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IR Blog

Why invest in Sampo?
IR Blog provides information about Sampo as an investment case and the Group's businesses and markets.

11 February 2021

Results for 2020 – Q&A

Despite the challenging environment, the year 2020 was good for Sampo. If, the Group’s largest business area, reported its best-ever technical result. In addition, investment income was supported by the fast recovery in the capital markets after the turmoil last spring.

The Group’s profit before taxes decreased to EUR 380 million from EUR 1,541 million a year ago. The reported result was negatively affected by the sale loss of EUR 262 million related to the Nordea sale in Q4 and the impairment of EUR 899 million for the rest of the Nordea shares held. Without these extraordinary items, the profit before taxes would be almost at the same level as a year ago.

Read more about Sampo’s January-December 2020 results

Key figures, EURm 2020 2019 Change,
Profit before taxes* 380 1,541 -75 -675 468 -
If 901 884 2 285 228 25
Topdanmark 167 238 -30 82 58 41
Hastings -16 - - -16 - -
Associates* -722 298 - -1,030 143 -
Mandatum 154 280 -45 54 68 -20
Holding (excl. associates) -103 -4 - -50 -29 69
Profit for the period 112 1,237 -91 -769 389 -
      Change     Change
Earnings per share, EUR 0.07 2.04 -1.97 -1.44 0.66 -2.10
EPS (without eo. items) EUR 2.16 2.31 -0.15 - - -
EPS (based on OCI), EUR 0.65 2.63 -1.88 -0.47 1.19 -1.63
NAV per share, EUR 19.82 20.71 -0.89 - - -
Average number of staff, FTE 13,227 9,813 3,414 - - -
Group solvency ratio, % 176 174 2 - - -
RoE, % 3.1 12.0 -8.9 - - -

*The reported loss related to the sale of Nordea shares in November 2020 and the impairment of Nordea holding made in the consolidated Group accounts 2020, together EUR 1,161 million is included in the 2020 figure. The comparison figure includes a valuation loss of EUR 155 million related to Nordea shares.

The figures have not been audited.

Why did Sampo make an impairment to Nordea’s book value?

Nordea is Sampo’s associated company and its book value is based on equity accounting. To simplify, Sampo’s share of Nordea’s quarterly profits increase the book value and paid dividends decrease it. In addition, the book value is affected by certain, more technical items, such as amortization of goodwill and share of Nordea’s other comprehensive income.

The book value is tested regularly and compared to the recoverable amount for the investment by using a discounted cash flow model, where the cash flows are based on the public information on Nordea. Based on the latest test, the recoverable amount was EUR 7.50 per share.

Nordea’s market price has for a protracted period been under the Group’s book value for the Nordea shares. Thus, the Board decided, after applying management judgement, to impair the book value of Nordea to EUR 7.50 per share from EUR 8.90 per share at the end of December 2020. 

As a result, the impairment had a negative effect of EUR 899 million for the Q4 result.


Picture from Supplementary financial information presentation

Does the impairment loss affect Sampo’s solvency and NAV calculations?

No, it does not, since both calculations are based on the market value of Nordea. The impairment loss does not affect Sampo’s liquidity position either, and therefore nor on ability to pay dividend.

Does the impairment loss affect Sampo’s plans for Nordea?

No, it does not. Even though the regulatory and macroeconomic uncertainty weight Nordea’s share price, the company has continued its positive performance. Sampo continues to see upside in Nordea’s 2022 plans but the group will, over time, explore options to reduce its exposure to banking.

How did the coronavirus pandemic affect Sampo’s business in the fourth quarter?

Vast majority of Sampo plc’s and the subsidiary’s personnel has continued to work from home. Despite of this, the Group companies have succeeded to serve their customers normally.

Various restrictions and the decrease in general activity continued to lower the claims frequency, particularly within motor insurance, which supported the technical results. The effect of the pandemic on If’s combined ratio was approximately 4 percentage points positive in the fourth quarter and approximately 3 percentage points for the full year.

Partly due to the positive effects related to the pandemic, If reported its best-ever combined ratio. The combined ratio was 81.3 per cent in the fourth quarter and 82.1 per cent for the full-year 2020.

How did the technical profitability develop by business areas and markets?

Geographically, If’s combined ratio improved in all markets, except in Finland, where the discount rate was lowered in the third quarter. The development was strongest in Sweden, If’s largest market, where the combined ratio improved to 72.3 per cent (76.5) in 2020.


Picture from Supplementary financial information presentation

By business areas, the combined ratio increased only in BA Industrial due to higher large claims than expected in 2020. In the largest business area, BA Private, the technical development was excellent and supported by fewer claims due to the pandemic.


Picture from Supplementary financial information presentation

How did If’s premiums develop in 2020?

