Ladies and gentlemen, welcome to the Alm. Brand Interim Report, first quarter 2022. For the first part of this call, all participants will be in listen only mode, and afterwards there will be a question and answer session. Today, I am pleased to present CEO Rasmus Werner Nielsen. Dear speaker, please go ahead.
Thank you. Good morning, everybody, and thank you for taking the time to join us on our call on the Alm. Brand's results for the first quarter of 2022. I'm here with my CFO and investor relations. Again, we had a quarter with plenty of actions, and only last week we finally closed the deal to acquire Codan Denmark. Although we have spent a lot of time defining the roadmap ahead, we have also been dedicated to maintaining a strong focus on the day-to-day operations to ensure we stay on track to further strengthen our business. I believe the most important takeaways this time are the pickup in premiums as well as the improvement in the underlying business, so that we have a very strong platform from which we can build the new enlarged Alm. Brand group.
Having said so, I must add that our business is not resilient to external negative effects. Both the stormy weather and the stormy financial markets have negatively affected the numbers that we have presented today, but in the bigger picture, these are manageable. On the following slides, I will walk you through both the highlights and our earnings numbers from the quarter, and after this, I'll be happy to take your questions. We start on slide two with our highlights. The process of acquiring Codan has taken almost 1.5 years, and I'm very happy that it has now been finalized, so we can progress on integration and shape our new combined entity. As you all know, we received the final approval from the Danish DCCA on April 27, and we closed the transaction a few days later on May 2.
Secondly, we announced a new group management and an organization layout with a total of five client-facing units as well as three units that will support the group's operations and development. This Monday, we announced the second layer of 45 leaders, and they now have until before summer to shape the new organization and harvest the first round of synergies. We have a very strong platform to build upon. Alm. Brand grew premiums by more than 5% in the first quarter of the year, and it should be noted that both private and commercial have gained strong momentum and that our partnerships are also adding to the positive development. Turbulence on the financial markets fueled by the Russian aggression in Ukraine has led to a sharp rise in the interest rates, which has cost dearly. Admittedly, this has affected our full-year guidance.
All in all, we are, however, able to balance this out. The upgrade we are making on the non-life technical results offsets both the loss we are making on investments and the additional costs we have incurred on the short-term placing of the funds for the purchase of Codan. On slide three with our financial highlights for continuing activities, we are pleased with the strong development in the underlying business, and I will come back to this. But we also know that costs stemming from both weather-related and major claims are on the high side compared to what we normally witness. Thus, the technical results amounted to DKK 45 million compared to DKK 104 million same quarter last year.
Investment income was a loss of DKK 55 million, and adding the two together, we get to a modest pre-tax loss for the first quarter of DKK 10 million against a profit of DKK 107 million in first quarter last year. Other costs increased to DKK 55 million. Headquarter costs stayed fairly unchanged, but as short-term interest rates has remained negative, it's been costly to place the large sum of cash earmarked for the purchase of Codan. Thus, we made a loss of DKK 65 million in the quarter against a profit of DKK 107 million in first quarter of 2021.
Further special costs amounted to DKK 143 million, including in this mostly costs related to preparing the integration of Codan and the divestment of our life business, but also an amount of DKK 20 million due to the bankruptcy of Gefion Insurance, where we, like the rest of the sector, pick up our share of the total loss. On slide four, we have made an overview of the results in Codan. Top line measured by gross earned premiums was reduced by 3.4% to DKK 1.2 billion. As expected, the pruning and the deliberate reduction in exposure towards large claims is leading to a reduction on the top line, as well as delivering the improvements Codan has been targeting. In the private segment, Privatsikring is growing fast, leading to an overall growth in private lines.
