Finland’s biggest insurance group Sampo saw its net profit plummet by more than half to 125 million euros ($172 million) in the third quarter due to restructuring.
Net profit for the same period last year reached 284 million euros. The results followed a profit warning issued in October, in which Sampo warned that restructuring changes in the majority-owned Swedish bank Nordea would affect its performance.
“In the third quarter, Sampo’s performance was well in line with our expectations. The (pre-tax) result of 906 million euros (for the first three quarters) was only five per cent below the same period the previous year,” group president and chief executive Kari Stadigh commented in a webcast press conference.
“With the impairments that affected it, it was still a very good result,” he said.
In 2010, Sampo’s stake in Nordea, now 21.3 per cent, shifted from being considered an equity investment to an associate company, immediately boosting Sampo’s reported profits for every subsequent quarter and the year.
The group’s share of equity in Nordea continued to have a major impact on Sampo’s performance, with its share of Nordea’s third quarter net profit amounting to 80 million euros, down from 140 million euros in the same period last year.
Additionally, a lower quarterly net profit and one-off restructuring costs affected the Nordea contribution to Sampo’s profitability.
The company’s insurance business was also hit by significant claims and equity market turbulence, which resulted in the devaluation of some of its equity holdings.
“Currently the debt crisis continues to be an external uncertainty factor which, in addition to creating volatility in the financial markets, can potentially generate abrupt structural changes in markets,” the company said in a statement.
“The crisis has been aggravated by inability and slowness in political decision making, increasing uncertainty and spreading the problems to the banking sector,” it added.
Helsinki, Nov 2, 2011 (AFP)