Good morning, everybody. My name is Gianandrea Roberti. I'm the Head of Financial Reporting at Tryg. We published our Q2 figures earlier this morning, and I have here with me Johan Brammer, our Group CEO, Allan Thaysen, our Group CFO, and Mikael Kärsten, our Group CTO, to present the figures. With these words, over to you, Johan.
Thanks a lot, Giana ndrea, and good morning from me as well. I will move straight to slide four in the deck and the financial highlights. I will start by commenting on our insurance service result that exceeded DKK 2.3 billion in the second quarter, driven by a strong combined ratio of 77.2%. I will repeat that: a strong combined ratio of 77.2%. In that context, it is probably important to remind you all that we restated our quarterly figures for 2024 due to an accounting change for our inflation hedge, and that you can find all restated figures for 2024 published in the newsletter we sent out in March. The restatement impacts primarily the runoff result in a negative manner, and therefore the ISR, and the investment result in a positive manner.
Moving on from that, our insurance revenue grew 4%, primarily driven by good growth in the private segment, which grew 4.4%. As for our ISR in the quarter, it increased by 4.3% compared to the reported figures, which is roughly in line with the top-line development. It increased more against the restated figures, but this is, as mentioned, driven by a lower runoff in 2024 as per the accounting change and hence less relevant. Our underlying claims ratio improved by 30 basis points, while the private segment improved by 20 basis points, up from the 10 basis points in the previous quarter. From a geographical perspective, the quarter was strong across the board, and we see improvements in line with our expectations in the Norwegian business.
Motor claims costs have been a headache for a while, but we are pleased to see these stabilizing, while at the same time we also notice a generally positive trend in our Norwegian business. Nevertheless, I can assure you that we remain alert and price accordingly. The overall investment result was DKK 110 million, with a good performance from our conservative covered bonds portfolio. Please note that the result last year still included DKK 7 billion of risky assets that had a good return in 2024. As you know, the asset mix was changed during Q4, as disclosed at our CMD in December. To sum it up, we are reporting a pre-tax result above DKK 2 billion. We are reporting an operating EPS, which is our favorite earnings metric, of DKK 2.80, and a return on own funds of 44.7%.
I'm also therefore pleased to announce that Tryg pays a Q2 dividend per share of DKK 2.05 in line with Q1 and a healthy solvency ratio of 199%. With that, I move to page five on the customer satisfaction. Customer satisfaction remains very important for us at Tryg, and we are satisfied to achieve a Q2 level of 82 against an overall CMD target of 83 in 2027. In that context, I'd like to remind everybody that we now have fully included our Swedish business in the baseline of 81 for 2024. In fact, the main driver of the improvement is indeed our Swedish business, whether it's an intensified focus on customer satisfaction following the full integration of Trygg-Hansa. In general, we see a strong link between customer satisfaction and customer retention, which remains supportive of our low distribution cost and our level of profitability.
With that, let's move to slide six, where we comment on the recent developments following the publication on April 1st from the Danish Consumer Council of a report on the Danish private insurance market. The DCCA has, at the end of June, announced that it is starting an investigation into the Danish private market with a particular focus on the indexation practice, exactly as expected. Price indexation is a general market practice in Denmark, and it has been so for many decades. Any proposed changes to this, should that happen, will be an industry move affecting all players. Please note, and this is important, that we have experience navigating in markets without price indexation, as it is not used in Norway and only partially in Sweden.
I would also like to remind you in this context that private Denmark is an important part of our Danish business, but it is in fact a smaller part of our diversified group following the acquisition of RSA Scandinavia. I also think it's important to remember that we run an efficient business characterized by a low expense ratio and a highly efficient setup. We focus a lot on procurement to keep the cost of claims under control, and we have a high customer satisfaction, which is a significant differentiating factor compared to quite a lot of other geographies. Finally, just to sum it up, we are confident that our ability to continue to run a healthy business with a strong customer satisfaction and attractive shareholders' return will not change.
With that, I'll move on to slide seven, where we show the developments for the insurance service result for the private and commercial segments. As mentioned at the beginning of this call, the restated figures include the accounting change related to the new inflation hedge methodology. This impacts the runoff result and therefore the overall ISR level. We're therefore showing you in this chart both the reported and the restated figures for the comparison quarter last year. Zooming in, the private segment benefited from good growth, a higher runoff result, and a generally improved underlying performance, especially in our Norwegian business. We'll get back to that. The commercial segment reported very strong figures with a headwind from almost DKK 100 million additional large claims compared to Q2 2024, while the underlying performance actually improved.
