Insurer Sampo says its Solvency II ratio could fall in 2024-2026

By Marta Frackowiak and Elviira Luoma

(Reuters) - Sampo said its 2024-2026 Solvency II ratio might fall compared to the prior three years, as the Finnish insurer unveiled new medium-term targets ahead of its capital markets day on Wednesday.

The group targets a Solvency II ratio - a measure of insurers' capital strength under European Union rules - of between 150% and 190% over the next three years.

That brings the lower end of the range down from 170% compared to its 2021-2023 target.

It had reported a ratio of 182% for 2023.

Sampo's shares fell 2.8% to 40.33 euros at 1123 GMT. J.P.Morgan said in a note that investors might not "feel comfortable" with a Solvency II ratio of 150% at the bottom of the range.

Citi and J.P.Morgan analysts also pointed to the lack of a share buyback announcement or other comments on timing of excess returns.

Analysts' consensus is expecting about 800 million euros ($870 million) in share buybacks over 2024 and 2025.

Sampo, which mainly operates in the Nordic countries, aims to distribute at least 70% of operating profits as dividends in 2024-2026.

It expects operating earnings per share to grow by more than 7% on average over the same period.

The group said it aims for an improved combined ratio of below 85% annually in 2024-2026. A consensus by Vara Research had forecast a ratio of about 83% for the next two years.

In 2021-2023, Sampo had targeted a combined ratio - a key earnings metric calculated by adding the loss ratio and expense ratio - of below 86%.

A ratio lower than 100 means an insurer earns more in premiums than it pays out in claims.

Sampo, which last year spun off life insurance unit Mandatum to focus on property and casualty insurance, said its "M&A appetite remains limited" to bolt-on transactions in markets where it is already present.

($1 = 0.9195 euros)

(Reporting by Marta Frąckowiak and Elviira Luoma in Gdańsk; editing by Jason Neely, Louise Heavens and Milla Nissi)