My name is Sergei, and I'll be your coordinator for today's event. Please note this call is being recorded, and for the duration of the call, your lines will be in a listen-only mode. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star one on your telephone keypad to register your question. If you require assistance at any point, please press star zero, and you will be connected to an operator. I will now hand you over to your host, Mitra Hagen Negård, Head of Investor Relations, to begin today's conference. Thank you.
Thank you. Good morning, everyone, and welcome to our third quarter presentation of Gjensidige Forsikring ASA. As always, my name is Mitra Hagen Negård, and I'm Head of Investor Relations. As always, we will start with our CEO, Geir Holmgren, who will give you the highlights of the quarter, followed by our CFO, Jostein Amdal, who will run through the numbers in further detail. We have plenty of time for questions after that. Geir, please.
Thank you, Mitra, and good morning, everyone. The third quarter saw relatively stable weather in our region. However, earlier this month, Storm Amir reminded us of the growing impact of climate change and extreme weather, affecting large parts of Norway and areas in Denmark. The storm caused significant property damage through strong winds, once again testing our organization's resilience in preparation for the event. Cross-functional teams across the organization were mobilized to ensure customer safety and uphold the consistently high standards of service. Building on lessons from past events, we have streamlined our processes for faster, more effective support. According to the Norwegian Natural Perils Pool, over 11,000 claims have been registered in Norway, with total industry-wide insurance losses from natural perils estimated at NOK 1.5 billion-NOK 2.1 billion.
Additional claims for cars, boats, and water-related incidents fall under separate insurance schemes. Gjensidige 's total claims cost for Amir in Q4 2025 is estimated at approximately NOK 400 million net of reinsurance and including reinstatement premiums. With the emergency phase behind us, the focus is now on supporting our customers in repairing and replacing what has been damaged. Events like Amir highlight the need for continued climate risk preparedness. The insurance industry remains committed to prevention, collaboration with the municipalities, and developing solutions that reflect the changing risk landscape. Now let us turn to page three for comments on the third quarter results. We delivered our profit before tax of NOK 2,067 million. This result includes a non-recurring expense of NOK 429 million related to the termination of the new core IT system in our pension business.
We generated a general insurance service result of NOK 2,271 million, significantly up year-on-year. Our strong growth momentum continued in the quarter, with an 11.3% increase in insurance revenue when adjusted for the positive effect of the change in the recognition of home seller insurance. The combined ratio declined to 79.7%, reflecting the improvements in both the loss and cost ratios. The online frequency loss ratio improved by 1.4 percentage points, and our investment generated returns of NOK 534 million, contributing to delivering a solid return on equity of 29.6%. We have a solid capital position, and our solvency ratio was 191% at the end of the quarter. Jostein will revert with more detailed comments on the results for the quarter. Turning to page four, I will start with private property insurance in Norway, which showed lower profitability this quarter, reflecting the inherent natural volatility in claims.
Claims frequency increased by 5%, repair cost increased by 4%, in line with our expectation. We continue to implement price increases, although at a more moderate level, reflecting the outlook for inflation and frequency and the current profitability level. Average premiums increased by almost 16%. Over the next 12 to 18 months, we expect repair costs to remain within the range of 3%- 5%, and we will continue to price at least in line with expected claims inflation. Our current average rate of price increases for private property in Norway is 12.5%. Moving over to private motor insurance in Norway, profitability for this product line improved over the same quarter last year, thanks to our targeted pricing measures. Claims frequency increased by 4%, reflecting an elevated claims level in July, likely as a consequence of the good weather and high traffic density in the vacation weeks.
We estimate that the increase in the online claims frequency was in the range of 1%- 2%. Repair costs increased by 4.4%, well within our estimated range. Average premium increased by 18.6%, although inflationary pressures are easing. The overall level is likely to remain within the 3%- 6% range for the next 12 to 18 months. We are monitoring the key drivers closely and acknowledge the uncertainty stemming from, among others, geopolitical risk and escalated trade tensions. Our current average rate of price increases for private motor in Norway is 13%. Moving on to page five, the strong performance in Norway continued this quarter, driven by sustained growth momentum and focus on efficient operations. We are very pleased to see that our retention rates for both the private and commercial portfolios remain at very high levels despite the necessary price increases.
