Welcome to the Alm. Brand Interim Report fourth quarter of 2021. 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 Rasmus Werner Nielsen, CEO. Please begin your meeting.
Good morning, thank you for taking the time to join us on our call on the Alm. Brand results for the full year of 2021. For me, this is the quarterly report number 10 that I'm presenting. It has been an exciting period, and we made meaningful strategic changes to the company that will define the roadmap ahead of us for the years to come. I'm also happy that we have maintained a strong focus on the day-to-day business, and during the year, we have continued to press forward our work to further strengthen our business. Again, we have had a good quarter with strong earnings, and thus we have reached a full year result that demonstrates that the underlying non-life business continues to improve as we successfully implement changes across the full value chain.
Looking back at the year, I'm pleased to know that the strong result is based on many of the initiatives that we have implemented to improve our operation. The new organization put in place back in early 2020, the ongoing optimization of the backbone and the digital platform of our business, as well as the relentless focus on improving the customer touch points and ensuring the best value proposition for our customers. We have spent a vast amount of time and resources on preparing for the takeover of Codan Denmark. In the fourth quarter, we have completed the rights issue needed to fund the acquisition. This was completed in a very successful way with strong commitment for both existing and new investors, and I'm of course grateful for the trust that so many investors has placed in us.
The main focus for today's call is however the financial result that we have made, and I'm happy to first walk you through the numbers after which I will take your questions. Please turn to slide two. For the next many years, 2021 will mark the strategic step change for Alm. Brand. Back in June, we announced the acquisition of Codan's Danish business, and we presented our investment case to the market. We have spent a good amount of time in preparing for the actual takeover, which is planned to happen in the first half of this year, and we have successfully secured financing from both the bond market and the equity market. Also, we have agreed to sell our life business, which will lead to Alm. Brand being a pure non-life company with a clean focus on the Danish market.
In the fourth quarter, we have added further to the positive development in our underlying business, and we have made a healthy 150 basis point improvement in the underlying combined ratio after adjusting for the COVID-19 effect. The top line is still trailing a little behind where we want it to be, but at the turn of the year, momentum was seen to be improving also for the private sector. Just to be clear, although we would like to accelerate premiums growth, then our focus is on profitability. In some cases this means that we will turn away from business where we do not see an attractive balance between price and risk. The ongoing operational initiatives that have been implemented are step by step adding to the efficiency of our business, and eventually this is reflected in the key numbers like the claims ratio.
Our focus will remain on both growth and cost initiatives as we strive for improving profitability further. Again this year, COVID-19 has affected the numbers. We guided for a positive impact of DKK 50 million on this already back in the beginning of last year, and the impact has been in line with what we expected. Also, as expected, there's been no effect in the last quarter of 2021. Further, we have had nice tailwind from the development on the financial markets. You know that we historically always have had a conservative approach to investments as we believe this will give our shareholders the cleanest exposure to our non-life operations. Nevertheless, we have made a little more than DKK 100 million this year.
We are confident in our future and strongly believe that the significant investments we make to further develop Alm. Brand will benefit both customers and shareholders. Please turn to slide three. The group today posted a satisfactory result for the fourth quarter of the year, leading to a full year pre-tax profit of DKK 839 million, excluding special costs relating to the Codan transaction, against a pre-tax profit of DKK 796 million in 2020, i.e. up 5% year-over-year. Pre-tax profit for the quarter amounted to DKK 249 million against DKK 289 million in the fourth quarter of 2020.
The key takeaways here are that the underlying profitability and cost development continued to be satisfying, but this was offset by large claims and weather-related claims being somewhat higher compared to the same quarter last year. Also, investment income was nice but not as high as last year. The result of other activities was a small minus of DKK 5 million. Headquarters costs remain more or less flat, but are primarily offset by a positive contribution for the remaining mortgage fees and debt collection portfolios. All in all, this has been yet another quarter with progress in the underlying business, and part of this development is due to the ongoing initiatives in claims handling that successfully have offset some of the claims inflation due to higher prices of materials, energy, and salaries.