If reported strong premium growth in 2020, although the growth slowed down a bit towards the end of the year. In local currency, premiums grew by 4.7 per cent in 2020. Geographically, the growth was strongest in Denmark, where If focuses more on larger corporate customers.


Picture from Supplementary financial information presentation

Customer retention continued to be high and stable across all business areas. In the largest business area, BA Private, the customer base increased for the third year in a row and was approximately 3,142,000 at the end of 2020.

How did the landslide in Gjerdrum, Norway at the end of the year affect If’s results?

The tragic landslide in Norway was classified as a natural peril and the damages will be covered by the national Natural Perils Pool, whose costs will be shared among the P&C insurers operating in Norway in proportion to their market shares. If’s claims related to the landslide were EUR 18 million in the fourth quarter.

How has the continued good momentum in the capital markets impacted the Group’s investment income?

Both If and Mandatum Life have reported good investment returns after the market turmoil last spring. Especially, the fourth quarter was strong. However, the full-year figures were still impacted by the EUR 191 impairments booked in January-March (If EUR 94 million, Mandatum Life EUR 61 million and Sampo plc 36 million).

In the fourth quarter, If’s net investment income was EUR 76 million (71). Mandatum Life, which has clearly higher equity exposure than If, reported EUR 108 million (78) net investment income excluding income on unit-linked contracts. When looking at investment income, it is good to note that only realized profits are included in it. Changes in market values, on the other hand, are included in the Group’s comprehensive total income.

The good momentum in the capital markets also supported Mandatum Life’s unit-linked technical reserves, which were at all-time high level of EUR 8.8 billion (8.1) at the end of 2020. With-profit reserves linked to higher guarantees (3.5% and 4.5%) continued to shrink and decreased by EUR 268 million to EUR 1.9 billion.

Why did Mandatum Life’s profit before taxes decrease in the fourth quarter despite the strong investment returns?

Mandatum Life has further strengthened its technical provision in response to the continued period of low interest rates. In the final quarter, Mandatum Life lowered its discount rate to 0.25 per cent for the years 2022 and 2023. This had a negative impact of EUR 77 million on the profit.

How did Hastings’ last quarter go?

Hastings has been consolidated as a subsidiary of Sampo since mid-November. Thus, only the figures for the last 6 weeks are included in the Group’s income statement. In addition, these figures include a group of extraordinary items related to the Hastings acquisition and the delisting process. Therefore, the reported figures do not give an accurate picture of Hastings’ operational performance.

In general, the full-year 2020 and the fourth quarter were good for Hastings despite the challenging environment and the company’s customer base continued to grow steadily. Hastings’ business will be presented in more detail at Sampo’s Capital Markets Day on 24 February 2021.

Nordea has, in line with ECB’s recommendations, postponed its dividends. Is the Board’s dividend proposal of EUR 1.70 per share on a solid base?

Yes, it is, since the dividend is primarily funded by internal dividends from insurance operations.

If paid a dividend of approximately EUR 600 million in the fourth quarter to Sampo and Mandatum is expected to pay EUR 200 and Topdanmark EUR 113 million in spring. These internal dividends exceed EUR 1.6 per Sampo share. In addition, after the Nordea share sale in November, Sampo’s liquidity position is strong.


Picture from Supplementary financial information presentation

The dividend proposal is 79 per cent of the Group’s net profit excluding extraordinary items related to Nordea (EUR 2.16 per share) and therefore in line with Sampo’s dividend policy (at least 70 per cent of the Group’s net profit excluding extraordinary items).

Investment company Elliott has publicly expressed its views on Sampo’s strategy. How would you comment on these views?

Sampo’s strategy is on the agenda at the Capital Markets Day on 24 February 2021.

We appreciate investors providing clear and forthright feedback. Elliott happens to be an investor that also shares this feedback publicly.


Mirko Hurmerinta

IR and Communications Specialist, Sampo plc

11 November 2020

Nordea sale – Q&A

Sampo announced on 10 November 2020 that it has reduced its ownership in Nordea in line with its strategy. Sampo sold 162 million Nordea shares in an accelerated bookbuild offering to institutional investors.

The transaction price was EUR 7.25 per share, resulting in gross proceeds of approximately EUR 1,174 million. Sampo will incur an accounting loss of EUR 222 million from the transaction for the last quarter of 2020.

After the transaction, Sampo holds 642,924,782 Nordea shares, corresponding to 15.9 per cent of all shares and voting rights in Nordea. Sampo has entered into a lock-up undertaking, under which it has, subject to certain exceptions, agreed not to sell any Nordea shares for a period ending at 9 May 2021.

Sale release
Result of the sale

Questions and answers

Why did you decide to reduce your ownership in Nordea?

