Sampo Group's results for January-June 2010
(Thomson Reuters ONE) -
SAMPO PLC INTERIM REPORT 11 August 2010 at 9.40 am
SAMPO GROUP´S RESULTS FOR JANUARY - JUNE 2010
Good performance on all fronts
Sampo Group's profit before taxes for the first six months of 2010 rose to EUR
621 million (433). The total comprehensive income for the period, taking changes
in the market value of assets into account, was EUR 773 million (1,900).
* Earnings per share amounted to EUR 0.92 (0.61) and marked-to-market EPS
was EUR 1.38 per share (3.33). The return on equity for the Group was 19.9
per cent for the period (69.5).
* Net asset value per share amounted to EUR 14.50 (14.63). The dividend of
EUR 1 per share paid in April 2010 decreased the NAV per share
correspondingly. Nordea's share price has risen significantly since the end
of June and consequently Sampo Group's net asset value has increased by
roughly one billion euro by early August. The fair value reserve after tax
on the Group level increased to EUR 401 million (296).
* The insurance technical performance of the P&C insurance operation
returned to normal after the difficult first quarter of 2010. The combined
ratio for the second quarter of 2010 improved to 89.9 per cent (90.7) and
was 94.1 per cent (92.5) for the first half of 2010. The profit before taxes
increased to EUR 333 million (308) and marked-to-market result was EUR 414
million (438). Return on equity remained high at 35.4 per cent (47.0).
* Profit before taxes for the life insurance operations rose to EUR 69
million (52) and the marked-to-market result decreased to EUR 100 million
(166). The return on equity was 25.0 per cent (95.7).
* Nordea is accounted for as an associated company. In the segment
reporting share of Nordea's net profit is included in the holding segment.
The profit before taxes for the segment amounted to EUR 222 million (52), of
which Nordea's share was EUR 231 million.
KEY FIGURES 1-6/2010 1-6/2009 Change %
EURm
Profit before taxes 621 433 43
P&C insurance 333 308 8
Life insurance 69 52 31
Associates (Nordea) 231 - -
Holding excl. associates -9 52 -
Profit for the period 518 345 50
Change
Earnings per share, EUR 0.92 0.61 0.31
EPS, marked-to-market, EUR 1.38 3.33 -1.95
NAV per share, EUR *) 14.50 14.63 -0.13
Average number of staff (FTE) 6,958 7,436 -478
Group solvency ratio, % *) 159.7 158.3 1.4
RoE, % 19.9 69.5 -49.6
*) comparison figure from 31.12.2009
The figures in this report are not audited. Income statement items are compared
on a year-on-year basis whereas comparison figures for balance sheet items are
from 31 December 2009 unless otherwise stated.
SECOND QUARTER 2010 IN BRIEF
Sampo Group's second quarter 2010 profit before taxes amounted to EUR 334
million (264). Earnings per share were EUR 0.48 (0.38). Marked-to-market
earnings per share were EUR 0.32 (3.45).
Net asset value per share decreased in the second quarter of 2010 by EUR 1.62
largely explained by the dividend of EUR 1.00 per share paid in April 2010 and
by the decrease in Nordea's share price during the second quarter. Since the end
of June the recovery of Nordea's share price has increased Sampo Group's net
asset value by roughly one billion euro.
In P&C insurance the second quarter was benign and the profit before taxes rose
to EUR 208 million (164). The combined ratio improved to 89.9 per cent (90.7).
Profit before taxes for the life insurance operations amounted to EUR 33 million
(26). Premiums written increased 36 per cent to EUR 256 million (188).
Segment 'Holding' reported a profit before taxes of EUR 96 million (74) in the
second quarter, of which EUR 106 million relates to Sampo's share of Nordea's
second quarter 2010 profit.
BUSINESS AREAS
P&C insurance
If P&C is the leading property and casualty insurance company in the Nordic
region, with insurance operations that also encompass the Baltic countries and
Russia. The P&C insurance group's parent company, If P&C Insurance Holding Ltd,
is located in Sweden, and the If subsidiaries provide insurance solutions and
services in Finland, Sweden, Norway, Denmark, the Baltic countries and Russia.
If's operations are divided into four business areas: Private, Commercial,
Industrial and Baltic&Russia.
Results 1-6/2010 1-6/2009 Change %
EURm
Premiums 2,358 2,174 8
Net income from investments 237 191 24
Other operating income 11 11 4
Claims incurred -1,357 -1,234 10
Change in insurance liabilities -437 -378 15
Staff costs -235 -220 7
Other expenses -231 -220 5
Finance costs -14 -15 -8
Profit before taxes 333 308 8
Key figures Change
Combined ratio, % 94.1 92.5 1.6
Risk ratio, % 70.6 68.7 1.9
Cost ratio, % 23.5 23.8 -0.3
Expense ratio, % 17.0 17.3 -0.3
Return on equity, % 35.4 47.0 -11.6
Average number of staff (FTE) 6,443 6,916 -473
Claims development in If P&C was favorable in the second quarter of 2010 after
the extreme winter conditions of the first quarter. Combined ratio for the
second quarter was 89.9 per cent (90.7) and consequently the combined ratio for
January - June 2010 improved from the first quarter to 94.1 per cent (92.5).
Marked-to-market result amounted to EUR 414 million (438).
