Sampo Oyj : Sampo Group's interim report for January - March 2013
SAMPO PLCSTOCK EXCHANGE RELEASE8 May 2013 at 9.30 am
Sampo Group's interim report for January - March 2013
STAYING THE COURSE
Sampo Group's profit before taxes for the first quarter of 2013 amounted to
EUR 370 million (370). The total comprehensive income for the period, taking
changes in the market value of assets into account, decreased to EUR 490
oEarnings per share amounted to EUR 0.57 (0.57) and mark-to-market EPS was
EUR 0.88 per share (1.18). The return on equity for the Group amounted to
19.1 per cent for the period (28.7).
oNet asset value per share reached an all-time high of EUR 21.03 (17.38).
The fair value reserve after tax on the Group level increased to EUR 846
oP&C insurance operations reported best ever first quarter combined ratio
of 90.9 per cent (91.7). The profit before taxes was EUR 204 million
(198). Mark-to-market result amounted to EUR 279 million (328) and return
on equity to 39.2 per cent (52.1).
oNordea is accounted for as an associated company. Sampo's share of
Nordea's profit for the first quarter of 2013 was EUR 162 million (158).
oProfit before taxes for the life insurance operations increased to EUR 36
million (33) as EUR 20 million was used to lower the discount rates for
the with profit portfolios further. The mark-to-market result decreased to
EUR 66 million (172). The return on equity at market value amounted to
22.4 per cent (72.3).
KEY FIGURES 1-3/ 1-3/ Change,
EURm 2013 2012 %
Profit before taxes 370 370 0
P&C insurance 204 198 3
Life insurance 36 33 8
Associates (Nordea) 162 158 3
Holding excl. associates -30 -19 57
Profit for the period 320 321 0
Earnings per share, EUR 0.57 0.57 0
EPS, mark-to-market, EUR 0.88 1.18 -0.30
NAV per share, EUR *) 21.03 17.38 3.65
Average number of staff (FTE) 6,787 6,796 -9
Group solvency ratio, % *) 175.8 170.4 5.4
RoE, % 19.1 28.7 -9.6
*) comparison figure from 31.12.2012
The figures in this report are not audited. Income statement items are
compared on a year-on-year basis whereas comparison figures for balance sheet
items are from 31 December 2012 unless otherwise stated.
Due to the adoption of the revised accounting standard IAS 19 on Employee
benefits, the comparison figures for 2012 have been restated and differ from
the earlier published figures. The changes concern directly the P&C insurance
segment but are consequently reflected in the consolidated items as well.
The average EUR-SEK exchange rate used for income statement items for the
first quarter of 2013 is 8.4955 and the end of period exchange rate used for
balance sheet items is 8.3553.
Sampo follows the disclosure procedure enabled by the Finnish Financial
Supervisory Authority (Standard 5.2b) and hereby publishes its Interim Report
attached as a PDF file to this stock exchange release. The Interim Report is
also available at www.sampo.com/result.
Profit before taxes for P&C insurance rose to EUR 204 million (198) in
January-March 2013. Combined ratio improved to 90.9 per cent (91.7), because
of the lower risk ratio 67.6 per cent (69.0). Improvement in risk ratio was
due to less large claims than in the comparison period. EUR 14 million (26)
was released from technical reserves relating to prior year claims.
Technical result was stable at EUR 122 million (120) although the allocated
investment return continued to decrease. Technical result for Private and
Commercial business areas improved to EUR 73 million (68) and to EUR 32
million (26), respectively. For business area Industrial technical result
decreased to EUR 11 million (13) and for Baltic to EUR 2 million (4).
Insurance margin (technical result in relation to net premiums earned)
amounted to 10.9 per cent (11.1).
Return on equity (RoE) was 39.2 per cent (52.1). Fair value reserve increased
from the end of 2012 to EUR 421 million (364).
