Earnings Call: Q4 2020

Feb 11, 2021

Ladies and gentlemen, welcome to this conference call on Samba Group's 2020 results. I'm Jarmo Saan, Head of Investor Relations. And I have with me here our Group CEO, Torbjorn Magnuson and Rekka Wennerglind, Chief of Strategy for the Group Group CFO, Knut Arne Alsacker Martin Torshud, CEO of IFF and Toby van der Mer, who's CEO of Hastings. And I hope I did not forget any names. So We're here to discuss the full year results, and you're more than welcome to join us in a couple of weeks' time, 24th February, to discuss more strategy and that sort of issues in at the Capital Market Day. We'll start, as always, with a presentation from Torbjorn. And after that, we'll take your questions. Let me remind you that you can follow this transmission on samber.com/results, and a recorded version of the call will later be available at that same address. Now I hand over to Torbjorn. Torbjorn, please. Thanks, Jarmo. I'm very pleased indeed to present a set of extremely strong numbers for 2020, which was at the same time also a year of intense activity to develop our group. 1st and foremost, of course, the operational performance of our biggest division, FP and C, didn't leave much to wish for, I think. The lowest combined ratio ever, very strong indeed compared to peers and even at the lower end of our outlook from Q3. And this, combined with further improvements in efficiency and good growth, again, especially in the digital channels. I'm sure that the momentum in IFP and C has never been stronger and better. And as you know, I have a rather long history with that company. Today, some attention is also given to the extraordinary accounting step to reduce The book value of Nordea at Sampo. However, this has nothing to do with Nordea's business. As you will have seen, Nordea is progressing impressively well towards their targets, and our confidence in this is unperturbed. Brief remark on Mandatum Life. It's encouraging to see that the high guarantee liabilities have never run off faster than this year. This, of course, reduces risk and releases capital in this solvency intense segment. When it comes to our preparations for the future, I think our actions from the last year are well known. Suffice it Say now that with hindsight, the timing for the acquisition of Hastings and the date for the Nordea sell down seem to have been well chosen or at least done with good timing. For IFP and C, let's begin with a few remarks on the combined ratio. As a large motor insurer, it was certainly helped by COVID effects. On the other hand, large losses came in quite a bit above normal except for Q4. So the net effect of those two effects is not huge. The starting point for the coming years is thus very strong, and we give an outlook of below 85% for the year, Not a range as we usually do as estimating COVID effects is uncertain, to say the least. Growth continued to be distinctly higher than the GDP, And this is despite a negative premium effect in excess of 1% due to the low new car sales. As many of you are aware, car dealers is a channel in which we have excelled for many years and continue to do so as several of the largest agreements were renewed last year, in all cases, for long time periods, long contract time periods. All in all, underwriting profits continue to grow, and the Nordic markets seem to be on the way to even more consolidation, Thanks to Trigg and RSA. Hastings. For the first time, we have Toby van der Meer, CEO of Hastings Group, on the call. So a special welcome to you, Toby. We have now had the chance to work together for a couple of months. So let me give you some impressions On Hastings as it is now a new part of our group. It's been exciting to start to work together. The corporate cultures are definitely so similar that we should have done this a long time ago. Toby and his team are hands on Thrifty insurance professionals with high long term ambitions, all characteristics we value at Sampo. And when we looked at the company last year, we became convinced that we did not share the doubts about the company that the market seemed to have. And consequently, we looked more positively at valuations. 2020 ended well for Hastings, in line with our previous plans on growth and loss ratio. And we were also stable we were also able to strengthen the balance sheet of Hastings at the year end so that it holds the same standards we are used to at Sampo. And all this combined with a strong 76.5% loss ratio. We have also designed structured process for synergy development that started in January, which I have planned to discuss more in detail with you at our Capital Markets Day in 2 weeks' time. Turning finally to the dividend. You could consider Sampo to be in a transition phase in some respects As we're moving towards a more focused, more simply structured insurance group. For this reason, It is natural to look to the insurance operations to supply the means for the dividend, and this slide details the numbers. We will work on increasing the insurance dividends as a reflection of the underwriting profits as a solid basis for our group dividends. Volatility in underwriting profits is certainly much lower than other lines that are more exposed to the investment markets. The present market situation supports our ambitions better than in many years, and our insurance operations are better equipped Then I