Alm. Brand A/S (ALMB) Earnings Call Transcript & Summary

Welcome to the Alm. Brand's Interim Report Fourth Quarter of 2021. [Operator Instructions] Today, I am pleased to present Rasmus Werner Nielsen, CEO. Please begin your meeting.

Good morning, and thank you for taking the time to join us on our call on the Alm. Brand's results for the full year of '21. For me, this is the quarterly report #10 that I'm presenting. It has been an exciting period and we made meaningful strategic changes to the company that will define the road map ahead of us for the years to come. But I'm also happy that we have maintained a strong focus on the day-to-day business. And during the year, we have continued to press forward our work to further strengthen our business. Again, we have had a good quarter with strong earnings, and thus, we have reached a full year result that demonstrates that the underlying Non-life business continues to improve as we successfully implement changes across the full value chain. Looking back at the year, I'm pleased to note that the strong results is based on many of the initiatives that we have implemented to improve our operation: the new organization put in place back in early 2020; the ongoing optimization of the backbone and the digital platform of our business as well as the relentless focus on improving the customer touch points and ensuring the best value proposition for our customers. We have spent a vast amount of time and resources on preparing for the takeover of Codan Denmark. In the fourth quarter, we have completed the rights issue needed to fund the acquisition. This was completed in a very successful way with strong commitment for both existing and new investors. And I'm, of course, grateful for the trust that so many investors have placed in us. The main focus for today's call is, however, the financial results that we have made. And I'm happy to first walk you through the numbers, after which I will take your questions. Please turn to Slide 2. For the next many years, 2021 will mark the strategic step change for Alm. Brand. Back in June, we announced the acquisition of Codan's Danish business, and we presented our investment case to the market. We have spent a good amount of time in preparing for the actual takeover, which is planned to happen in the first half of this year, when we have successfully secured financing from both the bond market and the equity market. Also, we have agreed to sell our Life business, which will lead to Alm. Brand being a pure non-life company with a clean focus on the Danish market. In the fourth quarter, we have added further to the positive development in our underlying business, and we have made a healthy 150 basis point improvement in the underlying combined ratio after adjusting for the COVID-19 effect. The top line is still trading a little behind where we want it to be. But at the turn of the year, momentum was seen to be improving also for the [indiscernible]. And just to be clear, although we would like to accelerate premiums growth and our focus is on profitability, and in some cases, this means that we will turn away from business where we do not see an attractive balance between price and risk. The ongoing operational initiatives that have been implemented are step-by-step, adding to the efficiency of our business. And eventually, this is reflected in the key numbers like the claims ratio. Our focus will remain on both growth and cost initiatives actually strive for improving profitability further. Again, this year, COVID-19 has affected the numbers. We guided for a positive impact of DKK 50 million on this already back in the beginning of last year, and the impact has been in line with what we expected. And also, as expected, there has been no effect in the last quarter of 2021. Further, we have had a nice tailwind from the development on the financial markets. You know that we historically always have had a conservative approach to investments as we believe this will give our shareholders the cleanest exposure to our non-life operations. But nevertheless, we have made a little more than DKK 100 million this year. We are confident in our future and strongly believe that the significant investments we make to further develop Alm. Brand will benefit both customers and shareholders. And please turn to Slide 3. The group today posted a satisfactory result for the fourth quarter of the year, leading to a full year pretax profit of DKK 839 million, excluding special costs relating to the Codan transaction against a pretax profit of DKK 796 million in 2020, i.e., up 5% year-on-year. Pretax profit for the quarter amounted to DKK 249 million against DKK 289 million in the fourth quarter of 2020. The key takeaways here are that the underlying profitability and cost development continues to be satisfying, but this was offset by large claims and weather-related claims being somewhat higher compared to the same quarter last year. Also, investment income was nice, but not as high as last year. The result of other activities was a small minus of DKK 5 million. Net quarter costs remain more or less flat but are primarily offset by a positive contribution for the remaining mortgage fee and debt collection portfolios. All