Sampo’s strategy is to focus on its core competence area, P&C insurance, as this is where we think we can add most shareholder value. The Hastings acquisition offer was the first step towards that direction and reducing ownership in Nordea is another. The transaction adjusts the balance between P&C insurance operations and our other assets.

Have you lost your faith in Nordea’s turnaround process?

No, we definitely have not. Nordea remains committed to achieve its financial targets for 2022 and has shown very positive signs of progress during the last couple of quarters. With 15.9 per cent ownership, Sampo still remains the largest shareholder of Nordea and we are confident that Nordea will meet its targets. The sale reflects our strategic ambitions towards P&C insurance.

Will you continue to sell Nordea after the lock-up period ends?

We review our holdings continuously and will align these with our P&C focused strategy as and when we think this makes sense for the group. This process is driven by how we see each asset contributing to the group, its financial performance and overall impact on shareholder value rather than practical factors such as the lock-up.

What are you going to do with the proceeds?

Part of the proceeds will be used to reduce Sampo’s leverage and the rest will further strengthen Sampo’s liquidity position and ability to respond to future opportunities.

The market is full of cheap debt capital, why are you worried about your leverage?

We are not worried, but after the Hastings offer, the leverage rose a bit too high for our taste.

Are there any M&A opportunities in sight?

We always keep our eyes open for opportunities, but at the moment we are not in an acquisition mode as we focus on closing the Hastings deal.

Does the sale affect Sampo’s dividend policy?

It does not. The accounting loss from the transaction will be treated as an extraordinary item in calculating the dividend paid for 2020 and it will therefore not impact the dividend. Sampo’s dividend policy, adopted on 6 February 2020, is to pay total annual dividends of at least 70 per cent of Group’s net profit (excluding extraordinary items) and that share buy-backs can be used to complement the cash dividend.

Nordea will still be an associate of Sampo. At what point the position must be changed?

The position as an associated company is based on Sampo’s influence in Nordea. Sampo is still the largest shareholder of Nordea by a margin and Torbjörn is the Chairman of the Board there. The position is something that must be discussed with the FSA and auditors. There is no exact percentage for that.

Are you going to exit your financial and fintech assets as well? (Saxo Bank, Nets, Nordax, Bank Norwegian and Enento Group)

These are financial investments for Sampo. Thus, it’s likely that we will eventually divest these investments, but we have no need to make any sudden moves. These are all different investment cases at different stages of development, and all of them are generally performing well at the moment.

Mirko Hurmerinta

IR and Communications Specialist, Sampo plc

4 November 2020

Results for January-September 2020 – Q&A

Sampo Group’s profit before taxes for January-September 2020 amounted to EUR 1,054 million (1 073) and earnings per share was EUR 1.51 (1.38).

Results were driven by If’s very strong performance in the third quarter. In addition, investment income was supported by the continued positive development in the capital markets. Meanwhile, associated company Nordea showed more solid signs of progress towards its financial targets for 2022.

With the strong development in the P&C insurance operations, outlook for If’s combined ratio for 2020 was improved to 82-84 per cent from the previous 82-85 per cent.

Interim report for January-September 2020 and the supplementary financial information are available at

Key figures, EURm 1-9/
Profit before taxes 1,054 1,073 -2 485 92 425
If 616 655 -6 233 215 8
Topdanmark 85 180 -53 46 34 35
Associates* 308 0 - 170 -227 -
Mandatum 100 212 -53 60 75 -20
Holding (excl. associates) -53 26 - -25 -6 -333
Profit for the period 881 848 4 412 22 1,777
      Change     Change
Earnings per share, EUR 1.51 1.38 0.13 0.70 0.01 0.69
EPS (based on OCI), EUR 1.12 1.44 -0.32 1.10 -0.24 1.34
NAV per share, EUR** 18.63 20.71 -2.08 - - -
Average number of staff, FTE 10,309 9,769 540 - - -
Group solvency ratio, %** 214 167 47 - - -
RoE, % 7.0 9.2 -2.2 - - -

* The valuation loss of EUR -155 million on distribution of Nordea shares in Q3/2019 is included in the comparison figures.
** Comparison figure from 31 December 2019
The figures are not audited. Income statement items are compared on a year-on-year basis and comparison figures for balance sheet items are from 31 December 2019 unless otherwise stated.


How did the coronavirus pandemic affect Sampo’s business in the third quarter?

Sampo’s subsidiaries have been able to continue their operations normally despite the challenging environment. At the end of September, around 70 per cent of If’s and Mandatum Life’s personnel worked from home and recommendations for remote work continue.

