Tryg A/S (TRYG) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Tryg Capital Markets Day. My name is Gianandrea Roberti. I'm Head of Investor Relations here at Tryg. I would like to share with you today's agenda. We'll start today with our group CEO, Johan Brammer. He will take us through the first 2 points and also for strategic pillar scale and simplicity. We're going to have a coffee break, 10 minutes, at 11:20, very sharp. After Johan, we're going to move on with Mikael Karrsten, our Group CTO or Chief Underwriting Officer to use English terminology. He will take us through technical excellence and he will be followed by Alexandra Winther, Group Chief Commercial Officer, a presentation on customer and commercial excellence. We are going to move on to sustainability and ESG with our Group COO, Lars Bonde. A coffee break after that 10 minutes at 12:20. Allan Thaysen, our Group CFO, will take us through on financial and capital management. And importantly, we're going to have a full Q&A session of 40 minutes at that point with all our Executive Board, so I will ask you to keep questions for that session. After that, Johan will have the concluding remarks, and there will be a light lunch [indiscernible]. And with this, over to you, Johan. Thanks.

Thanks a lot, Gianandrea. And by the way, I think the Q&A started over coffee to be very honest. I would like to also extend a big warm welcome on behalf of 7,000 employees on behalf of Tryg management team and behalf of myself. Welcome to everybody who made it to the room here today in London. Also a big warm welcome to those of you who are following the live transmission today. This is an exciting day for us at Tryg. We are coming out with a 3-year strategy. We are coming out with what we believe is a very ambitious financial scorecard that we're going to spend the next 3 hours presenting and discussing. So a big warm welcome to an exciting 3-hour session now. I think before I kick it off here today, there were a few things I wanted to just highlight. One is taking a more holistic view on who we are at Tryg. So we are operating in Denmark, Sweden and Norway in the Scandinavian markets. And as a matter of fact, Tryg has a meaning in the Scandinavian languages, it means feeling safe, it means peace of mind. And why is that important? Well, it's important because it's an ingrained part of the culture at Tryg. It's an ingrained part of how we conduct our business to our customers and to the societies of which we are part of. It's a very important part of our overarching purpose at Tryg. So I'd like to just kick off today's session with a small video showing you the purpose of Tryg. [Presentation]

