SAMPO OYJ 
INTERIM STATEMENT FOR JANUARY-MARCH 2024
Contents | |
| The major risks and uncertainties for the Group in thenear-term | |
Topdanmark | 11 |
Hastings | 12 |
Holding | 13 |
Financial position | 14 |
Group solvency | 14 |
Financial leverage position | 14 |
Ratings | 14 |
Other developments | 15 |
Shares and shareholders | 15 |
Remuneration | 15 |
Personnel | 16 |
Events after the end of the reporting period | 16 |
Tables | 20 |
Group financial review | 20 |
Calculation of key figures | 22 |
Group quarterly result | 25 |
Statement of profit and other comprehensive income | 26 |
Consolidated balance sheet | 27 |
Statement of changes in equity | 28 |
Statement of cash flows | 29 |
Notes | 30 |
Accounting principles | 30 |
Result by segment for three months ended 31 March 2024 | 31 |
Result by segment for three months ended 31 March 2023 | 32 |
Balance sheet by segment at 31 March 2024 | 33 |
Balance sheet by segment at 31 December 2023 | 34 |
Other notes | 35 |
1 Insurance service result | 35 |
2 Net investment income | 36 |
3 Net finance income or expense from insurance contracts | 37 |
4 Other income | 37 |
5 Financial assets | 38 |
6 Insurance contract liabilities | 39 |
7 Financial liabilities | 39 |
8 Discontinued operations | 40 |
9 Contingent liabilities and commitments | 40 |
10 Subsequent events after the balance sheet date | 41 |
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INTERIM STATEMENT FOR JANUARY-MARCH 2023
7 May 2024
Sampo Group's results for January- March 2024
- Sampo Group achieved top line growth of 10 per cent on a currency adjusted basis, driven by strong development in all business areas
- The underwriting result decreased to EUR 260 million (292) and the combined ratio increased to 87.1 per cent (84.0), as a result of challenging Nordic winter conditions
- The Group underlying combined ratio improved by 1.1 percentage points and the outlook for 2024 was narrowed to 83-85 per cent (below 85)
- Profit before taxes increased to EUR 465 million (359), supported by strong investment returns and slightly higher discount rates
- Operating EPS was broadly stable at EUR 0.50 (0.51) despite the lower underwriting result
- Solvency II coverage stood at 180 per cent (182), pro forma of demerger-related transactions and including dividend accrual, and financial leverage at 24.6 per cent (25.3)
Key figures
EURm | 1-3/2024 | 1-3/2023 | Change, % |
Profit before taxes | 465 | 359 | 29 |
If | 356 | 337 | 6 |
Topdanmark | 63 | 63 | - |
Hastings | 26 | 10 | 178 |
Holding | 20 | -45 | - |
Net profit for the equity holders | 343 | 271 | 27 |
Operating result | 253 | 262 | -3 |
Underwriting result | 260 | 292 | -11 |
Change | |||
Earnings per share (EUR) | 0.68 | 0.53 | 0.15 |
Operating EPS (EUR) | 0.50 | 0.51 | -0.01 |
Net profit for the equity holders and earnings per share for January-March 2023 include result from life operations. The figures in this report have not been audited.
Sampo Group key financial targets for 2024-2026
Target | 1-3/2024 |
Operating EPS growth: over 7% (period average) | -1% |
Group combined ratio: below 85% | 87.1% |
Solvency ratio: 150-190% | 180% (pro forma of demerger-related transactions |
and including dividend accrual) | |
Financial leverage: below 30% | 24.6% |
Financial targets for 2024-2026 announced at the Capital Markets Day on 6 March 2024.
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Group CEO's comment
Group CEO's comment
The first quarter saw the most severe Nordic winter weather since 2010 and our primary focus has been on helping affected customers. Nonetheless, operational momentum was strong, with 10 per cent currency adjusted premium growth and positive underlying margin momentum. Hence, we have narrowed our combined ratio outlook for 2024 and now expect to land in the 83-85 per cent range.