Sales activity has been strong, leading to an increase in both customer numbers and volumes for private in Norway. We continue to maintain strong competitiveness in the SME part of the commercial market, with strong focus on profitability as we move closer to the January renewals. In Denmark, profitability improved for the private portfolio, with solid revenue growth driven by both volume and pricing. Profitability for the commercial portfolio was lower, reflecting the inherent variability. We are satisfied with the underlying developments. The implementation of our new core IT system in Denmark is progressing steadily, supported through our testing and a strong focus on quality. Sales are being rolled out gradually, and we are preparing for the migration of the portfolio next year. We are seeing clear benefits from the experience gained during the implementation and use of the system in the private portfolio.
I am pleased to see that our Swedish operations continue to build on positive momentum, showing sustained progress through solid growth and improved profitability. We are currently conducting a thorough assessment of the core IT system in Sweden, taking into account the specific characteristics of our operations in that market. Over to page six, we continue to actively pursue our strong sustainability ambitions. As shown on this slide, we have launched a number of innovative initiatives that are designed to create significant customer value while reducing claims costs over time. With that, I will leave the word to Jostein to present the third quarter results in more detail.
Thank you, Geir, and good morning, everybody. I will start on page eight. We delivered a profit before tax of just over NOK 2 billion in the third quarter. The insurance service result increased significantly to NOK 2.271 billion, driven by continued strong top-line growth and a lower loss ratio. A further decrease in the cost ratio also contributed to higher results. Private delivered a higher result, driven by both Norway and Denmark. The improvement in Norway mainly reflects revenue growth across all products, improved profitability for motor insurance, and a lower cost ratio. A non-recurring effect related to change of ownership insurance also added to the result. The positive development in private Denmark was driven by a combination of revenue growth for all main products, higher profitability for property and motor insurance, and a lower cost ratio.
The increase in results from commercial was driven by our Norwegian portfolio due to revenue growth for all products, improved profitability for accident and health insurance, motor and property insurance, and a lower cost ratio. Higher run-off gains also contributed positively. Our Danish commercial portfolio showed lower results, primarily driven by a higher number of fires impacting property insurance and lower run-off gains. In Sweden, the increase in insurance service result mainly reflected higher profitability for private and commercial property and private income protection insurance. A lower cost ratio also contributed to the improved results. The pension segment reported a loss of NOK 414 million, largely related to the non-recurring expense of NOK 429 million related to the termination of the core IT system. The net result from our investment portfolios amounted to NOK 441 million in the quarter, with positive returns from all asset classes.
The negative development in the result under other items this quarter is attributable to profits from natural perils insurance transferred to the natural perils pool and provisions related to the termination of cooperation agreements with seven fire mutuals, effective from next year. We are taking proactive steps to secure our market position in the affected areas, and we expect only a limited impact on revenue. The result from our Baltic business is recorded as discontinued operations, pending regulatory approval for the sale. We expect to close the transaction in the beginning of next year. The higher result reflects the write-down of goodwill related to the sale of the company recognized in the third quarter last year. The insurance service result also contributed positively, driven by an increase in run-off gains and lower loss and cost ratios.
Turning over to page nine, our strong growth momentum continued in the third quarter, with insurance revenues for the group increasing by more than 11% in local currency, when adjusting for the non-recurring effect in private Norway. I'm very pleased with the increase, which was mainly driven by pricing measures across the private and commercial portfolios in all geographies, solid renewals in the commercial portfolios, and higher volumes in Denmark and Sweden. The growth in our private segment was driven by both Norway and Denmark. Private Norway showed a strong growth momentum, even when excluding the home seller insurance product. This strong development was primarily driven by price increases in all main product lines. I'm very pleased that we also saw increased volumes for motor, property, travel, and accident and health insurance.
The growth in Denmark was also strong, thanks to both price increases and higher volumes for all main products. Growth in commercial was also driven by both Norway and Denmark. In Norway, the growth was driven by price increases for all products and solid renewals. As in the previous quarters this year, growth for some products within accident insurance was muted due to a continued focus on profitability improvements. Growth in commercial Denmark was good, adjusting for an accrual last year. The growth rate was 6.4% in local currency, driven by price increases for all main products and higher volumes for property, accident and health, and liability insurance. Growth in Sweden was negatively impacted by accruals. The underlying growth, however, was good, mainly reflecting higher volumes for leisure craft insurance in the private portfolio and higher volume and price increases for commercial motor and private property insurance.
