Tryg A/S ($TRYG)

Good morning, everybody. My name is Gianandrea Roberti. I'm Head of Financial Reporting at Tryg. We published our Q1 figures earlier this morning. And I have here with me, Johan Brammer, our Group CEO; Allan Thaysen, our Group CFO; and Mikael Karrsten, our Group CTO, to present the numbers. With these few words, over to you, Johan.

Thanks a lot, Gian. And a very good morning from me as well. This is a good day, and I will go straight to the first section of the presentation, where I'll start by commenting on the financial highlights as usual, as well as comment a bit on the revenue development. So Tryg reported a premiums growth of 3.5%, primarily driven by the private segment and in particular, by our Norwegian business, whereas the commercial segment reported lower growth also following a challenging first of Jan renewal. The insurance service result was a strong DKK 1.655 billion, driven by a strong combined ratio of 84%. The group underlying claims ratio improved by 40 bps, showing an improvement compared to recent trends. This is primarily driven by profitability initiatives in Norway. The investment result was DKK 2 million positive in a quarter that experienced the return of sharp volatility in capital markets following high geopolitical tensions in the Middle East. Equities dropped, corporates widened and interest rates moved upwards following changes to inflation expectations. But as a reminder, we have a very conservative asset mix made up primarily by Danish and Scandinavian covered bonds. We have no equities. I repeat, we have no equities in the mix. And hence, we did well in the midst of the storm. The pretax result was DKK 1.276 billion. Operating EPS was DKK 1.85 billion and the return on own funds were 28.6%. Finally, Tryg pays a Q1 dividend per share of DKK 2.15 and reported a solvency ratio of 192 supportive of future capital repatriation. And before I end my initial comments, I would like to add the remand to closure, of course, the development in the Middle East tensions and the potential to spill over on the global economies and specifically inflation. The situation remains very volatile. And upon looking at our book, it is primarily the motion property liabilities not exposed to inflation in Wave 1. With that, I'm mainly referring to inflation on goods and spare parts and not so much on salary inflation. We remain very alloy, but also remain confident in our ability to price risks correctly and steer through any scenario we'll face. With that, we are now turning to the next slide on custom highlights. The customer satisfaction score for Q1 was 82, coming from 81 at the end of 2024 and against the target of 83 for next year. The higher satisfaction has been driven by improved online features that resulted in a better customer experience. Additionally, the new contacts and platform called Puzzel is gradually being implemented successfully across the group and we know that improved customer satisfaction linked to this, in particular at Alka and Trygg-Hansa. Now let's move to the next slide where we take a look at the ISR by segments. Please remember that a lot of moving items such as large weather claims, interest rate movements and runoff do, of course, impact the ISR on a reported basis. The private business reported a higher ISR driven by good growth and improved underlying performance together with a higher runoff, which was then partly offset by large and weather claims together being higher than in Q1 2025 despite remaining lower than normal. The commercial segment reported lower ISR driven by a muted top line growth, higher large and weather claims together and lower runoff result, while an improved underlying performance was noticeable. In the next slide, we illustrate the bridge of the performance from Q1 last year to Q1 this year and take a quick look at the performance by geography. If we just start with the bridge on the right-hand side of the slide, the result this quarter was improved by the premium growth, particularly in the private lines and improved underlying performance, our higher runoff and positive currency developments, where from the negative side, higher large and weather claims taken together were recorded although, and I repeat that, although these were still below normal levels. On the left-hand side, the ISR by geographies saw a positive development across all countries. As mentioned before, a lot of moving parts can impact the reported figures. However, we do notice a continuous positive development and an improved combined ratio across the board. That's important. On the next slide, we zoom in on our Norwegian performance that continues to show improvements. It's important to remember that Q1 is by far the more complicated quarter of the year in Norway due to often challenging winter weather. Nevertheless, Q1 2026 was the best Q1 in the last 8 years, continuing the improvements seen in the last 18 months or so. The combined ratio for the quarter was 93.7%. As mentioned previously, price increases are expected to be lower starting from the Spring, but we remain very vigilant to protect profitability, should inflation become visible again as discussed before with reference to the Middle East tensions. As for the composition of our book, motor represents a bigger share of our revenues in Norway, around 40% compared to the group just above 30%. And therefore, our attention here is, of course, at the highest level. With that, we turn to the next section and the first slide of the insurance revenue section. In this slide, we illustrate that the group premium growth was 3.5% in local currencies at levels similar to recent quarters. As for the Private segment, it grew nicely above 5%, while the commercial segment growth was more muted. The growth in the Private segment is still primarily driven by price increases, mainly in our Norwegian segment, although we are also seeing commercial activities starting to pay off, especially in Sweden. As for the Commercial segment, we continue to focus on SME, while some customers exited in the corporate part of the first of January renewal, we do expect the group top line development to improve slightly and gradually in the second half of 2026 and onwards, both in absolute terms, but also with a more sustainable composition. Obviously, the precise timing of this is also linked to the current Middle East tensions and potential inflation spill over. With that, let's turn to the next slide on customer retention. When looking at the retention levels, we noticed a general improvement in the private segment while pressure remains in the commercial segment. Our experiences from the past show us that it takes a little while before and following periods of price increases, the retention stabilized and bounces back. We've now achieved that balance in the private lines, and we expect to do so in the commercial lines during 2026. It is noteworthy in this context to mention that our main shareholder, TryghedsGruppen, has just announced its customer bonus of 7%. It was 6% latter to Danish customers. I mentioned that here as we believe this is helpful in terms of the session going forward. And I guess with that, I'll turn it over to you, Mikael.

