Earnings Call: Q2 2021

Jul 14, 2021

Thank you. Good morning, everyone, and welcome to the Second Quarter Presentation of Gensidia. My name is Mitra Niegoi, and I am Head of Investor Relations. As always, we will start with our CEO, Helge Laiu Borstan, who will give you the highlights of the quarter followed by our CFO, Jyrstain Amdahl, who will go through the numbers in further detail. Helge, please? Thank you, Mitra. Good morning, and welcome, everyone. I hope you are healthy and well. We are very happy to See that the recovery from the pandemic is moving ahead many places in the world. Rising delta cases are a concern. However, it appears that the general direction is positive and the economic outlook, at least in our part of the world, is very promising. I'm very proud of our organization's handling of the extraordinary situation we have all endured. And I'm very pleased to see that Jensidige's strong momentum has continued into the Q2. Let's turn to Page 2 for some comments on our very strong second quarter results. We generated a solid profit before tax of NOK 2,330,000,000, of which NOK 1,000,000,000,000 527,000,000 in underwriting result. This is the best ever second quarter underwriting result in our history. Earned premiums rose by a healthy 6.1%, reflecting strong sales, solid renewals on effective and differentiated pricing measures. And we further strengthened our strong market position. We continued improving our underlying profitability through both strong growth and very efficient operations. Our cost discipline remains strong, as you can see from the ratio of 14.2% for the quarter. And we generated a A financial result of NOK 802,000,000 altogether contributing to a very strong return on equity of 27.7 Jost Dan will revert with more detailed comments on the results for the quarter. Turning to Page 3 and our unique customer dividend model. For the 12th year in a row, Jensidige Stifelzen Has distributed its share of regular dividend from Jensidja to our general insurance customers in Norway. This year, more than 800,000 customers will receive a total of NOK 2,300,000,000 corresponding to 13% of the premiums paid in 2020. The customer dividend model is highly valued by our customers and supports our strong brand and delivery of superior customer experiences. As you can see on this slide, the model is well known. Then turning to Page 4, a few words about our operations. Let me start with Norway. Operations continue to run very well despite remote working for almost all Jensidja employees through the quarter. We plan to gradually return to our offices after the summer. We have gained valuable experience over the past year And explore the possibilities which lie in remote work, and we will take this with us in our planning going forward. Sales have been strong this quarter too, particularly in the private segment. Business volumes are up And we have managed to continue to put through necessary price increases, while maintaining high customer retention. The commercial segment has also continued good development through the Q2 with strong renewals, Adding new business and putting through necessary price increases. Retention is at a good level of 91%. The Norwegian Association of Insurance Brokers ranked us number 1 among the P and C Companies in Norway for the 2nd year in a row, Emphasizing our profession ability, expertise, claims settlement, timeliness and predictability. This is a great recognition of our highly qualified staff and the efforts they put forth for our customers every day. And although we don't primarily focus on market shares, we are happy to see that our shares of the commercial P and C space in Norway climbed further to 30.1 percent in the first quarter. Going forward, We will continue to raise prices in Norway to reflect claims inflation. And for private property and certain pockets in the large corporate portfolio In the commercial segment, we will raise prices beyond claims inflation to improve profitability. I will revert to the topic of inflation On the next slide. With no signs of market contraction so far, promising economic outlook and a continued firm market, We expect premiums in Norway to continue the strong development. We recognize the importance of taking holistic approach to our customer And as discussed before, we have strong ambitions for our position in the Nordic mobility space. Executing on this, we have recently entered into agreement to acquire 2 toll service providers in Norway. The purpose to expand our offering with complementary services, simplifying We are awaiting regulatory clearance and hope to be able to close the transactions later this year. Over to a few comments on our operations outside Norway. We have had good progress in our Danish operations. We will be adding new business later this year through the acquisition of NEM Forschickling. NEM's customer portfolio, partners and insurance products make a Good strategic fit for us. And we are particularly excited about the opportunity to tap further into bank assurance Through NEM's 2 saving banks partners, we have also entered into a partnership agreement with Toyota, this time in Denmark, providing a strong platform for growth in the car dealership channel. We have moved forward On the launch of our new core IT system, gradually opening up for sale of private products, we will be moving our Existing contracts later this year before moving forward with commercial insurance lines in Denmark. We are convinced about Profitability in Sweden and the Baltics is not satisfactory. As mentioned earlier, we are fully focused I'm transforming our Swedish business to become a more digital insurance provider. Our ambition is to deliver excellent customer experiences through digital services and A high degree of automated internal processes. We look forward to speaking more about our measures later this year. We have a clear ambition to improve results in the Baltics with a particular focus on distribution, pricing and claims handling processes. Then over to Page 5 and a few comments On inflation, which