1st Quarter Results

SOLID PROGRESS IN ALL BUSINESS AREAS

 

Sampo Group's earnings per share increased to EUR 0.32 (0.10) and operating profit to EUR 252 million (75). The operating profit for the review period includes EUR 104 million in gains from the sale of the shareholding in Skandia. Net asset value per share was EUR 5.85 (5.28). The Group's cost efficiency improved as planned and expenses continued to decrease.

 

On 11 February 2004, Sampo announced the acquisition of a majority shareholding in If. Following implementation of the transaction, Sampo will own approximately 90 per cent of If, and If will become a subsidiary of Sampo. The necessary official permits specified in the sales contract were received by 29 April 2004. Assuming that the acquisition would have been implemented at the beginning of 2004, the Group's earnings per share would have improved by 4 cents to EUR 0.36 (see the pro forma profit and loss account and balance sheet). If will publish a separate interim report for the first quarter of 2004 on 6 May 2004 (www.if-insurance.com).

 

The result of the life insurance business was excellent. Operating profit more than tripled to EUR 91 million (27). The good performance of the stock markets in the first quarter increased net investment income to EUR 159 million (51). The solvency margin of the Group's life insurance companies rose to 20.0 per cent of technical provisions (12.2). Sampo Life's market position in its focus areas strengthened further.

 

The operating result of banking and investment services improved a little. Operating profit was EUR 57 million (73). The comparison figure includes an exceptionally large dividend paid by Sampo Life (21). Although the prevailing low interest rates depressed net income from financial operations, fees and commissions receivable grew substantially and costs decreased. The lending portfolio, especially housing loans, grew strongly and credit quality remained good. 

 

 

The profitability of the P&C insurance business of the associated company If developed as planned and the combined ratio was 100.8 per cent (105.0). The moving 12-month combined ratio fell to 99.8 per cent. The company's operating profit was SEK 826 million (284), of which Sampo Group's share was EUR 27 million (18).

 

                             

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The operating profit of the holding company increased to EUR 78 million (-22). This figure includes EUR 95 million in gains from the sale of the shareholding in Skandia and write-down of EUR 9 million.

 

 

 

 

 

The internal dividends and sales profits between the different lines of business have not been eliminated in the result analysis and specifications or key figures of banking and investment services and the insurance business. The above-mentioned items have been eliminated in the Group operating profit. Furthermore, the profit or loss corresponding to the share held in the associated company, If, has been added or deducted in the operating profit. Therefore, the Group operating profit is not equal to the sum of the business area operating profits.

 

 

 

 

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Chief Executive Officer's Review

 

P&C insurance returns as a core business of Sampo Group

 

At the outset of 2002 we transferred our P&C insurance operations to If, established two years earlier by Skandia and Storebrand. The company's first steps were woeful; profitability was abysmal and operations were inefficient. With the arrival of Sampo, everything changed. The new leadership chosen for If systematically and skilfully turned the company around. A loss of SEK 1,682 million in 2002 was converted into a profit of SEK 1,835 million in 2003.

 

The last two years have also seen major changes in If's operating environment. Companies in the P&C insurance market were forced, in a time of low investment returns, to focus on profitability in a new way. The times when ample gains from the stock market could compensate for large losses in insurance operations are over. The consolidation of the Nordic insurance market also had a beneficial effect on competition and rationalised pricing.

 

Investors were eagerly awaiting the public listing of If. However, Sampo had another option open to it - the acquisition of a majority holding in If. Now that the transaction has been completed, we can state that its price of EUR 1.37 billion is approximately 1.2 times If's net asset value on 31 March 2004. In my opinion, the price is very reasonable.

 

If's profit outlook for 2004-2006 is excellent. I believe If will achieve the targets set for return on equity (15 per cent) and for the combined ratio (97-99 per cent). From Sampo shareholders' perspective, listing would not have been nearly as advantageous.

 

Realisation of a financial investment

 

At the beginning of 2003, Sampo had nearly EUR 1 billion in excess capital. To get a better return than was possible with fixed income investments, we sought suitable investment opportunities on the stock market. Skandia, which has lately been troubled by scandals, seemed under-priced. Gradually, we accumulated 7.37 per cent of the company's stock. After we disclosed on 24 January 2003 that our holding had exceeded 5 per cent, the markets were flooded with speculation as to Sampo's intentions.

