Good afternoon, everyone, and welcome to the Sampo Group second quarter 2022 conference call. My name is Sami Taipalus, and I am Head of Investor Relations at Sampo Group. I'm joined on the call by Group CEO Torbjörn Magnusson, Group CFO Knut Arne Alsaker, and CEO of If P&C Morten Thorsrud. The call will feature a short presentation from Torbjörn, followed by Q&A. A recording of the call will later be available on sampo.com/result. With that, I hand over to Torbjörn. Please go ahead.
Thanks, Sami, and welcome everyone. We have had a more or less flawless quarter despite the volatile surroundings. Let me first list a few simple facts from our largest entity, If P&C. Combined ratio of 77 in the quarter, with average rate increases marginally above present claims inflation, say 5% versus 4%. No reduction in retention rates or customer satisfaction as a consequence. Quite the contrary, in fact. No segment with special issues in the book, and there is no significant segment where we cannot increase rates, at least in parallel with claims inflation. Hastings next shows the results of having the same underwriting focus as the rest of Sampo. Clearly a challenging market, but the claims inflation is no secret, and Hastings immediately reacted. Of course, the company also benefits from a smaller back book than many peers without GIPP issues.
A combined ratio close to our target even for the first half year, this challenging year. Furthermore, the GIPP reform provided home insurance opportunity, and growth this year exceeds 20% in this line. Q2 for us also saw our complete exit from Nordea with excellent results and impeccable timing. This was the big step we had to take to become a pure play insurance company, and what remains now in terms of structural simplification is very small in comparison. The world is volatile, and so are investment returns at the moment, but Sampo benefits from this in several ways. We have increased the nominal discount rate for Finnish liabilities to 1%, and our running yield has quickly come up significantly.
As a consequence of all of the above, our solvency ratio is very high at 245%, and already in the middle of the quarter, we were able to launch another buyback program of EUR 1 billion. Our next checkpoint for this is the full year result in February when we will consider any further distribution of capital. Giving a little bit more color to the P&C operations, the key question at the moment is, of course, claims inflation versus rate increases. In the Nordics, claims inflation has edged upwards gradually during 2022 and now varies, say, between 3%-6% with a 4% average.
It's driven by general inflation in spare parts and building materials, but not to any significant degree by wage inflation, and there are no structural changes into repair shop chains or contracting firms as in other markets. We expect a modest further increase in claims inflation for the rest of the year and price for that. So far, competition is unchanged and rational. There are no substantial new movements of market shares in the Nordics, and our retention levels and customer satisfaction is even slightly higher than a quarter ago. For large corporate business, the situation is a bit different. Some international competitors have left the market after a number of years of poor results, and we benefit from their absence. We have a 22% volume increase in the first half year, and two-thirds of that is rate increases or improved terms.
We also enjoyed a somewhat favorable large claims outcome in Q2. When it comes to the U.K. and Hastings, we now see the effect of Hastings being part of Sampo Group with no group volume pressure in market segments with inadequate rates, just as for the rest of Sampo. Hastings management team has handled the development really well, first by not participating in the price pressures late last year, then by taking the opportunities presented to us by GIPP, and then finally reacting immediately and intelligently to the sudden increase in claims inflation. Maybe just to point out there that if you try to explain the U.K. market results this year, this quarter, the rate changes in Q4 last year are not least important, and Hastings was very careful not to underprice then.
With a smaller back book than many peers and very little price walking, we had a very minor need for price adjustments from GIPP on 11 this year. In home insurance, as I already mentioned, we saw a substantial opportunity which is now ongoing. There are also other subsegments that became attractive in the new market situation. Claims inflation, in particular in the U.K., also with structural changes with suppliers, develops, and we continue to react carefully and without delay. Rates in the market are clearly on average insufficient and will cause a lot of pain to some participants going forward the longer this goes on. The last few months, we have seen some small rate increases, but far from enough for the market as a whole.
