Sampo Group's results for 2016 SAMPO PLC    

SAMPO PLC    FINANCIAL STATEMENT RELEASE     8 February 2017 at 9:30 am

SAMPO GROUP'S RESULTS FOR 2016

Despite the low interest rate environment, 2016 was a very good year for Sampo Group as profit before taxes amounted to EUR 1,871 million (1,888) and the total comprehensive income for the period, taking changes in the market value of assets into account, rose to EUR 1,760 million (1,564).

• Earnings per share was almost unchanged at EUR 2.95 (2.96) but mark-to-market earnings per share improved significantly to EUR 3.14 (2.79). Return on equity for the Group amounted to 15.0 per cent (14.0) for 2016. Net asset value per share on 31 December 2016 was EUR 24.86 (23.79).
• The Board proposes to the Annual General Meeting to be held on 27 April 2017 a dividend of EUR 2.30 per share (2.15). The proposed dividend payment amounts in total to EUR 1,288 million (1,204).
• Profit before taxes for the P&C insurance was EUR 883 million (960). Insurance technical result was excellent and combined ratio for January - December 2016 reached a record of 84.4 per cent (85.4). Even adjusted for non-recurring items the combined ratio for 2016 was still best ever and amounted to 86.1 per cent and 86.5 per cent for 2015. Return on equity was 25.3 per cent (21.5). The contribution of Topdanmark's net profit for 2016 amounted to EUR 65 million (43).
• Sampo's share of Nordea's net profit for 2016 amounted to EUR 773 million (751). Nordea's RoE, excluding non-recurring items, amounted to 11.5 per cent (12.3) and core Tier 1 ratio (excluding transition rules) was stronger than ever before at 18.4 per cent (16.5). In segment reporting the share of Nordea's profit is included in the segment 'Holding'. Nordea's Board of Directors proposes to the AGM 2017 a dividend of EUR 0.65 per share (0.64). If the AGM approves the Board's dividend proposal, Sampo plc will receive a dividend of EUR 559 million (551) from Nordea on 27 March 2017.
• Profit before taxes in life insurance operations rose to EUR 210 million (181). Return on equity amounted to 15.9 per cent (12.7). Premium income on own account was EUR 1,116 million (1,144) as the premiums in the fourth quarter grew 46 per cent. The discount rates for with profit policies used for 2017, 2018 and 2019 are 0.25 per cent, 0.50 per cent, and 2.25 per cent, respectively. The discount rate reserve reached an all-time high of EUR 273 million.

Income statement items are compared on a year-on-year basis and comparison figures for balance sheet items are from 31 December 2015 unless otherwise stated.

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

Fourth quarter in brief

Sampo Group's profit before taxes for the fourth quarter of 2016 amounted to EUR 528 million (413). Earnings per share rose to EUR 0.84 (0.65), which is the highest ever for a fourth quarter. Mark-to-market earnings per share were EUR 0.98 (0.95). Net asset value per share rose EUR 3.05 during the quarter to EUR 24.86. The impact of Nordea's share price rise was EUR 2.20 per share.

Combined ratio for the P&C insurance operation in the fourth quarter amounted to 85.6 per cent (87.7). It is the best ever fourth quarter combined ratio lowered by 3.8 percentage points of run-off gains and burdened by  -1.8 percentage points of large claims above the expected level. Profit before taxes increased to EUR 223 million (204). Share of the profits of Topdanmark amounted to EUR 23 million (6).

Sampo's share of Nordea's fourth quarter 2016 net profit rose to EUR 227 million (173). Nordea's Group core tier 1 capital ratio, excluding transition rules, increased to 18.4 per cent (16.5) at the end of 2016.

Profit before taxes for the life insurance operations increased to EUR 53 million (48). Mandatum Life continued to strengthen its technical reserves due to low level of interest rates. Premiums written grew 46 per cent from EUR 306 million to EUR 446 million.