Thanks, Johan, and good morning from me as well. The underlying claims ratio improved 40 basis points, both for the group and the Private segment in Q1. And this is an improvement compared to the most recent quarters, showing that profitability measures, especially in Norway, are paying off. Stability remains paramount for us. And as we have been mentioning at the Capital Markets Day, we do expect that the underlying claims ratio to remain broadly stable to slightly improving towards 2027. And this remains unchanged today. Turning to Slide 14. We are here showing the development of the most volatile items, large and weather claims, the runoff result and the overall level of interest rates that we used to discount the claims reserves. Large claims were above normal in Q1, while weather claims were well below normal level during this quarter. Q1 held a couple of large commercial claims, in particular, in Sweden, while weather claims were low despite snow and colder weather than normal, that affected Denmark and Southern Sweden in the quarter. The runoff result was fairly stable at 2.5% and in line with recent experience and our guidance of a runoff around 2% towards 2027. Finally, the discount rate was 2.4%, unchanged from Q4. And please remember that this is an average of the 3 months, and it's also a function of both interest rates level and the claims mix. And with this, I hand it over to you, Gian.

Thanks, Mikael. We are now moving into the investment section of the presentation. At the end of Q1, total invested assets were DKK 62 billion with the match portfolio being approximately DKK 48 billion and the free portfolio DKK 14 billion. The asset mix is completely unchanged, also in light of the fact that properties exposure has remained stable in Q1 versus the end of 2025. If you look at the actual investment result in the quarter, it was DKK 2 million. As Johan mentioned, it was a quarter characterized by high volatility following renewed Middle East tensions. Equities drop, corporate bond spreads widened and interest rates move upwards. Against this backdrop, we were quite happy about our very conservative asset mix. I'm pleased to report a modestly positive investment result. The free portfolio posted a return of close to 0. The match portfolio returned DKK 76 million while other financial was slightly negative, DKK 69 million, a little bit better than normal. All in all, the current asset mix is confirming downside protection at the time of high volatility and this is what we were looking for when we did the change to the asset mix. With this, over to you, Allan.

