Elliott Advisors (UK) Limited (Elliott or we), which advises funds that as at the date of this release collectively hold investments equivalent to more than 3% of the share capital of Sampo Oyj (Sampo or the Company), welcomes Sampos decision to begin the disposal of its investment in Nordea Bank Abp (Nordea). Elliott believes this announcement will help to highlight the value of Sampos insurance assets, particularly IF P&C, and marks a positive first step towards Sampo making the rapid structural simplifications necessary to re-establish its reputation among shareholders. Elliott believes that a value-creation plan that transforms Sampo into a pure-play insurance company would provide much needed focus and strategic clarity for Sampo, while unlocking in excess of EUR 7 billion in value for shareholders.
Elliotts investment in Sampo reflects our conviction in the intrinsic value of IF P&C, which represents the majority of Sampos value. In our view, Sampos management team has built the best underwriter in the most attractive P&C insurance market in Europe, a remarkable achievement that reflects the track record of Sampos current CEO and CFO, both of whom led IF P&C for the past two decades. As a result of its sustainable competitive advantages, IF P&C stands head and shoulders above its insurance peers in terms of COR outperformance and stability, along with attractive growth opportunities, all of which have enabled the company to generate stable, growing dividends. In addition to IF P&C, Sampos portfolio of insurance companies includes stakes in Topdanmark AS, Mandatum Life Insurance Co Ltd and the recently announced acquisition of Hastings Group Holdings plc. Outside of insurance, Sampo owns minority stakes in several private equity investments and a significant stake in Nordea, which has materially outperformed the broader banking market over the past decade.
However, Sampos structural complexity and a lack of clarity in its longer-term strategic narrative have contributed to a profound and persistent disconnect between the Companys intrinsic strengths and its market valuation over the past two years. This significant share price underperformance has not been operationally driven, but rather the result of growing divergence between the performance of the wider insurance and banking sectors. Sampos share price has suffered due to the weak share price performance of Nordea, which has damaged sentiment in Sampo and has caused a substantial de-rating of Sampos insurance assets, which have seen their P/E multiple vs. peers reduce by ~8x since 2017.
Elliott believes that reconstructing Sampos equity story now, through full-scale structural simplification, is necessary to allow the market to appropriately value the Companys industry-leading insurance assets. This pathway would entail the full separation of Sampos investment in Nordea and divestment of Sampos various private equity investments. A more coherent corporate structure would allow Sampos talented management team to provide more focused stewardship of its different assets and alleviate investor uncertainty surrounding Sampos strategy. Elliott believes these sensible measures could create in excess of EUR 7 billion of value, thereby restoring market confidence and reinforcing managements reputation for delivering value-creating outcomes. In Elliotts view, yesterdays announcement is a first step on the path to creating more than 35% upside for Sampo shareholders, underscoring the importance of executing these actions expeditiously.
We look forward to Sampos continued transformation and to its February 2021 Capital Markets Day. To provide further details on how Sampo can build upon yesterdays announcement, Elliott is enclosing a presentation with this press release.
Elliott Management Corporation manages approximately $41 billion of assets. Its flagship fund, Elliott Associates, L.P., was founded in 1977, making it one of the oldest funds of its kind under continuous management. The Elliott funds investors include pension plans, sovereign wealth funds, endowments, foundations, funds-of-funds, and employees of the firm. Elliott Advisors (UK) Limited is an affiliate of Elliott Management Corporation.
Elliott intends to reviews its investments in the company on a continuing basis and depending upon various factors, including without limitation, the companys financial position and strategic direction, the outcome of any discussions with the company, overall market conditions, other investment opportunities available to Elliott Management, and the availability of company securities at prices that would make the purchase or sale of company securities desirable, Elliott may from time to time (in the open market or in private transactions, including since the inception of Elliott position) buy, sell, cover, hedge or otherwise change the form or substance of any of its investments (including company securities) to any degree in any manner permitted by law and expressly disclaims any obligation to notify others of any such changes. Elliott also reserves the right to take any actions with respect to its investments in the company as it may deem appropriate.
Sarah Rajani CFA
Elliott Advisors (UK) Limited
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