Gjensidige Forsikring ASA (GJF) Earnings Call Transcript & Summary

Hello, and welcome to the Gjensidige Q1 2025 Results Presentation. My name is Laura, and I will be your coordinator for today's event. Please note this call is being recorded. [Operator Instructions] I will now hand you over to your host, Mitra Negård, Head of Investor Relations, to begin today's conference. Thank you.

Thank you. Hello, everyone, and welcome to this first quarter presentation of Gjensidige. My name is Mitra Negård, and I'm Head of Investor Relations. As always, we will start with our CEO, Geir Holmgren, who will give you the highlights of the quarter, followed by our CFO, Jostein Amdal, who will run through the numbers in further detail. And we have plenty of time for Q&A after that. Geir, please?

Thank you, Mitra, and good morning, everyone. We are navigating uncertain times characterized by heightened geopolitical tension, significant macroeconomic uncertainty, and considerable market turmoil. We anticipate that this tension will persist for some time. And in light of this, it is more crucial than ever to focus on keeping the customers' trust, effective risk management, and prudent financial risk taking. We will continue to closely monitor developments in drivers of claims expenses and respond swiftly to emerging changes. Our strong capital position places us in a favorable position to withstand further turbulence in the capital markets. So, let us move on to comments on our first quarter results on Page 2. I'm very pleased to see that our strong efforts to improve the results are gradually coming through. The profit before tax was NOK 1.790 billion. The general insurance service result was NOK 1.340 billion, significantly up year-on-year. Insurance revenue increased by more than 10%. The combined ratio declined to 86.9%, reflecting improvements in both the loss and cost ratios. It is very encouraging to see that the underlying profitability improved by 3.7 percentage points when adjusting for weather-adverse development in claims and provisions in the first quarter last year. Large losses were somewhat higher than our quarterly estimate this year, amongst others, driven by one large fire loss in Norway. Our investment generated returns of NOK 503 million, contributing to delivering a solid return on equity of 22.2%. Jostein will revert with more detailed comments on the results for the quarter. A few words about property insurance on Page 3. I'm very pleased to see high profitability for private property this quarter, also when adjusting for the more favorable weather conditions. This is thanks to the successful implementation of targeted pricing measures, which have been put through over the past quarters. Although claims for property insurance are highly volatile, we see a promising development in underlying profitability for this product line. Let me take you through some of the drivers this quarter. Claims frequency was significantly lower this year compared to last year. Claims inflation has developed as expected, and we currently expect it to increase in the range of 4% to 6% for the next 12 to 18 months. The ongoing international trade disputes and tariff threats are creating significant uncertainty. This applies both to property and motor. We are monitoring the situation closely. Average premiums increased by almost 13% during the past year. Our current rate of increase is just about 70%. These are necessary price increases, but having this in mind, it is particularly encouraging to see that our customers remain loyal to us. And that we continue to attract more customers. So, over to Page 4 and a few words on motor insurance in Norway. Thanks to the effective pricing measures, we have seen profitable movement in the right direction for this important product in our portfolio. After several quarters with deteriorating margins, profitability was stable this quarter, also when adjusting for weather, and the adverse development in claims occurred in the first quarter last year. We will continue to raise prices until we reach satisfactory profitability. So, moving over to drivers this quarter, we can see that the increase in underlying claims frequency appears to be gradually abating. This quarter, it was up 1.5%. Our prices reflect continued moderate increases in the claims frequency. Claims inflation increased just over 5% this quarter, which is within our expected range. We expect the repair cost to increase in the range of 4% to 7% over the next 12 to 18 months. And as mentioned, we are monitoring the situation very closely, and we will respond swiftly to changes in our assumptions. The more benign weather conditions this quarter resulted in less costly losses. The claims mix varies depending on weather, driving behavior, and the mix of types of cars in our portfolio. We continue to put through price increases. Average premiums rose by more than 17% during the past 12 months. The current average rate of increase is more than 19%. And I'm very happy to see that we are able to put through these significant and necessary price increases and maintain our high customer loyalty. So moving on to Page 5. The strong growth momentum for private continued in the first quarter. Retention in Norway remained at a high level, and we increased the number of our customers. Our strong position, combined with our predictive models and targeted differentiated pricing, has ensured that we have kept the best customers in Norway and improved underlying profitability. We observed that the churn is twice as high for customers in the weakest customer scoring group compared to the best one. Growth in private in Denmark was also strong, and customer retention improved. However, I'm not satisfied with the results yet. We will continue to implement pricing measures as well as improve risk selection, claims handling, distribution efficiency, and overall cost efficiency. Our commercial business in Norway and Denmark continued to show good growth this quarter. Customer retention remained high in Norway, while in Denmark, it declined due to pricing measures. The growth in revenues in Norway was somewhat muted, reflecting our prioritization of profitability over growth. Thanks to our underwriting expertise and our strong market position, we continue to improve the quality of our Norwegian commercial portfolio, reflected in the improved margins for our Norwegian commercial business. As you can see on the slide, retained customers had a 22 percentage point better loss ratio over the past 36 months than customers who have left us during the past 12 months. Commercial in Denmark shows weaker profitability this quarter, although this is partly explained by natural inherent volatility. We will maintain a strong focus on enhancing operational efficiency and raising prices to ensure good results. Sweden is progressing well, with results showing the benefits of further digitalization, automation, and improved CRM. Moving on to Page 6 and a few words about our acquisition of BuySure. The acquisition broadens our footprint in the market for change of ownership insurance products through a wide range of real estate agents. Home seller insurance fits well into our offerings for customers' home journey by protecting them at key touch points from preparing to sell, navigating the sale, and moving out to transitioning into new insurance products for the next home. It complements existing products, ensuring that the seller is comprehensively covered throughout the entire process. In addition to revenues from this growing market, we see very interesting opportunities for cross-selling other insurance products in Gjensidige. Over to Page 7. We continue to follow up on our strong sustainability ambitions. We have a number of innovative initiatives, as you can see on this slide. The initiatives will create great customer value and reduce claims costs over time. So with that, I will leave the word to Jostein to present the first quarter results in more detail.

