Earnings Call: Q2 2021

Jul 9, 2021

Good morning, everybody. My name is Giorandrea Roberti. I'm Head of Investor Relations at TRIC. We published our Q2 results earlier on this morning. And here with me, Morten Hube, our Group CEO and Barbara Pluckner Jenssen, Group CFO. Yes, with these few words. Over to you, Mort. Thank you, Jern, and warm welcome also from my side. We start on Slide 3 with the highlights of the Q2. And be aware in this quarter, of course, that most of the numbers are TRIC Classic and only in a few selected investment lines, you can see data from RSA. We show on the left hand side a pretax Classic results of almost SEK1.3 billion for the 2nd quarter. And as planned, as previously communicated, we see in FX hedge with a negative impact of SEK 1,200,000,000 under investments in the quarter, and we see a consolidation of RSA Nordic only for 1 month earnings and also under the investment line. Generally, we are very pleased to see a technical result, which is up almost 8% to SEK 1,144,000,000, result of a very good top line growth and improved underlying claims and the delivery of Alka Synergies. If you look at the investments, again, the classic investment line is plus 253,000,000 and this is then here we subtract the impact of the FX hedge and add the positive of 1 month of equity accounting. So one month of earnings from what we have acquired, including the 50% stake of Denmark. Then we announced a dividend, not surprising, of SEK 1.07 as guided for the quarter, resulting in over SEK 175,000,000 solvency, well in line with the previous communication of an expectation between SEK 170,000,000 SEK 180,000,000. On Slide 4, we show the customer highlights. You may recall in Q1, we mentioned a new method for measuring customer satisfaction. We're very pleased to see that customer satisfaction improves further from 83% to 84%. And the advantage of the new method is that we can measure both individual touch points, for instance, buying insurance and a full process from start to finish, For instance, claims handling. We do get significantly more responses with the new methodology. We get all touch points. And actually, there's quite a lot of variation. So for instance, beneath the 84, we see that the single contact on the telephone in Private Denmark has a score of 94, whereas a full process in commercial Norway has a score of 74. So this new methodology provides a ton of new data that will allow us to further improve customer satisfaction from a very high starting point. On Slide 5, we elaborate on the technical results. Very pleased that it increases almost 8% to SEK1.144 billion in the quarter, of course, helped by higher premium and also the improved underlying claims. Really pleased to see that all business areas delivered a strong performance and particularly private and the commercial SME space. Corporate in Sweden continues to improve, but for us it's really quite clear that the profitability initiatives in Corporate needs to continue. And on Slide 6, for the first time, we add information about the performance of the new acquired business, zooming in only on Turkansa in Sweden and Codan in Norway. Be aware that here we show both the half year numbers and the June month numbers. The June month numbers is, of Of course, what flows into the equity accounting under the investment line, together with half of Kona and Denmark, together with investments. But actually, we thought we would add the half year figures because that actually gives a better flavor of the well-being of the businesses we've board. So it will allow you to monitor the business performance better. And we're really pleased to see strong performance in the businesses we've in Sweden and Norway. Top line in Sweden and Norway growing around 3.3%. And then we see a very, very strong combined ratio in Turkansa Sweden of 76.4 for the 6 months numbers and then a combined ratio of Koda and Norway of 88.2 for the half year. But bear in mind, of course, a smaller portfolio in Norway, which will be more volatile. But all in all, it means that the acquired businesses produce an insurance technical result of SEK 1,100,000,000 for the 1st 6 months. Again, remember that only June is ours, but it tells you the story of very, very strong businesses with very strong performance. And of course, there are 0 synergies included in those numbers for the 1st 6 months. On Slide 7, we give a brief update on COVID, hopefully, we won't be doing that for much longer, but the total impact for the quarter is positive, mainly due to lower level of travel claims. We also see a couple of other areas like break ins that has had lower claims. Then we have seen also somewhat higher level of motor claims, both due to the growth in private business, but also we see, for instance, in Q2 that after a period where people have not repaired their wind means and they've waited during COVID. We see an unusual jump upwards in, for instance, glass claims in motor in the quarter, but actually it will then start to normalize, we believe, the rest of the year. On Slide 8, we elaborate on Shareholders' return, as I mentioned, we're paying out SEK 107 per share in the quarter as guided. And as guided, this will be the pattern for all courses this year. And despite the transition year that 2021 is and with the transaction costs and with the restructuring costs, FX hedges, etcetera. As communicated, we expect the technical results to roughly double by 2024 and we expect the dividends to follow roughly the same trajectory. And of course, we look forward to a significant increase in our dividends. And then following the announcement of the sale of Kona Denmark, we announced a SEK 5,000,000,000 buyback, which will start next year in connection with the actual closing of that transaction. And it shows our strong commitment to returning capital and to improve the ROI of the deal further. On Slide 9, we show the current status of the Alka synergies and very pleased to see a continued strong delivery according to our plan. We see Q2 synergies of €35,000,000 bringing the half year up to SEK 63,000,000 and bringing the total up to SEK 239,000,000 of the SEK300,000,000 announced. And we're very confident that we'll deliver the full 300,000,000 by the year end. And we have learned a lot and the methodology and the process and the responsible is proving very important also in the RSA process. And if we move on to Slide 11, we elaborate on the composition of the top line growth. Total growth is 4.7% in Q2, and that is 7.1% before