Profit before taxes for P&C insurance for the first six months of 2010 increased
to EUR 333 million (308). The technical result was EUR 210 million (241). The
decrease was due to lower allocated investment income and lower underwriting
result. The technical result for Private business area amounted to EUR 110
million (121), Commercial EUR 54 million (65), Industrial EUR 35 million (38)
and Baltic and Russia EUR 8 million (13). Large claims development was worse
than normal in both Commercial and Industrial business areas.
Insurance margin (technical result in relation to net premiums earned) was 10.9
per cent (13.4). Return on equity (RoE) remained high at 35.4 per cent (47.0)
and the fair value reserve rose to EUR 160 million (105).
The combined ratio for January - June 2010 was 94.1 per cent (92.5). EUR 68
million (44) was released from the technical reserves related to prior year
claims. The risk ratio of 70.6 per cent (68.7) still reflects the difficult
first quarter of the year.
In the Private business area the combined ratio rose to 94.0 (92.5). Cost ratio
developed favorably and decreased 0.5 percentage points to 23.6 per cent. In the
Commercial business area risk ratio rose 1.5 percentage points to 71.9 per cent
and the combined ratio weakened to 96.1 per cent (94.5). In the Industrial
business area large claims had a negative effect on the combined ratio which
rose to 90.6 per cent (90.3). In the Baltic&Russia business area the combined
ratio was 92.4 per cent (89.7).
Gross written premiums increased 8 per cent to EUR 2,523 million (2,337).
Adjusted for currency the premiums increased 0.3 per cent. In the business area
Private the premiums grew in all countries and overall increased 4.0 per cent.
In the Commercial business area premiums were almost flat with a decrease of
0.1 per cent. The Industrial business area still suffered from recessionary
effects and the premiums decreased 4.4 per cent. The business area Baltic&Russia
was worst affected with a drop of 20 per cent in premiums written.
The cost ratio improved to 23.5 per cent (23.8) and adjusted for currency the
nominal costs decreased 1.6 per cent.
As at 30 June 2010, total investment assets amounted to EUR 11.2 billion (10.7)
of which 87 per cent (89) was invested in fixed income instruments and 12 per
cent (11) in equities. Net income from investments rose to EUR 237 million
(191). Investment return for the first six months of 2010 was 3.1 per cent
(5.0). Duration for interest bearing assets was 2.0 years (2.5).
If P&C's solvency ratio as at 30 June 2010 (solvency capital in relation to net
premiums written) amounted to 81 per cent (77). The solvency capital was EUR
3,268 million (2,943) in comparison to the regulatory minimum capital
requirement of EUR 687 million. Reserving position continues to be strong with
reserve ratio of 173 per cent (172) of net premiums written and 237 per cent
(240) of claims paid.
Life insurance
Mandatum Life Group consists of Mandatum Life, a wholly-owned subsidiary of
Sampo plc, operating in Finland, and its subsidiary Mandatum Life Insurance
Baltic SE, which has the form of a European company and is headquartered in
Estonia. It operates in the other Baltic countries through branches.
Results 1-6/2010 1-6/2009 Change %
EURm
Premiums written 603 332 82
Net income from investments 245 251 -3
Other operating income 0 0 -
Claims incurred -435 -312 39
Change in liabilities for inv. and ins. contracts -296 -177 67
Staff costs -17 -13 25
Other operating expenses -27 -24 14
Finance costs -4 -4 -8
Profit before taxes 69 52 31
Key figures Change
Expense ratio, % 119.8 121.4 -1.6
Return on equity, % 25.0 95.7 -70.7
Average number of staff (FTE) 463 465 -2
Mandatum Life reported a good result and a strong premium growth for the first
half of 2010. Premium income rose more than 80 per cent to EUR 603 million.
Profit before taxes in life insurance for January-June 2010 was EUR 69 million
(52). Net investment income, excluding income on unit-linked contracts, amounted
to EUR 153 million (132). Meanwhile, net income from unit-linked investments was
EUR 92 million (119). The fair value reserve increased to EUR 258 million from
EUR 210 million at the end of 2009. Return on equity (RoE) in life insurance
amounted to 25.0 per cent (95.7).
Excluding the assets of EUR 2.7 billion (2.4) covering unit-linked liabilities,
investment assets amounted to EUR 5.5 billion (5.4) at market values as at 30
June 2010. Fixed income represented 64 per cent (68), equity 25 per cent (23),
private equity 4 per cent (4), real estate 3 per cent (3) and other assets 3 per
cent (2) of the total assets.
Return on investments for January - June 2010 was 3.8 per cent (6.2). At the end
of June 2010 the duration of fixed income assets was 2.6 years (2.6).
Mandatum Life maintained its strong solvency position during the second quarter
of 2010. The company also exceeds clearly internal Economic Capital
requirements. The solvency ratio was 20.7 (18.5). Mandatum Life Group's total
technical reserves were EUR 7.1 billion (6.8), of which unit-linked reserves
accounted for 2.7 billion (2.4). The share of unit-linked reserves of total
technical reserves increased to 37 per cent (35).
Expense ratio for the life segment improved to 119.8 per cent (121.4). This
ratio does not take into account all fees intended to cover the operating
expenses. Mandatum Life does not defer acquisition costs, which burdens the
first year's result.
