3rd Quarter Results

SAMPO PLC               STOCK EXCHANGE RELEASE  1(57)

9 NOVEMBER 2005, at 9:30

 

 

SAMPO PLC INTERIM REPORT JANUARY - SEPTEMBER 2005  

 

Profit before taxes for January - September 2005 exceeds 1 billion euro

 

Sampo Group's profit before taxes for January - September 2005 exceeded EUR 1 billion euro and amounted to EUR 1,007 million (668). Annualised RoE was 32.3 per cent (23.8), well in excess of the targeted 19 per cent. All business areas exceeded their RoE targets.

Earnings per share, as reported in the income statement, rose to EUR 1.29 (1.04). The quality of earnings has improved in 2005 as the result contains significantly less one-off items than in January - September 2004. Taking the change in the fair value reserve into account, earnings were EUR 1.64 per share (1.04). Net asset value per share rose to EUR 7.39 (5.60).

- Sampo Group's profit before taxes for January - September 2005 rose to EUR 1,007 million (668). Profit for the financial period was EUR 738 million (610) and earnings per share amounted to EUR 1.29 (1.04). Taking the change in the fair value reserve into account increases earnings by an additional EUR 0.35 per share.

- As a result of the growth in lending volumes and increasing fee income, profit before taxes for banking and investment services rose to EUR 229 million (225). The actual profitability improved more, as the comparison figure contains significant one-off items. Banking and investment services exceeded its RoE target of 20 per cent with an annualised RoE of 22.2 per cent.

- Favourable development in P&C insurance continued in the third quarter of 2005 and the combined ratio decreased to 91.6 per cent for January - September 2005 (93.4). Net investment income amounted to EUR 401 million supported by good equity returns. Profit before taxes was EUR 626 million. Annualised return on equity was 25.3 per cent, thus clearly exceeding the target of 17.5 per cent.

- The strong performance of equity investments was reflected in the profit of Sampo Group's life insurance operation. Profit before taxes rose to EUR 186 million (97). The annualised RoE for January - September 2005 was 52.2 per cent.

- The results of Sampo plc, the Group's parent company, and Primasoft, its IT services provider, are reported in the Other segment. The segment's loss before taxes of EUR 34 million (109) was largely due to the interest paid on the finance for the acquisition of the P&C subsidiary, If. The profit of EUR 109 million in January - September 2004 contains EUR 95 million in sales gains from Skandia shares and EUR 40 million in If's first quarter 2004 profit.

 

 

The figures in this interim report are unaudited.

Sampo Group will publish its first audited consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) for the period 1 January to 31 December 2005. This interim report for January - September 2005 has been prepared in accordance with the IFRS and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) issued and effective at the time of preparing these statements. The consolidated financial statements for 2005 will be prepared in accordance with the IFRS, endorsed by the EU, effective at 31 December 2005. Sampo's consolidated financial statements were prepared in accordance with the Finnish Accounting Standards (FAS) until 31 December 2004. The FAS differs in some areas from the IFRS. The comparative figures for 2004 have been restated to comply with the IFRS.

Sampo Group

Sampo Group's profit before taxes for January - September 2005 amounted to EUR 1,007 million (668). Earnings per share rose to EUR 1.29 (1.04). Taking into account the change in the fair value reserve earnings per share were EUR 1.64 (1.04).

The RoE target of 19 per cent was exceeded as the annualised RoE for Sampo Group rose to 32.3 per cent (23.8). Annualised RoEC for January - September 2005 was 30.3 per cent (24.8).

The Group's equity at 30 September was EUR 4,145 million (3,107). Equity was strengthened by the profit for the period, the increase in the fair value reserve and new capital through subscriptions with option rights in the first half of 2005. Equity was reduced by the dividends paid in April and the repurchase of Sampo A shares in June and July.  As of 1 January 2005 Sampo Group's capital adequacy has been measured by the Finnish rules on conglomerate capital adequacy based on the European Union's Directive 2002/87/EU. At the end of September 2005 Sampo Group's own funds exceeded the minimum solvency requirements by EUR 2,212 million and the solvency ratio was 199.3 per cent, up from 170.6 per cent at 31 December 2004.

Third quarter in brief

 

Sampo Group's profit before taxes for the third quarter of 2005 was EUR 374 million (254). Earnings per share were EUR 0.48 (0.21). The increase in net asset value per share was EUR 0.65 from the end of the second quarter of 2005 and net assets per share amounted to EUR 7.39.