bonus and premium rebates. Very pleased to see that our highest growth comes from the business areas with the highest profitability. We see that private as the most profitable area, has a growth of 5% after bonus and premium rebates and 8.6% before bonus and premium rebates. You can see that the difference between the two numbers is higher than usual. We see Some spillover impact of the bonus and premium rebates that actually belong to Q1 that actually impacts Q2 negatively. We're trying to avoid this, but with the fast closing of the quarter, not all partner contracts have been finalized when we do the closing of the quarter. So it's probably not possible to fully avoid spillover from quarter to quarter. And when the results are very strong, of course, there is a strong sharing of that with the partners as well. And then we're quite pleased to see that sales and the market is starting to normalize. We have In a period where, particularly in Denmark, the sale of new cars with the car dealers has been lower than normal. Actually, 40% of our inbound calls is new cars needing an insurance, and that has been subdued due to corona, but now normalizing. And then of course, the purchase of travel insurance has been subdued. But from May to June, the sale of travel insurance is actually up 43%, pointing to a world that is gradually normalizing. In commercial, we see a growth of 8.1%, really positive, also an area with strong profitability. In Denmark, this is largely organic growth. In Norway, it is largely price increases. And then you see a roughly flat growth in Corporate. Growth is not a target in Corporate, stronger earnings is. So we're working hard with high price increases. And that is then offset by churn of the business resulting in a flat development. Sweden growth of 2.4%, which is primarily price increases. On Slide 12, we show the development in average prices. And clearly staying up to date with price changes to match inflation is Extremely important, Barbara will elaborate further on that. This is a very, very high area of focus. And in recent years, we've managed to improve and professionalize our methodology. So I would say that today we are above average in the insurance industry. Clearly, Alka has helped us in that process with methodology and data. And we can see that particularly Turkansa in Sweden can further help us improve this area. In general, our price increases are following a healthy pattern. But bear in mind, in Q2 last year, there was a price drop in house insurance prices for a large partner in Norway, still impacting the Q2 numbers this year. And then on Slide 13, we show the positive trend in retention levels. We've seen some quarters where Private Lines had a slight drop in Denmark because of the churn of Nordea customers. The retention in Denmark is improving in Q2, and we're seeing that the churn of Nordea customers more than offset by the new Danske customers, but of course they don't account in the retention numbers. We're pleased that in Private Norway, we have a continued increase in retention. And also on Commercial Retention, we see stability in Norway and an improvement of 0 point 2 percentage points in Denmark. So over to you, Barbara. Thank you very much, Morten. If you turn to Slide At 15, you can see the development in the underlying claims ratio. For Group, this improved by 80 basis points in the quarter, while it was unchanged for Private. Please note that the underlying claims ratio doesn't include the impact from COVID-nineteen claims. Price adjustments and the claims excellence program, including claims synergies related to ALCA, are the main drivers behind the improvement. Also bear in mind that the growth in Private has a positive impact on group figures even with a flat development in the underlying claims ratio for Private as Private is the most profitable area in TRIC. The high growth in the private business had, as expected, a modest negative impact on the underlying claims ratio as new customers in general have a frequency approximately 3 percent higher than the portfolio in general. We are very satisfied that the initiatives in our corporate areas in Commercial Norway supports the improved underlying claims ratio development for the group of 0.8%, which is similar to the previous quarter. On Slide 16, we address a key topic at the moment that Morten also just mentioned, namely claims inflation. As mentioned before, Trick benefits from having worked with procurement for many years. Our procurement agreements as well as our diligent work with our specialists in key areas of the claims handling team makes it possible for Trick not to be hit by claims inflation in the same way as many of our competitors. As you can see on the top right corner of this slide, we have a very strong internal focus on coordinating and collaborating across the whole value chain around our claims in order to help us understand the drivers of the claims development and prepare price adjustments when needed. Please turn to Slide 17. Life in the Nordics is still impacted by COVID-nineteen, albeit significantly less than what we have seen in previous quarters. In Q2 'twenty one, the total impact from COVID-nineteen was €32,000,000 primarily related to property and travel insurance. Lower motor frequencies also had a positive impact, although to a less degree than what we have seen in previous quarters. On Slide 18, we take a look at large claims, weather claims and runoff. The level of large claims was DKK 105,000,000 in 2nd quarter, which was higher compared to the same quarter last year, but was still lower than a normalized level that we expect around 140,000,000. Weather claims were slightly higher in the Q2 compared to Q2 of 2020, with NOK 57,000,000 in this year compared to SEK 49,000,000 last year and closer to normal levels as Q2 in general is the quarter with the lowest level of weather claims. The discounting impact in the Q2 was somewhat higher than the same period prior year due to increased interest rate levels. And finally, the runoff result was somewhat higher with 4% in the Q2 this year compared to 3.6% in the Q2 last year, very much in line with the communication of runoff between 3% to 5% for the year. On Slide 19, we take a look at the expense ratio. In Q2, this was 14.1%, slightly lower than the comparable period last year. We want to invest in our business and by a continuous focus on finding more efficient distribution channels, we can to a large degree finance these IT investments. In the