Sampo Group's Results for January - March 2018 SAM

SAMPO PLC            INTERIM STATEMENT         9 May 2018 at 9.30 am

SAMPO GROUP'S RESULTS FOR JANUARY - MARCH 2018

Sampo Group's profit before taxes for January - March 2018 amounted to EUR 445 million (430). The total comprehensive income for the period, taking changes in the market value of assets into account, decreased to EUR 108 million (557). The insurance technical result remained exceptionally strong but the weak investment markets and Swedish krone weighted heavily on the mark-to-market results.

-Earnings per share amounted to EUR 0.63 (0.68). Mark-to-market earnings per share were EUR 0.15 (0.99). The return on equity (RoE) for the Group was 2.5 per cent (18.4) for January - March 2018. Net asset value per share on 31 March 2018 amounted to EUR 24.27 (25.37).

-The Annual General Meeting held on 19 April 2018 decided to pay a dividend of EUR 2.60 per share (2.30). The dividend was paid on 3 May 2018.

-Profit before taxes for the segment If amounted to EUR 193 million (180). Combined ratio for January - March 2018 was 86.5 per cent (87.4). Return on equity was -0.9 per cent (37.5).

-Topdanmark segment's profit before taxes amounted to EUR 60 million in Sampo Group's consolidated accounts. This deviates from the pre-tax profit that Topdanmark reported on 23 April 2018 due to alignment of accounting principles. Combined ratio amounted to 83.7 per cent.

-Sampo's share of Nordea's net profit for the first quarter of 2018 amounted to EUR 165 million (171). Nordea's return on equity was 10.0 per cent (10.3). Core Tier 1 ratio (excluding transition rules) strengthened to 19.8 per cent (19.5). In segment reporting the share of Nordea's profit is included in the segment 'Holding'.

-Profit before taxes for the segment Mandatum amounted to EUR 73 million (54). Return on equity declined to -5.8 per cent (24.3). Premium income on own account increased to EUR 243 million (229).

*) comparison figure from 31.12.2017

The figures in this report are not audited. Income statement items are compared on a year-on-year basis and comparison figures for balance sheet items are from 31 December 2017 unless otherwise stated.

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

BUSINESS AREAS

If

Profit before taxes for January - March 2018 for the If segment amounted to EUR 193 million (180). The total comprehensive income for the period after tax reflecting the weak development of Swedish krone decreased to EUR -6 million (246). Combined ratio was 86.5 per cent (87.4) and risk ratio 64.7 per cent (65.4).

Net releases from technical reserves relating to prior year claims were EUR 50 million (17) in the first quarter of 2018. Swedish discount rate used to discount the annuity reserves rose 0.01 percentage point to -0.12 and had a positive impact of EUR 1 million on the profit. Technical result increased to EUR 143 million (139). Insurance margin (technical result in relation to net premiums earned) amounted to 13.8 per cent (13.2).

Large claims were EUR 4 million worse than expected in the first quarter of 2018. The weather conditions during the first quarter resulted in a more normal winter, which affected the risk ratio negatively compared to last year. In the comparison period, the lowering of the discount rate for annuities in Finland had a negative impact on the Finnish country specific result and on all the business areas excluding Baltic.

Gross written premiums decreased to EUR 1,621 million (1,643) in January - March 2018, but adjusted for currency, premium growth was 2.1 per cent. Growth was positive in all business areas and all markets, except in Finland. The customer base continued to increase during the first quarter in all Business Areas. The large corporate segment, Business Area Industrial that renews a significant part of the portfolio in the beginning of the year reported a premium growth adjusted for currency of 2.0 per cent compared to last year.

Cost ratio continued to improve and amounted to 21.8 per cent (22.0) and expense ratio to 16.2 per cent (16.3).

