Good morning, everybody. My name is Gianandrea Roberti. I am 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 Kragh Thaysen, our Group CFO, and Mikael Kärrsten, our Group CTO, to present the numbers. With these few words, over to you, Johan.
Thanks a lot, Gian, and a very good morning from me as well. Earlier this morning, we published our Q3 results, and I will begin by commenting on the financial highlights, as I always do. Revenue growth was 4.1% in DKK and 2.3% in local currencies. As we have experienced in the previous quarters, the growth was higher in the private segment, close to the 4% mark, while we did experience a slight top-line fall in the commercial segment. Our outlook for approximately 3% revenue growth for the full year of 2026 remains unchanged, as does our ambition to show an improved revenue growth as we move into next year, 2027. I will get back to this later on in this presentation. The insurance service result of DKK 2.454 billion was driven by an excellent combined ratio of 76.8.
This performance stems from a strong performance across the board, with also the large and weather claims experience being below normalized expectations. As for the underlying claims ratio, it improved by 60 basis points in the quarter against 50 basis points last quarter. The improvement was higher in the private segment and slightly lower in the commercial segment. As for the overall investment result, it was DKK 42 million.
The free portfolio delivered a slightly negative mark to market return as increased interest rates weighed on the fixed income portfolio, whereas the match portfolio was very positive. In general, we are satisfied with the investment performance considering the volatility in the quarter and our chosen asset mix. Additionally, and as we already flagged in Q2, we have been selling properties further down, and we now report an exposure of DKK 1.9 billion against the DKK 3.3 billion when we announced our de-risking strategy.
Finally, we are reporting an operating EPS of DKK 2.96 and a return on own funds of 47%. The solvency ratio at the end of the quarter was a very robust 203, supportive of future capital repatriations. We are now turning to the next slide on customer satisfaction, and the customer satisfaction score was record high at 83 for the second quarter in a row and already now in line with our 2027 target. Amongst many things, we have developed an AI assistant called Nora that assists our claims handlers in the processing of complex documents. This allows them to quickly identify all relevant information and in turn provide a better and more swift customer service, and this drives customer satisfaction in the right direction.
In addition, I would like to mention that Tryg during the quarter also processed around 220,000 claims through STP, straight-through processing, which reduces wait time for customers and improves the overall customer experience. Good news on the customer highlights. With that, let's move to the next slide where I will comment on the insurance service result split between our two main segments, private and commercial. The insurance service result in the private segment was just shy of DKK 1.6 billion, driven by a combined ratio of 78.3%, good top-line growth and improved underlying performance, as well as higher run-off, which also helped the numbers. The insurance service result in the commercial segment was DKK 866 million, driven by a very strong combined ratio of 73.5%.
A lower run-off result for the quarter weighs negatively, of course, but is offset by an improved underlying performance and also lower than normal weather and large claims. With that, I am turning to the next slide where I will comment on the insurance service result by geography and the ISR walk as you see it on the right-hand side. As always, and I will repeat that, the reported ISR and combined ratio can be impacted by different factors such as large and weather claims, run-off results, and of course the overall level of interest rates. In Q3, we note a strong performance across the board. I am particularly pleased to see the best reported combined ratio in the last 10 years in Norway and a Swedish performance that remains stellar while the Danish combined ratio remains solid, although impacted by a lower run-off result and a flattish revenue development.
The ISR walk of Q3 versus last year, the chart you see on the right-hand side, shows a lot of positives. In fact, only positives, which provides a lot of comfort going forward. The ISR is up 12% from Q3 last year to Q3 this year. 12%. I am now turning to the next slide on the financial performance of our Norwegian business. We are reporting a combined ratio of 76.1% in Norway, the best reported figure of the last 10 years. From the chart on the bottom left-hand side, the improvement is very visible also when you look at the nine-month figure. As a reminder, we put in place significant profitability initiatives in the last two years. We have discussed that at length, and these are paying off as expected.
Also, it is important to remember that price increases continue to taper off, and therefore the pace of improvement will slow down going forward. Additionally, please note that we are now entering the most difficult part of the earning season for the Norwegian P&C with autumn and especially the winter approaching, and hence it is unlikely that the current performance will be similar to Q4 and even more so the Q1 with winter. In general, our Norwegian business has reached a very satisfactory profitability level, and our key focus now in management is to avoid some of the large swings seen in the past. I am now turning to the revenue growth section. On the first slide in this section, we show that revenue grew 4.1% in DKK and 2.3% in local currencies in Q3, with the growth at a satisfactory level of 3.7% in the private segment.
The commercial segment developed negatively following the losses during the January 1st renewal of selected corporate customers, as well as a general retention pressure in that particular segment. We mentioned in the Q2 call that revenue growth would likely be lower in the second half of this year, and have updated the outlook to a revenue growth for 2026 of around 3% for the full year. Today's numbers are fully in line with that statement. At the same time, we continue to expect a good and gradual revenue pickup entering next year, 2027. We have a very strong focus currently on both on retention and on commercial go-to-market initiatives, and many internal, more operational indicators are pointing in the right direction. That makes us very optimistic for what is ahead of us.
