If P&C’s premium growth for 2014 was 1.7 per cent. Positively affected by strong new car sales, continued high activity together with partners and growing internet sales on the back of high digital focus during the past years. Several agreements were renewed during the year and new partnerships were signed.
Underwriting has always been fundamental to If P&C and work to further enhance the understanding of risks and to provide the optimal cover to every client continues.
In 2014, Nordea continued to welcome more new relationship customers and were trusted with more savings, thereby passing the milestone of EUR 250 billion in assets under management. Despite the challenging environment, income was stable, driven by net fee and commission income and Nordea is on track to deliver on its cost targets. Credit quality continued to improve and the loan loss level is below the 10-year average.
In terms of new business, more than ten years ago Mandatum Life set unit-linked insurance and personal risk insurance as its core business areas. At the time, the company’s technical provisions were almost exclusively related to with profit products, and the share of the particularly high (3.5 per cent and 4.5 per cent) guaranteed interest rate portfolio of the total technical provisions was close to 90 per cent. Due to the strong growth in unit-linked technical provisions (51 per cent of the total technical provisions) and the technical provisions that transferred from Suomi Mutual (13 per cent of the total technical provisions), the share of the high guaranteed interest rate portfolio is now only around 30 per cent of the technical provisions.
Mandatum Life develops in-depth expertise of personnel in key areas and combines this know-how in innovative ways to benefit customers. Successful performance requires personnel with high level of motivation and well-being. Employee Satisfaction is measured and benchmarked with Great Place to Work survey. Mandatum Life ranked among the 30 best Finnish companies in the 2014 survey.
Managers (male 35.0%, female 65.0%) All employees (male 48.3%, female 51.7%)
• The Nordic Environmental Group is responsible for managing and monitoring the implementation of all environmental initiatives concerning facilities and procurement.
The well-being of its personnel is one of Mandatum Life’s strategic targets that are being monitored. The company has been selected as one of the best workplaces in Finland for four consecutive years. Taking care of personnel ensures customer satisfaction and provides the company with even better capabilities to operate in the future. Mandatum Life’s responsibility for its personnel also means providing security for employees and their families in case of financial risks. The company also wishes to offer its employees a motivating work environment.
• Brunila holds 8,406 Sampo plc shares directly or through a controlled company.
The Finnish Fair Association, Member of the Supervisory Board; Confederation of Finnish Industries EK, Member of Representative Assembly; Service Sector Employers PALTA, Vice Chairman and Member of the Board; The National Emergency Supply Council, Member
• Mattila holds 4,287 Sampo plc shares directly or through a controlled company.
The Committee convened five times in 2014. The attendance of members at meetings was 100 per cent.
• Alsaker holds 10,380 Sampo plc shares directly or through controlled companies or persons closely associated with him.
Mr. Kari Stadigh is the CEO of Sampo Group. For year 2014 the Group CEO was paid EUR 851,144 in fixed salary and EUR 498,229 in short-term incentive (including deferred compensation pertaining to the operative year 2010 and excluding compensation deferred in 2014) and EUR 2,304,000 in long-term incentive, together totaling EUR 3,653,372.
The results of business areas Private and Commercial were positively impacted by the favourable frequency claims development and benign weather conditions. Business area Industrial performed well in 2014 as both combined ratio and risk ratio improved compared to previous year. In the Baltics, risk ratio and combined ratio improved also significantly helped by a very low claims level in the beginning of the year and negative large claims outcome in the comparison year. Also in Denmark both risk and combined ratios improved significantly helped by positive large claims outcome. The large claims outcome for If in total was close to the expected level ending up EUR 7 million negative.
Change in liabilities for inv. and ins. contracts -499 -648 -23
The segregated fund carries a guaranteed interest of 3.5 per cent, which has been lowered to 1.0 per cent by supplementing the technical reserves with EUR 241 million.