Due to the transformation of our group, we have a large amount of special costs relating to both the acquisition and the preparation of the integration of Codan. In total, we have spent DKK 141 million this year, whereof DKK 34 million is directly linked to the preparation of the integration and thus expected in the non-life business expense in the non-life business. The board will propose the AGM in April that a dividend of DKK 0.3 per share is paid out. This corresponds to a payout ratio of 77%, and as such, in line with our dividend policy that targets our minimum of 70% of post-tax earnings to be distributed to the shareholders.
Following this, and considering the funds reserved for the acquisition of Codan, we arrive at a solvency cover relative to SCR of 210%. Included in this is the pre-funding of the restructuring cost, thus we will expect solvency cover to trend down towards 170% over the next years. Now please turn to slide four. Codan posted its full year numbers yesterday, and again, this time we have included a single slide on this. Top line measured by gross earned premiums grew by 1.5% to DKK 5.5 billion. For the full year, Codan reduced combined ratio to a respectable 95.2, i.e. an improvement of 4.3 percentage points.
This translates into an increase in current year's underwriting result to DKK 238 million against DKK 27 million in 2020. Major claims were high in Q4, but for the full year they are trending towards a satisfactory level for our business with a portfolio with a bias towards commercial, including tanker line. All in all, we see strong evidence that the pruning and the deliberate reduction of the exposure towards large claims is leading to the improvement of what Codan has been targeting, and we believe this will provide a good starting point for the further development. Now turn to slide five for an update on how we are progressing on the Codan transaction.
Our team continues to push forward, and in the last quarter of the year, we successfully completed the rights issue, whereby a new share worth of a total of DKK 10.5 billion was subscribed by institutional and retail investors. We are very pleased with both the process and the strong interest in the rights issue, and following the approval from Danish FSA that we obtained in November, we now only await the competition authorities to approve the takeover. This is a huge transaction, will position Alm. Brand stronger, and we both acknowledge and understand that the competition authorities have decided to move this into phase II in order to ensure a thorough investigation before reaching a final conclusion. Please observe that we have not received any indication about any material matters that will affect the takeover.
Thus, we are confident in expecting the closing of the deal to be in first half of this year. Now back to our operational performance on slide seven. The non-life business made a pre-tax profit of DKK 254 million in the fourth quarter of the year, which comprises a satisfactory technical result of DKK 207 million and a positive investment result of DKK 47 million. Again, the technical result benefited from a good development in the underlying business, and also the run-off result contributed positively, with 37 million corresponding to 2.8 percentage point and thus slightly higher than we would normally expect. However, on the other hand, we have had more large claims in the quarter, which of course did lead to higher costs, although this was somewhat offset by our well-functioning and well-scaled reinsurance program.
Our investment strategy remains a conservative long-term strategy with respect to overall portfolio exposure. In the last quarter of the year, we had tailwind from the development on the financial markets and thus adding a net of DKK 47 million to our result. Let's go to slide eight. Premium income grew by a modest 1% in the quarter, i.e. at somewhat lower pace than in the previous quarters. Again, growth has been very positive in the commercial segment, and we have seen premium climb by 3.7% in the quarter as a result of both influx of new customers and adjustment of prices within especially workers' compensation.
In the private segment, we see clear signs indicating that the various initiatives implemented on pricing, customer retention, and value proposition is making a difference, and we are confident that this will soon be visible also in the reported numbers. Not forgetting, our main focus continues to be on profitability rather than growth. Now I turn to slide nine. Again, this quarter, we witness a positive development against same quarter last year. You might remember Q4 2020 with an almost full lockdown, and in the last quarter of 2021, everything was more or less back to normal. The underlying combined ratio was 78.8, representing a strong improvement of 130 basis points year-on-year, excluding the COVID-19.
