ALM. Brand A/S

CSE:ALMB

Earnings Call Analysis

Alm. Brand Q4 Results and 2024 Outlook

Alm. Brand's 2023 was challenged by high weather claims at 3.8%, peaking at 7.8% in Q4 due to storms, but Personal Lines saw 5% YOY growth. A strategic review of the thriving Energy business with a 72% combined ratio is underway. Dividends and buybacks total a record DKK 1.1 billion, with a 98% payout ratio. The Q4 insurance service result dipped slightly with weather mitigated by improved claims and investment gains. Synergies are on track, aiding a 2024 technical result guidance of DKK 1.4-1.6 billion, supporting continued market share growth and premium adjustments to outpace inflation and claims costs.

Company Performance Overview

During the earnings call, Rasmus Werner Nielsen presented an overview of the company's performance in the last quarter. One of the noticeable trends was the higher weather claims which reached 3.8% for the year, spiking to 7.8% in Q4 compared to the usual 2-3%. Despite challenging weather conditions affecting claims, the Personal Lines grew by 5% year-on-year, attributed to robust partnerships leading to market share gains. However, Commercial Lines growth was more subdued due to project volatility and a tougher stance on price increases.

Financial Highlights

Financially, the company had a strong insurance service result in Q4, barely below the previous year even with high weather-related claims. Investment results contributed positively, with a strong DKK 140 million partly due to the free portfolio. Nevertheless, special costs increased, influenced by a sector charge and expenses related to FTE reductions announced in November.

Sector-Specific Developments

Looking closer at sector-specific performance, Commercial Lines saw an impressive insurance service result of DKK 227 million in Q4, overcoming the impact of high weather-related claims with a significant drop in underlying claims ratio. The Energy segment also excelled with a combined ratio of under 70%. Personal Lines, however, faced headwinds from increased motor frequency and harsh weather, with technical results below the normal level.

Strategic Movements

Strategic initiatives included the decision to review the Energy business after a strong performance year. Synergies continued to roll in, with significant distribution to shareholders including a proposed dividend of DKK 0.55 per share and buybacks totaling DKK 300 million. The company is also starting to benefit from a past coal cessation move.

Operational Efficiency

Operational efficiency was a key topic, with the insurance revenue seeing a 3% growth split between Commercial and Personal Lines. Premium increases kept pace with inflation in claims repair costs. The company made a proactive effort to cut costs, including a reduction of 105 FTEs in November as part of an effort to improve the expense ratio in Personal Lines.

Investment and Synergy Outlook

On the investment and synergy front, the company expects an investment result of around DKK 250 million, primarily from the free portfolio, and is projecting to harvest DKK 450 million in synergies in 2024. The technical result is guided to be DKK 1.4 billion to DKK 1.6 billion, including expected synergy gains. The company plans to pursue further pricing efforts and expects the cost ratio to be in the range of 17% to 17.5% with the combined ratio between 87% to 89%.

Ownership Structure and Shareholder Considerations

Discussion turned to the ownership structure, particularly the foundation's approach to managing dividends from the Group and their intent to exceed a 50% stake. There appeared to be an undercurrent suggesting a potential re-evaluation of this goal, which may become clearer following their Annual General Meeting scheduled around the end of March. The company's distribution strategy, including buybacks, is designed to weigh the interests of all shareholders, amid ongoing dialogue about the foundation's funding strategies and ownership policies.

Concluding Thoughts

To wrap up, the earnings call highlighted key operational strengths, financial resilience amidst significant weather claims, and strategic initiatives for future growth. The guidance provided indicates a company on a solid footing for the next year with a strong focus on maintaining operational efficiency, capturing market share, and delivering value to its shareholders.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning or good afternoon, and welcome to the Alm. Brand Q4 2023 Interim Financial Statement. My name is Adam, and I will be your operator for today. [Operator Instructions]

I will now hand the floor to Rasmus Werner Nielsen to begin. Sir, please go ahead when you are ready.

[Rasmus Nielsen, executive]

Good morning, and thank you for joining us on our conference call. I'm Rasmus Werner Nielsen. As usual, I have with me today, CFO, Andreas Ruben Madsen; and the Head of our IR team, Mads Thinggaard.