Q2, a slightly higher number of employees is driven by, among other things, the higher business volume and also resources needed to deliver development in IT and digitalization. Please turn to Slide 21. As usual, you can see the split of TRIC's stand alone investment assets where we are reporting total invested assets of approximately SEK 44,600,000,000 split between a free portfolio of SEK 12,600,000,000 and a matched portfolio of around SEK 32,000,000,000. For more details on the investment income in itself, I want you to turn to Slide 22. Here, you can see more details on the TRICK stand alone investment result. In the Q2, financial markets developed positively and Trick reported good returns from equities, properties and corporate bonds. The overall return on the free portfolio was 2.5% and the Match portfolio was also slightly positive, while other financial income and expenses included slightly higher interest expense and some quarterly periodization. The chosen asset allocation has not changed much for a while. As Morten mentioned earlier, it is important to note that in this quarter, the investment result was impacted by the negative charge of approximately SEK1.2 billion related to currency hedge put in place to hedge the proceeds for the RSA acquisition and also a positive amount of €181,000,000 from the 1 month result of RSA Scandinavia since we closed the deal on the 1st June. Adding these three items, overall, the P and L reported investment income, therefore, lands at a negative SEK757,000,000 but bear in mind, it's very much driven by the one off items. I will also use To remind you that until demerger, the earnings from RSA Scandinavia will be included in our investment income as it is taken in as equity accounting. After demerger, the results will be fully consolidated into our ordinary reporting. Please turn to Slide 23 on solvency. The solvency ratio, as reported, was a record high, €899,000,000 at the end of Q1, but obviously, a more meaningful €180,000,000 when we adjust for the rights issue. At the end of Q2, we are reporting 175,000,000 right in the middle of our previous guidance for end Q2 of between 170 to 180. We now expect a full year 2021 solvency ratio at approximately 180, slightly higher than what we previously guided. Both Own Funds and the SCR are now included in now include the RSA Scandinavia The main movements in the Own Funds are shown in this chart, and it's fairly clear that as expected, the inclusion of the results. Negligible debt and the quarterly results and dividends. The SCR is also impacted by the inclusion of Codan SCR, which is close to DKK 4,800,000,000 meaning that the SCR for the entire group is now equal to approximately DKK 9,900,000,000. Finally, it is important to remember that TRIC's solvency ratio mostly remains a function of profits and dividends and hence the underlying development should be stable. On Slide 24, we're showing the additional Tier 1 and Tier 2 capacity after the inclusion of the new assets. Please remember that group SCR will decrease by approximately SEK1 1,000,000,000 once Koda and Denmark is out of the picture, meaning that the Tier 2 capacity will be approximately €500,000,000 lower compared to what is shown here. On Slide 25, we are showing the main components of our SCR and the main components of the market risk in the SCR. It should not be a surprise that equities due to the high capital charge and spread risk due to a high proportion of covered bonds in our asset mix shows the on Slide 26, you see the historical development of the solvency ratio And per end Q2, the solvency ratio is, as mentioned, 175. For the year end 2021, we expect this to be around $180,000,000 And in a year where we have closed a, for TRIC, very large transaction with many movements, we believe this to be a comfortable level. On Slide 27, we show the solvency sensitivities as usual, which are broadly unchanged compared to what you have seen before. The only change this time is that the figures are pro form a, including the new assets. And hence, the new starting point is, of course, the reported solvency ratio of 175%. The highest sensitivity remains unchanged to be spread risk as covered bonds by far the largest asset class. This concludes my part of the presentation, and I will hand back to Mohsen for our latest outlook. Thank you, Barbara. And rounding off Slide 28, we show the outlook where Monday this week, 5th July, we increased our guidance for the technical result for the year. So from previously guidance of SEK3.3 billion to SEK3.7 billion to a new guidance of 3.5 to 3.8, so very pleased with that. And today, we update our investment guidance for the full year from previously €350,000,000 to €500,000,000 to now €450,000,000 to €550,000,000 And also a negative adjustment to guidance, other income and costs actually related to the acquisition from minus €150,000,000 to €200,000,000 to now minus €200,000,000 to €300,000,000 And you will also notice A few modest adjustments to the overall costs of RSA, but leaving the total unchanged at SEK4.4 billion. And then hopefully, you've all seen the Capital Markets Day date, An announcement of that for the 16th November this year, clearly hoping that we will all meet in person. That is the plan. And then finally on Page 29, we finished with our favorite quote from John D. Roggefella. Really pleased that we have an outlook for a very strong technical result by 2024 and a dividend trajectory, which will follow that path. And also very pleased that when we look at what we have acquired, TRICANSA Sweden and Koda Norway, Stand alone, they made 1 point or more than SEK 1,100,000,000 of technical result for the 1st 6 months of this year before any synergies. And while only June is ours, then clearly that gives us So yet another set of data showing very strong quality in the businesses we've acquired. We look forward to the integration and we look forward to adding the synergies between now and 2024. I think with that, we'll turn over to your questions. Results. The first question comes from the line of Jakob Brink from Nordea. Please go ahead. Your line is open. Thank you very much and good morning from my side. First question on solvency and the capital gain related to the sale of Coden Denmark. Could you maybe start by telling us how should we look at this, I. E, the capital gain Compared to the sales price, please. So what is it booked at in your accounts? Yes. I think as a starting point, the sale of Codan doesn't change any of our numbers