In the short-term, the P&C insurance businesses have been positively affected by the coronavirus pandemic as claims have decreased due to slower economic activity and, in particular, lower traffic. During the third quarter, claims frequency returned to somewhat more normalized level as restrictions were eased, however with some variation between countries and business lines. The effect of the coronavirus pandemic on If’s risk ratio was approximately 3 percentage points positive in the third quarter.

Since last spring market turmoil, the coronavirus pandemic has not had a significant impact on Mandatum Life’s daily business.


If’s combined ratio was 82.9 per cent in the third quarter but 80.5 per cent in the second quarter. Why did the combined ratio deteriorate from the second quarter?

If’s combined ratio was negatively affected by the reduction of the discount rate used to discount the annuity reserves in Finland from 0.95 per cent to 0.75 per cent.

Long-term pension liabilities are discounted to present value. Such liabilities are common especially in workers compensation insurance and motor insurance. Discounting must be carried out in a safe manner. In addition, the returns of long-term high-quality bonds or government bonds must be taken into account when deciding the discount rate.

The lower the discount rate, the greater the present value of technical provisions is. Thus, lowering the discount rate will increase claims. The reduction of the discount rate used in Finland had a negative impact of EUR 51 million on the profit. Excluding this effect, If’s combined ratio was 80.9 per cent in January-September and 78.3 per cent in the third quarter. Even including the negative effect, If reported its best-ever third quarter combined ratio.


If’s premium growth was 5.2 per cent for January-September in local currencies. What were the growth drivers?

If reported a solid, organic premium growth in all Business Areas and markets with continued increase in number of customers and a stable retention throughout all segments. The growth has been supported by If being well positioned in the continued digitalization during these exceptional times.

The premium growth was strongest within corporate customers (BA Industrial 11.0% and BA Commercial 5.3%). In addition, the growth in If’s largest segment, BA Private, was very solid and accelerated in the third quarter compared to the second quarter.


Picture from January-September Supplementary Financial Information package.

Why did Topdanmark’s technical result decreased clearly in the third quarter compared to last year?

Topdanmark’s technical result was affected, among other reasons, by increased claims in house insurance, which had a negative impact of 2.1 percentage points on claims trend. Among the reasons are a higher level of water claims due to the rainy start of the year, COVID-19 has caused a higher level of refurbishment on houses increasing the number of water pipe and fungus claims and a couple of very large fire claims.

It is good to note that unlike If, Topdanmark operates only in Denmark. Thus, the volatility in claims frequency can be higher compared to a company that operates in multiple markets.

Further information on Topdanmark and its January–September 2020 Interim Report is available at


Mandatum Life’s technical with-profit portfolio related to higher guarantees (3.5% and 4.5%) dropped below EUR 2 billion for the first time. Why is this noteworthy?

Mandatum Life’s old with-profit portfolio has been in a run-off stage, because it ties a lot of capital and the company’s focus area is in wealth management and unit-linked products. In 2010, technical reserves of 3.5 and 4.5 per cent guarantees were over EUR 4 billion, and that figure is now halved. The decrease of with-profit portfolio improves Mandatum Life’s ability to pay dividend and releases capital to be re-allocated into more attractive assets.

The unit-linked portfolio, i.e. Mandatum Life’s focus area, continued its positive development and increased close to all-time high figure of EUR 8.1 billion at the end of September. Since the end of March, unit-linked reserves have increased by EUR 850 million.


Mandatum Life’s premiums decreased clearly in the third quarter compared to last year. What explains the drop?

The large difference is explained by the strong comparison period. 2019 was a record year for Mandatum Life’s unit-linked premiums. In addition, in the third quarter of 2019, premium income was driven mainly by couple of large contracts with corporate clients. Despite the coronavirus pandemic, Mandatum Life’s unit-linked premiums in January-September were at the same level as in 2018, which is the second-best year so far.


If decided to pay a dividend of approximately EUR 600 million, in December. What is the situation of Sampo’s other internal dividends?

Mandatum Life usually pays its dividend in the first quarter and the Board’s proposal is usually announced in the full-year financial statement. Mandatum’s dividend capacity is strong.

Both Nordea and Topdanmark has expressed their desire to distribute the undistributed dividends for 2019 but they will follow authorities’ regulations and recommendations.


How did Sampo’s investments develop in the third quarter?

The continued positive development in the capital markets increased investment income in the third quarter. If’s net investment income was EUR 46 million (38) and Mandatum Life’s net investment income, excluding income from unit-linked investments, was EUR 53 million (77) in the third quarter.

There were no major changes in the Group’s investment allocation during the third quarter.


Picture from January-September Supplementary Financial Information package.


What is the situation of Sampo’s Hastings deal?

In September, Hastings’ shareholders accepted the offer made by Sampo and RMI as expected. At the end of October, Sampo announced that it has received all the regulatory approvals for the transaction. The next step is the Court Hearing procedure, which is anticipated to be held on 13 November 2020, after which the deal will be closed. Sampo will announce the completion of the transaction and the consolidation of the figures later.