The focus of Sampo Group’s corporate responsibility work is on the subsidiary level, If P&C and Mandatum Life. This is where the customers are met and where 99 per cent of the personnel work. As the operations of Sampo Group’s insurance subsidiaries differ significantly from each other, the subsidiaries have taken care of corporate responsibility activities and corporate responsibility reporting. However, in anticipation of the changing reporting requirements, Sampo has embarked upon a project to develop Group level non-financial reporting.
Internal Dividends Sampo plc, Sampo Group’s parent company, received close to EUR 1.2 billion in dividends from its subsidiaries and associated company Nordea Bank AB during 2014. The following dividend payments were received during 2014: • 24 March 2014; Mandatum Life; EUR 100 million, • 1 April 2014; Nordea Bank AB; EUR 370 million and • 9 December 2014; If P&C; SEK 5.5 billion (approx.
Loss ratio excl. unwinding of discount ²) % 70.970.9 71.4 72.0 74.7 75.6
Adjusted number of shares at 31 Dec. 1,000 560,000560,000 560,000 560,000 560,000 561,282
Dividend per earnings, % dividend per share earnings per share x 100%
141 Mandatum Life 143 Capitalization 143 Capitalization at Company Level 147 Capitalization at Group Level 154 Risk Management Process Outlook
In its underwriting and investment operations, Sampo Group is consciously taking certain risks in order to generate earnings. These earnings risks are selected carefully and managed actively. Underwriting risks are priced reflecting their inherent risk levels and the expected return of investments is compared to the related risks. Furthermore, earnings risk exposures are adjusted continuously and their impact on the capital need is assessed regularly.
• Decision making is based on accurate, adequate and timely information.
The main risk steering mechanism used by the Boards of Directors is the policy framework. As part of their responsibilities the Boards of Directors approve the Risk Management Policy and the other risk steering documents, receive risk reports and ensure that the management and follow-up of risks are satisfactory. The reporting lines of different governing bodies in If P&C are described in the figure Risk Governance in If P&C.
The Own Risk and Solvency Assessment Committee (ORSAC) assists the Chief Executive Officers (CEOs) of If P&C in fulfilling their responsibilities pertaining to the risk management process. The ORSAC reviews, discusses and gives input to reporting from If’s other committees within the Risk Management System, as well as from functions, experts and the line organization. Furthermore, the ORSAC also monitors that If P&C’s short-term and long-term aggregated risk profile is aligned with its risk strategy and capital adequacy requirements. The Risk Control and Reporting unit within the Risk Management department is, on behalf of the Chief Risk Officer (CRO), responsible for coordinating and analyzing the information reported to the ORSAC.
With respect to the underwriting businesses carried out in the subsidiary companies, it has been established that If P&C and Mandatum Life are operating mostly in different lines of business and hence their underwriting risks are different by nature. The most material common risk factor is life expectancy in Finland that is affecting both companies’ technical provisions.
Breakdown of Gross Written Premiums by Business Area If P&C, 2014, total EURm 4,634
Capital rCapital redemption operedemption operaationstions 44 11 00 00 00 00 00 44 00
FuturFuture bonus re bonus reserveserveses 1.01.0 00 00 00 00 00 00 00
RReserveserve fe for decror decreased disceased discount rount raattee 3.93.9 8181 1212 2020 1111 66 22 33
MandaMandatum Liftum Life pare parent cent companompany ty totalotal 9.49.4 1,9341,934 1,6351,635 2,9912,991 2,0362,036 1,5301,530 866866 1,1931,193
Technical provisions are analyzed and the possible supplement needs are assessed regularly.
FX ExposurFX Exposuree,, *)Private Equity also includes direct holdings in non-listed equities
Individual Exposures by Issuer and by Asset Class, Sampo Group, 31 December 2014.
In If P&C, regulatory solvency capital was EUR 3,347 million (EUR 3,372 million in 2013) while the regulatory capital requirement was EUR 841 million (EUR 849 million in 2013). Hence Solvency capital was 4.0 times regulatory capital requirement at the end of year 2014.
