Earnings call transcript: Alm. Brand reports strong Q2 2025 growth amid stable stock performance

Alm. Brand A/S reported robust financial performance for Q2 2025, with significant growth in insurance revenue and improved investment income. The company’s stock experienced a slight increase of 0.27% following the earnings call, adding to its impressive 35.2% year-to-date return. According to InvestingPro analysis, the company appears undervalued based on its Fair Value assessment, with strong financial health indicators supporting its market position.

Key Takeaways

• Insurance revenue reached 2.9 billion DKK, with Personal Lines Insurance growing by 11%.
• Synergies are on track to achieve a target of 600 million DKK for the year.
• Upgraded guidance with improved combined ratio and strong investment results.

Company Performance

Alm. Brand demonstrated strong performance in Q2 2025, driven by organic growth and effective cost control measures. The company achieved an 8% organic growth rate, reflecting its successful market strategies and competitive positioning. Notably, Personal Lines Insurance saw an 11% growth, underscoring the company’s focus on revitalizing its insurance offerings and partnerships.

Financial Highlights

• Insurance revenue: 2.9 billion DKK
• Technical result: 20 million DKK
• Investment income: increased by 102 million DKK
• Personal Lines Insurance revenue growth: 11%
• Commercial Lines premium growth: 5.3%

Outlook & Guidance

Alm. Brand has upgraded its insurance service result guidance to a range of 1.55-1.6 billion DKK. The company anticipates an improved combined ratio of 84 and expects an investment result of 250 million DKK. Profit excluding special costs is projected between 1.73 and 1.93 billion DKK, highlighting a positive outlook for the remainder of the year. This optimistic guidance is supported by the company’s strong financial health score of 2.86 (rated as "GOOD" by InvestingPro) and its attractive PEG ratio of 0.13, suggesting efficient growth relative to valuation.

Get exclusive access to Alm. Brand’s comprehensive Pro Research Report, along with 1,400+ other detailed company analyses, by subscribing to InvestingPro.

Executive Commentary

CEO Rasmus Werner Nielsen expressed satisfaction with the company’s growth, stating, "We are very satisfied with that impressive 11% growth." He also emphasized the successful realization of synergies, noting, "Synergies are materializing just as we plan." CFO Andreas reiterated confidence in achieving the synergy target, saying, "We remain confident that the synergy for the full year will add up to DKK 600 million."

Risks and Challenges

• The hardening reinsurance market may impact future profitability.
• Capital solvency and future strategy concerns were raised during the Q&A session.
• Maintaining competitive pricing in a dynamic insurance market poses ongoing challenges.

Q&A

During the earnings call, analysts inquired about Alm. Brand’s handling of a claim in Mexico and its reinsurance mechanisms. Discussions also focused on the composition of growth, including pricing, indexation, and market share, as well as the company’s capital solvency and strategic plans moving forward.

Full transcript - Alm. Brand (ALMB) Q2 2025:

Operator: Hello everyone and welcome to today’s Alm. Brand A/S Q2 2025 conference call. Hello everyone, my name is Seb. Today I’ll be your operator. If you would like to ask a question during the Q&A session, please press 1 on your telephone. I will now hand the floor to Rasmus Werner Nielsen, the CEO. Please begin. Please go ahead.

Rasmus Werner Nielsen, CEO, Alm. Brand A/S: Begin joining us. Please go ahead. Conference call. I am Rasmus Werner Nielsen, thank you. Good morning and thank you for joining us. This morning we published our interim. As usual, I will walk you through. This morning we published our interim and as usual, I will turn to slide 3 highlights and then Andreas. I’m pleased with the overall financial performance and satisfaction with good cost control. Q2 year on year while leading strongly and significant drop in the synergies and year on year while the underlying organic growth 8% in future helped by the price adjust as well. Organic growth of about 8%, insurance revenue growth of 11% in the Personal Lines Insurance, which implies we’re taking quite a few. Revenue growth of 11% with our strong partnerships, which implies we’re taking quite a bit of market share with our strong bank.

