Earnings Call: Q1 2021

May 5, 2021

Ladies and gentlemen, welcome to this conference call on Sampo Group's First Quarter 2021 Results. This is Jarmo Saanen, Head of Investor Relations. And with me here in Helsinki, I have our Group CEO, Torbjorn Magnuson. And in Stockholm, we have Group CFO, Knutta Nelsacker and Chief of Strategy, Rikka Wennerglind and in Oslo, Martin Tushor. We'll start, as always, with Torbjorn's presentation, after which we will Take your questions. Please let me remind you that a recorded version of this call will be later available at The same address, samba.com/result. And that, I think, is all from me. I'll hand over to Torbjorn. Torbjorn, please. Thank you, Jarmo. Good afternoon, everyone. I have a very satisfactory set of figures to present today And even more so considering that they have sorry, that they, to a large degree, arise from sustainable business strengths and from rational markets. Our Q1 profits before taxes are up to €632,000,000 And the comparison period is, of course, one where the stock markets were in a completely different place than today. Nevertheless, Both the €0.82 per share reported earnings and the €1.39 mark to market earnings this year are amongst the highest in Sampo's history. It is especially pleasing to be able to report consistent progress in all our operations. The core of our results is, of course, the P and C underwriting result, which even when excluding the COVID-nineteen effects clearly meets our growth targets. Similarly, the combined ratio for IFP and C is well below our ceiling of 85% with a higher COVID-nineteen effect than last year, but on the other hand also with a higher negative winter effect. Spending a little bit more time on IFP and C. The strategic progress follows our plans, and results this quarter are excellent. We continue to be able to increase rates selectively when needed, which is mainly for the corporate segments. Markets are rational, and we have not seen any new entrants for some time after the failure of the group of major Norwegian ones a few years ago. We estimate the positive effect of the pandemic to be roughly 3 percentage points on the combined ratio and the mainly Norwegian winter this time to make up 2 percentage points in the opposite direction compared to last year. Large claims were close to normal. On the next page here, we have a simple waterfall chart showing the main differences compared to last year. From the bars on the right hand side, you can also deduce the obvious that the remaining needs for rate increases are more pronounced for Corporate Lines And more for Norway than the other countries. Maybe the main conclusion though is that we see rational markets receiving these rate changes And of course, that having a large book in Norway, relatively speaking, at the moment helps growth numbers. The next slide is an attempt to follow the effects of the pandemic on Countries with our mix of geographies. This is no exact science, but we are trying to be transparent about the types of facts we're using for our estimates. In our outlook for IFP and C for the rest of the year, We're assuming that the pandemic effects on the motor frequencies will fade during the second quarter and that the second half of the year will be back to normal. As you can see from this page, we still have healthy growth from our operations in Sweden and Norway. And this is all the more satisfactory as it arises to a large degree from our digital channels. Also, the general digital interaction with our customers is increasing, and roughly a quarter of all private lines policies are now sold online, making this one of our biggest channels together with the call centers and the car industry collaborations. If P and C writes a 5th of its business in Finland, where GDP and growth has been very low for a few years, Only partly due to COVID-nineteen then. Rates increases also have been very low and more of the insurances are renewed oneone than the other Countries. So we continue to see healthy growth in Scandinavia then especially in the digital channels, as I mentioned. Another way to look at the same thing possibly is customer satisfaction and retention. On the left hand side, This graph, customer satisfaction shows that that has been even been increasing during the pandemic. And on the right hand side, the less emotional retention numbers have been stable at a very high level. Then to our new friends at Hastings. Since we mainly write motor insurance there, the COVID effect is substantial. But even adjusting for that, we are handsomely meeting our targets for the operational ratio. Live customer policies are stable. The market is quite competitive now. We're growing in home insurance. And we have rapid progress in the strategic work, both internally in Hastings as well as the synergy work within our group. The synergies in claims management, in digital pricing and in fraud prevention or work are higher than we expected when we started this process. Finally, both the underwriting Profits and investment returns have translated into a very strong solvency position, and our leverage also meets our our target of being below 30%. As you are all aware, the board is proposing a €1.70 dividend to the AGM in 2 weeks' time. And to make sure that we don't overstate our numbers, we have accrued a quarter of that in the solvency calculation on the left hand side here also for next year. All in all, a quarter that contains very few technical market or strategic And with that, I pause and open up for questions. Jarmo? Thank