IR BLOG
Strong performance in insurance businesses
Sampo Group’s insurance companies continued their strong performance, which compensated for tame banking results.
Group’s profit before taxes for January–September increased to EUR 1,643 million from EUR 1,340 million, when adjusting for the non-recurring profit item of EUR 706 million resulting from the change of Topdanmark’s accounting status.
| Key figures, EURm | 1-9/ 2018 |
1-9/ 2017 |
Change, % |
7-9/ 2018 |
7-9/ 2017 |
Change, % |
|---|---|---|---|---|---|---|
| Profit before taxes** | 1,643 | 2,046 | -20 | 490 | 1,181 | -59 |
| If | 626 | 603 | 4 | 211 | 202 | 5 |
| Topdanmark** | 170 | 90 | 89 | 65 | 37 | 74 |
| -Impact of change in accounting for Topdanmark | - | 706 | - | - | 706 | - |
| Nordea | 527 | 491 | 7 | 139 | 169 | -18 |
| Mandatum | 385 | 180 | 113 | 72 | 64 | 13 |
| Holding (excl. Nordea) | -45 | -27 | 66 | 4 | 0 | - |
| Profit for the period | 1,397 | 1,875 | -25 | 414 | 1,122 | -63 |
| Change | Change | |||||
| Earnings per share, EUR** | 2.38 | 3.35 | -0.97 | 0.69 | 2.01 | -1.32 |
| EPS (incl. change in FVR), EUR | 1.92 | 3.51 | -1.59 | 0.78 | 2.04 | -1.26 |
| NAV per share, EUR* | 24.13 | 25.37 | -1.24 | - | - | - |
| Average number of staff, FTE | 9,504 | 9,418 | 86 | - | - | - |
| Group solvency ratio, %* | 148 | 156 | -8 | - | - | - |
| RoE, % | 11.2 | 21.4 | -10.2 | - | - | - |
*Comparison figure from 31 December 2017
**The comparison figures contain a non-recurring profit item of EUR 706 million from a change in accounting.
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 2017 unless otherwise stated.
If’s results were, once again, strong, thanks to the excellent technical result. Profit before taxes for January–September 2018 increased to EUR 626 million from EUR 603 million and combined ratio amounted to 85.8 per cent. Development for If’s top-line was good as well; premiums increased 3.1 per cent in January–September. In geographical terms, the strongest performance was reported in Sweden where premiums increased 4.9 per cent in local currency. In addition, the number of customers grew in all markets.
At the beginning of the third quarter, the large forest fires that raged in Sweden gained plenty of media attention. However, those had only a marginal impact on If’s result – approximately EUR 4 million.
Due to If’s excellent performance, we upgraded our outlook for If’s full-year combined ratio. We expect If to reach a combined ratio target of 85-87 per cent. The earlier target was 86-88 per cent.
In the beginning of November, If distributed a dividend of SEK 7 billion, approximately EUR 675 million, to the parent company Sampo plc. In 2017, the dividend was SEK 6 billion, approximately EUR 620 million.
Topdanmark reported strong results as well. Profit before taxes amounted to EUR 170 million and combined ratio was excellent, 82.7 per cent. In January–September, Topdanmark’s premiums increased 2.2 per cent in non-life insurance business and 14.1 per cent in non-life insurance business.
Topdanmark also upgraded its outlook for full-year results and combined ratio.
Nordea’s performance was not that desirable, as the bank’s management admits in the interim report. However, for the 9 months period, Sampo’s share of Nordea’s net profit increased to EUR 527 million from EUR 491 million. Positive things in the report included low levels of credit losses, good cost development and very strong capital position.
Mandatum Life’s profit before taxes for January–September increased to EUR 385 million from EUR 180 million. The profit includes the contribution of EUR 197 million from the Danske Bank co-operation agreement in the second quarter of 2018.
Mandatum Life’s technical reserves increased to a record-high level. At the end of September, reserves amounted to EUR 7.2 billion, which was EUR 100 million more than year ago.
Mandatum Life’s with-profit technical reserves continued to shrink and were EUR 4.3. billion at the end of September compared to EUR 4.6 billion a year ago. Reserves related to the higher guarantees (3.5% and 4.5%) decreased by EUR 174 million during January-September. With-profit portfolio requires lots of capital. Thus, the shrinking of the portfolio improves Mandatum Life’s ability to pay dividend to the parent company.
In late September, Mandatum Life distributed an additional dividend of EUR 150 million to the parent company. In the spring, Mandatum Life paid a dividend of EUR 150 million. Hence, the total dividend for the year 2018 amounted to EUR 300 million compared to EUR 275 million in 2017.
Loss before taxes for the Holding segment (excluding Nordea) for January–September amounted to EUR 45 compared to a loss of EUR 27 million a year ago. In the first half of the year, the result was affected by unfavorable currency development, especially by the weak Swedish krona. In the third quarter, currency development was clearly more stable and the segment’s profit before taxes was slightly positive.
In the third quarter, we continued to make larger, direct financial investments via the parent company. Our ownership in the Swedish credit management services provider Intrum exceeded 5 per cent and lead to a flagging announcement. In addition, we closed the Saxo Bank deal announced last year.
On capital markets, autumn was calm at first but after the quarter changed, there has been very strong movements. For an opportunistic and patient investor like Sampo, increased volatility is the most welcome phenomenon because it can offer good investment opportunities.
