Sampo’s businesses performed well in the first quarter of the year. The Group’s profit before taxes increased by 7 per cent to EUR 475 million compared to EUR 445 million a year ago.

The state of the economy has remained cautiously positive in Sampo’s home markets, enabling a positive operating environment for our businesses. In addition, after the sharp decline at the end of last year, the equity markets have rebounded, which has supported our investment returns. In fact, the total comprehensive income, taking changes in the market value of assets into account, increased to EUR 561 million compared to EUR 108 million a year ago.

However, interest rates have remained at low levels and interest rate forecasts have been cut around the world. This still makes it difficult to find good investment returns.

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 2018 unless otherwise stated.

Another boring (good) quarter for P&C insurance businesses

If’s performance was, once again, strong, thanks to the strong operative efficiency and technical excellence. In general, the winter season was quite normal in If’s home markets.

If’s profit before taxes amounted to EUR 198 million (193) and combined ratio remained unchanged from a year ago at 86.5 per cent. Both cost ratio and expense ratio improved. Adjusted for currency, gross written premiums growth was strong at 3.9 per cent. The growth was driven by increased retention levels and increased number of customers. The growth was strongest in Norway, 10.5 per cent. In Denmark, the growth was 6.2 per cent and in Sweden, 3.2 per cent. However, in Finland, where the price competitions remained tight, premiums declined by 2,5 per cent.

We upgraded our guidance for If’s combined ratio for 2019 to 85 - 88 per cent. Previously the guidance was 86 - 90 per cent.

Topdanmark had a very strong start for the year 2019. Profit before taxes strengthened to EUR 92 million from EUR 60 million a year ago. The combined ratio improved to 78.2 per cent from 83.7 per cent.

In addition, Topdanmark's top line continued to grow. Premiums increased by 2.6 per cent in non-life insurance and by 18.6 per cent in life insurance.

The digitization of Topdanmark’s businesses and efficiency improvements proceed well. Already 95 per cent of all claims can be reported digitally and 47 per cent all claims reported digitally are automated fully or partially.

Thanks to the strong performance in the first quarter, Topdanmark upgraded its full-year guidance. The post-tax profit forecast model for 2019 is now DKK 1,250 – 1,350 million (previously DKK 1,000 – 1,100 million). The combined ratio without run-off profits for 2019 is now expected to be 86 – 87 per cent (89 – 90). The assumed premium growth for non-life insurance continues to be higher than the growth of 1.7% in 2018.

Topdanmark’s share price has continued to climb higher. At the end of March, the market value of the Topdanmark shares held by Sampo was EUR 1.87 billion. The original average purchase price was approximately EUR 600 million. In addition, Sampo has received total dividends worth EUR 191 million from Topdanmark during the past two years.

Good start for Mandatum Life, tame results for Nordea

Mandatum Life benefited from the strong performance in the equity markets in the first quarter of the year. Profit before taxes remained at excellent level and amounted to EUR 72 million (73).

Net investment income, excluding income on unit-linked contracts, increased to 126 million (72). The largest single item effecting investment returns was the acceptance of the takeover offer for Amer Sports. Before the acceptance, Mandatum Life held approximately 2.4 per cent of the total shares of Amer Sports.

Mandatum Life’s technical reserves amounted to EUR 11.6 billion compared to EUR 11.2 billion at the end of 2018. Unit-linked reserves increased to EUR 7.4 billion, corresponding to 64 per cent (62) of total technical reserves. With profit reserves amounted to EUR 4.2 billion.

With profit reserves related to the higher guarantees of 4.5 and 3.5 per cent continued to shrink and decreased by EUR 74 million compared to the end of 2019. With profit reserves require lots of capital. Thus, the decline of those reserves improves Mandatum Life’s ability to pay dividend to the parent company Sampo plc.

Sampo’s share of Nordea’s net profit decreased to EUR 83 million from EUR 165 million a year ago. In part, the results were burdened by the provision of EUR 95 for AML related matters, that Nordea booked in the first quarter.

Nordea’s tame performance during the beginning of the year has reflected to the bank’s share price, which has had a negative impact on Sampo’s NAV per share as well.

In 2019, Sampo has received internal dividends worth EUR 828 million from its subsidiaries and associates. Mandatum Life paid a dividend of EUR 150 million in March. In April, Sampo received dividends of EUR 594 million from Nordea and 84 million from Topdanmark. If usually pays dividend towards the end of the year.

Potential extra dividend in Nordea’s shares to be decided before the end of 2019

Sampo’s Annual General Meeting held on 9 April 2019 decided to pay a dividend of EUR 2.85 per share. The dividend has now been increased for 10 years in a row.

In addition to the ordinary dividend, the AGM authorized the Board, in its discretion, on the distribution of an extra dividend up to EUR 500 million (EUR 0.9 per share) either in cash and/or in financial instruments.

The authorization is meant to be one available tool that can be used to counter the increasing capital requirements. If the extra dividend was decided to be paid in Nordea’s shares held by Sampo and Sampo’s ownership in Nordea thereby decreased to below 20 per cent, it would significantly improve Sampo’s solvency ratio. The exact timetables have not yet been decided upon, but the potential actions are expected to be taken before the end of 2019.