Sampo - Interim report (Q1 and Q3)

Sampo Group's Interim Report for January-June 2014

SAMPO PLC                 INTERIM REPORT            13 August 2014 at 9.30 am



SAMPO GROUP'S INTERIM REPORT FOR JANUARY - JUNE 2014

Sampo Group's profit before taxes for January - June 2014 amounted to EUR 861
million (825). The total comprehensive income for the period, taking changes in
the market values of assets into account, rose to EUR 790 million (579).

  * Earnings per share was EUR 1.34 (1.27) and mark-to-market EPS increased to
    EUR 1.41 per share (1.03). The return on equity for the Group was 14.9 per
    cent for the period (11.6).
  * Net asset value per share on 30 June 2014 was EUR 23.00 (22.15). In early
    May 2014 Sampo plc paid a dividend of 1.65 euro per share which reduced the
    net assets correspondingly. The fair value reserve after tax on the Group
    level strengthened to EUR 1,106 million (960).
  * In the first half of 2014 the combined ratio of the P&C insurance operations
    amounted to 88.3 per cent (88.8). This is the best ever combined ratio in
    If's history for the period of January - June. The profit before taxes rose
    to EUR 483 million (473). Return on equity was 25.1 per cent (21.7).
  * Nordea is accounted for as an associated company and Sampo's 21.2 per cent
    share of Nordea's profit for January - June 2014 was EUR 309 million (319).
    Nordea's second quarter results contain a restructuring charge of EUR 190
    million.
  * In life insurance operations profit before taxes rose to EUR 73 million
    (69). The interest rate used to discount with profit liabilities in 2015 was
    lowered to 2 per cent and the rate used in 2016 to 3.25 per cent. For 2014
    the discount rate has already earlier been lowered to 2 per cent. The return
    on equity at market values was 17.9 per cent (4.6).



Key figures                   1-6/  1-6/  Change, 4-6/ 4-6/ Change,

EURm                          2014  2013  %       2014 2013 %

Profit before taxes           861   825   4       465  455  2

  P&C insurance               483   473   2       289  270  7

  Associate (Nordea)          309   319   -3      139  157  -11

  Life insurance              73    69    6       36   33   8

  Holding (excl. Nordea)      -3    -34   -92     1    -4   -

Profit for the period         749   710   6       399  390  2

                                          Change            Change

Earnings per share, EUR       1.34  1.27  0.07    0.71 0.70 0.01

EPS (incl. change in FVR) EUR 1.41  1.03  0.38    0.74 0.16 0.58

NAV per share, EUR  *)        23.00 22.15 0.85    -    -    -

Average number of staff (FTE) 6,757 6,827 -70     -    -    -

Group solvency ratio, %  *)   189.3 184.4 4.9     -    -    -

RoE, %                        14.9  11.6  3.3     -    -    -


*) comparison figure from 31.12.2013

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 2013 unless otherwise stated.

The average EUR-SEK exchange rate used for income statement items for January -
June 2014 is 8.9592 and the end of period exchange rate used for balance sheet
items is 9.1762.  For January - June 2013 the corresponding exchange rates used
were 8.5302 and 8.7773, respectively.

Sampo follows the disclosure procedure enabled by the Finnish Financial
Supervisory Authority 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.



SECOND QUARTER 2014 IN BRIEF

Sampo Group's profit before taxes for the second quarter 2014 amounted to EUR
465 million (455). Earnings per share rose to EUR 0.71 (0.70). Mark-to-market
earnings per share was EUR 0.74 (0.16).

Net asset value per share in the second quarter of 2014 decreased to EUR 23.00
from EUR 24.06 at the end of March 2014. The decrease is explained by the
dividend of EUR 1.65 per share paid on 7 May 2014.

P&C operation achieved a second quarter combined ratio of 86.5 per cent (86.7).
Profit before taxes increased to EUR 289 million (270). Share of the profits of
the associated company Topdanmark amounted to EUR 15 million (18).

Sampo's share of Nordea's second quarter 2014 net profit amounted to EUR 139
million (157). In the second quarter Nordea reported a restructuring charge of
EUR 190 million. The Bank's Common equity tier one capital ratio continued to
rise and amounted to 15.2 per cent.

Profit before taxes for the life insurance operations rose to EUR 36 million
(33). Premiums written grew 18 per cent to EUR 339 million from EUR 288 million
at the corresponding period a year ago.



BUSINESS AREAS

P&C insurance

For January - June 2014 profit before taxes for P&C insurance increased to EUR
483 million (473). Combined ratio amounted to 88.3 per cent (88.8) which is the
best ever January - June combined ratio. Risk ratio decreased 0.2 percentage
points and cost ratio 0.3 percentage points. EUR 5 million (39) was released
from technical reserves relating to prior year claims. Return on equity (RoE)
rose to 25.1 per cent (21.7) and fair value reserve on 30 June 2014 increased to
EUR 561 million (472).

