Good morning, everybody. My name is Gianandrea Roberti. I'm Head of Financial Reporting at Tryg. We published our Q3 figures earlier this morning, and I have here with me Johan Brammer, our Group CEO, Allan Thaysen, our Group CFO, and Mikael Kärrsten, our Group CTO, to present the figures. With this, the floor is over to you, Johan.
Thanks a lot, Gian. A good morning from me also this morning. I will on the first slide, as always, start by commenting on the financial highlights for the quarter. As you can see from the slide, we are reporting a premiums growth of 3.4%, which is in fact 4% when adjusting for a one-off booked in the corresponding quarter last year. The insurance service result landed at DKK 2.181 billion, which corresponds to a growth of 7% when normalizing large and weather events. The combined ratio was 78.6%, a very strong performance in a seasonally favorable quarter. I am very pleased to see that all business segments and geographies reported a strong profitability development.
The group underlying claims ratio improved by 30 bips, which is in line with recent experience. It is worth highlighting that the private segment accelerated the positive development, improving also 30 bips against 20 basis points in the previous quarter. The investment result was solid, helped by both the free and the matched portfolio. We'll get back to that. Even more importantly, we are showing a good traction on the sell-down of properties. To be more specific, we had DKK 3.3 billion of properties at Q2. We have DKK 2.9 billion now here at Q3. In addition, we are flagging today that two new sales right after the reporting date are bringing us to DKK 2.4 billion in Q4. We continue to work, of course, hard on reducing our asset risk further into next year in line with our promise at the Capital Markets Day.
To wrap up this slide, we're paying a quarterly dividend of DKK 2.05 and report a robust solvency ratio of 204%, which is supportive of course of future capital repatriation. With that, I'll move to the next slide on the customer highlights. I'm pleased to report that after three quarters of our new strategy period towards 2027, we are reaching a customer satisfaction level of 82%, which is midway between our baseline in 2024 and our targeted level of 83% at the completion of the strategy period in 2027. Customer satisfaction, as you know, remains absolutely paramount in our industry, and during 2025, we've actually launched several exciting STP straight-through processing initiatives as an efficient and speedy claims handling process is a key driver of customer satisfaction.
As an example, Claim Sweden has now enabled that certain claims are swiftly reimbursed with Swish, a mobile banking app. The customers receive their money in a fast and secure manner. I'd also like to highlight that TryghedsGruppen has paid its member bonus in September amounting to 6% of premiums paid in 2024. In the next slide, we show you the development of the insurance service result by our two segments, private and commercial.
As always, there are many moving parts impacting the reported number. In addition, it's also important to remember the changed accounting practice due to the inflation hedge, which explains the difference between reported and restated in this chart. I would love to highlight that in the private segment, especially in Norway, we see a continuous progress driven by profitability initiatives, which I'll comment on later on during this call.
As for the commercial segment, it reported an excellent combined ratio of 73.7%, also driven by our strategic focus on SMEs, and of course, also the reduction of the corporate book carried out during the previous strategy period. Let's turn to the next slide on the group insurance service result, where we show the ISR development by geographies here. On a group level, the ISR of DKK 2.181 billion benefited primarily from premiums growth, improved underlying performance, and a higher run-off result. These were partly offset by higher large and weather claims compared to last year. Normalizing the large and weather claims development, the ISR grew 7%, a strong uplift as illustrated at the bottom right. From a geographical perspective, we once again see a very strong Swedish performance, also helped by a higher run-off result.
We see a Danish performance which is slightly lower, weighed down by the July cloud bursts across Denmark. Finally, we see a Norwegian performance that continues to show progress following the profitability actions that were initiated a couple of years ago. All in all, this is important, very solid and robust ISR developments across the board. We're now moving into the revenue development section, our premiums growth was 3.4% in Q3, or more importantly, 4% when adjusting for a one-off included in Q3 last year. As always, most of the growth comes from the private segment, which grew 4.7%, adjusting for the previously mentioned one-off.
During the last two and a half years, we have worked in a disciplined manner to protect our margins in the most complicated period for our industry, following the return, as you all know, of sudden and high inflation. We believe this effort has proven successful as we're posting industry-leading margins. That being said, we have, of course, in parallel, gradually reignited and accelerated commercial initiatives aiming at improving our top-line development starting next year and onwards. On that, we're starting to see positive signs in private Sweden already.