At the same time, it is of course important to remember that staying disciplined is key to continue to run a profitable and stable business. This should not be rushed, and this will not be rushed. With that, let's turn to the next slide on customer retention. In general, the overall picture is actually improving. Retention is moving up in all three private segments, which is reassuring and positive. We also see signs of stabilization and slight improvements in the commercial segment with an uptick in two out of three business units, which is very important. As mentioned previously, past experiences tell us that it does take a little while for retention to stabilize and improve again after a prolonged period of price increases to offset inflation. With this good news, over to you, Mikael.
Thanks, Johan, and good morning from me as well. We are pleased to report an improvement in the group underlying claims ratio of 60 basis points, up 10 basis points from the Q2 level. The improvement is mainly driven by the private business, which improves 80 basis points. As mentioned multiple times before, the underlying loss ratio is expected to be stable to slightly improving during this strategy period, and Q3 is a firm confirmation of that. It's also important to repeat that going into 2027, as Johan mentioned, we are likely to see a revenue improvement, and this will likely slightly dampen the level of improvement in the underlying. This is a natural consequence of the business dynamics and our way to achieve a balanced earnings growth.
Turning to slide 14, where I, as usual, will comment on the more volatile items, large and weather losses, as well as discounting and runoff. Q3 was a positive quarter, both in terms of large and weather claims. Large claims were DKK 169 million and weather claims DKK 83 million, both below the quarterly guidance. In the slide, we are showing both the quarterly and the year-to-date numbers, as well as the historical development. We recognize that at times, these figures attract a lot of interest, but as you can see, the annual development has been both better and worse than our guidance in the past. In 2026, we are so far in line with the total guidance for weather and large, but with large losses performing worse than planned and weather better.
The discount rate has increased somewhat, primarily as a function of the overall higher level of interest rates, while the runoff result at 2.4% is in line with our broad 2% runoff guidance. With this, I hand it over to you, Gian.
Thanks, Mikael. We are now moving into the investment section. Total invested assets were DKK 58.5 billion at the end of the quarter, with the free portfolio being slightly below DKK 14 billion and the matched portfolio being around DKK 44 billion. The asset mix is largely unchanged, leaving aside DKK 250 million lower properties exposure already mentioned from Johan. This money has been reinvested in covered bonds. The asset mix remains very conservative, in line with the strategy launched in November 2024 at the CMD. In the following slide, we show the specification of the investment result in the quarter. In general, we are pleased about the numbers considering our chosen asset mix and especially the interest rates volatility seen in the quarter. The fixed income book in the free portfolio was hit by increasing interest rates while properties experienced a positive return.
The matched portfolio benefited from a good interest on the premium provision and narrowing Danish and Norwegian covered bond spreads. Other financial was also better than normal, helping the overall results. With this, over to you, Allan.
Thanks, Gian, and good morning from me as well. We are now moving into the solvency and expenses section. The first slide shows the development of the solvency position as per end of the quarter. In this slide, we are highlighting a robust solvency ratio of 203%, which is up from 196% at the end of last quarter. Furthermore, we are highlighting a very strong operating capital generation before dividend of 25% for the quarter. Own funds are, as always, primarily impacted by the movement in operating earnings and the dividend payment. The SCR in the quarter includes a very modest uptick with an increase from the revenue growth, which is offset by the reduced properties exposure. Turning to the next slide, we show the historical development of the solvency ratio.
We are pleased to report a very robust solvency ratio of 203% in a quarter characterized by very solid earnings and a modest increase in the solvency capital requirement.
As mentioned multiple times, we expect our solvency ratio to gravitate towards a less conservative level long term. As promised, we will review our solvency position at year-end, and at that time consider extraordinary capital repatriation if found appropriate. Currently, many things are pointing in the right direction, and with a robust solvency position of 203%, it is hard to stay pessimistic. As always, remember that we prefer a gradual approach benefiting our shareholders with balanced actions. We are now turning to the solvency sensitivities. Sensitivities are virtually unchanged since last quarter, which should not be a surprise, as the asset mix itself is largely unchanged when leaving aside the DKK 250 million properties reduction in the quarter. The biggest sensitivity remains towards covered bond spreads movements, as this is our chosen asset class and represents the vast majority of our investments.
The low solvency sensitivities are a key feature of Tryg's investment case. We remain focused on running a profitable and stable insurance business while we are arguably taking the lowest asset risk in the sector. Now please turn to the next slide for details on the expense ratio development in the quarter. We are reporting an expense ratio of 13.3%, which is at the same level as last quarter and fully in line with our 2027 guidance for the expense ratio to be stable to slightly improving. Investments in additional commercial activities are funded internally by improvements in our operational efficiency. With this, I will hand it over to you, Johan.
