Good morning, and welcome to the Gjensidige Q4 2025 results presentation call, hosted by Mitra Hagen Negård, Head of IR, and Geir Holmgren, CEO. Please note this conference is being recorded, and for the duration of the call, your lines will be on listen only. However, you'll have the opportunity to ask questions after the presentation. 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'll be connected to an operator. I will now hand you over to Mitra Hagen Negård to begin today's conference. Thank you.
Thank you, operator, and good morning, everyone. Welcome to this fourth quarter and full year 2025 presentation of Gjensidige. My name is Mitra Hagen Negård, and I am Head of Investor Relations. As always, we will start with our CEO, Geir Holmgren, who will give you the highlights of the quarter and the year, followed by our CFO, Jostein Amdal, who will run through the numbers in further detail. And we have plenty of time for a Q&A after that. Geir, please.
Thank you, Mitra, and good morning, everyone. We have concluded a strong year, driven by solid efforts across the organization. We moved forward with confidence, guided by a clear commitment to honoring our purpose of being there for our customers when it matters most. Over the course of the year, we processed nearly 1 million claims, including a high volume related to Storm Amy, maintaining a strong emphasis on speed and efficiency. We always continued to introduce innovative solutions that help prevent damage and simplify everyday life, further strengthening the value we provide. Our customers' continued loyalty confirms the relevance of what we do. In parallel, sustained efficiency initiatives have contributed to a return to strong profitability. So let's turn to page two for comments on our fourth quarter results before moving on to the full year result.
We generated a general insurance service result of NOK 1.297 billion. This result includes a total of NOK 502 million in expenses related to reduction of the book value of the core IT system and the downsizing of our workforce in Denmark. Adjusted for this, the insurance service result was up almost 8%, reflecting continued strong revenue growth, efficient operations, and continued good cost control. The combined ratio, when adjusting for the expenses I just mentioned, was 83.8%, and I'm very pleased with the 0.7 percentage points improvements in the underlying frequency loss ratio. Our investments generated returns of NOK 482 million, contributing to a profit before tax of NOK 1.754 billion, and a solid return on equity of 27.3%.
Jostein will revert with more detailed comments on the result for the quarter. Turning to page three and looking at the year as a whole, we delivered on all financial targets. Our combined ratio improved by 2.5 percentage points to 83.4%, thanks to a strong revenue growth of 11.5%, supported by successful implementation of pricing measures and continued operational improvements. Our cost ratio at 12.7% was well within our target. Adjusted for the NOK 502 million in expenses I just mentioned, our cost ratio was 11.5%. We have a solid capital position, with a solvency ratio of 188% at the end of the year, after subtracting total dividends of NOK 14.5 per share.
Investment return for the year were good, which, together with the result from our pension business, contributed to a return on equity of 27.3%. So let's turn to page to the next page for further comments on the proposed dividend. The board has proposed a total dividends of NOK 7.25 billion for the year, consisting of a regular dividend of NOK 5 billion and a special dividend of NOK 2.25 billion. The regular dividend is equivalent to 10 NOK per share, up more than 11% from 2024. The special dividend is equivalent to 4.5 NOK per share. For our Norwegian general insurance customers, this once again bodes for distribution of a solid customer dividend from the foundation, and Gjensidigestiftelsen.
The regular dividend corresponds to a payout ratio of 76% for the group. The proposal requires approval from the FSA, since the total amount, including the special dividend, exceeds 100% of net profit in Gjensidige Forsikring. Based on very strong capital position for the group, we expect the application to be approved. We have made a small technical revision of our dividend policy to clarify our target to pay, pay out growing regular dividends. No other amendments have been made, and the revision does not change our existing practice... Moving on to page five. The process of replacing our core IT system in Denmark started in 2018. The system is fully implemented for our private portfolio in Denmark, and we are currently carrying out thorough testing and quality assurance before starting full implementation for the commercial portfolio.
