Annual Report 2007 Annual Report 2007 telephone +358 (0)10 516 0100, fax +358 (0)10 516 0016, fi [email protected] www.sampo.com, sampo plc Fabianinkatu 27, 00100 helsinki, finland Jarmo Salonen Head of Investor Relations and Group Communications Investor Relations Investor telephone +358 (0)10 516 0030, fax +358 (0)10 516 0016 Contact Information [email protected] Sampo plc Visiting address Fabianinkatu 27 Peter Johansson Group CFO contents Postal address 00100 Helsinki, Finland Telephone +358 (0)10 516 0100 Sampo Group 1 | CEO’s Review 2 Fax +358 (0)10 516 0016 telephone +358 (0)10 516 0010, fax +358 (0)10 516 0016 [email protected] Strategy 4 | History 5 | If P&C Insurance 6 Internet www.sampo.com E-mail fi [email protected] Sampo Life 8 | Sampo plc 10 | Year 2007 in Brief 12 Business id 0142213–3 Main Legal Structure 14 | Organisation 15 Registered domicile Helsinki Corporate Governance 16 | Board of Directors 20 The contact information for Group subsidiaries is available on Group Executive Committee 22 | Group Staff 24 Essi Nikitin Corporate Responsibility 26 | Board of Directors’ Report and the Internet at the address www.sampo.com/contacts IR Offi cer Financial Statements 2007 29 | IR Information 140 www.sampo.com/ir/feedback Contact Information 141 telephone +358 (0)10 516 0066, fax +358 (0)10 516 0016 [email protected] Kirsi Ylikoski Service Manager Shareholder services telephone +358 (0)10 516 0068, fax+358 (0)10 516 0623 [email protected] Maria Silander Press Offi cer Media contacts Design and production: Miltton Oy, Photos: Nina Dahl, Lehtikuva and Getty Images, Printing: Libris, Helsinki 2008. telephone +358 (0)10 516 0031, fax+358 (0)10 516 0016 [email protected] www.sampo.com fi [email protected] www.sampo.com/ir/feedback Sampo Group comprises • If, the leading P&C insurer in the Nordic countries, with operations in Finland, Sweden, Norway, Denmark, the Baltic countries and Russia • Sampo Life, a life insurance company operating in Finland and the Baltic countries, and • Sampo plc, the parent company, which owns and administers the insurance subsidiaries and manages investment assets of approximately eur 5 billion. Sampo Group is also one of the largest investors in the Nordic countries. In the beginning of February 2008, Sampo Group’s investment assets totalled over eur 20 billion. CEO’s Review have always emphasized the fact that Sampo has no group- tions. We had just sold a bank at price-to-book multiple of 3.6 I level strategy. Our goal is to create shareholder value by be- and price-to-earnings multiple of 16. By investing half of the ing able to seize opportunities emerging in the market. The proceeds into a highly correlated asset producing roughly the sale of Sampo Bank Group, which was closed on 1 February same return on equity as Sampo Bank, namely Nordea Bank, 2007, is a case in point. We received an off er from Danske Bank at a price-to-book multiple of less than 2, we easily obtain a in November 2006 and in a few weeks the completion of the yield pick-up of 50–60 per cent. The best part is that we have transaction was missing only the authority approvals. about 2 billion euros of cash left after having done this. Cash The transaction created another kind of Sampo with two is king, they say. It is certainly the case in turbulent capital strong operating units – P&C insurance and life insurance – and markets of today. a huge pile of cash. The use of the sales proceeds has been the number one topic of our investor discussions ever since. The Board made early on a decision to invest the proceeds in either Northern European fi nancial stocks or cash. We also promised our shareholders and the media to revisit this issue in connec- tion with our full-year 2007 result release in February 2008. After going through the most promising investment oppor- Key Figures tunities a decision to focus on Nordea was made. While main- taining a sizeable part of holding company Sampo plc’s assets eurm 2007 2006 change % in cash, we have amassed a 10 per cent holding in Nordea with Profi t before taxes 3,833 1,353 183 an average acquisition price of around 11 euros per share. The P&C insurance 534 730 –27 cash became very handy when the equity market turbulence Life insurance 342 295 16 pushed our own share price down and we activated our share Holding 95 –27 – repurchase programme. We have bought 6.4 million Sampo A Profi t for the fi nancial year 3,573 991 261 shares from the market by the end of January 2008. Earnings