Translation: Original published in Finnish on 08/20/2026 at 08:54 am EEST

Mandatum’s investor story relies on two cornerstones: growth in capital-light asset management and the release of balance sheet capital from the with-profit insurance portfolio that is being ramped down. Thanks to these factors, Mandatum's profit distribution will continue to be generous going forward, and the stock's expected return is strongly weighted towards dividend flow. The company's performance is currently extremely impressive, but the current price tag sets the bar too high. We therefore reiterate our Reduce recommendation and EUR 6.2 target price.

The Group's growth strategy relies on asset management

Mandatum's operations consists of capital-light businesses (asset management and life insurance) and investment activities on its own balance sheet (business with with-profit business). In life insurance, Mandatum offers savings and investment, compensation and rewards, pension plans and personal risk insurance services to its private and corporate customers. The company has a particularly strong position in corporate unit-linked pension insurance. In the growing Finnish asset management market, Mandatum focuses primarily on serving institutional clients and wealthy individuals. In addition, the company sells its highly successful interest rate products to international investors.

Mandatum aims for strong growth in capital-light businesses focused on wealth management solutions and to return significant capital to shareholders as the balance sheet investment portfolio gradually shrinks. The significance of investment activities from the company's own balance sheet (net finance income) will decrease year by year, as the company gradually ramps down its with-profit business and has already largely exited from other balance sheet investments. Thanks to strong fee result growth, it should exceed the net finance result for the first time this year.

The contraction of the investment portfolio enables ample profit-sharing

We made no estimate changes in connection with the extensive report. We expect Mandatum's group-level profit to bottom out in 2026. For 2027, we expect a strong earnings jump as investment income normalizes and fee results continue their strong growth, both organically and supported by the Cliens acquisition.

Going forward, we expect the group's earnings to continue growing, but at a more moderate rate. While we anticipate a significant increase in Mandatum's wealth and asset management earnings, the decline in the investment portfolio will impede earnings growth, maintaining a moderate group-level earnings growth rate in our forecasts. However, the earnings mix is continuously improving as the share of wealth and asset management increases.

The flip side of the reduction in the investment portfolio is that profit distribution will remain generous, as Mandatum will return the funds released from this to its shareholders. In the coming years, the focus of dividend distribution will be strongly on returning excess capital, with accumulated earnings playing a smaller role. Consequently, our estimates indicate that the dividend per share will exceed earnings per share by a clear margin.

Expectations for the share are demanding

We have gauged the value of Mandatum primarily using the dividend discount model, as it best reflects the company's high payout ratio and the unwinding of its overcapitalized balance sheet. Our DDM model indicates a value of some EUR 6.2 per share. From a sum-of-the-parts perspective, wealth management trades at a P/E multiple of nearly 30x, which is significantly above its domestic peers and sets a high bar for performance. However, the high dividend yield limits the stock's downside.