At our Capital Markets Day on 6 March 2024, we outlined an agenda that puts organic growth at the heart of our ambition to grow operating EPS by more than 7 per cent per annum in 2024-2026. We have made an excellent start on this in the first quarter, with Private and the UK growing premiums by 7 per cent and 25 per cent, respectively, on a currency adjusted basis. Private benefited from investments made in digital and non-motor products, as premiums increased by 14 per cent in personal insurance and 7 per cent in property insurance. In the UK, we continued to see the effect of the significant price increases taken during the second half of 2023 and a rise in customer count, both in motor and home.
First quarter severe weather claims amounted to approximately EUR 100 million in If P&C - the highest level observed since the severe winter of 2010. An extended period of cold weather, heavy snow and icy roads in January and February adversely affected both the motor and property lines, particularly in Private. By geography, Norway and Sweden were most affected, accounting for almost 90 per cent of recorded winter claims, while Denmark was within the normal range. Partly offsetting this, large claims were around EUR 40 million below budget. Although it is clearly too early to draw any firm conclusions, I am encouraged by this as it follows a tightening in risk appetite in Industrial over 2023.
The underlying Group combined ratio improved by 1.1 percentage points year-on-year, driven by positive momentum in all segments except Topdanmark, as claims inflation remained below our prudent pricing assumptions. The adjusted risk ratio in If P&C improved by 0.3 percentage points, ex-discounting, with Private seeing the most positive momentum, and the cost ratio declined on a combination of efficiency gains and solid top line growth. We continue to cover estimated Nordic claims inflation of 4-5 per cent with price increases, even as this appears to be trending toward the lower part of the range.
In the UK, we estimate that market-wide motor claims inflation fell modestly from the 12 per cent observed over most of 2023, while the benefits of the substantial price increases taken over 2023 continued to earn into the P&L. As a result of this, our headline UK operating ratio improved by 2 percentage points to 91.4 per cent, in what is typically the seasonally most challenging quarter. Together with strong premium growth, this enabled Hastings to deliver a 71 per cent increase in underwriting profit year-on-year, adding 5 percentage points to group-level growth. UK motor pricing has stabilised during the first few months of 2024 as the market assesses the impact of the price increases taken in 2023 and shifting claims trends but we continue to be prudent in our own underwriting, as always.
In addition to a delivering on organic growth, we will continue to be disciplined in managing our capital. We are in the process of executing on capital optimisation actions worth up to EUR 700 million, as outlined at our CMD, and will provide an update on capital allocation with our First-Half 2024 results.
Torbjörn Magnusson
Group CEO
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Outlook
Outlook
Outlook for 2024
Following the first quarter result, Sampo has narrowed its 2024 outlook and now expects to deliver a Group combined ratio of 83-85 per cent. Previously, the outlook for the 2024 Group combined ratio was below 85 per cent, as per the stock exchange release published on 6 March 2024.
Sampo Group's combined ratio is subject to volatility driven by, among other factors, seasonal weather patterns, large claims and prior year development. The net financial result will be significantly influenced by capital markets' developments.
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. Macroeconomic and financial market developments affect Sampo Group primarily through the market risk exposures it carries via its insurance company investment portfolios and insurance liabilities and through strategic investments. Over time, adverse macroeconomic effects could also have an impact on Sampo's operational business, for example by reducing economic growth or increasing claims costs.
Inflation has continued to fall in 2024 with euro-area headline inflation starting to approach the central bank target. The worst of the recent inflation surge seems to be over unless geopolitical events cause new shocks to energy prices. However, the continued strength of Europe's labour market and rapid wage growth could keep price pressures elevated. This creates uncertainty on whether central banks will be keeping interest rates elevated longer than expected. This may lead to both a significant slowdown in economic growth and a deterioration in the debt service capacity of businesses, households and governments, raising the risk of abrupt asset repricing in financial markets. Furthermore, the potential escalation of wars in Ukraine and the Middle East represent a major economic risk. These developments are currently causing significant uncertainties in economic and capital market development. At the same time rapidly evolving hybrid threats create new challenges for states and businesses. 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.