It's always important to remember that growth can easily be achieved in our industry, but profitable growth is a different story, and we only seek the latter. Long term, our goal remains, we've discussed this before, our goal remains to achieve a growth which is carefully balanced between price increases, new customers and upselling to current customers.
With that, let's turn to the next slide, where we are zooming in on our Norwegian performance. The combined ratio in Norway has improved more than 500 basis points accumulated for the first nine months of 2025. Looking at Q3 in isolation, it's worthwhile to note that large and weather claims experience impacts the combined ratio comparisons, while on an underlying basis, the performance continues to improve significantly. Profitability initiatives are evidently working, improving in particular our motor and property performance, and it is perhaps worthwhile to remember that we are significantly overweight on motor in Norway with more than 40% of our book coming from motor. While we are satisfied with the performance improvements, we are also mindful that Q4 is a more challenging quarter from a seasonal perspective.
In general, I want to stress, and this is also important, that we acknowledge that we still have work to do to achieve a sustainable earnings level towards 2027. I'll move to the next slide and comment on the retention levels, which remain broadly stable. It is evident from this slide, retention is slightly down in Denmark, slightly up in Sweden, whereas Norway appears fairly stable. We've mentioned many times before that the current development, especially in Denmark, is not surprising following a period characterized by significant price adjustments to fight off inflationary pressures. I can also add that the development in private Denmark in this specific quarter is primarily driven by the technical adjustment impacting Q3 last year. Without this, the development is actually stabilizing and closer to flat.
We have experienced similar developments before in situations similar to this. As we move into 2026 and onwards, we are confident that the situation will stabilize. I guess with that, I will hand it over to you, Micke.
Thanks, Johan, I will now comment on the development of the underlying claims ratio. On a group basis, the underlying claims ratio improved by 30 basis points, in line with previous quarters and primarily driven by the improvements in Norway. The private underlying claims ratio improved as well by 30 basis points, while it was 20 basis points in Q2, as a reminder, the private segment represents almost 70% of group revenues. Initiatives in Norway, and in particular in private Norway, has been the primary driver of the improvement. At the Capital Markets Day in December 2024, we mentioned that we expect an underlying claims ratio to be stable to slightly improving towards 2027. We reiterate that today. With that, we turn to the next slide.
Always in this slide, we comment on the development of the volatile items, large and weather claims. Level of interest rates impacting the discounting as well, of course the run-off result. The quarter was favorable looking at the large and weather claims experience taken together. Large claims were well below the quarterly expectations of DKK 200 million, while weather claims were somewhat above the Q3 expectation of DKK 160 million. In general, the large and weather claims experience in 2025 has been fairly positive compared with the normalized expectations. The discount rate was unchanged compared to Q2, while the run-off result of 2.4% was broadly in line with the guidance of a run-off around 2% towards 2027. With that, I hand it over to you, Gian.
Thanks, Micke. I'm now in the first of the two slides of the investment activities. Total invested assets were at DKK 59 billion, of which three-quarter is our matched portfolio and one-quarter is the free portfolio. The asset mix is broadly unchanged with one noticeable difference. Our real estate exposure, as Johan mentioned at the start, was DKK 3.3 billion in Q2, was DKK 2.9 billion at Q3, and actually we're flagging the level around DKK 2.4 billion at year-end following an additional sale right at the beginning of Q4. The lower properties exposure is completely in line with our promise from the CMD, where we announced we were exiting all risky assets to minimize earnings volatility, lower capital consumption, and ultimately increasing the return on own funds.
Moving to the second slides, you can see that the overall investment return was DKK 177 million, helped by a good free and matched portfolio returns. Other financials was broadly in line with expectation. The matched portfolio result was helped by the income on premiums provision and a general narrowing of covered bond spreads in all geographies. The free portfolio benefit from a good return from covered bonds, while the positive properties return included the sale of the properties in the quarter. In general, it was a satisfactory quarter for our investment activities, and we are particularly pleased about the property reduction shown in Q3 and flagged for the year-end as well. With this, over to you, Allan.
Thanks, Gian. Good morning from me as well. Please turn to the first page in the solvency and expenses section, where we are showing details on our solvency position as per end of the quarter. In this slide, we are highlighting a robust solvency ratio of 204, which is up from 199 at the end of last quarter. Furthermore, we are highlighting a strong operating capital generation before dividend payment of 22% in Q3. As always, the difference between operating earnings and the dividend payment is the primary driver of the change in own funds.