This morning, we published our interim report for the fourth quarter. And as usual, I will walk you through the operating highlights, and then Andreas will comment on the financials.

Let's move to Slide 2. Overall, 2023 ended as a year with relatively high weather claims of 3.8% following an uptick in the second half of '23 and in particular, in Q4, with 7.8% compared to our normal level of 2% to 3% for an average quarter. We saw many cloudbursts in Q4, while the storm, Pia, just before Christmas, took its toll as well and so did the stormy weather linked to the storm surge in October.

Growth in our Personal Lines ended on a high note in Q4 with 5% growth year-on-year. Thanks to our strong partnerships, we are taking a bit of market shares in Personal Lines, while the lower growth in Commercial Lines is linked to project volatility and the acceptance rate related to price increases.

Following a year with an overall balanced development between underlying claims in Personal Lines, facing headwinds due to higher motor frequency and commercial claims having tailwinds due to significant repricing, we ended in Q4 with nice underlying improvements, among others, due to our Marine business, [ 2 things ], the balance in favor of underlying improvements with an unusual strong underlying quarter.

Following a strong '23 for our Energy segment with a combined ratio of 72%, we have decided it's now time to go ahead with the strategic review of our Energy business. Nothing has been set in stone at this point, but we will look through the various scenarios for the segment.

The synergies continue to tick in as planned with the run rate increasing steadily quarter by quarter and our proposed dividend of DKK 0.55 per share and buybacks of DKK 300 million represent a record-high in all distribution of more than DKK 1.1 billion and a payout ratio of 98%. The [ coal ] cessation is also starting now to pay off on our distribution as well.

And now I'll turn to Slide 3 with our financial highlights. The insurance service result in Q4 was just a bit below last year despite the very high weather-related claims of 7.8% and we had a strong investment result of DKK 140 million linked to our free portfolio.

Special cost of DKK 157 million is somewhat higher than last year due to a sector charge for the bankruptcy in Gefion with DKK 28 million expense attach, and we had cost for our FTE reduction announced in November '23 of DKK 61 million.

Going into the details with the insurance service result on Slide 5. Commercial Lines did quite well in Q4 with an insurance service result of DKK 227 million. We had a significant drop of 5% in the underlying claims ratio eating a big part of the elevated weather-related claims.

Q4 was another positive quarter for the Energy segment with a combined ratio below 70%.

Personal Lines was negatively affected by the increase in motor frequency and obviously, the hard Danish weather in Q4. The technical result of DKK 106 million for Personal Lines in Q4 is well under normal level, and we are set to better the effects of higher motor frequency with broad-based price adjustments in 2024.

Now please turn to Slide 6. Insurance revenue grew by 3% in the quarter with a split between Commercial and Personal Lines. In Personal Lines, we are taking market share due to our strong partnerships, while Commercial growth has muted a bit in the quarter, partly due to less support from the Energy segment and normal fluctuations on premiums for our larger clients.

In line with the expectation, the ordinary indexation of the premium level supplemented by selected premium increases has fully compensated for the inflation in claims repair costs this quarter.

Moving on to Slide 7 and the claims ratio. In Q4, claims ratio was up 70 basis points year-on-year in a quarter with higher weather claims, but also much lower large claims than in Q4 last year. The underlying claims ratio improved 180 basis points year-on-year driven by Commercial Lines with a strong support from the development we have seen in recent quarters with large underlying improvements among our largest clients and with an especially good quarter in our Marine business.

Moving to an undiscounted basis, adjusted for our new threshold for large claims, we see a 240 basis point improvement in underlying claims year-on-year. We do not expect the same level of underlying improvement next quarter, but the development does leave us with a quite positive note here at the start of 2024.

Now please turn to Slide 8 and the Personal Lines. I've already touched upon the significant weather effect and higher motor frequency in Q4, but I would also like to address the expense ratio in Personal Lines in Q4, which is too high.

To handle this, we executed on a round of 105 FTE reductions in November. To prepare the expense ratio for our Personal Lines in orders '23 is down with 2 percentage points from '22 on a pro forma basis, but the expense ratio needs to go further down, which the November initiatives should help secure.

Please turn to Slide 9 and the Commercial Lines. Again, I've already touched upon the significant improvements we are seeing in our Commercial Lines. In Q4, we're seeing the underlying improvements from the recent quarters continue and we expect to continue on this journey in 2024 with more profitability initiatives.

