2017-05-11 08:30:23 CEST
2017-05-11 08:30:23 CEST
REGULATED INFORMATION
Sampo - Interim report (Q1 and Q3)
Sampo Group's results for January - March 2017
SAMPO PLC INTERIM STATEMENT 11 May 2017 at 9.30 am
SAMPO GROUP'S RESULTS FOR JANUARY - MARCH 2017
Sampo Group's profit before taxes for January - March 2017 amounted to EUR 430
million (416). The total comprehensive income for the period, taking changes in
the market value of assets into account, rose to EUR 557 million (204).
* Earnings per share increased to EUR 0.68 (0.65). Mark-to-market earnings per
share were EUR 0.99 (0.36). The return on equity (RoE) for the Group was
18.4 per cent (7.1) for January - March 2017. Net asset value per share on
31 March 2017 amounted to EUR 26.67 (24.86).
* The Annual General Meeting held on 27 April 2017 decided to pay a dividend
of EUR 2.30 per share (2.15). The dividend was paid on 9 May 2017.
* Profit before taxes for the P&C insurance segment amounted to EUR 202
million (216). Combined ratio for January - March 2017 was 87.4 per cent
(83.0). Excluding one-off items the combined ratio for the comparison period
January - March 2016 was 89.8 per cent. Return on equity was 37.5 per cent
(15.3). The contribution of Topdanmark's net profit for the first quarter of
2017 increased to EUR 21 million (5).
* Sampo's share of Nordea's net profit for the first quarter of 2017 amounted
to EUR 171 million (159). Nordea's return on equity was 10.3 per cent
(10.2). Core Tier 1 ratio (excluding transition rules) strengthened to 18.8
per cent (18.4). In segment reporting the share of Nordea's profit is
included in the segment 'Holding'.
* Profit before taxes in life insurance operations amounted to EUR 54 million
(53). Return on equity rose to 24.3 per cent (-4.4). Premium income on own
account decreased to EUR 229 million (244).
+-----------------------------+---------+--------+---------+
|KEY FIGURES |1-3/ 2017|1-3/2016|Change, %|
+-----------------------------+---------+--------+---------+
|EURm | | | |
+-----------------------------+---------+--------+---------+
|Profit before taxes |430 |416 |3 |
+-----------------------------+---------+--------+---------+
| P&C insurance |202 |216 |-7 |
+-----------------------------+---------+--------+---------+
| Associate (Nordea) |171 |159 |8 |
+-----------------------------+---------+--------+---------+
| Life insurance |54 |53 |3 |
+-----------------------------+---------+--------+---------+
| Holding (excl. Nordea) |3 |-12 |- |
+-----------------------------+---------+--------+---------+
|Profit for the period |378 |362 |5 |
+-----------------------------+---------+--------+---------+
| | | |Change |
+-----------------------------+---------+--------+---------+
|Earnings per share, EUR |0.68 |0.65 |0.03 |
+-----------------------------+---------+--------+---------+
|EPS (incl. change in FVR) EUR|0.99 |0.36 |0.63 |
+-----------------------------+---------+--------+---------+
|NAV per share, EUR *) |26.67 |24.86 |1.81 |
+-----------------------------+---------+--------+---------+
|Average number of staff (FTE)|6,844 |6,763 |81 |
+-----------------------------+---------+--------+---------+
|Group solvency ratio, % *) |158.9 |154.3 |4.6 |
+-----------------------------+---------+--------+---------+
|RoE, % |18.4 |7.1 |11.3 |
+-----------------------------+---------+--------+---------+
*) comparison figure from 31.12.2016
The figures in this report are not audited. Income statement items are compared
on a year-on-year basis and comparison figures for balance sheet items are from
31 December 2016 unless otherwise stated.
Sampo follows the disclosure procedure enabled by the Finnish Financial
Supervisory Authority and hereby publishes its Interim Statement attached as a
PDF file to this stock exchange release. The Interim Statement is also available
at www.sampo.com/result.