As you can see, where we operate. Tryg is not just a brand. It's actually a feeling, and it's important for us going forward. And I think you'll see in the presentations today how customer satisfaction and taking responsibility for the societies in which we operate is very important for us. With that being said, I want to move into something that I think is also quite important to highlight today before we start the formal agenda. That is actually our financial scorecard for the next 3 years. It is the most ambitious financial scorecard we've ever come out with at Tryg. And I'll just take you through the highlights before we start the formal agenda. So we are strengthening our profitability to a combined around 81%. We are also growing our ISR to 8.2% in '27. We've given ourselves a little bit of a cushion here. So the target is 8% to 8.4%. And please bear in mind, as always, for these 2 financial metrics, as always, we are assuming the current interest rate levels, we are assuming the current consensus levels, and we are assuming the guided large and weather claims. We also have a target for our return on own funds of around 35% to 40%, and then we have set an ambitious target also for our shareholder remuneration of somewhere between DKK 17 million and DKK 18 billion, including the ordinary and growing dividends as well as the extraordinary buyback that was announced as of today. So this number is not including any future extraordinary buybacks. I want to just speak a few minutes on the extraordinary buyback that was announced this morning of DKK 2 billion. This buyback came on the back of a very strong solvency for a while. We reported the Q3 solvency level at 202. Since we reported Q3, we have actually derisked our free portfolio. Allan will get back to that later on. We've sold off most of the risky assets in the free portfolio. That has actually bumped up our solvency with 23 percentage points, bringing us to 225. And as you can see here with a few adjustments that we expect for Q4 and taking into full account the DKK 2 billion buyback, we expect to deliver a solvency for Q4 around 195, still a very robust position. I want to mention 2 things, 2 important things here. One is when we announced the RSA Scandinavia transaction, we came out very clearly stipulating that we would take a conservative approach to our solvency position. And I think it's fair to say that after 3 years of turbulent macroeconomics around us, this conservatism has served us very well. I also want to state that we maintain our annual year-end assessment of our solvency position, also driven by our variant business ROOF targets. And I also want to state that long term, we expect to gravitate towards a less conservative solvency position. With that out of the way, I think we are ready to start the more formal part of the agenda. I'll start by making stock of the 2024 strategy. I think we need to see how we are traveling right now before we start looking into 2027. And I think, again, I want to take a step back before we dive into the scorecard for the 2024 strategy. It's an ingrained part of Tryg to deliver on our promises. It's part of our culture, it's part of the management team's culture. And if you look back at least the last few strategy periods where I've been part of the Tryg journey, back in 2017, we delivered on all financial targets. Back in the strategy ending in 2020, we delivered on all our financial targets, and we are on track to deliver on the financial targets for 2024, both the combined ratio, the insurance services result, also the ROOF, but also the expense ratio. And for those of you who look possible with all the ticks on the right-hand side, this is an indicator with which comfort we are delivering the financial targets, but we will be delivering on all the financial targets. This is important as we look forward into 2027. In addition to the financial KPIs, we also have a set of strategic KPIs. The first 1 is our customer satisfaction. We set out when we started the strategy period, we were at 84%. We set out to achieve 88 in customer satisfaction. We alluded to in the last few quarters that it appeared that we would be falling just short of that number. It appears now we'll be closing the books by the end of December, around 87%. So the bad news is we're not quite hitting that 88%. I think the good news is that we've actually elevated our customer satisfaction from 84% to 87% in a very inflationary period where the need for pricing and repricing has been very imminent. This has had an impact and some headwind in our customer satisfaction. So we got close. We didn't quite hit that customer satisfaction mark. As for the other strategic KPIs around our CO2 emissions and for our digitalization, we are happy to also hit those particular targets. So it's a pretty strong scorecard altogether for 2024. But I think it needs to be seen in context also. It needs to be seen in context of what we've been through in the last 3 years. And I want to just take you through some of the macroeconomic headwinds we have experienced. One of them is the inflationary environment, as you see on the left-hand side here, you see the 3 lines there, the inflation level for Denmark, Sweden and Norway. You can see how it's been very benign, stable, 0. And then overnight, it went double digits. For any insurance operator, inflation is the worst enemy, especially when it comes suddenly and it comes abrupt as it come in this strategy period. This is something we've had to tackle in the last 3 years. We've also had to tackle the fact that currencies has devaluated, the SEK and NOK has gone down since we announced our targets by somewhere between 10% and 15%. It appears to be stabilizing now at a lower level, but nevertheless, a significant headwind for our targets. In addition to macroeconomic headwinds, we've also seen geopolitical uncertainties going through the markets. One of them is the post-COVID frequency normalization impacting especially motor throughout the last few years. We've had a few dialogues around that, I remember. We've also seen how the extreme weather situation globally also hit Scandinavia that put a lot of operational pressure on us and also hurt our customers. In addition to that, we are seeing war in Ukraine and besides the few main elements to that has also impacted the value chains globally. We've seen it impacting the flow of new cars into Scandinavia. We've seen the impact value chains for spare parts, et cetera. So there's been a lot of uncertainty around us. And I think on this backdrop, we're quite pleased and proud that we are actually delivering on the 2024 financial targets. That brings me to something else we've been doing. We haven't just delivered on the financial scorecard in the last 3 years. We haven't just dealt with ongoing turbulence. We've also integrated the biggest acquisition in Tryg's history. We have changed who we are at Tryg over the last 3 years, and we are coming out of this strategy period in 2024 with a scale we've never had before. So we are entering into a strategy phase with capabilities we never had before. Short term, of course, we had to deliver on the DKK 900 million of synergies we promised to the market when we announced the RSA Scandinavia deal. As per Q3, we were at DKK 864 million. We'll, of course, deliver the DKK 900 million. If we hadn't seen the currency devaluations, as I mentioned before, we would have probably overshot this target. Now we'll meet this target, and I'm pleased to announce that. But I think the important part is if you look at the right-hand side, we are here showing the insurance service result from '17 to 2023, and you see it's gone up with more than 129%. So we're coming in to 2025 with a completely changed position. And we'll get back to that in a minute because the overarching theme of this strategy period is going to be scale. In addition, we have actually worked very strategically on changing the composition of our book upon which we built the strategy. We have deliberately retracted from parts of the corporate segment to improve our profitability and to reduce our volatility. And we have deliberately focused our organic and inorganic growth in the retail part of town being the private lines and Commercial lines. If you look at this chart, you can see back in '18, we had 78% of our book was in retail, Private lines and Commercial. We have now grown that to 93%. And why is that important? Well, it's important for a number of factors. The retail space, Private lines and Commercial is where we see the highest profitability, is also where we see the least capital consumption. And by retracting from parts of corporate, we are also seeing reduced volatility and hence, more stability, which is what we are all about in Tryg. That brings me to something else that we are all about. We are a dividend-yielding stock. We're proud of being that. And I think on this chart, you can see how we have remained focused on providing big trends to our shareholders in the last 10 years or so. The dark red pillars you see here is our ordinary and growing dividend. You can see how that's been growing since '14 up until today. You so see a small blip in '21 and '22, that was due to the RSA acquisition and the equity raise announced this to the market. We also announced to the market that in 2023, we would be back at pre RSA levels, which I'm pleased to also say that we were. On top of the dark red colors, you see the lighter red colors. Those are the situations where we've had the annual year-end assessments, and we've felt disciplined to pay back either in special dividends or extraordinary dividends. You see that, that's been the case for many years in the last 10 years. And you're also seeing how the extraordinary dividend announced this morning will flow into 2025. So we have remained disciplined, not just on the ordinary but also on the extraordinary capital repatriation. I think with that starting point, a strong track record for 2024 strategy. I think I'm ready to open up for the 2027 strategy. Before I dive into the actual content, I think it's worthwhile just spending a minute on discussing who we are at Tryg and where we operate. I know there are some here who are very familiar with the Tryg story. Some are less familiar. So let me just spend a few minutes explaining exactly who we are. So we operate in Denmark, Sweden and Norway. You can see on the map here, it's the dark spot on top of the continent. Why is that important? Well, it's important because that particular region has a set of characteristics that makes it very attractive to run an insurance business in. Some of those characteristics is, for instance, the business environment. We see that the trust in the government in Denmark, Sweden, no way stand out compared to the rest of Europe so does the ease of doing business. Why is this important? Well, these factors actually are indicators of stability and predictability. So we are in a very stable region. We're also operating in a region with high productivity levels. On this chart, you see the GDP per capita, and we have a very productive region in which we operate, which is also an indicator of stability going forward. All this translate into expense ratios for Tryg, as you can see here for the last 2 years, an average expense ratio of 13.5%. You see other scaled Scandinavian operators also having strong expense ratio. But when you come less scaled or when you move out of Europe, you see the expense ratios going all the way up to 28%. That is a function of the stability in the region and the productivity in the region. It's also a function about the level of digitalization in our region as well as the level of customer satisfaction, which is very high in Scandinavia and hence, also the retention levels, of course. All this translates into the combined ratio for the region. We, at Tryg, have an average for the last 2 years, a combined ratio average of 83%. Our scaled Scandinavian peers are close to that the less scaled peers. And when you go into Europe, you see combined jumping up 5 to 10 percentage points. So this is a very attractive region in which to operate, which is also why I'm fairly pleased to say that this is the only place we operate. So if you look at this chart next to Tryg 100% of our insurance premiums are coming out of this very attractive region. In addition to that, if you look on the color split next to the Tryg logo here, you see that we have a well-diversified split across the 3 countries. In addition to that, we are very skewed towards the Private line segment. You can see here that almost 2/3 of our insurance premiums are coming from the Private lines segment. That sets us apart from the rest of the market, and we're very pleased with this exposure. Because having a similar operational setup and having a skew towards the retail and the private line segment gives us some advantages. It allows for further cross-border scaling. It allows for efficiencies having a similar operational setup and in addition to that, it actually provides very low risk and high predictability. So that was just what I wanted to give an insight into where we operate and why we operate as we do. That brings me back to where we started a minute ago on the financial scorecard. Let me just reiterate a combined ratio around 81%, an ISR of 8.2%, with a bit of cushion, so it's 8% to 8.4%, a ROOF of 35% to 40% and a capital or shareholder remuneration of somewhere between DKK 17 billion to DKK 18 billion. In addition to the financial metrics, we also operate with a set of strategic targets for this period. The first 1 is around our customer satisfaction. As I mentioned upfront, this is a huge part of who we are at Tryg. We want to keep investing into customer satisfaction. We have a baseline of 81% that we will bring to 83%, an increase of 2 percentage points over the next 3 years. If you're somewhat puzzled when I said 87% before, this is because we are rebasing our data now, including all of the data coming from Trygg-Hansa. Alexandra will get back to that later on in her section. In addition to that, we want to increase our straight-through processing. Straight-through processing is when a customer files the claim online, and there's no hands associated, no employees involved. It's a fully automated process, handling the claim. Today, we have a straight-through processing ratio of 45%. We're going to take that up to 55%, and I will get back to that later on in my section. The third strategic KPI is around reducing our CO2 emissions. This is important for us to play a pivotal role in society and be a good corporate citizen. Our corporate responsibility is important, and we'll take down the CO2 emissions on average per claim by 6% in 2027. And Lars, we'll get back to that in his section later on. So these are the targets. Now let's turn to how we are going to actually deliver these targets. I think that's the important part of the day. We're going to do this through 3 strategic pillars. The first 1 is around scale and simplicity, 2 terms that go well in hand. And as I mentioned upfront, we now, for the first time in 300 years, have the sufficient scale to really flex this. We'll be doing this by transforming and simplifying our IT landscape and also automating our processes to get economies of scale. This will deliver DKK 500 million by the end of 2027. The second strategic pillar is around technical excellence. This is very much around taking existing best practices within portfolio management, underwriting or pricing, especially tapping in to some of the insights we're getting from the Trygg-Hansa business. Mikael will take you through this in his section later on, but this will have an impact of DKK 300 million by 2027. The last strategic pillar is around customer and commercial excellence. This is, again, very much around tapping into the best practices we have around the business, making sure we leverage our commercial scale in terms of our customer value proposition. Alexandra will take you through this later on and this will deliver DKK 200 million in 2027. I guess the important bit now is to figure out how this stacks up in our financial bridge and our financial modeling. The way to look at this is to look at how is 2024 going to end. Of course, we don't know that yet. Let's wait for December closing. What we do know is that when we normalize the 2024 result for large and weather, we have a very firm grip on our ISR normalized run rate for the business for 2024. So we're coming out with a run rate of DKK 7.2 billion. I'm not saying that's where the 2024 will end. As you all know, per Q3, we had a little bit of surplus take on large and weather of around DKK 91 million. But let's see how the year ends. This is a normalized run rate in terms of our ISR number for 2024. This is a number upon which we are stacking our 3 strategic pillars, the 500, the 300 and the 200, getting us to 8.2%. And then we put a little bit of cushion around that. So the real number here and the target is 8% to 8.4%. But make no mistake, we are aiming for 8.2%. I guess that brings me to a little bit of an educational topic here. I just want to explain to you how we operate in Tryg in terms of having impacts gross and net. If we just go back here, as you can see on these pillars, the net impact is 500, 300 and 200. But as you can also see, there's a so-called under hang here. This is the difference between the gross and the net of all the initiatives you're going to see in the next hour or so. So for all the initiatives you're going to see in the next hour, we're going to show you the gross impact -- gross impact. We all know that gross is not what's going to hit the bottom line. We know that there are elements like market effects, compare data dynamics, there's going to be execution risk on our side, but there's also going to be investments. So we have factored in a gross factor, bringing us to the net impact. So for each of these strategic pillars, expect 500, 300 and 200. Don't get trapped by the numbers you're going to see in a minute, which is all going to be gross numbers. Don't add them up and get to a bigger number. We are aiming for 8.2% based on the net impact from each of these 3 strategic pillars. So please keep this in mind as we go through the next few sections because I'm going to open up the first strategic pillar scale and simplicity in a second. So scale and simplicity. There are terms that go well hand in hand, and I think it's becoming clearer and clearer to everybody that this is a strategic imperative that will help you run an efficient insurance business if and when you are scaled. We are fortunate enough now to be scaled at Tryg, allowing us to invest in our IT infrastructure to simplify that to get economies of scale, but also in terms of exercising increased purchasing power, but also allowing ourselves to invest and scale new technologies in AI. That's exactly what I'm going to unfold in this next section. I think it's prudent, though, to start by saying a little bit of context around this strategic pillar. How did we get to where we are? We've had a period of strong growth in Tryg. If you look at this chart, this is the insurance revenue back from '16 up until today, it's gone from DKK 18 billion of revenues to almost DKK 40 billion of revenues as of today this year. As you can see, we've had inorganic growth in this period. You see Alka, you see Codan Norway, you see Trygg-Hansa. That's the inorganic part. If you look at the bubbles and the percentages in the bottom, you're seeing the organic growth, which has also been strong throughout this period. This has been exactly on strategy. The byproduct is, however, when we look at the complexity that this has brought along, we're looking under the hood of our IT functions. And we see now more than 1,000 IT applications. We see that more than 1,200 IT vendors, and we see more than 1,000 IT consultants. This is not a surprise to us. It's not a disappointment to us. It's just reality. That's a byproduct and a consequence of the strategy we've been on for the last few years. So for me, this doesn't represent problems. It represents potential and this is exactly what this strategy will handle. The way we are going to a process is having 3 focus areas in our scale and simplicity pillar. The first 1 is around simplifying our IT foundation. The second 1 is around scaling our already world-class claims handling in Denmark and Norway. And the third 1 is actually around automating our back-end operations. This is how we're going to achieve the DKK 500 million of impact in 2027. I'm going to open up the hood now and show you some of the initiatives that will deliver these DKK 500 million. I think I mentioned that you're going to see gross impact. That's not what you should expect. We expect the DKK 500 million, as you see here. But I wanted to just emphasize that this is not a dream and a vision and some pretty pictures. We have a bottom-up build strategy with a number of set initiatives that are either being rolled out as we speak or in a road map to be rolled out. So our confidence around delivering this is very strong. What you're going to see now is just a select list of initiatives. We have selected the ones with the most strategic impact or the highest financial impact, but there are other initiatives that we will be rolling out. So take this as some examples. If we open up the first box around simplifying our IT foundation, the first initiative is around decommissioning IT applications. The second 1 is around consolidating our IT vendor landscape. As I mentioned, there are 1,200 IT vendors. We will consolidate and streamline that. And the third 1 is around streamlining our IT development organization. If we open up the first 1 around streamlining our IT applications, just to give you a few facts around that, when we look at the IT cost for Tryg in the last 3 years, it has gone up with 53%. Not a surprise, but nevertheless, a significant step-up. And just to give you an example, a data point on this, you can see that 56% of our IT applications are only serving 1 country. So 56% of our IT applications are serving 1 country with very limited scale. I'll get back to that specific data point in a minute. We have worked with decommissioning our IT applications before. We know that when we start decommissioning IT applications, we reduce our IT run costs for once. We also accelerate our time to market and most importantly, actually, we are also improving our customer communication. When we decommissioned IT applications most recently as a byproduct of our integration work with RSA and Codan Norway, we decommissioned around 335 IT applications. So we know how to do this. We've done this before. And we saw an ISR impact of DKK 120 million. In the next strategy period, we are going to do more of this. We are going to get a benefit of DKK 150 million of ISR impact. We're going to do this from decommissioning our IT applications, a large part of that. We are going to take out redundant IT applications, and we're going to rightsize our IT development functions around a landscape with fewer IT applications. And to give you a specific data point, the 56% I mentioned that only serves 1 country, we're going to take the number down to less than 30% to get more scale out of our IT applications. This is initiative number one. Initiative number 2 is around streamlining our IT vendor landscape. As I mentioned, we have more than 1,200 IT vendors. When you look at how that pans out, 60 of those, 60 accounts for 80% of all spent, meaning we actually have 1,000 IT vendors who only take up 5% of our total spend. We know that when we consolidate our spend and take the spend from the long tail into our strategic vendors, we see cost savings of around 30%. We've done that before. So we are pretty firm on that. So that's the cost component. We can reduce costs by bundling our vendors. In addition to that, we also see a quality uplift when we saw the Trygg-Hansa IT landscape being moved into 1 of Tryg strategic vendors, we also saw the number of incidents going down by 62%. So there's a significant quality component also. In this next strategy period, we're going to get DKK 100 million out of trimming this vendor tail. We are going to take and make sure that 80% of all our IT projects are going through a very rigorous tender process, and we are going to be pruning that long tail of vendors. So we don't have 1,000 vendors taking up 5% of our spend. The last initiative in this focus area around our IT application landscape is actually taking and streamlining our IT development functions. If you look to the left, we have established a very agile development function in Tryg in the last many years. We've done that with a very local touch, making sure we were close to customers with responsiveness and speed, that has worked very well and served us well in the last 6 years. We are now going to take those benefits of speed and agility and being close to the customers. And we are going to add a scaling element to this. If you look at this future organization of our IT development, you see a larger Scandinavian layer, and you see national layers instead of local layers. So this is going to give us scale on top of the speed and agility we already had. This is not -- again, this is not a dream, this is a rollout we are in the midst of doing it as we speak. So this will have an impact of around DKK 200 million by 2027. This will be a matter of taking out some of the redundant setups. This will be about taking out some of the external vendors and manning up internally. This will be taking out some of the admin roles in the IT development functions. This is going to make us more lean, it's going to scale our IT development. That's focus area, number one. Number 2 is around scaling our world-class claims handling. And I think, again, I just want to put a little bit of context around that. We have actually, over the last many years, implementing a new claims handling system called Guidewire in Denmark and Norway. We are actually world-class in our claims handling processes already. In the last 3 years, we've seen the number of online claims going up. So now 81% of all claims filed in Denmark and Norway are conducted online. It's a very high number. It's gone up with 12 percentage points in the last 3 years. So 80 -- more than 80% of all claims are filed online. Out of those online filed claims, we have seen an increase in the number of claims that go straight through, no employees involved. It's an automated process from the claim is filed online until it's settled. We now see that 45% of all claims filed in Denmark and Norway are being handled straight through, more than 0.5 million claims. And then you could ask, so why is this important? Well, it speeds up our claims handling processes. When we look at the amount or the ratio of claims that are closed within 72 hours of being filed, it's gone up dramatically. We see almost 50% of our claims filed online in Denmark and Norway are settled within 72 hours. And again, why is that important? Well, it's important because that's something customers crave for. We see the claims satisfaction in the processes has gone up from 78% to 82%. So the customers are demanding this speed and responsiveness. In addition to that is also increasing our effectiveness at Tryg. We've seen the number of claims per FTE gone up with 12% in the last 3 years. This has contributed with DKK 140 million on the ISR annual run rate in the last 3 years. In the next 3 years, we are going to see an impact of DKK 100 million from taking this guideline implementation rolled out in Denmark and Norway now scaling that into Sweden, scaling the same system, redeciding the processes in spite of what we've done in Denmark and Norway. We're also going to take that number of 45 in STP, straight-through processing. We're going to get that to 55%, not just across Denmark and Norway, but across Denmark, Norway and Sweden. So this is a skilled initiative once more. In addition to utilizing Guidewire and redesigning our processes to get the benefit of DKK 100 million, we're also going to apply new technologies and take use of AI support tools. And I wanted to just show you a quick video of 1 of our more efficient employees. Her name is Marie. She's shifting through 2/3 of all the repair quotes we're getting for motor shops in Denmark determining whether there should be an automated process for them or whether it should be kicked off and challenged by some of our manual people. I'll just show you a quick video. Have a look here. [Presentation]