Mirko Hurmerinta

IR and Communications Specialist, Sampo plc

22 September 2020

Bond issue – Case Sampo’s EUR 1 billion bond

Companies generally use both equity and debt to finance their investments and operations in order to keep their capital structure optimal and return on equity attractive. Debt can be obtained directly from a bank in the form of a bank loan or from the financial markets by issuing bonds.

Due to regulatory and practical reasons, usually only institutional investors and private investors classified as professional investors can make orders for corporate bonds in the primary market. The minimum settlement amount is usually EUR 100,000.

This blog entry opens up the process behind the bond issuance with using Sampo’s EUR 1 billion Tier2 hybrid bond issued at the end of August to fund the Hastings acquisition offer as an example.

Decisions on financing, selecting the bookrunner banks for the issue and documentation

The management of the company makes the decision on raising debt capital from the financial markets, but the bond issue usually also requires a Board approval. The type of a bond that the company decides to issue depends on many factors, but the company’s current debt structure and the maturity profile of its bonds issued are key factors when deciding on the maturity of a new bond – and of course the interest rate levels.

From the balance sheet and cash management point of view, it is desirable that the maturity profile of the bonds is smooth over the coming years. The first call date for Sampo’s new EUR 1 billion hybrid bond is 12 years from the issue date, i.e. in 2032, which is currently the longest-maturity bond for Sampo.

Maturity profile of Sampo’s debt instruments prior the new issue (30 June 2020)


Once management has decided to issue a bond, the next step is to select the bookrunner banks for the issue and to start preparing the legal documentation required for the issue. The extent of the documentation process depends on whether the bond is issued under an existing bond program or under separate documentation. Sampo’s EUR 1 billion hybrid bond was issued under its existing EUR 4.5 billion EMTN (Euro Medium Term Note) program.

At this stage, the company is also typically in contact with the credit rating agencies, assuming the bond will be rated. Credit rating is a key factor for the spread level of the bond and determines what kind of investors will be interested in investing in the bond. Many investors require that the bond has at least an investment grade rating from the leading credit rating agencies (S&P/Fitch BBB- and Moody’s Baa3). In addition, some investors favor bonds that have a rating from two different agencies. Sampo’s hybrid bond has BBB+ rating from S&P and Baa1 rating from Moody’s.

Mapping investors’ interest

Once the documentation is completed and the expected ratings are confirmed, markets will be informed about the planned issuance. In practice, this means that the preliminary information about the bond will appear on Bloomberg screens or will be sent to investors in the form of a mandate announcement.

At the same time, the bookrunner banks begin marketing the bond and survey investors’ interest and preliminary thoughts on the spread level. The bookrunners usually have a good idea of the type of investors that might be interested in investing in the bond. Also, investors are often in direct contact with the bookrunners after seeing the preliminary details of the bond. These initial discussions with potential investors give an idea of the initial spread level and the size of the order book.

In case the company has not previously issued similar bonds or the company is less familiar to international investors, views on attractive spread levels may vary a lot. As Sampo is a well-known company in the market and issued a EUR 500 million hybrid bond in the Spring 2019, it was easier for the bookrunners to gather the feedback on pricing from investors. Comments on pricing may be quite general or very precise and are usually expressed as a credit spread to the reference rate (Euro Mid-Swap rate).

The feedback given by the investor could be, for example: “I’m interested, if the rate is MS + 270-280 basis points and I could invest EUR 20-30 million.”

Concurrently with the process of gathering feedback, meetings with the company’s management are arranged for the interested investors. During the pandemic, these meetings are held by telephone or via virtual events. In normal times, the company would also arrange roadshows in the major financial hubs. Prior to this year’s issue, Sampo held virtual roadshows with over 50 investors within two days.

Since fixed income investors have a somewhat different risk tolerance level compared with equity investors, their questions also differ from equity investors’ questions. Balance sheet, debt coverage and capital structure are usually the key factors for fixed income investors to focus on, whereas expectations on next year’s dividend does not raise that much attention.

‘Go’ or ‘No-go’ call

Once the investor roadshows are done and there’s a good view on the initial investor demand, the books are ready to be opened for investors’ orders. As orders are received in one day and the whole process takes only a few hours, the issue must be carefully planned and the prevailing market sentiment well-observed. However, sometimes, issuers are forced to move ahead with issuance even if the time is not optimal from their perspective.

When the Covid-19 crisis hit the market with full force in the spring, plummeting stocks filled the news headlines in financial media. However, less attention was paid to the fact that at the same time, credit spreads of corporate bonds shot up and the new issue market was totally stalled. For example, the credit spread of Sampo’s hybrid bond issued last year rose from below 200 basis points at the end of February to almost 400 basis points at its worst.