If's share of Topdanmark's profit for the first half of 2014 amounted to EUR 26
million (34). On 30 June 2014 If P&C held 31,476,920 Topdanmark shares,
corresponding to over 28 per cent of all shares. All Topdanmark shares held by
Sampo Group are concentrated in If P&C Insurance Holding Ltd (publ).

Claims development in the first half of 2014 was generally benign. Combined
ratio for BA Industrial improved significantly as both risk and cost ratios
decreased.  All in all large claims outcome was close to expected and ended up
EUR 3 million negative. In Sweden, however, the large claims amounted to
approximately EUR 20 million above expected level. The continuing decline in
discount rates used to discount the annuity reserves also burdened the Swedish
result. The strong improvement in the Finnish risk ratio for the second quarter
of 2014 is largely due to the fact that the discount rate was lowered in the
comparison period. The large claims result in Finland also improved compared to
last year.

Gross written premiums decreased to EUR 2,812 million (2,907) because of
weakened Swedish krona. Adjusted for currency, premiums rose 1.5 per cent.
Premiums in BA Industrial decreased but all other business areas had positive
growth. Cost ratio improved to 22.6 per cent (22.9) and expense ratio remained
unchanged at 16.7 per cent.

On 30 June 2014 the total investment assets of If P&C amounted to EUR 11.9
billion (11.7). Net income from investments amounted to EUR 209 million (198).
Investment return mark-to-market for January-June 2014 was 3.1 per cent (1.9).
Duration for interest bearing assets was 1.0 years (1.3) and average maturity
2.2 years (2.3). Fixed income running yield was 2.5 per cent (3.1).



Associated company Nordea Bank AB

On 30 June 2014 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 7.94 per share. The closing
price as at end of June 2014 was EUR 10.28. Nordea is accounted as an associated
company in Sampo Group's accounts.

The following text is based on Nordea's January - June 2014 interim report
published on 17 July 2014.



Net interest income was down 1 per cent compared to last year. Lending volumes
were up 3 per cent excluding reversed repurchase agreements in local currencies.
Corporate and household lending margins were higher, while deposit margins
overall were down from one year ago.

Net fee and commission income increased 10 per cent and the net result from
items at fair value decreased by 11 per cent compared to the first half of last
year.

Total expenses were largely unchanged compared to the first half year 2013
excluding restructuring costs and in local currencies. Staff costs were up 3 per
cent excluding restructuring costs and in local currencies.

Net loan loss provisions decreased to EUR 293 million for the continuing
operations, corresponding to a loan loss ratio of 17 basis points (23 basis
points in the first half year last year).

Net profit including restructuring costs decreased 2 per cent to EUR 1,556
million.

The Group's fully loaded Basel III Common equity tier 1 (CET1) capital ratio
increased to 15.2 per cent at the end of the second quarter from 14.6 per cent
at the end of the first quarter, following the divestment of Nordea Bank Polska,
strong profit generation and the continued focus on REA (Risk Exposure Amount)
initiatives. REA was EUR 152.2 billion, a decrease of EUR 6.7 billion compared
to the previous quarter.

Nordea's cost efficiency programme is progressing as planned and the net cost
reduction effects are expected to be seen by the end of 2014 and onwards. An
annualized gross reduction in total expenses of EUR 45 million has been
conducted in the second quarter and EUR 300 million from the beginning of 2013.
The plans for reduce costs by 5 per cent by the end of 2015 vs 2013 are now in
place. Restructuring costs for the cost efficiency programme were made with EUR
190 million in the second quarter.

The focus on capital efficiency will continue. In the second quarter,
efficiencies of approximately EUR 6 billion have been achieved. Of the remaining
efficiencies, the focus is on delivering process efficiencies.

The sale of Nordea Bank Polska was completed on 1 April 2014.

The sale of Nordea's 20.7 per cent stake in Nets Holding A/S was completed 9
July 2014. Nordea's total proceeds of the divestment was approx. DKK 3.5 billion
(approx. EUR 470 million) leading to a tax free capital gain of approx. DKK 2.8
billion (EUR 378 million) that will be recognised during the third quarter 2014
in Other income.

Further information on Nordea Bank AB and its January - June 2014 result is
available at www.nordea.com.



Life insurance

Profit before taxes in life insurance for January-June 2014 amounted to EUR 73
million (69). The interest rate used to discount all with profit liabilities in
2015 was lowered to 2 per cent and the discount rate for 2016 to 3.25 per cent.
The discount rate used in 2014 has already earlier been lowered to 2 per cent.
Mandatum Life has increased its technical reserves with a total of EUR 161
million due to low level of interest rates.

Return on equity (RoE) rose to 17.9 per cent (4.6). The total comprehensive
income for the period, taking changes in the market values of assets into
account, amounted to EUR 113 million (25).

