Sampo Q3'25: Good performance, but share is correctly priced

Translation: Original published in Finnish on 11/5/2025 at 7:00 pm EET.

Sampo’s Q3 report was excellent in terms of numbers, but operationally, it did not contain any major surprises. Changes to our estimates have remained marginal, and we still expect the company to achieve strong annual earnings growth of around 10% in the coming years. However, we believe the share is fairly valued and thus reiterate our Reduce recommendation and our EUR 10.0 target price.

Strong Q3 report as expected

Sampo's insurance revenue increased by 8% to 2303 MEUR, in line with expectations. As usual, the growth was driven by price increases in the Nordic countries and new sales in the UK. The insurance-technical profitability was excellent, and the combined ratio remained at around the comparison period's level at 83%. As a result, the important underwriting result also increased by 5% to 392 MEUR but fell short of estimates by a small margin. The excellent underwriting result was underpinned by revenue growth, mild weather conditions in the Nordic countries, few large claims and a calm competitive environment. Profit before taxes was an impressive 866 MEUR, as the company recorded significant non-recurring investment returns following NOBA's successful listing. However, investment returns have little impact on the company's value, and operationally, the quarter was largely as expected.

The company also communicated, as expected, that it will launch a new 150 MEUR share buyback program. Additionally, Sampo raised its EPS growth target for the 2024-26 strategy period to >9% (was >7%). This increase came as no surprise, as the company is far ahead of its target at this stage of its strategy period. The company also reiterated its guidance for the current year, as Storm Amy in October will slightly hinder Q4 figures.

No changes to estimates, earnings outlook is strong

We have only made cosmetic changes to our forecasts following the Q3 result. Compared to the market consensus prior to the Q3 report, our earnings forecasts are fully aligned, and we do not expect the consensus to make any significant changes to their forecasts. We expect the company to be able to grow its operational EPS by more than 10% on average between 2024 and 2028. The main driver is, of course, the underwriting result, and the rest comes mainly from the share series, which is reduced by the purchase of own shares. Overall, Sampo's earnings growth is currently on a very strong footing. The company is growing rapidly on the basis of its strong digital capabilities, profitability is at an excellent level and the threat from competitive pressure has dissipated with lower interest rates. Although lower interest rates are putting pressure on the company's investment returns, this is of limited significance as they only account for a quarter of the group's result. As usual, profit distribution will remain generous, and we expect the basic dividend to grow steadily, in line with earnings per share (approximately 10% per year). In addition, the company will buy back its own shares annually using its excess capital, and these share buybacks will play a significant role in profit distribution in the coming years.

The stock is correctly priced

We continue to view P/E multiples of around 16-17x as an acceptable valuation level for Sampo, which is in line with the historical levels of key peers. Due to the brisk earnings growth we forecast for the coming years, valuation multiples are within our acceptable valuation range. The valuation levels are by no means cheap, but on the other hand, we believe they are justified given Sampo's excellent performance and strong earnings outlook. Compared to the main peers Gjensidige and Tryg, Sampo's pricing is quite well in line. The dividend will remain at 4-5% for the next few years, rising to 5-6% if share buybacks are taken into account. Overall, we see Sampo as correctly priced.