Sampo: Initiating Coverage; Sampo Balances Underwriting Quality With Growth

We are initiating coverage of Sampo with exemplary capital allocation, a stable moat trend, a narrow economic moat, and Medium Uncertainty Rating. Our fair value estimate is EUR 40 per share. Sampo generated an average return on equity of 13.5% over the last 10 years. We believe Sampo will earn an average return on equity of 14.5% over the next 10 years. Our stage two forecasts use a 12% average return on equity. We apply a 9% cost of equity in line with what we apply to other personal lines insurance businesses.