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Sampo Group's results for January-December 2011

The Board proposes a dividend of EUR 1.20 per share

Sampo Group's profit before taxes for 2011 amounted to EUR 1,228 million (1,320). Total comprehensive income for the period, taking changes in the market value of assets into account, decreased to EUR 686 million (1,807).

- Earnings per share were EUR 1.85 (1.97). Mark-to-market earnings per share amounted to EUR 1.22 (3.22) and return on equity for the Group decreased to 7.7 per cent for 2011 (21.8).

- The Board proposes to the Annual General Meeting to be held on 12 April 2012 a dividend of EUR 1.20 per share (1.15) and an authorization to repurchase a maximum of 50 million Sampo A shares.

- Net asset value per share on 31 December 2011 was EUR 14.05 (17.79). Fair value reserve on the Group level amounted to EUR 355 million (736).

- Profit before taxes in the P&C insurance segment amounted to EUR 636 million (707). Combined ratio improved to 92.0 per cent for the full year 2011 (92.8). Return on equity was 12.4 per cent (39.8) and fair value reserve decreased to EUR 139 million (315).

- Sampo's share of Nordea's net profit in 2011 rose to EUR 534 million (523). In segment reporting the share of Nordea's profit is included in the segment 'Holding'.

- Life insurance segment's profit before taxes remained stable at EUR 137 million (142). Fair value reserve decreased to EUR 214 million as at 31 December 2011 (436). Return on equity was -11.7 per cent (36.2).

KEY FIGURES 2011 2010 Change, % Q4/2011 Q4/2010 Change, %
EURm            
Profit before taxes 1,228 1,320 -7 322 361 -11
  P&C insurance 636 707 -10 171 188 -9
  Associate (Nordea) 534 523 2 161 152 6
  Life insurance 137 142 -3 30 42 -27
  Holding (excl.Nordea) -77 -48 60  

-40
 

-21
 

93
Profit for the period 1,038 1,104 -6 279 302 -8

 
    Change     Change
Earnings per share, EUR 1.85 1.97 -0.12 0.50 0.54 -0.04
EPS (incl. change in FVR), EUR 1.22 3.22 -2.00  

0.94
 

0.82
 

0.12
NAV per share, EUR  14.05 17.79 -3.74 - - -
Average number of staff (FTE) 6,874 6,914 -40 - - -
Group solvency ratio, % 138.6 167.1 -28.5 - - -
RoE, % 7.7 21.8 -14.1 - - -

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 2010 unless otherwise stated.

Sampo follows the disclosure procedure enabled by the Finnish Financial Supervisory Authority (Standard 5.2b) and hereby publishes its Financial Statements Release attached as a PDF file to this stock exchange release. The Financial Statements Release is also available at www.sampo.com/result.

Fourth quarter 2011 in brief

Sampo Group's profit before taxes for the fourth quarter of 2011 amounted to EUR 322 million (361). Earnings per share were EUR 0.50 (0.54). Mark-to-market earnings per share were EUR 0.94 (0.82).

Net asset value per share increased in the fourth quarter of 2011 by EUR 0.43 and amounted to EUR 14.05 at the end of 2011.

Good technical profitability was maintained in P&C insurance operation and combined ratio improved to 90.2 per cent (92.3) with improvement in both risk and cost ratios. Profit before taxes amounted to EUR 171 million (188).

Sampo's share of Nordea's fourth quarter 2011 net profit rose to EUR 161 million (152).

Profit before taxes for the life insurance operations decreased to EUR 30 million (42). Premiums written amounted to EUR 237 million (284).

Business areas

P&C insurance

Profit before taxes for P&C insurance decreased to EUR 636 million (707) in 2011. The decrease was mainly explained by financial markets' uncertainty during the year, which led to lower investment returns. Year 2011 was also characterized by demanding weather conditions throughout the year. However, despite the higher than normalized weather-related claims, both risk ratio and combined ratio improved to 68.4 per cent (69.1) and 92.0 per cent (92.8), respectively. EUR 135 million (113) was released from technical reserves relating to prior year gains, out of which EUR 85 in business area Industrial.

If P&C's holding in the Danish insurance company Topdanmark exceeded 20 per cent on 16 May 2011. With the holding exceeding 20 per cent Topdanmark became an associated company to If. Topdanmark's profit contribution for 2011 was EUR 7 million. The book value for Topdanmark in the Group balance sheet was EUR 329 million on 31 December 2011. At the end of 2011 If held altogether 3,147,692 Topdanmark shares, corresponding to 23.6 per cent of the votes.

Technical result increased to EUR 457 million (449). Technical result for Private business area increased to EUR 256 million (236). For business area Commercial technical result amounted to EUR 124 million (127), Industrial EUR 53 million (65) and Baltic & Russia EUR 22 million (15).

Return on equity (RoE) decreased to 12.4 per cent (39.8) mainly due to lower investment result mark-to-market and the change in the accounting treatment of Topdanmark holding in the second quarter of 2011. Insurance margin (technical result in relation to net premiums earned) was 11.1 per cent (11.5). Fair value reserve decreased during the year to EUR 139 million (315) at the end of December 2011.

Associated company Nordea Bank Ab

On 31 December 2011 Sampo plc held 860,440,497 Nordea shares corresponding to a holding of 21.3 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 7.27 per share. The closing price as at 31 December 2011 was EUR 5.98.