at this point in time that will all Impacting the numbers once the deal is closed, Jacob. And at that point, we will give you further details in terms of exactly how it will impact. But for now, it doesn't change. You can say the numbers that we're looking at. I understand that. But the but you did disclose the €5,000,000,000 expected share buyback next year after the sale has happened. So I'm just trying to result. We reconcile that. So if we take consensus has a €4,000,000,000 ordinary dividend for next year and roughly a €4,000,000,000 net profit if you adjust for amortization of intangibles. So that evens out. So still 180% solvency at the end of next year, then a €1,000,000,000 reduction in SCR that adds 20 percentage points around €2,000,000,000 I'm just wondering how you get to the last SEK 3,000,000,000 I would have thought it was somewhat more. I think what you should remember, Jakob, is that we are seeing Ultimately, SEK 5,000,000,000 for the share buyback because obviously, when you do a trade and a transaction like what we have done with Codan, there is a number of outstanding items relating to opening balances, etcetera, etcetera. And we don't have, you can say, the full visibility on And that's why we are guiding approximately SEK 5,000,000,000, but that will be confirmed when we are a little further in the process. So I'm sorry, I won't be able to give you more specific guidance. I think your logic is right. Those are the drivers that will be impacting the solvency. But I think it's also fair to say that there are still a number of outstanding items that we don't have Visibility on that we will give you more details on when we come closer to these items. I guess you can say, Jacob, that is a completely fair result. It's also quite unusual to announce such a large buyback 10 months or whatever the number is in advance. And Separating the legal entities in the Nordics is one thing that has not been finalized yet. There are also changes in accounting principles from their regime to our regime. And of course, we have plans and visibility for all of that. But there are details and moving parts that will change some of the numbers before we get to the final outcome. And that's why we've chosen to give an estimate and we will give you more information when we get closer. That's fair enough. And just one follow-up though. So would if I ask this way, would you prefer now I assume that you would still have 180 and solvency ratio, but would you maybe prefer slightly higher and then postpone some of the payouts for the 2 following years in the forecast period? Or is it simply a matter of all those details? I like your question, Jakob. I think we are very committed to returning capital to our investors. But as you also understand, there is a lot of complexity still involved in this. So I think you should revert to, you can say, our position result of the history and the track record we have of returning capital to our shareholders. I think generally, Jacob, you should get the takeaway that it is result. Of course. Thank you. Then the next question is a bit more on the detailed side, but just looking at consensus estimates for investment income when things get normalized by 2023 2024. It's around €400,000,000 But I would have thought that let's say that you have a SEK 9,000,000,000 SCR when Kota and Denmark has been divested, a solvency ratio of around 180%, That's owned funds of around €16,000,000,000 times the normal investment return of around 1.5%. At least that's what people used to have times the own funds of REIT portfolio. That gives only around €250,000,000 Is there something that have changed that would mean that we should not use total owned funds as a proxy for the free portfolio? Or is there something else I'm missing? No. You should still look at the old principles applying. I think what I would say about the investment result is obviously, we don't get, you can say, our hands on the investment assets until the time of demerger. And you can say, we need to adjust a little bit on the investment profile of the assets that we take over. And that will be something that we try to do as fast as possible, but it will take some time to make sure that the portfolio we take over, which is in total around SEK24 billion, of which SEK6 billion is the free portfolio that needs to be adjusted for. So again, the principles totally agree to that. More details to come a little later, Jakob. Okay. And my last question, thank you, is on other income and expenses in Truck standalone. If I calculate backwards from the table you gave us on one of the first pages, it was €113,000,000 negative this quarter. I know it's Not a big deviation, but it's usually around €70,000,000 €80,000,000 Is there any reason for this pickup? And should it be that new level going forward? Or is it still of the €70,000,000 €80,000,000 per quarter in SWK stand alone. SWK stand alone, you should see the ordinary level. If you remember, in Q2, We repaid an existing loan and raised new capital and so forth. So you had some other Things flowing through that you wouldn't see in an ordinary quarter. So I would look back at the ordinary levels in future quarters. So it's not a new level. You can we will revert to the old level. Thanks a lot. That was all from my side. You're welcome. Thank you. The next question comes from the line of Asbjorn Juk from Danske Bank. Please go ahead. Your line is open. Yes. Hi, good morning from my side as well. My first question basically on the underlying claims ratio improvement, the 80 basis points In Q2, I'm fully aware, of course, that the ALCA synergies are somewhat higher this year than the previous years. But At the same time, private has been unchanged. So maybe a little bit of wording on first of all, on the private side, should we Expect an actual deterioration here going forward considering the claims inflation environment that we have at the moment and that kicking in. I know you say that You have the situation roughly under control, but I guess all things equal, there is a headwind to some extent. And then, of course, if not, if you're actually able to improve private going forward, I guess, we should look at the 80 basis points as the new The basis points that you used to guide for any comments around that would be highly invaluable. Thanks. Yes. Thank you, Espian. Prove underlying the most is actually corporate and to some extent commercial, particularly commercial Norway. And we see largely that when we can deliver fairly high top