per share, EUR 6.18 1.73 257 All this meant that there will be no breaking news to de- EPS (incl. change in FVR), EUR 5.89 1.89 212 liver to investors or the media on 12 February 2008. We have Dividend per share, EUR * 1.20 1.20 0 already picked our horse and will actively participate in build- NAV per share, EUR 13.49 9.21 46 ing Nordea’s future. Average number of staff (FTE) 6,846 11,657 –41 I am frequently asked the reason for choosing Nordea and Return on equity, % 52.6 22.6 133 not some other Nordic banking or insurance stock. I usu- Group solvency ratio, % 774.6 202.7 282 ally start by reminding of the starting point for our delibera- *Year 2007 fi gure is the Board of Directors’ dividend proposal 2 sampo group annual report 2007 | CEO's Review How the Nordea investment will fi nally play out is impos- the rather harsh competition it faced in some of its markets. that I don’t know. But I know that we intend to create a lot of sible to tell at this stage. The bank off ers in our view a lot of Capital market conditions in the latter half of 2007 were dif- shareholder value in getting there. Certainly we expect 2008 potential for operational improvements and, in the longer run, fi cult. If also suff ered from the weak equity markets but man- to be another interesting year for Sampo Group with turbulent interesting strategic options. aged to achieve an RoE of 19.2 per cent. All in all, 2007 was capital markets and all the possibilities it may off er. What happens with the remaining roughly 2 billion euros another successful year in building the leading pan-Nordic All Chief Executive Offi cers end their reviews with an of cash in Sampo plc’s balance sheet, depends entirely on valu- P&C insurer. obligatory thank-you to diff erent interest groups. In my case ations. We can increase our Nordea holding. If our own share Sampo Life reported an exceptionally good result as profi t it is not only a mere formality but comes from the heart. I wish price development so requires, we are ready to intensify the before taxes rose to eur 342 million from the already high 2006 to thank my colleagues throughout the Group for excellent buyback eff orts. Our fi nancial muscle extends well beyond profi t of eur 295 million. The big question for Sampo Life in performance in 2007 and our shareholders for trust shown in the excess cash as we have basically no leverage in the holding 2007 was how Sampo Bank would succeed in selling life in- these uncertain times. Finally I want to extend my thanks to our company. I will not totally rule out the possibility of an addi- surance products after the change of ownership. When look- more than three million customers for choosing us in 2007. tional acquisition either. The valuations need to come down, ing back at the sales results, one has to admit that the Bank did however, for us to pursue this option. Looking at the stock surprisingly well, with the exception of December when ob- market in late January 2008, when I write this review, every- viously the integration process with Danske Bank took its toll. Best regards, thing seems possible. The area where our life insurance business keeps growing at an To a great extent the speculation around our intentions and amazing pace is the Baltics. In 2007 the premiums written by the volatile equity markets have overshadowed the outstanding Sampo Life’s fully-owned subsidiary SE Sampo Life Insurance results our business areas have continued to produce in 2007. Baltic increased by almost 70 per cent and are already more The insurance technical profi tability of Sampo Group’s P&C than 10 per cent of Sampo Life’s total premiums. insurance operation If continues to be excellent. If reached a 'Where will Sampo be in fi ve years’ time?' is another ques- Björn Wahlroos combined ratio of 90.6 per cent for the full-year 2007 despite tion with which I am often faced with. My honest answer is Group Chief Executive Offi cer and President CEO's Review | sampo group annual report 2007 3 Strategy Sampo Group aims to create value for its shareholders. Whilst the Group has no strictly defi ned Group level strategy, it fl exibly utilizes opportunities arising in the market to create shareholder value through transactions such as disposals and acquisitions. ampo Group’s business areas are P&C insurance and life Sampo Life operates in Finland and, via its subsidiary Sinsurance. The Group is also a signifi cant investor on the SE Sampo Life Insurance Baltic, in all the Baltic countries.