can remember to win in these increasingly digital markets. And now we look forward to your questions. Operator? Thank you, Torbjorn. And operator, we are now ready for the questions, And our first question comes from Yudish Chury from Autonomous Research. Good afternoon, everyone. I've got two questions, please. The first one is on dividends. I was wondering if restrictions on bank dividends are lifted Later this year, I know they are able to pay a further €0.72 per share. I was wondering whether Sampo will then distribute That dividend income as a special dividend, well, later this year or maybe next year? That's my first question. And then secondly, in terms of pricing in P and C, Can you give us a sense of the price increases you have managed to achieve on the January 1st renewals in your Industrial and Commercial Lines, please. Thank you. Morten, if you ask answer the price increases, I'll take the dividend after that. Yes, sure. Price increases in at the first of first renewals, I think the general statement would be that They are fairly high seen in a historical perspective, particularly in the large corporate segment, So, I. E, our industrial book of business. Also fairly substantial in the commercial book of business, In particular still in Norway, which is a situation that we see now for quite a while. And all in all, price increases well above what is assumed sort of inflation. So that kind of situation continues also on the 1st renewal? Are they as strong as last year or better? I would say on the commercial on the industrial side, I would say it's Perhaps slightly stronger and then commercial in line with last year in general. Great. Thank you very much. And on the dividend, if the recommendation or ban on dividends were to be was to be lifted in the autumn, We would potentially then get a dividend for from Nordea, hopefully, I trust. And That would actually the timing of that would not be too different from when we receive normally the dividend from FP and C. We have a policy that's In excess of 70% of earnings, there's no ceiling to that. And we don't have any M and A agenda, Except possibly if possibilities will occur for bolt ons in the Nordics. So that is probably as much as I can give as an answer. All right. Thank you. Thank you very much. Thank you. Our next question comes from John Denham from Morgan Lee, please go ahead. Your line is now open. Good afternoon. Thanks very much for taking my questions. Firstly, on IF, you flagged a, I think, as a 4 point The combined ratio from COVID, are you or your competitors passing any of the benefit on to consumers via lower pricing yet or still no? And I think you said less than 85% instead of a range because it was hard to estimate the COVID effects. Just wondering what would that range Before assuming any impact from COVID, I guess, take the opportunity as Toby is here. What's driving the acceleration in the policy count at Hastings? What kind of rate changes are you putting through versus the market? And just finally, I think you mentioned that you strengthened Hastings' balance sheet at year end. What kind of benefit do you think COVID has on Hastings' loss ratio in 2020? So on the range first, We have typically given a range of 4 percentage points at the beginning of the year, which is the uncertainty that we've held had in our normal planning. So that's what history indicates. Morten, if and COVID? Yes. As you say, we estimate 4% COVID effect in the 4th quarter. I think one should bear in mind that it's, of course, extremely difficult to really estimate that effect. It's hard to really understand what's More sort of what's weather, what's kind of more normal frequency development and what's kind of specifically COVID related. So it's a very rough estimate. And similarly, we have a very rough estimate of a 3% effect on the full year level. We are not passing that benefit back to the customers mainly because most customers place a number of products with us. And again, we see beneficial development on motor insurance due to low frequencies. But then of course, we have other lines of businesses where we see a more negative development. So that's, I think, the situation on the COVID and maybe pass it on to the customers. And Toby, the last one. Yes. Hi, John. Thanks for the question. So on your first question related to Hastings on policy count growth, Then I guess there's a couple of moving parts to the 8% policy count growth that we've seen for the full year 2020. The first is that we saw continued strong retention rates throughout the year. So very pleased with all of the team the work the teams have done to Continue what is now pretty close to market leading levels of customer retention. And then secondly, Throughout the year, we've been able to deliver a series of enhancements to our pricing models that have helped our new business volumes, I. E. Increased our share Of price comparison website sales during the year. And that was particularly true during the Q2 and Q3 where We were able to continue running the business without too much interruption from COVID. And at a time when some of our competitors had to retrench As they dealt with operational or systems issues, we were able to keep forging ahead. On your second Question on the impact of COVID on the loss ratio. You'll have seen in the numbers that Sjogren talked about a 6 point or so Improvement in