Sampo Oyj

OMXH:SAMPO

Earnings Call Analysis

Sampo Group Reports Strong Q3 with 20% Profit Growth and Strategic Acquisitions

In its third quarter, Sampo Group demonstrated robust performance with a 20% increase in profit before taxes, driven by strong underwriting results, up 8% year-to-date. The U.K. market saw gross written premiums soar by 27%, while the Nordic region maintained high retention rates at 89%. Notably, the company successfully completed the acquisition of Topdanmark, enhancing their operational efficiency and solidifying their position in the property and casualty sector. With this transformation, Sampo is poised for sustainable growth, as it aims for further cost ratio improvements despite investments in digital capabilities.

Strong Underwriting Performance

In the latest earnings call, Torbjorn Magnusson, Group CEO of Sampo, highlighted that the company experienced a robust performance in the third quarter. The year-to-date underwriting result increased by 8%, indicating a resilient business model despite challenges like severe weather conditions earlier in the year. The profit before taxes surged by 20%, reflecting Sampo's disciplined strategy in managing growth and risk effectively.

Growth in the U.K. Market

Sampo's operations in the U.K. demonstrated impressive growth, with gross written premiums soaring by 27%. This growth was supported by pricing adjustments taken in 2023. Additionally, the company increased its live customer policies by 11%, culminating in a total of 3.8 million policies. Notably, the underwriting profit in the U.K. skyrocketed by 61%, a significant improvement indicating the successful enhancement of profit margins.

Nordics Performance and Market Dynamics

In the Nordics, Sampo reported sustained strong momentum. The retention rate for private customers remained high at 89%, and the company exceeded its growth targets in online sales, property, and personal insurances. The claims inflation rate decreased to 4%, a positive signal for future profitability metrics. Sampo is on track to meet its cost ratio ambitions for the year while continuing to invest in enhancing its capabilities.

Acquisition of Topdanmark

A significant strategic move was the acquisition of Topdanmark, which Sampo completed in September. This landmark transaction aligns with Sampo's transformation into a pure Property and Casualty (P&C) group. Magnusson expressed enthusiasm about realizing synergies in IT, digitalization, and procurement from this acquisition, which will enhance operational efficiency and customer service. The integration of Topdanmark's proficient staff is expected to strengthen Sampo's market position substantially.

Strategic Positioning for Shareholder Value

With the successful integration of Topdanmark, Sampo is poised to create long-term value for its shareholders. The company is strategically positioned in both the Nordics and the U.K. to capitalize on growth opportunities in the insurance sector, driven by disciplined underwriting and successful market expansion strategies.

Earnings Call Transcript 2024-Q3

[Torbjoern Magnusson, executive]

Good morning. I'm Torbjorn Magnusson, Group CEO of Sampo, and I'm here today to share some highlights from our third quarter results with you. We have delivered yet another strong quarter. Following the robust performance earlier this year, our 9-month underwriting result is up by a strong 8%. This shows our resilience despite the severe winter earlier this year. Profit before taxes rose by 20%, which reflects our disciplined approach to growth and risk management.

Starting with the U.K., we continue to see profitable growth. Gross written premiums grew by 27%, backed not least by the pricing adjustments we made in 2023 already. Live customer policies grew by 11%, reaching 3.8 million. U.K. underwriting profit was up a staggering 61% as we all saw an improvement in the margin.

Moving on to the Nordics. The strong momentum there has continued for us. Retention in private remains high at 89%, and we saw year-on-year growth rates that exceeded targets in online sales, property and personal insurances. We are on track to achieve our cost ratio ambition for the year, despite investing further in our capabilities, as always.

Market dynamics in the Nordics remain stable, but with some peers indicating large price increases in some of our geographies. Meanwhile, claims inflation has trended down to 4%.

Finally, we're, of course, happy to have completed the acquisition of Topdanmark in September. We're now looking forward to realizing the synergies in IT, digitalization and procurement. These will make operations even more efficient and improve our ability to serve our customers. I'm delighted to welcome Topdanmark's very professional staff to Sampo Group and look forward to continuing the integration with the same energy seen so far.

With this transaction, our transformation journey to a pure P&C group is now complete. We're now in a strong position, both in the Nordics and in the U.K. to create long-term value for our shareholders. Thank you.