Sampo plc

OTC:SAXPF

Earnings Call Transcript 2023-Q1

[Knut Alsaker, executive]

Hello. My name is Knut-Arne Alsaker, and I am Group CFO of Sampo.

Let me give you an overview of our first quarter results. Sampo has enjoyed a very good start to the year. Underwriting profit is up by 21% to EUR 292 million and profit before taxes is up by 30% to EUR 359 million, applying the new accounting principles, the insurance industry has implemented.

Let's look at underwriting performance in more detail. Quarterly premiums increased to EUR 3 billion. Growth was particularly strong in the U.K. at almost 40% as we continued to increase prices to cover high claims inflation and to grow the home book.

Nordic premium growth was also solid at 6%, driven by pricing, high retention and our growth initiative in personal insurance and SME. In terms of margins, the group combined ratio improved by 220 basis points year-over-year to 84%, driven by strong performance in the Nordics.

Both if and Topdanmark achieved combined ratios in the low 80s, despite wintry weather, and we have improved the outlook for If's 2023 combined ratio to 82% to 84%.

In the U.K., our operating ratio ended somewhat higher compared to the start of last year due to adverse weather and continued high claims inflation. On a positive note, the U.K. market is now reacting with price increases, which have accelerated over the first quarter.

We reiterate our 2023 outlook and operating ratio for Hastings or below 88%.

Net investment income was good at EUR 253 million despite the volatile capital markets as we have continued to benefit from higher running yields in our fixed income portfolio and positive equity markets.

Importantly, the group has very limited exposure to many key asset risk areas such as commercial real estate.

Next, Mandatum. Following a period of careful deliberation, the Sampo Board has proposed to separate Mandatum from Sampo by means of a demerger. This would make Sampo a pure play P&C insurance group and allow Mandatum to pursue growth more ambitiously. The proposal will be considered by the AGM on May 17. Mandatum delivered a resilient first quarter with net inflows of nearly EUR 300 million and a 5% increase in AUM to almost EUR 11 billion.

Our balance sheet remains in excellent condition. Solvency was stable in the quarter at 208%, including accrued dividend, while financial leverage improved slightly to 27%, including both the proposed dividend as well as the ongoing buyback.

To conclude, we have had a very good start to 2023 and feel confident about the rest of the year. Thank you for listening.