line growth in private with very attractive combined ratios The value creation of that for shareholders is very high. On your question on whether we expect underlying for private to deteriorate going forward because of inflation. I think that's a very relevant question. The short answer is no. We don't Like that, I think we will even see some periods where we have a positive underlying in private, not changing the pattern that we believe commercial and corporate should be the main drivers of improvement, but there will be some periods with improvement in private as well. Can you then just add that on top of the level of commercial and corporate? Not necessarily because whichever way we turn it, Commercial and corporate is always a little bit more volatile than private. So no, private will not deteriorate. Yes, Private will have a slight positive in periods, but watch out that you don't just add that on top. But is it fair to assume that if private goes from basically flat to, let's say, 20, 30 basis points improvement over time, Admittedly, yes, Corporate and Commercial will not improve as much as they do right now, but wouldn't the net effect then be largely Neutral, hence, your 80 basis points should be rather sustainable going forward? Well, I don't think we have a plan that the current level should deteriorate. So, I think your line of thinking that there is stability in that Makes sense. And then over time, the composition will vary. And honestly, the number will not be fixed per quarter either. But the logic that over time we'll continue to do this underlying improvement makes sense. That is our logic as well. And then, of course, we're working hard to make sure that we stay at or ahead of the inflation curve. But that is The outlook we have and that is what we're doing. In that context, Barbara mentioned that the claims ratio is around 3 Ten points higher for new customers. I guess your churn is just below 10%. So is it fair to assume that the new customer inflow has around 30 basis Negative impact at the moment and hence your underlying is on the existing customer basis, is 30 basis points better than what we see here? I think if you look at the new customers and the 3%, that's basically what we look at in the 1st couple of years in the customer journey with us or the customer lifetime value. So again, if you look at the growth, The lifetime value. So again, if you look at the growth we have experienced, it sort of comes in various steps where you have a gradual inflow of new customer portfolios. If you think, for instance, that the Norwegian customer base that has been impacted by We took over Neto, which has given us a very strong inflow. Then after some time, you have seen an increase in customers and business from the car channel enter. Last year, we also saw inflow by a number of customers that were previously with 2 companies that had their licenses withdrawn. So you see a gradual inflow. So it's not that you see an inflow day 1 and Then after a certain time, you can say now that's over and that has a certain impact on the remaining part. Bear in mind that just this year, we have had an inflow of almost 7,000 customers in the Norwegian Private Business. So it is something where obviously you have to see it in a slightly longer perspective than just on a Fixed time with the impact that you highlight there. I think basically your calculation logic is right, Espian. And then bear in mind that You can calculate the difference in the normal inflow, outflow if there's a net net growth of 0 customers. That I think was your 30 basis point calculation. Then of course, what you should add to that is if the growth is higher, so there's a net net growth, which would then change your calculation slightly. And I guess both this year and the year before, we have seen a net net growth in private, both in Denmark and in Norway. So right logic, but I think you will need to add a little bit for the net growth. All right, fair enough. On Slide 16, you have this very detailed slide on claims inflation and how you monitor it. Could you give us a little bit more flavor on you say in all things equal, how has it on a group level, how has the Inflation environment that we are in at the moment, how is that impacting your total claims ratio, all things equal, if you don't change result. Pricing, so what kind of basis point effect are we talking about? Very good question and very relevant Given what we see right now, I would more look at what are the areas that are specifically impacted by the claims inflation we see right now. That is very much in the property area, which accounts for about 18% of our claims business. And there, you should also look at what is the Claims inflation when it comes to the raw material and what is the claims inflation when it comes to the craftsman. So there are various dynamics underneath. So I think in general, it is a question of where do we see the claims coming in And how does that then feed through? But given the structure we have, which is very much the message in our presentation today, We are not as impacted by a certain spike in a month or in a half year like you would see other companies be Because first of all, we have longer tenors on the agreements that we have with our suppliers and the craftsmen that we work with. And then also you can say, if you look at the duration of our insurance Then you would also see that it is relatively short tail. So by adjusting prices, we will be able to take into account The potential inflation that is impacting certain areas. But it's fair to say also that we've left behind completely The logic of working with an overall inflation assumption. So now it is an extremely detailed bottom up built not only by country and by line of business, but by components within that line of business, whether that is a fixed compensation or it is salary compensation and inflation or it's material inflation, etcetera, etcetera. So it is becoming a very, very large hierarchy of data with a lot of variation from product to product. All right. Fair enough. So it seems like the risk at the moment seems isolated to 3%, 4% of your total claims. Is that the ballpark? Yes. That's a fair That's a right summary, Espian. All right, fair enough. Then on the Strykansa and Coden slide that you have, just really one question on Norway. I guess, when you look at Sweden, there's a lot of reasons why the combined ratio is slightly higher versus the first half of last year. I don't know how many details you have