+--------------------------------+--------+---------+--------+--------+--------+
|Exchange rates used in reporting|1-3/2017|1-12/2016|1-9/2016|1-6/2016|1-3/2016|
+--------------------------------+--------+---------+--------+--------+--------+
|EUR 1 = SEK | | | | | |
+--------------------------------+--------+---------+--------+--------+--------+
|Income statement (average) |9.5063 |9.4698 |9.3739 |9.3023 |9.3280 |
+--------------------------------+--------+---------+--------+--------+--------+
|Balance sheet (at end of period)|9.5322 |9.5525 |9.6210 |9.4242 |9.2253 |
+--------------------------------+--------+---------+--------+--------+--------+
|DKK 1 = SEK | | | | | |
+--------------------------------+--------+---------+--------+--------+--------+
|Income statement (average) |1.2785 |1.2718 |1.2586 |1.2486 |1.2501 |
+--------------------------------+--------+---------+--------+--------+--------+
|Balance sheet (at end of period)|1.2816 |1.2849 |1.2912 |1.2668 |1.2381 |
+--------------------------------+--------+---------+--------+--------+--------+
|NOK 1 = SEK | | | | | |
+--------------------------------+--------+---------+--------+--------+--------+
|Income statement (average) |1.0575 |1.0192 |0.9998 |0.9875 |0.9790 |
+--------------------------------+--------+---------+--------+--------+--------+
|Balance sheet (at end of period)|1.0397 |1.0513 |1.0706 |1.0133 |0.9799 |
+--------------------------------+--------+---------+--------+--------+--------+
BUSINESS AREAS
P&C insurance
Profit before taxes for January - March 2017 for the P&C insurance segment
amounted to EUR 202 million (216). The total comprehensive income for the period
after tax reflecting the changes in market values of assets rose to EUR 268
million (114). Combined ratio was 87.4 per cent (83.0) and risk ratio to 65.4
per cent (60.7). Excluding the non-recurring reserve release, combined ratio for
the comparison period would have been 89.8 per cent.
Net releases from technical reserves relating to prior year claims were EUR 17
million (88) in January - March 2017. In the first quarter of 2017 the discount
rate used to discount Finnish annuities was lowered by 0.3 percentage points to
1.2 per cent. This impacted the combined ratio negatively with 6.7 percentage
points. The impact was, however, to a large extent offset by higher reserve
releases in other areas compared to same period last year.
Technical result decreased to EUR 140 million (184). Insurance margin (technical
result in relation to net premiums earned) amounted to 13.2 per cent (17.5).
The lowering of the discount rate for annuities in Finland had a negative impact
on the Finnish country specific result and also on all the business areas
excluding Baltic. The combined ratio for Finland increased by 30 percentage
points due to the change. The release from the Swedish MTPL reserves affected
both the Swedish country specific result and the Private and Commercial business
area results positively in the comparison period. The combined ratio for Norway
benefited from higher reserve releases. Large claims all in all were EUR 10
million worse than expected in the first quarter of 2017.
Swedish discount rate used to discount the annuity reserves remained at the same
level as at the end of 2016.
Gross written premiums increased to EUR 1,643 million (1,616) in January - March
2017. Adjusted for currency, premium growth was 0.2 per cent. Growth was
positive in business areas Private and Baltic, and negative in business areas
Commercial and Industrial.
Cost ratio improved to 22.0 per cent (22.3) and expense ratio to 16.3 per cent
(16.9).
On 31 March 2017, the total investment assets of If P&C amounted to EUR 12.3
billion (12.2), of which fixed income investments constituted 82 per cent (79),
money market 5 per cent (8) and equity 13 per cent (13). Net income from
investments amounted to EUR 52 million (36). Investment return marked-to-market
for the first quarter of 2017 was 1.5 per cent (-0.2). Duration for interest
bearing assets was 1.5 years (1.4) and average maturity 3.0 years (2.8). Fixed
income running yield without taking into account the FX hedging cost as at 31
March 2017 was 1.7 per cent (1.8).
Reserve ratios remained stable at 165 per cent (165) of net written premiums and
234 per cent (238) of claims paid. If P&C's solvency position is described in
the section Solvency.
Associated company Nordea Bank AB
On 31 March 2017 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 8.40 per share. The closing
price as at 31 March 2017 was EUR 10.73.
Income momentum has improved and total income is up by 6 per cent in local
currencies compared to the first quarter of 2016, mainly driven by net fee and
commission income. Net fee and commission income increased 12 per cent both in
local currencies and in euros from the previous year.
Operating profit was up 8 per cent in local currencies (10 per cent in euros)
from the prior year excluding non-recurring items.
Net interest income was unchanged in local currencies (up 2 per cent in euros)
from 2016. Average lending volumes in business areas in local currencies were
unchanged from the first quarter of 2016 while deposits volumes were up 1 per
cent.
Net result from items at fair value increased 17 per cent in local currencies
(13 per cent in euros) from 2016.
Costs are up 5 per cent in local currencies (6 per cent in euros) compared to
the first quarter of 2016 mainly driven by Group projects, Compliance and Risk.
Total expenses amounted to EUR 1,246 million. Staff costs were up 7 per cent in
local currencies excluding non-recurring items.