I think this is a good example of how AI will support us going forward ingrained in the business strategy. I'll go on to the second initiative in this focus area, which is around increasing our repair rates, but also bundling our suppliers. If we look at the repair rates, we see that in motor, when we are able to repair a motor spare part rather than replace it, we get savings of 45%. So replacing -- repairing spare parts is not just good for society and the environment, is also good for the customers in terms of speed and is very good financially for Tryg that can get a 45% saving. That's why we've worked in the last 3 years to increase the repair rates on motor. I'm showing you here a few examples. You can see on car bumpers, we've gone up with 15 percentage points in the repair ratio. We're also showing it for glass, where we've gone up 4 percentage points. On an average across all categories in motor, we have a repair ratio for spare parts of around 30%. In the next 3 years, we're going to take that 30% up to 38%. That's one driver in this initiative. Another initiative is around consolidating our spend with Scandinavian suppliers. It's become clear to us being now a scaled operator. Then when we take the local agreements for repairs in Denmark, Sweden and Norway, and scale that into a Scandinavian supplier. We get savings of somewhere between 5% to 15%. An example I'm showing here is how this -- how we did this with car windshields and got a saving of DKK 65 million from taking local agreements and making them into a Scandi agreement. In the next 3 years, we're going to double the amount we spent on Scandinavian agreements going from a lot of local suppliers into Scandi suppliers. Altogether, increasing repair rates and also increasing our Scandinavian supplier spend, will bring an additional DKK 200 million of ISR in 2027. The last initiative in this focus area is around using AI and technology to continue to improve our ability to detect fraud. We've worked with this for many years. You can see on the left-hand side how we've gone from DKK 150 million to DKK 400 million to DKK 600 million of avoided fraud every year. We're going to take that up a notch by deploying new technologies and AI support tools. Here are 2 examples. One is called Lima. Lima is an AI support tool in Sweden that's scans through more than 600,000 claims every year. Out of that, Lima will take out 2,500 for further investigation and, out of that, 42% of those claims are actually rejected as fraud, giving us an impact of DKK 65 million. Another example here is called Venice. Venice doesn't go to individual claims. Venice is an AI support tool that looks for patents in the claims. And Venice we're able to, in Sweden, detect 8 motor repair shops that were fraudulent towards Tryg and they were kicked out of our network. This gave us an impact of DKK 40 million. These are 2 examples from our Swedish business in Trygg-Hansa. This next strategy period will be all around scaling these particular AI support tools and other while also enhancing the existing AI tools we have, this will have an impact of another DKK 100 million in 2027. That brings me to the last focus area and this strategic pillar. Again, we have 3 initiatives I want to show you. One is around cleaning up product variations across Tryg. Another 1 is around utilizing chatbots to support our employees and lastly, also around automating our processes. There's 1 process to optimize. Simplifying product variations. Why is that a good idea? Well, when we look at how our product variations are across our geographies, we see that 90% of our revenues come from 15% of our product variations. When we look at the split between geographies, Denmark, Sweden and Norway, we see that Norway and Sweden are very efficient in terms of use of product variations. Within Denmark, we have 2 to 3x as many product variations. Some of that is, of course, explained by the sheer size and the multi-brand strategy in Denmark. But nevertheless, there's huge potential to improve the number of product variations across all geographies. When we do this, and we have done this in the past, we see a number of benefits. It allows us to do faster pricing and product updates. It allows us a lower IT run cost also. We also see more efficient claims handling. And again, very importantly, we have simple customer communication. In the next trading period, we have got an impact of DKK 50 million from simply reducing the number of product variations and also decreasing the amount of niche products with very, very little revenue attached. As for the second and third initiative we are using chatbots in general already across the group to support our employees. Here is a number of the chatbots we are using today. You can see the names, they're all names. If I were to just unfold Osa, 1 of our existing chatbots. Osa is by design a second-level support chatbot. So when our employees, our front employees run into technical questions instead of having to call second level support, they can open up a chat. Osa is able to handle more than 0.5 million chats every year. Meaning that our customer representatives don't have to wait in line to speak to our second-level support team, meaning that the customers don't have to wait to get an answer because Osa can actually support most of those crews. This has allowed us to reduce our number of second-level support staff by 75%. In addition to that, we've seen how the automization and use of AI to automate our back-end processes is giving us savings. I'm showing you here an example where we had 30 -- equivalent of 30 FTEs outsourced from Norway to do manual processes outside of Norway. So instead of having an outsourcing cost equivalent to 30 FTEs, we invested in AI to automate these processes, reducing the cost to 0 on the outsourcing need for these particular processes, but also increasing the customer satisfaction as the speed went up in the processing. In the next 3 years, we are going to take existing chatbots, we are going to take existing methodologies around automization, and we're going to scale that across the group and this will have an impact of DKK 100 million in 2027. I think that brings me to an end of this strategic pillar. As you can see, we have a list of very specific initiatives. We have a high degree of comfort with what to do and when to do it, and we are quite confident that this will deliver the DKK 500 million of net impact in 2027. And with that, Gianandrea, I'll hand it over to you.

We're just going to have a 10-minute coffee break, back here at 11:25 sharp. [Break]

I hope you enjoyed the coffee break. I think we're ready to reignite here and get started. And now we're going to go into the strategic pillar called technical excellence. And I think it's fair to say that technical excellence is, as essentially the backbone of Tryg. We are going to talk to you in a little while around how we can use portfolio insights and portfolio management to a large extent, how we scale that? Also in terms of having the right underwriting and risk selection and selling the accurate prices. I'll leave that to Mikael. I think you're the right person to take us through this with a background as Chief Underwriting Officer as RSA Scandi, actually taking the responsibility from what's working in the Trygg-Hansa many years ago, and now we're actually deploying that and scaling that in the business going forward. So I think you're the right person, Mikael, to take us through this next section.

Thank you, Johan, and good morning, everyone. So now we're switching over to technical excellence and technical excellence is about finding the optimal balance between sustainable profitability, growth and manage volatility. So it's definitely not only around the combined ratio. But nevertheless, the combined ratio is the most fundamental and convincing evidence of having a strong focus on technical excellence. And despite macroeconomic headwind, we have managed to produce a very solid and stable improvement in the combined ratio over a long period of time as displayed on the chart here with the combined ratio, excluding the prior year runoffs. Now this is not something that has come for free, but rather from very dedicated actions that we have taken throughout number of years. And to take you through a couple of those actions, those include that we have invested in our portfolio management organization. So heavily inspired by the setup in RSA and Trygg-Hansa, and as Johan said, I spent a decade there. Lars as Scandinavian Chief Underwriting Officer before joining Tryg as part of the acquisition. So we have invested in more than 20 roles in this organization. What we've also done is that for a long period of time, we have invested in our infrastructure and our capabilities for pricing and for individual underwriting. So making sure that our pricing sophistication and our underwriting quality has improved over time. And what we've also done over the most recent couple of years is that we have established a Scandinavian Center of Technical Excellence that covers all the different technical disciplines and something that I have the pleasure of being in charge of. So this is what we have done, but let's look at what we will do going forward. So in this coming strategic period, we seek to, first of all, improve our portfolio management. We seek to advance our pricing even further and to optimize our individual underwriting process. And by doing this, we look forward to add DKK 300 million of net bottom line impact by the end of this strategy period. So let's first zoom into portfolio management and how we can use and improve subperforming portfolios to be even more profitable and to increase data granularity. So here is a chart, a simplified chart that shows our portfolios, Sweden, Denmark and Norway. And on the x-axis, we have the profitability in terms of combined ratio, going from worst to best. On the y-axis, we have the growth going from worst to best. And obviously, we seek to have portfolios that are in the top right-hand corner with the best profitability and the best growth rate. And as you're familiar with, here, we have displayed the Swedish, Danish and Norwegian portfolio and the size of the bubbles is the size of the premium. And we then have the Swedish portfolio with the best profitability but also with a somewhat lower growth rate followed from a profitability point of view with the Danish portfolio and then last by the Norwegian portfolio. Now the interesting thing that happens is if we look at this, but from a slightly different lens, so looking at all our different sub portfolios, and here, we have divided the sub portfolios based on product and based on distribution channel. And then the picture changes. So we can see that we have a quite widespread in terms of profitability with some portfolios performing really well and some portfolios have the opportunity to do better. And portfolio management is all about de-averaging and understanding where each of the different bubbles are i.e., the portfolios and whether we'll move next. What we also can conclude is that the Swedish portfolios tend to be centered around the right-hand side which is natural given that Sweden has been through the same kind of portfolio management processes for a longer period of time. Because what we also can conclude is that if we do not actively manage portfolios, then the drift in portfolios and the volatility in how they move around increases. And to take 1 specific example of that. Here is 1 of the portfolios that we have. And if we look at where that started in 2020, it was here in the middle and let's then fast forward time 1 year, things are actually looking really great. So improving growth, improving profitability, and you can think, well, this looks fantastic, right? And if we then, again, fast forward time 2 years to 2022 and to 2023, we can actually see that the portfolio detracted in terms of both growth and profitability. So potentially in hindsight, we could have been maybe overestimating things like COVID effects, underestimating things like the inflation spike that we knew came along later. So portfolio management might seem simple, but it's actually 1 of the most differentiating things in insurance. And that is not to understand where a bubble or a portfolio is at a specific point in time but rather to understand where it will move next from things like claims trends, changing customer behavior and so on, and more importantly, to take the proactive actions for how we will move it going forward. So that's very much our job understanding where the portfolios are, where they will move next and what actions we can take in order to improve it. And those actions can be either to improve profitability, so moving the portfolios to the right in this chart or to improve growth of already well-performing portfolios. And in this session, I will speak mainly about improving profitability. Alexandra will come back a little bit later on to speak more about commercial excellence and growth. So let's look at 1 specific example, which illustrates really good portfolio management. And here, we have the Norwegian commercial property book illustrated here by the dot in the middle. But what we actually could see was that this was further to the left 3 years earlier. So we have improved profitability from very dedicated portfolio management actions during this 3-year period. So let's look at what we did. And basically, there were 4 levers to drive this improvement. First of all, we secured to increase the adherence to our Scandinavian risk management guidelines. And what this in practice means is that we walked away from some of the non-Scandinavian property exposures. So very much in line with the strategic ambition that we've had for this strategy period. The second thing that we did was to make some very strategic exits in this portfolio. So we exited some high-volatility segments like food production and recycling, so taking down the exposures by 16% during this point in time. The third thing that we did was to make individual rate adjustments where needed so making sure that we had a better alignment between risk and price. And the fourth thing that we did, not least important, is we secured to increase the pricing sophistication in our tariffs mainly for the large and weather element of the tariff, which is really important for a commercial property book. So by doing this, we managed to maintain the growth rate, improving the top line by 15% over a 3-year period. But more impressively, we managed to, during a time of macroeconomic headwind, improve the profitability by between 6 and 7 points. So adding just short of DKK 40 million to the bottom line. Now this is just 1 example of good strategic portfolio management, which we're now scaling across the business. And we will do this from a proven toolbox that we have across the Swedish business that consists of a couple of different things. So first of all, it holds clear roles and mandates, securing that we have 1 version of the truth. The second thing is that we have a strong process of going from data to forward-looking insights and actions. And the third thing is that we have a very sophisticated way in how we target specific customer segments either to increase profitability or to increase growth. So this is now something that we're scaling across the business. So based on this, Swedish starting point, adding already really good elements across Norway and Denmark. We set forth a Scandinavian Tryg portfolio management process. And by doing that, we have already in our portfolio review sessions identified more than DKK 5 billion worth of premium that are currently going through specific targeted actions for profitability improvements. And by doing this, we seek to add DKK 200 million of bottom line during the strategy period. So let me then take you to the next session around pricing and how we can improve pricing sophistication and increase the use of data to make pricing differentiation even further. Now our ability to update tariffs in a fast and sophisticated way is crucial to run a highly profitable insurance company. And we have established a unified pricing platform that has enabled us to, first of all, decrease the updating time when we deploy tariffs, so taking that from a month down to less than 24 hours. We have also been able to increase the way we update tariffs and the tariff compositions by more than 10x. So this increases our ability to drive pricing sophistication and pricing quality. And this unified platform is established 100% for our Private lines business for the applicable parts and roughly to 50% for our Commercial Lines business. And what it also gives us, it gives us a very scalable platform to drive further improvements from. So for instance, to add more external data to add new functionalities like AI and to drive further automation. And by doing this, we seek to add DKK 150 million to the bottom line by the fact that I've said earlier and also to secure that this platform is 100% installed for Commercial lines. So let me take you through 1 specific example of how we can use external data into increasing our price sophistication. And Johan talked before about climate and climate risk. And obviously, that's something that we are really focused on. And when we look at the Scandinavian market, that is mainly for the flooding elements and water-related risks that comes as a consequence. And here, we have established what we describe as a wetness index, something that started in our Norwegian Private lines business, where we look at external geo data for things like height, also for slope, drainage. And then we combine that with our pool of historical data. And here, we can see that we have an advantage being a large insurer because we have a large pool of historical data to draw conclusions from. And when we do this, we create this what I called before, the wetness index. So here illustrated by this picture, which shows low-risk areas in green, high-risk areas in red. And then when we back test this towards our historical claims, we can see that there is a very high correlation between the high-risk areas and the claims that we're seeing. So we actually add a lot of explanatory power that previously wasn't captured in our tariffs. And when doing this, we increase our price differentiation among our clients. So in essence, some customers will get a higher price, some customers will get a lower price, but all customers will get a more risk correct price, increasing the pricing sophistication, increasing the pricing quality that we have. And this is just 1 example of how we can utilize external data, and we have quite a long list to work further from. And let me then move to our individual underwriting process and how we look to scale our underwriting platform that we've built over the last couple of years. So our individual underwriting covers roughly 1/3 of our Commercial lines business. And the underwriting platform in 1 simplified form is an IT tool that covers all of our 6 phases of underwriting. So going from customer screening to fulfillment of the agreements. So this gives a streamlined process for this. And this might seem very basic, but having done this for more than 20 years, I can actually assure you that it's not. So the price here is in securing that the intelligence and the know-how that we have from our individual underwriters that's structured in a format that enables us to utilize that in the best possible way. And here, we secured to do just that. But even more importantly, what it gives us, it gives us a tool to drive further quality -- from further sophistication from, for instance, through leveraging all the internal data that we have, potentially also with external data going forward and to make benchmarking and assessments of how we evaluate risks and how we do pricing. And when we've done this and analyzed this tool, we can see that this creates an improvement in the combined ratio of somewhere between 2 and 3 percentage points. And what it also gives us, again, it gives us a very scalable platform where we can add new functionality, we can actually plug in new tools quite easily. So tools like exposure management, driving further AI, et cetera. And by doing this, we seek to add DKK 50 million to the bottom line from the fact that I just said, but also through making sure that the adoption rate increases from the current level of 30% and up to 80% during the strategy period. So to sum up, this strategy period is about taking technical excellence to the next level and increasing the use of data accuracy across the different items of portfolio management, of pricing and of individual underwriting. And the end goal here is quite clear. That's to improve our competitiveness and add to the bottom line. By that, I will hand it back over to you, Johan.

