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Latest Outlook

Interim Statement, 4 May 2022

Outlook for 2022

Sampo Group’s P&C insurance operations are expected to achieve underwriting margins that meet the annual targets set for 2021-2023. At Group level, Sampo targets a combined ratio of below 86 per cent, while the target for its largest subsidiary, If P&C, is below 85 per cent. Hastings targets an operating ratio of below 88 per cent. Following strong performance in the first quarter, the outlook for If P&C’s 2022 combined ratio has been improved to 82–84 per cent.

The combined and operating ratios of Sampo Group’s P&C insurance operations are subject to volatility driven by, among other factors, seasonal weather patterns, large claims, prior year development and fluctuations in claims frequency related to the COVID-19 pandemic. These effects are particularly relevant for individual segments and business areas, such as the Danish and UK operations.

The mark-to-market component of investment returns will be significantly influenced by capital markets’ developments, particularly in life insurance.

With regard to Topdanmark, reference is made to the profit forecast model that the company publishes on a quarterly basis.

The major risks and uncertainties for the Group in the near-term

In its current day-to-day business activities Sampo Group is exposed to various risks and uncertainties, mainly through its major business units.

Major risks affecting the Group companies’ profitability and its variation are market, credit, insurance and operational risks. At the Group level, sources of risks are the same, although they are not directly additive due to the effects of diversification.

Uncertainties in the form of major unforeseen events may have an immediate impact on the Group’s profitability. The identification of unforeseen events is easier than the estimation of their probabilities, timing, and potential outcomes. After the outbreak of the COVID-19 pandemic a combination of fiscal and monetary stimulus, supply chain problems and elevated demand for consumer goods have led to high levels of inflation, with energy and product prices being particularly affected. More recently the war in Ukraine has created a new negative supply shock for the global economy depressing economic growth and further pushing up the prices of commodities and energy. The pandemic and the war in Ukraine are consequently currently causing significant uncertainties on economic and capital market development. There are also a number of widely identified macroeconomic, political and other sources of uncertainty which can, in various ways, affect the financial services industry in a negative manner.

Other sources of uncertainty are unforeseen structural changes in the business environment and already identified trends and potential wide-impact events. These external drivers may have a long-term impact on how Sampo Group’s business will be conducted. Examples of identified trends are demographic changes, sustainability issues, and technological developments in areas such as artificial intelligence and digitalisation including threats posed by cybercrime.

Updated 4 May 2022