The combined ratio for the quarter was a very satisfactory 84.7, as you see on the graph on the right side of the page. With underlying combined ratio performing well, the increase in the combined ratio can be attributed mostly to higher costs on the major claims, but also slightly higher costs following spending on our partnerships. Run-off gains contributed with 2.8 percentage points, primarily from motor and building insurance, as such was a little better than we usually see. We go to slide 10. Fourth quarter, again in 2021, had only a very low level of weather-related claims with mild weather during late fall and early winter. Thus, the amount of cost for the weather-related claims was DKK 16 million against DKK 6 million in the same quarter last year.
Contrary to this, the major claims has again been in the high end of the normally expected range and amounted to DKK 101 million against DKK 83 million due to a couple of larger claims, but somewhat offset by our reinsurance program. Turn to slide 11. For the private segment, claims experience was 60.5% against 56.3% last year, i.e., somewhat higher in spite of the higher run-off gains. The reopening of the society and the subsequent increase in activity and accidents explains the development. This quarter costs has remained at a relatively high level, partly reflected in continued investment in our partnership, but in all fairness, also a result of premium growth not having reached the target that we defined at year start.
Last quarter, I stated that we are now on a more positive trend with earned premiums increasing slightly versus last quarter. I see the same development today, and I believe that this will soon reflect in a more justified level. Turn to slide 12. For the Commercial segment, the combined ratio was 88.5, i.e., showing an improvement of 1.2 percentage points against fourth quarter last year. Again, this quarter we have seen a positive development in the claims ratio leading to a reduction of 0.8 percentage points to 74.0% in spite of a high level of loss claims as this has been offset by our reinsurance program. Again, the underlying development is positive as we continue to implement various earnings enhanced initiatives including price adjustments.
The expense ratio has been cut by 0.4% to 14.5% as we continue to keep tight cost control on our cost development. Please turn to slide 14 for the outlook for 2022. In the guidance that we present today, we guide for Alm. Brand excluding any earnings contribution from Codan. We expect a full-year pre-tax result in the range of DKK 450 million-DKK 500 million, which is based on an expected pre-tax profit in non-life of DKK 525 million-DKK 575 million, excluding run-offs, which reflects continued positive development in the underlying business and net group cost of DKK 75 million. Our guidance assumes that the tailwind we have had in 2021 with respect to a number of factors will not repeat themselves in 2021.
First and foremost, with COVID-19 no longer causing a lockdown of society, then claim frequency is expected to be back to normal. Thus, the DKK 50 million positive effect we had on earnings in 2021 will vanish in 2022. Secondly, for both major claims and weather related claims, we budget for something close to normal for the rest of the year, i.e., around 3% for weather related and 7% for major claims. However, you should know that Storm Malik in January has already cost us in the range of DKK 50 million-DKK 75 million, i.e., if there has been no storm, our guidance for non-life would have been higher. Thirdly, we expect only a modest investment result.
Our earnings guidance is based on increasing growth to around 3%-4%, partly fueled by our partnership, but also that the positive development we have had in commercial continues, and that the encouraging improvement in private by the end of 2021 continues at a positive trajectory in 2022. Adding it all together, we will expect the combined ratio to be at 90%-91%, excluding any effect from run-off. Further, we are of course awaiting the final approval to take over Codan so that we can initiate the programs to harvest the planned synergies. We still firmly believe that this will happen in the first half of the year. Provided this, then we will expect to realize synergies of DKK 90 million in 2022 as previously stated in connection with the announcement of the acquisition.
Finally, the sale of the life business was approved by the Danish FSA last week. As such, the timing of closing will lead to the profit from this to be booked in 2022 instead of 2021. Still in good time before we need the funds to pay for Codan. No change to the financial implications, i.e. the sale gives us a gain close to DKK 545 million after recognition of costs directly related to the transaction. The sale is expected to incur restructuring costs of DKK 60 million, which lead to a net result of DKK 485 million from discontinued activity. In total, our guidance reflects a business with all major parts moving as we would like them to, and, except for the storm in January, I therefore hand over the comments to our presenter, the moderator. Thank you from me.