In general, we're pleased to see that the private segment is contributing more to the overall group underlying performance improvement, and we expect this to remain the case also going forward. On slide eight, the next slide, we show, as usual, the development in our results by geography and the overall ISR bridge to the right-hand side in this chart. The figures by geographies are strong across the board, but I'd like to comment specifically on Norway, as we are reporting a Q2 combined ratio of 82.1%, while the first-half performance sees a combined ratio below 89%. We need to continue our ongoing actions, and we already see clear evidence that price increases and additional profitability actions are improving their financial performance. As for Sweden, we're reporting an excellent combined ratio of 69%, while Denmark is reporting a healthy 80.5%.
When we look at the bridge for the group ISR, leaving aside the mentioned restatement as displayed in the chart, we'd like to highlight a good growth, higher large and weather claims taken together, and a generally improved underlying performance. With that, I will move into the next section on the insurance revenue development and go to slide 10. In this slide, we're showing the group growth of 4% split between private and commercial. As you can see, we continue to report a growth primarily driven by price increases to offset inflationary pressures and improve the underlying performance. The price adjustments continue to be higher in Norway, where we have more need of improving the profitability. The growth of the commercial segment is still impacted by the rebalancing exercise conducted in what was previously called.
The corporate segment, although the impact of this is smaller than previously and gradually tapering off. Long term, we expect a more balanced growth profile, but we have deliberately remained very disciplined in the last few years following the sudden return and stubbornness, I might add, of high inflationary levels. With that, let's move to the next slide on the combined ratio performance with a focus only on Norway. We're pleased to report a Q2 combined ratio of 82.1%, a significant improvement compared to last year. It is important to remember when looking at past performance in this chart that figures for Q2 in 2021 and 2022 were indeed impacted by the COVID outbreak, so it is quite a complicated comparison. In first half this year, the combined ratio is below 89%. It is more specifically at 88.5%, so it is trending clearly in the right direction.
We continue to focus on improving our financial performance in Norway and expect this to further improve in 2026. It is also important to remember that especially in Norway, the performance of the quarters in the middle of the year, be it Q2 and Q3, tend to be significantly stronger than Q1 and Q4, as weather patterns, especially in Norway, can create quite a lot of noise in the figures. With that, let's turn to the next slide on the customer retention. On page 12 here, we are showing you an updated picture of the customer retention for the two main segments. As mentioned in many calls before, we continue to see small drops, which are in line with our expectations and driven by our profitability initiatives. However, please note that in Sweden, we do actually see slight improvements across both segments.
It's not unusual to see customers reacting to price adjustments. This is just a proof point of the fact that we work in very well-functioning markets where there is a healthy competition between the providers in the market. We'll continue to increase our efforts and expect the situation to stabilize as we move into 2026. In this context, it's important to remember that history sometimes has a tendency to repeat itself. When we go back in time, retention rates in private Denmark actually dropped somewhat post-2009 to 2010 on the back of significant price increases to restore profitability. In fact, after a couple of years, these were back at similar levels again. With this, I'll pass the word on to you, Mikael.
Thanks, Johan. I now turn to slide 14 and comment on the development in the underlying claims ratio.
This has improved 30 basis points for the group, which is unchanged versus last quarter. For personal lines, the improvement is 20 basis points, up from 10 basis points in Q1. Profitability initiatives, especially in Norway, are contributing primarily to the improvements in the private segment. We also note that the development within Motor, both in terms of claims frequency and claims severity, is in line with our expectations. As Johan stated previously, Motor will always be a key focus area for us, with nearly one-third of our premium income and a Motor market that has changed in recent years. All this is business as usual for us. As a reminder, we have guided for an underlying claims ratio to be broadly stable to slightly improving towards 2027.
Turning to slide 15, here we, as usual, show the level of large and weather claims in the quarter, the runoff result, and the discounting level. Q2 was a relatively benign quarter in terms of large and weather claims experience, as both were somewhat below the normalized expectations for the quarter. The runoff result was broadly in line with recent quarters and the guidance for 2027. Importantly, when you look at the Q2 2024 level, you ought to remember that this is impacted by the accounting change related to hedging inflation, which has lowered the runoff result by approximately 200 basis points, improving the investment results equally. Finally, our discount rate is unchanged compared to Q1. Remember that discounting is a function of both the level of interest rates and claims mix, meaning that small discrepancies can be observed from time to time.