The recent and very successful Tier 2 issue in the beginning of October will be included in Q4, although this will not impact the overall solvency level, as we have called back the old equivalent subordinated loan. The overall Solvency Capital Requirement is up DKK 26 million in Q3, primarily driven by business growth and some small movements in currencies. These movements are partially offset by the lower real estate exposure, ensuring a fall in the Solvency Capital Requirement of DKK 45 million. Note that the further sale of real estate exposure in Q4 will provide additional relief in the Solvency Capital Requirement of approximately DKK 50 million. Now please turn to the next slide. In this slide, we are showing the historical development of the solvency ratio.
We have mentioned multiple times that post the RSA Scandinavia acquisition, we have been operating at a higher level of solvency ratio compared to 4 years ago, where we were running our business at a level of around 175-180. The return of sudden and high inflation and the following macroeconomic turbulence has been problematic for the industry, therefore we believe a higher level of solvency has served us well. As we mentioned at the Capital Markets Day, our solvency ratio will gravitate towards a less conservative level long term. As promised, we will review our solvency position at year-end, at that time consider extraordinary capital repatriation if found appropriate. Currently, many things are pointing in the right direction, it's hard to stay pessimistic. As always, remember that we prefer a gradual approach benefiting our shareholders with balanced actions.
Now please turn to the next slide 21. Solvency sensitivities are virtually unchanged since last quarter, and we generally have very low sensitivities following the asset de-risking carried through during last autumn. In this quarter, we have further reduced the property sensitivity by selling approximately DKK 400 million of real estate, and more will come in Q4 with the October sale of another approximately DKK 500 million. As always, the biggest sensitivity remains to covered bonds, as this is by far our biggest single asset class. The sensitivity to interest rates movement is very low, taking our matching strategy into consideration and generally low sensitivities across the board 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 13.3% in the quarter, supported by a continued tight cost control in general. We continue to believe that the low expense ratio is a key competitive advantage for Tryg, and we remain very focused on this. The slight increase in the number of employees this quarter is driven by an increase in the customer fronting activities, especially in Private Lines Denmark. Finally, please note that redundancies related to the TCS agreement will only be included from the end of Q4. With this, I will hand it over to you, Johan.
Thanks a lot, Allan. I will now take you to the next section on the strategic and financial targets. In the first slide, we are recapping our 2027 strategy and the three strategic pillars that underpin our financial targets and the ambition to grow the normalized ISR by DKK 1 billion from 2024 to 2027. When it comes to the first building block, scale and simplicity totaling DKK 500 million, I would highlight the recent expansion of our TCS agreement to greatly simplify our IT setup. As for the second and middle strategic pillar on technical excellence, we continue to work on improving our portfolio management and improve the profitability in selected lines of businesses in selected geographies.
Finally, as for the last strategic pillar, customer and commercial excellence, I would like to highlight that Trygg-Hansa has entered into two new partnership agreements and expanded a third, strengthening its position in the very important motor segment in Sweden. In the next few slides, I'd like to unfold some of the activities behind pillar one and pillar three. On the next slide, let's start by unfolding the first strategic pillar. As mentioned at our Capital Markets Day, the Tryg that you know today is in all essence the product of several mergers and acquisitions through the years, more recently Alka, Codan Norway, and Trygg-Hansa. This has naturally had an impact on our IT setup with a vast number of applications, suppliers, and consultants as illustrated on the left-hand side, which is essentially a recap from CMD.
As we communicated in Q3, we have, amongst other activities, expanded our agreement with TCS with a firm objective to simplify our IT setup across the group. As illustrated on the right-hand side of this slide, one of the levers in the agreement with TCS is the sharp reduction in the number of ways we develop IT in Tryg, which will drop from 10-1 . In combination with other levers, this strategic move means that the IT organization at Tryg will see an approximate reduction of 33% in the number of employees in our IT organization as we come into 2026. The next slide, I'll open up some of the recent activities behind the third strategic pillars. As mentioned previously, Trygg- Hansa has recently entered into two new partnerships within motor and expanded a third.
