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Sampo Group’s results for January – June 2021

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SAMPO PLC HALF-YEAR FINANCIAL REPORT 4 August 2021 at 9:30 am


Sampo Group’s results for January – June 2021

Sampo Group delivered strong performance across all its business units in January - June 2021. Profit before taxes grew to EUR 1,343 million (569) and earnings per share increased to EUR 1.80 (0.81).

Sampo Group’s core business, P&C insurance, achieved an underwriting result of EUR 658 million (489) for the first half of 2021, representing year-on-year growth of 34 per cent. Adjusting for the Hastings acquisition and COVID-19 effects reported by If P&C and Topdanmark, underwriting profit growth was 12 per cent. The Group combined ratio improved by 1.9 percentage points year-on-year to 80.7 per cent (82.6). The strong result is well ahead of Sampo Group’s 2021–2023 annual financial targets of mid-single digit per cent growth in underwriting profits and a combined ratio below 86 per cent.

If P&C reported first half underwriting profit of EUR 443 million (393) and a combined ratio of 81.1 per cent (82.1). The year-on-year improvement in the combined ratio was driven by a 1.5 percentage point reduction in the risk ratio. A similar improvement was observed in the risk ratio excluding the impact of large and weather claims, COVID-19 effects and prior year development. To reflect the strong performance year-to-date, the outlook for the If combined ratio has been improved to 81.5 – 83.5 per cent. If P&C delivered 4.4 per cent FX-adjusted premium growth in the first half, supported by 7.2 per cent FX-adjusted growth in the second quarter. Profit before taxes grew to EUR 566 million (383).

Topdanmark’s profit before taxes for January - June 2021 amounted in Sampo Group’s profit and loss account to EUR 208 million (38). The combined ratio improved to 82.2 per cent (84.2).

Hastings delivered first-half underwriting profits of EUR 101 million. Live customer policies remained stable at 3.1 million over the first half, and the second quarter, but grew by 4 per cent year-on-year. Premium reductions were observed across the UK motor market during the first half, but the second quarter showed signs of stabilisation. Hastings achieved an operating ratio of 76.5 per cent – materially ahead of the annual target of 88 per cent - supported by lower claims frequencies as a result of COVID-19 restrictions, particularly in the first quarter. Hastings profit before taxes was EUR 85 million, net of EUR 20 million of non-operational depreciation and amortisation.

Mandatum reported January–June 2021 profit before taxes of EUR 141 million (39), net of the establishment of EUR 39 million of new discount rate reserves. The result was supported by strong investment markets. Mandatum Life generated EUR 364 million of Solvency II own funds, which drove an increase of 21 percentage points in the Solvency II ratio to 209 per cent (188). Unit-linked and other client assets under management grew by 13 per cent to EUR 10,352 million from EUR 9,192 million at year end.

On 25 May 2021, Sampo Group sold 162 million Nordea shares via an accelerated bookbuild offering, leading to a 4 percentage point reduction in the Group’s stake in the bank to 11.9 per cent. The sale generated proceeds of EUR 1,377 million and a positive accounting effect of EUR 93 million that will be treated as an extraordinary item. Nordea is consolidated as an associate in the Sampo Group accounts and contributed profit before tax of EUR 267 million (132) in the first half of 2021.

Sampo Group’s Solvency II ratio increased to 209 per cent from 176 per cent at year-end and 189 per cent at the end of the first quarter. After adjusting for dividend accrual based on the 2020 DPS of EUR 1.70, the Solvency II ratio was 201 per cent. The sale of Nordea shares in the second quarter supported the solvency ratio by 17 percentage points. Sampo targets a solvency ratio of 170–190 per cent.

Sampo Group financial leverage of 28.4 per cent remained stable relative to the 2020 year-end level of 28.6 per cent but increased from the first quarter figure of 28.0 per cent, mainly as a result of the payment of the annual dividend of EUR 944 million in the second quarter. Sampo Group targets financial leverage below 30 per cent.