Topdanmark's profit contribution for January-March 2013 was EUR 16 million
(12). At the end of March 2013 If P&C held altogether 31,476,920 Topdanmark
shares, corresponding to approximately 23 per cent of all shares and over 26
per cent of the related votes. The increase in the number of shares held is
due to the 1:10 share split that Topdanmark conducted with effect from 13
At the end of March 2013 the total investment assets of If P&C amounted to EUR
12.0 billion (11.7). Duration for interest bearing assets was 1.1 years (1.3)
and average maturity 2.3 years (2.5). Fixed income running yield was 3.4 per
Associated company Nordea Bank Ab
On 31 March 2013 Sampo plc held 860,440,497 Nordea shares corresponding to a
holding of 21.2 per cent. The average price paid per share amounted to EUR
6.46 and the book value in the Group accounts was EUR 7.57 per share. The
closing price as at end of March 2013 was EUR 8.83.
Sampo's holding exceeds 20 per cent and Nordea has been accounted as an
associated company in Sampo Group's accounts since 31 December 2009. Sampo's
share of Nordea's net profit is shown on the face of Sampo Group's profit and
loss account on the line Share of associate's profit/loss.
Nordea paid a total dividend of EUR 1,370 million in March 2013, of which
Sampo plc's share amounted to EUR 293 million.
Total expenses were unchanged compared to the first quarter of 2012 in local
currencies when excluding performance-related salaries and profit-sharing,
i.e. with the cost definition for the cost target in the financial plan. Staff
costs were down 2 per cent in local currencies when excluding
performance-related salaries and profit-sharing.
Net loan loss provisions decreased to EUR 199 million, corresponding to a loan
loss ratio of 23 basis points (25 basis points last year excluding provisions
related to the Danish deposit guarantee fund).
Net profit increased 3 per cent to EUR 796 million, due to higher income and
The Group's core tier 1 capital ratio, excluding transition rules, was 13.2
per cent at the end of the first quarter, a strengthening of 0.1 percentage
points from the end of the previous quarter. The tier 1 capital ratio
excluding transition rules decreased 0.3 percentage point to 14.0 per cent due
changed regulatory deductions for holding in insurance companies. The total
capital ratio excluding transition rules increased 0.3 percentage point to
16.5 per cent. Improved core tier 1 capital ratio has been achieved by strong
profit generation but countered by the implementation of revised IAS 19,
Profit before taxes in life insurance for January-March 2013 rose to EUR 36
million (33). EUR 20 million was used in the first quarter of 2013 to lower
the interest rate used to discount all with profit liabilities in 2014 with
2.7 per cent. The discount rate for 2013 has already earlier been lowered to
2.5 per cent. All in all, Mandatum Life has increased its technical reserves
with a total of EUR 128 million due to low level of interest rates. Return on
equity (RoE) amounted to 22.4 per cent (72.3). The total comprehensive income
for the period, taking changes in the market value of assets into account,
decreased to EUR 66 million (172).
Excluding the assets of EUR 4.1 billion (3.8) covering unit-linked
liabilities, Mandatum Life Group's investment assets on 31 March 2013 amounted
to EUR 5.6 billion (5.5) at market values. Investment return mark-to-market
during January - March 2013 was 2.3 per cent (5.2). The fair value reserve
increased from the end of 2012 by EUR 38 million to EUR 429 million. At the
end of March 2013 the duration of fixed income assets was 1.7 years (1.8) and
average maturity 2.0 years (2.4). Fixed income running yield decreased to 4.4
per cent (5.3).
Mandatum Life's solvency position remained strong and Mandatum Life Group's
solvency ratio as at 31 March 2013 was 27.3 (27.7). The dividend of EUR 100
million paid in April 2013 to Sampo plc has been deducted from the solvency
margin. Mandatum Life's capital requirement is to a very large degree related
to with profit technical reserves and the investments covering these reserves.
With profit reserves have shrunk by EUR 340 million during the last two years,
which has decreased the required capital and contributed to company's ability
to pay a dividend. The with profit reserves are expected to continue to
annually decrease by roughly the same amount for the next five years.