Thanks a lot, Allan, and we are now shifting gears as we enter the final part of this presentation focused on strategy and the financial targets. As a reminder for everyone, we aim to grow the insurance service result by DKK 1 billion during this strategy period from 2024 to 2027. As you know, the strategy is based on these three pillars: scale and simplicity, that should add DKK 500 million; technical excellence, that should add DKK 300 million; and customer and commercial excellence, that should add DKK 200 million. A number of strategic initiatives are continuously being implemented, and we remain confident and pleased with the progress being made on the strategy implementation. As for the scale pillar, we continue to strike more Nordic agreements leveraging our procurement scale. As for technical excellence, we continue to scale more advanced risk modeling across the group.
As for customer and commercial excellence, I would like to highlight two new partnerships focused primarily, but not only on the motor segment. It is the Mercedes partnership in Sweden and the XPENG partnership in Norway. Allow me to elaborate on these in the next slide. These two partnerships are both very important for us in our pursuit of balanced organic growth. One needs to always remember that motor is very often the key entry product for customers, and from the motor product, it is possible to cross and upsell to other product categories. In Sweden in particular, Trygg-Hansa has a strategy to grow its fair share of the motor segment in order to diversify the very strong foothold within PA.
This new partnership with Mercedes is therefore perfectly aligned with the strategy, and with Mercedes as one of the top brands in Sweden, this partnership demonstrates that we are truly getting commercial traction. At the same time, we are also very pleased to have signed a new agreement with XPENG in Norway, an increasingly popular brand in Norway, the country with the highest penetration of EVs in the world. This partnership is building on a well-established market presence and will help us maintain a good revenue momentum in the face of lower price increases ahead of us, looking at more muted inflation outlooks. I will now be moving on to the next slide on sales and retention. As communicated at Q2, we expect an approximate 3% revenue growth in 2026 as repricing measures are tapering off following lower claims inflation.
We do expect to gradually move from a more price-driven growth to a more balanced approach. However, as you all know, organic growth in a healthy manner takes a bit more time to kick in due to the nature of the insurance business. Therefore, we have brought with us this slide, a slightly updated version from the Analyst Day, which summarizes why we are optimistic on the revenue outlook entering 2027. It illustrates the sale index year to date versus last year for each of our six business units, while also with a little arrow indicating how retention is trending. Total sales for the group year to date versus last year is on average up by 12%, and the sales index for five out of six business units are pointing strongly in the right direction.
These positive data points are supported with retention trends that are stable or improving for all business units. This is very important as we aim to achieve a higher and more balanced revenue growth in 2027, when price increases are likely to continue to taper off. With that, let us turn to the next slide, recapping our well-known financial and strategic targets towards 2027. I will just briefly repeat that we target an ISR between DKK 8 billion- DKK 8.4 billion, driven by a combined ratio around 81% and a ROOF between 35% and 40%. As always, our targets are assuming unchanged interest rates and currency levels as at the CMD in 2024 and assuming normalized weather and large claims. All targets are, of course, completely unchanged, and we work relentlessly to deliver on these.
And we now enter the final slide with the rock-solid world reiterating our commitment to be a healthy dividend stock underpinned by strong and stable earnings and a healthy solvency position. And with this, I think we're ready for questions.
If you wish to ask a question, please press five star on your telephone keypad. To withdraw your question, press five star again. In the interest of time, we ask that you please limit yourself to one question. If you have additional questions, you may rejoin the queue. We will have a brief pause while questions are being registered. The first question is from the line of Martin Birk from SEB. Please go ahead. Your line will now be unmuted.
Thank you. Thank you so much. Johan, just a question to the last slide that you have about sales index in your various countries and also across business segments. You indicate 92 in Denmark, and I guess that is no surprise. But you also indicate an increasing retention ratio. When you report 92 in sales index, you have an upwards retention ratio. Could you please help me explain, is that a sign of severe price pressure in that segment, or how should we interpret that? Thanks.
Thanks a lot, Martin, and thanks for that question on that page having both the sales index and retention trends. I think you need to see these two numbers in isolation. So the retention trend is as a result of the fact that we're working diligently with the customer experience in the commercial segment in Denmark. But it's also a result of the fact that inflation is tapering off and the need for repricing is also tapering off similarly. So I think we are expecting to see retention, broadly speaking, across all business units, bounce back to where they were gradually. As for the sales index, I think that is actually a matter of our strategic re-transitioning from a period of double-digit inflation and a lot of focus on margin protection. We are now reactivating our organic growth engines.
In all fairness, you could argue that our business, our commercial business in Sweden and Norway is just a little bit ahead in this transitioning, going from margin protection to organic growth. I am confident that the Danish commercial lines business will also get there. They are slightly behind the two other segments. To be honest, I think this is one of the benefits of being a Nordic book. We are well exposed into three markets with six business units, and we are allowing ourselves to deliver the strongest quarter ever, even with the commercial lines Denmark slightly behind the transition. I think actually it is a positive.
