Sampo Oyj (SAXPF) Q2 2025 Earnings Call Highlights: Strong Underwriting Profits and New Share ...

Yahoo

07-08-2025

Underwriting Profits: Increased by 21%.
Premium Growth: 8% increase.
Operating EPS: Grew by 16% to EUR 0.14 per share.
Share Buyback Program: New EUR 200 million program announced.
Gross Written Premium (Private Nordic): 9% increase.
Digital Sales (Commercial): 30% increase.
Top Line Growth (Commercial): 6% growth.
Combined Ratios: At target levels or better.
Customer Growth (Hastings): Added 360,000 new policies.
Underwriting Result (Hastings): Up 40% in the first half.
Topdanmark Synergies: Target synergies of EUR 24 million for the year.
Underwriting Results Outlook (2025): Raised by EUR 25 million, representing 8% to 16% growth.
Warning! GuruFocus has detected 8 Warning Signs with OHEL:BOREO.
Release Date: August 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Sampo Oyj (SAXPF) reported a 21% increase in underwriting profits, driven by an 8% growth in premiums and improved large claims outcomes.
Operating EPS grew by 16% to EUR 0.14 per share, despite an increased share count.
The company announced a new EUR 200 million share buyback program, indicating strong financial health.
Sampo Oyj (SAXPF) achieved a 9% gross written premium increase in its Private Nordic business, supported by improving customer retention rates and solid growth in digital sales.
The company has successfully integrated Topdanmark, with expected synergies of EUR 24 million for the year, mainly appearing in the second half.
Negative Points
The Nordic Industrial division is not growing significantly more than GDP, despite derisking efforts.
The UK market has stabilized, leading to a decrease in demand for quotes, which may impact future growth.
The expense ratio in the UK ticked up slightly due to acquisition expenses, indicating potential cost pressures.
Sampo Oyj (SAXPF) has lower prior year gains this quarter compared to the same period last year, impacting profitability.
The reinvestment yield is slightly lower than the running yield, which could pressure future investment income.
Q & A Highlights
Q: Can you provide insights on the premium growth in the private portfolio, especially regarding the hardening market in Norway? A: The Norwegian market has been hardening for a while and seems to have peaked, but pricing remains higher compared to other countries. In Denmark, we have a record high indexation, and in Sweden, premium increases are rising slightly. Overall, profitability is excellent across the Nordic markets. The derisking in the industrial portfolio was completed as expected, focusing on reducing capacity in more loss-prone industries, which aligns with our plans.
Q: How is the underlying profitability in the Nordic commercial sector, and what lines have been particularly profitable? A: The commercial sector benefited from benign weather, better-than-planned large claims outcomes, and repricing in the health insurance portfolio. These factors contributed to an excellent combined ratio in the commercial book.
Q: Can you discuss the expense ratio in the UK and how it might develop as top-line growth normalizes? A: We aim to improve the expense ratio in the UK, similar to the Nordics. Excluding acquisition costs, the UK cost ratio has improved. If acquisition costs were at last year's level, the group cost ratio would decrease by about 20 basis points.
Q: What is the outlook for investment income given the current reinvestment yield trends? A: Our running yields have been stable due to active management when mark-to-market yields were higher. Although the reinvestment yield is slightly lower, the impact on running yield is minimal. We are integrating the Topdanmark portfolio into our fixed income strategy, which will support the running yield without significantly increasing credit risk.
Q: How does the derisking in the industrial portfolio affect your large claims budget and underlying risk ratio? A: The derisking initiative, focused on the property book, aims to reduce volatility rather than improve profitability. It should lead to less volatility in large claims, but the budget remains unchanged. The underlying risk ratio improvement is not significant for large corporate accounts.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.