Sampo Pank: “You Have to Be Ready for Everything”

Conservatism and prudence has helped one of the biggest Scandinavian investors manage well during the crisis, and the same they suggest to Estonians.

Sampo owns the biggest Scandinavian property insurance company IF and the life insurance company Mandatum Life, which subsidiary – Sampo Life – operates in Baltics. In addition, the group is active in banking. In 2007 they sold Sampo bank, however they have increased their share in Nordea bank.

Petri Niemisvirta, who has been working in the company from the year 2001 and is the leader of the life insurance company Sampo Finland, as well as the member of the directive company of the group. Niemisvirta says that one factor, that has brought success to Sampo, is conservatism.

Unusual attitude

“During the financial crisis we did not need capital from the market,” he recalled. “Instead, we searched for more, because we had capital at that moment.” By compared to others, the group managed to accomplish a better state thanks to the prudent sale and decrease of the stock portfolio of Sampo bank.

“We saw quite realistically, that the market is moving too fast and is too high,” explained Niemisvirta. “We thought that the price of the bank is good now, so we were prepared to sell it, however it was, and is now, a good bank.”

“We also saw that the stock prices are high, and sold a substantial amount of stocks in the years 2007 and 2008,” he added. “Thanks to that, we were in a better situation compared to others in the beginning of the financial crisis – we had low stocks and a lot of capital.”

“We used common sense – taking risks is totally different for us than it is for others,” Niemisvirta disclosed another factor, which brought success to Sampo.

“We do not think that diversification decreases the risk. We do not think that in order to decrease the risk, we must invest into a lot of stocks,” he explained. “We think, it is better to invest in these names, which you really know, and even if there are not many, because you cannot know a lot of names well. In order to minimize the risk, we invest in tens of good stock, not into hundreds.”

Niemisvirta acknowledged that this kind of attitude is contrary to usual way of thinking that a company should invest everywhere: USA, Europe etc.

“Creating wealth in the longer perspective is based upon taking reasonable risks and avoiding superfluous risks,” the vice president of Sampo life insurance company, Janne Saarikko, agreed to Niemisvirta.

Nothing is certain

Because of this, Saarikko has a suggestion to Estonian people and companies. “It is very unlikely, that Estonia devaluates kroon in the near future,” recognized Saarikko. “However, if I were a company or an individual and difference between the interest rates of euro and Estonian kroon would be small, I would take all my loans in Estonian kroons and put my investments into euros.”

“If the difference in interest rates would be 0,2 per cent, it would be a good insurance for that really unlikely, however for individuals as well as companies catastrophic event,” she explained.

“It is important, that nothing is certain in the finance markets and everything can happen,” Saarikko emphasized. “Even whilst the probability of devaluating is small in Estonia, it is a possibility, which might come true, as we know from the experience of Finland from the beginning of 1990s.”