All right. Thanks.
The next question is from the line of Vash Gosalia from Goldman Sachs. Please go ahead. Your line will now be unmuted.
Hi. Thank you for the opportunity. I have two questions. One, again, just on the sales index. When I look at those numbers versus what you had presented in the Analyst Day presentation, it appears that the numbers for Norway private and commercial and Sweden commercial have actually worsened from January to April versus January to September. Just could you give us a little bit more color as to what is going on? Do you see, or are you not as confident as you were, let us say, beginning of the year versus now? What is happening to the competition there? Second question, it is a little bit more around the comment again you had made earlier in the year that you are reasonably and quite confident that you would beat the then consensus top line growth estimate of 3.7%.
But now, obviously, the recent comment has been like you are confident that you will accelerate. Can we still take that comment of 3.7% as the benchmark and then sort of model our numbers against that? Thank you.
Thanks a lot. Two very relevant questions. As for the sales indexes across the six business units, you are asking me whether I am still confident in what I am seeing, and I am more confident than I was when we had the Analyst Day. You will see some of them going up, some of them going down. There is a lot of seasonality and a lot of stochastic things going in. I am very confident with the commercial traction we are seeing, both in all the commercial go-to-market activities that we have launched, but also on the partnerships. Bear in mind that in these numbers, a lot of the partnerships that we have announced are not really playing in yet. The Mercedes deal in Sweden is just coming into play first of January next year. There is a lot of boosters coming on top of this.
I am very confident of our commercial momentum, especially because it is underpinned by retention improving. As to your other point, I have by no means tried to weaken my point at Q2 saying I will beat the consensus at that time of 3.7%. I will stand firmly on that.
Thank you.
The next question is from the line of Youdish Chicooree from Autonomous Research. Please go ahead. Your line will now be unmuted.
Good morning, everyone. Hi. I've got two questions, please. The first one is on interest rates. I mean, there's been a very sharp increase in the past three months, and I think your discounting benefit doesn't fully reflect that benefit. I was wondering if you could tell us what the benefit is going to be like in 4Q, and also, what is the impact on your investment result as well on an ongoing basis? That's the first question. The second one is, again, if I could come back on the sales index. Well, firstly, I don't quite understand how you calculate this because the numbers looks quite rosy for a lot of the segments.
I was wondering if you could explain exactly how this is calculated and why not just show gross written premiums, for example, because that should be a fairly good indicator of future earned revenues. Thank you.
Thank you, and good morning, Youdish. For your first question around interest rates and the impact on discounting this quarter and going forward, please remember that discounting effects are based on a combination of interest rates and claims mix, of course. But the 2.8% that we are printing this quarter goes for the interest curves as we see them right now. So that was the first one on discounting. On investment results, yes, please remember that we are heavily into covered bonds and based on that. Also we have a free and a matched portfolio. Of course, the matched portfolio that is as by nature a hedge, and making sure that increasing or decreasing interest will not impact our liabilities and so goes for the matched portfolio. The free portfolio is a very short-durated covered bonds of duration of two years.
The impact will be very minor, even though rates are increasing or decreasing.
As for your other question regarding the sale dynamics, why we are showing this is based on the volumes we are selling in each of our six business units. The reason why we are showing you this, that this is a leading indicator what will actually happen on the gross written premiums. There is a little bit of a lag from you actually conduct the sales until customers migrate their policies into Tryg books until we earn the premiums. We are essentially trying to give you comfort a little bit further out in the funnel than we usually report in, just because we know that the top-line growth is very important to all of us, and this is a way for us show why we are comfortable with the growth outlook for next year.
Right. Okay. Just two follow-up questions. The first one on the interest rates point. I thought the discounting was actually based on average rate, the change in average rates during quarters as opposed to the change period end to period end. That is the first follow-up. Then secondly, Johan, if you are saying that this sales index is a leading indicator for GWP, then you are printing like mid-teens increases well across most of your segments here. So when you talk volumes, you mean in millions or you are talking like policies sold here?
Maybe I can just answer the last one. We are talking volumes in local currencies. That is how we measure the sales index. The reason why we are showing you this is that some of this sales has not really converted into real policies and premiums as of yet. This is a leading indicator. As for the discounting question.
Yeah. Well, back to, again, remember this is a combination of the interest rates and the claims mix. We use month-end interest rate curves in the way that we discount our reserves. So again, back to the fact the 2.8% right now, that is actually mirroring the interest curves that we see.
Okay, cool. Thank you very much.
The next question is from Mr. Sundar from Danske Bank. Please go ahead. Your line will now be unmuted.