you, Bjorn. And operator, we are now ready for the questions, please. Thank you. Our first question comes from the line of Jakob Bank from Nordea. Please go ahead. Your line is open. Thank you, and good afternoon, everyone. The first question, Torbjorn, I know you said and I agree that it's not an exact science with the COVID impacts. So I fully acknowledge that. But still, looking at South Denmark, it was 1.4 percentage points in the quarter. TRK 1.3 percent, and Citi is 1.9 percent, but Sweden only 0.5 percent. So and I see your calculations, but of course, If the other ones are right, then of course, you are understating the underlying profitability of if this time. So Could you see anywhere where maybe you could be more cautious or where you might have been adding too much to the COVID impact this quarter? The non humble answer Would be no, of course. But the this is not an exact science. There are differences between the companies. We write quite a lot on motor business, not least in Sweden, where the effects have been quite pronounced. So proportion of business in different countries is one thing that will differ. And we this is certainly a very honest attempt From us to show the correct number as far as it's possible. Fair enough. Yes. On a different question on the discounting and impact of discounting, I See that the impact of higher rates in Sweden was SEK 170,000,000 in the quarter. You had a 26 basis Points change. So basically looking at your historical impact of rate changes, it seems to be Somewhat larger typically than it has been this time. Is there any reason for that? Or is it just Yes. It's just a different sensitivity than it used to be. Knut, do you have an answer to that? Yes. Good afternoon, Jacob. There's no changes in our modeling in Sweden. One of the reasons why these sensitivities vary a bit now when rates tick upwards is that the Nominal rate for the discounting has been floored at 0, While the inflation, of course, have been adjusted to inflation environment at any time, but the nominal rates have been floored at 0. So you don't you get some asymmetry in the discounting when rates now tick up from The very low level where parts of the curve has been below 0, if you look at actual market rates. Okay. I hope that probably explains it. And then my last part of the question is actually A few questions in one, but about Hastings. So for the first time now, give us a quarter number. The €108,000,000 net earned premiums seems a bit low compared to the full year premiums of last year Hastings. Could you maybe give us some more detail? Is Q1 always lower than the rest of the year? Or is this the new run rate? Secondly, other revenues seems to be quite high compared to the sort of old level of other revenues in Hastings. Is that also the new level? And then finally, I was listening to the direct line call earlier today, and they were About market average price reductions of around 8% on Motor. Has been the decline for Hastings in Q1, please? Knut, the first two, I think, We should see as technical questions probably. And then let me just comment that the direct line 8% is Probably more than we've seen from a number of other insurers in the U. K. If I understood you correctly, Jacob, whether or not the split between underwriting This quarter was a new normal level. Was that your question? I'm just basically just trying For my modeling to understand what is the run rate of premiums and other revenues in Hastings. So as I said, I think the Premium income in the Q1 was somewhat lower than I had expected looking at full year numbers of Hastings historically. And the other revenues were somewhat higher than I would have expected given the history of this. So is there some Have you moved some income from one line to the other? Or is this the new run rate levels? No, that particular split It's not the counting technicalities. I mean, obviously, with your reference to Sort of the direct line call, GDP as such for motor insurance in the U. K. Has probably been lower This quarter than in a normal quarter. So that's one explanation. Then Hastings It's, of course, doing smart decisions to optimize and maximize profitability on a customer basis. Whether or not that income from on individual customers is coming from underwriting technical income derived by Premiums from retail income is not the first port of call. It's the totality that matters. That's also Why we have for Hastings a combined operating ratio target, which includes both Those type of revenue streams, both from the insurance company and from the retail division. Our next question comes from the line of Blair Stewart from Bank of America. Thank you. Good afternoon, everyone. I've got a couple of questions. I wonder, Koutarne, whether you might be able to give us an update On the impact on capital requirements, as you exit the non insurance businesses, I think at the Capital Markets Day, you said that €5,700,000,000 of capital requirements went down to €4,000,000,000 Things have moved along. I know the capital requirements overall have gone up With markets. So maybe an update on that calculation would be very helpful. Similarly, Going back to Slide, the now famous Slide 35 of the Capital Markets Day where you talked about the €5,000,000 to €6,000,000 per share of excess capital. Again, I wonder given the various movements, Particularly in the market value of Nordea, whether you could provide an update to that number, that would be great. And finally, just on the Hastings question, I suspect you may not have the answer to this