has caught high attention lately. Supply shortage and high demand Have led to a surge in prices for many products, among others, construction materials. The extent, Reach and duration of the inflationary pressure the world is experiencing now is uncertain and widely debated. In our business, agility is key to maintaining good profitability. We need to make sure our pricing stays ahead of inflation. There are several factors mitigating the impact that the mounting inflationary pressure within certain materials has on our business. More than 90% of our motor and property claims settlements are managed through suppliers with which we Have multiple year agreements. We have, of course, the best terms in the market, reflecting our superior position in Norway and mitigating the impact of rising inflation. The terms in our contracts for property repairs are such that labor rates are fixed for 1 year at a time, According to a predefined index, the majority of our property claims are frequency claims With approximately 75% to 80% of claims cost related to labor and the remaining 20% to 25% related to materials. We have a similar situation in Denmark in terms of contracts and frequency claims cost. Over the past years, we have developed advanced dynamic tariff models and robust processes to manage and stay ahead of claims inflation. Together with our deep expertise, wide channel network and significant data pool, we are able to analyze and process tariff adjustments in matter of days and implement pricing measures upon renewal throughout the year. So far, the magnitude of price increases for our property repairs have been very modest compared to Search in raw materials prices. And for Motor, there has in fact been a slightly favorable development due to depreciation of the Norwegian kroner. At this point, we expect a modest and highly manageable increase in our claims inflation for property We're around 5% going forward. As communicated earlier, we have been raising prices for private property insurance in Norway, Well above index during the past couple of years. We expect to be able to continue with that to continue to improve profitability for this product line. For Motor, we still expect claims inflation somewhere around 4% to 5%. Thanks to our solid position and strong competitiveness, We are comfortable that we will be able to put through the necessary price increases for this product in line with expected claims inflation. We cannot rule out the risk of a generally high inflationary pressure impacting more than just materials, Most importantly, labor and costs and claims for personal injuries. This would impact the whole industry. Thanks to our strong market position And Asia Capabilities, we expect to continue staying ahead of and pricing at least in line with expected claims inflation. Then over to Page 6 and a few comments on our latest initiatives and results to Damage prevention is one of the most important initiatives we can put through to contribute to safer society And reduce carbon intensity. We have launched several new damage preventing initiatives this quarter. Customer alert services Have been expanded to include flood alerts based on customer data and information from the Norwegian Water Resources and Energy Directorate. An alert will enable customers to make necessary preparations to avoid or limit damage from floods that affect our regions from time to time. We have also launched a pilot for sensor technology installed in private homes. This enabled early detection For example, water leakage, which are handled by Jensidia without the customers having to take any action. Our online mental health program together with our partner Brave has been very well received with our Commercial customers since the launch in February and so far, 560 customers have started treatment for areas such as depression, work related stress and general mental well-being. We have also signed the guide against greenwashing, committing to open and transparent information about our work on sustainability. And we have signed the Women in Finance Charter committing to proactively promoting gender balance in the group. We have also received a few recognitions this quarter. We moved 2 places up to a number 4 ranking among all Norwegian companies in the sustainability survey, Bergkrafts Parameter, conducted by the Norwegian Business School. And we have been ranked as the most attractive employer in the insurance industry and the climber of the year according to the Univarztum survey in Norway. And we continue preparation to report according to the EU taxonomy from next year. And with that, I will leave the word to Justein to present the Q1 results in more detail. Thank you, Elke, and good morning, everybody. I will start on Page 8. We delivered a profit before tax of DKK 2,330,000,000 in the second quarter compared with SEK 2,477,000,000 in the same quarter of last year. The results from underwriting and the pension business improved significantly year on year. Our financial result, although very good, was lower than the extraordinary results we saw last year as the markets rebounded in the Q2 of 2020. Our underwriting result increased due to a combination of premium growth and improved underlying profitability. The The COVID-nineteen pandemic had a positive impact on claims this quarter, too, estimated at approximately €119,000,000 or 1.7 percentage points on the loss ratio. Our Our Norwegian operations were the main contributors to the improved results, although Denmark and Sweden also contributed to the increase. The Baltic segment reported lower results. Turning to Page 9. Earned premiums were up 6.1% or 8.6% adjusted for currency effects. All segments recorded higher premiums in local currencies. We saw a strong increase in premiums for the private segment driven by price increases for motor, property and accident and health As well as higher volumes for motor insurance. We also increased the number of customers. As Helgi mentioned, we have a strong market position and we demonstrated high competitiveness. Demand