Financial targets
Sampo Group’s new financial targets and capital management framework for 2024-2026 were announced at the Capital Markets Day on 6 March 2024.
The new financial targets and capital management framework reflect Sampo’s transformation into a pure P&C insurance group during the previous strategic period and its continued focus on increasing shareholder value by growing underwriting profits and managing capital in a disciplined manner. The Group financial targets are based on detailed operational ambitions.
Financial targets and capital management for 2024-2026
Group financial targets
- Operating EPS growth: >7% (period average)
- Combined ratio: <85% (annual)*
- Deployable capital generation: >EUR 4.5 bn**
*) Target assumes a discount rate benefit of 2 percentage points.
**) Defined as the sum of cumulative operating result and capital optimisation actions in the period. The target was raised from more than 4bn following the completion of the exchange offer for Topdanmark.
Operational ambitions*
- If P&C cost ratio reduction: ~20bps (annual)
- If P&C GWP growth in PI: >7.5% (period average)
- If P&C online reported claims: >70% by 2026
Private
- Customer retention: 89% or higher
- GWP growth in Property: >5% (period average)
- Digital sales: >160 EURm by 2026
Commercial
- GWP growth in SME: >6% (period average)
- Digital sales: 45 EURm by 2026
UK
- Underwriting profit growth: 10-15% (period average)
*) In operational ambitions, Private and Commercial refers to If P&C’s Business Areas, UK to Hastings
Group capital management framework
- Solvency II ratio: 150-190%
- Financial leverage: <30%
- Capital optimization: ≤ EUR 1.2 billion deployable capital
- Stable regular dividend that grows with operating result (payout ratio of at least 70%)
*) defined as own funds released through capital optimisation actions
Calculation formulas
The operating result:
+ net income
- discontinued operations
- non-controlling interests
- unrealised gains or losses
- effects from changes in discount rates
- non-operational amortisations
- non-recurring items
In 2023, operating EPS amounted to EUR 2.07.
Combined ratio:
Claims incurred + operating expenses / insurance revenue, net (including brokerage) x 100%
Solvency II ratio:
Own funds / solvency capital requirement
Financial leverage:
Group financial debt / (Group financial debt + IFRS equity)
Previous targets and capital management framework
Financial targets and capital management framework for 2021-2023 were announced at the Capital Markets Day on 24 February 2021.
Financial targets and outcome for 2021-2023
| Company | Financial target | 2021 | 2022 | 2023 |
|---|---|---|---|---|
| Sampo Group | Mid-single digit underwriting profit growth annually on average* | 19% | 13% | 13% |
| Group combined ratio <86% | 81.4% | 82.1% | 84.6% | |
| If | Mid-single digit underwriting profit growth annually on average* | 15% | 26% | 25% |
| Combined ratio <85% | 81.3% | 80.3% | 83.1% | |
| Cost ratio reduction of 20bps annually on average | -10bps | -30bps | -30bps | |
| Hastings | Operating ratio <88% | 80.3% | 89.7% | 89.8% |
* Excluding reported COVID-19 effects.
Capital management framework and outcome for 2021-2023
| Target | 2021 | 2022 | 2023 |
|---|---|---|---|
| Solvency II ratio: 170-190% | 185% | 210% | 182% |
| Financial leverage: <30% | 28.6% | 23.8% | 25.3% |
| Dividend payout ratio: >70%* | 143% | 108% | 86% |
| Progressive regular dividend** | EUR 1.40 (+8%) | EUR 1.50 (+7%) | EUR 1.60 (+7%) |
| Return excess capital | During the strategic period, Sampo returned EUR 4.4 billion of excess capital to shareholders through extra dividends and buybacks. | ||
*) For 2021 and 2022, based on EPS excluding extraordinary items; for 2023, based on operational result per share.
**) Dividends for 2021 and 2022 adjusted for the partial demerger.
Updated