Good morning, everybody. My name is Gianandrea Roberti. I'm head of investor relations at Tryg. We published our Q1 results earlier this morning, and I have here with me Johan Brammer, Group CEO; Allan Thaysen, Group CFO; and Mikael Kärrsten, Group CTO, to present the figures. Before that, I just would like to remind everybody to ask one question at a time to allow the highest number of questions from participants. With these words, over to you, Johan.
Thanks a lot, Gianandrea, and I will go straight to slide three with the financial highlights. Tryg is today reporting a solid insurance service result of DKK 1.275 billion in Q1 despite a harsh Scandinavian winter and adverse loss claims experience weighing negatively on the result. The sum of weather and loss claims was more than DKK 180 million higher than a normalized Q1, and as for comparison, the sum of weather and loss claims was very favorable in Q1 last year, being more than DKK 200 million below a normalized level for the first quarter of the year. Insurance revenues grew 4.8% in Q1, with the entire growth coming from the private and commercial segment and driven fully by price increases to continue to offset the inflationary pressures. The corporate segment saw a drop in topline driven by an intense focus on profitability.
Tryg is reporting a combined ratio of 86.6, with the group underlying claims ratio improving by 50 basis points while the private underlying claims ratio deteriorates by 50 basis points, primarily driven by increased motor frequencies. It is evident that profitability improvements in commercial and corporate have been noteworthy considering the private development. The investment result was DKK 117 million, driven primarily by good equities performance and narrowing covered bond spreads in the quarter, as it has remained virtually unchanged for the quarter. We report a return on own funds, the so-called ROOF, of 21% in the most seasonally challenging quarter, and I'm very pleased that Tryg pays a Q1 dividend per share of DKK 1.95, which is an increase of more than 5% compared to last year. The solvency ratio was 191% at the end of the quarter, supportive of future capital returns.
Turning to the next page on customer highlights, we continue to have a strong focus on customer satisfaction, as we do see a clear link to retention and thereby our distribution costs and overall profitability. In Q1 2024, we report a customer satisfaction score of 85 against 86 in the same quarter last year. Price adjustments and a more challenging claims mix, with many water damages to assess, have dragged down the customer satisfaction slightly. This is not exactly unexpected, as firstly, price adjustments for natural reasons have some impact, and secondly, also because claims related to water and buildings have a much more complicated claims process, which inevitably has a negative impact on the customer satisfaction for the group. We continue to be very focused on customer satisfaction, and I'm confident it'll improve going forward.
Turning to the next slide on the insurance service result, we unfold the performance for each of our three segments. In the private segment, we report an insurance service result almost DKK 100 million lower than last year due to a higher level of weather claims in combination with an increase in motor claims frequency, which was also observed in the quarter. In the commercial segment, performance for Q1 was flat against last year, with a higher level of large and weather claims virtually offset by higher runoffs. An underlying improvement was clearly visible and driven by price adjustments. Finally, in the corporate segment, we report an insurance service result almost DKK 100 million lower than last year, driven by a higher level of loss claims. An underlying improvement was clearly visible and driven by both pricing and rebalancing of the portfolios.
Turning to the next slide, we have split the Insurance Service Result by geography. From this chart, it's very evident that the headline figures show a very strong result in Sweden, a fairly weak result in Norway, with Denmark being somewhere in the middle. Runoff results, especially on a quarterly basis, can complicate the headline reading slightly, and in general, I would like to flag that the Norwegian results, while unsatisfactory, are not very far from an average Q1 looking at the last six to seven years. Additionally, we would flag that our Swedish book is somewhat different from most of our peers, with the PA segment clearly not sensitive to weather events. Taking a step back, I started this presentation highlighting the very different large and weather claims experience in Q1 2024 versus Q1 last year.
If you take a look at the chart in the upper right corner, it is shown how we report an ISR, which is approximately DKK 200 million lower than reported same quarter last year. But if we exclude all large and weather claims for both quarters, our Q1 this year would have been some DKK 200 million higher than Q1 last year. That gives me comfort. The ISR walk shows the different building blocks as usual, and for Q1 2024, the main moving parts are the higher large and weather claims experience, partly offset by a higher runoff result. It should also be noted that currency impact in this quarter was not material compared to same quarter last year.