Synergies are materializing just as we plan and currently we see good momentum for claims. Synergies are materializing just as we plan, just significantly lower discounting effect as well as cost synergies. We reach an improvement as just significantly lower discounting effect. We reach an improvement. Now I turn to slide 3 with our financial highlights. Insurance revenue grew to above 2. Now turn to slide 3 with our financial highlight. Very satisfactory growth to about DKK 2.9 billion. The technical result is very last year. The technical uses DKK 20 million supported by a strong underlying development and good cost control. We view this as a healthy clear path supported by a strong underlying development. Strategic target of a technical result, we see a clear DKK 25 to 1.2, reaching strategic target of investment income in Q2. Million investment income increases DKK 102 million.

Both slides illustrate that we have had now in nine hours that we have had the Q2 last year being the one quarter above the normal nine out of the last. On a group level, we had major Q2 last year being the 1/4 of the normal level on average during the group level. Of course, we had compared to our normal expected level on average during the last. Despite some volatility, we are in a better overall position in our continuing business. Despite some volatility, divestment, however, we will continue with further divestment. However, we will continue to work with the further adjusted. Now let us continue on slide 7. The group made a technical result of now let us continue $20 million in the quarter, up from $300 million. Made a technical result of $500 million due to sinister $20 million growth in the quarter.

$312 million insurance result from commercial premium was $234 million. Again, Commercial Lines, which was Commercial Lines, affected by very large major $6 million large losses. Commercial Lines was impacted by we had a small increase in to $286 million from lines last year with good underlying improvements countering much, even though the insurance service result underlines the improvement. Quality was much better, even though the insurance service result was just turned to slightly higher this year. The quality was much. Insurance revenue grew strongly by 8.3% compared to 5.2%. Insurance revenue grew strong. I would say overall payment growth very satisfactory with an accelerating strong momentum. I would say also with the excess and the price increases we have Personal Lines, we are clearly considered 11% growth in personal entries, a very bright spot.

We do consider it in Commercial Lines this year, rebound in premium growth to 5.3% despite a drag. Commercial Lines rebound in the premium growth despite a discussion from the future among our largest clients, especially moving on to slide 9 and the claims ratio compensation. The Q2 claims ratio was down and moving on to slide 9 in a quarter with lower but also a bit higher weather-related year and year, but also a bit higher weather-related claims and reinstated premium paid to Australia related to the Mexico case was a drag. Reinstatement premium paid to our underlying claims ratio related to the next year, especially driven by Commercial Lines, the underlying claims range.

For an.

Improvement in the moving to the underlying claims we see Commercial Lines 10,000 around 750 the underlying claims year and year in the underlying lines 18.30 the underlying undiscounted claims here and year wide person return to slide 10 combined ratio in Personal Lines increased to 81% from 82%. The combined ratio in Personal Lines increased last year to 160 basis point run-off gains from 8 compared to run-off gains of 500 due to 160 basis points run-off gains as well as higher with the run-off gains with the 500 basis point cost ratio and under the higher weather related with the related cases the quality is getting much better and underlying loss premium adjustments are helping the cost. The quality is getting much better as we’re seeing motor frequencies helping to cost ratio as well and a continuing increase in the average motor.

In total we see a bit of continuing increase in the overall motor repair cost. In total we see a bit of return to slide 11 and commercial motor change. Commercial Lines we see a significant decrease in the combined. Turn to slide 11 Commercial Lines we see 97.3 in the combined ratio the massive drop due to a combination of emission claims coming down from a very high level last year while the underlying growth coming down from a very high level cost ratio drops synergies and cost initiatives check in cost ratio on the other hand lower discounting effects synergies and causing a significant headwind for the combined on the other hand, lower discounting effects makes synergies investments and with these comments I will now hand over the.

Andreas, CFO or Financial Executive, Alm. Brand A/S: Now please turn to Slide 13 for an update on synergies. Thank you, Asbjørn. We had a nice jump, now please, DKK 151 million. We had a nice jump to DKK 156 million in synergies year on year. Improving our underlying claims ratio implies a full survival of 0.7 percentage points, and our synergies year on year improving our underlying claims ratio year on year is currently quite balanced between the cost side and 0.8 percentage points. We remain confident that the synergy for the full year will add up to DKK 600 million. Now I move to Slide 14 and the investment result. We have stated the investment result was very satisfactory.