Paul may not be willing to give the answer to this, but I just wonder what was the impact on the premium Figure year on year, what was the year on year movement in premiums? And have are you able to quantify the impact of COVID Rather than just significant. So I guess the question there to the latter part is how far away from your target Operating ratio, are you in underlying terms, good or bad? Let's see. If I start with the first two, I guess, Torbjorn, let's see who takes the last. But on the capital requirement, Blair, it's roughly the same number given that what we talked about, what was a Pro form a situation where we have reduced the market risk from the DEA And the PE Petroleum basically are left with our insurance operations and capital requirements for our insurance business Has not significantly changed. There's also always, of course, a little bit of volatility on a quarterly basis, But with a nice round number of SEK 4,000,000,000, I would still call that SEK 4,000,000,000. Obviously, what has changed and will change and could go up and down Is excess capital in a situation where we monetize own funds from Nordea in one shape or form? And when the market value of those assets are going up, that monetization will also lead to approximately a Similar increase in the excess capital Because we're right we're still left with the same capital requirement. Meaning again that when looking at the indication of how much Capital, do we need to retain for use to of solvency purposes? We gave a range of 40% to 50%. That range still holds, but it's more closer to 40% than 50% Now compared to the end of 2020. Great. I mean just looking at Nordea, that €5,000,000 to €6,000,000 has gone up by around €2,000,000,000 or a bit more than €2,000,000,000 That would be an approximate correct number, yes. Maybe then to just reason a bit around Hastings. Adjusting for COVID-nineteen, I said in my introduction that They are well below their operating combined ratio target of 88%. The number of policies is roughly constant, slightly up. Rates are down this quarter and the end of last quarter in the U. K. Market. However, There are now mixed signals in the U. K. Market about where rates are going for the rest of the year when we all expect the corona effects to fade. So that's probably as good as guidance that I can give you for where Hastings is going at this point in time. That's excellent. Thanks very much. Torbjorn, just while I've got you I wonder if I may ask you a question with your Nordea hat on. Come September, when the dividend ban is expected to be lifted, is it your expectation that, that would also allow companies to start to reduce excess capital through additional capital returns over and above dividends. Is that a fair assumption? Nordea has stated publicly, which is, of course, the only thing that I can say here, That they intend to apply to use dividend sorry, to use buybacks. But that there are no Indications from the ECB that I'm aware of on this nor is there any application yet from Nordea. Okay, super. Thanks for your time. Thank you. Our next question comes from the line of John Denham from Morgan Stanley. Firstly, I think the Nordea lockup ends at the end of this week. Are there any reasons why you wouldn't look to do another block shortly after? And maybe more broadly, And how do you think about the scope to outperform the 18 month time horizon you set out at the CMD given the current market conditions? Secondly, you spoke a bit about the increase in excess capital as a result of your Nordea estate going up in value. Should we expect all of that to be returned to shareholders? Or would you expect to do more on reducing leverage or the M and A front? And then just finally, you've had a bit more of an appetite for industrial business than peers for a couple of years now. And I think you previously mentioned substantial rate increases in Industrial at Jan 1. However, the premium growth was pretty low in 1Q. I was just wondering what was driving that and what the outlook is for the business. Thank you. I think I'll start with the one that I can answer, that's The appetite for Industrial Business. First of all, remember that even though the Nordic market for Industrial Business is nothing like the U. K. Or the U. S. Market. Industrial Business for us is companies with more than 500 employees, which is really SMEs in U. K. Terminology. But we are a much bigger player in that market than most than Triggery and CDG or other, indeed the mutuals. So our appetite hasn't increased, but the rates have. And that's very helpful, of course. And we have been able to increase rates along the lines That we needed to and wanted. Last year at the beginning of last year, we wrote A number of policies on project insurance, where the gross written premium, as we publish, is a multiyear premium. So from an earned perspective, the growth last year was Slightly overstated and this year understated because in the gross written premium, we don't get any premiums from those project insurances from last year. So that's that. And then when it comes to exactly what and when is going to happen with our Nordea stake, Of course, our Board and this is the only answer I can give you. Our Board will constantly evaluate the opportunities that we have to realize the strategy statement that we made in February to materially reduce The holding within 18 months. So and you also stated what are we going Ask what we're going to use the proceeds for. And we could use them for in theory, we could use them for Dividends or