Sampo publishes the 2001 Annual Report in Finnish, Swedish and English.
A printed Annual Report can be ordered by e-email at the above-mentioned
Interim Reports in 2002: the Interim Report for January–March is published on 21 May 2002 the Interim Report for January –June is published on 13 August 2002 the Interim Report for January–September is published on 14 November 2002
The financial statements presented on pages 18–121 are based on bookkeeping and financial statements drawn up in Finnish markka. The official financial statements can be inspected in full at Sampo Legal Affairs, Unioninkatu 22, Helsinki and at the address
Mandatum exchange offer according to the proposal of the company’s Board of
Sampo plc. The Board also specified the strategy of the Group.
Sampo-Leonia and Mandatum Bank were met. As a result, Mandatum Bank became a subsidiary company of Sampo-
• The name of Leonia Bank plc was changed to Sampo Bank plc.
• Sampo-Leonia published its results for 2000. The operating profit doubled to
Company, i.e. 20.1% of the Sampo Life share capital. After the transaction,
General Meeting of Sampo, the parent company’s name was changed from
• The Annual General Meeting also approved the amendments to the Articles of Association, including a split of the company’s share in five.
Storebrand and made a cash and share offer to Storebrand’s shareholders. At the same time, Sampo announced an agreement to transfer its P&C insurance business to If. The agreement was conditional upon successful completion of Sampo’s offer for Storebrand.
• Sampo’s cash and share offer to Storebrand shareholders was launched on 11 June.
• Sampo’s cash and share offer to Storebrand expired on 10 July. Sampo’s offer was supported by Storebrand shareholders representing approximately 83.5% of the shares in the company. As the offered amount did not meet the set conditions of 90%, the offer period was extended until 10 August 2001.
• The offer period for the cash and share offer made by Sampo to Storebrand shareholders expired on 28 September.
The offer was accepted by shareholders representing less than 90% of the shares in the company. On 1 October, Sampo decided not to extend the offer period and not to pursue the Storebrand transaction due to the drawn-out offer process, changes in the value of
Mandatum Fund Management Ltd surrendered the management of its mutual funds to Sampo Fund Management Ltd.
• The preparatory euro work launched in 1996 reached its climax in Sampo
Bank’s great euro conversion, after which all banking services have been eurodenominated. The insurance services were gradually euro-denominated during the transition period.
In addition to the ordinary dividend of EUR 0.8 an extra dividend of
In February 2001, Mandatum also joined the Group. The new Sampo is a holding company with subsidiary companies such as Sampo Bank, Sampo Fund Management Company, Mandatum Omaisuudenhoito and Sampo Life Insurance
Banking and investment services RORAC > 20 per cent C/I -ratio < 0.55
If *) The shown stakes are owned by a fully owned subsidiary of Sampo plc: Mandatum Holding.
Despite the time-consuming process of restructuring, the Group managed to achieve good results in each of its business areas. In the latter half of the year there were encouraging signs that the new organisation was beginning to operate efficiently. Sampo increased its market share by an exceptional 3.6 percentage points in mutual funds. All our significant competitors lost market share.
In my view, 2001 was a positive year for Sampo, particularly bearing in mind the operating environment. As I forecast a year ago, equity markets proved difficult. Slower economic growth was reflected in the markets, and the terrorist attack in America on September 11 made the situation temporarily even gloomier.
Mandatum, reported near record profits, even though the industry in general was going through considerable difficulties as a result of the market downturn and the predicaments of IT firms. Following a sluggish period at the beginning of the year, life insurance improved both its market position and financial results. In domestic property & casualty (P&C)
This was precisely what we did. We sold 23 million of the 30 million shares we had in our Nokia portfolio at the beginning of the year at an average price of around EUR 34 per share.
In May, Sampo made an offer to purchase Storebrand ASA’s share capital and to combine its P&C operations with those of If. A condition of the arrangement was the realisation of the Nordic
Under the conditions of the offer, Sampo had the right to withdraw if materially adverse changes occurred. This clearly was the case.
