Sampo Group's interim report for January - March 2013

STAYING THE COURSE

Sampo Group's profit before taxes for the first quarter of 2013 amounted to EUR 370 million (370). The total comprehensive income for the period, taking changes in the market value of assets into account, decreased to EUR 490 million (659).

• Earnings per share amounted to EUR 0.57 (0.57) and mark-to-market EPS was EUR 0.88 per share (1.18). The return on equity for the Group amounted to 19.1 per cent for the period (28.7).
• Net asset value per share reached an all-time high of EUR 21.03 (17.38). The fair value reserve after tax on the Group level increased to EUR 846 million (749).
• P&C insurance operations reported best ever first quarter combined ratio of 90.9 per cent (91.7). The profit before taxes was EUR 204 million (198). Mark-to-market result amounted to EUR 279 million (328) and return on equity to 39.2 per cent (52.1).
• Nordea is accounted for as an associated company. Sampo's share of Nordea's profit for the first quarter of 2013 was EUR 162 million (158).
• Profit before taxes for the life insurance operations increased to EUR 36 million (33) as EUR 20 million was used to lower the discount rates for the with profit portfolios further. The mark-to-market result decreased to EUR 66 million (172). The return on equity at market value amounted to 22.4 per cent (72.3).

*) comparison figure from 31.12.2012

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 2012 unless otherwise stated.

Due to the adoption of the revised accounting standard IAS 19 on Employee benefits, the comparison figures for 2012 have been restated and differ from the earlier published figures. The changes concern directly the P&C insurance segment but are consequently reflected in the consolidated items as well.

The average EUR-SEK exchange rate used for income statement items for the first quarter of 2013 is 8.4955 and the end of period exchange rate used for balance sheet items is 8.3553.

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.

BUSINESS AREAS

P&C insurance

Profit before taxes for P&C insurance rose to EUR 204 million (198) in January-March 2013. Combined ratio improved to 90.9 per cent (91.7), because of the lower risk ratio 67.6 per cent (69.0). Improvement in risk ratio was due to less large claims than in the comparison period. EUR 14 million (26) was released from technical reserves relating to prior year claims.

Technical result was stable at EUR 122 million (120) although the allocated investment return continued to decrease. Technical result for Private and Commercial business areas improved to EUR 73 million (68) and to EUR 32 million (26), respectively. For business area Industrial technical result decreased to EUR 11 million (13) and for Baltic to EUR 2 million (4). Insurance margin (technical result in relation to net premiums earned) amounted to 10.9 per cent (11.1).

Return on equity (RoE) was 39.2 per cent (52.1). Fair value reserve increased from the end of 2012 to EUR 421 million (364).

Topdanmark's profit contribution for January-March 2013 was EUR 16 million (12). At the end of March 2013 If P&C held altogether 31,476,920 Topdanmark shares, corresponding to approximately 23 per cent of all shares and over 26 per cent of the related votes. The increase in the number of shares held is due to the 1:10 share split that Topdanmark conducted with effect from 13 March 2013.

At the end of March 2013 the total investment assets of If P&C amounted to EUR 12.0 billion (11.7). Duration for interest bearing assets was 1.1 years (1.3) and average maturity 2.3 years (2.5). Fixed income running yield was 3.4 per cent (3.9).                     

Associated company Nordea Bank Ab

On 31 March 2013 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 7.57 per share. The closing price as at end of March 2013 was EUR 8.83.

Sampo's holding exceeds 20 per cent and Nordea has been 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.

Nordea paid a total dividend of EUR 1,370 million in March 2013, of which Sampo plc's share amounted to EUR 293 million.

Total expenses were unchanged compared to the first quarter of 2012 in local currencies when excluding performance-related salaries and profit-sharing, i.e. with the cost definition for the cost target in the financial plan. Staff costs were down 2 per cent in local currencies when excluding performance-related salaries and profit-sharing.

Net loan loss provisions decreased to EUR 199 million, corresponding to a loan loss ratio of 23 basis points (25 basis points last year excluding provisions related to the Danish deposit guarantee fund).

Net profit increased 3 per cent to EUR 796 million, due to higher income and stable costs.

The Group's core tier 1 capital ratio, excluding transition rules, was 13.2 per cent at the end of the first quarter, a strengthening of 0.1 percentage points from the end of the previous quarter. The tier 1 capital ratio excluding transition rules decreased 0.3 percentage point to 14.0 per cent due changed regulatory deductions for holding in insurance companies. The total capital ratio excluding transition rules increased 0.3 percentage point to 16.5 per cent. Improved core tier 1 capital ratio has been achieved by strong profit generation but countered by the implementation of revised IAS 19, Employee Benefits.