Thanks a lot. Thanks a lot, Mikael, for taking us through a very important part of the strategy and a fairly technical part of the strategy. And I think with this, I think we are ready to change gears slightly and go into another part of the strategy, that is as important as this is the part that will be future proofing our business from a more commercial point of view, looking into how we improve our customer loyalty and scale some of our strongholds across the business. So I'll leave it to you, Alexandra.

Thank you. Hello, everyone. Now let's dig into the details of the strategic pillar. At Tryg, we know that commercial excellence is one of our key competitive advantages. Let's try to look at the strong commercial fundamentals that we have. So looking across the three markets, we can see that brand awareness is above 96%, which makes us a household name in Scandinavia. We also see that retention levels are around 88%. And zooming in on the individual markets, we can see that in Denmark, we are the market leader with a 24% market share. In Sweden, we are the market leader in personal accident with a 42% market share and we're also the leader in online distribution in private lines because half of our new sales is coming from online. In Norway, we have the most satisfied customers of the entire group with customer satisfaction at 88 out of 100. Now looking towards '27, revenue synergies will be driving our commercial strategy. When we acquired Trygg-Hansa from the RSA group, as Johan mentioned, we acquired a very unique company. And as we have gotten to know it more intimately, it is very evident to us that our newly acquired Swedish business and our existing businesses in Denmark and in Norway have clear complementary strengths. And this is why our commercial strategy is all about harvesting the next generation revenue synergies, really taking the full advantage of the transformative acquisition we did back in the day. It also means that the delivery certainty of our commercial initiatives is high because it's basically all about scaling what we know and what we tried and tested in other markets. This pillar is divided into 2 different themes and they're quite simple. The first theme is all about scaling what we know in Sweden to Denmark and Norway and the other theme is scaling in the other direction. And as we've mentioned before, the bottom line impact will be DKK 200 million by '27. When we open these pillars, today, we're bringing 5 examples. And please bear in mind that this is not an exhaustive list, it is just the examples that we feel are the most strategic, and we would like to share with you today. In the first theme, we have 2 initiatives. The first one is about growing the personal accident portfolio in Denmark and Norway by the pregnancy product. And the second initiative is improving our online offering to small commercial customers. Now Trygg-Hansa has spent decades building up a world-class portfolio in personal accidents. And when they started, they were actually the first mover in this market. Today, we enjoy a market share of 42%, as I mentioned, being the market leader. And looking at Private lines in Sweden, PA today still accounts for 38%. The profitability is attractive. We see that combined ratio levels are around 11 percentage points lower than the non-PA segments, and this is really driven by best-in-class risk assessment. Everyone, thinks Mikael. And it's supported by a long history of data. It's also supported by a very strong focus on cost efficiency and working diligently with our suppliers. The way Trygg-Hansa has built this portfolio is by following the customary through different life stages. Everything starts with the pregnancy product, ensuring the mother and unborn child. Then when the child is born, we're cross-selling child insurances. And when the child becomes an adult, we're cross-selling adult insurances. Now this means that customers stay with us in PA for staggering 30 years on average. Now being a market leader is quite demanding, and this is why we constantly seek to develop and strengthening our position in PA. This strategy period, we have in Sweden seen an increase in the number of leads by 40% from Preg Life. And Preg Life is an app that more than 70%, 7-0 percent of all pregnant women used in Scandinavia, and it's one of our key distribution channels. We have also seen a 20% increase in our child insurance product after revamping it to focus even more on mental health. So in conclusion, we believe that this world-class portfolio is definitely worth scaling to Denmark and Norway. Now in scaling to Denmark and Norway, -- let me see if I can change slide. And it is really important for us to replicate what we have done well in Sweden when it comes to products, services and also distribution model. And this is why, in this strategy period, we have launched the pregnancy product in Denmark and in Norway already. In Denmark, we are the first mover, meaning that until now, no pregnant women have been insured by this product, whereas the number in Sweden is 85%. In Denmark right now, we can see that half of the customers we're getting into the pregnancy product are entirely new to Tryg. So it's a great lead generation channel, and the numbers are quite similar to what we see in Norway and in Sweden as well. In Norway, we have similar to Sweden, relaunched our child insurance product, and that has boosted our sales by 50%. So when we look ahead towards '27, our ambition is to increase insurance revenue by DKK 1 billion from growing personal accident across Scandinavia. Now let's switch gears and look at Commercial lines, where we will be strengthening our position with small commercial customers by improving our online channel. So the way we define a small commercial customer is a company with fewer than 10 FTE. And in Scandinavia, we have 2 million of those. This is from a profitability perspective, a very attractive segment because we can see that combined ratio levels are around 7 percentage points lower than the non-small segments. What we also see is that this segment is quite similar to private customers in their digital readiness. So data shows that 80% of small customers, they say that online is their primary channel for company purchases. And our own data shows that 75% of the claims that they file with us are done so digitally. So this is why we believe that online is the next frontier when it comes to winning in small. In the strategy period, we have had Commercial lines Sweden being our first mover in online, heavily inspired by Private lines in Sweden, where, as you know, we are the market leader. And this has resulted in, as you can see, an increase in online sales of 70%. Now -- then we decided that Denmark should be our second mover in online. And what we saw the very first year was that we managed to beat our budgets 3x over. Now it's not because Danish companies are more digital than the Swedish ones. Rather, we think this is a proof point to the tailwind we create when we scale from one market to another. At the same time, we also realize that not all companies are ready to purchase insurances online. And this is why we use information about their visits to our websites as leads into our outbound call centers. And in this strategy period, we have seen that Denmark has captured 130% more leads and Norway has captured 70% more leads from online visits. So this means that the online channel is also an important leads generator into sales. Looking ahead towards '27, our ambition is an increase in insurance revenue by DKK 300 million coming from online sales to the small commercial segment, which is almost half of our total ambition of DKK 700 million in growth in small. Now this leads us to the second theme where we have 3 main initiatives. The first one is about growing our profitable motor portfolio in Sweden. The second one is focusing even more on strategic partnerships. And the third one is about increasing customer satisfaction because we want to further drive cross sales and retention. Let's look at the first one. So we want to grow our profitable motor portfolio in Sweden by leveraging insights that we have from Denmark and Norway. Let's take a look at Denmark and Norway. Here, we can see that our market shares in motor are greater than the fair share we have in the market. And there is no silver bullet explaining this. Rather, it's a combination of getting many, many things right, ranging from the right brand mix, the right product offering, supported by the right pricing, distribution channel, customer focus, and I could continue list and give different factors. But one thing is for sure, and that is that in Sweden, we actually see the opposite picture. Namely that we are underrepresented in motor and in some segments in Sweden, we are as low as the #5 or #6 player. So there's huge potential in learning from Denmark and Norway. In this strategy period, we have already done a number of things in Sweden focusing on motor, and here I bring 2 examples. The first one is that we have recently relaunched our motor product, which has earned us the #1 ranking by an influential independent consumer rating agency and then boosted sales by 30%. We have also relaunched recently the Aktsam brand. And in Swedish Aktsam means careful. And this brand is exclusive to customers above the age of 50. And there are 3 things you need to know about this segment. First of all, they have a great risk profile because they are indeed careful. Secondly, they own more than 50% of all privately held vehicles in Sweden. And thirdly, our market share is only 11%. And in some regions, it's as low as 8%, so a huge potential that we will harvest using Aktsam. Looking ahead towards '27, the insurance revenue we're targeting is DKK 300 million from growing motor in Sweden. Now let's switch gears and talk about the second initiative in this pillar, which is increasing focus on strategic partnerships, and we'll do so because we know that they are efficient, and effective distribution channels because, ultimately, what they're doing is giving us access to attractive customer segments at scale. Now looking at our own data, we can see that we have 76% more products per customer in the partnership channels. Acquisition costs are 10 percentage points lower and retention rates are 5 percentage points higher. So there is no doubt that being affiliated with a partner has a direct positive impact on our relationship with the customer. In the strategy period, we have built a number of partnership successes in Denmark and in Norway Unfortunately, we're not mentioning names. So you have to see two sanitized examples from Denmark and Norway. In Denmark, we have managed to grow one of our largest partners portfolio by 75% and in Norway, we have grown a large partner by 60%, and these numbers are driven by customer growth and product growth. And the way we have done that is by collaborating extremely closely with the partners, targeting their member base specific preferences for products and distribution approach, and this has fueled what you're seeing on these graphs. So looking ahead towards '27, we will be targeting an insurance revenue uplift of DKK 300 million from scaling our successful approach to partners to Sweden. The final initiative that I want to walk through is about increasing customer satisfaction and that we'll do that because it's good for business. And the way we define a satisfied customer is someone who scores 5 or 4 out of 5. And our data shows that when a customer is satisfied, their insurance premium grow 20 percentage points more over the next 18 months and the retention rates are 10 percentage points higher. That means that happy customers are buying more and staying longer. In the strategy period, as Johan mentioned, we have worked very structured with improving customer satisfaction along the customer journey. In every single year, we're collecting more than 1 million data points in Denmark and Norway. And here, I have three select examples of initiatives and specific touch points that increase customer satisfaction. So in Norway, we have seen that by changing the way we communicate with customers during the onboarding process, we managed to increase satisfaction by 6 points. That's massive. In Norway, we have also managed to increase satisfaction by 5 points by proactively offering our customers a review, a checkup of their insurances which, of course, has the nice byproduct that we managed to cross-sell in those interactions. In Denmark, we have increased satisfaction by 6 points by slashing claims handling times by 1 week. Now looking ahead, we will, of course, be including Sweden into our metric in this -- or the next strategy period. And that inclusion means that we will be rebaselining group satisfaction measure from 87 down to 81, driven by the fact that Sweden has lower customer satisfaction, especially in the claims handling process, which we need to address. So looking towards '27, our ambition is to increase customer satisfaction by 2 points, going from 81 and up to 83. Now this concludes this strategic pillar, which will yield a bottom line impact of DKK 200 million. And now, Johan, I think you want to be up on stage again with Lars. Thank you so much.