Thank you, Geir, and good morning, everybody. I will start on Page 9. As Geir mentioned, we delivered a profit before tax of NOK 1.719 billion in the first quarter. The insurance service result increased significantly to NOK 1.314 billion, driven by continued strong top-line growth and a lower loss ratio. A further decrease in the cost ratio also contributed to higher results. I'm very pleased to see the improvement in underlying profitability in Norway and Sweden. The development of commercial in Norway, driven by property, marine, motor, and health insurance, is particularly encouraging. The improvement for private in Norway was driven by property and travel insurance, while in Sweden, it was property and private health insurance that drove the development. We expect the positive impact from the ongoing pricing measures to gradually improve profitability as premiums are earned. The results in both the commercial and private portfolios in Denmark declined this quarter. Property insurance was the main driver of the decline in the commercial portfolio, while accident and health, motor, and travel insurance were the drivers behind the deterioration in the private portfolio. Commercial business is generally more volatile due to the composition of products and the magnitude of exposures. We recognize an upside potential for both portfolios in Denmark, which we will seek with targeted measures, as Geir mentioned. The Pension segment reported a lower pretax result, mainly due to the negative development in the insurance service result. I will revert on this in a moment. The net result from our investment portfolios amounted to NOK 441 million in the quarter. We see good progress in our mobility services, driving the improvement in the other items in this quarter. The result from our Baltic business is recorded as discontinued operations, pending regulatory approval for the sale. The result reflects higher insurance revenue and lower loss and cost ratios. We expect to close the transaction at the latest by the beginning of next year. Turning over to Page 10. Our strong growth continued in the first quarter, with insurance revenues increasing by more than 10%. This is mainly driven by price increases and continued high customer retention. Within private, we saw particularly high growth in Norway, reflecting mainly price increases in the main product lines, but also some increases in volumes for motor, property, travel, and accident and health insurance. The increase in the Danish private portfolio was due to price increases for all main products and higher volumes for motor, accident, health, and property insurance. Growth in Commercial was driven by both Norway and Denmark. In Norway, the growth was driven by price increases for all products and solid renewals. Growth for some products within accident insurance was muted due to improved risk selection and our consistent prioritization of profitability over growth. Gjensidege continues to maintain strong competitiveness in the SME market, but has experienced a slight increase in churn among larger, less profitable customers this quarter. In Denmark, the growth was driven by price increases for all main products and higher volumes for property, accident, health, and liability insurance. The insurance revenue in Sweden decreased when measured in local currency. This was due to the termination of a partner agreement. Adjusted for this, insurance revenue increased, driven by payment protection and health insurance in the private portfolio due to pricing measures. Higher volumes of motor and price increases for health insurance in the commercial portfolio also contributed to the growth. Turning over to Page 11. The group's loss ratio improved by 4.5 percentage points, reflecting an improvement in the underlying frequency loss ratio, higher runoff gains, and a positive impact from the change in risk adjustment. Higher large losses and a lower discounting effect contributed negatively. The weather this year was more favorable than last year. The first quarter results last year were, in addition, negatively impacted by provisions related to the court ruling on pricing in Denmark involving one of our peers. On the other hand, we saw an adverse development in claims incurred in the first quarter, but recognized only in the second quarter accounts of last year. Adjusting for these effects provides a clearer view of our profitability trends. Based on this, the loss ratio was broadly stable, while the underlying frequency loss ratio decreased by 3.7 percentage points. The improvement was primarily driven by our Norwegian commercial and private portfolios. Our Swedish operations also showed improved underlying profitability. We are strongly dedicated to continuing the implementation of pricing measures and enhancing operational efficiency to further improve profitability. Bear in mind that the implemented pricing measures take time to get fully reflected