On 31 March 2018, the total investment assets of If P&C amounted to EUR 11.6 billion (11.5), of which fixed income investments constituted 81 per cent (84), money market 7 per cent (3) and equity 11 per cent (13). Net income from investments amounted to EUR 53 million (52). Investment return marked-to-market for the first quarter of 2018 was -0.1 per cent (1.5). Duration for interest bearing assets was 1.4 years (1.4) and average maturity 2.6 years (2.7). Fixed income running yield without taking into account the FX hedging cost as at 31 March 2018 was 1.5 per cent (1.7).

If P&C's solvency position is described in the section Solvency.

Topdanmark

Sampo Group started to consolidate Topdanmark as a subsidiary from 30 September 2017. In Sampo Group's segment Topdanmark Sampo plc's share of Topdanmark's purchase price allocated to customer relations is amortized over a period of 10 years leading to a quarterly amortization of around EUR 5 million, net of tax (included in Other operating expenses).

Topdanmark reports its stand-alone financials based on the same accounting principles as they have reported in the past. Sampo reports Topdanmark segment in its consolidated accounts based on accounting principles that are adjusted to be in line with accounting policies of Sampo, because Group companies are required to have similar policies. This leads to differences in numbers reported by Topdanmark as a listed company compared to the segment Topdanmark as part of Sampo.

The following text is based on Topdanmark's January - March 2018 result release published on 23 April 2018.

Topdanmark's pre-tax profit for January - March 2018 amounted to EUR 60 million.

Topdanmark's premiums amounted to EUR 837 million. In non-life insurance premiums earned increased 1.7 per cent and in life insurance gross premiums increased 18.6 per cent. The non-life insurance run-off profits of EUR 8 million were primarily generated in workers' compensation, motor and illness/accident insurance. In the first quarter of 2018 there were no weather related claims, similar to the first quarter of 2017. Adjusted for run-off, weather related claims and large claims, the claims trend improved by 1.4 percentage points.

The combined ratio amounted to 83.7 per cent in the first quarter of 2018. The expense ratio was 17.4 per cent.

Topdanmark's solvency position is described in the section Solvency.

Further information on Topdanmark A/S and its January - March 2018 result is available at www.topdanmark.com .

Associated company Nordea Bank AB

The following text is based on Nordea's First Quarter Report 2018 published on 25 April 2018.

After an exceptionally stable situation on the financial markets in 2017, 2018 has started with higher volatility. The synchronized growth in the Nordic markets continued. Geopolitical factors continued to challenge globalization trends, however, Nordea has seen that geopolitical concerns start to create volatility in the market. Additionally, there are early signs that the business cycle is starting to reach a peak level, and just as in 2017, Nordea continues to focus on disciplined lending underwriting principles and is well prepared to handle a situation with lower growth.

Total revenues decreased 4 per cent in local currencies compared to the first quarter of 2017 but increased 4 per cent in local currencies compared to last quarter. Net interest income decreased 9 per cent in local currencies compared to the first quarter of 2017 mainly due to de-risking, deconsolidation of the Baltics and lower revenues from Treasury.

Fee and commission income was down 9 per cent in local currencies compared to the first quarter of 2017, mainly driven by lower corporate and institutional activities and lower AuM. Net flow was EUR -3.6 billion (1.3). The net result from items at fair value increased 17 per cent in local currencies to EUR 441 million (375) and 90 per cent in local currencies compared to last quarter.

Costs decreased by 1 per cent compared to the first quarter of 2017 and total cash spending decreased by 7 per cent. Credit quality continued to improve and our loan losses are at the lowest level since 2007. Nordea reiterates its guidance on loan losses, which are expected to be below the long-term average in the coming quarters. Nordea's reported Common Equity Tier 1 (CET1) ratio increased to 19.8 per cent (18.8), and the management buffer has again reached an all-time-high level of 230 bps, well above target level of 50-150 bps.

Further information on Nordea Bank AB and its January - March 2018 result is available at www.nordea.com .

Mandatum Life

Mandatum segment's profit before taxes for January - March 2018 amounted to EUR 73 million (54). The total comprehensive income for the period after tax reflecting the changes in market values of assets declined to EUR -19 million (85). Return on equity was -5.8 per cent (24,3).