We continue to develop our book, our selection of segments to operate in, and to avoid being volume driven, but of course, take the opportunities from this special situation. This next slide shows some of the effects of higher interest rates for us. As most of you are aware, we have a good starting point, relatively speaking, as we have kept a very short duration in the fixed income portfolio. Now, higher interest rates help us in two ways going forward by increasing the running yield and by reducing the liabilities. One should bear in mind that over the last decade, we have had to reduce the discount rate gradually to extremely low levels, with corresponding reported losses, and now this is reversed. You have some details here.
If P&C has gained some EUR 120 million from discount rate changes in the first six months, and the running yield came up 50 basis points in the last quarter from purchases of investment-grade papers. Also of importance to us in this context is the fact that higher interest rates support Mandatum's solvency ratio. The increased rates have offset by a margin the challenging development of riskier assets this first half year. Let me finally also point out that, as usual, we prefer prudent reserving, and when there is a discretionary element, we have in no way maximized the possibilities from higher discount rates. This, my final slide, shows our results compared to our financial targets. This quarter, it would seem that we can have an extended holiday as we are well ahead of our targets, maybe with the exception of Hastings.
However, this is, of course, most certainly not the way we think about it, or see our opportunities. If P&C is in a very promising position looking forward right now with a leading position in the growing digital channel, but also, of course, having achieved the excellent growth this year without what is normally one of our strongest channels, the car industry collaborations, as car sales have been so extremely low. Furthermore, we have no intention of relaxing our relentless work with costs in If P&C, and the synergies from Hastings add to our ambitions for overperforming on accurate and tactical pricing over the coming period also in the Nordics. As regards Hastings, we like the development of skills and the broadening of the product portfolio this year.
Whatever the near-term behavior on the market, we will continue to push to stay or become the best digital insurer for personal lines, but always with our usual eye on profitability. This is still a growing channel, and we are definitely already ahead of most of our competitors. With the momentum we have in If P&C, both in the Nordics and in the U.K., there is a lot of value to be created by organic growth rather than acquisitions. This is clearly our strategy at this point in time. Looking at the totality of all of this, we feel very motivated to continue running at high speed. As a team of insurance specialists now running a pure insurance company, we look forward to your questions. Sami.
Thank you, Torbjörn. Operator, we're now ready for Q&A.
Thank you. If you wish to ask a question, please dial zero one on your telephone keypads now to enter the queue. Once your name has been announced, you can ask your question. If you find it's answered before it's your turn to speak, you can dial zero two to cancel. Our first question comes from the line of Jan Erik Gjerland of ABG. Please go ahead. Your line is open.
Thank you. Two questions from my side. The first one is on the distribution side, and it's regarding your saying that you will wait until the finalization of this full year before you decide anything on the extraordinary dividend potential. Would you shed some light on what you sort of could walk down to on the solvency ratio versus the leverage ratio to see what kind of magnitude we could expect from such a dividend? That is my first question.
Hello, Jan Erik, it's Knut Arne here. As you know, we have a solvency range between 170%-190% as a target, and I would consequently define a solvency ratio above 190% as excess capital. Then, of course, we have a flexibility to work within that 170%-190%. A solvency ratio above 190% is excess capital. I don't see that we have any leverage issues to work our way down there.
It will require us to work on our debt stack, which we have said for a while that we will do, and you will see us take some actions to do exactly that and be below the 30% leverage ratio target, as we work our way down towards our solvency range. Just to add a comment on that, there's nothing that I see in terms of transitional effects on our equity going into new accounting rules that would change that fact.
Okay. Very good. Secondly, on the insurance operation, both from If P&C and Hastings delivered very well, and Hastings probably a little bit above expectations. Could you shed some light into what it did other than of course to reprice and stay away from the most aggressive market? Secondly, on the If P&C side, what kind of price increases do you think the market will have to put in into 2023 as well as maybe into 2024 to cope with the sort of higher inflation speed as we see at the moment?
Well, on Hastings then first, as I pointed out, I think one of the most important things that we did with Hastings was to avoid being too aggressive late at the end of last year when the market was clearly not putting in the price increases that would have been needed with hindsight. That was one. GIPP, of course, hit us less than the average in the market, and that's a bit difficult to assess exactly what the consequence of that is. Being part of Sampo, Hastings has reacted immediately when we saw claims inflation. There's no need for us to speculate whether, you know, when such a situation occurs, we should wait and see what happens. We reacted right away.
