Translation: Original published in Finnish on 5/6/2026 at 8:12 pm EEST.

Sampo's Q1 result was operationally excellent, even though the reported result was weak due to subdued investment income. We have made small upward revisions to our estimates and expect strong earnings growth to continue. The stock's valuation is tight, but the strong earnings growth outlook and stable dividend stream provide a sufficient expected return. We reiterate our EUR 10.0 target price with an Accumulate recommendation.

An excellent start to the year

Sampo's insurance revenue grew better than expected by 8%, driven by Nordic personal customers. Gross written premium growth slowed to 2% on a comparable basis due to the tight competitive situation in the UK and volume pressure from large customers. The Q1 underwriting result was 368 MEUR (Q1'25: 336 MEUR), clearly exceeding both our and market expectations due to favorable weather conditions and fewer large claims than anticipated. The combined ratio was 84.4%, which is an excellent performance. Profit before taxes was only 28 MEUR, as the decline in Noba's share price and the weakness of fixed income investments weighed on investment income. Earnings landed well below consensus, but in our view, this is because some analysts in the consensus had forgotten to account for the decline in Noba's share price.  Overall, the Q1 result was operationally very good.

Sampo also updated its 2026 guidance upwards for both growth and earnings. Further, the company announced that it will launch a 350 MEUR share buyback program, which is larger than we expected, but this is purely a matter of timing, and we still expect around 600 MEUR in buybacks for the full year. The company also stated that it is able to cover the effects of the Danish occupational accident insurance court ruling from existing reserves. This was a clear positive surprise, as we had expected a clear negative impact on Q2 earnings. Moreover, Topdanmark synergies are materializing faster than the company previously expected, and we believe the company will further raise its final target of 140 MEUR.

Earnings growth picture remains positive

We have made small upward adjustments to our estimates after Q1. We expect Sampo to be able to grow its operational EPS by approximately 10% on average between 2026 and 2029. The main driver is naturally the underwriting result, which is supported by growth and Topdanmark synergies. The remainder of the earnings growth comes from the reduced share count due to share repurchases. Overall, Sampo's earnings growth is currently on a very strong footing. The company is growing at a good pace on the back of its strong digital capabilities, profitability is at an excellent level, and Topdanmark synergies are materializing rapidly. As usual, profit distribution will remain generous, and the ordinary dividend will be supplemented by significant share buybacks annually.

Earnings growth keeps the expected return sufficient

We believe it is justified to price Sampo in line with high-quality Nordic insurance peers (P/E 16-18x). Based on actual earnings, we believe that Sampo's share is fully priced, with no room for multiples to rise (P/E ~18x). Consequently, Sampo's expected return must come entirely from earnings growth and dividends. We forecast an average operational EPS growth of around 10% over the next three years. In addition, investors will receive a growing dividend yield of 4%. All in all, we believe that Sampo's share is correctly priced at its current level, but the attractive earnings growth outlook, combined with steadily growing dividends, offers a sufficient expected return. While the company's earnings outlook for the coming years is undeniably very good, the current valuation sets the bar high and leaves no room for error.