

Thanks, Sami, and welcome, everyone. This quarter presents a 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 than last year. Operating EPS grew by 16% to EUR 0.14 per share despite the increased share count, and we are 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 are necessarily in this my last sample 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 plan period. Although much has changed in the insurance world in the past 2 decades, our success continues to rest largely on the same principles now as when I became CEO of If P&C in 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 bracketing up large underwriting losses. Our challenging starting point meant that we could carry out major changes of the type only possible in the 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 2 or 3 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 4 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 derisking 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%, 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 6% growth, 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, it was now years ago since we saw retention numbers below 89%. Finally, the broad picture of 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 insurance is 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, 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 1 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 a learning experience, both ways, I think. The U.K. market changed more slowly and broadly stabilized in the past quarter, and the demand 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 will -- most of them come later naturally. Following the strong results, we have raised our 2025 outlook for the underwriting results by EUR 25 million in both ends, representing an 8% to 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 5 years has laid a solid foundation for future value creation centered on operational excellence in nonlife 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 continue 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. And with that, Sami, we open up for questions.

Thank you, Torbjorn. Operator, we are now ready for the Q&A.

[Operator Instructions] The next question comes from Hans Rettedal Christiansen from Danske Bank Markets.

Yes. I have 2. I guess the first one is on sort of pricing and then second one on profitability. So 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 sort of specifically how long you see that hardening continuing? And then secondly, in the industrial portfolio, you've been sort of very open about the derisking taking place there, both with regards to the reported premiums this quarter. How is that tapering versus your expectations in Q2? And how much is sort of lower new sales and competition affecting that number, which you also mentioned in the report?

That's for you, Morten.

It is. On pricing in private, the Norwegian market, as you say, is clearly hardening and has been doing -- 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. And then the development is a little bit different in other markets. So if you take Denmark, we have a record high indexation this year. In Sweden, premium increases are coming up a little bit. So it's a little bit different development in different markets. But obviously, Norway has been hardening for quite a while already, and 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 derisking 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 type 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. And the development that we've seen is very much in line with that plan.

Okay. And then just on the -- your comments around the lower new sales and competition, which has also affected that number.

Yes. I think new sales has been low in industrial, partially because we've been working quite a lot on the derisking. And that has taken a lot of focus, not only for us, but also for other players in the market, brokers and customers. So 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. And 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.

Got it. And then my second question, I guess, was on profitability and then specifically on the risk ratio in the Private Nordic portfolio. As you say, I mean, profitability is excellent. But I was just trying to get my head around the reported risk ratio of 60% last year. I guess in Q2, it was 59%. My guess would have been, given your comments around benign weather and the other parts that, that would have been down year-over-year. So I just want to sort of understand how you see this level versus, say, normalized basis in the private portfolio? And then, I guess, 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 disclosed prior development, risk adjustment and other effects. That is impacting both private and commercial. So this year, sort of the result is less supported by prior year gains. And as Torbjorn alluded to, of course, we make sure that our reserves are prudent as always.

The next question comes from David Barma from Bank of America.

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? And then 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's -- what you see as a normal expense ratio had you not grown your top line by so much? Or maybe how you think this can develop as top line growth normalizes? And then lastly, on investments, as you've reduced a bit your exposure to cash like assets in Q2 and increase in credit, 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, in Europe?

Good. I'll start with the perspective on commercial in the Nordics. I think 3 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. Then secondly, large claims outcome both year-to-date and in the second quarter isolated, clearly better than planned in commercial. In industrial, it's also better than planned year-to-date, but in the second quarter, more closer to plan. So again, commercial benefited from, again, a benign situation on the large claim side. And then 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 3 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 to -- and plans and work to improve the expense ratio as we have in the Nordics. And if you exclude acquisition costs, we also have a positive development also there. 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. So 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, and also our Swedish equities did well also compared to the Swedish benchmarks. In addition to that, what we benefited 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, but we have our exposure in the short -- 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, and that contributed also positively to the net finance result. So not due to any major reallocation of our asset portfolio.

The next question comes from Nadia Claressa from JPMorgan.

First one is just on pricing. I 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% claims inflation number in the Nordics specifically. And 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?

