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

Hello, everybody. Welcome to our Capital Markets Day. I am Mads Thinggaard, Head of Investor Relations in Alm. Brand Group, and I have been looking very much forward to seeing you here at our headquarters today. And I must say, it's a great pleasure to see so many investors and analysts showing up here at [ Medeon ]. I would also like to welcome our webcast participants. I hope the next 2.5 hour company with the executive management of Alm. Brand Group will be interesting for all of you. Talking about our group executive management, I would like to make a brief introduction of today's speakers. Our Group CEO, Rasmus Werner Nielsen has been with ABG since 2017 and as CEO from 2019. Rasmus has transformed Alm. Brand from a financial conglomerate to add up 3 non-life insurer in Denmark. Rasmus didn't do the transformation alone our group CFO and Deputy CEO, Andreas Madsen was onboard for the entire transformation. Andreas joined Alm. Brand in 2016. Our Chief Commercial Officer, Camilla Amtrup, joined Codan in 2016 after many years within the tailored communications industry. And thus, she became part of Alm. Brand Group when Codan was acquired in 2022. And then I would like to introduce our Chief Operating Officer, Bo Krag Esbensen, who joined ABG in 2023 following a career for plus 10 years, Mackenzie of which some included a dedicated effort as consultant here at Medeon. And now let's take a brief look at today's agenda. Rasmus will start out with our transformation how we unfolded the synergy part of the scale potential from the Codan acquisition and where we are today. Then Andreas will open for a deeper look into the 2028 and strategy with Camilla and Bo explaining about the strategy and initiatives in detail. We will end this section with a short Q&A and a little break. After the break, Rasmus will explain about the opportunities we have with our largest shareholder, the foundation of 1,792. Andreas will then make a deep dive into our financials as well as our new ESG strategy. When Rasmus has given his concluding remarks, we will go into a longer Q&A session followed by lunch around 1:00. Rasmus, the stage is yours.

Thank you, Mads. Very nice to see you all the Midband also very nice to see you that are participating on the webcast. Well, we started on a journey and we say, journey, I think nobody could ever have believed on that we are where we are today. Today, we have 2,000 employees, leaders, managers that are highly skilled and highly motivated. We have more than 800,000 customers, and they come in at a flow that we are very happy about. We manage this company in a profitable way. And I think -- and I firmly believe that we do our utmost to serve the shareholders as well. We are in such a good position. And even though we have worked hard, and we have done a lot of things, there's still a lot of things to do. That's why we call the next strategy unfolding the potential of scale. So 6 years ago, we start changing Alm. Brand Group, Alm. Brand to the better. After 1 year, we divested the bank. After 2 years, we took over Codan and at the same time, we sold a nonlife company transforming and brand into a purely non-life insurer. After 1 year, 1 year after we took over Codan, we got the keys finally. And just after that, we had our first Capital Markets Day in Alm. Brand Group, that was in 2022. On that, we had 3 main topics. What then was very ambitious targets for 2025. The second one was how we would reach the DKK 600 million. And the third one that we discussed a lot with some of you is how we would manage our international business of Energy & Marine. We have worked with the synergies. We have reported that the quarter after quarter. And I'm happy to say that we will reach the target of DKK 600 million, and we will even reach a little bit more, so we'll go into next year with a level of DKK 650 million in synergies. We also delivered on the Energy & Marine case. We prioritize that a lot from management. We had a firm hand on how to deal with the activities. After a year, so we made the activities profitable. And it actually became more and more profitable. And in the end, we concluded that it was not really our core business, and we sold it to Norske GARD. The proceeds from that freed up DKK 1.6 billion in capital. And as you know, we use that for [indiscernible] Share buyback. Quarter after quarter, we also worked on improving the underlying business. And as the claims ratio has decreased nice and steadily is done with the improvement of our portfolio, and it also helped the strong synergies we had in place. And that's even though we had quite a bit of hit for the increase in more frequency. The divestment of Energy Marine took out a lot of volatility in the malclaims, as you see here. And of course, the message here today is that we will continue to work on reducing volatility going forward on major claims. So standing here in quarters and almost 3 years after the last CMD, I think we can say that we succeeded with the transformation. And we also succeeded with reaching the financial targets we set out at least 3 years ago. We are in a very strong position and we do have a strong team, we do have very committed employees, and I think we are ready to go into the next period. As you know, it's not really up to me and I normally never comment on the share price. But I think it's fair to say now that the years that have gone, we have we have led to a nice increase in the share price and also the dividend spend. So if you take everything together the total returns should be okay, in my view. We started using share buybacks as a weapon, so to say, a tool. And we do that, of course, if we have surplus capital. So this brings us to where Alm. Brand Group is today. We are a firm non-life leading insurance company in Denmark. We do have 800,000 customers. We have a market share of 15%, hopefully, increasing nice and steadily. We have a balanced business split between the commercial lines and the personal lines. And we have 4 strong brands, 2 of them that are very well known, Alm. Brand and Codan and the 2 others that we use together with our partnership banks. And then we are in the nice market in Denmark. It's a market where the insurance density is very high, it's a very attractive market. We are able to have, I think, as you know, quite okay buying ratio compared to other markets, and we are the important top 3 player here, and there's quite a far distance down to #4. Our business model is very strong. As you see, it's lined up here, we now have one platform in one country. It's a simple model. It's an agile model. We're able to resist if something happens, [indiscernible] . We can increase prices with -- automatically with the annual wage inflation. So we are also resistant in terms of price increases on material and stuff like that. We are, in general, able to have agile prices if something should happen. So all in all, we can mitigate the risk. Then there's been a lot of discussion about climate. I also discussed that a lot. And of course, doing business in Denmark, climate is an issue. Denmark is flat. But I think with the way we deal with prevention -- discuss about prevention, we can mitigate that risk. And if it's not enough, then we can -- we have price adjustments to be used there as well. So that was a little bit about our business. And then maybe a few words about our foundation. Our foundation dates back to 1792, most of you know that. And they own 47% of the group. The foundation only have one activity, and that is Alm. Brand Group shares in the Alm. Brand Group. And they are here for the long-term investments of their members, which are exactly our customers. And of course, I'm very happy that we today announced that the foundation has decided to make a contribution to Alm. Brand Group of DKK 185 billion. And that contribution is given to us so we can enhance the customer relations activities. What we also announced today is that we in Alm. Brand Group, we have guided to use DKK 100 million of that of a new customer loyalty program. It's a program we haven't had before. Some of our competitors had are of course, very happy and very thrilled to be able to say that. It's a program where we will be able to pay out a cash rebate to the customers that are part of the program. I'll come back to the foundation and the program later in the presentation. So summing up my introduction. We now have 100% focused non-life company. It takes some years, but we are there now. We have significant sales that gives us benefits. We are dealing with a low complexity. We have 4 well-known brands, and we have now also a very strong foundation based ownership. So I think all in all, we are in a very position and we are ready to take on the next 3 years. Andreas will come up and tell you a little bit about our targets for the going period.