If is by far the largest P&C insurer in the Nordic countries and a key associated company for Sampo. We are strongly committed to improving If ’s financial performance. The business portfolio transferred from Sampo serves both as an example and a goal in the efforts to improve the performance of operations in the other parts of the If Group. If acquired a healthy P&C insurance portfolio from Sampo, partly due to the sale in October of Sampo Industrial Insurance N.V.
I would describe the past year primarily as a process of internal restructuring.
We still have a great deal to do in customer service, product development and a deeper integration of the various business areas. The task is made somewhat easier because the fundamental strategic choices have now been made and the organisation is ready to take full advantage of new opportunities. As from 1 February 2002, Finnish legislation allows customer information to be transferred between the various parts of the financial group for customer service and marketing purposes. This anticipated amendment is of crucial importance for
The year 2002 could also be described as a year of returning to normal. Excess capitalisation has been reduced and the new organisation has got off to a good start. Although absolute return figures will not be on the same level as during the two previous years when we sold out our Nokia portfolio, we do expect a good return on capital invested. Our business operations are now on a sound basis.
Growth of the world economy slowed down markedly in 2001. The unemployment rate continued to fall steadily, dropping to an average 9.1 per cent for the year. Inflation fell to 2.6 per cent on average. Short and long-term interest rates also fell. Overall, share prices declined compared with the previous year. The terrorist attacks against the
September, differences narrowed again towards the end of the year, while remaining greater than at the beginning of the year. The volume of corporate bond issues on the European market reached record proportions, at about
The fall in share prices which started in 2000 continued almost throughout the year. In the last quarter, the market picked up, however, as average market expectations of future economic growth increased. The HEX all-share index fell by 31 per cent over the year, while the portfolio index fell by 22 per cent. The flagging world economy and lower-thanexpected growth caused a slump, particularly in share prices for growthoriented telecommunications companies.
Telecom shares as a group fell by about 39 per cent during the year. Share prices in the banking and finance sector dropped by an average of 27 per cent.
New York and Washington, D.C. led to enormous indemnities for personal injury and property damage to those affected.
Central banks helped to stabilise financial markets by lowering interest rates and providing liquidity.
Consumer confidence in personal finances remained firm, but expectations of general economic growth in Finland flagged. The employment trend weakened towards the end of the year, but the unemployment rate for the year as a whole still fell to 9.1 per cent. Both the nominal and real income of households increased. There was reasonably good interest in borrowing, and the proportion of euribor-linked loans went up considerably. By December, the overall stock of household bank loans had risen 8.5 per cent on the previous year, reaching EUR
37.5 billion. Despite the rapid rise in lending, the household indebtedness ratio in per cent of disposable income remained reasonable. The general public’s euro and foreign currency denominated deposits stock went up by about 5 per cent. Among mutual funds, those investing in short-term interest instruments were particularly popular.
Wholesale and retail sales increased, while automobile sales fell. According to statistics from the Vehicle Administration
Both exports and imports fell in 2001 compared with the previous year.
Finland’s main export markets. The terms of trade improved slightly as a result of import prices falling more than export prices. The trade surplus remained close to 2000’s record level. The current account surplus fell slightly more, since a record amount of dividends was paid out to recipients abroad.
Industrial investment activity was fairly low, although investments in machinery and equipment went up. In other sectors, such as the services, investments grew at a slightly faster pace. Bank loans to non-financial and housing corporations rose by about 4 per cent on the previous year.
in Europe apart from Ireland. Economic growth supported restructuring of the area’s banking system and increased its stability during 2001.
Interest rates fell towards the end of the year and the interest rate spread between
Industrial output 1997–2001 Three-month moving year-onyear change, per cent 12-month euribor 3-month euribor 9SampoAnnual Report 2001
As investor vigilance grows, the share of funds as a form of savings is expected to increase even further. Together with growing household wealth, this means that Finland is one of Europe’s fastest growing areas in fund saving. Simultaneously, the demand for quality asset management services is increasing.
Preliminary estimates indicate that the sector’s total premiums written fell by about 17 per cent to EUR 3.2 billion.
In particular, sales to households in the last quarter of the year grew favourably.
The caution of investors and savers in the markets was reflected in a shift of life insurance saving into with-profit insurance, in which Sampo Life strengthened its position. In unit-linked insurance, the targeted improvement in market share was not achieved in full.