For a while, it was almost impossible for companies to issue new bonds. No investor really dared to make bids or if dared, the rate demands were very high. The general market sentiment can therefore significantly affect investors’ appetite and the required rate of return. When talking about bonds worth hundreds of millions or billions, even small movements in rates matter.

In the morning of the planned bond issue, the bookrunners have a so-called ‘Go’ or ‘No-go’ call with the issuer, during which final decision to open the books for the bond is made.

Opening the books and pricing process

When the books are opened for investors’ orders, the bookrunners announce the preliminary spread level based on the investor feedback. In the case of Sampo’s hybrid bond, the books opened on 27 August 2020 at 10:15 am with initial price talk of MS+300 basis points area.

The orders received during the first hours play an important role for the final pricing as attention generates more attention. For Sampo’s bond, there were orders worth over EUR 2 billion received during the first hour. After two hours, the price guidance was lowered to MS + 270 basis points (+/- 5) area. When the books are open, investors can withdraw their bids at any time. Thus, one must be very careful when setting the price guidance so that that investors will not lose their interest in the bond if the spread falls too low. At 1:55 pm, the book exceeded EUR 5 billion and was closed and the final spread was set at MS + 260 basis points. Over 350 investors participated in the issue and most orders were received from the UK/Ireland, German-speaking Europe and the Nordics.

The coupon rate of Sampo's hybrid bond maturing in September 2052 was set at 2.50 per cent, payable until 3 September 2032, which is the first date for the bond. If the bond is not redeemed at its first call date, the coupon rate will step up to 3m Euribor + 360 basis points until the final maturity. 

Allocation and listing on the stock exchange

As the size of Sampo’s hybrid bond was EUR 1 billion and the book was 5 times oversubscribed, investors’ orders had to be scaled back. The allocation of the bond is decided by the company together with the bookrunners in accordance with pre-defined allocation principles.

In the event of an oversubscription, priority is normally given to investors who have given constructive feedback during the process, i.e. shown meaningful interest with preliminary orders at reasonable price level during the roadshow, which has helped the company and the bookrunners to form a better view on pricing as well as investors who were among the first to give their orders to the bookrunners when the books were opened.

Once the allocation is complete and trades are settled, the bond will be listed on a stock exchange. Sampo’s hybrid bond was listed on the London Stock Exchange on 3 September 2020.

Issuing new debt in Sampo


Mirko Hurmerinta

IR and Communications Specialist, Sampo plc

15 June 2020

Q&A - Investor Questions

In this blog entry, we answer investors questions collected from different channels. Thank you for the good questions!

In January-March 2020, Sampo’s profit included an impairment of investment assets of EUR 191 million. What are the principals for these kind impairments?

Impairments are booked on a case-by-case basis and are based on accounting principles. The main rule is that impairment is assessed if significant or prolonged. In Sampo Group, e.g. for listed equities, the impairment is normally assessed to be significant if the fair value decreases below the average acquisition cost by 20 per cent and prolonged, when the fair value has been lower than the acquisition cost for over 12 months.

Value of an equity that has already been impaired cannot be increased later even if the fair value has recovered. However, values of fixed income investments can be increased to the original acquisition cost.

Who decides on the direct financial investments made from the parent company (e.g. the purchase and sale of Intrum shares)?

Investments are made in accordance with Sampo’s investment policy, and Patrick Lapveteläinen, Group Chief Investment Officer, is responsible for the decisions. Some, especially larger investments may require the Board’s approval.

Why did Sampo decide to sell its ownership in Intrum in February 2020?

Sampo does not usually comment on its individual financial investments. The sale of Intrum shares was a part of our normal investment operations.

If’s premiums increased 7.0 per cent in January-March. How much of the growth was explained by price increases and how much by new customers?

Roughly 60 per cent of growth came from price increases and 40 per cent from new customers. Premiums increased in all business areas and markets, but in Denmark and Norway, the growth was very strong.

Why did If’s combined ratio weaken so much in Norway in January-March from a year ago?

In Norway, the combined ratio was burdened by two very large claims. One of these was the fire in the parking garage at Stavanger Airport, which also gained some attention in the news headlines. If has limited its risk in individual large claims to approximately EUR 25 million through re-insurance.

How does inflation affect If’s business?

Very high inflation would create pressure on profitability as the increase in claims costs cannot be passed on to insurance prices between contract periods. So-called “normal” inflation does not have a large impact on business.

Does Sampo favor certain sectors or geographical areas in its investments?

Geographically we prefer the Nordic countries, where we know the markets, companies and people. Other main principle is that we like to keep our investments and technical reserves in substantially the same currency in order to avoid extra currency risk.