BUSINESS AREAS

P&C insurance

Profit before taxes for the year 2016 for the P&C insurance segment was EUR 883 million (960). Combined ratio improved to 84.4 per cent (85.4) and risk ratio to 62.3 per cent (66.6). In the first quarter of 2016 EUR 72 million was released from the Swedish MTPL reserves, following a review of mortality tables by the Swedish insurance federation. This improved the combined ratio for the full-year 2016 by 1.7 percentage points. The comparison figure contains two non-recurring items - the reform of the pension system in If Norway and the lowering of the interest rate used in discounting annuities in Finland from 2.0 per cent to 1.5 per cent. Their combined effect on 2015 combined ratio was 1.1 percentage points positive. Excluding the non-recurring items combined ratio for 2016 would have been 86.1 per cent and 86.5 per cent for 2015.

EUR 141 million, including the Swedish MTPL release, was released from technical reserves relating to prior year claims in January - December 2016. In the previous year the reserves were strengthened by EUR 61 million mainly explained by the lowering of the interest rate used in discounting annuities in Finland. Return on equity increased to 25.3 per cent (21.5) and the fair value reserve on 31 December 2016 increased to EUR 484 million (391).

Technical result increased to EUR 658 million (657). Insurance margin (technical result in relation to net premiums earned) improved to 15.5 per cent (15.1).

The release from the Swedish MTPL reserves in the first quarter of 2016 affected the full-year 2016 result positively while the comparison figures for the Finnish business are burdened by the change in the Finnish discount rate in the second quarter of 2015.  Large claims in BA Industrial were EUR 11 million better than expected in 2016 and the total large claims for If P&C ended up EUR 17 million better than expected for the full-year.

Swedish discount rate used to discount the annuity reserves decreased to -0.03 per cent by the end of December 2016 and had a negative effect of EUR 29 million in the full-year results. The discount rate was 0.41 per cent at the end of 2015. In the fourth quarter of 2016 the effect was EUR 19 million positive. In Finland the discount rate for annuities remained unchanged at 1.5 per cent.

Gross written premiums decreased to EUR 4,458 million (4,559) in 2016. Adjusted for currency, premium growth was flat. Growth was positive in business area Private and negative in business areas Commercial, Industrial and Baltic. Geographically, gross written premiums grew by 4 per cent in Sweden and Denmark, while the growth was negative in Norway and Finland.

Cost ratio was 22.1 per cent (18.8) and expense ratio 16.6 per cent (13.0). The comparison year was impacted by the positive effect of the non-recurring reform of the pension system in If Norway booked in the second quarter of the year. Excluding the non-recurring item the comparison ratios were 22.3 per cent and 16.6 per cent, respectively.

On 31 December 2016, the total investment assets of If P&C amounted to EUR 12.2 billion (11.4), of which fixed income investments constituted 79 per cent (74), money market 8 per cent (12) and equity 13 per cent (13). Net income from investments amounted to EUR 173 million (304). Investment return marked-to-market for the full-year 2016 increased to 2.9 per cent (1.5). Duration for interest bearing assets was 1.4 years (1.2) and average maturity 2.8 years (2.6). Fixed income running yield as at 31 December 2016 was 1.7 per cent (1.8).

Associated company Nordea Bank AB 

On 31 December 2016 Sampo plc held 860,440,497 Nordea shares corresponding to a holding of 21.2 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 8.78 per share. The closing price as at 31 December 2016 was EUR 10.60.

Nordea's Board of Directors proposes to the AGM 2017 a dividend of EUR 0.65 per share (0.64). If the AGM approves the Board's dividend proposal, Sampo plc will receive a dividend of EUR 559 million from Nordea on 27 March 2017.

2016 has probably been the most eventful year in the history of Nordea. On top of macro and regulatory challenges for the sector, Nordea has addressed significant media attention and started to implement a profound transformational change agenda. Two major achievement have been the creation of a new legal structure and launching a term deposit product on the new core banking platform. Despite a challenging revenue situation in 2016, Nordea has throughout the year improved its net interest margin; for 2016, the inflow to Assets under Management reached an all-time high, and Nordea has confirmed its leading Nordic position in corporate advisory operations.