Sampo Fund Management Ltd was the only top-ten fund management company in Finland that increased its market share in 2001. Sampo’s share of the total mutual fund assets under management registered in Finland grew during the year from 14.8 per cent to 18.4 per cent.
Management Ltd with the transfer of funds managed by Mandatum Fund
The rapid growth of assets managed by Mandatum Omaisuudenhoito Ltd continued. The assets under management, including mutual fund assets, grew to over EUR 10 billion. The operations of Mandatum Asset Management Ltd were transferred to Mandatum Omaisuudenhoito Ltd. The Sampo Group and
Nordea Sampo Life Suomi Group Aurum Tapiola Life Kaleva Skandia Liv Veritas Fennia Life SEB Life Sparfond SHB Liv 11SampoAnnual Report 2001
was to make Sampo the most attractive partner for Finnish customers in savings and investment. This re-orientation has borne fruit: mutual fund and life insurance sales and market shares have grown rapidly.
Economics. Performance measurement and incentive systems have also been reformed to support the sale of investment services.
The sale of investment products gathered momentum with the differentiation of financial and insurance service sales in the branches in summer of 2001.
By the end of 2001, Sampo’s financial services were offered in 146 branches, 90 of which also offered insurance services.
The number of Internet customers grew by almost 25 per cent. At the end of the year, 533,000 customers had access to e-services. Payment transactions increased by 44 per cent and mutual fund business volumes by 16 per cent. Nearly 70 per cent of loan requests through the
Sampo’s new deposit product launched in December, the equity deposit, was warmly received. In addition to a fixed interest rate, the deposit includes the possibility for extra returns depending on the price development of three chosen equities during the deposit period.
Mandatum brand. It offers customised asset management services through its nation-wide network of 12 branches, an e-bank and a telephone bank.
Mandatum Private Bank customers are given their own contact person who focuses on the customers’ asset management and works actively toward the
Mandatum Private Bank has achieved a firm position as an asset manager for
In order to support the new strategy’s emphasis on expertise, all customer account officers participated in an investment specialist programme conducted together with the Helsinki School of
During the year, special attention was paid to improving the return on equity and on keeping net income from financial operations at a good level. This was done by improving the structure of the credit portfolio. Lending is focused on
Despite the deterioration in the economic conditions, credit losses did not increase.
Corporate bond issues continued growing. Sampo upheld its leading position as a manager of bond issues and syndicated loans.
The e-business of corporate customers also increased substantially. The number of corporate WebBank customers grew by 39 per cent to 24,000.
The Bank’s operating efficiency will be improved through already initiated projects for increasing the efficiency of administration, support operations and basic product processes.
Bank was able to strengthen its market position and to achieve a good financial result.
Stockbrokers Ltd. Mandatum & Co is responsible for corporate finance and
Mandatum & Co was able to strengthen its market position in mergers and acquisitions and to expand its customer base to technology companies.
In capital market transactions, the year was slow in terms of the number of transactions, with no IPOs being implemented on the Helsinki Exchanges during the year. Still, Mandatum & Co was able to strengthen its market position as a financial advisor and lead manager in capital market transactions. At the end of 2001, Mandatum & Co was one of the two Nordic lead managers in the Sonera rights issue.
In 2001, the stock brokerage operations of Leonia Bank were transferred to
Stockbrokers. With regard to Finnish and international institutions, the aim will be to at least maintain the current market share. In line with the company’s strategy, a key priority will be the further development of investment research.
A specific goal for 2002 will be to launch an Internet-based research library and
The company’s current resources will offer excellent opportunities for growth as the market situation normalises. The stock brokerage is expected to reap the benefits of synergies resulting from the 2001 merger (the merger of Mandatum
As a step in the structuring process of the new Sampo Group, Sampo subsidiaries Sampo Enterprise and Industrial
insurance was transferred to Sampo’s new wholly-owned subsidiaries Sampo Insurance Company Ltd and Sampo Industrial
Insurance Company Ltd. The former was given the private and corporate customer portfolio, and the latter the major customer portfolio.
Hampden Plc in July. The Dutch insurance supervision authorities approved the deal on 31 October 2001, and after that date, the company was no
Despite this arrangement, both companies remain Finnish and within the jurisdiction of the Finnish Insurance
According to preliminary information, the market share of domestic direct insurance went up by more than one percentage point, to 35.3 per cent.
