FULLTEXT DEL 1 AV 3
Årsredovisning 2023
===== SIDA 1 ===== Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements ===== SIDA 2 ===== REPORTS FOR THE YEAR 2023 WWW.SAMPO.COM/YEAR2023 Contents Board of Directors’ Report 2023 ........................ 3 Review of the 2023 financial year ....................... 4 Outlook ......................................................................... 7 Outlook for 2024 .................................................. 7 The major risks and uncertainties for the Group in the near-term ...................................... 7 Dividend proposal ..................................................... 8 Operating environment ........................................... 9 Business areas ............................................................ 10 If ................................................................................. 10 Topdanmark ........................................................... 13 Hastings ................................................................... 14 Holding .................................................................... 15 Financial position ...................................................... 16 Group solvency ..................................................... 16 Financial leverage position ............................... 16 Ratings ..................................................................... 17 Other developments ................................................ 18 Demerger of Sampo plc .................................... 18 Group Partial Internal Model application ..... 19 Shares, share capital and shareholders ............. 20 Shares and share capital ................................... 20 Authorisations granted to the Board ............ 22 Shareholders .......................................................... 22 Holdings of the Board and Executive Management .......................................................... 23 Share buyback programmes ............................ 24 Governance and related issues ............................ 25 Governance ............................................................ 25 Annual General Meeting .................................... 25 Risk management ................................................ 27 Remuneration ........................................................ 27 Changes in Group structure ............................. 28 Changes in the Group management and the Board of Directors ....................................... 30 Personnel ................................................................ 32 Sustainability ............................................................... 33 Highlights from year 2023 ................................ 33 EU Taxonomy ........................................................ 34 Events after the end of the reporting period .. 41 Key figures ................................................................... 42 Calculation of key figures ....................................... 46 Group’s IFRS Financial Statements ................... 48 Statement of profit and other comprehensive income ........................................... 49 Consolidated balance sheet .................................. 50 Statement of changes in equity ........................... 51 Statement of cash flows ......................................... 52 Group’s notes to the financial statements ...... 53 Accounting principles .............................................. 54 Segment information .............................................. 72 Result by segment for twelve months ended 31 December 2023 .................................................... 73 Result by segment for twelve months ended 31 December 2022 .................................................... 74 Balance sheet by segment at 31 December 2023 ............................................................................... 75 Balance sheet by segment at 31 December 2022 ............................................................................... 76 Geographical information ....................................... 77 Other notes .................................................................. 78 Sampo plc’s Financial Statements ..................... 190 Sampo plc’s income statement ............................ 191 Sampo plc’s balance sheet .................................... 192 Sampo plc’s statement of cash flows ................. 193 Sampo plc’s notes to the financial statements ................................................................... 194 Summary of significant accounting policies .... 195 Notes 1–5 ...................................................................... 196 Notes 6–8 ..................................................................... 197 Note 9 ............................................................................ 198 Notes 10-17 ................................................................... 199 Notes 18–20 ................................................................. 200 Note 21 ........................................................................... 201 Approval of the Financial Statements and the Board of Directors’ Report ........................... 202 Auditor’s Report ....................................................... 204 This Board of Directors’ report and Financial Statements in pdf format is not an xHTML document compliant with the ESEF (European Single Electronic Format) regulation. Sampo’s ESEF Financial Statements is available at www.sampo.com/year2023. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2023 2 ===== SIDA 3 ===== Board of Directors’ Report 2023 Review of the 2023 financial year ..................... 4 Outlook ......................................................................... 7 Outlook for 2024 ....................................................... 7 The major risks and uncertainties for the Group in the near-term ........................................... 7 Dividend proposal .................................................... 8 Operating environment .......................................... 9 Business areas ............................................................ 10 If ....................................................................................... 10 Topdanmark ................................................................ 13 Hastings ........................................................................ 14 Holding .......................................................................... 15 Financial position ..................................................... 16 Group solvency .......................................................... 16 Financial leverage position .................................... 16 Ratings .......................................................................... 17 Other developments ................................................ 18 Demerger of Sampo plc .......................................... 18 Group Partial Internal Model application .......... 24 Shares, share capital and shareholders ........... 20 Shares and share capital ......................................... 20 Authorisations granted to the Board ................. 22 Shareholders ............................................................... 22Holdings of the Board and Executive Management ............................................................... 23 Share buyback programmes ................................. 24 Governance and related issues ........................... 25 Governance ................................................................. 25 Annual General Meeting .......................................... 25 Risk management ...................................................... 27 Remuneration ............................................................. 27 Changes in Group structure .................................. 28Changes in the Group management and the Board of Directors .................................................... 30 Personnel ...................................................................... 32 Sustainability .............................................................. 33 Highlights from year 2023 ..................................... 33 EU Taxonomy ............................................................. 34 Events after the end of the reporting period 41 Key figures .................................................................. 42 Calculation of key figures ..................................... 46 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 3 ===== SIDA 4 ===== Board of Directors’ Report 2023 Review of the 2023 financial year Sampo Group delivered strong premium growth and resilient underwriting margins in 2023, despite the year being characterised by elevated severe weather and large claims experience, as well as unfavourable currency movements. Gross written premiums (GWP) and brokerage income increased by 11 per cent on a currency adjusted basis and 6 per cent on a reported basis to EUR 8,870 million (8,375). The growth was broad-based and supported by all business lines, both in the Nordics and in the UK. In the Nordics, the Group’s largest business area, Private, saw currency adjusted growth of 5.0 per cent, up from 3.5 per cent in the prior year. This was driven by strong development in non-motor lines, particularly in personal insurance, and continued high and stable retention. Meanwhile, corporate lines benefited from successful 1 January renewals, rate action and continued strong trends in SME. In the UK, the pricing environment continued to improve throughout the year, enabling substantial price increases and selective volume growth. UK premiums increased by 32 per cent on a local currency basis and policy count grew by 8 per cent year-on-year to 3.5 million, driven by 4 per cent growth in motor insurance and 31 per cent growth in home insurance. Despite elevated severe weather and large claims experience over the year, Sampo achieved its combined ratio target of below 86 per cent. The group underwriting result amounted to EUR 1,164 million (1,031) and the combined ratio was 84.6 per cent (85.8). The 2022 combined ratio under IFRS 4 included significant items related to prior year development in the fourth quarter, some of which have been recognised in the net financial results under IFRS 17. Hence, the figures are not fully comparable between years. Large claims and severe weather had a negative effect of 4.7 percentage points on If’s risk ratio, clearly up from 1.3 percentage points in 2022. The underlying trend remained positive throughout the year and as a result, If’s undiscounted adjusted risk ratio improved 0.5 percentage points year-on-year. This was achieved by disciplined underwriting and pricing exceeding Nordic claims inflation, which fell to the lower end of the 4-5 per cent range observed over 2023 towards the end of the year. Hastings reported an operating ratio of 89.8 per cent (87.2) on the back of improving pricing trends and high but stabilised claims inflation of around 12 per cent for most of the year 2023. The net financial result amounted to EUR 560 million. This was driven by strong net investment income of EUR 1,006 million. Insurance finance income or expense (IFIE) amounted to EUR -446 million. Changes in discount rates had an effect of EUR -160 million and the unwind of discounting had an effect of EUR -248 million on IFIE. Following the announcement of the strategic review of Mandatum on 7 December 2022, the Board of Directors of Sampo plc resolved on 29 March 2023 to propose to the Annual General Meeting a partial demerger of Sampo plc to separate Mandatum from Sampo Group. The Annual General Meeting held on 17 May 2023 resolved to approve the partial demerger. The partial demerger was completed on 1 October 2023 and the first trading day for Mandatum on Nasdaq Helsinki was 2 October 2023. Mandatum’s profit before taxes consolidated in Sampo Group’s P&L amounted to EUR 173 million and net profit to EUR 140 million in January-September 2023. In addition, the partial demerger had a positive accounting effect of EUR 111 million in the Group’s profit before taxes and net profit. Financial effects of the demerger are disclosed in more detail in the section Demerger of Sampo plc. The Group’s profit before taxes from P&C operations increased EUR 1,481 million after adjusting for IFRS 9 (803), but declined on a reported basis (1,924). Net profit for the equity holders amounted to EUR 1,323 million (1,031), of which EUR 1,072 million (1,528) was from continuing operations. Earnings per share amounted to EUR 2.62 (3.97), of which EUR 2.12 (2.88) was from continuing operations. On 8 February 2024, Sampo plc’s Board of Directors proposed a dividend of EUR 1.80 per share for 2023 to the Annual General Meeting to be held on 25 April 2024, representing a payout ratio of 86 per cent based on the operational result of EUR 2.07 per share. The proposed total dividend consists of a regular dividend of EUR 1.60 per share and an extra dividend of EUR 0.20 per share. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 4 ===== SIDA 5 ===== The proposed regular dividend represents growth of 7 per cent from the prior year regular dividend of EUR 1.50 per share adjusted for the partial demerger. Sampo Group’s pro forma Solvency II ratio, adjusted for demerger-related transactions, amounted to 182 per cent at the end of 2023, down from 210 per cent at the year-end 2022. The decrease was primarily driven by the demerger. The financial leverage was 25.3 per cent at the end of 2023, down from 25.6 per cent at the end of 2022. Adjusting for the proposed dividend of EUR 1.80 per share, financial leverage was 27.7 per cent. Sampo Group’s targets for 2021-2023 were a solvency ratio of 170-190 per cent and a financial leverage ratio of below 30 per cent. In 2023, Sampo returned over EUR 0.5 billion of excess capital to shareholders by repurchasing and cancelling 12.6 million own shares, representing 2 per cent of the total share count. Since the start of the buyback programmes in 2021, Sampo’s share count has decreased by 10 per cent. On 20 June 2023, Sampo announced a submission of an application for a Group Partial Internal Model for purposes of solvency capital requirement calculation to the Finnish Financial Supervisory Authority. Following the completion of the partial demerger, the Swedish FSA (Finansinspektionen) became Sampo’s group prudential supervisor as of 1 October 2023. As a result, Sampo refiled its application for a Group Partial Internal Model to the Swedish FSA on 2 October 2023. The Partial Internal Model recognises the risk profile of Sampo’s P&C operations better than the Standard Formula and it is estimated that it would have reduced the group-level solvency capital requirement (SCR) by up to EUR 0.3 billion in 2023. The application process is expected to be completed during the first half of 2024. Sampo will issue a report on non-financial information in accordance with Chapter 3a, Section 5 of the Accounting Act. The report, Sampo Group Sustainability Report 2023, will be separate from the Board of Directors’ Report and published around the turn of March and April 2024 at www.sampo.com/year2023. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 5 ===== SIDA 6 ===== Key figures Sampo Group, 2023 EURm 1–12/2023 1–12/2022 Change, % Profit before taxes (P&C Operations) 1,481 1,924 -23 If 1,358 1,550 -12 Topdanmark 162 158 3 Hastings 129 107 21 Holding -160 146 — Net profit for the equity holders 1,323 2,107 -37 Underwriting result 1,164 1,031 13 Change Earnings per share (EUR) 2.62 3.97 -1.36 Operational result per share (EUR) 2.07 — — Return on equity, % 15.6 4.2 11.4 Profit before taxes (adjusted for IFRS 9), EURm* 1,481 803 84 % The comparison figures for 2022 have been restated for IFRS 17 but not for IFRS 9, meaning some figures, such as investment income, are not presented on a comparable basis between the reporting periods. Net profit for the equity holders, EPS and return on equity figures include results from life operations. Mandatum was classified as discontinued operations as of 31 March 2023. * To enhance comparability, a Group profit before taxes (P&C operations) figure adjusted for IFRS 9, reflecting market value movements, has been provided for the prior year. Financial targets Sampo Group, 2021-2023 Target 2023 Group Mid-single digit UW profit growth annually on average 13% Group combined ratio: below 86% 84.6% Solvency ratio: 170-190% 182% (pro forma of demerger- related transactions) Financial leverage: below 30% 25.3% If Combined ratio: below 85% 83.1% Hastings Operating ratio: below 88% 89.8% Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 6 ===== SIDA 7 ===== Outlook Outlook for 2024 Sampo Group is expected to deliver a combined ratio in 2024 that meets the 2024-2026 annual target of below 85 per cent, including an assumed discount rate benefit of 2 percentage points. The major risks and uncertainties for the Group in the near-term In its current day-to-day business activities Sampo Group is exposed to various risks and uncertainties, mainly through its major business units. Major risks affecting the Group companies’ profitability and its variation are market, credit, insurance and operational risks. At the Group level, sources of risks are the same, although they are not directly additive due to the effects of diversification. Uncertainties in the form of major unforeseen events may have an immediate impact on the Group’s profitability. The identification of unforeseen events is easier than the estimation of their probabilities, timing, and potential outcomes. Macroeconomic and financial market developments affect Sampo Group primarily through the market risk exposures it carries via its insurance company investment portfolios and insurance liabilities and through strategic investments. Over time, adverse macroeconomic effects could also have an impact on Sampo’s operational business, for example by reducing economic growth or increasing claims costs. Inflation declined significantly in Europe during 2023 due to lower energy prices. The worst of the recent inflation surge seems to be over unless geopolitical tensions cause new shocks to energy prices. However, the continued strength of Europe’s labour market and rapid wage growth could keep price pressures elevated. This creates uncertainty on whether central banks will be keeping interest rates elevated longer than expected. This may lead to both a significant slowdown in economic growth and a deterioration in the debt service capacity of businesses, households and governments, raising the risk of abrupt asset repricing in financial markets. Furthermore, the war in Ukraine continues to represent a major economic risk. These developments are currently causing significant uncertainties in economic and capital market development. At the same time rapidly evolving hybrid threats create new challenges for states and businesses. There are also a number of widely identified macroeconomic, political and other sources of uncertainty which can, in various ways, affect the financial services industry in a negative manner. Sampo Group’s insurance exposures in Russia or Ukraine are limited to certain Nordic industrial line clients, with coverage subject to war exclusions. On the asset side, Sampo has no direct investments in Russia or Ukraine. Given the limited direct exposure, the biggest risk from the war in Ukraine to Sampo relates to the second order capital markets’ and macroeconomic effects outlined above. There were no material COVID-19 effects in the Group’s insurance operations in 2023. Given the limited impact of COVID-19 and the increasing difficulty in reliably estimating associated effects, Sampo has not disclosed quantitative COVID-19 effects in its financial reporting since February 2022. Other sources of uncertainty are unforeseen structural changes in the business environment and already identified trends and potential wide-impact events. These external drivers may have a long-term impact on how Sampo Group’s business will be conducted. Examples of identified trends are demographic changes, sustainability issues, and technological developments in areas such as artificial intelligence and digitalisation including threats posed by cybercrime. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 7 ===== SIDA 8 ===== Dividend proposal Dividend Under Sampo Group’s capital management framework, the Group aims to return a significant share of ongoing surplus capital generation through a reliable regular dividend. In addition to this, excess capital is returned through additional dividends and/or buybacks, to the extent that it is not utilised to support business development. According to Sampo plc’s Dividend Policy applicable to the distribution of 2023 earnings, total annual dividends paid shall represent at least 70 per cent of Sampo Group’s operational result for the year. The parent company’s distributable capital and reserves totalled EUR 5,367 million of which profit for the financial year 2023 was EUR 963 million. Based on the policies outlined above, the Board proposes to the Annual General Meeting that a total dividend of EUR 1.80 per share be paid to all shares except for the shares held by Sampo plc on the dividend record date of 29 April 2024. The total dividend includes a regular dividend of EUR 1.60 per share as well as an extra dividend of EUR 0.20 per share. As the Group’s operational result amounted to EUR 1,046 million, the payout ratio for the total dividend equates to 86 per cent. The remainder of the distributable funds are left in the company’s equity capital. After adjusting for the proposed dividend, Sampo Group’s 2023 year-end distributable funds amounted to approximately EUR 4,463 million, Group Solvency II ratio to 177 per cent and financial leverage to 27.7 per cent. Dividend payment The dividend is proposed to be paid to the shareholders registered in the company’s shareholders register held by Euroclear Finland Oy as at the record date of 29 April 2024. The Board proposes that the dividends be paid on 7 May 2024. The issuer of the Swedish depository receipts shall ensure that the dividend is paid to the depository receipt holders registered in the securities depository and settlement register maintained by Euroclear Sweden AB as at the record date of 29 April 2024, which payment shall be made in Swedish kronor. Financial position No significant changes have taken place in the company's financial position since the end of the financial year. The company's liquidity position is good and in the view of the Board, the proposed distributions do not jeopardise the company's ability to fulfil its obligations. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 8 ===== SIDA 9 ===== Operating environment Nordic countries Over 2023, the Nordic region experienced a challenging macroeconomic environment with historically high inflation and interest rates. The P&C insurers were also affected by more weather-related claims than normal. Despite this, the Nordic P&C insurance market continued to perform relatively well, delivering better profitability than most other European P&C markets. The Nordic P&C market is highly consolidated, with the four largest players accounting for some 80-90 per cent of the markets in Norway, Finland, and Sweden respectively. Many insurers are established in more than one Nordic country. In Denmark, the market is less consolidated with the top four insurers controlling around 60 per cent of the market. During the year, the competitive environment remained broadly stable in the private and SME markets, while the large corporate market remained in the hard part of the underwriting cycle. The larger listed insurers maintained strong financial discipline and implemented price increases to combat elevated claims inflation. Market-wide claims inflation was above the levels observed in the recent past in 2023 and amounted to 4-5 per cent for If P&C. Inflation was mainly driven by the property and motor products which were affected by higher building materials and spare parts costs following raw material shortages and increasing transportation and energy costs. Weaker local currencies also added pressure to cost inflation. Towards the end of the year, Nordic claims inflation showed signs of moderation, reducing the uncertainty around the outlook for 2024. Nordic claims frequencies returned to pre-pandemic levels in 2023. During the year, the region suffered various weather-related claims, of which the most severe was the storm “Hans” at the end of the summer. “Hans” delivered the heaviest rain in 25 years in Norway, causing flood and landslide damage. Sweden was also affected by this storm, as well as parts of Denmark and Finland. During the year, the Nordic region also experienced some elevated claims from severe winter conditions. In the beginning of the year, the region was affected by harsh winter weather, especially in Sweden and Norway. The last quarter of the year saw a longer and more severe winter season than usual. There was heavy snow and freezing temperatures in early November, which resulted in weather related claims. In 2023, the Nordics continued to be affected by the hardening reinsurance market with a high cost of coverage and reduced risk appetite among reinsurers. The reinsurance prices increased, as expected, based on global inflation, claims trends and climate change, which also impacted the direct insurance market. According to the UN’s climate panel IPCC, the effects of climate change are already seen in the Nordic region with more heatwaves and floods expected in the future. This development is expected to be gradual where the insurance industry with one-year contracts is well equipped to handle the changes over time. The Nordic region is known for being digitally advanced and Nordic insurers committed to technological advancements and innovation. During the year the digitalisation trend continued with increased focus on cyber risks. Targeted investments and continuous monitoring for emerging threats were on top of every insurer’s agenda for effective risk mitigation in the complex area of cybersecurity. United Kingdom In the UK, P&C insurance market prices increased significantly over the last 12 months in response to elevated claims inflation. Claims inflation increased significantly during 2022 and remained persistent throughout 2023. Claims frequencies also increased as travel returned closer to pre-pandemic levels and as a result of adverse weather experienced in the first quarter of the year. Price comparison websites, Hastings’ primary distribution channel, remain by far the largest sales channel for UK car and home insurance customers. In light of increasing market prices, the use of these websites has increased during the year, as customers shop around in order to find a more competitive price. The FCA continues to be an active regulator in UK General Insurance and introduced new Consumer Duty rules with effective 31 July 2023, aiming to set higher and clearer standards of consumer protection across financial services. Hastings has successfully delivered Consumer Duty in a timely manner and continues to ensure that the principle of Consumer Duty is embedded in line with its customer focused strategy. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 9 ===== SIDA 10 ===== Business areas If If P&C is the leading property and casualty insurer in the Nordic region, where it offers solutions in all major lines of business through its four business areas; Private, Commercial, Industrial and Baltic. If P&C’s business model is based on high customer satisfaction, best in class underwriting and leveraging the scale benefits that its unified Nordic model offers. Excellent digital sales and service capabilities are a core part of If’s strategy, particularly in the Private and SME Commercial market segments. Underwriting performance If reported an underwriting result of EUR 842 million (673) for 2023 and a combined ratio of 83.1 per cent (86.6), after achieving improvements in the undiscounted adjusted risk ratio of 0.5 percentage points and a reduction in the cost ratio of 0.3 percentage points. The 2022 combined ratio under IFRS 4 included significant items related to prior year development in the fourth quarter, some of which have been recognised in the net financial results under IFRS 17. Hence, the figures are not fully comparable between years. Premium development If reported gross written premiums, GWP, of EUR 5,468 million (5,432) in 2023. Excluding currency effects, premiums grew by 6.7 per cent year-on-year. Growth was robust across business areas and driven primarily by successful pricing measures to mitigate claims inflation, and high retention. Results If, 2023 EURm 2023 2022 Change, % Gross written premiums 5,468 5,432 1 Insurance revenue, net 4,996 5,024 -1 Claims incurred, net -3,093 -3,267 -5 Operating expenses and claims handling costs -1,061 -1,084 -2 Insurance service result / underwriting result 842 673 25 Net investment income 871 278 214 Insurance finance income or expense, net -331 610 — Net financial result 539 888 -39 Other items -24 -11 122 Profit before taxes 1,358 1,550 -12 Key figures EURm 2023 2022 Change Combined ratio, % 83.1 86.6 -3.5 Cost ratio, % 21.2 21.6 -0.3 Risk ratio, % 61.9 65.0 -3.1 Large claims and severe weather, % 4.7 1.3 3.4 Risk adjustment and other technical effects, current year % 1.2 0.8 0.4 Prior year development, % -5.3 0.6 -6.0 Adjusted risk ratio, current year, % 61.3 62.3 -1.0 Discounting effect, current year, % -3.4 -2.9 -0.5 Undiscounted adjusted risk ratio, current year, % 64.7 65.2 -0.5 Loss ratio, % 67.6 70.7 -3.1 Expense ratio, % 15.6 15.9 -0.4 All the key figures in the table above are calculated on a net basis. Large claims measured against budget but severe weather claims are reported in full; negative figures indicate a positive outcome. Severe weather includes natural catastrophes. Negative figures for prior year development indicate positive reserve run-off. The discounting effect represents the impact of discounting of current year claims reserves on the risk ratio. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 10 ===== SIDA 11 ===== Currency adjusted GWP growth in 2023 in Private was 5.0 per cent, driven mainly by price increases covering claims inflation. Geographically, Norway and Finland saw the highest GWP growth. The year saw particularly solid growth especially in the personal and property insurance segments. Motor also contributed to GWP growth but was adversely affected by new car sales, which remained at a historically low level during the year. The Nordic new car sales market declined by 2 per cent, while Sweden, If P&C ‘s most important market for motor insurance, saw an increase of 1 per cent. Excluding the Swedish mobility business, currency adjusted GWP growth in 2023 was 6.3 per cent in Private and 7.6 per cent for If P&C. Despite rate actions and a general slowdown in the Nordic economies over the year, the demand for insurance was relatively stable, and Private retention stood above 89 per cent (90) at the end of 2023. Development in online services and digital engagement in business area Private remained good in 2023, following consistent investments into this area over many years. In 2023 online sales increased by 8 per cent compared to last year, and the digital share of incoming sales was 54 per cent. Currency adjusted GWP growth in Commercial in 2023 was 5.6 per cent year-on-year, mainly driven by rate actions. Over the year, all countries contributed to growth with the Swedish business being particularly strong. This positive development was supported by good growth in the SME segment during the period, successful renewals at the beginning of the year and high retention. Strong momentum in online sales and accelerated expansion of the digital offering with increased usage of self-service solutions also contributed to the positive development. In 2023 online sales in Commercial increased by more than 8 per cent year-on-year, and 30 per cent of new SME clients now start their customer journey online. Industrial saw strong GWP growth of 11.8 per cent on a currency adjusted basis in 2023. Growth was primarily driven by strong renewals at the beginning of the year with significant rate action and high retention. During the year, inflation-driven price increases continued, with the largest contribution coming from the property segment. Geographically, Industrial saw GWP growth in all countries except Denmark which was affected by a small number of large policies not being renewed. The Baltic business delivered GWP growth of 15.7 per cent in 2023. The positive development was mainly driven by continued rate increases to mitigate claims inflation. All three Baltic countries showed strong growth in 2023 year-on-year. Combined ratio development If reported a combined ratio of 83.1 per cent (86.6) for 2023. After a favourable large claims outcome in the first quarter of the year, the following three quarters saw adverse large claims and severe weather development. Large claims and severe weather (including natural catastrophe event Hans) in 2023 had a 4.7 percentage points (1.3) negative effect on the risk ratio. If’s large claims outcome is reported as a deviation against budget, while severe weather effects are disclosed in full. Prior year gains in 2023 increased to 5.3 percentage points from -0.6 percentage points in the prior year. Prior year gains were mainly driven by inflation reserve releases as the uncertainty regarding claims inflation outlook reduced over the year. Risk adjustment and other technical effects had an impact of 1.2 percentage points (0.8) in 2023. Discounting effects in 2023 increased by 0.5 percentage points year-on-year to 3.4 per cent (2.9). Following an analysis of the application of IFRS 17 over 2023, the reference point used in If P&C for disaggregation of IFRS 17 discounting effects had been changed from the beginning of year to the beginning of quarter. The change in reference point impacts on the split of discounting effects between the ISR and IFIE, but not profit before taxes. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 11 ===== SIDA 12 ===== In total, the risk ratio improved by 3.1 percentage points year-on-year to 61.9 per cent (65.0) in 2023. The undiscounted adjusted risk ratio improved by 0.5 percentage points year-on-year in 2023. The cost ratio for 2023 improved by 0.3 percentage points to 21.2 per cent (21.6). The 2023 cost ratio development compares favourably to If P&C’s target for 2021-2023 of an around 20 basis point yearly cost ratio reduction. Education and development costs are included in the cost ratio. Combined ratio, % Risk ratio, % 2023 2022 Change, % 2023 2022 Change, % Private 83.1 84.7 -1.6 62.1 63.4 -1.3 Commercial 81.9 86.8 -4.8 60.0 64.6 -4.6 Industrial 87.3 97.3 -10.0 68.3 77.4 -9.0 Baltic 85.9 89.5 -3.6 59.8 62.4 -2.6 Sweden 83.2 82.5 0.7 63.8 62.6 1.1 Norway 87.2 88.4 -1.2 66.8 67.3 -0.5 Finland 75.7 80.3 -4.7 53.5 57.9 -4.5 Denmark 88.4 110.0 -21.6 62.9 84.3 -21.4 Net financial result For the full year 2023, If reported a net financial result of EUR 539 million (888). Mark- to-market return on investments stood at 8.3 per cent (-4.4), driven by increased interest rates and positive development in equity markets During the period the investment portfolio was gradually reinvested at higher rates, improving the running yield. At the end of December, fixed income running yield was 4.2 per cent (3.2). The unwind of discount rate amounted to EUR -180 million in 2023. Changes in discount rates had an impact of EUR -136 million in the year. Profit before taxes In total, If reported profit before taxes of EUR 1,358 million (1,550) for 2023, representing a decrease of 12 per cent year-on-year. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 12 ===== SIDA 13 ===== Topdanmark Topdanmark is one of the largest P&C insurance companies in Denmark. It focuses on the private, agricultural, and SME markets. The company is listed on Nasdaq Copenhagen. Sampo plc held 44.0 million shares in Topdanmark at 31 December 2023. The holding increased slightly from 43.7 million shares at the end of 2022 and corresponds to an ownership of 48.9 per cent of all shares and 49.6 per cent of all votes. The market value of the holding was EUR 1,904 million at 31 December 2023. The insurance service result for January - December 2023 decreased to EUR 194 million (230) due to a high frequency of weather-related events. At the same time, the combined ratio for 2023 increased to 85.0 per cent from 81.7 per cent in the comparison year. With the support of increased net investment income, Topdanmark reported a profit before taxes of EUR 162 million (158) for January - December 2023 in Sampo Group’s profit and loss account. The Board of Directors of Topdanmark will recommend to the AGM a distribution of a dividend of DKK 1,035 million, representing a dividend of DKK 11.5 per share. Subject to the approval from the AGM, Sampo will receive approximately EUR 68 million in dividends from Topdanmark after the Topdanmark AGM in April 2024. On 27 October 2023, Topdanmark received the final regulatory approval for the acquisition of Oona Health A/S from the Danish Competition and Consumer Authority, and the acquisition was completed on 1 December 2023. As a result, Oona Health is included in Topdanmark Group’s results from 1 December 2023. The fourth quarter 2023 result includes one-off costs of DKK 35 million related to the transaction. Further information is available in Note 34. Further information on Topdanmark A/S and its Results for 2023 is available at www.topdanmark.com. Results Topdanmark, 2023 EURm 2023 2022 Change, % Gross written premiums 1,339 1,308 2 Insurance revenue, net 1,288 1,255 3 Claims incurred and claims handling costs, net -862 -809 7 Operating expenses -233 -216 7 Insurance service result / underwriting result 194 230 -16 Net investment income 107 -142 — Insurance finance income or expense, net -79 115 — Net financial result 27 -28 — Other items -59 -45 32 Profit before taxes 162 158 3 Key figures 2023 2022 Change Combined ratio, % 85.0 81.7 3.3 Loss ratio, % 66.9 64.4 2.5 Expense ratio, % 18.1 17.2 0.8 All the key figures in the table above are calculated on a net basis. Comparison figures do not include Topdanmark’s life operations. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 13 ===== SIDA 14 ===== Hastings Hastings is one of the leading digital P&C insurance providers in the UK predominantly focused on serving UK car, van, bike and home insurance customers. Hastings has over 3 million customers and operates via its two main trading subsidiaries, Hastings Insurance Services Limited in the UK and Advantage Insurance Company in Gibraltar. During the year, the UK motor insurance market saw significant market price increases in response to elevated claims inflation. Market wide claims inflation has remained persistent in the UK and is estimated to have been around 12 per cent for most of the year, with a modest reduction observed in the fourth quarter. In this environment, Hastings has continued to increase prices, whilst also benefiting from increased demand as consumers continue to use digital channels in order to find a more competitive price. Hastings’ gross written premium increased 32 per cent year-on-year on a constant currency basis to EUR 1,706 million (1,314), reflecting higher average premiums and an increase in live customer policies (LCP). Total LCP increased to 3.5 million, up 8 per cent year-on-year, with an increase in motor insurance policy count of 4 per cent. Home insurance policies grew significantly, up 31 per cent year-on-year. The rise in policy count was achieved whilst prioritising rate increases to cover claims inflation. The loss ratio for the year increased to 63.3 per cent (57.2), reflecting claims inflation, the weather events experienced in the first quarter and increased claims frequencies in line with changing driving behaviours. The rate increases implemented by Hastings during 2023 are expected to support profitability as these continue to earn through into 2024. The operating ratio for the year increased to 89.8 per cent (87.2), mainly due to a higher loss ratio and the upfront recognition of distribution costs given the high level of new business volumes in the current period. Hastings generated an underwriting result of EUR 128 million (128 million), as growth in premiums was largely offset by higher claims costs. Results Hastings, 2023 EURm 2023 2022 Change, % Gross written premiums 1,706 1,314 30 Brokerage revenue 357 322 11 Insurance revenue, net (incl. brokerage) 1,251 998 25 Claims incurred and claims handling costs, net -714 -509 40 Operating expenses -409 -361 13 Underwriting result 128 128 — Net investment income 79 16 397 Insurance finance income or expense, net -35 11 — Net financial result 44 27 61 Other items -42 -49 -14 Profit before taxes 129 107 21 Key figures 2023 2022 Change Operating ratio, % 89.8 87.2 2.6 Loss ratio, % 63.3 57.2 6.1 Live customer policies (millions) 3.5 3.2 0.2 All the key figures in the table above are calculated on a net basis. Hastings’ result table was simplified in 2023 by combining all brokerage revenues into one line (brokerage revenue), which is also included in the insurance revenue. Brokerage expenses are included in operating expenses. As a result, the insurance service result is no longer presented in the table. These changes have no effect on the underwriting result. All the key figures in the table above are calculated on a net basis. The net financial result increased to EUR 44 million (27 million) as net investment income of EUR 79 million, including EUR 46 million of unrealised gains, was partially offset by EUR -30 million of discount rate unwind and EUR -5 million of discount rate changes. Hastings’ profit before taxes increased to EUR 129 million (107) primarily due to the increase in the net financial result for the reasons mentioned above. The profit before taxes includes EUR -41 million (-58) of non-operational amortisation related to intangible assets identified on acquisition of the Hastings Group by Sampo plc in 2020, without which it would have been EUR 171 million (165). Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 14 ===== SIDA 15 ===== Holding Sampo plc is the parent company of Sampo Group and responsible for the Group’s strategy and capital management activities. In addition to the Group’s insurance subsidiaries, a small number of direct investments are held in the holding company. Results Holding, 2023 EURm 2023 2022 Change, % Net investment income -37 177 — Other income 1 132 -99 Other expenses -57 -48 20 Finance expenses -66 -96 -31 Share of associates' profit or loss — -19 — Profit before taxes -160 146 — The holding segment’s profit before taxes for 2023 decreased to EUR -160 million (146). Net investment income includes an impact of market value changes of EUR -73 million in 2023, which offset interest income and dividends. The increase in other expenses was driven mainly by costs related to the Mandatum demerger process. Prior year net investment income includes Sampo's share of Nordea's dividend of EUR 157 million and prior year other income includes the positive accounting effect from Nordea transactions of EUR 103 million and a group contribution of EUR 29 million from Mandatum. The accounting effect of EUR 111 million from the reallocation of long-term debt and valuation effect in connection with the demerger is treated as profit from discontinued operations and not included in Holding segment's P&L. The share of NOBA’s (previously known as Nordax) profit is no longer consolidated into Holding segment’s P&L from the start of year 2023 due to reclassification from an associated company to a fair value investment. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 15 ===== SIDA 16 ===== Financial position Group solvency Sampo Group’s pro forma Solvency II ratio, adjusted for the demerger-related transactions, amounted to 182 per cent at the end of 2023, based on own funds of EUR 5,849 million and solvency capital requirement (SCR) of EUR 3,217 million. The regulatory Solvency II ratio amounted to 177 per cent (210) based on own funds of EUR 5,849 million (8,083) and SCR of EUR 3,301 million (3,857). The decrease from 210 per cent at the year-end 2022 was primarily driven by the demerger. Sampo’s Solvency II ratio target for 2021-2023 was 170-190 per cent. Financial leverage position Sampo Group’s financial leverage is calculated as Group financial debt divided by the sum of IFRS shareholders’ equity and financial debt. Sampo’s financial leverage target for 2021-2023 was below 30 per cent. Sampo Group’s shareholders’ equity amounted to EUR 7,687 million and financial debt to EUR 2,604 million on 31 December 2023, translating into a financial leverage of 25.3 per cent. At the end of 2022, shareholders’ equity amounted to 10,178 million (IFRS 17) and financial debt to EUR 3,288 million, translating into a financial leverage of 24.4 per cent. The decrease in shareholders’ equity in 2023 was driven by the demerger and capital returns to shareholders during the year. Financial debt decreased due to the demerger and maturity of EUR 318 million senior debt in September 2023. Adjusting for the proposed dividend of EUR 1.80 per share, financial leverage was 27.7 per cent at the end of 2023. More information on Sampo Group’s outstanding debt issues is available at www.sampo.com/debtfinancing. Financial debt Sampo Group, 31 December 2023 EURm Sampo plc If Topdanmark Hastings Eliminations Group total Sub/hybrid 1,490 135 148 0 -127 1,645 Senior bonds 959 0 0 0 0 959 Total 2,449 135 148 0 -127 2,604 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 16 ===== SIDA 17 ===== Ratings Relevant ratings for Sampo Group companies on 31 December 2023 are presented in the table below. Rated company Moody’s Standard & Poor’s Rating Outlook Rating Outlook Sampo plc – Issuer Credit Rating A3 Positive A Stable If P&C Insurance Ltd – Insurance Financial Strength Rating A1 Positive AA- Stable If P&C Insurance Holding Ltd (publ) - Issuer Credit Rating - - A Stable Fitch rating on Hastings was discontinued during the second quarter due to no outstanding debt issues. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 17 ===== SIDA 18 ===== Other developments Demerger of Sampo plc Following the announcement of strategic review of Mandatum in December 2022, the Board of Directors of Sampo plc resolved on 29 March 2023 to propose to the Annual General Meeting a partial demerger of Sampo plc to separate Mandatum from Sampo Group. The Annual General Meeting held on 17 May 2023 resolved to approve the partial demerger as set forth in the demerger plan approved by the Board on 29 March 2023. The demerger was successfully completed on 1 October 2023. In the demerger, all of the shares in Mandatum Holding Ltd (a wholly-owned direct subsidiary of Sampo plc) and related assets and liabilities were transferred without a liquidation procedure to Mandatum plc, a company incorporated in the demerger on the effective date. Mandatum shares were listed on Nasdaq Helsinki on 2 October 2023. Effects of the partial demerger Mandatum was consolidated in Sampo Group’s P&L and balance sheet until the end of September. The following table illustrates the financial effects of the demerger on the Group’s January-September 2023 results and on the Group’s balance sheet at the end of September 2023. Since a dividend liability was established for Mandatum during the third quarter, Mandatum’s contribution has been added back into Sampo’s end of September shareholders’ equity and financial debt figures in the table. As such, these figures do not correspond to reported numbers. Key figures 1-9/2023 Pro forma, including Mandatum* Pro forma, excluding Mandatum** Net profit for the equity holders of the parent EURm 941 801 Earnings per share EUR 1.86 1.58 Own funds EURm 8,918 6,589 Own funds, including dividend accrual EURm — 6,026 Solvency capital requirement EURm 3,776 3,087 Solvency II ratio % 236 213 Solvency II ratio, including dividend accrual % — 195 IFRS shareholders’ equity EURm 9,033 7,309 Financial debt EURm 2,860 2,610 Financial leverage % 24.0 26.3 * Pro forma figures related to solvency and financial leverage exclude all demerger effects and related transactions. ** Pro forma figures related to solvency and financial leverage include all demerger effects and related transactions. Dividend accrual is based on the regular dividend of EUR 1.50 per share for 2022, i.e. excluding Mandatum’s contribution. As the Board of Directors resolved to complete the demerger of Sampo plc during the third quarter, a dividend liability equal to the estimated fair value of Mandatum’s net assets was recognised on the Group’s balance sheet. This had a negative effect of EUR 1,826 million on Sampo’s shareholders’ equity at 30 September 2023. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 18 ===== SIDA 19 ===== After the demerger completed on 1 October, the dividend liability was remeasured against a fair value based on Mandatum’s weighted average share price on the first trading day on Nasdaq Helsinki, amounting to EUR 1,835 million. The EUR 9 million difference between the revised fair value of the dividend liability and the net assets at the end of September was taken through the P&L in the fourth quarter. The effect had no impact on cash flow or solvency. Following completion of the demerger, EUR 102 million of long term debt was reallocated from Sampo plc to Mandatum, to satisfy conditions for tax neutrality. Adjusting for this, Sampo’s pro forma shareholders’ equity for the end of the third quarter would have been EUR 7,309 million. The reallocation of the long-term debt had a positive effect of EUR 102 million in the Group’s profit before taxes and net profit in the fourth quarter. With the valuation difference of EUR 9 million mentioned above, the total accounting effects on profit before taxes and net profit from the debt reallocation amounted to EUR 111 million for the fourth quarter. Planned transactions in connection with the demerger Sampo sold or plans to sell certain assets to Mandatum in connection with the demerger. These assets include holdings in Saxo Bank and Enento Group, guarantee shares of Kaleva Mutual Insurance Company and other smaller equity, debt and alternative investments. Additional details are available at www.sampo.com/demerger. Mandatum’s financial development Mandatum’s profit before taxes consolidated in Sampo Group’s P&L amounted to EUR 173 million and net profit to EUR 140 million in January-September 2023. The total net profit booked under life operations for 2023 amounted to EUR 252 million, as this includes the EUR 111 million of demerger related accounting effects in the fourth quarter. Group Partial Internal Model application Following the completion of the demerger of Sampo plc, the Swedish FSA (Finansinspektionen) became Sampo’s group prudential supervisor as of 1 October 2023. As a result, Sampo refiled its application for a Group Partial Internal Model to the Swedish FSA on 2 October 2023. The application had previously been filed with Finnish FSA. Sampo expects that the application process will be completed during the first half of 2024. The Partial Internal Model recognises the risk profile of Sampo’s P&C operations better than the Standard Formula and it is estimated that it would have reduced the group-level solvency capital requirement (SCR) by up to EUR 0.3 billion in 2023. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 19 ===== SIDA 20 ===== Shares, share capital and shareholders Shares and share capital At the end of 2023, Sampo plc had 501,796,752 shares, which were divided into 501,596,752 A shares and 200,000 B shares. The total number of votes attached to the shares was 502,596,752. Each A share entitles the holder to one vote and each B share entitles the holder to five votes at the General Meeting of Shareholders. In 2023, Sampo cancelled 14,782,760 of its own A shares that were repurchased under the share buyback programmes in 2022 and 2023. These shares were cancelled in March and August 2023. At the end of 2023, Sampo plc’s share capital amounted to EUR 98 million (98) and the equity capital in total to EUR 7,687 million (10,178). The Annual General Meeting held on 17 May 2023 decided on the deletion of the minimum and maximum amounts set for the company’s A and B shares in the Articles of Association due to the authorisation granted to the Board to resolve upon a share split. Sampo plc’s Articles of Association contain a redemption obligation (16§) ,according to which, a shareholder whose holding of all shares or of all votes relating to the shares reaches or exceeds 33 1/3 per cent or 50 per cent, is obliged to redeem, at the presentation of claims by other shareholders, their shares and the documents giving entitlement to the shares, as stipulated in the Finnish Companies Act, in the manner prescribed in the Article. The Article contains further provisions on calculating the shareholder’s holding and redemption price. Sampo A shares have been quoted on Nasdaq Helsinki since 1988 and all of the B shares are held by Kaleva Mutual Insurance Company. B shares can be converted into A shares at the request of the holder. Sampo’s Swedish Depositary Receipts (SDR) have been quoted on Nasdaq Stockholm since 2022. Helsinki-listed A shares can be converted into SDRs and vice versa. Approximately 2.1 million SDRs were issued at the end of 2023. Shareholders by the number of shares held Sampo plc, 31 December 2023 Number of shares Shareholders, number Share- holders, % Shares, number Shares, % Voting rights, number Voting rights, % 1–100 110,146 53.21 4,614,546 0.92 4,614,546 0.92 101–500 65,836 31.81 15,989,786 3.19 15,989,786 3.18 501–1,000 15,006 7.25 11,180,875 2.23 11,180,875 2.22 1,001–5,000 13,414 6.48 28,078,213 5.60 28,078,213 5.59 5,001–10,000 1,518 0.73 10,652,503 2.12 10,652,503 2.12 10,001–50,000 875 0.42 16,947,504 3.38 16,947,504 3.37 50,001–100,000 90 0.04 6,610,344 1.32 6,610,344 1.32 100,001–500,000 72 0.03 13,643,773 2.72 13,643,773 2.71 500,001– 35 0.02 394,079,208 78.53 394,879,208 78.57 Total 206,992 100 501,796,752 100 502,596,752 100 of which nominee registered 11 301,533,372 60.09 301,533,372 60.00 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 20 ===== SIDA 21 ===== Share price performance Sampo plc, 2019–2023 Share price performance adjusted for the partial demerger in 2023. Monthly trading volume Sampo plc, 2019–2023 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 21 ===== SIDA 22 ===== Authorisations granted to the Board The Annual General Meeting held on 17 May 2023 authorised the Board to repurchase a maximum of 50,000,000 Sampo A shares, representing approximately 9.7 per cent of all outstanding shares. The Board was also authorised to resolve upon a share issue without payment (share split). Based on this authorisation, the Board can resolve to issue new shares to all shareholders without payment in proportion to their holdings so that a maximum of 5 new A and B shares would be issued for each current A and B shares respectively. If the Board decided on a share split, a maximum of 300,000,000 A shares could be repurchased. The authorisation to decide on a repurchase of own shares is valid until the close of the next Annual General Meeting, expected to be held on 25 April 2024, nevertheless not more than 18 months after AGM’s decision. The authorisation to decide upon a share split is valid until the next AGM, however at the latest until 30 June 2024. Shareholders The number of Sampo plc’s Finnish-registered shareholders increased during 2023 by 8,849 shareholders to 206,992 as at 31 December 2023. The holdings of nominee-registered and foreign shareholders stood stable at 60.3 per cent (61.7) of the shares and 60.2 per cent of the votes (61.6). Sampo did not hold any own shares at the end of 2023. On 31 December 2023, the total number of Sampo A shares owned directly, indirectly or through financial instruments by BlackRock Inc. and its funds was above 5 per cent of Sampo’s total stock. The total number of voting rights attached to Sampo A shares was above 5 per cent of Sampo’s total voting rights. Sampo did not receive any flagging notifications of change in holding pursuant to Chapter 9, Section 5 of the Securities Markets Act during in 2023. The latest notifications are available at www.sampo.com/flaggings. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 22 ===== SIDA 23 ===== Shareholders Sampo plc, the largest shareholders registered in Finland, 31 December 2023 A and B shares Number of shares % of share capital % of votes Solidium Oy 33,278,580 6.63 6.62 Varma Mutual Pension Insurance Company 22,248,420 4.43 4.43 Ilmarinen Mutual Pension Insurance Company 6,037,057 1.20 1.20 Oy Lival AB 4,020,000 0.80 0.80 Elo Mutual Pension Insurance Company 3,968,000 0.79 0.79 The State Pension Fund 2,900,000 0.58 0.58 OP Life Assurance Company Ltd 1,834,542 0.37 0.37 Svenska litteratursällskapet i Finland r.f. 1,469,150 0.29 0.29 Nordea Nordic Fund 1,343,000 0.27 0.27 OP-Finland Fund 1,331,025 0.27 0.26 Nordea Pro Finland Fund 1,188,034 0.24 0.24 Evli Finland Select Fund 1,185,000 0.24 0.24 OMX Helsinki 25 Exchange Traded Fund 1,149,960 0.23 0.23 Åbo Akademi University Foundation 1,063,872 0.21 0.21 Nordea Life Assurance Finland Ltd. 904,380 0.18 0.18 Samfundet folkhälsan i Svenska Finland rf 848,402 0.17 0.17 Nordea Suomi 841,844 0.17 0.17 Keva 814,100 0.16 0.16 OP Finland Index Fund 808,173 0.16 0.16 Föreningen Konstsamfundet rf 800,000 0.16 0.16 Foreign and nominee registered total 302,593,499 60.30 60.21 Other total 111,169,714 22.15 22.12 Total 501,796,752 100 100 Shareholders by sector Sampo plc (A and B shares), 31 December 2023 Sector Number of shares % Corporations 20,004,337 3.99 Financial institutions and insurance corporations 17,654,345 3.52 Public institutions 70,733,556 14.10 Non-profit institutions 13,830,150 2.76 Households 76,980,865 15.34 Foreign ownership and nominee registered 302,593,499 60.30 Total 501,796,752 100 Holdings of the Board and Executive Management The following table presents the Board’s and Group Executive Committee’s holdings of Sampo A shares. At the end of 2023, members of Sampo plc’s Board of Directors and their close family members owned either directly or indirectly 197,429 (195,664) Sampo A shares. Their combined holdings constituted 0.04 per cent (0.04) of shares and related votes. Members of the Group Executive Committee and their close family members owned either directly or indirectly 227,321 (564,438) Sampo A shares representing 0.05 per cent (0.1) of shares and related votes. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 23 ===== SIDA 24 ===== Shares owned by the Board of Directors and the Group Executive Committee Sampo plc, 31 December 2023 and 31 December 2022 Board of Directors 31 Dec 2023 31 Dec 2022 Antti Mäkinen1 7,010 — Jannica Fagerholm 8,751 7,597 Christian Clausen 38,479 37,819 Fiona Clutterbuck 3,678 2,853 Georg Ehrnrooth 129,532 128,681 Johanna Lamminen2 — 2,695 Steve Langan 1,498 673 Risto Murto 5,169 4,449 Markus Rauramo 2,407 1,668 Björn Wahlroos3 — 9,229 Annica Witschard1 905 — Total 197,429 195,664 Board of Directors ownership of shares, % 0.04 0.04 Board of Directors share of votes, % 0.04 0.04 Group Executive Committee 31 Dec 2023 31 Dec 2022 Torbjörn Magnusson 46,268 46,480 Knut Arne Alsaker 43,412 39,646 Ingrid Janbu Holthe 5,588 1,875 Patrick Lapveteläinen4 — 276,423 Petri Niemisvirta4 — 93,470 Ville Talasmäki5 17,801 — Morten Thorsrud 65,788 61,344 Ricard Wennerklint 48,464 45,200 Total 227,321 564,438 Group Executive Committee's ownership of shares, % 0.05 0.1 Group Executive Committee's share of votes, % 0.05 0.1 1 Member of the Board of Directors since 17 May 2023 2 Member of the Board of Directors until 1 October 2023 3 Member of the Board of Directors until 17 May 2023 4 Member of the Group Executive Committee until 1 October 2023 5 Member of the Group Executive Committee since 1 October 2023 Share buyback programmes In 2023, Sampo repurchased its own A shares under two different buyback programmes based on the authorisation granted by the Annual General Meeting of 2022. On 9 June 2022, Sampo’s Board launched a EUR 1 billion buyback programme. The programme started on 10 June 2022 and was completed on 8 February 2023. Through this programme, Sampo repurchased 22.1 million shares, of which 3.2 million were repurchased in 2023. The average price amounted to EUR 45.28 per share. On 29 March 2023, the Board launched a new EUR 400 million buyback programme. The programme started on 3 April 2023 and was completed on 1 August 2023. Through this programme, Sampo repurchased 9.4 million shares at an average price of EUR 42.64 per share. In total, Sampo repurchased 12.6 million shares in 2023, corresponding to approximately 2.4 per cent of cent of all shares based on the share count prior to the start of these programmes. These shares were cancelled in March and August 2023. Further details on the company’s share buyback programmes are available at www.sampo.com/sharebuyback. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 24 ===== SIDA 25 ===== Governance and related issues Governance During 2023, Sampo complied in full with the Finnish Corporate Governance Code 2020 approved by the Securities Market Association on 19 September 2019, effective from 1 January 2020 (the “CG Code 2020”). In compliance with the Corporate Governance Code, Sampo publishes a separate Corporate Governance Statement on its website in fulfilment of the requirement referred to in the Finnish Securities Markets Act (746/2012), Chapter 7, Section 7. The statement will be available at www.sampo.com/year2023. Annual General Meeting The Annual General Meeting held on 17 May 2023 decided to distribute a dividend of EUR 2.60 per share for 2022. The record date for the dividend payment was 22 May 2023 and the dividend was paid to Sampo shareholders on 31 May 2023 and to Sampo SDR holders on 2 June 2023. The Annual General Meeting adopted the financial accounts for 2022 and discharged the Board of Directors and the CEO from liability for the financial year. The AGM increased the number of the members of the Board of Directors to ten members. Christian Clausen, Fiona Clutterbuck, Georg Ehrnrooth, Jannica Fagerholm, Johanna Lamminen, Steve Langan, Risto Murto and Markus Rauramo were re-elected to the Board. Antti Mäkinen and Annica Witschard were elected as new members to the Board. The members of the Board were elected for a term continuing until the close of the next Annual General Meeting. At its organisational meeting, the Board elected Antti Mäkinen as Chair and Jannica Fagerholm as Vice Chair. Christian Clausen, Risto Murto, Antti Mäkinen (Chair) and Markus Rauramo were elected to the Nomination and Remuneration Committee. Fiona Clutterbuck, Georg Ehrnrooth, Jannica Fagerholm (Chair), Johanna Lamminen, Steve Langan and Annica Witschard were elected to the Audit Committee. All the Board members have been determined to be independent of the company and its major shareholders under the rules of the Finnish Corporate Governance Code 2020. The curriculum vitaes of the Board Members are available at www.sampo.com/board. The AGM decided to pay the following fees to the members of the Board of Directors until the close of the 2024 AGM: the Chair of the Board will be paid an annual fee of EUR 228,000 and other members of the Board will be paid EUR 101,000 each. In addition, the members of the Board and its Committees will be paid the following annual fees: the Vice Chair of the Board EUR 30,000, the Chair of the Audit Committee EUR 28,000 and the member of the Audit Committee EUR 6,400 each. A Board member shall, in accordance with the resolution of the Annual General Meeting, acquire Sampo plc A shares at the price paid in public trading for 50 per cent of his/her annual fee after the deduction of taxes, payments and potential statutory social and pension costs. The company will pay any possible transfer tax related to the acquisition of the company shares. The AGM accepted Sampo plc’s Remuneration Report for Governing Bodies. The resolution was advisory. Deloitte Ltd was re-elected as Auditor of Sampo plc. The Auditor will be paid a fee determined by an invoice approved by Sampo. Jukka Vattulainen, APA, will act as the principally responsible auditor. The AGM updated the business area of the company on the Company’s Articles of Association to reflect the company’s current strategy and main business area. In addition, the minimum and maximum amounts set for the Company’s A and B shares were deleted. The AGM also resolved to amend article 11 § of the Company’s Articles of Association such that, should the Board of Directors so decide, General Meetings may be convened as a so-called hybrid or remote meeting. As part of the resolution on the demerger of Sampo plc and conditional upon the registration of the completion of the demerger, the AGM resolved to establish a new entity, Mandatum plc, approve its articles of association, and elect Markus Aho, Jannica Fagerholm, Kimmo Laaksonen, Johanna Lamminen, Patrick Lapveteläinen and Jukka Ruuska to Mandatum plc’s Board of Directors. It was proposed that said Board of Directors elect from among themselves Patrick Lapveteläinen as the Chair and Jannica Fagerholm as the Vice Chair of the Board of Directors. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 25 ===== SIDA 26 ===== The AGM also resolved to, until the close of the first Annual General Meeting of Mandatum following the partial demerger pay a term fee of EUR 27,000 to each member of the Board of Directors, EUR 42,000 to the Chair of the Board of Directors and EUR 36,000 to the Vice Chair of the Board of Directors; pay meeting fees for each meeting of the Board of Directors of EUR 600 for each member of the Board of Directors and EUR 1,500 for the Chair of the Board of Directors and the Vice Chair of the Board should she chair the meeting; pay meeting fees for each meeting of the Audit Committee of EUR 600 for each member of the Audit Committee and EUR 1,000 for the Chair of the Audit Committee. The AGM elected Deloitte Ltd as Mandatum plc’s auditor, with Reeta Virolainen, APA, acting as the principally responsible auditor, and resolved for the auditor to be paid a fee determined by an invoice approved by Mandatum plc. The AGM also resolved to establish a Shareholders’ Nomination Board for Mandatum plc. Including proxy representatives, there were altogether 324,489,527 shares (63.5 per cent of shares) and 325,289,527 votes (63.5 per cent of all votes) in the company represented at the Annual General Meeting. The minutes of the Annual General Meeting are available for viewing at www.sampo.com/agm and at Sampo plc's head office at Fabianinkatu 27, Helsinki, Finland. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 26 ===== SIDA 27 ===== Risk management Sampo’s capital management framework aims to support value creation by enabling its strategy. Quantitative targets are set for group solvency and group financial leverage, but other metrics are also steered, such as adequate liquidity buffers. Subsidiary balance sheets are calibrated to cover needs for business plans and to provide a stable dividend. Potential risk concentrations and adequate diversification of risks are generally monitored closely, and their sources are analysed. To the extent possible Group-level risk concentrations are proactively prevented by strategic decisions. Sampo Group companies operate in business areas where specific features of value creation are the pricing of risks and the active management of risk portfolios in addition to sound customer services. Successful management of underwriting risks and investment portfolio market risks is the main source of earnings for Sampo Group companies. In Sampo Group the risks associated with business activities fall into three main categories: business risks associated with external drivers affecting the competitive environment or resulting from lack of internal operational flexibility, reputational risk associated with the company’s business practices or associations and risks inherent in business operations. A more detailed description of Sampo Group’s risk management activities, governance, risks, and capitalisation is available in the Risk Management Report 2023 at www.sampo.com/year2023. Remuneration The Board of Directors has established the Sampo Group Remuneration Principles, which apply to all Sampo Group companies. The Remuneration Principles are part of Sampo Group's internal governance framework and describe the remuneration structure and the principles for setting up remuneration systems in Sampo Group. The Remuneration Principles may apply to the Group CEO, insofar as they do not conflict with Sampo plc’s Remuneration Policy for Governing Bodies. The core of the Remuneration Principles is that all remuneration systems in Sampo Group shall safeguard the long-term financial stability and value creation of Sampo Group and shall comply with regulatory and ethical standards. They shall also be aligned with the risk management framework and thus be designed in parallel with the risk management principles and practices. Remuneration mechanisms shall encourage and stimulate employees to do their best and surpass their targets. Remuneration packages shall be designed to reward fairly for prudent and successful performance. At the same time, however, in order to safeguard the interest of other stakeholders, remuneration mechanisms shall not generate conflicts of interest and shall not entice or encourage employees to excessive or unwanted risk taking. The different forms of remuneration used in Sampo Group are the following: (a) Fixed Compensation (b) Variable Compensation (c) Pension (d) Other Benefits Fixed compensation is the basis of an employee’s remuneration package. Fixed salary shall support financial stability by representing a sufficiently high share of the total remuneration. Variable compensation is used to ensure the competitiveness of total remuneration packages. Variable compensation can either be based on the contribution to the company’s profitability and on individual performance (short-term incentive programs) or be linked to committing employees to Sampo Group for a longer period and aligning the employees' interests with those of the shareholders by linking the payout of the schemes to key performance criteria and, if applicable, to the positive development of Sampo’s share price (long- term incentive schemes). The members of the Board of Directors do not participate in any short-term incentive programs or long-term incentive schemes. The payment of variable compensation shall be based on the assessment of the incurred risk exposure and the fulfilment of solvency capital requirements. The payment of a certain portion of the variable compensation payable to the Senior Executive Management and to certain key persons shall be deferred for a defined period of time, as required in the regulatory framework applicable to each Sampo Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board of Directors of each Sampo Group company shall decide whether the deferred variable compensation shall be paid/released in full, partly or cancelled in whole. In 2023, a total of EUR 6.5 million (7.0) of short-term and long-term incentives has been deferred. The Board of Directors decides on the launch of long- term incentive schemes based on financial instruments of Sampo plc. No new long-term incentive schemes based on financial instruments of Sampo plc were launched in 2023. The last instalment of the long-term Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 27 ===== SIDA 28 ===== incentive scheme 2017 and the first instalment of the long-term incentive scheme 2020 vested in 2023. The vesting of the schemes is determined on the basis of Sampo's share price development and dividends paid over each instalment’s performance period, starting from the issue of the schemes, and performance criteria related to the insurance margin and/or return on capital at risk (RoCaR) applicable for each instalment. Both incentive schemes contain a cap for maximum payout. The terms and conditions of the incentive schemes are available at www.sampo.com/incentiveterms. A deferral rule applies to incentive rewards paid to the Senior Executive Management and to certain key persons. Persons subject to the deferral rule shall at payout from the schemes acquire Sampo A shares with a certain part of the instalment after deducting income tax and other comparable charges. The shares are subject to disposal restrictions for three years, after which the Board of Directors shall decide on the possible release. A total of EUR 71 million (77), including social costs, was paid as short-term incentives in January-December 2023 in Sampo Group. In the same period, a total of 38 million (35) was paid as long-term incentives. The long- term incentive schemes in force in Sampo Group produced a negative result impact of EUR -10 million (-43). The 2022 Remuneration Report for Governing Bodies was presented to the Annual General Meeting in 2023. The AGM resolved to adopt the Remuneration Report and the resolution was made without being voted on, which is considered unanimous acceptance based on Finnish law. Sampo plc publishes the 2023 Remuneration Report for Governing Bodies in connection with the Board of Directors’ Report at www.sampo.com/year2023. The Remuneration Report for Governing Bodies provides information on the remuneration of the Board of Directors and the Group CEO, and has been prepared in accordance with the Corporate Governance Code 2020. The Corporate Governance Code 2020 can be viewed in full on the website of the Securities Market Association at www.cgfinland.fi/en. Sampo plc presents the updated Remuneration Policy for Governing Bodies to the 2024 Annual General Meeting. The Remuneration Policy defines how the remuneration of the Group CEO and the members of the company’s Board of Directors has been arranged. The Remuneration Policy has been developed in accordance with the requirements set forth by the amended EU Shareholders’ Rights Directive, as implemented into Finnish legislation. The previous Remuneration Policy was adopted by the AGM in 2020. The updated Remuneration Policy is available at www.sampo.com/agm. Changes in Group structure On 29 March 2023, the Board of Directors of Sampo plc proposed to the Annual General Meeting a partial demerger of Sampo plc to separate its fully-owned subsidiary Mandatum from Sampo Group. The AGM held on 17 May 2023 resolved to approve the demerger plan and the demerger was successfully completed on 1 October 2023. Further information is available in the section Effects of the partial demerger and Note 32. On 16 March 2023, Topdanmark A/S disclosed that Topdanmark Forsikring A/S has signed an agreement to acquire Oona Health A/S and all subsidiaries. On 27 October 2023, Topdanmark received the final regulatory approval for the acquisition of Oona Health A/S from the Danish Competition and Consumer Authority, and the acquisition was completed on 1 December 2023. Further information is available in Note 34. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 28 ===== SIDA 29 ===== Sampo Group structure 31 December 2023 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 29 ===== SIDA 30 ===== Changes in the Group management and the Board of Directors Following the completion of the partial demerger of Sampo plc on 1 October 2023, the Sampo Group Executive Committee (GEC) terms of Patrick Lapveteläinen, former Sampo Group CIO, and Petri Niemisvirta, CEO of Mandatum, ended. As of the same day, Ville Talasmäki was appointed as Group Chief Investment Officer and Group Executive Committee Member of Sampo. Head of BA Commercial Klas Svensson was appointed to the Group Executive Committee on 13 December 2023. Svensson started in the GEC on 1 January 2024. After the changes, there are seven members in the Sampo GEC, equivalent to the number of GEC members in the beginning of 2023. The Annual General Meeting of 17 May 2023 decided to increase the number of members of the Board of Directors to ten members. The number of the Board members decreased to nine in the middle of the term as Johanna Lamminen left the Board of Directors upon the completion of the partial demerger of Sampo plc in October 2023, as set in the demerger plan. After the partial demerger, the Board of Directors consists of nine members until the close of the Annual General Meeting to be held in 2024. At the AGM, Antti Mäkinen was elected as Chair of the Board. Björn Wahlroos, the former Chair of the Board of Directors, was not available for re-election. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 30 ===== SIDA 31 ===== Sampo Group organisation 31 December 2023 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 31 ===== SIDA 32 ===== Personnel The average number of employees (FTE) in Sampo Group’s P&C operations in 2023 was 13,272 (12,947). On 31 December 2023, the total number of staff in the Group’s P&C operations was 13,450 (12,861). Number of personnel Sampo Group 2023 Sampo Group personnel (P&C operations) Average personnel (FTE) 2023 % Average personnel (FTE) 2022 % By company If 7,858 59 7,496 58 Hastings 3,200 24 3,021 23 Topdanmark 2,160 16 2,381 18 Sampo plc* 54 0.4 50 0.4 Total 13,272 100 12,947 100 By country United Kingdom 3,176 24 3,000 23 Denmark 2,756 21 2,969 23 Finland 1,934 15 1,838 14 Sweden 2,446 18 2,379 18 Norway 1,613 12 1,580 12 Other countries 1,346 10 1,181 9 Total 13,272 100 12,947 100 *At the end of 2023, the total personnel (FTE) at Sampo plc amounted to 58 (51), of which 49 (46) worked at the headquarters in Finland and 9 (5) at the branch office in Sweden. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 32 ===== SIDA 33 ===== Sustainability Sampo will issue a report on non-financial information in accordance with Chapter 3a, Section 5 of the Accounting Act. The report, Sampo Group Sustainability Report 2023, will be separate from the Board of Directors’ Report and published around the turn of March and April 2024 at www.sampo.com/year2023. Sampo will integrate the Group’s sustainability reporting into the Board of Directors’ report according to the requirements of the Corporate Sustainability Reporting Directive (CSRD) in 2025 covering the reporting year 2024. Highlights from year 2023 Sampo has a sustainability programme, which drives the sustainability work on a group level. The programme consists of strategic sustainability themes and under each of the themes the most material sustainability topics have been identified. Sampo’s sustainability themes are Sustainable business management and practices, Sustainable corporate culture, Sustainable investment management and operations, Sustainable products and services, and Sustainable communities. During 2023, Sampo continued to work on sustainability in line with the themes. Business management and practices In 2023, Sampo started to prepare for the implementation of the CSRD and the related European Sustainability Reporting Standards (ESRS). Sampo conducted, for example, a double materiality assessment, a human rights impact assessment, and a gap analysis against the ESRS. The implementation of the legislation will continue in 2024, with the focus on meeting the identified gaps, development of internal processes, data collection, and final reporting. During 2023, Sampo committed to the Science Based Targets initiative (SBTi) and started to develop science- based climate targets for its own operations and investments. The targets will be submitted to the SBTi for validation no later than October 2025. In addition, the individual Group companies continued to work on their company-specific targets according to schedule. If’s targets were validated during the year, and Hastings and Topdanmark will submit their targets for validation in 2024. Corporate culture In 2023, Sampo advanced sustainable corporate culture, for example, by updating related policies, conducting employee surveys, launching new employee initiatives, and developing training. The results of the continued efforts are visible, as If, Topdanmark, and Hastings were all able to exceed their employee engagement targets . Sampo considers it important that there is an inclusive corporate culture. Therefore, in 2023, a specific focus area was diversity, equity, and inclusion (DEI). Sampo introduced new targets, initiatives, partnerships, and policy updates related to DEI. In addition, development could be seen related to inclusive recruitment practices, awareness raising, and overall DEI work, among others. Investment management and operations Sampo maintained its focus on responsible investment practices during 2023. Investment policies were strengthened by adding further instructions on how to take environmental, social, and governance (ESG) issues into account in investment processes. Climate- related considerations were highlighted, as Sampo is committed to setting science-based climate targets for its investments according to the SBTi’s methodology. In 2024, Sampo wants to develop group-level reporting on responsible investment. Products and services In 2023, Sampo continued to develop the sustainability of its supply chains. For example, If introduced a new science-based climate target for its supply chain stating that 30 per cent of the company’s suppliers by spend covering purchased goods and services should have science-based targets by 2028. Also, Topdanmark continued to work on setting science-based climate targets for its supply chain, while at the same time focusing on the company’s existing supply chain-related goals set for 2025. Hastings completed an ESG due diligence on all critical suppliers and is committed to developing a Supplier Code of Conduct during 2024. Sampo also worked on the EU Taxonomy. During 2023, Sampo analysed to what extent its underwriting and investment activities are Taxonomy-eligible and Taxonomy-aligned according to the latest guidance from the EU. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 33 ===== SIDA 34 ===== EU Taxonomy The EU Taxonomy is a classification system that translates the EU’s climate and environmental objectives into criteria for specific economic activities for investment purposes. The Taxonomy is part of the EU’s efforts to achieve ambitious development goals in line with Agenda 2030 and the Paris Climate Agreement. The aim is to provide a common language to help investors and companies navigate the transition to a low-carbon, resilient, and resource-efficient economy. The basic principle of the EU Taxonomy is that for an economic activity to be recognised as environmentally sustainable (Taxonomy-aligned), it must make a substantial contribution to at least one of the EU’s climate and environmental objectives, which are climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; transition to a circular economy; pollution prevention and control; and protection and restoration of biodiversity and ecosystems. In addition, the economic activity cannot significantly harm any of these objectives and must meet the minimum safeguards criteria. The Taxonomy Delegated Acts establish and maintain criteria (i.e. technical screening criteria) for activities, which have a substantial positive environmental impact. The EU Taxonomy is implemented gradually. For the financial years 2021 and 2022, insurance companies were required to report on Taxonomy eligibility (i.e. reporting on whether the economic activity is included in the Taxonomy Climate Delegated Act). Reporting on Taxonomy alignment (i.e. reporting on whether the economic activity meets the technical criteria for i) substantial contribution, ii) do no significant harm, and iii) comply with minimum safeguards) is required for reporting from the financial year 2023 onwards. Therefore, Sampo Group reports the EU Taxonomy alignment of its insurance activities and investment portfolio for the first time as part of the 2023 Board of Directors’ Report. Insurance companies are required to report key performance indicators (KPIs) on sustainable underwriting activities and sustainable investments. The first one refers to the proportion of the non-life gross written premiums (GWP) – in relation to total non-life GWP – corresponding to insurance activities identified as environmentally sustainable in the EU Taxonomy and the second one to the proportion of the insurer’s or reinsurer’s investments that are directed at or associated with funding economic activities that qualify as environmentally sustainable. Sustainable underwriting activities Non-life insurance and reinsurance are recognised as enabling economic activities that can make a substantial contribution to the environmental objective of climate change adaptation. At the time of writing this report, the EU Taxonomy does not define other environmental objectives for insurance activities. The non-life insurance activities listed in the Taxonomy Delegated Acts are (a) medical expense insurance, (b) income protection insurance, (c) workers’ compensation insurance, (d) motor vehicle liability insurance, (e) other motor insurance, (f) marine, aviation, and transport insurance, (g) fire and other damage to property insurance, and (h) assistance. Premiums related to life insurance and general liability insurance are not listed in the Taxonomy and are, therefore, not eligible. Methodology To be eligible, a non-life insurance activity must provide coverage against climate-related perils (e.g. flooding, landslides, and heat stress). In 2021 and 2022 Sampo Group calculated and reported the Taxonomy eligibility of its insurance activities by following the industry best practice at the time. If an insurance policy did not explicitly exempt climate-related events from coverage, Sampo Group concluded that the insurance product encompassed coverage against climate-related perils. Sampo Group interpreted that if there was some cover against climate-related perils for an insurance activity, total premiums were to be assessed as eligible even though there might have been climate-related exceptions in the terms and conditions. This methodology resulted in eligibility scores of 93.3 per cent and 92.3 per cent for the years 2021 and 2022, respectively, as Sampo Group’s insurance policies do not, in general, exempt climate-related events from coverage. In 2023, Sampo Group has revised its methodology to calculate Taxonomy eligibility to be in line with the European Commission Notice (draft) on the interpretation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation, published on 21 December 2023. Sampo Group has aimed at following the guidance provided by the Notice as closely as possible, and for the year 2023 solely the share of insurance premiums that only pertain to the coverage of climate-related perils is reported as eligible. Due to the late publication of the guidance, Sampo Group was not able to gather data of its whole insurance portfolio based on the new methodology. Eligibility could be calculated for the property insurance products, which were in focus for the Taxonomy alignment assessment, as the data on the share of the premium related to coverage of climate related perils was available. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 34 ===== SIDA 35 ===== As required by the December 2023 guidance, the premiums for which Sampo Group was unable to obtain the necessary data related to climate-related perils are reported as non-eligible. The new methodology leads to a significantly lower eligibility figure compared to the previous years. For an eligible insurance activity to be classified as Taxonomy-aligned, it must fulfil the technical screening criteria of • Substantial contribution to climate change adaptation: – Leadership in modelling and pricing of climate risks – Product design – Innovative insurance coverage solutions – Data sharing – H i g h l e v e l o f s e r v i c e i n p o s t - d i s a s t e r s i t u a t i o n • Do No Significant Harm (‘DNSH’) climate change mitigation criteria: The activity does not include insurance of the extraction, storage, transport, or manufacture of fossil fuels or insurance of vehicles, property, or other assets dedicated to such purposes. To assess the Taxonomy alignment of their activities, the Sampo Group companies first screened the fulfilment of the criteria of substantial contribution on a line of business level. For the product lines, where evidence of fulfilling the criteria was discovered, a more thorough, product level analysis was conducted. Where possible, the companies further divided the premiums to the most granular level (e.g. based on a policy, country, or element) where the technical screening criteria were fulfilled, and only deemed the share related to coverage of climate related perils of these specific premiums as Taxonomy-aligned. For assessing the DNSH-criteria, the Group companies used NACE codes to extract contracts that could be related to extraction, storage, transport, or manufacture of fossil fuels. For an economic activity to be considered as Taxonomy-aligned, a company carrying the activity must also meet the minimum safeguards, which are due diligence and remedy procedures implemented to ensure alignment with the OECD Guidelines for multinational Enterprises and the UN Guiding Principles on Business and Human Rights. Sampo Group has implemented the required policies (e.g. Sampo Group Code of Conduct) and taken actions to be compliant with the safeguards. Sampo Group has, for example, conducted a human rights impact assessment, and continues to ensure that the adequate human rights due diligence processes are maintained and constantly developed. As part of the Taxonomy alignment assessment, the Group companies have also assessed their compliance with the minimum safeguards separately. Underwriting KPIs The analysis, which is based on the above-mentioned interpretations, shows that 2.2 per cent of Sampo Group’s total non-life GWP were Taxonomy-eligible and 1.0 per cent of total GWP were Taxonomy-aligned in 2023. All the reported eligible and aligned premiums were in If’s insurance portfolio, as a proportion of If’s premiums related to fire and other damage to property insurance fulfilled all the technical screening criteria, and for those premiums If was able to separate the share that only pertains to the coverage of climate-related perils, as required by the European Commission guidance. If also complies with the minimum safeguards. If has screened its procedures based on the UN and OECD guidelines, and has, for instance, mechanisms in place to assess whether its corporate clients are complying with the UN Global Compact principles, uses norm-based research for investments to identify sustainability risks, and expects its suppliers to sign If’s Supplier Code of Conduct. More details on If’s Human rights due diligence process and its steps can be found on If’s Sustainability Report 2023. Sampo Group continues to integrate the EU Taxonomy into its business strategy and product development processes while monitoring the market expectations and customer needs in this area. In the coming years, Sampo Group aims to increase the share of Taxonomy- aligned underwriting activities in its insurance portfolio. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 35 ===== SIDA 36 ===== Taxonomy-eligible and Taxonomy-aligned non-life insurance and re-insurance activities Sampo Group, 2023 Substantial contribution to climate change adaptation DNSH (Do No Significant Harm) Economic activities Absolute premiums, 2023 Proportion of premiums, 2023 Proportion of premiums, 2022 Climate change mitigation Water and marine resources Circular economy Pollution Biodiversity and ecosystems Minimum safeguards (EURm) % % Y/N Y/N Y/N Y/N Y/N Y/N A.1. Non-life insurance and reinsurance underwriting Taxonomy-aligned activities (environmentally sustainable) 81 1.0 N/A Y Y Y Y Y Y A.1.1 Of which reinsured — — N/A — — — — — — A.1.2 Of which stemming from reinsurance activity — — N/A — — — — — — A.1.2.1 Of which reinsured (retrocession) — — N/A — — — — — — A.2 Non-life insurance and reinsurance underwriting Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities) 105 1.2 N/A B. Non-life insurance and reinsurance underwriting Taxonomy-non-eligible activities 8,266 97.8 N/A Total (A.1 + A.2 + B) 8,453 100.0 100.0 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 36 ===== SIDA 37 ===== Sustainable investment activities The EU Taxonomy requires insurance companies to report the proportion of underlying investments that are Taxonomy-eligible and -aligned. To facilitate this type of reporting at portfolio level, all holdings need to be screened and analysed in relation to the economic activities of the Taxonomy. Methodology Sampo Group analysed all underlying investments according to the Taxonomy reporting requirements, except for sovereign exposures that are to be excluded from the Taxonomy analysis. In Sampo Group’s analysis, exposures to municipalities were not categorised as sovereign exposure. When analysing Taxonomy eligibility and alignment, derivatives and investments to undertakings not falling under the scope for publishing non-financial information under Directive 2013/34/EU (i.e. non-NFRD companies), were excluded from the numerator, in line with the reporting requirements set in the Taxonomy Disclosures Delegated Act. Reporting requirements also obligate insurance undertakings to distinguish the proportion of the investments held in respect of life insurance contracts where the investment risk is borne by the policy holders and the proportion of remaining investments. Sampo Group has no investments held in respect of life insurance contracts where the investment risk is borne by the policy holders. The EU Taxonomy analysis of Sampo Group’s investments was performed with the use of data from an external data provider, ISS ESG (ISS). Sampo Group changed the data provider for its 2023 reporting. The change was due to the demerger of Mandatum and further alignment of service providers across the Group. Moreover, as Mandatum is no longer part of the Sampo Group reporting, the EU Taxonomy reporting for 2023 is not comparable to the previous years. ISS identified companies engaged in economic activities covered by the Taxonomy and produced all Taxonomy indicators directly based on the respective investee companies’ own reporting of Taxonomy eligibility and alignment. The indicators were provided based on both underlying companies’ revenue and capital expenditures. As security specific (e.g., mortgage bonds) eligibility and alignment data is still scarce, most of the securities’ eligibility and alignment data was matched to the issuer’s reported data. Companies’ reported eligibility and alignment data was not modified in any way by the data provider or by Sampo Group and, therefore, it includes some discrepancies (e.g., breakdown of alignment to environmental objectives does not correspond to total alignment). The relevant investment assets were further analysed according to the Taxonomy reporting requirements by using both data provided by ISS and data gathered based on each individual security's issuer. The investments in undertakings categorised as non-NFRD companies were identified by using data provided by ISS. As ISS does not cover all NFRD companies, there is a possibility that in the assets not covered by the analysis, there are NFRD companies that have not been identified. Investments in undertakings from the EU and non-EU countries have been identified using the securities' issuers' country code. Similarly, investments in undertakings categorised as financial and non- financial have been identified using the securities' issuers' internal sector information to determine the main sector the companies operate in (e.g., NACE codes). The underlying investments analysed also included Sampo Group’s real assets (property plant and equipment as well as investment property), cash and cash equivalents, investments in associated companies and intangible assets and they are included in the denominator of the EU Taxonomy calculations. For the direct real estate investments, no activities with EU taxonomy alignment were found. However, direct real estate investments have been included in the EU Taxonomy eligibility figures for Sampo Group. All investments in associated companies were in non-NFRD companies, and thus, included no EU Taxonomy eligibility or alignment figures. Cash and cash equivalents were analysed based on the counterparties but due to the nature of the instruments (e.g. cash and money market instruments), there was no EU Taxonomy eligibility or alignment reported. The intangible assets of Sampo Group were also not found to have activities related to the EU Taxonomy. Investment KPIs According to the analysis, the turnover and capital expenditures-based Taxonomy eligibility of Sampo Group’s covered assets was 4.1 per cent and 5.1 per cent, respectively and the turnover-based and capital expenditures-based Taxonomy alignment of Sampo Group’s covered assets was 0.7 per cent and 0.9 per cent, respectively, on 31 December 2023. As expected, the reported numbers are low, as most of the underlying companies are not subject to mandatory Taxonomy reporting and reported eligibility and alignment are low in general. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 37 ===== SIDA 38 ===== Taxonomy-eligible and Taxonomy-aligned investment activities Sampo Group, 31 December 2023 EURm The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities relative to the value of total assets covered by the KPI, with following weights for investments in undertakings per below: The weighted average value of all the investments of insurance or reinsurance undertakings that are directed at funding, or are associated with Taxonomy-aligned economic activities, with following weights for investments in undertakings per below: Turnover-based: 0.7% Turnover-based: 129 Capital expenditures-based: 0.9% Capital expenditures-based: 184 The percentage of assets covered by the KPI relative to total investments of insurance or reinsurance undertakings (total AuM). Excluding investments in sovereign entities. The monetary value of assets covered by the KPI. Excluding investments in sovereign entities. Coverage ratio: 96.0% Coverage: 19,847 Additional, complementary disclosures: breakdown of denominator of the KPI The percentage of derivatives relative to total assets covered by the KPI. The value in monetary amounts of derivatives. 