Sampo Group's Results for 2017

SAMPO PLC       FINANCIAL STATEMENT RELEASE     7 February 2018 at 9:30 am

SAMPO GROUP'S RESULTS FOR 2017

Sampo Group had a strong 2017. Particularly the insurance operations performed well and produced record results. Sampo Group's profit before taxes for 2017 amounted to EUR 2,482 million (1,871) and the total comprehensive income for the period, taking changes in the market value of assets into account, rose to EUR 2,146 million (1,760). The profit contains a positive non-recurring item of EUR 706 million because of the change in Topdanmark's accounting treatment.

• Earnings per share amounted to EUR 3.96 (2.95) and mark-to-market earnings per share to EUR 3.79 (3.14). Return on equity for the Group amounted to 17.1 per cent (15.0) for 2017. Net asset value per share on 31 December 2017 was EUR 25.37 (24.86).
• The Board proposes to the Annual General Meeting to be held on 19 April 2018 a dividend of EUR 2.60 per share (2.30). The proposed dividend payment amounts in total to EUR 1,444 million (1,288).
• Profit before taxes for If segment was EUR 818 million (824). Insurance technical result was excellent and combined ratio for full-year 2017 amounted to 85.3 per cent (84.4). Return on equity was 21.3 per cent (25.3). Premiums grew by 1.8 per cent with fixed currencies.
• Topdanmark segment's profit before taxes was EUR 142 million excluding the non-recurring profit item of EUR 706 million. With this profit item i.e. the difference between the carrying value and the fair value of Sampo's holding on 30 September 2017, segment reported a profit of EUR 848 million. Combined ratio was excellent and amounted to 82.0 per cent (85.1). Premium growth was 1.4 per cent in non-life and 11.0 per cent in life insurance. Topdanmark's Board of Directors proposes to the AGM of 2018 a dividend of DKK 19 per share. If approved Sampo plc's share of the dividend payment is EUR 107 million.
• Sampo's share of Nordea's net profit for 2017 decreased to EUR 616 million (773). Nordea's RoE, excluding non-recurring items, amounted to 9.5 per cent (11.5) and core Tier 1 ratio (excluding transition rules) rose to 19.5 per cent (18.4). In segment reporting the share of Nordea's profit is included in the segment 'Holding'. Nordea's Board of Directors proposes to the AGM 2018 a dividend of EUR 0.68 per share (0.65). If the AGM approves the Board's dividend proposal, Sampo plc will receive a dividend of EUR 585 million (559) from Nordea on 26 March 2018.
• Profit before taxes for segment Mandatum rose to EUR 236 million (210). Return on equity amounted to 13.3 per cent (15.9). The discount rate for with profit policies used for 2018, 2019 and 2020 is 0.25 per cent and 2.75 per cent for 2021. The discount rate reserve at the end of 2017 amounted to EUR 325 million (273).
• In the third quarter of 2017 Sampo plc made a commitment to invest approximately EUR 500 million into two financial companies, Nets A/S and SAXO Bank A/S.

KEY FIGURES	2017	2016	Change, %	Q4/2017	Q4/2016	Change, %
EURm
Profit before taxes	2,482	1,871	33	436	528	-17
If	818	824	-1	215	199	8
Topdanmark *)	848	59	-	52	23	-
Associate (Nordea)	616	773	-20	126	227	-45
Mandatum	236	210	13	56	53	6
Holding (excl. Nordea)	-40	6	-	-13	25	-
Profit for the period **)	2,239	1,650	36	364	471	-23
			Change			Change
Earnings per share, EUR	3.96	2.95	1.01	0.61	0.84	-0.23
EPS (incl. change in FVR), EUR	3.79	3.14	0.65	0.27	0.98	-0.71
NAV per share, EUR	25.37	24.86	0.51	-	-	-
Average number of staff (FTE)	9,364	6,780	2,584	-	-	-
Group solvency ratio, %	154	154	0	-	-	-
RoE, %	17.1	15.0	2.3	-	-	-

*) 2017 figures contain a non-recurring profit item of EUR 706 million related to the start of consolidation of Topdanmark as a subsidiary, without which profit before taxes for Topdanmark segment would have been EUR 142 million.

**) of which non-controlling interests are EUR 23 million

Income statement items are compared on a year-on-year basis whereas comparison figures for balance sheet items are from 31 December 2016 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.