the loss ratio embedded in that, although we haven't quantified the effect of COVID, but embedded in that is, of course, The benefits of lower frequencies, particularly in the second quarter, of course, very limited driving Then saw driving behavior increase during the Q3 and the beginning of Q4 and then tail off again, of course, when the 3rd national lockdown hit in the UK towards the end of the year. But as Johan has also said, overall, we have delivered a good loss ratio with that 6 point improvement, but also strengthened our reserving position. And I guess when you bring all of that together then when we think about 2021, it leaves us in a very confident position [SPEAKER JEAN FRANCOIS VAN BOXMEER:] To be able to say that the combination of the current accident year performance and the development patterns for prior years will leave us in a position where we can say that should be expected to improve. Thanks very much. Is it possible just to get the magnitude of reserve strengthening? We don't normally comment on that as there are so many moving parts in that statement. Okay. Thanks very much. Our next question comes from the line of Blair Stewart from Bank of America. Thank you and good afternoon. I have a few questions. Firstly, just with regards to The Hastings underlying performance in the year, it's very difficult to get much from the 6 week period that you've reported. Perhaps not today, but I wonder if that's something you'll talk about more at the Capital Markets Day so we can have an idea of what to expect from these things going forwards. Secondly, just on the reserve strength thing, you're clearly not going to comment on the number, but was that done just internally from Hastings? There's no need to transfer anything from Sampo Group into Hastings, I'm assuming that was just done internally? That's another yes. Also on Hastings, I wonder if you could just take the opportunity to ask management what the expected impact of the FCA pricing review and changes Will be on the company and its competitive position. And my final question, I'm sorry to ask so many, but they're all quite simple ones. The dividend from FP and C was only €600,000,000 against, I think, over €700,000,000 last year. Is that really just a balancing item in terms of what you need To fund the external dividend? Or is there something else going on there? So on the first two, we will speak more about Hastings' performance In the Capital Markets Day, and Toby will be there and have a separate session on Hastings. On the reserving, yes, it's been done within Hastings Resources. And then Yes. The next one was for you, Toby. Yes, great. So just to comment briefly on the FCA Pricing practices work and its impact on us, and we will talk more about this at the Capital Markets Day in a couple of weeks' time as well. But at a headline level, for today's purposes, I would just say that the FCA has identified, as you will be aware, that A large number of players in the industry have been making disproportionate returns and profits from renewing customers through practices such as price walking. And as you can imagine, that has been most prevalent in the businesses that have been around For the longest, have the most all standing customer bases. And for a company like ourselves that attracts Customers mainly from price comparison websites and mainly over the last, say, 4 or 5 years, you can imagine that we don't have the sorts of customers who would let us Do price walking. We do charge customers a little bit more today on renewal than for new business, but for us, that's a negligible amount. And therefore, I guess as we look ahead and we would expect the FCA's changes to have an impact on those sorts of profits, then it is largely irrelevant for us, but may have a big impact on some of our competitors. The second dynamic then is how it will change Shopping around behavior in the longer term and will it have an impact on price comparison websites as a distribution channel? I know some of our competitors are hoping that customers will all of a sudden become a lot more loyal, love their brands and start shopping around directly a lot more. I guess we're not sure about that. We suspect that customers across the UK have been told and educated to shop around, like using price comparison websites to do so And we'll continue to do so in the future. So I think we're relatively optimistic about the impact of all of the changes that the FCA will bring are supportive of them. But of course, we'll monitor them very closely as they start to have an effect on the market depending on the timing, The final FCA expectations, but much likely towards the end of the year. And finally, Knut, have you emptied the coffers of IF P and C? No, Torbjorn. That's one of the things, of course, we have not done. The dividend from FP and C was Based on the earnings in 2019, but also on a view that it was Reasonable to leave if P and C with a little bit extra strong solvency ratio at the end of the year, which they have, Given the uncertainties that we still have around us. Our next question comes from Jakob Brink from Nordea. Thank you, and good afternoon from my side as well. I guess the first question is on the leverage In Sampo Group, after the write down this which was announced this morning of roughly €900,000,000 Could you just help us through what will be the impact on the financial