in all, this has been yet another quarter with progress in the underlying business and part of this development is due to the ongoing initiatives in claims handling that successfully have offset some of the claims inflation due to higher prices of materials, energy and salaries. Due to the transformation of our group, we have a large amount of special costs relating to both the acquisition and the preparation of the integration of Codan. In total, we have spent DKK 141 million this year, where DKK 34 million is directly linked to the preparation of the integration and thus expected in the Non-life business, expensed in the Non-life business. The Board will propose the AGM in April that a dividend of DKK 0.30 per share is paid out. This corresponds to a payout ratio of 77%. And as such, in line with our dividend policy that targets a minimum of 70% of post-tax earnings to be distributed to the shareholders. Following this, and considering the funds reserved for the acquisition of Codan, we derived at a solvency cover relative to CSR of 210%. Included in this is the prefunding of the restructuring costs. Thus, we will expect solvency cover to trend down towards 170% over the next years. Now please turn to Slide 4. Codan posted its full year numbers yesterday. And again, this time, we have included a single slide on this. Top line measured by gross earned premiums grew by 1.5% to DKK 5.5 billion. And for the full year, Codan reduced combined ratio to a respectable 95.2%, i.e., an improvement of 4.3 percentage point. This translates into an increase in current year's underwriting results to DKK 238 million against DKK 27 million in 2020. Major claims were high in Q4. For the full year, they are trending towards a satisfactory level for our business with a portfolio with a bias towards commercial, including [indiscernible]. All in all, we see strong evidence that pooling and the deliberate reduction of the exposure towards large claims is leading to the improvement of Codan, of what Codan has been targeting, and we believe this will be provide -- will provide a good starting product for the further development. And now turn to Slide 5 for an update on how we are progressing on the Codan transaction. Our team continues to push forward and in the last quarter of the year, we successfully completed the rights issue, whereby new shares worth of a total of DKK 10.5 billion was subscribed by institutional and retail investors. We are very pleased with both the process and the strong interest in the rights issue and following the approval from Danish FSA that we obtained in November, we now only await the competition authorities to approve the takeover. This is a huge transaction that will position Alm. Brand stronger. And we both acknowledge and understand that the competition authorities have decided to move this into Phase II in order to ensure a thorough investigation before reaching a final conclusion. Please observe that we have not received any indication about any material matters that will affect the takeover. Thus, we are confident in expecting the closing of the B2B in the first half of this year. And now back to our operational performance on Slide 7. The Non-life business made a pretax profit of DKK 254 million in the fourth quarter of the year, which comprises a satisfactory technical result of DKK 207 million and a positive investment result of DKK 47 million. Again, the technical result benefited from a good development in the underlying business, and also the run-off result contributed positively with DKK 37 million corresponding to 2.8 percentage points and thus slightly higher than we would normally expect. However, on the other hand, we have had more large claims in the quarter which, of course, led to higher costs, although this was somewhat offset by our well-functioning and well-scaled reinsurance program. Our investment strategy remains a conservative long-term strategy with respect to overall portfolio exposure. But in the last quarter of the year, we had tailwinds from the development on the financial markets, and thus adding another DKK 47 million to our result. And then let's go to Slide 8. Premium income grew by a modest 1% in the quarter, i.e., a somewhat lower pace than in the previous quarters. Again, growth has been very positive in the commercial segment, and we have seen premium climb by 3.7% in the quarter as a result of both influx of new customers and adjustment of prices within especially workers' compensation. In the private segment, we see clear signs indicated that the various initiatives implemented on pricing, customer retention and value proposition is making a difference. And we are confident that this will soon be visible also in the reported numbers. And not forgetting, our main focus continues to be on profitability rather than growth. Now I'll turn to Slide 9. Again, this quarter, we witnessed a positive development against same quarter last year. You might remember, Q4 2020 with an almost full lockdown, and in the last quarter of '21, everything was more or less back to normal. The underlying combined ratio was 78.8%, representing a strong improvement of 130 basis points year-on-year, excluding the COVID-19. The combined ratio