Dear readers, Sampo (OTCPK:SAXPF) (OTCPK:SAXPY) is a company I frequently cover as new reports and updates come in. It has transitioned from a bank holding company/insurance mix to a pure-play insurance company. Unfortunately, Sampo has not performed well compared to the S&P500 in both the short-term and long-term. Since my last article, the company has shown negative ROR, despite favorable pricing trends and efforts to improve underwriting quality. Although the company has a strong combined ratio, its high valuation does not justify a conservative upside at this time.
The recent 1Q24 results show a decent performance by Sampo, but severe weather conditions have affected the underwriting results. The company’s various business areas have performed well, with positive underlying trends, stable-to-easing claims inflation, and growth in non-motor insurance. While the company continues to enjoy strong combined ratios and high solvency, its current valuation does not offer a significant upside potential.
Analysts expect Sampo to generate flat or slightly negative earnings, with a potential drop of 8% year-over-year. The company’s current P/E ratio is around 16x, making it relatively expensive compared to peer averages. Despite its strong fundamentals, Sampo’s valuation does not present an attractive opportunity for investment.
Based on the current market conditions and valuation, I maintain a “HOLD” rating on Sampo. I believe that waiting for the share price to drop below €38/share could present a buying opportunity in the future. As an investor, my focus is on buying undervalued companies at a discount and rotating positions based on market conditions.
In conclusion, while Sampo remains a qualitative and fundamentally safe company, its current valuation does not align with my investment goals. I consider it a “HOLD” at this time and will reassess my position if the share price becomes more favorable.
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