 

My repeated assurances that this was purely a financial investment did not convince everyone. On 1 March 2004, we reported that we had sold all our Skandia shares. This produced a sales gain of EUR 104 million.

 

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Each pension must be saved by someone

 

The life insurance sales have suffered in the opening months of this year from the uncertainty sowed by the government in late 2003 in its poorly considered statement concerning the taxation of individual pension insurance.

 

The taxation of half a million pension insurance policyholders threatens to be changed in a way that does not, in my view, exemplify the legislative practices of a civilised society.

 

At a time when the statutory pension system and other social security is under pressure, political decision-makers should seek solutions that allow as many as possible to choose their own pension solution. If pension saving is made unprofitable for the individual, it is inevitable that the level of voluntary pension security will sink in the future and that pressures on statutory systems will increase further. In whose interest is this? 

 

Successful start to the year for Sampo

 

In the midst of structural changes, normal business was not forgotten in Sampo. We performed well and the operating result developed favourably in all of our business areas.

 

We achieved a lot in Sampo Group in the first quarter of 2004. But the world is never complete. Nobody should suppose that Sampo is.

 

Björn Wahlroos

Chief Executive Officer

 

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Sampo Group

 

Sampo Group's core businesses are banking, long-term savings and P&C insurance. The Group's largest subsidiaries are Sampo Bank plc, Sampo Credit plc, Sampo Life Insurance Company Limited, Sampo Fund Management Ltd and Mandatum Asset Management Ltd. In February 2004 Sampo announced the acquisition of a majority shareholding in If, the largest P&C insurance company in the Nordic countries. Following the transaction, Sampo will own 89.94 per cent of If.

 

 

*) Profit before extraordinary items (taxes 29 %) / NAV (average)

The accounting principles used to calculate the key figures are

presented in the tables section of the report.            

 

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Changes in Group structure

 

Sampo plc has sold its shareholdings in AS Sampo Pank in Estonia and UAB Sampo bankas in Lithuania to Sampo Bank, a wholly-owned subsidiary of Sampo plc. The companies became subsidiaries of Sampo Bank on 2 January 2004. The measure strengthens the role of the Baltic countries in Sampo's banking operations.

 

On 11 February 2004, Sampo plc agreed to acquire the shareholdings of the Swedish company Skandia and its subsidiary Skandia Liv, and of the Norwegian company Storebrand, in If P&C Insurance Holding Ltd. Following the transaction, Sampo will own 89.94 per cent of If and If will become a subsidiary of Sampo. Varma Mutual Pension Insurance Company will maintain its 10.06 per cent shareholding in If. Implementation of the transaction was conditional on the receipt of the official permits specified in the sales contract and the transaction is expected to be implemented at the beginning of May 2004. Following the share transaction, Sampo will have three core businesses: banking, long-term savings and P&C insurance. The transaction will have no effect on the position of customers or the staff.

 

Sampo finances the transaction by subordinated notes to the amount of EUR 600 million, eligible for inclusion in the tier 2 capital adequacy calculations, senior notes to the amount of EUR 300 million and a short-term syndicated bank loan to the amount of EUR 550 million. The maturity of the subordinated notes is 10 years and Sampo has the right to recall them after 5 years. The new issue spread is 147 basis points above the five-year mid-swap rate. The EUR 300 million in senior notes will be redeemed in full in 2007 and the new issue spread is 3-month Euribor + 57 basis points. These notes have been accepted for public trading on the London Stock Exchange.

 

Sampo will merge Sampo Finance Ltd into Sampo Bank and Sampo Credit plc into the holding company to take effect from 30 September 2004. In addition, Sampo plc will transfer its life insurance subsidiaries in the Baltic countries, AAS Sampo Dziviba, UAB Sampo Gyvybes Draudimas and AS Sampo Elukindlustus, to the ownership of Sampo Life. Implementation of the share transactions is conditional on receipt of the necessary official permits. Decisions are expected in early June.