Credit quality is solid. Net loan loss provisions increased to EUR 113 million,
corresponding to a loan loss ratio of 14 bps (13 bps for first quarter 2016).
Net profit increased 6 per cent in local currencies (8 per cent in euros) to EUR
844 million. Currency fluctuations had an increasing effect of 1 per cent on
income and expenses as well as on loan and deposit volumes compared to a year
ago.
The capital position continues to strengthen and the Common Equity Tier 1 ratio
increased to 18.8 per cent at the end of the first quarter 2017 compared to
18.4 per cent at the end of 2016. REA increased EUR 0.4 billion. The main
drivers were increased REA calculated under the standardised approach and
changes to credit quality in the corporate and institution portfolios. This was
somewhat offset by decreased market risk.
Further information on Nordea Bank AB and its January - March 2017 result is
available at www.nordea.com.
Life insurance
Profit before taxes in life insurance operations for January - March 2017
amounted to EUR 54 million (53). The total comprehensive income for the period
after tax reflecting the changes in market values of assets rose to EUR 85
million (-14). Return on equity was 24.3 per cent (-4.4).
Net investment income, excluding income on unit-linked contracts, amounted to
EUR 97 million (78). Net income from unit-linked contracts was EUR 213 million
(-143). In the first quarter of 2017 fair value reserve increased to EUR 636
million (596).
Mandatum Life Group's total technical reserves increased to EUR 11.4 billion
(11.3). Unit-linked reserves rose to a record high of EUR 6.6 billion (6.4) at
the end of the first quarter of 2017, which corresponds to 58 per cent (57) of
total technical reserves. In the first quarter of 2017 with profit reserves
amounted to EUR 4.8 billion (4.8). Reserves related to the higher guarantees of
4.5 and 3.5 per cent decreased by EUR 54 million to EUR 2.8 billion in January -
March 2017.
Mandatum Life has all in all supplemented its technical reserves with a total of
EUR 284 million (273) due to low level of interest rates. The figure does not
take into account the reserves relating to the segregated fund. The discount
rate used for the rest of 2017 and 2018 is 0.25 per cent. For 2019 the rate is
1.25 per cent. Discount rate applied for the segregated fund is 0.50 per cent.
At the end of March 2017 Mandatum Life Group's investment assets, excluding the
assets of EUR 6.6 billion (6.5) covering unit-linked liabilities, amounted to
EUR 6.6 billion (6.6) at market values.
The assets covering Mandatum Life's original with profit liabilities on 31 March
2017 amounted to EUR 5.4 billion (5.4) at market values. 48 per cent (41) of the
assets are in fixed income instruments, 6 per cent (14) in money market, 31 per
cent (30) in equities and 15 per cent (15) in alternative investments. The
investment return marked-to-market for January - March 2017 was 2.6 per cent (-
0.1). The duration of fixed income assets at the end of March 2017 was 2.5 years
(1.9) and average maturity 2.8 years (2.3). Fixed income running yield without
taking into account the FX hedging cost was 3.3 per cent (3.5).
The assets covering the segregated fund amounted to EUR 1.2 billion (1.2), of
which 76 per cent (75) was in fixed income, 8 per cent (10) in money market, 9
per cent (8) in equities and 7 per cent (7) in alternative investments.
Segregated fund's investment return marked-to-market for January - March 2017
was 0.9 per cent (0.7). At the end of March 2017 the duration of fixed income
assets was 2.7 years (2.4) and average maturity 3.6 years (3.5). Fixed income
(incl. money market) running yield without taking into account the FX hedging
cost was 2.0 per cent (1.9).
Mandatum Life's solvency position is described in the section Solvency.
The expense result for life insurance segment was best-ever in the first quarter
and amounted to EUR 8 million (3). Risk result amounted to EUR 8 million (5).
Mandatum Life Group's premium income on own account amounted to EUR 229 million
(244) in the first quarter of 2017.
Holding
Holding segment's profit before taxes for January - March 2017 amounted to EUR
174 million (148), of which EUR 171 million (159) relates to Sampo's share of
Nordea's first quarter 2017 profit. Segment's profit excluding Nordea was EUR 3
million (-12).
Sampo plc's holding in Nordea Bank was booked in the consolidated balance sheet
at EUR 7.2 billion. The market value of the holding was EUR 9.2 billion, i.e.
EUR 10.73 per share, at 31 March 2017.
Sampo plc holds 41,997,070 Topdanmark shares, which correspond to 46.7 per cent
of all shares in Topdanmark and 49.3 per cent of all votes. The market value of
the holding was EUR 998 million and the book value on the Group accounts was EUR
616 million at 31 March 2017.