Exchange rates used in reporting	1-12/2017	1-9/2017	1-6/2017	1-3/2017	1-12/2016
EURSEK
Income statement (average)	9.6351	9.5833	9.5968	9.5063	9.4698
Balance sheet (at end of period)	9.8438	9.6490	9.6398	9.5322	9.5525
DKKSEK
Income statement (average)	1.2953	1.2885	1.2904	1.2785	1.2718
Balance sheet (at end of period)	1.3222	1.2965	1.2963	1.2816	1.2849
NOKSEK
Income statement (average)	1.0330	1.0376	1.0456	1.0575	1.0192
Balance sheet (at end of period)	1.0004	1.0251	1.0072	1.0397	1.0513
EURDKK
Income statement (average)	7.4387	7.4373
Balance sheet (at end of period)	7.4449	7.4423

FOURTH QUARTER IN BRIEF

Sampo Group's profit before taxes for the fourth quarter of 2017 amounted to EUR 436 million (528). Earnings per share decreased to EUR 0.61 (0.84). Mark-to-market earnings per share dropped to EUR 0.27 (0.98) due to the negative impact of currency fluctuations and asset valuations. Net asset value per share decreased EUR 1.47 during the quarter to EUR 25.37 as a result of the decrease in Nordea's share price.

Combined ratio for If in the fourth quarter amounted to 83.6 per cent (85.6), which is the best ever fourth quarter combined ratio. Profit before taxes increased to EUR 215 million (199).

Combined ratio for Topdanmark in the fourth quarter of 2017 was 82.1 per cent (84.6). Topdanmark segment's profit before taxes was EUR 52 million.

Sampo's share of Nordea's fourth quarter 2017 net profit decreased to EUR 126 million (227). Nordea's Group core tier 1 capital ratio, excluding transition rules, increased to 19.5 per cent (18.4) at the end of 2017.

Profit before taxes for Mandatum Life increased to EUR 56 million (53). Premiums written amounted to EUR 330 million down from the record fourth quarter 2016 of EUR 446 million.

Holding segment reported a loss before taxes of EUR -13 million because of currency losses from US Dollar and Swedish krona amounting to EUR -18 million.

BUSINESS AREAS

If

Profit before taxes for 2017 for the If segment was EUR 818 million (824). Combined ratio amounted to 85.3 per cent (84.4) and risk ratio to 63.3 per cent (62.3).

In 2017 EUR 111 million (141) was released from technical reserves relating to prior year claims. Return on equity decreased to 21.3 per cent (25.3) and the fair value reserve on 31 December 2017 rose to EUR 519 million (484).

Technical result decreased to EUR 640 million (658). Insurance margin (technical result in relation to net premiums earned) amounted to 15.1 per cent (15.5).

Large claims in BA Industrial were EUR 4 million better and in BA Commercial EUR 50 million worse than expected in 2017. Thus the total large claims for If ended up EUR 46 million worse than expected for the full-year 2017.

Swedish discount rate used to discount the annuity reserves was at -0.13 per cent at the end of 2017 and had a negligible effect on the full-year results. The discount rate was -0.03 per cent at the end of 2016. At the end of third quarter 2017 the discount rate was -0.14 per cent and had no effect on fourth quarter results. In Finland the discount rate for annuities was lowered from 1.5 per cent to 1.2 per cent in the first quarter of 2017 and had a negative effect of EUR 72 million on the results.

Gross written premiums increased to EUR 4,526 million (4,458) in 2017. With fixed currency rates premiums grew 1.8 per cent. Growth was positive in all business areas and geographically in all markets except Finland. The number of clients in BA Private grew in all markets including Finland. Gross written premiums grew by 4.1 per cent in Sweden, 2.6 per cent in Norway and 1.5 per cent in Denmark. In Finland premiums decreased -3.2 per cent.

Cost ratio improved slightly to 22.0 per cent (22.1) and expense ratio to 16.4 per cent (16.6).

On 31 December 2017, the total investment assets of If P&C amounted to EUR 11.5 billion (12.2), of which fixed income investments constituted 84 per cent (79), money market 3 per cent (8) and equity 13 per cent (13). Net income from investments amounted to EUR 216 million (173). Investment return marked-to-market for the full-year 2017 amounted to 2.6 per cent (2.9). Duration for interest bearing assets was 1.4 years (1.4) and average maturity 2.7 years (2.8). Fixed income running yield without taking into account the FX hedging cost as at 31 December 2017 was 1.5 per cent (1.7).