 

The Group's total operating expenses decreased to EUR 332 million (340). For the management incentive schemes, the payout of which is dependent on Sampo's financial performance and share price development, an additional EUR 2.2 million was recognised for later payment. At 30 September 2005 the total provision for management incentive schemes, including social security costs, was EUR 34 million. Payments under the schemes cover the financial years 2005 - 2008.

 

Profit before taxes in banking and investment services for the third quarter was EUR 93 million (88). Profit includes private equity gains of EUR 14 million. Net interest income grew to EUR 86 million (79) as lending growth more than compensated the decrease in margins.

 

In P&C insurance the combined ratio in the third quarter, which is a seasonally strong quarter, was 89.2 per cent (87.8). The profit before taxes amounted to EUR 251 million (145). The expense ratio in the third quarter improved further and was 17.4 per cent (19.0).  Net income from investments amounted to EUR 151 million (50) as equities continued to perform well.

 

Good investment performance continued in the life operations in the third quarter and net investment income amounted to EUR 157 million (71). The profit before taxes amounted to EUR 41 million (37). The marked-to-market result was significantly better with a EUR 104 million increase in the fair value reserve.                                          

The interest expenses relating to the If transactions in 2004 are recognised in the Other segment. Thus the segment recorded an operating loss of EUR 10 million in the third quarter (-16).

 

Changes in Group structure

 

Sampo Plc's Board of Directors decided in October 2005 to transfer the investment services companies owned by Sampo Plc to the ownership of Sampo Bank plc. The investment services companies to be transferred to Sampo Bank are Mandatum & Co Ltd, Sampo Fund Management Ltd, 3C Asset Management Ltd, Mandatum Asset Management Ltd, Mandatum Private Equity Funds Ltd, Mandatum Stockbrokers Ltd and Arvo Asset Management Ltd. The intention is to finalise these arrangements by 31 December 2005. The arrangements, to be executed by an exchange of shares, will change the legal structure of Sampo Group to correspond with the current business operations. In addition to clarifying the structure, the arrangements will also diversify Sampo Bank Group's revenue structure.

 

Arvo Asset Management Ltd, established in May 2005 by Sampo plc, started operations on 21 September 2005. The new asset management company focuses on value stocks. Sampo initially owned 62 per cent and will in the future own at least 51 per cent of the company, with the remainder being held by the management.

 

In June 2005, Sampo Plc signed a binding agreement to sell its subsidiaries in Poland - the pension company Sampo PTE S.A. and the life insurance company Sampo T.U. Zycie S.A. - to Nordea Life Holding A/S. The transaction is conditional on the purchaser obtaining the necessary permits.     

 

The consideration is EUR 95 million, of which Sampo will recognise a sales gain of EUR 25 million at the closing of the transaction. Sampo has already written off most of the goodwill associated with the acquisition of the sold companies.

 

In April 2005, Sampo Life Insurance Company Limited was granted permission to pursue life insurance business in Sweden. The new company, If Livförsäkring AB, is fully owned by Sampo Life.

 

Administration

 

The Annual General Meeting held on 11 April 2005 re-elected the earlier eight members to the Board of Directors - Tom Berglund, Anne Brunila, Georg Ehrnrooth, Jyrki Juusela, Olli-Pekka Kallasvuo, Christoffer Taxell, Matti Vuoria and Björn Wahlroos. The Board re-elected Olli-Pekka Kallasvuo as Chairman and Jyrki Juusela as Vice Chairman.

 

The Annual General Meeting approved the financial accounts for 2004 and discharged the Board of Directors and the Chief Executive Officer from liability.

 

In addition, the Annual General Meeting decided to approve the following amendments, as proposed by the Board, to the Articles of Association:

- In accordance with Article 2 of the Articles of Association, Sampo Plc's domicile was changed from Turku to Helsinki, where Sampo plc's head office and administrative domicile are already located.

- Paragraph 3 of Article 8 of the Articles of Association and the reference contained therein to the age of Board members at the beginning of their term of office was deleted.                                

 

- The reference in Paragraph 2 of Article 17 of the Articles of Association to the publication of a Notice of General Meeting in a newspaper published in Turku was deleted due to the above-mentioned amendment to Article 2 of the Articles of Association.