giving back money to shareholders, we could use them for bolt on acquisitions as we have limited ourselves to Or to reduce debt or any combination of those. And that will, of course, also be part of the board's deliberations. And that is as much as I can say. I think, Knut, do you wish to add anything to that? No. That was a good summary, Torbjorn. The only thing I would add is, of course, we're still sticking to our balance sheet targets, which we gave at the CMB as well To have solvency range between 1.17% and 1.19% and a leverage below 30%. Our next question comes from the line of Michael Hetler from Berenberg. Thank you very much and good afternoon. I had lots of questions, but apologies, I should say they're too light, that's Just say. On the you mentioned quite proudly the 61% customer satisfaction. Sumeet, how does this compare to when Nannian says we've got 75% NPS? It Feels like you measure it on a different basis, but I'm not quite sure. So I'm just asking whether your figure is better in quality than what your peers use. On the Mendatum, so this reorganization feels like Mendatum is more of a mini holding company now, Which is a holding company. And it feels like you're almost ready to sell it in the same way that There have been stories in the market. And I think Todd has confirmed that they'd be open for offers or some kind of stuff for their life business. Is that part of your thinking? Then on the combined ratio, you improved the target range, which is fabulous. It feels like, yes, unlike my expectations last year when I thought The discipline would change. The discipline is as wonderful as ever. This 82% to 84% target range, Should we is it would it be okay to kind of think, well, this is something you could sustain over many years, not just this year? And then 3 very little questions on Hastings. One is the 75%, do you have a comparative for Q1 last year? It's just a question. Then I think there's an incentive payment, which puzzled me of either €18,000,000 or €19,000,000 And I just wondered, is this What is this for? I mean, you've just bought Hastings. What is the incentive for? And then The final question, and he probably said I can't answer that. If there is a cash return, is there a preference Of among your shareholders, so how it is done, whether it is cash or I mean like a special dividend or buyback? Customer satisfaction is certainly not standardized between companies, so it's difficult to compare. But the time series within each company is important more than you probably have more to say on this? Yes. No, that's Correct, Torbjorn. This is actually why we have been a bit reluctant to sort of start publishing this type of numbers, But there's been clearly an interest in this. Customer satisfaction, you cannot compare it between companies. There are Large variations on how you do this, what questions you ask, what type of scale you use. This is a net promoter score. So it also depends on what you actually classify as promoters and detractors. Depends on whether you do it on Per transaction or relationship, it depends on whether you do it on claims or touch points. So there is a myriad of different ways of doing this. So I think the only thing that makes sense is to look at the development of each and every company. And I think What we've seen sort of Vryn, if it's a very good development, now over quite a period where we see that customers become more satisfied throughout all touch points. Perhaps then I can also comment on the combined ratio. The 82% to 84% is the current outlook for this year. And you asked, is this sustainable? Well, Our long term target is to be below 85, sort of for our 3 year target. So Then of course that is sort of the level below 85% where we expect to be. Thank you, Morten. Mandoorten, maybe just to say that it's a company that performs really well, Even in a little bit to my surprise, even in these pandemic times, the sales have been good. The Unit Linked and Wealth Management business is increasing the assets under management. Investment returns have been excellent. Solvency margin is high, and this company will support dividend ability going forward. So if I haven't been positive enough on Mandatum, I promise to change. If I may, and Elisabeth, you might say this is out of place, but you have an excellent opportunity to be even more positive by using that famous sailor And then the Hastings questions, I Didn't actually catch all of them. And but no, we haven't got a Q1 number for 75%. We've got a lot of new other things in the report this We haven't produced that. And the other of course, the other companies in the U. K. Only produce trading updates in Q1. What was the other question? There's an incentive payment. I didn't It's I can't remember where it was cited. It's either €18,000,000 or €19,000,000 And I was surprised because you just bought it. So I couldn't understand how management could have so quickly delivered and be paid so quickly. Can we try to take this offline when neither of us here can see what you're referring to? So we'll try to find it and come back to you. Yes. No worries. No worries. And the cash return And then there's no simple answer to your There's no simple answer to it. Yes, everyone wants a cash return or yes, everyone wants buybacks or anything else like that. Okay. Thank you. There is a €90,000,000 remuneration in the Q1, but that is not Hastings only. That's the group. Okay. Sorry. Yes. Well, Then I don't need any more than that. That's really clear. Thank you. Thank you. Our next question comes from