As a reminder from the CMD presentation on the left-hand side, there is a significant potential in our Swedish private lines business to bring the exposure in motor up to par with the total market share, similar to what we see in our other markets. One of the levers to achieve that is through partnerships. So far this year, Trygg-Hansa has signed agreements with Subaru and Carla, an internet portal, and expanded the partnership with Hedin Automotive, which is a retailer highlighting an increased commercial focus in an area where our market share in Sweden is below our aggregated market share. The plan is to continue down this path completely in line with our strategy as presented and laid out at the recent CMD. These initiatives are, together with other initiatives, expected to increase premiums by approximately DKK 300 million towards 2027.
We are well on track. That brings me to the next slide on the financial targets and the strategic targets, essentially a recap of our well-known targets towards 2027. We target a combined of around 81%, which drives an ISR of 8.2% or between 8%-8.4%, leaving us some room at both ends of the guidance. We target a return on own funds between 35% and 40%, while we have promised to return DKK 17 billion-DKK 18 billion to our shareholders, including DKK 15 billion-DKK 16 billion of ordinary divies and the already completed DKK 2 billion share buyback. We also show in this slide all our strategic KPIs which support the financial KPIs. Last but not least, we always end our presentations with the words of John D. Rockefeller that remind us of the importance of being a healthy dividend payer.
With that, I will pass it on to the operator for Q&A.
Thank you. If you do wish to ask a question, you will need to press five star on your telephone. To withdraw your question, press five star again. In the interest of time, we ask that you please limit yourself to one question. There will be a brief pause while question is being registered. Our first question comes from the line of Martin Gregers Birk from SEB. Please go ahead. Your line will be unmuted.
Thank you so much. Johan, just coming back to your ambitions of growing your business, and of course, now you have a good example in Sweden. Given your industry low combined ratio, how much space is there actually for growth? When you talk about those sort of strategic initiatives, what kind of growth rates are you thinking about? Thank you.
Thanks a lot for that question, Martin. I think it's an excellent place to start, basically. I think coming back to our industry-leading margins, that's something we are quite proud of after elevated inflation for the last two years. I would argue we are in exactly the position we want to be in to reignite some of the growth initiatives. You're right that there are parts of our business, you're alluding also to the combined ratio in Sweden, where of course, as we start growing that business, it will be with a combined ratio pressure upwards. Whatever we sell in Sweden will have an upwards pressure on combined ratio. That being said, on a group level, there's ample room to maneuver through that. We have set a target of a combined of 81 in 2027.
That leaves us plenty of room to also grow the business along the way. I.
Okay.
I wanna come back to after the last two years, being in a position with strong margins and a growth in the Private Lines business, which is actually 4.7%, is actually a very strong starting point.
Okay. how much, I mean, sort of, I guess this is coming back to the everlasting question about the relationship between growth and profitability, right? I mean, how much profitability can you sacrifice short term for growth? And given that, I mean, you've pushed through very large price increases over recent years, and I guess from a starting point, you are by no means the cheapest out there in the market. I'm just struggling a little bit to see how you sort of can get the best of both worlds going forward.
I think there's ample room for us to move on the growth ambitions that we have. Just to be very clear, we don't have a growth target as such. We are a disciplined player. Growing is very easy in our industry. Anybody can grow. The trick here is to grow in a profitable and disciplined manner. You were alluding to in your first question, you know, what kind of growth expectations do we have? I will never have a growth target on me. If you look back before inflation, we were growing somewhere between 4%-7% on our top line. That's probably a pretty adequate number to aim for. If the market is not there, we are not there, so we will not take the growth for the sake of growth. There's plenty of room to move.
I think to your point about whether our pricing is attractive or not, I tend to disagree. I think we have a very attractive value proposition in the market and we are priced accordingly. When we look at our customer satisfaction numbers, customers seem to echo that.
Okay. All right. Brilliant. Thanks.
The next question will be from the line of Qian Lu from UBS. Please go ahead. Your line will be unmuted.
Morning, everyone. Thanks for taking my questions. It's Qian Lu, UBS. You talk about, you know, inflation easing and commercial activities picking up. How do you think this would shape the competitive landscape in Nordics? Could peers would see similar growth opportunities as you have? Thank you.
Good morning, I think I'll start on that question. I mean, I think first of all, as you say, inflation is easing off. That's not to say that there is no inflation anywhere. In particular, most of we've spoken about that before. There is still some areas of inflation, especially for new cars. Having said that, I mean, now inflation is coming down. By that, it's also the necessary price increases that we drive are coming down. Obviously, that gives a much better starting point from a technical perspective to grow from. Obviously, as Johan alluded to, we are also putting through more focus on commercial initiatives from that. That's not to say that the market is not competitive. Obviously, it is.