for travel insurance is picking up, however. However, we are slightly below the pre pandemic level. The rise in premiums in the commercial segment followed effective pricing solid renewals and portfolio growth, including 1 new large contract included from the Q1. All the main product lines in this segment recorded higher premiums. The July renewals are also strong, boding well for the rest of the year. In Denmark, premiums increased for both the commercial and private segments. The premium growth in the private segment was primarily due to growth in change of ownership insurance, driven by a continued strong housing market. The premium growth in the commercial segment was a result of volume increases in motor and price increases in worker compensation product lines. Travel insurance volumes were up year on year, but were still below pre pandemic levels. The increase in earned premiums for our Swedish operation We're mainly driven by volume growth in the commercial portfolio. This was slightly offset by a volume decrease in the private portfolio. In the Baltics, we saw premiums gradually growing again, mainly driven by the health and property insurance lines. Travel volumes increased compared to the same period of last year, although still below pre pandemic levels. The improvement is fragile. However, the potential for deeper market penetration economic growth in the region represents an attractive growth opportunity. Turning over to Page 10. The loss ratio for the Q2 improved by 1.1 percentage points to 64.5%. Large losses were flat with a nominal level slightly above our expectations for our quarterly average. And runoff gains were a little higher than the Q2 of last year and somewhat higher than our planned release. The underlying frequency loss ratio improved by 1 percentage point compared with the same quarter of last year. Adjusted for the effects of the COVID-nineteen claims, which were lower this year, Particularly for Denmark, the underlying frequency loss ratio improved by 2.4 percentage points. In terms of segments, I'm particularly pleased with the development in Private, commercial and Denmark this quarter, showing further improvement in profitability. Sweden and the antibiotics do not deliver satisfactory results yet. We see a clear upside potential here and we will continue to implement measures to increase growth and improve operations going forward. We will look forward to speaking more about this at our Capital Markets Day later this year. So talking about costs, let's turn to Page 11. We recorded $1,020,000,000 in Operating expenses this quarter, corresponding to a cost ratio of 14.2% and 13.6% excluding the Baltics. We We have steadily brought down the cost ratio over time, thanks to a combination of growth in premiums, cost efficiency measures and strong cost discipline across the group. Denmark recorded a 1.1 percentage points increase in the cost ratio, mainly driven by commissions on high volumes of change of ownership insurance. As Helgi mentioned, we have moved ahead with a new core IT system now open for sales for private customers. We expect this to contribute to our cost efficiency in Denmark the system is fully up and running for all products and customers. The cost rate on our Swedish business improved by 3 point 5 percentage points, partly as a result of cost saving initiatives. The cost ratio of the Baltics was flat. As mentioned, We will continue to put true measures to enhance cost effectiveness. A few comments on our pension operation on Slide 12. The pretax profit came to €55,000,000 up year on year, reflecting growth in the business. Assets under management continued to grow, Reaching almost SEK 47,000,000,000 in the 2nd quarter. Annualized return on equity was 14.1%. The solvency margin at the end of the The quarter was 150%. So far, the introduction of individual pension account has not led to any significant change in the market dynamics. However, it is prudent to expect some pressure on our profitability in the short to medium term. We and other players in Norway are in the process of transferring policies and expect it to be completed towards the end of this year. The pension business is an important complement to our General Insurance business in Norway, Particularly within the SME part of operation and generates cross selling opportunities. 68% of the customers in our pension business We are general insurance customers as well in the Q2. Moving on to the investment portfolio on Page 13. Our investment portfolio generated a return of 1.3% in the 2nd quarter, with the Match and 3 portfolios returning 0.5% and 2.7%, respectively. An improved outlook for economic growth, higher inflation and low and stable interest rates and credit margins drove the performance of our cyclical assets Such as equities, commodities, real estate and fixed income instruments with credit exposure. Our private equity holdings had particularly strong returns this quarter as a result of both higher market valuations and successful transactions in some of the PE funds. Returns on property investments were also very good, reflecting the With a solvency rate of 2 12 percent at the end of the quarter. This is down 3 percentage points from the end of the first quarter. The Tier 2 loan in Jensidige, Panshard Schonforsviken of SEK 300,000,000 was redeemed during the Q2. Adjusted for the upcoming redemption of Jensidige's Tier 1 loan of SEK1 1,000,000,000 in September, the solvency margin would have been 203% at the end of the second quarter. A minor model change has been approved by the Norwegian FSA, which gives a small reduction in the capital requirement for inventory risk, underwriting risk and a reduction in the risk margin. Eligible loan funds increased as a result of Sandoz II earnings and the result in the free portfolio. And as usual, we have deducted a formulaic dividend of 80% of the result. The capital requirement increased as a result of growth in both non life insurance and life insurance as well as adjustments reflecting the introduction of the Own Pension Account regime