Turning to the next slide, we illustrate the progress on the RSA synergies, as we always do, and in general, most of the initiatives are not new but still producing ongoing synergies, and hence I'll only comment on a few of the more relevant ones. Procurement in this quarter contributes with DKK 16 million and is primarily driven by our stronger consolidated purchasing power, which allows us to get improved rates and conditions. We also saw benefits from repairing wooden floors instead of changing these entirely, which both creates savings and supports our focus on ESG as a group. Claims synergies were DKK 12 million and were primarily driven by optimization for fraud and recalls in Norway. Commercial synergies were DKK 10 million and were driven by the cross-selling of niche products in both private and commercial.
In private, we saw strong traction for pet and boat insurance, and additionally, it's worth mentioning our large-scale and full Scandinavian presence gave us the benefit of being able to win 3 new car partnerships. With that, I turn to the next section on insurance revenue and portfolio, and I go to slide nine. Tryg is reporting a premiums growth of 4.8% in Q1, which is clearly driven by the private and commercial segments, while the corporate segment is reporting a declining revenue due to profitability actions and rebalancing of the portfolios. The growth in private and commercial is clearly driven by price increases to continue to offset the general inflationary pressures and some increase in claims frequencies in motor. We'll get back to that topic quite soon.
The corporate segment is reporting a noticeable revenue decline driven by profitability measures and the rebalancing initiatives to achieve a smaller, more local, and more controllable book of business. Longer term, of course, we prefer to see a more balanced growth, but currently we remain very firm to fight off inflationary pressures, and we are satisfied and content with our measures to protect margins. Turning to the next slide, we are today showing a new slide with an updated view on price developments compared to what we have traditionally used in these calls. In the past, we have shown average prices based on earned premiums. This method has an inbuilt blind spot for potential mix changes, as for instance, the move from fuel to electrical cars was not captured.
We are therefore today showing the portfolio rate increases for the quarter, and we repeat that we are pricing according to inflation for both property and motor across all countries. In Norway, we're actually pricing slightly higher than inflation, as we are not satisfied with the performance of our Norwegian private business. On the next slide on customer retention, we are pleased to continue to report broadly stable customer retention levels, even in a period with elevated price increases following the stubbornly high inflation levels. The subsegments in which we do notice a slight drop in retention remain the customers with short tenure in the private segments, which typically display the lowest profitability levels. In general, looking at longer time series, it's evident how our business continues to show a relatively low price sensitivity across different economic conditions. With that, I turn it over to you, Mikael.
Thank you, Johan, and we now turn to slide 13. The group underlying claims ratio continued to improve by 50 basis points, also in Q1 2024. We continue to see significant improvements in the commercial and corporate segments following rate and other profitability actions, while personal lines experienced a 50 basis points deterioration. The private segment was affected by an adverse development primarily driven by increased motor frequencies across Scandinavia. The underlying claims ratio is expected to improve for the full year 2024, in line with previous communication. Over time, we expect the improvement composition to change and be more driven by personal lines. Turning to slide 14. In the Q4 reporting, we stated motor frequencies to be in the high end of our expectations, and as mentioned, we continue to see this development in Q1.
In this slide, we try to give some more insight to the development we experience. Starting on the left-hand side, during Q1, motor frequencies increased by 4-10 percentage points, most notably in Denmark compared to Q1 2023. If we move to the right-hand side, we decompose this frequency increase. Roughly half of the increase is attributable to extraordinary harsh winter weather during January and February. Approximately 1/3 is driven by changes in risk mix, for instance, mix changes over time from older cars to more modern vehicles. These are changes that we expect and that are part of our tariff pricing. Finally, the remaining 15% is driven by frequencies being at the higher end of our expectations. We are actively taking actions towards this development through pricing and deductibles mainly.
As a result of the observed frequency increase in the second half of 2023 and now in the beginning of 2024, we are recalibrating our frequency expectations. Turning to slide 15. In this slide, we show, as always, the volatile items of our income statement: large and weather claims, the runoff result, and the discount rate levels. We mentioned previously in this presentation that large and weather claims were significantly above normal levels in Q1, weather claims some DKK 58 million above normal, and large claims DKK 124 million above normal. Our normalized guidance on large and weather claims remains unchanged at DKK 800 million, but we obviously continue to monitor and analyze the development closely. The runoff result in the quarter was 3.9%, virtually in the middle of our 3%-5% guided range.
The Q1 level was a bit higher than recent experience, also helped by a favorable Swedish development in this specific quarter. Finally, the discount rate at the end of the quarter was 2.7%, reflecting a generally lower level of interest rates. With that, I hand over to you, Gian.