Now I move to Slide 14, primarily driven by a positive return from our free portfolio in combination with a profit from our return on bonds and equities by the key drivers and the strong components that we can’t hedge, return on bonds, and finally with the key drivers for the outlook for 2025, which we update. Finally, please turn, we upgrade our guidance for the insurance service result in 2025 to DKK 1.55 billion to DKK 1.6 billion insurance service result in 2025, realized run-off gain DKK 1.22 billion. The cost ratio is unchanged at 17% due to realized run-off gain. The combined ratio excluding the run-off, unchanged in the second half, is expected to be 84. The combined ratio excluding the run-off result, an improvement of 50 basis points, again due to the run-off gains, 4.5 to 86 points.

The guidance includes synergies, DKK 600 million again, and the effect of implemented repricing efforts in Commercial Lines Insurance as well as Personal Lines Insurance include synergies. We upgrade the guidance for the investment result at DKK 250 million, unchanged. Consequently, profit excluding special cost remains DKK 1.73 to DKK 1.93 billion. In addition, before tax for the second half, DKK 175 million, of which DKK 25 million change of our energy and marine business, DKK 175 million depreciation, DKK 95 million relate to affected duration business, DKK 305 million intangible assets to affect the income. I conclude our presentation and hand over the word to our moderator. Thank you. With this, I conclude our presentation.

Operator: If you’d like to ask a question, please press Star one on your telephone keypad. If you’d like to withdraw your question, please press Star one on your telephone keypad. The next question here is from Asbjørn Mørk from Danske Bank. Please go ahead.

First question here is from congratulations on these strong numbers. Just one question. Yes. 2025 guidance mid range and I guess sort of like run-off gains 120 mid range and I guess a little bit short of the 1,850 official target. Is that the reinstated premium from Mexico?

Andreas, CFO or Financial Executive, Alm. Brand A/S: A little bit short of the.

Is that it or is there anything else? I guess the strong development during the first half should have a positive impact. Strong development in the first half of the year.

Yeah, I think I’ll try to add to that. I think you’re right. I would, however, say that we guide the sort of round numbers. I mean, round numbers is in line with an overall expectation of around 1,850.

Operator: Including.

Andreas, CFO or Financial Executive, Alm. Brand A/S: Of the 1,850 including.

On the growth side, first, if you could sort of split the level on the growth private side into what is repricing, what is 11% growth, what is private underlying growth, and what sort of traditional brand pricing is preventing sort of rough splinter line growth in your traditional brand.

I can try to do that. 11%—we’re very, very satisfied with that impressive number. We also believe 11%. We do very satisfied with that. To do it in rough numbers, I would put around 3% coming through. I would put around 3%. I would say around 4% indexation time is from the pricing strategy, and I would say around that. Quite higher this time is also that from this quarter now and have seen the effect quite high this time. Travel insurance for this quarter now, some big, I’ve seen the changes going into repricing to our travel, and that actually accounts for roughly around 2% changes just for that going into, so that’s why we’re high on the pricing, account for 1 around 2 percentage points, and then the rest around, so that’s why we’re high on the pricing. We consider market share gain and then the rest.

A lot of that is also from, but has good momentum in the other brands. A lot of that is still, I would say, it’s true that have a strong momentum from the other brands. Still, I would say it’s true.

On the corporate partners, the Avail cycling, right? That’s very sort of a few years ago. We haven’t heard the Avail cycling since. Is that one of the drivers as well, and we have space for commercial space, or is that one of the drivers as well for your growth? Maybe factor into our models commercial space, or is there sort of a...

Potential here that we should commercialize 5% closer to what we would consider, let’s say, a normal Commercial Lines Insurance growth rate, price, and index. We have normalized, not a lot of market shares being had there, price and index. Not a lot of shares typically does not mostly index numbers. It is still, I would say, something where we specifically have an impact potential. It is still out that much.

To.

Tap into the potential.

How come numbers for now delivering anything, or is that, and how come something?

Rasmus Werner Nielsen, CEO, Alm. Brand A/S: You’ll come back to.

Delivering anything.

Operator: With.

Andreas, CFO or Financial Executive, Alm. Brand A/S: Some brief comments around it, I think.

Operator: Well.

Andreas, CFO or Financial Executive, Alm. Brand A/S: Brief comment around it. I think new Personal Lines Insurance long standing, running now for 25 years and long standing, revitalized that and also brought our new partners, revitalized that, and also, as such, it will take some time for that.

Operator: To.

Andreas, CFO or Financial Executive, Alm. Brand A/S: Starting from basic zero when we took over, something that matters for an amendment.