We believe that there's a lot of upside in this channel and understand that Codan is temporarily investing heavily to fuel this growth. Due to these investments and because of high weather-related claims, Codan had a combined ratio of 97.4 including run-offs, but underlying business still looks stable. All in all, this translates into a current year underwriting loss of DKK 38 million against a profit of DKK 100 million in first quarter last year. Large claims are slightly up but remains within what we would expect, an expected range for business with a portfolio with a bias towards commercial including tech lines. Further, Codan had a loss in investments of DKK 221 million in the quarter, and you should expect us to do a swift integration of investments processes and risk appetite following the takeover.
Now turn to slide five for an update on how we are progressing on this Codan transaction. It has been a busy agenda, both leading up to the agreement to acquire Codan back in June last year, and in the following months to obtain financing from both the equity and the bond market. To obtain a credit rating and to ensure the necessary regulatory approvals from both the Danish FSA and the DCCA, now with no remarks. All this has been completed to get the position where we could close the deal. This is truly a major achievement, which has required enormous teamwork from both Alm. Brand employees and external specialists.
Now we can finally turn our focus to what is next, and we are ready to move forward on integrating two companies with strong traditions and strong brands into one new entity. We have already set the management team, and we will gradually roll out a long list of initiatives to be implemented across the operational platform, so we can achieve the goals that we are targeting. Just to be assured, we will not slow down. Now back to our operational performance on slide seven. The non-life business made a modest pre-tax loss of DKK 10 million in the first quarter of the year, which comprises a technical result of DKK 45 million and a negative investment result of DKK 55 million. Again, the technical result benefited from a good development in the underlying business and a positive run-off result.
However, external factors hit the overall result. The storm Malik, we of course knew about when we did our guidance back in February, but nevertheless, it took away a good part of the profit in the quarter. Although our investment strategy remains a conservative long-term strategy with respect to overall portfolio exposure, we faced headwind in the quarter leading to a loss of DKK 55 million as uncertainty and volatility in the financial markets increased on the back of the Russian invasion of Ukraine. Just to put this into perspective, back in fourth quarter of last year, we had a positive investment income of DKK 47 million, i.e. we more or less just back to where we were six months ago.
Also, please note that although high interest rates have affected our investment income negatively in the quarter, then on the other side, we benefit from high interest rates on our non-life business as insurance provisions are reduced with a direct positive impact on the combined ratio. Please turn to slide eight. Premium income grew by 5.5% in the quarter, i.e. a significantly higher pace than in the previous quarters and years with positive contribution from both the private lines and the commercial lines. Again, growth has been very positive in the commercial lines, and we have seen premiums jump by 6.7% as a result of both influx of new customers and adjustment of prices within especially workers' compensation.
In the private lines, we see a notable increase in momentum with premiums up 4.3% on the back of a long string of initiatives implemented on pricing, customer retention, and value proposition. We know it is out there, and of course, we also see it in the numbers. Inflation is on the rise, and we keep a sharp eye on any development that may affect our business. So far, we have been able to offset claims inflation by a combination of adjusting premiums based on development in price index and adding to the efficiency in claims handling. Not forgetting our main focus continues to be on profitability rather than growth. Now please turn to slide nine with the major claims and weather-related claims.
For a large number of quarters, this has been a fairly small part of our story, but we have from time to time mentioned that at some point, we would have a quarter with higher claims. This happened in the first quarter of this year. The two storms, Malik and Nora, cost us a net of DKK 85 million, and weather-related claims totaled 6.6 percentage points. At the same time, large claims climbed to 10.2 percentage points. Adding weather-related and large claims together, this gives a total of DKK 234 million against DKK 124 million last year, almost a doubling and hitting pre-tax profit with additional DKK 110 million. However, there's a little comfort to be found.
Because of the high claims we had in the first quarter, the frequency program included in our total reinsurance program will probably cover large part of weather-related and large claims in the remainder of the year, thus reducing the amount of claims that we will have to cover ourselves. Now summing it together on slide 10. Underlying combined ratio improved by a like for like very strong 390 basis points after stripping out the positive COVID-19 effect in the last year's number. This development is based on a broad range of positives. First and foremost, the underlying claims ratio has improved, and the cost ratio has been stable. Also, workers' compensation is gradually moving towards a better balance between the premiums and the claims we are receiving.