The Energy segment has been a strong contributor in '23, beyond what you can expect in a normal year. This also goes for Q4.

Our expense ratio in Commercial Lines is flattish in Q4 year-on-year and a bit down for '23 on a pro forma basis. We are working to reduce it further in '24.

And with these comments, I'll now hand over the word to Andreas, who will walk us through the synergies, investments and our guidance.

[Andreas Madsen, executive]

Thank you, Rasmus. Please turn to Slide 11. We continue to move forward on our various synergy initiatives according to our plans. And this quarter, we realized DKK 75 million, leading to DKK 262 million harvested synergies in 2023, just a bit higher than the DKK 260 million we guided for when we raised our synergy guidance for 2023 back in July.

We have a synergy run rate into 2024 of around DKK 350 million, thus providing us with a solid starting point towards the DKK 450 million of synergies we will harvest in 2024.

And now I move to Slide 12 and the investment result. The investment result was a profit of DKK 140 million, driven by positive return from our free portfolio amid a drop in interest rates in Q4, while the match portfolio delivered a return close to 0 as it is supposed to do.

Overall, I'm quite pleased with the investment result for 2023, which ended well above the DKK 300 million we had in guidance. Even though we focus much more on the insurance services result in the group than the investment result, it is clear that a positive investment outcome like we had this year is a nice add-on to our distributions of dividends and buybacks for the year.

And now finally, please turn to Slide 14 for the outlook for 2024. Our guidance includes a technical result, excluding runoffs, of DKK 1.4 billion to DKK 1.6 billion, including expected synergy gains of a total of DKK 450 million. The guidance also reflects continued pricing efforts in Commercial as well as Personal Lines, while reinsurance costs are flat from 2023.

The cost ratio is expected to be in the range of 17% to 17.5%, and the combined ratio, excluding the runoff result, is expected to be 87% to 89%.

We expect an investment result of around DKK 250 million based on the current returns for the free portfolio and the 0 result for the match portfolio. For other activities, we guide a deficit of around DKK 125 million.

Consequently, the group profit, excluding special costs, is expected to be DKK 1.53 billion to DKK 1.73 billion before tax.

In addition, we guide for special costs in the range of DKK 200 million to DKK 250 million for integration of Codan and with the realization of synergies. And lastly, depreciation on intangible assets is expected to affect the income statement by approximately DKK 360 million.

And with this, I conclude our presentation and hand over the word to our moderator. Thank you.

[Operator]

[Operator Instructions] And our first question today comes from Asbjørn Mørk from Danske Bank.

[Asbjørn Mørk, analyst]

Yes. Congratulations on the solid '23 numbers. I have a couple of questions relating to your Energy business to begin. First of all, if I look at your combined ratio for the full year of '23 and doing the sort of the reverse math here, I guess a combined ratio in the 60s for Q4. I believe you said on previous occasions, at least Andreas, that we should expect some sort of higher claims pattern in Q4, a seasonality pattern, which we obviously did not see in Q4 '23. You also said that the underlying combined ratio for renewables was around 90% back at the Q3 report. I guess with the numbers we see now, that seems to be trending continuously lower.

So I'd like to hear your thoughts on what is actually happening in the renewables business and where you see the underlying trends? That would be my first question. Also on if there's any impact from discounting and if there's any duration impact from higher discounting that we should be aware of to the 360 basis points of discounting you do for the group? That will be the first question.

[Andreas Madsen, executive]

Thanks, Asbjørn, on that. I think -- well, we had a very good quarter also in Q4, as we mentioned, well low, 70 and I think you are fully right that we have -- we would normally actually have an expectation that Q4 tends to be a heavy quarter. There has been historically also some cyclicality to that point. I think that's a very difficult thing with this type of area. We do see some fluctuations even on, let's say, normal trends. So in actuality, we are a bit, let's say, also positively surprised by where [ few fall ] ended up in terms of large claims in the Energy business.

In terms of the underlying improvements, I think we've seen more or less a quite stable trend both within Commercial in general and also specifically within Energy. We expect that to continue stably improving the underlyings within both Commercial and general and in Energy.