Net investment income, excluding income on unit-linked contracts, amounted to EUR 72 million (97). Net income from unit-linked contracts was EUR -90 million (213). In the first quarter of 2018 fair value reserve decreased to EUR 521 million (599).

Mandatum Life Group's total technical reserves amounted to EUR 11.4 billion (11.6). Unit-linked reserves declined to EUR 6.9 billion (7.1) at the end of the first quarter of 2018, because of lower market value of assets covering the reserves. The amount corresponds to 61 percent (58) of total technical reserves. At the end of the first quarter of 2018 with profit reserves amounted to EUR 4.5 billion (4.8). Reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 64 million to EUR 2.6 billion in January - March 2018.

Mandatum Life has all in all supplemented its technical reserves with a total of EUR 301 million (325) due to low level of interest rates. The figure does not take into account the reserves relating to the segregated fund. The discount rate used for the rest of 2018, 2019 and 2020 is 0.25 per cent. For 2021 the rate is 2.75 per cent. Discount rate applied for the segregated fund is 0.50 per cent. In the first quarter of 2018 no reserve strengthening was made.

On 31 March 2018 Mandatum Life Group's investment assets, excluding the assets of EUR 6.9 billion (7.2) covering unit-linked liabilities, amounted to EUR 6.0 billion (6.6) at market values.

The assets covering Mandatum Life's original with profit liabilities on 31 March 2018 amounted to EUR 4.9 billion (5.2) at market values. 43 per cent (42) of the assets are in fixed income instruments, 14 per cent (16) in money market, 29 per cent (28) in equities and 14 per cent (15) in alternative investments. The investment return marked-to-market for January - March 2018 was -0.7 per cent (2.6). The duration of fixed income assets at the end of March 2018 was 2.2 years (2.0) and average maturity 2.4 years (2.2). Fixed income running yield without taking into account the FX hedging cost was 2.6 per cent (3.3).

The assets covering the segregated fund amounted to EUR 1.1 billion (1.1), of which 76 per cent (77) was in fixed income, 5 per cent (6) in money market, 12 per cent (11) in equities and 7 per cent (6) in alternative investments. Segregated fund's investment return marked-to-market for January - March 2018 was -0.7 per cent (0.9). At the end of March 2018 the duration of fixed income assets was 2.6 years (2.6) and average maturity 3.3 years (3.3). Fixed income (incl. money market) running yield without taking into account the FX hedging cost was 2.2 per cent (2.1).

Mandatum Life's solvency position is described in the section Solvency.

The expense result for life insurance segment in the first quarter amounted to EUR 7 million (8). Risk result amounted to EUR 5 million (8).

Mandatum Life Group's premium income on own account grew to EUR 243 million (229) in the first quarter of 2018.

Holding

Holding segment's profit before taxes for January - March 2018 decreased to EUR 119 million (174), of which EUR 165 million (171) relates to Sampo's share of Nordea's first quarter 2018 profit. Segment's profit before taxes excluding Nordea was EUR -46 million (3). The result is burdened by currency losses mainly from Swedish krone to the amount of EUR -59 million influencing both investment income and finance costs.

On 8 February 2018 Nordic Capital Fund VIII ("Nordic Capital") and Sampo, through NDX Intressenter AB ("NDX Intressenter"), announced a recommended mandatory public cash offer to the shareholders in Nordax Group AB (publ) ("Nordax") to acquire all outstanding shares in Nordax. At the end of the acceptance period on 21 March 2018, the Offer had been accepted by shareholders representing a total of 23,044,054 shares in Nordax, corresponding to 20.77 per cent of all shares and votes in the company. Sampo's ownership rose above 20 per cent and Nordax became an associated company to Sampo plc.

The acceptance period was extended to 5 April 2018 in order to give remaining shareholders an additional possibility to accept the Offer. At the end of the extended acceptance period NDX Intressenter controlled a total of 109,816,242 shares, corresponding to 98.98 per cent of all shares and votes in Nordax. As previously communicated, Nordic Capital and Sampo hold 63.75 and 36.25 per cent, respectively, of the shares and votes in NDX Intressenter following the completion of the Offer.

