ALM. Brand A/S Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Asbj°rn M°rk - Danske Bank - Analyst : Congratulations on the solid Q1 report. A couple of questions from my side. One, looking at synergies and the level you realized in Q1 versus the full year target, you're almost there. I was just wondering when December 31 becomes January 1, I guess, synergy potential doesn't end there. But could you may be shed some light on what kind of initiatives you think and what potential you see for further realization of synergies going forward? I guess there is still something to harvest there.

Question: Asbj°rn M°rk - Danske Bank - Analyst : Then maybe if I may, on your -- on the growth and especially the private growth, the 8.2%. Could you split that a bit into what comes from [Kuwait], what comes from your partnerships and what comes from your own sales channels, own brand sales distribution? Any insight there?

Question: Asbj°rn M°rk - Danske Bank - Analyst : Okay. So does that mean that basically your own sales channels, they are keeping your market share flattish. So you're able to maintain your market share on your own distribution.

Question: Asbj°rn M°rk - Danske Bank - Analyst : And then maybe on your guidance, you raised the guidance by DKK50 million. You have DKK34 million of runoffs in the quarter. But I guess if I look at weather and large claims, they are also something like DKK50 million better than, I guess, you would have expected for a normal Q1. And now you're also saying that synergies will be somewhat above the DKK600 million. So I was just wondering why you're only raising the guidance with DKK50 million. Is there sort of an underlying negative trend somewhere that we should be aware of?

Question: Asbj°rn M°rk - Danske Bank - Analyst : A final question from my side, then I'll move back in the queue. So now it's a month since we got the DCCA report on the competition in the private insurance market in Denmark. So what are your sort of your overall thoughts now having had some time to digest the views from the report?

Question: Asbj°rn M°rk - Danske Bank - Analyst : But do you see any risk like I think, I guess there's been some discussion around indexation, automatic indexation being at risk and stuff like that. What would be sort of your outcome scenarios?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : I can take some questions on the growth on the underlying for the corporate side or commercial side. Since it seems like you have lost some business or unprofitable workers' compensation business, how is the underlying for the rest of the book then running? Is it so that workers' comp is minus 5% or minus 2% or minus 0 or something? How should we read it? And how should we think about the growth for the remaining of 2025 and then potentially into 2026?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : So more the indexation and then not this minus and on the top, so indexation 3% and this minus 2%, is 1%? Is that a fair conclusion? Or is that 3% a better number? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00AM, ALMB.CO - Q1 2025 ALM. Brand A/S Earnings Call

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : No problem. The run rate you mentioned 190 basis points. To reach your sort of guidance on the insurance service results, you probably need to improve that. Is it a gradual improvement throughout the year we should expect because of the impact of the profitability as well as the synergies? Is that how we should read it?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Okay. Then on the capital side, the DKK4.9 billion you now have in capital, that is deducted with the full buyback of DKK1.6 billion as well as 80% of your dividend. Is that fair to assume because we don't -- have been given sort of the full disclosure on that number. And on the requirement, we should now assume that the Marine and Energy book is fully out. Is there anything else that has happened on the requirement side that we should be aware of in the quarter?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : And any news on the Codan standard book?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Yes, towards the internal model. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00AM, ALMB.CO - Q1 2025 ALM. Brand A/S Earnings Call

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Okay. Finally then from my side, the DCCA report. Since I'm not living in Denmark, is it so that they have now finalized the hearing period and for what they should like to investigate? Have they formally started the investigation that then has to take at least or minimum -- or maximum two years, sorry. Is that how we should read it?

Question: Jan Erik Gjerland - ABG Sundal Collier - Analyst : Okay. But do you think they will actually tell the market if they start the investigation or not?

Question: Mathias Nielsen - Nordea Bank - Analyst : And also nice to see that even though it looks like a small miss in the numbers, it's less volatile than it used to be back in history, so well done on that. So if you start on the cost line, maybe I have one question. It seems like it's a bit better this quarter. Is that a reflection of the new run rate that is actually running a bit ahead on -- or a bit better on the cost line? Or how should we think about that?

Question: Mathias Nielsen - Nordea Bank - Analyst : And then maybe moving on to the underlying claims ratio. There was this last year, the thing that one of your competitors talked quite a lot about of the Easter effect of claims moving into Q2 instead of Q1. How should we think about this for you going into Q2, like you're improving the underlying undiscounted by 190 basis points. Is that like a fair baseline to use for Q2 as well? Or is there anything that we should be aware of there that it should be even higher because of this Easter effect? How should we think about that? I think if you can say anything on last year, what you saw last year and then making the baseline even clear to us, that would be nice.