Mandatum Life Group's premium income on own account grew over 80 per cent and
amounted to EUR 603 million (332). Unit-linked premiums amounted to 72 per cent
(71) of all premiums written. Premium income from the Baltic countries was EUR
33 million (18).
Mandatum Life's overall market share in Finland measured by premium income was
23.1 per cent (23.4) and market share in unit-linked business was 30.2 per cent
(28.3). After deleting a duplication recorded in Finnish life insurance
statistics, Mandatum Life´s overall market share was 26.0 per cent. The
duplication has no effect on unit-linked market share. Market share in the
Baltic countries amounted to 23 per cent (14).
Holding
Sampo plc controls its subsidiaries engaged in P&C and life insurance. In
addition Sampo plc held on 30 June 2010 approximately 20 per cent of the share
capital of Nordea, the largest bank in the Nordic countries. Nordea is an
associated company to Sampo plc.
Results 1-6/2010 1-6/2009 Change %
EURm
Net investment income 49 86 -43
Other operating income 8 6 31
Staff costs -7 -6 17
Other operating expenses -6 -11 -42
Finance costs -52 -23 127
Share of associates' profit 231 - -
Profit before taxes 222 52 323
Change
Average number of staff (FTE) 52 55 -3
The segment's profit before taxes amounted to EUR 222 million (52), of which EUR
231 million relates to Sampo's share of Nordea's first half 2010 profit.
Sampo plc's holding in Nordea Bank was booked in the consolidated balance sheet
at EUR 5.4 billion. The market value of the holding was EUR 5.7 billion at 30
June 2010. In addition the assets on Sampo plc's balance sheet as at 30 June
2010 included holdings in subsidiaries for EUR 2.4 billion (2.4).
As at 30 June 2010 Sampo plc´s debt financing amounted to EUR 1,721 million, of
which senior bonds and notes accounted for EUR 1,006 million and commercial
papers EUR 575 million. Gross debt to Sampo plc's equity was 27 per cent (24).
Associated company Nordea Bank
On 30 June 2010 Sampo plc held 830,440,497 Nordea shares corresponding to a
holding of 20.5 per cent. The average price paid per share amounted to EUR
6.39. The closing price as at 30 June 2010 was EUR 6.82.
As Sampo's holding exceeds 20 per cent Nordea is accounted as an associated
company in Sampo Group's accounts since 31 December 2009. Sampo's share of
Nordea's net profit is shown on the face of Sampo Group's profit and loss
account on the line Share of associate´s profit/loss.
The following text is based on Nordea's January - June 2010 interim report
published on 21 July 2010.
Nordea's operating profit for the first half of 2010 amounted to EUR 1,608
million (1,651). Risk-adjusted profit decreased 22 per cent compared to last
year and was EUR 1,194 million (1,524). Net interest income held up well despite
the low interest rate levels. Net fee and commission income increased. The net
result from items at fair value decreased from the high level in the first
quarter.
Operating profit for the second quarter of 2010 was EUR 730 million (818). In
the second quarter net interest income increased 1 per cent compared to the
previous quarter to EUR 1,249 million. Lending and deposit volumes continued to
increase, resulting in higher net interest income in the customer areas, which,
however, was partly offset by higher average funding costs.
Net fee and commission income increased 13 per cent compared to the previous
quarter to EUR 538 million. Increases were seen in most areas, with higher
commission income from corporate finance and higher savings commission income
both from asset management and life as well as from custody business.
Net result from items at fair value decreased 38 per cent from a very high level
in the first quarter to EUR 339 million. The result on Group level included a
non-recurring gain of approx. EUR 50 million in connection to the merger of the
two payment transaction companies Nordito in Norway and PBS in Denmark.
Net loan loss provisions in the second quarter of 2010 were EUR 245 million.
This includes provisions of EUR 58 million related to the Danish guarantee
scheme (none in the first quarter), which includes incurred claims and also
provisions for potential claims under the guarantee. Net loan losses excluding
the guarantee scheme provisions were 28 per cent lower in the second quarter
than in the first quarter, with decreases in most countries.
The loan loss ratio was 35 basis points in the second quarter, including the
Danish guarantee scheme provisions, and 26 basis points excluding these. This
compares to 37 basis points in the first quarter, when no guarantee scheme
provisions were recorded. Net loan losses in 2010 are expected to be lower than
in 2009. Credit quality continues to stabilize, in line with the macroeconomic
recovery.
In its outlook for 2010, Nordea expects risk-adjusted profit to be lower in
2010 compared to 2009, due to lower income in Treasury and Markets.
The core tier 1 ratio, excluding transition rules under Basel II, was 10.0 per
cent. The tier 1 capital ratio and the total capital ratio are well above the
targets in Nordea's capital policy. The capital base of EUR 24.3 billion exceeds
the Pillar 1 capital requirements of EUR 14.8 billion excluding transition rules
by EUR 9.5 billion. The tier 1 capital of EUR 20.5 billion exceeds the Pillar 1
capital requirements (excluding transitions rules) by EUR 5.7 billion.