Total income was down 1 per cent in local currencies (-2 per cent in EUR) from the prior year and operating profit was down 8 per cent in local currencies (-9 per cent in EUR) from the prior year excluding non-recurring items.

Net interest income was down 3 per cent in local currencies (-5 per cent in EUR) from 2015. Average lending and deposit volumes in business areas in local currencies were unchanged from financial year 2015.

Lending margins were up 2 bps and deposit margins were up 6 bps compared to financial year 2015. Net fee and commission income increased 1 per cent in local currencies (unchanged in EUR) from the previous year.

Net result from items at fair value increased 4 per cent in local currencies (4 per cent in EUR) from 2015.

Cost performance and credit quality are in line with Nordea's guidance. Total expenses were up 5 per cent in local currencies (4 per cent in EUR) from the previous year excluding non-recurring items and amounted to EUR 4,886 million. Staff costs were down 1 per cent in local currencies excluding non-recurring items. The cost/income ratio increased to 50 per cent from 47 per cent.

Net loan loss provisions increased to EUR 502 million, corresponding to a loan loss ratio of 15 bps (14 bps for full-year 2015).

Net profit increased 4 per cent in local currencies (3 per cent in EUR) to EUR 3,766 million.

Currency fluctuations had a reducing effect of 1 per cent on income and expenses and a reducing effect 1 per cent on loan and deposit volumes compared to a year ago.

Nordea Group's Basel III Common equity tier 1 (CET1) capital ratio increased to 18.4 per cent at the end of the fourth quarter 2016 compared to 17.9 per cent at the end of the third quarter 2016. REA decreased EUR 3.0 billion, mainly driven by reduced average risk weight in the corporate portfolio and reduced capital exposures in the CCR portfolio, while CET1 capital increased EUR 0.1 billion driven by continued strong profit generation net dividend and increase in intangible assets.

On 18 December Finansinspektionen stated that the authority have reached an agreement with the Nordic supervisory authorities and European Central Bank on how to supervise significant branches in Denmark, Finland, Norway and Sweden.  On 2 January, cross-border mergers between Nordea Bank AB (publ) and its subsidiary banks in Denmark, Finland and Norway were executed. Consequently, all assets and liabilities of the subsidiary banks have been transferred to Nordea Bank AB (publ), and each of Nordea Bank Danmark A/S, Nordea Bank Finland Plc and Nordea Bank Norge ASA has been dissolved. The banking business in Denmark, Finland and Norway will be conducted in branches of Nordea Bank AB (publ).

For more information on Nordea Bank AB and its results for 2016, see www.nordea.com .

Life insurance 

Profit before taxes for life insurance operations in 2016 amounted to EUR 210 million (181). The total comprehensive income for the period after tax reflecting the changes in market values of assets increased to EUR 232 million (168). Return on equity (RoE) amounted to 15.9 per cent (12.7).

Net investment income, excluding income on unit-linked contracts, amounted to EUR 356 million (391). Net income from unit-linked contracts was EUR 276 million (239). During 2016 fair value reserve increased to EUR 596 million (532).

Total technical reserves of Mandatum Life Group increased to EUR 11.3 billion (10.9). The unit-linked reserves grew to EUR 6.4 billion (5.9) at the end of 2016, which corresponds to 57 per cent (54) of total technical reserves. With profit reserves continued to decrease as planned during 2016 and amounted to EUR 4.8 billion (5.0) on 31 December 2016. With profit reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased EUR 213 million to EUR 2.9 billion at the end of 2016.

Mandatum Life increased its technical reserves with EUR 28 million due to low level of interest rates in 2016 and the total discount rate reserves amounted to EUR 273 million (244) at the end of 2016, of which EUR 225 million is allocated to years 2017 - 2019. The figure does not take into account the reserves relating to the segregated fund.  The discount rates used for 2017, 2018 and 2019 are 0.25 per cent, 0.50 per cent, and 2.25 per cent, respectively.