Thank you so much, Alexandra. And I think that brings us to the next section. We've now discussed the 3 strategic pillars of the strategy. Now we are going to go to something that I also alluded to initially. That's very important for us at Tryg, it is our focus on sustainability and ESG. That is an essential part of who we are on Tryg. And Lars, you will take us through this important section.

Thank you very much. Now let's dive into a topic that gradually had become more and more strategic plan, while we also future-proof our business long term. And therefore, we have made ESG and sustainability an integrated part of our '27 strategy, and we will challenge the entire value chain in Tryg from suppliers to customers. But before we talk about the strategic themes and targets, let's explore the unique Tryg family. The Tryg family consists of Tryg, TryghedsGruppen and the Tryg Foundation. And TryghedsGruppen is the largest shareholder in Tryg and a part of their profit come from the dividend we received from Tryg, which are returned to their members, which are the customers in Tryg. And this year, they pay out a member bonus of DKK 1 billion to more than DKK 1.3 million customers. And as you can see, the retention rates for customers aware of the bonus are significantly higher. And furthermore, the Tryg Foundation contributed with DKK 650 million to philanthropic product that enhanced society development and in that sense, the Tryg family transcend the standard business model for insurance companies. TryghedsGruppen and the Tryg Foundation all worked together to promote initiatives that create peace of mind for our customers and society at large. And let me give you a couple of examples. Firstly, the lifebuoy, which is implemented by Trygg-Hansa in Sweden by Tryg in Norway and by the Tryg Foundation in Denmark. And the red and white lifebuoys have been strategically placed near harbors, docks and swimming areas and more than 150,000 lifebuoys have been placed throughout Scandinavia and play a vital role in saving lives every year. Secondly, we have been the main partner for the night raven in Norway since the early '19 and more than 300 groups walk to street at night to create a safe environment for young people and to prevent crimes from happening. These initiatives cost pride, they support our brand position and also have a positive impact on our retention rate. And as I mentioned at the beginning, sustainability is a part of our business model and is anchored in our core business. For 300 years, we have been offering our customers peace of mind by offering them insurance against the risk and also advise them how they can prevent crimes from happening. And prevention is an element that we have worked intensively with and integrating preventive elements in our product offering will remain a top priority for us. And if you are a nonlife insurance company and really want to make a difference to the environment, you have to work with your claims handling. And in this strategy period, we have increased the number of repairs instead of replacing spare parts within motor with 5 percentage points and as Johan had already mentioned in the beginning, that is good for the environment, and it also has a positive impact on our cost for claims. And lastly, if you are an insurance company, people are very important. And therefore, I'm proud that we, again, this year was ranked as the most attractive workplaces within the financial sector. Our starting point is simple. Our strategy will comply with all regulatory requirements. We have to mitigate risk and future-proof our business, while we also attract and retain talents. And our strategic themes, we have 3 strategic themes for this strategy period, and that is climate action, it's future-fit products and it's people in Tryg. And we believe what's get measured, get done. And therefore, we have defined a set of ambitions that will secure the organizational engagement. And that we ensure the organizational engagement also supports Tryg's resilience and competitiveness and there will be a clear link to the executive remuneration. But let's start with the climate action. In '21 at the Capital Market Day, we announced some ambitious targets for sustainability. And as Johan have mentioned in the beginning, we are very satisfied that we have achieved those targets and continuing our high ambition level, our targets towards '27 will be to reduce the CO2 per claim with 6% on average. And one of the ways to achieve this would be to continuing our practice of reusing and repairing spare parts. As you can see up here, our suppliers have repaired more than 200,000 auto parts this year. And furthermore, we have succeeded in solving almost 30,000 claims with the reuse of recycled spare parts such as stores, vendors and batteries. And in Tryg, we orientate ourselves towards several ESG ratings, and we are very satisfied that MSCI just awarded us with a AAA rating, and we're glad to see that our dedication is recognized. Building further on this solid foundation, we will push it even further by joining the science-based target initiative, also named as SBTi. And SBTi is invented by the UN and the Worldwide Life Foundation as a trustworthy and ambitious methodology for corporates to link their targets within target -- within climate and sustainability to science. And as you can see, more than 6,500 companies have signed up for the science-based target initiative. And we will announce our targets as soon as they have been approved by the SBTi organization. I have worked within this industry for more than 25 years, and there's no doubt that we, in recent years have seen an increasing number of weather events causing damages across Scandinavia. And we know that our customers are worried about these weather events, and we aim to give them peace of mind by helping them to mitigate those risks. And let me give you a couple of examples of how we are helping our customers adapt to the climate change while we also safeguard Tryg's future business model. And as Mikael have already told, we at Tryg enhancing more price sophistication. And that is very clear if you look at our new house and building insurance, where we have went from using only historical weather data to now also looking -- forward-looking climate data and weather models. And we also want to note our customers towards more preventive measures. And that's the reason why we have sent out more than 800,000 text messages to relevant customers ahead of a forecasted weather events, advising them how they can prevent their -- how they can protect their homes and 39% reacted on the received guidance and feedback shows that they really appreciate our proactive communication. Towards '27, we will continue our work with prevention and climate adaption of our products and the climate adaption will be in line with the EU taxonomy. And people at Tryg is the last theme that I will dive into today, and we are entering this strategy period with a very healthy organization. We have a solid foundation and a strong business performance and from a dedicated effort over the past many years, we have achieved a strong progress in key areas. And we have an engaged organization that is indicated by an engagement index score that are consistently above the industry benchmark. And the diverse teams have been a strategic priority for us and from this, we have achieved a good mix of industry and nonindustry competencies as well as age and gender diversity. And I'm proud that we have increased our share female leaders from 35% to 43% over the past 5 years. And last, we are good at retaining our talent, and we have a strong talent pipeline, which provides us with the opportunity to fill our top leadership positions with our internal talents. And towards '27, we will continue this strong development. And our commitment to this agenda will remain strong because at the end of the day, it's all about people. Thank you. And Gian, I think you will guide us what will happen next.

Thanks a lot, Lars. We take a short break, 10 minutes, back right after 12:20. Thank you. [Break]

Great. Now we are getting ready for what I believe for some people in this room is the most important section. We are going into the financial and capital management, and that is in the safe pair of hands of you, Allan. Here you go.