 

The firm of authorised public accountants, Ernst & Young Oy, was re-elected Auditor.

 

On 5 April 2005, Sampo plc's Board of Directors appointed Morten Thorsrud as Head of If P&C Insurance business area Industrial. On 22 June 2005 the Board nominated Line Hestvik as Head of If P&C Insurance's business area Private and member of Sampo Group's Executive Committee. Line Hestvik will replace Gunnar Rogstad as a member of the Board of If P&C Insurance Ltd in Sweden and If P&C Insurance Company Ltd in Finland and also as a member of Sampo Group's Executive Committee.

 

The composition of Sampo Bank's Board of Directors and the titles of executives were changed on 15 October 2005. Björn Wahlroos, Group CEO and President, became Chairman of the Board of Sampo Bank, while the other Board members are Patrick Lapveteläinen, Ilkka Hallavo, Mika Ihamuotila, Maarit Näkyvä and a staff representative. At the same time, Mika Ihamuotila was appointed as President of Sampo Bank. He already had the overall responsibility for all of Sampo's banking and investment services operations. Ilkka Hallavo and Maarit Näkyvä were appointed as Executive Vice Presidents of Sampo Bank, with Hallavo being deputy to Ihamuotila. These appointments were linked to the streamlining of the legal structure of Sampo's banking and investment services segment.

 

Changes in share capital                       

 

The Annual General Meeting of 11 April 2005 authorised the Board of Directors to repurchase Sampo's own shares. The authorisation is valid until 11 April 2006. The maximum amount of A shares that can be repurchased 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 through 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 on the Helsinki Stock Exchange. Shares can only be repurchased to be cancelled.

 

On 22 June 2005, the Board of Directors decided pursuant to the above-mentioned authorisation, to repurchase a maximum of 7 million Sampo A shares through public trading on the Helsinki Stock Exchange. Repurchases started on 29 June 2005 and continued until the maximum amount was achieved on 13 July 2005. EUR 87.7 million was used to acquire the shares. At 30 September 2005 Sampo held 7 million of its own A shares corresponding to 1.2 per cent of the total amount of shares and votes. The repurchased shares corresponded to EUR 1.2 million in share capital at 30 September 2005.

 

The Annual General Meeting of 11 April 2005 also decided, in accordance with the proposal of the Board of Directors, to pay a dividend of EUR 0.20 per share for 2004. The dividend was paid on 21 April 2005.

 

During the third quarter no subscriptions of shares with the warrants of Sampo plc's 2000 option programme were submitted to the Board. The subscription period for the 1998 option programme ended on 31 May 2005 and trading in these options on the Helsinki Stock Exchange was terminated.                    

At the end of the review period Sampo plc's share capital amounted to EUR 95,860,065.11, and the number of A shares totalled 568,758,065 shares. The total number of shares of the company, including 1,200,000 B shares, is 569,958,065 shares.

                                   

At 5 July 2005 Sampo received a disclosure under chapter 2, section 9 of the Securities Markets Act, according to which Varma Mutual Pension Insurance Company's holding of Sampo A shares and connected voting rights had decreased below 15 per cent. After the end of the review period at 1 November 2005, Sampo received a disclosure according to which the total number of Sampo A shares owned by Barclays Plc and the funds managed by it had on 25 October 2005 risen above 5 per cent of Sampo Plc's entire stock.

 

Staff

 

The number of staff decreased in a year by 133 employees to 11,698 employees at 30 September 2005. Of the staff, 36 per cent worked in banking and investment services, 56 per cent in P&C insurance, 3 per cent in life insurance, 1 per cent in the holding company and 4 per cent in Primasoft. The staff decreased in P&C insurance and Primasoft, but increased in banking due to growth in the Baltic subsidiaries. The average number of employees during the first nine months of 2005 was 11,735, compared with 11,886 during the comparison period in 2004.

 

Ratings

 

Standard & Poor's Ratings Services raised its long-term counterparty credit and insurer financial strength ratings on Sweden-based If P&C Insurance Ltd (publ) and Finland-based If P&C Insurance Company Ltd to 'A' from 'A-', on 11 October 2005.