Thanks, Mikael. We are in the investment section. On the first slides, we show that Tryg had total invested assets of DKK 61 billion at the end of Q1, split between a matched portfolio of DKK 44 billion and the free portfolio of DKK 17 billion. The matched portfolio is constructed to match insurance liabilities and is primarily made up of Scandinavian covered bonds. The free portfolio represents Tryg's own funds and is invested in different asset classes. The asset mix is virtually unchanged from recent quarters. In the second slide, we are showing a total investment result of DKK 117 million in Q1, with good contribution from the free and matched portfolio, partly offset by a slightly worse than normal other financial income and expenses line.
The free portfolio benefits primarily by good returns from equities and fixed income asset classes, while property returns remain challenging in the quarter and in the current environment. The matched portfolio benefits both from narrowing covered bond spreads and the recurrent component of the interest on insurance provision now booked under this line in the IFRS 17. Other financial income and expenses include a negative DKK 97 million item on exchange rate adjustments on balance sheet items. This comes primarily from the value change and related hedge cost of the subordinated loans issued in NOK and SEK, but also other balance sheet items. Normalized expectations on this line remain around DKK -90 million per quarter. As I mentioned previously, the asset mix in the free portfolio is virtually unchanged from last quarter and remains fairly conservative. Over to you, Allan.
Thanks, Gianandrea. Please turn to the first slide in the solvency and expenses section for details on the solvency position. Tryg reports a solvency ratio of 191 at the end of Q1. The movement in the solvency ratio from year-end to end of Q1 is primarily driven by lower own funds, as the dividend was higher than operating earnings this quarter. The solvency capital requirement was virtually flat. Leaving aside operating earnings and dividends, we highlight that currencies had a minor impact on the solvency ratio this quarter. A lower value of the subordinate loans was included in the own funds, while a lower capital charge for the insurance business was included in the SCR. It is important to remember that Q1 is typically our weakest earnings quarter and therefore also the quarter where it is more likely to see a minor drop in the solvency ratio.
Now, please turn to the next slide. In this slide, we show the long-term development of the solvency ratio. The current level of solvency remains elevated even after Q1 burdened by higher than normal large and weather claims. As mentioned in our Q4 call, we will come back in the second half of this year with an updated view and message on our solvency position. Please turn to the next slide. The sensitivities of our solvency ratio remain completely unchanged, as we did not change the asset mix. The biggest single sensitivity remains to spread risk. This should not come as a surprise, considering the covered bonds are our single biggest asset class representing more than 80% of our total invested assets. Shocks to all other asset classes have a relatively small impact on the solvency ratio. Now, please turn to the next slide for details on the expense ratio.
The expense ratio was reported at 13.5% in Q1, helped by a good top-line growth and synergies from the RSA Scandinavia acquisition. As mentioned before, a significant amount of the cost synergies are being reinvested in business developments, especially in Sweden, and in digitalization across all geographies. The number of employees has fallen as a consequence of the efficiency initiatives launched in the autumn. We maintain a strong focus on the expense level, and we maintain our guidance for an expense ratio of around 13.5% for the full year 2024. With this, I would like to hand it back to you, Johan, for some concluding remarks.
Thanks a lot, Allan, and I'll turn to the first slide in the next section on the financial targets. This is a slide we've shown multiple times before, and it is completely unchanged from last time. Despite a difficult start to the year, we continue to firmly target an insurance service result in the range between DKK 7.2 billion-DKK 7.6 billion for the full year 2024, driven by a combined ratio at or below 82. As repeated multiple times, different items such as interest rates and currencies will impact the overall ISR. Short-term inflation spikes in general may also assert some pressure on earnings. Leaving aside 2024 earnings, I would like to remind you all that we will be hosting a Capital Markets Day in London on December 4th to discuss further the strategic outlook and financial targets towards 2027.
On the next slide, we display our financial targets for 2024 updated for the IFRS 17. Nothing has changed in this chart, and all 2024 targets are repeated as is. On the last slide, as usual, we conclude the presentation with our favorite quote from John D. Rockefeller. With that, I will hand it over to the operator so that we can open up for questions.
Thank you. We will now start the question-and-answer session. If you do wish to ask questions, please press five-star on your telephone keypad. If you wish to withdraw it, you may do so by pressing five-star again. Please respect only one question per participant, and afterwards, you can re-enter the queue for another one. There will be a brief pause while questions are being registered. The first question will be from the line of Asbjørn Mørk from Danske Bank. Please go ahead, Johan, I'll be unmuted.
