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

Good morning or good afternoon all, and welcome to the Alm. Brand Q4 '24 Earnings Call. My name is Adam, and I'll be your operator today. [Operator Instructions] I will now hand the floor to Rasmus Werner Nielsen to begin. Sir Rasmus, please go ahead when you are ready.

Yes. Good morning, and thank you for joining us on our conference call. I'm here today with our CFO, Andreas Ruben Madsen; and our Head of IR, Mads Thinggaard. This morning, we published our interim report for the fourth quarter. And as usual, I will walk you through the operating highlights, and then Andreas will comment on the financials. Let us move to Slide 2. Overall, '24 ended better than expected with large claims of just 4.7% and weather-related came out of 2.9%, being in the normal range we expect and somewhat lower than 4.1% in '23. We had strong growth in our Personal Lines in '24 of 7.7%, while also ending the year with the Q4 growth rate above 7%. Thanks to our strong partnerships with local as well as countrywide banks, we're taking market share in Personal Lines. We view growth in Commercial Lines as decent in '24 with around 3%, while ending the year at a high note above about 5% growth in Q4. Despite a significant headwind on motor claims, were an improvement in our undiscounted underlying loss ratio of 120 basis points in '24, while ending the year with 190 basis point improvement in following profitability initiatives kicking in along with an uptick in the synergy effects. The synergies continue to take in as planned with the run rate increasing quarter-by-quarter. On the cost side, we improved the cost percentage to 18.3% in '24 as planned, but we did need to make an extra effort to make this happen. Combined with a very satisfactory investment result for '24, the profit before special costs and tax were DKK 1.75 billion, somewhat above our latest guidance of DKK 1.58 billion to DKK 1.68 billion. Our proposed dividend of DKK 0.6 per share and total buybacks of DKK 150 million represent a record high normal distribution of DKK 1.15 billion and a payout ratio of 96%. The Codan transaction is simply paying off on our distribution as well. And now I'll turn to Slide 3 with our financial highlights for Q4. The insurance service results of Q4 '24 of DKK 440 million was a big improvement from DKK 287 million last year, which was driven by much lower weather-related case but also with support from strong growth in Personal Lines of about 7% and underlying improvements on claims. The investment result of DKK 74 million in Q4 was satisfactory despite being lower than last year. We ended '24 at a very satisfactory level for the investment result of DKK 439 million. Special costs of DKK 109 million is somewhat lower than last year and contained DKK 52 million for the integration of Codan as well as DKK 50 million cost for our FTE reductions announced in October '24. And now I'll turn to Slide 4, with just a few additional remarks on '24. Here, I wanted to highlight the improvement we make with an insurance service result of DKK 1.4 billion despite the headwind we saw in motor in '24, while runoff gains at 1.4% were 1 percentage point lower than in '24 than in '23, and a bit below the long-term expected level of 2%. We are repricing on motor following the uptick in frequency in recent years as well as average repair cost was up in '24. We expect the repricing effects to kick in into '25, while recent additional uptick in motor frequency seems to moderate quite a bit. Thus we see '24 form a good basis for reaching our targets in '25. And now I'll turn to Slide 5 and 6. Both slides illustrates that we had major claims below our normal level in 7 out of the last 8 quarters. On a group level, we had major claims of 4.7% on average during the last 8 quarters compared to our normal expected level of 7%. Despite some volatility between the quarters, we feel we are in a better overall position in our continuing business reflecting the upcoming divestment of Energy & Marine. However, we will continue to work with a further reduction on the volatility in major claims. On Slide 7, you can see the payout ratio for '24 of 96%. The payout ratio is achieved for the actual net profit with some add-backs after tax related to the integration of Codan and amortization of intangible assets. We are close to a 100% payout ratio again for '24 as we have been for recent years. This reflects our strong underlying capacity for distributions. We already completed the first buyback of DKK 150 million related to the '24 earnings while we will soon launch the second tranche of DKK 100 million to run in February. So adding together the remaining ordinary share buyback in February, the DKK 1.6 billion buybacks we expect to do related to the divestment of the Energy & Marine after the expected closing in March and the dividend of DKK 0.6 to be paid in April. We expect and total effect of DKK 2.6 billion in distributions in '25. Let's go into the detail with the insurance service results on segments on Slide 9. Commercial Lines did quite well in the fourth quarter with an insurance service result of DKK 238 million compared to DKK 181 million in the fourth quarter last year. The main driver for the improvement was weather-related claims dropping to 3.4% in Q4 '24 from 10.4% in the quarter the year before, while a 0.8 percentage point drop in the cost ratio helped Commercial Lines as well. Personal Lines almost doubled on the insurance services result to DKK 202 million in Q4 compared to the year before, but from Personal Lines, the improvement was driven by lower weather-related claims as well as a huge improvement in the underlying claims ratio with a drop of about 3% year-on-year. For Personal Lines, a 1.1% drop in the cost ratio helped as well. And now please turn to Slide 10. Insurance revenue grew by 6.2% in the quarter with a good growth in both lines. In Q4, growth was 7.2% in Personal Lines, at 5.1% in Commercial Lines. In Personal Lines, we are still taking market share due to our strong partnerships, bank partnerships, while repricing related to high motor claims health as well. Commercial growth is coming back to a level of around indexation of 3%, while a 2 percentage point effect from new legislation on workers' compensation comes on top of this in the fourth quarter growth rate of 5.1%. And moving on to Slide 11 and the claims ratio. The Q4, claims ratio was down 3.8 percentage points year-on-year driven by much lower weather-related claims. The 6 percentage point drop in weather-related case was countered by a 3% drop in run-up gains. The underlying claims ratio improved by 70 basis points year-on-year, driven by Personal Lines as successful repricing of motor teams while Commercial Line was adversely impacted by a lower discounting effect on claims and the remaining headwind on motor, even though we view this headwind as moderating in the quarter. Moving to an undiscounted basis, we reached 190 basis point improvement in underlying claims year-on-year, which is very positive for the improvements we are expecting in '25. And now please turn to Slide 12 and the Personal Lines. Here, you can see the drop in the cost ratio of 1.1 percentage points I mentioned before, following necessary achieve reductions as well as synergies kicking in. The drop in the claims ratio is a massive 5% and with underlying improvements above 3 percentage points as the main driver, I'm quite proud of this and believe we are standing out compared to our peers on their underlying development Personal Lines. Please turn to Slide 13 in the Commercial Lines. Again, I've already touched upon the improvements we are seeing in our Commercial Lines. In Q4 '24, we are seeing much lower weather-related claims than Q4 last year, but also much lower runoff gains and an adverse effect from the low discounting rate on claims. In sum, the underlying claims experience is not that different from last year, but still with a moderate headwind for motor. Our expense ratio in Commercial Lines in Q4 was down 0.8 percentage points year-on-year. And with these comments, I will now hand over the word to Andreas, who will walk us through synergies, investment, and the guidance.

