Sampo Group's results for January - September 2010

Yet another strong quarter

Sampo Group's profit before taxes for January-September 2010 rose strongly to EUR 959 million (625). The total comprehensive income for the period, taking changes in the market value of assets into account, was EUR 1,344 million (3,524).

-    Earnings per share rose to EUR 1.43 (0.88) and marked-to-market EPS was EUR 2.39 per share (6.05). Return on equity for the Group amounted to 22.3 per cent for the period (75.8).

-    Net asset value per share reached an all-time high, despite the dividend of EUR 1 per share paid in April 2010, and amounted to EUR 16.54 (14.63). The increase was due to sound reported profits, appreciation of Nordea's share price and favorable currency movements. Fair value reserve after tax on the Group level increased to EUR 630 million (296).

-    Combined ratio in the P&C insurance operations for January-September 2010 was 93.0 per cent (92.0). Profit before taxes increased to EUR 519 million (476) and marked-to-market result was EUR 729 million (932). Return on equity amounted to 39.0 per cent (54.0).

-    Profit before taxes for the life insurance operations amounted to EUR 100 million (85) and marked-to-market result was EUR 228 million (404). Return on equity was 35.2 per cent (116.5).

-    Nordea is accounted for as an associated company. In the segment reporting share of Nordea's net profit is included in the holding segment. Profit before taxes for the segment amounted to EUR 343 million (41), of which Nordea's share was EUR 371 million.

-    Sampo Group's investment assets, excl. holding in Nordea, amounted to EUR 17.8 billion (16.1) on 30 September 2010, of which fixed income covered 79 per cent (82), equity 17 per cent (15) and other assets 3 per cent (3).

 *) comparison figure from 31.12.2009

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 2009 unless otherwise stated.

THIRD QUARTER 2010 IN BRIEF

Sampo Group's third quarter 2010 profit before taxes amounted to EUR 338 million (192). Earnings per share were EUR 0.51 (0.27). Marked-to-market earnings per share were EUR 1.01 (2.72).

Net asset value per share increased in the third quarter of 2010 by EUR 2.04.

P&C insurance operation had a good third quarter and combined ratio improved to 90.6 per cent (90.9). Profit before taxes rose to EUR 186 million (167).

Profit before taxes for the life insurance operations amounted to EUR 31 million (32). Premiums written increased 23 per cent to EUR 223 million (181).

Segment 'Holding' reported a profit before taxes of EUR 121 million (-12) in the third quarter, of which EUR 140 million relates to Sampo's share of Nordea's third quarter 2010 profit.

BUSINESS AREAS

P&C insurance

If P&C is the leading property and casualty insurance company in the Nordic region, with insurance operations that also encompass the Baltic countries and Russia. The P&C insurance group's parent company, If P&C Insurance Holding Ltd, is located in Sweden, and the If subsidiaries provide insurance solutions and services in Finland, Sweden, Norway, Denmark, the Baltic countries and Russia. If's operations are divided into four business areas: Private, Commercial, Industrial and Baltic and Russia.

Profit before taxes for P&C insurance for the first nine months of 2010 increased to EUR 519 million (476). Technical result decreased to EUR 340 million (374) because of lower allocated investment income, as a result of lower interest rate level, and lower underwriting result. Technical result for Private business area amounted to EUR 177 million (186), Commercial EUR 101 million (106), Industrial EUR 45 million (55) and Baltic and Russia EUR 13 million (20).

Return on equity (RoE) exceeded clearly the target level of 17.5 per cent and was 39.0 per cent (54.0). RoE was further strengthened by favorable currency movements. Insurance margin (technical result in relation to net premiums earned) amounted to 11.7 per cent (13.8). Fair value reserve at the end of September 2010 rose to EUR 283 million (105).

Combined ratio for January-September 2010 amounted to 93.0 per cent (92.0) supported by third quarter's combined ratio of 90.6 per cent (90.9).  EUR 92 million (79) was released from technical reserves related to prior year claims. Risk ratio was 69.5 per cent (68.1). The deterioration of 1.4 percentage points from the same period last year was affected by the difficult first quarter of the year.