Discount rate of segregated liabilities was lowered in November 2016 to 0.50 per cent from 0.75 per cent and discount rate reserve of segregated liabilities increased accordingly to EUR 275 million (257).

At the end of 2016 Mandatum Life Group's investment assets, excluding the assets of EUR 6.5 billion (5.9) covering unit-linked liabilities, amounted to EUR 6.6 billion (6.7) at market values.

The assets covering Mandatum Life's original with profit liabilities at the end of 2016 amounted to EUR 5.4 billion (5.5) at market values. 41 per cent (47) of the assets are in fixed income instruments, 14 per cent (7) in money market, 30 per cent (29) in equities and 15 per cent (16) in alternative investments. The investment return marked-to-market for 2016 was 7.2 per cent (6.9). The duration of fixed income assets at the end of 2016 was 1.9 years (2.1) and average maturity 2.3 years (2.8). Fixed income running yield was 2.9 per cent (3.2).

The assets covering the segregated fund amounted to EUR 1.2 billion (1.2), of which 75 per cent (71) was in fixed income, 10 per cent (9) in money market, 8 per cent (12) in equities and 7 per cent (8) in alternative investments. Segregated fund's investment return marked-to-market for January - December 2016 was 4.7 per cent (3.8). On 31 December 2016 the duration of fixed income assets was 2.4 years (2.3) and average maturity 3.5 years (3.8). Fixed income running yield was 1.8 per cent (1.4).

Risk and expense results remained on a good level. The expense result for life insurance segment amounted to EUR 24 million (25) and risk result to EUR 31 million (33).

Mandatum Life Group's premium income on own account amounted to EUR 1,116 million (1,144). After a sluggish start to the year fourth quarter premiums rose to a record high of EUR 446 million (306). Premiums from unit-linked policies amounted to EUR 973 million (968). Mandatum Life's market share in Finland grew to 24.1 per cent (17.7).

Holding    

Holding segment's profit before taxes amounted to EUR 778 million (749), of which EUR 773 million (751) relates to Sampo's share of Nordea's 2016 profit. Segment's profit excluding Nordea was EUR 6 million (-1). The currency effects, particularly strengthening of Swedish krona, increased the investment income by EUR 25 million. The drop in the finance costs is due to lower interest rates and movements in SEK-EUR rates.

Sampo plc's debt financing on 31 December 2016 amounted to EUR 3,548 million (2,302) and interest bearing assets to EUR 2,104 million (1,343). Interest bearing assets include bank accounts, EUR 637 million (579) of hybrid capital and subordinated debt instruments issued by the subsidiaries and associates and EUR 28 million of other fixed income instruments (25). On 31 December 2016 the interest bearing net debt amounted to EUR 1,443 million (959).

Gross debt to Sampo plc's equity was 47 per cent (32) and financial leverage 32 per cent (24). Increase in leverage has two explanations. Firstly when purchasing Topdanmark shares, Sampo increased its debt by EUR 400 million. Secondly Sampo refinanced its EUR 500 million bond maturing February 2017 already in November 2016 by issuing a seven-year senior bond of EUR 750 million without simultaneously redeeming maturing 2017 bond. Leverage ratio is expected to normalize below 30 per cent during first quarter of 2017. 

As at 31 December 2016 financial liabilities in Sampo plc's balance sheet consisted of issued senior bonds and notes of EUR 2,877 million (1,997) and EUR 671 million (305) of CPs issued. The average interest, net of interest rate swaps, on Sampo plc's debt as of 31 December 2016 was 1.37 per cent (1.45). The increase in the average interest rate is temporary and due to closing of swap positions related to the February 2017 bond.