It's Anders from Danske. Congratulations for the semi-record in Norway. I have two questions, if I may. Could you provide some insights into the 2.3% local currency growth? How much would be rate and how much would be real business volumes? The second question goes on the auto deals that you've been signing up for. Do you expect that to be combined ratio dilutive? Thank you.
Maybe I can take the first question. I had a little bit difficult hearing the question, but as I understood, you were asking into the 2% growth and how it was decomposed. Right? I think if you just start very strategically on that question, we are in a transition now for having that growth composition being much more organic and balanced. Normally we strive to have 1/3 of the growth coming from price, 1/3 of it coming from cross and upsell, and 1/3 of it coming from inflow of new customers. If you look back in the last few years with high margin protection, price has been the predominant driver of the growth. The reason why we're seeing growth coming down is because price is taking up less part of the growth composition due to inflation tapering off.
As we move forward, and I think the sales index slide should give you comfort around that, we will see a higher level of cross and upsell and a higher inflow of new customers. This is a transition that is happening. When you decompose the 2.3%, we're seeing 3.7% in private, which is at an acceptable level. As you see for the commercial part, it's 0.7% drop. This is where we haven't quite completed the transition. I think what we're seeing is a natural projection and a natural transition in the growth profile over the next quarters to come. You will see us changing this balance. As for your other questions, which was regarding
Could you repeat the other question?
The auto deals you've been making, would you expect that to be combined ratio dilutive?
Okay. I think the question was on the partnerships deals that we are making with Mercedes and XPENG. I think first of all, motor is a capital light product, which means that the combined ratios are slightly higher than if you combine it to the average of the portfolio. Second of all, for especially Swedish motor deals, they are divided into the
collision damage waiver and the rest of the motor book. The first part you get a start with first, and the second part you sort of upsell gradually. So there is a bit of a timing effect in that, but it is both very sound business, but it has a small timing effect on the combined ratio impact.
Thank you.
The next question is from the line of Vinit Malhotra from Mediobanca. Please go ahead. Your line will now be unmuted.
Yes, good morning. Thank you. Congrats again. I do have two questions, but I will ask one now and then come back later if there is time. My main question is the underlying loss ratio, so congratulations on the success here. I am just curious that for your long, medium-term out, I do not know if it is the exact word, but the outlook has always been a little bit more cautious, let us say, on this metric. Is there another reason, or is it just conservatism and you want to be positioning in a steady way for this very important metric in which you are achieving very strong success already? I am just curious as to what your thoughts are on that. My second question on commercial, but I promise I come back, so I will come back later.
Oh, perfect. I will go into the question on the underlying loss ratio. I think as you alluded to, we have communicated before, and I will start off in that boring part with saying that we have communicated that the underlying loss ratio should be stable to slightly improving. Having said that, I think there are two other important data points that you should take with you as well. First, we are improving this quarter by 60 basis points, as we said, but we do expect the growth to pick up in next year and onwards from here, and that has an impact, slight dampening impact. That is all to do with that we want to have a balanced earnings growth. That is the only reason for having an impact on the underlying.
I think then, last and finally, when we look at the inflation and our pricing, we are pricing at or slightly ahead of the expected inflation going forward. I think that also gives you a data point of what to expect going forward.
Okay. Thank you.
The next question is from the line of Daniel Wilson-Omordia from Morgan Stanley. Please go ahead. Your line will now be unmuted.
Morning, guys. Thank you for taking my question. I guess I have one or two remaining questions. Firstly, on the solvency front. Clearly, your solvency is basically the same level it has been for about two, three years now. Your target, I think, or your guidance is that you're gradually going to move to a less conservative ratio. For that to happen, it seems like something has to move here in terms of capital returns, so I'm just wondering, is it fair to say that compared to the last year when you did DKK 1 billion in buyback, you need to do a little bit more this year and ongoing in order to actually beat that guidance. Is that fair? Then I guess my second question is probably kind of an extension of Vini's question. The improvements in the combined ratio have been pretty impressive.
You say that there is going to be some headwinds next year, but I'm just wondering how quickly do we see these improvements kind of fall off or iron out? I think everyone's been a bit surprised by just how long they've kept going. So I'm just wondering, what's the, say, the decay of improvement here? If there's any way you can sort of contextualize that'd be great.
Yes. Let me start with the question related to solvency. Let's just take a step back here. We are pleased to report a very strong and very robust solvency level that is clearly supportive of further future capital repatriation. Allow me to reiterate that currently many things are pointing in the right direction, and with the very robust level that we have, it is hard to stay pessimistic. We are not here today to guide on anything in terms of what will happen after Q4, and we have never, ever guided anything in relation to that. Predictability means a lot to us, and we have clearly stated that we will assess the capital position at year-end, and based on that, we will decide accordingly. So make no mistake, we will act accordingly. As mentioned, it is hard to stay pessimistic. On the other question, Mikael?