If insures about one in three Finnish households. There are about one million private customers, 100,000 corporate
Customers expect their insurance company to be active. The If Group plans to step up the frequency of its customer contacts, helping to ensure that customers ’ insurance cover is always in keeping with their life situation.
Internet. Experiences of this service show that customers of all ages are using the
Internet. The range of on-line services will be expanded in 2002.
The new customer and insurance management system was successfully introduced at all operating units in
Lakewood Insurance Company Ltd, which handle the run-off of foreign reinsurance, continued to operate according to plan. The technical provisions of the run-off companies fell by EUR 32.7 million.
P&C insurance will continue to focus primarily on boosting the profitability of the major customer portfolio and on improving cost-effectiveness and competitiveness by merging operations and improving the functioning and network services of the Contact Center.
Finnish population changes, privatesector services will be needed alongside existing public services. Growing use of electronic and wireless communications will demand new risk management solutions, as will the protection of intellectual capital. Rising demands for recycling create entirely new opportunities for a P&C insurance company.
Baltic area and Poland. In these countries, the level of insurance is still low compared with Western Europe, but as the legislation develops, statutory insurance will expand considerably over the next few years.
1 Private customers 42% 2 Corporate customers 30% 3 Major customers 27%
The Group adopted a holding company structure and the parent company became a holding company on 31 March 2001. Under a decision made by the
Sampo-Leonia plc to Sampo plc in April 2001. Mandatum Bank became a subsidiary of Sampo-Leonia in February and merged with Sampo Bank plc in December. Sampo concentrated on its core businesses, i.a. by selling its property and casualty (P&C) insurance business to If.
The arrangement came into effect after the end of the financial period on 2
1.50 (1.78). The net asset value per share less full deferred tax was EUR 5.67 (8.40).
Sampo-Leonia Insurance Company plc adopted a holding company structure and the parent company became a holding company on 31 March 2001.
The P&C insurance business previously carried out and received in subsidiary mergers by the parent company was transferred to Sampo-Leonia’s whollyowned subsidiaries Sampo Insurance
Insurance Company Ltd. The parent company was renamed Sampo plc on 9 April 2001. The Group’s subsidiaries and associated companies have been listed by business sector in the Notes to the Accounts.
Pank increased to 95.2 per cent from the previous 93.5 per cent.
Sampo-Leonia made an exchange offer to the shareholders of Mandatum Bank Plc offering an opportunity to exchange
A shares to be issued. For each five and a half (5 1/2) A or B share Mandatum shareholders were offered one (1) Sampo-
Mandatum Bank Plc was demerged on 13 December 2001 into the new Mandatum Bank Plc and Mandatum Holding
Ltd. The merger of Mandatum Bank Plc into Sampo Bank plc came into effect on 31 December 2001. Mandatum Bank’s branch offices operate as of the beginning of 2002 under the name Mandatum
On 21 May 2001, Sampo announced a proposal to combine with Storebrand.
At the same time, Sampo announced an agreement on the transfer of Sampo’s
P&C insurance business to If. The agreement was conditional upon the realisation of Sampo’s offer to Storebrand.
Sampo made a cash and share offer to the Storebrand shareholders, offering
shares for each Storebrand share in accordance with the shareholder’s choice.
The offer period commenced on 11 June 2001 and was extended twice. The completion of the transaction would have required an approval of shareholders representing more than 90 per cent of the
Storebrand shares and votes. The holding of shareholders supporting Sampo’s offer increased in August to more than 86 per cent. Sampo also filed an application to the Norwegian authorities for an exemption to hold less than 90 per cent of
The offer period for Sampo plc’s cash and share offer to the shareholders of
Sampo and the capitalisation of If, the holdings are as follows: Sampo 38.05 per cent, Varma-Sampo 10.06 per cent,
Skandia 19.36 per cent, Skandia Liv 10.06 per cent and Storebrand 22.47 per cent. In addition to its holding, Sampo received a cash consideration of more than EUR 209 million for its P&C
insurance business, of which approximately EUR 38 million was used to strenghten If ’s capital base. Sampo and
Varma-Sampo hold together 50 per cent of the votes in If.
