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Improved performance in 2023

The total profit for the group improved during the year to EUR 4.2 (0.5) million but did not achieve the target level for either the insurance business or the investment business.

Alandia’s premium income decreased in 2023 due to planned measures such as the transfer of the Statutory accident insurance portfolio in mid-2022, the termination of the cooperation with Marine Underwriting Services in Riga and the ending of the sale of Strike & Delay insurance from the beginning of 2023. A degree of active reduction in risk appetite in transport insurance has led to a fall in premium volume in that product segment. There has been a positive impact on premium income from a continued increase in insurance risks written by the organisation within Hull, P&I and Leisure Boat Insurance. Continued high prices in steel and spare parts, some disruption in supply chains and increased labour costs in the repair shipyards have led to higher repair costs, which will apply pressure to continue to increase premium levels. Premiums were also adjusted in early 2023 in particular.

In the leisure boat segment, rising interest rates during the year have led to noticeably reduced sales of new leisure boats, while the second-hand trade has remained lively. Overall, this has enabled continued growth in the segment although at a more moderate rate than in previous years. The significantly weaker Swedish krona on average has dampened growth translated into euros.

The loss ratio in accordance with IFRS 17 worsened to 100.8% for the year compared with 88.5% last year. The main reason for the increase is the major sinking claim that affected the group in the final days of 2022, where provision for the cost of wreck removal could only be made in early 2023. The loss is compensated by a negative reinsurance ratio of -18.2% (-3.0%). A negative reinsurance ratio means that Alandia received more compensation from our reinsurers than we paid to them in premiums. The group’s own share of claims costs decreased as a result of the continued fall in the overall claims frequency during the year. It is worth noting that during the year the group reports that a number of larger claims costs in commercial shipping as well as leisure boats were related to weather phenomena in the form of unusually strong winds.

The group’s expense ratio rose during the year to 17.3%, compared with 14.6% the previous year. This is a relatively strong increase and is partly due to reduced premium income and partly to increased costs due to new recruitment.

The return on investment assets was 2.6%, compared with 0.7% last year. Higher interest rates have meant we will once again receive a return on the fixed income portfolio. Private equity holdings achieved a good return during the year, as did the holding in Viking Line. The real assets and Hedge funds portfolios have not yielded a return in line with expectations. The holding in Ålandsbanken also performed significantly worse than the stock market in 2023, but over the past few years its overall return has been clearly better than the market.

The group’s solvency position remains very good and, according to Solvency II, amounts to 242% compared with 251% at the end of the previous year. Rating agency S&P Global maintained its stable outlook for Alandia’s A- rating during the year.

In December, Alandia decided to start providing insurance in renewable energy in the form of offshore wind power through a newly launched agency, NIORD. The initiative requires the approval of the FIN-FSA before it can be launched. Alandia also decided at the end of the year to establish a branch in Norway to enable it to conduct insurance distribution in the country using its own staff.

In 2021, Alandia signed up to the UN Principles for Sustainable Insurance (UN PSI). Work to implement these principles is ongoing and the aim is for the implementation to take place in a way that allows the group’s operations to develop and become continuously more sustainable from the perspective of all stakeholders. The annual sustainability report that Alandia committed to publish through the UN PSI was published on the UN website in June 2023.

During 2023, work has begun on the implementation of two major regulatory requirements: the Corporate Sustainability Reporting Directive (CSRD) and the Digital Operational Resilience Act (DORA). The DORA regulation is implemented on 17/01/2024 and Alandia’s first sustainability statement in accordance with CSRD will be made as part of the annual report for the financial year 2025.

On behalf of all Alandia’s staff, I would like to thank our customers, partners, Board members and owners for their continued good cooperation in 2023.

Tony Karlström