the line of Pierre Grumbent Two questions from my side. First, which Turning to the commercial line where clearly your growth is more muted this year than it was last year. What have you John, in the renewal on pricing and what sort of attention are you seeing? In this context, talking to a player like Turk, you have the perception that, yes, they're hiking prices a lot, but the outflow of clients are also visible. Are there new players coming in taking these clients? Or how do you see the trends in the commercial market Or the Industrial Lines, sorry. That's an easy one. So Morten, you can have it. Yes. Well, the Commercial Lines, we do see quite large Price increases in certain part of that segment sort of in Norway, in particularly in Commercial Lines and then basically throughout the board on the large corporates, what we call Retention is fairly stable. Then the explanation by The somewhat low growth on commercial stems from the development in Finland in particular. Workers' comp Marketeer is actually shrinking a bit due to low employment in Finland and Finland as a Result of the pandemic. And all of that business is basically renewed first of first. And since we report on gross written premium, you get all of that effect then on the Q1 result for Finland and effect in commercial in particular. So that's the main explanation for sort of the 0.6% growth on commercial. This points also the what was addressed earlier about single project contracts With multiyear premiums from last year, this indicates that earned premiums should actually continue to grow reasonably okay this year in this segment. Is that fair, Madhu? Yes. We are one of the few that report on gross written premium. Most other players report on some form of Gross premium earned. And of course, the good thing with gross written premium is that you get a bit more fresh figure, So to speak, but you also get a bit more volatility in the top line then. So yes, project insurance, For instance, would, of course, be earned over a number of years. So you will have more stability on the earned figures for sure. Going back to my initial statements on growth, Per, I'm pleased with the progress that we have. And there are some technical things that Make the Q1 number look a bit more subdued than it really is. We have good growth Scandinavia, we have good growth in the right channels. And that's the main conclusion here. Okay. Perfect. My second question, when I look at your mark to mark bond return, in a world where most The bond funds have yielded negative returns in Q1. You seem to have been able to generate quite solid positive returns. Of course, you have been good, but can you add some more color to it? Do you want to try Knut? No. Maybe we have been good pair. We're trying our best. But of course, in an environment where interest rates Take off a bit, of course. It's beneficial for us, at least compared to some others. I'm not sure who you compare us To have shorter duration, then we have the possibility to reinvest They have a slightly higher running yield and obviously on a mark to market basis get less Sort of negative impact from the higher rates. Let's see how that develops and those possibilities to reinvest And at higher rates continue going forward, but that might be one of the differences compared To others with somewhat longer duration in their bond portfolio. The impact you addressed from discounting rate on Slide 100 and So is that anyway influencing your investment income? Or where does that pop up in your P and L? Slide 104. I got all the way to the back of the slide deck. Yes, yes, yes. My apologies. I just had to see what you referred to. That would be a part of prior year gains and loss It's in the claims ratio. Okay. Okay. Okay, perfect. Thank you. Thank you. Our next question comes from the line of Stephen Hayworth from HSBC. Please go ahead. Your line is open. Thank you very much. Good afternoon. Just looking at your for FP and C, the underlying claims ratio, I think if you look at Slide 6, you can work out that potentially the underlying claim ratio is about 1 percentage points Better than last year. But could you tell us if it's this is maybe due to A considerable amount of luck? Or is it due to risk selection? Or is the 1 percentage point underlying improvement And even higher than the Q1 2020. This is on a normalized basis, excluding all the additional impacts Of COVID and weather and large losses, etcetera? The simple answer is some small rate increases on average, But 1% is a small number in non life insurance. Mort, don't you want to give some more color? No, I think that's correct. It's I mean, first of all, you know that we don't really like the term Of underlying sort of improvement, there's so many sort of effects going in all directions. But If you do the simple calculations, yes, I mean, that would be roughly right, sort of that we do see an improvement. It's mainly of course pricing slightly above inflation in certain segments. Of course, risk selection always being Important. But again, it's these things are more important and relevant to look at over long term, Not always that meaningful to calculate the underlying improvement sort of quarter by quarter, but we will definitely see strong development in our portfolio and good profitability in all parts of our book of business. And Morten, maybe to add One piece of information voluntarily. There's no major segment where we see difficulties in increasing prices In parallel with inflation or in excess of claims inflation at the moment, is there? No. We