Merger of If and Sampo P&C

Merger of If and Sampo's Property & Casualty Insurance business · The pan-Nordic property & casualty insurance company If and Sampo's property & casualty business merge their operations. · The new If will be the undisputed leading P&C insurance company in the Nordic region with market leading positions in private, commercial and industrial lines. · The enlarged If will have a Nordic market share of 24 per cent and 3.7 million customers and be managed in a pan-Nordic business-area organisation. · The enlarged If will substantially benefit from economies of scale and geographic diversification, facilitating the objective to become an independent publicly listed company. · As announced today, Storebrand and Sampo merge their operations and create a new Nordic financial services group with focus on long term savings. · Sampo/Storebrand will own 67.5 per cent of the enlarged If and Skandia will own 32.5 per cent. The transaction is subject to regulatory approvals and completion of Sampo's offer for Storebrand. The rationale behind the merger is to take advantage of the strong market presence the two companies have in their respective regions and to continue the development of one strong Nordic property & casualty insurance company. The transaction significantly strengthens If and thus improves its plans to become the leading Nordic independent publicly listed P&C company. Furthermore, the focus on P&C only will increase the competitive strength and enable skills transfer within the identified core processes; products & pricing, distribution and claims handling. The transaction will allow If to increase its capital strength and realise significant cost synergies, which have been jointly identified. If ´s vision is to become the market leader in distribution efficiency of P&C insurance products. If´s and Sampo´s customers will benefit from the more cost efficient new company through modern and innovative distribution channels and claims handling service. If will strive to provide best price/value to customers across the Nordic region by offering modern and flexible products. The merger will also provide If with a larger database which If can use to improve products and individualised, competitive pricing. The enlarged company will be able to retain, develop and attract competent employees within P&C insurance, which will strengthen If's position even more going forward. The larger entity will also create new challenging career opportunities in a variety of professions Bo Ingemarson, CEO of If: "It is with great pleasure that we announce this deal today. This is an important step to fortify If's position as the leading property & casualty insurance company in the Nordic region and at the same time position the company for further expansion." The mission of the new company is to be a pure play P&C insurance company operating at an efficient level of capitalisation and offering a broad range of P&C products and related risk management services. The future aspirations extend beyond the Nordic countries into other naturally related markets in Northern Europe, including in particular selected parts of Eastern Europe, as well as in defined niche markets where If has a competitive advantage. If will develop and maintain a strong awareness of the If brand on the Nordic market. In Finland, existing customers will be serviced by Sampo's distribution network. Distribution will be further developed to be more client oriented by developing present and new sales and service channels. Policies will be branded Sampo but will be underwritten by If's subsidiaries in Finland. Policies sold through other sales channels in Finland, such as call centres and brokers, will be branded If. The merger is subject to regulatory approvals. The completion of Sampo's voluntary offer to Storebrand shareholders is a condition for the transaction with If. A new Board of Directors will be established with three representatives from Sampo/Storebrand and two representatives from Skandia. Idar Kreutzer will be chairman of the board. Bo Ingemarson is CEO and President. Hannu Kokkonen will be first executive vice president and deputy CEO and Knut W Francke will be senior executive vice president. The transaction is structured as a share swap whereby Sampo receives If new issued shares as consideration for 100% of the shares in the Sampo P&C companies as well as a pre-closing cash payment of E 208MM. Upon completion, Sampo/Storebrand will hold 67.5% of If share capital and Skandia will hold 32.5% of If share capital, respectively. The enlarged If will have pro forma gross written premiums 2000 of SEK 30.4 Bn (E 3.6 Bn). Total assets amount to SEK 81,5 Bn (E9.2Bn). Sampo is Finland's largest P&C insurance company with 34 per cent market share and 1.1 million customers. In 2000, gross written premiums amounted to SEK 8.6 Bn (E 1,023Bn). Sampo also has a leading market position in Estonia and operations in Latvia, Lithuania, Poland and central Europe. If was created in 1999 when Storebrand and Skandia merged their P&C businesses. Today If has a 37 per cent market-share in Norway, a 23 per cent share in Sweden and a 5 per cent market-share in Denmark. Background The consolidation trend in the insurance market is evident. The creation of larger entities is fundamental to be able to continue to provide customers with high value insurance products and solutions in the future. If's position as the leading P&C insurer in the Nordic region lacked a large market presence in Finland. Sampo did not have a significant presence in other Nordic markets outside Finland. The two P&C organisations will together build a strong entity with excellent opportunities to realise synergies and improve customer satisfaction in the future. If will integrate development of new products and insurance solutions, marketing, IT-systems as well as risk management, finance, procurement and management on a pan-Nordic basis. Market position If will have a Nordic market share of 24 per cent. The market share will be 34 per cent in Finland (no 1), 37 per cent in Norway (no 1), 23 per cent in Sweden (no 2) and 5 per cent in Denmark (no 6). If will continue to monitor the Nordic markets and nearby regions for value creating expansion opportunities. The transaction does not change If's focus on profitability before market share. Synergies and financial objectives Sizeable cost synergies have been identified. These are estimated to be in the range of MSEK 150-200 per year, over and above the earlier identified cost synergies in If. In addition to the identified cost synergies, the merger creates significant further value potential through transfer of best practices from both sides and joint transformation. If's financial objective is to achieve a return on net asset value (after tax) of the risk-free rate plus 6 percentage points. Joint media and analyst conference Joint media and analyst conferences in the presence of Kari Stadigh and Bo Ingemarson will be held today May 21 at 17.00 at Skandia, Sveavägen 44, Stockholm. Enquiries: If Helena Dyrssen, +46-70 529 23 35 Sampo Taru Narvanmaa, +358-50 590 9398 ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2001/05/21/20010521BIT00520/bit0001.doc http://www.bit.se/bitonline/2001/05/21/20010521BIT00520/bit0001.pdf