With this, I hand it over to you, Gian.
Thanks, Mikael. I'm now commenting on slide 17, where we show the usual split of our invested asset of DKK 60 billion in the match and the free portfolio. There's very little news here, as the match portfolio represents DKK 45 billion of the total asset or 75%. The free portfolio is DKK 15 billion or some 25%. The asset mix is largely unchanged. On slide 18, we comment on the overall investment result, which was DKK 110 million in the quarter, virtually aligned with a normalized expectation with our chosen asset mix. The free portfolio benefited from good returns on Scandinavian covered and government bonds, also helped by a slight fall in interest rates. Properties produced a 1% return in the quarter. The match portfolio result included a return on the premium provision, but was also helped by lower interest rates in general.
Other financial income and expenses was -DKK 114 million, slightly worse than normal, primarily driven by currency adjustment to balance sheet items and related hedges cost. As mentioned previously, the asset mix is unchanged for the quarter, but long-term real estate is not expected to be part of the asset mix. We mentioned this at our CMD, so there is nothing new here. With this, over to you, Allan.
Thanks, Gian, and good morning from me as well. Please turn to the first slide in the solvency and expenses section. In this slide, we are showing details on our solvency position as per end of Q2. Tryg reports a solvency ratio of 199% as per end of the quarter, which is up from 195% at the end of last quarter. The group capital generation before dividend payment was 20% in Q2, which is a very robust level.
We would like to repeat that modeling Tryg's solvency ratio is fairly simple. Own funds is mainly a function of operating earnings and capital distribution, while the SCR remains relatively stable, as this is primarily impacted by the overall business growth. Now, please turn to slide 21. Here you can see the long-term development of our solvency ratio. As mentioned, we expect the solvency level to gravitate towards a less conservative level in the long term. During the last period of macroeconomic turbulence, we believe a robust solvency position has been positive for our investment case. We will review our solvency position at year-end, and at that time, we may consider extraordinary capital repatriation if found appropriate. As always, we prefer a gradual approach, benefiting our shareholders with balanced actions. Please turn to the next slide for updated solvency sensitivities.
Solvency sensitivities are virtually unchanged since Q1, and we generally have very low sensitivities, especially after the asset de-risk carried through during last autumn. The vast majority of our fixed income exposure is represented by Scandinavian covered bonds, and therefore, it is not surprising that spread risk against this asset class is our biggest sensitivity. The sensitivity to interest rates movement is very low, taking into consideration our matching strategy and generally low sensitivities due to a strong and hedged balance sheet. Now, please turn to the next and last slide in this section for details on the expense ratio development. The expense ratio was 13.5% in Q2, held by good top-line growth and a tight cost control in general. The total number of employees increased slightly this quarter, driven by investments and some of our strategic initiatives.
The total cost base remains fully in line with our recent guidance that we expect a stable to slightly improving expense ratio development towards 2027. Finally, we see our low expense ratio as a key competitive advantage, and we are very pleased to be able to run our business with such a strong level of efficiency. With this, I will hand it over to you, Johan.
Thanks a lot, Allan. We are now entering the final part of this presentation, and I'll take you to slide 25. In this slide, I'm just recapping essentially our three strategic pillars supporting our ambition of growing the insurance service result by DKK 1 billion from the full year of 2024 to the full year of 2027. As you remember, DKK 500 million will come from Scale and Simplicity, DKK 300 million from Technical Excellence, and DKK 200 million from Customer and Commercial Excellence.
We've shown these pillars at the CMD in December, and we continue to work on implementing all the initiatives behind each of them in order for us to secure our 2027 targets. As for the first pillar on Scale and Simplicity, we are seeing strong traction on the strategy execution. One particular example to highlight today on Simplicity is an AI model developed in Claims Denmark. This particular model can automate the process of assessing who is liable when two cars collide. This AI model automates 85% of these particular claims, providing faster customer journeys and, as a result, higher customer satisfaction. Just to put this in context, this AI model is applicable to more than 50,000 claims per year in Denmark and is therefore also very relevant for scaling to Sweden and Norway.