Thank you, Rasmus. Please turn to Slide 15. We continue to move forward on our various synergy initiatives according to our plans. And this quarter, we have realized DKK 138 million leading to DKK 460 million harvested in synergies for 2024, slightly above our target of DKK 450 million. DKK 138 million harvested synergies in Q4, a significant uptick from the DKK 75 million in Q4 of '23, as we are now seeing more support from IT and administration for the year-on-year uptick. I'm proud to point to the fact that we are moving into with a run rate of synergies of DKK 550 million, which is not that far from the DKK 600 million targeted in P&L synergies for 2025. And now I move to Slide 16 and the investment results. The investment result was a profit of DKK 74 million, driven by a positive return from our free portfolio amid a drop in interest rates in Q4, while the match portfolio delivered a return of bit above 0. Overall, I'm quite pleased with the investment result for '24, which ended close to the DKK 450 million that we guided for. Even though we focused much more on the insurance service results and the investment result, it's clear that a positive investment outcome like we had in '24 is a nice add-on to our distributions of dividends and buybacks for the year. And now finally, please turn to Slide 18 for the outlook for '25 initially stated on January 22. Our guidance includes a technical result, excluding one-offs of DKK 1.5 billion to DKK 1.7 billion including expected synergy gains of a total of DKK 600 million. The guidance also reflects continued pricing efforts in Commercial as well as Personal Lines. The cost ratio is expected to be at 17% and the combined ratio, excluding the runoff result is expected to be at 85.5 to 87.5. We expect an investment result of DKK 200 million in '25 based on the current returns for the free portfolio and a series of the match portfolio. For other activities, we guided a deficit of around DKK 125 million. Consequently, group profit, excluding special costs, is expected to be DKK 1.58 billion to DKK 1.78 billion before tax, excluding runoff gains for '25. In addition, we guided for the restructuring costs of DKK 175 million of which DKK 25 million relates to the separation of our Energy & Marine business, while we expect depreciation of intangible assets to affect the income statement by approximately DKK 335 million in '25. Lastly, we expect the result after tax with continued -- discontinued activities of DKK 250 million. And with this, I conclude our presentation and hand over the word to our moderator. Thank you.