That's as it should be.
Thanks.
Our next question will be from the line of Nadia Claressa from J.P. Morgan. Your line will now be unmuted.
Hi, morning. I have two questions, please. My first one is just on Sweden. obviously a very strong combined ratio there. Could you just provide some more context on the drivers behind that, please? secondly, on Norway, I mean, the development there has been pleasing to see, and I think earlier in your commentary you mentioned that there's still work to do there. I was just wondering, you know, with rate increases starting to slow down, could you just remind us what specific initiatives you're referring to here? Thank you.
Good morning, Nadia. I'll start addressing those questions. We start with Sweden, I would say first of all it's a very strong result overall. I mean, basically from the private segment to the commercial segment. Very strong sort of across the board and all product areas. Obviously, as we've said many times before, a big part of the Swedish book is personal accident, which is capital heavy and therefore also should have a good combined ratio. I think it's basically sort of all different parts sort of drawing in the same direction and therefore giving a really strong, super strong, I mean, we need to say super strong, combined ratio in Sweden.
If I move over to Norway, yes, we are improving this quarter as well. We've said a number of times that we are putting through initiatives. Those are mainly rate initiatives, but it's also other profitability initiatives, including, for instance, deductibles. This is mainly targeting private Norway. We are continuing to putting through the same measures as we've done before. This will ease off going into 2026. We're also very confident that the actions we have taken and the actions that we are still taking and the earnings effect of that will have the impact that we want to, and that we will come to into that mid-eighties core that we talked about before.
I think if I could just add one thought on that, Mik, is I think what we are seeing now is the benefit of having a group hedge in the sense that we are very well exposed now with strong businesses in Denmark, Sweden and Norway. Whereas we've seen Norway being slightly challenged for all operators in the Norwegian market, we have benefited from having a very strong and stable business in Sweden and the same in Denmark. I think this is the group hedge that we bring to the table.
Thank you.
The next question will be from the line of Derald Goh from Jefferies. Please go ahead.
Hey, morning, everyone. Just going back on the Danish retention rate. Notice it's dropped by about 80 basis points in both private and commercial. Could you elaborate about the technical factor that you spoke about? You mentioned pricing, but then if I look at the revenue growth, it was something like 1%-2%. Maybe could you explain what's happening behind that retention ratio, please? Thanks.
Maybe I should start on this one. Yes, we are mentioning a one-off that is printed in the growth rates in the Privates, in the Private growth rates. It's just around DKK 50 million that is related to a partner agreement last year. We have decided to adjust the numbers to align the market expectations on the top line growth.
Just on the top of that, Allan, you're correct that we are seeing some drops on the retention rates in the Danish market. Before I get to that, we are seeing an uplift in Sweden. We are pleased to see that. We are seeing a stabilization in Norway. Yes, we are seeing slight drops in Denmark. As for the private lines, as Allan alluded to, this technical adjustment actually means we are flat in Denmark Q on Q when you do the technical adjustment. We still see some sort of a drop in the commercial lines. Just to bring that into the context of where we are, we are coming out of a period of high price increases offsetting inflationary pressures. We've seen this before.
You don't have to go more than 8 or 10 years back where we see drops in retention of similar nature. When these situations taper off, we've seen a bounce back, and we expect a similar bounce back in our Danish market going forward. To be very honest, we couldn't have wished for a better position to be in right now than where we are. Strong margins, strong customer satisfaction, and the ability to invest into the market.
Great. Thanks.
The next question will be from the line of Asbjørn Mørk from Danske Bank. The line is open.
Good morning. Thanks for taking my question as well. On the underwriting, just trying to understand first, the combined ratio trend in Denmark. The duration we're seeing here, you say the retention has been softer. I guess you've been repricing mainly at low profitability clients, so I guess your core or combined ratio should improve, all else equal. Also more on the underlying claims ratio trend for the coming years, the 30 basis points improvement you print again here for Q3, and the composition that private continues to improve also on the second order derivative. With the repricing measures, seems like at least on official data, you're repricing more than most of your peers in Norway. Guess well trends on the claim side is moving in the right direction.