Ladies and gentlemen, we will now begin our question and answer session. If you have a question for us, if you'll "please dial zero and one" on your telephone keypad. Please hold until we have the first question. The first question is from Jakob Brink, Nordea. Your line is now open. Please go ahead.
Thank you and good morning. I have a few questions. The first one is on the premium growth guidance for 2022, which you have lowered a bit, from the previous level of 5%. Could you maybe help us a bit with the sort of parts that leads you to now think 3%-4%, i.e. what drivers do you see? And also, I guess, putting it in perspective to the -1% growth in 2021. What will change? Yeah, that was the first question, please.
Thank you, Jakob. I think when we communicated the 5%, it was two years ago. We are now seeing a tough year in the private segment in 2021, and we also have now Codan coming into play. The surroundings are a bit different to what we thought two years ago. I think the 3%-4% is a positive thing compared to where we are in 2021. As said in the presentation, we have a lot of good initiatives coming up in private. We see them already coming into the books. We ended up 2021 with a higher balance than we ended 2020. In private, we have lots of good initiatives in the commercial side, and we also have increases in inflation. I think more or less we are confident with the level of 3%-4%.
Sorry to just try a bit more, but on the Sydbank, how many leads did you get in the full 2021 from Sydbank?
I can say that we got exactly what we expected when we started the year. The cooperation with Sydbank is very much running as expected. We have very good leads coming in, and we have a high hit rate on these leads. I think checking Sydbank everything is moving as expected. We have our full insurance app in the Sydbank app. All their customers having a Alm. Brand insurance that they can use that app going forward. A lot of positive things are happening in that country.
Just so I guess the fact that there will be an app is that going to fuel growth, you think? I guess the fact that customers in Sydbank can see that they already have a product will not be adding more products. Is there some kind of built-in product distribution also on the mobile platform of Sydbank?
When we have this link to the Sydbank customer, it's much easier to connect with these customers, easier for these customers to add on new insurance products, and then it's easier for us to approach them. They can make claims, they can do everything. This is just another tool to be an interesting part for other Sydbank customers, which are not an Alm. Brand customer yet. It's a very good tool when you want to obtain new customers.
If the Sydbank cooperation is working as expected, what is it then that is somewhat weaker than you had expected, a few months ago or a half a year ago?
Yeah. First of all, the competition, especially with private market, is very fierce. We try to run a business with long relationships to our customers. We will remain focused on having the right premiums compared to costs. The competition is a bit stronger on the private part than we have seen in the past. That will put a little bit of pressure on our growth.
Is it because you now expect to lose some clients or because you will have to lower prices to keep the clients?
If we wanted growth, then we could just decrease prices. It's almost as simple as that. Then we will not be profitable in the long run. It's really about finding the right point here between profitability and growth. Maybe we were a bit too conservative in 2021, but it is about finding the right balance here.
Okay, thank you. Next question is on Codan and the not so good Q4. As far as I can estimate, it's around 105% combined ratio in the fourth quarter. I saw Codan's announcement yesterday. It seems like they ended up with a large claims ratio of around 10.5% or so in 2021 as a whole. Which of course is better than 2020. Given what, I guess, you said after Q3, that it was maybe a bit too good, the large claims ratio of Codan, given their current risks on the books, how do you feel about the 10%? Is that sort of the normalized level given the risk they have? Or could we even see it moving up a bit more in 2022? Also just remind us how is the progress on run-off of the more risky part of the offshore wind?
Hi Jakob, this is Andreas here. I think you have roughly the right numbers in what you're reading from the full year announcement. I think the short version is that the combined they are delivering around 95% current year is very much close to what we were actually expecting at this point in time. Also, as you said, we did say after the first three quarters that this looked a bit better than also we had been expecting. Roughly also implicit in that, I would say that the full year large claims are also more or less in line with what we had been expecting originally.