The Group’s investments by sectors and equities by geographical areas are described in the risk management report.



Has the coronavirus crisis affected Sampo’s investment policy? Has Sampo’s risk appetite increased or decreased during the crisis?

Sampo is a conservative investor and thus careful. We monitor the situation. No major allocation changes have been made.

Some investors feel betrayed as Sampo cut its dividend twice during the past year. How is Sampo going to regain their trust?

Investors’ trust can be earned sustainably only through deeds, not words. Sampo’s objective is to create shareholder value and success in this will play a crucial role in investor confidence.

In your view, how Sampo succeeded in its communication regarding the dividend during the past year?

There’s always room for improvement and, in retrospect, it is easy to see what could have been done differently. However, it is good to remember that all decisions and comments are always based on the best available information.

Has Sampo considered paying dividends quarterly?

There have been discussions about it every now and then. Such change would be decided by the Annual General Meeting and it would be good if the proposal came from the shareholders.

Would it be time for Sampo to sell Nordea?

As we stated many times, all of Sampo’s businesses and investments are for sale if the price is right. However, It is noteworthy that the sale of a nearly 20 per cent ownership in the largest bank in the Nordics cannot be conducted simply by pressing the sell button.

In autumn 2019, Nordea published its new financial targets for 2022. We consider the first steps encouraging and we believe that Nordea will achieve these targets. It is reasonable to expect that the success in the turnaround will also be reflected in Nordea’s share price.

Electric cars are becoming more and more common. In addition, cars will become more autonomous in the future. How these trends will affect insurance business?

Patrik Duraj, If’s Project Manager, Corporate Control & Strategy, answers this question.

“The automotive industry is presently undergoing structural change, driven by a long-term shift towards a more convenient, safer and cleaner mobility future. Two of the key technological trends fueling this transformation is vehicle autonomy and electrification, which we will hereby explore in more detail.

The term ‘autonomous vehicles’ emerged into the mainstream after the US military’s Defense Advanced Research Projects Agency in the early 2000’s showcased how new sensors, connectivity and computing technology could be merged to enable self-driving or even driverless vehicles. The trials induced the private sector to enter the race, most famously Google’s self-driving car project (now: Waymo) in 2008. The initial technological leap spurred aggressive deployment timelines, suggesting widespread deployment in just under five years – an outlook which since has been modified as the broader scope and complexity of the problem has been understood. Increasingly non-technological factors, namely ethical issues, costs, new insights on human-machine interaction, liability and legal obstacles has further prolonged development. Today, the leading players foresee a more gradual roll-out of self-driving functions, and signal that widespread adaptation of full self-driving systems (i.e. Level 5, according to SAE J3016) is likely still decades away.

Nevertheless, Advanced Driver Assistance Systems (ADAS) have gradually trickled down to vehicles available to consumers. Already today the most advanced vehicles are able to accelerate, change gears, steer and break under predefined conditions. This provides insights on how the computerization of vehicles influence driving behavior and risk, under real-life traffic scenarios. On the one hand, systems may be effective in limiting certain accidents. On the other hand, new accidents emerge from lacking user understanding of the systems’ capability, user error or sensor malfunction. Furthermore repair of even trivial accidents has increasingly become costly due to exposed expensive sensory equipment and evolving vehicle design.

Over the recent years, the push for electrification has overshadowed most of the other trends in the automotive industry. With the help from new lithium-ion batteries Tesla redefined the electric vehicle formula, showing how Electric Vehicles (EVs) could match fossil fueled cars on performance and luxury. Despite facing ever more stringent emission regulations, such as EU’s 2019/631, high battery costs proved prohibitive for most automakers. However, the Dieselgate-scandal fundamentally altered the narrative, as the targets were proven to no longer be achievable with fossil fuel drivetrains alone. As a consequence, most major OEMs are presently heavily focused on electrifying their line-ups, with disruptive implications on the automotive value chain as a whole.

One of Ifs home markets, Norway, has been a leader in electromobility, after introducing special incentives already in the late 1990s. Norway therefore is today by far the most electrified car market in the world per capita, with 42% of all new cars delivered in 2019 being fully electrified and even 9,3% of the total car stock being fully electrified.  This provides If with an unique insight into how electromobility affects risk. On the one hand, electric vehicles induce new driving behavior, be it if you aim to drive efficiently (‘hypermile’) or enjoy the performance embedded in the vehicle (e.g. 0-100 in 2,5 seconds). On the other hand, electric vehicles diverge from traditional vehicles in construction, for example through the use of exotic materials (e.g. aluminum, carbon) or parts (e.g. batteries, electromotors, sensors), which affect repairability, repair methods and lead times.

