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Sami Taipalus: Good morning, everyone, and welcome to the Sampo Group Third Quarter 2025 Conference Call. My name is Sami Taipalus, and I'm Head of Investor Relations at Sampo. I'm joined on the call by Group CEO, Morten Thorsrud; and Group CFO, Knut-Arne Alsaker. The call will feature a short presentation from Morten followed by Q&A. A recording of the call will later be available on sampo.com. With that, I hand over to Morten. Please go ahead.
Morten Thorsrud: Thanks, Sami, and good morning, and warmly welcome to the conference call on Sampo's third quarter results also on my side. As this is my first set of results as CEO, I'm going to spend a little bit of time on our strategy and how it's playing out in our results. But before I go into that, let me first comment briefly on the third quarter as such. Sampo delivered another excellent set of results in the third quarter. By and large, we saw the same positive operating trends as earlier in the year, with strong premium growth, driven by private and SME and solid margins. The claims environment has been favorable with benign weather, large claims below budget and frequency trends in line with expectations. Still, we are continuing to be prudent in setting our loss ratio picks, meaning the benign claims environment has not fully flowed to the bottom line. On our underwriting margin, we saw a roughly 50 basis points of improvement in the underlying Nordic combined ratio, driven by both the cost and risk ratio. U.K. margins, on the other hand, continued to normalize from the elevated levels seen in the prior year, but remained within our target range. All in, year-to-date underwriting profit grew by 17%, driving a 14% increase in operating EPS to EUR 0.38. The result comes on the back of very strong performance through the strategic period so far, leading us to upgrade our operating EPS target from the period 2024 to 2026 to now above 9%. Outside of the operating result, we had a EUR 355 million gain from our stake in NOBA, driven by successful IPO, followed by strong share price performance. We sold only 1/4 of our holdings in the IPO, meaning we retain a 15% stake in NOBA valued at EUR 636 million, at the end of September. The EUR 150 million sales proceeds from the IPO will be returned to shareholders through a share buyback announced today. So that was an overview of the result. Now, let me turn to strategy. I'd like to start with a short comment on where Sampo is as a company today. We are, of course, a pure-play P&C insurer, large and well diversified with EUR 10 billion of premiums, spread across 5 markets of roughly equal portfolio size and then the 3 Baltic countries on top of this. However, what really stands out is that Sampo is at the forefront of the industry in pretty much every area in which it operates. As mainly a direct insurer, without material physical distribution, it has been essential for us to master the art of digital P&C insurance. In the Nordics, we've been at the helm of the industry digitalization, while the acquisition of Hastings in 2020 has catapulted us into a leading position in the U.K. price comparison website market. At the same time, our unparalleled partnership network with the Nordic motor industry, bring wide customer reach and expertise in new car technology. We are a leading -- we are a leader and digital frontrunner also in the Nordic commercial market, and we are the market leader and preferred partner in the Nordic large corporate market. Further, our pan-Nordic PI proposition has recently been strengthened by specialist insurer, Oona. Our Baltic business is a profitable, low-cost direct writer in a market of brokers and agents. Indeed, even Denmark, which used to be our Achilles heel, has been transformed into an attractive opportunity for us now through the acquisition of Topdanmark last year. In conclusion, we are in an enviable position to meet the future of our industry. So where do we go from here? I see the biggest opportunity in leveraging our unique set of operational capabilities to drive organic growth. As shown on this slide, we see structural growth opportunities in areas representing more than half of group's premiums. These should be familiar, is the digital U.K. market, PI in the Nordics, private property, SMEs. Our ambition in these areas are backed by structural trends as well as competitive advantages. For example, in PI, we are seeing increasing demand, combined with our first rate Nordic PI offering, which create opportunities across the customer segments. Similarly, U.K. consumers continue to shop more and more on price comparison websites, for which we have optimized our business. Taking a step back, we see growth opportunities in other parts of our portfolio as well. Right now, I would highlight Nordic motor, where we are in a pole position to benefit from a normalization in new car sales. Now, I talked a lot about growth, so before we go further, let me be completely clear on one thing, we are only interested in growing, of course, at attractive margins. The underwriting discipline that Sampo is known for remains fully intact. Turning to the numbers. Our results show that our strategy has traction. The