And in terms of discounting, I would say that it is -- let's say, it has a higher duration than completely plain vanilla auto, but it's not near the duration of what you would see in terms of, for instance, workers' compensation. So it's still property risk and with moderate duration. So not very heavy in terms of duration.

[Asbjørn Mørk, analyst]

Okay. But I guess the 83% combined ratio for '25, you must be somewhat more confident on that target now than you were 6 quarters ago.

[Andreas Madsen, executive]

Yes. Definitely, I think it's hard to say where we are exactly. I think the last time I was asked the question, I answered that we're probably somewhere around the 90s mark. We're probably now moving into the zone of the 80s combined ratio structurally, but also noting that both Q4 and 2023 has been above what we would expect in an average performance.

But we are very happy with the results we're seeing in the Energy business, and we do feel that it is -- at least it does provide some evidence that what we have been working on is starting to -- we're starting to see the results of that.

[Asbjørn Mørk, analyst]

All right. Then second question from my side. In terms of the process that you say has been initiated to examine alternative scenarios. So basically -- and I guess you're also stating quite clear that you're not -- it's not carved in stone that you'll be selling the business. But just back to Rasmus, you had comment saying on Slide 6 that the Commercial growth was quite limited in Q4, amongst other things, due to renewables. So I guess you're still not willing to grow the business in line with sort of the market opportunities for growth that you see out there.

So just wondering what do you see sort of as a scenario where you would still want to own this business going forward? Is that only a matter of a price? So if you don't get the right price, you will hold it? Or because it seems like you're not willing to grow in line with the market, but it's doing fantastic underwriting, so it should be worth more to somebody else?

[Rasmus Nielsen, executive]

Yes. I comment about that, Asbjørn. I think we are still in the middle of, you can actually say, a turnaround. And the good thing is that the improvements we have made in the Energy business is actually the background that we, et al., are discussing a strategic review of the business.

And within this strategic review, it can move in a -- that's the part of -- that's the deal with the review is that it can move in either direction. It can either move in the direction of there could be a buyer that can bring more out of this asset than we can do. Or it could be that we are moving through the turnaround phase and then we look for more possibilities internal. That is the deal with the strategic review. And where it will end, I think we will have to move around the summer holiday in order to come out with solutions suggestions around that.

[Asbjørn Mørk, analyst]

All right. Fair enough. Last question from my side on your underlying claims ratio trends for the group. If you look at the Commercial segment and adjust for renewables, which obviously had a very good year-over-year impact, I still get to something like more than 300 basis points of improvement to the underlying. And if you look at the group, the 240 basis points that you show and adjust for renewables, it's still 140-basis-points-ish better underlying.

So just trying to get a little bit of sense going into '24 with the renewals you did 1st of Jan, with the reinsurance prices and how they landed and I guess, with the motor claims frequency still being there but maybe being less of a year-over-year headwind going forward, how do you see the underlying claims ratio develop going into '24 -- or during '24?

[Andreas Madsen, executive]

Yes. Let me try to get around those points. I think just one comment on the quarter. I think it is a very strong quarter in terms of underlying development. We do see a particularly strong quarter in Commercial and also, to some extent, at least, let's say, a stagnation in the increases we've seen for Personal Lines compared to the previous quarters. But there are, let's say, some fluctuations in that, that we wouldn't expect to recur, especially within Commercial Marine is probably what's tipping it this quarter towards a full 5% underlying loss ratio improvement.

But even behind that, we have seen in Commercial, a continued good trend through the year. So some of that is definitely structural. And I think the real focus point for us is, obviously, we need -- we're continuing that strategy on Commercial hoping to -- expecting also to further improve that. But I think what we really need to get right into '24 is Personal Lines. And we've set into motion some quite significant measures with pricing, among other things, to secure that. And we expect to begin to see that effect come through the numbers as we progress further and further into 2024.

So at least for now, I think we are somewhat positive. And we also feel that at least from what we're seeing, that claims inflation is starting to bend off also further. So we're in a good place going into '24.

[Operator]

The next question comes from Jakob Brink from Nordea.

[Jakob Brink, analyst]

First one, coming back to the strategic review. You announced now, black and white, in the report. We have obviously talked about it quite a few times in the past where we have been asking questions, but what's the key reason why you now decide to put it black and white in the report, please?