Thanks, Gian, and good morning from me as well. Let's move into the solvency and expenses section. This first slide shows details on the development on our solvency position as per end of Q1. Tryg report solvency ratio of 192% against 196% at the end of last quarter. It is important to remember that Q1 is historically the quarter with the lowest normalized level of earnings and therefore, also the quarter where dividend costs are proportionately higher from a solvency perspective. As a reminder, today's announced dividend is already deducted from the current solvency position of 192%. Own funds have been primarily impacted by the operating earnings, the dividend payment and by the strengthening of the Norwegian krone. On top of that, the temporary 3 percentage points uplift from the refinancing back in November has now been deducted from our own funds. The solvency capital requirement has primarily been impacted by the higher level of interest rates resulting in lower claims reserve on the balance sheet and, therefore, a lower capital charge. SCR is also positively impacted by a lower nominal amount of fixed income instruments. And finally, the strengthening of Norwegian krone has impacted the capital requirements negative. Now please turn to the next slide. In this slide, you can see the historical development of our solvency ratio. We are very pleased to report a robust solvency ratio of 192% after quarter with significant macro starts by the level remains supportive of future capital repatriation. As mentioned, we expect solvency ratio to gravitate towards a less conservative level long term, and we elect to continue our year-end assessment of our solvency position also going forward. And now please turn to the next slide for updated solvency ratio sensitivities. Sensitivities are virtually unchanged from the last quarter, which should come as no surprise as the asset mix is broadly unchanged. The biggest sensitivity remains the 1 towards common bond spread movements as this is our chosen asset class and represents the vast majority of our investments. The low sensitivities about our investment case fits our thinking well, as stability is one of the most important elements also in times with high volatility in capital markets. And now let's move to the expense ratio development on the next slide. We are reporting an expense ratio of 13.3%, which is fully in line with the levels shown in Q1 last year, and the overall number of employees remained stable in the quarter. Investments in additional commercial activities are funded internally by improvements in our operational efficiency. And finally, we continue to expect the expense ratio to be stable to slightly improving towards 2027. And with this, I will hand it over to you, Johan.

Thanks a lot, Allan. And I guess, with this, we are now entering the final part of the presentation, which is on strategy and financial targets. As a reminder to all of you, we are aiming to grow the insurance service result by DKK 1 billion over the 3-year strategy period. Most of you know the strategy is based on 3 pillars: scale and simplicity that should add DKK 500 million technical excellence that should add DKK 300 million and customer and commercial excellence that should add DKK 200 million. A number of strategic initiatives are being implemented as we speak, and we remain very confident and very pleased with the progress across all 3 strategic pillars. As for scale and simplicity, I'd like to highlight just a new partnership with Carbucks in the next slide. So if we move to that next slide, I want to just highlight that we've entered into a new Nordic partnership with Carbucks, and for some of you, you might ask yourself, what is Carbucks. Well, Carbucks is a claims handling company focused solely on car repairs across all brands in a fast and very efficient manner, limiting the use of replacement parts. Carbucks has a very sophisticated setup, and they can prepare a wide range of dents, scratches and cracks in just a few hours, actually in just 2 hours, and we believe this partnership will increase our customer satisfaction. We believe it will allow for a very effective and ultimately cheaper claims handling, while also offering a more sustainable solution to our customers. We see already in our figures a sharp increase in the number of claims steered to Carbucks and do we expect this to grow substantially towards 2027. With that, let's turn to the next slide on our well-known financial and strategic targets towards 2027. I'll just briefly repeat that we target an ISR between DKK 8 billion to DKK 8.4 billion. You should see it on the midpoint of DKK 8.2 billion, driven by a combined around 81% and a route between 35% and 40%. All targets are completely unchanged, and we work relentlessly to deliver on these. With that, we go to, I guess, our favorite slide, our usual slide and our final slide with the Rockefeller words, reiterating our commitment to be a healthy dividend stock, underpinned by strong earnings and a very healthy solvency position. And with that, I think I'll turn it over to you, Operator.

[Operator Instructions] The first question is from the line of Asbjørn Mørk from Danske Bank.

I would like to ask around the contingent liabilities note. And I guess you already now know what kind of topic that would be around, but of course, the case on the appeal board against the [indiscernible] Denmark. I do read your note stating that you expect that it will not affect the group's solvency position. I guess you are expecting the appeal board to win the case. But could you unwrap this note a little bit for us in terms of what would be the different potential outcomes as you see it in terms of impact for you? Should the Appeal Board lose the case? Would that still be the case, the conclusion that it will not affect the solvency position? Or is that just a probability weighted statement? And how would we -- sort of, how should we think of this in terms of impact financially for you?