Okay, on repricing, at the Q1 report we discussed on the call on the actual repricing quite a.

Operator: Lot of.

Discussed on the repricing that you had already quite a lot of initiating repricing that you had already sold the rest of the initiative. Where are we now in terms of how much do we have still on the resting table? Where are we now in terms of how much do we have on the.

Andreas, CFO or Financial Executive, Alm. Brand A/S: On the premiums table we gave some clarity around how the renewals in overall I would say I mean around we gave some and for if you look around total removal we would have around 50% renewal round number one. Ah, and we would have for if you look at the total renewing we’d have around 50% and then we have 1%, we would have 15, sorry, 22, and then we have 30%. That means that right now rough numbers somewhere with around a third of the portfolio. That means that right now we would be putting number somewhere and then you can say okay, but we maybe started a bit before year end which is also true. That might and then you could say we maybe started a bit before that might be putting a head higher in the coming retakes from how we’ve already of our pricing.

So max around a third.

All right. Final question from my side on the capital side, so your solvency comes out on the capital side with the PIM model. Your solvency obviously comes out, I guess you’ll be something like 43, which I guess you’ll be going to bring yourself almost 340 higher next quarter, which I guess, how should we look at that, almost 241, sort of like, should we wait until, how should we, 2025, before you will address the full year 2025, or is that going to be already going to be a Capital Markets Day topic, or is it going to be already the.

PIM model for now, as we’ve already guided, is around DKK 500 million. PIM model for now, as we’ve already guided, is around DKK 500 million. That comes to around 18% or so on solvency. I think that comes all around 18% or so. I think our guidance for now would be that moving factors, you know, we have some Tier 2, and we think our guidance for now would be that sort of the moving FCR comes down. There’s some Tier 2. On the other hand, we also do have some surplus to the SDR, but I think for now we like more or less around a 1. We also do have some surplus factors. Now we like capital production coming out around a one-on-one. We also have ratings like other, like STR release and power rating reduction to factor.

We also have now that other guide to number rating and other factors. You’re right. I think as a part of for now, later we’ll be coming with a full review, also part of the Capital Markets Day later, targets and coming with some sort of a full review, Tier 1, and how we have the sort of targets and the Census Capital Tier 2, sort of just to understand, Andreas, so.

The 18% that would be a story for later solvency. Is that because you’re just to understand, so the 18% will drop or is.

That’s because I just took the 500 and divided by 2,800, or why is it only 18, which is our SCR for now. I just took the 500 calculation. What I said before is, I mean, if you look at it all else equal, as when you could say, and what I said, you should maybe multiply. I mean, if I look at it all else equalize, when you say we should maybe multiply 600, that’s from 1.2. 50% of it disappears because of that 600, that’s from SCR, 50%, and then we have coverage, surplus coverage of 1.7 on the SCR effect. What I’m saying is I think we should guide around the 500 for now, think about 500, because we also have rating and other factors.

What I’m saying is to analyze, either we are able, 500 for now, think about 500, because we also have rating and other factors.

I fully agree. If I take -500 on the same. I fully agree. It was more that on the same own fronts. Okay. So the 18 was the drop.

I was looking at the 18 was the drop. I was looking at it from a different perspective.

No, no.

Okay, got it.

Everyone has to decide what we will do with that. All right, that’s very clear. Thanks a lot, that’s very.

Operator: From Mathias Nielsen at Nordea. Please go ahead.

My first question is a bit around this Mexico case.

Andreas, CFO or Financial Executive, Alm. Brand A/S: So.

My first question is a bit to make divest business and then related like expect from my understanding of reinsurance and then related to this like retention like what you pay on the first has gone up quite a lot because the reinstate meaning that you basically pay. The second meaning that you basically pay. When I look at the second half of this year.

If you have a last question, then.

The mechanism around when I look at words that be just as it is actually mean that you would have a bit more. Would it actually.

Mean that you would, how should we.

Is there also the mechanism about how many times can you reinstate in those, how you can think about it, the mechanism about how many times can you reinstate in those? Think about that comment.

On the Mexico claim. We also mentioned, I can try to actually start with just the only that is claim as we also mentioned, the only energy in the green business, which the only digital and all else is not energy in the green business, that is not a part of the group anymore. Retain looking at that claim specifically, if you look at another part of the reinsurance, looking at that claim, typically we’re actually tapping into a program which is dated, reinsured all the way back to 2000. We’re actually tapping into a historically dated term and all the way back, still we still tap into, that’s the way our tax reinsurance works. Payment and other things, our type of reinsurance, so we are in historic program which is not relevant for us to stay in a mini partner.