Hi Jan, Morten here. When it comes to price increases, first perhaps just repeating what Torbjörn said in the introduction, today we sort of have seen a little bit more than 4% inflation on the claim side, and we're pricing sort of on average around 5%, so slightly ahead of what we have observed so far. We see that property inflation over the last few months have stabilized, and then we see that motor inflation is still ticking up somewhat. Of course, we make sure that we are ahead of the curve and price for the inflation that we expect to see in the future. Of course, I would like to refrain from speculating in sort of what that will be in 2023 and 2024.
Of course, we will make sure to continue to stay ahead of the curve.
Very good. Just one follow-up on the wage side. I think Torbjörn mentioned that you haven't seen any particular claims inflation from the wage part yet. Is that something you sort of expect to come now during the fall as we see next year, as we see wage inflation picking up in several countries?
I don't think I necessarily said yet.
No, I think, I mean, you know the system, well, Jan Erik, in the Nordics, that it's basically a result of collective agreements. We haven't seen any really significant movements yet for this year. I guess the general outlook for the Nordics is that we will have a quite disciplined behavior also going forward. Of course, that remains to be seen. Of course, again, the Nordic markets are far more disciplined due to the collective agreements we have when it comes to wage increases. It's much more of a gradual movement here than what you might see outside of the Nordics.
Okay. Thanks a lot for your answers.
Thank you. Our next question comes from the line of Jakob Brink of Nordea. Please go ahead, your line is open.
Thanks a lot, and good afternoon. The first question is on the quite significant drop in the SCR quarter-over-quarter of around EUR 1.4 billion, as far as I can estimate. Roughly half of it comes from the sell down in Nordea. Maybe a few EUR 100 million more from the drop in equity markets and the symmetric adjustment, but then still probably left with around EUR 500 million unexplained reduction in SCR. Have you done anything to reduce risk exposure, or is it just me that did the calculation on market exposure wrong?
Yes. Hi, Jakob . There are clearly some drops in the SCR during the quarter and of course the main item you're on in terms of the Nordea sell down which is reducing SCR, and there's of course nothing happened when we do the buyback. That clearly explains the main delta. There are some other, I would still call it combined smaller changes where the SA is actually the largest of them. There are some which I would call more volatile items from quarter to quarter in the SCR movements, which almost all moved our way.
One of them, for example, being lower FX risk due to FX movements, which impacts a couple of different market risk elements in our market risk stack, which wasn't significant, but it was 4% or 5% this particular quarter, and that could of course also reverse back quite quickly. It had, I would say, a significant impact this quarter. We did a little bit of de-risking across the group. During Q2, there was a little bit of de-risking in Topdanmark. On a marginal basis, closing the duration gap is also reducing the SCR by reducing the market risk SCR of If and of Sampo. Those are some of the flavors of things that contributed to the sort of reduction in SCR.
Some of them I would call volatile items, which can increase the SCR again quickly. The majority is of course permanent in terms of de-risking market risk from Nordea and some of the smaller things we did under the same label.
Okay. Very clear. Thanks. Second question on the interest rate sensitivity. Torbjörn, you showed the slide. I was just wondering, I think I've asked the question once before, but just to make sure. Obviously there is an upfront impact on the whole reserving part when you change the discounting rate in Sweden, Finland and Denmark. But also, I guess there must be a running impact on new claims, which is not that insignificant, I guess, given the impact you're having on the reserving part. Doing the math of the impact of the change you did in Finland this quarter and also the sensitivity in Sweden, then I see your average duration in this is around seven years.
I get to a running impact on the combined ratio of just above 1% for 1% change in the interest rate level. Does that sound accurate or?
I think the previous time I answered that it was a relatively minor effect. You've just tried to prove that, I think. It is small and depends on a number of other things also.
If I should add to that, Jakob, it's Knut Arne here. Of course, the main changes on discount rates are coming from long-tailed reserves annuities, not on our nominal reserves, which we don't discount, neither on an IBNR basis or a case reserve basis under current accounting regimes. The impact of new claims being annuities on an annual basis is clearly minor, compared to the impact we have of reducing the discount rates on prior year claims. There is of course a small effect, but I would call it clearly minor.