Okay. Thanks a lot for that question, Asbjørn, and good morning to you. I understand, of course, that this contingent liability is a hot topic these days. I read the reports, I read the news. I follow this very closely. And I think just to be very helpful to everybody who's listening into the call today, I'll only comment on this once during this conference call. So we don't waste 40 minutes saying the same things 10 times. So let me be very clear with 3 things on that question because it is an important question, Asbjørn. First of all, we clearly believe -- we clearly believe that the ruling will be favorable to the industry and Tryg, right? So that's point number one. We believe the ruling will be favorable to the industry and Tryg. Second, should the case still end up being adverse for the sector, we are confident that a pragmatic solution will be found with the Danish state. Thirdly, in the very, very unlikely event that this case affects Tryg's reserves. We do not see it significantly affecting our solvency position. Let me just underpin that word. We do not see it significantly affecting our solvency position. And for those of you who don't know the case in details, I can clearly state we have more insights into this topic than you do, and I can only reiterate this will not be significant for our solvency position. I hope that's sufficiently clear because I think that's the only time we're going to answer this question on this call. So those of you who are in line with questions on this topic, find another one. Thank you so much.

And that was very clear. So I guess that means the worst case, you don't see any significant impact on your solvency position. But I may just ask because, obviously, right now, we are forming a government in Denmark these days. So the whole second scenario you mentioned where you expect the primary outcome. Is that going to be impacted by the recent election and the forming of the government? Or how do you see that?

I think, maybe I was unclear as to how many times I would discuss this. But as well, I see your point. I think what you're discussing is timing. It doesn't change my confidence in the fact that a pragmatic solution will be found with the Danish bank. You're discussing timing. My confidence remains intact.

The next question is from the line of [indiscernible]

So my question is come back to something we have discussed over the past calls a few times of [indiscernible] several targets. I know [indiscernible] is a bit volatile at the moment, but when you go out to win even consensus now above the top of the guidance range. So my question is more related, like do you see anything that could like could make you end in the lower end of the range and related to the [indiscernible] so far from the Middle East contract that has hit the supply chain or something like that had to already experience something -- I know it might be only in a small part of your business, but -- have you seen some [indiscernible] already of [indiscernible] of things that has changed so far?

So first of all, thanks -- for those 2 questions. I believe it was to be honest. Let me try and answer them both. So on the first whether that's around our 2027 target. And I appreciate the question, and I appreciate your ambition on our behalf. I think it comes from the fact that we have a very strong 2025. We've had a very strong start to 2026. I will say we are only 5 cars into the new strategy going for a 3-year period. It is still too early to conclude on 2027 at this stage. And you are alluding to also the topic that is high [indiscernible] radar, geopolitical tensions are rising. There are disturbances in the middle. And there are early signs of some rising inflation, for instance, within oil which lowers our visibility, of course, not just us, but the whole industry and all industries. The average that we have reported strong development in 2025. When you adjust that for our, let's call it, tailwind on margin whether we actually bang on where we said it would be for 2025. So we will stick to our 2027 targets and I don't see any reason why we should change that the going down at this point. To your part of your question, which is around the Middle East, I think I just want to say a few things on that. That is relevant to pinpoint. So if you look at it from an asset mix point of view, I think maybe I'll pass on to you in a second and you can talk to that in a second. But so far, our conservative as has been helpful. That's 1 way the Middle East can affect us. Very medium term, the Middle East has an impact on traveling. So we have held a lot of customers already in Q1 when traveling to the Middle East being in the Middle East or traveling through the Middle East. We've got more than 11,000 customers. So we've been busy on the phones, but it's very tangible from a financial point of view. So that's not something for you to worry about. That's what operational issue than our financial issues. So far, even going into Q2. The second part where the Middle East can have an impact on our business is, of course, around inflation, should this materialize in inflation. And just a couple of thoughts on that. The areas where the Middle East would affect the retention in the Middle East is inflation driven by transportation and energy. The area is now a book where we see the most impact would be on motospare parts and building materials. Promotor 60% of our claims costs are related to goods for building materials, it's around -- for priority, it's 35%. That is related to goods. So that's where we would see sort of a midterm inflation impact. The good thing is we will see the main impact in our business due to fixed price procurement agreement that will then below any impact, first of all. Second of all, I need to be very clear also -- if inflation outlook changed for us, we will price accordingly. And of course, we are following the situation very closely, and we will always take the pricing actions needed should this become necessary. I can clarify 1 thing no scenario we see in no scenario we see -- we see our 2027 targets coming on the end.