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

Topdanmark

Topdanmark is the second largest non-life insurance company and the sixth largest life insurance company in Denmark. The company is listed on Nasdaq Copenhagen. In non-life insurance, Topdanmark has a 17 per cent market share. Topdanmark focuses on the private, agricultural and SME market where the company has around 600,000 customers and handles around 300,000 claims a year. In life insurance, Topdanmark has a 9 per cent market share in Denmark.

At the end of 2017 Sampo plc held 41,997,070 Topdanmark shares, corresponding to 46.7 per cent of all shares and 48.9 per cent of related voting rights in the company. Sampo consolidates Topdanmark as a subsidiary as of 30 September 2017 in its financial reporting in accordance with IFRS.  

The AGM on 4 April 2017 decided to revoke the authorization granted to the Board of Directors to buy back Topdanmark shares.  In the interim report for January - March 2017, the Board of Directors presented a new earnings distribution policy according to which Topdanmark will maintain its disciplined approach to capital consumption to avoid accumulation of unnecessary capital. The pay-out ratio is at least 70 per cent.

The Board of Directors recommends to the AGM of 2018 that distribution of dividend for DKK 1,710 million (EUR 230 million), i.e. DKK 19 per share. If the AGM approves the proposal, Sampo plc share of the dividend payment is EUR 107 million.

The following text is based on Topdanmark's full-year 2017 result release published on 25 January 2018.

Topdanmark's pre-tax profit increased to EUR 300 million, of which the share of non-life insurance amounted to EUR 257 million and life insurance to EUR 33 million.

Due to the start of the consolidation of Topdanmark as a subsidiary, Sampo Group's 2017 results for Topdanmark contain a non-recurring profit of EUR 706 million as the difference between the carrying value and the fair value of Sampo's holding on 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).

In non-life insurance premiums earned increased 1.4 per cent to EUR 1,208 million. Run-off profits of EUR 46 million were primarily generated in motor and illness/accident insurance. 2017 was impacted by a low level of large-scale claims. Compared to 2016, the level was EUR 15 million lower, thus improving the claims trend for the Topdanmark Group by 1.2 percentage points.

The combined ratio amounted to 82.0 per cent in 2017 (85.1). Excluding run-off profits, the combined ratio was 85.8 per cent (90.4). The expense ratio was 16.1 per cent (16.4) impacted among other things by a reduction in the number of employees.

In life insurance gross premiums increased 11.0 per cent to EUR 1,109 million in 2017 (999). Unit-linked contracts represented 94 per cent of new sales in 2017.

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

Associated company Nordea Bank AB

Nordea is the largest bank in the Nordic region and among the ten largest financial groups in Europe in terms of total market capitalization with around 11 million customers. The Nordea share is listed on the Nasdaq exchanges in Stockholm, Helsinki and Copenhagen. In Sampo Group's reporting Nordea is treated as an associated company and is included in the segment Holding.

On 31 December 2017 Sampo plc held 860,440,497 Nordea shares corresponding to 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 8.81 per share. The closing price as at 31 December 2017 was EUR 10.09.

Nordea's Board of Directors proposes to the AGM 2018 a dividend of EUR 0.68 per share (0.65). If the AGM approves the Board's dividend proposal, Sampo plc will receive dividend of EUR 585 million (557) from Nordea on 26 March 2018.

The following text is based on Nordea's full-year 2017 result release published on 25 January 2018.

In 2017, volumes and margins were relatively stable, and business momentum was solid overall. At the end of 2017, Nordea was negatively impacted by a very low activity level on capital markets. The planned de-risking of the bank, with reduced exposure to Russia, Shipping, Offshore & Oil Services, also reduced income levels.

After years of intense investments, things are happening now and Nordea is entering the next stage on the transformation journey. Nordea has built up its capabilities within compliance and risk management functions. Nordea's digital investments result in an increased roll out frequency of improved products and services to customers. The core banking platform replacement is proceeding in line with budget and will lead to lower operational risks and improved customer satisfaction. Costs are being reduced as part of improved cost efficiency structures throughout the organisation.

Total income was down 3 per cent in both local currencies and EUR from the prior year and operating profit was down 8 per cent in both local currencies and EUR from the previous year excluding non-recurring items.