leverage in Sampo Group and what that might have consequences or might not have consequences? That was my first question. And secondly, a bit more broader question, and I don't know if you can or will answer it, but I see there is Change to the board composition where your main owner is, as far as I can read, no longer going to be represented in the board of Sampo. Can I read anything into this? Then lastly, why exactly did you choose to write down the The value now, anything specifically happened that may do the change now? Knut, will you talk about leverage and Nordea timing? Sure. Good afternoon, Jacob. Leverage in Sampo at the end of the year based on Our booked equity was just below 29%. If you would calculate it Based on the market value of Nordea, which would be just above 29%. The impairment as such, which had an impact on our equity of SEK 900,000,000, as you know, impacted the leverage ratio So based on booked equity by around 1.5 percentage points. Obviously, no change on the ratio based on Nordea at market value. This is an adequate level for us. It has no impact on any considerations for us in terms of ratings and obviously not solvency. When it comes to the timing, we have of course have had a Market value of Nordea that is has been below our book value for some time. And we have done impairment testing On a regular basis every quarter according to accounting regulation. What has changed during 2020 and also in the Q4 It's of course that Nordea have made good profit and we have consolidated our part of it, which is increasing the book value. But different than in historical years, there's been very little in our dividend payments. And that has not adjusted the book value downwards. The book value is a mechanical exercise of the acquisition price plus all the accumulated profitless dividend. That brought the book value Up to a level which we're about to exceed what we had as the value in use in our model And it was needed to do an impairment. And that basically happened now when Nordea announced their 4th quarter And also announced their plans to postpone the dividend further to the 4th quarter of this year. So it's basically the timing is basically due To the fact that Nordea is doing very well and not the changed view from our side on Nordea And not because the Nordea profitability is not in line with what we expect. And then on board representation, Antti Mecklen is not available for Another season, but remember that Janneke Fagerhallmer, Vice or Deputy Chairman, is actually also on the Board of Soledium. So I don't know. You shouldn't read anything into this as far as I am aware. Okay. Thank you very much. Very clear. Our next question comes from Per Van Boer from SEB. Yes. Per Grundberg from SEB. A couple of questions from my side as well. First of all, why 7.5% and not down to 7% as the current market value Waffley is on the impairment. Ed? I couldn't hear the question, Per. Can you repeat it? Why 7.5% and not 7%, the market price? Having Nordea down to 7.5 years, why don't you why not impairing it down to the market value? What's the rationale behind that? This is we make an accounting Consideration according to accounting rules, we use a model which is based on requirements under accounting regulations. We use assumptions which are based market based, particularly based on What we observed were cost of equities at the time when we sold Nordea Stakes, The 4% in Nordea in November. So it's not based on the actual market value. If we We're to impair it down to the exact market value which there are no reasons to do based on our view of Nordea, That would more be an indication of a change in accounting principle going mark to market On Nordea. And that's not what we do. We still accounted as an associate company and not as an available for sale asset. And maybe How should your owner stake in Nordea drop before you couldn't account for it as an associate any longer? There's no such exact limit. It used to be more clear before, But there's no such an exact limit. That consideration is based, of course, on the size of the ownership, On the size of the ownership versus other shareholders, our Board representation, the fact that Torben is Chairman, etcetera. So there I can't give you an exact limit, but it's lower than where we are today obviously. Not everything in the world is exact. At least that tells us where we are. My second question, back to what is important, the P and T underwriting. If I should make a very rough bridge from your 2020 results until and after COVID situation. You have 3 percentage points in COVID impact that will reverse. If I look at you don't read for well over the exchange, but if I look at a peer like They are guiding for renovated being approximately 1 percentage point better in 'twenty than in a normal year. I doubt your numbers are that different. Then you have the large claims that are a couple of percentage points above your normal run rate. Does this imply that after COVID, we should Look for a combined ratio, our claims ratio, it is approximately 2 percentage points worse than it was last year, plus, minus, of course, the improvements So you will do to the business in between? I think we have probably discussed this before, you and I. And let me give you an indication of what I think, and then Morten will correct me. But We, of course, do planning. And the factors that