That was very clear. The only cut going to have like I think both interest rate and currency lives has moved a bit in a favorable direction since December '24. So I guess that could be the the changing thing why you should upgrade your target at some point, but I will leave that for you to think about on to the next quarter.

Thanks a lot for that Mathias. Thank you.

The next question is from the line of Vash Gosalia from Goldman Sachs.

I have a question around your sort of underlying claims ratio. And just basically trying to understand how that would evolve over the next year? So a couple of things there. So 1 is, obviously, you have said claims inflation, we're hearing claims inflation within the Scandinavian region is coming down. As a result, let's say, pricing would come down a little bit. So now when I look forward to the next 12 months, I'm just trying to think whether the earn-through of the improvement in the claims ratio could be at the same level as we've seen in this quarter? Or do you think a more fair level could be something like what we've seen in 2025 simply because pricing is sort of behind us. That's my first question, and I can come back with the second question a bit later.

Thank you very much for that question. So I think if I tried to sort of unwrap this in a couple of different ways. I mean, first of all, we are very pleased around the underlying development and the improvement that we see in the quarter of 40 basis points. And just reiterating that, that's coming from personal lines and in particular, from Norway. And obviously, there is an earnings impact on this from the initiatives that we put through in 2025, again, most notably in Norway. And I mean, right now, we are pricing lower than we did in 2025, but still ahead of inflation. So you're right in the fact that there will be an earnings impact on this going forward. With the disclaimer that Johan just mentioned relative to Middle East, that we will price for, et cetera, if that happens. But overall, this is also a balancing act of igniting more commercial initiatives, most notably in Sweden, where we will see -- we'll see a marginally higher call, which is very much in line with our plan, where we balance growth and the underlying improvement.

Got it. And then I had a second question in line just following from something you said about pricing in line with inflation. So I remember in the past, you have alluded to sort of your top line is going to be 1/3 pricing, 1/3 volume and 1/3 upselling, cross-selling. Now there, I just wanted to understand if currently, you're growing at 3.5% on a constant currency basis, which is potentially in line with the claims inflation. So then I'm just trying to understand where do the cross-selling, upselling and the volume piece sort of fit in? Or do you expect that to sort of come in maybe later half of this year or even in '27? Because it just feels like you're currently your top line is growing just in line with inflation.

And if I start and then I'll give it over to you, Johan as well. I mean, first of all, I'd just like to emphasize that we are pricing ahead of inflation, just to make that clear. Sorry, if that wasn't perfectly clear before. So we are pricing ahead of inflation. And again, it's in particular in Norway, where we are slightly ahead. And then like you said, we are expecting a more balanced growth going forward from price increases coming down and then having a more balanced approach with these 3 elements that you just mentioned.

I agree to Mikael. If I could just add to that, if we sort of zoom out a bit, profitable growth has always been and will remain our primary focus. I think that's very important, and we are pleased to see, and that's something we see that you don't necessarily see. We are starting to see a better balance with growth being less driven by price than in the past. That's not obvious to everybody externally, but internally, we are seeing that movement. But to be fair, organic growth does take a bit longer to materialize than price driving growth and we are not in a hurry to grow. We'd rather grow in a very sustainable, healthy manner, and that's what we feel we are doing. We don't see anything in our growth numbers now that is off our expectations. We don't see anything that gives us cause for concern.

Got it. I have a couple of more questions, but I'll just rejoin the queue.

The next question is from the line of Martin Birk from SEB.

Johan, just out of curiosity, since your annual report, you have now classified this as a contingent liability. And by the way, you are the only insurance company in the Nordics that I classify this workers comp cases a contingent liability at least directly in the nodes. What has changed over these past 2 months?

So thanks for that question. I think, I was trying to be very clear upfront that we don't have anything more to add to this. I can just reiterate. We believe the ruling will be favorable to the industry and Tryg. If it ends up adverse for the sector, we are confident that our pragmatic solution will be found. And in the very, very unlikely event that this case affects try to serve, we do not see it [indiscernible] affecting our solvency position. I cannot speak for my competitors.

I'm not asking about that. I'm asking about why this is now a certainly contingent liability when it was 2 months ago?

Nothing has changed.

And I can just add that the note was general before. So there was that note before. We just added the world of mortgage company because there's so much discussion. But the note was that in the previous quarter from last year as well, it was referred on a general basis. Just to be clear.

