J.P. Morgan on Tuesday revised its recommendations on two Nordic insurers, downgrading Tryg A/S to "underweight" from "neutral" and lowering Sampo Plc to "neutral" from "overweight." The broker cited a weak earnings-growth trajectory for Tryg relative to peers and concluded that Sampo's potential for further capital returns has largely been realized.
In its published note, J.P. Morgan cut its price target for Tryg to 140 Danish crowns from 170 crowns, using a December 2027 horizon for the valuation. The bank also trimmed Sampo's target to 10.50 euros from 11.30 euros.
Tryg - earnings momentum and margin ceiling
J.P. Morgan projects Tryg's earnings-per-share (EPS) growth at roughly 3% across 2025-28, notably below the broker's stated sector average of about 7.5%. The firm attributes the weaker outlook to softer top-line momentum and restricted scope for further margin expansion given Tryg's already strong profitability.
The broker described Tryg's revenue trajectory as a "show-me" story after the company missed market expectations through 2026. Management has guided to approximately 3% revenue growth in 2026, following 3.4% growth in the first half of the year.
J.P. Morgan expects higher volumes to be concentrated in lower-margin lines of business, which would exert modest pressure on underlying margins. The broker also modeled a slight deterioration in Tryg's underlying claims ratio for 2027-28. As a result, J.P. Morgan's pre-tax profit forecasts for Tryg are set about 3% and 5% below Bloomberg consensus for 2027 and 2028, respectively.
Sampo - limited capital upside after balance-sheet moves
For Sampo, J.P. Morgan forecasts operating EPS growth near 8.5% over 2026-28, a pace that sits above the sector average and within the 6%-10% growth range targeted by European composite insurers. Despite this relatively stronger growth projection, the broker reduced Sampo's rating because the balance sheet now offers limited incremental capital-return potential.
The note points to optimizations achieved via a Partial Internal Model extension and further sell-downs of legacy holdings. J.P. Morgan highlighted Sampo's remaining 12.9% stake in NOBA, valuing that stake at about 490 million euros as of end-July, and judged that the market value of that holding leaves little additional upside.
Moreover, the broker estimated that roughly 370 million euros of "extraordinary" buybacks are already embedded in 2026-28 consensus assumptions on top of Sampo's 90% total payout policy. Those built-in buybacks reduce the scope for further upside from the current market value of the NOBA stake, which J.P. Morgan equated to about 0.4% of Sampo's market capitalization.
Market backdrop and recent headwinds
Both Tryg and Sampo have lagged year-to-date as investors reassess insurer exposures to evolving risks. The note cited renewed concerns about the potential impact of autonomous vehicles on motor insurance and an unfavorable Danish Supreme Court judgment that lowered the threshold for workers' compensation claims. That court ruling forced Tryg to record a 1.2 billion Danish crown pre-tax charge; Sampo estimated a net impact in the range of 80-160 million euros.
Despite the recent share-price weakness, J.P. Morgan noted that both stocks still trade at roughly a 25% premium to the SXIP index, although that premium sits below each company's five-year average valuation.
Sampo is scheduled to report second-quarter results on August 12 and will lay out its next strategic plan at a Capital Markets Day in November.
Implications
J.P. Morgan said it retains a relative preference for Sampo over Tryg based on the former's stronger earnings-growth outlook at comparable price-to-earnings multiples. The broker's adjustments reflect a mix of near-term earnings skepticism for Tryg and a narrowing of capital upside for Sampo after recent balance-sheet actions and consensus assumptions.
Key points
- J.P. Morgan downgraded Tryg to underweight and cut Sampo to neutral, while lowering price targets to 140 DKK for Tryg (from 170 DKK) and 10.50 euros for Sampo (from 11.30 euros).
- Tryg's EPS growth is forecast at about 3% over 2025-28 versus a sector average of about 7.5%, with pre-tax profit forecasts for 2027-28 about 3% and 5% below Bloomberg consensus.
- Sampo's operating EPS is projected to grow about 8.5% over 2026-28, but J.P. Morgan sees limited remaining capital-return upside after balance-sheet optimizations and expected buybacks.
Risks and uncertainties
- Regulatory and legal outcomes - The Danish Supreme Court ruling reduced the workers' compensation threshold, leading to material one-off charges for insurers and creating uncertainty for future claims experience, particularly in the Danish market.
- Structural market shifts - Concerns about autonomous vehicles could weigh on motor-insurance underwriting and pricing, affecting insurer top lines and profitability in motor-heavy portfolios.
- Capital-return assumptions - For Sampo, a large portion of expected extraordinary buybacks is already priced into consensus estimates, limiting potential upside from existing asset holdings like the NOBA stake.
Note: All figures and forecasts referenced in this article reflect J.P. Morgan's published views as described above.