Thank you, Rasmus. Yes. I'll take you through in a very short minute. I'll go through the overall targets. I'm sure you're excited to see. And then we'll also dive into the overall building blocks and thinking around the strategy before Camilla and Bo in the next section will dive to the specifics of the strategy. So let's start with the targets. This strategy we present today will deliver a significant increase in the insurance service results, DKK 500 million of increase towards 2028 compared to the '25 targets. That's DKK 2,350 million in Insurance result corresponding to a combined ratio of 82%. And within there, we also have a cost ratio of 16%. Combined ratio being down 2.5 percentage points in total and the 16% corresponds to a 100 basis points reduction compared to the '25 levels. And then if we turn to the capital side of things. Today, we introduced a new target, focusing on our return on own funds of 40%. And as we'll go into more detail later, you'll see that this significant increase in Insurance Services coming from our core business, in combination with also our ability to do buybacks in the future period, will translate into us delivering an average yearly increase in earnings per share of 10% over the coming 3 years. And then just to round it up, we stick to our strong commitment to pay out any proceeds, we don't need to run our business. And as such, we restate our minimum payout policy rate of 80% of net earnings. I think Rasmus was tied this up nicely. We had -- in the period, we just went through, I think we feel that we got the scale we needed to actually become viable in the market we now operate. The DKK 600 million synergies we heavily deliver this year, I see them as proof point for the Codan transaction, also the -- the price we paid for the Codan transaction, and it sort of shows that the returns we presented to shareholders 3 years ago came in as we planned. What we present today is an actuality the potential we have to do further from that scale we achieved in the Codan transaction. And in a way, comes on top -- and even though we might not be the largest in the Nordics. I think the point here is that we do have the position we like with a simple model and viable scale in the Danish market. And that is the strong proof fund that enables us to do the DKK 500 million in net Insurance Service result improvements over the coming years. And we presented in this way, where we will come back to the key focus areas driving that. But we have DKK 650 million coming in gross benefits. And then we have DKK 150 million going the other way, so to say, for the needed investments and a few other moving parts. So, DKK 500 million on a net basis and improvements in Insurance Service results. So now I'll spend a few minutes on the overall framework and the building blocks in our '28 Strategy, unfolding the scale potential. Starting with the first key focus area customer engagement. Customer engagement is about how we will focus on the full customer journey, making sure we play in the right segments in the right way. And that will deliver us DKK 125 million in benefits, which Camilla will go further into in a minute. The next one is our insurance capabilities, the largest single block DKK 350 million in gross impact from there. That key focus area says a lot about how we will use data and insights to basically improve our core underwriting motor, our core underwriting profitability and also driving further efficiency within especially the claims area. And all that will translate into what we feel comfortable saying would be us coming with a market-leading position in terms of the claims ratio. And then to round it up, we have the operational platform DKK 175 million in gross benefits coming from that. And that's a lot about using the advantage we have of having a simple platform today in one country and further streamlining that and taking home benefits and efficiency gains from that in the coming years. So all those strategic initiatives are based on what we term 2 key enablers. And the first is the strong foundation ownership we have. And as Rasmus already teased, we can look into the foundation having an even more direct impact towards supporting our strategy and business model in the coming strategy period and we'll be unfolding that further as we get into the next sections. And then rounding it up, behind it all, we won't be able to deliver on this strategy and the initiatives in there if we don't have the right talent in the organization and engage employees to deliver on these targets. So that is the overlap for the strategy we will now dive into. On top of the overall financial targets I've already mentioned, we also, this time around, introduced overall strategic KPIs. The idea behind these KPIs are that we feel that they support from an operational standpoint, our ability to deliver on the financials i.e., if we deliver, when deliver on the strategic KPIs, we feel highly confident that we'll also with a very high likelihood, mean that we are delivering on the financials. And to begin with, we introduce customer [indiscernible] We will set out to improve customer selection from 73% to 77%. On top of that, we also, regarding the customers, [indiscernible] Financials. And then we've operational KPI , which is our proposing, which we seek to increase to 50% of all claims handled in the future. That means that you don't have any manual or any people in that sort of claims being handled, all be automatically. [indiscernible] To further on all these later on. Then we have adding one of our key enablers. We have employee engagement also. The firm ambition that success from also having engaged with the ambitious target of an engagement score of 80. And as you see, we'll dive into that later, but we are luckily the 79 at the current time. And then we'll also be introducing an ESG strategy today, where we even want to highlight here as a part of the [indiscernible] -- and the one we've chosen has to do with emission reduction in [indiscernible] Claims, which will also be unfolding later on in the presentation. So that's the overall map we have for our strategic KPIs. Camilla will take us on to how we engage our customers in the right segments.

