IR Blog

In this blog entry we address the main questions regarding the dual listing on Nasdaq Stockholm and the practicalities related to Sampo’s Swedish Depository Receipts, Sampo SDRs. Please note that this does not concern Finnish natural or legal persons, since they are not allowed to own Sampo SDRs.

What is a Swedish Depository Receipt (SDR)?

An SDR is a financial instrument, issued by a Swedish intermediary, representing shares in a non-Swedish company. The Sampo SDRs will be issued by Skandinaviska Enskilda Banken AB (the “Custodian”). Each Sampo SDR will represent one Sampo A share.

Can I buy and sell Sampo SDRs?

The SDRs will be listed on Nasdaq Stockholm, under the short name (ticker) Sampo SDB, and will be fully tradable as all financial instruments listed on Nasdaq Stockholm. You will be able to hold your Sampo SDRs in a securities account, securities custody account, investment savings account or an endowment insurance with your bank or broker.

I’m a Swedish shareholder and own Helsinki listed Sampo shares. Do I have to convert my shares to Sampo SDRs?

No, you don’t have to do anything if you don’t wish to convert your Sampo shares to Sampo SDRs. Please note that Finnish natural or legal persons are not allowed to own Sampo SDRs.

Can I convert my Sampo shares to Sampo SDRs and vice versa?

Holders of Sampo shares will be able to convert their Sampo shares into SDRs, and holders of SDRs will be able to convert their SDRs into Sampo shares. Holders who wish to convert Sampo shares into Sampo SDRs, or vice versa, should liaise with their bank or broker to execute the conversion together with the Custodian.

What will be the cost of converting to/from SDRs after the free conversion period?

Certain fees will apply to the conversion. However, Sampo will during a period of 14 calendar days from and including the first day of trading in Sampo SDRs on Nasdaq Stockholm, pay the conversion fees charged by the Custodian for conversions of Sampo shares into Sampo SDRs.

Any additional fees or charges pertaining to the service of the shareholder’s bank or broker in conjunction with the conversion will not be paid by Sampo.

How will I as an SDR holder receive dividends from Sampo?

A Sampo SDR holder will be entitled to dividends and other distributions in the same manner as a holder of Sampo shares. The dividends to SDR holders will be paid out in SEK and be distributed a few days after the dividend payment date for the Sampo shares.

What is the withholding tax on dividends from Sampo SDR?

The Finnish withholding tax rate applied on dividend payments is a function of each investor’s individual circumstances.

Sampo is not able to provide tax advice, but it is Sampo’s understanding that Euroclear Sweden deducts 35 per cent Finnish withholding tax on all dividends paid to SDR holders in Finnish companies listed on Nasdaq Stockholm, with the possibility for the SDR holder to reclaim potential overpayments any excess withholding tax relative to the investors’ applicable Finnish withholding tax rate from the Finnish Tax Authority.

Please contact your bank or broker for further tax information.

How will I as an SDR holder be able to vote at future Sampo shareholders’ meeting?

Sampo SDR holders are able to participate and vote in Sampo shareholder’ meetings in one of two ways:

a) vote by instructing SEB or the Sub-Custodian to vote on behalf of the Depository Receipt Holder in SEB’s or the Sub-Custodian’s name by proxy form or

b) participate and vote at the shareholders’ meeting in the Depository Receipt Holder’s own name by being temporarily registered in the Company’s shareholder register maintained by Euroclear Finland Oy for participation and voting purposes.

For detailed information on how to participate and vote, please see the SDR terms and conditions (link)

Market maker and liquidity provider arrangement

Sampo has engaged Skandinaviska Enskilda Banken AB (SEB) as market maker and liquidity provider in the Sampo SDR as from the first day of trading in the SDRs on Nasdaq Stockholm.

What is a market maker and liquidity provider?

A market maker or liquidity provider is a market participant that quote both bid and ask prices on a continuous basis.

What is the purpose of the market maker and liquidity provider arrangement?

The purpose of the arrangement is to promote trading liquidity in the SDRs on Nasdaq Stockholm and to reduce the difference between the bid and ask prices in trading in the SDRs.

Can the price in the SDR deviate from the price of the Sampo A share?

The Sampo A share is listed on Nasdaq Helsinki and is traded in EUR while the Sampo SDR is listed on Nasdaq Stockholm and is traded in SEK. SEB as a market maker and liquidity provider will quote bid and ask prices for the Sampo SDR based on the Sampo A share price in EUR and the current EUR/SEK spot exchange rate. It should be noted that the difference between bid and ask prices (spread) could fluctuate over time based on the underlying markets. However, under normal trading conditions the maximum spread shall be 2 per cent (or 4 per cent during stressed market conditions), calculated from the bid price, and the aim is to keep a spread that is no more than 0.50 per cent wider than the spread of the Sampo A share traded on Nasdaq Helsinki.