are Satisfied with the underlying profitability that we have in all business areas, all geographies. There are only smaller adjustments here and there. So quite a good situation. Okay. Thank you very much. That was very helpful. And If you're not liking the underlying claims ratio, you may not like my next couple of questions. Because you're obviously now disclosing your large claims above expectations. But can you tell me what your Yearly expectation of large claims is can you give me a nominal amount or even a percentage of the combined ratio? And maybe the same for the weather claims, Can you give your estimated normalized expectations in a nominal amount again? We could, but it wouldn't be helpful because we change it As the portfolio changes and the exposure changes, so we would have to update that all the time and you wouldn't be able to use it. Okay. No, I appreciate that. And just a final question from me on the solvency. You've provided 189 percent, so obviously, 2 ratio, but you also provided one that is accruing the dividend at 186%. And I think that is probably A more appropriate ratio to use. But can you just clarify what level you're accruing the dividend at? Is it 70% payout ratio? It's in that number, there's a small asterisk and it says, I think, SEK 170,000,000 is used also for this year Just to pick a number so that you know that we're doing what we're doing. There's no indication that the dividend will be €170,000,000 but that's the number that has been used in that It's the quarter of last year's dividend. Our next Question comes from the line of Jan Erik Jeller from ABG. Please go ahead. Your line is open. Yes. Good afternoon. It's Jan Erik from ABG here. Just a couple of questions as well. Since you can't talk too much about the year on year position, could you just remind us about your tax situation Below and above 10% threshold, we should talk about at the Capital Markets Day. Has there been any changes to that? Or How should we look at from that when you're thinking about taking your position down? Knut? Yes. Good afternoon, Jan Erik. Now there's no changes compared to what we have Swipe before and just to remind what that is, it's treated as a so called fixed Assets as long as we are above 10% holding and we've owned it for as long as we have, meaning that any Sales gains or losses will be tax exempt and also dividends from Nordea is Tax exempt and consolidated profit, we consolidated on a net basis. So that's also not the part of our tax line in the P and L. Then if we go below 10%, there will be a similar treatment For 12 months, meaning that if we have any shareholding after 12 months of dropping below 10, Then that will be subject to tax both in terms of realized gains and And direct investment income meaning dividend received. Perfect. That's very clear. Secondly, Morten, could you just elaborate a little bit on this Premium growth potential above inflation, is it so that you try to price above inflation to improve your book? We just saw that you are happy with your current pricing and just try to price according to inflation currently. Yes. What we do is that we always look forward and try to estimate How we look upon the future sort of claims development, severity, inflation and so forth and price Then according to what we need in order to reach our financial targets, that sort of If the risk doesn't change, then of course and you don't need to improve the Combined ratio, then you would price basically according to expected inflation development. Then you might have certain books of business need to do slightly more than that. Currently, as I said, sort of I think we have a good underlying profitability In all of our business areas and all of the different countries. So broadly speaking, there is Not many areas where we need to price for more than inflation. The exception to this has been and still Partially continue to be Commercial Lines and Industrial Lines, in particularly Norway. But Yes. It's again, the price according to expected future risk Development including inflation compared to sort of our financial targets. I I don't know if that's the right one. Yes, yes. No, you're absolutely so if you then have sort of a competitive price, you can actually add the business as your competitors are still pricing above inflation in some areas? I'm not sure if I got your question there really, Henrik. But of course, I mean, it's Can you gain business now as you are sort of happy with your Stability, as you say, and you don't need to improve your combined ratio so much anymore. So you can then gain market share or gain business even though that is not on your agenda. Is it sort of easier to Gain business these days because your peers or competitors are pricing still above the expected claims inflation level? Well, it all depends on what the peers are actually doing. But always, I mean, we always see a situation where we gain market share since Certain segments, certain products, certain geographies and then we might lose market shares in other segments Very much because of this dynamic. Hard to predict sort of what's going to happen in terms of development. So But of course, I mean, it's that is essentially what will drive them one of the elements that will drive market share development. That's an internal game, and it also has do with how strong your distribution capacities are in the areas where your pricing is correct or competitive, of course. Okay. Just 2 technical questions at the end there. Your funding cost was SEK 26,000,000 and you expect