Thank you, Andreas. Before we dive into the first strategic focus area of customer engagement. I would like insights on our customer approach because there's a clear link between our customer engagement and our customer approach. Today, in Personal Lines, we have 3 strong brands. When Codan was acquired by Alm. Brand in 2022, we made an extensive study on market and customer behavior. And brand strategy, and it's worked really well for us. We have spent this strategy period developing distinct position, getting different customers and different needs. In the coming towards '28, we will focus more on developing and value propositions to support each brands. Of course, for efficiency purposes, everything will be based on our one core platform, meaning that our core products will be the same across brands, but it will be the bundling of services and propositions that will differ from brand to brand. You take Alm. Brand today, our main focus will be to increase our business with our existing customers. Its customers' primary living outside the larger cities, typically families. These customers, they value a customer experience where they feel recognized and by us using the insights that we showed and that we understand their unique life situation. For Codan, our focus will be more on attracting new customers. Codan customers is typically mid- to high-income customers living in the larger seas. They value our customer experience with focus on fax and strong advisory and high degree of flexibility in our offerings. They also have a stronger preference for digital solutions. Privatsikring will continue to be our strong brand for bank distribution, and we will focus on adding the abilities for these customers to do self-service and buy additional products within their online banking solutions. There's also no doubt that across all brands and all segments, there is an increased preference for digital solutions. So to prepare for the future, we have made an ambitious target of increasing our direct sales through digital channels. We know today, a lot of customers research online but end up buying off-line due to complexity, but we believe the time is right to increase our investments in digital solutions. We have one digital platform already migrated all brands to the platform that enable us to develop services in a more efficient manner to fully gain the potential of this platform, we also need to have our customers migrated to our one core platform. We have actually experienced high growth on mainly brand digital sales, although it is from a very low starting point. And of course, we will take some of these learnings and apply them to code as soon as they are on our new platform. For Commercial Lines, we have actually also have a multi-brand strategy approach. It's been based on the size of the customers. Codan has historically been very strong, focusing on corporates and large corporates. And that is actually a perfect fit with a [indiscernible] Brand that's primary focus on small and medium-sized enterprises as well as agriculture. We will grow our market share among the small and medium-sized enterprises as well as agriculture. It is a market, but with fierce competition, but we have experienced high growth already in the smallest part, up to 20 employees. And we actually believe that we can provide a strong competitive offering to the midsize segment, combining our industry knowledge from the [indiscernible] with our knowledge of how you should approach the smaller business. On the agricultural side, we have also already seen an increase in our growth. We have been growing around 9% for the [indiscernible] And with the help from our bank distributions, we are also getting more leads. Agricultural customers with a pure Danish player. We have recently reorganized our sales organization, so we have a stronger focus on the midsize segment, which is also [indiscernible] And we're already starting to see now a much stronger pipeline for our Q1 corporates and [indiscernible] . Large corporates, it is still very much about selective growth and balancing our portfolio. We have exited most of our compensation, and we will have a stronger focus on also generating full service customers among the corporates. So it's not only the lines that are exposed to large losses that we will underwrite. For the large corporates with [indiscernible] , we also have a strong focus on decreasing our lion's shares, and we will also exit some of the geographical areas for instance, decreasing our exposure in the U.S. for these Danish customers. So that will be all about reducing the volatility that atmos already mentioned. So all in all, the Commercial Lines strategy is very much about rebalancing the portfolio growth. To support our service model for Commercial Lines, we will take an even stronger position as a trusted adviser. We want to improve the perception of Codan and [indiscernible] Commercial Lines as a company that actually provides strong advices when it comes to claim prevention, optimization of risk and so forth. We've just conducted a study around with our business customers, and they clearly state that they expect us to provide this information. Large corporates, they take the information and their own risk management organization changed it into corporate actions. For the medium-sized corporates and the agriculture, they also expect us to come up both claim prevention measurements, share insights and how they can reduce your damage cost. Towards '28, we will launch several new initiatives focusing on risk management. We have just recently with the support of our foundation launched intention Service Check with our agricultural customers, and that has been really well received -- we will also launch a risk management event in Q2 targeting the large corporate and we will intend our investment in our claims stop that we have already learned a lot about the last 5 years, especially focusing on motor and Transportation segment. that will be extended to other lines of business and also to other industries within motor. And as you can see, we have provided fairly high damage savings for these customers. That concludes what I would share on our insights or on our customer approach. Now I would like to return to our customer engagement as our first strategic key focus area. As Andre has already mentioned, strengthening our customer engagement is all about using our insights to improve customer journeys end-to-end and improve our sales and service models. In the following slides, I will provide you with some concrete examples of how we are going to improve our insurance service result of around DKK 125 million, based on the 6 focus areas you see on this slide. We have spent the last couple of years building a very strong data foundation and integrating most of our data. And we've also rolled out our CRM system across all brands. Towards '28, we want to work more with tailoring our messages targeting customers in different ways with different messages and different setups depending on where they are in life. Today, we have a one size fits all approach. Most of our customers actually get this yearly Service Insurance check without us actually knowing if that is what they actually need. In the future, we will use the insights and our ability to analyze our data within the CRM system to target the customer with the next best offer, the next best experience or messaging depending on where they are in their customer journey, which channels they prefer and when they prefer it. So we will shift from a one-size-fits-all approach to a tailored approach with next best experience. In combination with our 360 data insights and the CRM system, we will also be able to enable our customer frontline employees to engage with the customers in a much more meaningful and proactive manner. And that's also why we expect we can increase our customer satisfaction from [indiscernible] because increasing our customer satisfaction is crucial in order to deliver on our customer engagement. Increased focus on the customer journey and providing hassle-free service experiences will not only increase the customer experience is also expected to increase the customer lifetime. And in addition, we will put a stronger focus on getting more full service than we have today. For instance, in [indiscernible] , we have several partnerships where party assign, they generate a lot of one policy customers. It could be within motor, it could be within change of ownership. With our improved lead flows and our better understanding of the customers, we will be able to convert more of these customers from one policy to multi-quality customer. It's a journey we have already started, and we've seen some positive results. So our target will be to increase our number of full-service customers from 51% to 55%. And there is also a close link between customer lifetime and number of products. So increasing the number of full-service customers, we will also increase the number -- the length of the customer lifetime. And with the support of our new loyalty program, we will be able to strengthen the lifetime even further, and Rasmus will get back to talk more about the loyalty program. We will also continue to leveraging our strong existing bank partnerships. Today, we have a strong partnership with Privatsikring and also within [indiscernible]. We have just celebrated 25th anniversary to Privatsikring, and we now have more than 30-plus banks within Privatsikring, local banks and Asian-wide banks. We have seen very high growth through bank insurance. Just last year, we saw a growth of 17%. It is driven not only by high sales of full-service customers but also of a higher average lifetime. In average, there is a 2.5-year longer lifetime on a Privatsikring customer compared to a Codan or a [indiscernible] Customer. We estimate that we have access to around 45% of the Danish bank market, and it is our aim to increase our penetration between -- within our partner banks from 11% to 13%. And there's quite a big variation between the banks and actually even the local branches within one bank that we believe that we can actually increase even further. I also have a few more banks on my wish list for Privatsikring and one is starting up in March next year. We will, as I already mentioned, also invest in the integration with the bank's data centers that will enable our customers to do self-service and buy additional services through the bank's online student. That was the examples, I would like to share with you on customer engagement. Now I will dive into strengthening our insurance capabilities. I will talk a little bit first, and then I will invite Bo on stage to finalize the [indiscernible] About claims handling and fraud prevention. There is no doubt that we need to continue strengthening our competitiveness and create even better customer experience. I've also touched upon the extensive work we have made on having a strong data platform with integrated data and now is the time to actually harvest from the benefits, all these insights provide. We will also continue to invest in our data and data modeling. And with the support of AI, we actually believe there is quite a lot of benefits that we can take out of strengthening our insurance capabilities, not only working with underwriting, portfolio optimization, but especially working with claims handling and fraud prevention. That's also why this is the biggest part of our improvement in our insurance service result of DKK 350 million. We are constantly working on optimizing our portfolio and will continue to do so. I would say it is actually part of running the business. With our new data models, we have increased [indiscernible] To risk and get a much better understanding of our risk. [indiscernible] These changes. And that is one of the benefits we will get from our new one unified platform. We will get a much more agile pricing toolbox that will enable us to faster, more free and on a granular level, it changed our prices. So we have a strong focus on migrating most of our customers to the new platform to the new standard products as soon as possible. For Commercial Lines, we also have a lot of underwritten customers. And we've already launched our next underwriting program, taking extra internal data and combine it with machine learning and AI, and that has helped us augment the underwriting decision from our underwriters. We have already seen an increase in our hit rate. Of course, the hit rate should only increase if the claims ratio stay stable or decreases. And we actually expect that we can increase the hit rate a little bit further because we will extend the program to more lines of business but also include more functionalities. So our aim is that we will have a hit rate around 45% in a market that is very much driven by brokers and whether it's a strong focus on competition. That what I would like to share with you about the data-driven underwriting and portfolio optimization. Now I would like to invite our COO, to the stage. Bo, please.