 

 

 

 

 

 

 

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Administration

 

The Annual General Meeting held on 7 April 2004 elected eight members to the company's Board of Directors. The re-elected members were Tom Berglund, Anne Brunila, Georg Ehrnrooth, Jyrki Juusela, Olli-Pekka Kallasvuo, Christoffer Taxell and Björn Wahlroos. Matti Vuoria was elected as a new member to the Board of Directors.

 

The Annual General Meeting approved the financial accounts for 2003 and discharged the Board of Directors and the Chief Executive Officer from liability. The Meeting also decided, in accordance with the proposal of the Board of Directors, to pay a dividend of EUR 1.50 per share, i.e. total dividend payment of EUR 831 million.

 

The firm of authorised public accountants, Ernst & Young Oy, was elected as the Auditor.

 

Changes in share capital

 

The Annual General Meeting of 7 April 2004 granted the Board of Directors authorisations, valid until 7 April 2005, to buy back and convey Sampo's own shares. The maximum amount of A shares that can be bought back is 5 per cent of the company's share capital or of the number of votes attached to all shares. Shares can be bought back either by an offer made to all holders of A shares in proportion to their holdings and on equal terms determined by the Board, or through public trading in the Helsinki Exchanges, in which case the shares will not be bought in proportion to the holdings of the shareholders.

Shares can be bought back to develop the company's capital structure, to finance acquisitions or other reorganisations or otherwise to be further conveyed or cancelled. Sampo plc did not buy back any of its own shares in the review period.

 

During the review period, Sampo received disclosures under chapter 2, section 9 of the Securities Markets Act on changes in ownership from the Finnish Government (holding fell below 1/3 of votes and shares), Varma Mutual Pension Insurance Company (rose above 15 %) and the Franklin Templeton Group (fell below 5 %).

 

The B options of Sampo plc's year 2000 option programme were accepted for trading on the main list of the Helsinki Exchanges from 2 January 2004, at which time they were also combined with the A options. At the same time, the options were renamed as year 2000 A/B options.

 

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As a result of the 281,250 A shares subscribed for with warrants from Sampo's year 1998 option programme, the company's capital and reserves grew by EUR 1,621,850.69 and its share capital increased to EUR 93,209,953.17. The new shares were accepted for trading in the Helsinki Exchanges from 13 February 2004. At the end of the review period, the total number of Sampo plc's shares, including the 1,200,000 B shares, was 554,201,215.

 

Staff

 

The Group's staff decreased in a year by 541 employees and from the end of 2003 by 103 employees to stand at 5,162 employees at the end of March. 80 per cent of the staff worked in banking and investment services, 7 per cent in life insurance, 2 per cent in the holding company and 11 per cent in Primasoft. The average number of employees in the review period was 5,152, compared with 5,745 in the corresponding period of 2003.

 

The number of employees decreased due to natural turnover and the staff reductions carried out in the Finnish retail customer network.

 

Ratings

 

In relation to the If-transaction, Standard & Poor's downgraded Sampo Bank's counterparty credit rating from A/A-1 to A-/A-2 with a negative outlook on 30 April 2004. S&P also lowered the long-term counterparty credit and insurer financial strength ratings of Sweden-based If P&C Insurance Ltd and Finland-based If P&C Insurance Co. Ltd. from A- to BBB+ with a stable outlook. Moody's assigned Baa1 first-time issuer rating to Sampo plc on 16 March 2004.

 

Banking and investment services

 

The Group's most important domestic banking and investment service companies are Sampo Bank plc, Sampo Fund Management Ltd, Mandatum Asset Management Ltd, Mandatum Stockbrokers Ltd, Mandatum & Co Ltd, Sampo Finance Ltd, Sampo Credit plc, Mandatum Private Equity Funds Ltd and 3C Asset Management Ltd. The Sampo PTE S.A. pension fund company in Poland and AS Sampo Pank in Estonia and UAB Sampo bankas in Lithuania are also included in Sampo's banking and investment services. The branch network also operates as a distribution channel for a wide range of advisory services and long-term savings products.