We are strongly convinced of the operational benefits of the new core IT system in Denmark. Due to technological advancements and the continual evolution of business requirements, it has become evident that the operational life, lifespan of the existing core systems in Norway, and potentially also in Sweden, can be extended by several years. We now have high optionality in evaluating future alternatives. We expect to make the decision regarding Sweden first, based on thorough assessment of business needs, available technology, and the requirements for a system that offers sufficient flexibility to adapt changing conditions. I will now turn to the next page. Private property insurance in Norway saw lower underlying profitability this quarter, mainly due to fires. Claims frequency was high, reflecting the impact from the storm Amy in October, with a claim recognized as a large loss, primarily in the corporate center.
Repair costs developed as expected, with 4% increase year-on-year. We continue to raise prices, though more moderately, with average premiums up just over 18, 14% last year. Over the next 12 to 18 months, we expect the repair cost inflation to remain in the 3%-5% range. Our current average price increase is 9%. For private motor insurance in Norway, underlying profitability improved year-on-year, supported by targeting prices, and claims frequency was flat, reflecting Storm Amy and an underlying increase estimated at 1%-2%, offset by the impact from a mild December. Repair costs rose 4.1%, and average premiums increased 16.5%. Inflationary pressures are easing, but are likely to stay in the 3%-6% range. Our current average price increase for private motors, it is 10%.
Finally, on this slide, following 2.5 years of targeted pricing measures following a large shift in both claims frequency and average claims costs, we will adjust the level of detail presented going forward, as the underlying trends are now well established. I will nevertheless like to emphasize that we will continue to price at least in line with the development in claims cost. So moving to page 7. The strong growth momentum in Norway continued this quarter, reflecting price increases across the private and commercial segment, as well as some volume growth in private. The general renewals for commercial are solid, reflecting strong competitiveness in the SME part of the commercial market. Our consistently high retention rates represent a strong vote of confidence from our customers. Underlying profitability for private in Norway improved year-on-year, while natural inherent volatility resulted in a lower underlying profitability for commercial Denmark.
Commercial Denmark showed improved profitability in both for private and commercial portfolio, reflecting positive underlying development alongside reserve adjustment and normal inherent volatility. It is also very encouraging to see high retention for the commercial portfolio. We continue to implement measures to enhance profitability in Denmark, most recently through a reduction in the workforce. While this may have a short-term impact on growth for the private portfolio, it is a deliberate and expected trade-off to strengthen profitability. Our Swedish operations continue to build on their positive trajectory, showing sustained progress underpinned by solid growth and strengthened profitability. We have recently concluded the renewal of the majority of our reinsurance programs. We are satisfied with the required capacity, that the required capacity has been renewed with unchanged retention levels. Reinsurance premiums represent approximately 2% of our premium income, and the renewals were completed at lower risk-adjusted premium levels.
Over to page eight. I'm pleased with the strong sustainability progress through 2025, and the recognitions highlighted here. I'm also particularly pleased to have received renewed confirmation of our triple-A rating from MSCI. Our focus on damage prevention continues to create customer value, business impact, and support our broader sustainability ambitions. Sustainability is at the core of our business, and we firmly believe that sustainable operations are essential to long-term value creation. So with that, I will leave the virtual stand to present the fourth quarter results in more detail.
Thank you, Geir, and good morning, everybody. I will start on page 10. We delivered a profit before tax of NOK 1,754 million in the fourth quarter. The insurance service result was NOK 1,798 million, when adjusting for the increase in operating expenses related to the reduction in book value of the core IT system, and the expenses related to the reduction in the workforce. The result also reflected high large losses, which included NOK 349 million in claims related to the storm Amy, net of reinsurance, and including reinstatement premium. Higher run-off gains contributed positively. Private delivered a higher result, driven by both Norway and Denmark. The improvement in Norway reflects continued strong revenue growth and a lower underlying loss ratio for motor, travel, and accident and health insurance. We also see the further decrease in the cost ratio.
The positive development in private Denmark was driven by a combination of revenue growth, reserve adjustments for property insurance, and an improved cost ratio. Commercial also delivered a higher insurance service result. In Norway, the insurance services result reflected revenue growth, partly offset by natural, inherent volatility in claims for property and accident and health insurance, while motor insurance showed improved profitability. In Denmark, higher results were driven by revenue growth and improved underlying frequency loss ratio for all the main products, and a lower cost ratio. In Sweden, the increase in insurance services result was due to improved underlying profitability and revenue growth. Property insurance in both portfolios, private motor, and payment protection insurance, showed better profitability. Higher run-off gains also contributed positively. The pension segment reported a pre-tax profit of NOK 187 million, mainly driven by a higher net finance income.