Sampo Group reported solid results in the third quarter of 2022, driven by continued robust underwriting performance.

The Group’s profit before taxes amounted to EUR 1,472 million (1,974) in January-September and EUR 407 million (632) in the third quarter. Excluding all Nordea-related items, profit before taxes was EUR 1,212 million (1,356) in January-September and EUR 407 million (374) in the third quarter.

Earnings per share was EUR 2.19 (2.74) in January-September and EUR 0.58 (0.93) in the third quarter.

Sampo Group’s core business, P&C insurance reported an underwriting profit of EUR 1,009 million (958) in January-September and EUR 330 million (327) in the third quarter. The Group combined ratio was 81.6 per cent (80.9) in January-September and 82.4 per cent (81.1) in the third quarter.

*) Nordea-related accounting effects of EUR 103 million in January-September 2022 have been defined as extraordinary items in accordance with Sampo Group’s dividend policy. The comparison figures included extraordinary items of EUR 237 million in January-September and EUR 144 million in the third quarter.
**) OCI refers to Other comprehensive income.
The figures in this report have not been audited.

What where the key factors behind the solid underwriting performance in Q3?

The Group underwriting profit continued to be supported by strong development in the Nordics, driven by strong premium growth and stable and high retention, leading to an increase of 1 per cent year-on-year. Excluding the reported COVID-19 effects in the comparison period, underwriting profit increased by 5 per cent, in line with our financial targets.

If achieved a stable underwriting profit despite being negatively affected by an unusually high large claims load. Meanwhile Topdanmark increased its underwriting profit by 21 per cent year-on-year in Q3.

In the UK, the motor insurance market has remained challenging which limits Hastings’ growth opportunities in the short-term. Given the current market conditions and the unwind of COVID-19 effects, Hastings’ underwriting profit was solid, although 12 per cent lower than a year ago.

For the first nine months of 2022, Sampo Group’s underwriting profit increased by 3 per cent or 13 per cent excluding the reported COVID-19 effects in the comparison period, well ahead of our financial targets.

What where the key drivers behind If’s currency adjusted GWP growth of 5.7 per cent in Q3?

If’s premium growth was robust across the board and driven primarily by rate increases, continued high and stable retention and an increase in customer count. The strongest growth figures were reported in Business Areas Commercial (11.8%) and Baltic (21.0%).

If’s largest Business Area, Private saw 3.5 per cent premium growth, supported by a rebound in travel insurance volumes and healthy growth in property and personal insurances. However, the growth continued to be negatively affected by weak new car sales in the Nordic, particularly in Sweden which is the largest market area for If. Excluding the Swedish mobility business, the GWP growth during Q3 stood at 4.8 per cent for If Private and 6.8 per cent for If as a whole.

How did the claims inflation develop in Sampo’s core markets?

In the Nordics, claims inflation was at 4-5 per cent during Q3, broadly unchanged from Q2. If continued to increase prices to cover the claims inflation with somewhat above 5 per cent increases in Q3.

In the UK motor insurance market, claims inflation ticked up to 12 per cent in Q3 from 10-12 per cent in Q2 and market prices continued to lag behind. Hastings has remained disciplined in pricing and continued to apply rate increases, supporting currency adjusted GWP growth of 20 per cent in Q3.

If’s combined ratio improved in January-September but deteriorated by 1.4 percentage points to 81.6 per cent in Q3. What explains this development?

The main negative effect in Q3 came from large losses which, as measured by a share of net premiums earned, were 2.4 percentage points above the budged, whereas in the comparison period in 2021, large claims were 3.1 per cent below the budget. The increased number of large claims seen in If’s Industrial business were mostly property fire claims. In addition, in the comparison period, the combined ratio still benefitted by approximately 1 percentage point from COVID-19 effects. On the positive side, the combined ratio benefitted from higher discount rates and lower effects from severe weather.

If’s adjusted risk ratio, which excludes the impact of impact of large losses, severe weather, reported COVID-19 effects and prior year development, improved by 0.5 percentage points in Q3. This translates into an improved adjusted combined ratio in Q3.

Picture from Investor Presentation

Interest rates continued to rise during the third quarter. How did this affect Sampo?