Thank you, Camilla. Then we move on to the claims side, and we start with the topic of fraud. In the last 3 years, we have quite significantly increased our ability to detect and prevent fraud. But fraud is still running through the system. So there's still an opportunity for us to professionalize those capabilities. and make sure that these cases do not come through. By fraud, we mean the fraudulent behavior can be either from vendors or customers that often leads to inflated claims costs. This can be for a property where repair where larger repair is conducted than was actually the scope of the claim. We see the same things happening in motor. We have kind of fraudulent report of stolen and lost items. We have workers comp cases, et cetera. To prevent fraud is all about pattern recognition. And today, we have technology that helps us with that. We have artificial intelligence that listens into some of our channels and try to identify what is a suspicious pattern and what are the cases we should take out for inspection. But technology is improving. And that also means that if we look at a 3-year horizon, we expect that we are going to increase our ability to detect those patterns, take those specific cases out for inspection. And furthermore, as you said, as an expect -- sorry, an inspector with these cases, today can be sometimes hard to actually prove if it's a fraudulent case or not. But again, new tools are coming in, and we think we can support our inspectors with an even better toolbox in order to go and prove whether this is a fraud case or not. So in total, better detection and better ability in inspection will mean that we can prevent even more fraud than we are doing today. This, of course, has financial potential, but it's also important to state that this has a positive impact on all the customers not showing this behavior because, of course, today, it has a negative impact on everyone when we see fraud happening. If we then move in to the actual handling of claims. Of course, Camilla talked about the customer experience. This is also a key element in the claims processes. But we also work with the effects of efficiency and quality. By efficiency, I mean the ability to handle more claims with less. And by quality, meaning that we make sure we pay out exactly the right amount for a claim, not less, not more, but being able to settle that at the right amount. We talked a little bit about straight through processing earlier. This is the example I also brought here. Of course, if we can increase our ability to handle more claims without human involvement, it has an efficiency gain. But it also has a quality gain because if we can have the systems process the cases, then you at least take out the risk of human errors in a manual process. Today, we have around half of our claims coming in through a digital channel. We want to improve that or increase that because that is the basics for being able to actually do a system processed straight through after. So you want to increase that to 80% by making it easier but also making sure that whenever we actually have customers in the digital first notice of loss, we make sure we capture all the information required in the next step, in order to be able to then straight through process 50% of those cases coming in digitally. This is a significant increase, but we firmly believe that, that is possible with establishing the right technology behind. Some of it will be rule-based, but again, artificial intelligence coming in, helping to increase even more the share of [indiscernible] Through processing on a claims case. In 3 years' time, we will also have cases that are not suitable for straight through processing. We'll have our skilled employees to work on those. That can be either due to customer preference for a given case, but of course, very often driven by the complexity of the actual claim. Again, we have an opportunity to equip our employees with better processes, better system support, better technology support. We call that here also the AI support of our claims handlers. And with that support, we can again increase the efficiency of that. We can make sure we spend our time of the skilled people on what really adds value but have technology to support the surrounding processes. That will lead to efficiency again, but also quality, making sure we settle claims at the right amount. So in total, there's a potential here when we talk customer experience, this also has a very positive effect. When you, as a customer, have a claim, all you want to do is get that process fast, get to pay out and move on in your life. If we can straight through process half of the claims coming in to us. That, of course, means a lot of customers can be helped faster and and move on. And we also believe that is a big contributor to customer experience. Finally, within the claims area, we, of course, work with vendors. So when we have a claim and we need to go and repair that, we have vendors and partners helping us on that. I brought 2 examples here from -- one from motor and one from property. Of course, we have also partners, vendors across other lines but these are 2 of the biggest areas. If you look into motor, there are new technologies in the market now, which means that some of the smaller and medium-sized repairs can be done in new ways. Basically, that can mean that as a customer, you might have a dent or something in your car, not too big. You can go to one of these workshops, you hand in your keys, 2 hours later, you have your key back and you drive on, you can move on your claim is fixed. This is a great experience, but it also is more financially attractive to have the claims repaired in that way. These technologies have been evolving over the last couple of years. We have a lot of discussions with the partners that are able to provide these. The challenge the last few years has been the capacity. So actually the ability to fix 6,000 claims per year, that is coming now. And it was the joint partnerships, we can actually establish that capacity to make sure we can steer 85% of our cases in this space onto these type of repair technologies in 3 years' time. So that is very attractive, both for the customer and for us. In the property side, again, we have a network of partners that helps us when we have damages on properties. We have scale. And the next period is again unfolding that even more, making sure we have the right geographical cover across the country, making sure that we leverage our scale in the contracts that we have. And then thirdly, maybe even most important to make sure that we then actually steer our repairs towards that network. So shown here that we want to increase the steering rate from 50% today to 70% in 3 years' time, means more of the claims go through our network, we can guarantee that the customer will have a good experience because we know these vendors, and we stand by the quality they deliver. And secondly, we, of course, have better deals with them. So there's a financial potential on that. So in total, we can optimize the way we work with vendors on the claims side for the best possible repair cost. That concludes a bit on the claims. I will then move into our third pillar, which is the operational platform. And Rasmus already mentioned in the beginning that we strongly believe in the competitiveness of operating on -- in one geography on one platform. We have taken a lot of benefits from the platform we have established since the acquisition of Codan, already in the previous period. But there is more potential as we fully leverage that. That means we can make sure we get all our customers onto the new platform, that will lead to further simplification in the way we do business and in the operating model below. So again, it's about unfolding that, making sure we capture all the value of what we have established. I just want to put a few words on what we mean when we talk the one platform. After the acquisition of Codan, we have invested quite a lot of time and energy into this. What we have now is a scalable platform, and I will explain what that means. If we look at the front layer, so all the presentation layer towards customers and our web pages, et cetera, we have consolidated that to modern technology. We have built it in a way that now if we build a digital experience within sales and service for one of our brands, we can automatically use that across all the brands. So we do not need to build things 4 times, and we do not need to maintain them 4 times. We have established what we believe is the world-class CRM system, rolled it out to all employees. That means when you are the customer, you now have perfect overview to give a good experience, but also make sure you act on all the leads that we have out there. Our coinsurance platform is where all the products, policies billing, everything happens from. Again, it's now built scalable means if we build a product -- or that means we build a product once we can have a different proposition across a [indiscernible] Codan and Privatsikring but we build it once, we maintain it once and we can use that across all the different brands. That makes a huge effort -- huge impact in terms of being able to, again, leveraging the scale that we have, we can do it much more efficient. Our data platform, we talk a lot about the data insights here. Now the data platform is there. We have most of our data in. That means we can start to leverage data in all our processes from financial reporting, risk calculations all the way down to the daily management of sales and service, claims handling, everything. We have a lot of it in use. In the next period, we'll make sure everything is used and then capture the full potential of that. This will not only be scalable for us. This also means that we can make sure all our customers get the experiences that we're having. So making sure we get full leverage of that. On the back of having established the application landscape, it's natural to consolidate on the infrastructure side. We are coming from a scenario of having -- after the acquisition of Codan having multiple data center setups. In the next period here, we are going to consolidate that all into our own. We have already established the capacity in that to be able to do it. So relatively quickly in the next strategic period, we're going to in-source that and not only in the data center, but actually all the operations of that. That is -- means we can run things at a lower point, leverage the scale of that, also has a positive impact on the risk, and it also contributes to agility and again, making things faster, changes faster going forward. So that will happen relatively quickly in the next period on the back of having established the platform. Finally, within this strategic pillar, we introduced process excellence. We have cost harmonized, standardized, automated already a significant part of our processes in the operations. But there's still quite a lot [indiscernible] And by heavy, I mean, process of high volume or processes where many people involved. Identify those processes and streamline them, apply automation where we need to, but there's also a lot of streamlining we can do just by analyzing templates and tools available at the right time. I'll show an example here from Commercial Lines. When we have analyzed quite in detail our processes from a first dialogue with a customer all the way to a policy being issued. What we can see is that there are a lot of handovers back and forth between the sales agents engaging with the customers and the back office support. There's no value on the customer for that. There's no value in -- for our employees in doing so. This is -- these are processes where we have an opportunity, again, with the right mandate out on the front with the right tools and templates available, we can take out a lot of these handovers as we move forward. So here, we have shown taking 1/3 of those handovers out over time. There are similar examples within Personal Lines, similar Services within claims, but this is to give you a little bit of a flavor of what are the type of things we're going to look at in order to take out inefficiency in our processes and capture the benefits of that. That concludes a bit the operational platform. So I will hand it back to Mads for the Q&A.