DEVELOPMENTS IN THE FIRST HALF OF 2010
Annual General Meeting
The Annual General Meeting held on 13 April 2010 decided to distribute a
dividend of EUR 1.00 per share for 2009. The record date for dividend payment
was 16 April 2010 and the dividend was paid on 23 April 2010. The Annual General
Meeting adopted the financial accounts for 2009 and discharged the Board of
Directors and the Group CEO and President from liability for the financial year.
The following members were re-elected to the Board of Directors: Tom Berglund,
Anne Brunila, Veli-Matti Mattila, Eira Palin-Lehtinen, Jukka Pekkarinen,
Christoffer Taxell, Matti Vuoria and Björn Wahlroos. At its organisational
meeting, the Board elected Björn Wahlroos as Chairman and Matti Vuoria as Vice
Chairman. The following members were elected to the Nomination and Compensation
Committee: Veli-Matti Mattila, Eira Palin-Lehtinen, Christoffer Taxell, Matti
Vuoria, and Björn Wahlroos. Tom Berglund, Jukka Pekkarinen and Christoffer
Taxell were elected to the Audit Committee.
The Annual General Meeting decided to pay the following fees to the members of
the Board of Directors until the close of the 2011 Annual General Meeting: the
Chairman of the Board will be paid EUR 160,000 per year, the Vice Chairman EUR
100,000 per year and the other members EUR 80,000 per year. After deduction of
taxes and similar payments, approximately 50 per cent of the Board members'
annual compensation will be paid in Sampo A shares and the rest in cash.
Ernst & Young Oy was elected as Auditor. The Auditor will be paid a fee
determined by a reasonable invoice. Ernst & Young Oy nominated Heikki Ilkka,
APA, as responsible auditor.
The Annual General Meeting resolved to amend section 12 of the Articles of
Association as a result of the amendments to Chapter 5, section 19 of the
Finnish Limited Liability Companies Act that entered into force on 3 August
2009 and 31 December 2009
Personnel
The number of full-time equivalent personnel in Sampo Group decreased during the
first half of 2010. On 30 June 2010 the number of staff was 6,899 compared to
7,087 on 31 December 2009. The average number of employees in January-June
amounted to 6,958 (7,454).
Approximately 92 per cent of the Sampo Group staff - 6,381 employees - worked in
P&C insurance on 30 June 2010. The number of staff is divided into 1,706
employees in Finland, 1,858 employees in Sweden, 1,516 employees in Norway and
1,301 employees in Baltics and other countries. The number of personnel in P&C
insurance decreased somewhat during the first half of the year.
Nearly 7 per cent of the Sampo Group staff - 467 employees - worked in life
insurance. Life insurance operations had 359 employees in Finland and 108
employees in Baltics. The number of staff increased slightly.
Approximately 1 per cent of the Sampo Group staff - 51 employees - worked in the
holding company Sampo plc. The number of staff remained at earlier level.
Management incentive schemes
The management incentive schemes of Sampo Group are of two types; long-term
management incentive schemes based on share appreciation rights and one
share-based incentive scheme.
The outcome of the long-term management incentive schemes is determined by
Sampo's share price development over a period of approximately three years
starting from the issue of the respective program. The programs are subject to
thresholds on share price development and company profitability, as well as
ceilings for maximum bonuses. Furthermore, the programs are subject to rules
requiring part of the paid bonus to be used to acquire Sampo shares, which must
in turn be held for a specified period of time.
In 2006, Sampo's Annual General Meeting decided on a share-based incentive
scheme for the Executive Management belonging to the Group Executive Committee.
Under the program, the participants are granted the right to receive up to a
pre-determined number of Sampo shares, if Sampo's share price has outperformed a
predefined threshold value and insurance margin targets have been exceeded. The
bonus will be paid in Sampo shares, in cash or a combination thereof.
Furthermore, the programs are subject to lock-up on Sampo shares received.
Payments based on the long-term management incentive schemes in the first half
of 2010 amounted to EUR 2 million (0). No payments were made on the basis of the
share-based incentive scheme 2006 (0).
The terms of all incentive schemes are available on Sampo's web pages at
www.sampo.com/compensation.
Shares and share capital
As at 30 June 2010, Sampo plc had 561,372,390 shares, which were divided into
560,172,390 A shares and 1,200,000 B shares. Sampo plc held 90,000 of its own A
shares corresponding to 0.02 per cent of the total number of shares and voting
rights. The shares were purchased at an average price of EUR 16.53 per share and
the total amount paid for the shares was EUR 1.5 million. The shares were
purchased in late 2009 under the authorization received in the AGM of 2009. The
other Group companies held no shares in the parent company.
On 8 June 2010 the Sampo Board decided to cancel the 90,000 Sampo A shares
referred to above according to the authorization by the Annual General Meeting.
The cancellation reduces the number of Sampo A shares with the corresponding
amount but has no effect on the share capital.
The cancellation was entered into the trade register on 13 July 2010, after
which the number of Sampo plc's A shares totals 560,082,390. Total number of
shares of the company, including 1,200,000 B shares, is 561,282,390 shares.
Sampo plc does not hold its own A shares on 11 August 2010. The other Group
companies hold no shares in the parent company either.
The Annual General Meeting of 2010 authorised the Board to acquire in one or
several lots a maximum of 50,000,000 Sampo A shares. Shares can be repurchased
in other proportion than the shareholders' proportional shareholdings (private
repurchase). The share price will be no higher than the highest price paid for
Sampo shares in public trading at the time of purchase. The authorisation will
be valid until the close of the next Annual General Meeting, nevertheless not
more than 18 months after AGM's decision.
