Finnish insurer Sampo Plc has surprised analysts by agreeing to acquire a majority stake in If P&C Insurance for €1.37 billion ($1.75 billion).
The move was surprising for several reasons. Nordic insurer If had been considering an IPO but its stakeholders, Swedish financial services group Skandia, Skandia's mutual unit Skandia Liv and Norwegian insurer Storebrand ASA, may have decided they would not get the price they wanted in an IPO and instead found Sampo's offer of 1.4 times shareholders' equity more appealing.
It was a change of direction for Sampo as well. The company has said for years that it is not committed to non-life insurance, but it will now have full control of If, which has 23% of the Nordic non-life insurance market . Sampo previously held 38% of If but will now hold 89.94%. Varma-Sampo Mutual Pension Insurance will continue to own the remainder.
There also had been talk of Sampo bidding for Skandia, in which it holds a 7.4% stake, but the If purchase reduces the likelihood of that happening as it - plus a proposed dividend of €830 million - means the excess capital Sampo had is now mostly gone.
However, Sampo CEO Björn Wahlroos says: "The transaction will significantly improve our earnings per share this year already and especially in 2005.