Sampo Group's results for January - March 2012Stock Exchange Release - 05/08/2012 at 09:30 AM
A very good start for the year
Sampo Group's profit before taxes for January - March 2012 amounted to EUR 363 million (387). The total comprehensive income for the period, taking changes in the market value of assets into account, rose to EUR 654 million (232).
- Earnings per share amounted to EUR 0.57 (0.58) and mark-to-market EPS was EUR 1.17 per share (0.41). The return on equity for the Group amounted to 28.3 per cent for the period (10.3).
- Net asset value per share rose to EUR 16.61 (14.05). The fair value reserve after tax on the Group level increased to EUR 660 million (355).
- In the P&C insurance operations the combined ratio for the first quarter of 2012 was excellent and amounted to 92.4 per cent (94.4). This is the best first quarter combined ratio in If's history. The profit before taxes was EUR 191 million (221). The underlying profitability improved as the comparison figure contains a one-off sales gain of EUR 75 million. Mark-to-market result rose to EUR 323 million (91). Return on equity increased to 50.2 per cent (14.0).
- Nordea is accounted for as an associated company. Sampo's share of Nordea's profit for the first quarter of 2012 was EUR 158 million (152).
- Profit before taxes for the life insurance operations decreased to EUR 33 million (44) as EUR 17 million was used to lower the 2012 and 2013 discount rates to 2.5 per cent and 3.25 per cent, respectively. The mark-to-market result increased to EUR 172 million (13). The return on equity at market value rose to 72.3 per cent (5.0).
|Profit before taxes||363||387||-6|
|Holding excl. associates||-19||-30||36|
|Profit for the period||317||325||-2|
|Earnings per share, EUR||0.57||0.58||-0.01|
|EPS, mark-to-market, EUR||1.17||0.41||0.76|
|NAV per share, EUR *)||16.61||14.05||2.56|
|Average number of staff (FTE)||6,796||6,872||-76|
|Group solvency ratio, % *)||150.5||138.6||11.9|
*) comparison figure from 31.12.2011
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 2011 unless otherwise stated.
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 decreased to EUR 191 million (221) in January-March 2012. The decrease is explained by lower net income from investments in relation to the previous year due to a one-off sales gain of EUR 75 million in the comparison period.
Both risk ratio and combined ratio improved in the first quarter of 2012 to 69.0 per cent (71.0) and 92.4 per cent (94.4), respectively. EUR 26 million (39) was released from technical reserves relating to prior year gains. Change in the interest rate used to discount the annuity reserves in Sweden improved the result by EUR 12 million. Technical result increased to EUR 112 million (100). Insurance margin (technical result in relation to net premiums earned) improved to 10.3 per cent (9.7).
Return on equity (RoE) increased significantly to 50.2 per cent (14.0) supported by the strong mark-to-market investment result in the first quarter. Fair value reserve increased from the year end to EUR 297 million (139) at the end of March 2012.
Topdanmark's profit contribution for January-March 2012 was EUR 12 million. At the end of March 2012 If P&C held altogether 3,147,692 Topdanmark shares, corresponding to 24.2 per cent of the votes and 22.9 per cent of the shares.
Investment return mark-to-market for January-March 2012 was 2.9 per cent (0.7).
Duration for interest bearing assets was 1.3 years (1.2) and average maturity 2.5 years. Fixed income running yield was 3.9 per cent (4.1).
Associated company Nordea Bank
On 31 March 2012 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 7.21 per share. The closing price as at 31 March 2012 was EUR 6.80.
In the first quarter of 2012 Nordea's strong business momentum continued. Profitability was maintained at a high level, with an ROE close to 12 per cent.
Costs were kept under strict control and the capital position strengthened further. Core tier 1 capital ratio increased by 0.4 percentage point to 11.6 per cent. Nordea paid a total dividend of EUR 1,048 million, of which Sampo plc's share amounted to EUR 224 million.
Total income decreased 1 per cent from the previous quarter to EUR 2,531 million. Net interest income was largely unchanged compared to the previous quarter at EUR 1,420 million.
Net loan loss provisions decreased to EUR 218 million, including a provision for the Danish guarantee system related to Fjordbank Mors of EUR 8 million. Excluding these deposit guarantee-related provisions, the loan loss ratio was 25 basis points (36 basis points in the previous quarter).
Operating profit increased 1 per cent from the previous quarter to EUR 1,037 million. Risk-adjusted profit decreased to EUR 799 million, down 2 per cent from the previous quarter and up 4 per cent compared to the first quarter last year. Net profit decreased 1 per cent compared to the previous quarter to EUR 775 million, corresponding to a return on equity of 11.7 per cent.
Profit before taxes in life insurance for January-March 2012 decreased to EUR 33 million (44). EUR 17 million was used to lower the interest rate used to discount all with-profit liabilities to 2.50 per cent for 2012 and to 3.25 per cent for 2013, respectively. Mandatum Life Group's premium income on own account increased by 20 per cent and amounted to EUR 260 million (216). Net income from investments, excluding income on unit-linked contracts, amounted to EUR 86 million (115). Net income from unit-linked investments was EUR 185 million (-19).
Return on equity (RoE) rose to 72.3 per cent (5.0). The total comprehensive income for the period, taking changes in the market value of assets into account, rose to EUR 172 million (13).
Investment return mark-to-market during January - March 2012 was 5.2 per cent (1.4). The fair value reserve increased to EUR 359 million from EUR 214 million at the end of 2011. At the end of March 2012 the duration of fixed income assets was 1.8 years (1.8) and average maturity 2.4 years. Fixed income running yield was 5.3 per cent (5.4).
Mandatum Life's solvency position strengthened further during the first quarter of 2012. Mandatum Life Group's solvency ratio as at 31 March 2012 was 24.8 (20.9). Mandatum Life Group's total technical reserves were EUR 7.6 billion (7.3), of which unit-linked reserves accounted for 3.4 billion (3.1). The unit-linked reserves reached an all-time high and their share of total technical reserves increased to 44 per cent (42).
The segment's profit before taxes amounted to EUR 139 million (122), of which EUR 158 million (152) relates to Sampo's share of Nordea's first quarter 2012 profit. The segment, excluding share of Nordea's profit, reported a loss of EUR 19 million (-30).
Sampo plc's debt financing on 31 March 2012 amounted to EUR 2,534 million (2,329) and interest bearing assets including bank accounts to EUR 1,277 (1,121) million. During the first quarter the net debt increased EUR 49 million to EUR 1,257 (1,208). Gross debt to Sampo plc's equity was 36.6 per cent (34.6).
OUTLOOK FOR THE REST OF 2012
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 market risk, credit risks and insurance risks. Their contributions to Group's Economic Capital requirement are currently within normal boundaries at levels 39 per cent, 36 per cent and 14 per cent, respectively.
Sovereign debt crisis, crisis of political system, potential banking crisis and slow growth in Europe 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 the rest of 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.
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 telephone conference for investors and analysts at 4 pm Finnish time (2 pm UK time). The call is held in English. Please call +44 20 3003 2666 (Standard international access), 0800 914 672 (Finland), 0808 109 0700 (UK Toll Free) or +1 866 966 5335 (North America). Please be ready to state the conference name 'Sampo plc Q1 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 a Supplementary Financial Information is available at www.sampo.com/result.
Sampo will publish the second quarter 2012 interim report on 8 August 2012.
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