in the accounts, and the quarterly volatility in claims frequency and severity will impact results. Let's turn to Page 12. We managed to bring the group's cost ratio further down to 12.0%. Commercial and Private in Norway drove the improvement of 0.8 percentage points this quarter, thanks to higher insurance revenue. We recognize substantial potential in enhancing our cost ratios in Denmark. Our commitment to operational efficiency remains strong. Over to Slide 13 for comments on our pension operations. Our pension business delivered a pretax profit of NOK 77 million this quarter, or NOK 105 million adjusted for the change in the contractual service margin. The results were lower than the same quarter last year, mainly driven by lower profitability for occupational pension and adjustments related to reinsurance contracts. Net finance income came to NOK 90 million, reflecting an increase in interest rates during the quarter. Our unit-linked business continues to grow. The number of occupational pension members rose by around 2,500 at year-end to over 319,000 members this quarter. And assets under management rose by around 1% to NOK 87.8 billion. Although both administration fees and management income increased, the result from the unit-linked business was slightly lower year-on-year due to increased expenses driven by higher activity levels. Moving on to the investment portfolio on Page 14. The first quarter of this year saw significant fluctuations in the capital markets, driven by uncertainty stemming from ongoing trade disputes and the imposition of new tariffs, which heightened investor caution and market volatility. Our investment portfolio generated positive returns for all asset classes, except listed equities. The match portfolio, net of unwinding and the impact of changes in financial assumptions, returned around 40 basis points, mainly reflecting stable credit spreads and the fact that the investments did not fully match the accounting-based technical provisions. The free portfolio returned 110 basis points, reflecting positive returns from high running yields, stable credit spreads, and positive returns from real estate. The risk in our free portfolio was already low entering the quarter, but was further reduced during the quarter. The global macro outlook remains uncertain, with continued volatility expected in the capital markets. And despite the significant market turmoil in April, we have seen very limited impacts on our investment portfolio. We are well-positioned to withstand any further common turbulence in the markets. Our investment portfolios are balanced and comprise solid fixed income investments, the majority of which hold an investment-grade rating. A few words on the latest development of our operational targets on Slide 15. The customer satisfaction score is measured annually in the fourth quarter. The score was slightly down compared with the fourth quarter of 2023, reflecting a lower score mainly in Private Norway. We will continue to identify measures and take steps to maintain a strong customer offering and high customer satisfaction. As Geir mentioned, retention in Norway remained high and stable. Retention outside Norway, adjusted for the previously mentioned termination of a partner agreement in Sweden, was broadly stable this quarter. The improvement in the digital distribution index this quarter reflects an increase in digital sales and digital services. Distribution efficiency is progressing well as a result of improvement initiatives in Norway and Denmark, including the transfer of best practice between the countries. Improved digital customer solutions, enhanced implementation of the new core IT system in Denmark, as well as organizational adaptations, are among the key drivers for the improvement. Digital claims reporting increased during the quarter, driven by Norway, Denmark, and Sweden. Automated claims also increased in the quarter. Over to Page 16. We had a solvency ratio of 188% this quarter, up 3 percentage points from the end of the year. Adjusted for the acquisition of BuySure earlier this month, the solvency margin was 184%. Solvency II operating earnings and returns from the free portfolio contributed positively to eligible own funds, while the formulaic dividend reduces own funds. The capital requirement is stable this quarter, reflecting the impact of growth, offset by changes in technical provisions and currency rates. The approved version of our partial internal model differs from our own model. The differences lie in the calibration of certain parameters in the model. We sent an application to the Norwegian FSA on the correlation between underwriting risk and market risk earlier this year. We will continue to have a dialogue on the remaining differences between our own and the approved model. If all differences were approved, the capital requirement would be reduced by NOK 1.6 billion. And I'll now hand the word back to Geir.