for our pension business. Higher risk from an increased equity exposure was offset by lower market risk than estimated related to the 2 new loans issued in April. It is worth noting that the closing of the NEM and toll company transactions will in sum, based on the numbers as of June 30, Bring down the solvency ratio with approximately 6 percentage points, all other things being equal. And finally, a few words on the latest development of operational targets on Slide 15. I'm very pleased with the progress on operational targets this quarter. We delivered on these operational targets, We continue to improve our competitive position and lay the ground for future profitability. Customer satisfaction continues to be at a very high level. Retention in Norway is slightly down from the last quarter, but still at a very high level. And retention outside Norway has improved slightly for all three segments. We have further exceeded our target on sales effectiveness based on running 12 months at 22% compared to our baseline year 2017, mainly driven by higher sales in Norway. There will still be some volatility in these figures going forward. The share of automated tariffs is up compared to the level last quarter and we currently stand at around 55%. Progress is good and we'll continue to include more products going forward in addition to further refining tariffs already included. On the claims handling side, digital claims reporting has gone slightly up this quarter and has reached a target of 80%. And the share of claims handled fully automatically has improved as well. For a claims process to be defined as fully automated, no human interaction is required. Several sub processes are automated, And we anticipate an accelerated development going forward. We'll continue to develop these digital services further through 2021 and onwards. We have reduced claims cost further and exceeded the target even more this quarter, with procurement and insurance fraud making the largest contributions to the increase. I'll then hand the word back to Erik. Thank you, Austin. To sum up on Page 16, we are very pleased with the strong results we continue to deliver. This is, to a large degree, a result of our solid brand, efficient operations and dedicated employees We put strong efforts in serving our customers every day. We will continue to focus on growth in our markets. Together with strong and efficient operations, this is a prerequisite to continue delivering solid results and attractive returns. Our solvency position is very robust. The economic prospects in our Nordics market Are encouraging and the pricing environments, particularly in Norway and Denmark, continue to be very good. This together with our strong product offering and efficient operations lay the ground for continued strong research going forward. We are committed to having strong capital discipline. Together with our encouraging results outlook, This provides us with a solid base to deliver a continued steady and nice regulatory dividend curve. Special dividends Have been and will still be utilized from time to time to ensure an efficient capital structure. Finally, on Page 17, before we open up for questions, I would like to remind you Of our Capital Markets Day on the 24th November. We are really looking forward to this opportunity to speak about our ambitions and plans. We will revert with more details on the agenda as we move closer to the date. And with that, I will now open for Q and A session. Thank you. We'll take the first question from Blair Stewart from Bank of America. Thanks very much and good morning. I've got two questions. On the inflation point, thanks very much for all the details. Are you is it possible to say How much your agreements on labor rates are protecting you from the actual cost of labor at this time? And how might that roll Through in the years that follow. So I guess the question is, is there a risk that inflation does pick up as those agreements expire, I think on an annual basis and to what extent can you react to that. So any color around that inflation Question would be really useful. And then my second question on capital. I think on a mark to market basis, Capital position is maybe just below €200,000,000 if you adjust for the redemption and the planned deals. You do, however, have quite a lot of debt capacity and you made a comment there about special dividends being used to ensure An efficient capital structure. So can you maybe comment around where you feel the capital structure is at the moment? Is it efficient? Will you make use of those debt headrooms that you've got in future? Thanks very much. Thank you, Blair. In terms of the risk of kind of wage inflation or cost of labor inflation, That is what we received through these agreements of fixed It's an postponement, of course, of the increase in labor costs. Over time, we will be exposed to these cost increases. But we also have time to react on the pricing side. As you have commented, These spikes in certain material types are dramatic for each and every material type. But in the overall picture, The general inflation, including wage inflation, is more important to keep track of. This will then be an issue for the whole industry. And the point is to be agile enough to react early when you see this if there's a potential for these increases. And as I have mentioned, we do increase premiums now, especially for property, by more than the expected claims inflation going forward. So it is a short term protection with a 1 year kind of agreement and then but it also Reflects fine with the 1 year policy period. Is that okay on the inflation side there? Yes. Is it possible to comment on how much protection You're actually getting where is wage inflation relative to what your agreements are protecting you? In general, wage inflation is not a big issue in the Norwegian economy at the moment. Although unemployment is luckily on its way down and the economy is doing quite well, the wage growth seems Contained, I would say. So I don't see a large risk there. And it will be