Sampo has been well positioned to benefit from higher interest rates. The short duration in our fixed income portfolios has enabled the fast rotation into higher yielding instruments, which has reflected to relatively rapid increase in running yields.

In Q3, If’s running yield increased by another 60 basis points to 2.7 per cent, now up 120 basis points from the 1.5 per cent at the 2021 year-end. This translates to approximately EUR 120 million rise in run-rate pre-tax earnings. In addition, If’s underwriting profit benefitted by EUR 43 million from higher discount rates in Q3 and in total EUR 163 in January-September.

Mandatum Life’s running yield increased to 3.3 per cent from 3.0 per at the end of Q2, exceeding the average guaranteed rate of the with-profit portfolio. Higher interest rates also continued to support Mandatum Life’s Solvency II ratio, which increased to a new record of 282 per cent at the end of Q3.

The extremely fast increase in interest rates seen in the UK drove Hastings’ running yield to 5.4 per cent at the end of Q3, up by 240 basis points just during one quarter.

Picture from Investor Presentation

The capital markets were very volatile during Q3 amid increased economic uncertainty. How did this affect Mandatum?

Mandatum reported a solid performance during Q3, supported by a strong operational result (expense result and result from asset management) of EUR 17 million (12). However, as most of Mandatum’s total profit comes from investments, there is no escape from market turbulence affecting investment returns.

Mandatum’s investment result taken through the P&L was stable at EUR 41 million (40) in Q3, but the fair value investment result decreased to EUR -126 million (14), affected by decreasing market values across a broad range of asset classes.

Despite the challenging market environment, net flows into capital light third-party assets remained positive during Q3, highlighting Mandatum’s strong position in the Finnish market. In addition, rising interest rates improve Mandatum’s running yield and support solvency as mentioned above.

Sampo’s balance sheet remained strong in Q3 as both the solvency and leverage ratios improved during the quarter. What were the drivers behind the improvement?

On the solvency side, the Solvency II ratio increased to 256 per cent from 245 per cent at the end Q2. Including the dividend accrual based on the insurance dividend of EUR 1.70 per share for 2021, the Solvency II ratio increased to 238 per cent from 233 percent. The Solvency II ratio is well above the target range of 170-190 per cent.

The main driver behind the improvement was the continued strong operating performance, increasing the Solvency II ratio by 8 percentage points. Capital market effects had a positive effect of 3 percentage points as the benefits of rising interest rates and a lover symmetric adjustment were partially offset by wider credit spreads and currency movements.

Meanwhile Sampo’s financial leverage improved to 25.9 per cent from 29.2 per cent at the end of Q2, clearly within the target of below 30 per cent. The improvement was driven by EUR 0.8 billion reduction in gross debt, consisting of EUR 501 million repurchase of Sampo plc’s senior bonds and the redemption of Hastings’ GBP 250 million (approx. EUR 290 million) senior bond in September.

How much excess capital does Sampo hold and when can shareholders expect that to be returned?

The excess capital above the needs of Sampo’s insurance operations is estimated to be EUR 3-4 per share. Of this, over EUR 2 per share is excess capital remaining from the Nordea-exit, which Sampo continues to gradually return to shareholders, given the uncertain capital markets. As communicated, Sampo will announce the Board’s proposal for further capital returns in connection with full-year 2022 results on 10 February 2023.

The rest of the estimated excess capital of EUR 3-4 per share is tied into the so called “PE portfolio” and could be freed up when Sampo eventually exits these investments.

Picture from Investor Presentation

Sampo has today initiated an evaluation of a dual listing of its shares on Nasdaq Stockholm. In this blog entry we address the main questions regarding the potential listing.

Why is Sampo considering a dual listing on Nasdaq Stockholm?

Stockholm is the largest and most liquid market in the Nordic region, and Sampo has natural connections to Sweden via If P&C. However, Swedish shareholders hold only approximately 5 per cent of Sampo’s shares.

As a large cap P&C insurer, Sampo would be a unique asset on Nasdaq Stockholm – a resilient financial, with strong pricing power and positive interest rate gearing. A Stockholm listing could make available new pockets of demand for Sampo shares, such as Swedish funds, and would therefore benefit existing shareholders as much as potential new owners.

Would the dual listing affect Sampo’s presence in Finland?

The potential dual listing would not affect Sampo’s operational presence in Finland or the share’s listing on Nasdaq Helsinki.

What kind of process is a dual listing? What are the main steps?

At this stage, the option to list is being evaluated by Sampo’s Board of Directors. Should the Board decide to proceed, the trading on Nasdaq Stockholm could start during the fourth quarter.