Sampo Group's insurance exposures in Russia or Ukraine are limited to certain Nordic industrial line clients, with coverage subject to war exclusions. On the asset side, Sampo has no material direct investments in Russia or Ukraine. Given the limited direct exposure, the biggest risk from the war in Ukraine to Sampo relates to the second order capital markets' and macroeconomic effects outlined above.
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.
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Financial highlights
Financial highlights for January-March 2024
The start of the year 2024 brought the most challenging winter conditions seen in the Nordics since 2010, having a material impact on the Group's underwriting result. However, top line growth was strong, supported by all business areas, and underlying margin development remained positive.
Gross written premiums and brokerage income increased by 10 per cent on a currency adjusted basis and by 9 per cent on a reported basis to EUR 3,297 million (3,016). The Nordics saw first quarter currency adjusted growth of
7.6 per cent. Private GWP growth accelerated to 7.2 per cent, driven by high and stable retention of 89 per cent and strong development in personal insurance and property, while motor volumes were subdued due to continued low new car sales. UK top line growth amounted by 21.9 per cent on a local currency basis on the back of policy count growth of 6 per cent and as the large price increases made during the second half of 2023 continued to roll into the portfolio. Commercial benefited from high retention and rate increases at 1 January renewals that drove local currency premium growth to 5.1 per cent. Industrial achieved 13.1 per cent growth in GWP supported by successful 1 January renewals with material price increases but reductions to certain large property exposures led net premiums being broadly stable year-on-year.
The underlying margin trend remained positive as the Group delivered a 1.1 percentage point improvement in the underlying combined ratio, following positive momentum in both the Nordics and the UK. If reported an undiscounted adjusted risk ratio improvement of 0.3 percentage points year-on year. This was achieved by continued disciplined underwriting and pricing exceeding Nordic claims inflation, which remained stable at the lower end of the 4-5 per cent range. The UK business also saw continued positive development as Hastings reported an operating ratio of 91.4 per cent (93.3); combined with strong top line growth, this drove a 71 per cent increase in the underwriting result. UK claims inflation remained elevated but has modestly reduced from the 12 per cent observed over most of 2023.
The solid underlying development was offset by harsh Nordic winter conditions that led to 8.0 percentage points of severe weather effects on If's risk ratio. The negative effect was approximately EUR 100 million on the If's underwriting result, partly offset by large claims being approximately EUR 40 million below budget. As a result, the group underwriting result decreased by 10 per cent on a currency adjusted basis and by 11 per cent to EUR 260 million (292) on a reported basis. The Group combined ratio was 87.1 per cent (84.0). Nonetheless, given the strong momentum in Sampo's business, the Group has narrowed its combined ratio outlook for 2024 to 83-85 per cent (from below 85).
Sampo Group underlying combined ratio development for January-March 2024
1-3/2024 | 1-3/2023 | Change | |
Combined ratio, % | 87.1 | 84.0 | 3.1 |
Large claims, % | -2.0 | -1.9 | -0.1 |
Severe weather, % | 6.0 | 2.0 | 4.1 |
Prior year development, risk adjustment | |||
and other technical effects, % | -1.2 | -1.6 | 0.3 |
Discounting effect, current year, % | -2.9 | -2.8 | -0.1 |
Undiscounted underlying combined ratio, | |||
current year, % | 87.3 | 88.4 | -1.1 |
Large claims measured against budget but severe weather claims are reported in full; negative figures indicate a positive outcome. Severe weather includes natural catastrophes.
Negative figures for prior year development indicate positive reserve run-off. The discounting effect represents the impact of discounting of current year claims reserves on the underlying combined ratio.