Thank you very much, Johan. And definitely, this is the most important part of today. In the financial section, I would like to deep dive into 4 key areas for Tryg. First of all, I'll give a further recap of our call in insurance earnings targets towards 2027. Then I'll move to a deep dive into our return on capital framework. And that is leading us naturally into an update on the investment activities, highlighting some very important changes. And finally, I will end the section commenting on our plans for shareholder remuneration. But let's start with the core insurance operations. We are targeting our highest ever insurance service results, targeting the midpoint DKK 8.2 billion of the range of DKK 8 billion to DKK 8.4 billion, and this is driven by our strongest ever combined ratio of around 81%. We find this as a strong continuation of an insurance service result that has virtually doubled in the period from 2020 to 2024, primarily driven by the RSA Scandinavia acquisition, the related synergies and of course, by all the strategic initiatives that we have been realized throughout this existing strategy period. And as mentioned previously, as always, our insurance service result and combined ratio targets, as always assume current interest rate levels, current consensus levels and a normalized impact from large and weather claims. And going forward, we continue to guide DKK 800 million and DKK 800 million per annum for large and weather claims, respectively. Looking at the runoff contribution, it was higher many years ago when we deliberately decided to reduce our buffers. Runoff levels have been gradually reduced over the period and lately, we have been printing around or just below the 3 percentage points. For the 2027 strategy period, we are now guiding a runoff results of around 2% and we find this appropriate considering that 93% of our portfolio as of today is retail, very diversified earning streams. And you should see the guided runoff level as a continuation of our conservative reserving approach in Tryg. And before I turn into return on capital part of this section, I would like to wrap up on the impact from -- that is associated with our 2027 strategy, also in a balance sheet perspective. We have presented the impact from our strategic initiatives as net numbers. And this also means that any OpEx investments are already accounted for in the ISR impacts. Regarding CapEx buildup on our balance sheet -- in our balance sheet, we do expect a slight net increase of approximately DKK 300 million towards 2027. And then I'll move to return on capital section. Return on own funds is a fundamental part of our capital management in Tryg. Ultimately, we optimized for shareholder remuneration in everything we do and in a Solvency II world, earnings do not equal dividend capacity. Earnings tie up capital that must be kept to maintain our solvency, and this is where the return on own funds framework comes into play. There is a large variation in capital consumption across different insurance products. Capital light products have a more direct route from earnings to dividends and the opposite goes for products with higher capital consumption. Products with higher capital consumption simply needs to be more profitable to achieve similar ROOF. And the important difference in capital intensity is something that you would miss by only considering the combined ratio. Important to note that we are viewing ROOF as an important supplement and definitely not a substitute to combined ratio. For us, return on own funds and combined ratio simply goes hand-in-hand and keeps us disciplined. And as said, we are focused on capital consumption in everything we do in Tryg, and that includes how we run our investment operation, and I'll get back to that as part of my update on the investment activities. Our return on own funds has continuously improved from around 15% back in 2021 to a targeted level at or above 25% in 2024. And we actually expect to print an even higher level of around 30% out of 2024, and that is before the impact from the derisking activities and the related share buyback. This improvement has primarily been driven by the increased earnings and the synergies from the RSA transaction and by the ongoing optimization of our operation. And we are now targeting a very ambitious return on own funds target of 35% to 40% in 2027. And as it shows here in this slide, the vast majority of this further improvement is driven by the asset derisking followed by today's launch of a share buyback of DKK 2 billion. Additionally, we also expect to grow in retail areas with low relative capital consumption during the next strategy period, and this will further support the return on own funds level. And in this slide, we show ROOF among the Nordic names that are running business models that are pretty much similar to ours. Most international players have different business models and are obviously running their business in different geographies, which typically makes the ROOF significantly lower. We remain firmly convinced that having a strong Scandinavian retail footprint with unique and stable earnings diversification reduces the capital requirement and helping achieve a higher return on own funds, all else being equal and a return on own funds target between 35% and 40% clearly places Tryg among the most profitable insurers worldwide. And that is leading us into an update and a focus on the investment activities, highlighting some important changes. On the investment activities, we are today announcing a significant derisk of our free investment portfolio. And just to recap, our total invested portfolio is split into two. First of all, we have the match portfolio, totally unchanged, made out of covered bonds, hedging the interest rate risk of our provisions. And we have the free portfolio that ensures a return on our own funds. Now focusing on the free investment portfolio we have, during October and November sold around DKK 7.4 billion of risky assets and replaced them with covered bonds to reflect a less risky and a much more simple free investment portfolio. And we believe that this change strengthened our position as a profitable retail focused, low-risk pure-play P&C Scandinavian insurer. And with the derisking, we have released approximately DKK 800 million of solvency capital requirement that is partly financing the extraordinary share buyback that we have announced today. The free portfolio is derisked to reduce the volatility and to improve our return on own funds. We have, for many years, invested around 55% to 65% of our free portfolio in equities and in properties and in alternatives and corporate bonds. With the derisking, our free portfolio now consists of around 20% properties and around 80% government and covered bonds, which are very liquid, highly rated and with an average duration of around 2 years. The free and the match portfolio now consists of approximately 95% highly rated government and covered bonds, up from 85% previously. Short-duration, highly rated covered bonds have more than 10x lower capital charge compared to equities and a charge multiple times lower than other risky asset classes. And this makes the return on own funds significantly higher for covered bonds relative to other asset classes. We have strategically been looking at this for some time now, and we have had an orderly internal process and we have been looking very much forward to announce this move today. Important to highlight that properties is currently still a part of our free investment portfolio. Long term, we do not expect properties to be part of our asset mix, releasing a further potential of around DKK 300 million of solvency capital requirement. Important to note here that we expect our exposure to be gradually reduced over time, very much depending on market conditions. In this slide, we show the most important benefits from the derisking of our free portfolio. And first of all, short-rated covered and government bonds are significantly less volatile compared to other asset classes, and I'll get back to that on the next slide. The lower volatility lowers the group SCR by approximately DKK 800 million or approximately DKK 1.6 billion of own funds at current solvency level. The new asset mix is associated with lower normalized investment return, but the significantly reduced capital consumption makes the ROOF for free portfolio increase from approximately 20% before the derisking to around 40% after the derisking. And last but not least, our operating earnings per share will be largely unchanged as the lower number of shares following the share buyback program will simply offset the lower normalized investment result of approximately DKK 200 million pretax. And as said, the free portfolio is derisked to enhance stability of our earnings. And in this slide, we show a back test of the reported quarterly portfolio results against the like-for-like investment result with the new asset mix as of today. There's a very significant difference in the stability of the results, and this is precisely what we are aiming for with this move. As we showed you previously, owing risky assets introduces volatility, which is simply not a good deal for shareholders in a Solvency II world. And in general, we are agnostic in terms of asset classes, but we are not agnostic in terms of normalized returns, but on the capital employed covered by our return on own funds framework. The past few years, there's been multiple shocks to capital markets, and we do not really want to be in a position where our solvency position or our dividend capacity can be questioned. Today's move is very supportive of this reasoning. We believe that our balance sheet is strong. We believe that our balance sheet is very resilient. And we hereby take the opportunity to repeat some important points around our risk mitigation strategies in Tryg. As announced today, we have significantly lowered our market exposure from the derisking of our free portfolio. Our match portfolio unchanged, is hedging the interest rate changes to ensure our ability to meet our future obligations. And this ensures low capital requirement and a very low overall interest rate sensitivity for Tryg. On that, we are protecting our solvency ratio from currencies movements. And finally, we are hedging long tail lines of business against inflation using financial instruments such as swaps. And in this slide, we show the pro forma Q4 2024 solvency ratio sensitivities. And as part of this restatement, you will see that we have removed risks that we are not exposed to anymore. It should be to no surprise that spread risk remains. Our biggest sensitivity as we now have around 95% of our total invested assets invested in covered and government bonds. And this sensitivity have increased modestly around 2 percentage points following the increased exposure from the 85% previously to the 95% as of today. Generally, low sensitivities due to a strong and hedged balance sheet. Towards 2027, you should expect solvency developments to be primarily driven by our organic capital duration and, of course, the shareholder remuneration. Two exceptions mentioned here today. Firstly, we expect and intangibles to slightly increase by approximately DKK 300 million net related to IT investments towards 2027. And secondly, we expect our property exposure to long-term decrease, which, over time, will impact our capital requirement in a positive direction. We find that stability and predictability of the solvency ratio stands out and we believe this should be a key valuation driver. And as the last part of my presentation here, I will comment on remuneration of our shareholders. To recap, today we are pleased to announce that we aim at paying ordinary dividends in the DKK 15 billion to DKK 16 billion range between 2025 and 2027 and that we are launching a DKK 2 billion buyback following our asset derisking. And this brings the total remuneration communicated today to DKK 17 million to DKK 18 billion. And taking a step back, we chose a more conservative approach to solvency following the RSA Scandinavia acquisition, and we believe that this has served us very well in the ongoing turbulent macro environment. Long term, we expect to gravitate towards a less conservative level, and we will annually at year end, assess our solvency position again, keeping in mind our very ambitious return on own funds targets. And with the share buyback that we have announced here today, our next year-end assessment will be at Q4 2025. Our dividend policy is totally unchanged with a targeted payout ratio of 60% to 90%, but still a very important to highlight, secondary to the aim of growing the annual ordinary dividends. And the concluding remarks for this section will be that we find strong capital management as a key enabler for continuing Tryg's attractive dividend journey. And with this, I will hand it over to you, Gian.

I will now ask our Executive Board to come up, and we will start a Q&A session. 40 minutes. We have 2 microphones, 2 of my colleagues will be in the room. Please ask one question at a time and make sure that your voice is heard also for the people following on tryg.com. I think Asbjørn has -- we can start Asbjørn has a question.

Asbjørn Mork from Danske Bank. I'll limit myself. One question. So Johan, you said that the DKK 7.2 billion underlying result for '24, obviously, in the lower end of the range for this year was sort of the starting point for the DKK 8.2 billion, which I think you've highlighted a couple of times, DKK 8.2 billion, not DKK 8 billion or DKK 8.4 billion. And I guess this has been a period with quite a lot of headwinds. You also mentioned yourself, FX, inflation, et cetera. And looking ahead, it seems like the sector, including yourself, is repricing quite a lot above claims inflation. So just wondering what have you sort of applied in addition to the building blocks? What have you applied to sort of general market trends in the next 3 years when we sort of look at how the market is developing.

Thanks a lot for that question. Asbjørn, I'll kick it off. First of all, thanks for noting that I said DKK 8.2 billion. I think it's fair to assume that, yes, by having a normalized ISR run rate at DKK 7.2 billion for 2024, we are at the lower end of our range. We're in the range but at the lower end of the range. Looking forward, we are not assuming the world to continue as it's been in the last 3 years. We are assuming some sort of a normalization of the macroeconomic conditions. So we're assuming sort of a, as everybody else expecting, we don't believe we have better insight as to where the world is going than the rest of you. We're expecting a normalization. We are seeing inflation in the markets tapering off slowly, not quickly, but slowly, we still see significant claims inflation that requires a need for repricing. So I think in general, we are looking into a more benign but not completely as it was 10 years ago. There's still turmoil out there and there's still claims inflation. So I think that's the market we're anticipating. So yes, repricing is part of the strategy also towards 2027.

Faizan has a question. Thanks.

Faizan from HSBC. I assure myself to one question as well. And sort of a follow-up on that one. I understand that you see the market is benign, but even if you see sort of a 3% inflation, you sort of get 10% growth in earnings over a 3-year period. So that puts you at nearly DKK 8 billion anyway. It doesn't feel like it's a great deal of allowance for your 3 building blocks within that. Are you effectively saying that you assume the market will be flat in terms of growth for the next 3 years in terms of earnings?

Good question. So I think it's a little bit too many simple assumptions. I think when we look at the group from a sort of portfolio management view, we alluded to some of the initiatives in Alexandra's point around the commercial excellence pillar, which is going to deliver DKK 200 million of bottom line impact. If you add up those initiatives, we get above DKK 2 billion in top line. In addition to that, we're going to see, of course, repricing and other growth initiatives around the group. But I think if you double-click on of the countries, they are on each of their own journey. So -- Norway is on a profitability journey probably focusing more on profitability than top line. Sweden, as Alexandra alluded to, will be on a journey of cross and upselling into a very profitable PA book, whereas Denmark is more on a sort of optimization journey going forward. So I think when you add up these portfolios, I think having a growth assumption for the next 3 years of somewhere around 4% to 5% would make sense. That's what we had historically. And I think assuming the same going forward is probably not completely off.

Youdish has a question.

Youdish Chicooree from Autonomous Research. Is your combined ratio target of around 81% too conservative considering your normalized is already 81%. And on top of that, we've got DKK 1 billion of initiatives planned over the next 3 years. And I think that's worth around 2.5%. And then finally, you've been raising rates ahead of inflation for quite a few years now, and I presume you plan to do the same going forward.

Thanks for that question, Youdish. Mikael, will you go for that?

Yes, I'll start at least. And thanks for the question. I think when looking at the combined ratio, I think the first thing to start is just mentioning the 81 number. It's a very strong starting point. So first of all. And then when we look at the different components of the expense ratio and the underlying claims ratio, I think for both of those items, we are projecting those to be broadly flat or somewhat improving. So that's the sort of how the composition is made up. And then I think I'll reiterate again what Johan said because there will be a couple of different moving parts here. There will be the Norwegian business, obviously, with an improvement journey, which is on, and that will continue in this strategy period, and there will be other growth areas where the profitability will be somewhat lower in the beginning. But then again, it's important to note as well that we are not only aiming to be a fantastic company in '24 and '27 but actually to be a fantastic company for a long period of time.

If I can just add one thing, calling us at around 81 combined ratio conservative is in itself amusing.

Mathias has a question.

Mathias from Nordea. So my question is on the capital distribution part. After the Q3 report, I think you were quite vocal about that you wanted to lower the solvency ratio gradually over the coming years. Is that still a part of the plan? And what does long term mean? Does that mean that by the end of '27 that we should expect the capitalization to be at the optimal level at that time?

