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CEO's Review: A Year of Successful Decisions

The fact that the global financial crisis turned into a sovereign debt crisis presented significant challenges to our industry in 2010. However, despite the turbulence, our results proved to be excellent.

2010 was an outstanding year for Sampo. Our P&C insurance's long-term investments in underwriting excellence paid off and our lead over Nordic competitors grew considerably. Furthermore, we succeeded in assessing the risks properly and our combined ratio fared well despite the difficult weather conditions. And for the seventh successive year, If P&C Insurance exceeded its target of achieving a combined ratio of below 95 per cent. Overall, the company's results for the year were good.

If's customer satisfaction improved in line with expectations and especially those customers who had a claim and consequently had to use the company's claims handling organization were particularly pleased with If's service. In addition, we have correctly anticipated the wishes of our customers, who clearly prefer to settle claims on the Internet. Thanks not least to our online services, already approximately 60 per cent of our Private customers' claims are settled within just 24 hours of submitting a claim.

Increased customer satisfaction can also be seen in the development of the gross written premiums in P&C insurance. The premiums written remained stable during the financial crisis, while 2010 saw a growth in gross written premiums, which reached an all time high of EUR 4.2 billion.

Nordea Lives up to Expectations

The development during 2010 of Nordea Bank, our associated company, met with our expectations. The company's operating profit increased by almost 20 per cent and credit losses decreased. In addition, the bank's customer base grew rapidly and customer satisfaction rose to its highest ever level. The company's governance was further improved due to changes in both the top management and the board. All of this was reflected in the company's share price. At the end of December, the market value of our holding in Nordea amounted to EUR 6.8 billion. The valuation difference of Nordea's shares has already increased significantly from the original purchase price of EUR 5.3 billion.

Life insurance operations had major successes as well. As Finland's leading expert in corporate benefits, Mandatum Life was able to provide enterprises with solutions for retaining employees, and largely speaking, the traditional area of life insurance sales also proceeded well. Furthermore, the Wealth Management Unit of Mandatum Life performed extremely well and experienced strong growth during 2010. Also of significance was Sampo Bank, our partner, producing an exceptionally good sales performance and in doing so returning to the pre-financial crisis level. This was an outstanding achievement from Sampo Bank as our main distribution channel for consumers. Thanks to these achievements, Mandatum Life's results rose and premiums written climbed to an all time high and reached a value of over EUR 1.1 billion.

The European Sovereign Debt Crisis Did Not Take Us by Surprise

Our investment decisions proved to be sound: we predicted the global financial crisis would be followed by a European public sector fiscal crisis. Consequently, our investment portfolio does not contain any sovereign debt of the so called PIIGS countries. Moreover, the general weight of sovereign debt in our investment portfolio remains exceptionally low. In addition, we predicted the positive developments of the Scandinavian economies and elected to increase the Nordic equity weight in our portfolio at the right moment.

The success we achieved in 2010 clearly demonstrates that we listen to our customers' needs. To this end, I would like to extend my sincere thanks not only to our customers, but also to all of the parties in our group who have contributed to making so many successful decisions throughout the year. I would also particularly like to express my thanks to the Board and the Chairman of the Board.

Finally, I would like to say a well deserved thank you to all of our shareholders. Our ownership base has grown steadily and at the end of 2010, the number of shareholders had risen to more than 86,000. In my opinion this demonstrates that our owners have placed considerable trust in us to make the correct decisions. I also believe that the owners will welcome the Board's proposal for a dividend of EUR 1.15 per share.

Despite the good year we must be humble as we face future challenges. Our work continues and many new decisions that will need to be made lie ahead of us in 2011.

Kari Stadigh
Group CEO and President

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