you mentioned are 2 of the more important ones. But also going into these calculations are, of course, the price increases, the rate increases that we've done during the year and the Exact timing of those as well as the weather influence on our results. So it is a little bit more comprehensive than what you have described. Morten, what do you think? Yes. I think when we do our calculation, we do reach to quite a fair underlying improvement, if you may. Large claims, 1.9% higher this year than last year. Run of risk So more or less in line with last year. COVID is a very rough estimate, rounding up to 3% on the full year Net of those being about 1% on the full year. Weather and event, for us, it's Quite a similar 2020 as 2019. When we look at weather and also events, of course, In that, bearing in mind the tragic landslide claim in Norway at the very end of the year. So all in all, sort of this leaves us with improvement in the combined ratio of 2020 versus 2019 of somewhere between 1% 2%. So I think it's the way we see it is a good underlying improvement as a result of Generally, underwriting improvements, but also pricing being above inflation now for a time period. Okay. Thank you. Thank you. Our next question comes from Daryl Wall from Citigroup. Please go ahead. Your line is now open. Hi, good afternoon. Thanks for taking my questions. The first set of questions I have relates to FP and C. So firstly, in terms of the large losses, which I think for the 1st 3 quarters and even for the 4th quarter has exceeded budget for expectations. Are there any specific trends that you've observed? Were there specific lines of businesses or regions where the last losses have recurred? Morten? Yes. No particular trend. Of course, large claims In the Industrial segment, it will be a bit volatile and you need to go really far back in time to find A deviation, a negative deviation on the level that we had in 2020. So it's typically sort of normal property claims, No specific geography. Clients that's been with us for a long, long time period typically. So we look upon this as being the normal volatility that you will have in the industrial market. So yes. Yes. And my next question is just on the run off trends. So it's Roughly stable year on year. Can you maybe talk about the sources of the runoffs and maybe the outlook for them given that some peers have been commenting on In more moderated level going forward? Morten? Yes. It will be, of course, later repeating a little bit What we said before, but the main source of the run of profits still is From the motor business in Sweden, which is one of the most long tailed businesses in all of Europe actually. And again, the driver is that we've seen over the last 10 years, more benign development on bodily injury claims than what was Assumed in their serving models. We typically, of course, do not Try to predict too much about the future. And then of course, sort of at a certain point in time, sort of this development It's leveling out. But of course, we continue to have strong reserves. So I guess And again, the development has been positive and constant over the last 10 years when it comes to motor About the injury claims payments. Yes. Thanks. And just one more on FPMC, please. Just looking at the underlying trends between the 4 segments, it's quite hard to assess from the outside. But could you maybe give some comments on the 2020 performance So it's just 2019, so which were the main segments of improvements? And what were the main drivers, if you like? Yes. I think the private business area being the largest one Continue to perform really well. It had a great performance in 2019 and continued to have very strong performance in 2020. The larger positive COVID-nineteen effects, of course, will be visible in the business area private result as result of the motor business that they have there. Commercial show an improvement In combined ratio compared to 2019, large claims more or less on plan, Good pricing momentum throughout 2020. So I think again that represents an improvement in the underlying performance For commercial? Then industrial, very high combined ratio that can be fully attributed to the large claims outcome. So when just for that, we do have a good Profitability also in the industrial business area. One could also bear in mind that We reduced the discount rate for Finnish workers' comp or Finnish annuities, impacting Commercial and industrial to a fair extent in 2020, and that's what we talk about on the Q3. And then finally, Baltics continue to have a stellar performance, 86.6% combined ratio for 2020 On the same level as they had in 2019. So I think all in all, good profitability throughout all Business segments and all geographies. Thanks so much, Martin. Just one last question on debt leverage, please. So what is the main metric that you look at? And is it dictated by the rating agency? So whether is it IFRS Equity, is it tangible equity? Is it Sansi 2? And what might be the ideal level that you want to Operator, please. Thank you. Could you repeat that? I didn't get the first part of your question, sorry. I Yes. So I was talking about debt leverage. Yes. You've done it. Hi, there. We'll talk elaborate a bit more on that at our Capital Markets Day. But obviously rating agencies is one such consideration to have leverage levels, which is in line with the rating that we have