The net result from our investment portfolios amounted to NOK 370 million in the quarter, with positive returns for most asset classes. Other items was -NOK 100 million this quarter, with improvement mainly reflecting a positive year-end balance related to the transfer of profits to the Natural Perils Fund. In addition, mobility services had a higher result. Following the completion of ADB and CDG earlier this month, this is the last quarter in which the results of the Baltic business are reported. The decrease in result was due to a lower insurance service result and net financial income. Turning over to page 11. Our strong growth momentum continued in the fourth quarter, with insurance revenues for the group increasing by 10.4% in local currency.
The increase was mainly driven by pricing measures across the private and commercial portfolios in all geographies, in addition to higher volumes in private, commercial in Denmark and in 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, main product lines. But I'm also very pleased to see that volumes increased, not insignificantly, for motor, property, travel, and accident and health insurance. The growth in Denmark was also strong, thanks to 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 last year, growth for some products within accident insurance and for larger customers was muted due to a continued focus on profitability improvements. Growth in commercial Denmark was driven by price increases for all main products, and higher volumes for property, accident and health, and liability insurance. Growth in Sweden was primarily driven by higher volumes related to leisure boat and payment protection insurance in the private portfolio, and motor insurance in the commercial portfolio. Price increases for all main product lines also contributed to the growth in insurance revenue. Turning over to page 12. The loss ratio increased by 1.3 percentage points, reflecting an increase in large losses. Higher run-off gains contributed positively.
I'm very pleased with the development in the underlying frequency loss ratio, which improved by 0.7 percentage points, reflecting improvements in all segments and geographies, except commercial in Norway. Let's turn to page 13. Our commitment to operational efficiency remains strong. The group's cost ratio was 15.9% this quarter. Excluding the expense related to the core IT system and workforce reduction in Denmark, the cost ratio improved by 0.8 percentage points, reflecting revenue growth, targeted efficiency measures, and strict cost discipline. Both geographies in private and commercial in Denmark showed a lower cost ratio. 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 14 for comments on our pension operations.
We are very pleased with the performance of our pension business, which delivered a pre-tax profit of NOK 124 million, including the change in CSM this quarter. The increase over the fourth quarter in 2024 was mainly driven by a higher net finance income, and, in addition to a positive effect from discontinuation of reinsurance contracts during the quarter. Higher profitability for the disability pension product also contributed positively, whereas lower results for child pension negatively impacted the results. Net finance income was NOK 73 million, reflecting running yield, return from real estate, marginal spread tightening, and an increase in interest rate levels. The unit- linked business continues to grow, with the number of occupational members increasing by almost 18,000 members, and assets under management up more than NOK 17 billion year-on-year... this drove administration fees and management income higher.
However, higher expenses due to the growth in business weighed on the result, bringing it down compared with the same quarter in 2024. Moving on to the investment portfolio on page 15. Our investment portfolio generated positive returns from most asset classes, driven by running yields, lower credit spreads, and positive equity markets. The match portfolio, net of unwinding, and the impact of changes in financial assumptions returned around 50 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 around 70 basis points, driven by running yields, lower credit spreads, and positive equity markets. The risk in our free portfolio remained low. A few words on the latest development of our operational targets on slide 16.
Customer satisfaction in the fourth quarter of seventy-seven was in line with the same period last year, but remains slightly below our target. We continue to take steps to further improve our customer offering and satisfaction levels. Retention in Norway remained high and stable at 91%. Retention outside Norway was unchanged at 84%, but we're pleased to see that commercial Denmark increased retention from 85% to 86% this quarter. The improvement in the digital distribution index this quarter reflects a significant increase in digital sales and digital service, as well as a steady number of digital customers. Distribution efficiency is progressing well, primarily as a result of higher sales in private Norway. Digital claims reporting was stable during the quarter, with a slight increase in Sweden, and automated claims processing in Norway improved further. Turning to page 17.