Changes in Group Structure

Mandatory offer on Topdanmark shares

Sampo plc announced on 7 September 2016 the obligation to make a mandatory offer to the shareholders of Topdanmark A/S. In the mandatory offer, Sampo offered to acquire all outstanding shares, excluding treasury shares, and other financial instruments, warrants and share options, if applicable, issued by Topdanmark and shares held by Topdanmark shareholders resident in certain restricted jurisdictions. The cash price offered in the mandatory offer was DKK 183 for each share issued by Topdanmark. The offer period commenced on 27 September 2016 and expired on 25 October 2016. As a result of the offer, Sampo plc acquired altogether 7,374,306 Topdanmark shares and held 41.1 per cent of all Topdanmark shares on 26 October 2016.

The mandatory offer was made pursuant to the Danish Takeover Order (no. 562 of 2 June 2014) Section 2(1). The obligation to make the Mandatory Offer arose as a result of Sampo in the period from 6 September 2016 until 7 September having acquired 200,000 Topdanmark shares in the market with the highest purchase price being DKK 183 and thereby crossing the applicable Danish threshold of one third of the total outstanding voting rights of Topdanmark. In connection herewith, Sampo also acquired 31,476,920 Topdanmark shares at a price of DKK 183 per share, representing approximately 33.13 per cent of the entire issued share capital and of all voting rights of Topdanmark (including treasury shares), from its wholly owned subsidiary If P&C Insurance Holding Ltd. Following Sampo's acquisition of If's shareholding in Topdanmark, If P&C no longer holds any shares in Topdanmark.

Sampo plc's share of Topdanmark's profit will continue to be shown in the P&C insurance segment although Topdanmark is Sampo plc's associate going forward. On 1 February 2017 Sampo plc held 39,579,226 Topdanmark shares corresponding to 41.7 per cent of all shares and 45.7 per cent of votes.

Mandatum Life's agency agreement with Danske Bank

In connection with the acquisition of Sampo's banking operations by Danske Bank A/S in early 2007, Sampo Bank plc (now Danske Bank Plc), and Sampo Life Insurance Company Ltd (now Mandatum Life Insurance Company Ltd) signed an agency agreement that guaranteed Sampo Life the exclusive right to sell life and pension insurance products through Sampo Bank's branch network in Finland.

Mandatum Life decided on 20 October 2016 not to prolong the agency agreement as of 31 December 2016. In relation to the agency agreement Mandatum Life has the right to sell the insurance portfolio sold through Danske Bank's branch network in Finland, to Danske Bank. Mandatum Life decided on 27 October 2016 to use this option.

The valuation of the portfolio will be conducted by a third party in accordance with the terms and conditions of the bank transaction agreement referred to above. The valuation is estimated to take until the summer of 2017 and the transfer of the portfolio is estimated to take place during the fourth quarter of 2017 at the earliest. The transfer is subject to regulatory approvals.

The portfolio consists of more than 150,000 policies and the technical reserves related to the portfolio amounted to EUR 3,202 million at the end of 2016. The portfolio contains almost exclusively unit linked and loan insurance products. The amount of with profit technical reserves is EUR 210 million. The portfolio is treated as Assets held for sale in the balance sheet for 2016.

SHARES AND SHARE CAPITAL

When Sampo plc's shares were incorporated to the book-entry system in September 1997 shareholders were obliged to provide the share certificates and request registration of the shares into their book-entry accounts during the registration period set in the General Meeting's resolution to incorporate the shares into the book-entry system.  A joint book-entry account in the name of the Company was opened for those shareholders who did not request the registration of their shares.

According to the Finnish Companies Act the Annual General Meeting may after 1 September 2016 resolve that the shares in the joint book-entry account and the rights that those shares carry have been forfeited. After the General Meeting's resolution the provisions on treasury shares apply to forfeited shares and the Board may, for example, resolve on cancellation of treasury shares.

As this will be the first time the Annual General Meeting has an option to resolve the issue, the Audit Committee initiated a project to look into the procedure and consequences of such a resolution by the Annual General Meeting with a particular view on the equal treatment of all shareholders.

