German investment bank Berenberg expects Finnish insurer Sampo to report solid third-quarter premium growth when it publishes results on November 4th, even after a €118 million IT impairment prompted the bank to lower its longer-term earnings forecasts.
In a note to clients, Berenberg said it sees gross written premiums – the total value of policies sold – rising 7.5% in the Nordics, with UK private premiums up 8.7% year over year. The bank also highlighted an 88.5% combined ratio in the UK, a key measure of underwriting profitability. A combined ratio below 100% means premiums are covering claims and expenses, so the figure points to a healthy underwriting business.
Why the profit forecasts were trimmed
But underwriting is only part of the story. Berenberg cut its adjusted operating earnings per share forecasts for 2026-2028 after Sampo pre-announced a €118 million non-operating IT impairment and flagged mark-to-market losses. Those losses stem from higher bond yields, which reduce the paper value of bonds held on the insurer's balance sheet.
Mark-to-market accounting means assets are valued at their current market price rather than their original cost. When interest rates rise, the market value of older bonds typically falls, which can show up as a loss on the income statement even if the insurer has no intention of selling those bonds. For an insurer like Sampo, which holds large bond portfolios to back its insurance liabilities, this can create volatility in reported earnings and return on equity.
Berenberg kept its buy rating and €11.20 price target on Sampo shares. The bank said it does not expect major announcements such as new share buybacks at the results, ahead of Sampo's investor day on November 17th.
What it means for investors
The contrast between strong premium growth and trimmed profit forecasts is a useful reminder that insurers can be writing more business while reported profits swing around when interest rates move. As yields rise, the market value of older bonds usually falls, and under fair-value accounting that can weigh on reported earnings even if the combined ratio stays healthy.
So Berenberg can like the 7.5% Nordic premium growth story while still lowering medium-term earnings after the IT impairment and rate-driven valuation hits. Because the target price stayed flat while earnings expectations fell, the case for the stock now rests more on how investors price that volatility – either accepting a higher valuation multiple or believing earnings will recover later.
That puts extra weight on Sampo's messaging at the November 4th results and the November 17th investor day. Investors will be listening not just for growth numbers, but for how the company plans to deliver stable profits in a higher-yield world.
For everyday investors, the key takeaway is that an insurer's reported profit can be noisy. A single impairment charge or a swing in bond values can obscure the underlying health of the insurance business. Looking at metrics like premium growth and the combined ratio can give a clearer picture of how the core operation is performing.
Berenberg's stance also highlights that analysts often separate one-off items from ongoing operations. The IT impairment is a non-operating charge, meaning it is not part of the day-to-day insurance business. Similarly, mark-to-market losses on bonds are paper losses that may reverse if yields fall or if the bonds are held to maturity.
Still, the fact that Berenberg trimmed its 2026-2028 earnings forecasts suggests the bank sees some lasting impact from the IT write-down and the higher-yield environment. The unchanged price target implies the bank believes the stock can still deliver returns, but the path may be bumpier than previously expected.
Investors will likely watch Sampo's results on November 4th for confirmation of the premium growth trend and for any guidance on how the company plans to manage its investment portfolio in a period of elevated bond yields. The investor day on November 17th could provide more detail on strategy, capital returns, and how management views the balance between growth and stability.
For those following the broader European insurance sector, Sampo's situation is not unique. Many insurers are grappling with the same forces: rising premiums in a hardening market, but also mark-to-market volatility from higher interest rates. How they communicate that trade-off will be a recurring theme in the coming quarters.