On 31 October 2001, Sampo Bank was demerged into three companies. Assets and liabilities relating to banking were transferred to the new Sampo Bank plc.
Sampo Group and TietoEnator agreed on a long-term cooperation in information technology. Sampo transferred its insurance IT services to Tietoleonia Oy, a joint venture company owned by Sampo and TietoEnator as of 1 January 2002.
Sampo holds 40 per cent of the company ’s share capital and 60 per cent of the votes. The company was renamed
Primasoft Oy on 1 January 2002. The joint venture’s turnover during its first year of operation is estimated to total approximately EUR 110 million.
Bank and the Group’s Baltic and Polish subsidiaries, amounting to EUR 23 million, as well as income from one-off items amounting to EUR 24 million.
The results for 2000 had been positively affected by one-off items totalling EUR
Net income from financial operations grew by 10 per cent to EUR 469 million
(426), of which the new companies accounted for EUR 27 million. The average interest spread between lending and deposits shrank by 0.9 percentage points over the year, but was on average 3.9 percentage points, as in the previous year.
Dividend income totalled EUR 27 million (224). This included dividends and corporate tax credits from Sampo Life shares amounting to EUR 14 million, and the return of surplus contributions and corporate tax credits to Sampo Bank
Net income from transactions in securities and foreign exchange dealing 43 71 –29
Income from companies accounted for by the equity method 4 1 3
Balance on technical account before the change in equalisation provision –103 –117 14
EUR 30 million to EUR 179 million. Of this amount, Mandatum Bank accounted for EUR 46 million and the other new companies for EUR 6 million. In particular, the net fees and commissions of investment banking increased. The increasing popularity of the WebBank and automated services reduced fees and commissions from traditional payment transactions and account use.
EUR 45 million. The change was influenced by investments in developing new services and distribution. Due to the new companies, staff costs increased by EUR
Depreciation and write-downs of tangible and intangible assets amounted to EUR 36 million (42). Other operating expenses increased by EUR 7 million to
20 million (24). At year-end, total specific provisions for bad and doubtful debts amounted to EUR 84 million (71), of which provisions pooled by customer group, basing on customers’ credit ratings, were EUR 31 million (27).
Change in technical provisions before customer bonuses and change in equalisation provision –452 –530 78
Technical result before customer bonuses and change in the equalisation provision 81 427 –346
Fees and commissions payable –12 –8 –10 –7 –10 –10 –9 –6
Net income from transactions in securities and foreign exchange dealing 7 4 18 9 7 26 10 32
Other operating expenses –13 –13 –10 –8 –12 –8 –10 –8
Provisions for bad and doubtful debts –6 –21 –7 1 2 1 –6 2
Write-offs in respect to debt securities held as financial fixed assets 0 0 0 – – – – –
Income from companies accounted for by the equity method 2 0 1 1 0 0 2 0
Balance on technical account before the change in equalisation provision –24 –37 –9 –26 –24 –39 –46 –15
Change in technical provisions before customer bonuses and change in equalisation provision –232 –96 –28 –50 –95 –112 –97 –272
Share of associated undertakings’ profit 0 0 0 0 0 0 0 0
During the year, non-performing loans to corporate customers grew by EUR 43 million. Of these, EUR 37 million were secured by the Finnish government or by bank guarantees in OECD countries.
The non-performing and other noninterest -earning loans of the new Group companies totalled EUR 10 million.
At the end of 2001, the capital adequacy ratio of the consolidated group of companies in banking and investment services was 12.7 per cent (13.3 per cent on 31 March 2001). The tier 1 capital ratio was 15.6 per cent (14.7). The tier 1 capital ratio was higher because the parent company’s investments in insurance companies, deducted from the total capital, were higher than the tier 2 capital. These deductible items were increased following the purchase of the shares of Sampo Life from Varma-Sampo
At the end of the year, the total capital stood at EUR 1,775 million (2,033) and the total risk-weighted assets (on-balance sheet and off-balance sheet) at EUR
Group, Sampo Credit plc, Sampo Business Properties Ltd, AS Sampo Pank,
Operating profit, excl. one-off items and the impact of new companies 249 248 x) Sampo’s intra-group item
The total assets of banking and investment services were EUR 20.9 billion
During the year, on-balance sheet assets and liabilities were reduced primarily by money and capital market items. Loans and advances to credit institutions fell by EUR 1.3 billion and the amount of debt securities by EUR
Loans and advances to customers at the end of the year amounted to EUR
EUR 5.8 billion, and loans to foreign customers by EUR 0.6 billion to
5.2 billion (5.9). The amount of undrawn credit facilities fell from the level at the beginning of the year. At the end of the year, the value of derivative contracts grew to EUR 27.2 billion (23.4).
