ALM. Brand A/S Q3 2024 Earnings Call Transcript

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

Question: Asbjorn Mork - Danske Markets - Analyst : Yes. I have a couple of them. If I may start with your underwriting trends. And let's start with the commercial business. So you had a very strong Q1. You had a very weak Q2, and you sort of indicated back then that we should sort of take the average of the two quarters. Now if you look at Q3, you're 320 basis points higher on the underlying claims ratio year-over-year, if you adjust for discounting. I guess it's more like 180 or something like that. So there is an improvement to the sort of second order derivative. But I guess it's still a deterioration. With the things we're seeing right now with the repricing that you're doing, considering that we just had motor claims out for October still up 8% year-over-year. And you're also mentioning the workers' compensation with the, I guess, the regulation eventually will have an impact on that underwriting business. What should we sort of expect for your year-over-year trend for Q4? And what is your expectation for 2025? What have you sort of boiled into your 18, 50 insurance service result target for next year on the underlying in commercial?

Question: Asbjorn Mork - Danske Markets - Analyst : So that was a 1 to 2 percentage point improvement in the underlying claims ratio next year versus '24?

Question: Asbjorn Mork - Danske Markets - Analyst : Okay. So not versus the current trend. So not a flat trend, but more an actual improvement in the underlying claims ratio full year '25 versus full year '24. And then if you... REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00AM, ALMB.CO - Q3 2024 ALM. Brand A/S Earnings Call

Question: Asbjorn Mork - Danske Markets - Analyst : Okay. Fair enough. Then on private, if you do sort of the same math here, private also doing very well. You talked about the growth above market with your partner distribution agreements, with the price initiatives you're also doing in private, what would be sort of the effect for the full year '25, given the starting point is significantly better in '24?

Question: Asbjorn Mork - Danske Markets - Analyst : Okay. Fair enough. If I may turn to synergies, you're obviously doing well on target. But I guess, it was also the low-hanging fruits that you've been harvesting initially. What are sort of the biggest concerns from your side for next year on the sort of the delta and synergies that you need to deliver next year?

Question: Asbjorn Mork - Danske Markets - Analyst : Okay. Then final question from my side. On your capital and capital distribution. So it seems like you have more visibility now on the energy sale. So could you then elaborate a little bit, given the DKK3.7 billion minimum capital return that you have shown earlier. And I guess, given the numbers today, that number is maybe slightly higher, if anything. How should we sort of see you play out over the full year report? How will you sort of initiate the capital distribution? And have you made any sort of plans in terms of how we should expect all that money to come out to shareholders?

Question: Asbjorn Mork - Danske Markets - Analyst : Okay. Now that you mentioned extraordinary items. What about the PIM model approval process with the FSA, any news there?

Question: Asbjorn Mork - Danske Markets - Analyst : But sort of the solvency target for year-end '25, the 170, that still stands, including PIM model, right? So if you get a PIM model approval next year, that amount will come out to shareholders during '25 as well.

Question: Mathias Nielsen - Nordea Markets - Analyst : And also congratulations on the decent results this time. So my first question is on the Personal Lines. In your slide 9, you say like otherwise favorable experience from minor claims in Personal Lines. Could you maybe put a bit more flavor on what that means and how much that deviates from a normalized level?

Question: Mathias Nielsen - Nordea Markets - Analyst : That's very clear. And then also on repricing. Now you talk about the repricing on 1st of October, and then when I look at the claims of the Commercial Lines, it looks like the top line growth is a bit weaker in Q3. Is there anything around the renewal on 1st of October? Is the declines into the renewal that at least at brand -- is that some part of the expectation for the weaker top line development in Q3? Or is there any comments around how that has been received by customers in the start of Q4?

Question: Mathias Nielsen - Nordea Markets - Analyst : Okay. And then is there any on how that has been received like when you did October 1, then do you have any comments on that?

Question: Mathias Nielsen - Nordea Markets - Analyst : Great. And when we look into '25, should we expect the premium growth in '25 to be higher than the premium growth in '24, given that you do so many price hikes?

Question: Mathias Nielsen - Nordea Markets - Analyst : From the whole group, you can split it up if you want to, it'd be even better. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00AM, ALMB.CO - Q3 2024 ALM. Brand A/S Earnings Call

Question: Jan Erik Erik Gjerland - ABG Sundal Collier - Analyst : The first one is to continue on the growth path here. You said that you have won a lot of new banking clients or volume in the banking channel. How would you say the profitability is on that book, the first year, the second year and the third year, if you could shed some light into your profitability improvement during such a trend. Is it so that you should expect that first year to be a little bit less profitable than your back book? Or should we think it's equal profitability as your back book? That's my first question.