Key figures

1-6/2021

1-6/2020

Change, %

4-6/2021

4-6/2020

Change, %

EURm

Profit before taxes

1,343

569

136

710

407

74

If

566

383

48

309

254

22

Topdanmark

208

38

442

71

52

37

Hastings

85

-

-

38

-

-

Associates

369

137

169

243

51

376

Mandatum

141

39

260

65

55

18

Holding (excl. Associates)

-26

-29

-8

-15

-5

-204

Profit for the period

1,112

469

137

586

330

78

Underwriting profit

658

489

34

341

275

24

Change

Change

Earnings per share, EUR

1.80

0.81

0.99

0.99

0.55

0.43

EPS (based on OCI) EUR

2.66

0.02

2.64

1.27

1.73

-0.46

RoE, %

25.2

0.2

25.0

-

-

-

The figures in this report have not been audited.

Sampo follows the disclosure procedure enabled by the Finnish Financial Supervisory Authority and hereby publishes its Half-Year Financial Report attached as a PDF file to this stock exchange release. The Half-Year Financial Report is also available at www.sampo.com/result.

Sampo Group financial targets for 2021-2023

Target

1-6/2021

Group





Mid-single digit UW profit growth annually on average (excluding COVID-19 effects)

34% (12% adjusting for the Hastings acquisition and COVID-19 effects in If P&C and Topdanmark)

Group combined ratio: below 86%

80.7%

Solvency ratio: 170-190%

209%

Financial leverage: below 30%

28.4%

If

Combined ratio: below 85%

81.1% (84% excluding COVID-19 effects)

Hastings

Operating ratio: below 88%

76.5%

Loss ratio: below 76%

63.4%

Financial targets for 2021-2023 announced at the Capital Markets Day on 24 February 2021.

SECOND QUARTER IN BRIEF

During April - June 2021, Sampo Group recorded profit before taxes of EUR 710 million (407) and EPS of EUR 0.99 (0.55). Second quarter underwriting profit increased by 24 per cent year-on-year to EUR 341 million (275). Adjusting for the Hastings acquisition and COVID-19 effects reported by If P&C and Topdanmark, underwriting profit growth was 6 per cent.

If P&C achieved profit before taxes of EUR 309 million (254) in the second quarter, while underwriting profit grew by 8 per cent to EUR 230 million (213). Gross written premiums grew by 7.2 per cent on an FX-adjusted basis and the combined ratio remained stable at 80.7 per cent (80.5). COVID-19 effect reduced to 3 percentage points from 4 percentage points in the prior year. The risk ratio improved by 0.4 percentage points on a reported basis and by 1.4 percentage points excluding the impact of COVID-19 effects.

Topdanmark reported a combined ratio of 79.7 per cent (79.7) for the second quarter, driving a profit before tax contribution to Sampo of EUR 71 million (52).

Hastings’ live customer policies remained stable at 3.1 million during the second quarter as the company maintained a disciplined approach to underwriting. Some signs of stabilisation in UK motor insurance market pricing were observed over the quarter. Hastings’ second quarter profit before taxes amounted to EUR 38 million.

Sampo’s share of Nordea profits in the second quarter amounted to EUR 146 million (48). The sale of 162 million Nordea shares in the second quarter led to a positive accounting effect of EUR 93 million, attributable to the Holding segment.

Mandatum reported profit before tax of EUR 65 million (55) for the second quarter. Mandatum Life own funds increased by EUR 181 million, driving a 9 percentage point rise in the Solvency II to 209 per cent. Mandatum client assets under management increased by EUR 675 million in the second quarter to EUR 10,352 million.


GROUP CEO’S COMMENT

Sampo Group’s operations have, without exception, delivered strong performance during the first half of the year, driving an increase in profit before tax to EUR 1,343 million (569). The result is supported by excellent operational momentum across all our businesses but I would like to highlight the performance of our P&C operations; adjusting for the Hastings acquisition and COVID-19 effects reported by If P&C and Topdanmark, first half underwriting profit grew by 12 per cent year-on-year, which illustrates the strong underlying development in the business.