Thank you, Jostein. To sum up on Page 17. We are very pleased with the strong performance this quarter, and we remain dedicated to implementing the necessary measures to achieve even better results going forward. Our robust capital position, combined with our conservative investment strategy, should help us navigate the current turbulence. And with that, we will now open the Q&A session of this presentation. Thank you.

[Operator Instructions] We will now take our first question from David Barma of Bank of America.

Firstly, I wanted to ask about the performance in private lines in Norway, please. Could you come back on the quarterly deterioration in the underlying loss ratio in that segment? Is there anything particular in there, or is it just the typical Q1 seasonality that we're seeing? And also, if you can touch on the prior year releases in the period, which were particularly low. I'll start with this, and then I just have a second question.

If you look at the underlying development in the Private Norway, as I believe your question was related to, David, it's an improvement in the underlying frequency loss ratio of 2.3 percentage points when adjusted for the weather effect and prior years or adverse development on the losses in 2024. So there is an improvement, which we're quite satisfied with there in the Private segment and it's driven by the before mentioned price increases on the main products as well as a flattening out of the claims frequency development within motor and an inflation level, which is in line with what we have said for a couple of quarters now.

Yes, I'm just thinking, compared to the last few quarters, is it just a bit of weather frequency in Q1 that's driving the uptick, not compared to Q1 last year, but compared to the rest of '24?

It's generally best to compare the same quarter with the quarter previous year due to the seasonality in Scandinavia on especially weather-related losses, not necessarily big events, but it's more difficult driving in the fourth and third quarter typically than in the second and third quarter. So I prefer to keep that comparison in mind. If we look at the ongoing effect that we talked about, especially in private property and motor, when these pricing measures are now starting to be earned in the accounts, that lies behind the improvement that we see in the underlying development.

Can I ask a second question, please, on Denmark? And are there any comments that you could share on the competition authority inquiry into different pricing practices for existing and new customers and on indexation?

Yes, I can start on that. Our view on the competition level in Denmark, our starting point is that there's a high level of competition in Denmark in the private segment. We see that there is a high focus on value proposition on pricing, and so on. But looking at the report from the competition and consumer authority, we tend to expect that we will start an investigation in the upcoming years. We look at our own books and our own pricing methods, and so on, and we don't have any concerns about the way we have handled this over the past years. So we are meeting such an investigation while being transparent and explaining what we have done. And yes, we are not worried about weak competition in the Danish market at all. So we don't meet the kind of arguments that we are hearing from the authority regarding this report.

We will now move on to our next question from Ulrik Zürcher of Nordea.

Just on private Norway because earned premiums are up 10% plus year-on-year. And 1 year ago, you guided on just like roughly 10% growth in '24. And now it seems like you basically have doubled this, not fully, but it seems you almost doubled what you say you're doing. So does that mean that on the flat retention ratios that the private premiums in Norway next year might approach almost a 20% growth rate?

We are not guiding on the growth rate for Private Norway. But as you can see, when we comment on what we're doing within property and within motor, we see that within property, the average premium, and that's the premium in force for properties, has increased on average by almost 13%. And the price increases we are having in the market at the moment are slightly above 17%. For motor, the numbers are like a 70% increase in average premium and above 90% for the price increases we have in the market today. And motor and property for private use are core and made products.

And this will take a typical cycle here that when you start in April now, you lift it a little bit, that will go like obviously, you can change based on stuff that's happening, but basically, that will then go through. It takes 12 to 18 months to get it through the P&L?