Question: Mathias Nielsen - Nordea Bank - Analyst : And when you say not very big, is that below 50 basis points or below 10 basis points or something like --

Question: Mathias Nielsen - Nordea Bank - Analyst : And then the last one, I had a drop off at some point. So sorry for that. So maybe you already said that once, but just for my understanding as well. On the investment result, it seems like you're reiterating the guidance of DKK200 million, even though that Q1 was like quite a lot better. Is that because of something you have seen so far in Q2? Or how should we think about that? Sorry if you already said it, I had a small drop off.

Question: Martin Birk - SEB - Analyst : Just coming back to the question and answers that we've basically been dancing around. So you said to reach the [DKK1,850 million] by year-end, which basically gives you a quarterly run rate of DKK504 million for the remaining three quarters. Andreas, given everything that is happening and given that the improvements that are -- that will be gradually coming through over the year, how would you divide those, that quarterly run rate of DKK504 million out over the remaining quarters?

Question: Martin Birk - SEB - Analyst : But perhaps more giving us a sense of how you see it because I mean, basically, it's getting quite a big step-up already by Q2.

Question: Martin Birk - SEB - Analyst : I mean, it's -- but Andreas, I hope to get you a little bit closer to an answer here because it's -- if you're looking at your underlying and if you're looking -- keeping the DKK504 million as a quarterly run rate in mind and the seasonality and the improvements that you are guiding for, I mean, you're putting in normalized large claims and normalized runoffs and also keeping discounting in mind, your undiscounted underlying claims ratio is set to see a quite substantial improvement from next quarter already. Is that a fair assumption, 400 or 500 basis points?

Question: Martin Birk - SEB - Analyst : Okay, okay. All right. I mean, it could be very nice if you could shed a little bit more clarity on this, perhaps on Monday.

Question: Bhavin Rathod - HSBC - Analyst : The first one would be on your Commercial Lines reserve strengthening. Can you just provide more color on what's driving that strengthening? And how should we think about that reserve strengthening for the full year? Should we expect more strengthening for the remainder of the quarter? Or would you say that more or less of the strengthening is already there in place?

Question: Bhavin Rathod - HSBC - Analyst : Yes, partly, yes. I was just more looking at the runoff result for the Commercial Lines, which came in a bit adverse at 0.7%. If you could provide more color on what's driving that? And how should we think about that evolving for the remainder of the quarter.

Question: Bhavin Rathod - HSBC - Analyst : That's very helpful. The other one that I had was again on the DCCA report and on the findings, would you be able to provide any sort of color in terms of what's the average duration of your customers? And what's the kind of delta between the new and renewing customer for the group? And do you see that being any different versus the other players in the market in terms of margin between the new and the renewing customers?

Question: Mathias Nielsen - Nordea Bank - Analyst : So maybe coming a bit back to Martin's question and maybe asking in a bit different way. So can you maybe like give a bit numbers on like your renewals. Like when does the higher prices tick in for the clients? How many renew in Q1, Q2, Q3, Q4? Maybe a bit of split on those things. I think like the majority -- it sounded early on like the majority was on 1st of January on the commercial side. But maybe if you can give a bit of flavor on that, that would be able to quantify the price impact on the underlying, if you know that, that could help a lot, I guess.

Question: Mathias Nielsen - Nordea Bank - Analyst : So 10% to 20% of clients in commercial only or is that in the total?

Question: Mathias Nielsen - Nordea Bank - Analyst : So 10% to 20% of the overall clients you have has not seen the price hike yet, and they will see it when? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 01, 2025 / 9:00AM, ALMB.CO - Q1 2025 ALM. Brand A/S Earnings Call

Question: Mathias Nielsen - Nordea Bank - Analyst : Okay. So that means like you have like around 10% each quarter besides January 1 where we have the remaining part. Is that a fair thinking of that? Is that okay?

Question: Mathias Nielsen - Nordea Bank - Analyst : Okay, okay.

Question: Mathias Nielsen - Nordea Bank - Analyst : Yeah, I think that would be great. I guess on that, that would be very helpful, like just on the actual data, maybe that would be very nice. Then the last follow-up question I had for now is on the discounting. Have you seen any material changes to the discounting in Q2 so far?