[Rasmus Nielsen, executive]

Yes, I can comment on that. I think we are in this fortunate situation that we have an area where there will be growth in the future. You can just look at around all the big projects that are coming in. Maybe not within the first months, but they will be picking up very soon and will almost boom towards 2030.

So it is, of course, when we have an asset like this, on a segment like this, it is up to us and the Board to give you whether how we should deal with that in the future. And then we are, of course, happy that this turnaround we have worked on for the last years is now coming in. It seems to come in quite good, better than -- much better than expected this year.

So if you take all this in combination, where we are at the moment with the market we are looking into and the size of Alm. Brand Group, as such, I think it's normal that we move into a review phase of how to deal with this asset going forward. And that is what we initiated in Q3 call, and now we are, you can say, stating in black and white that we're actually looking at this.

[Jakob Brink, analyst]

Should we read it then as if this is sort of a formal process now where you will go out and attract some bidders? Or is -- or how is the process now? You mentioned summer for time line?

[Rasmus Nielsen, executive]

I don't think we can get into the exact details, but we will review all the possibilities we have with this asset. And then we go into a more, let's say, strict phase with the way we will choose to do. And everything takes a bit of time getting into the numbers, discussing with the Board and all these things, and then we go into the next phase. Hopefully, before summer.

[Jakob Brink, analyst]

Okay. Sorry, just to ask one more time. But what you're saying is that now it's an internal process with getting the numbers right. And then when you say into next phase, that's the external phase or?

[Rasmus Nielsen, executive]

Yes. If there's going to be an external phase, that could be the next phase.

[Mads Thinggaard, executive]

Jakob, it's Mads. It's simply because now we have taken the decision to move ahead with this strategic review that we mentioned as something that could be -- could come relatively soon when we commented on it at Q3. So now there has simply been taken, I mean, an active decision to make this review. So that is why it's reflected in the report in black and white.

[Jakob Brink, analyst]

Okay. Very clear. Then on the payout for 2023, the dividend payout ratio, if I get it correctly, it's around 70%. And then, of course, it's 98% total payout. Is that the dividend payout ratio we should be looking at going forward, around 70%? And then what is left down to 170%, adjusted for the integration cost, is coming as buybacks?

[Andreas Madsen, executive]

Yes, I can provide some guidance on that, Jakob. I think our thinking about our payout policy is that we will choose to prioritize a steadily increasing dividend per share as we pick up in earnings per share also as we go forward.

So in terms of overall distribution, I don't think it's too far off to say that there will be this main portion coming from dividends. And then when we have the opportunity to pay out above our minimum of 80%, then that would -- that's where the buyback typically comes into play. So I think that's more or less the right thinking.

[Jakob Brink, analyst]

But just exactly on that detail, you said to pay out more than your minimum of 80%, but this quarter, you didn't.

[Andreas Madsen, executive]

I said when the opportunity is to do that.

[Jakob Brink, analyst]

Yes. But for example, now last year, if I'm correct in my estimate, it's around 70% dividend payout ratio. So basically, I guess, if that is the level, you would always be doing some sort of buybacks. Or I'm just trying to get the...

[Mads Thinggaard, executive]

Yes, Mads here. We haven't really looked at it like that. We had a very low dividend last year due to a poor investment result. That is much better this year. So we have a better starting point. Then we have looked at what kind of yield would we like to start with, setting a kind of baseline dividend, which could be allowed to grow for many years ahead. And then the buybacks are a bit of a residual to that.

So what we're aiming for is a steady growth in the dividend from this standpoint at DKK 0.55 per share, and when we have that, then the rest will be buybacks. And also looking to our target in the long run to cover our SCR with 170%.

[Jakob Brink, analyst]

Okay. I get that. Last question. You touched on this in the previous question from Asbjørn around pricing. So you said something about Personal Lines is where you would be doing sort of most initiatives in 2024, expect the biggest improvement, and you said you had put some material things in motion, and you mentioned price, but could you be more specific?