 

 

 

 

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*) Fees and commissions net

**) Net operating profit (taxes 29 %) / Risk Allocated Capital,

average (7 % of risk weighted assets)

***) Net Operating Profit (taxes 29%) / NAV (average)

 

 

Costs decreased and operating profit improved a little

 

Operating profit from banking and investment services was EUR 57 million (73). The return on risk allocated capital (RORAC) decreased to 16.3 per cent (22.8). Operating profit improved a little. The operating profit for the comparison period included Sampo Bank's share (EUR 21 million) of Sampo Life's additional dividend, which is eliminated in the result for the whole Group.

 

Net income from financial operations weakened to EUR 97 million (106), because the interest margin was narrowed by the fall in market interest rates. Sampo Bank's interest spread between funding and lending averaged about 2.4 percentage points in the first quarter, which was about 0.6 percentage points lower than it had been one year earlier. Compared with the latter half of 2003, net income from financial operations stayed at the same level.

 

 

 

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Fees and commissions receivable increased to EUR 62 million (53), with the biggest increase being recorded in fees and commissions receivable for asset management which rose to EUR 18 million (13). Fees and commissions receivable from banking operations were slightly higher than in the comparison period. In the corporate finance function, fees and commissions receivable were a little lower than in the comparison period, but income from stock brokerage rose as a result of greater efficiency and the upward trend in the stock markets.

 

Dividend income decreased to EUR 3 million (21). The comparison period included the additional dividend paid by Sampo Life. Net income from securities transactions and foreign exchange dealing declined by EUR 6 million.

 

Efficiency improvements lowered administrative expenses by EUR 6 million. The cost to income ratio (including the net amount of fees and commissions receivable and payable) weakened to 66.9 per cent (58.2).

 

Strong growth continued in housing loans

 

Sampo Group's loan portfolio grew by 10 per cent in a year, with growth continuing to be focused on loans to households. Housing loan stock increased by 17 per cent year-on-year. Sampo Credit's foreign loans decreased by EUR 568 million year-on-year. Due to the rapid growth of the Baltic banks, the amount of foreign loans began to rise early in the year. Loans granted to domestic companies increased by 12 per cent. There was pressure on the spreads of both corporate and housing loans in the first quarter.

 

Total deposits increased in one year by approximately 8 per cent, rising to EUR 9,035 million. The volume of deposits in savings accounts and corporate giro accounts increased, while time deposits decreased. The pricing of current accounts and certain services was streamlined and renewed, which is expected to slightly increase fees and commissions receivable from deposits and the net income from financial operations.

 

No change in provisions for bad and doubtful debts and non-performing loans

 

 

 

 

 

 

 

 

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Net provisions for bad and doubtful debts affected operating profit positively by EUR 7 million, because recoveries increased. At the end of the period, provisions pooled by customer group were EUR 39 million (31). The amount of non-performing loans was EUR 72 million (72) at the end of the period, while other non-interest-earning loans totalled EUR 1 million (2). Of these, corporate and institutional customers accounted for EUR 39 million and households for EUR 33 million.

 

Mutual fund assets still growing strongly

 

Mutual fund assets continued to grow strongly. Encouraged by favourable stock markets, customer investments were increasingly directed to equity and balanced funds. Mandatum Russia, which invests in the Russian equity markets, was a new fund that performed extremely well.

 

Mutual fund assets had increased by the end of March to EUR 5.9 billion (4.5). This figure includes EUR 545 million (397) in investments by Sampo Group companies. The number of unit holders continued to increase rapidly. At the end of the review period, Sampo Group's funds had over 259,000 unit holders (211,000). The number of regular savings contracts exceeded 90,000 (64,000). According to the Finnish Association of Mutual Funds Report, Sampo had a 23.0 per cent (24.8) market share in March.

 

Mainly due to the increase in funds and consultative asset management, the total amount of assets under management within Sampo Group increased to almost EUR 20.9 billion (17.8). This figure includes mutual fund assets of EUR 5.9 billion and investments by Sampo Group companies amounting to around EUR 4.2 billion. The above figures do not contain the Polish pension fund management company, Sampo PTE, which had approximately EUR 331 million of assets under management at the end of the year. Assets grew by over 50 per cent, measured in Polish zloties.