growth that we've seen in the third quarter is a continuation of several years of strong development, as we can see on the left-hand side on this slide. Partially, this is the result of elevated inflation, particularly in the U.K., but at the same time, our growth is broadly based as we illustrate on the right-hand side. I would even argue that this understates the breadth of our growth momentum. In the third quarter, we achieved growth of 5% or more in all countries in both business area Private and Commercial in the Nordics. Let's take a closer look at operating trends by segment. I'll start with Private Nordic, which delivered a fourth consecutive quarter of record high GDP growth. What's behind this? Well, let's focus at least on 3 things. First, good underwriting through the inflation spike means that we have had -- we have not had to do corrective price actions in the same way as some of our competitors. This supports retention and increasingly allows us to attract new customers. Second, we have strong momentum in our target growth areas. PI, in particular, is strong, which is why we also have raised our guidance and outlook on GDP growth with a now ambition of more than 10% for the strategic period. Third, we are benefiting from higher new car sales with strong motor GDP growth of 13% in the quarter. Put simply, the investments we have made into underwriting, pricing and service are paying off as customer traction. Let me turn to the U.K. The last few quarters have truly illustrated the skills we have in trading on price comparison websites. By actively shifting the mix and leveraging our innovative telematics product, we have sustained attractive policy count growth and solid margins, while market pricing has fallen. This comes on the back of a strong 2024, allowing us to raise our U.K. underwriting profit growth target to now 20% to 25%. Looking ahead, we're always adapting to growth. We are always adapting growth to market conditions. The start of 2025 saw attractive motor market conditions, but as pricing declined, we have responded by slowing our growth rates. At the end of Q3, market pricing has fallen to a level, where we see fewer opportunities for growth, while larger part of the portfolio begins to hit up against target margins. As we are committed to being a disciplined underwriter, this means that we need to see increasing motor market pricing to be able to continue to grow. Like in the Nordics, we have a great track record in delivering solid margins through the cycle, also in the U.K., and we very much intend to keep this. The good news is that due to diversification, we are not too reliant on any one market or strategy for profit growth. Next, I will make a few short comments on Commercial. Our portfolio is dominated by SMEs that tend to act in a similar way to private customers. Here, we can leverage the same skill set that we have in private, particularly as the market is becoming more digital. Outside of SME, a material part of the book is what one could call local specialty business that require specific skills and a strong market presence. This includes our market-leading agriculture business in Denmark and Personal Insurance. Only some 20% of commercial sales are done via brokers, and retention are almost as high as in private. Turning to performance. We continue to deliver solid growth, driven by our target areas, SME, PI and online sales. So we can again see that our strategy has traction. Then, to the Topdanmark integration, Q3 saw a critical step in the Topdanmark integration process in the form of the legal merger of Topdanmark into If. Following this, we have seen a surge in synergies, as we've been able to move to If's Nordic operating model and start also to restructure our reinsurance programs. We have now delivered run rate synergies of EUR 24 million year-to-date, meaning we have reached our target for 2025 one quarter early. You should take this with a pinch of salt, synergy emergence can be a bit lumpy. So we stick to our target of EUR 140 million of ultimate synergies in 2028. Nonetheless, the strong execution to date increases our confidence in being able to achieve this figure. Longer term, the most important thing about the Topdanmark deal is that it transforms our competitive position in Denmark. Since it's still early days, we are not yet fully benefiting from our combined strength in the Danish market, and thus, there is a clear opportunity to improve the performance going forward. Final slide, let me try to tie it all together. We are in a great position as a group. Our results show that we have an organic growth strategy that is working and that we continue to deliver attractive and stable margins. The third quarter performance brings year-to-date underwriting profit growth to 17%, driving a 14% increase in 9-month operating EPS. This follows a 13% operating EPS growth in 2024. On back of these strong results, we have increased our operating EPS target for 2024 to 2026 to above 9%, up from the previous target of about 7%. The increase in the target show that we are going into 2026 with confidence and with ambition. We have great momentum, and we will not let up on pace. That concludes my opening remarks. Back to you, Sami, for Q&A.