We had a solvency ratio of 188% at the year-end, down from 191% last quarter. Note that the completion of the sale of operations in the Baltics will have a positive impact of approximately 5 percentage points on the solvency ratio. This impact will be recognized in the first quarter of 2026, as the transaction was completed after year-end. Solvency to operating earnings and returns from the free portfolio contributed positively to eligible own funds. Note that the reduction in book value of the core IT system does not impact the eligible funds. The seasonal impact from premium provisions, reflecting growth and higher profitability, contributed to the operating earnings. The proposed dividend for 2025 reduced eligible own funds by NOK 3.1 billion this quarter. In addition, more of the Tier 2 capital is eligible this quarter.
The impact from growth on the non-life capital requirement was offset by an approval of a minor change in the internal model. Capital requirement for life decreased due to annual update of the model assumptions and parameters. Capital requirement for market risk increased due to recalibration of certain parameters and higher exposure towards equities in our pension business. With that, I hand the word back to Geir.
Thank you, Jostein. To sum up on page 18, I'm encouraged by the progress we made in 2025, demonstrating our strong financial and operational resilience. We will continue our effort to retain our leading and unique position in the Norwegian market, while strengthening profitability and growth, both in and outside Norway. We will ensure that pricing remains ahead of claims cost, development, and maintain a disciplined focus on operational efficiency. I am confident that we remain on a positive trajectory toward delivering on our financial targets for 2026. So finally, on page 19, before we open up for questions, a reminder of our Capital Markets Day on 26th of February. Please refer to the invitation published on 15th on January for further details. And with that, we'll now open up the Q&A session of this presentation.
So, and as a reminder, if you would like to ask a question, please press star one on your telephone keypad. If you change your mind and want to withdraw your question, please press star two, and please ensure your lines are unmuted locally, as you'll be prompted when to ask your questions. So again, to raise your hand for question, please press star one on your keypad. The first question today comes from a line of Deepak Verma from Bank of America. Please go ahead.
Thanks for taking my questions. So firstly, I wanted to ask you about the Danish business in the quarter, on the private side. And you note there was a support from re-reserve releases during the quarter. Can you come back on that and explain what that is, please? And then secondly, on pricing conditions in private Norway, please. The helpful comments you show on the pricing impact in January are still really positive. You're now at record combined ratios. So can you give us some color on how long you think that can last and what the rationale is to still be pricing that much ahead of claims inflation in 2026?
And then lastly, coming back on the core IT system announcement. Can you explain your decision regarding this change, and whether we should expect you to make further investments on your Norwegian and Swedish systems in 2026? Thank you.
Thank you, David. I will start on the first one. As I said, and we wrote, during the year, reserves on claims already reported will be adjusted as they are going through the claims adjustment process. So that's a very natural part of the business. And in the fourth quarter, we've seen a positive effect on claims in especially property, private Denmark, which were reported earlier this year. And that's improved, of course, the results in the fourth quarter in private Denmark. We're not disclosing exact amounts there, but there's nothing particular or special about it. It's natural part of the process. We see that the underlying improvement in private Denmark is very high in this quarter.
But if you look at the year, the whole year figures, they are not affected by those kind of intra-year movements on the reserves, and they also show a very solid improvement in the underlying frequency loss ratio of 4.5 percentage points. So, there is some steadily increasing improvement, I would say, in the underlying profitability of the private business in Denmark.
Yeah. Regarding the private business in Norway, I'm very satisfied with the development, positive development we have had in the past. I see that we have succeeded with all our profitability measures, including change in terms and conditions, high retention levels, or deductibles, and also pricing measures. If you look... Now, in January, as mentioned, and as you can see in the presentation, we are still increasing prices both for motor and property, which is above the inflation levels we are seeing at the moment. I will see that we have to consider on an ongoing basis what to do during the next quarter, so I can't share any comments on future pricing.
But we will always have a position where we are doing the repricing, at least in line with all the inflation numbers we are seeing. If you look at retention level, still very high. We have very loyal customers in Norway. We have been through the storm Amy, and also by the end of the year, we had a storm in the northern part of Norway. We see that the customers are very happy with the way we are handling the claims, which is very positive and probably our main purpose of being relevant for customers, that we are helping customers when they actually need us.