 

Capital adequacy

 

Because its operations are weighted towards financial services, Sampo's capital adequacy is calculated under the Act on Credit Institutions. The Group's capital adequacy ratio was 15.1 per cent (17.7). The tier 1 capital ratio was 14.9 per cent (18.9). The decline in capital adequacy derives largely from the inclusion of the dividend of EUR 831 million in the calculation. The consolidation group comprises Sampo Bank Group, Sampo Credit plc, AS Sampo Pank, UAB Sampo bankas, Sampo PTE, Sampo Fund Management Ltd, Mandatum Asset Management Ltd, Mandatum Private Equity Funds Ltd, Mandatum Stockbrokers Ltd, Mandatum & Co Ltd, 3C Asset Management Ltd and the holding company, Sampo plc.

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Life insurance

 

The core of the Group's life insurance business is Sampo Life, operating in Finland. The business area also includes life insurance companies located in the three Baltic states and Sampo T.U. Zycie in Poland.

 

 

 

*) Profit before extraordinary items (taxes 29 %) / NAV (average)

 

 

 

 

 

 

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The operating profit of Sampo Group's life insurance companies in the review period was EUR 91 million (27), which is more than three times as much as in the comparison period in 2003.

 

Sampo's life insurance is divided into two types of business, different in terms of their earnings logic: the strongly growing unit-linked insurance and with-profit insurance. The statutory operating result is formed mainly from the investment income covering technical provisions for with-profit insurance and capital and reserves. The effect of unit-linked insurance operations is reflected in the "embedded value" calculation as a change in the insurance portfolio's value-in-force. Sampo does not defer acquisition costs or include the value-in-force in its financial accounts, but publishes the embedded value in a separate report.

 

The net investment income of Sampo Group's life insurance companies increased to EUR 159 million (51). The return on investment assets at current values for the review period was 3.5 per cent. The favourable stock market performance was reflected in strong growth in equity-linked returns.

 

On 31 March, 2004 the market value of investment assets (excluding unit-linked insurance investments) was EUR 5.6 billion (5.1), of which 58 per cent (60) was invested in fixed income instruments, 36 per cent (33) in equity-linked instruments and 6 per cent (7) in real estate. Due to the regulatory reporting requirements, the share of equity-linked investments comprises 6 percentage points of investments in fixed income funds (6). Finnish investments accounted for 44 per cent, those elsewhere in the euro zone for 26 per cent and other foreign investments for 30 per cent. 58 per cent of the equity investments were in Finland, 5 per cent elsewhere in the euro zone and 37 per cent outside the euro zone.

 

The solvency of the Group's life insurance companies developed very favourably to 20.0 per cent of technical provisions on own account (12.2). The corresponding solvency ratio for Sampo Life was 19.9 per cent (12.0). Sampo Life's solvency margin was EUR 954 million (563) or close to five times the minimum requirement.

 

According to the accounting practice based on the principle of fairness introduced in Sampo Life at the beginning of 2002, the company's owners' share of valuation differences has been standardised at 25 per cent. On 31 March, 2004, therefore, EUR 103 million (49) was allocated to shareholders from a total of EUR 409 million in valuation differences (195).

 

 

 

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The premiums written by the Group's life insurance companies in the review period totalled EUR 132 million (132), of which Sampo Life accounted for EUR 127 million (129). The premiums written for unit-linked policies during the review period increased to EUR 73 million (36), exceeding those written for with-profit policies for the first time. In unit-linked insurance, growth was strong in individual pension insurance and in life insurance linked to funds with a capital guarantee. The proportion of premiums accumulated from regular payment policies was 56 per cent of all premiums (45). The premiums written for with-profit insurance totalled EUR 56 million, a decrease of almost 40 per cent from the previous year.

 

Premiums written by Sampo Group's life insurance companies operating in the Baltic states and Poland continued to increase vigorously, totalling almost EUR 5 million (3). Growth was particularly strong in Estonia and was focused on unit-linked insurance. All four companies have operated only for a short time and their effect on the Group's operating profit is small.

 

Sampo Life's market position strengthened. In unit-linked insurance, the market share grew to 27.8 per cent (25.1) and in retail customer insurance (excluding with-profit savings policies), it grew to 25.3 per cent (23.5). The company's overall market share increased to 16.9 per cent (16.2).