[Andreas Madsen, executive]

I think I'm being quite specific using those words, at least in terms of what direction we are moving. We have set into motion some -- [ both ] in terms of pricing new business. We have adjusted prices on a number of products in Personal Lines. And we're also going through now the motion of adjusting prices for existing customers. And it is -- as we've also talked about earlier, we're not -- even though motor frequency is where our main issue is, we are choosing an approach where the pricing will be impacting other products as well within Personal Lines. So it is a significant activity for us this year. And one of our key focus points is to monitor that and see that we get the right net results from those, yes, initiatives.

[Operator]

[Operator Instructions] And the next question comes from Martin Birk from SEB.

[Martin Birk, analyst]

First, a question on the comments, Rasmus, that you made on your expense ratio in your -- the Private Lines business. Did you say that the pro forma expense ratio would have been 2% lower?

[Mads Thinggaard, executive]

Yes, versus the -- this is Mads from IR, versus the pro forma numbers, we were down with 2%.

[Martin Birk, analyst]

So this redundancy round that you guys announced, that will effectively lower the expense ratio going forward by 200 basis points?

[Mads Thinggaard, executive]

Yes. Yes. No, not by 2 -- what I mean, I think you can do the math on...

[Andreas Madsen, executive]

Maybe I -- Let me try to explain. Sorry to jump in, but pro forma is adhering to 2022. So what we're saying is if you look at the full year '22 with both Codan and [indiscernible] in the numbers, then you see a 2% drop in the Personal Lines expense ratio. So it's not [ taking ] into the effects of, as such, specifically the round of FTE reductions we had, but there will be a positive effect on that also going forward. And we're also hinting that Personal Lines is where we need to do the most work in terms of cost improvements.

[Mads Thinggaard, executive]

I think the comment Rasmus made about the FTE reduction was to secure a further drop in 2024.

[Andreas Madsen, executive]

Exactly. Yes.

[Martin Birk, analyst]

Okay. Okay. All right. And then coming back to matters which we have already discussed, I also see that there are quite a few changes going on in your Board business. And given those changes, does that hinder a potential selling process or a strategic review process in your Energy business?

[Rasmus Nielsen, executive]

That is -- it's, of course, a very good question. We don't see any -- I think the changes in the Board has nothing to do with how we, at the moment, are managing business. It's the foundation that are changing how they are managing their Board. They are expanding from 5 to 8 due to the fact that they will stand up -- start initiating a bit more professionalism and how they will treat the dividends they're getting from us. And I think that's a very good idea. And then they have said that they will not only be represented with 3 in the [ bank ] group instead of 5. And that will, of course, initiate there are 3 from the Board, 3 from external parts and then 3 employees. So it will be 9 in the Board going forward, if everything goes as expected at the Annual General Meeting, instead of 12 as it is today. And as such, I don't think it has any -- it will not change, at least I do not expect it will change anything in how we are managing operations in the [ bank ] group.

[Martin Birk, analyst]

Okay. Now that we talk about your owner, I guess, over H2 last year, we were all waiting for an update on their purpose. I have not seen any update so far. I'm not sure if you have seen any. And also going forward, Rasmus, your thoughts on how the FMPA can continue to support Alm. Brand?

[Rasmus Nielsen, executive]

Yes. A few comments about that. I know they have an Annual General Meeting here end of March, and I would expect something would come out after that. But of course, I don't have all the details anymore. So that is one thing.

I think the other thing that we have tried to say for quite a period is that they are changing ways of working in the foundation. They are, of course, looking into what are Tryg doing, what are [indiscernible] and all these other foundations, how are they working, and how can they manage the dividends they are getting from Alm. Brand Group in the future. And of course, we are happy with that development as such, as we have a feeling and an expectation that it will provide some positive things for us in the group going forward on the benefit, of course, of our customers, but in a little bit longer term also for the shareholders.

[Martin Birk, analyst]

Then last question, what are your expectations for how they can be -- they can support Alm. Brand?

[Rasmus Nielsen, executive]

Yes, but I think there are many ways things can be done. First of all, we have to see how much funding -- how much dividend do they give? Do they receive in terms of our balance sheet? That is a little bit different from how Tryg is managing. And then there could be many ways of, you can say, providing funds to Alm. Brand in the future. And as such, I understand that, that is how things are being discussed at the moment. And you can be sure that we, as Alm. Brand group, we have a lot of ideas on how that should be done. But of course, in the end, it's the foundation that decides.