[Operator Instructions] And our first question today comes from Asbjørn Mørk from Danske Bank.

Congratulations on strong set of numbers. Basically, first of all, trying to understand a little bit the underlying improvement, the 190 basis points for the group undiscounted. Considering the impact, you also mentioned from the health and accident business and the sort of the impact in Q4 on the premium side versus the claims, which, if I understood you correctly, was still there in Q3. So I guess that's around 50 basis points of sort of a switch for the underlying into Q4. A tailwind on the underlying for the group and hence, 100 basis points or 110 basis points for the Commercial business. Is that correctly understood that we should sort of adjust for that to get to real underlying, so to speak?

Yes. Asbjørn, this is Mads. I think it sounds a bit high. I mean we are talking about a DKK 50 million extra in Q4 stemming from Q3. So we have double effect of DKK 30 million, which would normally be DKK 15 million in Q4. And I think in the Commercial Lines, that would produce a positive or a drop in the underlying loss ratio of around 70 basis points. So on a group level, 30 to 40 basis points help from that.

All right. That was very clear. Then if we then look at the 190 and adjust for this, I guess, still for the true underlying, you are seeing somewhat better underwriting momentum than what you at least sort of soft guided for Q2 and Q3. So what is it that has sort of gone better in Q4? Is it that the price acceptance for clients has been better? Or is it early signs. If you look at the motor claims, for instance, the last 3 months have been pretty benign. Is that the trends we're starting to see coming through? Or could you give a little bit more flavor on what it is actually that is sort of on the margin during better than you thought 3, 4 months ago?

Yes. Andreas here. I'll try to answer that. I think we have a few things which have moved in the good direction. In general, we've had a good -- we had another solid quarter in Q4 for Private Lines also where some of the -- apart from also some of -- a lot of our other lines have had a quite good strong quarter, which is a bit better than we would normally see. But -- and then on top of that, I think Commercial Lines, we are beginning to see effect of the repricing come in. We also see them -- we see motor frequency moderate a bit now and they come in almost flat if we adjust for interest rates on Q4. So even though we still have some headwinds on those, I think we are beginning to see maybe the first signs of also the part of the renewal we've had in 110 for the last quarter. We do see some tailwinds coming in maybe a bit sooner than we had originally expected.

Okay. Fair enough. If we then go to the private lines and the 5 percentage points improvement to the claims ratio year-over-year. Is there a retention risk here that you have repriced more than maybe your peers or that you have repriced for a little bit of a more adverse claims scenario than what we're seeing right now? Is there a sort of -- do you see an increased churn risk going forward here?

Thanks, Rasmus here. No, we don't see that. We have had this very good momentum for the last -- almost say many quarters. So I don't see that as a major risk. We also see our competitors that they really increase prices and some are even doing it higher than we are doing. So I think it's a moderate risk.

Let's say, the motor claims numbers that we've seen for November, December, and January, that trend sort of continues, does this change your pricing policy in '25? I guess you have been repricing for a continued sort of deterioration or at least a slight improvement, but still some adverse scenario on this. So is there anything there we should be aware of?

I think we still see increases they are more moderate. And I think it's too early today to say how that will affect in the last half of '25, but we definitely -- we look to see more moderation on the pricing hike, so to say.

Okay. And then a final question from my side. On the PIM model, you mentioned now in the Q4 report that the process is ongoing. You have, of course, discussed this a couple of times, but now you actually write it. Is there a change in why you put this sort of in text, and this is sort of like you being extremely firm on this to a level where you can sort of put it in the report and the actual capital release, any estimate on that and when we should expect that to come back to shareholders?

Yes, as we put it in the report because I know that we verbally mentioned this a number of times, but we feel for full transparency for all of our stakeholders, we felt it was good to put in the report. So that was out there for everybody to see in writing that where we want -- we are in the process, but we're still too soon to be able to give any estimates for the effect.

Okay. That's fair. A final, final question on the renewable sale. Since the date is very fixed, in March? What is it sort of we're waiting for that deal to close? Is there any deal risk at all?

Yes. Well, we don't see any deal risk. We are waiting for the final part of the regulatory improvements the one coming from the Norwegian FSA, and we still expect that to be within time so that we can close in the beginning of March. And there's no sort of -- there's been no problems right in the process so far. We're still waiting for the final approval. But basically, we are where we were expecting to be at this point in time.