In addition the assets on Sampo plc's balance sheet included holdings in
subsidiaries for EUR 2.4 billion (2.4).
OTHER DEVELOPMENTS
Annual General Meeting
The Annual General Meeting of Sampo plc, held on 27 April 2017, decided to
distribute a dividend of EUR 2.30 per share for 2016. The dividend was paid on
9 May 2017. The Annual General Meeting adopted the financial accounts for 2016
and discharged the Board of Directors and the Group CEO and President from
liability for the financial year.
The Annual General Meeting elected eight members to the Board of Directors. The
following members were re-elected to the Board: Christian Clausen, Jannica
Fagerholm, Adine Grate Axén, Veli-Matti Mattila, Risto Murto, Eira Palin-
Lehtinen, Per Arthur Sørlie and Björn Wahlroos. The Members of the Board were
elected for a term continuing until the close of the next Annual General
Meeting.
At its organizational meeting, the Board elected Björn Wahlroos as Chairman and
Eira Palin-Lehtinen as Vice-chairperson. Veli-Matti Mattila, Risto Murto, Eira
Palin-Lehtinen and Björn Wahlroos (Chairman) were elected to the Nomination and
Compensation Committee and Jannica Fagerholm (Chairman), Christian Clausen,
Adine Grate Axén and Per Arthur Sørlie to the Audit Committee.
All the Board members have been determined to be independent of the company and
of the major shareholders under the rules of the Finnish Corporate Governance
Code 2015. The curriculum vitaes of the Board Members are available at
www.sampo.com/board.
The Annual General Meeting decided to pay the following fees to the members of
the Board of Directors until the close of the 2018 Annual General Meeting the
Chairman of the Board will be paid an annual fee of EUR 175,000, the Vice
Chairperson of the Board and the Chairperson of the Audit Committee will be paid
EUR 115,000, the members of the Audit Committee will be paid EUR 96,000 and the
other members of the Board of Directors will be paid EUR 90,000 each. A Board
member shall in accordance with the resolution of the Annual General Meeting
acquire Sampo plc's A shares at the price paid in public trading for 50 per cent
of his/her annual fee excluding taxes and similar payments.
Ernst & Young Oy was elected as Auditor. The Auditor will be paid a fee
determined by an invoice approved by Sampo. Kristina Sandin, APA, will act as
the principally responsible auditor.
Based on the proposal made by a shareholder and the Board of Directors, the AGM
made the decision on the forfeiture of the share certificates that were still in
the joint account and the rights carried by the shares. The decision does not
apply to shares whose transfer into the book-entry system has been validly
requested by 27 April 2017 at 2 pm and whose request for conversion after the
conversion period will be finalized by 31 October 2017. The company's Board of
Directors will cancel the treasury shares to be held by the company as a result
of the forfeiture. Approximately 98.9 per cent of the votes cast at the AGM were
in favor of the proposal for the forfeiture of the share certificates that were
still in the joint account and the rights carried by the shares.
There were 3,105 shareholders represented at the beginning of the meeting
holding altogether 373,911,948 shares and 378,711,948 votes in the company.
The minutes of the Annual General Meeting will be available for viewing at
www.sampo.com/agm and at Sampo plc's head office at Fabianinkatu 27, Helsinki,
Finland, on 11 May 2017 at the latest.
Shares and share capital
The Annual General Meeting held on 27 April 2017 authorized the Board to
repurchase a maximum of 50,000,000 Sampo A shares. The maximum price to be paid
will be highest market price quoted during the authorization period. The
authorization will be valid until the close of the next Annual General Meeting,
nevertheless not more than 18 months after AGM's decision. Sampo plc did not
repurchase its own shares during the first quarter of 2017. At the end of March
2017, neither Sampo plc nor its Group companies held any Sampo A shares.
Sampo's Annual General Meeting held on 27 April 2017 decided to forfeit the
rights carried by the shares in the joint book-entry account (for details see
section Annual General Meeting). The number of shares on the joint account on
28 April 2017 amounted to 5,951,580.
Internal dividends
Mandatum Life paid a dividend of EUR 125 million to Sampo plc on 22 March 2017.
If P&C normally pays its dividend towards the end of the calendar year.
On 16 March 2017 Nordea Bank AB's Annual General Meeting decided on a dividend
of EUR 0.65 per share. Sampo plc's share of total dividends amounts to EUR 559
million. The dividend was paid on 27 March 2017.
Solvency
As of 1 January 2016 insurance subgroups If P&C and Mandatum Life apply Solvency
II rules in their regulatory solvency calculations. Both subgroups use a
standard model when calculating their solvency requirements and eligible own
funds at Group level.