So, and your last question regarding the core IT systems and what about investments in Sweden and Norway? We are doing an assessment what to do in Sweden. As Sweden is definitely a small portfolio, so we have to definitely be assured that make sure that we are doing investments in Sweden, which are at a level which could be easily handled by the Swedish business alone. The reduction on the book value we are doing this quarter gives us definitely higher optionality on what to do in Sweden and in Norway on a later basis.
And the positive thing here is that we see that technological development we have seen in the past and definitely see the next years gives us more an improved optionality to what to do, and which also will, I expect, have a good impact on expenses used in relation to Norwegian core IT system going forward.
Thanks very much. Just coming back on the first one, on Denmark. Is this a step change in profitability in the market, or is it more a function of conservativeness in the attritional, in how you book your attritional loss ratio early in the year that's that was actually unwarranted?
No, I think this is a real improvement in profits, but the magnitude of this is somewhat influenced by these reserve adjustments. But there is no doubt about that in our portfolio, there is a real improvement in the underlying profitability.
Thank you very much.
The next question comes from the line of Vrajesh Gosalia from Goldman Sachs. Please go ahead.
Hi, thank you for taking my questions. I have two questions. The first one on claims frequency. So here, when I talk about claims frequency, I would love to get your inputs on how do you expect that to develop ex natural catastrophe? And what I'm trying to understand is, obviously, you're growing pricing at 9%-10%, with claims inflation mid-single digits. But I guess to get a better view on combined ratios, it would be helpful to understand how you think frequency is going to develop. And the other part to this particular question is, obviously, Norway is a bit more ahead of the curve in terms of, you know, vehicle adoption or new vehicle adoption. Do you see a structural decline as a result of that in your claims frequency, especially in motor? So that's the first one.
The second one is on your cost ratio. So obviously, that has, it's pretty strong, adjusted for the NOK 502 million, and even in 3Q, it was pretty strong, in, in my opinion.
... So just trying to understand, is that like the new normal level? And can we expect that to improve further, or is that, or would you say that's like a fair level for our models and our forecast?
Yeah, I'll start it up. Thank you, Vash. I mean, then we need to distinguish between the different products if we talk about claim frequency, because they will be different then. With reference to net cats, I assume you're most focused on the property side here. So, for private property, we have talked about for a number of years that there is a long-term increase in the claims frequency due to climate change, that there will be more water-related damages affecting our private book of business, and we need, therefore, to increase prices a bit more than just the inflation figures look like. And so we have done.
We don't have any specific forecast for you on the claims frequency for neither property nor motor, except from what we've shown you in this page in the, in the presentation, where we do think there is, except for these climate, related things on property, a fairly flat development in the claim frequency for property. Whereas for private cars, vehicles, we do think there's an underlying, small increase in claims frequency ongoing, and at the same level as we talked about in the previous quarter, which is, you know, 1%-2%. But the important part is that we are monitoring this very tightly and are ready to adjust pricing, or terms if we see any unexpected developments.
Regarding cost, cost ratio, you know our financial target for 2026, and we are reporting cost ratios in the last quarters, excluding the expenses related to the IT core system, in the last quarter. You see that it's below 13%. We have an organization where we have a very high level of cost discipline. We have many measures to improve cost efficiency on an ongoing basis. We see that our distribution efficiency, both in Norway and gradually in Denmark, is improving, based on use of data and how we actually run our business, in the distribution area.
You see that the hit rates when having a dialogue with customers is at a very high level around 45%-50% of the calls coming in are converted to sales. So you also see on the more operational KPIs in the presentation that we are improving when it comes to automation and digitalization, which is helpful when it comes to cost and cost efficiency. So as organization, we are strong focused on cost discipline and referring to our financial targets is my best comment.
That's helpful. Thank you so much.
The next question comes from the line of Hans Rettedal from Danske Bank. Please go ahead.
Good morning, and thank you for taking my question. I was just wondering if you could clarify for me the write-down in the IT system, because it's not completely clear exactly what it stems from, given the fact that you're saying you're extending the lifetime of the Norwegian and Swedish systems, but at the same time, sort of looking into the Swedish system here going forwards. Am I correct in thinking that it's the value of implementing the Danish system into Norway and Sweden that's being written down? That's the first one, and then the second one is just again, back on pricing in private Norway.