0.1% 21 The proportion of exposures to financial and non-financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/ EU over total assets covered by the KPI: Value of exposures to financial and non- financial undertakings not subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: 19.9% For non-financial undertakings: 3,947 For financial undertakings: 37.1% For financial undertakings: 7,362 The proportion of exposures to financial and non-financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of exposures to financial and non- financial undertakings from non-EU countries not subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: 9.5% For non-financial undertakings: 1,877 For financial undertakings: 8.8% For financial undertakings: 1,750 The proportion of exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/ EU over total assets covered by the KPI: Value of exposures to financial and non- financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: Additional, complementary disclosures: breakdown of denominator of the KPI For non-financial undertakings: 9.7% For non-financial undertakings: 1,927 For financial undertakings: 14.9% For financial undertakings: 2,955 The proportion of exposures to other counterparties and assets over total assets covered by the KPI: Value of exposures to other counterparties and assets: 18.3% 3,636 The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned economic activities1: Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy- aligned economic activities1: 100.0% 19,847 The value of all the investments that are funding economic activities that are not Taxonomy-eligible relative to the value of total assets covered by the KPI2: Value of all the investments that are funding economic activities that are not Taxonomy- eligible2: 95.9% 19,025 The value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned relative to the value of total assets covered by the KPI3: Value of all the investments that are funding Taxonomy-eligible economic activities, but not Taxonomy-aligned3: 3.5% 693 1The figure on the table equals the total amount of Sampo Group’s investments covered by the KPI other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders. The turnover-based and capital expenditures-based alignment for these investments are 0.7% and 0.9%, respectively. 2Turnover-based figure is reported on the table. Capital expenditures-based figure is 94.9%. 3Turnover-based figure is reported on the table. Capital expenditures-based figure is 4.2%. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 38 ===== SIDA 39 ===== Additional, complementary disclosures: breakdown of numerator of the KPI The proportion of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU over total assets covered by the KPI: Value of Taxonomy-aligned exposures to financial and non-financial undertakings subject to Articles 19a and 29a of Directive 2013/34/EU: For non-financial undertakings: For non-financial undertakings: Turnover-based: 0.6% Turnover-based: 124 Capital expenditures-based: % 0.8% Capital expenditures-based: 166 For financial undertakings: For financial undertakings: Turnover-based: 0.0% Turnover-based: 6 Capital expenditures-based: 0.1% Capital expenditures-based: 18 The proportion of the insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy-aligned: Value of insurance or reinsurance undertaking’s investments other than investments held in respect of life insurance contracts where the investment risk is borne by the policy holders, that are directed at funding, or are associated with, Taxonomy- aligned: Turnover-based: 0.7% Turnover-based: 129 Capital expenditures-based: 0.9% Capital expenditures-based: 184 The proportion of Taxonomy-aligned exposures to other counterparties and assets in over total assets covered by the KPI: Value of Taxonomy-aligned exposures to other counterparties and assets over total assets covered by the KPI: Turnover-based: —% Turnover-based: — Capital expenditures-based: —% Capital expenditures-based: — Breakdown of the numerator of the KPI per environmental objective Taxonomy-aligned activities – provided ‘do-not-significant-harm’(DNSH) and social safeguards positive assessment: (1) Climate change mitigation Turnover: 0.5% Transitional activities: Turnover: 0,1% ; CapEx: 0,1% CapEx: 0.8% Enabling activities: Turnover: 0,2% ; CapEx: 0,4% (2) Climate change adaptation Turnover: 0.0% Enabling activities: Turnover: 0,0% ; CapEx: 0,0% CapEx: 0.0% (3) The sustainable use and protection of water and marine resources Turnover: —% Enabling activities: Turnover: -% ; CapEx: -% CapEx: —% (4) The transition to a circular economy Turnover: —% Enabling activities: Turnover: -% ; CapEx: -% CapEx: —% (5) Pollution prevention and control Turnover: —% Enabling activities: Turnover: -% ; CapEx: -% CapEx: —% (6) The protection and restoration of biodiversity and ecosystems Turnover: —% Enabling activities: Turnover: -% ; CapEx: -% CapEx: —% Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 39 ===== SIDA 40 ===== Supplementary voluntary information To supplement the mandatory disclosures, Sampo Group provides voluntary disclosures with additional details. Calculation of Taxonomy eligibility according to the previous methodology, not taking into consideration the European Commission Notice (draft) published on 21 December 2023, shows that 94.2 per cent of Sampo Group’s non-life insurance GWP would have been Taxonomy eligible in 2023 (92.3 per cent in 2022). Calculation of taxonomy alignment, not taking into consideration the European Commission Notice (draft) published on 21 December 2023, shows that 6.7 per cent of Sampo Group’s non-life insurance GWP would have been Taxonomy-aligned in 2023. Going forward, Sampo Group closely follows the development of the Taxonomy regulation as the Group is committed to developing its assessment and reporting processes accordingly. Following the publication of the Commission Notice (draft) on 21 December 2023, Sampo Group has acknowledged the reporting requirements laid down by the Delegated Regulation (EU) 2022/1214, related to fossil gas and nuclear energy sectors. Due to late publication date of the Notice, Sampo Group was not able to gather reliable data for declaring the information as part of this report. In addition, the varying reporting practices and data quality of non-financial companies impacted Sampo Group’s capabilities of producing high quality reporting for the financial year 2023. During 2024, Sampo Group will focus on enhancing its data collection in accordance with the European Commission guidance. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 40 ===== SIDA 41 ===== Events after the end of the reporting period Change in reference point for disaggregation of IFRS 17 discounting effects in If On 18 January 2024, Sampo published a press release regarding technical changes in the calculation methodology for discounting effects in If. Following an analysis of the application of IFRS 17 over 2023, the reference point used in If P&C for disaggregation of IFRS 17 discounting effects has been changed from the beginning of year to the beginning of quarter. The change in reference point impacts on the split of discounting effects between the ISR and IFIE, but not profit before taxes. This reflects the Group’s practice of providing financial results for individual quarters, and a desire to align more closely with common market practice and the approach taken by other Group companies. SAMPO PLC Board of Directors Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 41 ===== SIDA 42 ===== Key figures Financial highlights 2023 2022 (restated) 2022 (published) 2021 2020 2019 Group Gross written premiums & brokerage income EURm 8,870 8,375 — — — — Insurance revenue, net EURm 7,412 7,168 — — — — Insurance service result, net EURm 1,193 1,062 — — — — Underwriting result EURm 1,164 1,031 1,314 1,282 967 — Net financial result EURm 560 1,056 — — — — Profit before taxes (P&C operations) EURm 1,481 1,924 1,863 3,171 380 1,541 Net profit for the equity holders EURm 1,323 2,107 1,427 2,567 37 1,130 Combined ratio % 84.6 85.8 82.1 81.4 83.4 — Solvency ratio1 3 % 182 210 210 185 176 174 Financial leverage % 25.3 24.4 25.6 23.8 28.6 — Return on equity % 15.6 4.2 -1.3 26.8 3.1 12.0 Average number of staff incl. Mandatum 13,935 13,550 13,550 13,274 13,227 9,813 If 2023 2022 (restated) 2022 (published) 2021 2020 2019 Gross written premiums EURm 5,468 5,432 — — — — Insurance revenue, net EURm 4,996 5,024 — — — — Insurance service result/underwriting result EURm 842 673 985 891 801 682 Net financial result EURm 539 888 — — — — Premiums written before reinsurers' share (IFRS 4) EURm — — 5,432 5,134 4,823 4,675 Premiums earned (IFRS 4) EURm — — 5,002 4,772 4,484 4,388 Profit before taxes EURm 1,358 1,550 1,217 1,077 901 884 Combined ratio % 83.1 86.6 80.3 81.3 82.1 84.5 Cost ratio % 21.2 21.6 21.1 21.4 21.5 21.8 Risk ratio % 61.9 65.0 59.2 59.9 60.7 62.7 Adjusted risk ratio, current year, %5 % 61.3 62.3 — — — — Undiscounted adjusted risk ratio, current year, %6 % 64.7 65.2 — — — — Loss ratio % 67.6 70.7 64.9 65.5 66.4 68.4 Expense ratio % 15.6 15.9 15.4 15.8 15.8 16.1 Return on equity % 31.3 13.2 6.1 37.0 33.3 34.5 Average number of staff 7,858 7,496 7,496 7,223 7,182 6,603 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 42 ===== SIDA 43 ===== Topdanmark 2023 2022 (restated) 2022 (published) 2021 2020 2019 Gross written premiums EURm 1,339 1,308 — — — — Insurance revenue, net EURm 1,288 1,255 — — — — Insurance service result/underwriting result EURm 194 230 224 227 182 210 Net financial result EURm 27 -28 — — — — Premiums written before reinsurers' share, P&C insurance (IFRS 4) EURm — — 1,391 1,383 1,315 1,272 Premiums earned, P&C insurance (IFRS 4) EURm — — 1,326 1,285 1,227 1,178 Profit before taxes EURm 162 158 220 346 167 238 Combined ratio % 85.0 81.7 83.1 82.3 85.2 82.1 Loss ratio % 66.9 64.4 66.8 66.7 69.0 66.2 Expense ratio % 18.1 17.2 16.3 15.6 16.2 16.0 Average number of staff 2,160 2,381 2,381 2,395 2,428 2,322 Hastings 2023 2022 (restated) 2022 (published) 2021 16.11.-31.12.2020 2019 GWP & brokerage income EURm 2,063 1,636 — — — — Insurance revenue, net EURm 1,128 889 — — — — Insurance service result, net EURm 157 159 — — — — Underwriting result EURm 128 128 104 164 — — Net financial result EURm 44 27 — — — — Premiums written before reinsurers' share (IFRS 4) EURm — — 1,313 1,127 103 — Net premiums written (IFRS 4) EURm — — 727 495 137 — Premiums earned (IFRS 4) EURm — — 594 499 63 — Profit before taxes EURm 129 107 73 127 -16 — Operating ratio % 89.8 87.2 89.7 80.3 — — Loss ratio % 63.3 57.2 83.7 62.2 — — Return on equity % 13.2 -8.5 — — — — Average number of staff 3,200 3,021 3,021 3,005 2,974 — Holding 2023 2022 (restated) 2022 (published) 2021 2020 2019 Profit before taxes EURm -160 146 146 1,331 -826 139 Average number of staff 54 50 50 63 67 63 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 43 ===== SIDA 44 ===== Per share key figures 2023 2022 (restated) 2022 (published) 2021 2020 2019 Earnings per share EUR 2.62 3.97 2.69 4.63 0.07 2.04 Earnings per share, continuing operations2 EUR 2.12 2.88 — — — — Earning per share, discontinuing operations EUR 0.50 1.09 — — — — Operational result per share EUR 2.07 — — — — — Equity per share EUR 14.47 18.70 17.44 23.39 20.56 21.44 Net asset value per share EUR 15.30 20.01 18.74 25.48 19.82 20.71 Market capitalisation4 EURm 19,876 25,112 25,112 24,093 19,199 21,609 Dividend per share EUR 1.80 2.60 2.60 4.10 1.70 1.50 Dividend payout ratio % 68.8 65.4 96.7 88.6 78.7 73.5 Effective dividend yield % 4.5 5.3 5.3 9.3 4.9 3.9 Price/earnings ratio 15.1 12.3 18.1 9.5 16.0 19.1 Number of shares at 31 Dec. 1,000 501,797 514,369 514,369 546,812 555,352 555,352 Average number of shares 1,000 505,939 530,296 530,296 554,317 555,352 555,352 Weighted average number of shares 1,000 505,939 530,296 530,296 554,317 555,352 555,352 A shares 2023 2022 2022 2021 2020 2019 Number of shares at 31 Dec. 1,000 501,597 514,169 514,169 545,612 554,152 554,152 Average number of shares 1,000 505,739 530,096 530,096 553,117 554,152 554,152 Weighted average number of shares 1,000 505,739 530,096 530,096 553,117 554,152 554,152 Weighted average share price EUR 39.36 44.25 44.25 40.50 32.35 39.15 Adjusted share price, high4 EUR 45.21 49.97 49.97 47.33 42.46 43.38 Adjusted share price, low4 EUR 34.53 35.85 35.85 33.82 21.34 34.45 Adjusted closing price EUR 39.61 48.82 48.82 44.06 34.57 38.91 Share trading volume during the financial year 1,000 178,801 257,879 257,879 243,763 376,964 250,282 Relative share trading volume % 35.4 48.6 48.6 44.1 68.0 45.2 B shares 2023 2022 2022 2021 2020 2019 Number of shares at 31 Dec. 1,000 200 200 200 1,200 1,200 1,200 Average number of shares 1,000 200 200 200 1,200 1,200 1,200 1 The Group solvency is calculated according to the consolidation method defined in the Solvency II Directive (2009/138/EC). 2 Earnings per share on continuing operations for comparative period 2022 includes the divested operations i.e. Topdanmark Life operations. 3 The solvency ratio for 2023 is pro forma figure excluding the effect of Saxo Bank on the Group SCR. 4 Share prices have been adjusted to reflect the separation of Mandatum Group in the partial demerger. 5 Adjusted risk ratio illustrates the underlying underwriting performance as it excludes certain volatile effects such as large and severe weather and prior year development on risk ratio. 6Undiscounted adjusted risk ratio excludes the effect from current year discounting on adjusted risk ratio and illustrates the underlying current year underwriting performance. The number of shares used at the reporting date was 501,796,752 and as the average number during the financial period 505,939,064. In calculating the key figures the tax corresponding to the result for the accounting period has been taken into account. In the net asset value per share, the Group valuation difference on the listed subsidiary Topdanmark has been taken into account Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 44 ===== SIDA 45 ===== Calculation of key figures Sampo Group applies IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments from 1 January 2023. Comparative information (IFRS 17) for the year 2022 has been restated. Due to the change in the accounting principle, Sampo presents both the restated key figures and previously published figures for 2022. As a result of the partial demerger during 2023 and the sale of Topdanmark Life operations during 2022, the table excludes any key figures related to the life operations. In addition, the following key figures are no longer included: Equity/assets ratio, Group solvency (in euros), and Earnings per share, incl. items in other comprehensive income or extraordinary items. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 45 ===== SIDA 46 ===== Calculation of key figures The key figures have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying regulations and instructions of the Financial Supervisory Authority. The Group solvency is calculated according to the consolidation method defined in the Solvency II Directive (2009/138/EC) and Insurance Companies Act (521/2008). Additional information on the Group’s alternative performance measures is on the Group’s website www.sampo.com. Return on equity, % + total comprehensive income attributable to owners of the parent x 100%+ total equity attributable to owners of the parent (average of values 1 Jan. and the end of reporting period) Equity/assets ratio, % + total equity attributable to owners of the parent x 100%+ balance sheet total Financial leverage financial debt x 100%equity + financial debt Underwriting result + insurance revenue, net + other income (Hastings) - claims incurred - operating expenses underwriting result Operational result + P&C operations’ (incl. Sampo plc) profit after tax - non-controlling interest in P&C operations - unrealised gains/losses on investments in P&C operations - result effect from changes in discount rates in P&C operations - non-operational amortisations in P&C operations - non-recurring items operational result Combined ratio for P&C insurance, % + claims incurred + operating expenses x 100%+ insurance revenue, net + other revenue (Hastings) Risk ratio for P&C insurance, % + claims incurred – claims settlement expenses x 100%insurance revenue, net Cost ratio for P&C insurance, % + operating expenses + claims settlement expenses x 100%insurance revenue, net Loss ratio for P&C insurance, % claims incurred x 100%insurance revenue, net Expense ratio for P&C insurance, % operating expenses x 100%insurance revenue, net Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 46 ===== SIDA 47 ===== Operating ratio for Hastings, % + claims incurred + acquisition costs + other operating expenses + operational depreciation and amortisation x 100%+ insurance revenue, net + other revenue Per share key figures Earnings per share profit for the financial period attributable to owners of the parent adjusted average number of shares Operational result per share operational result adjusted average number of shares Equity per share equity attributable to owners of the parent adjusted number of shares at the balance sheet date Net asset value per share + equity attributable to owners of the parent ± valuation differences on listed Group companies adjusted number of shares at balance sheet date Market capitalisation number of shares at the balance sheet date x closing share price at the balance sheet date Dividend payout ratio Dividend per share x 100%Earnings per share Effective dividend yield Dividend per share x 100%Adjusted closing price Price/earnings ratio Adjusted closing price Earnings per share Relative share trading volume Share trading volume during the financial year x 100%Average number of A shares Exchange rates used in reporting 1–12/2023 1–9/2023 1–6/2023 1–3/2023 1–12/2022 EURSEK Income statement (average) 11.4745 11.4787 11.3310 11.2050 10.6286 Balance sheet (at end of period) 11.0960 11.5325 11.8055 11.2805 11.1218 DKKSEK Income statement (average) 1.5406 1.5411 1.5219 1.5052 1.4288 Balance sheet (at end of period) 1.4888 1.5465 1.5852 1.5145 1.4956 NOKSEK Income statement (average) 1.0048 1.0116 1.0013 1.0194 1.0522 Balance sheet (at end of period) 0.9871 1.0248 1.0087 0.9900 1.0578 EURDKK Income statement (average) 7.4510 7.4486 7.4464 7.4428 7.4396 Balance sheet (at end of period) 7.4529 7.4571 7.4474 7.4485 7.4365 EURGBP Income statement (average) 0.8697 0.8707 0.8764 0.8831 0.8527 Balance sheet (at end of period) 0.8691 0.8646 0.8583 0.8792 0.8869 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements BOARD OF DIRECTORS’ REPORT 2023 47 ===== SIDA 48 ===== Group’s IFRS Financial Statements Statement of profit and other comprehensive income .......................................... 49 Consolidated balance sheet ................................. 50 Statement of changes in equity .......................... 51 Statement of cash flows ........................................ 52 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 48 ===== SIDA 49 ===== Statement of profit and other comprehensive income EURm Note 1-12/2023 1-12/2022 Insurance revenue 8,417 8,062 Insurance service expenses -7,076 -6,759 Reinsurance result -148 -242 Insurance service result 1 1,193 1,062 Net investment income 2 1,006 320 Net finance income or expense from insurance contracts 3 -446 736 Insurance finance income or expense, gross -529 827 Insurance finance income or expense, reinsurance 83 -90 Net financial result 560 1,056 Other income 4 277 350 Other expenses 5 -457 -436 Finance expenses 7 -93 -98 Share of associates' profit or loss 1 -10 Profit before taxes 1,481 1,924 Income taxes 17,18 -339 -366 Profit from the continuing operations 1,142 1,559 Discontinued operations, net of tax 32 251 579 Divested operations, net of tax 33 — 102 Net profit 1,393 2,240 EURm Note 1-12/2023 1-12/2022 Other comprehensive income 8 Items reclassifiable to profit or loss Exchange differences -1 -268 Available-for-sale financial assets — -1,121 Cash flow hedges -1 0 Taxes — 209 Total items reclassifiable to profit or loss, net of tax -3 -1,180 Items not reclassifiable to profit or loss Actuarial gains and losses from defined pension plans -6 32 Taxes 1 -7 Total items not reclassifiable to profit or loss, net of tax -5 26 Total other comprehensive income for the continuing operations, net of tax -8 -1,154 Other comprehensive income for the discontinued operations, net of tax — -484 Other comprehensive income total, net of tax -8 -1,639 Total comprehensive income 1,386 601 Profit attributable to Owners of the parent 1,323 2,107 Non-controlling interests 70 133 Total comprehensive income attributable to Owners of the parent 1,316 468 Non-controlling interests 70 133 Earnings per share (EPS), EUR 2.62 3.97 Earnings per share, continuing operations, EUR 2.12 2.88 Sampo Group applies IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments from 1 January 2023. Comparative information on IFRS 17 for the year 2022 is restated. For more information on the implementation, please see accounting principles section IFRS 17 and IFRS 9 transition impacts. Mandatum segment has been presented in the table on a single line as a discontinued operations. For further information, please see note 32. Earnings per share on continuing operations for comparative period 2022 includes the divested operations, i.e. Topdanmark Life operations. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 49 ===== SIDA 50 ===== Consolidated balance sheet EURm Note 12/2023 12/2022 1 Jan 2022 Assets Property, plant and equipment 10 318 355 373 Investment property 12 0 166 236 Intangible assets 11 3,637 3,494 3,660 Investments in associates 13 12 16 475 Financial assets 14,15,16 15,757 19,565 19,862 Financial assets related to unit-linked contracts — 9,930 10,546 Deferred income tax 17 3 11 53 Insurance contract assets — 6 41 Reinsurance contract assets 21 2,282 1,821 2,008 Other assets 19 800 775 712 Cash and cash equivalents 1,415 3,073 4,690 Non-current assets held for sale* 33 — — 16,029 Total assets 24,225 39,212 58,684 EURm Note 12/2023 12/2022 1 Jan 2022 Liabilities Insurance contract liabilities 20,21,22 ,23 11,716 16,210 18,266 Investment contract liabilities — 7,103 7,239 Subordinated debts 24 1,645 1,983 2,016 Other financial liabilities 24 1,269 1,457 2,315 Deferred income tax 17 567 666 851 Other liabilities 25 1,342 1,617 1,532 Liabilities related to non-current assets held for sale* 33 — — 13,010 Total liabilities 16,538 29,035 45,228 Equity 27 Share capital 98 98 98 Reserves 1,530 1,530 1,530 Retained earnings 6,378 8,482 9,945 Other components of equity -743 -492 1,231 Equity attributable to owners of the parent 7,263 9,618 12,805 Non-controlling interests 424 560 651 Total equity 7,687 10,178 13,456 Total equity and liabilities 24,225 39,212 58,684 Sampo Group applies IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments from 1 January 2023. Comparative information (IFRS 17) for the year 2022 has been restated. For more information on the implementation, please see accounting principles section IFRS 17 and IFRS 9 transition impacts. Mandatum is included in the IFRS 17 opening balance sheet on 1 January 2022, and in the comparative period 2022. For further information, please see note 32. *Topdanmark Life was classified as non-current assets held for sale on 1 January 2022 and the sale was completed on 1 December 2022. Topdanmark Life is accounted for under IFRS 17 in the opening balance 1 January 2022. Please see note 33 for further information. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 50 ===== SIDA 51 ===== Statement of changes in equity EURm Share capital Legal reserve Invested unres- tricted equity Cash flow hedges Total Non- controlling interest Total Equity at 31 December 2021 (IFRS 4) 98 4 1,527 9,952 -415 1,622 — 12,788 676 13,464 Impact of IFRS 17 transition 1 January 2022 — — — -7 — 23 — 16 -25 -9 Restated equity at 1 January 2022 (IFRS 17) 98 4 1,527 9,945 -415 1,646 — 12,805 651 13,456 Changes in equity Acquired non-controlling interests — — — -6 — — — -6 -2 -8 Dividends4 — — — -2,186 — — — -2,186 -207 -2,393 Acquisition of own shares — — — -1,444 — — — -1,444 — -1,444 Changes in associate share holdings — — — -10 — — — -10 — -10 Other changes in equity — — — 51 -58 -1 — -9 -15 -24 Profit for the reporting period — — — 2,107 — — — 2,107 133 2,240 Other comprehensive income for the period — — — 26 -268 -1,396 — -1,639 — -1,639 Total comprehensive income — — — 2,133 -268 -1,396 — 468 133 601 Equity at 31 December 2022 98 4 1,527 8,482 -741 248 — 9,618 560 10,178 Equity at 31 December 2022 (IFRS 17, restated) 98 4 1,527 8,482 -741 248 0 9,618 560 10,178 Impact of IFRS 9 transition 1 January 2023 — — — 248 — -248 — — — — Restated equity at 1 January 2023 98 4 1,527 8,730 -741 — 0 9,618 560 10,178 Changes in equity Acquired non-controlling interests — — — -11 — — — -11 -3 -14 Dividends4 — — — -1,321 — — — -1,321 -187 -1,508 Transferred assets at fair value in the demerger — — — -1,835 — — — -1,835 — -1,835 Acquisition of own shares — — — -555 — — — -555 — -555 Other changes in equity — — — 51 — — — 51 -15 36 Profit for the reporting period — — — 1,323 — — — 1,323 70 1,393 Other comprehensive income for the period — — — -5 -1 — -1 -8 — -8 Total comprehensive income — — — 1,318 -1 — -1 1,316 70 1,386 Equity at 31 December 2023 98 4 1,527 6,378 -742 — -1 7,263 424 7,687 Retained earnings1 Transla- tion of foreign operations2 Available- for-sale financial assets3 1 IAS 19 Pension benefits had a net effect of EUR -5 million (26) on retained earnings. 2 In the comparison year, the translation differences of the other comprehensive income include associate Nordax’s share of exchange difference EUR 8 million. 3 In accordance with IAS 39, the comparison year includes EUR -1,300 million recognised in equity and EUR -96 million was transferred to profit or loss from available-for-sale financial assets. 4 Dividend per share EUR 2.60 (4.10) Sampo plc has cancelled 5,401,743 acquired own shares on 30 March 2023 and 9,381,017 shares on 10 August 2023. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 51 ===== SIDA 52 ===== Statement of cash flows EURm 1–12/2023 1–12/2022 Operating activities Profit before tax 1,765 2,744 Adjustments Depreciation and amortisation 158 170 Unrealised gains and losses arising from valuation -559 1,119 Realised gains and losses on investments -280 217 Change in liabilities for insurance and investment contracts 1,146 -14,380 Other adjustments* -537 -2,193 Adjustments total -72 -15,068 Change (+/-) in assets of operating activities Investments** -86 10,384 Other assets -208 2,127 Total -294 12,511 Change (+/-) in liabilities of operating activities Financial liabilities 176 35 Other liabilities -196 291 Paid taxes -277 -290 Paid interest -132 -190 Total -429 -155 Net cash from (or used in) operating activities 970 33 Investing activities Investments in subsidiary shares -247 -7 Divestments in subsidiary shares 20 519 Divestments in associate shares — 2,291 Dividends received from associates — 160 Net investment in equipment and intangible assets 5 8 Net cash from (or used in) investing activities -223 2,970 EURm 1–12/2023 1–12/2022 Financing activities Dividends paid -1,321 -2,186 Dividends paid to non-controlling interests -187 -207 Acquisition of non-controlling interests -14 -9 Acquisition of own shares -555 -1,444 Issue of debt securities 142 62 Repayments of debt securities in issue -473 -920 Net cash used in (or from) financing activities -2,407 -4,704 Total cash flows -1,660 -1,701 Cash and cash equivalents at the beginning of reporting period 3,073 4,819 Effects of exchange rate changes 3 -44 Cash and cash equivalents at the end of reporting period 1,415 3,073 Net change in cash and cash equivalents -1,660 -1,701 Additional information to the cash flow statement 1–12/2023 1–12/2022 Interest income received 751 375 Dividend income received (excl. profit sharing from funds) 92 273 Total out-going cashflows from leases -37 -21 * Other adjustments in the comparison year relate mainly to the sale of Nordea shares. ** Investments include investment property and financial assets. Statement of cash flows includes continuing and discontinued operations. Profit before tax for 2023 is the Group’s profit before taxes together with the discontinued operations’ profit before taxes. In the comparison year, the profit before tax includes the divested operations. The presentation of line items in the comparison year have changed due to the transition to IFRS 17. The items of the statement of cash flows cannot be directly concluded from the balance sheets due to e.g. exchange rate differences, and acquisitions and disposals of subsidiaries during the period. Cash and cash equivalents include cash at bank and in hand EUR 1,081 million (2,907) and short- term deposits (max 3 months) EUR 334 million (166). Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 52 ===== SIDA 53 ===== Group’s notes to the financial statements Summary of material accounting principles . 54 Segment information .............................................. 72 Result by segment for twelve months ended 31 December 2023 ..................................... 73 Result by segment for twelve months ended 31 December 2022 ..................................... 74 Balance sheet by segment at 31 December 2023 ............................................................................... 75 Balance sheet by segment at 31 December 2022 ............................................................................... 76 Geographical information ..................................... 77 Other notes ................................................................. 78 1 Insurance service result ....................................... 78 2 Net investment income ....................................... 79 3 Net finance income or expense from insurance contracts .................................................. 80 4 Other income .......................................................... 80 5 Other expenses ...................................................... 80 6 Auditor's fees .......................................................... 81 7 Finance expenses .................................................. 81 8 Components of other comprehensive income ........................................................................... 82 9 Earnings per share ................................................ 82 10 Property, plant, equipment ............................. 83 11 Intangible assets .................................................... 84 12 Investment property ........................................... 86 13 Investments in associates and joint ventures ........................................................................ 87 14 Financial assets .................................................... 88 15 Determination and hierarchy of fair values 91 16 Movements in level 3 financial instruments measured at fair value ........................................... 96 17 Deferred tax assets and liabilities ................ 99 18 Taxes ....................................................................... 103 19 Other assets .......................................................... 103 20 Insurance contract liabilities ......................... 104 21 Reconciliation of insurance contract liabilities ....................................................................... 105 22 Assets for insurance acquisition cash flows .............................................................................. 114 23 Non-life claims development ......................... 115 24 Financial liabilities .............................................. 124 25 Other liabilities .................................................... 127 26 Employee benefits ............................................. 128 27 Equity and reserves ........................................... 133 28 Incentive schemes ............................................. 134 29 Investments in subsidiaries ........................... 137 30 Material partly-owned subsidiaries ............. 138 31 Related party disclosures ................................. 139 32 Discontinued operations ................................. 139 33 Business operations divested ....................... 142 34 Business combinations .................................... 143 35 Contingent liabilities and commitments .... 144 36 Subsequent events after the balance sheet date ................................................................... 146 37 Risk management disclosure ......................... 147 Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 53 ===== SIDA 54 ===== Group’s notes to the financial statements Summary of material accounting principles Sampo plc (business ID 0142213-3) is a Finnish public company listed in Helsinki Nasdaq. It is domiciled in Helsinki and the headquarters are at Fabianinkatu 27, 00100 Helsinki, Finland. The consolidated financial statements of Sampo Group include Sampo plc together with its subsidiaries and associates as of 31 December 2023. The group subsidiaries have insurance and financing activities in Finland, Sweden, Norway, Denmark, the Baltic countries, and the United Kingdom. A copy of the Group’s financial statements is available at the internet address www.sampo.com. Basis of preparation Sampo Group has prepared the consolidated financial statements for 2023 in compliance with the International Financial Reporting Standards (IFRSs). In preparing the financial statements, Sampo has applied all the standards and interpretations relating to its business, adopted by the commission of the EU and effective on 31 December 2023. In the financial year of 2023, Sampo adopted two new standards IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments. The impact of these two standards on the Group’s financial statements reporting is described in the section IFRS 17 and IFRS 9 transition. The annual improvements or other amendments to the standards, adopted at the beginning of 2023, had no material impact on the Group’s financial statements reporting. In preparing the notes to the consolidated financial statements, attention has also been paid to the Finnish accounting and company legislation and applicable regulatory requirements. The going concern accounting assumption has been assessed by the Board and used in the preparation of the financial statements. The consolidated financial statements are presented in euro (EUR), rounded to the nearest million, unless otherwise stated. The Board of Directors of Sampo plc accepted the financial statements for issue on 6 March 2024. In accordance with Limited Liability Companies Act, the Annual General Meeting has right to approve or reject the consolidated financial statements or change the statements after they have been issued. Consolidation Subsidiaries The consolidated financial statements combine the financial statements of Sampo plc and all its subsidiaries. Companies in which the Group has control are consolidated as subsidiaries. Control exists when the Group has more than half of the voting power or it has power over the entity together with exposure to variable returns from its involvement there and the ability to use its power to affect the amount of these returns. Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date that control ceases. The acquisition method of accounting is used for the purchase of subsidiaries. The cost of an acquisition is allocated to the identifiable assets, liabilities and contingent liabilities, which are measured at the fair value of the date of the acquisition. Acquisition-related costs are recognised through profit or loss. Possible non-controlling interest of the acquired entity is measured either at fair value or at proportionate interest in the acquiree’s net assets. The acquisition- specific choice affects both the amount of recognised goodwill and non-controlling interest. The excess of the aggregate of consideration transferred, non-controlling interest and possibly previously held equity interest in the acquiree, over the Group’s share of the fair value of the identifiable net assets acquired, is recognised as goodwill. The accounting policies used throughout the Group for the purposes of consolidation are consistent with respect to similar business activities and other events taking place in similar conditions. All intra-group transactions and balances are eliminated upon consolidation. Non-controlling interests The technical division of profit for the financial year and the total comprehensive income to the owners of the parent and non-controlling interests is presented after the statement of comprehensive income. The share of profits is attributed to non-controlling interests even if it should be negative. Non-controlling interests are presented in the balance sheet separately as part of equity. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 54 ===== SIDA 55 ===== Non-controlling interests in an acquiree are measured either at fair value or as a proportionate share of net assets of the acquiree. The choice is made for each acquisition separately. At the end of the financial reporting period, Sampo’s non-controlling interests were determined as the proportionate share of net assets of the acquirees. Foreign currency translation The consolidated financial statements are presented in euro, which is the functional and reporting currency of the Group and the parent company. Items included in the financial statements of each of the Group entities are measured using their functional currency, being the currency of the primary economic environment in which the entity operates. Foreign currency transactions are translated into the appropriate functional currency using the exchange rates prevailing at the dates of transactions or the average rate for a month. The balance sheet items denominated in foreign currencies are translated into the functional currency at the rate prevailing at the balance sheet date. Exchange differences arising from the translation of transactions and monetary balance sheet items denominated in foreign currencies into functional currency are recognised as translation gains and losses in profit or loss. During comparative period, exchange differences arising from non-monetary financial assets classified as available-for-sale financial assets were recognised directly in the fair value reserve in equity. The income statements of Group entities whose functional currency is other than euro are translated into euro at the average rate for the period, and the balance sheets at the rates prevailing at the balance sheet date. The resulting exchange differences are included in equity and their change in other comprehensive income. When a subsidiary is divested entirely or partially, the cumulative exchange differences are included in the income statement under sales gains or losses. Goodwill and fair value adjustments arising from an acquisition of a foreign entity are treated as if they were assets and liabilities of the foreign entity. Exchange differences resulting from the translation of these items at the exchange rate of the balance sheet date are included in equity and their change in other comprehensive income. The following exchange rates were applied in the consolidated financial statements: 1 euro (EUR) = Balance sheet date Average exchange rate Swedish krona (SEK) 11.0960 11.4745 Danish krona (DKK) 7.4529 7.4510 Pound sterling (GBP) 0.8691 0.8697 Segment reporting The Group’s segmentation is based on business areas whose risks and performance bases as well as regulatory environment differ from each other. The control and management of business and management reporting are organised in accordance with the business segments. The Group’s business segments are If, Topdanmark, Hastings, and Holding (including Nordea in 2022). Mandatum was presented as a segment until it was reclassified as discontinued operations during the first quarter of 2023. Geographical information has been given on income from external customers and non-current assets. The reported areas are Finland, Sweden, Norway, Denmark, United Kingdom, and the Baltic countries. In the inter-segment and inter-company pricing, for both domestic and cross border transactions, market- based prices are applied. The pricing is based on the Code of Conduct on Transfer Pricing Documentation in the EU and OECD guidelines. Inter-segment transactions, assets and liabilities are eliminated in the consolidated financial statements. Non-current assets held for sale and discontinued operations Non-current assets and the assets and liabilities related to discontinued operations are classified as held for sale, if their carrying amount will be recovered principally through sales transactions rather than from continuing use. For this to be the case, the sale must be highly probable, and the asset or disposal group must be available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets. In addition, the management must be committed to a plan to sell, and the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification. The classification, presentation, and measurement requirements of non-current assets or disposal groups held for sale also apply to those that are held for distribution to owners acting in their capacity as owners. Assets that meet the criteria to be classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Immediately before the initial classification of the asset as held for sale, the carrying amount of the asset shall be measured in accordance with applicable IFRSs. If the fair value less costs to sell is the lower, an entity recognises an impairment loss at initial reclassification. Gains for subsequent increases in fair value are recognised through profit or loss. Once reclassified, any depreciation or recognition of associates’ share of profit or loss on such assets ceases. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 55 ===== SIDA 56 ===== Income and expense recognition principles related to insurance contracts The introduction of IFRS 17 changed the structure of the statement of profit or loss to reflect the key sources of profit. The insurance service result, comprising of insurance revenue, insurance service expenses, and reinsurance result, reflects the result relating to underwriting and servicing insurance policies. The net financial result reflects the impacts arising from financial components of insurance contracts. Insurance revenue Insurance revenue reflects the compensation that Sampo receives from the policyholder in return for the transfer of risk (insurance contract services) on an earned basis. The insurance revenue recognised in the reporting period is based on premium receipts and expected premium receipts allocated linearly over the underlying terms of the insurance contracts, i.e. based on the passage of time. The liability for remaining coverage is reduced with a corresponding amount as the insurance revenue. Insurance service expenses The insurance service expenses comprise of both claims incurred and operating expenses. Claims incurred for the reporting period include claims payments during the period and changes in the liability for incurred claims. The change in liability for the incurred claims includes the changes in undiscounted best estimate, discounted risk adjustment and the changes in discounting effect due to changes in underlying best estimate or changes in payment patterns. The claims incurred also include claims handling expenses and changes in the loss component. Operating expenses reported in the insurance service result relate to administrative expenses arising from the handling of insurance contracts. Additionally, the operating expenses include the acquisition cash flows recognised in profit or loss, where the liability for remaining coverage changes with a corresponding amount. Reinsurance result Reinsurance result comprises both reinsurance premium expenses and reinsurer’s share of claims incurred. Reinsurance premium expenses related to reinsurance contracts held are recognised similarly to insurance revenue and reflect the premium payments attributable to the reporting period for the reinsurance contract services received. Any commissions received reduce the reinsurance premium expenses. The reinsurers’ share of claims incurred is reported consistently with direct insurance expenses, including also changes in the risk of non-performance. Insurance finance income or expense The insurance finance income or expenses included in the net financial result reflect the impacts arising from financial components. These include changes in the liability for incurred claims related to changes in discount rates and time value of money (unwinding). Therefore, the effect from changes in interest rates as well as interest expense is presented in its entirety as insurance finance income or expenses. The effect of changes in indexation of annuities is also presented within insurance finance income or expenses. Amounts related to reinsurance contracts are presented separately. The option to present changes in discounting effect in other comprehensive income is not applied. Net investment income Interest and dividends Interest income and expenses are recognised in the income statement using the effective interest rate method. This method recognises income and expenses on the instrument evenly in proportion to the amount outstanding over the period to maturity. Dividends on equity securities are recognised as revenue when the right to receive payment is established. Fees and commissions The fees and transaction costs of financial instruments measured at fair value through profit or loss are recognised in profit or loss when the instrument is initially recognised. Revenue from contracts with customers Other income consists of income from insurance-related services provided, that do not involve a transfer of significant insurance risk, and are therefore accounted for under IFRS 15 Revenue from contracts with customers. Such income is primarily attributable to sales commission and services for administration, claims settlement, etc. in insurance contracts on behalf of other parties. Furthermore, If Group’s subsidiary Viking Assistance Group AS provides roadside assistance. Income from these services is recognised when roadside assistance has been provided. The subsidiary Hastings has revenue from broker activities in accordance with IFRS 15 Revenue from Contracts with Customers. The revenue consists principally of fees and commissions relating to the Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 56 ===== SIDA 57 ===== arrangement of third party underwritten insurance contracts and ancillary products. Revenue from insurance brokerage activities is recognised at the point of sale to the customer and revenue from other retail services is recognised when the service has been completed. Revenue arising from insurance broking activities is measured on an agency basis, net of cost, at the fair value of the income receivable after adjusting for any allowance for expected future cancellation refunds. Hastings may also provide contracts for the provision of other ad hoc, point-in-time services to customers. Such income is recognised when the performance obligation has been satisfied at the expected value of consideration. In the consolidated financial statements, the fees and commissions from external broker activities are included in Other income or Other expenses. Financial assets and liabilities Sampo Group is applying IFRS 9 Financial Instruments from 1 January 2023. IFRS 9 superseded IAS 39 Financial Instruments: Recognition and Measurement. Sampo Group applied the temporary exemption regarding the adoption of IFRS 9 and implemented IFRS 9 at the same time as IFRS 17 Insurance Contracts. The IFRS 9 comparative figures 2022 were not restated. More details on the IFRS 9 transition are included in the section Transition to IFRS 17 Insurance Contracts and IFRS 9 Financial Instruments. Initial recognition and derecognition Financial assets and liabilities are measured at the initial recognition at fair value. If the acquired financial assets and liabilities are not measured at fair value, transaction costs directly attributable to acquisition or issue are added or deducted respectively. Purchases and sales of financial assets at fair value through profit or loss are recognised and derecognised on the trade date, which is the date on which the Group commits to purchase or sell the asset. Loans and other receivables are recognised when cash is advanced. Financial assets and liabilities are offset, and the net amount is presented in the balance sheet only when the Group has a legally enforceable right to set off the recognised amounts and it intends to settle on a net basis, or to realise the asset and settle the liability simultaneously. Financial assets are derecognised when the contractual rights to receive cash flows have expired or the Group has substantially transferred all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation specified in the contract is discharged, cancelled or expired. IFRS 9 Classification and measurement principles (applied 1 January 2023 onwards) Financial assets are classified as being subsequently measured either at amortised cost, at fair value through other comprehensive income (FVOCI) or at fair value through profit or loss (FVPL). Under IFRS 9, the majority of Sampo Group’s financial assets are classified at fair value through profit or loss and only a limited amount of financial assets is measured at amortised cost. No financial assets are classified as FVOCI. The classification of financial assets into these measurement categories is based on Sampo Group’s business model for managing the financial assets and the contractual cash flow characteristics of the financial assets. Business model reflects how the portfolios of financial assets are managed to achieve business objectives and to generate cash flows. The factors considered in determining the portfolio’s business model include how the financial assets’ performance is evaluated and reported to management, how risks are assessed and managed, past experience of how the cash flows have been collected, and how compensation is linked to performance. Financial assets at fair value through profit or loss Financial assets classified as at fair value through profit or loss include mainly investments in equity instruments and funds, debt instruments, and other loans. Equity instruments are classified and measured at fair value through profit or loss. Debt instruments, such as bonds and other interest- bearing securities, are classified as measured at fair value through profit or loss when the business model reflects the assets being managed and evaluated on a fair value basis. The instruments are initially recognised and subsequently measured at fair value. Transaction costs that are directly attributable to the issue or acquisition of the assets are expensed in profit or loss. Gains and losses arising from changes in fair value, or realised on disposal, together with related interest income and dividend, are recognised in the income statement under net investment income. Derivative instruments that are not designated as hedges and do not meet the requirements for hedge accounting are classified as financial assets at fair value through profit or loss. Derivatives are initially recognised at fair value. Derivative instruments are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Derivative instruments are recognised at fair value, and gains and losses arising from changes in fair value, together with realised gains and losses, are recognised in the income statement under net investment income. Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 57 ===== SIDA 58 ===== Financial assets measured at amortised cost A financial asset is measured at amortised cost only if the objective of the business model is to hold a financial asset in order to collect contractual cash flows, and the contractual cash flows of the financial asset meet the SPPI criteria (solely payments of principal and interest - criteria, SPPI) i.e. it is consistent with basic lending arrangement. SPPI criteria is met when the financial instrument’s contractual cash flows are solely payments of principal and interest on the principal amount outstanding. Financial assets measured at amortised cost comprise mainly debt instruments, loans, and receivables. Financial assets measured at amortised costs are initially recognised at their fair value, including transaction costs directly attributable to the acquisition of the asset. Loans and other receivables are subsequently measured at amortised cost using the effective interest rate method. Interest revenue is calculated using the effective interest rate method. Under IFRS 9 financial assets subsequently measured at amortised cost are subject to loss allowance, that is, expected credit losses (ECL) requirements. Financial liabilities Financial liabilities, including subordinated debt securities, debt securities in issue, and other financial liabilities, are subsequently measured at amortised cost using the effective interest rate method. Interest expenses and gains or losses on derecognition are recognised in the income statement. Derivative financial liabilities are measured at fair value through profit or loss. If debt securities issued are redeemed before maturity, they are derecognised and the difference between the carrying amount and the consideration paid at redemption is recognised in profit or loss. IAS 39 Classification and measurement principles (comparative period 2022) During the comparative year 2022, based on the measurement practice, financial assets and liabilities were classified in the following categories upon the initial recognition: financial assets at fair value through profit or loss, loans and receivables, available-for-sale financial assets, financial liabilities at fair value through profit or loss, and other liabilities. Accounting principles related to classification and measurement principles under IAS 39 are presented in full in the Financial Statements 2022. Fair value The fair value of financial instruments is determined primarily by using quoted prices in active markets. Instruments are measured either at a bid price or at the last trade price if there is an auction policy in the stock market of the price source. An exception are the syndicated loans which are measured at a mid-price because of the lower liquidity. The financial derivatives are also measured at the last trade price. If the financial instrument has a counter-item that will offset its market risk, the same price source is used in assets and liabilities to that extent. If a published price quotation does not exist for a financial instrument in its entirety, but active markets exist for its component parts, the fair value is determined based on the relevant market prices of the component parts. Fair values of financial assets are based on either published price quotations or valuation techniques based on market observable inputs, where available. If these are not available, the fair value is established by using generally accepted valuation techniques including recent arm’s length market transactions between knowledgeable, willing parties, reference to the current fair value of another instrument that is substantially the same, discounted cash flow analysis, and option pricing models. For a limited amount of assets, the value needs to be determined using these other techniques. The carrying amount of cash and cash equivalents as well as settlement receivables included in other assets is used as an approximation of fair value. The financial instruments measured at fair value have been classified into three hierarchy levels in the notes, depending on, e.g. if the market for the instrument is active, or if the inputs used in the valuation technique are observable. On level 1, the measurement of the instrument is based on quoted prices in active markets for identical assets or liabilities. On level 2, inputs for the measurement of the instrument include also other than quoted prices observable for the asset or liability, either directly or indirectly by using valuation techniques. On level 3, the measurement is based on other inputs rather than observable market data. The majority of Sampo Group’s level 3 assets are private equity and alternative funds. For private equity funds, the valuation of the underlying investments is conducted by the fund manager who has all the relevant information required in the valuation process. The valuation is usually updated quarterly based on the value of the underlying assets and the amount of debt in the fund. There are several valuation methods, which can be based on, for example, the acquisition value of the investments, the value of Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 58 ===== SIDA 59 ===== publicly traded peer companies, the multiple-based valuation, or the cashflows of the underlying investments. Most private equity funds follow the International Private Equity and Venture Capital (IPEV) guidelines which give detailed instructions on the valuation of private equity funds. For alternative funds, the valuation is also conducted by the fund managers. Alternative funds often have complicated structures, and the valuation is dependent on the nature of the underlying investments. There are many different valuation methods that can be used, for example, the method based on the cashflows of the underlying investments. The operations and valuation of alternative funds are regulated, for example by the Alternative Investment Fund Managers Directive (AIFMD), which determines the principles and documentation requirements of the valuation process. Impairment of financial assets Sampo assesses at the end of each reporting period whether there is any objective evidence that a financial asset, other than those at fair value through profit or loss, may be impaired. A financial asset is impaired and impairment losses are recognised based on the estimated future cash flows of the financial asset if there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset and if that event has an impact that can be reliably estimated. There is objective evidence of impairment, if, for example, an issuer or debtor encounters significant financial difficulties that will lead to insolvency and to estimation that the customer will probably not be able to meet the obligations to the Group. When there is objective evidence of impairment of a financial asset carried at amortised cost, the amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of estimated future cash flows discounted at the receivable’s original effective interest rate. The difference is recognised as an impairment loss in profit or loss. In Sampo Group the impairment is assessed individually for each asset. Financial assets measured at amortised cost IFRS 9 introduced a forward-looking ECL model, which in Sampo Group is mainly applicable to financial assets measured at amortised cost. Impairment requirements do not apply to equity instruments or other financial instruments measured at FVPL. Expected credit losses reflect past events, i.e. historical loss experience, current conditions, and forecasts of future economic conditions. IFRS 9 introduces a general approach for impairment in which a loss allowance is calculated either for 12-month expected credit losses or lifetime expected credit losses. A three staged model is used to determine the ECL at each reporting date. In stage 1, the credit risk has not increased significantly. Loss allowance is measured at an amount equal to 12-month expected credit losses. In stages 2 and 3, the credit risk has increased significantly since initial recognition and the loss allowance is measured at an amount equal to the lifetime expected credit losses. In stage 3, the financial asset is assessed to be credit-impaired (at default) and the interest is calculated on the credit-impaired amount instead of gross carrying amount. In Sampo Group, the general approach is based on three components, namely probability of default (PD), loss given default (LGD), and exposure at default (EAD). Board of Directors’ Report Group’s IFRS Financial Statements Sampo plc’s Financial Statements Auditor’s Report ≡ Group’s notes to the financial statements Sampo plc’s notes to the financial statements FINANCIAL STATEMENTS 2023 59 ===== SIDA 60 =====