Turning over to page ten, I'm very pleased with the development in the group's loss ratio, which improved by 3.2 percentage points compared with the third quarter last year. Part of the improvement was due to lower large losses, which are random in nature. Another important driver was the improvement in the underlying frequency loss ratio of 1.4 percentage points. I'm very satisfied with the development in all the segments and particularly encouraged by seeing an improvement for private Denmark. Let's turn to page 11. Our commitment to operational efficiency remains strong. The group's cost ratio was 10.8% this quarter. The 1% improvement was driven by private in Norway and Denmark, commercial in Norway, and the Swedish operations. We continue to strengthen our competitiveness, particularly in Denmark, and we're working to optimize our cost base across the group to create greater capacity for future investments in technology and growth.
Over to slide 12 for comments on our pension operations. Our pension business delivered a pre-tax loss of NOK 414 million this quarter, significantly impacted by the non-recurring expenses from discontinuing the new core IT system project. For the time being, we'll continue using the existing core system as recent improvements have enabled us to extend its operational lifespan. The underlying development in results for our pension business is good. Business volumes for the insurance products were higher this quarter, which together with price increases lifted insurance revenue. Adjusted for the non-recurring termination expense, the insurance service result improved year-on-year, but it was still in the red due to the asymmetric recognition of onerous contracts and expected future profits from new contracts. Net finance income contributed with just over NOK 1 million this quarter, reflecting running yield and higher interest rates.
The unit linked business continues to grow, with the number of occupational pension members increasing by 5,500 to almost 335,000 at the end of the third quarter. Assets under management rose by NOK 4 billion to NOK 100 billion. This drove an increase in administration fees and management income, improving the net income from the unit linked business when excluding the non-recurring item. Moving on to the investment portfolio on page 13, our investment portfolio generated positive returns for all asset classes, driven by running yields, lower credit spreads, and positive equity and real estate markets. The matched portfolio net of unwinding and the impact of changes in financial assumptions returned around 40 basis points, mainly reflecting lower credit spreads and the fact that the investments did not fully match the accounting-based technical provisions. The free portfolio returned 110 basis points, reflecting positive returns from all asset classes.
The risk in our free portfolio remained low. A few words on the latest development of our operational targets on slide 14. The customer satisfaction score is measured annually in the fourth quarter. We continue to identify measures and take steps to maintain a strong customer offering and high customer satisfaction. As Geir mentioned, retention in Norway remained high and stable. Retention outside Norway improved slightly during the quarter, with increases seen in Sweden and the private and commercial portfolios in Denmark. We are steadily progressing toward our 2026 target of achieving a retention rate above 85% outside Norway. The improvement in the digital distribution index this quarter reflects an increase in digital sales and digital customers, somewhat offset by a decline in digital service. Distribution efficiency is progressing well, primarily as a result of higher sales in Norway, but also in Denmark.
Increased sales following the acquisition of Byshore contributed positively, improving this metric by 2 percentage points. Digital claims reporting increased during the quarter, driven by Denmark and Sweden, and automated claims in Norway increased as well. Now over to page 15 and a few words on our successful tier one bond issue of NOK 1.2 billion in September. We aim to take advantage of what we viewed as an attractive market condition while also preparing for the first call of another tier one bond in April next year. The issue was substantially oversubscribed, and we are very satisfied with the floating rate coupon of Tremont Naiber plus 215 basis points. We also took the opportunity to buy back NOK 487 million of the tier one bond with the upcoming call, resulting in a net increase of NOK 713 million in outstanding tier one capital.
Over to page 16, we had a solvency ratio of 191% this quarter, up from 182% in the second quarter. Solvency to operating earnings and returns from the free portfolio contributed positively to eligible own funds, while the formulaic dividend, which corresponds to a payout rate of 80%, reduced eligible own funds by NOK 1.3 billion this quarter. The net increase in tier one capital I just mentioned added NOK 713 million to the eligible own funds. The capital requirement increased slightly this quarter, primarily due to growth in our pension business. The non-life and writing risk was stable, reflecting growth offset by the effect of settlement of larger claims and changes in currency rates. With that, I hand the word back to Geir.