much if there is an increase in cash, it will be much more gradual than what we've seen in these partly supply chain induced spikes in timber and so Capital. Yes. That's correct. Thank you. On the capital side, I think your assumption is correct. We said that we have a solvency margin of 203,000,000 if you adjust for the upcoming redemption in September of the Tier 1 loan. And then the sum of the 2 toll road operators and NEM for seeking is approximately 6%, so $197,000,000 if you had done everything by June 30. And then, of course, we also need to take into account here that we Still continue to take out 80% of the profit after tax as a formulaic dividend assumption, which then It's quite a high number in this quarter. So the Zonzi is, I've been saying, very strong even though. On the debt utilization part, I think the communication is as it has been always. It's we have Some remaining capacity still in the Tier 1 space mainly. And we'll Consider that on an ongoing basis whether we should take on more or not. I think we'll never utilize the full capacity potential there because We'll then be vulnerable to fluctuations in the Tier 1 unrestricted capital. Yes. Okay. Am I right to saying, Justine, that the EUR 1,000,000,000 Of Tier 1 that is used to be redeemed in September. You've already refinanced that, right? Yes. That was part of the communication we had in Around the Q1, late March, early April, when we issued a new Tier 1 loan. Okay, great. Thanks very much. The next question comes from Ulrik Zuscher from Nordea. Thank you for taking my questions. I have 2. One is, do you have any comments on I know it's not a long time since it's expired, but it turned on the back of the loss of the NIIIT debt agreement in Denmark. Second question. Have you seen any increase in materials cost for building repairs in Q2? 2. And also if you could comment on the claims frequency on property in the same quarter maybe compared to recent quarters. Yes. I can take the first question and then just then follow. Our distribution agreement with Nukludet was terminated 1st May. And we have strong momentum in our Danish operation, but of course, we see some Leakage show customers to prevent sickling, but it's no dramatic trend actually. So, and we have lots of measures to secure our portfolio, both on the product side And towards the customers. But some churn is expected and we have some churn, but it's no dramatic development. In terms of the increases in building cost, I think this has And it's what the headline inflation or the news is around timber and steel and raw materials directly And in the reconstruction or fixing of houses, I mean, this is process materials, it's place where it's and always forget the English word for pocket, but Wooden flooring. Wooden flooring, sorry. But so and in these materials, we haven't the answer is no. We have not seen any particularly strong price increase in these inputs to when we fix houses and so far. The claims frequency has been benign for property in, I would say, over a couple of quarters now. So which means We talked about in the earlier calls the needs to improve profitability within the private property also in Norway. But I think this is well underway, I would say now. We see clear improvements in that business plan or that product. So basically, not to put words in your mouth, but Basically, if this low frequency and low inflation on wood flooring, etcetera, continues into the second half, this will Likely be very fine for you on your claims ratio. But let's say we get a big storm or something like that, so the frequency goes up a lot, will that also Increase the risk of you noticing the claims inflation more, like the materials cost increase? It's a general settlement that when there are larger events, there are short term shortages in both labor and materials. That is something we calculate in our models and we're assuming our models for stoma exposure. But Overall, we don't see any particular needs for the current good trends, I mean, except for storms and other From the kind of volatility events, that should change the direction we're in heading in now. Thanks a lot. The next question comes from Jan Erik Jernlund from ABG. Here. Good morning. Thank you for taking my questions. I would just go back to the competition issue here and to see you have a strong Premium growth. How much is sort of price or how much is volume? And how do you see the competitors Reacting to this theme of building construction inflation. What do you how do you see the competitive picture these days In Norway, private, Norway Commercial, Denmark as well as Sweden. Jan Erik. The competition is, as you know, the competitors and it's a competitive market. And you know the players. We have especially focused on 2 strong players, If and Fremtind, but of course, you know the others as well. Our price and volume balance, it's actually fifty-fifty for motor insurance, and that's we are really pleased with that balance. So it's extremely strong position on the motor. We have the majority of the growth on the property side. I'm now in Norway, Property and Content. The majority of the growth is price driven, but it's positive volume development also for Property and Content. And as you know, for several quarters, we have priced above the expected claims inflation. On the commercial side, The competition is Iftrig. And we see that they take They are pricing to secure strengthened profitability and in line with expected claims inflation. So We the majority of the renewals are 1st January, but we also have a significant renewal per 1st July, And that was once again extremely strong. So that means that we increased the number of customers and we managed to also Price in line with what we have said about to meet claims inflation and above claims inflation for property And some large customers. In inflation, we commented maybe that, Joss Stein, For the next 12 to 18 months, property and commercial property, it's around 5% and 4% to 5% for motor insurance. If you move to Denmark, it's higher underlying inflation