Nothing has changed from our view.

And the next question is from the line of Michele Ballatore from KBW.

Yes. So -- my question is more related to the growth, let's say, initiatives. I mean now that let's say, pricing is less of a tailwind if we look at the growth in top line earnings and everything. Can you remind us the the key growth initiatives you're putting in place, especially in Sweden, where, of course, the underwriting profitability is significantly better than the other geographies.

Thanks for that question. And I think it's a very important topic, the growth component. And I can -- and you're rightly saying that pricing is as it looks like now tapering off, and we need the commercial engines up and running. We are confident that we have sufficient commercial activities launched in the market. If we have actually launched more than 20 different activities that will drive growth and loyalty in the markets over the coming quarters. Specifically to your question around Sweden, I think it's important to mention the fact that we have entered in, just to give you an example, we've launched more than 10 different motor partnerships in Sweden last year. That will increase our sales into motor with more than SEK 130 million this year. That is part of the initiatives that will drive growth, both on the top line and pricing but also from an inflow of new customers. So there's plenty of organic initiatives that will drive organic growth. But as I said, and I think you, of course, know this, right, organic growth takes a bit longer that time to materialize than the price-driven growth. So our plan is -- and we are currently following plan is for these organic initiatives to take over as pricing tapers off.

We can assume that, let's say, the bulk of these growth initiatives will probably be something related to the next strategic phase rather than this strategic phase?

No. I must say I believe that we will see the impact of these commercial activities gradually coming into the numbers as we go through the year. Don't expect things to change dramatically overnight. That's how we operate. But you should see the -- we are expecting the commercial initiatives to kick in gradually as we go.

The next question is from the line of Nadia Claressa from JPMorgan.

I just had a quick 1 for more to clarify perhaps on the comment earlier that you are pricing ahead of inflation. Could you maybe elaborate more on the pricing versus inflation trends across each of the 3 markets? I mean, I understand it in Norway, it's still ahead. But from memory, for example, in Denmark, I believe [indiscernible] for example, that 9 out of the 10 customers are not getting price increases of inflation. So any further elaboration on that would be helpful.

Absolutely. So if we go through the pricing a bit more on the individual country perspective, I mean you're right to say, first, we will state that we are pricing somewhat ahead of inflation still, although that it's at a lower level than in 2025. And if I sort of unpick that into the different regions, you're quite right that Norway is where we are pricing the highest in this. It's also the country where we see the highest inflation in -- sorry, if we compare across the Scandi region. But nevertheless, still sort of a bit higher than the Norwegian inflation. Sweden and Denmark is a bit more balanced and right like you referred to in the -- in your note of the indexation part but we are pricing also in these countries pretty much on inflation or just a tad above.

Okay. And Norway, if I could, I mean, is mid- to high single digits still the right indicator of roughly where pricing is at the moment?

I think you should read into it that we are pricing a couple of percentage points ahead of inflation in Norway as we speak. And the inflation in Norway is a couple of percentage points or 1 or 2 percentage points higher than in the rest of Scandinavia.

[Operator Instructions] And with that, we'll pick up again Vash Gosalia from Goldman Sachs.

So the other 2 questions I had. One was just trying to unpack your market shares. So just looking at the slides that you provide at the end of the deck, this quarter versus last quarter, it appears that you have lost a little bit of share in Denmark and Sweden. But I was hoping you could sort of unpack that potentially, where is it coming from? And I appreciate there's some rounding in there. So to what extent is is that sort of ignorable? That's the first question. And second question was just on the reserve release. So obviously, we have your guidance of 2%. But it feels like for a few quarters now, you have been ahead of that. So just trying to under the driver of reserve release at least in this quarter, which is somewhat higher than what we've seen in the recent past and how we should probably think of it going forward.

Vash, this is Gianandrea. I can take easily the first question. There is an around sign in our background slide in the investor presentation. I think it's around 17% at Q4, and it's around 16% now. So 1 should be a little bit careful to draw conclusion precisely because there is an around sign. I think the market share fall in Denmark, if I remember correctly, it's around 40, 50 bps that is statistical variation in data coming from the Danish Insurance Association. This is not an issue for us and a similar thing in valid for Sweden. And I'll give the word to Allan.