Is it fair to assume that the private underlying will improve also on the second order derivatives for the coming quarters, and that the group will continue to deliver 30 basis points also in 2026 and 2027?
Because when we look at consensus, it seems as if the consensus at least expects some sort of deterioration to the underlying improvement trends. Sort of, getting a little bit more flavor on that would be good. Thank you.
Good morning, Asbjørn. If we start with the combined ratio in Denmark, the specifics for this quarter is obviously that we had some weather events. Those were, like we said before, on a Scandinavian basis, slightly above our expectations, the main parts of those came from Denmark. Weather is impacting Denmark a bit more in the quarter. If we move to our underlying expectations before, I know I'm a bit boring when I'm going back to and stating that we will be stable to slightly improving going forward as well. That statement still holds also from these levels.
In order to sort of double-click on that and give a little bit more flavor on that, of course, as we've said before, the composition of that slight improvement will come more from the private segment. We've said that before. We are seeing that in the numbers today, and that is something that we also expect going forward. That's not least coming from the repricing initiatives in Norway and the profitability initiatives in Norway. Just a final point, I mean, one of the big good things about being a big, well-diversified Scandinavian player is obviously that we can utilize that in order to drive the right measures in the right markets.
In Sweden, as Johan has alluded to, we see that we have commercial initiatives to be done and are doing. In Norway, we are protecting our margins and improving our margins. It's also depending on market on what type of initiatives we drive.
If I just may follow up, Mik. If we look at Denmark and we adjust for weather, or then last season with the underlying, is there then an improvement in Denmark year-over-year? Secondly, just trying to understand, do you expect a deterioration to the underlying claims ratio on a group basis for commercial going forward? Or, I mean, are you seeing any changes in competition, anything like that would impact that? Or should we expect sort of managed development there?
Yes. If we start with Denmark specifically, now we don't guide for the underlying in specific markets. But I think I'll just like to reiterate once again that the improvement is very much coming from the Norwegian book, which is natural and that we want and we need that improvement. Denmark and Sweden Personal Lines, we're more targeting to grow from very healthy levels that we start with. Then if we look at the composition in underlying, again, staying sort of stable to slightly improving, we don't guide on the specifics between commercial and private.
As I've said before, we expect the composition to be more driven from the private segment. That's also natural given the extremely good combined ratios that we're seeing for the commercial segment.
Asbjørn, just to add one comment on this. I do understand where you're coming from when you see the combined for Denmark moving up slightly. One thing is weather, but in general, don't get too hung up on one quarterly combined. I mean, we are running a quite sizable book. Don't get hung up on that. We are printing for the three markets combines of 81.9%, 83.1%, and 70.7%. I think you need to have the broader perspective and, you know, allow the quarters to come in the order they're coming. On a group level, this is very satisfactory.
I fully agree. Much appreciated. Thank you.
Our next question comes from the line of Mathias Nielsen from Nordea. Please go ahead. Your line will now be unmuted.
Thank you very much for taking my questions as well. I just have two questions. The first one is some sort of just a small technical one, just to be clear. Like the one off you had last year of DKK 50 million on revenues, like as far as I have understood it, like there's not been any claims related to that. That means like you've got some or some headwind on the combined ratios on the group level this year. On the underlying, I know you prefer like to have stable earnings.
Would it be fair to expect an uptick in the improvement in the underlying claims ratio in Q4, given that it also really seems to be in the private segment where you're already ticking up by another 10 basis points in Q3 despite this headwind? That's the first question. The second one, on like, coming a bit back to the Danish retention rates, is it? If I hear you right, like it seems like we're now at the peak negative on the retention rates in Denmark. As you say, after adjusting for the technical, for the technical stuff you have done, it's actually been flat. Would you expect the retention rates to increase from Q4 already?
Should we go further into the future before we see that improvement? How should we think about that?
Yes. I think I'll start with the first question here, and that is just to reiterate that we are a very large book, and immaterial one-offs will occur from time to time, and we have chosen to adjust the DKK 50 million related to the specific one-off related to a partner agreement last year. In terms of underlying, what we're discussing here is 10 basis points. It's around DKK 10 million that you're alluding to here. Not much to add on this part, Matthias.
Sorry to interrupt, but it's like DKK 50 million profits. If it's like you've had no cost associated to that, it's actually gonna be, like, DKK 50 million, like, going directly to profits where you normally would have around 80% of that going to claims and costs. That's what I'm asking about. Is that was there any claims related to those DKK 50 million last year?
