Sampo Group’s results for 2023
SAMPO PLC FINANCIAL STATEMENT RELEASE 8 February 2024 at 9:50 am
Sampo Group’s results for 2023
• Sampo Group achieved top line growth of 11 per cent on a currency adjusted basis, supported by strong development both in the Nordics and in the UK
• The underwriting result was EUR 1,164 million (1,031) and the combined ratio 84.6 per cent (85.8)
• Underlying Nordic margin trends remained positive throughout the year, with If achieving a 0.5 percentage point improvement in the undiscounted adjusted risk ratio
• Profit before taxes increased to EUR 1,481 million after adjusting for IFRS 9 (803), but declined on a reported basis (1,924)
• Solvency II coverage stood at 182 per cent (210), pro forma of demerger-related transactions, and financial leverage at 25.3 per cent (25.6)
• The Board proposes a EUR 1.80 dividend per share, including a regular dividend of EUR 1.60 per share and an extra dividend of EUR 0.20 per share
• Sampo will issue an outlook statement for 2024 in connection with the publication of its 2024-2026 financial targets at its Capital Markets Day on 6 March 2024
Key figures
EURm | 1–12/ | 1–12/ | Change, % | 10–12/ | 10–12/ | Change, % |
Profit before taxes (P&C Operations) | 1,481 | 1,924 | -23 | 368 | 67 | 449 |
If | 1,358 | 1,550 | -12 | 369 | 60 | 520 |
Topdanmark | 162 | 158 | 3 | 19 | 79 | -77 |
Hastings | 129 | 107 | 21 | 59 | 6 | 866 |
Holding | -160 | 146 | - | -78 | -48 | 64 |
Net profit for the equity holders | 1,323 | 2,107 | -37 | 382 | 61 | 526 |
Underwriting result | 1,164 | 1,031 | 13 | 281 | 109 | 159 |
|
|
| Change |
|
| Change |
Earnings per share (EUR) | 2.62 | 3.97 | -1.36 | 0.76 | 0.14 | 0.62 |
Operational result per share (EUR) | 2.07 | - | - | 0.42 | - | - |
Return on equity, % | 15.6 | 4.2 | 11.4 | - | - | - |
Profit before taxes (adjusted for IFRS 9), EURm* | 1,481 | 803 | 84% | 368 | 176 | 110% |
The comparison figures for 2022 have been restated for IFRS 17 but not for IFRS 9, meaning some figures, such as investment income, are not presented on a comparable basis between the reporting periods. Net profit for the equity holders, EPS and return on equity figures include results from life operations. Mandatum was classified as discontinued operations as of 31 March 2023.
*) To enhance comparability, a Group profit before taxes (P&C operations) figure adjusted for IFRS 9, reflecting market value movements, has been provided for the prior year.
The figures in this report have not been audited.
Sampo Group key financial targets for 2021–2023
| Target | 2023 |
Group | Mid-single digit UW profit growth annually on average | 13% |
| Group combined ratio: below 86% | 84.6% |
| Solvency ratio: 170-190% | 182% (pro forma of demerger-related transactions) |
| Financial leverage: below 30% | 25.3% |
If | Combined ratio: below 85% | 83.1% |
Hastings | Operating ratio: below 88% | 89.8% |
|
GROUP CEO’S COMMENT
Sampo maintained strong operational momentum through the fourth quarter, with solid premium growth, resilient underwriting margins and an excellent investment result. Profit before taxes for 2023 increased to EUR 1,481 million (803), under comparable accounting assumptions. I believe the strong result achieved by the Group in 2023, despite a tough claims environment, illustrates our scale, diversification and disciplined underwriting.
Sampo delivered currency adjusted top line growth of 11 per cent in 2023, broadly based across the Group. In the Nordics, growth was driven mainly by continued high retention, despite rate increases, enabled by the investments into service and digitalisation we can afford as the largest P&C insurer in the region. We continue to see particularly positive development in our target growth areas, such as personal, home and SME insurance. Nonetheless, the UK was the stand-out performer in terms of top line growth, delivering an increase in GWP of 32 per cent in 2023, on a currency adjusted basis, on the back of substantial rate increases in motor, and volume and price growth in home. Monthly price increases in the UK motor market moderated over the fourth quarter, following a large step up in prices in the previous two quarters, but at premium levels that appear much more sustainable than at the start of the year.
The claims environment has proven challenging in 2023, substantially denting the financial performance of many P&C insurers in both the Nordics and the UK. We have seen adverse weather conditions, some of the largest single claims in Nordic history, fluctuations in claims frequency and elevated UK claims inflation. The fourth quarter was no exception, with storms and an unusually early start to the Nordic winter. Despite this, Sampo delivered a robust underwriting result, thanks to our diversification and disciplined underwriting. We are present in all the Nordic countries, the UK and the Baltics, and in all lines of business and customer groups in the Nordics. We have made cautious assumptions around claims inflation, even though this appears to be moderating, and avoided the temptation to call a “new normal” on claims frequency after COVID-19. Our discipline was once again in evidence at 1 January 2024 renewals, where we implemented significant further rate increases and took action to reduce our exposures to single large property risks.