In Private business area combined ratio rose to 93.2 (92.3). Nominal costs were flat and cost ratio decreased 0.7 percentage points to 23.7 per cent. Risk ratio deteriorated 1.7 percentage points reflecting the effects from extreme winter conditions in the first quarter of the year. Despite the exceptional storms in Finland and cloud bursts in Denmark, the third quarter claims development was stable. In Commercial business area combined ratio was stable at 93.3 per cent (93.1). In Industrial business area combined ratio rose to 92.4 per cent (90.9) due to an increase in large claims costs. Risk ratio deteriorated 1.7 percentage points to 73.9 per cent. In Baltic and Russia business area combined ratio was 92.1 per cent (89.4).

Gross written premiums increased 9 per cent to EUR 3,332 million (3,083). Adjusted for currency the premiums increased 0.6 per cent. In business area Private the premiums grew 3.9 per cent with fixed currencies. The largest increase was in Denmark but all countries had positive development. In Commercial business area premiums increased 0.2 per cent with positive growth in Norway and Denmark. Industrial business area still suffered from recessionary effects and premiums decreased 4.4 per cent. In business area Baltic and Russia premiums fell 18.4 per cent.

Cost ratio improved in all business areas, except Baltic and Russia, and was 23.5 per cent (23.8). Adjusted for currency the nominal costs decreased 2 per cent.

At the end of September 2010 the total investment assets amounted to EUR 11.8 billion (10.7) of which 87 per cent (89) was invested in fixed income instruments and 12 per cent (11) in equities. Net income from investments rose to EUR 341 million (284). Investment return for the first nine months of 2010 was 5.7 per cent (10.1). Duration for interest bearing assets was 1.7 years (2.5).

If P&C's solvency ratio as at 30 September 2010 (solvency capital in relation to net premiums written) was 86 per cent (77). Solvency capital amounted to EUR 3,599 million (2,943). Reserve ratios were 174 per cent (172) of net premiums written and 241 per cent (240) of claims paid.

Life insurance

Mandatum Life Group consists of Mandatum Life, a wholly-owned subsidiary of Sampo plc, operating in Finland, and its subsidiary Mandatum Life Insurance Baltic SE, which has the form of a European company and is headquartered in Estonia. It operates in the other Baltic countries through branches.

Mandatum Life Group's strong premium growth continued in the third quarter of 2010 and the result remained good. Premium income grew more than 60 per cent to EUR 827 million (513).

Profit before taxes in life insurance for January-September 2010 amounted to EUR 100 million (85). Net investment income, excluding income on unit-linked contracts, amounted to EUR 233 million (205). Meanwhile, net investment income from unit-linked investments was EUR 206 million (290). The fair value reserve increased to EUR 362 million from EUR 210 million at the end of 2009. Return on equity (RoE) in life insurance amounted to 35.2 per cent (116.5).

Excluding the assets of EUR 2.9 billion (2.4) covering unit-linked liabilities, investment assets amounted to EUR 5.8 billion (5.4) at market values as at 30 September 2010. Fixed income represented 64 per cent (68), equity 27 per cent (23), private equity 4 per cent (4), real estate 3 per cent (3) and other assets 2 per cent (2) of the total assets.

For January - September 2010 the return on investments amounted to 8.0 per cent (14.0). The duration of fixed income assets was 2.4 years (2.6) as at 30 September 2010.

Solvency capital continued to grow fast and amounted to EUR 1,210 million and the solvency ratio rose to 23.4 per cent (18.5). Mandatum Life Group's total technical reserves were EUR 7.3 billion (6.8), of which unit-linked reserves accounted for 2.9 billion (2.4). The share of unit-linked reserves of total technical reserves increased to 39 per cent (35).

Expense ratio for the life segment improved to 113.6 per cent (116.5). This ratio does not take into account all fees intended to cover the operating expenses. Mandatum Life does not defer acquisition costs, which burdens the first year's result.

Mandatum Life Group's premium income on own account grew over 60 per cent and amounted to EUR 827 million (513). Unit-linked premiums amounted to 72 per cent (69) of all premiums written. Premium income from the Baltic countries was EUR 44 million (29).

Mandatum Life maintained a high overall market share of 22.9 per cent (23.6) in Finland measured by premium income. The unit-linked market share amounted to 28.0 per cent (26.6). After deleting a duplication recorded in Finnish life insurance statistics, Mandatum Life´s overall market share was 24.9 per cent. The duplication has no effect on unit-linked market share. Market share in the Baltic countries amounted to 21 per cent (15).

Holding

Sampo plc controls its subsidiaries engaged in P&C and life insurance. In addition Sampo plc held on 30 September 2010 more than 20 per cent of the share capital of Nordea, the largest bank in the Nordic countries. Nordea is an associated company to Sampo plc.

