HELSINKI (Reuters) - Finland’s Sampo SAMP.HE reported a record first-quarter performance for its property and casualty insurance business, based on a key gauge of profitability, boosting its shares despite a drop in pretax profit and a cut in the dividend.
The pan-Nordic financial group said on Wednesday the so-called combined ratio at its If property and casualty unit was 83.7% in the first three months of the year, and that its insurance businesses had seen little impact from the coronavirus pandemic so far.
Sampo also revised its 2020 combined ratio guidance for If to 84%-87% from 85%-89%, with a lower ratio indicating improved profitability.
Shares in the company were up 3.8% at 1330 GMT.
While the impact of the pandemic had been marginal on its insurance operations so far, Sampo CEO Torbjorn Magnusson said they expected a decrease in business volume in the rest of the year.
The crisis has had a much bigger impact on Sampo’s investment portfolio, the market value of which has dropped more than a billion euros, the group said, as it reported a 66% drop in first-quarter pretax profit.
The company also cut its dividend payout by about 30% to 1.50 euros per share from a previously proposed 2.20 euros.
Sampo owns 19.9% of Nordea Bank (NDAFI.HE) which postponed its dividend plan at the end of March, while Sampo’s other insurance business, Topdanmark, halved its dividend in April due to the impact of the virus outbreak.
Magnusson defended Sampo’s decision to pay a dividend despite the Finnish Financial Authority’s (FSA) guidance for banks and insurance companies to refrain from doing so under the crisis.
“We have had a dialogue with the Finnish FSA,” Magnusson told an analyst call.
Sampo said uncertainty in financial markets and changes in the group’s internal dividends caused it to cut its payout, but Magnusson noted Sampo and its subsidiaries had reported solid solvency ratios.
“It is important for us to pay dividends in accordance with our dividend policy as we have the capital and the liquidity to do so,” Magnusson said.
He said the crisis proved the robustness of Sampo’s business model, with more than 60% of it property and casualty insurance.
Magnusson said lower claims due to a mild winter in the Nordic region and a reduction in driving had helped to balance out the extra cost of claims associated with COVID-19.
Reporting by Anne Kauranen; Editing by Edmund Blair and Mark Potter