for the quarter was a very satisfactory 84.7%, as you see on the graph on the right side of the page, with underlying combined ratio performing well. Then the increase in the combined ratio can be attributed mostly to higher cost on the major claims but also slightly higher cost following spending on our partnerships. One-off gains contributed with 2.8 percentage points, primarily from motor and building insurance, as has just was a little better than we usually see. And then we go to Slide 10. Fourth quarter, again, in 2021 had only a very low level of weather-related claims with mild weather during late fall and early winter. Thus, the amount of cost for the weather-related claims was DKK 16 million against DKK 6 million in the same quarter last year. Contrary to this, the major claims have again been in the high end of the normally expected range and amounted to DKK 101 million against DKK 83 million due to a couple of large claims, but somewhat offset by our reinsurance program. And then we turn to Slide 11. For the Private segment, claims experience was 60.5% against 56.3% last year, i.e., somewhat higher despite of the higher run-off gains. Again, the reopening of the society and the subsequent increase in activity and accident explains the development. This quarter cost has remained at a relative high level, partly reflected with continued investment in our partnership, but in all fairness, also a result of premium growth not having reached the targets that we defined at [ year start ]. Last quarter, I stated that we are now on a more positive trend with rent premiums increasing slightly versus last quarter. I see the same development today, and I believe that this will soon reflect in a more justified level. And then turn to Slide 12. For the Commercial segment, the combined ratio was 88.5%, i.e., showing an improvement of 1.2 percentage points against fourth quarter last year. Again, this quarter, we have seen a positive development in the claims ratio, leading to a reduction of 0.8 percentage points to 74.0% in spite of a high level of gross claims as this has been offset by our reinsurance program. Again, the underlying development is positive as we continue to implement various earnings enhanced initiatives including price adjustments. Also, the expense ratio has been cut by 0.4% to 14.5% as we continue to keep tight cost control cost development. And then please to turn to Slide 14 for the outlook for 2022. In the guidance that we present today, we guide for Alm. Brand, excluding any earnings contribution from Codan. We expect a full year pretax result in a range of DKK 450 million to DKK 500 million, which is based on an expected pretax profit in non-life of DKK 525 million to DKK 575 million, excluding run-offs, which reflects continued project development in the underlying business and net group cost of DKK 75 million. Our guidance assumes that the tailwind we have had in 2021 with respect to a number of factors will not repeat themselves in 2021. First and foremost, with COVID-19 no longer causing a lockdown of society, then claims frequency is expected to be back to normal. Thus, the DKK 50 million positive effect we had on earnings in 2021 will vanish in 2022. Secondly, for both major claims and weather-related claims, we budget for something close to normal for the rest of the year, i.e., around 3% for weather-related and 7% for major claims. However, you should know that the Malik storm in January has already cost us in the range of DKK million to DKK 75 million, i.e., if there has been no storm or guidance, well, non-life would have been higher. Thirdly, we expect only a modest investment result. Our earnings guidance is based on the increasing growth to around 3% to 4%, partly fueled by our partnership, but also that the positive development we have had in commercial continues and that the encouraging improvement in private by the end of 2021 continues at a positive trajectory in 2022. Adding it all together, you would expect the combined ratio to be at 90% to 91%, excluding any effect from run-off. Further, we are, of course, awaiting final approval to take over Codan so that we can initiate the programs to harvest the planned synergies. We still firmly believe that this will happen in the first half of the year and provided this, then we would expect to realize synergies of DKK 90 million in 2022, as previously stated, in connection with the announcement of the acquisition. Finally, the sale of the Life business was approved by the Danish FSA last week. And as such, the timing of closing will lead to the profit for this to be booked in 2022 instead of 2021, but still in good time before we need the funds to create for Codan. No change to the financial implications, i.e., the sale gives us a gain close to DKK 545 million, after recognition of cost directly related to this transaction. And the sale is expected to incur restructuring costs of DKK 60 million, which leads to a net result of DKK 485 million from discontinued activity. In total, our guidance reflects a business with all major parts moving as we would like them to and except for the storm in January. I therefore hand over the comments to the presenter -- moderator. So thank you from me.