Good question. Maybe I'll start with that. I think just taking a step back, as we both Allan and I alluded to, having a conservative approach to our solvency position has served us very well. And the words we've chosen today stating that long term, we expect to gravitate towards a less conservative level, a very deliberate choice of words. So we don't want to lock ourselves in. I think we've been living through 3 very turbulent years in our macro conditions. Nobody knows what the next 3 years will give us. So we're going to take a conservative approach. We'll be less conservative going forward, and we'll take it year-by-year in our annual year-end assessments. We don't want to lock ourselves in. Our conservative approach has served us very well.

Vinit has a question.

This is Vinit from Mediobanca. Sorry if I can drew 1.5 actually. The topic is still initiatives. So for me, this -- one thing is just back to the conservativeness topic. So when I look at gross versus net, for example, the scale and simplicity topic. It's quite a big delta there. And the reason I'm asking is not as you asked us not to look at it, but the reason I'm asking is that possibly you've kept some buffer there between those 2, it's almost half, it's a net versus growth. So I'm just curious on your thoughts on how you -- have you been a bit conservative there? And just literally following up on the Slide 41, from Mikael on the Swedish portfolios. So I'm always curious, Sweden had a different book for very good reasons that the child health care for many years has been prominent. And -- so how much of that portfolio slide you showed us is just the fact that historically, Sweden has different products in the market. So I'm just always curious on how much is that versus actually delta?

All right. Thanks for that question that I somehow think was actually 2 questions. So I'll address the first one around whether there's a conservative element into the scale and simplicity pillar. And I do see where you're coming from in the sense that if you add all the gross initiatives then you get to a bigger number. But I want to just emphasize that in this particular pillar, there is actually an investment need that is not accounted for in the gross impacts when we are cleaning up IT applications, when you are making up reducing your number of product variations there is an IT component and investment needed. That's why even for the scale and simplicity where the delta is the biggest one, there's no conservatism build in. You should expect the DKK 500 million and hence also expect the DKK 8.2 billion. And for the second part of the question on the Swedish portfolio?

Again, thanks for the question. So I think the Swedish part actually sort of consists of two things. I mean, one, which you alluded to, part of the Swedish business is the personal accident part, which should have a better combined ratio also from the fact that it requires more capital. But I think the second part is and for all the sort of observant guests in the room here and on the TV as well, we see that all portfolios were actually somewhere from the middle to a better place. So it's definitely not only around the risk mix. It's very much related to the processes that we've built around portfolio management and which sort of covers all the different parts, regardless if it's PA or housing content or motor and so on.

Martin has a question.

Martin, SEB. We talk about -- or you talk about Norway as being on an improvement journey. We have heard that before. Is there something else wrong in Norway? Or is this a game of scale? Are you positioned wrongly in Norway? And what's -- and given that this RSA synergy period is now done and dusted at least the DKK 900 million, what is the inorganic appetite in the Norwegian market?

Thanks a lot, Martin, for addressing Norway for us, and I want to make it very clear to your point. There's nothing wrong structurally with Norway, and we have sufficient scale to run a profitable business in Norway. I think we've been pretty clearly stating for the last few quarters that we came into the year with an unacceptable profitability level in Norway. We're in the midst of actually fixing that. And I think we are very confident that you will see an improving profitability in Norway from now on going forward. So when we have sufficient scale to sustainably deliver a strong profit also in Norway. That being said, in terms of our inorganic appetite, in general, we don't have a strong M&A appetite at Tryg at the moment. We have plenty of opportunities and potential within our current footprint. Should we have any appetite right now, it would probably be sort of an opportunistic view on opportunities in Norway. So we'll have a look at any opportunities that might come our way but we don't need it to run a profitable business in Norway. There's nothing wrong structurally with Norway. I think it's fair to also say if you take a step back and look into the Norwegian market, we have on Tryg's side, we've grown quite a lot in Norway, that's always something that can have an impact on your short-term profitability. On top of that, Norway has been looking into an environment where there's been high inflation levels. There's also been weather impacts. And on top of that, you've seen the NOK currency's devaluating also creating an imported inflation level. So there's been many factors playing into Norway, but we are confident that we can run a profitable business in Norway going forward.

Jan Erik has a question.

Jan Erik Gjerland from ABG. I have one question regarding the profitability across the countries because if you run the PA portfolio, which is sort of highly profitable in Sweden with the long-tail business, how easy is it to replicate it into Denmark and Norway since it's not sort of already done there. It should have been plenty of opportunities for all companies to take that PA business to Norway and Denmark for the last 20 years since Trygg-Hansa successfully done it in Sweden. So why is it -- has not happened before and why it will be a success now?

I'll start on that, and maybe Johan, you can add later on. But I think, first of all, when doing PA business, it's important to have a really long-term horizon because when the Swedish book was initiated many decades ago, obviously, there was a growth from a quite low level. So this means that that's not sort of growing excessively in the beginning. It's also which we know from distribution costs and other that profitability is something that comes over time. But as Alexandra alluded to before, we have customer relationships that last, on average, 30 years. So it builds fantastic lifetime value as a result of that and that's also what we take in. So I think that's one perspective. The other perspective is also it's a book of business, which takes more competence and more insight to run relative to housing content, relative to motor, et cetera. And now we actually have that scale, and we have that in-house knowledge, which enables us to run it also in Denmark and Norway.

If I could just add one thing to this. I think you're going through the right sort of short-term perspective. I think if you take a more strategic stance, expanding and scaling the PA business from Sweden into Denmark and Norway is not a short-term fix. It's not something that will pop up on the P&L in a big manner in the short term. This is us future-proofing the business, building up a very profitable business for the next strategy period. So don't expect grow excessively short term, but long term, this is about future proving our revenues.

Youdish has a question.

Youdish from Autonomous Research. I've got a few questions on Swedish motor. Firstly, can you remind us why your market share in Swedish motor is lower than your national market share in non-life, firstly. And then secondly, how are your competitors reacting as you try to gravitate to a higher share of the market? And then thirdly, what is the medium-term ambition in this line of business in Sweden?

I didn't quite hear the third question, sorry.

What's the medium-term ambition in terms of market share in Swedish motor?

I think maybe, Alex, do you want to kick that off?

I can kick it off and then you can supplement. So if I start with the first part around the market share, right, I think we can see that throughout the past 2 decades, this market share has been monotonically decreasing, where as it was sort of around the 20% level back in the day. Now we are at around 15%. And one of the key reasons for this has been, in our view, lack of investments into commercial activities that are more long-term focused. And I think it's no secret that when RSA was owning Trygg-Hansa, it was the crown jewel of their portfolio in terms of margins and profitability. And, in our view, not enough investments. Now when we look at the competitive response, I think for us, it's a daily business, on the one hand, responding competitively and also seeing competitors' responses. So we will not do this as a big bang, very aggressive. We'll do this very controlled, slow, assess the market, but we believe there is a room for us as well in this market because we don't have a large market share, right? And then on your last point around market shares, we're not per se targeting any market share as you also allude to. Let's see what the competitive response will be. But ultimately, we want to grow profitably. Johan, do you have anything? No.

Claudia has a question.

Claudia Gaspari, Barclays. Staying on Sweden but back to the PA business, are you seeing any changes in terms of competitive behaviors by some of the incumbents? Is anyone becoming more aggressive trying to grab share? As in Sweden, PA is clearly where you need to defend market share, and it's a very profitable business.

I would say the short answer is no. I think there will always be different ways of sort of trying to attack the distribution model in Sweden. We are partnering with the, I would say, the absolute sort of #1 in terms of pregnancy insurance and so on. But again, that's normal business. So no changes.

Faizan has a question.

Faizan, HSBC again. Can I just turn to the capital sort of management? How do I think about the next 3 years in terms of the capital intensity of the business, especially if you try to pivot to a sort of PA business? Is premium growth a fair proxy now for SCR? And just attach that as well in terms of capital generation as well, you're not paying out 100% in terms of net income and especially on an adjusted for intangibles. So that [ DKK 195 million ] should gravitate towards a higher number. That sort of goes against your long-term thinking. So why is there not an additional special dividend in the forecast for the next 3 years?

Yes. Thank you very much. I will -- I think you had 2 questions here, and I'll start with the last one. Alluding to our payout ratio, as said, totally unchanged policy. But if you do the math, you will see that we are in the very, very high territory of the 60% to 90% as of now. And as part of the cancer management, we also need to finance capital wise, the growth that we have in our portfolio and thereby, we need to offset a few percentage points as well. And that will leave us to a sort of a buildup of just a couple of percentage points to our solvency ratio, all else being equal. And then I mentioned the CapEx buildup and so forth. And of course, that will represent some kind, you can call it, a headwind and then we have some tailwind probably from the Properties portfolio. So we are not amassing a lot of capital here as a starting position. We have a strong starting position pro forma at around DKK 195 million. And this is sort of the point from where you will see the few points taking in based on this plan. When it comes to PA book, there is a huge difference in the product design and Mika, can -- he can entertain for hours about that. From a capital perspective, it is so that the long tail part of the PA book is in Sweden. In both Denmark and Norway, it's a short-tail product, that does not capture a lot of capital. So you should not see this focus -- strategic focus area as something that will, I mean, tie up a lot of capital in our books, not at all.

And if I can just add one thing to your initial question, you were saying why there are no extraordinary dividends or other extraordinary buybacks announced today. I think that goes into the term of them being extraordinary. So we're not saying that will not happen. We are saying that at the annual year-end process, we'll assess our ability and look at our return on own funds targets. And we will make our decisions on that point. Not starting January this year, but on the back of Q4 next year. That's when we will have the opportunity to assess our solvency position. And we were trying to be very clear upfront saying we expect long term to gravitate toward a less conservative solvency position.

Jan Erik has a question.

Jan Erik from ABG. When it comes to short and long-term claims trends, we have seen that the claims trend and frequency have picked up in Denmark. It has also in Sweden to some extent and of course, Norway. Looking at what you're saying or peers are saying is that the EVs have this blame. What can you learn and what can you learn in short term and long term from Norway when it comes to EVs and claims trends and repricing pricing of them? And how could you give us examples which you haven't really done today about that type of sort of development, which we think is very important, both short term and long term?

Very good question. Mikael, I think maybe you're the right to answer that.

I'll start at least. I think the first part around EVs is, I mean, the profitability for electrical vehicles is the same as the fossil-driven vehicles. The only difference here is that the profitability improves over time, and that comes not from price increases, it actually comes from risk decreases that comes over time. So obviously, the electrical vehicle book has a lower -- has been around for less years. And therefore, there is a difference. But there is no profitability difference whatsoever. And then I think, I mean, as you said, yes, there are learnings from the Norwegian book of business. There are also learnings from the fact that we've had a Tesla, for instance, as a branded car insurance in the Swedish market. And maybe I could entertain also in that for hours. But I think the main part here is that some -- when the electrical vehicles were introduced and some new customers went on to electrical vehicles, that meant also going on to cars with more horsepower. So that took a little bit of sort of customer behavior and learning into sort of driving cars with that kind of horsepower. But again, this is what we should be experts on. This is what we price for. This is what we risk assess, this is what we do all day. So that's what we do, and we will take care of that, making sure that we deliver the results that we need to and that we're presenting today.

Asbjørn has a question.

Follow-up or 2 follow-up questions from my side. First, Johan, you said quite a lot that you changed the business mix of Tryg in the last 3 years and still you operate with a DKK 400 million range in your insurance service result. I guess you should have a more stable business now than you've had for quite some years. So should we read anything into this when it comes to reinsurance, I guess, with the price changes we've seen and how you would retain risk on your own balance? And then the second question was on personal accident. You said 11 percentage points lower combined ratio. You also had a slide saying there's a 10x difference in capital charge. So could you, first of all, break up the 11% in terms of how much is acquisition costs on clients? I guess, 30-year return on has an impact on acquisition costs and how much is claims? And secondly, how does the return on own funds actually look in the sort of long term or long tail business that you have in Sweden?