Leveraging our scale to improve productivity is another hallmark of Sampo P&C insurance strategy, as is our ability to generate pan-Nordic synergies. The cost ratio in If P&C fell by 0.3 percentage points in 2023, making it the 14th consecutive year in which this metric has improved. Importantly, these efficiency gains have not been achieved at the expense of volume growth or by cutting business investment – indeed, we expect to continue to invest heavily in further efficiency improvements in the future.
Looking to the asset side of our balance sheet, Sampo enjoyed an excellent investment result in the fourth quarter, on the back of broad-based gains across our portfolio. As a group, we are comfortable taking measured investment risk in order to enhance earnings over the medium term. Since 2009, we have earned an average spread of roughly 290 bps above the 5-year swap rate in If P&C, equivalent to around EUR 300 million per annum based on our current investment portfolio.
In summary, I am pleased to conclude on another good year. Our operational performance remains excellent and our competitive advantages are as strong as ever. I look forward to updating the investors and analysts on our plans at our upcoming Capital Markets Day on 6 March 2024.
Torbjörn Magnusson
Group CEO
FOURTH QUARTER 2023 IN BRIEF
The year 2023 ended with elevated severe weather conditions as the stormy beginning of the quarter was followed by an early winter with heavy snowfall and freezing temperatures in the Nordics. Nonetheless, the Group’s top line development and underlying performance remained solid.
Gross written premiums and brokerage income increased by 12 per cent on a currency adjusted basis and by 9 per cent on a reported basis to EUR 1,864 million (1,711). The growth was supported by continued solid development in the Nordics and strong pricing trends in the UK. In the Nordics, Private saw currency adjusted GWP growth of 5.0 per cent, driven by non-motor lines. Commercial had a strong quarter with growth accelerating to 6.7 per cent, while Industrial saw 3.5 per cent growth. In the UK, premiums increased by 34 per cent on a local currency basis as the pricing environment remained firm over the quarter.
The group underwriting result amounted to EUR 281 million (109) and combined ratio to 85.5 per cent (94.1). The fourth quarter 2022 combined ratio under IFRS 4 included significant items related to prior year development, some of which have been recognised in the net financial results under IFRS 17. Hence, the figures are not fully comparable between years. In the Nordics, the positive underlying margin development continued to be strong, as If’s undiscounted adjusted risk ratio improved by 0.5 percentage points year-on-year. In addition, underwriting profit was supported by 19 per cent growth in the UK as price increases started to earn through the P&L. Hastings reported an operating ratio of 87.8 per cent (87.4).
The fourth quarter saw significant severe weather effects; although the impact of this was diluted by diversification at group-level, it had a notable adverse impact on Sampo’s Danish operations through Topdanmark. On If’s risk ratio, large claims and severe weather had a negative effect of 3.8 percentage points (2.7), mainly driven by harsh winter conditions. This was offset by prior year development of 5.0 percentage points. The positive effect from discounting increased to 4.1 percentage points (3.1) following a change in calculation methodology that flattered the fourth quarter due to a true-up of year-to-date effects.
The net financial result amounted to EUR 175 million, as strong investment returns offset negative discounting effects on the liability side. Net investment income amounted to EUR 517 million, as the steep decline in interest rates at the end of the quarter pushed asset prices higher. Insurance finance income or expense (IFIE) amounted to EUR -342 million, driven by EUR -271 million effect from changes in discount rates. The unwind of discounting had a EUR -81 million effect on IFIE.
SAMPO PLC
The Board of Directors
The Financial Statement Release for January - December 2023, Investor Presentation and a video review with Group CEO Torbjörn Magnusson are available at www.sampo.com/result.
Conference call
A conference call for investors and analysts will be arranged at 2:30 pm Finnish time (12:30 am UK time). Please call tel. +1 786 697 3501, +44 (0) 33 0551 0200, +46 (0) 8 5052 0424, or +358 9 2319 5437.
Conference passcode: Sampo Q4
The conference call can also be followed live at www.sampo.com/result. A recorded version will later be available at the same address.
For more information, please contact
Knut Arne Alsaker, Group CFO, tel. +358 10 516 0010
Sami Taipalus, Head of Investor Relations, tel. +358 10 516 0030
Maria Silander, Communications Manager, Media Relations, tel. +358 10 516 0031
Sampo will publish the Interim Report for January - March on 7 May 2024.
Distribution:
Nasdaq Helsinki
Nasdaq Stockholm
London Stock Exchange
The principal media
FIN-FSA
www.sampo.com
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