Yes, good morning. Thanks for taking my question. It's going to be two questions in one because it's quite interlinked, and it relates basically to slide 10 and slide 14 on your repricing versus motor frequencies. It seems like you are repricing more or less in line with sort of underlying frequencies when we adjust for weather. And then you mentioned that you would be looking also at sort of increasing the deductibles on your insurance policies. If I look at the average comprehensive motor claim last year, it was DKK 8,000. To what extent do you think you can actually raise the deductibles? Is there sort of a limit on how much you can do here before the insurance becomes almost irrelevant for the client looking at the average claim? Also looking in terms of frequencies, what can you actually do?
Do you need to do more on prices if you can't do enough on the deductibles to sort of offset the inflation we're seeing here? And that basically feeds into the second part of the question being the 50 basis point improvement to the underlying group claims ratio. Considering that 2/3 of your premiums come from your private segment, is it fair to sort of assume that the commercial and corporate had 100 basis points roughly in underlying improvement? And how long do you think you can continue that? So how dependent are you on fixing the motor issue in order to deliver the 50 basis point group improvement going forward as well? Thank you.
Thanks, Asbjørn, and good morning. So I'll try to answer the two questions, sort of starting with deductibles and rates on motor. And I think, first of all, yes, we think we can increase deductibles. And that's pretty natural also given that many of them are in a fixed number of kroner, either Swedish, Danish, or Norwegian. So a small increase is in line with market and also in line with inflation. And then there will be, as you alluded to as well, a combination of rate increases and deductible increases that will form the total of our profitability actions.
So it's those two in combination that will affect us. And if I go to the second one with the improvement in the underlying, it's actually the improvement in commercial and corporate without giving an exact number. It's higher than what you mentioned in your question. But it's true that going forward, and that's also what we noted in the presentation, that the composition of the improvement going forward will be more driven by personal lines. So that means improvements across the board, but less so in commercial corporate and improvements in the personal segment.
Okay, so just a follow up. Maybe I'm not reading the slides correctly, and I know that slide 10 is only on the private segment. But if you look at the, let's take Denmark as an example, the price hikes seem to be something like 8%. Then if you look at the claims frequencies on slide 14, it's 10%, and you say 50% of that is weather. So let's strip that out and say that's a one-off. So it's 5%. And then we have claims frequency in addition to frequency or higher inflation on the actual claims. I guess you're not really repricing above the underlying claims inflation if we take frequencies and actual headline inflation in combination. So I'm just thinking, I mean, you need to do much more on deductibles to get the improvement in the motor segment coming through. So that was basically the first.
And then the second being the things you have done to trim your corporate portfolio, I guess most of that is behind us. So at some point within a not-so-distant future, I guess it's fair to assume that the underlying improvement in corporate and commercial will be coming down significantly year-over-year.
Thanks, Asbjørn. I'll try to dig a little bit deeper into those questions. If I start with the first one on motor and the claims frequency, I mean, first of all, you're correct that Denmark in particular had a high increase in Q1. But again, remember that a lot of this is weather-driven, especially for Denmark. So I think if we would go Denmark standalone, those 50% would actually be a little bit higher. So I think that's number one. Number two is to please remember as well the risk mix effect here. And just to elaborate a little bit on the risk mix. So this is what we capture when one vehicle is changed from one to the other. So that means there is a new price for that vehicle, and that's taken into account. And what we're looking at here is the repricing.
What we're looking at for slide number 10 is the repricing for the same vehicles, the same portfolio. So that needs to be taken into account as well. So our repricing, we're comfortable that it is taken into account both the severity inflation and the frequency inflation. And then on the second one, I mean, again, you're correct. We think the composition of our underlying improvement will be different going forward. So it will be less dependent on commercial and corporate, but there will also be an improvement from the personal lines.
All right. Thanks a lot. I'll move back in the queue.
Thank you. The next question will be from the line of Tryfonas Spyrou from Berenberg. Your line will now be unmuted.