Within the P&C business, the performance of If P&C is noteworthy, combining 7.2 per cent FX-adjusted premium growth and a 1.5 percentage point year-on-year risk ratio improvement, excluding COVID-19 effects, in the second quarter. Over the last few years If P&C has taken determined pricing action in areas with insufficient rate adequacy, particularly in parts of Industrial and Commercial, which is benefitting margins as higher premiums are earned through. In the Private business focus has been on capitalising on the extensive investments made in digital capabilities over the last decade. In the first half of 2021, our market leading partnership network with Nordic car dealerships allowed us to capture a 26 per cent market share in a new car market that grew by 25 per cent year-on-year. This helped drive an increase in the Private customer base to 3.2 million households, many of whom have multiple products with us.

Sampo continues to make good progress on the integration of Hastings. During the first half, we have identified annual pre-tax earnings benefits of EUR 30 million from knowledge sharing with If P&C and a further EUR 15 million from capital optimisation actions. Combined, these represent over 30 per cent of Hastings average profit before tax in 2018-2020 and we estimate that their value outweighs the premium paid on the transaction. In combination with the attractive valuation at which we acquired the company, I believe this lays a strong foundation on which to build significant future value creation by capitalising on Hastings’ leading position in the digital UK P&C market.

In May, Sampo took a further step in increasing its P&C focus by selling 162 million Nordea shares, which reduced our holding to 11.9 per cent. Sampo remains by far the largest owner of Nordea shares, so I am pleased to observe the excellent progress made by the bank and to receive the news that the ECB is removing dividend restrictions from October 2021. Nonetheless, I see the greatest scope for long term value creation in P&C insurance; hence, we remain committed to materially reducing our Nordea ownership by September 2022. As our balance sheet ex-Nordea strengthens, we will look to deploy proceeds from potential future Nordea disposals into bolt-on acquisitions in P&C insurance or return these to shareholders, as communicated at our CMD in February 2021.

To conclude, I am delighted with the strong momentum I see across our businesses. I believe we are well positioned to continue to deliver good performance in the second half and to execute against our strategic ambitions. I look forward to discussing our business further with you at our upcoming company events and road shows.

Torbjörn Magnusson
Group CEO and President


OUTLOOK

Outlook for 2021

Sampo Group’s insurance businesses are expected to report good insurance technical results for 2021, although the mark-to-market component of investment returns will be significantly influenced by capital markets’ developments, particularly in life insurance.

If P&C is expected to reach a combined ratio of 81.5 – 83.5 per cent in 2021.

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

Hastings is on track to deliver against its financial targets but uncertainties relating to COVID-19 development, regulatory reform and Brexit remain.

Nordea continues to focus on creating great customer experiences, growing income and improving operational efficiency, and it is on track to deliver against its 2022 targets.

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 separately managed major business units.

Major risks affecting the Group companies’ profitability and its variation are market, credit, insurance and operational risks that are quantified independently by the major business units. 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. Currently, the COVID-19 pandemic and the measures taken to contain the virus are 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 digitalization including threats posed by cybercrime.

EFFECTS OF COVID-19 ON SAMPO GROUP

If

Claims cost for the first six months was positively impacted by low claims frequencies in the motor and travel insurance portfolios following imposed government restrictions. The effect of COVID-19 on the risk ratio was approximately 3 percentage points positive in the first six months and 3 percentage points in the second quarter. During the second quarter, motor claims were above last year’s level, but still below pre-pandemic levels. A gradual normalization of claims frequency is expected as vaccinations are progressing and restrictions lifted.

The topline effect of COVID-19 in the first six months was minor. In the Private segment, the impact was primarily within travel insurance where volumes continued to be lower than the pre-pandemic level. In the corporate segments, COVID-19 had a slight negative impact on premium volumes in the Finnish workers’ compensation portfolio.

Topdanmark

Topdanmark has reported on the impacts of the COVID-19 pandemic in its interim report for January–June 2021 published on 16 July 2021. The report is available at www.topdanmark.com.

Hastings

Motor claims frequencies have remained low throughout the duration of the pandemic, reflecting reduced motor vehicle usage as a result of the national and local restrictions. Motor claims frequencies have increased throughout the second quarter of 2021, as motor usage has increased as restrictions are lifted.