Mandatum Life Group's total technical reserves exceeded EUR 8 billion for the
first time ever and amounted to EUR 8.1 billion (7.9), of which unit-linked
reserves accounted for 4.1 billion (3.8). The unit-linked reserves reached an
all-time high and their share of total technical reserves exceeded 50 per cent
The segment's profit before taxes amounted to EUR 132 million (139), of which
EUR 162 million (158) relates to Sampo's share of Nordea's first quarter 2013
profit. The segment, excluding share of Nordea's profit, reported a loss of
EUR 30 million (-19). The negative effect of the strengthening of Swedish
krona and decrease in the fair value of interest rate swaps amounted to EUR
Sampo plc's debt financing on 31 March 2013 amounted to EUR 2,108 million
(2,162) and interest bearing assets including bank accounts to EUR 1,215
million (1,048). During the first quarter the net debt decreased EUR 221
million to EUR 893 million (1,113). Gross debt to Sampo plc's equity was 30
per cent (32).
After the end of the reporting period Sampo plc paid a total of EUR 756
million in dividends and received a dividend of EUR 100 million from Mandatum
Life. Together these measures increase the net debt to approximately EUR 1,5
billion at the end of April.
Adoption of IAS 19R
The amendment to IAS 19 Employee Benefits (effective for annual periods
beginning on 1 January 2013 or after) mandated all actuarial gains and losses
be recognized in other comprehensive income, thus the so-called corridor
approach was eliminated and in the future the benefit cost will be determined
based on the net funding.
The change had an impact on the employee benefits recognized in If subgroup.
The net accumulated unrecognized losses EUR 123 million related to the
corridor method at 31 December 2011 reduced the opening equity for the
comparison year 2012. The corresponding amount at 31 December 2012 was EUR 93
million. The subsequent changes from 2013 on (including comparables for 2012)
will be recognized in other comprehensive income. The effect has already been
taken into account in the calculation of If subgroup's capital base.
Outlook for the rest of 2013
Sampo Group's business areas are expected to report good operating results for
However, the mark-to-market results are, particularly in life insurance,
highly dependent on capital market developments. The low interest rate level
also creates a challenging environment for reinvestment in fixed income
The P&C insurance operations are expected to reach their long-term combined
ratio target of below 95 per cent in 2013 and achieve a combined ratio of 89 -
92 per cent. Nordea's contribution to the Group's profit is expected to be
The major risks and uncertainties to the Group in the near term
In its day-to-day business activities Sampo Group is exposed to various risks.
As a financial group the major sources of profitability and its variation for
Sampo Group are market, credit and insurance risks. Their contributions to the
Group's Economic Capital - used as an internal basis for capital needs -
currently represent normal levels of 32 per cent, 45 per cent and 12 per cent,
Major unforeseen events or abrupt structural changes in the business
environment may impact the profitability of Sampo Group or they can affect
Group's ability to conduct its business activities. For example the continuing
political and financial crises in Europe combined with slow growth may
escalate in ways that can affect Group's activities unfavourably. This is,
however, mitigated by the fact that Sampo Group companies have no direct
exposures in sovereigns under pressure and have small exposure to banking
sector outside the Nordic region.
Board of Directors
For more information, please contact:
Peter Johansson, Group CFO, tel. +358 10 516 0010Jarmo Salonen, Head of
Investor Relations and Group Communications, tel. +358 10 516 0030Maria
Silander, Press Officer, tel. +358 10 516 0031
Sampo will arrange a conference call for investors and analysts today at 5 pm
Finnish time (3 pm UK time). The call is held in English. Please call +44 20
7162 0025 or +1 334 323 6201. Please be ready to state the ID number 931495
and the password 'Sampo'.
The conference call can also be followed from a direct transmission on the
Internet at www.sampo.com/result. A recorded version will later be available
at the same address.
In addition a Supplementary Financial Information Package is available at
Sampo will publish the second quarter 2013 interim report on 7 August 2013.
NASDAQ OMX HelsinkiThe principal mediaFinancial Supervisory
Interim Report Q1/2013
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information contained therein.
Source: Sampo Oyj via Thomson Reuters ONE
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