Does 1% sound too much? I was just wondering where would that end up?
I think.
Would that end up?
I think 1% sounds too much. Again, as Knut Arne reminds you about, a lot of the claims reserves that we have are not discounted, they are nominal. It's really on the annuities that you will have any effect, and that's quite a small part of it, sort of in every single year.
The annuities in Sweden are re-discounted with real rates for good reason. That's also different. It just sounds a bit much to us, Jakob.
Okay. Yeah. Makes sense. Okay. Last question. On the, I think you wrote in the report that you have raised the assumption for large claims. Maybe I missed how much, but could you just elaborate on how many millions have you increased the large claims assumption on an annual basis?
Yeah. We are of course revising the large claims budget every year. Of course, since our industrial book of business has grown a bit both last year and this year, then the large claim budget in nominal terms is reflecting that. I think roughly we talk about a little bit more than on a total yearly basis a little bit more than EUR 20 million in increased large claims budget. It's again it's fully in line with the growth that we have in that book of business. That's what drives it.
Okay. Thanks a lot. Thanks for the answers.
Thank you. Our next question comes from the line of Youdish Chicooree of Autonomous Research. Please go ahead. Your line is open.
Good afternoon, everyone. I've got three questions, please. The first one is really on underwriting and claims inflation. You still sound quite confident that you will be able to actually at least price in line with claims inflation. So from that perspective, would it be fair to expect what you call your adjusted risk ratio to continue to improve in the coming years? That's my first question. Secondly, I've got two, one question on solvency. There was obviously a very strong benefit from markets in the second quarter.
I'm just considering, given that the risk-free rates have pulled back in the last months or so, I was just wondering whether you had a more up-to-date position to give us on solvency. My second question, and then finally just on leverage and the planned debt reduction of EUR 800 million, does this all relate to senior debt? Or are you also planning to reduce, you know, sub-debt which is currently, you know, included in your solvency capital? Thank you.
On the first one, both for the Nordics and Hastings, I said in my introduction that we of course expect to aim to continue to improve on the underwriting and at the moment that there is no segment where we have an issue with rate increases. At the very minimum, no deterioration, but of course, much of our work is aimed at improving.
Hello, Youdish. On the solvency side, I haven't a sort of up-to-date number to give you. We haven't published that in our report and disclosed that. Obviously rates, which we all know, dropped a bit in June, but then returns on other asset classes was good. Meaning that it's not a materially different position than what we had. Again, these volatile items I alluded to are volatile on a monthly basis and a quarterly basis, so we should of course be careful to think that they necessarily have to be at the same high level as of 30th of June. That would only be due to these volatile items and not any other net negative sustainable impacts that has happened since we closed the book.
All right. Got it. Thank you.
On the leverage, I'm not gonna point to individual loans on our balance sheet, but as we've said before, and which you also see on our maturity profile, it would be natural for us to include senior debt in our thinking. Just also for the purpose that the hybrid capital we have works well as a regulated insurance entity in terms of being used as a solvency capital. I'm not gonna point to exactly which outstanding loan we sort of have thoughts around.
All right. Okay. Thank you.
Thank you. Our next question comes from the line of Alexander Evans at Credit Suisse. Please go ahead. Your line is open.
Hi. Yeah, thanks for taking my questions. I just wanna touch on the discounting impact at Sampo. If I look at what you said, it's EUR 120 million across the first half, and I think in your 1Q report, that was EUR 44 million. It implies sort of, you know, about 6% of earned premium in this quarter, and reserve releases were, you know, sort of just behind that. I just wanted to get your thoughts of, you know, is this sort of increased prudence on your behalf, or are there some sort of degree of concerns around inflation?
As you pointed out on sort of rates that have stepped down, since when you closed the book, that would be, you know, a little bit of a headwind in Q3 at the moment. Given the action that you've taken, can we assume that this is probably gonna be smoothed? Secondly, just on industrial, how much of that growth is rate related and how much is volume and what's the appetite for sort of a little bit increased volume there? Sort of thirdly, if I may, just on Hastings, you're sort of saying that the operating ratio and the loss ratio should come in line with targets, for this year.
