Sampo financial group was established at the outset of 2001 when Finland’s leading insurance group, Sampo, and one of the leading banking groups, Leonia, joined forces. In February 2001, Mandatum, a specialist in private and investment banking, joined the Group. The Mandatum brand is still used for Sampo Group’s private banking, asset management, investment banking and mutual funds. In early 2002, Sampo Group’s property & casualty insurance companies were integrated as a part the Nordic P&C insurance group, If, with Sampo as its largest shareholder. Sampo Group has 1.2 million retail customers and 80,000 active corporate and institutional customers in Finland. Including Sampo’s associated company, If, the number of customers in Finland rises to over 2 million. Although Sampo’s operations are concentrated primarily in Finland, it has subsidiary banks in Estonia and Lithuania. Sampo provides life insurance services in the whole Baltic region and Poland.
Sampo’s strategy: The most customer-oriented and competent financial services group in Finland – in Europe’s fastest growing investment and savings market
New statistics showed that positive developments had also occurred in insurance savings: during the year Sampo Life’s share of unit-linked policies in the retail segment rose by as much as 14.3 percentage points and was 25.6 per cent at the end of September.
Sampo’s Baltic life insurance companies continued to increase their business rapidly. In Estonia and Latvia, premiums written were up by 100 per cent. In Lithuania, sales increased even more, and the number of customers doubled. Sampo now has about 15,000 insured customers in the Baltic countries. In Poland, premiums written increased by 17 per cent and the number of customers rose to 17,000. Assets invested in the Polish pension fund increased by 35 per cent. The pension fund has 440,000 customers.
Mandatum Private Bank is a specialist in private wealth management. Its aim is to be the leading and most respected Finnish private bank. Mandatum Private Bank offers wealth management and banking services primarily to private individuals and to companies and institutions owned or controlled by them.
Sampo holds a 38 per cent interest in If and actively participates in the development of the Group. Varma-Sampo is another significant Finnish owner, with a 10 per cent interest.
If is also the leading Nordic P&C insurance company with 3.7 million customers and a market share of 24 per cent (2001). In 2002, the company ’s gross written premiums totalled EUR 4.2 billion (SEK 38.1 billion). The If Group employs approximately 7,600 people, about 2,600 of whom work in Finland.
The Committee convenes regularly each quarter at the request of the Chairman and reports to the Board on its activities at least four times a year.
Christoffer Taxell, Jyrki Juusela and Georg Ehrnrooth. Olli-Pekka Kallasvuo and Paavo Pitkänen.
He holds 11,839,890 Sampo plc shares directly or through a controlled company. Options (1998 programme): Options (2000 programme): -
First Vice Chairman of the Board of the Finnish Bankers’ Association, member of the Boards of MB Rahastot Oy and MB Eurogiro Network A/S, member of the Supervisory Boards of Finpro ry and Luottokunta and member of the Executive Committee of the Customer Advisory Office of the Banking Sector.
Sales network strengthened in many ways All employees of the retail customer network participated in training to familiarise themselves with the Sampo way to deal with customers, which was launched in the spring, and to develop the skills needed for planning customers’ finances. Persons working in customer service tasks completed a self-study networked programme in subjects such as economics and investment. In addition, branch managers and employees serving scheduled customers participated in more extensive training.
In line with these developments, Sampo refined some of its guidelines and policies. The complete and revised guidelines on, for example, money laundering and the Group’s ethical principles were made available to the staff on Sampo’s intranet pages, and sustainability continued to be integrated into Sampo’s operations. The Corporate Responsibility steering group continued its work, with group members familiarising themselves with the Green Office and GRI reporting and its applicability to Sampo. Additionally, Sampo has significantly increased its emphasis on paperless communications.
Sampo’s operations increasingly focused on core competence areas. Efficiency was increased by outsourcing and reorganisation. This has already been reflected in increased market share in core businesses and in cost reductions.
