Sampo posts two-fold profit jump, but misses forecast

(Reuters) — Finnish insurer Sampo said Thursday that its fourth-quarter profit more than doubled, aided by price hikes, but that it missed market expectations as tough winter weather led to more frequent claims in Nordic countries.

It joins Nordic peers such as Gjensidige and Storebrand in flagging higher claims related to weather conditions, with heavy snowfall and low temperatures that continued into early 2024.

Sampo, which owns Nordic property/casualty insurer If and Britain’s Hastings, and holds a 49% stake in Danish Topdanmark, posted quarterly profit before tax of €368 million ($397 million), compared with €176 million in the year-earlier period.

That missed analysts’ estimate of €385 million, a poll by Vara Research showed.

However, Sampo shares rose 1.8% in early trading, with J.P. Morgan pointing to better-than-expected performance at If and Hastings, which nearly offset weaker results in other units.

“Claims inflation looks to be moderating in both If and Hastings, which, in theory, should be positive for margins going forward,” J.P. Morgan said in a note.

Operational performance in Sampo’s property/casualty business will be a bigger driver of sentiment going forward, after Sampo last year spun off life insurance unit Mandatum to refocus on its non-life offering, the brokerage added.

Sampo’s combined ratio fell 1.4 percentage points to 84.6% in 2023 compared with a year earlier, meeting its target of below 86%. A ratio lower than 100 means an insurer earns more in premiums than it pays out in claims.

“I believe the strong result achieved by the group in 2023, despite a tough claims environment, illustrates our scale, diversification and disciplined underwriting, CEO Torbjorn Magnusson said.

Growth was driven mainly by continued high customer retention, despite rate increases, helped by investments in services and digitalization, the company said.

It proposed a dividend of €1.80 per share for 2023, 3.4% above the €1.74 expected by analysts.