I guess sort of in the backdrop of the rest of the U.K. players that have been struggling quite significantly, what do you think that means for the Hastings outlook in 2023 and 2024, given, you know, where you should be positioned relative to the market? Thanks.
Good. I'll take then the two first ones. First on discounting, yes, it's correct that a larger part of the run-off gain both in the first quarter and second quarter comes from discounting effects. In the first quarter, mainly from Sweden, and then in the second quarter from Finland. Think it's fair to point out that we have increased prudence in our reserving during the second quarter to really make sure that we also account for short-term inflation risk in the reserving. There is definitely a bit of prudence on top of that.
When it comes to interest rate movements, the Swedish part is more a mark-to-market type of development, while the Finnish one, as you might recall, is more rate set as a management decision. While the interest rate in Sweden has come down a bit, a little bit in July, there is still quite a lot of room up to sort of the potential sort of mark-to-market interest level in Finland.
When it comes to industrial, we have sort of about 2/3 of the volume increase is sort of price increases. Half of that, so 1/3, of the total growth in industrial is what you could call rate increases. The other 1/3 is adjustment of insurance values. In sort of a commercial or private market, sort of both of these elements would sort of be classified as premium increases, while in industrial sort of you typically talk about rate increases being then again 1/3, which is really sort of supposed to improve the underlying profitability while the last 1/3 is more updating to new insurance values as a result of inflation on insured objects.
On Hastings, evidence so far from the few companies that have published results and also rate statistics on the price comparison sites seem to indicate that Hastings has a very, very good position compared to the market at the moment. If the market would not react to the claims inflation, that would be extremely painful after a while for the market. It would seem that Hastings could come out of this from a position of strength.
Okay. Perfect. Thanks a lot.
Thank you. Our next question comes from the line of Faizan Lakhani of HSBC. Please go ahead, your line is open.
Hi, this is Faizan Lakhani from HSBC. My first question is sort of coming back to the solvency. I understand a number of the movements over the quarter come from sort of volatile items. Would you classify that as genuine improvement in capital position, or would you look through that when redistributing capital? The second one again comes back to capital returns. You laid out your framework pertaining to sort of solvency and financial leverage. I wanted to understand this from the lens of liquidity. At what sort of level are you happy to operate at on this front? My third question is on Mandatum. Obviously, the positive rate evolution is a real positive for Mandatum in terms of the strain on the guarantee side. Could we see some benefit on unwind reserves from here?
If I remember in the past, you've guided from upstream about EUR 150 million. Does that guidance still stand? Thank you.
All right. On the solvency items there, I mean, I would look through it in the way that I would expect them actually to change and sort of be plus and minus go zero over time. I would expect some of these volatile items, which I would sort of total up in Q2 solvency ratio to be sort of high single digit percentage points thereabout to actually eliminate itself over time. If I'm wrong on that, we will not look through them. I'm not giving at all a different cap range for our solvency range. It's 170%-190%.
It's just making you aware that 245%, it does include some benefits with all the different things that impact the solvency ratio that I would expect on a normalized basis would have made it a little bit less than 245%. That's the only thing I'm saying. In terms of liquidity, I mean, we have a number of companies in the group and different sort of liquidity consideration in different subsidiaries. Of course, we would always in all companies which have some kind of operation like to have a margin and a surplus liquidity position.
If your question is regarding Sampo plc, you should, of course, because of what I just said, think that it's not the only company where we have liquidity in the group. You should be a bit careful to do a simple calculation and deduct all the group liquidity buffer from that particular balance sheet.
Okay. Understood.
On Mandatum, the higher interest rate as such doesn't change the run-off profile in terms of when policies expire in Mandatum. We have the same guarantees on the same policy, whatever market interest rates are. Of course, the reserves that we need to hold against those guarantees, as you know, those change, meaning that when we have higher interest rates, some of the reserves that we currently have on Mandatum's balance sheet will be equity and own funds.
Maybe just one more remark on the solvency ratio, Knut, just to make absolutely clear. Of course, it is true that some of these items are volatile and some of them went the same way this quarter, but it's not like we had lots of luck and what goes up must come down. This is not a forecast about the Swedish exchange rate between the Swedish krona or euro or anything. That could equally well go further in the same direction. It is not a prediction that things will be worse.