Net interest income was down 1 per cent in both local currencies and EUR from 2016. Average lending volumes in business areas in local currencies were down by 2 per cent compared to 2016 and deposit volumes were down by 1 per cent. Net fee and commission income increased 5 per cent in local currencies and 4 per cent in EUR from the previous year. Net result from items at fair value decreased in local currencies by 22 per cent and by 23 per cent in EUR from 2016.

Total expenses were up 5 per cent in local currencies and 4 per cent in EUR from the previous year excluding non-recurring items and amounted to EUR 5,102 million. Staff costs were up 7 per cent in local currencies excluding non-recurring items.

Net loan loss provisions decreased to EUR 369 million, corresponding to a loan loss ratio of 12 bps (down from 15 bps in 2016).

Net profit excluding non-recurring items decreased 14 per cent in both local currencies and EUR and amounted to EUR 3,048 million.

Currency fluctuations had no effect on income and operating profit but a positive effect of 1 percentage point on expenses and a negative effect of 3 percentage points on loan and deposit volumes compared to a year ago.

Nordea Group's Basel III Common equity tier 1 (CET1) capital ratio increased to 19.5 per cent at the end of the fourth quarter 2017 compared to 19.2 percent at the end of the third quarter 2017. Risk exposure amount, REA, decreased EUR 2.5 billion. The main drivers were decreased counterparty credit risk, favourable FX movements and changes to credit quality. CET1 capital decreased EUR 0.2 billion, driven by reduced retained earnings due to OCI impacts and increased deduction related to intangible assets. The decrease was partly offset by a dividend from Nordea's life and pension operations.

Mandatum Life

Profit before taxes for Mandatum Life in 2017 amounted to EUR 236 million (210). The total comprehensive income for the period after tax reflecting the changes in market values of assets decreased to EUR 188 million (232). Return on equity amounted to 13.3 per cent (15.9).

Net investment income, excluding income on unit-linked contracts, amounted to EUR 376 million (356). Net income from unit-linked contracts was EUR 405 million (276). During 2017 fair value reserve remained stable at EUR 599 million (596).

Total technical reserves of Mandatum Life Group increased to EUR 11.6 billion (11.3). The unit-linked reserves grew to EUR 7.1 billion (6.4) at the end of 2017. Unit-linked reserves were highest ever and corresponded to 61 per cent (57) of total technical reserves. Roughly EUR 3 billion of the unit-linked reserves is expected to be transferred to Danske Bank by the end of 2018.

With profit reserves continued to decrease as planned during 2017 and amounted to EUR 4.6 billion (4.8) on 31 December 2017. With profit reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased EUR 226 million to EUR 2.6 billion at the end of 2017.

In the course of 2017 Mandatum Life increased its technical reserves with EUR 53 million due to low level of interest rates and the total discount rate reserves at the end of 2017 amounted to EUR 325 million (273), of which EUR 282 million is allocated to years 2018 - 2021. The figure does not take into account the reserves relating to the segregated fund.  The discount rate used for 2018, 2019 and 2020 is 0.25 per cent for 2021 a rate of 2.75 per cent is used. Discount rate of segregated liabilities is 0.50 per cent and discount rate reserve of segregated liabilities amounted to EUR 261 million (275).

At the end of 2017 Mandatum Life Group's investment assets, excluding the assets of EUR 7.1 billion (6.5) covering unit-linked liabilities, amounted to EUR 6.3 billion (6.6) at market values.

The assets covering Mandatum Life's original with profit liabilities at the end of 2017 amounted to EUR 5.2 billion (5.4) at market values. 42 per cent (41) of the assets are in fixed income instruments, 16 per cent (14) in money market, 28 per cent (30) in equities and 13 per cent (15) in alternative investments. The investment return marked-to-market for 2017 was 6.5 per cent (7.2). The duration of fixed income assets at the end of 2017 was 2.0 years (1.9) and average maturity 2.2 years (2.3). Fixed income running yield without taking into account the FX hedging cost was 2.4 per cent (2.9) on 31 December 2017.

The assets covering the segregated fund amounted to EUR 1.1 billion (1.2), of which 77 per cent (75) was in fixed income, 6 per cent (10) in money market, 11 per cent (8) in equities and 6 per cent (7) in alternative investments. Segregated fund's investment return marked-to-market was 1.8 per cent (4.7). On 31 December 2017 the duration of fixed income assets was 2.6 years (2.4) and average maturity 3.3 years (3.5). Fixed income running yield without taking into account the FX hedging cost was 2.1 per cent (1.8).

