IR Blog

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.

In this blog entry, we address questions we have received from investors and analysts during the first quarter.

Why did Sampo decide to launch a new buyback programme straight after the previous one and before the AGM in May?

The buyback was launched to return excess capital to shareholders, in line with our commitment to capital discipline. Sampo Group’s solvency balance sheet remained robust in the first quarter.

What was the COVID-19 situation like in Q1?

In January, there were still some restriction measures in place but in February and March general activity levels were more or less normal.

What were the weather conditions like in Q1 in the Nordics and the UK?

The Nordic region was affected by winter storms typical for the season, and in Finland the winter has been more snowy than usual. Temperatures have been in the normal range.

Like in the Nordics, the winter quarters (Q1 and Q4) in the UK tend to see relatively higher levels of motor and property insurance claims than the summer quarters (Q2 and Q3). In Q1 2022, the UK has been affected by a number of storm events.

How is the increase in inflation affecting Sampo’s P&C operations?

As stated with FY 2021 results, our Nordic business was not materially impacted by the increased rate of inflation in 2021, as was relatively brief and contained. Overall claims inflation across If’s operations stood at around 3 per cent at the end of 2021.  In the UK, we highlighted high single digit inflation in the severity of motor insurance claims with our FY 2021 and we note that a number of our peers have made similar, or more cautious, comments recently.

A potential prolonged period of broadly based inflation, including wage inflation, would likely lead to increased claims inflation across all our geographies. Hence, we are monitoring the situation carefully and taking a very disciplined approach to pricing.

How has the new car sales developed in the Nordics?

The weak trend seen in Q4/2021 continued in January-February with new registrations declining in all countries, most notably in Finland and Norway.

How did the volatile capital markets develop during Q1 affect Sampo?

Sampo Group does not have any direct investments in Russia or Ukraine but we do hold a small amount of instruments issued by Nordic companies with exposure to the region (see recent IR blog). Since the start of the war, Sampo has reduced its ownership in such assets.

The increase in interest rates over the quarter is supportive of higher reinvestment rates and an increase in the solvency ratio (see sensitivities chart below). Although a reduction in equity markets has a negative economic impact on Sampo, the effect on solvency is substantially moderated by the symmetric adjustment (a countercyclical buffer applied to the capital charge for equities).

Was Nordea’s dividend booked in Sampo’s P&L for Q1?

Yes. Dividends are booked on the ex-dividend date, which for Nordea was 25 March 2022. Nordea’s dividend will be included in the Holding segment’s Net income from investments line. The share of Nordea’s result is no longer consolidated in Sampo’s P&L.

In this blog, we address questions we have received from investors and analysts about the war in Ukraine and its potential effects on Sampo Group.

Does Sampo Group have business operations in Russia or Ukraine?

The Group does not have any business operations in Russia or Ukraine. Sampo’s subsidiaries operate in the Nordics, in the Baltics and in the UK.

The Group have employees with background and ties to Russia and Ukraine that we support in these difficult and sad times.

Does If have any underwriting exposure to Russia or Ukraine?

If’s underwriting exposure to Russia and Ukraine is very limited and mainly within Business Area Industrial. If monitors the situation closely and has taken action to minimise the risks.

In its largest business area, BA Private, If does not have any material underwriting exposure to Russia or Ukraine.

However, rising energy and raw material prices, supply chain shortages and exchange rate fluctuations could be reflected in the claims inflation.

How will the changing economic outlook in Europe affect Sampo Group?

P&C insurance is stable and defensive business by nature, and not directly linked to short-term fluctuations in economic output or commodity prices. However, longer-term economic developments, could affect the demand and supply of P&C insurance. Of the Group’s core markets, the Baltics and Finland with close trade relations with Russia are could be directly more affected than other countries.

Does Sampo Group have investments in Russia or Ukraine?

The Group has no direct equity or fixed income investments in Russia or Ukraine. However, the Group does hold investments worth of double-digit million euros with material Russia/Ukraine exposures, such as shares in listed Nordic companies with Russian/Ukrainian operations.

How does the general market turbulence affect Sampo Group’s investments?

The market turbulence naturally has an impact on Sampo’s investment portfolio. However, the Group’s solvency (185% at the end of 2021) and liquidity positions are strong. In addition, the symmetric adjustment used in Solvency II calculation will absorb the impact from falling equity prices in the short-term, as shown in the sensitivity chart below.