As mentioned earlier, we do have an overall positive impact on the combined ratio from high interest rates, this accounting for around one percentage point of improvement. Run-off gains contributes with 2.2 percentage points, primarily from movable and building insurance. We have, for now, a row of quarters seeing a stable run-off numbers around two percentage points. Please turn to slide 11. On the private lines, claims ratio was 71.5 against 66.7 same quarter last year, i.e., somewhat higher and primarily due to claims following the Malik storm in January. This quarter's cost has remained at relatively high level at 19.6, partly reflecting the continued investment in our partnerships, but also in absolute numbers because of safe provisions increasing as premiums has shown a very positive development.
Adding the two together, combined ratio was 91.1, and as mentioned before, due to the weather-related claims. Thus, I'm confident that what we have seen in the quarter is a very important step change in the development in the private lines. Then on slide 12 for the commercial lines. Again, this quarter, we have seen a positive development in the underlying combined ratio with a reduction of 230 basis points towards to 79.0. However, a very high level of both weather-related and large claims as significant to the combined ratio, which then amount to 102 against 97.7 the same quarter last year. Expense ratio has been fairly flat at 16.44, and as such, a satisfactory level as we continue to keep tight control on the cost development.
Now on slide 14, I would like to comment on the inflation and how it affects our business. Just like all other businesses, we see that inflation is picking up and is beginning to affect our claims expenses, although it is still at a fairly moderate level. Our best forecast is that in 2022, there will be an increase in claims expenses due to cost inflations of around 3%-4%, which will be driven by construction-related claims costs. In areas such as building and home insurance, inflation may well exceed 5%, and an adjustment of premiums in some segments is therefore under consideration. We work in a structured way with supply agreements, which is helping us to mitigate the inflation.
We also see that contracts with suppliers are renegotiated on an ongoing basis, and that there may be a need to compensate them for additional costs due to the high energy prices. Then please just turn to slide 15 for the outlook of 2022. In the guidance that we present today, we guide for Alm. Brand excluding any earnings contribution from Codan. Still, we have a lot of moving parts, and we introduce a new guidance on the non-life technical result. The overall full-year guidance remains unchanged with a pre-tax result in range of DKK 450 million-500 million. The guidance is based on an upgrade on non-life technical results to DKK 650 million-700 million, excluding run-offs, which reflects continued positive development in the underlying business.
This is an increase by DKK 150 million compared to what was in the February guidance. Further, investment income in the non-life is expected to be a loss of DKK 100 million compared to a guidance in February of a modest gain, including this is a continued negative development in the financial markets also in April and May. Adding the two together leads to a small upgrade of non-life net pre-tax result of DKK 25 million to DKK 550 million-DKK 600 million. Going forward, we will focus on guiding on the core earnings of our non-life business, i.e., the technical result. Also, our guidance on group cost has been updated. Due to higher than expected costs related to the placing of the funds earmarked to the purchase of Codan, we adjust this to DKK 100 million compared to a previous guidance of of DKK 75 million.
Adding the non-life and the group cost together, we derive at a group pre-tax result guidance for continuing activities of DKK 450 million-DKK 500 million, i.e., unchanged, but we have a much stronger underlying business. Our earnings guidance is based on an increasing growth to around 4%, partly fueled by our partnerships and a continuation of the positive trajectory which we have seen in the first quarter of the year. Adding it all together, we would expect the combined ratio to be at around 89%, excluding any effects from run-offs. Finally, we are confident that we will meet the synergy target and realize synergies of DKK 90 million this year, as previously stated in connection with the announcement of the acquisition. Restructuring costs this year for the integration of Codan will be around DKK 300 million.