Does Sampo plan to issue new shares?

There is no plan or need of issuing new shares. Sampo has excess capital that is currently being returned to shareholders via share buybacks.

What would be the costs related to the dual listing for Sampo?

The incremental costs would be very limited as Nasdaq has largely harmonised regulation across the Helsinki and Stockholm exchanges.

How would the dual listing impact Sampo’s existing Swedish shareholders?

The potential dual listing would not require any action from Swedish shareholders as it would not impact Sampo’s listing in Nasdaq Helsinki.

How would the dual listing impact Sampo’s Finnish shareholders?

The potential dual listing would not affect Sampo’s Finnish shareholders in any way. Finnish shareholders (natural or legal persons) are not allowed to own Finnish-domiciled companies through nominee-registration, or other similar, comparable structures. Thus, they could not own Sampo through the Stockholm stock exchange.

Sampo Group continued its robust performance in the second quarter of 2022, driven by strong underwriting development.

The Group’s profit before taxes amounted to EUR 1,066 million (1,343) in the first half and EUR 499 million (710) in the second quarter. Earnings per share was EUR 1.61 (1.80) for half and EUR 0.75 (0.99) for the second quarter.

Sampo Group’s core business, P&C insurance reported an underwriting profit of EUR 679 million (658) for the first half and EUR 389 million (341) for the second quarter. The Group combined ratio was 81.1 per cent (80.7) in the first half and 78.9 per cent (80.2) in the second quarter.

With the robust results achieved in the first half of 2022. The Group is performing well ahead of its financial targets for 2021-2023.

*) Nordea-related accounting effects of EUR 103 million in January-June 2022 have been defined as extraordinary items in
accordance with Sampo Group’s dividend policy. The comparison figures included extraordinary items of EUR 93 million.
**) OCI refers to Other comprehensive income.
The figures in this report have not been audited.

Financial targets for 2021-2023 announced at the Capital Markets Day on 24 February 2021.

Sampo Group’s underwriting profit for the second quarter increased by 14 per cent. What were the drivers behind the strong growth?

The underwriting profit growth was driven by the continued strong performance in our Nordic P&C operations.

If’s underwriting profit increased by 26 percent in the second quarter, supported by strong premium growth and continued robust underlying development in a competitive but disciplined operating environment. In addition, If benefitted from higher discount rates. Meanwhile, Topdanmark reported stable but solid underwriting results.

The UK motor insurance market has remained challenging with competitive pricing and elevated claims inflation. Despite the challenging environment, Hastings was able to report resilient underwriting results supported by disciplined pricing and its agile business model.

If’s currency adjusted gross written premiums (GWP) growth accelerated to 8.4 per cent in the second quarter from 6.9 per cent in the first quarter. What were the biggest growth drivers?

If’s premiums grew across all markets and Business Areas, supported by continued strong renewals, high retention and price adjustments. The strongest growth was reported by the Business Area Industrial, which achieved 33.2 per cent year-on-year in the second quarter. The conditions in the Nordic Industrial market are currently compelling following a withdrawal of capacity by some competitors, which has allowed us to increase rates to attractive levels over recent years.

In addition to BA Industrial, If’s Baltic operations reported particularly strong GWP growth of 23.7 per cent. Growth was very strong in all three Baltic countries with continued rate increases, high retention and growing customer base.

If’s largest Business Area, Private, saw GWP growth of 2.4 per cent in the second quarter, supported by rate increases, a growing customer base and high retention. However, the growth was negatively affected by the weak new car sales in the Nordics and especially in Sweden, which is the largest market for If. Excluding the Swedish mobility business, the GWP growth for BA Private was 5.3 per cent in the second quarter.  

Picture from Investor presentation

How did the claims inflation develop in Sampo’s core markets?

In the Nordics, claims inflation has ticked up from 3-4 per cent at the end of the first quarter to just above 4 per cent, in line with expectations. This has successfully been covered with rate increases and we continue to monitor claims trends carefully and react with further price adjustments if needed.

In the UK motor insurance market wide pricing has continued to lag claims inflation, which has now increased to 10-12 per cent. Hastings has been disciplined in its pricing and protected its margins with price increases ahead of the market, leading to lower motor volumes.

How have Sampo benefitted from higher interest rates?

On the asset side, Sampo has been well positioned due to the short duration of fixed income assets in the insurance portfolios. This has enabled the fast rotation into higher yielding instruments. For example, during the second quarter, If invested EUR 2 billion into high quality assets with longer duration, leading to added annual pre-tax earnings of EUR 24 million (relative to the Q1 running yield). In aggregate, If’s running yield increased to 2.1 per cent from 1.6 per cent at the end of the first quarter. On the liability side, If benefitted by around EUR 120 million from higher discount rates in the first half of 2022.