Internal dividends
On 13 April 2010 Sampo plc received a dividend of EUR 103 million (SEK 1,000
million) from If P&C Insurance Holding Ltd. In addition the associated company
Nordea Bank AB paid on 8 April 2010 Sampo plc a dividend amounting to EUR 204
million. No dividend was paid from Mandatum Life to Sampo plc in the first half
of 2010.
Ratings
All the main ratings for Sampo Group companies remained unchanged in the second
quarter of 2010.
+--------------------------------------+--------------+-------------------+
|Rated company | Moody's |Standard and Poor's|
+--------------------------------------+------+-------+---------+---------+
| |Rating|Outlook|Rating |Outlook |
+--------------------------------------+------+-------+---------+---------+
|Sampo plc |Baa2 |Stable |Not rated|- |
+--------------------------------------+------+-------+---------+---------+
|If P&C Insurance Ltd | | | | |
|(Sweden) |A2 |Stable |A |Stable |
+--------------------------------------+------+-------+---------+---------+
|If P&C Insurance Company Ltd (Finland)|A2 |Stable |A |Stable |
+--------------------------------------+------+-------+---------+---------+
Group solvency
Sampo Group, with Nordea Bank AB (publ) as its associated company, is regarded
as a financial and insurance conglomerate according to the Act on the
Supervision of Financial and Insurance Conglomerates (2004/699).
Group solvency has been calculated according to Chapter 3 of the Act on the
Supervision of Financial and Insurance Conglomerates (2004/699). The Act is
based on Directive 2002/87/EC of the European Parliament and of the Council on
the supplementary supervision of credit institutions, insurance undertakings and
investment.
SAMPO GROUP SOLVENCY 30 June 2010 31 December 2009
EURm
Group capital 7,847 7,613
Sectoral items 1,734 1,545
Intangibles and other deductibles -2,403 -2,314
Dividends -281 -561
Group's own funds, total 6,898 6,283
Minimum requirements for own funds, total 4,320 3,968
Group solvency 2,577 2,315
Group solvency ratio
(Own funds % of minimum requirements) 159.7 158.3
The Group's solvency ratio (own funds in relation to minimum requirements for
own funds) was 159.7 per cent (158.3) as at 30 June 2010. Nordea is treated as
an associated company in the solvency calculation and the part of Nordea's
capital requirement corresponding to Sampo's holding in Nordea is taken into
account in the Group's capital requirement.
In Sampo Group solvency is assessed internally by comparing the capital required
to the capital available. Capital requirement assessment is based on an economic
capital framework, in which Group companies quantify the amount of capital
required for measurable risks over a one year time horizon at 99.5 per cent´s
confidence level. In addition to economic capital companies are assessing their
capital need related to non-measurable risks like risks in business environment.
Capital available or Adjusted Solvency Capital include regulatory capital and in
addition other loss absorbing items like the effect of discounting technical
reserves and other reserves excluded from regulatory capital.
The economic capital tied up in Group's operations on 30 June 2010 was EUR
4,131 million (3,783) and adjusted solvency capital was EUR 7,168 million
(7,077).
OUTLOOK FOR THE REST OF 2010
Global economic recovery is well under way and is expected to continue despite
European debt issues and some other factors creating uncertainty in the capital
markets.
Sampo Group is expected to report a good result for 2010 with a continuing good
profitability of its insurance operations supported by the share of Nordea's
profit.
If P&C is expected to reach its long-term combined ratio target of below 95 per
cent in 2010 and achieve a combined ratio between 92 and 94 per cent. Profit is
expected to remain on a very good level. The macro economic situation will
continue to dampen the premium growth but has a limited impact on profitability.
Mandatum Life's marked-to-market profit is highly dependent on capital markets
and is expected to remain good. Reported profit is foreseen to reach year 2009
level. The company seeks further growth in the unit-linked volumes.
The associated company, Nordea Bank AB, is expected to contribute significantly
to the Group profit in 2010.
SAMPO PLC
Board of Directors
For more information, please contact:
Peter Johansson, Group CFO, tel. +358 10 516 0010
Jarmo Salonen, Head of Investor Relations and Group Communications, tel. +358
10 516 0030
Maria Silander, Press Officer, tel. +358 10 516 0031
Sampo will arrange a Finnish-language press conference (Savoy, Eteläesplanadi
14, Helsinki), at 12:30 pm Finnish time. An English-language telephone
conference for investors and analysts will be arranged at 4 pm Finnish time (2
pm UK time). Please call +44 207 162 0025 (Europe) or +1 334 323 6201 (North
America). Please be ready to state the conference ID '869182', the conference
title 'Sampo plc 2010/Q2 release' and the password 'SAMPO'.
The telephone conference can also be followed from a direct transmission on the
Internet at www.sampo.com/result. A recorded version will later be available at
the same address.
In addition, Group CEO and President Kari Stadigh's video interview and
Supplementary Financial Information are available at www.sampo.com/result.
Sampo will publish the third quarter 2010 interim report on 3 November 2010.