That does not mean that I say it's hard to predict the ratio and the progress exactly also going into next year. As we talked about before, we do expect Codan to continue the development of the trend in lowering the overall large claims. We also feel confident that they are on the right trajectory now.
Okay. Thank you. Then just coming back to the weather, and the storm here in January and what you said before, Rasmus. So just to understand, now we have this, was it DKK 50 million-DKK 70 million extra claims related to the storm? Does your 90%-91% combined ratio guidance include a full normal expectation for weather-related claims in the full year on top of the 50-70 or whatever it was? Or do you include the 50-70 in the normal weather guidance?
Yeah, Jacob, I can take that also. What we do here is that we now we've closed January, we had the big storm, and then we do our guidance based on that event. We take that out. As you mentioned DKK 50 million-DKK 75 million. We from now on account for what we would say is a normal weather yeah claims ratio going forward. That means that we would have our normal guidance from here on out the rest of the year.
How much of the normal, normalized level is typically in January?
Yeah. What we do, Jakob, is we even it out also in terms of pricing because when a weather event comes, it always hits very hard in the month it hits. You can't say that the January isn't as such representative in the way we do it. We even it out also in some sense in the month. There's not a lot of normal weather expense in our January budget normally.
Okay. Very good. Very last question from my side. The synergies of DKK 90 million in 2022, how confident are you that that will still be realized in 2022, given the potential delay of the Codan acquisition?
We are very confident, and that's why it's important for us to highlight it in our accounts that we do expect the DKK 90 million to realize if we get to take over Codan here before end of spring.
It's mainly FTE reductions or something that you can pretty easily activate or?
Yeah. It's a, you know, normal cost like headcounts. It could be premises and things like that.
Okay. Fair enough. Many thanks for the answers.
You're welcome.
The next question is from Martin, Carnegie. Your line is now open. Please go ahead.
Thank you so much. On to maybe we can start were we listed on the computation towards this month. How soon could you guess, we skip the letter of uncharge. Do you mind sharing the consent?
Hi Martin. We cannot really share the consent but I can say that there's nothing in that letter that varies me and nothing unexpected. It is a matter of two big entities being combine especially on the commercial side that needs.
I guess this competition issue has been a topic that we've discussed over and over. You have also said that you expected it to be approved in the first round. What has changed?
Yeah, I did expect it to be approved in the first round as there were no discussion of matters really. Now it seems that they need a bit more time to investigate, especially the commercial side, and therefore we simply need to await. That's why they moved into p hase II.
Coming back to the storm, the DKK 50 million-DKK 75 million, could you please remind me how does that factor into potential or into your reinsurance program?
I can do that. If that estimate holds, we will be incurring the full cost. That's also why we have it out of our guidance. If we are unlucky from now on also seeing higher than expected level of, let's say, another windstorm or potentially also large claims, such as traditional property risk, then we will get further coverage if the amount of that increases above a normal level. I can say that we have this aggregate programme which kicks in at DKK 175 million. Now we sort of spent the first, let's say, DKK 60 million of that if the estimate holds. That could potentially come into play if we have a bad development from now on.
Did you say 175 reinsurance coverage?
Maybe I should specify also. In a catastrophe event, if the event is large enough, then the deductible is DKK 75 million. A very large windstorm will give us, if it's above DKK 75 million, we will have the DKK 75 million on our risk. What I'm talking about here is the aggregate cover we have in supplement to that program.
Okay. If I understand you correctly, let's say there's gonna be another Malik next week, then it's not on your books.
The next Malik will also be on our books, but let's say probably the third Malik will not be. Then we'll start kicking into the aggregate program. That aggregate program is not only weather claims, it's also large claims. That means that if we have a few large claims, that would also go into that number.
Coming back to your 2022 combined ratio guidance, when you set that target back in 2020, wasn't it fair to assume that that target was supposed to or could contain a weather event like Malik, and that maybe there's some other stuff going on that hasn't exactly come out the way that you had hoped, and that's why it's now 90%-91% and not 90% or even below 90%?