                                   

At the same time, Standard & Poor's raised its counterparty credit

ratings on Sampo Bank plc to 'A/A-1' from 'A-/A-2'. The outlook is stable in both cases. According to Standard & Poor's, the upgrades reflect continued outperformance of earnings expectations and the Group's significantly reduced financial leverage. On 8 November 2005 the ratings were as follows:

 

 

 

Group solvency 

 

New rules on calculating solvency for financial conglomerates entered into force at 1 January 2005. Group solvency consists of the difference between the Group's own funds and the minimum requirement set for them. The rules determine the own funds and minimum own funds requirements for subsidiaries and associated companies operating in the banking or insurance sector to be calculated according to sectoral rules. In the group solvency calculation, funds that cannot be used to cover losses in other group companies are not taken into consideration. Sampo Group applies the consolidation method to calculate its solvency position.                                

 

The Group's solvency ratio (own funds in relation to minimum requirements for own funds) at 30 September 2005 was 199.3 per cent compared to 170.6 per cent at 31 December 2004.

 

 

 

Banking and investment services

 

The Group's main banking and investment service companies are Sampo Bank Plc, which operates mainly in Finland and through subsidiaries in all the Baltic countries, Sampo Fund Management Ltd, Mandatum Asset Management Ltd, Mandatum Stockbrokers Ltd, Mandatum & Co Ltd, Mandatum Private Equity Funds Ltd and 3C Asset Management Ltd. In addition, Arvo Asset Management Ltd started operations in September 2005. Sampo PTE S.A., a pension fund company in Poland to be sold, has been treated as a discontinued operation. The branch network operates as a distribution channel for a wide range of advisory services and long-term savings products.

 

 

                                   

Profit before taxes in the banking and investment services was EUR 229 million (225), but the actual operating profitability improved more. The period's profit before taxes includes one-off sales gains from private equity worth EUR 32 million. The comparison period includes non-recurring income of EUR 25 million in private equity gains and EUR 23 million from a VAT refund. In addition, the comparison figure contains Sampo Credit plc which was merged into Sampo Plc in September 2004. The merger reduced net interest income and its impact in the three quarters was EUR 9 million. The annualised RoE was 22.2 per cent for the first nine months of the year.

 

Total operating income was EUR 532 million (526) and expenses were EUR 303 million (298). The period was characterised by continued strong growth in retail lending and mutual funds. In retail marketing, the focus on housing loans was supplemented with a stronger emphasis on consumer credit. Sampo Bank opened a new branch office for corporate clients in Stockholm in September and joined the Swedish bankgiro payment system.

 

Net interest income rose to EUR 251 million (239), because strong growth in lending volumes more than compensated for tightening of spreads. The growth of loans and advances was fast throughout the period and the total of EUR 17,750 million was 22 per cent higher than one year earlier. Housing loans grew extremely strongly by 30 per cent in total and 25 per cent in Finland, exceeding market growth. Sampo Bank's market share of Finnish housing loans rose to 15.2 per cent (14.2).

 

Sampo Bank Group diversified its funding by activating Sampo Housing Loan Bank plc, which issued the first Nordic benchmark-size EUR 1 billion covered bond in September 2005. The issue is covered by EUR 1.1 billion in housing loans transferred from Sampo Bank to the Sampo Housing Loan Bank.

 

Corporate lending grew by 18 per cent, with the largest increases being in finance lease receivables and other commercial loans, which was largely influenced by mergers and acquisitions related funding. Spreads in corporate lending remained flat. As in 2004, the growth in lending and deposits was the fastest in the Baltic countries. Credit quality remained good.

 

Deposit growth slowed down to less than one per cent, because corporate current accounts decreased while growth in retail demand deposits continued. Deposits rose to EUR 9,856 million at the end of September. Net impairment on loans and receivables was positive and added EUR 7 million (14) to the profit.  

 

Net fee and commission income grew to EUR 166 million (147) mainly because the growth in mutual funds and asset management continued. Lending and investment banking fees also grew strongly. Mutual fund assets grew by 33 per cent to EUR 8,773 million (6,588), with the strongest increases in balanced and bond funds. Assets include EUR 1.3 billion in Group investments (1.3). Sampo's market share of the assets of mutual funds registered in Finland was 20.1 per cent at 30 September 2005 (22.7).

 

Sampo Bank Group's capital adequacy declined to 10.0 per cent (10.6) because the strong growth in lending increased risk-weighted assets. The tier 1 ratio was 7.0 per cent (7.0) and tier 1 capital rose to EUR 1,141 million (943) due to retained profits.                  

