Outlook for 2013
Sampo Group’s business areas are expected to report good operating results for 2013. However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The low interest rate level also creates a challenging environment for reinvestment in fixed income instruments.
In light of the excellent combined ratio development in 2012, the P&C insurance operations are expected to reach their long-term combined ratio target of below 95 per cent in 2013 by a margin. Nordea’s contribution to the Group’s profit is expected to be significant.
The Major Risks and Uncertainties to the Group in the Near Term
In its day-to-day business activities Sampo Group is exposed to various risks. As a financial group the major sources of profitability and its variation for Sampo Group are market, credit and insurance risks. Their contributions to the Group’s Economic Capital - used as an internal basis for capital needs – currently represent normal levels of 40 per cent, 35 per cent and 13 per cent, respectively.
Abrupt changes in the business environment or major unforeseen events may always impact the profitability of Sampo Group. Adverse structural and macro economic developments, such as current crisis in Europe, and slow growth are major sources of uncertainty which may escalate in ways that can affect the Group’s activities unfavorably. This is, however, mitigated by the fact that Sampo Group companies do not have direct exposures in sovereigns under pressure and have small exposure to banking sector outside the Nordic region.