Yeah. No, what we're doing here, as I tried to explain before, we just unfortunately had a Malik, which has basically put it in. As the way we do our guidance, we are now DKK 50 million-DKK 75 million, given that estimate, behind compared to if we hadn't had the Malik. When we look forward now, we do a normal expectation of claims from now on. That means, very simply, that we, to be transparent now, would need to lower the estimate. That's only from Malik coming in January.
If you look at your combined ratio, your combined ratio development in 2021, I mean, you see a fairly nice underlying improvement, right? Bridging that to the 90%-91% even with Malik on top of it, I mean, it seems like either it's conservative, either it's something else happening, or either your underlying combined ratio improvement trajectory is gonna come to a complete standstill in 2022. I don't know if I'm wrong here.
I think you should also remember that if we look from where we were last year also, we had in 2021 at least about basically DKK 50 million from COVID-19, which is not coming in next year. If we hadn't had Malik, we'd be coming out with a combined around 90% and a non-life solvency of around 600. Now we have Malik, and then the simple math is that we push the combined up correspondingly.
Okay. Onto your guidance for the new group. You say that you will revert with Codan's guidance in Q4 2022, as far as I recall. Does that also mean that you will not consolidate Codan until Q4 of 2022, or what should we put into that?
I think as soon as we open the books of Codan, we are allowed to do that, then we will look into what Codan can bring into us for 2022. We will have a look as quick as possible. In terms of our guidance for 2025, we expect to come out with that in more details in fourth quarter of this year.
Okay. Just two very short questions on your run-offs in your corporate division. What is happening here? Finally, my last question on the RT1 issue, what's the progress on that?
To start with the runoffs in the corporate, I'd say nothing major happening there. We have had some tailwind on, as I recall, especially the auto segment and buildings. I still feel it's within a natural level. If you look at Q4, I would more say that the private lines, which have a very impressive 5% runoff gain, is the more unusual part of the Q4, also coming from auto as one of the big contributors. Nothing I would say systematic in that.
Okay.
There was the RT1 process. If that's enough for that. We're sort of looking into the exact timing and preparing when we have to come out. Right now, the expectations is that we would come out in the first quarter with an RT1 insurance, obviously depending on market developments and the timing of that.
Good. Very clear. Thank you.
The next question is from Per Grønborg, SEB. Your line is now open. Please go ahead.
Yes. Thank you. My first question is a bit of clarification on Martin's question on the competition authorities. Just to understand correctly, you said that the concerns they had been addressing to you was on the corporate side and not on the private side. Was that correct?
It was primarily on the corporate side. You can say there's no concerns, just that they need a bit more time to investigate the commercial side, yeah.
They are looking both at the private and corporate?
Yes. Primarily corporate.
Okay.
Yeah
Okay, good. On Codan, you expressed that 95% combined ratio was as expected. That's of course always nice that things are developing as you originally expected. Maybe you can share with us what is your expectations on when Codan standalone will reach the sub 89% combined ratio that was implied in your original guidance? Just so we have a perception of the timeframe we should look at as things seem to be developing as you are expecting.
I think it's a bit early, Per, to sort of further develop our timing of that trajectory. Also given the fact that, to be honest, we have limited information in Codan in this period. I think we stick to our long-term target, which we have communicated previously, and stick to saying that also in fairness, when we looked into this and acquired Codan in the summer last year, we were saying that what we see now in the full year is around where we should be.
Okay. On the growth, is it fair to guess that the motor part is causing you some challenges towards the end of the year in the light of electric cars being approximately half of new sales and your prices, at least in December, being extremely uncompetitive on electric cars? What are your intentions on electric cars? Because I assume your uncompetitive prices, at least the ones that you flashed on for second guidance, will hardly allow you to take any clients in that segment.