 

P&C insurance

If is the leading property and casualty insurance company in the Nordic region, with insurance operations that also encompass the Baltic countries. If P&C Insurance Holding Ltd is the parent company for property and casualty insurance within the Sampo Group. Business operations are conducted via subsidiaries and branch offices in the Nordic and Baltic countries.

 

Sampo Plc's holding in If P&C was 38.05 per cent in the first quarter of 2004 and the company was treated as an associated company. As of 1 April 2004 the company has been fully consolidated in Sampo Group's accounts. Accordingly, the comparison figures for 2004 only reflect the second and third quarter.

Profit before taxes for the P&C Insurance operations rose to EUR 626 million (237). The excellent result was due to both a strong insurance technical result and good investment performance. The Board of Sampo plc has set an RoE target of 17.5 per cent for the business area. The target was exceeded as the annualised RoE rose to 25.3 per cent.

 

The combined ratio improved by 1.8 percentage points to 91.6 per cent (93.4). Claims experience was favourable in all other business areas except Industrial, where several large claims burdened the quarter. The cost ratio improved for the whole operation and in each and every business area. The total cost ratio was down by 1.2 percentage points with the biggest improvement in Industrial.

 

The decrease in total costs to EUR 684 million was mainly driven by staff reductions and lower commission costs. The number of full-time equivalent staff was reduced by 142 during 2005.                              

 

Significant progress was made in the Finnish operation, which, in particular, was subject to a comprehensive cost reduction programme.

Total premiums in January - September 2005 grew by 1 per cent. Premiums grew in all other business areas except Industrial, in which premiums decreased by 6 per cent. The development levelled off towards the end of the period.   

                                   

Investment income amounted to EUR 401 million (83). The returns were largely due to the good performance of equity investments. The return on investments rose to 4.9 percent for the first nine months of 2005 (3.0). At 30 September 2005 the duration for interest-bearing assets was 2 years, well below the target length of 3.5 years. 85 per cent of all investment assets was invested in fixed income instruments (84), 11 per cent in equity-linked instruments (12) and 4 per cent in other assets (5). 

The solvency ratio, i.e. solvency capital in relation to net premiums written, rose to 84.3 per cent (63.6) and solvency capital increased to EUR 3,070 million (2,343) due to an increase in shareholders' equity and in the deferred tax liability. In addition, the issuance of a subordinated loan of EUR 150 million in June 2005 increased the solvency ratio by 4 percentage points. Shareholders' equity rose to EUR 2,475 million, compared with EUR 2,064 million a year earlier.

Life insurance

Sampo Group's life insurance subsidiary, Sampo Life, operates in Finland and through its subsidiaries in all the Baltic countries. The company also has a subsidiary in Sweden to complement the product offering of If P&C. Sampo T.U. Zycie S.A., the Polish life insurance company due to be sold, has been treated as a discontinued operation.

 

 

Profit before taxes for Sampo Group's life insurance operations was EUR 186 million (97). The excellent result was largely due to the good performance of the equity markets. Net investment income rose to EUR 442 million (244), which includes EUR 128 million in investment income on unit-linked contracts (24). The yield on investments at market values in the first three quarters of 2005 was 10.0 per cent (5.0). The RoE target of 17.5 per cent was easily surpassed, as the annualised RoE of life insurance operations amounted 52.2 per cent. The cost efficiency of the life insurance operation developed favourably. The expense ratio decreased to 92.9 per cent (104.0).                  

 

Of the total EUR 5.7 billion (5.4) of investment assets at market values (excl. assets covering unit-linked liabilities) at 30 September 2005, 60 per cent was invested in fixed income instruments (64), 37 per cent in equity-linked instruments (30) and 3 per cent in real estate (6).

 

The solvency position of Sampo Group's life operation continues to be exceptionally strong. The solvency capital amounted to EUR 1,234 million (810) and the solvency ratio rose to 24.9 per cent of technical reserves on own account (16.8). Sampo Life's technical reserves on own account amounted to EUR 5,811 million (5,401), of which unit-linked insurance reserves were EUR 1,151 million (779). The share of unit-linked reserves grew to 20 per cent (14).

 

The Board of Sampo Life decided to lower the interest rate used to discount the technical reserves relating to endowment and capital redemption policies by 1 percentage point to 2.5 per cent as of 31 December 2005. The total financial effect of the change is EUR 25 million, of which EUR 16 million is included in the third quarter figures.