Yeah. Let's just be clear on that. The I mean, those DKK 50 million are normal DKK 50 million. Earnings from those are also obviously some claims from that. That doesn't have any impact whatsoever on the underlying loss ratio. No impact whatsoever, sort of up or down from the 30 basis points. You should ignore those totally from the underlying claims ratio improvement.
Okay. That was very clear. On the retention rates, please.
Yeah. On the retention rates, I don't wanna guide on retention rates for a certain segment in a certain market. You're right in sort of summarizing my statement earlier saying that if we adjust for this technical adjustment, we are seeing it plateau our retention rates. I think we are playing a marginal sport here. Whether it goes down slightly or up slightly is difficult to judge. I think we are coming to an end of some of the impacts of repricing in our retention rates. In that sense, I agree with you.
Okay. Then if you look historically, how fast did it come back last time? Do you have any empirical evidence on how quickly retention rates get back to historical levels after such change?
Takes a few years, I would argue. Let's see. You know, it depends on how things develop from here in terms of inflation and et cetera. It's hard to guide. In the previous situations, it's been a few years for the bounce back.
Thank you very much.
The next question will be from the line of Vinit from Mediobanca. Please go ahead. Your line will be unmuted.
Yes, good morning. Thank you. My one question and one clarification, if possible, please. One question would be the very interesting news to me about your car dealership agreements in Sweden, where one of your other peers is quite prominent already in that space. I'm just curious if did you face much competition or resistance in the market when you were trying to do this? Because obviously it's a different signal. I think you've been bigger in the used car space, so, and versus new, so it obviously has some implications medium term for your motor book. Are you planning to do more of these in other markets? I'm just curious about this new agreement in motor insurance. Any comments helpful?
On the clarification, you know, the DKK 1 billion or so less roughly of real estate sold, have you indicated any gains on that in the P&L, either in Q3 or in Q4 or in the, in whichever way? Thank you.
Thanks a lot for those questions. I will start by looking into the Trygg-Hansa, and then I think Allan will comment on the sale of real estate afterwards. As for the motor agreements in Sweden, this is actually not a completely new strategy. Already in the last strategy period we attracted quite a lot of car agreements also with BMW in the recent strategy period. What we're doing now is going down the same path now of actually using and leveraging our very strong Trygg-Hansa brand in Sweden to attract partners and customers. As for the competition, of course it is a competitive space. Winning motor customers is an attractive business. We're very pleased with the agreements we've signed now with Subaru and Carla. We are also very pleased with expanding with Hedin Automotive.
You're asking me, do I think there will be more to come? I sincerely hope so. I think this is a very good way of attracting new customers. This is down the path of not just the strategy we launched at the Capital Markets Day in December, but it fits very well with the rationale behind the RSA transaction, where we said that we believe the Trygg-Hansa brand was punching underweight in Sweden. We're investing into the Swedish market. The brand is vibrant as ever. We see this also allowing us to attract new partnerships like the ones just closed this year. We expect more from this and it's benefiting the growth profile in the Swedish market. I think, Allan, could you just share a few words on the sale of real estate?
Yeah. Well, happy to do that. Just to go back in time, as mentioned at our Capital Markets Day back in December, long term, we do not expect properties to be part of our asset mix. Now we have started the de-risking of the book. Very pleased to announce today the sale of that made in Q3, and also commenting that we have done a further de-risking in Q4. We are very obviously hard at work to bring down our real estate exposure further down the line. As also said earlier, for real estates, timely quick liquidity is very important considerations.
We will still take an opportunistic approach to this asset class, and we, just as planned, we plan to exit and we will revert when we have news on the further de-risking.
Okay. Thank you.
Our next question comes from the line of Youdish Chicooree from Autonomous Research. Please go ahead.
Good morning, everyone. I would like to come back on the topic of the trade-off between margins and top line growth. If I take your combined ratio you reported for the first nine months, I normalize for last month's weather and, you know, did the latest discounting and assume run-off of just 2%, I get a normalized combined ratio of 81.5%. You still have over a year of your strategic plan and efficiency measures to realize which, in my view leaves you in a very strong position to actually beat your combined ratio target. Would it be fair to say that you are deliberately choosing to operate at that 81% level while prioritizing maybe more top line growth that we've seen in the recent quarters? Thank you.