[Operator Instructions] And the first question is from Jakob Brink, Nordea.

I have a few questions. The first one is on the premium growth guidance for 2022, which you have lowered a bit from the previous level of 5%. Could you maybe help us a bit with the sort of the parts that leads you to now think 3% to 4%, i.e., what drivers do you see? And also, I guess, putting it in perspective to the minus 1% growth in 2021, so what will change? Yes, that was the first question, please.

Thank you, Jakob. I think when we communicated the 5% just 2 years ago, we are now seeing a tough year in the Private segment in 2021. And we also have now Codan coming into play. So the surroundings are a bit different to what we thought 2 years ago. I think the 3% to 4% is -- it's a positive thing compared to where we are in 2021. As said in the presentation, we have a lot of good initiatives coming up in Private. We see them already coming into the books. We ended up 2021 with a higher balance than we ended 2020 in Private. We have lots of good initiatives in the commercial side, and we also have increases in inflation. So I think more or less, we are confident with the level of 3% to focus on.

Sorry to just try a bit more. But on the Sydbank, how many leads did you get in the full 2021 from Sydbank?

I can say that we got exactly what we expected when we started the year. So the cooperation with Sydbank is very much running as expected. We had very good leads coming in, and we have a high hit rate on these leads. And I think, speaking of Sydbank, everything is moving as expected. We are -- we have our full insurance app in the Sydbank app. So all their customers having Alm. Brand ensures that they can use that app going forward. So a lot of positive things are happening in that country.

But just -- so I guess the fact that there will be an app is not -- is that going to fuel growth, you think? I guess the fact that customers in Sydbank can see that they already have a product, will not be adding more products? Or is there some kind of built-in product distribution also on the mobile platform of Sydbank?

When we have this link to the Sydbank customer, it's much easier to connect with these customers, easy for these customers to add on new insurance products and then easier for us to approach that they can make claims, they can do everything. So this is just another tool to be an interesting part for other Sydbank customers, which are not Alm. Brand customer yet. It's a very good tool when you want to obtain new customers.

So if the Sydbank cooperation is working as expected, what is it then that is somewhat a little weaker than you had expected a few months ago or half year ago?

Yes. First of all, the competition, especially with private market, is very fierce. We try to run a business with long relationships to our customers. We will remain focused on having the right premises compared to costs. So it is -- the competition is a bit stronger on the private part than we have seen in the past. And that will put a little bit of pressure on our growth.

So is it because you will -- you now expect to lose some clients or because you will have to lower prices to keep the clients?

Say, if we wanted growth, then we could just decrease prices. It's almost as simple as that. But then we will not be profitable in the long run. So it's really about finding the right point here between profitability and growth. And maybe we were a bit too conservative in 2021, but it is about finding the right balance here.

Okay. Next question is on Codan and the not so good Q4. As far as I can estimate, it's around 105% combined rates in the fourth quarter. And I saw Codan's announcement yesterday. Seems like they ended up with a large claims ratio of around 10.5% or so in 2021 as a whole, which, of course, is better than 2020. But given what, I guess, you said after Q3 that it was maybe a bit too good, the large claims ratio of Codan given their current risks on the books, how do you feel about the 10%? Is that sort of the normalized level given the risk they have? Or could we even see it moving up a bit more in 2022? And then also just remind us how is the progress on running off the more risky part of the offshore wind?

Jakob, this is Andreas. Yes. I think you have roughly the right numbers in what you're reading from there -- from the full year announcement. And I think the short version is that combined, they are delivering around 95 current year, is very much close to what we were actually expecting at this point in time. And also, as you said, we did say after the first 3 quarters that this looked a bit better than also we have been expecting. So -- and roughly also implicit in that, I would say that the full year large claims are also more or less in line with what we have been expecting originally. That does not mean that I'd say it's hard to predict the ratio and the progress exactly also going into next year. But as we talked about before, we do expect Codan to continue the development of the trend in lowering the overall large claims. And we also feel confident that they are on the right trajectory now.