Life insurance

Profit before taxes in life insurance for January-March 2013 rose to EUR 36 million (33). EUR 20 million was used in the first quarter of 2013 to lower the interest rate used to discount all with profit liabilities in 2014 with 2.7 per cent. The discount rate for 2013 has already earlier been lowered to 2.5 per cent. All in all, Mandatum Life has increased its technical reserves with a total of EUR 128 million due to low level of interest rates. Return on equity (RoE) amounted to 22.4 per cent (72.3). The total comprehensive income for the period, taking changes in the market value of assets into account, decreased to EUR 66 million (172).

Excluding the assets of EUR 4.1 billion (3.8) covering unit-linked liabilities, Mandatum Life Group's investment assets on 31 March 2013 amounted to EUR 5.6 billion (5.5) at market values. Investment return mark-to-market during January - March 2013 was 2.3 per cent (5.2). The fair value reserve increased from the end of 2012 by EUR 38 million to EUR 429 million. At the end of March 2013 the duration of fixed income assets was 1.7 years (1.8) and average maturity 2.0 years (2.4). Fixed income running yield decreased to 4.4 per cent (5.3).

Mandatum Life's solvency position remained strong and Mandatum Life Group's solvency ratio as at 31 March 2013 was 27.3 (27.7). The dividend of EUR 100 million paid in April 2013 to Sampo plc has been deducted from the solvency margin. Mandatum Life's capital requirement is to a very large degree related to with profit technical reserves and the investments covering these reserves. With profit reserves have shrunk by EUR 340 million during the last two years, which has decreased the required capital and contributed to company's ability to pay a dividend. The with profit reserves are expected to continue to annually decrease by roughly the same amount for the next five years.

Mandatum Life Group's total technical reserves exceeded EUR 8 billion for the first time ever and amounted to EUR 8.1 billion (7.9), of which unit-linked reserves accounted for 4.1 billion (3.8). The unit-linked reserves reached an all-time high and their share of total technical reserves exceeded 50 per cent (48).

Holding

The segment's profit before taxes amounted to EUR 132 million (139), of which EUR 162 million (158) relates to Sampo's share of Nordea's first quarter 2013 profit. The segment, excluding share of Nordea's profit, reported a loss of EUR 30 million (-19). The negative effect of the strengthening of Swedish krona and decrease in the fair value of interest rate swaps amounted to EUR -19 million.

Sampo plc's debt financing on 31 March 2013 amounted to EUR 2,108 million (2,162) and interest bearing assets including bank accounts to EUR 1,215 million (1,048). During the first quarter the net debt decreased EUR 221 million to EUR 893 million (1,113). Gross debt to Sampo plc's equity was 30 per cent (32).

After the end of the reporting period Sampo plc paid a total of EUR 756 million in dividends and received a dividend of EUR 100 million from Mandatum Life. Together these measures increase the net debt to approximately EUR 1,5 billion at the end of April.

OTHER DEVELOPMENTS

Adoption of IAS 19R

The amendment to IAS 19 Employee Benefits (effective for annual periods beginning on 1 January 2013 or after) mandated all actuarial gains and losses be recognized in other comprehensive income, thus the so-called corridor approach was eliminated and in the future the benefit cost will be determined based on the net funding.

The change had an impact on the employee benefits recognized in If subgroup. The net accumulated unrecognized losses EUR 123 million related to the corridor method at 31 December 2011 reduced the opening equity for the comparison year 2012. The corresponding amount at 31 December 2012 was EUR 93 million. The subsequent changes from 2013 on (including comparables for 2012) will be recognized in other comprehensive income. The effect has already been taken into account in the calculation of If subgroup's capital base.

Outlook for the rest of 2013

Sampo Group's business areas are expected to report good operating results for 2013.

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 2013 and achieve a combined ratio of 89 - 92 per cent. 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. As a financial group the major sources of profitability and its variation for Sampo Group are market, credit and insurance risks. Their contributions to the Group's Economic Capital - used as an internal basis for capital needs - currently represent normal levels of 32 per cent, 45 per cent and 12 per cent, respectively.

Major unforeseen events or abrupt structural changes in the business environment may impact the profitability of Sampo Group or they can affect Group's ability to conduct its business activities. For example the continuing political and financial crises in Europe combined with slow growth may escalate in ways that can affect Group's activities unfavourably. This is, however, mitigated by the fact that Sampo Group companies have no direct exposures in sovereigns under pressure and have small exposure to banking sector outside the Nordic region.

SAMPO PLC
Board of Directors

For more information, please contact:

Peter Johansson, Group CFO, tel. +358 10 516 0010Jarmo Salonen, Head of Investor Relations and Group Communications, tel. +358 10 516 0030Maria Silander, Press Officer, tel. +358 10 516 0031

Sampo will arrange a conference call for investors and analysts today at 5 pm Finnish time (3 pm UK time). The call is held in English. Please call +44 20 7162 0025 or +1 334 323 6201. Please be ready to state the ID number 931495 and the password 'Sampo'.

The conference call 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 Package is available at www.sampo.com/result .

Sampo will publish the second quarter 2013 interim report on 7 August 2013.

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