at the moment on the Norwegian business, but the improvement there, can you give us a little bit of flavor there? Is this sort of The run rate we should expect from Kvaer Norway ahead, is that €100,000,000 in technical profits? Or how should we look at that? Well, I think if you look at the historical data and obviously, we don't have full access to that data yet. So you will hopefully Understand that we don't have the insight or level of detail into that data yet. But what is quite clear when you look at the historical data is that, Turkansa Sweden has been very stable, with a very, very healthy combined ratio. When you look at Dakota and Norway, the combined ratio has been significantly higher in longer periods around 100 and even slightly above 100, particularly with a very high cost ratio. So when we see the improve or the delta between last year And this year for Koda Norway, one driver is that there were more larger claims in the same period last year and a more normalized level of large claims this year. The second is that we are now in a period where for Several years, they've worked with price increases, which is starting to sort of pull down the run rate. So I would say that what they saw last year It's clearly above what is the future run rate. I would hesitate to say that what we see now is a new run rate. We're quite confident that when we get the synergies through and we get the cost ratio level down, we will approach an even stronger run rate than this. But stand alone, I think that the stability is not really there and that the combined ratio we see in the first half in Koda, Norway. It's a little bit too flattering to just be assumed as a new run rate. So watch out a little bit even though the numbers are small. All right. Very clear. My final question on Slide number 12 on the insurance pricing. In Norway, I'm just a bit surprised to see the house insurance pricing again flat. Looking into the, I guess, potential claims inflation we have already talked about. So shouldn't we expect that to trend upwards? I know there's competition, but still. And of course, looking into the motor insurance where you see quite significant repricing in Norway. So obviously, you are getting some repricing through on the private side there as well. So any comments on the house insurance? Yes. So the short answer is yes. We do expect that to trend upwards. Result. And the only reason why house in Norway is not trending upwards is this one rather large adjustment actually a year ago in house prices for and actually a year ago in house prices for 1 very, very large partner, the largest one we have. And then the earned premium impact of that adjustment for that single partner is what keeps the total flat in house Norway. So first of all, I believe that subsequently that partner's pricing on house will go upwards again. And we are seeing in all of the other areas of our portfolio in house Norway prices are going up. So it is really a large isolated impact in a portfolio where all of the other customers are seeing increases And this partner will see increases as well. So your expectation for the future is correct. All right. I thought that was already in the base figures by now, but okay. Thanks. It takes 12 months to earn it. So it has a quite long impact. Sure. Okay. Thanks. Thanks. Thank you. The next question comes from the line of Pierre Grumbaugh from SEB. Please go ahead. Your line is open. Yes. Hello. Just a single question from me. Great that we get some numbers on The acquired business, can you elaborate a bit on the development in Sweden like you were able to do in Norway? Yes. And think about the underlying numbers, one off last page of Teva of course. Yes, we can do that. So, I think it's positive to see if you start on the top line that growth is 3.3%. I think if we look at the past 5 years, the average has been closer to 2%. So 3.3% is closer to being the market growth. So I think that's one important area and we see that both in the private and in the commercial SME space. Then we've seen a number of good months in the first half. But we also saw a period with private lines in Sweden, where weather claims were significantly higher than planned. So actually, if you take the individual months and actually also the impact on the full year, we can see the underlying being very positive, both in Private Lines and in Commercial SME in Sweden. And then we can see a negative a clear negative on weather impact, particularly in Private Lines in Turkansa, Sweden. So it's a little bit a combination of very strong underlying and then quite negative on weather. And then I think fairly stable on large claims in general, so mainly weather playing a role. So weather has been pretty bad in the first half in year and Sweden? In some areas, yes. Yes. There's In some areas overall. Around Stockholm to be specific. They have had some, what do you call that, Rainfalls and cloudburst. Yes. So rain showers and cloudburst. What are you getting upset? I believe that was in the late spring. Yes. It was late spring. Okay. And of course, Peer, this is the summary for the 6 months and therefore not split into the quarters as normal, right? So that's why we're summarizing also the spring. What about the prior year gains in Sweden? Any impact of those? Are they at unchanged level? They were not last year? Sorry. No, that's Sorry, that has not Yes. Thank you. Any changes to prior year gains in Sweden? No. I think, Per, in all fairness, we have had the access to the business for 1 month. The next quarter, we will have Significantly more insights because there we have had the business in full. But I think we'll leave it at those more generic comments and as Morten is saying, focusing on the half year and just giving us a very good comfort that what we expected in terms of the business and the business result is actually what we see overall. And then I think it's positive to see that also after being Directing with our new colleagues in Sweden and Norway, we can see that there is a whole lot of areas that We will be working on together going forward. But generally, Per, we haven't seen big moving parts on prior years' gains or losses. I think the main volatile part we've seen are these weather claims in the spring around Stockholm. Okay. That explains why the numbers are trending in the wrong direction. We should probably not be that concerned about that. Just one final question. Amortization of client intangibles, it looks like you won't start amortizing that before