[Martin Birk, analyst]

But, Rasmus, if you want maximum support from your owner, why are you not a 100% dividend stock?

[Rasmus Nielsen, executive]

You need to put a little bit more words on that.

[Martin Birk, analyst]

No. I mean, I guess, of course, if they sell into the share buyback, I assume they're not going to do that, but I mean at the end of the day, what the FMBA needs to support you is hard cash, right? They don't get that through a share buyback; they get that through cash dividends.

So if -- well, I guess I suspect that you have a dream about a customer dividend model. And if you really have that, I'm puzzled to see that you guys are doing share buybacks and not 100% dividend in order to support that.

[Rasmus Nielsen, executive]

We see where you're coming from here, Martin. But I mean, the thing is that regardless of how the foundation they will get their funding, whether they should -- I mean we don't know what they will decide at the end of the day.

[Martin Birk, analyst]

But I guess you have a say in, right?

[Rasmus Nielsen, executive]

No. No, we don't. Actually, they decide for themselves. And we have kind of -- as you also started asking about initially, I mean, we are separating the company from the foundation to an increasing degree. So now, I mean, now we made a change. So they have their own CEO. Now they don't -- I mean, with the changes they have proposed, they don't control the Board anymore, but we don't have a link to them. So they are quite independent of the company. So we will have to see what kind of decision they make and, of course, they could get cash by getting a dividend, they could also get it by looking at the number of shares. We don't really know that. But the thing is that we believe our share price is valued quite low in the market. So we think it's the right decision for all of our shareholders to have share buybacks as a component of the distribution as it is today. So there, we have taken all shareholders into consideration.

[Operator]

We have a follow-up from Asbjørn Mørk from Danske Bank.

[Asbjørn Mørk, analyst]

Basically, just a follow-up to your answer to the previous question. I guess your owners -- majority owners, they still have a desire to go above 50% again, right? So they are, I guess, depending on some sort of buyback to get above 50% or they need to buy in the market. So -- or is there some signal changes here that you have heard of?

[Mads Thinggaard, executive]

No. Asbjørn, we can't really comment on the foundation. I mean they have to make a decision in their own right. You are right that about -- I mean, the most recent communication that they gave to the market was moving above 50% at some point in time again. But as Rasmus was also pointing to, they are looking into their overall ownership policy as far as we understand it. So it's really a question for the foundation and not for the company.

[Asbjørn Mørk, analyst]

No, no. I fully understand, Mads. It was just that back to the previous question, I guess, the real question, the real relevance here is how much the total payout from your company is and not whether it's dividends or buybacks because you have an owner that at least officially wants to increase its ownership too. So I just wanted to make sure that you hadn't heard any or seen any indications that your majority owner had changed their view, but it doesn't seem to be the case.

[Mads Thinggaard, executive]

No. No, we haven't seen that.

[Operator]

We have a follow-up from Martin from SEB.

[Martin Birk, analyst]

Now I'm getting super confused here. I thought that you have said in the past that once you surpass 50% ownership, then you become a [ 5 ] shareholding company, and the FMBA does not want to do that. And that's also partially the reason why we should expect this update which apparently now is due in March. Isn't that correct?

[Rasmus Nielsen, executive]

Martin, you are correct that we have said that. That is not a situation that is very attractive for the foundation. But as such, the official guidance right now is, of course, that they will do want to get above 50%. So I do understand it's a little bit a contradiction, everybody. But I think we have tried to say something between the lines. But what you need to wait a bit upon and what we are waiting a bit upon is that they have their Annual General Meeting and that they have that in the end of -- just before Eastern break. And I do expect that there will be more view on how they will be with their ownership of Alm. Brand group in the future and we reach that date.

[Martin Birk, analyst]

Okay. And if they decide not to pursue a 50% ownership, that needs to be approved by their announced [ and circumstances ], right?

[Rasmus Nielsen, executive]

Yes. I guess they will -- I do expect them to have discussions around that already if needs.

[Operator]

[Operator Instructions] As we have no further questions, I'll hand the call back to the management team for any concluding remarks.

[Rasmus Nielsen, executive]

Yes. Thank you for participating, and thank you for your questions. See you later.

[Operator]

This concludes today's call. Thank you very much for your attendance. You may now disconnect.