Well, hi there. Thank you for taking my question. I have plenty, but I'll limit myself to the one. Norway, I understand that the business there is much smaller than the other two countries. But actually, looking at the numbers, the expense ratio is what we're now with the group. I'm just trying to square why the loss ratio is actually higher. I appreciate the lesser weather and frequency there. But actually, the frequency pickup in Q1, as you showed on slide 14, is actually lower than Denmark. So it can't be just that. So just curious to get your thoughts on this and whether this relates to specific customer cohort or anything else, just to understand what's the scope for improvement to come from Norway going forward. Thank you.
Thanks for that question. Maybe I'll sort of start high-level on answering, and then maybe we'll deep dive into some of the frequency components. I think in general, Norway is structurally in Q1 more exposed to weather. That's why we normally see the combined ratios for the Norwegian business being slightly elevated. It's 102 for the Q1. We normally see it high. If you look at the last six to seven years, it's always been high for Q1. This is especially high. I think there are a few components playing into Norway on a sort of fundamental basis. One is that inflation is clinging on slightly longer in Norway and Sweden than we've seen in Denmark. Second of all, the weak currencies in Norway are also sort of forcing more imported inflation into the market. So I think that's sort of the structural components.
And as we alluded to, getting Norway back to a more profitable level is on schedule. We have plans. We are executing those plans. We expect those to have impact over the next six to 12 months. We should expect to have a different conversation. But I mean, these things take time. And I think for your specific discussion on the motor frequency, I don't know, Mikael, if you want to elaborate a bit.
Yeah, let's elaborate there. And I think we're moving back to slide number 10 again if I start with the rate increases. So I think it's important to note that rate increases are higher in Norway relative to what they are in the rest of our Scandinavian portfolio. And I would also like to remind everyone that these are the portfolio rate increases. When we look at the earned impact of this, this is something that will increase going forward.
So we're clearly pricing for inflation, but more in Norway in order to improve the profitability in Norway going forward.
And I think if you take a step back from Norway and look at our group numbers, we're delivering DKK 1.275 billion in a quarter with massive headwinds from large and weather, with a Norwegian business that we are seeing is very unsatisfactory. So I think we feel fairly comfortable that we've got enough levers to pull to actually bring us home for 2024, but also going into the next strategy period with guns blazing.
That's great to hear. Thank you. I'll go back in the queue.
Thank you. The next question will be from the line of Johan Ström from Carnegie. Your line will now be unmuted.
Thank you very much, and thanks for taking my question. I'll continue on the same topic and really appreciate the comments that you made on claims frequency on that slide number 14. But can I just ask you on the Danish motor claims frequency? Because there was some data out showing a very bad trend in, I think, January and February. But this slide 14 kind of indicates that the frequency numbers came down quite a bit in March. Is that true? And what are you seeing now in terms of Danish motor claims frequency? Thank you.
Yes, thanks for that question. I mean, first of all, yes, I'll confirm that. I think going on a total Scandinavian level, we definitely saw more extraordinary weather in January and February relative to what we did in March. So March was a good number in that perspective. And then for Denmark specifically, I think it's also fair to say that Denmark had a relatively benign weather situation in Q1 2023. And we have more of what we call weather days and then days that are sort of going sort of from plus to minus and so on in Q1 2024. So definitely, Denmark was more affected than the other countries. And we also saw a positive outcome when it came to March.
Just to put it in perspective from a claims experience level, we saw the biggest snowstorm in Denmark we've had for 10 years with more than 5,000 road assistance claims with people even not able to start their cars or being stuck somewhere. I mean, Denmark is not used to these snowstorms. We had a massive one in Q1. As Mikael says, we saw a drop in March, which is what we would have expected, but it's still nice to see.
That's great to hear. Just to squeeze in, everyone's asking about it. Are you involved in the big fire in Copenhagen yesterday?
Yeah, I understand where that question is coming from. Nothing appears to be on our books in this matter. So from our perspective, we are more preoccupied with the fact that Copenhagen has lost a very historical building. So I think that's probably what's taking up our mind. We don't have anything on the books as it appears now.
Thank you very much. I'll hand it back.
Thank you. The next question will be from the line of Vinit from Mediobanca. Your line will now be unmuted.
Yes, good morning. Thank you. So I think for me, one question remains that you have your technical result or insurance service result target. You have kind of re-rated it, but qualified with a lot of risks. So in the past, last year, we heard about effects. And now we're also reading in the report about litigation in your post-balance sheet date. And then this whole motor frequency and inflation. I'm just curious, when you look at this target, how much more or less comfortable you are with that 7.2-7.6 with consensus sitting bang in the middle at the moment? I'm just curious to hear your thoughts from an overall perspective on that. Thank you.