In total, our guidance reflects a business with all major parts moving as we would like them to. With this, I will conclude my presentation and hand over the word to our moderator. Thank you. Moderator, are you there?
Thank you. Ladies and gentlemen, if you wish to ask a question, please press zero one on your telephone keypad. Our first question comes from Asbjørn Mørk, Danske Bank. Please go ahead.
Yes. Thank you. Thanks for taking my questions. A couple of questions from my side, if we start with your existing business. The growth for Q1 and the guidance for the full year, the 4% and the 5.5% for Q1. You seem to mention partnerships, sales, retention as driving factors. Could you sort of split this up a little bit? How much is repricing? How much is new sales? How much is existing or sales to existing clients? Just to give us a little bit of a flavor of what are the moving parts on the premium side. Thanks.
Yeah. Hi, Asbjørn, and you're right. The growth as we discussed for some quarters that we would expect it to come is a combination of the things you're mentioning here. I think it's difficult to say what is exactly what, but at least what I can say is that a very positive thing is that the customer seems to stay longer with us, which we are very happy for. That is a very positive things. We have also the pricing, as you say. All in all, we have moved with the basics of customer's experience. This all comes up to the improvement we see now in the business.
Any reason why you say 4% for the full year, being prudent, or are you seeing something in the Q2 or Q3 numbers that should have a negative impact on your growth?
That is a reason. Of course, we would like, and we also hope to end more than four, maybe five. Also what I've said for some years now, there are continuing competition out there, both in the private market but also in the commercial part. That's why I think we have a very good beginning of the year. We hope it to continue, but there's still nine months to come.
If I may ask on the partnerships and also a little bit on the inflation slide you have. We'll start with the partnerships. How much is sort of the upfront payment when you take on new clients? I see your operating costs are up 5% in private and 7% for commercial. So should we expect this to continue at these levels, or will it come down in the next couple of quarters if your growth sort of moderates to the 4% level? On the inflation, how much of what we're seeing right now is basically 2021 effects, and how much inflation do you see for 2023?
I know it's early days, but just a little bit of flavor there.
Yeah. Asbjørn, Andreas here. Starting out with growth and the answers you had around, let's say partnership payments. The model we have is to a very high extent based on running provisions to the partners. So we don't have as such significant amounts in numbers going to the partners at the moment of sale. As you know, we use our traditional tied agents set up for a lot of our sales. That is in all insurance growth. It's always costly in the beginning. The first year is not as profitable as the next because there is the commission especially going to the tied agents.
That's the main reason for the expenses there in management's books. Going through the claims inflation, as we tried to picture here, you're right that in the broad sense, we don't see this as a major issue for 2022. It is a moderate effect we're looking into for the full year. We do see specifics, as we mentioned on especially buildings, where we think it will be necessary to look at pricing in the short term. Going into next year, a lot of that's very hard to say at this point in time.
If we see a stabilization from now on at the already increased levels in materials and earnings, then we would expect to be getting a significant portion from the ordinary indexation next year, and then the need for further pricing initiatives will be very moderate. If on the other hand, it continues the rise as we've been seeing for the beginning of this year, then we'll have to take action. That's why we're following that closely from now on.
Okay, thanks for that. If I may ask on the Codan numbers, first, I mean, how much visibility do you actually have at this stage on the underlying trends? Is it just numbers that you get from Codan or is it your own interpretation of the numbers? Especially, looking into the Q1 technical result or the technical loss, if we look at it before run-off, if there's any specialties here on the clients business or renewables business, anything there that we should be aware of that you are aware of at this stage?
Also looking at the guidance for when you say that you will come with a guidance for the full year in August, how do you see the general development at the moment given, you know, relative to the business case that you bought into a year ago? Just a little bit of flavor of that as well.