Sampo plc started to consolidate Nordax as an associated company in March 2018.

Sampo plc's holding in Nordea Bank was booked in the consolidated balance sheet at EUR 7.1 billion. The market value of the holding was EUR 7.5 billion, i.e. EUR 8.66 per share, at 31 March 2018.

In addition, the assets on Sampo plc's balance sheet included holdings in subsidiaries for EUR 3.4 billion (3.4).

OTHER DEVELOPMENTS

Events after the end of the reporting period

Mandatum Life disclosed on 27 October 2016 that it would use its right to sell the insurance portfolio distributed by Danske Bank's Finnish branch network to Danske Bank or a third party appointed by Danske Bank. As a result of the valuation process, conducted by external valuators, the value of the insurance portfolio as at the 31 December 2016 was determined to be EUR 334 million. After the correction for the theoretical result since 2017, Mandatum Life would have received EUR 297 million at the end of 2018.

Mandatum Life and Danske Bank agreed on 24 April 2018 to continue their co-operation and that the transfer of the insurance portfolio agreed earlier will not take place. The agreed transaction is subject to confirmation of the tax treatment. On closing of the transaction, Mandatum Life will receive a transaction price of EUR 197 million from Danske Bank for the above arrangement. The amount is subject to corporate tax. The transaction is expected to close within 3 months.

Annual General Meeting

The Annual General Meeting of Sampo plc, held on 19 April 2018, decided to distribute a dividend of EUR 2.60 per share for 2017. The dividend was paid on 3 May 2018. The Annual General Meeting adopted the financial accounts for 2017 and discharged the Board of Directors and the Group CEO and President 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, Jannica Fagerholm, Adine Grate Axén, Veli-Matti Mattila, Risto Murto, Eira Palin-Lehtinen and Björn Wahlroos. Per Arthur Sørlie was not available for re-election. Antti Mäkinen 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 Chairman and Eira Palin-Lehtinen as Vice Chairperson. Veli-Matti Mattila, Risto Murto, Eira Palin-Lehtinen and Björn Wahlroos (Chairman) were elected to the Nomination and Compensation Committee and Christian Clausen, Jannica Fagerholm (Chairperson), Adine Grate Axén and Antti Mäkinen to the Audit Committee.

All the Board members have been determined to be independent of the company under the rules of the Finnish Corporate Governance Code 2015. Furthermore, all Board members but Antti Mäkinen have been determined to be independent of the major shareholders.

The Annual General Meeting decided to pay the following fees to the members of the Board of Directors until the close of the 2019 Annual General Meeting: the Chairman of the Board will be paid an annual fee of EUR 175,000, the Vice Chairperson of the Board and the Chairperson of the Audit Committee will be paid EUR 115,000, the members of the Audit Committee will be paid EUR 96,000 and the other members of the Board of Directors will be paid EUR 90,000 each. 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.

Ernst & Young Oy was elected as Auditor. The Auditor will be paid a fee determined by an invoice approved by Sampo. Kristina Sandin, APA, will act as the principally responsible auditor.

Based on the proposal made by the Board of Directors, the Annual General Meeting decided to amend Sections 9 and 12 of the Articles of Association.

There were 3,371 shareholders represented at the beginning of the meeting holding altogether 362,200,385 shares and 367,000,385 votes in the company.

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

Shares and share capital

The Annual General Meeting 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 AGM's decision.

Sampo plc did not repurchase its own shares during the first quarter of 2018 and at the end of March 2018, neither Sampo plc nor its Group companies held any Sampo A shares.

Internal dividends

Mandatum Life paid a dividend of EUR 150 million to Sampo plc in March 2018.

On 15 March 2018 Nordea Bank AB's Annual General Meeting decided on a dividend of EUR 0.68 per share. Sampo plc's share of total dividends amounts to EUR 585 million. The dividend was paid on 26 March 2018.