Yes, that's right for new price increases, but it's also a good indication of what the average premium is, which is already the premium paid by the customers already. And what's very satisfactory is that retention rates are still high, even though we have those price increases.

Also in Denmark, because of the trailing 12-month underwriting result in Denmark now, you need to lift that 50% to reach your target in '26 of over DKK 750 million. Is it possible to reach that target now in Denmark, like in 1 year?

I think there is a need to distinguish between private and commercial because the stories are somewhat different. In commercial, there is quarterly volatility, as we talked about many times before. And the performance this quarter was slightly under par, maybe. But if you're looking at this with a premium increase in Commercial Denmark in local currency and adjusted for leap year effects, 8.5%. And then the underlying frequency loss ratio was 1 percentage point weaker now when adjusted for weather effects, but that was still a clear improvement from the previous quarter. The trajectory is actually still good for commercial, whereas in private, as I mentioned in the previous question, there are a number of things that need to be done. But we have the positive signs here that we are doing quite well on the top-line growth there. And when the pricing effects and the efficiency measures we are taking get through to the P&L accounts. This will contribute to the NOK 750 million target in 2026. And it's still 1 year and 3 quarters to go. So, that is still the financial target for Denmark.

So we shouldn't see if you lift up a little bit, that this bit of bad momentum in Denmark, it won't interfere with your group's combined ratio target, do you think?

No, definitely not.

We will now move on to our next question from Hans Rettedal Christiansen of Danske Bank.

So I just wanted to go back to an earlier question on the development in the underlying frequency loss ratio in Norway, which is sort of on a reported basis, down 5% year-on-year, which is good to see. But then in Q4, i.e., last quarter, it was down 10% year-on-year. So I'm trying to understand how we should think about that delta? Specifically, then, how much of the Q4 decline was driven by the synergy realization that you spoke about earlier in the quarter, where you had an update? And if you say that the frequencies are stable in Q1, should we then interpret it as severity being higher than in Q4?

We need to distinguish between the change in claims frequency and changes in the underlying frequency loss ratio. It's absolutely correct that the improvement in the underlying frequency loss ratio, as reported, was much higher in Q4. But as we mentioned in the Q4 presentation, Q4 2023, which was the basis for the Q4 2024 improvement, was particularly weak, driven by adverse loss development, weather, and then just volatility, if you remember back to the presentation we had at that time. So if you strip out that, we think there is an improvement in Q1 2025, which is more or less exactly as we had planned it, and we're actually quite satisfied with the development there. The price increases in the main product lines go through. Claims inflation is more or less as expected within the interval we've given you. And then the frequency in the largest product, motor, is leveling off if you look at the numbers we reported here. So I think that is quite satisfactory.

Maybe just on the synergies, where you announced sort of NOK 800 million in claims synergies taken out during the second half of last year. Could you quantify the effect of that?

Do you have that number, Mitra Negård, updated on that one?

It has been 2 more months since the webinar. So it's higher, but I don't have the exact number here at the moment. So might get back on that one. I'll see. But it's, I mean, the measures are still running. And of course, we are still getting higher effects from that claims program. I don't have the exact number.

We will now move on to our next question from Youdish Chicooree of Autonomous Research.

So I'll start with 2 questions, please. The first one is just on your pricing in Norway across motor and property. I mean, your retention has been very stable despite quite high price increases. And then you're still planning to actually step it up this year? Are you seeing any changes in competitor pricing behavior that might start to affect retention? That's my first question. And then secondly, regarding Denmark, I think you spent quite a few years trying to improve profitability by a number of measures, including price increases. Does the investigation by the Danish authorities actually affect what you are planning in terms of price increases?

Starting with the kind of competition or intention levels in Norway. Yes, we are very satisfied with keeping the high retention level in Norway, both in the private and in the Commercial segment. As mentioned during the presentation, we saw that we had somewhat a little bit higher churn within the commercial segment in Norway during the last quarter, and that's also due to continued high price increases. But the positive thing about that is that the churn is among less profitable customers, which is helpful for the overall profitability numbers. When it comes to the competition level in Norway, we see that it's at the same level as we have seen before. We also see that Fremtind, as a competitor, has announced financial targets last autumn, which is overall helpful when it comes to pricing discipline. But we haven't seen any changes when it comes to whatever competitors are doing in the market during the last quarter. Regarding Denmark, we are not satisfied with the profitability within Private Denmark, as mentioned. We are doing a lot when it comes to improving profitability, including price increases, claims handling processes and procurement agreements, and cost efficiency in general. We will continue to do that. We don't see any kind of obstacles or challenges regarding the report from the Competition and Consumer Authority regarding doing the necessary and right things to do on the pricing level. We just have in mind that we had to give the customers a notice in advance before we do the price increases, and that's how we do business.