 

Uncertainty about the taxation of individual pension insurance slowed down the new sales in the review period. Despite this, customers continue to save actively under previously-made individual pension contracts, which resulted in an increase in premiums written by 10 per cent. Sampo Life's sales of new individual pension insurance policies decreased by 60 per cent compared with the first quarter of 2003. The sales of other insurance policies developed as expected.

 

Holding company

 

The main function of the holding company, Sampo plc, is to own and control subsidiaries engaged in banking, insurance and investment services. In a departure from previous practice, the figures of Primasoft Oy, an IT services company jointly owned by Sampo and TietoEnator, have been combined with the holding company's figures as a subsidiary. The change is based on a decision issued by the Financial Supervision on 30 January 2004.

 

 

 

 

 

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The holding company's operating profit for the review period increased to EUR 78 million (-22). The operating profit includes a gain of EUR 95 million on the sale of its shareholding in Skandia and a write-down of EUR 9 million.

 

The holding company's balance sheet total was EUR 3.3 billion. Of this amount, holdings in banking and investment services companies accounted for EUR 1.6 billion and holdings in insurance companies for EUR 0.5 billion. Other investments totalled EUR 0.3 billion. At the end of the review period, Sampo plc had 81 employees (88) and Primasoft 587 (585).

 

On 1 March 2004, Sampo Group announced that it had sold its total shareholding in the Swedish company, Skandia. As Sampo plc owned 68 million of the total 75.5 million shares held by Sampo Group, it booked a sales gain of EUR 95 million.

 

On 11 February 2004, Sampo plc announced the acquisition of the shareholdings of Skandia and its subsidiary Skandia Liv and of the Norwegian company Storebrand in If P&C Insurance Holding Ltd. Following the transaction, Sampo will own 89.94 per cent of If, and If will become Sampo's subsidiary. In the first quarter of 2004 Sampo's ownership share was still 38.05 per cent and If's result has been accounted for by the equity method. The conditions for completion of the transaction were fulfilled on 29 April 2004.

 

If is the leading P&C insurer in the Nordic countries, with 3.8 million customers and an approximately 23 per cent share of the Nordic P&C insurance market. It operates in four customer segments - private, commercial, industrial and the Baltic region.

 

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If's premiums written decreased to SEK 14.5 billion (15.9). The company's combined ratio in the review period was 100.8 per cent (105.0). Operating profit for the review period was SEK 826 million (284) and Sampo's share of If's profit in the review period was EUR 27 million (18).

 

Outlook for 2004

 

Sampo Group's result is expected to be good and a clear improvement on 2003. The increase in the ownership of If P&C Insurance Holding Ltd and the Group's new, efficient financial structure will boost return on equity.

 

Low interest rates will strain net income from financial operations in banking. It is expected that lending will continue to increase, especially in housing loans, and that provisions for bad and doubtful debts will remain at a low level. The effect of cost efficiency measures carried out in 2003 will be fully reflected in results this year. Strong growth is expected to continue in the Group's banks operating in the Baltic countries.

 

It is expected that the assets of Sampo's fund management company will continue to grow strongly and that the share of equity and balanced funds will continue to strengthen. At the same time, the strong growth in equity-market-linked fees and commissions receivable, and especially asset management fees and commissions, is expected to continue.

 

Sampo Life's result is expected to be extremely good due to high income from investment activities. The company is believed to maintain its solid market position in its core areas, in unit-linked and individual insurance. Premiums written for life insurance companies operating in the Baltic and Polish markets are expected to continue their substantial growth. When the uncertainties related to taxation that have slowed down the sales of individual pension policies in the early months of the year will be removed, sales are expected to pick up from their present level.

 

The associated company If will become a subsidiary in the second quarter. It is expected that, during this year, the company will achieve the level of 97-99 per cent targeted for combined ratio and that the company's result will be good.

 

 

 

 

 

 

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The consolidated accounts after the closure of If-transaction

If will be consolidated as a subsidiary in Sampo Group's accounts as of April 1, 2004. At the beginning of 2002 Sampo sold its P&C insurance operations to If. In exchange for its P&C insurance companies' shares, Sampo received 38,05 per cent holding in If and made a gain of EUR 397 million incurring a deferred tax liability of EUR 115 million. The tax treatment was based on the intention to list If.