As for the second pillar on the Technical Excellence, I will highlight the progress on an underwriting tool that we mentioned on the CMD in December 2024. I'll unfold that further in the next slide. As for the last strategy pillar on Customer and Commercial Excellence, I'd like to highlight an example from Denmark regarding patient insurance for dentists. In December 2024, new legislation was imposed in Denmark requiring dentists to hold patient liability insurance from January 1, 2025. As a result, Tryg launched in record time the product through strong cross-functional collaboration and was the first in the market to sell these patient liability insurances to dentists starting January 1. We benefited from this commercial speed and were able to take a strong share of the market above 50% before the demand was fulfilled by the deadline in April 2025.
That brings me to the next slide where I'll unfold the mentioned underwriting tool example, one of the many initiatives part of the Technical Excellence pillar that Mikael mentioned already at the CMD in December. Our underwriting tool enables more consistent and technically sound underwriting for individual customers across markets by actually applying a uniform methodology and shared data foundation. The underwriting tool supports our ambition to become more data-driven by actually incorporating internal and external data sources systematically. The tool is built as a shared Nordic platform, and the underwriting tool leverages best practices across countries. The key to achieve impact from this underwriting tool is increasing the adoption rate as we see a clearly improved combined ratio of somewhere from 2% -3 % when the tool is applied.
In 2024, the adoption rate was 30%, but already now, by the end of first half 2025, we have increased the adoption rate to 45%. The tool is fully adopted in Norway, where all underwriting cases are registered and processed through the tool, ensuring consistent documentation and improved traceability. In Denmark, the adoption is gaining traction as a result of a strong rollout of this initiative in Commercial Lines Denmark with the expansion of the tool usage beyond underwriters to include sales, who can now initiate cases when underwriting support is needed. Full adoption is still in progress. As for Sweden, the final market, the initial rollout is scheduled for second half this year, starting with the Motor portfolio. With that, I move to slide 27, where we show our financial and customer targets toward 2027. As a reminder, we target a combined ratio of around 81.
We target an insurance service result between DKK 8 billion and DKK 8.4 billion, zooming in on the midpoint together with a return on own funds between 35% and 40%. Additionally, we promise shareholders to return DKK 17 billion- DKK 18 billion in the three years between ordinary dividends and the recently concluded buyback of DKK 2 billion. Our strategic KPIs are also completely unchanged, of course. As mentioned earlier in today's presentation, we're seeing a noteworthy improvement in our customer satisfaction, now including the entire Swedish business. We see this already in the middle of 2025. As always, on the last page, I conclude this presentation repeating our intense focus on being a very good and disciplined dividend payer. We run a long-term profitable business, as you know, and we like to return most of our profits to shareholders in the form of dividends.
Operator, we are now ready to take questions.
Please, everybody remember, just ask one question at a time. Thanks.
Thank you. We'll now start the Q&A session. If you wish to ask a question, please press five-star on your telephone keypad. To withdraw your question, you may do so by pressing five-star again. In the interest of time, we ask that you limit yourself to one question. If you have additional questions, you may rejoin the queue. We will now have a brief pause while questions are being registered. Our first question will be from the line of Asbjørn Mørk from Danske Bank. Please go ahead. Your line will now be unmuted.
Hi, and good morning. Thanks for taking my question. I'll try to merge two or three questions into one then, so I stick to the one-question rule.
Basically, just looking at the Norwegian slide, the 6 percentage point improvement to your combined ratio in Norway, and looking at what one of your main peers reporting this morning is telling us about Norway. It seems like there is quite a lot of repricing still going on in the Norwegian market, but also that there's been, I guess, some benign weather in the quarter and, I guess, some year-over-year tailwinds from fire claims. Maybe you could just give us a little bit more sort of granularity to that improvement in Norway in Q2 and what you see sort of going forward, also looking at your retention drop in Norway. I would have expected that to sort of stabilize given how much your peers are repricing. Sort of what you are seeing there.
In addition to that, considering the repricing effects that we should expect going forward from price hikes already sort of announced and initiated, is it fair to assume we'll get four-six quarters of tailwinds on your insurance business both in Norway and Denmark from those kinds of trends if we see sort of a more normalized claims picture from here? Thank you.
Good morning, Asbjørn, and thanks for that question. If I start with the improvements in Norway, I mean, as you said, we improved by six percentage points in our core for Norway. We think that is really strong. We improved by seven in the first quarter, but actually we deemed the six percentage points in this quarter to be even stronger, given that we had some more weather if we look back on Q1 2024 when we do that comparison.