Thanks for that, Vini. And I understand where you're coming from. There are a lot of moving parts at the moment. So let me just remove any doubt from your mind. I am fully confident we'll hit in the range between 7.2-7.6. It's our job to sort of maneuver through all these moving parts, and we'll land in that range.
Okay, very clear. Thank you, sir.
The next question will be from the line of Faizan Lakhani from HSBC. Your line will now be unmuted.
Hi there. Thank you for taking my questions. The first question is just coming back to the underlying development and in particular in sort of Corporate. I know you're not specifying how much is coming from there, but I just wanted to sort of get an understanding of what is sort of the earned pattern in Corporate. Does that come across in 12 months, or is there sort of a longer period that that will come through and feed through? And second, I just wanted to go back to the math in terms of the improvement in Private. So it appears what you're saying is claims frequency is up sort of 8%, but only 15% is what you need to reprice for.
The rest is either risk mix or weather, which would suggest sort of a 1 point from claims frequency, sort of 3%-4% for claims severity. So would that suggest sort of the overall claims inflation is sort of 4%-5% for motor? Thank you.
Thanks for those questions. If I start with the question on the corporate book, yes, you are correct that sort of the earned impact of that is over 12 months. There is a small, small part of our portfolio, which is more sort of construction-based, that has a longer earning pattern. But the vast majority is definitely over 12 months. And then the question on motor rates, risk mix, etc., etc. Yes, broadly speaking, I confirm your calculation. I think the only thing I would like to add to that is, again, what I alluded to before on the risk mix. The risk mix is something that we take into account in the new business pricing, so not the renewal pricing. But I think that goes without saying. So it's something we feel fully on top of the development.
We understand the development, and we're not backing away from the actions that we're taking quite the other way around, sort of increasing the actions in order to make sure that we are pricing for minimum for the development that we're seeing.
Great. Thank you very much.
The next question will be from the line of Alexander Evans from Citi. Your line will now be unmuted.
Hi. Thanks for taking my question. I just wanted to follow up on Faisal's question on the underlying and maybe if you could help me a little bit here. But just looking at sort of the motor frequency, maybe sort of 7% across markets, about a third of your book is motor, and only that 15% repricing, it looks like that's sort of a 30 basis point headwind on the underlying there. Can you just help me how that's changed relative to the 4Q when sort of the private lines was only deteriorating by 30 basis points? Are we saying that that was more weather-driven and there's actually a little bit more sort of structural underlying there? And then just added to that, obviously, sort of travel was a headwind in the past. My understanding was sort of the combined ratio there was 95% in 2023 and sort of normalized.
It'd probably be looking at 80, which again is about a 30 basis points tailwind for 2024. Could you just sort of unpick some of those moving parts and why you're seeing sort of a greater deterioration there?
Yeah, so if I start again on the underlying, if I relate back to Q4 and this quarter, again, sort of taking a step back, there is a 20 basis points difference in one quarter. So I don't think it should be overplayed. But again, it's motor frequencies. And as mentioned before as well, we also have a development in Norway, which is not only related to motor. So I think that calls for the difference. And again, we are taking the actions in order to mitigate the development.
No, I think probably just taking a step back, also listening to the questions on this call, which I think are all clearly relevant. I think if we take a step back from page 14, I think the purpose of this slide was essentially to show that we've got our arms around motor frequencies, is also to show you that we know where it's coming from. We are saying that 85% are pretty much catered for already in the sense that it's weather and risk mix. And the remaining bit, as Mikael has alluded to, not significant, not something we cannot take care of through pricing and adjustments of terms. So I think generally speaking, I think we feel comfortable with motor frequencies development and that we have that under control. That's essentially the purpose of the slide.
I guess just sort of looking forward, it seems like frequency increased from sort of Q3 onward in 2023. Obviously, you've got some of the pricing that you put through going forward, so obviously as well, travel is a tailwind. How do you view that into the second half of the year in private lines?
So I think going forward, I mean, if I start with travel and then I'll come back to motor. I mean, as we said before, travel is something which is not a factor for the worsening anymore. But still, we are actively taking actions in order for it to improve to better levels. I mean, obviously now Q1 is a relatively sort of, I shouldn't say tough, but seasonally tough quarter also for travel. And that's not changed this quarter. But overall, I mean, we're taking the necessary actions in order to get the travel to where we want it to be. Yes, sorry. Please, can you remind me of the second question as well?