SPEAKER01 Thank you Bo and of course, we realized this was quite a bit of inflammation in a relatively low amount of time. So we thought it would be rather a good idea to have a small Q&A here. So -- but we will try to keep it a bit limited. So if you could limit yourself to one question and only relating to the first part of the presentation, then that would work quite fine. And if I can invite the executive management. Who has the first question? I can see Martin from SEB.

Yes. So I think -- well, my first question goes to you, Bo, I know now, of course, you're biased, but if you take off your unbias glasses for a second. I'm sure you've seen many insurance companies on the back end. You are guiding for pretty aggressive digital targets. How do you -- how would you rank Alm. Brand digital capabilities today in the Nordic context? And once you achieve this, how would you -- would you change that rank?

Yes. Brilliant question. So if we take today go out in the back, we have the systems and platforms available, but we have not rolled out all our process into those. So I think if you rank it today, we are not leading. But we have a very clear opportunity to be leading in 3 years' time from now because the platform, the ability to move on to standard products based on standard processes, makes automation, everything a lot easier. So I think our potential is significant.

Okay. And then just perhaps just following up. So many of all these talks to you have? Are those based on use cases? Or are they based on you sort of trying to speculate on where technology is going or how are all those targets sort of ...

I think when you go through a target process, you use a bit of a combination of what you're seeing, right? We have -- we can take inspiration from companies around us, other industries, from other geographies when we set those targets, where is technology in 3 years' time from now, you have to -- but I think putting all that together, we believe we have put ambitious realistic targets out for instance, on the claims side. We don't know exactly what technology is available in a few years' time. But I think the development we see recently is giving a good comfort that we can automate and put systems behind a lot more things that we can do today.

And Asbjørn from Danske.

Now just one question. Is it looking at the DKK 650 million in gross benefits driven or technologies that you will have to buy or implement going forward in some of the internal measures -- I guess looking at the internal measures, it makes sense to assume you can sort of maintain those benefits also on a midterm horizon. But looking at the other measures, the smart repairs, the [indiscernible] Can sort of -- that your competitors will be able to use as well. How much do you think you will be able to retain? How much will be lost in competition? How much of the DKK 650 million is that really a growth number? Or is there a bigger growth number than then adjusted down to DKK 650 million, that would be interesting to hear.

Yes, I can try giving some flavor to that. We've tried to model it in this way of thinking gross number. We are -- we think we have -- we believe firmly that we can make a gross via the specific initiatives we have, and we've gone through a range of examples today, which will, in total, deliver DKK 650 million in gross impact. And then I think a bit of the answer to your question is hidden [indiscernible] And in reality, there are some places where we might have a bit of tailwind actually going from '25 into next year. But there are also some places where we can see some pressures coming in the years to come. I think a very important statement for us is that the strategy is not about us squeezing more margin from the customers by increasing prices. We are becoming this strategy about us creating margin for ourselves by becoming more efficient and the insight, delivering the same overall products and services. So I hope that...

Yes. If I can just follow up, just more that the DKK 650 million is more how to interpret the growth element to it. Is that all the impact the other way around or is there more than DKK 650 million, but you're conservative in the DKK 650 million and then you have DKK 150 million investments, whatever you want to call it. I mean how much room for ever is there in the net [indiscernible]

Well, I think Asbjørn, I think it's a bit of an academic friction. I mean the reality is we have -- our best estimate is that we can do via specific strategic initiative DKK 650 million. And then on top of that, we estimate also that some of that will need to be handled specifically because we need to invest in solutions to actually create those impacts. And then we might also have a bit of headwind in specific areas. So -- and that's how we try to model it.

Mathias of Nordea.

So my question goes a bit back to Asbjørn's question on the timing of things. So obviously, you get the DKK 500 million in improvement when you get to '28, but you also say that you need to kind of invest as you just said, in some things. So should we think about improvement as being more of a straight line or should we think about -- how do you think about that in your way of thinking it?

Is it -- I'm very happy to answer it, but can we save that for after the next section when I've gone through the financials because I think we'll sort of try [indiscernible]

My question, if I can ask about customer engagement. Presumably, you've done some benchmarking exercise. And your peers talk about customer retention in the high 80s, low 90s. So how do you compare versus that versus those numbers? Just to get a sense of the runway you have to actually improve over the next 3 years?

Yes. We already seen also retention rates in the high 80s there is a bit of a difference compared to the brands, as I already mentioned, Privatsikring tend to have a longer lifetime, and they also have therefore, a higher retention. But we are also in the range of the end 80s. And retention is important for us because since this is a mature market, most of our initiatives should also help us increase the lifetime of our customers.

Did you have a question here in the front row? Alexander Vilstrup from DNB.

You briefly touched on it just now. You have a multi-brand strategy, and you also mentioned the full-service customer ambition. Could you just brief you have, do you have -- where do you see the most potential for improving full-service customers? And also since you mentioned the lifetime of the Privatsikring customers, how many brands did they have? Is that the reason for the higher lifetime?

The first part of the question, there is a difference in terms of full service customers and the biggest potential is within Enviniban and then Codan. Privatsikring, that typically generate full service customers. So that's very much about just upselling additional coverages depending on the customers' needs. So the biggest potential is within enveliban and Codan and for Privatsikring, [indiscernible]. Just to clarify.

And Simon from ABG.

Yes. Camilla, just following up on that, in terms of having a Lebron customers, which you also mentioned was sort of the most needy types of customers in terms of the full service offering and also leveraging on the scale and efficiency, could you just share some thoughts on how you managed to stay relevant for the more needy customers, but at the same time, leveraging scale benefits [indiscernible] Fits.

Yes. First of all, with the help from our one digital platform and our core platform and our data, I think we actually have a strong position in targeted customers individually. We will learn even more about what is the right offering in the right time. We have already some knowledge about what is the best way to approach customers. We have seen that making regular service checks talking through the customers. [indiscernible] . If they make changes, we actually see a higher lifetime. So having a regular -- based on the scales and the simplicities we get from the data and the CRM systems that some of the things that's going to help us, but we will be testing different approaches as well.