Per, as we discussed before, it has been an issue, especially in the beginning of 2021, and it takes time to come from that. We are now very well in place. We get a lot of new, you can say car insurers in. We have the Semler coming up working. We have a very good inflow. We are now competitive in pricing. Maybe not on the for second guidance, but then we are giving discounts as we discuss with customers. I'm not so worried for that anymore. We are in place on that. You can say it's taking a long time, it has. It's taking far too long time, but we are there now. That's also why I'm a bit more confident growth in the private sector that we have seen in the past year.
What was your market share on new sold electric cars in the fourth quarter, just in big numbers?
I cannot-
5, 10, to 20%?
I don't know, Per . I don't know. I cannot. We need to come back to you on that.
Okay. That would be great. Just a small clarification. I guess you have decided within probably the last 24 hours not to book the life insurance gain in 2021 as you had previously guided to the market. What has triggered the decision to postpone it to 2022? I assume it's not something that you have known that long ago. Otherwise, I would have assumed that you would have had to tell it to the market that your guidance was wrong.
I think you can tell, on the other hand, when we have not got the what you can
Approval.
approval from the Danish FSA, then we cannot really book it that
You knew that first of January. Shouldn't you have posted guidance update on first of January if that's the key trigger? I'm just wondering that we haven't heard anything from you up until now. Of course, the fundamental impact of it is zero, but I'm just wondering about the way the communication has flowed to the market.
Y ou can turn it around saying, if we got the approval, then we will as we did, we will come out immediately. That was how we thought it. When we have not said anything, it's due to the fact we've not received it. You can always discuss if that was the right move, but that is how we saw it. As you also say, it's not really have any financial impact.
Okay. Thank you. That was all from my side.
Welcome.
We haven't received any further questions at this point. As a reminder, if you would like to ask a question, "please press zero and one" on your telephone keypad. There are no further questions so I hand back to the speakers. That is, we do have a follow-up question from Jakob Brink. Your line is now open again.
Thank you. Just to follow up on the dividend payout rate of 77%, you have 70%+ as a target going forward. Can I read anything into 77% in a year where you're also doing transactions and rights issues, et cetera? Is this level what I should expect going forward?
I can answer that. I think, I mean, we have the minimum 70%, as you say. We are just a bit above that now. I think that's fully in line with what we communicated we would stick to. I think it's a balanced approach also given the fact that it's not that far. Yeah, we recently went out and asked our shareholders to provide investments in the emission. Going forward, we stick to what we've had until now. Also, we have the same policy of minimum 70%. As we've also talked about before, now that integration costs will become a major part of our results, the 70% is before these integration costs. We stick to that.
Okay. Thank you.
We have a follow-up question from Martin , Carnegie. Your line is now open again.
Thank you. Just again on the dividend. Next year, what is the argument for not paying out 100% of net profits now that these one-off costs are already funded?
This bit, I think. Well, I think it's a balancing, what the exact percentage is. We feel this is a sound level in line with what we have also communicated until now. To be honest, I think, we just went out with a large emission recently, and I think it's okay to be maybe a little bit more prudent now that we're starting the integration and such next year. I can just supplement that, we see a comfortable level and still expect a solvency of just around below 200% when we take Codan on, if we sort of merge the balance sheets today. That is before the restructuring costs being incurred, and that would bring us down to just above 170% level for the group. We are exactly where we want to be also with the dividend we now have suggested.
I totally get your point on this year, and I guess it's also fairly in line with what you guys have been sort of hinting to. When we stand at the same time next year, why-
Oh, okay.
Why isn't it? I mean, what is holding you back from going back to sort of the recent trend that you guys have had to return 100%?
Yeah, just to be clear, we have the same policy we've always had, but we always factor in the situation in the current time. Obviously we also expect some growth to be had, and that's also part of the business case, especially in personal lines. That's also why we as a starting point only have the 70% as a minimum target we inform.
Okay. All right. Thanks.
This concludes the Q&A session, and I hand back to the speakers to close the remarks.
Yeah, thank you for taking your time. I look forward to talking to you one by one also. Thank you.