For Mandatum, higher interest rates improve the profitability of the with-profit portfolio, which is in a run-off stage. Mandatum Life’s fixed income running yield increased to 3.0 per cent at the end of second quarter, the highest since 2017 and approaching the average with-profit guaranteed rate of 3.2.

Picture from Investor presentation

Sampo Group’s Solvency II ratio was exceptionally high, 245 per cent or 233 per cent including the dividend accrual at the end of June 2022. What explains the high solvency coverage?

The three main drivers behind the 41 percentage points increase from the first quarter (204) were the robust underwriting performance, the Nordea-exit and favourable market effects such as higher interest rates. The Nordea-exit had positive effect of 29 percentage points, which was partially offset by launch of the 1 billion buyback programme (-19 percentage points). The Groups’ operating performance had positive effect of 6 percentage points, while market items had a positive effect of 16 percentage points, including 7 percentage points from higher interest rates and another 7 percentage points from lower symmetric adjustment.

Sampo Group’s financial leverage increased to 29.2 per cent from 24.8 per cent at the end of the first quarter. What explains the increase?

The increase was driven by the payment of the annual dividend in May, executed share buybacks and adverse asset value development taken through other comprehensive income. Adjusting for the EUR 1 billion buyback programme and planned EUR 800 million debt reduction in the future, the financial leverage was 26.8 per cent.

Sampo completed the Nordea-exit in April 2022. When will the other financial investments be divested?

We expect to exit the other investments to over the next 2-3 years, as these assets naturally mature. However, as a co-investor, we are not fully in control over this schedule, which will also depend on the prevailing market environment.

Sampo has repurchased its own shares under three buyback programmes since October 2021. How does this benefit Sampo’s shareholders?

Many Sampo shareholders prefer to receive capital returns via buybacks; hence, Sampo has chosen to use both dividends and buybacks to return excess capital. Buybacks also provide flexibility, as they enable shareholders to choose between receiving cash returns by selling shares while maintaining their ownership share in the Group, or increasing of their stake in the company by holding on to the stock.

Between the start of the first buyback programme in October 2021 and the end of July 2022, Sampo has returned almost EUR 1.2 billion of excess capital to shareholders via buybacks. In total, 27.1 million shares have been repurchased, corresponding to 4.9 per cent of all shares prior to the start of the first programme. This has led to an EPS accretion of 5.1 per cent.

The ongoing buyback programme of EUR 1 billion (EUR 793 million remaining at the end of July 2022) will end by 8 February 2022. As announced on 9 June 2022, Sampo’s management intends to propose to the Board a second distribution of capital in the form of buybacks or extra dividend, or a combination thereof, in connection with the publication of the 2022 financial result in February 2023.

Sampo’s Investor Update 2022

Sampo will hold an investor update event on Thursday 8 September 2022 in London. The event will be a deep dive into key operational initiatives that underpin Sampo Group’s financial targets, with presentations from management and Q&A.

The presentations will start at 13:00 pm (UK time). The agenda will be later available at www.sampo.com. The event will be webcast and can be followed live at the same address.

For further information, please contact Sampo’s IR Team by email: ir@sampo.fi

In this blog entry we address the questions regarding the sale of Sampo’s entire holding in Nordea announced today. 

Release

Why did you decide to sell the entire stake instead of the originally announced 100 million shares?

The strong market demand offered us an opportunity to reduce our holding to zero, which is in line with our P&C focused strategy.

The total remaining holding was 200 million shares. Does this mean that Sampo had already sold around 46 million shares between year-end 2021 and the final sale?

Yes. Around 19 million shares were sold in the open market in Q1 and 27 million in April.

Sampo’s management intends to propose that a new buyback programme is launched after the AGM. What will be the size of the programme?

The current programme of EUR 250 million launched in March is still ongoing and will end by latest 17 May 2022. Details of the new programme will be announced after the current programme is completed.

How will the sale affect Sampo Group’s solvency?

The positive effect from selling the entire stake, including previous sales in 2022, will be around 30 percentage points on the Group’s Solvency II ratio.

How will the sale affect Sampo Group’s financial leverage?

The effect will not be material, however slightly positive.

Do you have to use some of the proceeds for decreasing the financial leverage?

No, we don’t need the money for deleveraging. Funds for that purpose had already been secured with the Nordea disposals in 2021.