Premiums grew 6 per cent and amounted to EUR 584 million (549) and the overall
market share in Finland remained stable at 18.6 per cent (18.8). Unit-linked
premiums were 84 per cent of the total volume.

Excluding the assets of EUR 5.1 billion (4.6) covering unit-linked liabilities,
Mandatum Life Group's investment assets on 30 June 2014 amounted to EUR 5.4
billion (5.5) at market values. Net income from investments, excluding income on
unit-linked contracts, amounted to EUR 152 million (145). Net income from unit-
linked investments increased to EUR 202 million (31).

Investment return mark-to-market for the first half of 2014 was 3.9 per cent
(1.7). The fair value reserve amounted to EUR 544 million (492). At the end of
June 2014 the duration of fixed income assets was 1.7 years (1.8) and average
maturity 2.0 years (2.2). Fixed income running yield was 3.3 per cent (4.2).

The expense result for the first half of 2014 rose to EUR 8 million (4). The
risk result decreased to EUR 9 million (11) in the same period.

The unit-linked reserves reached an all-time high and amounted to EUR 5.1
billion (4.6). The with profit reserves amounted to EUR 3.9 billion euro (3.9)
and the total technical reserves were EUR 9.0 billion (8.5).

In March 2014 Mandatum Life Insurance Company and Suomi Mutual Life Assurance
Company announced that they have agreed on the transfer of Suomi Mutual's with
profit group pension portfolio to Mandatum Life. The required approval of both
companies' Annual General Meetings and the consent of the Financial Supervisory
Authority have been received and the transfer is scheduled to take place on 30
December 2014. The final amount of transferred assets will be established in
connection with the transfer, but it is estimated to have been around EUR 1.3
billion on 31 December 2013.



Holding

The segment's profit before taxes amounted to EUR 306 million (285), of which
EUR 309 million (319) comes from Sampo's share of Nordea's January - June 2014
profit. The segment's profit, excluding share of Nordea's profit, was EUR -3
million (-34). The depreciation of Swedish krona decreased finance costs in the
first of half 2014 by EUR 16 million.

Sampo plc's debt financing on 30 June 2014 amounted to EUR 2,009 million (2,027)
and interest bearing assets to EUR 460 million (980). Interest bearing assets
include bank accounts and EUR 352 million of hybrid capital instruments issued
by the subsidiaries and associates. During the first half of 2014 the net debt
increased EUR 501 million to EUR 1,549 million (1,048). Sampo plc's dividend of
EUR 924 million paid in early May 2014 increased the net debt but dividends of
EUR 470 million received from Nordea Bank and Mandatum Life decreased it. Gross
debt to Sampo plc's equity was 31 per cent (29).

Financial liabilities in Sampo plc's balance sheet on 30 June 2014 consisted of
issued senior bonds and notes of EUR 1,709 million (1,720) and EUR 300 million
(308) of outstanding CPs issued. The average interest on Sampo plc's debt as of
30 June 2014 was 2.25 per cent (2.26).



OUTLOOK

Outlook for the rest of 2014

Sampo Group's business areas are expected to report good operating results for
2014.

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 assets.

The P&C insurance operations are expected to reach their long-term combined
ratio target of below 95 per cent in 2014 and achieve a combined ratio of 88 -
91 per cent.

Nordea's contribution to the Group's profit is expected to be significant.



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 which it identifies and assesses regularly.

Major risks affecting the Group's profitability and its variation are market,
credit and insurance risks that can be quantified by financial measurement
techniques. Currently their quantified contributions to the Group's Economic
Capital - used as an internal basis for capital needs - represent normal levels
of 33 per cent, 45 per cent and 11 per cent, respectively.

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.
One of the latest examples is the tension in Ukraine that started as an
unforeseen event leading to increased volatility at financial markets, but
probably will also have an impact on business environment as a result of
financial sanctions. Sampo Group has no direct exposures to the region.

Other sources of uncertainty are unforeseen structural changes in the business
environment and already identified trends. They both may have also long-term
impact how 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, Press Officer, tel. +358 10 516 0031



Press Conference and Conference call

Sampo will today arrange a Finnish-language press conference at Savoy
(Eteläesplanadi 14, Helsinki), at 12.30 pm Finnish time.

An English-language conference call for investors and analysts will be arranged
at 4 pm Finnish time (2 pm UK time). Please call
+44 203 194 0550, +1 855 269 2605, +46 8 5199 9355 or +358 (0)9 8171 0465. The
title for the conference is 'Sampo's Interim Report Q2/2014'.

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 a Supplementary Financial Information Package is available at
www.sampo.com/result.

Sampo will publish the Interim Report for January - September 2014 on 6 November
2014.



Distribution:
NASDAQ OMX Helsinki
The principal media
Financial Supervisory Authority
www.sampo.com


[HUG#1848493]

Attachments:

Interim Report Q2/2014.pdf