Yeah, just on the motor frequency. So I think it's sort of mainly stepped up around sort of the end of Q2 last year. What you think sort of the 50 basis points looks like to the end of the year, 2024?
Yeah, I mean, going forward, I mean, we are, as we said before, we're actively repricing and also taking actions on the deductibles. So the earned impact of the actions that we are taking will increase going forward. So we're very comfortable that the worsening that we're seeing is something that will turn around as the impact of the earnings pattern will gradually increase going forward. So we're very comfortable that we're taking the right actions.
Perfect. Thank you.
The next question will be from the line of Jan Erik Gjerland from ABG. Your line will now be unmuted.
Thank you for taking my questions as well. The first one I have is on the solvency situation. Did I redo correctly when you said that you would come back with your sort of solvency targets before the 4th of December Capital Markets Day? So we will have those in the second half of this year. Or is that so we should expect them to come rather at the CMD to be precise, so we understand what kind of level of solvency you wish to have going forward below the 191%? Thank you.
Yeah, thank you very much for your question here. I mean, we have never guided for any particular solvency targets, and we have not promised to get back or to do that. What we have said is that we will get back to you in the second half of this year with an updated position on our solvency and what it means in terms of future capital repatriation. That is what we've been said, and that was what we will reconfirm today.
Okay, and that will happen then on the Capital Markets Day. Is that what you intend?
I mean, it's right that our Capital Markets Day is actually in the second half of this year. But I mean, we stick to the second half of this year for the moment. Thanks.
Okay. Perfect. Thank you. I'll return to the queue then.
The next question will be from the line of Martin Birk from SEB. Please go ahead. Your line will be unmuted.
Thank you so much. I guess we talked a lot about the underlying. But when improvements in the underlying combined ratio in Commercial or underlying claims ratio in Commercial and Corporate, they start to come down, what is going to happen to the reported underlying claims ratio? Will that still be within the 50-60 basis points year-on-year improvement range, or will that also deteriorate?
Good morning, Martin, and thanks for your question. I mean, what we are guiding for is that we are guiding for improved underlying claims ratio in order to support our financial targets going forward. And the composition of that improvement will come both from the commercial and corporate segment, but less so than it has done over the past quarters and in this quarter. But it will also come from the personal lines market. So it will come across the board.
Okay, but what's going to happen to the net effect of those two? That's basically my question.
I think, to be honest, Martin, I see where you're coming from. I think we'll get back to that when we announce our new strategy. We'll have a new set of KPIs, and we'll get back to that. I think for this strategy period, I think the current development seems to be a good trajectory and a good path for us. So I think we'll get back to that at the CMD.
Okay, thanks. And then maybe just one final quick question here. The ombudsman case, you don't really say a lot about that today. What kind of financial implications is that going to have?
Well, it's an important topic, of course. We believe at Tryg that we have followed all the applicable regulation. We've followed all guidelines stated by the Danish FSA. On the 5th of April, as you know, the Danish Maritime and Commercial Court ruled in favor of the Danish Consumer Ombudsman against Tryg. We have appealed the decision. I think we should leave the case with the courts. Until then, we have not disclosed any amounts as the case is deemed to have immaterial financial consequences for Tryg's equity and solvency position.
I guess you have lost the first round now, isn't it? Time to sort of quantify this contingent liability?
No, we believe we have followed all regulation. We've followed the guidelines stated by the Danish FSA. The answer is no.
Okay, thanks.
As a reminder, please press five stars to ask a question. The next question will be a follow-up from the line of Jan from ABG. Your line will now be unmuted.
Yeah, thank you for my follow-ups. If you look back to slide 11, where you see a Swedish retention rate deteriorating, it looks like maybe is it Trygg- Hansa or is it the old Moderna brand, or how should we think about it? Is it because you are pruning also on the corporate and commercial in Sweden, or how should we read that number? And second question is also on the corporate side. You had -12% in the corporate earned premiums this quarter. When should we expect sort of the underlying deterioration there on the premiums to come to an end, so to speak? When have you done all of your pruning internationally? Thank you.
Thanks for those questions. If I just start off on the customer retention level on page 11, I think what you're seeing on there for the Swedish numbers, that's a blended Swedish number. So that's the combined entity of Trygg- Hansa and Moderna. And I think what you're seeing here is on the markets, it's on the decimals that things are moving. So I think overall, our sentiment is fairly positive, that our customer base seems fairly resilient to the price increases that we're going through at the moment. So you shouldn't read anything into this. This is a matter of roundings on the decimals.