We'll now take our next question from Hakon Astrup of DNB Markets.

Two for me as well. The first one is on regulation. I appreciate your comment on the report from the Danish Competition Authority. Can you update us on your dialogue with the Norwegian regulator on the topic of ethical pricing and price walking? Do you see any risk of meaningful changes to the practices in Norway? And just a quick second question on your [indiscernible] the application that you sent to the FSA regarding approval of your internal model of correlation between underwriting risk and market risk, according to your internal model, how much is the uplift there compared to the standard model in terms of solvency percentage points?

Yes, starting with the last one. Yes, we have a dialogue with the FSA. We don't give any kind of comments regarding the progress of the process. But as we saw with the last process, it was within the time frame as expected, and that's the situation we have today as well, with the last model we like to have approved is that we expect it to be approved within that time frame. So, we have a good dialogue with the FSA. What we tell on the impact on the capital requirement is that if we get everything in our fully internal model approved, it should give a reduced capital requirement of approximately NOK 1.6 billion, and that's the total. So, we have one application regarding one module included in that number. And the first one was about?

Ethical pricing in Norway.

Ethical pricing in Norway. There are no surveys conducted by the FSA in Norway regarding that topic. We have conducted surveys in Sweden. We see that the investigation probably starts in Denmark as well. But we are doing everything we can to have the right mechanism, avoiding price walking, which is not legal, and so on. So we are ready to be transparent and share all information with the FSA if necessary. But today, we have not received any kind of service or questionnaire from the FSA in Norway.

We will now take our next question from Jan Gjerland of ABG.

Firstly, on this large loss, could you shed some more light into this was a structural fire? Are there a lot of fires? Or could you shed some more details on what has happened? Or if it's a structural one? Is it something you sort of think is random? And your risk appetite in that property market would be interesting to hear about. Then, secondly, the M&A interest has been, of course, large in Denmark. What kind of opportunities do you see? And for Sweden, with some jump in the revenue growth there, would you have some more appetite in Sweden for smaller players?

Starting with the large losses. Yes, we give quarterly estimates on the large losses. And it will have some volatility from quarter-to-quarter. Now, we are more on the negative side. We have a higher level of large losses than our estimate for this quarter. And as pointed out in the presentation, it's especially one large loss, including that. And I won't share any details on which loss that could be, but it's a large one. When it comes to the termination situation, that's part of our way we are doing business. We are looking at opportunities, targets in the Nordics. It's still within non-life business. But as you know, the market is consolidated. So, we have to be patient. And it's the main focus, I would say, and the emphasis is to have this organic growth and improve profitability and improve efficiency and operational excellence day by day. And for us, it's extremely important to maintain focus on that, especially in Private Denmark, where we see that we have to improve the way we are doing both risk selection and improving cost efficiency. So that's the main core and main focus. Yes, in Denmark or in Sweden, as you asked about, it's still a consolidated market in Sweden. And you could argue that it could be possible to buy a minor company or P&C portfolio, but we have to assess such a kind of acquisition against what kind of operational impact it will have and what kind of benefit it should actually give. So yes, it's a more kind of focus we have over time, but it's extremely important for us now to keep the focus on improving the profitability in Denmark.

Do you think it will be less easy to buy portfolios in Denmark or smaller companies because of the authorities' report out? Do you think they will be even more sort of strict when it comes to market shares and consolidation among the top players?

The competition and consumer authority in Denmark tends to be more strict than you probably see in Norway. That's nothing new. That's something we have seen over the last years. So what we have seen in the report in this quarter is as expected, and actually it's a kind of view from this authority, as we have already expected. And so it's not a big surprise. But in general, the competition authority in Denmark is stricter when it comes to the way of handling potential acquisitions than compared to what we see in Norway.

[Operator Instructions] We will now move on to our next question from Thomas Svendsen of SEB.