Well, let me start out at least. I would say we have full visibility in the sense that now we have full access. Keep in mind, it's been a very short time period. One thing is actually gaining access to employees, to the organization and also the large portions of material which lay behind them, which they have been working on and documenting. We haven't had time to fully dive in, but we do have visibility now. I would say we can see sort of what the moving parts are.
To give you some more flavor on the development in the underwriting result for this quarter. We see, I like to focus on the current year underwriting result. We see a pickup in terms of combined ratio of a total of around 11 percentage points compared to the same quarter last year. 5-6 percentage points of that is weather-related. A significant portion of it is actually weather related to the renewables lines, where they have had some losses stemming from the windstorm Malik. You have 5%-6% coming from weather.
You have, let's say, a slight increase in large claims of 1-2 percentage points still within the normal, but compared to Q1 last year, a net pickup, also primarily stemming from renewables this time. To finish it off, they are spending quite some sums, especially in the growth area around Privatsikring, both in IT investments for the customers which have been delivered now, and also IT investments in lead management and optimization. They, as Alm. Brand has, it is just expensive to grow, and it takes commission, and it takes people on the roads also to sell that amount of growth which is starting to come.
Rounding that off, if you look forward, as you mentioned, we'll be coming back with some more guidance in August, but I can say to sum it up, we see this as mostly one-offs and temporary effects. We don't see anything that makes us worried with the business case we have.
All right. A final question from my side on the communication of 2025 targets. You're reiterating the 1.7 or 2 to 1.8 pre-tax. It just sounds like you're basically just repeating what you said a year ago. But just looking at the discounting in this quarter, which I think is around DKK 70 million impact or the impact from the rising rates in your own business. Rates have gone up further in Q2. I guess the discounting effect will be even higher for Codan, given the lines of business they operate within, and of course, your investment results. How do you look at the 1.7, 1.8 billion ambition for 2025?
I guess all things equal, you should increase that guidance at some point.
Yeah, I think as we are to cut it short, I think you're correct in the sense that we're reiterating the old target. We've not fully sort of loaded a structural change in interest rates. To be fair, it's also been a very short period we've seen these hikes in, so we won't be changing that around every quarter. These are long-term targets, but if they stay at the levels we've seen, you're right, there might be a positive there. We're comfortable with the levels. Let's put it that way.
All right.
Hi, Christian. It's from investor relations here just to clarify on the DKK 70 million help to our technical result guidance from the higher rates here in 2022. It's also including the interest rate increase after Q1. It's both. I mean, it's the total effect.
Sure, sure. I guess with Codan having sort of the same-ish effect and then investment results in addition. Yeah, are you?
I forgot that question. Sorry, Asbjørn. That's right. I would say to put it in broader terms, Codan is a bit more sensitive to interest rates than Alm. Brand is. A bit more. They have a slightly larger average duration on their case provisions.
Okay.
That's correct.
All right. That's very helpful. Thanks a lot. That's all from my side.
Thank you, Asbjørn.
Thank you. Our next question comes from Jakob Brink, Nordea. Please go ahead.
Thank you. Just to continue where you left off on discounting, just to make 100% sure. We saw with Topdanmark when they sold now their life insurance business, then the rate sensitivity dropped quite a bit because apparently a very big part of the sensitivity was related to the illness and accident part of the life business. Just to make 100% sure that these numbers you're giving us now has been adjusted for the discontinuation of life.
Yeah, I can confirm that it's been adjusted from the discontinuation of life.
It's around one to one in the old Alm. Brand, and it's more in Codan. Is that correct?
Slightly above, yes.
Okay, fair enough. Thank you. Second question on solvency. The 195, was it 195 post-deal, if I do the math, I think I get somewhat higher now. Could you maybe give us some details or kind of a Q1 pro forma including Codan? Is 195 still the best guess, or has it changed?