The segment's profit before taxes was EUR 343 million (41), of which EUR 371 million relates to Sampo's share of Nordea's January - September 2010 profit. Segment's profit without Nordea was EUR -19 million in the third quarter.

Sampo plc's holding in Nordea Bank was booked in the consolidated balance sheet at EUR 5.5 billion. The market value of the holding was EUR 6.4 billion at 30 September 2010. In addition the assets on Sampo plc's balance sheet included holdings in subsidiaries for EUR 2.4 billion (2.4).

At the end of September 2010 Sampo plc´s debt financing amounted to EUR 1,735 million, of which senior bonds and notes accounted for EUR 1,026 million and commercial papers EUR 580 million. Gross debt to Sampo plc's equity was 28 per cent (24).

Associated company Nordea Bank

On 30 September 2010 Sampo plc held 830,440,497 Nordea shares corresponding to a holding of 20.5 per cent. The average price paid per share amounted to EUR 6.39 and the book value in the Group accounts was EUR 6.65 per share. The closing price as at 30 September 2010 was EUR 7.63.

As Sampo's holding exceeds 20 per cent Nordea is 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.

The following text is based on Nordea's January - September 2010 interim report published on 27 October 2010.

Nordea's total income reached a record high as it increased 9 per cent from the previous quarter and 4 per cent compared to the third quarter last year. The development in the customer business remained strong. Lending volumes increased by 4 per cent and deposit volumes by 3 per cent from the previous quarter, margins were largely stable in the quarter and market shares increased, mainly within household.

The fair value result in the Nordea Group increased from the low level in the second quarter. Total expenses increased 1 per cent compared to the previous quarter and staff costs increased by 3 per cent. In local currencies and excluding costs related to Group initiatives, total expenses were down 2 per cent in the third quarter. Net loan loss provisions amounted to EUR 207 million, of which EUR 50 million relates to the Danish guarantee scheme. The loan loss ratio was down by approx. 6 basis points compared to the previous quarter and was 29 basis points including and 22 basis points excluding the Danish guarantee scheme provisions.

Operating profit was up 32 per cent from the previous quarter, mainly due to higher net interest income and net result from items at fair value. Risk-adjusted profit increased 37 per cent compared to the previous quarter.

The inflow of new Gold and Private Banking customers remained strong, increasing by more than 15,000 per month. Around 60 per cent of the new Gold and Private Banking customers were new customers to Nordea.

Nordea has continued to benefit from a strong funding name and has continued to issue long-term funding throughout the third quarter. Nordea issued its first covered bond in Norway during the third quarter and has announced its covered bond program in Finland with the first issue expected in the fourth quarter 2010.

The core tier 1 capital ratio, i.e. excluding hybrid loans, was 10.4 per cent excluding transition rules according to Basel II (10.0 per cent in the second quarter). Including transition rules, the core tier 1 capital ratio was 9.1 per cent (9.0 per cent). The effect from currency fluctuations contributed to an increase in income and expenses of approx. 1 percentage point compared to the previous quarter and of approx. 4-5 percentage points compared to the third quarter last year.

DEVELOPMENTS IN JANUARY - SEPTEMBER 2010

Personnel
The number of full-time equivalent personnel in Sampo Group on 30 September 2010 was 6,920 compared to 7,087 on 31 December 2009. The average number of employees in January-September amounted to 6,933 (7,454).

Approximately 92 per cent of the Sampo Group staff - 6,391 employees - worked in P&C insurance on 30 September 2010. The number of staff is divided into 1,725 employees in Finland, 1,856 employees in Sweden, 1,535 employees in Norway and 1,275 employees in Baltics and other countries. The number of personnel in P&C insurance decreased further.

More than 7 per cent of the Sampo Group staff - 476 employees - worked in life insurance. Life insurance operations had 371 employees in Finland and 105 employees in Baltics. The number of staff increased 5 per cent compared with the end of the previous year.

Approximately 1 per cent of the Sampo Group staff - 53 employees - worked in the holding company Sampo plc. The number of staff remained at earlier level.

Management incentive schemes

On 8 June 2010 Sampo's Board approved a Compensation Code which applies to all Group companies. The Boards of these companies have adopted company-level policies based on the Code. The Code lays down the principles for e.g. management incentives and can be viewed at www.sampo.com/compensation.

