SFAB.ST — mttssn research

BUY

Conviction: MEDIUM

A profitable Swedish niche non-life insurer (warranty/assistance/travel/A&H/pet, partner-distributed) with a ~90% combined ratio, ROE ~16.4%, solvency 189% and a ~6.7% total dividend yield. On a normalized ROE the Gordon fair value is ~SEK 116 (+15%). The unusual cost structure (very low claims, high acquisition expense) and small scale are the caveats. BUY/accumulate; base SEK 116.

Return on Equity

16.2%

Cost of equity ~9.0%

Price / Book

1.95×

1.95x book; Gordon fair ~2.23x

Fair P/B (Gordon)

2.20×

(ROE−g)/(COE−g); g 3%

Price / Target

SEK 101 → SEK 116

+15% base; BUY

Price / Earnings

12.0×

~12.2x earnings

P / TBV

2.00×

Price / tangible book

Economic Profit

+SEK 66M

Residual income +SEK 66M; ROE ~16.4% vs 9% COE

Equity (book)

SEK 921M

Economic equity incl. SEK 488m safety reserve; solvency 189%

Thesis

Solid Forsakring underwrites niche non-life lines — product/warranty, assistance/roadside, travel, accident & health, pet — distributed via retail/partner channels. FY2025 combined ratio ~90% (88.7% in Q1 2026), ROE ~16.4% (on the correct economic-equity base including the statutory safety reserve), solvency 189%, residual income +SEK 66m over a 9% cost of equity. The combined ratio's shape is unusual — a very low claims ratio (~26%) offset by a high expense ratio (~64%) — reflecting a low-frequency, partner-distributed, commission-heavy model.

It trades at 1.95x book / 2.0x tangible / 12.2x earnings with a ~6.7% total dividend yield (incl. an extra). On a normalized 16.4% ROE the Gordon fair P/B is ~2.23x -> ~SEK 116 (+15%). The caveats are scale and partner-channel concentration, plus a weak Q1 2026 investment quarter (annualized ROE 9.4%) and a 10% YoY net-profit decline. A high-return niche insurer at a modest discount to fair value.

Valuation · residual income (equity frame) & scenarios

Gordon fair P/B = (ROE-g)/(COE-g) with COE 9%, g 3% and a 16.4% ROE -> ~2.23x -> ~SEK 116 (+15%); sensitivity SEK 95-127. Current 1.95x book, 12.2x earnings, ~6.7% total yield.

Base SEK 116 (normalized-ROE Gordon fair value); bull SEK 127 if underwriting + partner growth hold; bear SEK 92 on combined-ratio normalization or partner-channel loss.

Market-implied ROE

14.7%

sustainable ROE the price already demands — vs 16.2% observed

Current → Fair P/B

1.95× → 2.20×

at a sustained 16.2% ROE, K_e 9.0%, g 3%

Excess-return premium

SEK 62 / sh

value above SEK 52.01 book from the +7.2pp ROE−K_e spread

The operating reverse-DCF (NOPAT / invested capital / WACC) does not apply to a balance-sheet business — leverage is the raw material and "net debt" is not meaningful. The equity is valued on residual income: book equity plus the present value of returns above the cost of equity, discounted at K_e; the single-stage lens is the Gordon fair price-to-book, (ROE−g)/(K_e−g). The market prices in a sustainable ROE of 14.7% vs 16.2% currently earned; at a sustained 16.2% ROE the warranted P/B is 2.20× (SEK 114/sh, +13%).

Scenario	24m target	Impl. ROE	Upside	Prob.	Driver
Bull	SEK 127	18%	+25%	35%	Underwriting + partner growth hold
Base	SEK 116	16%	+15%	45%	Normalized-ROE Gordon fair value
Bear	SEK 92	14%	-9%	20%	Combined-ratio normalization or partner-channel loss
Prob-weighted	SEK 115	—	+14%	100%	Scenario-weighted expected value

Sensitivity — fair value / share at K_e × ROE

K_e \ ROE	10%	14%	18%	22%	26%	30%	34%
7.50%	81	127	173	220	266	312	358
8.25%	69	109	149	188	228	267	307
9.00% (base)	61	95	130	165	199	234	269
9.75%	54	85	116	146	177	208	239
10.50%	49	76	104	132	159	187	215

Green = fair value above the current price of SEK 101.20. For a financial the surface is dominated by cost of equity and sustainable ROE — not unit growth.

Method & data. ROE 16.2% and book equity are observed (net income / total equity). Cost of equity 9.0% and terminal g 3% are assumptions, shown explicitly and overridable. The underwriting bridge resolves to a 16.4% ROE (combined ratio 90%, observed from the deep-dive).

⤓ Download the full model (.xlsx) — formula-driven sheets; flex the blue input cells and the model cascades in Excel.

Key drivers

1. Niche underwriting

Low-frequency warranty/assistance lines with a ~90% combined ratio.

2. Partner distribution

Sticky retail/partner channels drive low-cost premium growth.

3. High dividend

~6.7% total yield (incl. extra) at ~80% payout.

4. Strong solvency

189% solvency supports continued distributions.

Key risks

Scale + concentrationSmall; dependent on a few partner distribution channels.
Expense-heavy model~64% expense ratio (high acquisition cost) — margin sensitive to commissions.
Investment quartersQ1 2026 ROE 9.4% on a weak investment result; net profit -10% YoY.
Combined-ratio normalizationA claims uptick erodes the underwriting profit.