I can say that we are in a slightly more positive place in terms of solvency expectations. It's driven to a large extent by the lower SCR you're seeing also in Alm. Brand, and we also are expecting maybe a slightly lower SCR on the Codan side. To give you a flavor, and this is in round numbers, we're probably looking into something maybe around 190% for the end of the year, but that's after the restructuring. We are planning and guiding at around 300% before tax. We're in a comfortable place and maybe slightly more comfortable than last time.
DKK 190 in this year, including DKK 300 million. Does it also include dividends for 2022?
It includes our minimum dividend of 70%.
What is the new SCR? Two billion used to be the Codan number, and one billion used to be the Alm. Brand number. Now Alm. Brand is a bit lower, but how much lower is the DKK 2 billion from Codan?
Yeah, I think we're looking at a total SCR now of around DKK 3 billion still, but we were actually calculating on around DKK 3.1 billion as I remember it. We also keep in mind these are. I mean, it can change a bit also on the Codan side. A hundred million in both directions is not unexpected and that's the kind of fluctuation we must be able to handle.
Okay. Thank you. Rasmus, you mentioned in your speech about the reinsurance, sideways coverage or the frequency coverage, I think you called it. Could you just remind me, so what would be the exact way this works from now on?
Yeah. We have had some large claims and also this, weather-related claims like the storm. Of course, this all affects our reinsurance program. It is almost full. That means that if we have a storm or some other weather-related that could be put into this, then they will be fully covered by the reinsurance program. You can say we have had all the expenses unfortunately in Q1. If something more comes then it will be taken up by this program.
What are the size, limits that are required in order to be put into this, sideways coverage? I mean, how big does the claims-
It's a minimum of DKK 10 million on single claims which comes into the coverage.
Just wondering, so the large claims, obviously, your guidance for large claims is DKK 1 million to be included in large claims. How would you adjust for-
Yeah.
For this going?
Sorry, Jakob. Included in the guidance we're coming with today, we also have a slight positive effect from this. I think it's around DKK 25 million for the rest of the year. Which, if we use our capital model and large claims model, we would expect something like that in benefit, given the fact that we now are so close to the limit.
Okay. Very clear. Thank you. Back to also Asbjørn's question on inflation and your comments around 3%-4% and 5% for house and potential need for price increases. Shouldn't you already be doing those price increases now? If I look back at the more recent conference calls, it's been about whether you were too high on prices and now I understand you might have lowered them a bit on some motor segments. Shouldn't you be moving now in order not to get behind the curve on inflation?
It's not fully the picture we are seeing on buildings and insurances like that. We have on a continuing basis, we are putting risk and pricing together is what we have done in the past years. As has been, the profits has simply been too poor. You're right on motor insurance. It's a little bit more competition on that side. What we are seeing in the future and also what I think we see now on numbers with the underlying combined ratio we have, I think it's somehow is not prudent, you can say to just increase prices on this right now. We are following it, especially in the building side.
Of course, we are also looking how will this develop, as Andreas said, during the year, because then we will have this inflation be able to calculate that into our products next year. We just we're keeping our breath a little bit and then we will take action if needed.
Okay. On the investment income, the guidance you're giving now of DKK 100 million loss for the year, that includes April. Should I read that as if April has been negative DKK 45 million and you expect DKK 0 profit for the rest of the year? Or should I read it as if April has been even weaker and then you expect some profits for the rest of the year?
I'd say that it's mostly the first scenario. We have had a bad April in terms of investments. It's a combination of both, stock price decline, but also the rate increases and the development in the hedge-matched portfolio, have sort of summed up to something that now amounts to around DKK 100. There is also some positive effect, to be fair, from the fact that we now have a higher yield also on our free portfolio. So there's a slight number from a better positive result, especially on the bond side for the rest of the year. Most of it is the fact that April was just not very good.
Okay. Fair enough. Last question on the Codan integration, just a bit of housekeeping. Will you give us any numbers, sort of restated numbers ahead of the Q2 report? That would be really nice if you could. Also the investment risk on Codan, you mentioned that previously you would make a swift turn of their book into your investment standards. Do you know anything about sort of the beginning of May? Is it just as bad? How fast can you restructure their investment risk?