you consolidate the Our day business line by line, is that correctly understood? Correct. Remember that right now, we have them as we're taking them in via equity accounting. They and associated investment and not until demerger where we have a full consolidation line by line. Okay, perfect. Thank you. Thank you. Next question comes from the line of Will Hardcastle from UBS. Please go ahead. Your line is open. Good morning, everyone. Just following up on the claims inflation questions. I guess, could you provide us with a Few more tangible examples back of how you've achieved this significantly lower average claims cost in Motor. And how much of that advantage do you think is sustainable? And perhaps a follow on to that is, do you think some of The smaller players perhaps are finding this a bigger challenge and that's making you increasingly competitive. Is that a fair comment? Yes, I think that's absolutely a fair comment. I think we have been prioritizing this with our procurement team and our claims team for a number of years now. So we have built strong competencies in the area. It is something that require that you are well equipped also with Technical experts in certain areas, both in order to challenge and make sure that you negotiate the right terms and deals with the supply chain. But I think what we have demonstrated in the last couple of years and exactly like you see In the example with the claims cost for motor, then it is something where we believe that we are in a good position. I definitely believe that it is something that all our peers are also looking very much into because it is something where, in particular, in select Areas like property that we have talked about today. It does have an impact and it does impact competition in terms of the results and so forth. But we will focus on, you can say, ensuring that our business is as strong as possible and So as much as possible in control in the area. I guess we've noticed, Will, that even some of our larger competitors Been trying and have been stealing a few of our staff in this area. So I believe that's probably because they are good and our methodology is better than the industry. I think longer term, we'll see that the top sort of 3, 4 players will become professional at this. And then exactly as you put it, the smaller players will struggle. And that is part of, I think, The scale advantage with that will allow the bigger players to perform in this area and make it more challenging to be competitive as to Small Player. Yes, very helpful. Thanks. Thank you. The next question comes from the line of Martin Gregorzdierk from Carnegie. Please go ahead. Your line is open. Thank you so much. Two questions from my side. The first one on Norway, where I believe you booked a technical result of SEK 388,000,000 I guess that's The highest technical results I have I can remember at least what's happening there. And then coming back to your claims costs inflation slides. When we talk about price hikes, Can you put any elasticities on how much are you actually able to raise prices without seeing any notable churn? Well, if we take the first question, first, Martin, I think that We've seen I think if you put up the if you look at the data series in a longer time horizon, clearly, There is a bigger difference between the summer quarters in Norway and the winter quarters in Norway than we see in Denmark. And if you look at the total combined ratio for Norway as a country in Q2, we're seeing a combined ratio of just around 79%. So clearly, a very strong quarter for Norway. It should be a strong quarter given that it's Q2, but we're also seeing the fact that commercial Norway is starting to contribute more. We're seeing that corporate Norway is starting to contribute more and we see less volatility on large claims. So it's a combination of Underlying improvement, the summer quarter and then less large claims in the quarter. So Hopefully, we'll be seeing more quarters that are good in Norway going forward, but probably still more volatility, particularly between the season quarters. I think on the pricing and elasticity, it's a little bit easier to See the elasticity question in a private and SME context, where you largely see that as long as you're not above 5% of price differences. The reaction is very, very limited. And when you move to corporate, it does So a large extent also depend on what the rest of the market does. And I think what we're seeing at the moment is to a large and large extent that competitors, particularly Norway, are increasing prices as well. We see in Denmark a little bit of more of a mix picture in terms of competitors pricing, but also there we're starting to see a tendency of competitors increasing prices. Result. So we've seen examples of price increases of more than 25%, 30% of corporate where the customers stay. Result. We've also seen price increases of 7%, 8% where the customer leaves. So I wouldn't say that there's a sort of statistically clear pattern of elasticity on pricing in corporate. And that's probably why we need to continue standing firm that we do the price increases necessary and we accept whatever consequence we'll see on the top line. But of course it is helpful that competitors are following suit, particularly Norway and starting to see the same in Denmark. Okay. Very clear. Thank you so much. Thank you. The next question comes from the line of Yudish Chikari from Autonomous. Please go ahead. Your line is open. Good morning, everyone. I've got three questions, please. And the first one, sorry to go back again on this, it's on claims inflation. You have clearly, you have procurement agreements that protects you against a spike in claim inflation. But Considering these agreements will come up for renewal, is there a risk of a large adjustment in the coming year? And should you not be adjusting your prices today? That's my first question. The second one is on claims frequency and coronavirus related restrictions. I was just wondering, have you seen a material change in frequency trends as some of the restrictions have been eased? And what are your expectations going forward. And then finally, a question on the Swedish business, your own Swedish business. I mean, the results Seems I mean, they were down quite significantly year on year. And part of that seems driven by runoff. So could you just give us some color on what's driving this, please? Yes. I think if we start with the claims inflation, Jurij, I think when it comes to the tenors of