(Adds analyst comment, share price)
HELSINKI, Feb 8 (Reuters) - Finnish financial holding group Sampo on Wednesday proposed increasing its annual dividend for the eighth consecutive year, and posted record underlying profits for its property and casualty (P&C) insurance unit If.
If, the Nordic region's largest P&C insurer, has benefited from its strong position in all Nordic and Baltic countries.
Sampo - which also owns a fifth in Nordea Bank - proposed a dividend of 2.30 euros per share, up from 2.15 euros a year earlier and above analysts' average forecast of 2.26 euros in a Reuters poll.
"The larger-than-expected dividend is an indication that the management is very confident of increasing the dividend also in the future," said OP Equities analyst Antti Saari, who has a "hold" rating on the stock.
Shares in the company were up 1.3 percent by 1025 GMT.
The group's fourth-quarter pretax profit rose 28 percent from a year ago to 528 million euros ($563 million) with the help of one-off items such as investment returns and released insurance reserves.
If posted its best-ever full-year combined ratio, a measure of core profitability, of 86.1 percent excluding one-offs, from 86.5 percent in 2015. A lower figure indicates better profitability.
The company said it expected good operating results from 2017, but added that low interest rates posed a challenge.
"Sampo is an extremely stable case... but increasing profits will be difficult in the coming years. Efficiency measures will take time in Nordea, and If is already very efficient," OP's Saari said.
Sampo also owns 41 percent of If's rival Topdanmark and it is planning to scrap share buybacks and reinstate dividend payouts at the Danish company.
"I'm sure they will acquire the whole Topdanmark at some point, but they will be patient and won't overpay," Saari said. ($1 = 0.9379 euros) (Reporting by Tuomas Forsell and Jussi Rosendahl; editing by Susan Thomas)