SEK 1.6 percent or 1.7 percent. I couldn't get that back to my SEK 16,000,000, SEK 17,000,000. So just what's the difference between the 26 reported and the €16,000,000, €17,000,000 expectations, so to speak. Knut? Was it for me? I didn't really hear what you were referring to, Jan Erik. I thought it was a claims standard also. It's funding cost In the quarter, on the holding company, it was SEK 26,000,000, it says in the report. But it also says it was from 1 point 6% or 1.7 percent actual cost. But just couldn't square the equation between those 16%, 17% 226,000,000 you reported? The EUR 1.7 billion, that's right. That's the average funding cost It's roughly a cost of just above €70,000,000 let's say €70,000,000 Euros on an annual basis. So divided that by 4, you have the quarterly number. And then There are some derivatives positions, not as much as we had before, but Some derivatives position that makes the financial result in the holding company a little bit higher and a little bit lower from time to time Depending on interest rate and developments compared to that Nominal cost of which if you like of 1.7 Percent average, which I referred to. Okay. Yes, perfect. That's really helping us a lot. Thank you. Just finally, just a wish. Thank you so much for your improved disclosure on IFRS. Everything that's great. We hope you can do some similar on Hastings because those numbers we cannot still not square around as much as we can to get better Estimates going forward. So that will be highly appreciated. That's all from my side. Thank you. Thanks, Suneirik. Our next question is the follow-up question from Blair Stewart from Bank of America. Please go ahead. Your line is open. Thank you. Kirtan, I just want for you. You commented earlier that you're sticking to your balance sheet targets. And I just wanted to check a clarification on the 170 to 190 solvency ratio target. I think And correct me if I'm wrong, I think you said that you will review that as and when you have sold your non insurance holdings. Is that correct? And if so, what would you be looking at in terms of peer group Targets, for example, that might be more appropriate for a business that is significantly less risky than it is today. Thank you. Thanks, Blair. We're certainly sticking to $170,000,000 $190,000,000 because We sort of set that target in February, and we have currently more or less the same balance sheet. So it makes sense to stick to it. And it also makes sense to review it when we have materially less market risk. In terms of the peer group, It's I wouldn't say that the peer group is the first port of call. What we will base our evaluation is then is our risk appetite, What we would like to have in terms of comfort level within that target range. But of course, what I We referred to earlier that if we have material less market risk on our balance sheet compared to today where we think SEK 1.70 1.90 It's appropriate. It would naturally be so that, that target range would be somewhat lower, Not materially lower, but somewhat lower. How that compares to certain other companies who might have a little bit different balance sheet So a little bit different view of the world, it would be less important. Yes. I mean, it makes perfect sense. I think Every 10 point reduction would be about €400,000,000 impact, wouldn't it, based on what you said earlier? No, no. I stick to My €4,000,000,000 there, Blair. So that's Yes. That's easy math. I'll go away into the math, so 10% of €4,000,000,000 Thank you. Thank you. We have a follow-up question from Michael Hasner from Berenberg. Please go ahead. Your line is open. On the IF dividends, so last year, euros 600,000,000 I think the year before slightly more. Can you say what's Give me very strong if results we could expect this year. And then you mentioned inflation. I just wondered if you could say a word about this. It seems such a big in the U. S. I know it's very far away, but maybe that's and then on Norway Industrial Risk, I'm actually quite surprised because I thought the rates really jumped really hugely last year. So I'm surprised it's still an issue. It's Norway and the rest of the country do they have different standards or something? If I start with the dividend, Michael, you shouldn't Anything of the IF dividend really, that's mine. But you should expect that The insurance dividend of Sampo is progressive going forward with the starting point of The euros per share, which then originates back to all our insurance businesses, both The Non Life Businesses and the Life Businesses that we have and how we fund it with cash flows from various balance sheet, That will be our job to do. Excellent. And then what non inflation and Norwegian Industrial? Yes. In terms of inflation, I was a bit unclear what your question It was, Mikael. But the inflation in the Nordics, typically up towards 2% yes, up towards 3%. Of course, the inflation that is relevant for us is quite different than sort of the Consumer price type of index. This is more than inflation in spare parts, labor work Related to body shop work at the car industry and so forth. But it's been sort of towards 3% sort of Lately more towards the 3%. And then the question about repricing in Norway, I think What happened was that we saw in the total Norwegian market quite a bit of claims development, Yes, 2, 3 years back in time on the commercial segment in particular. And the whole Norwegian industry has been pricing kind of for that then over a couple of years. Then lately, sort of the last, yes, more last 2 years, we've