August 7, 2019 / 7:13 AM / 3 months ago

UPDATE 2-Finnish insurer Sampo eyes new Nordic investments

(Recasts on CEO comment, switches dateline to HELSINKI)

By Anne Kauranen

HELSINKI, Aug 7 (Reuters) - Finnish insurance group Sampo could increase investment across the Nordic financial sector with surplus capital after reducing its stake in regional bank Nordea, its chief executive said.

Sampo expects to free up 1.2 billion euros ($1.34 billion) when it cuts its stake in Nordea to 19.9% from 21.3% to help it comply with solvency regulations. The plan was first mooted in June and confirmed on Wednesday.

“Every day we are considering where to deploy our capital,” Chief Executive Kari Stadigh told Reuters on the sidelines of Sampo’s second-quarter earnings presentation.

“People know that we are over-capitalised and that we are quick decision makers.”

Stadigh said the company’s preference would be to make bolt-on investments in its existing businesses.

Sampo last year joined forces with private equity firm Nordic Capital to buy niche Swedish lender Nordax and acquired a 5% stake in Swedish credit management company Intrum .

The group also owns 46.7% of Danish insurer Topdanmark .

Earlier on Wednesday Sampo reported a smaller than forecast drop in quarterly earnings and said its largest business, insurance company If, would be more profitable this year than previously expected.

Sampo posted a 29% fall in pretax profit to 506 million euros ($566.9 million), citing one-off losses and weakness at Nordea. That compared with a forecast of 492 million euros in a Refinitiv poll.

Profit at If grew 9% year on year and the business now expects a so-called combined cost ratio - a key earnings metric - of 84-86% this year, beating its previous target of 85-88%.

Stadigh said the combined ratio was Sampo’s lowest ever score at this time of year, indicating improved profitability.

With large holdings of stocks and fixed-income instruments in its portfolio, Sampo’s share price has fallen by 13% in the past month amid a rout in global shares and falling yields. The share price hit a three-year low this week.

Sampo’s Helsinki-listed shares rose 2.4% by 1247 GMT. ($1 = 0.8938 euros) (Additional reporting by Terje Solsvik in Oslo Editing by David Goodman)

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