The next question comes from Jan Erik Gjerland from ABG.

The first one is on the sale here. What happened to the -- is it a runoff gain you will sort of write in the report that gives you this fantastic sort of discontinued earnings for these 2, 3 months of DKK 250 million. Secondly, the growth in your market share in the private area looks to be stemming from your banking operation or banking channels. Could you shed some more light into who you are taking clients from? And if it's price driven or is it new volume? Or is it sort of added volumes from your clients? On the price increases in general, you mentioned last year that you had repricing for DKK 100 million each of profitable growth in the Commercial as well as the Private Lines. How are you doing on those numbers? If you could shed some more light into how well you have been succeeding in those sort of successful repricing. And finally, on the PIM model as Asbjørn talked about, when could we expect anything? Is it in the second half of this year? Or is it early '26 that you would that you could get some approval from the regulator?

Erik, Andreas here. I'll start out with the first part around our discontinuing operations guidance. But there are a few moving parts in there. We have the -- I'm not sure this is the right in them, but we do have the depreciation of the goodwill relating to the sale. We have the depreciation of also the other immaterial assets, the brand and customer relations. Then we have the actual payment from Gard in there also. And then as you rightly mentioned, we have the, let's say, the profits we expect for the business as such until March 3. And in the end, we also have some -- a minor part coming from some costs related to the sale we're handling this year also. So there are some moving parts in there, and that all sums up to this after-tax number of DKK 250 million for the year, all expected to be booked in Q1. So that was me, and then I think Rasmus would take that.

I can take your second question about the growth in Personal Lines. And you're right, very much of that can be connected to our bank partnerships, and we are definitely taking market shares in this area. I think we have a solid product. We have a very good relationship with this bank. It's now kicking in as one quarter takes the other that we are improving ways of working is becoming more digital to arrange meetings. We are better in having the meetings, less cancellations and all that. So step by step, this partnership just becoming stronger and stronger. And as they have a 40% market share of the total banking activities in Denmark, we really have good growth opportunities in this area. I think as we have faced before, but it is definitely kicking in quarter by quarter. And who are we taking our customers from? I think it's very much spread around all of our competitors. It's not to say that it is one or the other. It's definitely spread out. The bank partnerships are very strong in [ Jyske ]as an example, with Spar Nord and [indiscernible] in Denmark. It's also coming in Copenhagen in [indiscernible] coming in strong, has now been part of this family for some period. So all in all, it's working out, you can say, exactly as we wanted to work out.

I can try to shed some -- to give a status on the repricing also compared to what we had our profitability initiatives and what we have been communicating earlier, I think in the -- and the overall status is that in terms of round numbers, we've been talking about around DKK 100 million coming from both -- yes, from Personal Lines and Commercial Lines, respectively. And I think that is still a good estimate for the proportion of benefits we see coming and what we have sort of set in motion. And we don't see back to some of the other questions we see -- we've seen, as some have noticed, maybe we've seen a moderation now in motor frequency. We still feel that's too early to sort of see a structural. If that was to materialize, later on as a structural benefit, then we would take action. But for now, we still feel we have the right plans in motion.

Then Erik, I think you had a question on the PIM timing as well. And we write in the report, we say it's a process for Q1 to Q3, '25. So we don't want to put any pressure on anybody. But I think, I mean, by the end of Q3, we would expect an outcome of the process.

The next question comes from Martin Birk at SEB.

Perhaps a couple of small questions from my side. Special costs is a little higher than anticipated. What's the reason for that? Also what's the reason for -- and also your guidance for 2025 [ inflation ] cost also seems in the high end. If you look at discontinued activities was happening in the quarter. And then finally, when I look at your tax rate. I guess your average tax rate over recent 8 quarters like 34%, which is a lot higher than the statutory tax rate in Denmark for companies. Are there any moving parts to this tax rate that we should be aware of going forward?

Yes, I'll try to go through that step by step. First question was around the special costs. For Q4, I think we more or less landed where we have been expecting. We had, let's say, we have DKK 52 million coming from the ordinary integration. And then we have the DKK 50 million on top. We also communicated related -- earlier related to the reorganization we -- and FTE takeout we had in October. So I think that's in line with what we've said earlier. And you're right that if we move to '25 with the guidance there, DKK 175 million in total, DKK 25 million of that has to do with Gard, Energy & Marine and that's in line with what we've -- we've never been very specific on timing, but we have communicated a total cost of around DKK 50 million related to the separation. Some of that's already being -- have already been held in '24 and some relating around DKK 25 million to '25. So that's more or less also in line. So if you add it all up in integration for the -- when we are done in '25, we will be at just below DKK 1.1 billion for the integration as such. That's a bit higher than the DKK 1 billion in round numbers. We started out communicating. But just below DKK 1.1 billion for the integration as such. And then we've had this need to do further on costs along the way among the DKK 50 million we just did in the end of last year. So I think that should be -- that's at least where we are now for integration and special costs. Then you asked also to the discontinued activities, as I recall, that was related to the Q4 results margin? Or maybe you could repeat that.