Distribution:
NASDAQ OMX Helsinki
The principal media
Financial Supervisory Authority
www.sampo.com
GROUP FINANCIAL REVIEW
FINANCIAL HIGHLIGHTS 1-6/2010 1-6/2009
GROUP
Profit before taxes EURm 621 433
Return on equity (at fair value) % 19.9 69.5
Return on assets (at fair value) % 9.5 19.9
Equity/assets ratio % 27.8 25.6
Group solvency ¹) EURm 2,577 4,707
Group solvency ratio % 159.7 675.7
Average number of staff 6,958 7,436
PROPERTY & CASUALTY INSURANCE
Premiums written before reinsurers' share EURm 2,523 2,337
Premiums earned EURm 1,921 1,796
Profit before taxes EURm 333 308
Return on equity (at current value) % 35.4 47.0
Risk ratio ²) % 70.6 68.7
Cost ratio ²) % 23.5 23.8
Loss ratio ²) % 78.6 76.9
Loss ratio excl. unwinding of discount ³) % 77.1 75.2
Expense ratio ²) % 17.0 17.3
Combined ratio % 95.6 94.1
Combined ratio excl. unwinding of discount % 94.1 92.5
Average number of staff 6,443 6,916
LIFE INSURANCE
Premiums written before reinsurers' share EURm 609 338
Profit before taxes EURm 69 52
Return on equity (at current value) % 25.0 95.7
Expense ratio % 119.8 121.4
Average number of staff 463 465
HOLDING
Profit before taxes EURm 222 52
Average number of staff 52 55
PER SHARE KEY FIGURES
Earnings per share EUR 0.92 0.61
Earnings per share, incl. other
comprehensive income EUR 1.38 3.33
Capital and reserves per share EUR 13.98 10.85
Net asset value per share EUR 14.50 10.87
Adjusted share price, high EUR 20.23 15.03
Adjusted share price, low EUR 16.13 8.63
Market capitalisation EURm 9,749 7,550
¹) The Group solvency is calculated according to the consolidation method
defined in Chapter 3 of the Act on the Supervision of Financial and Insurance
Conglomerates (2004/699). In the comparison year the solvency was calculated
based on adjusted solvency calculations for insurance groups according to the
Decree of the Ministry of Social Affairs and Health (1106/2000), determined on
the basis of the Group financial statements. Nordea Bank has been consolidated
as an associate as of 31 Dec. 2009, so the capital demand required by this
investment did not burden the Group's solvency on 30 June 2009.
²) The key figures for P&C Insurance are based on activity based costs and
cannot, therefore, be calculated directly from the consolidated income
statement. The result analysis of P&C insurance is presented in note 13.
In calculating the per share key figures, the number of shares used at the
balance sheet date and as the average number of shares was 561,282,390.
The valuation differences on investment property have been taken into account in
calculating the return on assets, return on equity, equity/assets ratio and net
asset value per share. The tax component includes the tax corresponding to the
result for the period, and the deferred tax liability related to valuation
differences on investment property.
The total comprehensive income has been used in the calculation of the return on
assets and return on equity.
The key figures for the insurance business have been calculated in accordance
with the decree issued by the Ministry of Finance and the specifying regulations
and instructions of the Finance Supervisory Authority (former Insurance
Supervisory Authority).
+----------------------------------------------------------------------+-------+
|CALCULATION OF KEY FIGURES | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Return on equity (fair values), % | |
+----------------------------------------------------------------------+-------+
|+ total comprehensive income | |
+----------------------------------------------------------------------+-------+
|+ change in valuation differences on investments | |
+----------------------------------------------------------------------+-------+
|- tax (incl. change in deferred tax relating to valuation differences |x 100 %|
|on investments) | |
+----------------------------------------------------------------------+-------+
|+ total equity | |
+----------------------------------------------------------------------+-------+
|+ valuation differences on investments after deduction of deferred tax| |
+----------------------------------------------------------------------+-------+
|(average of values 1 Jan. and the end of reporting period) | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Return on assets (at fair values), % | |
+----------------------------------------------------------------------+-------+
|+ operating profit | |
+----------------------------------------------------------------------+-------+
|+ other comprehensive income before taxes | |
+----------------------------------------------------------------------+-------+
|+ interest and other financial charges | |
+----------------------------------------------------------------------+-------+
|+ calculated interest on technical provisions | |
+----------------------------------------------------------------------+-------+
|+ change in valuation differences on investments |x 100 %|
+----------------------------------------------------------------------+-------+
|+ balance sheet total | |
+----------------------------------------------------------------------+-------+
|- technical provisions relating to unit-linked insurance | |
+----------------------------------------------------------------------+-------+
|+ valuation differences on investments | |
+----------------------------------------------------------------------+-------+
|(average of values on 1 Jan. and the end of the reporting period) | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Equity/assets ratio (at fair values), % | |
+----------------------------------------------------------------------+-------+
|+ total equity | |
+----------------------------------------------------------------------+-------+
|+ valuation differences on investments after deduction of deferred tax|x 100 %|
+----------------------------------------------------------------------+-------+
|+ balance sheet total | |
+----------------------------------------------------------------------+-------+