Hastings does not provide insurance for any business lines which have been negatively impacted by COVID-19, such as travel or business interruption.

Mandatum

Mandatum did not experience significant financial COVID-19 related impacts during the second quarter.


BUSINESS AREAS

If

If P&C reported an underwriting result of EUR 443 million (393) for the first half of the year, representing 13 per cent growth year-on-year. This was driven by a 1.0 percentage point improvement in the combined ratio to 81.1 per cent and FX-adjusted premium growth of 4.4 per cent. Excluding COVID-19 effects, year-on-year underwriting profits grew by 7 per cent which is in the upper part of the mid-single digit annual growth target range for If P&C.

In the second quarter, If P&C delivered underwriting profit of EUR 230 million (213) – an 8 per cent increase year-on-year. Premiums grew by 7.2 per cent on an FX-adjusted basis while the combined ratio remained stable at 80.7 per cent (80.5). Excluding COVID-19 effects, second quarter underwriting profits grew by 15 per cent year-on-year.

If P&C reported gross written premiums, GWP, of EUR 3,045 million (2,846) in the first half. Excluding currency effects, premiums grew by 4.4 per cent, driven by strong development across Private, Industrial and Baltic. In the second quarter premium growth increased to 7.2 per cent as the Commercial business area saw a particularly strong improvement in trend.

If P&C’s Private business delivered GWP growth of 4.9 per cent in the first half, with the second quarter being slightly stronger than the first at 5.8 per cent. Geographically, growth in Private was strongest in Sweden and Norway. Private benefitted from a 25 per cent year-on-year increase in new car sales in the Nordic region; If P&C has a leading partnership network with car dealerships in the region, allowing it to capture an market share of 26 per cent of new car sales in the first half. Private customer retention remained strong at approximately 90 per cent, stable over the first half, and NPS increased to 61 from 60 at year-end. Travel insurance had a negative impact on premium development in Private.

First half constant FX GWP growth in Commercial stood at 2.8 per cent, while second quarter growth was 10.2 per cent. The improvement in trend during the second quarter was driven primarily by Sweden and Finland. In Finland, COVID-19 related premium adjustments in workers’ compensation had material negative impact on the first quarter. At a Nordic level, Commercial retention increased slightly from an already strong level. Digital sales – a key focus area for Commercial - doubled year-on-year.

In Industrial, GWP grew by 5.4 per cent in the first half and 8.5 per cent in the second quarter, on an FX-adjusted basis. The business area has enjoyed strong renewals activity, with significant rate increases and good retention. Industrial premium growth was driven by Sweden and Norway, while the shrinking workers’ compensation market in Finland had a negative impact. Multi-year project business had a negative impact on year-on-year premium growth.

Growth in the Baltic was stronger than the market average and driven by an increase in number of policies sold due to If’s strong competitive position.

The first half combined ratio of 81.1 per cent was 1.0 percentage points better than the year before (82.1), while the second quarter combined ratio of 80.7 per cent was broadly stable year-on-year (80.5). Excluding COVID-19 effects, the second quarter combined ratio improved by 0.8 percentage points.

First half large claims measured as a per cent of net earned premiums were 1.4 percentage points (2.1) worse than expected, while second quarter large claims were 2.7 percentage points worse than expected (2.4). The heightened large loss activity in the second quarter related primarily to Swedish property claims in the Industrial business.

In the first half, weather claims were slightly above normal levels and approximately 1 percentage point above the prior year. During the second quarter, weather claims were in the normal range and at a comparable level to the prior year.

COVID-19 effects supported the combined ratio by approximately 3 percentage points in the first half. Second quarter COVID-19 effects of approximately 3 percentage points were 1 percentage point lower than the approximately 4 percentage points in the prior year. Effects related to the pandemic declined over the first half of 2021 as COVID-19-related restrictions and recommendations were reduced across the Nordic region.

Development on prior year reserves supported the combined ratio by 4.0 percentage points both in the first half and second quarter of 2021, representing a reduction from 4.7 percentage points in the first half of 2020 and a small increase from 3.7 percentage points in the second quarter of 2020. The Swedish MTPL portfolio remains the largest driver of prior year profits.