Yes. On the pricing, it's, of course, hard to answer that on an aggregated Nordic level, but we continue to communicate that the inflation, shy of 4%, and pricing, a little bit above this. And then obviously, quite large differences between product groups and countries, motor typically being above this, Norway being well above this. So it's quite a different situation in the different countries. But inflation shy of 4% and pricing around 5-ish, I would say. Reserve strength, this is just a normal development. We always make sure to have prudent and strong reserves and of course, take an opportunity now to make sure that, that is also the case after the second quarter. Nothing really particularly 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 a year of roughly 2%. And of course, that comes from natural movements in our claims liability as well as the risk adjustment. And this quarter, it was about 1%. So that gives you an indication of the delta for this particular quarter and what we have done primarily in private and commercial.

And it also reflects our constant inclination to be conservative with the balance sheet.

The next question comes from Ulrik Zürcher from Nordea.

Just one question for Torbjorn since it's the last time we have him. And just like -- you took -- our combined ratios in the Nordics gone down from 100% when you took over If, to low 80s it is now. And I was just wondering, are we at a point in a very long-term cycle where you think like 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 it ensure the next 10 years, grow earnings more than the market?

It's difficult to predict, especially the future, isn't it? But joking apart, we have, for the past period, quite a few years, have 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, dramatically in any direction, then we'll see what happens further out. I think it's -- that's dangerous to try to predict. But 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. And that is the real improvement that we're looking for now. So in a way that -- you're right, it is a different focus and a different world we live in now.

Yes. It will be interesting to see. And 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 like back-end loaded synergies and stuff. Will the full year cost ratio, is that on track to go below what you reported this quarter?

No, we keep our guidance on the cost ratio development as we already have communicated. So our starting point is really 23.0 when we include all the corporate center costs that previously was outside of Topdanmark's expense and cost ratio. When we include that into the If cost ratio, we have a starting point of 23. And then our target for this year is, as I said, 22.6, a 40 basis points improvement, and we are on track to reach that. And again, that's very much the target for the full year.

Great. And just if you can help me with one a bit more technical thing is since you have this relatively new partial internal model, it's just like what -- how much of your earnings do you need to retain per year, given your growth plans, just like roughly.

No. We don't have a -- it's reasonably new, the internal model. But of course, we are -- we have sent an application for what is called a major model change to include also the Topdanmark business in our internal model, and that's not included now as of Q2, just to be clear on that. So when that is approved, that solvency ratio would look slightly different, slightly better than what we compare -- what we reported in Q2. But given our internal model, the retention for growth in the Nordics is very small, with the current growth rate, low single digits. But 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 Torbjorn gave you numbers on in his introduction. So that adds disproportionately compared to the Nordic 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.

Yes. And then -- but 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 for -- retain enough for growth?

That would be the result of the numbers I just gave you, yes.

The next question comes from Jan Erik Gjerland from ABG.

I have 2 questions. The first one on the U.K., 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 grow there at 88% to 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. So this is 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.

You're a bit, 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, we -- 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. So we cannot expect growth to be as easy as it was late last year, but we are meeting our targets. We will not write business if we don't meet our targets.

But 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 quarter -- 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 before that this is the new growth -- good growth in the Nordics as well. So where should we expect it to grow -- continue to grow, in which market and 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 then, obviously. A little bit more benign situation, I would say, still in Norway compared to the other markets. So the growth in terms of number of customers is stronger in Norway than in the other countries.

Do you still expect you to have a market share gains in all these countries? Or do you expect you to sort of grow in line with the markets?

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. And I think overall now, the market share on the Nordic level has been fairly stable over the last 3, 4 years, actually. So hard to speculate about market share growth in the future. But I think we continue to see a strong development and a very benign development in terms of number of customers. Of course, that should support growth also going forward.

I just want to thank Torbjorn for his 23 years of excellence in Sampo. So thank you for all those years, and looking forward to see you in the future. And good luck to you, Morten, as well.

Always been a pleasure, Jan Erik.

Thanks.

The next question comes from Vash Gosalia from Goldman Sachs.

I have a couple of them. One is in the U.K. market. So 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? So that's the first one. And then the second one was just going back to the investments, I see your running -- your reinvestment yield is basically now below your running yield. So just trying to think about what would the investment income going forward look like? Or -- and potentially you answered some of this, but can we expect you to probably move some of your government into credit and get the yield back up?