from S&P and Moody's. And obviously also to have a leverage Which is in line with our balance sheet and our balance sheet as PMC Insurance Group. And I'll talk more about this in 2 weeks' time. Yes, appreciate it. Thank you. Thank you all. Our next question comes from Ashik Musaddi from JPMorgan. Yes. Hi. Thank you and good afternoon, everyone. Just a simple couple of questions. I'm pretty sure this must have been asked in the past as well. Well, how do we think about leverage in case you were to exit Nordea completely? I mean, what would be the end leverage profile that you would want the company, The insurance company do have. So that will be my first question. The second question is for on Hastings, basically. Now clearly, as you suggested that There are participants in the market who are suggesting that loyalty will improve both the FCA move basically, royalty is going to improve or not. I mean, that's not the way you are thinking about. According to you, there will be more volume That will come on your way. Now given that you are Hastings is making profit in the current pricing model, how do we think about the volume versus Profitability focus of Hastings if SCA review goes through. And lastly is Hastings never have Strong reserve basically like no not much buffers are typically there in Hastings back book. So how would you think about Creating buffers in Hastings' back book at the moment. Thank you. The first one and leverage, We will discuss capital management more in detail in the Capital Markets Day. So Welcome to that. Then I had a little bit of trouble hearing exactly what you said. I don't know if you heard more, Toby. Yes, I think I've got the gist. Thank you for the question. So in terms of the FCA's work, I guess our base case expectation is that if other firms are no longer able To make money from renewal pricing, and at the moment, they're often discounting new business prices assuming that they'll get the money back in the 2nd year, then they will no longer be able to afford to do so. And because of that, you could imagine That new business prices might go up in the future. We'll see whether that happens, but it would be our base case expectation as we sit here today. I guess, Hastings then, because we don't rely on that price walking and we're already are in a position where we can price customers effectively In their 1st year and make a profit from that. We will like, I guess, then be in a position where we can choose to take, As the market prices go up, whether we also increase our prices and therefore increase our margin for new business customers or whether we take it as additional volume. And that is a series of trade offs that we have models in place for At an aggregate level, but more importantly, at an individual customer level, in other words, we would ask the underwriting team in our business to continue to be very disciplined In hitting a target loss ratio and improving that over time and that our retail trading team would maintain the algorithms that look at The trade off between volume and long term value at an individual customer and segment level. And if there are parts of the market where we think it's more effective In terms of long term value creation to put our prices up rather than take it as volume, then we'll do that. If there are other parts of the market We think there are higher value customers that we should be writing more of, then we might use to take it as volume. But we'll trade in it through the models In the way we always do, rather than taking an ivory tower decision by the executive team, we prefer to let the models do the talking. [SPEAKER STEPHEN ROBERT BINNIE:] In terms of the buffer, I guess firstly to say is we're not explicitly trying to create a buffer. We just have a very On reserving position at the end of 2020, and we're happy with that reserving position. No particular objective to increase it further as we sit here today nor to create any other sort of buffers. So I guess that means that as we improve the loss ratio, As we build more customers, generate more profits and more free cash, then we should be in a position to Release that to shareholders and make it available for dividends. That's very clear. Thank you. Our next question comes from Michael Huttner from Berenberg. And so one of my questions is going to be repeat and one because I didn't understand the answer. So Combined ratio for the year 2020 is 82%. There was 3 points of COVID benefits, so adjusting for about 85. The large claims were, I think, 1.9% higher than expected, so I'm right back at 83%. I'm rounding here. And your new guidance is below H5. And I'm just wondering, normally, you improve your guidance every year, but it doesn't feel like you're improving it. And I'm sure you kind of discussed it and I completely missed it, but I would wonder if you could kind of say if you're new guidance for the improvements or you're kind of staying flat this year? And then the other question is, it's a really stupid one, you're going to say, oh my god. But if I look at the banner You have, which is the leading financials group in the Nordic region. What are you going to do when you can no longer use that banner? I mean, if you sell Nordea Or if trade completes its rights issue and does all these things, you won't be there. How are you what's the What you're going to say to investors when they say it