Sami Taipalus: Thank you, Morten. Operator, we are now ready to begin the question-and-answer session.
Operator: [Operator Instructions] The next question comes from David Barma from Bank of America.
David Barma: Firstly, on growth in Nordic Private, it was really good again this quarter. Could you give us a bit more color on growth by country? We spent a lot of time on Norway in the last few quarters, but maybe if you could give us some color on the rest of the geographies and the key lines that have been driving the growth in Q3, please? And then secondly, on Storm Amy in October, would you have some early estimates that you can share on the impact for Sampo, please? And then lastly, on the U.K., top line and policy count growth were still pretty strong in the quarter despite average premium being down high single digits. So could you please comment on the profitability of that new business? And how you're seeing market conditions change since the comments you've made on -- regarding Q3, I mean, in the last 6 weeks or so?
Morten Thorsrud: Yes. Perfect. I'll try to answer to these 3 questions. First, on growth in Nordic Private, yes, quite a stellar performance, 10% growth overall for Private Nordic, and it's actually quite broad-based. So we have 5% or more in all countries, which actually is the situation, both within Private and Commercial. So both Private and Commercial produced more than 5% growth in all countries. And Norway, of course, still continue to stand out with double-digit growth. But it's good to see that the growth now is broad-based, and also, definitely, the other countries strongly support the growth story. When it comes to Storm Amy, it was a fairly sizable event, mainly impacting Norway in beginning of October. Initial estimate for us is between EUR 30 million and EUR 40 million. So somewhat sizable event, but of course, we're used to seeing these events from time to time, typically in the fall. Top line and policy growth in the U.K., what you will see is that we shifted the growth towards a little bit some other areas. So we had -- continued to have good growth in our telematics offering, also in other areas like bike, van, home. And then we had less growth in, what you could call, the core or classic motor product. So I think we used our excellent capabilities in the U.K. market in driving growth in areas where we believe that we still get attractive margins. And we still then have the same target for our U.K. operation. We talked about 88% to 90% in operating ratio. That is still what we focus on, and that's still what we aim to achieve when we write business, also the new business that we write now.
Operator: The next question comes from Ulrik Zürcher of Nordea.
Ulrik Zürcher: Yes. I thought the Nordic cost ratio was quite impressive in this quarter. Has anything changed? I think you indicated around 22.5% or something for the full year, which would mean, the cost ratio is a bit back-end loaded into Q4. Has that changed? And also, I'm wondering about given the strong top line momentum and scale economics that you have with -- like what should we look out for, for cost improvement in '26?
Morten Thorsrud: Yes. The Nordic cost ratio develops favorably. As you remember, the starting point is 23%, when we include the overhead cost in Topdanmark, that is now included in If's cost base. And the progress is good. So we have a target of 40 basis points reductions for this year, and that's also the target for next year. Of course, growth is supporting this, and also, the synergy realization is supporting this. But again, there is nothing new on the target. We have a 40 basis points target for this year and also next year on cost ratio reduction in the Nordics.
Ulrik Zürcher: Okay. Great. And also just a follow-up slightly on Norway. Like, obviously, this sort of exceptional situation can't continue forever. Do you see it continuing into next year? Or are we approaching sort of the peak of the market repricing?
Morten Thorsrud: That's hard to comment on really what will happen in the future. Pricing in the Norwegian market has come down a little bit over the last few months. And, of course, it's difficult to expect that repricing will continue on these levels, but I'll revert from speculating when it comes to exactly when.