Thank you. To sum up on page 17, we are very pleased with the performance and continued progress across the private, commercial, and Swedish segments this quarter, and our capital position is strong. We continue to implement measures and maintain a strong focus on operational efficiency, progressing well toward delivering on our financial targets this year and in 2026. Finally, on page 18, before we open for questions, I'm very happy to announce that we have set a date for our next Capital Markets Day, which will be held on the 26th of February next year in Oslo. We are looking forward to this opportunity to speak about our ambitions and plans. We will provide more details in a while, but in the meantime, please save the date. With that, we will now open the Q&A sessions for this presentation.
Thank you, ladies and gentlemen. As a reminder, if you would like to ask a question, please press star one on your telephone keypad. We kindly ask you to ask one question per person at a time. We will pause for a brief moment. Thank you. Our first question is from Hans Rettedal from Danske Bank. Please go ahead.
Thank you. Good morning. Thanks for taking my question. My question is around the claims frequency numbers that you give, in motor and property. I guess there's a lot of volatility, especially between Q2 last quarter and Q3 this quarter, with quite a sizable effect on the overall claims outcome. I was just wondering if you could give a little bit more color on your confidence that frequency will come down, and also perhaps just a bit more elaboration on what was driving the July pickup in motor and also in property. Just a very small question on the amounts recovered from reinsurance, which is lower than it typically is, of only NOK 12 million this quarter. I know there's nothing typical about reinsurance, but still, any help on why this is or drivers behind it would be interesting to hear. Thank you.
Thank you. We'll now move to our next question from Ulrik Zürcher.
I'll try to answer the question first, please. Thank you. Hans, I can start with the claims frequency volatility. As you know, we have an improvement when it comes to online compared to this quarter to the third quarter last year. We see an improvement both on the group level and in private and commercial, and also in the Swedish operations. When it comes to volatility within the Norwegian part of the business, we see in the property sides more fires this quarter than we normally see. It's also a kind of impact on some level of volatility, which is a part of our business from quarter to quarter. In addition, we saw a pickup, as you mentioned, on the motor side in the start of the third quarter.
That's more due to higher frequency in July, due to higher traffic density, vacation weeks, which this time tended to be more have a kind of an impact on the frequency side when it comes to motor. We do have quite high pricing measures, as mentioned. In the October renewal, we see pricing measures both for property and motor renewal with renewals on 12.5%- 13% price increases on average, which is still above what we expect when it comes to frequency development and inflation going forward.
Yes, on the reinsurance recoveries, although we can't comment on specific claims, there has been a reduction of the estimates of some previous large claims, which have been above the retention limits. That has an effect that the assumed reinsurance recoveries will come down. You have to try to explain more clearly if you have a reduction in a large claim estimate with no net effect because you have a reduction in gross claims and a reduction in assumed reinsurance recoveries. That's the main reason why it's such a low number in the third quarter. Was that clear, Hans?
Yes, very clear. Thank you very much. That was all from my side.
Thank you. Our next question is from Ulrik Zürcher from Nordea. Please go ahead.
Thank you. Just a short one. When you say limited effect from the fire mutuals, is it possible to, like, how much is that of premiums? Secondly, just the technical one, you transferred some profits to the natural perils pool. I was just wondering, how will this work going forward?
Okay. Thank you, Ulrik.
Is it like a quarterly thing, or?
Yeah. I get the question. The fire mutuals, we say there's a limited effect on the future development because this is, first of all, a situation we also had five years ago when we had a termination of a number of fire mutuals as well. The fire mutuals have sold fire insurance on their own account, and then they've been an agent for all other products for Gjensidige. We have both the fire mutuals and Gjensidige having the customer relationship. Of course, we will be competing for these same customers. We do expect a limited negative development on the premium development from these. We will be strengthening our efforts within these geographical areas where these fire mutuals have operated. Yeah.
If you talk about the impact on the profitability, I will also mention that because that's due to kind of an agent distribution setup, we also will get definitely reduced expenses going forward regarding distribution. We improve the distribution efficiency when it comes to existing customers through that channel.