And on the second question, I mean, we have continued our very conservative reserving practice for many years now. And our reserving strength remains very strong. And you should expect some fluctuations quarter-to-quarter in terms of runoff and not as such in a trend over from this quarter. And we stick to the guidance that we have given to the market that we will print around 2 percentage points for the strategic period.

But are you able to share with us what was the driver in this quarter?

I mean, there's no such special things this quarter. I mean, it is then you should expect some fluctuations quarter-to-quarter. I mean, 2.5%, 2.3%, we print around 2%, and you should expect that to be continued towards '27.

The next question is from the line of Qian Lu from UBS.

It's Qian Lu from UBS. Just a quick 1 on the SCR bridge. So business evolution appears to be a capital release rather than a drag, which feels a bit counterintuitive given growth. Could you please talk through the main drivers behind this, please?

Yes. And yes, thank you so much. And you're right, we have a positive development in the SCR bridge. It is relatively small movements. So that's just to make that clear, and it's pretty much driven by the higher interest rates resulting in lower claims reserves. So that is the read from this one. You should expect also going forward that growing the business also means that we need to grow the capital requirement linked threats going forward. But in this particular quarter, we have relatively small movements linked to the interest rate movements.

The next question is from the line of Vinit Malhotra from Mediobanca.

Yes. So my 1 will be on Slide 24, please. And the growth topic. Just looking a little bit. I mean, maybe it's minor coincidence that both second and third pillar have a commercial product initiative. I'm just obviously, I don't want to read too much into it, but I know private lines growing 5% is great. But is it some thinking that maybe you might lean a bit more on the commercial lines to produce some offsetting some growth more? Or is that too much to read, but just a little bit more thoughts on that business mix as we keep talking about quality of growth. So just a little thought on that would be very helpful.

Thanks a lot, Vinit, for that question. And I don't think you're reading too much into it. As we said initially, the growth in the private segment was around 5%, a little bit up from the full year growth last year, which was 4.7%. Within commercial, growth was in positive territory within the SMEs, but negative around the corporate space. That is also why we are over-indexing right now on growth initiatives, not just in Private Lines but also in Commercial Lines. So a few specific initiatives we renting 1 here for Commercial Denmark around being the preferred insurer agriculture. There will be a growth engine in Denmark. We are also launching initiatives. As I mentioned before, we have more than 20 commercial initiatives One of them is on the med distribution in commercial lines in Sweden. And the third one, just to mention here would be a focus on housing associations in Norway. So there is a broad range of different growth initiatives. And you're right, also, as you are highlighting, we are targeting some of them into the commercial space also.

The next question is from the line of Mathias Nielsen from Nordea.

It's more of a technical 1 maybe, but could you please put a few words on like the discounting impact going forward? Like now it was 2.4 this quarter. And I [indiscernible] something like it was average over the quarter. So given where interest rate expectations are at the moment, like how should we think about the discounting impact in the rest of the year? Could you maybe say a few words on the mechanism there. So it will be easier for us to understand.

Yes. Mathias, I mean, as a starting point, as Mikael was mentioning, it is a combination of interest rate curves and the claims mix that is underneath. And you're right that we are printing 2.4% in this quarter. We also did that in the last quarter. I mean, it's some volatility out there in the interest rate curves at the moment. I think that we have been very precisely by describing this in our reports that I mean, higher discounting of insurance liabilities. I mean, the normal rule of thumb of this is that if you take a 100 bps parallel shift to the yield curve, that will correspond to a 100 bps impact on the group combined ratio. So that is the the overall guidance so to speak. And what we have seen lately is a movement in the short part of the curve. And I mean, the biggest impact, you will see that from the more longer tail of the business, so to speak, coming back to the claims mix. So it is hard to predict the coming quarters.

Sure. So when I think about it, like I think it's about it being slightly up the discounting impact in the coming quarters, but not much. Is that a fair assumption given what you're also seeing like that short rate yes have moved up, but not the really short rates like it's been the 1- to 5-year yield has basically moved, but not the 3 months. Is that a fair assumption that it's going to be -- it is going to be minor, but small table on the long end of the curve also move up. Is that fair? What do you think of it?

Exactly, I mean, all else being equal. And as of today, I mean, we agree.