As for the situation going forward, we continue to price in personal lines in the same way that we have done year to date. As a result of that, obviously, since that is clearly above inflation, we expect to drive further profitability improvements as a result of that. Obviously, at some point in time, there will be a gradually lowered price increase when we deem that to be appropriate. No doubt, we will see improvements from the medicine that we're taking, and we're very comfortable with that medicine because we see that it's working. Maybe if I can just add to that, Mikkel, I absolutely agree. I think if we take a sort of strategic stance on what's going on right now, I think we're demonstrating the strength of the new Tryg Group with having three strong legs.
We've been talking about the profitability in Norway for a while. Now it's coming into a territory where we can really fully stretch our legs here in all three markets, which is giving us a competitive advantage in the region. As for your retention questions, I think your comment is fair. We are seeing some caving in on the retention levels across all markets, also in Norway. That being said, it's rather benign. It's better than we expected. When we take a historic stance on this, this is what happens when you have stubborn inflation. The price increases need to flow through, and retention rates tend to bounce back. We are not concerned.
If I may just follow up on that one, because if I look at your Nordic peer.
Repricing maybe even a little bit more than you are and actually seems to be gaining market share. It seems a little bit peculiar that your retention continues to drop in Norway. Is that something that will limit you sort of in your price actions going forward? Or, I mean, what is sort of the acceptable level from your side when it comes to retention in Norway?
If I follow up on that, Asbjørn, the slight drop in retention rate should also be read against that there are specific agreements that we are also looking into that have specific profitability challenges. In specific cases, we have chosen not to continue with those agreements. You should not read too much into slight retention decreases with a couple of 10 basis points in this.
I think we should read this more from a strategic point of view, where we're very much driving the actions that we want to do and get the benefits accordingly.
Okay. Thanks a lot.
Thank you. The next question will be from Autonomous Research. Please go ahead. Your line will now be unmuted.
Good morning, everyone. My question is on severity inflation. I think last time you said you put that at around 6% across all your markets on average. Could you just give us an update on what you're expecting going forward, especially in light of one of your peers lowering their expectations this morning? Thank you very much.
Good morning. Commenting on that as well, I mean, from an overall point of view, we see that severity inflation is coming somewhat down relative to what we've seen before.
That's also very much in line with our expectations. Obviously, we're pricing accordingly and feel very comfortable with that. Having said all this, there are pockets, again, especially in motor, where we see higher levels of claim severity inflation. Again, this is something that we are accounting for and something that we're pricing for.
All right. No surprise on frequency either, right?
On frequency, we have seen definitely normalization in this quarter. I mean, we can see in some of the public figures also available in the Danish market. Obviously, claims frequency is down quite a bit. When reading these numbers, one should keep in mind that there were some weather events in 2024. Overall, again, claims frequency is very much in line with our expectations, and we feel very comfortable with that development. I guess just to supplement that.
All right. Thank you.
Just to supplement that, in general, we have in the last three, four, five, six quarterly calls discussed two areas of improvement for Tryg, which has been motor, and it has been Norway. I think it's fair to summarize that we are seeing very strong improvement both on Norway and on motor. Some of the headaches are disappearing as we speak.
All right. Great. Thank you very much.
Thank you. The next question will be from the line of Mathias Nielsen from Nordea. Please go ahead. Your line will now be unmuted.
Thank you very much, and congratulations on the strong results. If we come back a bit to the revenue growth and the retention rates, when I look at private lines on revenue growth, it's now down to 4.4% year-on-year, which, if I understand it, is offset by some client loss.
It is 100% price letter, more than that, actually. When you look at the client mix that you lose over the quarters, can you say a bit on what is the share of clients that are okay to lose? I guess in Norway, there have been quite a few above 100% combined ratio, which is okay to say goodbye to. Then there are also some other clients, which are good clients where they are quite profitable that do not accept the higher prices. Can you tell us a bit about the split and if that has changed and how that has changed over the past year or one and a half year, maybe?
It is a good question. Maybe if I just stop high level, and then I will zoom in on exactly what we are seeing.