First of all, thanks for the question. I think fundamentally, if you take a step back, the key question here is whether there's any boundaries for us to take organic profitable growth in the market with the financial targets that we've set out. We don't see any. I think it's true, of course, that as you start growing your business, it's an investment that will put some upwards pressure. If you do this in a disciplined manner, we have ample opportunities to navigate through this financially. We have, in the strategy, many cost levers also that we're pulling that will allow us to navigate our combined ratio to hit around the 81 that is in our financial targets. Expect us to, you know, continue to deliver an improving underlying stable to improving underlying.
Expect us to navigate to the 81%, and expect us to start rebalancing the growth profile also. We are in a very strong position to do so, and we don't see any boundaries. That being said, you'll never see us coming out in an uncontrolled manner, you know, chasing for growth. We'll leave that to other people. We wanna have a very disciplined approach to our growth profile, and we have ample room to do that in the financial targets.
Yeah. All right. That's copy. Thank you very much.
As a reminder, please press five star to ask a question. The next question will be from the line of Daniel Wilson-Omordia from Morgan Stanley. Please go ahead. Your line is open.
Hi. Morning, guys. I just had a quick question on the investment portfolio. I've noticed over the past few quarters or so, the size of the portfolio has come down quite a bit. I mean, we are at DKK 17.5 billion just in Q2 2024, DKK 16.5 billion in the end of 2024, DKK 15 billion last quarter, and now we're at DKK 14 billion. I'm just wondering, I know some of this will be to do with the buyback, I'm wondering if there's anything else going on there that's causing the portfolio to shrink. I also noticed that, you know, you sold down the real estate portfolio this quarter, it doesn't seem like you've reinvested the proceeds from that back into the bonds.
I'm just wondering what's happening there. If there's any sort of timing issues or, things happening there that you could elaborate on. Thanks.
Maybe I can help you out with this. The absolutely primary explanation is the buybacks. That's what explains the reduction in total of the free portfolio. You should also expect any proceeds from the sale of real estate to be reinvested in Danish corporate bonds. There can be delays in time that the DKK 500 million we're flagging at the beginning of Q4 is obviously to be booked in Q4, so there can be slight delays there, but there shouldn't be any doubt of what we'll be doing with this. I hope that's clear.
Yeah. Thank you.
Our next question comes from the line of Simon Brun from ABG. Please go ahead. Your line is unmuted.
Yes. Hi, guys. Thanks for taking my question. Just on a follow-up on the comments on Denmark. Looks to be a relatively muted revenue growth in Denmark, even adjusting for the one-off, well below indexation levels. I guess the volume part of the equation is just the damping effect here. Is this simply the sort of like the effect from retention levels dropping or is there still some pruning of the portfolio less than? If so, when should this effect fade off? Just any color on that would be very helpful.
Yeah. Thanks for that question. Just to share a few numbers before I try to answer the question. You're right, when you do the adjustments for the technical adjustments, your growth rates for Denmark will be somewhere between 2% and 3%. If you look into the Private Lines business, I can share so much. The Private Lines is actually quite above that. You are right, there is a lack of growth in our commercial segment, and that comes down to a combination of the metrics you are alluding to here. One is a pruning of the portfolio, and another part is what we discussed earlier on this call, the retention part.
There is sort of the topic to discuss for the Danish growth levels. That's something that we will be tackling in the quarters to come.
Okay, thanks.
As our final question, we have a follow-up from the line of Derald from Jefferies. Please go ahead, Derald.
Hey, just a quick one, please. Could you share what sort of price increases you're putting in Norway and Denmark, please. How did that compare to your assumed level of claims inflation? Thank you.
Yes. If we start with Norway, I'm assuming that the question is mainly for the private segment in Norway. Currently, we are still putting through the same price increases as we have talked about previously, which is in sort of the mid to high teens. We obviously expect that, and I said that before as well, to be much lower in 2026. Obviously still well covered for inflation. In Denmark, the situation is very different. Again, we've said that before. We are much more sort of indexed linked and much more in line with compensating for inflation when it comes to the private segment in Denmark.
Yep. Thank you.
Well, back to me now. I just would like to thank you all for the good dialogue and always good question. As a reminder, Robin and Investor Relations team will be able to help you today in the next few days. Otherwise, thanks again, and we'll speak to you soon.