Sampo plc has received two proposals regarding the forfeiture of the rights of the shares in the joint book-entry account from shareholders. First a shareholder has proposed that the Annual General Meeting resolves, within the meaning of Chapter 4, Section 10(2) of the Finnish Companies Act, that the rights to shares in the book-entry system and the rights carried by the shares will be forfeited with regard to the shares in the joint book-entry account. On the basis of the proposal, the company's Board of Directors should cancel the treasury shares to be held by the company as a result of such forfeiture. In its meeting of 8 February 2017, Sampo plc's Board of Directors has resolved to concur with this proposal.

According to Board's proposal this would apply to shares remaining in the joint book-entry account, for which no claim for registration into the book-entry system has been made before the General Meeting's decision on 27 April 2017 at 2pm.

Another shareholder of the company has proposed to the General Meeting that if a proposal on the forfeiture of shareholder rights within the meaning of Chapter 4, Section 10(2) of the Finnish Companies Act has been submitted to the General Meeting for resolution, the General Meeting would resolve that said decision could be made at the earliest on 1 February 2020 and provided that the company has actively sought to reach out to all shareholders of the company who have not transferred their holdings into the book-entry system.

Given that future General Meetings are not bound by the resolutions of previous General Meetings, the second proposal is, in practice, a motion to dismiss the first mentioned proposal concerning the forfeiture of the shares in the joint book-entry account.

Proposals will be published in full later today and will be available at www.sampo.com/agm .

Sampo plc has actively pursued to locate the holders of the shares in the joint book-entry account. Sampo has sent on 3 November 2016 a letter to 75,000 private persons, who had been registered as holders in the shareholder register dated 12 September 1997. The letter and widespread media attention following it has led to approximately hundred thousand contacts with potential shareholders.

The measures adopted have been successful. The number of shares in the joint book-entry account has decreased between 1 November 2016 and 6 February 2017 by 472,380 shares and on 6 February 2017 there were 6,436,120 shares in the account corresponding to 1.15 per cent of all shares.

INTERNAL DIVIDENDS

Sampo plc, Sampo Group's parent company, received EUR 1,555 million in dividends from its subsidiaries and associated company Nordea Bank AB during 2016. The following dividend payments were received:

• Mandatum Life; EUR 125 million in March 2016,
• Nordea Bank AB; EUR 551 million in March 2016 and
• If P&C; SEK 5.8 billion (EUR 586 million) in December 2016. In addition If P&C paid an extra SEK 2.8 billion (EUR 293 million) dividend to Sampo plc in September 2016.

On 26 January 2017 Nordea Bank AB's Board of Directors proposed to the Annual General meeting to be held on 16 March 2017, a dividend of EUR 0.65 per share. With its current holding Sampo plc's share amounts to EUR 559 million. The dividend is proposed to be paid on 27 March 2017.

A dividend of EUR 125 million is planned to be paid by Mandatum Life during the first quarter of 2017. If P&C normally pays its dividend towards the end of the calendar year.

RATINGS

On 15 December 2016 Moody's upgraded the insurance financial strength ratings of If P&C to A1 from A2 with stable outlooks. In the same rating action, Moody's has upgraded the senior debt rating of Sampo plc to Baa1 from Baa2. Moody's has also (unsolicited) assigned a Baa2(hyb) rating to the dated subordinated notes issued in November 2016 by If P&C Insurance Holding Ltd. 

SOLVENCY

As of 1 January 2016 insurance subgroups If P&C and Mandatum Life have applied Solvency II rules in their regulatory solvency calculations. Both companies report in accordance with standard formula for Solvency II.

For If P&C the standard formula has roughly a EUR 350 million higher capital requirement than the model used for internal purposes. However, If P&C Group has an A rating from S&P which will continue to require significantly more capital and therefore the use of standard formula has no practical implications on If P&C Group's capital position. On 31 December 2016 If P&C Group's Solvency II capital requirement under standard formula amounted to EUR 1,942 million (2,073) and own funds to EUR 3,822 million (3,202). Solvency ratio amounted to 197 per cent (154). S&P A rating requirement for If P&C Group amounted to EUR 2,967 million (3,058) at the end of 2016.