Yeah. I think, again, coming back to the composition of the earnings growth, and as Johan has been saying a couple of times during this call, we are expecting the growth to pick up. We are showing the leading indicators for that, so hopefully showing some confidence and some trust in those numbers. Then in combination with that, we have a very sound underlying profitability, again, stating that we expect stable to slightly improvement in that with a couple of more data points as I alluded to before. We've also communicated stable to slightly improving cost ratios before. I think that's how you should see the sort of combination of operating earnings going forward.
Thank you.
The next question is from the line of Michele Ballatore from KBW. Please go ahead. Your line is now open.
Yes, thank you for taking my question. I have one question about solvency again, and capital in general, but from the point of view of growth. So the growth you're targeting for next year and onwards, what kind of, let's say, capital consumption we should expect based on the line of businesses where you want to grow, especially in Sweden, of course. Also, having our solvency so strong, is this or could be an incentive to accelerate growth? Or in general, this strong capital position could help in increasing growth? Thank you.
Thank you for some very good questions here. On the first one related to growth and the impact on our capital requirement, I just want to remind you that we are running a very retail stable business here that is not capturing that much capital. Every year, we only expect a few percentage points of our earnings that will go to fund, so to speak, the capital requirement linked to the growth. That will not impact the solvency level much going forward. On the other question of should that make us want to grow even more?
I think fundamentally, just to put it in perspective, I think our high solvency ratio is not a requirement for us to grow. Where we are growing is, as Allan is alluding to, is in the retail space. It's very much the Personal Lines, it's SMEs. We don't need and the reason for our high capital position is not due to our growth ambitions. I think that's merely a testament to the fact that we have had a strong few years, and that has made us very robust on the solvency. I have very little argument for why we need 203% to operate our business. We are an SME-oriented business and a retail-oriented business. We don't need that, and I think we've been clearly stating that we will come down to a less conservative level.
We have a, I guess you could argue, a routine of looking at this at year-end at our capital position. We're getting to year-end. We'll have a look at our capital position at that time. We don't need the solvency to grow.
Thank you.
The next question is from the line of Vinit Malhotra from Mediobanca. Please go ahead. Your line will now be unmuted.
Oh, good. Thanks for this opportunity. For me, the one question remaining is on commercial lines in Denmark. Could you just share some light on what exactly is the reason why retentions are low? Is it competition? Is it people don't like pricing, or is there something else that is happening there? Now that I'm here, one follow-up on this famous slide 26. Compared to May, I just want to check my understanding. In Norway, there has been a much lower print compared to May. In Denmark, it's much higher. Is this a result of pricing mainly, or is it something else? For example, private lines in Norway was 123, then 114 now, 110 in Denmark, then 119 now. They're both different trends. Is it just pricing-driven? Just a quick clarification. Thank you.
Thanks for those two follow-up questions. On the first one on commercial lines Denmark, I think you're spot on zooming in on commercial lines Denmark. When we look at the growth profile for the group, we're seeing private lines in general being acceptable just under 4%. We're seeing when we look at commercial lines, we're seeing actually Sweden and Norway growing in commercial lines. The key issue to focus in on is commercial lines Denmark, as you're alluding to. Just to give you comfort, the brand stands very strong in commercial lines. Stands very strong. The distribution and the customer earnings stand very strong. What we need to complete in commercial lines Denmark is to transitioning from being in margin protection mode to organic growth mode. That transitioning is happening as we speak.
It's just taking a little bit longer than it has done in the other markets. We are seeing retention, as you said. It's not where we want it to be, but it's actually improving in this quarter, and we expect it to continue to improve. This is a matter of doing the growth in a very sustainable, healthy manner. Anybody can grow very fast in commercial lines. We are not interested in growing fast. We are interested in growing in a healthy, sustainable manner. That might take a little bit longer in one out of six business units. I think it's fair to say we have the luxury of being a hedge book where we can allow that to take a little bit of time. This will come through. We don't expect it to turn around too quickly. We don't want too quick movements here.
Expect this to be sort of at the back end of this strategy period that we are going to see the growth coming back into the commercial lines Denmark segment. As for your other questions, looking into the variations in the sales index, do not read too much into this. This comes down to seasonality, marketing campaigns, partners coming in and out. Do not read too much into that. I think the way and what we want to convey is that if you look at these numbers, you will see a 12% pickup year to date across all business units on average. You will see if you only look at private lines, you will see a 15% pickup. That is how you should read it. There will be variations week in, week out. You should get comfort from the average year to date, which is strongly supportive of future growth.
Okay. Thank you.
Let me just remind you that if you have a question, please press five star on your telephone keypad. The next question is from the line of Vash Gosalia from Goldman Sachs. Please go ahead. Your line will now be unmuted.