and it's a volatile price situation for building material in Denmark. And We expect claims inflation to be around 5% also in Denmark for the next 12 to 18 months. And our pricing in Denmark is slightly below Claims inflation, but we have a task force established for private property and to improve long term profitability By optimizing claims practice terms and pricing. And as you know, we will also have gains from the new legacy system in Denmark. That's that will The positive contributing measure. Yes. That was pardon? Sweden, maybe you stay. Once again, Jan Erik. Now in the competitive picture in Sweden, how are you doing on you saw you sort of have was lower on sales than retail Yes. We're up on commercial. So how do you view your competitive edge in Sweden now? Maybe, Josten can what I can say initially is that the written premium is very strong actually, the written premium for all segments, Also including Sweden. But Jost Dan, you can maybe say some about the competition in Sweden. Yes. I mean, as you Very well know we have less than 2% market share and our position in the market is very different from especially in Norway but also from Denmark. So We do see a higher growth than we have had in Sweden. I mean, we've done a lot of portfolio pruning actions over the last couple of years, and We see the results of that. But in terms of earned premiums in local currency, that increased by 6.4% for the quarter. And as Helgi mentioned, if you look at written premiums, which is a kind of early indicator of earned premiums in the coming 12 months, that has increased even more. This is mainly driven by volume growth in the commercial portfolio, which is where we succeed most at the moment, but and a slight reduction in The private portfolio. In terms of competitive position, we are we are less than 2% market share. We are much more a price taker in Sweden and the other markets. I think that's enough to be said on the competitive position. Back to your question, Jan Erik. The overall Comment is that we are in a very hard or firm market. It's really extraordinary. And Bear in mind my comments regarding motor insurance in Norway. Extremely strong profitability. We gained new customers, fifty-fifty balance between price initiatives or price Increase and volume. So that's unique. It's fantastic. Why do you think you Trying to sort of discount your pricing even more because it's so profitable for you. Ask them. Finally, on the commercial side, Ferentin has said that they would like To grow in the SME side, which is sort of where you are a competitor, what which areas are you What's the freight for? Is it BNB's distribution power in the SME side? Or what is your most cautious worries? No, as I said, we have lots of competitors in Norway, but we follow closely 2 of them, and that's IFF and Fremtind. And of course, it's SME and the distribution power of both Saving Bank 1 and DNB. But it's not like SME or commercial is not like travel insurance, a simple property incumbent Insurance and a couple of cars. So we think and I commented over 1st July renews, We actually increased number of SME customers. And that's strong when you know that the strongest part of our commercial book is SME. So we are in a very strong position there as well, but we follow Fremtind closely. They are clever and of course, Yves. Thank you so very much for your answers. The next question comes from Peter Dovrood from Pareto. Good morning. My questions are in the area of Jan Erik, I would say. You mentioned that your competitive position is strengthening. So the customer dividends and so on are not something new. Is it the competitive position strengthening then due to larger price hikes from the mentioned competitors? Or Are there something else going on there? It's I think it's a combination of several things. We have our brand is extremely strong. We are also investing heavily into our brand at the moment. The customer dividends, dividend models, as I commented, 12 year in a row, It's 12 year in a row, significant contribution for our customers. But as I said, it's a firm market and Our competitors, it has been lots of debate regarding claims inflation. And if you look at the profitability level of some of our competitors, they need to strengthen their profitability as well. But if you look into our What's really key points for Jensidja? I think we are gradually improving our CRM capabilities. And I think in the Norwegian market, talking about services in general, we are in the front line Actually regarding CRM. And of course, we also work very advanced with sales effectiveness and digital solutions. And we have a very strong team working continuously to improve that part of the business. I think the main difference between maybe peers and ourselves is on that part actually. Yes. Would you say that your position is strengthening more on private or on SME? I will say private and SME. But of course, the private position now is extremely strong. But you have seen what we have managed since 20 eighteentwenty nineteen on the commercial side as well. We have managed To increase prices significantly, we have maintained our customers. At the moment, we also gained new customers. And we implement on the SME side some of the expertise from the private side. So But maybe the strongest part is private, slightly bigger. Okay. Thank you. And then On the growth, not by product, but by business units, Is it possible to say how much of the 7.9% on private and 11.8% on commercially driven by repricing? As I said, Josten can help me on the commercial side. The majority is price, of course, on the commercial side. But as I said, the 2 large business lines, Cars or motor, that's fifty-fifty volume and price. And if you combine property and content, It's like 20.80 or something like that, volume, price. For travel insurance, it's negative volume development due to the pandemic situation. So we have some few percent points negative development in volume, but we have positive price development, of course. That's a small business compared to the 2 others. And