The Swedish Financial Supervisory Authority has in November 2016 approved a partial intern model for calculating the solvency capital requirement for If P&C Insurance Company Ltd (Sweden).

If is investigating the possibility of extending the partial internal model to also cover the Finnish business. This would require the transformation of If's Finnish subsidiary, If P&C Insurance Company Ltd. (Finland), into a branch office of the Swedish company.

The change would be in line with If's business model as the Swedish company already consists of If's Swedish, Norwegian and Danish businesses through a branch structure and further enhances If Group's capital situation and its risk management structure.

On 31 December 2016 Mandatum Life's solvency ratio after transitional measures is strong at 160 per cent (158). Own funds of EUR 1,893 million (1,913) exceed Solvency Capital Requirement (SCR) of EUR 1,182 million (1,212) by EUR 711 million. Without transitional measures, own funds would have amounted to EUR 1,441 and the solvency capital requirement to EUR 1,409 million leading to a solvency ratio of 102 per cent (103).

Group's conglomerate solvency ratio (own funds in relation to minimum requirements for own funds) using Solvency II rules for the insurance subsidiaries was 154 per cent (145) as at 31 December 2016.

Group solvency is also calculated by Solvency II rules. More information on this method is available at the Risk Management section of the Annual Report 2016. The requirements calculated with the two methods differ very little from one another.

OUTLOOK

Outlook for 2017

Sampo Group's business areas are expected to report good operating results for 2017.

However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The continuing low interest rate level also creates a challenging environment for reinvestment in fixed income instruments.

The P&C insurance operations are expected to reach their long-term combined ratio target of below 95 per cent in 2017 by a margin.

Nordea's contribution to the Group's profit is expected to be significant.

The major risks and uncertainties to 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. Parent Company Sampo's contribution to risks is minor one.

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 same, but they are not directly additive because of diversification effects.

Uncertainties in the form of major unforeseen events may have an immediate impact on the Group's profitability. Identification of unforeseen events is easier than estimation of their probabilities, timing and potential outcomes. Currently there are a number of widely identified macro-economic, political and other sources of uncertainty which can in various ways affect financial services industry negatively. Especially the political risks are at the elevated level at the moment.

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 also have a long-term impact on how business shall be conducted.

DIVIDEND PROPOSAL

According to Sampo plc's dividend policy, total annual dividends paid shall be at least 50 per cent of the Group's net profit for the year (excluding extraordinary items). In addition, share buy-backs can be used to complement the cash dividend.

The parent company's distributable capital and reserves totaled EUR 7,423,628,273.90 of which profit for the financial year was EUR 1,565,149,328.44.

The Board proposes to the Annual General Meeting a dividend of EUR 2.30 per share to company's 560,000,000 shares. The dividends to be paid are EUR 1,288,000,000.00 in total. Rest of funds are left in the equity capital.

The dividend will be paid to shareholders registered in the Register of Shareholders held by Euroclear Finland Ltd as at the record date of 2 May 2017. The Board proposes that the dividend be paid on 9 May 2017.

No significant changes have taken place in the company's financial position since the end of the financial year. The company's liquidity position is good and in the view of the Board, the proposed distribution does not jeopardize the company's ability to fulfill its obligations.

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 Essi Nikitin, IR Manager, tel. +358 10 516 0066 Maria Silander, Communications Manager, tel. +358 10 516 0031

Press Conference and Conference Call

Sampo will today arrange a Finnish-language press conference at Savoy (7 ^th floor), Eteläesplanadi 14, Helsinki, at 12:30 pm Finnish time.

An English-language conference call for investors and analysts will be arranged at 4 pm Finnish time (2 pm UK time). Please call +44 (0)330 336 9105, +1 719 325 4746, +46 (0)8 5033 6574 or +358 (0)9 7479 0361.

The conference code is 8784082.

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 a Supplementary Financial Information Package is available at www.sampo.com/result .

Sampo will publish the Interim Statement for January-March 2017 on 11 May 2017.

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

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