Thank you. I have a couple questions, and potentially a bit more sort of market level generic, but one is there is. Danish workers' comp has been obviously a topic of discussion for a while, but now looking into 2027, what I understand is there still continues to be at least one specific player in the Danish market who is extremely competitive. Now, given the repricing that is expected, assuming that particular competitor does not reprice, I would believe that Tryg would then be willing to give up volume. Can you just help us contextualize how does that sort of tailwind on pricing versus headwind on volume in Danish workers' comp sort of play through the entire numbers and the entire book? That is one.
The second is, there has been lately a lot of discussion on agentic AI distribution, and obviously there has been a lot of chaos around Meta Muse, et cetera. Could you help us understand what is Tryg doing specifically to sort of future-proof itself in this context? Thank you.
If I start with the first one on Danish workers' comp, I think first of all, it's important to state that we are always true to our underwriting focus and combining how we best price from a technical perspective and a commercial perspective. That is always the case, and Danish workers' comp is no different. Then I think the second really important point here as well is that Danish workers' comp is 2% of our total book. So that gives you a quite important data point that it's a very limited impact overall if we look at Tryg from a Scandinavian point of view.
Then I think for your second question, which is more a strategic question around the worry that AI has created globally on insurance models, allow me to just elaborate a bit on that question because I think this is probably a pretty good crowd to discuss this, and I'd love to share our view how we see this at Tryg. I think just to kick it off, to not sound defensive, because we of course acknowledge that regulation can change in the future, but current regulatory environments do not support AI agents buying insurances on behalf of consumers. Just as a few examples, under the current regulatory regimes, we as an insurance company need to ensure, one, I guess you would say that the consumer has been advised on products and coverages sufficiently. Two, that the consumer's needs are covered adequately.
And three, we need to also ensure that the AI agent's power of attorney can be documented. So you could say with this in mind, we don't currently envisage insurance operators allowing AI agents to purchase insurances on behalf of consumers. I guess on this notion of this commotion that's been right, it's important to highlight a few facts that may have somehow disappeared in the news flashes around AI agents. Already today, the large U.S. insurance aggregator Insurify and other sites have blocked Muse as an agent on their website over concerns regarding the stripping of critical coverage details, added cost, obvious mistakes in obtaining quotes, et cetera. In addition, Meta has actually limited Muse's autonomy by requiring manual acceptance, human in the loop before ultimately buying new insurances, simply to avoid mass consumer lawsuits over AI mistakes.
And I guess if you sort of zoom out of this, consumer protection regulations have always been and will always continue to be very high on the agenda of European countries. This could very likely hinder rapid or any changes to the distribution models. However, should the regulatory environment become more agentic AI friendly against our expectations, we believe there are certain characteristics in the Scandinavian markets in which we operate that will prevent this from becoming an actual problem, and more likely just a new market condition on which we have to adapt. The way, and I'll take you guys a little bit a step up here in the strategic answer here. The way insurances are bought is materially different between Scandinavia when you compare to the rest of the world. Products are in general bundled.
The average consumer can easily buy four products or more. Insurances in our region are very much a convenience products, and peace of mind and strong coverage is much more important to customers than necessarily getting the ultimate low price. Very strong value proposition, the customer experience, that is what drives high customer loyalty, which is why our market is characterized by insurance companies selling their products, not customers proactively seeking to swap insurances every so often. Naturally, in that dynamic, strong brands are a key differentiator in the search for peace of mind. And I guess, and this is not you saying that, this is what you can see in all the news flashes. I'd like to challenge the connotation that an AI agent purely optimizing on price actually matches the customer sentiments in insurance, and I guess in almost all other products.
If that was the case, if that was the customer sentiment, you could argue that all customers would be with one carrier already today or all buy the same mobile phone, which is not the case. We strongly believe that product quality, trust in the brand, trust in the customer service, trust in the peace of mind is much more important, especially in our part of town in the Scandinavian markets, where customers are not willing to sacrifice peace of mind to potentially save DKK 1 on the price for a product if they are with a company they do not feel entirely comfortable with. I think this is a critical factor. We are operating in a very affluent part of town in the Scandinavian markets. And then I guess if you take it even a step further back, distribution has changed significantly over the past many decades.
We've been around for 300 years. I'm not going to bore you with what has happened in 300 years, but just if you look at the last 20 or 30 years, we've gone from home visits. We've seen the introduction of brokers in the corporate segment. We've seen sales moving into call centers. We've seen sales moving into virtual meetings with customers. We've seen online sales. We've seen chatbots. We've even seen attempts from aggregators trying to penetrate and change the market. But the industry in Scandinavia has remained resilient throughout, not least due to the strong brands that we actually carry. So you're asking me where do I stand, right? We expect strong brands and associated peace of minds will continue to be a competition parameter going forward. Of course, we're not defensive here.
We're welcoming any technological advances in our markets, but we are convinced we will navigate through that as the most scaled player in the region. We are comfortable with this.
Perfect. Thank you so much.
The next question is from the line of Qian Lu from UBS. Please go ahead. Your line will now be unmuted.