I understand that you can't say anything about the absolute pricing levels for 2026, but just trying to get an understanding of what your expectation for, for inflation is, because the range 3%-5% to 3%-6% is quite, quite large. So, so are you sort of pricing at the top end of that, or mid-middle end, or, or lower end of that, also considering the frequency? That's my two questions.
Yeah. I'll start on the right then, Hans. It's, it's... I think you are, I think you're on to it. It's like we have developed a score system that started out as a group project, and then we see that, given the technology development since we started this, the life span of the existing core systems, especially in Norway, but potentially also in Sweden, might be enhanced for many more years. And that then, when part of the investments that were allocated to kind of the Norwegian future core IT system is now taken down to zero. So the remaining book value is related to the Danish core system.
With the remaining book value, which we now have disclosed at a bit more than NOK 600 billion, we do think we have a fairly, cost-efficient, core IT system covering, both claims and sales and so on in Denmark. And also note that this system is in use for private. It's working well, and we're now in the process of implementing it for commercial Denmark. It will take some time, but we're doing it in a very thorough way and testing, so to make sure that there is as little operational disturbances as possible when moving from one core IT system to another. Yeah, regarding pricing in Norway, yes, it's not easy to comment on future pricing.
... ambitions. But our core ambition is to price at least in line with the development of claims cost, which include that we have to be more on the conservative side when looking at the inflation interval. Which also... Before we know the exact numbers on the inflation, we have to be assured that we are at least pricing in line with what we see on the inflation basis and claims development. So, I have to admit that our starting point under this assessment is at the top end of the intervals, commented.
Thank you. That's helpful. I was just wondering, just a quick clarification on the IT system. Maybe just why it sort of works in Denmark, but then it doesn't work in, or you don't think it will work in Norway and Sweden?
I'm sorry, Hans, I was probably unclear. What I meant was that it is working in Denmark, but the existing system, which we have had for a number of years, is going to work for a longer time in Norway. We're not saying that we're not going to use the Danish system also in Norway and Sweden, but especially for Norway, this will be a number of years into the future before we are moving to any other, any new core IT system. And the one we're using in Denmark is one of the candidates for a future Norwegian system.
I would say that now we have-
Okay
... gained higher optionality when it comes to what to do in Norway and Sweden. And it's also a message here that actually, at the moment, we are very satisfied with how the system works in Norway. It gives us... If you look at all the technological development we have been seeing during the last couple of years and what we expect in the future, we don't have to use the core system in Denmark, also in Norway. We do have more alternatives, which is positive.
Okay. Thank you very much. That was all from my side.
The next question comes from the line of Youdish Sikari from Autonomous Research. Please, go ahead.
Good morning, everyone. Thank you for taking my question. If I may, please, I would like to stay on the topic of your core IT system. I was just wondering, I mean, look, is there not a benefit from operating a unified system across all your geographies? Because I know some of your peers do that. And when you talk about, you know, the lifespan of the Norwegian system expanding by several years, it just sounds like you're just delaying the possibility of having, you know, like a one platform across, you know, your geographies. So your thoughts on, you know, on the potential savings you could have further down the line by making the investment today would be interesting.
And then secondly, on pricing and the competitive environment, you're still pricing, you know, like at a decent margin above your expected claims inflation. I was wondering about, you know, whether there's been a change in the competition landscape, considering that, you know, some of your other peers have talked about, you know, doubling the market share from single digits. So any comments around that would be actually quite helpful. Thank you.
Yeah. Starting with a core IT system, I would say if you look at Norwegian platform, and I would say that everything we do in Norway, all the processes, including claims, distribution, everything, is not only dependent on the core IT system. We are using technology in all our processes across our business. And my core idea a couple of years ago was to enhance the operational benefits of having operations in both Norway and Denmark. So we are seeing synergies on the way we are doing on the distribution side, how we use data. We are facing synergies on how we run the business, both in private and commercial segments in Norway and Denmark.
It's not only dependent on having one single IT platform across the markets. It's more how we use data, how we have a common management team across Norway, Denmark, and how we run the processes, the core processes, related to our business. So, I would say that we have done many measures. We are facing progress when it comes to have more on the operational benefits and synergies across Norway, Denmark. So it's not dependent alone on a common core IT platform. Yes.