|+ valuation differences on investments | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Risk ratio for P&C Insurance, % | |
+----------------------------------------------------------------------+-------+
|+ claims incurred | |
+----------------------------------------------------------------------+-------+
|- claims settlement expenses |x 100 %|
+----------------------------------------------------------------------+-------+
|insurance premiums earned | |
+----------------------------------------------------------------------+-------+
| | |
+----------------------------------------------------------------------+-------+
|Cost ratio for P&C Insurance, % | |
+----------------------------------------------------------------------+-------+
|+ operating expenses | |
+----------------------------------------------------------------------+-------+
|+ claims settlement expenses |x 100 %|
+----------------------------------------------------------------------+-------+
|insurance premiums earned | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Loss ratio for P&C Insurance, % | |
+----------------------------------------------------------------------+-------+
|claims incurred |x 100 %|
+----------------------------------------------------------------------+-------+
|insurance premiums earned | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Expense ratio for P&C Insurance, % | |
+----------------------------------------------------------------------+-------+
|operating expenses |x 100 %|
+----------------------------------------------------------------------+-------+
|insurance premiums earned | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Combined ratio for P&C Insurance, % | |
+----------------------------------------------------------------------+-------+
|Loss ratio + expense ratio | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Expense ratio for life insurance, % | |
+----------------------------------------------------------------------+-------+
|+ operating expenses before change in deferred acquisition costs | |
+----------------------------------------------------------------------+-------+
|+ claims settlement expenses |x 100 %|
+----------------------------------------------------------------------+-------+
|expense charges | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Per share key figures | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Earnings per share | |
+----------------------------------------------------------------------+-------+
|profit for the financial period attributable to the parent | |
+----------------------------------------------------------------------+-------+
|company's equity holders | |
+----------------------------------------------------------------------+-------+
|adjusted average number of shares | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Equity per share | |
+----------------------------------------------------------------------+-------+
|equity attributable to the parent company's equity holders | |
+----------------------------------------------------------------------+-------+
|adjusted number of shares at the balance sheet date | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Net asset value per share | |
+----------------------------------------------------------------------+-------+
|+ equity attributable to the parent company's equity holders | |
+----------------------------------------------------------------------+-------+
|+ valuation differences on listed associates in the Group | |
+----------------------------------------------------------------------+-------+
|+ valuation differences after the deduction of deferred taxes | |
+----------------------------------------------------------------------+-------+
|adjusted number of shares at balance sheet date | |
+----------------------------------------------------------------------+-------+
+----------------------------------------------------------------------+-------+
|Market capitalisation | |
+----------------------------------------------------------------------+-------+
|number of shares at the balance sheet date | |
+----------------------------------------------------------------------+-------+
|x closing share price at the balance sheet date | |
+----------------------------------------------------------------------+-------+
GROUP QUARTERLY INCOME STATEMENT
EURm 4-6/2010 1-3/2010 10-12/2009 7-9/2009 4-6/2009
Insurance premiums written 1,198 1,764 1,077 896 1,036
Net income from investments 163 363 259 348 384
Other operating income 6 3 6 6 5
Claims incurred -874 -918 -792 -767 -729
Change in liabilities for
insurance and investment 26 -759 -61 -17 -165
contracts
Staff costs -124 -135 -134 -136 -125
Other operating expenses -139 -121 -130 -115 -122
Finance costs -29 -35 -25 -23 -21
Share of associates' profit/loss 106 124 0 0 0
Profit for the period before 334 287 199 192 264
taxes
Taxes -62 -41 -51 -44 -46
Profit for the period 273 245 148 148 217
Other comprehensive income for
the period
Exchange differences on 30 83 -8 102 17
translating foreign operations
Available-for-sale financial -179 328 -189 1,549 1,875
assets
Cash flow hedges -4 -2 -3 1 -8
Share of other comprehensive 9 27 - - -
income of associates
Income tax relating to components 48 -85 -50 -175 -143
of other comprehensive income
Other comprehensive income for -96 351 -250 1,477 1,741
the period, net of tax
TOTAL COMPREHENSIVE INCOME FOR 177 596 -102 1,624 1,959
THE PERIOD, NET OF TAX
Profit attributable to
Owners of the parent 273 245 148 148 217
Non-controlling interests 0 0 0 0 0
Total comprehensive income
attributable to
Owners of the parent 177 596 -101 1,625 1,958
Non-controlling interests 0 0 0 0 0
CONSOLIDATED COMPREHENSIVE INCOME STATEMENT
EURm Note 1-6/2010 1-6/2009
Insurance premiums written 1 2,961 2,506
Net income from investments 2 527 549
Other operating income 9 8
Claims incurred 3 -1,792 -1,546
Change in liabilities for insurance and investment -733 -555
contracts
Staff costs 4 -259 -240
Other operating expenses -260 -250
Finance costs -63 -38