Absolutely not. It's just that I recognize that our solvency was clearly higher than some estimates.
I think there's some good reasons for it and some are non-call sustainable, and some other things is difficult to estimate because it is these volatile items which I'm just alluding to trying to put that 245% in perspective.
No, completely understand. I was just worried about, you know, plugging in at 245% and, you know, back-solving mechanically to get to sort of 170%-190% range might lead to some quite high numbers. I just want to understand that. No, thank you very much for answering my questions.
Thank you. Our next question comes from the line of Jimmy Fan at UBS. Please go ahead. Your line is open.
Thank you for taking my questions. I have two please. My first question is on the excess capital, and I mean, we can see the growth in even If P&C is very positive at good level of margins. Kind of Nordea might still yielding or attracting margins, despite the claims inflation challenge. Also given your last announced buyback was not very well received by the shareholders, have you reconsidered recently perhaps other more you know, accretive ways of deploying the capital through organic or inorganic means? If it's the organic growth that you have mentioned, are there such opportunities that you need to retain some of your excess capital for growth for next year?
I'll try to answer. We had a little bit of a difficulty hearing you. No, we have not changed the time schedule here. The next milestone here is the full year results when we will consider the full year dividend and any additional distribution of capital. Then what was the second one? The need for capital, retaining capital for that. No, the need for, with the present growth, even though significant, the extra need for capital is very small, driven by the growth.
Thank you. No, that was actually my first question. My second question is for the If P&C cost ratio, and it certainly looks very good in 2Q [audio distortion] and much better improvement versus your guidance. The absolute terms is pretty flat year-over-year. Could you remind us on some of the actions you have taken in reducing costs on top of the impact of premium growth reducing the cost ratio?
Yes. First, just to remind you about sort of the target that we have is sort of a 20-30 basis points cost ratio improvement year-over-year. That's sort of our target. Of course, cost ratio, as we also talked about in earlier conference calls, is fluctuating quite a bit from quarter to quarter. One shouldn't put too much emphasis on one single quarter. Of course, the main improvement item when it comes to efficiency for us is digitalization as such. Moving distribution from sort of the old channels more towards online gives us efficiency improvements. Having more and more claims reported online and doing more and more automated claims handling gives us efficiency improvements.
Of course also a lot of self-service with customers sort of logging in and using our apps and different self-service solutions is driving up efficiency. Digitalization is sort of the main explanation for the improvements that we've seen and also why we expect to see also good development going forward since the digitalization still sort of is progressing to a quite high speed.
Thank you. That was very clear.
Thank you. Our next question comes from the line of Michele Ballatore of KBW. Please go ahead. Your line is open.
Yes. Thank you. Two questions from me. The first question is about the reinvestment rate. How do you see, of course, I mean, the scenario now, the outlook, it's more positive. How do you see this developing, although also in terms of what kind of opportunity on the asset side you are seeing, so what kind of asset you are planning to invest if there is any change there? And my second question is about the portfolio of companies you have like Saxo Bank, Nordax. I mean, what kind of developments are there, if you can give us an update. Thank you.
Starting with Saxo, et cetera, we have said that we are not driving them, we are not the lead investor, and we will at some stage not participate in the next step of those companies' development. However, I think that there is going to be very little action there for the next six months probably, given the circumstances. Reinvestment rates going forward is always difficult to answer, but of course we were able to, in the investment climate in May and June, to reinvest at higher rates, increasing the running yield significantly. Now investment returns or rates have come down again.
Just to add to Torbjörn's comment there, we will obviously continue to use opportunities that we see to do similar things like we did in May and June, taking advantage of opportunities to continue to reinvest at higher rates than we sort of have right now in our book. It's that sort of. That's gonna be in the fixed income space. In the equity side, we have been sort of very stable. No sort of change in our portfolio allocation to equities recently.
Great. Thank you. If I may just a follow-up on the. Sorry, a third question if I can. On the next update, should we see also some details on IFRS 17 impact?