Conclusion

Solid Forsakring is a high-return niche Swedish non-life insurer (~90% combined ratio, ROE ~16.4%, 189% solvency) at a ~15% discount to a normalized-ROE Gordon fair value with a ~6.7% yield. BUY/accumulate; base SEK 116.

Own it for the underwriting quality + yield; the caveats are scale, partner concentration and investment-result volatility.

Footnote evidence & sources

Every adjustment traces to the cited note/page in the source filing — click to open it there. Annual report / 10-K: 📄 open · Latest interim: 📄 open

Adjustment / figure	Value	Source	Why mttssn treats it this way
Net profit for the year (to owners)	149	Annual Report 2025 p.27 - Income statement 📄 p.27	Profit after tax (single share class = all to owners) - the ROE numerator.
Premiums earned, net of reinsurance	1,063	Annual Report 2025 p.27 - Income statement (technical account) 📄 p.27	IFRS top line / insurance revenue; gross written premiums 989.5.
Technical result (non-life)	134	Annual Report 2025 p.27 - Income statement; p.8 five-year summary 📄 p.27	Underwriting result; adjusted 139.576 ex items affecting comparability.
Result of asset management	74.514	Annual Report 2025 p.27 - Non-technical account; Note 8 📄 p.27	Investment result on the float (total return 5.6%).
Combined ratio	0.899	Annual Report 2025 p.8 - Performance measures (5-yr) 📄 p.8	89.9% (89.0% adjusted); under the <90% target. Underwriting profit.
Claims ratio	0.258	Annual Report 2025 p.8 - Performance measures 📄 p.8	Very low loss ratio (25.8%) - hallmark of partner-distributed warranty/PPI.
Expense ratio	0.641	Annual Report 2025 p.8 - Performance measures 📄 p.8	Very high (64.1%) - heavy partner acquisition/commission costs; the cost side dominates the combined ratio.
Total equity (IFRS)	534	Annual Report 2025 p.29 - Balance sheet (Equity and liabilities) 📄 p.29	Raw IFRS equity; excludes the statutory safety reserve, so understates capital.
Contingency (safety) reserve - untaxed reserves	488	Annual Report 2025 p.29 - Untaxed reserves / Note 20 📄 p.29	Statutory safety reserve outside IFRS equity; net of 20.6% tax it is added to reach Equity (2).
Equity (2) - adjusted capital base	921	Annual Report 2025 p.8 / p.11 - APM table 📄 p.8	IFRS equity + contingency reserve net of deferred tax = the economically correct ROE / P-B denominator (921.436).
NAV (2) - tangible adjusted equity	897	Annual Report 2025 p.8 / p.11 - APM table 📄 p.8	Equity (2) less intangibles 24.865; the P/TBV and RoNAV base.
Intangible assets (goodwill+other)	24.865	Annual Report 2025 p.28 - Balance sheet; Note 11 📄 p.28	Goodwill 12.004 + other intangibles 12.861; stripped to reach NAV (2)/tangible equity.
RoE (2) / RoNAV (2)	0.164	Annual Report 2025 p.8 - Performance measures 📄 p.8	Company RoE (2) 16.4% (on Equity (2)) and RoNAV (2) 17.7% (tangible) - the ROE used for valuation.
SCR ratio (audited)	1.89	Annual Report 2025 p.8 / p.11 - solvency 📄 p.8	189% FY2025 (own funds 900.973 / SCR 477.296); restates the preliminary 214% in the year-end report.
Dividend per share (total)	6.75	Annual Report 2025 Note 29 p.41; p.12 📄 p.41	SEK 5.25 ordinary + SEK 1.50 extraordinary; ~6.7% total yield, ~80% payout.
Combined ratio Q1 2026	0.887	Interim Report Q1 2026 p.5 - Performance measures 📄 p.5	88.7% (claims 24.8%, expense 63.9%); improved from 90.0% Q1 2025.
Profit after tax Q1 2026	22.001	Interim Report Q1 2026 p.5 - Performance measures 📄 p.5	SEK 22.0m, -30% YoY; annualised RoE (2) only 9.4% (weak investment result -0.8m).
Equity (2) Q1 2026	942	Interim Report Q1 2026 p.5 - Performance measures 📄 p.5	Adjusted capital base SEK 942.3m at 31 Mar 2026 (NAV (2) 919.7); SCR ratio 189%.

Analysis history

How the mttssn view has evolved — each prior dated note is preserved.

2026-06-09 · BUY/MEDIUM · Streamlined — this version
2026-05-31 · Buy/high

Quality · Buffett tenets11 / 15

Understandable business●●●

Solid Forsakring — Swedish niche non-life insurer (product/warranty, assistance, travel, accident & health, pet); partner-distributed; legible.

Durable moat●●○

Moderate: sticky partner-distribution relationships + low-frequency, niche lines, but small and acquisition-cost-heavy.

Able & honest management●●○

Disciplined niche underwriter; high payout (incl. extra); strong solvency.

Financial strength●●○

Combined ratio ~90%, solvency 189%, but small and dependent on a few partner channels.

Margin of safety●●○

Some: ~+15% to a normalized-ROE Gordon fair value; ~6.7% total dividend yield.

Sensitivity — fair value / share at Ke × ROE

1. Niche underwriting

2. Partner distribution

3. High dividend

4. Strong solvency

Sensitivity — fair value / share at K_e × ROE