Profitable Sampo warns on Ukraine crisis

Scandinavian insurance group Sampo enjoyed higher profits in the first quarter of 2014 in a set of solid results. But it warned on the unpredictable long-term implications of the rising tensions between Russia and the west over Ukraine.

The company’s pre-tax profit was €396 million for the quarter compared with €370 million in the same period a year earlier. It said its total comprehensive income for the period, taking changes in the market value of assets into account, decreased to €374 million compared with €490 million in Q1 2013.

Profit before taxes in its P&C insurance unit decreased to €194 million compared with €204 million a year earlier. The combined ratio of its P&C insurance operations for January-March 2014 improved to 90.3 percent compared with 90.9 percent a year earlier, which was the best ever first quarter combined ratio in the unit’s history.

Gross written premiums decreased €1.7 billion compared with €1.7 billion because of currency movements. Adjusted for currency, it said premiums rose 1.7 percent.

In a statement covering its outlook for the rest of 2014, the insurer said it anticipates good operating results but the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. It said the low interest rate level also creates a challenging environment for reinvestment in fixed income assets.

It also added: “Uncertainties in the form of major unforeseen events or structural changes in the business environment may have an immediate impact on the group's profitability or long term impact how business shall be conducted.

“Identification of uncertainties is easier than estimation of their probabilities, timing and potential outcomes. One of the latest examples is tension in Crimea which started as an unforeseen event leading to increased volatility at financial markets, but can potentially have also longer term impacts on business environment. Sampo Group has no direct exposures to the region.”