In terms of Codan, we will come back, and we have listened to your question, Jacob, on the revised figures, at latest with the Q2 results. Regarding investments, Jacob, the fact is that both actually you could say Trygg-Hansa and in this case, Codan's investment setup has just been radically different than the way Nykredit does it. They have had bonds taken up in the UK GAAP accounting principles at amortized cost. They haven't had mark to market, so they have lived with a portfolio with a much larger duration mismatch than we will be doing.
I expect already now I know that the Codan portfolio is moving to a more balanced place and had moved to a more balanced place than it had been in for large parts of Q1. This is one of our main focus areas, and to get it in, and we will run it in the way we plan to do it. That is not something that will take a long time. We're talking weeks at the most. I expect already next week to be doing, if needed, the first adjustments. We're very close to also being, let's say within months, we will have a fully integrated setup on the Nykredit side, also handled by our investment and accounting systems.
From Q3, we could expect a normal book.
I would say when we get out of COVID already now it is much less sensitive than it has been. When we get out of May, you will not see major risks in the sense that they have had in Q1.
Very clear. Many thanks for all the answers.
Thank you. Ladies and gentlemen, as a reminder, if you wish to ask a question, please press zero one on your telephone keypad. Our next question comes from Martin Gregers Birk, Carnegie. Please go ahead.
Thank you. If we can start on the premium growth and especially the 4.2% premium growth. 4.2% premium growth you guys report within your private segment. I guess that number doesn't really say a lot, since we don't really have any comps on that now that you have stripped out your health and accident business. If we go back to Q1 2021, stripping out your health and accident business, what would that number be?
I didn't say it's like for like. The growth is without both you can say. We have stripped out.
Yeah. Agree, right. Sort of how much is that? I know that's stripped out of the Q1 2020-
You would have seen an even better growth rate, Martin, if we hadn't stripped out health and accident historically.
Because health and accident was growing?
Sorry?
Because health and accident was underlying a growing business or.
No, I'm just saying mechanically, you see a growth that is like for like, correct, without health and accident.
Agree.
If we had chosen not to do that, you would have seen an even higher growth rate. Yeah.
Okay. It's just sort of a bit puzzling. I mean, I guess we've debated this over and over again, and sort of growth rates in your private segment have been very sluggish and then all of a sudden, then you're able to report 4.2% growth rate. If we dig a little bit into the components, can you be more specific where is that exactly coming from? And why didn't we see that last quarter, for example?
Yeah. I thought, I think we saw starting points last quarter. It was of course difficult because it was the full year as well. I also think I mentioned that we have worked very hard with this throughout 2021, especially in the private part. I also mentioned that we changed the head of the private lines and also some of the leaders underneath him in October. All this together with the, you can say almost pruning of the portfolio, new focus on keeping our customers and all that leads to this increase. You can say more or less it is, and as I said just in brackets, but it's just following the budgets we are setting.
Now, especially in end of 2021, but also throughout the first half of Q1. We are just very happy and thrilled but also pleased finally to be able to show the results of the hard work we have done in Privatsikring.
Rasmus, isn't there more to it? I guess you within insurance, you rarely see these step changes.
I don't know what you are thinking about, but I think for us, it's a matter of change in leadership. It's also the long hard work coming up now with the setting prices, working with the portfolio, making right packages. Stuff like that.
Okay, speaking to the private segment, the run-off loss in the quarter, what's the reason for that?
As I recall, I think it's a very small run-off loss.
DKK 3 million.
Sorry? DKK 3 million, yes. It's a number of things in there. I think we've had a slightly negative, as I recall, on some of the car lines. But it's nothing systematic. It's normal fluctuations.
Okay. All right. Moving to maybe the combined ratio. The combined ratio, the large loss you can see in the quarter, are those stemming from anywhere in particular?