Share of associates' profit/loss 231 0
Profit before taxes 621 433
Taxes -103 -88
Profit for the period 518 345
Other comprehensive income for the period
Exchange differences 113 28
Available-for-sale financial assets 149 1,628
Cash flow hedges -6 -1
Share of other comprehensive income of associates 36 -
Income tax relating to components of other comprehensive -37 -101
income
Other comprehensive income for the period, net of tax 255 1,555
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 773 1,900
Profit attributable to
Owners of the parent 518 345
Non-controlling interests 0 0
Total comprehensive income attributable to
Owners of the parent 773 1,900
Non-controlling interests 0 0
Basic earnings per share (eur) 0.92 0.61
CONSOLIDATED BALANCE SHEET
EURm Note 06/2010 12/2009
Assets
Property, plant and equipment 31 34
Investment property 124 124
Intangible assets 5 726 688
Investments in associates 5,389 5,172
Financial assets 6, 7 16,323 15,479
Investments related to unit-linked insurance contracts 8 2,679 2,366
Tax assets 76 81
Reinsurers' share of insurance liabilities 575 481
Other assets 1,751 1,439
Cash and cash equivalents 623 771
Total assets 28,295 26,635
Liabilities
Liabilities for insurance and investment contracts 9 13,945 13,014
Liabilities for unit-linked insurance and investment 10 2,666 2,359
contracts
Financial liabilities 11 2,250 2,098
Tax liabilities 566 500
Provisions 31 35
Employee benefits 106 104
Other liabilities 886 912
Total liabilities 20,448 19,022
Equity
Share capital 98 98
Reserves 1,530 1,530
Retained earnings 5,868 5,889
Other components of equity 351 96
Equity attributable to owners of the parent 7,847 7,613
Non-controlling interests 0 0
Total equity 7,847 7,613
Total equity and liabilities 28,295 26,635
STATEMENTS OF CHANGES IN EQUITY, IFRS
In- Trans- Avai-
Sha- vest- Re- lation lable-
Sha- re Le- ed un- tain- of for- Cash
EURm re pre- gal re- ed foreign sale flow Total
capital mium re- strict- earn- ope- finan- hedges
ac- serve ed ings rations cial ***)
count equity *) assets
**)
Equity at 1 98 1,161 370 0 5,614 -249 -2,375 11 4,631
Jan. 2009
Changes in
equity
Transfers
between -1,161 -366 1,527 -1
equity
Share-based -2 -2
payments
Recognition
of undrawn 11 11
dividends
Dividends -449 -449
Total comprehensive 345 28 1,528 0 1,900
income for the period
Equity at 98 0 4 1,527 5,519 -221 -847 11 6,090
30 June 2009
Equity at 1 98 0 4 1,527 5,889 -200 287 9 7,613
Jan. 2010
Changes in
equity
Share-based 0 0
payments
Recognition
of undrawn 10 10
dividends
Dividends -561 -561
Share of
associate's
other
changes
in equity 12 12
Total comprehensive 518 150 110 -5 773
income for the period
Equity at 98 0 4 1,527 5,868 -50 397 4 7,847
30 June 2010
*) The total comprehensive income includes also the share of the associate
Nordea's other comprehensive income, in accordance with the Group's share
holding. As Nordea's other comprehensive income comprise mainly the currency
hedging of net investments and exchange differences, the Group's share of
Nordea's other comprehensive income EURm 367 is also included in the Group's
exchange differences in the statement of changes in equity.
**) The amount recognised in equity from available-for-sale financial assets for
the period totalled EURm 177 (1,466). The amount transferred to p/l amounted to
EURm -67 (61).
***) The amount recognised in equity from cash flow hedges for the period
totalled EURm -6 (-0) .
The amount included in the translation, available-for-sale and cash flow hedge
reserves represent other comprehensive income for each component, net of tax.
STATEMENT OF CASH FLOWS
1-6/2010 1-6/2009
Cash and cash equivalent at the beginning of the period 761 499
Cash flow from/used in operating activities 244 1,168
Cash flow from/used in investing activities 61 -1,205
Cash flow from/used in financing activities -454 42
Dividends paid -554 -443
Increase of liabilities 989 487
Decrease of liabilities -888 -1
Cash and cash equivalent at the end of the period 612 504
The cash flow statement reports cash flows during the period classified by
operating, investing and financing activities. Cash flows are reported by using
the indirect method. Cash flows from operating activities derive primarily from
the principal revenue-producing activities. Cash flows from investments in
subsidiaries and associated undertakings and those from investments in
intangible assets and property, plant and equipment are presented in investing
activities. Financing activities include cash flows resulting from changes in
equity and borrowings in order to conduct the business. Cash and cash
equivalents consist of cash at bank and in hand and short-term deposits (under
3 months).
NOTES
ACCOUNTING POLICIES
Sampo Group's consolidated financial statements are prepared in accordance with
the International Financial Reporting Standards (IFRS) adopted by the EU. The
interim financial statements are presented in accordance with IAS 34 Interim
Financial Reporting. In preparing the interim financial statements, the same
accounting policies and methods of computation are applied as in the financial
statements for 2009.
Sampo adopted various new or revised standards and interpretations at the
beginning of the year 2010. These standards and interpretations are explained in
Sampos accounting policies for the financial year 2009. The financial statements
are available on Sampo's website at www.sampo.com/result .
The most significant of the adopted standards is the revised IFRS 3 Business
combinations. The standard includes various significant changes regarding the
accounting treatment of business combinations by allowing the company to measure
the non-controlling interest at fair value instead of the proportionate interest
in the acquiree's net assets. The choice affects the amounts of recognised
goodwill and non-controlling interest.
CONSOLIDATED INCOME STATEMENT BY SEGMENT FOR SIX MONTHS ENDED 30 JUNE 2010
Unternehmensinformation / Kurzprofil:
Datum: 11.08.2010 - 08:41 Uhr
Sprache: Deutsch
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