Topdanmark's Annual General Meeting held on 12 April 2018 decided to pay a dividend of DKK 19 per share. Sampo plc's share of the dividend payment was EUR 107 million. The dividend was paid on 17 April 2018.

If P&C normally pays its dividend towards the end of the calendar year.

Ratings

All the ratings for Sampo Group companies remained unchanged in the first quarter of 2018.

Solvency

Group's conglomerate solvency ratio (own funds in relation to minimum requirements for own funds) amounted to 146 per cent (154) as at 31 March 2018. The decrease was due to an increase in Nordea's capital requirement with effect from 1 January 2018 because of the expiration of the Basel I floor in Sweden. Until 31 December 2017 Sampo's share of Nordea's capital requirement was based on the minimum requirement including Basel I floor but as of 1 January 2018 Sampo started to use Minimum requirement for Own funds (as defined in Nordea's quarterly Factbook) as the capital requirement in Sampo Group's solvency. In addition, the dividend deduction increased as the dividends paid on 3 May 2018 and a quarter of the planned dividends for 2018 were both deducted from own funds.

If, Topdanmark and Mandatum Life apply Solvency II rules in their regulatory solvency calculations. If Group companies use either partial internal models or standard model for calculation of their solo solvency position. Mandatum Life reports in accordance with standard formula for Solvency II. Topdanmark uses an internal model to report its stand-alone solvency position. In Sampo Group's conglomerate solvency calculation a standard model is, however, used for all insurance entities.

If P&C's application to extend the partial internal model to include the Finnish branch for If P&C Insurance Ltd (Sweden) for calculating solvency requirement was approved on 19 February 2018 by the Swedish Financial Supervisory Authority. The implementation of the revised model resulted in a positive net effect on If P&C Insurance Ltd (Sweden) capital position on comparable basis of approximately EUR 150 million.

If P&C Group has an A+ rating from S&P which requires significantly more capital than Solvency II standard formula. On 31 March 2018 If P&C Group's Solvency II capital requirement under standard formula amounted to EUR 1,895 million (1,938) and own funds to EUR 4,063 million (3,818). Solvency ratio was 214 per cent (197). S&P A+ rating capital charge for If P&C Group amounted to EUR 3,046 million (3,098) on 31 March 2018 and the capital base was EUR 3,524 million (3,408).

Topdanmark uses a partial internal model to calculate the non-life insurance risk. This model, approved by the DFSA, provides the basis for including non-life insurance risks in Topdanmark's solvency calculations. Topdanmark's solvency ratio under the partial internal model was 204 per cent at the end of March 2018. On 31 March 2018 Topdanmark's Solvency II capital requirement under standard formula amounted to EUR 536 million and own funds to EUR 900 million. Solvency ratio amounted to 168 per cent.

Mandatum Life's solvency ratio after transitional measures on 31 March 2018 remained strong at 186 per cent (182). Own funds of EUR 1,947 million (1,977) exceed Solvency Capital Requirement (SCR) of EUR 1,047 million (1,087) with a billion euros. Without transitional measures, own funds would have amounted to EUR 1,533 million (1,555) and the solvency capital requirement to EUR 1,139 million (1,220) leading to a solvency ratio of 135 per cent (127).

OUTLOOK

Outlook for 201 8

Sampo Group's business areas are expected to report good operating results for 2018.

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.

If P&C is expected to reach a combined ratio target of 86 - 89 per cent for the full-year 2018.

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

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 affecting business environment. These external drivers may have long-term impact on how business shall be conducted. Examples of already identified trends are technological development in general, digitalization and sustainability issues that may have profound effects on financial sector companies as well.

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

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. +44 (0)330 336 9104, +46 (0)8 5033 6573, +1 929 477 0630 or +358 (0)9 7479 0360. The conference code is 381231.

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

Sampo will publish the Half-Year Financial Report for January - June 2018 on 8 August 2018.

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

Attachment

• Interim Statement Q1/2018.pdf