Wondering why -- what's happening this quarter on the discontinued activities? it's coming out a little lower than we really had hoped.

Yes. I think we've now had a fantastic quarter, but we are doing net profit in after tax terms, this is not too far from what we normally see. And then there are also these costs that I mentioned before. I think there is about just below DKK 20 million of costs being booked related to the separation in Q4 also.

Okay. Got you. That makes sense. And just lastly on your tax rate, which is my book is very high and it's been very high for now 8, 9 quarters in a row. And I'm wondering why that is the case.

Yes. And I think we do have some moving parts there also and just to give you sort of the flavor of the moving parts, we have a [ fluctuation ] -- that's a difference in tax rate between our parent company and Alm. Brand A/S with a tax rate of 22%. And then we have almost all of our profit losses are in the insurance company with a tax rate of 26% then you can also, on top of that, have some fluctuations, which I can come back to. But if you look at the structural thing, we do see an effect from having the depreciation of intangibles as the main item in the Alm. Brand A/S part of the perimeter, which is only on 22% deduction. That's not really affecting anything in terms of cash value because it's related to the immaterial assets and the depreciations there. On top of that, we can also see fluctuations when we have -- as we have had last year also, if we see losses on some of our strategic investments which are placed in the mother company, that will also be at a lower -- then we have a loss if that's the way it goes, which has been the case for the last year. We've seen some losses there, which also are deducted on '22, that could also be gains in other periods. But I think most of -- just to sum up, I think most of that sort of what you're seeing is from the depreciation of intangibles in the mother company.

So if you said in my chair, what kind of tax rate would you put in 2025?

Well, I think if you're looking at -- depending on how you build your model, but if you're looking at what actually generates...

Reported tax rate.

For what -- for the full '25, I think I have to get back to that, Martin. For the parts generating actual cash in the insurance company, it's '26. We can make a follow-up if you need more on that item and maybe we can spell it out a bit clearer for you in a different session.

[Operator Instructions] The next question comes from Mathias Nielsen from Nordea.

Congratulations on the strong underlying results this quarter. So my question is, firstly, on motor, like now we have seen motor frequency coming down in Denmark recently. And as far as I remember, like a year ago, we had this double whamming effect of both the frequency increasing, but also triggering basic repair shops and distressed supply chains, which also caused the claim inflation, like the cost of repairing them to spike quite a lot. How do you see it this year around? And at this time, like have you already seen any benefits from that? Or is it something that you expect to see in the early '25 that the cost inflation is also coming down on claims?

Yes, I can take that, Mathias. I think you're very much -- you're right in the overall picture. We saw -- we've seen frequency come up for some time. Now very recently, we see maybe a slight moderation. What happened in especially the second part of '24 was that also repair costs came up and that pushed average claims up. We're still not seeing a much different picture there. We're still at these higher levels. You might argue that in a blue sky scenario, over time, if frequency comes down a bit, and we still -- just to repeat that, we don't feel that we have -- that, that is structural yet that we can make that call. But if that was to happen, then we would also expect over time the average claims to come down as there was less pressure on supply chains. But for now, we feel we have the plans in motion we need, and we haven't seen anything that we consider structural at this point in time.

Okay. And then the second question on competition, like how do you feel the competition is out there right now, like earlier this week, I saw one of your competitors changing the way they do the list prices by changing the way they do discounts just to appear cheaper on the list prices than, for example, you on certain products. Have you seen the competition like intensifying over the past quarter? Or how should we think about that?

Rasmus here. I think just to put it out, I think we have quite tough competition at the moment in general, especially in the Personal Lines, but also in the SMB and lower lines of Commercial. There are bit always different ways to do it. And we're doing it our way. It's working quite good at the moment with our partnerships in the bank, as we just mentioned before. So yes, I cannot comment on what others are doing and how they do that. But I can just say that the customers, they are -- they know more and more about the prices. They have better views into policies and all that they have had ever before. So you cannot really do anything to hide it for the customers at all. So competition is quite tough out there, just to mention.