Ulrik Zürcher: And also, a last one, just on the renewal date. I think it was mentioned in your presentation, but -- should we expect like continued strong commercial momentum into the renewal date with both price hikes and new volumes or just more normalized 5%?
Morten Thorsrud: I think we continue to expect good development on the commercial book of business, also in the coming quarters.
Operator: The next question comes from Vinit Malhotra from Mediobanca.
Vinit Malhotra: Hope you can hear me clearly. The 2 questions I would choose today. First is the solvency even when adjusted for a little bit the buyback. I mean, was -- is there anything you would flag in that operating earnings contribution of about 9%, a touch lighter than other quarters. And maybe there's nothing to flag really, but I just thought I'll ask you on the solvency. The other thing I would -- wanted to quickly check is -- when we see your Slide 56, which is very helpful on the new car sales, and I see some big moves, but also Sweden being a little lower than recent, at least last 2 quarters, is there something to flag? Because also Q3 '24 was quite weak on the Swedish number here on the Slide 56. Is there something you would like to flag here? Also because -- are you seeing more competition? We've heard one of your peers talk about opening new contracts with car dealers. There's something you'd like to -- is there something there that is worth noting here for you?
Knut Alsaker: Vinit, why don't I start with the solvency, Knut-Arne here, while Morten is trying to find Slide 46 (sic) [ Slide 56 ]. There's really nothing to flag on the solvency in terms of things that worry me. There are some things to be aware of in the 172% that we print. As you referred to, it is including the full buyback, which we announced today, which shaved off 5% on the solvency. Then there are some seasonality in calculating solvency ratios, where that ratio will go up in the beginning of the year because we have a tilt on renewals towards 1/1. So there's a lot of premium reserves, which is beneficial for the solvency calculation, and there's less premium reserves in the third quarter. In the third quarter, that basically shaved off a couple of percentage points of the solvency. But like I said, that will come back. Then, the solvency ratio in the third -- on 30th of September was lower due to higher FX risk related to NOBA. We didn't -- we basically couldn't hedge the Swedish krona exposure before we knew what the share price roughly would land on when it comes to NOBA post-IPO, but that is now being done, and a lot of it has already been done. So that will add back some 3, 4 percentage points on the solvency as well. And then fourthly, I think it is, there is a bit of technicalities related to the legal merger of Topdanmark, it's only 1% or so. That also will come back in the beginning of the year when we have the internal model in place. That is on top of the already announced SCR benefit of EUR 60 million to EUR 90 million, which we talked before. So there are some things that move the solvency ratio a little bit like I now had listed, but nothing that worries me in terms of the stability and solidity of our capital base.
Morten Thorsrud: Good. And then to the now famous Slide 56. So that's the overview of new car sales in the Nordics. And as it shows, strong development in the Nordics overall, new car sales increasing with almost 10%, which is, of course, something that supports us, in particular, business area Private, where we see a 13% GDP growth on motor actually in the third quarter. Then the growth is mainly driven by other countries than Sweden. And for us, it's, in particular, important with growth in the Swedish market due to this special car damage warranty construction, where we are clearly the market leader, continue to be the market leader, which means that we have a good upside when the Swedish market continue to bounce back. But it's good to see now at least that the Swedish new car sales is also starting to show positive development.
Operator: The next question comes from Nadia Claressa from JPMorgan.
Nadia Claressa: Two questions from me, please. The first one is just going back on reserving. I think based on your opening commentary, Morten, it does seem like Q3 was a case of being opportunistically more cautious. So if you could just please confirm that the Q3 PYD is driven purely by this rather than any developments or underlying issues in your book? That would be great. And also, is this something that we should continue to expect going forward if the large loss experience allows for it? Or was this also more extra caution given your first quarter as CEO? So that's the first question. And secondly, on the change in the operating EPS target, just out of curiosity, why are you upgrading this now? I mean, were there any specific drivers that changed your view in the past quarter alone? Or was this more of like a catch-up given the strong year-to-date performance?