The net financial result amounted to EUR 265 million (123), driven by strong investment returns and slightly higher discount rates. Net investment income increased to EUR 295 million (253), supported by strong equity market performance and higher running yields. The Group fixed income running yield stood at 4.0 per cent and mark-to- market yield at 4.7 per cent at the end of March 2024. Insurance finance income or expense (IFIE) amounted to
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Financial highlights
EUR -30 million (-130), including a negative effect from unwind of discounting of EUR -59 million (-60) and a positive effect of EUR 34 million (-61) from changes in discount rates.
Operating EPS stood broadly unchanged at EUR 0.50 (0.51). The negative effect from lower underwriting result was partly offset by higher investment returns and capital management actions executed in 2023. Sampo targets more than 7 per cent operating EPS growth on average over 2024-2026.
The Group pro forma Solvency II ratio, adjusted for the demerger-related transactions and including dividend accrual, stood at 180 per cent, down from 182 per cent at the end of 2023. The decrease was mainly driven by an increased SCR due to a higher symmetric adjustment. Financial leverage amounted to 24.6 per cent, down from
25.3 per cent at the end of 2023. Adjusting for the dividend for 2023, financial leverage was 26.8 per cent, down from 27.7 per cent at the 2023 year-end. Sampo targets a solvency ratio of 150-190 per cent and a financial leverage of below 30 per cent.
Sampo Group results for January-March 2024
EURm | If | Topdanmark | Hastings | Holding | Elim. | Sampo |
Group | ||||||
GWP & brokerage income | 2,095 | 653 | 560 | - | -11 | 3,297 |
Insurance revenue, net (incl. | ||||||
brokerage) | 1,290 | 361 | 369 | - | - | 2,020 |
Claims incurred and claims | ||||||
handling costs, net | -926 | -241 | -220 | - | - | -1,387 |
Operating expenses | -193 | -63 | -117 | - | - | -373 |
Underwriting result | 171 | 58 | 32 | - | - | 260 |
Net investment income | 213 | 22 | 11 | 50 | -2 | 295 |
Insurance finance income or | ||||||
expense, net | -25 | 0 | -5 | - | - | -30 |
Net financial result | 189 | 23 | 6 | 50 | -2 | 265 |
Other items | -4 | -18 | -11 | -30 | 2 | -60 |
Profit before taxes | 356 | 63 | 26 | 20 | - | 465 |
Net profit for the equity holders | 343 | |||||
Combined ratio, % | 86.8 | 84.0 | 91.4 | 87.1 |
Sampo Group results for January-March 2023
EURm | If | Topdanmark | Hastings | Holding | Elim. | Sampo |
Group | ||||||
GWP & brokerage income | 1,966 | 604 | 445 | - | - | 3,016 |
Insurance revenue, net (incl. | ||||||
brokerage) | 1,235 | 318 | 275 | - | - | 1,828 |
Claims incurred and claims | ||||||
handling costs, net | -829 | -203 | -163 | - | - | -1,195 |
Operating expenses | -189 | -58 | -94 | - | - | -342 |
Underwriting result | 217 | 57 | 19 | - | - | 292 |
Net investment income | 239 | 26 | 14 | -22 | -3 | 253 |
Insurance finance income or | ||||||
expense, net | -113 | -10 | -7 | - | - | -130 |
Net financial result | 126 | 17 | 6 | -22 | -3 | 123 |
Other items | -6 | -10 | -15 | -23 | -1 | -56 |
Profit before taxes | 337 | 63 | 10 | -45 | -5 | 359 |
Net profit for the equity holders | 271 | |||||
- of which from life operations* | 28 | |||||
Combined ratio, % | 82.4 | 82.2 | 93.3 | 84.0 |
*) Net profit from life operations in January-March 2023 includes Mandatum's result.
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Business areas
Business areas
If
If P&C is the leading property and casualty insurer in the Nordic region, where it offers solutions in all major lines of business through its four business areas; Private, Commercial, Industrial and Baltic. If P&C's business model is based on high customer satisfaction, best in class underwriting and leveraging the scale benefits that its unified Nordic model offers. Excellent digital sales and service capabilities are a core part of If's strategy, particularly in the Private and SME Commercial market segments.
