Sampo announces new financial targets and focuses on creating long-term value from P&C insurance operations
SAMPO PLC INSIDE INFORMATION 24 February 2021 at 10:30 am
Sampo announces new financial targets and focuses on creating long-term value from P&C insurance operations
The Board of Directors of Sampo plc has today decided on Sampo Group’s new financial targets for 2021-2023 and that the holding in Nordea will be materially reduced over the next 18 months.
The financial targets and updated strategic framework will be presented in more detail at Sampo Group’s Capital Markets Day today starting at 11:00 am Finnish time (9:00 am UK time).
Strategy and objectives
Sampo continues its transformation towards a pure insurance group with a focus on high-quality P&C insurance operations, where the Board and the Management see the greatest potential for long-term value creation. To further this strategic agenda, Sampo has three objectives.
First, Sampo’s ambition is to organically grow P&C underwriting profits by a mid-single digit percentage per annum on average from the 2020 level excluding COVID-19 effects. The Group will target a combined ratio below 86 per cent for the period, and its largest operation, If P&C, will target a combined ratio below 85 per cent. The group’s M&A ambition is limited to bolt-on transactions within current markets.
Second, Sampo will further focus the group toward its P&C operations by materially reducing its stake in Nordea over the next 18 months.
Third, the Group will deliver attractive capital returns. Sampo remains committed to paying a dividend of at least 70 per cent of group net profit excluding extraordinary items. For 2020, the Board has proposed a dividend of EUR 1.7 per share, of which EUR 1.6 per share was generated by the insurance operations. Going forward, Sampo will refer to this part of the group dividend as the “insurance dividend”. This element of Sampo’s group dividend will be progressive and grow in line with P&C insurance earnings. The remainder of the group dividend is driven by Nordea’s earnings and dividends.
In addition to its dividend, Sampo commits to maintain a strong but efficient balance sheet and to return any excess capital to shareholders that may emerge as the holdings in financial investments are reduced. The Group will target a Solvency II ratio between 170 and 190 per cent and a financial leverage below 30 per cent.
FINANCIAL TARGETS FOR 2021-2023
Group P&C insurance operations
- Ambition to grow underwriting profits by mid-single digit percentage per annum on average from the 2020 level excluding COVID-19 effects
- Group combined ratio below 86 per cent
- Combined ratio below 85 per cent
- Operating ratio* below 88 per cent
- Calendar year loss ratio** below 76 per cent
*) Calculation formula: (claims + operating expenses + operational D&A)/net revenue excluding investment income
**) Consistent with historical Hastings disclosures, equivalent to If risk ratio.
Group capital management
- Solvency II ratio 170 – 190 per cent.
- Financial leverage* below 30 per cent
- Dividend payout ratio at least 70 per cent of net profit excluding extraordinary items
- Progressive insurance dividend
- Return excess capital to shareholders
*) Calculation formula: financial debt/(financial debt + IFRS equity).
CAPITAL MARKETS DAY
The Capital Markets Day can be followed live at www.sampo.com/cmd. Participants will have an opportunity to ask questions at the Q&A sessions.
A recorded version of the Capital Markets Day presentations will be available later at www.sampo.com.
For more information, please contact:
Head of Investor Relations and Group Communications
tel. +358 10 516 0030
IR & Communications Specialist
tel. +358 10 516 0032
Communications Manager, Media Relations
tel. +358 10 516 0031
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