The following text is based on Nordea's full-year 2011 result release published on 24 January 2012.

2011 showed continued high total income, up 2 per cent compared to 2010. Net interest income increased 6 per cent compared to last year. Lending volumes increased 7 per cent and deposit volumes 8 per cent. Lending spreads and deposit spreads have increased from last year.

Net loan losses decreased 16 per to EUR 735 million, compared to last year, corresponding to a loan loss ratio of 23 basis points (31 basis points last year).

Operating profit decreased 3 per cent compared to last year. Net profit decreased 1 per cent from last year to EUR 2,634 million. Risk-adjusted profit increased 4 per cent compared to last year to EUR 2,714 million.

The Board of Directors proposes to the AGM a dividend of EUR 0.26 per share (EUR 0.29). This corresponds to a payout ratio of 40 per cent of net profit, which is in line with the dividend policy. Total proposed dividend amounts to EUR 1,048 million.

Life insurance

Profit before taxes in Sampo Group's life insurance operations remained on previous year's level despite the challenging investment markets in 2011 and amounted to EUR 137 million (142). Premiums amounted to EUR 849 million which is the second highest level in the history of the Group. Net investment income, excluding income on unit-linked contracts, amounted to EUR 255 million (312). Net income from unit-linked investments was EUR -296 million (333). In 2011 fair value reserve decreased EUR 222 million amounting to EUR 214 million. Return on equity (RoE) in life insurance was -11.7 per cent (36.2).

Majority of Mandatum Life's traditional policies carry a guaranteed interest of 3.5 per cent. Individual policies sold in Finland before 1999 carry a guaranteed interest of 4.5 per cent. The discount rate for these policies has been lowered to 3.5 per cent and subsequently technical reserves have been supplemented with EUR 79 million (86). In addition, EUR 29 million has been reserved to lower the interest rate of all with-profit liabilities to 2.75 per cent in 2012. This supplement decreases the minimum requirement for investment yield to 2.75 per cent for 2012. All in all, Mandatum Life has increased its technical reserves with EUR 108 million (147) due to low level of interest rates.

Holding

The segment's profit before taxes amounted to EUR 457 million (474), of which EUR 534 million (523) relates to Sampo's share of Nordea's 2011 profit. Segment's profit without Nordea was EUR -77 million (-48).

As at 31 December 2011 financial liabilities in Sampo plc's balance sheet consisted of issued senior bonds and notes of EUR 1,677 million and EUR 652 million of outstanding CPs issued. The average interest on Sampo plc's debt as of 31 December 2011 was 3.73 per cent.

Outlook

The major risks and uncertainties to the Group in the near term

The major risks Sampo Group is exposed to in its normal business activities are credit risk, market risks and insurance risks. Their contributions to Group's Economic Capital requirement are currently within normal boundaries at levels 38 per cent, 36 per cent and 14 per cent, respectively.

Sovereign debt crisis, crisis of political system, potential banking crisis and slow growth may escalate in ways that can affect Group's activities unfavorably although Sampo Group companies do not have direct exposures in sovereigns under pressure and have small exposure to banking sector outside the Nordic region.

Outlook for 2012

Sampo Group's business areas are expected to report good operating results for 2012. However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments.

P&C insurance operations are expected to reach their long-term combined ratio target of below 95 per cent in 2012. Nordea's contribution to the Group's profit is expected to be significant.

Dividend proposal

According to Sampo Group's dividend policy, total annual dividends paid shall be higher than 50 per cent of Group's net profit for the year (excluding extraordinary items). In addition, share buy-backs can be used to complement the cash dividend.

The parent company's distributable capital and reserves totaled EUR 6,623,776,460.88, of which profit for the financial year was EUR 682,234,763.79.

The Board proposes to the Annual General Meeting a dividend of EUR 1.20 per share to company's 560,000,000 shares. The dividends to be paid are EUR 672,000,000.00 in total. Rest of funds are left in the equity capital.

The dividend will be paid to shareholders registered in the Register of Shareholders held by Euroclear Finland Ltd as at the record date of 17 April 2012. The Board proposes that the dividend be paid on 24 April 2012.

No significant changes have taken place in the company's financial position since the end of the financial year. The company's liquidity position is good and in the view of the Board, the proposed distribution does not jeopardize the company's ability to fulfill its obligations.

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

Essi Nikitin, IR Manager, tel. +358 10 516 0066

Maria Silander, Press Officer, tel. +358 10 516 0031

Sampo will arrange a Finnish-language press conference (Savoy, Eteläesplanadi 14, Helsinki), at 2 pm Finnish time. An English-language telephone conference for investors and analysts will be arranged at 4 pm Finnish time (2 pm UK time). Please call +44 207 162 0025 (Europe) or +1 334 323 6201 (North America). Please be ready to state the conference ID '910679' and the conference title 'Sampo plc 2011/Q4 Release'.

The telephone conference 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, Group CEO and President Kari Stadigh's video interview and Supplementary Financial Information are available at www.sampo.com/result.

Sampo will publish an on-line Annual Report 2011 in week 10. At the same time Corporate Governance Statement and Salary and Remuneration Report will be published.

Sampo will publish an interim report for January - March 2012 on 8 May 2012.

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

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