Results
EURm | 1-3/2024 | 1-3/2023 | Change, % |
Gross written premiums | 2,095 | 1,966 | 7 |
Insurance revenue, net | 1,290 | 1,235 | 4 |
Claims incurred, net | -854 | -759 | 12 |
Operating expenses and claims handling costs | -265 | -259 | 2 |
Insurance service result / underwriting result | 171 | 217 | -21 |
Net investment income | 213 | 239 | -11 |
Insurance finance income or expense, net | -25 | -113 | -78 |
Net financial result | 189 | 126 | 50 |
Other items | -4 | -6 | -37 |
Profit before taxes | 356 | 337 | 6 |
Key figures | 1-3/2024 | 1-3/2023 | Change |
Combined ratio, % | 86.8 | 82.4 | 4.3 |
Cost ratio, % | 20.6 | 21.0 | -0.4 |
Risk ratio, % | 66.2 | 61.5 | 4.7 |
Large claims | -2.9 | -2.8 | -0.1 |
Severe weather | 8.0 | 1.2 | 6.8 |
Risk adjustment and other technical effects, | 1.8 | 1.5 | 0.3 |
current year % | |||
Prior year development, % | -4.2 | -2.3 | -1.9 |
Adjusted risk ratio, current year, % | 63.5 | 63.8 | -0.3 |
Discounting effect, current year, % | -3.0 | -3.0 | -0.1 |
Undiscounted adjusted risk ratio, current year, % | 66.5 | 66.8 | -0.3 |
Loss ratio, % | 71.8 | 67.1 | 4.7 |
Expense ratio, % | 14.9 | 15.3 | -0.4 |
All key figures in the table above are calculated on a net basis. Key ratios are based on SEK figures.
Large claims measured against budget but severe weather claims are reported in full; negative figures indicate a positive outcome. Severe weather includes natural catastrophes.
Negative figures for prior year development indicate positive reserve run-off. The discounting effect represents the impact of discounting of current year claims reserves on the risk ratio.
Underwriting performance
If reported an underwriting result of EUR 171 million (217) and a combined ratio of 86.8 per cent (82.4) for the first quarter of 2024. The result was negatively impacted by a high number of severe weather claims following a significantly harsher winter season than usual and the storm Ingunn, while large claims developed favourably. The underlying margin trend remained positive with an undiscounted adjusted risk ratio improvement of 0.3 percentage points and a cost ratio reduction of 0.4 percentage points year-on-year.
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Business areas
Premium development
If reported gross written premiums, GWP, of EUR 2,095 million (1,966) in January-March 2024. Excluding currency effects, premiums grew by 7.6 per cent year-on-year. All business areas and countries contributed to growth which was mainly driven by repricing that exceeded Nordic claims inflation, falling within the lower end of the 4-5 per cent range. The strong development also benefited from successful 1 January renewals in Industrial and Commercial.
In the first quarter of 2024 Private delivered GWP growth of 7.2 per cent driven by rate increases covering claims inflation. Growth was particularly strong in Norway. The positive development was supported by 14 per cent growth in Personal insurance, and 7 per cent growth in Property insurance. Growth in the Motor segment was dampened by low new car sales volumes and stood at 5 per cent.
Nordic new car sales declined by 10 per cent year-on-year in the first quarter of 2024, with new car sales in If's largest market Sweden down 6 per cent compared to the same period last year. Excluding the Swedish mobility business, currency adjusted GWP growth in the quarter was 8.1 per cent for Private and 8.0 per cent for If.
The retention rate in Private in the first quarter stood at 89 per cent (90) despite rate actions and a general slowdown in the Nordic economies. Private digital sales growth remains strong with an increase of 7 per cent year- on-year.
