IR BLOG
Results burdened by Nordea-related one-offs
Sampo Groups profit before taxes for January-September 2019 was EUR 1,073 million compared to EUR 1,643 million a year ago. In the third quarter, profit before taxes decreased to EUR 92 million from 490 million a year ago and earnings per share was only EUR 0.01 (0.70)
The result was burdened by large non-recurring items. The distribution of an extra dividend in the form of Nordea shares in August caused a negative impact of EUR 155 million. In addition, Nordea booked in total of EUR 1.3 billion one-offs for the third quarter pushing the result to a negative territory. Sampo’s share of Nordea’s net result was EUR -75 million.
| Key figures, EURm | 1-9/ 2019 |
1-9/ 2018 |
Change, % |
7-9/ 2019 |
7-9/ 2018 |
Change, % |
|---|---|---|---|---|---|---|
| Profit before taxes | 1,073 | 1,643 | -35 | 92 | 490 | -81 |
| If | 655 | 626 | 5 | 215 | 211 | 2 |
| Topdanmark | 180 | 170 | 6 | 34 | 65 | -47 |
| Associates | 164 | 535 | -69 | -72 | 138 | - |
| Valuation loss on distribution of Nordea shares | -155 | - | - | -155 | - | - |
| Mandatum | 212 | 385 | -45 | 75 | 72 | 4 |
| Holding (excl. associates) | 26 | -42 | - | -6 | 4 | - |
| Profit for the period | 848 | 1,397 | -39 | 22 | 414 | -95 |
| Change | Change | |||||
| Earnings per share, EUR | 1.38 | 2.38 | -1.00 | 0.01 | 0.70 | -0.69 |
| EPS (based on OCI), EUR | 1.44 | 1.92 | -0.48 | -0.24 | 0.78 | -1.02 |
| NAV per share, EUR* | 18.90 | 20.60 | -1.70 | - | - | - |
| Average number of staff, FTE | 9,769 | 9,504 | 265 | - | - | - |
| Group solvency ratio, %* | 178 | 140 | 38 | - | - | - |
| RoE, % | 9.2 | 11.2 | -2.0 | - | - | - |
* Comparison figure from 31 December 2018
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.
The good momentum for Sampo’s insurance businesses continued in the third quarter. If’s profit before taxes for January-September increased to EUR 655 million (626) and combined ratio improved to 84.3 per cent (85.8).
In addition, If’s premium growth remained at very strong level. In local currency, If’s premiums grew 5.0 per cent in January-September, accelerating the growth pace from 4.3 per cent in the first half of the year. Premiums increased in all markets and business areas. Growth was particularly strong in Norway, 9.1 per cent, and in business area Industrial, 13.9 per cent.
However, If’s net investment income decreased by 13 per cent in January-September and 39 per cent in the third quarter, reflecting the challenging investment environment, especially in the fixed income markets.
The guidance for If’s combined ratio for 2019 remained unchanged at 84-86 per cent.
Topdanmark and Mandatum Life keep up the good work
Topdanmark’s profit before taxes for January-September was EUR 180 million compared to EUR 170 million a year ago. However, in the third quarter, the profit decreased clearly compared to the very strong period last year, partly due to lower discount rates and weaker investment income. Combined ratio for January-September was 80.5 per cent (82.7).
In January-September, Topdanmark’s premiums grew 2.4 per cent in non-life business and 13.5 per cent in life business.
Topdanmark updated its profit forecast model for 2019. The model forecasts combined ratio excluding run-offs to be 84-85 per cent (previously 85-86) and net profit to be DKK 1.30-1.40 billion (previously 1.25-1.35).
In the third quarter, Topdanmark and Nordea entered into a new non-life agreement for distribution on the Danish market. The agreement comes into force on 1 January 2020. From 2021, it is expected that the Nordea agreement in terms of premiums will compensate fully for the terminated distribution agreement with Danske Bank, which was terminated at the end of June 2019.
Topdanmark also introduced a new crop insurance, which covers up to 80 per cent of farmer’s normal crop yield if the crop yield is below average. Topdanmark is the market leader on the agricultural insurance market with approximately 50 per cent market share measured by the number of farms.
Mandatum Life’s profit before taxes for January-September amounted to EUR 212 million compared to EUR 385 million a year ago. The comparison figure contains a non-recurring profit item of EUR 197 million related to Mandatum Life’s co-operation agreement with Danske Bank.
Mandatum Life’s premium income increased to EUR 824 million (681), of which unit-linked premiums were 87 per cent. Net investment income, excluding unit-linked contracts, increased to EUR 280 million (196).
Technical reserves increased increased to EUR 11.7 billion (11.2), of which unit-linked reserves were at a record-high level of EUR 7.8 billion. With-profit reserves with higher guarantees (4.5% and 3.5%) continued to decrease as planned to EUR 2.2 billion, which is EUR 198 million less than at the end of 2018.
In September, Mandatum Life issued a Tier 2 bond of EUR 250 million due 2049 and received a long-term issuer credit rating of A+ from Standard & Poor’s.
In the field of wealth management, Mandatum Life’s determined work on socially responsible investing has received international recognition. In August, Mandatum Life Wealth Management received an excellent overall score of A+ (Strategy & Governance) in the 2019 UNPRI assessment. One fourth of all members of the UN’s Responsible Investment (PRI) organization worldwide achieve this score.
Change in Sampo’s view on expected dividends
Sampo’s management announced on 24 October 2019 that it has changed its view on expected dividends. This is due to Nordea’s new dividend policy and dividend guidance for 2019 and increasingly difficult operating environment, with government bond yields expected to remain negative for some time.
Sampo’s management expects to propose to the Board a dividend of EUR 2.10 – 2.30 a share for 2019. The Board will review the dividend policy in early February 2020.