Yes. So 2 questions from me as well. So when we look across all your segments in all the Norway regions, are there any segments where you see less acceptance for your price increases? Or is it all so that it's a win-win that the weak clients you want to get rid of are not accepted in price hikes?

In general, Thomas, you see that the retention level in Norway is higher than in Denmark, and that's due to our of course, our strong position in Norway. We have a little bit higher churn in Norway in the Commercial segment this quarter, and that's the positive thing, as mentioned, is that the churn is among customers with a weaker profitability. And the retention numbers in Sweden and Denmark are a little bit lower than we see in Norway due to our position. So it's a little bit harder to come through with all the price increases in Denmark, but we have a broad and variated types of measures to improve the profitability, including claims handling, procurement agreements, cost efficiency, and so on. So it's not only about pricing.

And just a second question from me as well. If you look at the underlying claims frequency in Private Norway, it decreased by 2.3 percentage points year-over-year, while that was in Norway. While in Denmark, it jumped 4.7% year-on-year. So, is it a simple way to explain this huge deviation in the underlying picture?

No, I think we touched upon the, I guess the focus would be on the one that's the weak one here, is Private Denmark. In Norway, I think through the 2 main products that we walked you through on the property and motor, we've shown why we get these improvements through a combination of price increases, mainly, but also there, we have an improvement in the underlying cost ratios as well. But in Denmark, there is a combination of measures that need to be taken in terms of increased prices, increased distribution efficiency, improved claims handling, and, in general, better operational efficiency. Yes. So the price increases in private Denmark have been significantly lower than what we've gone through in Private Norway. That's probably the simplest of all explanations.

We will now take our next question from Vinit Malhotra of Mediobanca.

My one question, if I had to choose, would be, you talked about the claim saving program, which you said is not quantified, but it's somewhat of a similar rising or strong trajectory as at the NOK 812 million for full year '24. And I'm just curious, I mean, this did have a big impact when you just look like a number for a quarter as well. You said it was mostly 2H last year. How should we be thinking, I mean, is that if it is running at a similar run rate, then is some of that going into investments? So that's why the effect is not very prominent? Or are you trying to say that there was some effect, but we haven't quantified that? I mean, just curious that it's quite a big effort and a big program and a big number. So, how should we think about that one? And I do have a follow-up on solvency, but maybe we stick to one for now and then follow up in later calls.

I think the claims program, although I don't have the updated number after the claims webinar that we helped, is still continuing to deliver, and we have a higher realization of improvements now than we had at the webinar. But I think to one of the previous questions is maybe important to get that message through that when you see a reduced improvement in the underlying frequency loss ratio this quarter and also every time talking year-on-year comparisons than we had in the fourth quarter of 2024, you need to look at the fourth quarter of 2023, where we had a significant deterioration in the underlying frequency loss ratio. If you remember back to that quarter, we had 12.9 percentage points deterioration in the Q4 2023 report, partly driven by reserve strengthening and adverse weather effects. And that you can take out the weather effect because we've stripped it out for you. But the other effects haven't been quantified in the same way. And so the large improvement in the fourth quarter of 2024 compared to the 2025 Q1 is partly due to the weak Q4 2023 number. That is the message I probably didn't explain well enough on the previous question, but that's an important message. So the improvement that we see now in Private Norway is as planned, and we're actually quite satisfied with it.

We will now take our next question from Herman Zahl of Pareto Securities.

Just go back to the Private Norway development. Since you are accelerating repricing further in the quarter, a bit for property and auto, should we interpret that as if you have seen anything in the quarter that has surprised you in any way? Or is it inflation frequency or something else that makes you think that this is needed? Or is it just to have some more margin to your profitability targets since I expect that your repricing to achieve a similar profitability quarter-on-quarter?

First quarter tends to be a more easier quarter when it comes to weather effects and impact. So it's benign weather, I would say. So, nothing has surprised us in the last quarter. And all the pricing measures we have in place are planned pricing measures, and we have our financial targets for '25 and '26 in mind to put us in the best position to achieve that. And I'm very confident about our ability to reach the target, both for '25 and '26, due to all the measures we have in place.

But just since even if you adjust for the runoff gains last quarter in Private Norway, claims are up a bit more than at least we expected. Bit of a question, but which of these quarters, Q4 last year or Q1 this year, do you think is the best underlying reflection of the profitability in your portfolio for winter quarter?