 

The premium income of Sampo Group's life insurance companies rose to EUR 444 million (338). The increase derived from insurance contracts transferring the liabilities of several pension funds to Sampo Life. These single premium transactions decreased the share of regular premiums to 48 per cent (61) and the share of unit-linked premiums to 42 per cent (54) of total premiums. The premiums of the Baltic life insurance companies increased by 40 per cent to EUR 12 million, corresponding to 3 per cent of total premiums.

 

Unit-linked premiums amounted to EUR 188 million (182). Sampo Life's market share in unit-linked insurance decreased to 20.9 per cent (25.7). The overall market share in Finland rose to 20.1 per cent (17.4).

 

Other

 

The operations of Sampo Plc (the holding company) and Primasoft are reported in this segment. Sampo Plc's main function is to own and control the subsidiaries engaged in insurance, banking and investment services. Primasoft provides IT services for various companies in Sampo Group.

 

 

 

The segment's loss before taxes amounted to EUR 34 million (109). The comparison figure contains EUR 95 million in sales gains from the sale of Skandia shares held by Sampo Plc and Sampo plc's share of If's profits (EUR 40 million) in the first quarter of 2004, when If was treated as an associated company.

 

Sampo Plc's balance sheet total was EUR 3.6 billion. Of this amount, holdings in banking and investment services companies accounted for EUR 0.9 billion and holdings in insurance companies for EUR 2.4 billion.

                                   

In addition to short term operational financing, liabilities include two debt instruments - a subordinated note and a senior note with face values of EUR 600 million and EUR 300 million respectively.                      

 

At current market rates Sampo Plc is liable for interest payments on the above instruments of approximately EUR 10 million per quarter. 

 

Primasoft has a negligible impact on the profit or loss of the Other segment.

Outlook for the fourth quarter of 2005

Sampo Group's result for the full year 2005 is expected to be good. The RoE target of at least 19 per cent is likely to be exceeded.

The positive development of Sampo Group's banking and investment services is anticipated to continue. Net interest income is supported by the increase in mortgage lending volumes in Finland and substantial growth in the Baltic banks. Banking and investment services is expected to reach its RoE target of 20 per cent.

The full-year 2005 combined ratio of the P&C insurance operation is estimated to be better than 93 per cent. Consequently, the P&C insurance operation is well on track to exceed its RoE target of 17.5 per cent.

Sampo Group's life operation is expected to post a solid profit in the last quarter of 2005, even though the marked-to-market result is highly dependent on the capital markets. With the strong profitability of January - September 2005 the RoE target of 17.5 per cent will be achieved.

Sampo Plc, the parent company, is included in the Other segment, which reports a loss of approximately EUR 12 million per quarter, mainly because of interest payments on the financing associated with the If acquisition in 2004.

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 at 4.00 p.m. Please call +44 (0) 20 7162 0125 (UK/European) or +1 334 323 6203 (North American). Password: SAMPO.

 

The conference can also be followed from a direct transmission on the Internet at www.sampo.com/ir. A recorded version will later be available at the same address.

DISTRIBUTION:

 

Helsinki Stock Exchange

Principal media

www.sampo.com

Financial Supervisory Authority

 

                                   

 

¹) Group solvency is calculated according to the consolidation method defined in Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates, which entered into force on 1 January 2005. Solvency ratio is defined as the ratio of own funds to the sum of minimum requirements calculated under sectoral rules.                    

                       

²) The net investment income of other business includes the income from If Group, accounted for by the equity method, for the first quarter of 2004                      

                       

³) The dilution effect has been calculated as if all the remaining subscription rights (5,111,000/the option programme of 2000 at the end of September, 2005) would have been realised. One subscription right entitles to subscribe 5 shares. 

                       

In calculating the key figures the tax corresponding to the result for the accounting period has been taken into account. The valuation differences of investment property and held-to-maturity debt securities have been taken into account in return on assets, return on equity, equity/assets ratio and net asset value per share. Additionally, the change in fair value reserve has been taken into account in return on assets and return on equity. A deferred tax liabilities has been deducted from valuation differences.              

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 insurance business have been calculated according to the decree of the Ministry of Finance and the specifying instruction 5/002/2005 of the Insurance Supervisory Authority.