In this blog entry, we have compiled questions we have received from investors and analysts during the second quarter.
How has the claims environment been in Q2?
During the second quarter, there were no major weather events, although there has been some localised unsteady weather, such as a period of heavy rain in Sweden and a couple of small storms in Finland.
Regarding to COVID-19 situation, the general activity has started to improve towards the end of the first half of 2021 after the spring lock-up periods.
How will the sale of Nordea shares in late May affect Sampo?
The gross proceeds of the transaction were EUR 1,377 million. Since the sale price of EUR 8.50 per share exceeds the book value of Nordea in Sampo’s balance sheet, Sampo will make a sales gain of approximately EUR 93 million, including recycling of previously recognized other comprehensive items of approximately EUR -30 million, from the transaction. The sales gain will be treated as an extraordinary item. Thus, it will not affect Sampo’s dividend.
In addition, the transaction will improve Sampo’s Solvency II ratio as the market risk decreases.
How will Sampo use the proceeds from the Nordea share sale?
As we communicated in the Capital Markets Day in February, Sampo is committed to return possible excess capital to its shareholders while maintaining a strong but efficient balance sheet.
Most of the proceeds from the latest sale will be consumed to further bring down the Group leverage ratio. In June, Sampo launched a debt buy-back, which is expected to be completed in Q3. In addition, there’s also one bond maturing in September.
Options for the rest are to re-deploy it in the business or return to shareholders, depending on where the returns are the highest.
Would the potential excess capital be returned to shareholders in dividends or through buybacks?
Both options are on the table and to be considered when the time is right. Some of our shareholders prefer dividends, others see buybacks as a better option.
Will Sampo sell more Nordea shares soon?
In connection with the latest transaction, Sampo entered into a lock-up undertaking, under which it has, subject to certain exceptions, agreed not to sell any Nordea shares for a period ending at 23 August 2021.
After that, the options naturally depend on Nordea’s performance and the share price, but also on ECB’s announcements on the dividend and buyback restrictions for banks.
Sampo has owned Hastings for over six months now. How do you feel about the acquisition?
Hastings has had a good start and the skills and knowledge transfer program between Hastings and If is progressing well. Due to the pandemic and heavy lockdowns, the UK motor market has been challenging, but Hastings has achieved a good profit growth through disciplined approach and strong margin development in Q1. We expect Hastings to get more opportunities for top line growth as the pandemic lifts.
What levers does Sampo have to grow its P&C insurance profits?
Sampo’s largest business, If, will continue to benefit from its pan-Nordic presence and being the leader in digitalization while pricing at least claims inflation and continuous cost focus and other initiatives will support margins.
Topdanmark has launched a bunch of digitalization initiatives that will further improve its efficiency. With regard to Hastings, we are confident that the company can take more market share in the medium term.
Mandatum has made a lot of changes recently. What are these about?
Mandatum is broadening its new business proposition to include a wider range of asset management products. This should help to support earnings development on top of the capital generated from the run-off of the old with-profit book.
How have the capital markets developed from Sampo’s perspective?
In the equity markets, the good momentum has continued, supporting especially Mandatum, which has the highest exposure in equities within the Group. In the fixed income market, there have been no major movements during Q2.
How have the key currency rates developed during Q2?
Both the Swedish Krona and the Norwegian Krone have strengthened against the Euro compared to Q2/2020. This will have a small positive effect as If’s figures are converted to euros.
If’s competitor Tryg sells Codan Denmark to Alm. Brand. Any thoughts about the transaction?
We don’t expect the transaction to cause any major changes in the Nordic P&C markets, which are expected to remain favorable.
Was Sampo interested in buying Codan?
We already have a strong presence in Denmark through Topdanmark and If. Thus, Sampo was not interested in buying Codan and did not participate the bidding process.
Mirko Hurmerinta, IR and Communications Specialist, Sampo plc
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