Currency adjusted GWP growth in Commercial in January-March 2024 was 5.1 per cent driven by robust growth across all countries, notably in Norway. The positive development was supported by successful 1 January renewals, rate adjustments aligned with claims inflation, and high retention. The growth benefited from strong development in personal insurance, while growth in the SME segment stood at 4 per cent. Digital sales increased by 20 per cent year-on-year, driven by an expansion of the digital offering and increased usage of self-service solutions.
The Industrial business saw a strong outcome at the 1 January renewal, driving currency adjusted GWP growth of
13.1 per cent in the first quarter of 2024. Rate increases continued in all countries, with the largest contribution coming from the property segment.
The Baltic business achieved a currency adjusted GWP growth of 8.5 per cent in January-March 2024. All three Baltic countries reported growth driven by both an increase in policy numbers and repricing initiatives to mitigate claims inflation.
Combined ratio development
If reported a combined ratio of 86.8 per cent (82.4) for January-March 2024.
In early 2024, the Nordic countries experienced a notably harsher winter than in previous years, leading to severe weather adding 8.0 percentage points (1.2) to the combined ratio. The increase in weather-related claims was driven by very low temperatures and heavy snowfall. Private was hit the hardest, with severe weather effects split roughly equally between motor and property. Geographically, Norway and Sweden were the most affected countries. The harsh winter was partly offset by large claims being 2.9 percentage points (-2.8) better than budget. If's large claims outcome is reported as a deviation against budget, while severe weather effects are disclosed in full.
Prior year gains increased to 4.2 percentage points (2.3) and the risk adjustment and other technical effects had an impact of 1.8 percentage points (1.5). The discounting effect in the first quarter of 2024 was 3.0 per cent, unchanged compared to the same period last year.
In total, the risk ratio deteriorated by 4.7 percentage points year-on-year to 66.2 per cent (61.5) in the first quarter of 2024. The undiscounted adjusted risk ratio improved by 0.3 percentage points year-on-year.
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INTERIM STATEMENT FOR JANUARY-MARCH 2024
Business areas
The cost ratio for January-March 2024 improved by 0.4 percentage points to 20.6 per cent (21.0). The cost ratio development compares favourably to If P&C's target for 2024-2026 of a ~20 basis point yearly cost ratio reduction. Education and development costs are included in the cost ratio.
Combined ratio, % | Risk ratio, % | |||||
1-3/2024 | 1-3/2023 | Change, % | 1-3/2024 | 1-3/2023 | Change, % | |
Private | 89.4 | 82.1 | 7.3 | 69.1 | 61.2 | 7.9 |
Commercial | 83.8 | 83.9 | -0.1 | 62.2 | 62.1 | 0.1 |
Industrial | 83.5 | 81.1 | 2.4 | 64.8 | 62.9 | 1.9 |
Baltic | 90.3 | 90.2 | 0.0 | 65.2 | 64.1 | 1.1 |
Sweden | 89.1 | 80.5 | 8.6 | 70.0 | 61.5 | 8.5 |
Norway | 88.2 | 86.1 | 2.2 | 68.3 | 65.5 | 2.8 |
Finland | 85.2 | 78.9 | 6.3 | 63.9 | 57.1 | 6.8 |
Denmark | 80.2 | 84.7 | -4.6 | 55.5 | 59.8 | -4.2 |
Net financial result
For the first quarter of 2024, If reported a net financial result of EUR 189 million (126). The mark-to-market return on investments stood at 1.9 per cent (2.2), driven by increased interest rates and positive development in equity markets.
The investment portfolio has gradually been reinvested at higher rates. At the end of March, fixed income running yield was 4.2 per cent (3.5), unchanged compared to year-end 2023.
The unwind of discounting amounted to EUR -43 million (-45) in the first quarter of 2024. Changes in discount rates had a positive effect of EUR 24 million (-64).
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Sampo Oyj published this content on 06 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 07 May 2024 07:43:03 UTC.