As with fossil fuel equivalents, there are differences among both models and users, calling for close-knit risk models. Rooted in our Best In Risk culture, If has continuously evolved its tariffs and claim processes to accommodate the shift towards green mobility, and is already distributing the insights gathered in Norway to prepare for more electrification in the rest of the Nordic markets.

As an end-note, it is important to highlight how the long-term trends are constantly moderated by the industry’s need to meet short-term obligations. Already prior to Covid-19, industry headlines were dominated by stagnating global demand and profitability pressures. These pushed some OEMs into cost-cutting mode even prior to Covid-19, with “moonshot” innovation projects typically being the easiest to scale back on. Although still early to conclude, it seems evident that timelines could be affected as the long-term consequences from the supply- and demand side disruptions caused from the ongoing pandemic are made clear.”

What are Sampo’s largest equity investments after Nordea? Which have performed best?

At the end of 2019, the Group’s largest listed equity investments were Intrum (EUR 184 million), Volvo (134), Nobia (122), Norwegian Finans Holding (114) and Asiakastieto (92). Of these, Intrum was sold in February 2020 with a profit of approximately EUR 30 million.

In addition, Sampo has invested EUR 284 million in Saxo Bank, EUR 230 million in Nets through a private equity fund, and EUR 245 million in Nordax, which is an associated company.

Sampo will not report the performance of its individual investments.

In what situation and at what price would Sampo buy its own shares?

Share buybacks are decided by the Board, which is traditionally authorized by the AGM to buy a maximum of 50 million own shares. However, Sampo’s primary method of profit distribution, also preferred by the shareholders, is paying dividends.

Why have Sampo’s insiders hardly bought any shares recently?

Naturally, we do not comment on the personal investments of the company employees or board members.

Has Sampo’s solvency been a limiting factor in seizing opportunities during the past corona-related market turmoil? How could Sampo be better positioned for similar events in the future?

Last year, Sampo’s solvency decreased below our comfort zone, but after the issuance of the hybrid loan and the extra dividend in the form of Nordea shares, solvency returned to a solid level, which allows enough room for our investment activities. During the market turmoil, our solvency was at a strong level and was not a limiting factor.

For possible larger mergers and acquisitions, Sampo can back its solvency for example by issuing more hybrid capital. However, it is worth noticing that larger-scale moves require lots of time and planning. Thus, it’s difficult to take the advantage of these kind short-term dips.   

What are Sampo’s key growth drivers in the coming years?

We answered this questions on our IR Blog on 17 December 2019.

“Insurance business is rather defensive and steady and one should not expect any rapid growth leaps. In P&C insurance, premiums can be expected to grow roughly at the same pace as GDP. However, If’s growth has been exceptionally strong recently, partly due to the favorable competitive environment in the Nordics. Low interest rates make it difficult to achieve good investment returns, which has forced all insurance companies to focus on technical profitability. This has reduced the aggressive price competition, which has positively reflected in If’s premium and customer volume growth.

In life insurance, the premium growth can be expected to be faster than the GDP growth. For the coming years, one key growth driver is the increasing importance of personal savings and financial safety net as unfavorable demographic trend create pressure on the public social security and pension system.

In the short-term, the biggest single profit potential relates to Nordea’s new business plan and targets.”

Could If seek growth from the healthcare sector?

If has no such plans at the moment and providing healthcare services is not within the company’s core competence.

Nordea will refrain from paying dividend at least until 1 October 2020 as the ECB recommends. If Nordea decides to pay the dividend after that, what will Sampo do with its share?

Sampo has no plans for the dividend it possibly receives from Nordea later this year.

Why is Sampo’s dividend policy so different (inconsistent according to the questioner, referring the decision to cut the dividend) than, for example, many American companies that have been increasing dividends every year for decades?

The dividend policy is decided by the Board elected by the AGM. Sampo’s shareholders have traditionally wanted to receive stable and high dividend, which is why the dividend payout ratio has been relatively high. Due to the high payout ratio, the dividend is more susceptible to significant changes, such as the change in Nordea’s dividend policy last year.

Some analysts have argued that there’s a “conglomerate discount” in Sampo’s share price, i.e. the share trades below Sampo’s sum of parts mainly due to Nordea. Does Sampo acknowledge such a discount and is it in the interest of shareholders? By what means could Sampo resolve the current situation?

Naturally, we do not comment on the valuation of our share, although Nordea-related questions have played a key role over the past couple of years, and that cannot be denied.

Sampo’s objective is to create shareholders’ value through its profitable businesses, investments and potential M&As. It’s reasonable to assume that in the longer-term, the valuation and share price will reflect our success in this. The fact is that Nordea’s success in achieving its new financial targets has a key role in creating shareholders value.

Mirko Hurmerinta

IR and Communications Specialist, Sampo plc