Yes, I think. Okay, thank you.
If we go over to the development on the corporate top line, I think first of all, it's important to note that there are a few Danish customers that went out of the books during the first quarter of this year that affected this, and they were primarily fronting customers. So it's affected the top line fairly much, but less so on the bottom line. So I think that's number one. And number two, I think maybe I'm repeating myself, but I mean, we expect underlying improvement across the board going forward, including corporate. But again, it will be less of an improvement for the corporate and commercial side relative to what we have seen.
In terms of the execution of risk mix changes for the international business, that's something that is done and concluded, but it doesn't change the fact that we're fully committed to profitability actions where necessary sort of across the board. That includes the corporate book as well, which for corporate has a little bit more of a volatile impact given the fact that it's larger customers.
Okay, so it means that your improvement underlying or let's say around 1 percentage points for commercial and corporate will then sort of start to diminish, but still be a positive number while the personal line, which has been negative 50 basis points, will sort of start to become more positive. You will meet somewhere in the middle there between zero and potentially 50 basis points improvement before you sort of are happy and competition starts to work again.
Okay, I think I understand your sort of back of the envelope Excel calculation there. But I think if I just sort of reiterate a couple of points, I mean, it's true that the improvement in commercial and corporate has been relatively big, actually bigger than the one percentage point that you're mentioning here. And it's also true that we think that that number will come down, but it will still be a contributing factor to an improved underlying going forward. But that improvement will also come from personal lines.
Very clear. Thanks a lot.
The next question will be a follow-up from the line of Tryfonas Spyrou. Please go ahead. Your line will be unmuted.
Hi, I just have one more question on corporate topline outlook. Can you share more color on whether we should expect a similar premium sort of decrease for the remainder of the year or whether Q1 it was more heavily influenced given that it's a newer quarter? And I guess how close are you to achieving the portfolio you want to have going forward? I'm just trying to understand when the group level growth should converge to the private commercial level and what this and what will headwind from corporate go away. Thank you.
Yes, thanks for the question. I mean, first of all, correct that the corporate book is more tilted to renew 1st of January. So there will be less of sort of actions up or down other parts of the year. I think that's number one. And then number two, corporate will always be a little bit more volatile when it comes to topline development relative to the SME and the personal lines market because it can more be affected by individual customers. So that volatility will still be there up or down going forward. And then I think just to reiterate what I said before, I mean, our commitment is to the profitability of that book and to continuously improve it. And that will not change going forward.
But I mean, we're comfortable with the book that we're having, but we still see opportunities to improve also with the actions that we have driven so far.
The next line will be for a follow-up from the line of Vinit. Please go ahead. Your line will be unmuted.
Vinit, thank you for the opportunity. Just looking at the regional mix and the underlying, let's say, ex runoff, which we have with us, it seems like Sweden has had most of the runoff maybe from the health business. And the underlying loss ratio in Sweden, or let's not call it underlying, combined ratio ex runoff has worsened a bit, but still very good with the level 87.6. I can see in Q1 2024 was 80.8 last year. Could you just talk a little bit about Sweden here? Because is it that last year was very good, and so this year is just normalizing, or is there anything to point out there? Because also when I see 11% growth in Sweden, I'm just curious if there's anything to note here, please. Thank you very much.
Thanks for that question. I think maybe I'll start off by just saying there's nothing to be worried about in our Swedish business. It's performing very well, also in Q1, being, of course, a challenging weather quarter as it always has been. That being said, you shouldn't read too much into how the runoff falls in a particular quarter. You need to take a longer time series for that to be meaningful. It is the most long-tail part of our business. It is where most of the reserves will be, also where most of the reserve releases will drop. But don't read anything into a particular quarter. Take a longer stance on that and be assured that our Swedish business is still delivering very strongly, and we believe that it will continue to do so for the full year also. So don't read too much into that.
All right. Thank you very much.
The next question. Please go ahead. Your line will be unmuted. As we cannot hear Asbjørn and no one else has lined up for questions, I'll then hand it back to the speakers for any closing remarks.
Thanks a lot to all of you for the good dialogue and the very good question. As always, Investor Relations will be around at your disposal today and the next few days, and we're also on the road in different roadshows. So looking forward to seeing you, and thanks a lot.