the agreements, I think it's important to understand that this is not just something that benefits us. It actually also benefits the suppliers that we are working with Because by having a counterpart like us when it comes to the claims handling, it also means that they have a more Stable inflow of work activity and so forth, which is stabilizing their own businesses. So it is not something where you should See, this only has a benefit for us in terms of better pricing, so we should see an increase. But it is actually also benefiting the counterparts that we are working with in the Parts that we are working with in the various areas. And hence, because you have that mutual, You can say interest in having those agreements in place. It is also something where we don't foresee that there will be certain large spikes related to the agreements when also renegotiating them. So I guess it's fair to say, Judith, that don't expect Sudden spikes, but we do ourselves expect that some of them will have increases and we have built those assumptions in to the price increases we are doing and have been doing for a while. So I think we completely agree with your logic, but we don't expect big spikes. Got it. Thank you. When it comes to the frequencies, I would say related to COVID, what we have seen in the last quarter is very much building on the trends that we saw in the second quarter, Where you start seeing, you can say, an increase in areas like health and and dental insurance and so forth. But also where we have a catch up related to glass repairs in the motor which is increasing the number of frequencies there in this particular quarter, but we see that as a backlog that we are addressing right Now overall, we see that you can say the car claims outside the glass repairs, as mentioned, They would typically follow the increased volume that we have in the area. Where we have seen and increase as well. And whether that is COVID related or not is within pets. I think everyone in the Nordics have an interest in getting cats and dogs. So first of all, we have seen an increased number of policies, but it's also an area where we see a Slight increase or actually quite an interesting increase in the level of claims on pets. But so far, it is still a very small part of our business. In general, I think you should expect, Which you can also see on the COVID-nineteen impact that we are getting back to more normalized levels. What we assess to be the COVID impact in the quarter is around €32,000,000 now. And I would expect that to gradually decrease further going forward unless We see sudden new 3rd waves or whatever might happen over the course of the summer. Last question was around Sweden? Yes. And the runoffs. I think, again, that is something where some of the areas where you have the runoff is related to the motor area, where you have seen a slightly different development, which has supported the business in this particular quarter. I think when looking ahead, yes, I wouldn't sort of guide that this is a new level as such. All right. Okay. Thank you very much. Thank you. The final question comes from Les Shingle from ABG. Please go ahead. Your line is open. Yes, thanks. I just have 2 small questions left. And the first one is on the bonus And premium discounts, of course, I realize it's not a negative thing that it's growing from €150,000,000 last year to €279,000,000 in Q2 this year. But could you help a With what you expect for the remaining part of the year here, will it come down in Q3 and Q4? Or what should we expect here? I think as such, we don't guide on the bonus premiums. I think again, you should look at where does it impact. Probably the majority is related to the private business. And again, we have seen a very strong performance, somewhat also helped in the Q1 by COVID-nineteen, somewhat less in the Q2, which is supporting the performance there. And how that will look in the coming quarter depends on, you can say, whether we will see any major impact again. But yes I think the current run rate is a little bit higher than usual and the spillover is a little bit higher than usual. But it is generally a reflection of strong performance in Private, as you put it, Baba. So in periods where we deliver strong performance in Private, we We'll see an elevated level of premium discounts, but the current level is a little bit high. I think we'll have a little bit higher level also the next couple of quarters. So but again, reflecting a positive underlying trend. Personally, I think it's a bit confusing that accounting wise, you need to subtract a what is in a sense sharing some of the profits comes up as a deduction in top line. It's a slightly challenging principle. And that's why we try to give results. Data on both before and after, so you can monitor what is the actual growth that the machine is delivering And then what is after subtraction of what is essentially profit sharing? Yes, yes. And Thanks for giving that information. And then just a more high level question now, I think, Brink Was asking about, I mean, perhaps a bit conservative buyback guidance for indication for next year. Do you have any thoughts about the normal buybacks? I mean, I know you love your Rockefeller quote, But I mean, could you are you entirely against having a part of your normal distribution as buybacks? How do you see that? I think clearly, our view is that A high level of returning capital to shareholders is extremely important for us. And we See that, that is extremely important for our shareholders and for the value creation and for the discipline of how we run the business. I think for as such, for us, it's not very important whether it is dividends or buybacks, but we get a clear signal from most of our shareholders that The dividends is preferred, and that's why we use dividends as the typical route, and we expect to continue to do that. If over time investor sentiment changes and the preference for the split between dividends and buyback changes. Then we will listen to our shareholders and be perfectly willing to change that. But As of now, the signals we're getting from our shareholders is a very clear preference for dividends. Okay, okay. Thanks for that. Thank you. We have no further questions. So I will pass back for any closing comments. Yes, this is John Andre again. I will just thank you all for all the very good questions. And as usual, Peter and I remain around if you have more. And We will wish you all a great summer at this point. Thank you. Thank you.