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 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.
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