Didn't quite catch your question, Herman. Did you ask about the runoff losses or the underlying frequency loss ratio?

No. So the underlying profitability in your private Norway portfolio at the moment. Which of the quarters, Q4 or Q1, do you think best reflects what you consider the underlying profitability at the moment for a winter quarter?

I mean, I think we are on an improving path on the underlying frequency loss ratios in Private Norway. If you go back to 2024, we were challenged on the kind of turning point communication. We have now seen an improvement in the underlying frequency loss ratio in the last 2 quarters. Also, there's a difference between the total UFLR and the motor development. If you remember back to Q4, we told you that if you kind of strip away various weather factors and so on, we saw a slight negative development still in the underlying frequency loss ratio for motor in the fourth quarter. This quarter, we see that, that has flattened out and we have a stable development in the underlying frequency loss ratio for motor, which is the single most important product. And then we showed you the pricing and inflation, and frequency numbers on the slide that Geir showed today, which show that we have fairly high price increases compared to our expectations around claims frequency and severity going forward, which should imply improved loss ratios going forward, further as well. So I'd say neither Q4 nor Q1 is the best representation. We are on a path towards an improved result.

We will now take our follow-up question from Youdish Chicooree of Autonomous Research.

I've got 2 questions. I think the first one is just on the Motor. You've maintained your expectation on severity inflation. Can you tell us what you're expecting on frequency? I mean, I know you said that in Q1, it was just over 1 point year-on-year, but what is your expectation for the rest of the year? And then secondly, on your asset, your investment mix. I mean, in your opening comments, you talked about increased political uncertainty, market volatility, et cetera. In light of that, are you planning to derisk your portfolio?

On the frequency development, we don't specifically guide on that, we say that it flattened out the increase in the frequency. If you try to strip away weather effects and so on, it's a slight increase in the frequency. And I think that will be totally within a normal variation around that frequency going forward. We talked at the Analyst Day back in 2024, I guess it was. We had Analyst Day focused on motor, and we showed you that there is a change in the car portfolio in terms of larger, more speedy or higher horsepower cars and so on, which has a slight negative development on the claim frequency overall. But this is priced. So it's not an issue in itself. So, although we don't guide specifically on the frequency development going forward, we say this quarter's development is totally within the normal. And then on the asset mix, I think the portfolio is fairly conservatively biased at the moment. So, it's no specific plans for any further derisking, and we'll update you when we report on the Q2 numbers.

We'll now move on to our next follow-up question from Jan Erik Gjerland of DBT.

Just kind of follow up on your financial question. Could you shed some more light on where you are currently in this quarter so far? Is it a loss? Is it again? Is it mixed? Or is it flat from the end of Q1? And secondly, could you please explain what premiums are in force? Is this more technical? Are they earned premiums? Is it gross written premiums? Or is it the portfolio premiums that you have at the current levels?

I think the comment we made around the investment result after the end of the quarter is that the market turmoil has had no significant effect on our portfolio. As you see from the asset mix we give you, it's a very conservative relatively conservative asset mix we have. So we're not significantly impacted by anything that happened after the end of the quarter. On the premiums in force, which means that is all the premiums or all the policies that are renewed that are currently in force, but it's not yet earned in the accounts. So if you have a policy that renewed yesterday, it will be within the policy in force. It will take 12 months to earn that policy through to the P&L.

So the old gross written premium thinking, or something like that. Is that how we should think about it?

Similar, but not quite the same. That's fine.

We'll now take our next follow-up question from Vinit Malhotra of Mediobanca.

Just a question on the solvency, the FSA discussions there are about other topics as well, not just this correlation, I understand. And you mentioned NOK 1.6 billion lower SCR on all the topics. Are you in a position to roughly indicate how much of that is from the ongoing correlation topic?

Well, we haven't disclosed and won't disclose that. If I may add, the windstorm model that we got approved last time was 1.3. This is smaller than that.

There are no further questions in queue. I will now hand it back to Mitra for closing remarks. Thank you.

Thank you, operator, and thank you, everyone, for your very good questions once again. We will be participating in roadshow meetings and a conference this quarter, starting with Oslo today. Please see our financial calendar on our website for more details. And with that, thank you for your attention, and have a nice day.