Morten Thorsrud: Good. I think on the reserving, you're exactly right that this is how we typically operate. We try to be cautious. We would like to have sufficient reserves, and of course, we saw a very benign development in the third quarter with benign development on large claims, benign development in terms of weather claims and also favorable frequency development. So it's part of our DNA to make sure that we have strong reserves, and there is nothing more than that, that explains the reason why we have a little bit less runoff gain in this quarter. Then, to the change in the operating EPS target, while we thought it was natural to do an update in a way almost midterm in the strategy period. Could I have done it after Q2, but then it would have been the previous CEO making predictions for the future. So we thought it was sensible for us to do it now. And it's a good way for me to, of course, also indicate that we have a strong belief in continued strong development, continued strong performance. So that's why we chose to update the operating EPS target at this time.
Operator: The next question comes from Vash Gosalia from Goldman Sachs.
Vash Gosalia: Just one quick question as most of the other ones have been asked. Just on the new car sales, could you help us understand what are your market shares in each country with new car sales? Why I'm asking this is because your comments sort of makes me believe that you're going to benefit from rising sales in each country. But in the past, you have mentioned that Sweden is an exception where you, I think, have around 40% market share. So just trying to get a sense of where the other countries are, and that will be quite helpful.
Morten Thorsrud: Yes, it's correct that we will benefit from increased new car sales in, of course, all markets. We are somewhat stronger on new car transactions than used car transactions. So a growth in this will benefit us in all markets. Don't have sort of exact market shares on the top of my head. But, in Sweden, we have about 70% -- 7-0, 70% market share on the car damage warranty construction. We have partnership with, by far, the most of the large brands in Sweden. And that's why that market is of particular importance. And again, when you buy a car in Sweden, you get a car damage warranty that comes with the car for free, is paid by the importer, and we are the main provider of this type of insurance.
Vash Gosalia: So sorry, just to follow up on that. For the other countries, could you at least give us a flavor of how far you are from the 70% mark? I mean, would you say you're roughly close to that? Or materially...
Morten Thorsrud: No, no, that's far from. This is quite an exceptional thing. The car damage warranty construction is something that only exists in Sweden. In the other markets, we would be typically having a market share a little bit above our underlying market share in motor in each market. So we will have an overweight towards new cars, but absolutely not in the same magnitude.
Operator: The next question comes from Emil Immonen from DNB Carnegie.
Emil Immonen: Just a couple more. First, on the operating EPS growth target, the 9%. Could you maybe elaborate on exactly how you think about it? The underlying driving factors as to reach it on average, you don't need that much growth next year, it would seem to me at this point.
Morten Thorsrud: Yes. And I think, in many ways, you have to look at the target with the same lens that you typically do when looking at Sampo's targets, it's an above 9% target. It's not 9%, it's above 9%. And I think it's signaling that we expect that we'll continue a strong performance, but it's an above 9% target.
Emil Immonen: Okay. And then one more question on NOBA, about how you approach that now as an investment. It was IPO-ed, and it's performing quite well on the stock market, it would seem. Is it still a legacy investment in your view that you want to exit fully? Or what's the thinking on that?
Morten Thorsrud: Yes, we've been rather clear on that all the time that our strategy is to exit fully. So we sold down from 20% to 15% in conjunction with the IPO. And we will, of course, in the future, also reduce our holding and eventually exit the NOBA position.
Operator: The next question comes from Henry Heathfield from Morningstar.
Henry Heathfield: I was just wondering if I could return back to this sort of cost ratio, basically in the Nordics. So if I'm right, you're tracking or you're currently at 22.5%. Based on the 40 bps, you should be at 22.6% if I am right, and you're at EUR 24 million year-to-date, which is the target. So I'm just kind of wondering what's stopping you, either this year or next year, from kind of raising those cost synergy targets?