The management incentive schemes of Sampo Group are of two types; long-term management incentive schemes based on share appreciation rights and one share-based incentive scheme. The outcome of the long-term management incentive schemes is determined by Sampo's share price development over a period of approximately three years starting from the issue of the respective program. The programs are subject to thresholds on share price development and company profitability, as well as ceilings for maximum bonuses. Furthermore, the programs are subject to rules requiring part of the paid bonus to be used to acquire Sampo shares, which must in turn be held for a specified period of time.

In 2006, Sampo's Annual General Meeting decided on a share-based incentive scheme for the Executive Management belonging to the Group Executive Committee. Under the program, the participants are granted the right to receive up to a pre-determined number of Sampo shares, if Sampo's share price has outperformed a predefined threshold value and insurance margin targets have been exceeded. The bonus will be paid in Sampo shares, in cash or a combination thereof. Furthermore, the programs are subject to lock-up on Sampo shares received.

Payments based on the long-term management incentive schemes in January - September 2010 amounted to EUR 10 million (0). No payments were made on the basis of the share-based incentive scheme 2006 (0).

The terms of all incentive schemes are available on Sampo's web pages at www.sampo.com/compensation.

Shares and share capital

On 8 June 2010 the Sampo Board decided to cancel the 90,000 Sampo A shares purchased in late 2009 according to the authorization by the Annual General Meeting. The shares were purchased at an average price of EUR 16.53 per share and the total amount paid for the shares was EUR 1.5 million. The cancellation reduced the number of Sampo A shares with the corresponding amount but had no effect on the share capital.

As at 30 September 2010 the number of Sampo plc's A shares totaled 560,082,390. Total number of shares of the company, including 1,200,000 B shares, is 561,282,390 shares. Sampo plc did not hold its own A shares on 30 September 2010. The other Group companies hold no shares in the parent company either.

The Annual General Meeting of 2010 authorised the Board to acquire in one or several lots a maximum of 50,000,000 Sampo A shares. Shares can be repurchased in other proportion than the shareholders' proportional shareholdings (private repurchase). The share price will be no higher than the highest price paid for Sampo shares in public trading at the time of purchase. The authorisation will be valid until the close of the next Annual General Meeting, nevertheless not more than 18 months after AGM's decision. The authorisation has not been used.

Internal dividends

During the third quarter of 2010 no dividends were paid by the subsidiaries to the parent company Sampo plc.

Sampo plc has received a dividend of EUR 103 million (SEK 1,000 million) from If P&C Insurance Holding Ltd on 13 April 2010 and, in addition, the associated company Nordea Bank AB paid on 8 April 2010 a dividend amounting to EUR 204 million. No dividend has been paid from Mandatum Life to Sampo plc in the first three quarters of 2010.

Ratings

All the main ratings for Sampo Group companies remained unchanged in the third quarter of 2010.

Group solvency

Sampo Group, with Nordea Bank AB (publ) as its associated company, is regarded as a financial and insurance conglomerate according to the Act on the Supervision of Financial and Insurance Conglomerates (2004/699).

Group solvency has been calculated according to Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates (2004/699). The Act is based on Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment.

The Group's solvency ratio (own funds in relation to minimum requirements for own funds) was 167.0 per cent (158.3) as at 30 September 2010. Nordea is treated as an associated company in the solvency calculation and the part of Nordea's capital requirement corresponding to Sampo's holding in Nordea is taken into account in the Group's capital requirement.

In Sampo Group solvency is assessed internally by comparing the capital required to the capital available. Capital requirement assessment is based on an economic capital framework, in which Group companies quantify the amount of capital required for measurable risks over a one year time horizon at 99.5 per cent´s confidence level. In addition to economic capital companies are assessing their capital need related to non-measurable risks like risks in business environment.

Capital available or Adjusted Solvency Capital include regulatory capital and in addition other loss absorbing items like the effect of discounting technical reserves and other reserves excluded from regulatory capital.    

The economic capital tied up in Group's operations on 30 September 2010 was EUR 4,189 million (3,783) and adjusted solvency capital was EUR 7,279 million (7,077).

EVENTS AFTER THE END OF THE REPORTING PERIOD

On 13 October 2010, Sampo plc received a disclosure according to which Capital Research and Management Company's holding in Sampo plc had on 11 October 2010 fallen below one twentieth (1/20) of Sampo plc's entire stock and voting rights. According to the notification Capital Research held 4.95 per cent of Sampo's total share capital and 4.91 per cent of related votes.