On home insurance and what we [ want and want ]. Well, home insurance in the U.K. has much, much lower average premiums than motor. So despite the fact that we have some 800,000 policies, it's a very small -- it's relatively small compared to motor. Now you could likely say that there's more volatility to this book because it's exposed to natural events, et cetera. 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 I mean any serious thinking about stopping the growth in home.

And on the investment side, as you've seen in the -- maybe have seen in the investor presentation, our running yields have been very stable now since -- over the last couple of years. And that's because we was quite -- we were quite active in our fixed income portfolio when mark-to-market yields were clearly higher than they currently are. And it is correct that, that 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. But 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 the fixed income portfolio, which looks like the rest of the fixed income portfolio in Sampo. That will be supportive for the running yield, but it's more using high-grade instrument than a significant change in our investment in high yield or credit.

[Operator Instructions]

This is Vinit from Mediobanca. So first of all, congratulations, Torbjorn, on a great career. It's been wonderful and very successful. Thank you -- from shareholders. And then I would say from the results side, I was just curious, we heard that PYD wasn't that big this quarter. But on Slide 34, I see actually a 1 point worsening -- a 1 point negative contribution from those lines. Could you just comment? Is it just more conservative accounting, given the low benign quarter? So just any clarity there, please? Second question is on the buyback and drivers there for the second half. Again, I know it's tricky to predict the 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 the probabilities of these future buybacks? And lastly, just a little bit follow-up on industrial derisking, please. Could you just elaborate a bit, but 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 affects a little bit the GWP. But is it done because you think that the mix is right? Or just any other comments on this industrial derisking would be useful.

Yes, I could start on first, the prior year development. What you see on the table on Page 34 is both prior year development, risk adjustment and also other technical effects. So it's not prior year development alone. However, as this table indicates, we clearly have much lower prior year gains this quarter and year-to-date compared to the same periods last year. And again, as we already have talked about, this has been a natural situation where we have, make sure that we still are prudent on the reserving. So I think that's the comment to the table on Page 34.

And maybe more importantly, on Page 34, the 1% is not a negative effect. It still is a positive effect. That's why we added back when calculating the underlying risk ratio. So 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. Buybacks, we just announced that we started a EUR 200 million buyback, and that will sort of take its time to complete, as buybacks usually do. And then there's 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 2 private equity investments, we have -- back from 7, 8 years ago in Sampo Plc. There's absolutely no change in that. It's just 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. But no change in our capital management strategy or possibility to generate deployable capital of exiting NOBA and Nexi.

And then to the derisking 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. And what we have done is that we grouped all of our customers into 4 different categories depending on sort of the risk level of those industries that the customers represent. And then in the more risk-prone segments, we have reduced our capacity. And this is more a volatility type of initiative than profitability initiative. So 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 a very strong growth in the property book in industrial. So 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 corporate side still in the Nordics.

And third, to follow up, but these industrial measures could also lead to lower capital targets less volatile...

Yes, but that's not a big effect on the capital.

The next question comes from Jan Erik Gjerland from ABG.

I just have one follow-up on your last comment, Morten, when it comes to the lowering the risks in the industrials and potentially lowering them 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 mean that your underlying risks are improving and that the budget we will see still will be lower so that we will sort of have a underlying improvement benefit, but then no change to the budget number, just so we understand what you are doing with the figures.

The budget will still be 0. Now...

Of course. But will it change your budget level because of this?

I'll try to explain a little bit on this. I mean, the reason why we never actually have disclosed a nominal kroner sort of for 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. And then the deviation that we disclosed is compared to that normalized level. And again, that level is actually changing almost every month because we do get new customers and we lose customers. And in industrial, they are large sort of, so they can represent a quite large change. So therefore, we thought that it's better to talk about the deviation compared to our plan then to talk about the budget that will change every quarter when we report. And this will also be the practice going forward. So we will still keep on reporting deviation compared to a budget, but 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 clarifying...

But of course -- yes, but of course, with lower risk then you should then also have an improvement on your underlying risk ratio? Of course, that's what you're seeking at least?

There is 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.

Underlying for us doesn't really work on large corporate. In principle, we're always trying to price accurately. And -- so I think the whole concept of underlying improvement for us is something that works for private and commercial, not really for large corporates.

There are no more questions at this time. So I hand the conference back to the speakers.

All right. Thank you for your attention, and we look forward to seeing you soon.