The risk ratio improved by 1.5 percentage points to 59.9 per cent (61.4) in the first half. Excluding the impact of large losses and weather losses, prior year development and COVID-19 effects, the risk ratio improved by approximately 1.5 percentage points year-on-year. The second quarter risk ratio improved by 0.5 percentage points year-on-year to 58.8 per cent (59.3). Adjusting for large losses and weather losses, prior year development and the COVID-19 effects, the second quarter risk ratio improved by approximately 1.4 percentage points year-on-year. The positive trend in the risk ratio primarily reflects the pricing action taken by If P&C, particularly in business areas Commercial and Industrial, as well as ongoing work on risk selection.

The cost ratio for the first half increased by 0.4 percentage points to 21.2 percent (20.8). For the second quarter, the cost ratio increased by 0.7 percentage points from 21.2 percent to 21.9 percent. The increase in the cost ratio was attributable to IT expenses and an increase in activity compared to the prior year.

If P&C reported a strong investment result of EUR 138 million (6) driven by supportive equity and credit markets. Mark-to-market return on investments stood at 2.5 per cent overall. Asset allocation remained stable; fixed income comprised 88 per cent (88) and equity 12 per cent (12) of the total assets of EUR 12.0 billion (11.0).

In total, If P&C reported profit before taxes almost doubled of EUR 566 million (383) for the first half of the year. Total comprehensive income for the period was EUR 591 million (106).

Topdanmark

At the end of June 2021 Sampo plc held 41,997,070 Topdanmark shares, corresponding to 46.7 per cent of all shares and 47.9 per cent of related voting rights in the company. The market value of the holding was EUR 1,843 million on 30 June 2021.

Topdanmark’s profit before taxes for January - June 2021 amounted in Sampo Group’s profit and loss account to EUR 208 million (38). The combined ratio improved to 82.2 per cent (84.2). The expense ratio was 16.2 per cent (16.7).

Further information on Topdanmark A/S and its January-June 2021 result is available at www.topdanmark.com.

Hastings

Strong performance continued to be delivered by Hastings throughout the first half of 2021, supported by the ongoing progress on strategic and operational initiatives, as well as lower claims frequencies as a result of COVID-19 restrictions.

Gross written premiums amounted to EUR 554 million, with lower average premiums reflecting a change in mix of customers to lower risk segments, with underlying premium rates broadly stable.

Premium reductions were observed across the UK motor market during the first quarter of 2021, but signs of stabilisation were seen during the second quarter. Hastings has remained disciplined, contributing to an increase in average premiums during the second quarter.

Live customer policies are broadly stable compared to the year end at 3.1 million, and up 4 per cent year-on-year, having lapped a period of strong growth in the second quarter of 2020. Customer retention rates continue to be high and above market averages, with overall retail income per policy also remaining broadly stable.

The calendar year loss ratio for the first half was 63.4 per cent, significantly below the full year target of 76 per cent. Prior year development was positive, reflecting favourable development on large bodily injury claims, whilst maintaining the overall reserving position consistent with the year end.

Motor claims frequencies, though higher than 2020, have remained below 2019 levels, reflecting reduced motor vehicle usage as a result of COVID-19 restrictions. However, frequencies have increased throughout the second quarter as restrictions were lifted.

The operating ratio for the first half was 76.5 per cent, well below the full year target of 88 per cent, reflecting the strong loss ratio performance. The ratio includes a 3.7 percentage point benefit from acquisition accounting across revenue and operating expenses for deferred acquisition costs and other fair value adjustments that will continue until fourth quarter of 2021.

Home insurance customer policies were up 27 per cent year-on-year to almost 300,000, supported by new pricing capabilities, with new home claims capabilities due to launch in the second half of 2021.

Profit before tax amounted to EUR 85 million. This includes a EUR 20 million charge for amortisation of non-operational intangibles, related to the acquisition, which will continue for the next seven years.