Also, it was within historic programs not relevant for us today. Basically, you can say there’s no direct program and the program that we have, so basically you can say there’s no direct connection, but in this program, in the general comment, you’re right, there have been in recent years hardening of the reinsurance market. General comment, you’re right, there has been in recent years with the hardening of these prepayments, reinsurance market for the reinstatement. In the old days, in the old good days, a lot of our programs didn’t have reinstatement. For the reinstatements, where in the old days and the old good days, a lot of our programs didn’t have. Just to restate the actual claim here, and the program is being handled, has no connection. Just to restate, the actual claim here and the program has no business connection to the, that’s very clear.

Thanks a lot for that clarity.

Like.

That’s a done deal, that’s very great. The second, the expense ratio, that’s a done deal, that’s great. I’m a bit curious actually, like.

Operator: Commercial.

Life, I’m a bit curious.

Rasmus Werner Nielsen, CEO, Alm. Brand A/S: Quite dramatically.

Given the feed on the premium group, I’m actually expecting that to be a bit more. Is there any front load variable pay for your bench rate? Is there any front loading? How does that cost you? You sell something like, how is.

Andreas, CFO or Financial Executive, Alm. Brand A/S: The variable pay for your overall, I would say that the BBC has more or less what you would expect on average. I mean, going forward overall, I would say that you would expect, keep in mind also that some of the growth we have when you grow a lot to also roughly the guidance we have, not the mind of pricing some of the market share. When you grow a lot, that’s not that typically also there’s some head up coming from crisis, but because the market shares actually, that’s not that typically also for your headwind in some of the cost ratio instances. You will also, you pay forward pay when we renew, we’ll pay for the partners instances, so it’s not as going forward you can say that this would have a lot of necessarily takeaway from partners we see.

It’s not at the beginning, actually, that tailwind comes out of the tailwind from the growth we see in the beginning from.

From the growth that you saw this quarter, that’s like 1.5 that we were going to see.

I think I’m talking more in broader terms, but at least it’s something that takes some time to materialize. I’m talking more in broader terms with insurance that takes some time to mature by a tight agency where you always have cost of sale with insurance. When you sell, you sell. When you grow a lot, you will have a sale in the quarters you grow. You will have, when you sell, headwind from that. In general, when you grow a lot, you will have a lot also in the quarters.

My last one is a bit coming back to like when I look at the guidance, then you’re also like on the slide. You’re seeing like if you do the math, it’s around at the moment the run-off gain around DKK 100 million times. Why is that? It seems a bit odd to me given that the performance is also like premier groups. A lot of gains in the first half. I think just due to premiums is also. How should we think about it? Is this anything that we should be?

Operator: Worried about.

How should we think about this? Is this anything that we should be worried about?

Andreas, CFO or Financial Executive, Alm. Brand A/S: No, there’s nothing to be worried about. I think, without reading too much into it, as I said, we’ve guided for round numbers. There’s nothing to be worried about, and without reading too much into it in any way, guidance around number you should know where in the balance anyway. I think this would correspond fine with our worried about in the second target. I can also, on the balance and mechanically, but again, I wouldn’t read too much into that target. I can also.

Again, 1850 was based on normalized large scale. 1850 was based on normalized.

To be fair, we were just.

You could say that we were just.

You could say that we had a very different approach here. We’ve tried to be prudent and adding here for now. I wouldn’t read more into a different approach here. We’ve tried to be perfect for now, but I wouldn’t read more into it than that. Perfect.

Operator: Thank you. As a reminder, for any final questions, please press 1 on your telephone keypad. Thank you. As a reminder, for any final questions, please press star 1 on your telephone keypad. We have no further questions on the call. Rasmus, I’ll hand back to you for any closing comments.

Rasmus Werner Nielsen, CEO, Alm. Brand A/S: Thank you.

We have no further questions on the call.

Operator: Rasmus, I’ll hand back to you for any closing comments. Yeah.

Rasmus Werner Nielsen, CEO, Alm. Brand A/S: Thank you all.

Operator: This concludes today’s conference call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.