Question: Jan Erik Erik Gjerland - ABG Sundal Collier - Analyst : Very good. The second one is, I think it was Mads mentioning a little bit of indexation around 3% as our best guess so far. But then you also talked about price increases on top of it. Is it so that it's 2 percentage points, which we should think about as a potential price hikes in the commercial or in private or in a combination of its 2% on top, which means that it should be potentially higher in commercial and lower in private. If you can shed some more light to that comment.

Question: Jan Erik Erik Gjerland - ABG Sundal Collier - Analyst : Okay. Then finally, on the profitability measures. Is it so that the DKK100 million each is sort of what you still expect for the '25 outcome? And the current year improvement in especially Private Lines then is not part of this DKK100 million. So we still should expect the DKK100 million to come on top of the current sort of improvement? Is that fair? Or is that still that you've taken some of the DKK100 million already in 2024?

Question: Jan Erik Erik Gjerland - ABG Sundal Collier - Analyst : Okay. Very clear. Then on financial, you said, I think, on the return for the running book is the interest rate has come off quite dramatically during the quarter. So how should we think about your sort of running yields in the books? How should we think about your match portfolio versus your free portfolio? If you can shed some more light into those discussions?

Question: Martin Birk - SEB Equities - Analyst : Just a couple of questions from my side. Perhaps starting with the expense ratio. I guess, when we talk to Mads, he has sort of saying that your expense ratio should decline by roughly 1 percentage point year-over-year recent quarter. And what is exactly happening here in Q3 in terms of your expense ratio development?

Question: Martin Birk - SEB Equities - Analyst : Okay. And then perhaps on the FTE reduction that you guys communicated in late October, how will that translate into benefits to the expense ratio already in Q4?

Question: Martin Birk - SEB Equities - Analyst : So what's the monthly support? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00AM, ALMB.CO - Q3 2024 ALM. Brand A/S Earnings Call

Question: Martin Birk - SEB Equities - Analyst : And then perhaps a CEO question here. I guess a three that makes a trend, Rasmus, this is, as far as I know, the third time that you have made around 100 people FTE reduction. Why is that? And is this something that we should expect to be a recurring event every single year?

Question: Martin Birk - SEB Equities - Analyst : But Rasmus, what are you seeing? Are you seeing less natural attrition? Is that because you need these rounds every year? Or has this been part of the plan all along? Or how should we view it?

Question: Martin Birk - SEB Equities - Analyst : So after this, do you think -- do you still sit back to the feeling that you have more to do in FTE, so this is it?

Question: Martin Birk - SEB Equities - Analyst : All right. And then just perhaps a couple of small questions from my side. Andreas on the previous question in regards to your investment results, did you come up with the running yields in your free portfolio?

Question: Martin Birk - SEB Equities - Analyst : Okay. And what's the -- a couple of -- well, a very harsh ending to U.S. hurricane season, what is the latest chatter on reinsurance prices?

Question: Martin Birk - SEB Equities - Analyst : Regarding cat or?

Question: Martin Birk - SEB Equities - Analyst : So what is your gut feeling tells you about the presented increase year-over-year reinsurance cost for Alm. Brand Group?

Question: Martin Birk - SEB Equities - Analyst : And then maybe final question. When you announced your DKK150 million share buyback program, you mentioned front-loading of capital distributions. If you look over the course of October, I know your weekly reporting has been volatile in terms of what has actually been bought back, but you're just shy of DKK10 million per week. And at that pace, you're looking at completing your share buyback programs and well, within the first weeks of December. Why wasn't Q3 and also given where your solvency position, why wasn't Q3 a good quarter to top that up? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00AM, ALMB.CO - Q3 2024 ALM. Brand A/S Earnings Call

Question: Bhavin Rathod - HSBC - Analyst : The first question that I had was just trying to untangle the pricing and volume effect on the premium growth, both for Personal Lines as well as for the Commercial Lines, the 7.7% premium growth we have seen in the Personal Lines. I appreciate if you can say what proportion of that was probably driven by price increases and how much of that was driven by volume increases. And likewise, within the Commercial Lines, the flattish development we have seen, appreciate if you can say how much of that was driven by higher price increases? And what was the volume losses on those premiums?

Question: Bhavin Rathod - HSBC - Analyst : All right. That's very helpful. And then related to that, you've been going quite strongly within the Personal Lines because of this banking partnership and going ahead of the market. Can you just give some colors on the sustainability of the growth going into 2025 in the context of competitive landscape in Denmark? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 10:00AM, ALMB.CO - Q3 2024 ALM. Brand A/S Earnings Call

Question: Bhavin Rathod - HSBC - Analyst : All right. And just one related to the higher claim inflation, high frequency within the Motor segment, can we talk about what's your expectation for the claims inflation going into 2025? Do you see inflation to remain at similar levels? Or do you see some sort of improvement going into next year with respect to frequency as well as with respect to inflation?