Board of Directors to decide on increasing the share capital by a rights offering, or by an issue of options or convertible bonds. The increase in share capital may correspond at most to approximately 5 per cent of the share capital and approximately 4.96 per cent of the total number of votes. The authorisation was not exercised during the financial year.
2000 Option Programme On 29 September, 2000, in deviation from the shareholders’ pre-emptive subscription rights, Sampo’s Extraordinary General Meeting decided to offer options without consideration to the management, middle management and other key people of Sampo and its subsidiaries and to a wholly-owned subsidiary specified by the Board of Directors.
The Franklin Templeton Group announced on 22 March, 2002 that the combined amount of votes attached to Sampo shares that are owned by its funds and administered by Franklin Resources Inc. had exceeded 5 per cent of the total voting power of Sampo plc’s shares.
Annual General Meeting Sampo plc’s Annual General Meeting will be held on Wednesday 9 April, 2003 at 2 p.m. in the Congress Wing of Finlandia Hall, address Mannerheimintie 13 E, 00100 Helsinki. The reception of persons who have registered for the meeting will commence at 1 p.m.
To be entitled to participate in the AGM, shareholders must be registered in the shareholder register maintained by the Finnish Central Securities Depository Ltd (Suomen Arvopaperikeskus Oy) by 28 March, 2003. Asset managers shall report the names of nominee-registered shareholders to Sampo’s shareholder register kept by the Finnish Central Securities Depository Ltd for the AGM.
32 Financial Statements 33 Board of Directors’ Report 41 Consolidated Profit and Loss Account 44 Consolidated Balance Sheet 49 Parent Company Profit and Loss Account 50 Parent Company Balance Sheet 51 Notes to the Accounts 51 Risk Management 61 Accounting Policies 70 Calculation Methods for the Key Figures 74 Key Figures 77 Other Notes to the Accounts 124 Auditors’ Report
At the end of 2000 Sampo acquired life insurance and pension fund companies in Poland. The economic situation in Poland has deteriorated considerably since the original acquisitions and the companies’ operating potential has weakened at the same time. In the present situation, they are not expected to meet the profitability targets set within a reasonable period. As a part of the critical review of Sampo’s balance sheet structure, the book values of these companies were adjusted to a level which in the current market conditions can be considered prudent, in the first quarter of 2002. The goodwill relating to the life insurance company Sampo TU Zycie, EUR 26 million, has been written off in full and 50 per cent of the EUR 142 million goodwill of the pension fund Sampo PTE has also been written off. These one-time write-offs are entered in the consolidated profit and loss account under ‘extraordinary expenses’.
In the difficult capital market conditions, subscription growth was focused on low-risk and especially money market funds. As the capital markets revive, it is expected that investments will gradually be transferred to equity funds. On 31 December 2002, the investments in Sampo’s mutual funds totalled approximately EUR 3.9 billion (2.7). The figure includes about EUR 425 million in investments of companies belonging to Sampo Group (117). The number of fund unit holders grew by a good 35 per cent and was 197,371 (146,046). The number of continuous fund agreements more than doubled in the year under review and increased to 54,312 (26,906). The fund investments are managed by Mandatum Asset Management Ltd and 3C Asset Management Ltd, both of Sampo Group, together with five foreign partners.
The growth of Sampo Life’s unit-linked premiums written significantly exceeded general growth in the sector and the market share rose to 25.3 per cent (14.5). In the retail customer segment, too, the company’s position was strengthened compared with the previous year, rising to 15.2 per cent (14.1). As a result of the concentration on focal areas, the company’s total market share fell to 18.2 per cent (23.1).
Board’s dividend proposal Distributable capital and reserves totalled EUR 1,340,756,866 in the Group and EUR 1,001,724,291 in the parent company. The Board proposes that a dividend for the financial year of EUR 0.35 per share be paid on the company’s 553,853,865 shares. The total amount of dividends would be EUR 193,848,853.