Both risk and expense results rose to new records. The expense result for life insurance segment amounted to EUR 33 million (26) and risk result to EUR 35 million (31).

Mandatum Life Group's premium income on own account amounted to EUR 960 million (1,116). Premiums from unit-linked policies amounted to EUR 850 million (973).

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

Holding   

Holding segment's profit before taxes amounted to EUR 576 million (778), of which EUR 616 million (773) relates to Sampo's share of Nordea's 2017 profit. Segment's profit excluding Nordea was EUR -40 million (6). The result is burdened by currency losses from US Dollar and Swedish krona to the amount of EUR -39 million impacting both investment income and finance costs.

Sampo plc's holding in Nordea Bank was booked in the consolidated balance sheet at EUR 7.6 billion. The market value of the holding was EUR 8.7 billion, i.e. EUR 10.09 per share, at 31 December 2017. In addition the assets on Sampo plc's balance sheet included holdings in subsidiaries for EUR 3.4 billion (2.4).

Sampo plc's debt financing on 31 December 2017 amounted to EUR 3,177 million (3,548) and interest bearing assets to EUR 1,754 million (2,104). Interest bearing assets include bank accounts, EUR 496 million (637) of hybrid capital and subordinated debt instruments issued by the subsidiaries and associates and EUR 58 million of other fixed income instruments (28). On 31 December 2017 the interest bearing net debt amounted to EUR 1,423 million (1,443). Gross debt to Sampo plc's equity was 41 per cent (47) and financial leverage 29 per cent (32).

As at 31 December 2017 financial liabilities in Sampo plc's balance sheet consisted of issued senior bonds and notes of EUR 2,884 million (2,877) and EUR 293 million (671) of CPs issued. The average interest, net of interest rate swaps, on Sampo plc's debt as of 31 December 2017 was 0.93 per cent (1.37).

OTHER DEVELOPMENTS

Changes in Group structure

Sampo Group started to consolidate Topdanmark as a subsidiary as of 30 September 2017 in its financial reporting in accordance with IFRS. Earlier as of May 2011 Topdanmark was consolidated as an associate in the P&C insurance segment.

The transformation of If's Finnish subsidiary, If P&C Insurance Company Ltd (Finland), into a branch office of the Swedish company, If P&C Insurance Ltd, was completed as of 2 October 2017 after all the necessary regulatory approvals were obtained.

In accordance with the plan published in May 2017 Mandatum Life's Baltic subsidiary, Mandatum Life Baltic SE, was merged to the parent company on 1 December 2017. Mandatum Life's Baltic operations became thereafter branches to Mandatum Life.

Mandatum Life's portfolio transfer to Danske Bank

Mandatum Life Insurance Co. Ltd. disclosed on 27 October 2016 that it will exercise its option to sell the insurance portfolio, sold through Danske Bank's branch network in Finland, to Danske Bank or its nominee. The valuation process was finalized by 19 June 2017 and the value of the insurance portfolio as at 31 December 2016 was determined to be EUR 334 million. The transfer of the portfolio is expected to take place during 2018. The sales gain is taxable under the Finnish tax law. The transaction will have a positive impact on Mandatum Life's solvency position.

Changes in Group Management

Timo Vuorinen, former Managing Director of If P&C Insurance Company (Finland), Head of Private Sales and Services (Finland) and Head of Business Area Baltic resigned in November 2017 from his operative responsibilities and hence left Sampo Group Executive Committee. This was a consequence of the decision to merge If P&C Insurance Company Ltd (Finland) with If P&C Insurance Ltd (Sweden). Vuorinen was employed by Sampo Group until the end of 2017.

Shares and share capital

In December 2017, Sampo plc announced that its Board of Directors had decided, according to the authorization by the Annual General Meeting, to cancel 4,648,150 Sampo shares that were in the joint account on 1 December 2017. This corresponded to 0.8 per cent of Sampo plc's total number of shares and votes. The cancellation of shares became effective on 22 December 2017.

Sampo plc made no repurchases during 2017 and has not purchased its own shares after the end of the reporting period.