Good questions. I will take the first question, and I'll pass it on to you, Mikael, for the second part. So linked to our mix of our book now having 93% retail, that gives us a lot more stability than we've ever had. And then you're saying, so why do we still have a range of DKK 400 million? I would argue, when you look 3 years out in the world we're living in today, having a DKK 400 million range, plus/minus DKK 200 million from the target DKK of 8.2 billion. I think that's actually a fairly narrow range and a strong indicator of us having a very stable business and predictable business. There's no link to any reinsurance or anything that implies that we need this range, but I think it's prudent in a time like this to have that range. I think, personally, it's a very narrow range for a company of this size 3 years out in the world we're living in. So I think don't read anything into reinsurance. And as for the second part, Mikael...

I'll start with the 11 percentage points better combined ratio. That is something that comes then again over a long period of time, like we said before, sort of having the customers on average for 30 years. And the profile here, I don't want to go into exact sort of details on the different years, but the profile is very similar to what it is for other clients and other products with sort of more distribution cost in the beginning, i.e. worse profitability in the beginning that then gradually improves and which has a really good lifetime value for us. And then the second part, when it comes to roof and the return on capital, I'll keep it to that it's really good, but there are still parts of the business which is even better from a roof point of view, very much linked to what we -- and Allan described earlier, where this is a more capital-consuming product.

And if I should just add a few comments on that part. I don't know if my mic is working again. Okay. It's perfect. This is actually why we are spending so much time on the growth and the capital framework as a supplement to the combined ratio because Swedish PA is a perfect example of a product where you could be, I mean, very impressed by the combined without just -- I mean if you're not taking into account that it ties up much more capital, it just needs to be more profitable to combined ratio compared to the rest. So that was just to add on that.

Vinit has a question.

I'll stick to one question. The solvency and the -- or rather the asset change is -- I mean, I can see your motivation to reduce volatility in the free portfolio. But I have a slight feeling that the mass portfolio is also not just a very steady set of numbers. So as an insurance company, living with asset risk is part of the mix that you have to expose yourself to. So I'm just curious whether in the quest for being very low volatile company, you have probably sold all of the upside and you still have volatility in the match portfolio. So I'm just curious as to -- if you could share your thoughts on this. It's quite an action to suddenly sell all your free portfolio upside assets, inflation is still uncertain, all those things. And just a quick number, check there. I mean DKK 7.4 billion assets sold but roughly 10% capital charge saved. I thought capital charges on risky assets were higher because DKK 800 million is the SCR reduction from DKK 7.5 billion of assets sold. Just a quick check. I mean, is it -- shouldn't it have been much more or because equities go 30%, 40%, real estate is much higher as well. So just curious as to your thought process there.

I think those are good questions. I think we see slightly different, and I think Allan will probably have a first stab at that.

Yes, yes. Well, please chip in. I could start with the last part, around DKK 800 million SCR relief. That is the net number for the change in our free investment portfolio. And I think that's based on the numbers that we have included in the slides. You should -- again, it is rounded the numbers, some of them, but you should be able to get very, very precise and very clear and very, very close to the DKK 800 million that will free up in the SCR. There was a lot of other questions. [indiscernible] one question.

Maybe I'll address the first point around whether we are selling off potential profits for the future. I think it's important to remember who we are at Tryg. We are running a very profitable, stable business on our insurance earnings. When you look at the capital that any free portfolio will tie up, the returns on that portfolio is actually not that strong. So I think we want to focus our business on running a very efficient insurance business. And we don't want to tie up capital having investments on this side. Just to clarify, if you look back in time in some of the quarters we've had in the last 3 or 4 years of turmoil, we've had even with a very conservative free portfolio, we've seen pretty strong drops in that free portfolio that we don't need with the profitability we're making on our insurance business. So I think for many other operators, the answer would probably be different. For us as a very profitable, stable operator, we do not need that profits from our free portfolio.

Faizan has a question.

Just a quick follow-up on the investment side. You've obviously taken a material change to your structure. What is the running yield on your fixed income portfolio and duration? And could you just help with the reinvestment yield as well?

I couldn't hear that. Sorry, can you just repeat that? Sorry.

What's the running yield on your portfolio now, the duration and what's the reinvestment yield?

Okay.

Yes. I think that we have actually printed that in the slides about the yield. The duration is around 2 years for the free portfolio. And I mean the 2 years is not just, I mean, a magic number. If you look at our own funds, that is what the free portfolio represents an investment of our own funds. You will see based on the dividend cash flow that you will find, it will, I mean, be somewhat around duration of the 2 years. So that's why we have chosen that.

And just from a strategic point of view, I just want to make it very clear that this is not a tactical opportunistic move. This is a strategic move for us to zoom in on our equity story to be a very profitable operator.

Mathias has a question.

Just a follow-up on the assumption on interest rates on the discounting part. So you say it's based on current levels. Is that current levels as what we saw in Q3? Or is it based on forward curve? I know one of your competitors was quite clear saying that their target is based on 2% discounting impact. So how should we think about that? And then secondly, if I may ask also about the runoff gains of 2%, which you guide for now, is there any specific things that we should keep in mind when seeing you lowering it to 2% instead of 3% to 5%, which you had in the previous CMB?

Yes. I mean starting with the discounting question. We have said today that we are targeting around 81% in combined ratio based on current levels. And that is based on forward curves. And it's not very different from the -- actually the level that we have printed previously around 2.2 percentage points. So around 2 percentage points that will be for you to expect on that part. And the other question was related to the runoff. Yes, I mean, deliberately, we came from a much higher level back in the days where we decided to reduce our buffers. In the last 2 years, we have been printing around 3 percentage points. And actually in the last 2 quarters, we've been more in the level of 2.5%. And now we have changed the guidance towards 2027 to around 2 percentage points. That is based on a totally unchanged conservative reserving approach and practiced in Tryg. That is mirroring the portfolio that we have now with around 93% retail business, very diversified and stable earnings streams. So this is what gives level of the around 2 percentage points that we are guiding as of now. So actually, it's not a big change from the current run rate that we have.

Jan Erik has a question.

Just a question around the return on own funds versus the PA book. You said that the PA books was not long tailed in Norway and Denmark. So how is the product different? Why do you need them so much more required capital in this period to fund it if it's not as long? Is it long tailed? Or how should we read it? If I may have a second one. It's just about the repair cost because it's cheaper to repair than to shift a thing on the car, for instance. Is it different between the countries because in Norway, I cannot actually fix anything without costing it extremely high for just having a repairment coming at DKK 10,000? It's much cheaper to fix it with a new thing. So where is the sort of the equation around that? How to fix it and when to fix it? And is it different between the countries?

Mikael, do you want to take that question?

Yes, let's start with the PA one. So the big thing here about PA and the child insurance, in particular for Sweden, is that it's sickness and accident. Accident would be the traditional part that we have had in all countries for a long period of time. You have an accident, you get to pay out with x number of kroner. Whereas the sickness part is more you have sickness, you have a payment that goes on for the time of the sickness, obviously, with some caps included in that. And the products in Denmark and Norway is more around the first part, accident and also keeping sort of the payouts fixed.

And as for your second question regarding repair rates, of course, there are differences between the 3 countries, but they are similarly going in the right -- in the same direction. I think the reason why these things happen gradually is that we need to work with our repair workshops. We need to make sure that the incentives are in place. We need to make sure that the competencies are in place to actually repair rather than replace. So it's a matter of not being lazy and just ordering new spare parts, but actually repairing the spare parts that are broken. That requires some time to adjust in our networks. And honestly, if you take Norway as an example, there's actually a big pull in Norway to have a sustainable profile and repairing not replacing is the most sustainable thing and the most sustainable repair we can do, and Norwegians have actually been pulling that from -- for quite a long time.

Youdish has a question.

Just a follow-up on interest rates, actually. Your combined ratio is stated based on current levels of interest rates. And the market is actually expecting base rates in the Nordic region to fall by close to 200 basis points, I think, in the next 18, 24 months. If that happens, do you downgrade your combined ratio target? Or does that get absorbed within what you called your strategic initiatives, but stated at a growth level?

Do you want to take that? I can also take a stab. I think to be -- what Allan was trying to say is that our interest rate assumption is based on the current assumptions also going forward. So if the market does what the market expects interest rates will do in the next 18 months, it will not have an impact on our targets.

Vinit?

Sorry, one question for Lars, who I remember about 10 years ago was presenting to us about how more and more customers have to go to the selected own network garages of Tryg rather than go in the open market for repairs. I mean just as a group, do you think that those kind of very basic targets are still there? Or you're too focused on getting some chatbots to set out or so -- because that's something on the ground, a car gets hit, you need to go to the right place. So I'm just curious.

But we have been working with our procurement processes for a lot of years. And that means that we also have IT systems that are actually helping our claims handlers to choose the best repair shops. So when a claims handler is actually handling a claim, they get some suggestions about which repair shop should they use for. And there, we will look at the prices and we will look at how they are contributing to sustainability and how many repairs they have and average claims cost, et cetera. So we are actually quite good in guiding our customers to the best repair shops.

Time for the last question. Jan Erik and then Johan will wrap up.

Jan Erik from ABG. Just one follow-up on the regulatory environment. You are regulated with the financial supervisory authorities in each country. So how much do they follow up on you when it comes to profitability per product? And how profitability as a product actually be at the end of the day? What kind of roof could actually have per product before it becomes sort of not according to the law because since you sort of can print money. So how much money can you actually print there?

I don't think we're printing money to be quite exact. But Mika, do you want to go into the regulatory environment part?

I'll start at least. I mean we're a regulated business. We were a regulated business yesterday. We will be a regulated business tomorrow. So that's just normal practice for us. I think that's the starting point. And then -- and I got that question before as well, sort of to what combined ratio levels do you think that the business can go going forward? And as we've shown here, we have shown a solid improvement, a stable improvement over a long period of time. We have now said that we will be around 81%, which we think is a very both ambitious but also very manageable level. And of course, it will not sort of decrease forever from that. And when sort of there are various analysis done, obviously, sort of the financial supervisory authorities take in sort of the data that they need. We comply with that in every sort of in every shape or form. So I don't think there's nothing new in this. We are regulated yesterday, and we'll be regulated tomorrow as well, and that's sort of just BAU for our business.

Johan, I leave it to you for the concluding remarks.

Thank you so much, Gianandrea. So I think we're getting to the end of our 3-hour session here, and I just wanted to wrap up with what we believe is sort of the synthesis of not just the last 3 hours but also the last 300 years. Who are we, why are we a special one? We -- I hope it's very clear for you guys that we stand out as a pure P&C player with a heavy skew towards the retail business. We are only operating in probably the most attractive region in the world, Scandinavia. In addition to that, we are delivering and will continue to deliver best-in-class combined ratios. We're going to do that with a very low volatile investment portfolio, even more low volatile now with the derisking behind us. And in addition, we have a very robust solvency position and a very predictable dividend trajectory. So this is what we believe makes us stand out. And I think with that, I will wrap up today's session with one of my favorite quotes. I hope it [indiscernible] too. It's from a guy called John D. Rockefeller. He loves to see the dividends coming in, so do we, and we'll make sure that they continue to flow out to you guys. So thanks a lot for a good session. I hope to see most of you for lunch now that is served outside in a few minutes Thank you so much.