Full-year 2024 results – Q&A

Sampo Group sustained strong top-line growth and delivered robust underwriting profit growth in 2024, supported by solid development in all business areas.

Profit before taxes amounted to EUR 1,559 million (1,481) in 2024, including one-off costs of around EUR 150 million related to the Topdanmark integration. Excluding this, profit before taxes would have been EUR 1,709 million. In the fourth quarter, profit before taxes stood at EUR 219 million (368), or EUR 369 million adjusted for the Topdanmark integration one-offs.

Earnings per share came in at EUR 2.25 (2.62), while the operating EPS increased by 13 per cent to EUR 2.33 (2.07). In the fourth quarter, reported EPS amounted to EUR 0.31 (0.76) and operating EPS to EUR 0.65 (0.42).

The Group combined ratio was 84.3 per cent (84.6) in 2024 and 83.4 per cent (85.5) in the fourth quarter.

In its outlook for 2025, Sampo expects the deliver insurance revenue of EUR 8.7 - 9.0 billion, representing growth of 4 - 7 per cent, and an underwriting result of EUR 1,350 - 1,450 million, implying an increase of 3 - 10 per cent. The outlook is consistent with Sampo’s financial targets of achieving a combined ratio below 85 per cent annually and operating EPS growth of more than 7 per cent on average over 2024-2026.

The Group top-line growth came in at 18 per cent on a currency adjusted basis in Q4. What explains such a massive growth in one quarter?

The fourth quarter growth was positively affected by Topdanmark’s acquisition of Oona Health as well as a change of inception date for a small group of large industrial contracts from the third quarter to the fourth quarter. Excluding these items, the currency adjusted top-line growth was 10 per cent, which is still a strong growth rate for organic development.

The growth was driven by a particularly robust development in Private, which grew 8.0 per cent on a currency adjusted basis, or nearly 10 per cent excluding the Swedish mobility business, which continued to be affected by weak new car sales. Sampo’s Nordic growth areas, such as personal insurance, private property and digital sales, all contributed to growth in the fourth quarter.

Topdanmark also had a strong quarter with organic growth accelerating to 11 per cent. The reported GWP growth of 41 per cent was driven by the acquisition of Oona Health, which generates most of its annual premiums in the fourth quarter. Oona Health has been included in Topdanmark’s results from 1 December 2023.

Our UK operations delivered solid top-line growth even though motor insurance market prices continued to ease during the quarter. Gross written premiums increased by 14 per cent in local currency basis, supported by higher average premiums and growth in live customer policies. In total, we added over 400,000 policies in 2024, of which 84,000 during Q4.

How did Sampo’s underwriting profitability develop in Q4?

The fourth quarter saw fairly normal winter weather, with claims damage caused mainly by localised events such as storms and flooding. This was not the case in the prior year, when winter started early in the Nordics with low temperatures and heavy snowfall. In total, severe weather and large claims had 2.3 percentage points negative effect on the Group combined ratio, down from 4.5 percentage points in the comparison period.

The Group underlying margin development remained positive in Q4, as for the rest of the year. The Group underlying combined ratio improved by 1.4 percentage points, driven by solid development both in the Nordics and in the UK.

As a result of more normal claims environment and positive underlying development, the Group combined ratio improved to 83.4 per cent (85.5). Combined with strong top-line growth, this led to a 28 per cent increase in underwriting result.

How did claims inflation develop in Sampo’s core markets?

Claims inflation remained stable both in the Nordics and in the UK compared to the third quarter.

In the Nordics, the claims inflation stood at around 4 per cent, with moderate development in property, while still somewhat elevated claims inflation in motor. In the UK, the motor claims inflation has slowed to high-single digit levels from around 12 per cent observed during 2023.

Sampo’s net investment income decreased to EUR 70 million from EUR 517 million a year ago. What drove such a big swing?

The big change seen in Q4 was the sum of two opposite drivers: soft market conditions in 2024 and exceptionally favorable market conditions in 2023.

In 2023 both fixed income and equities benefitted from the sharp decline in interest rates during Q4. As a result, over half the full-year net investment income was accumulated in Q4. Meanwhile in 2024, the quarter saw adverse market value movements in both fixed income and Nordic equities, although not as sharp movements as in the prior year.

Looking behind the short-term volatility, interest and dividend income, i.e. the recurring part of our net investment income stood stable at EUR 137 million (137) in Q4.

Sampo’s operating EPS increased by 55 per cent to EUR 0.65, while the reported EPS decreased by 59 per cent to EUR 0.31. What explains the difference?

The decline in the reported EPS was driven by three factors:

1.     The net financial result decreased to EUR 62 million (175), driven by lower net investment income due to adverse market value movements compared to the prior year as explained above.

2.     The Q4 profit included around EUR 150 million (pre-tax) worth of one-off cost related to the Topdanmark integration. Of this, EUR 76 million was allocated to the If segment and EUR 73 million to the Topdanmark segment.

3.     The prior year profit included positive accounting effects of EUR 111 million related to the Mandatum demerger.

The operating EPS is meant to reflect Sampo’s cash generation better than the reported EPS. Hence, it excludes unrealised gains or losses on the asset side and market value movements on the liability side as well as extraordinary items such as the one-off costs related to the Topdanmark integration and accounting effects related to Mandatum demerger in the prior year. The operating EPS growth of 13 per cent was driven by higher underwriting report, while investment returns stood fairly stable over the year. 

Sampo’s Board proposes a regular dividend of EUR 1.70 per share, but no extra dividend, unlike last year. Why is that?

A regular dividend is the core of our capital distribution policy and for that we prioritise reliability and a steady trajectory. The proposed increase to EUR 1.70 per share, or EUR 0.34 adjusted for the share split, represents growth of 6 per cent. In absolute figures, the regular dividend is proposed to be increased to EUR 915 million from EUR 803 million last year. This represents a 14 per cent growth, which is in line with the 14 per cent growth in the operating result.

As we have been communicating, we would like to do a mix of both dividends and buybacks going forward. To complement the regular dividend, we expect to launch a new buyback programme later in 2025, funded by capital generated in 2024 and by potential disposals of our “PE investments”.

Mirko Hurmerinta, IR Manager, Sampo plc

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