Whiplash reforms, designed to reduce the cost of small bodily injury claims, came into effect across the UK market at the end of May. Claims volumes processed through the new portal remain low and it therefore remains too early to assess the effectiveness of the reforms. In addition, the final report of the FCA’s general insurance pricing practices market study was issued in May, with full implementation required by the end of December 2021. Management remains supportive of both reforms and the approach to agile pricing, risk selection and business model means that Hastings is well positioned to adapt and become a net beneficiary versus competitors over time.

Mandatum

The profit before taxes for Mandatum in January – June 2021 increased to EUR 141 million (39). The total comprehensive income for the period after tax reflecting the changes in market value of assets was EUR 238 million (-90).

Mandatum’s operational result (expense result and result from Asset Management) increased to EUR 17 million (10). The risk result was EUR 11 million (10).

Mandatum continued to benefit from favourable investment markets. Net investment income amounted to EUR 178 million (30), excluding unit-linked contracts.

Mandatum’s unit-linked and other client assets grew by EUR 1.2 billion to EUR 10.4 billion (9.2) at the end of June, driven by approximately EUR 400 million of net flows and positive market movements.

Mandatum Life’s with-profit reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 97 million to EUR 1.8 billion (1.9). In total, with-profit reserves amounted to EUR 3.3 billion (3.5) at the end of June.

Mandatum Life’s discount rate for 2024 was lowered to 1.5 per cent in first quarter, which had a negative impact of EUR 31 million on the result. In the second quarter, the rate for 2024 was further lowered to 1.0 per cent, which had a negative result impact of EUR 8 million. The discount rate is 0.25 per cent for 2021–2023.

Mandatum Life has overall supplemented its technical reserves with a total of EUR 220 million (218). In addition, the discount rate reserve of segregated liabilities was EUR 204 million (232).

Holding

Holding segment’s profit before taxes for January - June 2021 rose to EUR 343 million (109), including a positive accounting effect of EUR 93 million related to disposal of 162 million Nordea shares on 25 May 2021. Excluding the one-off item, Nordea’s profit share was EUR 267 million (132) in January-June 2021. Nordax’s profit share was EUR 9 million (5) in the same period.

On 30 June 2021 Sampo plc held 480,924,782 Nordea shares corresponding to a holding of 11.87 per cent. The average purchase price per share amounted to EUR 6.46. Nordea is valued in the consolidated balance sheet at EUR 3.8 billion, i.e. EUR 7.93 per share on 30 June 2021. On the same date the market value of the holding was EUR 4.5 billion, i.e. EUR 9.40 per share.

On 17 June 2021, Sampo Group announced a tender offer and proposals relating to senior debt issued by Sampo plc with maturities in 2023 and 2025. This is discussed further in the section “Events after the end of the reporting period”.

OTHER DEVELOPMENTS

Disposal of Nordea shares

During the second quarter of 2021, Sampo continued to reduce its holding in Nordea in line with its strategic focus. Sampo sold on 25 May 162 million Nordea shares to institutional investors. The transaction price was EUR 8.50 per share, resulting in gross proceeds of EUR 1,377 million.

The sale has a positive accounting effect of approximately EUR 93 million, including recycling of previously recognized other comprehensive items of approximately EUR -30 million, from the transaction.

After the transaction, Sampo holds 480,924,782 Nordea shares, corresponding to 11.87 per cent of all shares and voting rights in Nordea.

In connection with the offering, Sampo entered into a lock-up undertaking, under which it had, subject to certain exceptions, agreed not to sell any Nordea shares for a period ending on 23 August 2021.

Annual General Meeting

The Annual General Meeting of Sampo plc, held on 19 May 2021, decided to distribute a dividend of EUR 1.70 per share for 2020. The record date for dividend payment was 21 May 2021 and the dividend was paid on 28 May 2021. The Annual General Meeting adopted the financial accounts for 2020 and discharged the Board of Directors and the CEO from liability for the financial year.

The Annual General Meeting elected eight members to the Board of Directors. The following members were re-elected to the Board: Christian Clausen, Fiona Clutterbuck, Georg Ehrnrooth, Jannica Fagerholm, Johanna Lamminen, Risto Murto and Björn Wahlroos. Markus Rauramo was elected as a new member to the Board. The Members of the Board were elected for a term continuing until the close of the next Annual General Meeting.