The second question on the natural perils technicalities is that when the line of business called natural perils has a surplus, that surplus is transferred to the natural perils pool accounts in a way. That's then something we have to pay to this central natural perils pool. That's then on the negative on the others of the lines, other items. If it's a good year, the positive will then be in the, in a way, it's just a surplus or deficit. If it's a surplus, it's a negative under others. There is no positive in a way. It's just a net negative.
Okay. Will this be done on a quarterly basis or annual?
In reality, it's every month, but then you, of course, get the accounts every quarter.
Okay.
Thank you. We'll now move to our next question from Derald Goh from Jefferies. Please go ahead.
Hey, good morning, everyone. My question is around a cost ratio. Now you're running at 12%. Is this the new base that is sustainable? Would you consider maybe reinvesting some of that into growth? Please, thanks.
Yeah. We are very happy to see reduced cost ratios. We have a very strong cost discipline, and we have many cost efficiency measures going on in the organization and in our business. Our target at the moment is around 13% next year, but we are aiming for keeping the business still cost efficient, of course, and work every day to try to improve the cost efficiency. At the moment, as you mentioned, it could probably argue that it's some kind of room for doing other types of investments, but every type of investments we are doing will have a good business case and will improve the profit over time. We are still focused on being a cost efficient business, and that's part of the core of our business and the way we are thinking.
Just to be clear, is it fair to assume that this 12% is a reasonable run rate for now?
I think we will not give any kind of guiding or a cost ratio going forward. The best thing to mention is our target for next year, which is around 30%.
Okay, thanks.
Thank you. We'll now take our next question from Thomas Svendsen from SEB. Please go ahead.
Yes, hi. Good morning. A question to the pension operation from my side. Can you just explain a little bit more why you scrapped this system? Are there any changes in your market approach or something other? Also, just remind us of the business plan for your pension unit. Could you indicate what you expect to be a normalized pre-tax profit level given the current asset base there?
Okay. The reason for terminating the core IT system within the pension business is due to our needs and requirements regarding the business we have today, regarding the pension business and pension-related products. Our assessment is that we are not getting the full benefit out of the existing core IT system, which was terminated. That has developed during the years we have been doing the development, I would say. This is our conclusion on the kind of assessment and consideration we have done in the past. Our assessment is that this is not the right system for Gjensidige going forward, taking care of our pension business in the Norwegian market with all the requirements needed for doing that efficiently and with high quality.
Our pension business in Norway, when it comes to a more strategic view on that, it's a very integrated part of our commercial business, especially in the SME areas. We see that we are running this business very cost efficient when it comes to distribution. It's capital efficient as well due to the types of products we have in the pension business. I'm very happy to see the growth we have had within that business during the last couple of years. It's a very motivated organization to keep that up on a high level going forward as well. We are focused on occupational pension and are happy to see that the market has a high level of growth, which we definitely take our earned part of. I think that's probably on the business side.
Yeah, I can add on the kind of financial guiding. I mean, we don't guide us in all summers, but we have stated a return on equity target for the pension business back in the Capital Markets Day in November 2023. When we said that based on IFRS earnings, which is the company accounts for the pension business, we need to target to return more than 15% return on equity. If you exclude this non-recurring item, year to date, the return on equity is 20.7%. We are well ahead of our stated financial targets for the pension business as a company.
If you look at the accounts for IFRS 4 in that business, it's actually a very good quarter when it comes to underlying profitability. Good growth on the income side, revenue side, and it's run very cost efficient as well.
Okay, thank you very much. Thank you. We'll now take our next question for the next caller. Caller, please introduce yourself by your name and the affiliation after the automated prompt. Thank you.
Good morning, everyone. This is Youdish Chicooree from Autonomous Research. Can you hear me?
Yeah, yeah.
Thank you. I have just one question just on solvency, given the very strong progress here today. I was wondering whether you could comment on where your preferences in terms of capital deployment currently lie, in terms of whether you see some good M&A opportunities on the horizon, or whether you are more leaning towards right-sizing your capital and potentially repatriate some in the form of special dividends or share buyback. Secondly, linked to the capital situation, if you could comment on any updates, if any, on the approval process for your own partial internal model. Thank you.
Yes, I'm very happy with the capital position. We have a strong solvency number of 191, which is above our target interval. The board will do their assessment when it comes to dividend at year end. We are not aiming for having any kind of surplus capital within the group. This is definitely a part of the consideration when doing the assessment of ordinary and extraordinary dividends by year end.