On 31 March 2017 If P&C Group's Solvency II capital requirement under standard
model amounted to EUR 1,980 million (1,942) and own funds to EUR 4,253 million
(3,822). Solvency ratio was 215 per cent (197).
Mandatum Life's solvency ratio with transitional measures strengthened to 181
per cent (160) due to higher interest rates and good investment performance.
This is the strongest Solvency II ratio Mandatum Life has reported. Own funds of
EUR 2,107 million (1,893) exceed Solvency Capital Requirement (SCR) of EUR
1,163 million (1,182) by EUR 944 million. Without transitional measures, own
funds would have amounted to EUR 1,663 and the solvency capital requirement EUR
1,393 million leading to a solvency ratio of 119 per cent.
Group's conglomerate solvency ratio (own funds in relation to minimum
requirements for own funds) was 159 per cent (154) as at 31 March 2017.
Group solvency is also calculated by Solvency II rules. More information on this
method is available at the Risk Management section of the Annual Report 2016.
The requirements calculated with the two methods differ very little from one
another.
More information on Sampo Group's capital policy is available at the Risk
Management section of the Annual Report 2016.
Debt financing
Sampo plc's debt financing on 31 March 2017 amounted to EUR 2,932 million
(3,548) and interest bearing assets to EUR 2,112 million (2,104). Interest
bearing assets include bank accounts, fixed income instruments and EUR 640
million (637) of hybrid capital and subordinated debt instruments issued by the
subsidiaries and associated companies. Altogether, excluding cash and
equivalents, the fixed income instruments yield over 5 per cent.
At the end of the first quarter of 2017 the interest bearing net debt amounted
to EUR 820 million (1,443). The net debt calculation takes into account interest
bearing assets and liabilities. Gross debt to Sampo plc's equity was 36 per cent
(47) and financial leverage 26 per cent (32).
On 27 February 2017 Sampo plc repaid EUR 500 million senior notes maturing on
that date.
On 31 March 2017 financial liabilities in Sampo plc's balance sheet consisted of
issued senior bonds and notes of EUR 2,399 million (2,877) and EUR 534 million
(671) of CPs issued. The average interest, net of interest rate swaps, on Sampo
plc's debt as of 31 March 2017 was 0.96 per cent (1.38).
More information on Sampo Group's outstanding debt issues is available at
www.sampo.com/debtfinancing.
OUTLOOK
Outlook for 2017
Sampo Group's business areas are expected to report good operating results for
2017.
However, the mark-to-market results are, particularly in life insurance, highly
dependent on capital market developments. The continuing low interest rate level
also creates a challenging environment for reinvestment in fixed income
instruments.
The P&C insurance operations are expected to reach a combined ratio of 87 - 90
per cent for the full-year 2017.
Nordea's contribution to the Group's profit is expected to be significant.
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
and uncertainties mainly through its separately managed major business units.
Parent company Sampo plc's contribution to risks is a minor one.
Major risks affecting the Group companies' profitability and its variation are
market, credit, insurance and operational risks that are quantified
independently by the major business units. At the Group level sources of risks
are same, but they are not additive because of diversification effects.
Uncertainties in the form of major unforeseen events may have an immediate
impact on the Group's profitability. Identification of unforeseen events is
easier than estimation of their probabilities, timing and potential outcomes.
Currently there are a number of widely identified macro-economic, political and
other sources of uncertainty which can in various ways affect financial services
industry negatively.
Other sources of uncertainty are unforeseen structural changes in the business
environment and already identified trends and potential wide-impact events.
These external drivers may also have a long-term impact on how the business
shall be conducted.
SAMPO PLC
Board of Directors
For more information, please contact:
Peter Johansson, Group CFO, tel. +358 10 516 0010
Jarmo Salonen, Head of Investor Relations and Group Communications, tel.
+358 10 516 0030
Maria Silander, Communications Manager, tel. +358 10 516 0031
Conference call
An English-language conference call for investors and analysts will be arranged
at 4 pm Finnish time (2 pm UK time). Please call tel. +44 (0)330 336 9105, +46
(0)8 5033 6574, +1 719 325 4746 or +358 (0)9 7479 0361. The conference code is
7569563.
The conference call can also be followed live at www.sampo.com/result. A
recorded version will later be available at the same address.
In addition the Supplementary Financial Information Package is available at
www.sampo.com/result.
Sampo will publish the Half-Year Financial Report for January - June 2017 on 9
August 2017.
Distribution:
Nasdaq Helsinki
London Stock Exchange
The principal media
Financial Supervisory Authority
www.sampo.com
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