Internal dividends

Sampo plc, Sampo Group's parent company, received approximately EUR 1,5 billion in dividends from its subsidiaries and associated company Nordea Bank AB during 2017. The following dividend payments were received:

- Mandatum Life; EUR 125 million in March 2017 and EUR 150 million in September 2017
- Nordea Bank AB; EUR 557 million in March 2017 and
- If P&C; SEK 6.0 billion (EUR 620 million) in December 2017.

On 25 January 2018 Nordea Bank AB's Board of Directors proposed to the Annual General meeting to be held on 15 March 2018, a dividend of EUR 0.68 per share. With its current holding Sampo plc's share amounts to EUR 585 million. The dividend is proposed to be paid on 26 March 2018.

Topdanmark's Board of Directors proposed to the Annual General Meeting of 12 April 2018 a dividend of DKK 19 per share. Sampo's share of the Topdanmark's total dividend amounts to EUR 107 million.

A dividend of EUR 150 million is planned to be paid by Mandatum Life during the first quarter of 2018. If P&C normally pays its dividend towards the end of the calendar year.

Ratings

There were no changes in Sampo Group companies' ratings during 2017.

Solvency

Group's conglomerate solvency ratio (own funds in relation to minimum requirements for own funds) amounted to 154 per cent (154) as at 31 December 2017.

Since 1 January 2016 If P&C, Topdanmark and Mandatum Life have applied 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.

For If P&C the standard formula has roughly a EUR 400 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 2017 If P&C Group's Solvency II capital requirement under standard formula amounted to EUR 1,938 million (1,942) and own funds to EUR 3,818 million (3,822). Solvency ratio amounted to 197 per cent (197).

S&P A+ rating requirement for If P&C Group amounted to EUR 3,098 million (2,967) at the end of 2017 and the capital base was EUR 3,408 million (3,565). On 31 December 2017 If P&C Group's Solvency II capital requirement under partial internal model was to EUR 1,510 million (1,581) and own funds to EUR 3,875 million (3,855). Solvency ratio amounted to 257 per cent (244).

The Swedish Financial Supervisory Authority approved in November 2016 a partial intern model for calculating the solvency capital requirement for If P&C Insurance Company Ltd (Sweden). After the Finnish operation was transformed into a branch in late 2017, If applied for the extension of the partial internal model to also cover the Finnish business.

Topdanmark uses a partially 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 2017.

On 31 December 2017 Topdanmark's Solvency II capital requirement under standard formula amounted to EUR 514 million and own funds to EUR 856 million. Solvency ratio amounted to 166 per cent.

Nordea's capital requirement in Sampo Group's solvency changes with effect from 1 January 2018 due to 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 starts to use Minimum requirement for Own funds (as defined in Nordea's quarterly Factbook) as the capital requirement in Sampo Group's solvency. At the end of 2017 this change would have increased Sampo Group's minimum requirement for own funds by ca. EUR 380 million and decreased solvency capital by the same amount. The Group solvency ratio would have on 31 December 2018 been 146 per cent.

Mandatum Life's solvency ratio after transitional measures on 31 December 2017 was strong at 182 per cent (160). Own funds of EUR 1,977 million (1,893) exceed Solvency Capital Requirement (SCR) of EUR 1,087 million (1,182) by EUR 890 million. Without transitional measures, own funds would have amounted to EUR 1,555 million (1,441) and the solvency capital requirement to EUR 1,220 million (1,409) leading to a solvency ratio of 127 per cent (102).

OUTLOOK

Outlook for 2018

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 its long-term combined ratio target of below 95 per cent in 2018 by a margin.

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 a 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. 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.

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 totalled EUR 7,570,983,877.42 of which profit for the financial year was EUR 1,395,971,059.94.

The Board proposes to the Annual General Meeting a dividend of EUR 2.60 per share to company's 555,351,850 shares. The dividends to be paid are EUR 1,443,914,810.00 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 23 April 2018. The Board proposes that the dividend be paid on 3 May 2018.

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. [phone]
Jarmo Salonen, Head of Investor Relations and Group Communications, tel. [phone]
Mirko Hurmerinta, IR and Communications Specialist, Media Relations, tel. [phone]

Press conference and conference call

Sampo will today arrange a Finnish-language press conference at Savoy (7th 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 [phone], [phone], [phone] or [phone]. The conference code is 774043.

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 2018 on 9 May 2018.

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

Financial Statement Release 2017

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Source: Sampo Oyj via Globenewswire