Nordics’ pure-play P&C insurer Sampo mulls demerger to reduce market risk

Sampo, the “largest” and most diversified pure-play P&C insurer in the Nordics by premium income, is seeking a partial demerger of the group in a bid to improve its capital efficiency and reduce market risk.

Following a strategic review, the board of directors of Sampo have proposed a partial demerger of the group to separate its wholly-owned financial services subsidiary Mandatum from its property and casualty business.

Management believes the demerger would create a “leading pure-play Nordic P&C insurer capable of delivering high and stable returns on capital”, and offer independence to Mandatum. The demerger process, established in Finland, provides a financially efficient means of delivering the separation in one step, said Björn Wahlroos, chair of the board.

Sampo said its strategic focus is firmly on P&C insurance, but the board sees “limited room” to commit to support this within the current group dynamic.

Sampo’s P&C business is primarily focused on retail clients and SMEs, which accounted for 89% of its total P&C insurance premiums in 2022. The company generated €8 billion in premiums in 2022.

Mandatum has a legacy portfolio of with-profits policies that has been in run-off for over a decade. For the financial years 2020 – 2022, Mandatum returned €500 million of capital to Sampo.

If implemented after the group’s annual general meeting in May, Sampo expects the demerger to generate potential capital efficiency that would drive a reduction in its exposure to market risk through a fall in the group’s exposure to risk assets and with-profit insurance liabilities, supporting a reduction in the volatility of earnings and capital. With reduced exposure to market stress events, Sampo could be able to operate with lower financial buffers.

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