 

The new strategy announced in February 2004 brings P&C insurance back to the core businesses of Sampo Group. Thus, once the If transaction is closed, the above-mentionned EUR 115 million deferred tax liability will be entered as income in the Group consolidated profit and loss account and will increase earnings and net asset value per share for the second quarter 2004 by EUR 0.21.

 

The book value of If in the parent company Sampo plc's balance sheet is appr. EUR 1.6 billion and in the consolidated balance sheet appr. EUR 2.1 billion, of which goodwill constitutes appr. EUR 0.4 billion.

 

 

SAMPO PLC

Board of Directors

 

For more information, please contact:

Peter Johansson, CFO, tel. +358 10 516 0010

Jarmo Salonen, Head of Investor Relations, tel. +358 10 516 0030

Hannu Vuola, Head of Group Communications, tel. +358 10 516 0040

 

An English-language telephone conference for investors and analysts will be held on 6 May, 2004 at 4.00 p.m. Finnish time. You can participate in this conference by calling + 44 (0) 20 7162 0193 (Europe) or +1 334 420 4951 (USA).

Password: Sampo.

The conference can also be followed from a direct transmission on the Internet, at www.sampo.fi/ir

A recorded version will later be available at the same address.

 

The Interim Report is unaudited.

 

DISTRIBUTION:

Helsinki Exchanges

The Principal Media

www.sampo.fi/press­_room

 

 

 

 

 

 

 

 

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GROUP FINANCIAL REVIEW

 

 

*) The internal dividends and sales profits between the different lines of business have not been eliminated in the result analysis and specifications or key figures of banking and investment services and insurance business.                    

                   

However, above mentioned items have been eliminated in the Group operating profit. Furthermore, the profit or loss corresponding to the share held in the associated company If has been added or deducted in the operating profit. Therefore, the Group operating profit is not equal to the sum of business area operating profits.                

**) The dilution effect has been calculated as if all  the remaining subscription rights (3,089,870/the bond loan with warrants of 1998 and 5,200,000/the option programme of 2000 at the end of March, 2004) would have been realised. One subscription right entitles to subscribe 5 shares.                         

The key figures for Banking and Investment Services and the holding company have been calculated according to regulation 20/420/98 of the Financial Supervision. The key figures for the life insurance business have been calculated according to the decree of the Ministry of Finance and the specifying instruction 23/09/2002 of the Ministry of Social Affairs and Health.                 

 

 

 

 

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In calculating the key figures, the tax consists of that corresponding to the profit of the financial period. In calculating the net asset value per share, the return on equity and the solvency ratio the 29% deferred tax liability which is estimated to be realised during the  next three years has been deducted from the holding company's valuation differences. Furthermore, the net asset value per share has been reported for all periods less full deferred tax.               

                   

In calculating the net asset value per share and the return on equity, an interpretation of the principle of fairness in life insurance has been taken into account, according to which the owners' share of the valuation differences is a standard 25 %. As valuation differences are not included in the Balance Sheet, their deferred     tax and the change in deferred tax are not entered in the                  

Profit and Loss Account or in the Balance Sheet. Other items of the solvency margin, including derivative contracts, have been deducted from/added to the valuation differences when calculating the key figures. The capital and reserves of life insurance, including a share of optional reserves and accumulated depreciation difference, is considered to belong entirely to the owners.                 

                   

The P&C insurance results include a part of the results of the If Group, acting as an associated company. Shares in the If Group have been entered in the balance sheet in P&C insurance net assets in accordance with the associated company accounting.                 

 

GROUP ANALYSIS OF RESULTS

 

ANALYSIS OF RESULTS BY QUARTER

 

BANKING AND INVESTMENT SERVICES

SPECIFICATION OF ANALYSIS OF RESULTS

 

 

PREMIUMS WRITTEN, LIFE INSURANCE

 

INVESTMENT INCOME AND CHARGES,

LIFE INSURANCE BUSINESS

 

 

 

GROUP'S NET ASSETS BY BUSINESS AREAS