Parent company Sampo plc is not an insurance company and there is no requirement to calculate the above figures separately for it. However, Sampo plc is subject to Financial Conglomerate rules and in this context its contribution to Sampo Group’s capital requirement is calculated by financial conglomerate rules.
In Sampo Group capital adequacy is assessed internally in addition to Solvency II methods by comparing ASC to the amount of capital needed for all risks. The basis for ASC is formed by eligible capital items included in the current regulatory solvency capital. On top of these items, other material loss absorbing items are added. These other loss absorbing items - equalization provision and the difference between the book value and the market value (including a risk margin) of technical provisions will be part of capital base also in the Solvency II framework.
The first phase in the assessment of the amount of capital needed is to calculate the EC, which is used to define the capital needed for measurable risks of current activities. The principles of EC calculations are as follows in Sampo Group: • EC is defined as the amount of capital required to protect the solvency over a one year time horizon with a probability of 99.5% being the calculation basis in Solvency II as well. This confidence level is used for all Group companies to be able to make capitalization comparisons based on a standardized measure.
If P&C’s rating target is single A by S&P which implies higher confidence level and respectively higher amount of capital. Hence, the amount of capital, at which If P&C is confident to operate, is higher than its EC.
Minimum rMinimum requirequirements fements for solvor solvencency capital, ty capital, totalotal 4,9014,901 4,6634,663
Change in liabilities for insurance and investment contracts 4 -489 -697
TTOOTTAL CAL COMPREHENSIVE INCOMPREHENSIVE INCOME FOME FOR THE FINANCIAL YEAROR THE FINANCIAL YEAR 1,1791,179 1,4251,425
Net incrNet increase in cash and cash equivease in cash and cash equivalentsalents 1,3111,311 -249-249
When the Group itself has to pay compensation to another insurer on the basis of a reinsurance contract, the liability is recognised in the item 'Other liabilities'.
Other cOther compromprehensivehensive ince income fome for the periodor the period
The assets transferred from Suomi Mutual equal the share of the group pension portfolio of the total assets of Suomi Mutual.
TTotal claims paidotal claims paid -2,969-2,969 195195 -2,774-2,774 -3,120-3,120 186186 -2,935-2,935
2) Includes other technical income EURm 27 (28) and other technical expenses EURm 27 (26).
Financial liabilities, grFinancial liabilities, group toup totalotal 2,1932,193 -73-73 1616 11 Property, plant and equipment
Net carrying amountNet carrying amount 11 22 33 11 33 44
SharShare of the lose of the loss/prs/profit of an asofit of an associasociattee 680680 635635 15 Financial assets
EEquity and equity indequity and equity index optionsx options 11 00 00 11 00 00
The interest rate derivatives hedging cash flows fell due in 2013 and no new cash flow hedges have been started.
PP&C insur&C insurancancee, t, total financial liabilitiesotal financial liabilities 373373 174174
The anticipated retirement age in connection with life-long pension is 65 years for Sweden and 67 years for Norway. In Sweden, life-long old-age pension following a complete service period is payable at a rate of approximately 10 percent of the pensionable salary between 0 and 7.5 income base amounts, 65 percent of salary between 7.5 and 20 income base amounts and 32.5 percent between 20 and 30 income base amounts. In Norway, life-long old-age pension following a complete service period is payable at a rate of approximately 70 percent of the pensionable salary up to 12 Norwegian base amounts, together with the estimated statutory old-age pension. Paid-up policies and pension payments from the Swedish plans are normally indexed upwards in an amount corresponding to the change in the consumer price index. However, there is no agreement guaranteeing the value and future supplements in addition to the contractual pension benefit could either rise of fall. Pension payments from the Norwegian plans are indexed upwards in an amount corresponding to the change in the consumer price index to the extent of 80 - 100 %.
Expected contributions to the defined benefit plans during 2014 and 2015
In addition, deferred compensation EUR 134,779 was paid to former members of the Group Executive Committee during the financial year. The equivalent sum paid in 2013 was EUR 584,500.
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the members of the Board of Directors of the parent company and the Managing Director should be discharged from liability for the financial period audited by us.