Do we have any final question? Otherwise, we will head for a short break now. [indiscernible] this room at 11:50, so in 15 minutes from now. And then, of course, there will be a longer Q&A session. [Break]

[indiscernible] and after I talked a little bit about that, then Andreas new ESG strategy. But as said, the foundation only have one [indiscernible] Foundation March 2024, the foundation. And in that policy, stated that the dividend strengthening the capital base. They will use up to 25% purposes, and then they will use 25% -- up to 25% for customer-related purposes. And of course, we contribute with DKK 185 million to us next year, that philanthropic purposes they're supporting, going to be something. And there are a lot of initiatives coming. And it actually has a very positive effect to our employees. They are even more in the [indiscernible] That the foundation supports these purposes. But it's also starting to be very positive towards our customers nowaday with a group that take things like that serious. And a few words about the governance. In many years, it's been the same Chairman and the same CEO, they both as in the foundation. And since 3 years ago, then the CEO of the foundation, I'm only -- not only, but I'm very happy about being CEO Alm. Brand Group, but I -- and since March, our Chairman is an independent of the our Board in Alm. Brand Group will now consists of 9 members, 3 chosen by the employees, 3 in the Foundation and 3 in that's now our Chairman of the Board. We in Alm. Brand Group has decided to use it in 3 different ways. We have talked about the DKK 100 million for the customer loyalty program. I will just come back to that briefly. DKK 45 million in customer adherence. And here is some of the things Bo talked about with AI, we want to have AI as the trigger for increased and improved customer experience. And you will see more than in the coming years. And then we will use DKK 40 million for prevention initiatives. We have worked with that already throughout 2025. We made climate ready plant water leakage packages and Camilla also discussed some of them in her presentation. So things are moving on and the contribution we get, we are really using for something that for the benefits of the foundation members, our customers. Switching to the Customer Loyalty Program. Of course, that is our largest initiative, and that program will benefit more than 100,000 Personal Line customers who benefited that, and that is spread throughout the 3 brands we have in the Personal Lines, Alm. Brand, Codan and Privatsikring. There will be further specifics around the program. We will not highlight them now. We will do that throughout first half when we go public with that. But I think the important thing is that it will be a cash rebate we are talking about that all these customers, they will benefit us. So that was a little bit about the foundation, Andreas will now take us into the financials.