And the next question is from Asbjørn Mørk from Danske Bank.

One follow-up question from me as well. Looking at the underlying improvement in the 40 basis points that you print for for this quarter. So the second order derivative obviously improving. If I look at the mix, it seems to be quite a solid improvement both for private and for the commercial business. And considering the sort of stability and predictability you like as a company. I was just wondering when I look at consensus, consensus expect 30 basis points improvement for the full year '26 and only 10 basis points for '27, '28. Are you seeing anything out there in aside the short-term impacts from the Middle East and how that could expert inflation. But is there any reason to expect the 40 basis points to deteriorate from here going through the rest of the year and into next year, would you be -- I mean, would you be satisfied with 10 basis points improvement in '27 given where we are today?

Thanks for that question, Asbjørn. And I think I'll start with the very sort of boring part of my answer, and that is to say that we expect the the underlying same ratio to be stable to slightly improving. I think if I sort of elaborate a little bit on that, I mean, as we said before, we are pricing somewhat ahead of inflation soon. We have priced in 2025 significantly ahead of inflation in Norway. So we do expect an earnings impact of that. And then obviously, you can come into different parts of sort of saying Middle East inflation sort of increases very much as Johan was mentioning before, that is something that affects part of the portfolio, not the entire portfolio. And it's also something that we have procurement initiatives towards and we'll price for accordingly if something happens. So I hope that sort of gives a little bit sort of more meat on the bone on what we expect and how we see underlying going forward.

Well, I guess that means if I look at the -- because go back a few years, your improvement was driven basically by the commercial business and you had the issues in private. Now both your businesses are improving. And it seems to be quite a structured you're repricing above claims inflation. So why should we end up at around 10 basis points improvement in '27. Would you expect something more than that given the -- unless we get some very unfavorable inflation hit from the Middle East situation?

So just on that point, with the risk of sounding depressive or crushing the party, right, 10 bps up and down, of course, we are happy to see an improvement with 40 bps. But the difference between 30 and 40 or between 40% and 50% is very minor to look at in absolute terms. So I don't think you should read too much into 10 bps up or down in that sense. Although we are, of course, happy to see that all our repricing, all our streamlining of the book and all the efficiency we're taking out is actually paying off on the underlying. But I wouldn't read too much into whether it's a 10 bps up or down.

No, no, I fully agree. I'm just thinking if you should improve your underlying by 30, 40 basis points next year and not the 10 basis points that consensus is expecting, then it becomes quite meaningful. And I just can't see why it would only be 10 basis points next year, considering with your repricing right now and how confident you seem to be that you're repricing above claims inflation?

But I don't think we want to comment and guide specifically on the underlying. What we can say is that coming out of Q1, we have a very, very strong position on our ability to earn. So we are in a very strong position right now, but we're not guiding on underlying in the next few quarters. We've never done anything we have started off exactly where I want to finish off. We have a slightly stable to slightly improving, and that's sort of what we stick to.

The next question is from the line of Martin Birk from SEB.

Just maybe following up on your commercial premium growth. As you also previously said that you're seeing growth within SME and then sort of the old corporate book is still a drag on total growth. Where do you actually want to be in this sort of on a reported basis for the Commercial division in terms of premium growth.

I don't think we have a specific target on growth because the second, we, as the group set a specific target on growth in corporate, we will get into trouble. So we will do the renewals as we go through it. We will price accordingly. And when we at this particular first of January renewal when we exit certain corporate clients, that's because the underwriting and the willingness to pay doesn't match. So that is how we want to guide on this. I think fundamentally, it is true that in our -- we have a 60% -- more than 60% private book. Our commercial lines is around 30%. Our corporate is a small component of that, and that means that we will see a big impact when large corporate clients do actually more enter. So I don't think we don't get hung up on the quarterly growth numbers. We just, of course, communicate them to you, but we don't want to run our business on quarterly growth.

How much is left of sort of the corporate book pruning?

We have alluded to previously around 6%, and that's still the case.

Yes, there are no further questions. I'll hand it back to speakers for any closing remarks.

Thank you, everybody, for all the questions. It's always the Investor Relations team here at Tryg, it's available for any follow-up. Otherwise, I'm sure we will see you around the next few days. Thanks a lot again.