Morten Thorsrud: I think we believe that we have an ambitious target in reducing by 40 basis points for a number of years going forward. That will give us strong support in terms of also underlying profitability. Of course, cost ratio is always jumping a bit up and down quarter-to-quarter. But yes, we are on good track on delivering on the 40 basis points improvement for this year and also have a good outlook then for next year. But I think 40 basis points is substantial and an important contribution, of course, to the Nordic business. So we continue with that as the target.
Henry Heathfield: Is there anything I should be thinking about in terms of the fourth quarter in terms of headwinds or you're just being conservative basically and sticking to your targets really?
Morten Thorsrud: No. I think, on the fourth quarter, we, of course, have the information about the Storm Amy, which is why we chose not to increase the forecast, but rather stick to the previous announced forecast or outlook. That, of course, is a sizable event, but something that is quite natural for our business, something that we typically see at this time of the year. But that's what's kind of puts a little bit of caution on the fourth quarter.
Operator: The next question comes from Youdish Chicooree from Autonomous Research.
Youdish Chicooree: This is Youdish from Autonomous Research. So my 2 questions. The first one is on the growth topic in the Nordics. You talked about the solid and broad-based trends in Private and Commercial. But could you also comment on Industrial? And yes, I'm really -- I really want to know whether you think this segment could be a drag on the overall growth next year. That's my first question. And then secondly, on the fixed income running yield, I mean, for the first time, the mark-to-market yield dropped below the running yield. So I was wondering if you could help us understand the implications of this and whether the book yield or the book running yield will drop by roughly 30 basis points in the coming couple of years, basically?
Morten Thorsrud: Yes. I'll address the growth in Industrial, and then, Knut-Arne will do the fixed income and running yield. . Industrial is showing a minus 50% growth in gross written premiums in the third quarter. One should bear in mind that it's a small quarter for industrial. There's not that many customers renewing in the third quarter. So in terms of nominal amounts, this is not a huge figure. Year-to-date growth is down by some 4% in industrial. Largely, this is driven by the derisking that we've done in Industrial, where we'd like to see less volatility from our industrial business, and in particular, the property part of it, which should secure our profits going forward. In terms of growth, Industrial is, of course, a little bit different than the other business areas. We will only grow in Industrial when we see that the market opportunity allows for it. And the Industrial, which, of course, is the same also for other business areas, but you have more volatility on the pricing in the Industrial segment. So, therefore, it's natural that the growth in industrial is a little bit more volatile than what you see in Private and Commercial, but it's usually more a stable development.
Knut Alsaker: On the fixed income running yield, Youdish, I would say that you're right in your assumption, everything else equal, and then, let's see where rates go in the future. But everything else equal, the running yield would trend downwards to the mark-to-market yield that we indicated end of third quarter. So roughly a 30 basis point drop, but trending downward, not necessarily in 1 quarter, obviously, given the maturity profile that we have.
Operator: The next question comes from Vash Gosalia from Goldman Sachs.
Vash Gosalia: Just a quick follow-up on your comment on NOBA. So we know you have, I think, 180-day restriction. But just trying to understand, is it fair to assume that you would sell down the entire stake within the current plan, so which is by the end of 2026? Or do you think there's a risk some of it might fall over to 2027 as well?
Morten Thorsrud: No, it's correct that we have a 180-day lockup, and we started with ownership of close to 20%. Now, we reduced it down to 15%. It's not likely that we will sell off everything, of course, at once after the lockup period expires. We have to look at the market development, and most likely, this is going to be a more gradual process. But it all depends on market conditions at the time. So it could take some time, but -- and I think that's the natural sort of expectation that we do this gradually in a controlled manner.
Operator: There are no more questions at this time. So I hand the conference back to the speakers for any closing comments.
Sami Taipalus: All right. Thank you very much. That concludes the call for today. Thank you for listening in.