maybe you could comment on the commercial side of that. Yes. I don't have any Fixed number and it's actually quite hard because when commercial customers renew, they changed the volume business The contract is based on the number of cars and so on. So it's a bit hard to distinguish price from volume effects there. But that maybe I would say that the overall majority Our price effects for the commercial segment. So if you look at 11.8 Percent in earned premiums increase, you will say that 70% or something like that, 60% to 70% of that are Price effects and the remaining parts is underlying business volume. But as I said, these are kind of estimates because The volume isn't that easy to define always in the commercial segment. Yes, understood. And thank you very much for The next question comes from Thomas Vincent from SEB. Yes, good morning. Two questions from my side. First, back to the issue of inflation, a more Technical thing, but if I don't remember wrong, you have said in the past that you increased prices by this statistics Norway, building cost Index, which is as far as I know, has a motor composition, more a 50% material, a 50% labor. While you point to another composition for your claims, how should we think about that, The difference between the index and how we are realized for you is? And the second question, All the Alain Brand is taking on Kaldan Denmark. Do you see any opportunities for you now in the Danish market when this transaction Okay. I'll start on the first one, Thomas. This building cost index is convenient because it's observed by everyone, but everyone is also aware that, that is not The true picture of our real cost composition. So when we say that we Increased prices by more than expected claims inflation. It's our expectation of claims inflation taking into the actual Composition of labor and materials, not that index as such. But it's a convenient focal point for everyone because it's The publicist and well known index. So if you want to kind of estimate our Inflationary exposure, it use our presentation rather than the composition of the building cost index as such. And also as Helgi mentioned, there is a difference between Frequency claims and the larger claims in the property and commercial property and so on. There are more materials compared to Wage cost in the larger claims than in the frequency claims. So this varies, pilot. Yes. The situation in Denmark, Thomas, as you know, we have been clear about Codan Denmark being strategically interesting for us. And We assume it would have been a good strategic fit for Jensidige, but we have to congratulate on Milblad with the acquisition. But what we note is that the price is very high, voting for continued price discipline in the market. We continue to focus on growth in our markets, primarily outside Norway. It's about growth in the perspective of an eternity for a company like ours. And but the list has become shorter, But there are still further consolidation opportunities in our markets and Denmark. It's opportunities in Denmark. I think it's medium term, longer term. It's also opportunities in Sweden and Finland. As I have said before, it's lots of Looking at what TRIG have done after us and what we have done with the dematerialization, foundations, customer dividends And really good value proposition for customers. So medium, long term, I think you will see more consolidation in the market. But short term, The list has been become shorter, absolutely. When that said, yes, I stop there. I stop there. Okay. Thank you. The next question comes from Hakan Astrup from BNP Markets. Good morning. Two questions from me as well. The first one on COVID-nineteen effects. Q2 has also the positive effect from the pandemic. So I was just wondering if it's possible to see as a permanent Positive impact on claims and going forward, for example, from less congestion on roads or people staying more at home and then Limiting damages from certain claims such as pipes first, etcetera. That was the first question. And the second question on your investments in And since the toll services, another Norwegian on that company has received some regulatory pushback on the back of I'm just wondering how you set the risk of you receiving similar treatment. COVID-nineteen effects, if I understand you correct your question correct, Hakan, is that kind of we reported what we have seen or estimated in from our numbers in the Q2. And then your question is kind of do we expect this to continue as a Positive effect on claims going forward in the second half of twenty twenty one, for instance. Ann? Yes, Exactly. That's not in the same magnitude, but we have seen some permanent shift in behavior that can support longer claims going forward. Yes. No, it's perfectly possible that we will see positive effects If the economic activity continues to be somewhat hindered or dampened by regulatory or government measures To keep people at home and so on. But what we've seen, the most effects have been or estimated most effects because these are estimates. We don't have a clear Clear number here, but it's mostly restaurant to motor, I would say, less driving. So maybe your guess is as good as mine. If there is less driving, there will be less claims. That's an easy statistic. And yes, I don't have a very clear view on what that will look like in the second half, but probably less than normal. But Comparing them with second half of twenty twenty, probably more driving and more returning to work and so We'll obviously report on these numbers as we go forward as well. But gradually, we will become less and less relevant and We're back to normal in inverted commas there that we don't quite know what new normal will be. The second question on the toll service providers. We strive to increase the offer we make to our customers. And as you all know, we already We are collecting the obligatory traffic insurance here For on behalf of the government, and we don't quite see any reason why we shouldn't be able to also collect the toll Road fees as well. And by doing