All right, understood. Yeah, thank you.
Yeah, on the competitive landscape-
Yeah
... it's, I'm not sure I know which players you're referring that are doubling their their market share or have the ambition of doubling the market share. Our our experience is that, is that competition is still very rational and disciplined. We still see all the major players, having fairly, similar or rather similar, profitability targets, especially if I adjust for the, for the cost advantage that Gjensidige has compared to the peers. And, and we don't see really any shifts in the competitive landscape, so far at least. And that goes for both Norway and Denmark and Sweden.
... All right. Thank you. Thank you very much.
As a reminder, if you would like to join the queue for question, please press star one on your telephone keypad. The next question comes from a line of Thomas Svendsen from SEB. Please go ahead.
Yes. Hi, good morning. So, question on Sweden. It seems to be a very strong, also underlying, results for a Q4 to be a Q4. So how will you describe the business in Sweden? Or is it, is this sort of a, a, highlight or sort of a, an underlying picture in Sweden? So this is a new better level in Sweden, and also how is price increases accepted in Sweden by the clients?
Hmm. Thanks, Thomas. Well, I'm very satisfied with development we have seen in Sweden, and during the last year. Very good profitability. We have a stable market position. Even though it's a minor or a smaller position. But if you see all the development we have done in the Swedish business during the last couple of years, we are doing progress when it comes to automation. We are doing progress when it comes to use of digital solutions. We are doing progress when it comes to risk selection and our competence and capabilities on underwriting. So I think the underlying development in the Swedish business is very very healthy. And it's...
It's a very good run and business with good progress. If you look at market conditions, it has been stable. We see that we are succeeding with the risk selection we are doing. And you can also, in the presentation, see the growth numbers we are having in Sweden. But having this stable position is a good asset and a strategically right for in CD.
Okay, thank you. And then maybe the final question on the IT system. So you wrote it down earlier in the year as well. So, what has changed, or what did you discover during Q4? I guess it was not smoothing of earnings, but that something has happened during Q4.
Yeah, in the third quarter, we had a termination on the core IT system in the pension business, which is a different system. So now we are running this business with the existing system and also recognize that we had a longer lifespan on the existing system. What we are doing now in this quarter is to give us higher optionality to what to do in Sweden and Norway. Because when we started this core system project many years ago, it was stated as a group project, and now we are giving ourself a higher optionality to look at this as a Danish project.
Then we have a good time and can use the time to decide what to do in Sweden and Norway, with no kind of tense situation where we had to conclude in due course.
I guess if you just look at Q3 and Q4 combined, I guess there are some learning points and how we do think for future investment in AI and new technology. Would you be very-
Yeah.
strict on that?
Yeah. Definitely. I would say that we have picked up learning points, not only in the last two quarters, but during the couple of last years. I would say that now we are running an IT project, and we have done this assessment and used competent resources to do the assessments. And now we are running an IT project with high level of management attention and with high level of strong control and steering, of course. And all the learning points we have picked up regarding all kind of investments and processes we are running. So, it's not only on the IT core system.
We all always have to improve the way we are doing our business and running our business, including core IT systems investments.
Okay, thank you.
Our next question comes from the line of Qian Lu from UBS. Please go ahead.
Morning, everyone. Thank you for taking my questions. This is Qian Lu from UBS. Firstly, just a quick clarification on the IT system. So you mentioned that this write-down is kind of giving you optionality as to what to do in Norway and Sweden. So does that mean it's still possible for us to see, like, utilization of this core system in Norway and Sweden in the future? And then secondly, just some long-term questions on autonomous vehicles, which are under heavy debate lately. I'm keen to understand what you are seeing in the Norwegian market. So to what extent is the speed of change of the car fleet in Norway different to other Nordic countries and continental Europe? When do you expect to see advanced AVs, that's L2 plus, to become a majority of the car fleet?
Are you insuring any AVs in your book at the moment?