seen also a trend in industrial, Which is actually more of a global trend where you see sort of rates for large corporate going up In particular, in property, more across the board. So that sort of would be relevant for all of our industrial business, not only Norway. So I try not to think there is something special about the Norwegian risk landscape, no. Okay. Thank you very much. Thank you. Thank you. Our next question is a follow-up question from Jacob Bank from Nordea. Please go ahead. Your line is open. Thank you. Just a follow-up here. You've previously mentioned that Sampo is not interested in life insurance outside Finland. Does that include that you're not interested in South Denmark having a life company? That was my first question. And then And one other sort of more structural thing, Nordex sent NOFI. That was an increased bid yesterday. So I know you're not going to as far as I understand, you're not going to get more money into this. But could you maybe just give us a bit more detail since, of course, It's maybe a bit contradictory to what you said at the CMD about exiting the PE stakes. And then lastly, sorry, Knut, I don't think I've ever heard about that 12 months rule and tax. Could you just repeat some? I'm sure I understand. First of all, life insurance in top Denmark, they have a wonderful and very efficient and successful life insurance company, which is well integrated with Non Life, which is run from the same building with the people in the same place and distribution overlaps And it's all unit linked. So are we it's doing well. So but we wouldn't expand The question has been, would we expand Life Business? Would we try to integrate Life Business between the Nordic countries? And the answer to that is still no. We don't see any synergies at all between life insurance business in different Nordic countries. Nordex, We're not running that, as we've said many times. And so it is not a contradiction. We don't intend to expand that group of Investments. And the third question was? It was 12 months. You just mentioned something with 12 months. I'm not sure I understood that part. Well, It's still when we or if we drop Below 10% shareholding in Nordea, that would go for other companies as well if we own More than 10% for a longer period of time. You have a period of 12 months Before, let's call it for simplified purposes, normal taxation of that As related to capital gains treatment and income treatment comes into force, To put it very plainly, meaning that if we sit on Nordea shares for more than 12 months After we have got below 10% in a hypothetical situation, Any capital gains we would make after that period would be subject To capital gains tax in Finland and also revenue dividend from Nordea would be subject To DAX. We have a last question from John Dunham from Morgan Stanley. Just on Top. Obviously, the solvency increased substantially at 1Q. While it's not cash, how should we think about the board's desire To return top solvency to a more normal level via dividends, I'm just thinking from the Sampo side, do you want or do you need the extra cash from the business? And just coming back to Knut's point on the progressive insurance dividend, would it trigger an unwanted step up in Sampo's progressive insurance dividend? Or would you Seek to hold money back at Mandaten or IH, for example. Knut, it is your money. So even though you're not on the board, Well, I first and foremost wish for any company that we have an interest To run a prudent balance sheet, and I'm sure the board of Topdanmark will consider that and the profitability The top down mark will generate during this year when they set and propose a dividend to the AGM next year. So obviously, to make changes in solvency calculations, I don't expect That have been done just because of samples insurance dividend. That probably wasn't thought about at all. So it's not because of that, just to be very clear. Then our insurance dividend is, of course, Linked to the profitability of our insurance operation, how we Handle cash management and cash flows within the group, that's a part of our day job. So you should, 1st and foremost, concentrate on the earnings that our insurance operation generate when thinking Progression in the insurance dividend from here. And then, of course, it's progressive. So we need to have a reasonable view on what is a normal profit for the year and what will be a normal profit for next year when setting that insurance dividend. But it's primarily driven to individual cash flows. We have sufficient Cash flow potentials to fix in the group. It's the earnings that, of course, we need to concentrate on. We have one more follow-up Question from Jan Erik Jelen from ABG. Just one follow-up On your Nordea stake, is it so that you are allowed to participate in a direct buyback if that should occur either by the Board of Or is that something you would consider to do if that should be an opportunity, either as a sole Buyback to you or in a sort of a complete buyback program? We don't know that yet. And we have heard from Nordea in the market That they seem to think that, that would be technically possible, but we've had no contacts with them. We have not discussed this. As I said, as far as I'm aware, Nordea has not applied for any buyback scheme with the ECB. Perfect. Thank you. That was all from me, Sal. Thank you. Thank you. We have no more questions from the line. I will hand it back to our speakers for closing comments. Thank you. And thank you all for your attention, and have a great evening.