I think, in general, in times of inflation, as we've seen in the last two years, it's not worthwhile debating whether you're losing one customer or gaining one customer. It's around protecting your margins. We are not seeing any significant changes to our customer stock. We are seeing some of the trends you're alluding to, that when we do the price increases we're doing at the moment, as are the rest of the industry, we are seeing the customers with the fewest products leaving us first. There is a tendency for people, for the price seekers and the ones who only have one product, to leave us first. Honestly, we are seeing a 4.4% growth. It is very acceptable in these times, and we're not seeing any massive changes at all to our customer stock. We are quite pleased with the current growth levels in private.
I believe as we exit an inflationary scenario where we've been in the last few years, I expect to have more organic growth going forward, but this is a very acceptable level for us to be at.
Thank you very much.
Thank you.
Thank you. As a reminder, if you wish to ask a question, please press five-star on your telephone keypad. The next question will be from the line of Michele Ballatore from KBW. Please go ahead. Y our line will be unmuted.
Yes. Thank you for taking that question. Just from Sweden, can you—sorry if I missed this—can you give more granularity about the performance in general, the underwriting performance in Sweden, please? Thank you.
I think if I start on that, and then Johan can complete with some more strategic measures. I mean, I think if we just sort of start looking at the.
Big KPIs with top line and combined ratio. I think it's fair to say that it's really, really, really strong. I mean, obviously, this is a place where we have a very solid profitability. It's somewhere where we look to gain more traction on growth going forward, but that very much relates back to Johan's point before of sort of how we like to accelerate organic growth going forward. In terms of the development, it's really solid.
If we just unfold some of the commercial initiatives going on in Sweden at the moment, I'll just give you a few soundbites to give you a flavor for the fact that we actually have a very attractive brand proposition in Trygg-Hansa in Sweden. We're seeing our online sales to commercial customers for motor has gone up with 10% Q1Q.
We are also in the private lines business in Sweden. We're seeing good growth in personal accident sales, which has been up 7% QoQ. The brand is vibrant as ever, and we're seeing good traction also, not just financially, but also commercially.
Okay. Thank you. Basically, the deterioration in the combined ratio quarter- on- quarter was led by a trade-off with growth if you are trying to do.
I think when you speak about the deterioration, I just want to re-emphasize that for Sweden, we're printing a combined of 69 for Q2. I think that's a stellar performance for Sweden's market.
Yes.
In addition to that, when comparing the quarters, I mean, obviously, we should take into account the volatile items of large and weather, and in this case, especially the large, which was at the slightly better level, still at a good level this quarter, but at an even better level in Q2 2024. You should not read too much into that quarter- on- quarter deterioration, or you should actually read nothing at all into that deterioration.
You mentioned large claims?
Correct.
Okay. Thank you.
Just to that, on a group level, we are taking in large claims of around DKK 100 million more in Q2 this year than compared to Q2 last year on a group level, not on Sweden, but on a group level. In the numbers we are printing today, we have DKK 100 million more large claims than the same quarter last year.
Thanks a lot.
Thank you. The next question will be from the line of Nadia Claressa from JP Morgan. Please go ahead. Your line is now unmuted.
Hi, morning. I had another question relating to Norway, please. I mean, it's pleasing to see that the pricing actions are coming through, and I think you stated yourself that the combined ratio there is still not at a satisfactory level. How far off are you from the levels you're happy with? Could you perhaps provide some more color on the magnitude of rate increases you're putting through there as well, please? Thank you.
Maybe I'll start with answering your questions on sort of the ambition levels. I think for the first half for Norway this year, we're printing a combined of around 89. I think that would be an acceptable level for the full year also.
Going forward, coming to the end of this strategy period of 2027, I would assume and target a combined ratio hovering somewhere in the mid-80s to high 80s for Norway. As for the specific rate increases, Mikael, maybe you'll comment.
Yes. We have previously stated that we are putting through rate increases of mid to high teens, and that is very much what we're continuing to do. As I said before, this is something that will drive profitability improvements. At some point, those increases are something which will become more modest as we go forward. That is very much sort of when we feel comfortable to do so and feel that we have all the profitability improvements very much in line with what Johan said.
Thank you.
Thank you. The next question will be from the line of Vinit from Mediobanca.
Please go ahead. Your line will be unmuted.