Okay. And then just coming back to the weather and the storm here in January and what you said before, Rasmus. But so just to understand, so now we have this, was it DKK 50 million to DKK 70 million extra claims related to the storm? Does your 90% to 91% combined ratio guidance include -- and full normal expectation for weather-related claims in the full year on top of the DKK 50 million to DKK 70 million or whatever it was? Or is -- or do you include the DKK 50 million to DKK 70 million in the normal weather guidance?

Yes. Jakob, I can take that also. What we do have is that we -- now we've closed January, we had the big storm and then we do our guidance based on that event. So we take that out, as you said -- mentioned, DKK 50 million to DKK 75 million. And then we, from now on, account for what we would say is a normal weather claims ratio going forward. So that means that we would have our normal guidance from here on out the rest of the year.

And how much of the normalized level is typically in January?

Yes. But what we do, Jakob, is actually, I would -- we have -- we even it out also in terms of budgeting. But when a weather event comes, it always hits very hard in the month it hit. So it -- so you can't say that the January isn't as such representative in the way we do it. We even it out also, in some sense, in the months. So there's not a lot of normal weather expense in our January budget normally.

Okay. Very good. And very last question from my side. The synergies of DKK 90 million in 2022, how confident are you that, that will still be realized in 2022 given the potential delay of the Codan acquisition?

We are very confident, and that's why it's important for us to highlight it in our accounts that we do expect the DKK 90 million to realize if we get to take over Codan here before end of [indiscernible].

So it's mainly FTE reductions or something that you can pretty easily activate or...

Yes. It's a normal cost like headcount, could be premises and things like that.

The next question is from Martin Gregers Birk, Carnegie.

On to -- maybe we can start where we left it on the competition authority. I must assume that you guys have received a letter of concerns. Do you mind sharing the content?

Martin, we cannot really share the content. But I can say that there's nothing in that letter that worries me, nothing unexpected. It is a matter of 2 big entities being combined, especially in the commercial side, that needs to -- it takes time to investigate this. They have sent out letters to our competitors, to the progress, to some of our -- a lot of our customers, and now they're gathering this information and then they will come back to us hopefully very soon.

But I guess this competition issue has been a topic that we have discussed over and over. And you have -- you have also said that you expected it to be approved in the first round. So what has changed?

Yes. I did expect it to be approved in the first round as there were no discussion of matters really. Now it seems that they need a bit more time to investigate, especially the commercial side. And therefore, we simply need to wait. And that's why they moved into Phase 2. So yes.

Okay. So coming back to the storm. The DKK 50 million to DKK 75 million, can you please remind me how does that factor into potential or into your reinsurance program?

Yes, I can do that. We will -- if that estimate holds, we will be referring to the forecast. That's also why we had it out of our guidance. If we are unlucky from now on, also seeing higher-than-expected level of, let's say, another windstorm or potentially also large claims, such as traditional property risk, then we will get further coverage if the amount of that increases here above a normal level. So I can say that we have this aggregate program, which clicks in at DKK 175 million, and now we sort of spent the first, let's say, DKK 60 million of that if the estimate holds. And then that could potentially come into play if we have a bad development from now on.

So you say -- did you say DKK 175 million reinsurance coverage?

Yes. And maybe I should specify also. We have a -- in a catastrophe event, if the event is large enough, then the deductible is DKK 75 million. So a very large windstorm will give us above -- if it's above DKK 75 million, we will have DKK 75 million on our risk. What I'm talking into here is the aggregate cover we have in supplement to program.

Okay. So if I understand it correctly, so let's say there's going to be another Malik next week, then it's not on your books?

The next Malik will also be on our books, but let's say, [indiscernible] the third Malik will not be, then we will start kicking into the aggregate program. And that aggregate program is not only weather claims, it's also large claims. That means that we have a few large claims that will also go into that number.