Sorry, what did you say, Martin?
The, the-
I didn't hear. The large loss.
The large losses you can see in the quarter.
On the Indebank side, I'd say it's nothing structural. We have just had both, let's say a slight increase in the number of large claims and also we've had 1-2 of large claims in the significant end. We have one grossing around DKK 100 million. And we're looking closely into all these claims. Nothing structural. It just seems like normal fluctuations. It's large claims related to property and fires.
Okay. It's not like a portion of that can be dedicated to a fire out in Vanløse, for example?
No, no. The segment we've seen actually some of it is in the agricultural segment and in our portfolio, these types of clients, we have very few actually. It's not something we see as a structural theme, but just basically, yeah, bad luck.
Our involvement in Vanløse was very small, a few apartments and a few shops. That's all.
Right. Okay. Under your comment on Codan, you see, you say significant increase in interim costs to strengthen your private lines. What does that mean?
Yeah. It's basically three things. It's let's say ordinary ramp-up costs related to headcounts and commissions to the sales personnel which are driving written premiums and growth higher. That's a part of it. You have let's say two components which are more temporary in nature, which both have to do with IT investments. One, as I understand it, comes from a delivery of an online client portal where the customers can go in and see the insurance and buy insurances in the Privatsikring brand. That's a delivery that came in this quarter and has driven some IT costs.
They've also invested in IT systems to better handle the whole lead management and the booking of meetings and the channeling of meetings to get basically, hopefully in the end, better penetrations on the customers. Those are the three things driving costs this quarter.
Final question from my side. On the restructuring charges, I guess you guys back when this was announced a year ago, you guided for an all-in restructuring charge of DKK 1 billion. Now, we've had a number of one-offs so far, booked through your P&L. What's the balance on the 1 billion? How much is outstanding basically? And do you have any idea about how much of that is gonna go through your P&L and how much is gonna be booked straight on equity?
Martin, I'm not sure I understand the question with the one-offs in restructuring. Could you clarify that for me?
No, I mean, when you guys, I guess, announced this transaction, when was that? That was in June last year, right? You funded DKK 1 billion for restructuring implementation cost, right?
Yeah.
Now we have seen a number of one-offs flowing through your P&L in recent quarters. I wonder how much of that DKK 1 billion has been expensed, and how much of that DKK 1 billion is left to be expensed, and how much will be over your P&L, and how much will be over your equity?
The short version is that I'm not 100% following the one-offs you're mentioning, but we are completely on plan with the amount of restructuring we've done. We have around DKK 60 million coming this quarter, and we had DKK 90 million before tax. Oh, sorry, DKK 30 million before tax in Q4, so a total of just above DKK 90 million in restructuring costs until now, and that's fully in line with the expectations we originally had. We have nothing changed and we are on target. The 300 we are guiding in total for this year, that's including the 60 we just had in Q1. It's also completely in line with our original expectations.
Okay, maybe just a final touch on guidance. Maybe also why we need to wait for Q2 for you guys to issue your new guidance. I assume that you guys already know by now what Codan is gonna make this year.
I can take that. The quick answer to that, Martin, is we really need to get into the details now, and it does take some time. Business is coming in, and we also need to set our foot down and find out exactly how to manage what we have received. That will take some time. Therefore, it will come at latest at the Q2. Focus is, as you also have seen, also at the same time on getting new organization to fly. That's why we changed the whole my first top management last Monday, and this Monday we changed the second level. We are really focusing on keeping business as is, but also setting the new organization within the next month or so, and also harvesting the synergies.
We'll come back with a full package later on.
Yeah. You also say that you are going to come back in Q4 with an update on the plan?
Yeah. We'll definitely do that.
Okay. All right. Excellent. Thank you.
Thank you, Martin.
Thank you.
Thank you. We have no further questions. Dear speakers, back to you.
Yeah. Thank you everybody for listening in, and have a good day. Bye.