At its organizational meeting, the Board elected Björn Wahlroos as Chair and Jannica Fagerholm as Vice Chair. Christian Clausen, Risto Murto and Björn Wahlroos (Chair) were elected to the Nomination and Remuneration Committee. Fiona Clutterbuck, Georg Ehrnrooth, Jannica Fagerholm (Chair), Johanna Lamminen and Markus Rauramo were elected to the Audit Committee.

All the Board members have been determined to be independent of the company and its major shareholders under the rules of the Finnish Corporate Governance Code 2020. The curriculum vitaes of the Board Members are available at www.sampo.com/board.

The Annual General Meeting decided to pay the following fees to the members of the Board of Directors until the close of the 2022 Annual General Meeting: the Chair of the Board will be paid an annual fee of EUR 184,000 and other members of the Board will be paid EUR 95,000 each. Furthermore, the members of the Board and its Committees will be paid the following annual fees: the Vice Chair of the Board EUR 26,000, the Chair of the Audit Committee EUR 26,000 and the member of the Audit Committee EUR 6,000. A Board member shall, in accordance with the resolution of the Annual General Meeting, acquire Sampo plc’s A shares at the price paid in public trading for 50 per cent of his/her annual fee excluding taxes and similar payments.

The Annual General Meeting accepted Sampo plc’s Remuneration Report for Governing Bodies. The resolution is advisory.

Deloitte Ltd was elected as Auditor. The Auditor will be paid a fee determined by an invoice approved by Sampo. Jukka Vattulainen, APA, will act as the principally responsible auditor.

There were altogether 330,774,332 shares (59.56 per cent of shares) and 335,574,332 votes (59.91 per cent of all votes) in the company represented, including advance voting and a proxy representation, at the Annual General Meeting.

The minutes of the Annual General Meeting are available for viewing at the AGM website at www.sampo.com/agm and at Sampo plc's head office at Fabianinkatu 27, Helsinki, Finland.

Personnel

The average number of Sampo Group’s employees (FTE) in January - June 2021 amounted to 13,226 (10,322).

If is Sampo Group’s largest business area and employed on average 54 per cent of the personnel. Topdanmark employed 18 per cent, Hastings employed 23 and Mandatum Life approximately 4 per cent of the personnel. The parent company Sampo plc employed 0.5 per cent of the personnel. The amount of staff was 7,209 persons in If P&C; 2,427 in Topdanmark; 2,998 in Hastings, 563 in Mandatum and 70 in Sampo plc.

In geographical terms Denmark had 23 per cent of the personnel, United Kingdom 22 per cent, Sweden 18 per cent, Finland 17 per cent, and Norway 12 per cent. The share of other countries was 9 per cent.

Remuneration

A total of EUR 66 million (44), including social costs, was paid as short-term incentives in January - June 2021 in Sampo Group. In the same period, a total of 3 million (1) was paid as long-term incentives. The increase in payouts is mainly due to the inclusion of Hastings in Sampo Group starting from November 2020. The long-term incentive schemes in force in Sampo Group produced a negative result impact of EUR -11 million (3). The terms of the long-term incentive schemes based on financial instruments of Sampo plc are available at www.sampo.com/incentiveterms.

In March 2021, Sampo Group published its Remuneration Report for Governing Bodies 2020 at www.sampo.com/year2020. The report has been prepared in accordance with the Corporate Governance Code 2020, issued by the Securities Market Association and effective from 1 January 2020.

Shares and shareholders

The Annual General Meeting held on 19 May 2021 authorized the Board to repurchase a maximum of 50,000,000 Sampo A shares. The price paid for the shares repurchased under the authorization shall be based on the current market price of Sampo A shares on the securities market. The authorization will be valid until the close of the next Annual General Meeting, nevertheless not more than 18 months after the AGM's decision.

During January–June 2021 Sampo plc made no repurchases of its own shares and it has not purchased any shares after the end of the reporting period. Furthermore, Sampo plc and its subsidiaries did not hold any Sampo shares as at 30 June 2021.