Okay. So -- okay, so coming back to your 2022 combined ratio guidance. When you set that target back in 2020, wasn't it fair to assume that, that target was supposed to or was -- could contain a weather event like Malik and that maybe there's some other stuff going on that hasn't exactly come out the way that you had hoped, and that's why it's now 90% to 91% and not 90% or even below 90%?

Yes. No, what we're doing here, as I tried to explain before, we just -- we unfortunately had a Malik, which has put us in -- which has basically -- as the way we do our guidance, we are now DKK 50 million to DKK 75 million given that estimate behind compared to if we haven't had the Malik. And then when we look forward now, we do a normal expectation of our claims from now on. And that means very simply that we -- to be transparent now, we need to lower this estimate solely from Malik recovery in January.

But if you look at your combined ratio and you look at your combined ratio development in 2021, I mean, you see a fairly nice underlying improvement, right? And then bridging that to the 90%, 95% even with the -- that -- bridging that to the 90% to 91% even with Malik on top of it, I mean, it seems like either it's conservative, either there's something else happening or either your underlying combined ratio improvement trajectories going to come to a complete standstill in 2022. I don't know if I'm wrong here or...

I think you should also remember that if we look from where we were last year, also, we had -- in 2021, we had at least -- we have basically DKK 50 million from COVID-19, which is not coming in next year. So if we haven't had Malik, we'd be coming out with the combined around 90% and the non-life [ install ] of around 600. Now we have Malik and then the simple math is that we push the combined correspondingly.

Okay. Okay. Then on to your guidance for the new group. You say that you will revert with Codan's guidance in Q4 2022, as far as I recall. Does that also mean that you will not consolidate Codan until Q4 of 2022? Or what should we put into that?

I think as soon as we open the books of Codan, we are allowed to do that, then we will look into what Codan can bring into us for 2022. So I think that we will have a look at as quick as possible. But in terms of our guidance for 2025, we expect to come out with that in more details in fourth quarter of this year, basically.

Okay. And then just 2 very short questions. On your run-offs your corporate division, what is happening here? And then finally, my last question on the RT1 issue, what's the progress on that?

To start with the run-offs in the corporate, I'd say nothing major happening there. We have had some tailwinds on, as I recall, especially the auto segment and buildings [indiscernible] within a natural level. If you look at Q4, I would more say that the private lines, which has a very impressive 5% run-off gain, is the more unusual part of the Q4, also coming from auto as one of the big contributors. But nothing I would say systematic in that. And then there were -- the RT1 process. That's enough for that. We're sort of looking into the exact timing and preparing when we have to come out. Right now, the expectation is that we would come out in the first quarter with an RT1 issuance, obviously, depending on market developments and the timing of that.

The next question is from Per Grønborg, SEB.

My first question is a bit of clarification on Martin's question on the competition authorities. Just to understand correctly, you said that the concerns they had been addressing to you was on the corporate side, not on the private side. Was that correct?

It's primarily on the corporate side. And as you can say there is no concern, it's just that they need a bit more time to investigate the commercial side. Yes.

So they are looking both at the private and corporate?

Yes. [indiscernible] yes.

Okay. Good. On Codan, you expressed a 95% combined ratio was as expected. That's, of course, always nice that things are developing as you originally expected. Maybe you can share with us what is your expectations on when Codan stand-alone will reach the sub 89% combined ratio that was implied in your original guidance? Just so we have a perception of the time frame we should look at as things seem to be developing as you are expecting.

I think it's a bit early, Per, to sort of further develop our timing of that trajectory. Also, given the fact that, to be honest, we have limited information in Codan in this period. And so I think we stick to our long-term targets, which we have communicated previously, and stick to saying that also in fairness when we looked into this and acquired Codan in the summer last year, we're just saying that what we see now in the full year is what -- where -- it's around where we should be.

Okay. On the growth, is it fair to guess that the motor part is causing you some challenges towards the end of the year in the light of electric cars being approximately half of new sales and fuel prices at least in December being extremely uncompetitive on electric cars? What are your intention on electric cars? Because I assume your uncompetitive prices, at least the ones that you flash on for [indiscernible], will hardly allow you to take any clients in that segment.