We'll talk to you about IFRS 17 during the fall. We haven't set an exact date for that yet, but we will. We'll give you an update on impacts for the group. Obviously I mentioned one point actually earlier on this call talking about leverage that the impact on group equity is basically zero. Could of course also mean slightly positive, meaning that the leverage ratio will not be impacted in any significant way from that transition. I think I would like to mention one more thing since you brought up the topic.
That is when you look at our so-called mark-to-market result, that is a mark-to-market result which only includes the fair value reserve changes related to our assets. If you had used IFRS 17 numbers using IFRS 17 discount rates both on the life side and non-life side, we would have had a very different IFRS 17 result in the second quarter, and we would have had a positive fair value or positive mark-to-market result for the Sampo Group and a positive ROE, clearly positive ROE.
That is, w e'll talk more about some of those details later this fall, but it is an important point for me to make also when you compare ourselves to some other companies in other markets which already uses accounting standards where they are mark to market both on the asset and liability side.
Very useful. Thank you.
Thank you. Our next question comes from the line of Tryfonas Spyrou of Berenberg. Please go ahead. Your line is open.
Oh, hi there. Good afternoon. I just have one question. I'm interested in the comments you made, Torbjörn, with regards to the dislocation in the U.K. market, potentially some players struggling to come out of the situation. Given your solvency here remains very strong, do you envisage any scenario where you could potentially look to capitalize on this dislocation and presumably help Hastings get more scale, acquiring other books of business or small bolt-on deals, and so forth? Or maybe you prefer to keep your eyes closer to home for the time being. Thank you.
There are some opportunities, not least in home insurance that we discussed, and that we're taking that opportunity very seriously in developing that but very quickly at the moment. We've always said that if there were an opportunity to add to that with a small bolt-on small in relation to Hastings, we'd of course be willing to do that, but that's business as usual for us in the Nordics or in the U.K. There are no such opportunities as we see it at the moment, so we continue to develop the company organically.
Okay. Thank you.
Thank you. We have one further person in the queue. That's Asbjørn Mørk of Danske Bank. Please go ahead. Your line is open.
Yes. Thank you. Thanks for taking my question. I actually have just one question, and it goes based on the FSA, the Swedish FSA's report from July on the pricing in home insurance, and the fact that they argue at least that loyal policyholders are paying a premium. Any comments from your side on this, and of course, also in the context of repricing currently to offset the claims inflation?
Yes, there was an FSA report. They looked at both motor and property during the spring, concluded that they didn't see any price increases linked to duration on motor, but that they could see some signs of it in property. It was a pure fact-finding type of exercise, so they didn't look into what was actually driving this. Of course, there are certain reasons why a homeowner or householder insurance actually would increase with price over time as kind of customers grow older and accumulate more wealth and gets kids, and in Sweden also travel insurance is included into this. Of course, again, this was a pure fact-finding exercise so far. The report is out, and it's closed so far.
Let's see what's happened with that in the future, whether kind of regulators come back to this. For us, this is not really having any impact or causing any concerns. We have a policy of pricing very kind of according to risk, and that's sort of our pricing philosophy. We are kind of, I think, in a situation where kind of we don't really use a lot of market-based pricing and again, not a lot of first-year discount or anything like that. Again, let's see what happens in the future. For us, this shouldn't really have any big impact. Of course, we have a fairly small property book in Sweden that we rather would like actually to grow.
Do you see any risk of this, from the FSA spreading to other insurance products?
No, I don't look upon this as a risk. Again, we have a strategy of pricing risk according to the risk exposure and kind of risk-correct pricing. Then that shouldn't be a risk with that.
There aren't really any other products, because they covered motor and property, which are clearly the two dominant products for personal lines where this is relevant. They concluded there are no issues with motor, which is our biggest product, and then they just fact found that there were price increases for property, but didn't indicate any actions. We're very happy with this. Morten, the biggest effect that this could have probably would be if there were price walking in other companies and that they were regulated, so we would have an opportunity rather than a risk.
All right. That's very clear. Thank you.
Thank you. As there are no further questions at this time, I'll hand the floor back to our speakers.
Thank you all for your attention today, and we look forward to seeing you all on the road soon. Thank you very much.