During January - June 2021 Sampo plc received altogether 34 notifications of change in holding pursuant to Chapter 9, Section 5 of the Securities Markets Act, according to which the total number of Sampo A shares or related voting rights owned by BlackRock, Inc. (tax ID 32-0174421) and its funds directly or through financial instruments had decreased below 5 per cent or increased above 5 per cent.

The details of the notifications are available at www.sampo.com/flaggings.

Ratings

Relevant ratings for Sampo Group companies on 30 June 2021 are presented in the table below.

Rated company

Moody’s

Standard & Poor’s

Rating

Outlook

Rating

Outlook

Sampo plc – Issuer Credit Rating

A3

Stable

A

Stable

If P&C Insurance Ltd – Insurance Financial Strength Rating

A1

Stable

A+

Stable

If P&C Insurance Holding Ltd (publ) - Issuer Credit Rating

-

-

A

Stable

Mandatum Life Insurance Company Ltd – Issuer Credit Rating

-

-

A+

Stable


In addition, Hastings Group (Finance) Plc has an outstanding senior bond of GBP 250 million maturing in 2025 for which Fitch has an Issuer Default Rating (IDR) of A- with a positive outlook.

Solvency

Sampo Group calculates its group solvency under the Solvency II rules. In this calculation Nordea is treated as an equity investment. Sampo Group targets a solvency ratio between 170 and 190 per cent according to the Solvency II rules, as published on 24 February 2021.

On 30 June 2021 Sampo Group’s solvency ratio stood at 209 per cent (176), or 201 per cent including dividend accrual based on the EUR 1.70 per share distributed for 2020. During the second quarter, the Group generated 20 percentage points of Solvency II capital, of which 17 percentage points is attributable to the disposal of Nordea shares on 25 May 2021 and 4 percentage points relates to operational capital generation.

Leverage position

On 24 February 2021 Sampo published a target of below 30 per cent for its Group financial leverage ratio calculated as Group’s financial debt divided by the sum of IFRS equity and financial debt. The leverage ratio was 28.4 per cent on 30 June 2021. Group financial debt amounted EUR 5,058 million, of which EUR 2,754 million related to senior instruments and EUR 2,305 to hybrid notes, respectively. IFRS equity was EUR 12,742 million.

More information on Sampo Group’s outstanding debt issues is available at www.sampo.com/debtfinancing.

Events after the end of the reporting period

On 17 June 2021, Sampo announced tender offers and proposals for its outstanding notes due 2023 and 2025. Sampo decided to accept for purchase all notes validly tendered pursuant to the offers. Accordingly, at settlement of the offers on the settlement date, EUR 90,366,000 in aggregate nominal amount of the 2023 notes and EUR 92,085,000 in aggregate nominal amount of the 2025 notes was purchased pursuant to the relevant Offer. The negative profit and loss impact of the redemption is approximately EUR 10 million.

The results of the cash tender offers and proposals were published on 26 July 2021 on the website of the London Stock Exchange plc.

SAMPO PLC
Board of Directors

For more information, please contact:

Knut Arne Alsaker, Group CFO, tel. +358 10 516 0010

Sami Taipalus, Head of Investor Relations, tel. +358 10 516 0030

Mirko Hurmerinta, Investor Relations and Communications Specialist, tel. +358 10 516 0032

Maria Silander, Communications Manager, Media Relations, tel. +358 10 516 0031


Conference call

An English-language conference call for investors and analysts will be arranged at 4 pm Finnish time (2 pm UK time). Please call tel. +1 631 913 1422, +46 8 5664 2651, +44 333 300 0804 or +358 9 8171 0310. The conference code is 97460637#.

The conference call can also be followed live at www.sampo.com/result. A recorded version will later be available at the same address.

In addition, the Investor Presentation is available at www.sampo.com/result.

Sampo will publish the Interim Statement for January–September 2021 on 3 November 2021.

Distribution:
Nasdaq Helsinki
London Stock Exchange
The principal media
Financial Supervisory Authority
www.sampo.com

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