that, we could combine that service with other services That could be given to our customers, the car drivers. And this is obviously something that both Fremt and ourselves We look at in a very similar way, and we think this should be possible. And the results of 2 regulations, we are Actually, I think this is actually within what should be possible. And then we have the What the FSA has said and we, of course, follow this closely and complained to the Ministry of Finance on the negative ruling That we have received on Vegamot, the first one we bought. So if I understand you correctly, you're not in a different position than Sven. It's more like so you disagree We disagree with that. That's great. And I think we have a very similar view on this as Fremtas. So we're very much in the same boat here. But then, Benoit, of course, this is Thank you, sir. Yes. The next question comes from Johan Strom from Carnegie. Please go ahead. Thank you. I had a couple of questions on the claims inflation topic, but I think you've answered all of them. So thanks very much for all that color. So maybe just a final one. On the own partial internal model, has there been any progress on the work with FSA on that side? Yes, we've had a small color improvement in what we have been able to Gotn approved from the FSA, which we also have reported or I mentioned in my comments to the results. It is technically related to the calibration of some Danish property insurance lines where we've been able to Get a better calibration approved, which has reduced the capital requirement, but not a large effect. I mean, you see it from the numbers. It is positive to see that our discussions and when we dig deeply into this, we have some gains down the road. So it's very positive. Yes. And I think as before, we continue to have an ongoing dialogue with FSA on the The areas within the modeling where we have disagreed historically. That's great to see. Thanks very much and congrats with a great quarter guys. Thank you. We'll now take the next question from Will Ardkassen from UBS. Hey, morning, everyone. Just trying to really get to grips with the extent of this underlying margin improvement, it's substantial year on year, The one point or the 2.4 points. I'm just really trying to handle on how you guys Really viewing year on year improvement, which number we should be thinking about, although there's some Slightly up. That's why it's greater than you probably expect at the normal run rate. Yes, that's it. And then secondly, just on solvency. Just trying to clarify, you mentioned the timing of when those Transaction with 6 point impact will be completed by when those deals are closing. Is that 3Q, should we say both? Thanks. On the underlying development, I would suggest you would look at the underlying That we have provided you in the appendix to the presentation on slide number 22 or something, Which is the 2.4. This is the underlying frequency loss ratio adjusted for weather, which is really nothing in Q2, And then the COVID effects. A bit of course, a Question mark here is my comment to Hakan's question earlier on the what is the new normal. We'll when we kind of We kind of add back kind of some of the positive effects from the COVID-nineteen effect there. Will they actually continue? So we underestimate how good the underlying frequency loss ratio really is. That is Something we could discuss, of course. But If you look at underlying development tariff, 2.4 percentage points for the group, I feel that's a fairly representative picture of what's going on here. Of course, even if you take away large losses and weather, there will still be volatility from quarter to quarter. This is non life insurance. But I think this is a fairly okay picture of what is going on. And the composition of it is also fairly well stated on the at least by business level on the same slide where you see that this is mainly driven by private and the Danish segment. But we have improvements also For commercial, whereas the development in Sweden and the Baltics is unfortunately negative. Timing on the solvency effects. NEM Forsikring, closing, I guess, during will be closed during this quarter, also the Q3. Our expectation, I think, yes. But then this is regulatory process. And there it's Also, the total service price, it's a regulatory process. Midstream, probably they expect it to close at least in the second half. I'll be that broad in answering that one. Just coming back on that, the extent of that frequency improvement, clearly that If we roll that forward, that's a very sizable uplift in ROE, for example, presuming some of that sticks for longer. I guess on the back of that is there no change in and we're talking about price increases here. Is there at what point should we expect perhaps competition to pick up as some of that's given away? Or do we think that this fix and We'd be looking at a higher ROE more sustainably. That's a glimpse into the crystal ball Trying to make there. I think as I said, the 65.5% undrawnfreakness in loss ratio, just before we get COVID, I think that's a Fairly okay picture of what's actually going on, what's the profitability level now. And starting to say, we do not guide on future Results there. But there is a very good momentum within non life insurance, the whole industry in Scandinavia, and We see it certainly in our figures. And I don't quite see in the short- to medium term, Astey, that this competitive picture should change dramatically. But I mean, we could be surprised, so I'm not giving any guarantees here, but it looks quite promising. As there are no further questions, I will hand the call back over to your host for any additional or closing remarks. Thank you. Everyone, We'll be participating in a number of virtual roadshow meetings and a conference over the summer starting in August. The meetings will be held with investors in Norway, the UK, Germany, Denmark, Italy and Finland. Please see our financial calendar on our website for more details. Thank you for your attention. Have a lovely summer and stay healthy. Bye.