Accumulated depreciation in excess of / less than plan 1 1
Risk management principles Risk is an essential part of Sampo’s operating environment. The main objective of risk management is to ensure that capital base is adequate in relation to the risks generated by the business activities. The Board of Directors of Sampo plc is responsible for ensuring that the Group’s risks are properly managed and controlled. The Board sets the principles of risk management and provides guidance on the organisation of risk management and internal control in the business areas. The Board monitors the risk management process and has established a Risk Control Committee to control the Group’s risks. The Group’s overall risk exposures are reported to the Board on a monthly basis.
Business risks Sampo Group provides to its customers a wide range of financial services and each company in the Group has its own separate business role defined by strategy. The clear division of responsibilities leads to minimal overlaps in the risk-taking. Sampo Group’s policy is to generate results mainly from customer business and thus the role of risk-taking unrelated to that is kept negligible. The sufficient return on allocated capital is basis for pricing products and services.
US, CA, JP, AU, NZ, Other Western Europe 1,263 5 1,375 5
Sampo Group engages in banking and investment services, life insurance business and holding company business.
For the purpose of comparison, in the consolidated accounts the results of the non-life insurance business for 2001 have been treated using the equity method of accounting. The results have been shown as a separate item in the profit and loss account under holding company business, under the heading “Income from P&C operations”. For 2002, the corresponding line shows income from If P&C Insurance Company.
Principles of consolidation The Group accounts are prepared by consolidating the profit and loss accounts, balance sheets and notes of the parent company and the subsidiary undertakings. The consolidated profit and loss account is drawn up by line of business, including the account of the banking and investment services, the technical and non-technical accounts of the life insurance business and the account of the holding company business, as well as extraordinary items, income taxes and minority interests combined for all businesses. Correspondingly, in the consolidated balance sheet, the assets and liabilities of the businesses are presented by line of business.
security is treated as interest receivable and accrued income over the life of the contract. Conversely, the difference between the repurchase price and the sale price is treated as interest payable and accruals over the life of the contract.
Securities Securities are classified as securities held for trading purposes and those held as financial fixed assets, the basis for classification being defined as is explained below.
Intangible assets Intangible assets are stated at cost, less amortisation according to plan. Long-term expenditure includes capitalised IT systems and costs of material improvements in flats and rented premises.
ment assets and investments covering unit-linked insurance are included in the profit and loss account and shown as a separate item under the items “Revaluations on investments” and “Revaluation adjustments on investments”.
The guaranteed interest rate used in the calculation of technical provisions of a Finnish life insurance company is in compliance with the calculation basis approved by the company’s Board of Directors and fulfils the requirements of regulation 1999:65 of the Ministry of Social Affairs and Health. The guaranteed interest rate used in the direct insurance premium basis is 3.5 per cent in policies commenced after 1 January 1999, and no more than 4.5 per cent in policies commenced prior to this. The discount rate used in the calculation of technical provisions is 3.5 per cent in the entire technical provisions. Due to the difference in the discount rate of technical provisions and the guaranteed interest of policies commenced prior to 1 January 1999, supplementary provisions of guaranteed interest have been added to technical provisions. The supplementary provisions for guaranteed interest have not been increased after 1 January 2002 regarding payments to respective policies, i.e. the discount rate of the technical provisions for these payments is 4.5 per cent.
Cost to income ratio + fees and commissions payable + administrative expenses + depreciation + other operating expenses
Net income from financial operations EUR m 448 469 426 392
Number of shares at 31 Dec. 1,000 553,854 555,623 520,000 – 304,000 304,000
Schroder Ventures Asia Pacific Fund CLP 2 Cayman Islands – – 8 8
Undrawn loans, overdraft facilities and commitments to lend 3,079 3,193 to Group companies – –
of which to or on behalf of associated undertakings 1 0 of which to or on behalf of Group undertakings – –
73 Derivative contracts Values of underlying instruments Values of underlying instruments
Members and deputy members of the Supervisory Board 0 0 – 0
Investment services 3C Asset Management Ltd. 1 Helsinki Finland 55.61 55.61 1
Kiinteistö Oy Salon Örninkatu 15 1 Salo Finland 100.00 – 12