Sampo plc

OTC:SAXPF

Earnings Call Analysis

Sampo Group reports strong growth and successful acquisition completion.

Sampo Group delivered a robust third quarter with a 20% rise in profit before taxes, mainly due to an 8% increase in underwriting results. In the U.K., gross written premiums soared by 27%, and underwriting profit jumped 61%. The Nordics also performed well, maintaining an 89% retention rate and witnessing growth in various segments. Claims inflation decreased to 4%. The successful acquisition of Topdanmark in September is expected to yield significant synergies in IT and digitalization, positioning Sampo as a stronger player in the property and casualty market.

Strong Underwriting Performance

In the latest earnings call, Sampo's CEO, Torbjorn Magnusson, reported that the company has delivered a robust third-quarter performance. The underwriting results for the first nine months of the year indicate an increase of 8%, showcasing the company's resilience despite adverse winter conditions earlier this year. Additionally, profit before taxes saw a significant rise of 20%, underscoring Sampo's disciplined approach to growth and risk management.

Profitable Growth in the U.K.

Sampo's operations in the U.K. continue to flourish, with gross written premiums surging by 27%. This growth is fueled by pricing adjustments made earlier this year. Following this, the number of live customer policies rose by 11%, now totaling 3.8 million. The U.K. underwriting profit experienced a remarkable 61% increase, which reflects improvements in profit margins.

Nordic Market Stability and Growth

In the Nordic region, Sampo has maintained its strong momentum, particularly with a high retention rate of 89% in private insurance. Year-on-year growth rates in online sales, property, and personal insurance have exceeded expectations, demonstrating the strength of Sampo's market position. The company remains on track to achieve its cost ratio goals for the year, all while investing in improving its capabilities. Claims inflation in the region has notably trended down to 4%, providing a more favorable environment for profitability.

Acquisition of Topdanmark and Strategic Positioning

A significant highlight from the earnings call was the completion of Sampo's acquisition of Topdanmark in September. This acquisition marks the culmination of Sampo's transformation into a pure Property and Casualty (P&C) group. The CEO expressed optimism about the potential synergies in IT, digitalization, and procurement that will enhance operational efficiency and customer service. The integration of Topdanmark's experienced staff is seen as a valuable addition to Sampo's capabilities moving forward.

Commitment to Long-term Value Creation

With the completion of its transformation journey, Sampo is now strategically positioned to create long-term value for shareholders in both the Nordic and U.K. markets. The company's strong financial performance, robust underwriting results, and expansion efforts through meaningful acquisitions reflect a promising outlook. This strategy not only aims to bolster profitability but also to enhance shareholder returns in the coming years.

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.