Sampo’s Profit Decline Narrowed as Underwriting Strength Outshines Market Volatility

Finnish insurer Sampo Group reported a narrower-than-expected 17% year-on-year drop in net profit for Q1 2025, driven by robust underwriting performance that offset softer investment returns. The results highlight the insurer’s operational resilience in a challenging macroeconomic environment, fueled by disciplined pricing, strategic acquisitions, and improving customer retention.

Underwriting Excellence Powers Resilience

The core of Sampo’s results lies in its underwriting division, where the underwriting result surged 29% to €336 million, lifting the group’s combined ratio to 84.6%—a 2.5-percentage-point improvement over last year. This metric, critical to insurers, reflects cost discipline and risk management. Key segments like Private Nordic and Private UK delivered standout performance:

• Private Nordic saw a combined ratio of 83.8%, with 20% growth in digital sales and retention rates exceeding 89%. Norway’s GWP jumped 17%, underscoring regional momentum.
• Private UK improved its combined ratio to 88.7%, with live policies surpassing 4 million—a 17% increase—thanks to growth in home and telematics insurance.

Investment Headwinds, But Balance Sheet Remains Strong

While underwriting shone, Sampo’s net financial result fell 62% to €101 million due to mark-to-market losses in equities, which dragged on overall profitability. However, the group’s balance sheet remains a fortress: its Solvency II ratio rose to 180%, and financial leverage dipped to 25.8%, bolstering confidence in its ability to weather market swings.

Synergies and Growth on the Horizon

The acquisition of Danish insurer Topdanmark is proving transformative. Sampo now expects synergies of €140 million (pre-tax) by 2028, up from €95 million, driven by IT integration and operational efficiencies. This bodes well for future margin expansion.

CEO Torbjörn Magnusson emphasized the “strong start to the year” and reaffirmed Sampo’s targets: a combined ratio below 85% annually and 7%+ annual operating EPS growth through 2026. The group also plans a share buyback program in 2025, signaling confidence in its capital position.

Outlook: Underwriting Gains to Drive Recovery

Sampo has raised its 2025 underwriting result forecast to €1.4–1.5 billion, a 4–9% increase over previous guidance. With insurance revenue now projected to grow 5–9% to €8.8–9.1 billion, the insurer is poised to capitalize on its pricing power and digital expansion.

Conclusion

Sampo’s Q1 results reveal a company thriving in two dimensions: operational excellence and strategic execution. While investment headwinds from equities remain a concern, the insurer’s underwriting prowess and balance sheet strength position it to outperform peers. With synergies from Topdanmark accelerating and a customer base growing through digital channels, Sampo is well-equipped to deliver on its 7%+ EPS growth targets.

Investors should monitor Sampo’s ability to sustain its underwriting margins amid potential economic slowdowns, but the data is clear: the insurer’s fundamentals are robust. As Magnusson noted, this is “a stable, operationally excellent asset”—a compelling case for long-term investors seeking resilience in a volatile market.