There we go. So now I'll dive a bit further to the financials. Just restate to begin with, we already saw this once, but what the next section is about diving further into the compositions of both the insurance service results benefit. Where is it going to come from. [indiscernible] Camilla went into some detail around. We feel that we have the opportunity to do a significant push, leveraging the scale we have to push our insurance search result in a significant way, the plus DKK 500 million compared to the '25 targets we've had. That comes in combination with what we consider a continued robust capital situation, driver also there is the full internal partial internal model we have now covering both Codan and [indiscernible] Approved in August. And when we look at the capital, we'll also be able to free up from [indiscernible] In the future, among other factors, from the internal model approval. That translates into this significant earnings per share growth in the coming years. And this is really the core part of the story today. So if we look at the combined ratio and the different parts of the targets, most of the improvements will come via the claims ratio. As we saw earlier, we've worked for many years also with some headwinds along the way, but actually managed to come down -- to put down the claims ratio. And in the future, 1.5 percentage points of the total 2.5 points will come from the claims ratio. Intuitively so, I would say if you look also at where the growth effects are coming from a lot of the factors in the -- within the insurance capabilities, also the claims area, specifically would translate into the claims ratio. And then as we have been doing in the past, we'll focus on being vigilant around driving efficiency through our administrative cost base also. Here's where especially the operational platform will come into play. And we target the 100 basis points improvement in the cost ratio towards 2028. Then diving into capital. We have this internal model approval I just mentioned. It came through in August this year. Those of you who were with us 3 years ago in the Capital Markets Day back then, we said that we will be working on this, and we're very happy that it came through just towards the end of the current strategy period. It's freed up around DKK 600 million in solvency requirements. And now it means that we now have a model fully covering all the material parts of our insurance risk in the solvency requirement. That both enables us to free up capital, and it also plays into the overall benefits we have within our ability to pay out a high capacity of our earnings on a going basis. I'll come back to that in a minute. But starting with the ability to buy back shares from the capital freed up I think we've already given some soft guidance to this point, and this is along the lines of what we've said. We still believe that this [indiscernible] Requirement will translate into ability we have to to specifically initiate a new buyback of DKK 600 million coming from this particular capital being freed up. So then we have the overall capital coverage, and we've chosen to increase the solvency ratio from 170 in the previous strategy period to now 180. A few comments around that before I get to the composition of that. We think it's very important to have a robust capital situation. You basically -- we don't want capital to be an issue. And where we are today, we feel the right number for us in terms of coverage is 180. Keep in mind that we freed up and put down solvency requirement by around DKK 600 million. We've also, after the divestment of Energy & Marine also come further down back then in terms of solvency requirement that just also means that the absolute amount of coverage has come down along with that journey. And all these facts together means that we feel that we -- it's the right balance for us to increase by 10 percentage points to 180. And in terms of how we aim to cover that solvency requirement in the future, we still, as you can see on the slide behind me, we still have most of it coming from our Tier 1 equity. So the total Tier 1 equity will be approximately DKK 3 billion, DKK 2.9 billion in the illustration here. And on a long-term basis, we would aim for the restricted Tier 1 to be around the 2% level, meaning around DKK 300 million. We have a bit more than that today in Tier 1. And then on top of that, we have the Tier 2 capital. And this is where recalling that the Tier 2 capacity follows the overall solvency requirement after we divested the Energy & Marine business and solvency came came down. And we finally got the approval for the internal model. We already executed on buying back around DKK 400 million of Tier 2 bonds because we didn't have any use for them. And it didn't make sense to pay any interest for something you can't use. So we are where we should be on that number already, and that totals the DKK 3.8 billion. So this is sort of the stylized way you can think about our capital base going forward. Payout capacity. What you can see here is that we -- throughout the entire period -- strategy period we're just coming out of, we've returned a very high proportion of the earnings we have. And I'll come back to the dynamics that support that capacity in a minute. But we stand firm behind the minimum commitment of 80% and the payout ratio still stands. And then we will aim in many circumstances in normal circumstances we'll be able to do close to historical levels. And -- this is around exactly that point. Today, we introduced a new way of looking at our capital return. We've chosen to focus on the own funds going forward. We do that for a number of reasons, but I think one of the main reasons is that it actually plays very well into also being disciplined in the way around the solvency requirement. We actually need to grow our business. That's the own funds coming from the requirement, and that's also what's actually feeding into the payout capacity we have. So being disciplined around own funds translates also into being able to deliver high payouts in the future. And maybe let me try to explain that a bit further. If we look at the total target we have for '28 of [ 40% ] return on own funds, when we grow in a profitable manner as we have done in the past and as we are planning to do in the future, on a stylized basis, we only need to retain a small portion of the earnings we make to fund, so to say, the capital requirements. And you can also think of it in this way, the capital requirements, if we grow in a balanced way, are actually growing on a roughly the same nominal basis. And when earnings come up as we are able to do when you look at our targets today, that means that translates into a higher payout capacity in the future than we have today. And roughly 2% of the 40%, meaning around 5% of earnings, that's what we basically need to fund the growth we have. And that's why we can have a payout capacity of around 95%. Then for good order. We also think it's a good opportunity, just restate and go through our thinking and expectations in our investment book also an important part of the balance sheet. There's nothing majorly new here, but let me just go through the overall thinking. We, today have around, as you can see, DKK 7 billion of the investments, meaning roughly 1/3 of total investments in what we call the free portfolio. The free portfolio is where we actively take the risks we choose to drive the returns in for in a good balance, driving the relatively conservative approach, I would say, we still have and will also have in the future. And then the match portfolio, the hedge portfolio is coming from -- that's where we hedge the market risk inherent handily coming from the insurance provisions and the premiums we attained through our core business. And we aim to hedge that as closely as we can. We won't be able to do that perfectly all the time. But on a long-term average, we should get close to 0 for the hedge portfolio. That means the return we create is entirely coming on a stylized expectational basis from the free portfolio. And as we have in the past, we will maintain the conservative approach, meaning that we have a high proportion coming from liquid assets, high-quality bonds. Only a quite moderate exposure to equities and then also moderate but slightly increasing exposure to illiquid credit because that's where we basically feel we get the best risk returns and also capital returns in terms of where it's most efficient for us to drive investments. So that's the oral thinking we have. And that translates it as we stand today with the amount of free portfolio we have, that would mean that the 3.5% stylized average return would translate into DKK 250 million on a yearly basis. And then we deduct the costs we have for running the investment book. And then we also have this more technical placement of our Tier 2 interest rates, which also figure in this part of the financial statements. So on a net basis, that would translate to DKK 175 million a year, given the amount of investments we have today in the free portfolio. And here, we get to one of the key slides. It's not really adding much news we've already said, but I think it's a nice way to illustrate it. What we are delivering today and what we've spent some time going through is that we feel that we have confidence that we can deliver significant improvements in the insurance results coming from the strategic initiatives we put out today. Looking at the average earnings per share growth we expect over the strategy period, the next 3 years, that will translate to around 9 points on a gross basis, that's the DKK 650 million and then accounting for the investments we need and other factors such as competition or other headwind in costs that would get back to the 7%. And then we have, on top of that, because we have the ability to buy back shares, both explicitly coming from the surplus capital we have today, a lot of that generated from the internal model approval we had in August, the DKK 600 million, but also on a going basis because of the way we think around payouts, we feel that we will we expect also to use buybacks in the future to top up on top of what we would consider predictable increases in dividends per share. And I can give you a rough guidance there, something along the lines of what I'm -- all we're seeing here on the earnings per share. So we would firstly prioritize seeing a meaningful increase in dividends per share, let's say, roughly around 10%, like the earnings per share is coming up. And then if we have capital on top, we will buy back shares. And if we for some unforseen reason, have some losses that could be from a big windstorm or something, the buyback would be the first thing to go. So that's the thinking we have. And on some of an average basis with the factors we put in there that would add support to around 3 percentage points of the 10 percentage points earnings per share growth. So that's sort of the mechanics of how we deliver the 10%. So I'll [indiscernible] To the financial part. And now I'll go to something a bit different. But I think maybe a good [indiscernible] Be to say that hopefully now, we feel confident or we've at least tried to add some flavor to why we feel confident that we can deliver significant financial result improvements from our core business. And what the next part I'm going to dive into now is -- is that, that comes in conjunction with us is also working with minimizing the adverse effects we have on the world around us from the core business we run. And that's to put it very briefly, a big part of the ESG strategy we're putting forward. Starting with the purpose, which is unchanged from -- we already have this press today, we secured today to create tomorrow together. It has this implicit duality there. We don't write, we insure today, but -- and meaning that the best claims we can sort of avoid are the claims actually avoided, expenses we can avoid. So if we can prevent a claim, that is both better for us, it's better for the customer and it's better for the world around us because then we will not need to actually repair a claim or in other ways, impact the world around us. But in the foreseeable future, and specifically, I would say, for the next 3 years, there will be a big need also for the traditional insurance to come into play to help our customers when claims arrive. And this section is a lot about how we have targets to reduce the impact from the whole value chain, which we drive through our core business when we handle claims, and when we do investments, which are the 2 major parts of the impact we actually have. So before I dive more into that, this is the total landscape of the ESG targets we set. The first one is the emissions target we already have relating to Scope 1 and Scope 2, that is unchanged, corresponding to a 42% decrease towards 2030. Then we today introduced 2 new targets. I'll be diving into in a minute, one relating to the buildings, repairs, the buildings claims of our insurance operations and the second to our investments. And those are the 2 major new impacts and really and where it matters for us. And then within the total ESG landscape, we also have the employees and the engagement score of 80. And then as Camilla also already mentioned, rounding out another factor within the ABS, we have our customers and our ambition to further improve satisfaction to 77 by '28. I'll go through them one by one. I think this is an interesting illustration. It will look like this for, I would imagine, many of our peers also. But just to state it, the type of emissions that we have had targets until now have been the type of emissions which are directly controlled by us. In reality, that has a lot to do with energy consumption in our buildings and our car fleet. That's Scope 1 and Scope 2 emissions. They account for a low 1% of the actual impact we have in terms of CO2. So in the total player things, it doesn't matter that much. It's obviously important that we need to also be ambitious around what we direct control. But in terms of our impact, scope free is where it comes. And as you can see, we have investments accounting for almost half of scope free. And then we have the rest coming from the claims areas and the purchase of goods and services. And we in the claims area, the largest impact comes from the building sites, the 27%. And just restating this, we have an unchanged ambitious target of reducing the emission from Scope 1 and 2. It has a lot to do with energy efficiency on our locations, our buildings and secondly, on our car fleet. And we are working with initiatives to secure that we can maintain this further reduction in the coming years. But there's nothing new here. The new thing comes here. This is the one we also put up on the strategic KPI, coming from the ESG part. This is the buildings area, where we set out to reduce emissions by 6%. And it's going to come from us working via the partnerships we have, the data we also now have access to both steer and incentivize our partners and our contractors to actually use more energy-efficient materials. And we haven't had a decision to do this yet. But with the framework we have in place now with the partnerships we have and also the data we now have available, we're actually able to start this journey and 6%, we feel is a meaningful and ambitious target, which also translates to quite a lot of CO2 emissions. So that's what we'll be working hard to achieve within the claims area. Obviously, we will also work with other areas. We expect to also dive into motor along the way, but we are not quite at a point yet where we have the same quality in data to actually be able to do it. But -- so this is where we'll start out and it's also the biggest part of the claims side. Then we have investments a major part of scope free for us. And 15% is also a really, I would say, ambitious target. It will come from 2 things. For one thing, for us to reach 15%, we are also expecting to get some help from the companies and the assets which are behind the investments we have. The world is hopefully also transitioning to a better place. But on top of that, we'll need to be selective around the type of investments we choose to cater for at least the amount of ESG, so we can get to a 15% reduction. So this is an ambitious target, which will discipline us. As we have had in the past, returns, financial returns are obviously also important, and we don't necessarily see an adversity here. getting to the 15%, but it will discipline us to be -- to cater for ESG emissions also when we select assets in the future. Then we have the employees. Very maybe the key enabler in reality of delivering on any strategy. We need engaged employees to get to the journey. It's also what drives a lot of both the initiatives were -- and also, I think, the customer satisfaction. A lot of that comes from having engaged employees also. So this is a strong ambition we will maintain. We've chosen to maintain the 80 targets. I think it's safe to say that 80 is also regarded in all actuality as a very high engagement for an organization. And we've also seen in the past that we've not -- in recent past, recent history have been close to the 80 mark and especially when you have transitions and changes this engagement can temporarily come under pressure. So we feel 80 is a sound target. And not too long ago in '24, we were actually at 75. So we've seen a steep increase here towards the end of our current strategy period, but we still feel 80 is a good ambitious target for the future. Then the customer satisfaction, I don't think I'll spend too much time here just restating what Camilla already went through, but this is a clear vision we set out to have to also improve the satisfaction customers have, which will translate into higher retention and in the end, also better financials for us. So that was it for me with ESG, and then Rasmus will wrap it all up.

