This article first appeared on GuruFocus .
Release Date: August 12, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Garantia's insurance service result grew 26.5% year-over-year, with a strong combined ratio of 36.7% and low claims expense ratio.
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Premiums received increased nearly 20% on a last-12-month basis despite a weak Finnish housing market, indicating strong cash flow generation.
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Garantia's solvency ratio remained strong and stable, with own funds growing to EUR125 million, supporting continued growth and dividend payments.
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The company successfully launched new international non-payment insurance contracts, advancing its internationalization strategy.
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Net income from investment operations was strong, driven by robust equity market gains, contributing to a material improvement in operating profit.
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Strategic execution progressed with the completion of Nordic Science Investments acquisition, launch of private credit strategy, and significant follow-on investments in Fintoil and RenGas.
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Fintoil demonstrated strong growth with 43% revenue growth in 2025 and over 30% expected in 2026, supported by a clear strategy to improve profitability.
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The balance sheet remains strong with a 71% equity ratio and net cash position of EUR50 million, exceeding market cap, providing financial flexibility.
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Garantia's operating profit exceeded EUR26 million on an LTM basis, with underlying performance even stronger, driven by positive net insurance and investment results.
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The company maintained its outlook for 2026, expecting continued growth in Garantia's insurance revenue and stable profitability in reinsurance operations.
Negative Points
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Revenue and operating profit in the investment segment were negative due to fair value changes, particularly a EUR2 million decline in the Texas wind farm investment.
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A write-down of EUR1.7 million related to a renewable energy fund (SolarWind 1) negatively impacted performance fees, reflecting adverse market conditions in the Middle East and Sweden.
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Continuing earnings in renewable energy declined due to the absence of retroactive fees recognized in the prior year, and the segment's operating profit margin has been declining.
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Other private asset management continues to be loss-making as the company invests in growth, with no immediate turnaround expected in 2026.
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Net expenses increased by EUR1.5 million due to write-downs, consolidation of Nordic Science Investments, and expansion of the sales team, pressuring profitability.
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The company's total revenue and operating profit remain volatile on a quarterly basis, driven by fair value changes and performance fee fluctuations.
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Fintoil's current profitability is low (EBITDA margin around 9%) due to aggressive growth and suboptimal market mix, with improvement expected only gradually.
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The Finnish housing market remains weak, limiting growth in Garantia's core residential mortgage guarantee business, despite premium growth.
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The company faces regulatory risks in Fintoil's operations, particularly related to blending mandates, though it maintains agility to adapt.
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The outlook for renewable energy continuing earnings is expected to decline in 2026 compared to 2025, due to the absence of one-off fees.
Q & A Highlights
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Q: Regarding the SolarWind 1 performance fee reversal, can you explain the rationale behind this decision and the implications for other funds currently in the exit phase? A: Ilkka Laurila (CEO) explained that the write-down is market-related, noting that the SolarWind fund has investments in Jordan, Serbia, and Sweden, with no investments in Finland. The reversal is due to geopolitical tensions in the Middle East and the challenging renewable energy market in Sweden, particularly in the northern region where investments have been cancelled. He clarified that the fund remains above the hurdle rate, with a small amount of carry still recognized on the balance sheet, and the technical process for calculating buffers remains unchanged.
Q: What is the timeline for launching the SolarWind IV fund, and have you received any indications from previous investors regarding commitments? A: Ilkka Laurila (CEO) stated that initial preparations have begun, but no exact timeline has been set. He expects a first closing within the next 12 months. He noted that active dialogue with LPs is ongoing, but there is nothing to communicate regarding commitments at this early preparatory stage. He also observed that overall fundraising activity and LP optimism have improved over the last six months, though capital recycling remains a challenge.
Q: Can you provide more details on the Fintoil follow-on investment and its expected impact on the investment segment? A: Ilkka Laurila (CEO) confirmed a EUR30 million follow-on investment in Fintoil as part of a larger financing round, with EUR25 million paid on completion and EUR5 million conditional on strategic investments. This will result in approximately 35% ownership. The transaction is expected to complete in Q3 2026, subject to customary conditions. Lauri Lipsanen (CFO) added that a new EUR30 million financial arrangement was entered into to execute this investment and maintain flexibility for strategic initiatives.
Q: Regarding Fintoil's growth strategy, are the new investments focused on expanding the existing Hamina site or creating new sites? A: Ari-Pekka Matanen (CEO of Fintoil) stated that the first stage of investment focuses on the existing site, but future stages do not exclude other options for profitable growth, including potential downstream acquisitions. He emphasized that the company's target of EUR180 million in revenue is expected to be achieved this year, with an upgraded target of over EUR200 million.
Q: How does Fintoil plan to achieve its 20% EBITDA margin target by 2030, given the current margin is around 9%? A: Ari-Pekka Matanen (CEO of Fintoil) explained that the first step is optimizing the customer and market mix, as the company is currently carrying acquisition costs from aggressive growth. This optimization is expected to take 1.5 to 2 years. Beyond that, the 20% target also relies on future investments, including upgrading commodity products towards rapidly growing markets, with a final investment decision expected by the end of this year or January next year.
Q: How is Fintoil managing the risks related to crude tall oil (CTO) availability and price increases, particularly given the tight market? A: Ari-Pekka Matanen (CEO of Fintoil) noted that CTO producers actually follow Fintoil's pricing, which is a unique dynamic. The strategy focuses on investments to upgrade products further and increase CTO paying capability, rather than just increasing fractionation capacity. He also highlighted the company's agility in adapting to changing market conditions, with a diversified portfolio across biofuels and biochemicals to mitigate regulatory risks.
Q: Can you break down the guidance for negative profitability in other private asset management, despite expectations of performance fees? A: Lauri Lipsanen (CFO) clarified that performance fees are mainly related to renewable energy, with some upside from Fintoil, but part of the Fintoil-related profit belongs to a different division, not other private asset management. The negative profitability guidance reflects ongoing investments in growth, new asset classes, and new activities in that segment.
Q: What is the current deployment status of Nordic Science Investments' (NSI) first fund, and when might the second fund be launched? A: Ilkka Laurila (CEO) stated that roughly 40% of the first fund has been invested, leaving room for a handful of new investments and significant reserves for follow-ons, which is typical for venture capital. Strategic discussions are ongoing regarding the next vintage, but no decisions have been made or published yet.
Q: What is the timeline for launching the new private credit strategy? A: Ilkka Laurila (CEO) said that next milestones will be published in the autumn. Following team recruitment and regulatory approvals, fundraising is targeted to begin early next year. The strategy will focus on direct lending to small and mid-sized companies in Nordic countries and neighboring markets, leveraging Garantia's expertise in credit risk assessment.
Q: Regarding Garantia's strong solvency ratio, why not take an extraordinary dividend to fund investments like Fintoil instead of raising debt? A: Ilkka Laurila (CEO) explained that as a small foreign insurance company, maintaining a strong solvency and balance sheet is crucial for a stable rating outlook and business continuity. This strength also supports Garantia's own growth activities, including international expansion. He emphasized that the current strategy of a strong balance sheet is a clear rationale for not extracting an extraordinary dividend.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