Yes, on the approval process, really no updates at this point. We are still in the process with the Norwegian FSA.
If I could follow up, there's nothing interesting on the M&A front you see at the moment?
M&A?
No, no. We are focused on organic growth in the business. We are not considering any structural way of growing the business. We are happy with the position we have in Norway and improving the business we're having in Denmark by many operational measures. That's our focus now. Yeah.
Thank you. Thank you very much.
Thank you. Once again, if you would like to ask a question, please press star one on your telephone keypad. The voice prompt on your phone line will indicate when your line is open. Please state your name and your affiliation before posing your question. We'll now take our next question.
Good morning. This is Vinit from Mediobanca. My one question would be just following up on your comment on the July weather effect driving the 1 to 2 point you mentioned on the underlying. I'm just curious, is there a similar explanation or is that the same explanation for commercial Denmark, which seems to have worsened about 4 points in the quarter when compared to 3Q 2024? Is there any comment on that that you could share that also throws some light on what's happened there? Thank you.
Thank you, Vinit. No, it's not related to the same cause. This is more just inherent quarterly volatility on a commercial book of business. It's really no specific explanation around it. We do see a somewhat increased level of both size and frequency of claims within that business, but nothing we regard as giving the indication of a future trend. It's volatility.
Okay, thank you.
I'm going to move to our next question. Please go ahead. Your line is open.
Yes. Good morning. This is Michele Ballatore from KBW. My question is related to, in general, the pricing regarding your comment earlier. Can you tell us what is the status of your pricing, both in private and in commercial, across Norway, Denmark, and Sweden? Thank you.
Yeah. Starting with Norway, we have over time now, two years' time, we have had quite heavy pricing measures going on, which also have increased the pricing level substantially for both property and motor insurance. The average increase within property was approximately 60% last year, and for motor, between 80% and 90%. The ongoing pricing measures are still having quite high price increases, but compared to what we have done in the past, it's a more moderate level. We are talking about 12%- 30% price increases on average for property and motor insurance in Norway. That's about what we expect when it comes to inflation in the next 12 to 18 months, and it's about the frequency development.
We have a very good and stable position in Norway, still high retention numbers, and still very happy to see our competitiveness in the Norwegian market, both on the private and commercial side. When it comes to commercial, a large part of the portfolio has renewals at the 1st of January. We are preparing for that as well with quite high price increases due to what we've done in the types of considerations we are doing. In Denmark, we have price increases going on in the private segment. As I mentioned before, we have not been satisfied with the profitability in our private Danish business. We have had many, many quarters with red numbers. Happy to see that we can face a progress during the second quarter and third quarter when it comes to profitability.
Price increases are needed to improve that kind of business in addition to cost measures and improving the cost efficiency of that business. On the commercial side, my opinion is that we have a very, very strong position in Denmark when it comes to our commercial business. We do have a good relationship with the main brokers. We have a recognized brand name, a stable, good portfolio. When it comes to results, it will be some kind of volatility from quarter to quarter, but our starting point going forward is at a very, very good level when it comes to our pricing power and our position in the commercial segment. For Sweden, yes, still ongoing pricing measures. I'm very happy to see that we have succeeded when it comes to improving our efficiency and to improve the way we are doing business with more digital solutions.
It's a small business, but the business we have succeeded to improve profitability over time during the last couple of years, and I'm very happy to see that.
Thank you. Sorry to follow up on Norway. If I understood correctly, you were talking about 12%- 13% price increases. This is significantly above inflation. You have, of course, quite a sizable market share in Norway. My point is, is this something, is there the same level of discipline in the market? I'm just trying to understand what you're doing compared to what the market is doing in Norway specifically.
Yeah, good question. We started with repricing our private portfolio in Norway third quarter two years ago. It has been ongoing pricing measures above inflation now during the last two years. My impression, my view is that Gjensidige probably started that kind of price using pricing measures quite heavily. Started that first in the Norwegian market. We are actually a first mover when it comes to having pricing measures. Yes, we still see that we have good pricing power. The retention rates are still high. We are prioritizing profitability before growth and use the market situation. You also see that our competitors are doing price increases, that we are still continuing with quite high price increases as well. The pricing level you mentioned, that's correct.