... Yes, on the IT system, we are definitely not saying that we're not going to use the Danish system. We are saying that by expanding the horizon for when we start a change of the core IT system in Norway in some years, that was the reasoning behind the write-down of the IT system. But the current Danish system is definitely one candidate for also for Norway and Sweden in the future. When it comes to autonomous driving, this is definitely a long-term trend. It's something we have followed for many, many years. As you know, we have a separate mobility strategy, which is integrated with our business, and especially our motor insurance business.
Having feet on ground with a RSA company is important and an important part of our mobility strategy. When it comes to risk development, you will probably see that over time due to autonomous driving, you will see that risk and claims frequency could be reduced. But on the other side, we also see that the OEMs, the car producers, will need to increase their kind of liability and due to responsibility regarding the autonomous cars. And we don't expect this to have a short-term impact. The average age of the car in the Norwegian car fleet is about 10 years.
We see that even though 98, 97, 98% of the cars, new cars sold today are EVs, the total share in the, in the total car portfolio is approximately 27% of the total car fleet. So it takes a lot, long time before actually this will have a larger impact. And then you'll probably see that Nordic driving conditions are very different from what you see other places. And you need a lot of data to make the autonomous cars being able to, to, to have this autonomous driving on the, on Norwegian and Nordic roads as well.
So, our response to that is that we are following this development very, very closely, and we are having our mobility strategy to be relevant for the OEMs and the car retailers forward. And there are also opportunities regarding risk and risk exposures related to the autonomous cars, which are very interesting also on a long-term basis.
Thanks very much.
This is a final reminder. If you'd like to ask a question, please press star one now. The next question comes from Michele Ballatore from KBW. Please go ahead.
Yes, thank you for taking my question. So I have two questions. So, the first question is about the message, the change in message in the dividend. So how should we read that? Why did you, you know, have you decided to change it? So that's the first question. The second question is on the special dividend. I mean, it's quite a sizable special. I mean, it's... Can you help us understand, you know, in terms of the expectation on this particular metric? I mean, how should we think about this, you know, its development in the future?
And then the third question, I'm really sorry to come back to the IT system thing, but I think, I mean, I will phrase the question slightly different from the others. If we look at the impact that this, you know, the in terms of benefits, depreciation, or whatever, the impact that this IT system had in the previous quarters or in the previous years, if they... I mean, are they going to change? I mean, it's if you were this impact more optimistic, less optimistic? I'm trying to understand what will change, you know, in terms of, you know, the future versus the past. Thank you.
Yeah. Thank you. Starting with the minor changes regarding the dividend policy statement, it's if you look at what's been happening during the last or over many years, the actual dividend, regular dividend has been increasing year by year. So it's, and so changing then the statement high and stable nominal dividend seems to be relevant to actually face what's actually happening. So it's a revision, which reflects the actual situation we have seen in the past, and it doesn't change any practice going forward, I would say.
When you go to the size of the special dividend for 2025, if you look at our dividend policy and everything we had, and what we actually is our main kind of thinking in the management and in the board, is that we don't aim to have much surplus capital in the group. We have this solvency interval, 140-190, which is something we have to have in mind when stating the proposed dividend.
So, with this in our mind, we are and doing this forecast on the capital situation in the group as well, it seems to be very right to propose a dividend, and in this situation, a surplus dividend of NOK 4.5, which reflects the capital situation in the group, and also what we have said, not having too much surplus capital in the group as well.
On the question on the IT system, the way we book this is that it's capitalized as we develop it, and then when we start taking the system in use, it's into annual depreciations affecting the P&L. When we started using the system for the private segment in Denmark, we started depreciating on the kind of the investments allocated to the private segment in Denmark, and that's been included in the accounts for the previous quarters. The write-down now doesn't change this because what's remaining on the book value is related to Denmark, and we start depreciating the cost allocated to the commercial part of this system when we start taking it into use in Denmark.
Over time, of course, we do have costs related to the existing system, and then those costs will be faded out as we move the portfolio from one system to the other.
Mm-hmm.
Thank you. There are no further questions, so handing back over to you, host, to conclude.
Thank you. Thank you everyone for good questions. We will be participating in roadshow meetings in Oslo today and in other cities abroad after our Capital Markets Day, which, as mentioned, will be held on the 26th of February. Please see our financial calendar on our website for more details. Thank you for your attention, and have a nice day.