was about by Trig or Nordea or Samba was now that until now it's been very clear, But it doesn't the climate change is no longer there, but maybe I'm not. I think the guidance that we've given earlier in the year, last year, Jarmo, that was 84% to 80 7%. So the upper end, SEK 85,000,000 rather than SEK 87,000,000 at the beginning of the year signifies an improvement. And as far as I can tell, after 19 years in FP with FP and C, We've missed our guidance 1 quarter when we had the worst winter in 30 years. Leading Nordic, I'm not sure how often you use that, but whatever. We have When and iftrigg has completed its transaction with Arce, we will still be the biggest Nordic insurer if we necessarily want to compete on that. But we obviously couldn't compete on being the best in sure, not necessarily the biggest one. But we will remain the biggest one in the Nordics even after even if they could keep Codan, which is not obvious to me that they will. That's very clear. And may I just ask one more, which is really Just to complete some, on the in Mandartan, where did you get mean, and this is more a really positive question. You added €77,000,000 to reserves, but the results were exactly in line with what I'd expect a 9 of the thoughts you'd add to reserves. Where did that money come from? The money came from a good result in Mandatum during 2020 and also During the Q4, there was a really good 4th quarter on the investment side and it was Better than last year risk and expense result. So it Basically came from the result, if you would add back that SEK 77,000,000, you would have the result for 2020 Pre that additional reserving. So it's a fairly straightforward answer. Maybe I missed Your point there. There's nothing funny. No, no, I'll just say, I'm wondering about being an underlying improvement. I missed the investment income. That's something. Thank you very much. Our next question comes from Stephen Haywood from HSBC. Thank you very much. I don't know if I'm jumping the gun here, but I believe Hastings tends to give policy targets And loss ratio targets for the year ahead. Can you provide these? Or will they be coming at the Capital Markets Day? Can I defer strategy questions to the Capital Markets Day, if I may? No problem at all. Sorry about that one. And then I don't know if this is strategy or if this is M and A related. But obviously, with the upcoming deal that TRIG is doing, do you see potentially some sort Business coming to IFP and C bought up Denmark because of potential dislocations in the market As a consequence of their integration of Codan? They will be rather busy for Yes, with all the synergies that they have promised the market. So out in the line organizations, there's a lot of activity Take business from them, but there's no transaction or any interest from us in Codan in Denmark or anything. Okay. That's clear. And finally, sorry, talking about current restrictions in the Nordic market, Can you sort of give us an update who are not based in the Nordic markets and what the restrictions are in the countries and how long It may be expected to occur? Knut, do you want to try? What was it, dividend restrictions? Was that the question, Stephen? I think it's more on the lockdown. Yeah, lockdown, economic restriction. Yes. I think I could try to comment that a bit. I think there are still quite Strong restrictions in all Nordic countries, which means that employees are mostly working from home, Which means that there is very limited travelling in the countries and between the Nordic countries. Of course, highly uncertain to know how long this is going to last. But the current restrictions, it varies a bit from country to country, but I think most countries talk about that They at least have restrictions into March and then we will see whether those will be prolonged again. So I guess it's On a certain situation for us, as it is for most other countries. Okay. Thank you. Thank you very much. Our next question comes from Jan Agib from ABG. Thank you. I have some couple of questions left. The first one is on the cost ratio, which seems to be And we're down every year for us, but it has jumped a little bit in the Q4 numbers. Is it so that you have been able to take out some cost In Q4 or was it some cash up effect from the Q3, which was very benign? If we can start with that. Sure. Yes, as you say, cost ratio is down 30 basis points, Which is a bit more than we see in an average year, I guess, typically being around 20 basis points year on year. So good underlying cost development. In Q4, it's a bit Up compared to Q4 last year. We're not sort of I mean, the cost Occurs a bit different from year to year, some of the cost items. And then this year, in particular, we had a number of Cost and sort of smaller, I want to say, kind of investments that were postponed from Q2 into Q3 and Q4. Of course, in Q2, when the current pandemic started, sort of we Put some project at a halt and never started again then into Q3. So then you see an effect of that in Q4. But I think the important thing is to focus on The full year development, the 21.5% compared to the 21.8%. Absolutely, I agree. But I may understand the development Between the quarters because it looked a little bit odd, but of course, COVID-nineteen has been around for the whole year or at least since March. Secondly, on the Life, which one of the other guys could focus