On average, 12.5% to 30% within motor and property within private, above inflation numbers as we see, and frequency development as we have seen in the past. We also take care of the kind of claims mix, which you will see from time to time when you get new cars in the market and different types of claims. That would also change from quarter to quarter due to the weather and conditions.
Okay, thank you. Thank you very much.
Operator, are there any further questions?
Yes, we have a question from Hans Rettedal. Your line is open. Please go ahead.
Yes, thanks for taking the follow-up question. I guess it's a bit general, but I was just wondering, sort of related to the previous question, do you see any effect from the price hikes that you've implemented now on customers, perhaps dropping coverage or changing coverage, changing terms of deductibles, or any sort of movements on the customer side as an effect of pricing having increased quite significantly over the past couple of years?
We spend more time with customers now than we have done in the past due to everything that's happening in the market. We also have a situation in Norway and in Denmark that we see quite high price increases due to what we have seen in the past. The pricing discipline among our peers is at a high level as well. This situation also makes the customer do more considerations regarding their insurance contracts, and they are checking prices more than they had done in the past. We don't see any negative impact on our business volume when it comes to that kind of activity. We still see that the retention numbers are still high, and I'm very satisfied with the level of customer satisfaction and customer loyalty we do have in our, especially our Norwegian portfolio.
My view is that we still have a very good pricing power when it comes to do all the necessary measures we have mentioned.
Thank you very much.
Thank you. We have another follow-up question from Derald Goh from Jefferies. Please go ahead.
Hey, this first one is a clarification. Could you say what are the rate increases that you're putting through in Denmark? Like what percentage is it, and how does it compare to the claims inflation in both the private and commercial side of Denmark? Could you maybe speak to how conservative you might be recognizing some of the margins? I think there are a few questions on this already, being that the rate increases seem to be far outstripping the claims inflation number. Is it a case that maybe you are building up a bit of a reserve buffer? Thanks.
I think on the first, what are the actual price or rate increases that we are putting through in Denmark? We haven't been as clear as we have been on the two main products in private Norway. We are looking at price increases that are well above our expected development in claims, which is a combination of claims inflation and the number of claims and claims frequency. That's what we're aiming for. Of course, as always, what we will get through will be a function of the competitive situation there. I remind you that our business is quite a lot larger in commercial than in private in Denmark, and we have a very strong position within commercial Denmark. We are looking at combined ratios of around 85%, 86%, depending on if you look at the quarter or the year to date, which is a healthy profit.
We still continue to put through price increases above our expectations of the claims development.
Thank you. We have another follow-up question from Thomas Svendsen from SEB. Please go ahead.
Yes, hi, this is Thomas again. Just on customer behavior in private Norway, is there this change in behavior by clients? Do you see much more inbound calls? Clients want to discuss the price. Also, do you need to sort of get back to rescue clients that are leaving you? Is that an increased activity there within the net retention levels that you talk about?
No, we haven't seen any change this quarter compared to the last couple of quarters when it comes to that kind of activity. If you look at the numbers of customers, we are increasing the number of customers in our private portfolio in Norway compared to what we had year-end 2024. I'm very satisfied with the sales activity, distribution efficiency. In all respect, we do talk more to customers during the last couple of quarters than we have done in the past due to all the high price increases the different types of customers meet across all insurance providers and for different insurance contracts.
I also remind you that the growth in private Norway was, although mainly price, we had an increase in the kind of the volume, the number of customers, as Geir mentioned, but also the number of cars, houses, travel insurance policies, and so on. There's an underlying volume growth as well, although the main part of the growth is price-driven.
Okay, thank you.
Thanks.
Thank you. We have another follow-up question from Mediobanca . Please go ahead. Representative from Mediobanca , please go ahead. Yes.
Yes, Vinit from Mediobanca. Thank you for the opportunity. The second question from me is on the inflation outlook, because I remember that we were all expecting you to provide an update on inflation in this quarter, and it appears to be unchanged versus Q2. In Q2, we heard you talk about reducing some of the price increases, and we see that in the numbers. Could you just comment that what is this inflation being unchanged Q2 versus Q3 a surprise to you, and what are the drivers, and are you still happy with lowering the price increases in Norway, even though inflation outlook is unchanged? Thank you.