The better improvements. Yes. Good morning. I hope you can hear me. Congratulations again on the Norwegian business. Just one query, based also on the commentary from your Norwegian peer. If they are taking pricing a bit of taking the foot off, if they are taking pricing foot off the accelerator a little bit in Norway, and your message is you continue to keep the similar pricing, then I mean, where do you think is the difference? I mean, do you think that your inflation outlook is a bit more cautious in Norway, and then you might be happy to give up some business for this objective of targets, or actually, you think in Norway inflation, labor costs, frequency are all now have peaked and now are getting better? I am just curious on that.
Also, just in the same line on Norway. In the six points mentioned, how much was just the fact there were lower fires or such, naturally occurring things? Thank you.
Good morning, Vinit. I'll start on that, and we'll see if Johan adds something to it as well. I think, without commenting on our competitors, we can just conclude that we are on an improvement journey in Norway. We are seeing that improvement coming through. Six basis points for the core in this quarter, seven basis points last quarter. Still, very much as Johan was saying, it's still cores that should improve going forward. As a result, we're still pricing on the same level as we've done year to date. Obviously, again, repeating, that is something that will come down at some point in time again.
I would not like to comment on what the competitors are doing, but I can conclude that. We probably have different companies have different starting points, and we are very much sort of committed to the improvements that Johan just stated. As for the last thing regarding sort of fires and etc., I mean, there will always be some volatility in claims development from one quarter to another. We know that there has been a quarter where there has been sort of more severe weather. This quarter, there is a bit less, especially in Norway. Again, that's the name of the game in the market. We are concentrated on the things that we can affect and pricing and driving profitability initiatives accordingly.
Okay. Thank you. Good to know. Thank you very much.
Thank you.
As a reminder, if you wish to ask a question, please press five-star on your telephone keypad. The next question will be a follow-up from Autonomous Research. Please go ahead. Your line will now be unmuted.
Hi there again. It's Youdish from Autonomous Research again. I have another question, which is on the DCCA pricing investigation. Would it be fair to say that, contrary to initial expectations, the scope is quite narrow and very limited, and therefore, any outcome of this would be rather benign? Would that be a fair characterization? Thank you.
I think that's a fairly accurate description. I think they've launched the investigation as we expected. They have, as expected, zoomed in on the automatic price indexation practice in Denmark. You're right in that we assume that this will not be a hindering for our ability to.
Create good customer satisfaction and strong shareholders' return out of Denmark. If it should change, it might impact transparency, which we, of course, salute and will, of course, work with authorities to promote.
Great. Thank you very much.
Thank you. The next question will be a follow-up from Mathias Nielsen from Nordea. Please go ahead, Johan, and I'll be unmuted.
Thank you very much for taking my question again. I have a bit detailed question maybe, but on your cost, on your operating expenses, it seems like they increased by DKK 70 million quarter- on- quarter after being flat for almost six quarters in a row. Even adjusting for the FX, which is around DKK 20 million-DKK 25 million or something like that, it seems like it's got even higher.
Is there any structured changes or front loaning of investments, or is it something that we should expect that this is a sign that you're turning more aggressive and want to staff up to be prepared for organic growth, or how should we see it?
Hi, Mathias. Thank you very much for this question on the expense ratio. We're printing 13.5%. That is pretty stable. Towards 2027, we expect it to be stable to slightly improving. You're right that in nominal numbers, it is increasing a bit. As you can see from the presentation, we have a few more FDs. We are within this cost base investing in our strategic initiatives, but also in the commercial activities that you are alluding to, and especially in Sweden. There's not any particular read of the nominal increase. That is fully in line with what we have been expecting.
It's fair to say that you staff up a bit to be a bit more commercial and get what you're setting out in your strategy. Is that fair to conclude it that way?
Yeah. Fully in line with our strategy, we are investing in people in sort of the right strategic initiatives, but also in the commercial activities at the moment.
I think if you take a step back and look at our three strategic pillars, one of them is called Customer and Commercial Excellence. As we are now seeing holistically that inflation is tapering off, we feel now is a better timing for us to lean into the market. We are deploying new products, new distributions into various parts of the business. You'll hopefully see the benefits of that in the quarters to come.
Thank you very much. That was very clear.
Thank you.
Thank you. As we have no further questions, I'll hand it back to the speakers for any closing remarks.
Y es. Thanks a lot to all of you for the good dialogue and always good questions. Just to remind you, the investor relations team here at Tryg, as always, will be able to help you today and the next few days. Otherwise, thanks again, and we'll speak to you soon.