upon. Is it only because you had Very strong return that you that you came with the thank you to the best on the Life side? Or is it also what you look up on Anyway, so to speak. Could you repeat that? You said that if it's on the reserving side? On the Life side, Hi, Jan Erik. It's not only because we have a strong result. It was a strong result for Mandatum and Mandatum had strong results also historically, so to speak, so there's nothing special in terms of the way we think around making prudent Reserve strengthening in Mandatum. They obviously have a interest rate guarantee on a back book, which of course is running off In fast pace and we want to maintain a buffer to meet those guarantees also Going forward from an reported profit perspective, the discount rate Reserve of Mandatum with the NOK 77,000,000 we made this year is about unchanged Compared to the end of 2019, so to speak. Then having said that, of course, The important factor one maybe even more important factor from Mandatum's dividend paying Going forward is their solvency strength, which actually this discount rate preserving has very little to do with nothing really because there It's market based and Solvency II reserves are Solvency II ratio on Mandatum is really strong at the end of the year and consequently a dividend from Mandatum of NOK 200,000,000 is expected. But it is to make sure that we Also from an accounting perspective, allocate the investment return we are generating to the discount rate We have to meet going forward from a reported profit basis. Okay, perfect. If you would as I see here that you have an adjusted EPS of €0.65 On your report, if you could give us some details on that later tonight or April this week about how you reached that level, that will be great because it's hard to get all of the small and nitty gritty stuff underlying For an analyst looking through your reports, so that will be great. And I'm looking forward to your T and D. Thanks a lot. Thank you. Thank you. Our next question comes from Blair Stewart from Bank of Just a couple of follow ups. Firstly, I wonder if you could give us some insight On the trajectory of the private equity businesses, obviously, you sold the stake in Interim last year. I think Netsys had The merger, what happens post that? So that's the first question. The second question is slightly awkward one to phrase, but I guess, well known in the market that there's some pressure from investors on you to exit Nordea quickly. As ever, the market wants to know when you're going to sell, what you're going to do with the money, etcetera. Difficult questions for you to answer. Just wonder, How is it possible for you to square that circle? What level of disclosures can you give around that? Or will it just be a case of investors being frustrated until such times as the final actions occur? I know you'll probably talk about that more at the Capital Markets Day, but I thought I'd post the question in any case. Okay. Thank you, Blair. The trajectory for PEs, there's not a lot to say. They will run their course together with our co investors. And nets is obviously doing something interesting, but There is no that deal isn't even closed yet. Pressure to exit Nordi, what would you do with the money? Well, The one thing that I can comment already is, of course, that I think I mentioned earlier, we don't have Any M and A agenda apart from possibly if there's a good opportunity for a bolt on in the Nordics, But we will not be looking for other investments around the world. Yes. And I guess just on I know their question is more complicated. It's not a simple investment because you do have the chair at the company. So Is that a hindrance to your ability to do anything quickly with Nordea? No, that doesn't have anything to do with that. And for the long term, of course, we are looking to allocate more capital to P and C. Okay, great. Well, I look forward to a bit more color around that in a couple of weeks. Absolutely. We have a follow-up question from Michael Huttner from Berenberg. Thank you very much. It was a very simple question. The momentum for the €200,000,000 dividend now, is that the new run rate annual run rate we should expect? What do you think, Knut? Yes. No, Michael, I would call that Higher than an annual run rate. It's a reflection also that we canceled the dividend last year and left Mandatum with a prudent balance sheet given the uncertainty we had in March 2020. Now the profitability in Mandatum As you also alluded to earlier, has been really good for the remainder of the year, which left Mandatum with a very strong solvency base at the end of 2020. And we then felt we could take out a little extra, if you like, Compared to an annual run rate. I would say an annual run rate for Mandatum It's more to the tune of 150. Thank you. And we have a final question from Jan Egwet from ABG. Please go ahead. Your line is now open. Thank you. Just one follow-up on the Life side. As you said, you would like to invest more money into the non Life industry. Is sort of Life in business also one of your exit businesses? No, it's not. But and I wouldn't call any of our businesses exit businesses. That's not a good phrase. But on strategy, welcome to our Capital Markets Day. And that's probably a good Final remark here, Jarmo, isn't it? Indeed, indeed. Thank you all for your attention, and have a very good evening.