Thank you, Andreas. And thank you all for joining here at Miramar and also at the webcast. To sum up, we've been through some hard years of work. We've done 4 major M&A transactions over DKK 1 billion each. We have merged 2 companies, it's historically done. And at the same time, we have reached our targets that when we set them, they were very, very ambitious, also seen from our side. So we are standing -- I think we're in a very, very bright spot at the moment. Bo and Camilla have shown the way forward with the potential we have. And I firmly believe that we can deliver on that and then reach the target Andreas just highlighted and hopefully, all that will be of the benefit of our shareholders. So with these remarks, I will conclude and then we will start the M&A session, I guess. Thank you.

Yes. So let's see here. We -- it is right that now we have the long Q&A session. It's -- we have a bit -- actually, we have up to 40 minutes of Q&A. And of course, this time is related to the entire presentation. [Operator Instructions]. So if I can invite the group executive management, so to join us here. So -- and then I think Mathias was a bit -- I think it's your turn.

So coming back to my first question on the other Q&A session. So like in terms of how we should think about the timing of the improvements that you target versus the investments that you will also need like should we think about it as a straight line or back-end loaded or front-end loaded, given the technology jumps we have seen in the recent quarters and years?

Yes. We -- I think it will be a bit split between what we'll see on the cost and the claims side. And we're not doing specific guidance, but I would say, roughly speaking, I think it's -- we would be aiming for something along the lines of a linear improvement with regards to the claims improvements we're aiming to have. The reality will be that there will probably be a bit more backloaded on the cost side. We need to do some investments also to drive these improvements and some of the initiatives we have, among others, within the IT simplification will come -- the benefits will come towards the end. So I think claims we would expect to start coming also next year, a meaningful improvement. And then over the rest of the period, cost would also start to kick in.

Sure, if I may take a second question down, and then I will leave the others and go back in the queue. On the pinball approval, you got DKK 600 million in relief that, then I think you put the DKK 600 million on the buybacks, you put the DKK 600 million upside down. So shouldn't that have been DKK 900 million, given the capital target that you have and given that if you want to reach the DKK 2.6 billion that you said in the in buildup afterwards, isn't it closer to DKK 900 million that you should come in buyback? Or is that just like relabeling that to be the earnings from this year instead?

No. I mean, we provided, I would say, also soft guidance when the FIM approval came that our thinking would be along the lines of a 1:1 translation into buybacks. And you're right that there is some effect also from the coverage we have. But also keep in mind that some of it is reduced from the Tier 2 capacity, which is lost. And then now we present the total capital we feel we need now, and there's also an increase of the 10 percentage points. And I think that roughly translate into us being able to stick to DKK 600 million and also come out of this with what we feel is the right robust capital situation.

Yes, Asbjørn from Danske.

If I just may follow up on the last question. So the 3 percentage points CAGR from buybacks based on your market cap, that's DKK 750 million on average per year in buybacks for the strategy period. So I guess if you look at the total buyback for next year with the DKK 600 million, that is fair back to the question -- previous question. I guess it's fair to put sizable amount in addition to the DKK 600 million in total buyback for the year?

That would be true, yes.

Good. Then we got that clarified. Okay. Then a question on the customer loyalty program. You mentioned 100,000 customers will benefit from this. You have 800,000 customers. How are you going to play this out? I know you said you'd come back with more diesel, but just a little bit, if you can shed some light on how to play out that only 1 out of 8 customers will actually benefit from this?

We make it a little bit different than from others, this loyalty program. So of course, not all customers are loyal, at least not from the very first day. So what we will do is that the real customers that will benefit from this. That is the whole idea with them. And we want them to stay even longer.

It's going to be difficult to communicate, I guess, I mean some of your peers have been quite -- it's difficult for them to communicate even though they distributed to all clients.

Yes. But we're not the companies, I'm sure we will find a way to communicate this.

Sounds good. And then a final question, and then I'll move back in the queue as well. On the free portfolio, you maintain equities exposure in the free portfolio, but you only expect 5% return on equities. If you look at sort of the capital tied up to holding equities in the free portfolio, and considering your new solvency target, I get to something like a 7% return on own funds from your equity exposure. And then there could be some diversification, but still it's kind of drain your group roof target of 40%. So why do you maintain equity exposure in your free portfolio?

Well, we don't look only at capital expenditure in the different categories. We do an asset allocation, which -- where we actually do this in attack it from different angles, but our aim is to find what we feel is also balanced and well diversified portfolio, which will also stand the test of time over the years to come. Capital regimes can change a bit. Other fact expected returns can change. And we think this is what balances out for now. But you're right that on an isolated basis coming from capital expenditure, it is not the most attractive asset class for us. But it's always looking at what returns can we get from barns in absolute terms? And what can we get from the eliquids? And what do we feel is also, let's say, just factoring in the human perception and what a balance is, we feel it's right to have some equity exposure.

Yes, then we have Martin, from SEB.

Just continuing on the loyalty program. I guess the 100 million is a start, but I assume that your ambitions are higher than that?

Yes. -- you're right. The 100 million is the start and to come back also to the other question. It's for the real loyal customers. And -- but we have 185 million. We are also doing other activities where other customers will benefit from. So we try to spread the amount out between all the members of the foundation.

Okay. And for those customers who will receive a bonus, what's going to be sort of the percentage point?

That is exactly what we will come back to later or early next year.

And did you sort out the tax?

Yes.

So those won't be taxable?

No. It will not. It's us giving a cash rebate to the customers.

All right. And then just coming on to the expense ratio, 16%. How is that -- what are the gross impacts? What should we think about FTEs, IT investments, et cetera?

There are many moving parts in the expense ratio. I think 16% is an ambitious target for us. It's no secret that we also have -- we have distribution model, which we are very happy with, which also really will -- has and also in the future will deliver sound improvements to the underwriting results, but which also comes with a slightly higher cost via the partnerships. So we will need to find real improvements, which we also believe we can to get to the 16%, and we also need to be able to do investments to get there. And that's -- we've tried to package that in the DKK 150 million, we sort of deduct. And there are -- because we also have some headwinds from some factors, you would probably remember the synergies running into next year. We had a little bit of repricing, roughly speaking, we could say that maybe DKK 150 million in either investments or something along those lines is not maybe a bad number to think about.

Okay. Still not sure how that translates into FTF and staff costs in general?