Hey. Morning, everyone. Thank you for taking my questions. I only got one left on the growth outlook. Group year-to-date new sales are up 12% year- on- year, if I heard it correctly. Pricing is still keeping pace with inflation, plus retention trends are also improving. Given all these dynamics, why shouldn't this translate into mid-single digits revenue growth next year or potentially something higher? Could you please help me understand the key offsetting risk factors here to this assumption? For example, to what extent general renewal next year could be a big swing factor? Thank you.
First of all, thanks for that question, and like you are getting ambitious on our behalf here. I think what you need to take into consideration, because you are right, we are looking at strong growth numbers, 12% up across the group. We are seeing retention rates bouncing back, but we are also seeing a headwind from pricing coming slightly down. I think when you do that math, I think we still stand behind our commitment in Q2 to beat the consensus, which was at 3.7% at that time. Things need to move gradual and slow. I think that's the sane way to run an insurance company. That's what we are doing. Expect us to gradually beat the consensus at Q2, which was 3.7%, and then let's take it from there. We don't want to be hung up on a growth number.
I think that's how you get in trouble in an insurance company. The reason why we are indicating where we are now is that we see a very strong commercial momentum, both with the organic growth engines, the retention, and the partnerships who haven't kicked in yet. I think I'm not going to go as far as you want me to go. I'm going to stand by my commitment to beat the consensus at Q2.
Thank you.
The next question is from the line of Carl Lofthagen from Berenberg. Please go ahead. Your line will now be unmuted.
Hi. Thank you for taking my question. I just have one on the net reinsurance ratio line, which was 1.5% this quarter compared to 2.8% in Q3 last year. I understand there's some volatility here given where we are in the insurance cycle, but just on a normalized basis, where do you expect that net reinsurance ratio to land? If you can add some guidance here, that would be helpful. Thank you.
Thanks for that question. I think if I take a step up, overall, we don't expect the reinsurance line to change dramatically. We're basically running the same reinsurance program this year as we did last year, and we expect the next year's program to be more or less the same as this year. I think it's much more important that we are now going into the renewal season of the reinsurance program and very much looking forward to that and to have competitive prices going forward.
Okay, thank you.
The next question is from the line of Martin Birk from SEB. Please go ahead. Your line will now be unmuted.
Yeah. Perhaps two follow-ups from my side. First of all, just touching on Norway and the recent two quarters performance in Norway, how much of that is actually underlying improvements and how much of that do you characterize as stochastic luck? Last question, I guess this goes for Allan. In 2024, I know we have touched on share buybacks and solvency, but in 2024, when you stood in London after having reported your Q3 result, your solvency also stood north of 200, and you talked about gravitating to a lower point over the course of this strategy period. Now of course you talk about potential for future share buybacks. But you haven't done it so far, Allan.
Sorry not to be a little bit pointy here, but why should we Isn't it coming to a point where we could ask ourself a fair question, why should we believe that this is going to gravitate to a lower level and not just stay at status quo?
Thanks, Martin, for those questions. If I start on the Norwegian one, we don't quantify exactly how much comes from the different sources, but we can conclude that we've had very good momentum on the underlying in Norway, especially Personal Lines Norway. We've also been fortunate on the weather part. It's a combination of different sources for the improvement. I think nevertheless, we are super happy about where we are in Norway. We can conclude that we are one year ahead of plan, and what we communicated will be delivering a mid-80s combined in Norway, which is a very capital light book, by the way. Similar to what we've been mentioning here for other parts of the book, we're now turning to more profitable growth going forward.
But even despite seasonality in your Norwegian business, even mid-80s at this run rate doesn't seem very ambitious, does it?
True. You should also keep in mind that we've had some luck on the weather part, and we also stay a bit deliberately vague on the mid-80s. I think that the overall comment, again, coming back to we are extremely confident of where we are in Norway and how we are going to progress from here on.
On your second question, Martin, alluding to our Capital Markets Day 2024, introducing our ambition of gradually taking our solvency position down to a less conservative level long term. I can remind you that we introduced a DKK 2 billion extraordinary share buyback at the day of the Capital Markets Day. We did the assessment of our capital position at year-end last year. We introduced a DKK 1 billion share buyback at that time. As promised, we will assess our capital position at year-end again. Just to underpin, we said we want to take our solvency position down to a less conservative level long term, not necessarily in this particular strategy period. Make no mistake, we will act accordingly. As mentioned, it is hard to stay pessimistic on a robust solvency position of 203.
I don't think that I have much more to add on this one, Martin.
All right. Agree it's a bit of a luxury problem, but I'm sure we will discuss later. Thanks.
As there are no further questions, I will hand it back to the speakers for any closing remarks.
Well, yes, thank you everybody for a very good conversation and for all your questions. As always, the investor relations team here at Tryg is available for any follow-up. Otherwise, we wish you a very good day, and thanks a lot again.