Translation: Original published in Finnish on 1/26/2026 at 8:00 pm EET.

We believe the scale of Sampo's recent share price decline is unwarranted, and as a result of the lower share price, the stock's expected return has risen to just about a sufficient level. We raise our recommendation to Accumulate (was Reduce) and reiterate our EUR 10.0 target price. We will return to Q4 expectations in more detail in a separate comment early next week.

Share price decline without justification

Sampo's stock has recently fallen along with other Nordic P&C insurers. We have not found any other explanation for the decline than the 50% insurance premium discount announced by the US property and casualty insurer Lemonade for drivers using Tesla's Full Self-Driving (FSD) system. While self-driving cars are undeniably a risk for non-life insurers in the very long term, we believe the share price reaction is overdone. We note that the widespread adoption of self-driving cars in Europe is still a long way off (due to regulation and a slowly renewing car fleet). Furthermore, we do not believe it is self-evident that wider use of FSD would even be a bad thing for a company specializing in vehicle insurance from a long-term profitability perspective.

Earnings outlook remains strong

We have made many changes to our estimates ahead of the Q4 results. We will return to Q4 expectations in more detail in our pre-comment early next week and will focus here only on annual changes. Our 2025 estimates have risen significantly, as Noba's share price has continued to climb, and Sampo will record strong investment income from it in Q4.  In addition, due to the favorable development of the capital market, other investment income is also at a strong level. The Q4 underwriting result will be under pressure due to Q4 storms, which will weaken the operational EPS for the full year, even though the reported EPS will increase by 12% year-on-year.

We note that Sampo pays its dividends based on operational EPS, and as a result, our dividend forecasts for the coming years have decreased by 4-5%. We expect the dividend to grow steadily, with the payout ratio close to the targeted minimum of 70%. The total profit distribution is significantly supported by share buybacks, which we still expect to be around 600 MEUR/year. The key drivers for share buybacks are the sales of Noba and Nexa, as well as more efficient use of capital.

For the coming years, our forecasts have decreased by a few percentage points due to changes we made purely to the modeling of investment income. The changes are marginal, and we still expect strong growth in underwriting profit (2026-2028 +7% p.a.). Operational EPS growth is approximately 10% p.a., supported by strong share buybacks in addition to operational earnings growth.

The share price decline makes the expected return just barely sufficient

We continue to consider P/E ratios of around 16-17x to be an acceptable valuation level for Sampo, which is in line with the historical levels of its key peers. As a result of the strong earnings growth we forecast for the coming years, the valuation multiples are within our accepted valuation range. The valuation levels are by no means cheap, but on the other hand, we believe they are justified given Sampo's excellent performance and strong earnings outlook. Compared to its key peers, Gjensidige and Tryg, Sampo is priced quite well in line. The dividend will be at 4-5% for the next few years, and considering share buybacks, the level rises to 5-6%. Overall, we see the stock as offering just enough expected return for a positive recommendation. Our dividend discount model is above the current share price, supporting our view of the stock's sufficient return potential.