But is it getting worse? Or is it just the same as it has been for quite some time?

Yes, you have a point. I think it's more or less the same. I don't know exactly but I have a feeling that being a small competitor is by definition in terms of all the AI coming in and whatever comes will be tougher and tougher to be small and not having the scale. There's a lot of compliance issues coming in for European Union and all that. Everything takes time. It takes cost and it will be -- end up in higher prices.

And then my last question is sort of a technical one. On the DKK 250 million in the result from the discontinued operations in '25. How much is that is actually impacting the solvency ratio, all of it? Or is it -- like it sounds like it was quite a few of accounting profits rather than cash profit. So is there any change in how we should think about that on the solvency ratio?

I can start out and then Rasmus, if you can help me. But I think the overall picture is that we have a lot of moving parts. Some of the parts I went through are handled also in terms of taxation in a different way, some of it being taxed on ordinary tax rate, some not being tax deductible, for instance, the goodwill depreciation. So in effect, what we communicated when we started out was that we had a total price, so to say, of DKK 1.6 billion, and we committed to pay DKK 1.6 billion because that's more or less -- that was our estimate for the capital effect we would be able to pay out after the -- and that still holds. So -- and then within the DKK 250 million, I can add the clarity that we, for now, have not had a fantastic quarter in Energy & Marine. So we do have -- and that's a small number in the big picture here, but we do have at least an after-tax loss of DKK 50 million we've booked on top of what we would normally expect for that. But most of what we see here is not actually impacting the capital position. There, I would go back to the DKK 1.6 billion, and that's more or less what we are -- that's also what we'll be paying out in the rights issue following the divestment.

Yes. I think I can perhaps add a bit -- I mean, I'll say it in a bit different way also with -- I mean, you have -- of course, you have money coming in from Gard on equity as well as liquidity. But that's going out again. then you have a disposal of intangible assets, but that is already deducted the capital. So you're not really seeing any difference on that in the solvency ratio and then you have a bit of pluses and minuses in the line.

The next question comes from Bhavin Rathod from HSBC.

So the first one that I have is on the commercial book again. Are you able to quantify the quantum of price increases that you were able to put through on your commercial book at the recent renewal in January. And in conjunction to that, are you seeing change in terms of customer behavior? Are you seeing any pressure in terms of customer retention when you're able to put through those rate increases? The second one would be on your reinsurance program, would be helpful if you could provide some color in terms of have you made any changes with respect to your reinsurance coverage at the recent renewal period? And the last one would be on your investment result target of DKK 200 million. Can you provide us the underlying macro assumptions that you have baked into that number with respect to interest rate movement or equity market movement?

Yes, Rasmus here. I can take the first one in terms of the commercial. And the rates, as Andreas mentioned before, we had the first round first of October, and we actually, as you see in our numbers, it was -- it ended up quite well, and we had a quite nice increase in our accounts in commercial in fourth quarter. Now we -- the big one is, of course, first of January, where we also increasing prices also significant in some areas. It's a little bit late to conclude, but we feel that we are in a very good position in terms of customers staying with us. So retention is good, and we're getting the rates we are asking for. So I would say from what we have seen so far, all in all, it is very positive in the Commercial part.

And in terms of reinsurance, we have more or less the same -- there's no like major changes to our program or structure going into 2025. So we still have the same retention level limits for all our major programs. So nothing new to report in terms of a structure for the reinsurance. And then I think you asked also around the investment results. We -- as you may recall, our expectations on the investment results stems from a combination of us assuming that the hedge part of the portfolio, which is most of the portfolio, we will, on average, reach at 0, expect to return for that. And then the return that we generate will be from what we call the free portfolio. And we've come a bit down in annual expectations here arriving at the DKK 200 million. That's then from 2, let's say, effects. One of them, the major one being that rates have come down quite a bit. We still have a lot of bonds and also illiquids, which are tied up to interest rates. So we are not -- we don't have that -- we're not heavy on equities. So we do follow sort of the overall interest rate expectations in the macro, and that's what's pushed down a bit. And then also some -- we will also see a reduction in the capital of the free portfolio coming up with the Gard divestment because some capital is freed up from that as we talking to earlier. So those 2 effects are pushing down the annual returns for investments a bit.

[Operator Instructions] We don't have any further questions. I'll hand back to the management team for any closing remarks.

Yes. Thank you very much for having your questions. We hope that you will have a nice day. Thank you.

This concludes today's call. Thank you very much for your attendance. You may now disconnect your lines.