OUTLOOK FOR THE REST OF 2010

Global economic recovery continues broadly as expected. In the Nordic countries economic activity has rebounded faster than anticipated despite sovereign debt problems causing uncertainty. Volatility in the capital markets will persist with quickly changing investor sentiments.

Sampo Group is expected to report a good result for 2010 with a continuing good profitability of its insurance operations supported by the share of Nordea's profit.

If P&C is expected to reach its long-term combined ratio target of below 95 per cent in 2010 and achieve a combined ratio between 92 and 94 per cent. Profit is expected to remain on a very good level.

Mandatum Life's marked-to-market profit is highly dependent on capital markets and is expected to remain good. Reported profit is foreseen to reach year 2009 level. The company seeks further growth in the unit-linked volumes.

The profit contribution of the associated company, Nordea Bank AB, is expected to remain significant.

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

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 '877782, the conference title 'Sampo plc 2010/Q3 release' and the password 'SAMPO'.

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 the full-year 2010 result release on 9 February 2011.

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

¹)  The Group solvency is calculated according to the consolidation method defined in Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates (2004/699). In the comparison year the solvency was calculated based on adjusted solvency calculations for insurance groups according to the Decree of the Ministry of Social Affairs and Health (1106/2000), determined on the basis of the Group financial statements. Nordea Bank has been consolidated as an associate as of 31 Dec. 2009, so the capital demand required by this investment did not burden the Group's solvency on 30 Sep. 2009.

²) The key figures for P&C Insurance are based on activity based costs and cannot, therefore, be calculated directly from the consolidated income statement. The result analysis of P&C insurance is presented in note 13.

In calculating the per share key figures, the number of shares used at the balance sheet date and as the average number of shares was 561,282,390.

The valuation differences on investment property have been taken into account in calculating the return on assets, return on equity, equity/assets ratio and net asset value per share. The tax component includes the tax corresponding to the result for the period, and the deferred tax liability related to valuation differences on investment property.

The total comprehensive income has been used in the calculation of the return on assets and return on equity.

The key figures for the insurance business have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying regulations and instructions of the Finance Supervisory Authority (former Insurance Supervisory Authority).

*) The total comprehensive income includes also the share of the associate Nordea's other comprehensive income, in accordance with the Group's share holding. As Nordea's other comprehensive income comprise mainly the currency hedging of net investments and exchange differences, the Group's share of Nordea's other comprehensive income EURm 38 is also included in the Group's exchange differences in the statement of changes in equity.

**) The amount recognised in equity from available-for-sale financial assets for the period totalled EURm 453 (2,851).  The amount transferred to p/l amounted to EURm -113 (50).

***) The amount recognised in equity from cash flow hedges for the period totalled EURm -6 (0) .

The amount included in the translation, available-for-sale and cash flow hedge reserves represent other comprehensive income for each component, net of tax.

The cash flow statement reports cash flows during the period classified by operating, investing and financing activities. Cash flows are reported by using the indirect method. Cash flows from operating activities derive primarily from the principal revenue-producing activities. Cash flows from investments in subsidiaries and associated undertakings and those from investments in intangible assets and property, plant and equipment are presented in investing activities. Financing activities include cash flows resulting from changes in equity and borrowings in order to conduct the business. Cash and cash equivalents consist of cash at bank and in hand and short-term deposits (under 3 months).

NOTES

ACCOUNTING POLICIES

Sampo Group's consolidated financial statements are prepared in accordance with the International Financial Reporting Standards (IFRS) adopted by the EU. The interim financial statements are presented in accordance with IAS 34 Interim Financial Reporting. In preparing the interim financial statements, the same accounting policies and methods of computation are applied as in the financial statements for 2009.

Sampo adopted various new or revised standards and interpretations at the beginning of the year 2010. These standards and interpretations are explained in Sampos accounting policies for the financial year 2009. The financial statements are available on Sampo's website at www.sampo.com/result.

The most significant of the adopted standards is the revised IFRS 3 Business combinations. The standard includes various significant changes regarding the accounting treatment of business combinations by allowing the company to measure the non-controlling interest at fair value instead of the proportionate interest in the acquiree's net assets. The choice affects the amounts of recognised goodwill and non-controlling interest.

Investment contracts do not include a provision for claims outstanding.

Liability adequacy test does not give rise to supplementary claims.

Exemption allowed in IFRS 4 Insurance contracts has been applied to investment contracts with DPF or contracts with a right to trade-off for an investment contract with DPF. These investment contracts have been valued like insurance contracts.