Per, as we've discussed before, it has been an issue, especially in the beginning of 2021. And it takes time to come from that. We are now very well in place. We get a lot of new, you can say, car insurance. And we have the Semler coming up working. We have a very good inflow. We are now competitive in pricing. Maybe not on [indiscernible], but then we are giving discounts as we discuss with customers. So I'm not so worried for that anymore. We are in place on that. And even if it's taking a long time, yes, it has seen far too long time. But we are there now. And that's also why I'm a bit more confident growth in the private sector that we have seen in the past year.

What was your market share on [ used sold ] electric cars in the fourth quarter, just in big numbers? 5%, 10% to 20%?

I don't know, Per. I don't know. I cannot -- we need to come back to you on that.

Okay. That would be great. Then just a small clarification. You -- I guess you have decided within probably the last 24 hours not to book the life insurance gain in '21 as you had previously guided to the market. What has triggered the decision to postpone it to '22? I assume it's not something that you have known that long ago. Otherwise, I would have assumed that you would had to tell it to the market that your guidance was wrong.

I think you can tell -- on the other hand, when we have got approval from the Danish FSA, then we cannot really [indiscernible] that.

But you knew that first of January. Shouldn't you have posted a guidance update on first of January if that's the key trigger? I'm just wondering that we haven't heard anything from you up until now. Of course, the fundamental impact of it is zero, but I'm just wondering about the way the communication has flown to the market.

Yes, you're going to turn it around saying if we got the approval, then we would -- as we did, we will come out immediately. So that was how we thought it. When we have not said anything, it's due to the fact we've not received it. You can always discuss if that was the right route, but that is how we saw it and as you also say, it's not really have any financial impact.

[Operator Instructions] We do have a follow-up question from Jakob Brink, Nordea.

Just a follow-up on the dividend payout ratio, 77%. You have 70% plus as a target going forward. Can I read anything into 77% in a year where you're also doing transactions and rights issues, et cetera? Is this level what I should expect going forward?

Yes, I can answer that. I think, I mean, we have the minimum 70%, as you say. We have just a bit above that now. I think that's fully in line with what we communicated we would stick to. And I think it's a balanced approach also given the fact that it's not that far. Yes, we recently went out and asked our shareholders to provide investments in the emission. So -- and going forward, we stick to what we've had. Until now also, we have the same policy of minimum 70%. And as we've also talked around before, now that integration costs will become a major part of our results, this -- the 70% is before these integration costs. So we stick to that.

And we have a follow-up question from Martin Gregers Birk, Carnegie.

Just, again, on the dividend. Next year, why -- what is the argument for not paying out 100% of net profits now that these one-off costs already funded?

This -- I think -- well, I think it's balancing what the exact percentage is. We feel this is a sound level, in line with what we also communicated until now. And also, to be honest, I think we just went out with a large emission recently. And I think it's okay to be maybe a little bit more prudent now that we are starting the integration and such next year. But -- and I can just supplement that we see a comfortable level and still expect a solvency of just around below 200% when we take Codan on, if we sort of merge the balance sheets today. And that is before the restructuring costs being incurred, and that would bring us down to just above 170% level for the group. So we are exactly where we want to be also with the dividend we now have suggested.

I totally get your point on this. Yes. And I guess it's also fairly in line with what you guys have been sort of hinting to. But when we stand at the same time next year, why is the -- I mean what is holding you back from going back to sort of the recent trends that you guys have had to return 100%?

Yes. Just to be clear, we have the same policy we always have, but we always factor in the situation in the current time. But obviously, we also expect some growth to be had, and that's also part of the business case, especially in personal lines, and that accounts for why we -- that's also why we have -- starting point only have the 70% as a minimum target we inform.

And this concludes Q&A session, and I hand back to the speakers for closing remarks.

Thank you for taking your time. Look forward to talk to you one by one also. Thank you.