Starting in property Norway, the actual inflation third quarter this year compared to or during the last 12 months was 4%. Our expectation for the next 12, 13, 18 months is between 3% and 5%. That's a combination of repair costs and labor expenses in the property segment. When it comes to motor, actual inflation in the last 12 months around 4.5% expected. The next 12 to 18 months is quite a broad interval between 3% to 6%. The kind of uncertainty is regarding trade barriers and what's happening in especially the motor industry. It's a kind of uncertainty, and that's the reason for having quite a broad interval as well when it comes to expected inflation going forward. As mentioned, we are having pricing measures at the moment, which are definitely above the expected inflation, including also what you have seen on the frequency development in the past.
May I also add that remember that these are what we tell you about, are the price increases that are in place for policies that will be renewing now. Whereas the accounting effect is a function also of all the price increases and the levels of price increases that we had over the last 12 months, which we have informed you about every quarter, which have over the last 12 months been slightly higher than the ones we are currently putting through to the customers. There is an overhang of kind of all the previous price increases now. As Geir said, given that these price increases are higher than what we expect, at least as a future claims development, that should bode for a margin improvement also further down the road.
Thank you.
Thank you. We have a new question from a new caller. Please introduce yourself and your affiliation.
Hi again. Hi, it's Youdish Chicooree from Autonomous Research. I was wondering if you could comment on the revenue growth dynamics in the near term. I mean, in the third quarter, your 13% year-on-year growth was kind of helped by some one-off factors. At the same time, because it's an earned revenue, it's also benefiting and reflecting the high rate increases that you've implemented in the past year. I was wondering whether that 13% is a sustainable level in the near term or whether it could potentially improve on the basis that it's reflecting the earned written premiums going forward. Thank you.
Thank you, Youdish. First of all, I remind you that we talked about a one-time effect due to a change in principle on the change of ownership insurance. The kind of adjusted currency and that, it's 11.3%, which is the level we report. The non-recurring is, of course, should not influence your forecast. It's more like the 11%, which is based on the premiums that we have implemented over the last 12 months. We also have given the growth numbers per segment. I think that is the best way for you to try to predict what's going to happen. We commented on the effects on commercial Denmark, which is 6.4% rather than 4.4% in the currency if you adjust for an accounting effect last year. Also, the Swedish number due to accruals is underlying a bit higher than what we have reported, which is 2.7%.
It's more in the 6%- 7% range as well. I think that is the building blocks you should probably use for your estimate of future revenue development.
All right, great. Thank you very much.
Thank you. We have another question. Please, caller, introduce yourself.
Morning, everyone. Thank you for taking my questions. It's Kiandal UBS. I just have one on the ongoing pricing measures in Norway, which slow down quarter on quarter. I'm wondering if this is implying a more proactive strategy to enhance your competitiveness in the market and grow policy counts? Is it more of a reaction to increased competition in the markets? I guess related to this, given one of your peers has indicated that they plan to normalize price increases from next year onwards, I wonder how you are thinking about the timeline for your price adjustments. Thank you.
The price increases we are having at the moment, and which are implemented, as mentioned, it's about expected claims inflation and frequency development. The high level of price increases we have had in the past is also a response on the frequency development we have seen during the last two years, especially on the motor side. We have also seen some more volatility regarding property insurance, high number of fires in some quarters, more water-related claims, and so on. That is a reason in the past for doing quite heavily pricing measures and to improve the profitability, which was weaker going two years back. Going forward, I'm not in a position where I can comment on future price increases due to antitrust and competition rules. We are only commenting on what we are doing and have done at the moment.
We are still having price increases, which is about frequency development. We don't expect the frequency development we have seen in the past. We don't expect that to continue in the kind of way it has done during the last couple of years. We have seen, especially, for instance, on the motor side, we have seen in the last quarter underlying development on the frequency side is between 1% and 2%. We still expect to have some kind of frequency development also for motor going forward, but not at certain levels we have seen during the last two years.
Very helpful. Thank you.
Thank you. There are currently no further questions in the queue. With this, I would like to hand the call back over to Mitra for closing remarks. Over to you, ma'am.
Thank you. Thank you, everyone, for good questions. We will be participating in roadshow meetings and a seminar during the next few weeks, starting with Oslo today and London next week. Please see our financial calendar on the website for more details. Thank you for your attention and have a nice day.