854 million. According to preliminary information, Sampo Group’s market share in Finland increased to 35 per cent
(34). The profitability of domestic direct insurance improved and, on a comparable basis, the combined ratio stood at 104.1 per cent (106.3).
The bases of technical provisions applied by domestic P&C insurance companies were specified with respect to the provisions for unearned premiums and for outstanding claims. These transfers of technical provisions between groups of insurance class had no significant impact on the balance on technical account before the change in the equalisation provision. The combined ratio, calculated before the specifications of the bases of technical provisions, improved in the largest groups of insurance class.
The EUR 20 million impact of the sale is included in the P&C insurance results.
As a precondition for obtaining official permission for the transaction, Sampo
Insurance N.V. a subordinated loan of up to EUR 10.2 million if the adequacy of the company’s technical provisions or the solvency requirements so necessitate.
This provision was released in its entirety in 2001. EUR 9 million was reserved under other expenses for P&C insurance staff restructurings in 2002.
Leonia Life figures are included in the reference figures given in brackets for 2000.
The operating profit for life insurance stood at EUR 78 million (421) in the review year. The operating profit in the reference year 2000 increased particularly due to EUR 222 million in dividends, avoir fiscal tax credit and profits from the sale of Pohjola shares. A restructuring provision of EUR 3.4 million relating to the integration of Sampo and Leonia was booked under other expenses in the final accounts of 2000. EUR 0.3 million of the provision was used for operating expenses of the financial year and the remaining part EUR 3.1 million has been released into other income with impact on results.
Life insurance premiums written fell by approximately 2 per cent and stood at
Sampo Life’s market share increased to 23.3 per cent (19.9) according to preliminary information. The market share of the private customer segment, which is the key development area, rose to 14.1 per cent (12.0).
EUR 149 million (209) of this accruing from pension foundation liability transfers. Sampo Life further strengthened its position as the leading group pension insurer in Finland.
Claims paid include EUR 138 million in surrenders and EUR 148 million in compensations paid from pension insurance.
The savings sums paid at the end of the insurance period increased considerably in domestic business and amounted to nearly EUR 100 million.
The expense ratio of life insurance was 108 per cent (106). The aim is to decrease the expense ratio by rationalising the functioning of sales channels, production, and administration and support functions.
Technical provisions of life insurance totalled EUR 4,737 million (4,254) at the end of the year. Unit-linked insurance accounted for EUR 299 million
In 2001 with-profit insurance savings were credited with a return of 5.3 - 5.6 per cent in domestic business, depending on the insurance line. Technical provi-
sions include EUR 56 million in customer bonuses granted for 2001. EUR 54 million in bonuses reserved earlier were used to fund customer bonuses. EUR 34 million was reserved for bonuses payable in future years. In addition, technical provisions for group pension insurance were supplemented by EUR 26 million due to the increase in life expectancy.
Fairness, this lower solvency status means that the shareholders could not be allocated a share of the life insurance valuation differences.
Operating expenses excluding the internal sale of services amounted to EUR 18 million. The provision of EUR 2 million for the integration costs of Sampo/Leonia was released in its entirety. EUR 6 million was reserved for staff restructurings in 2002.
Index, the international stock market decreased by 14.4 per cent in 2001. The economic outlook for companies weakened all through the year and market volatility remained high. The problematic market situation also had a weakening effect on the investment income of the Sampo Group insurance companies.
insurance stood at EUR 2.5 billion at year-end. Equity investments accounted for 26 per cent of the entire investment portfolio, investments in interest-bearing instruments for 58 per cent and real estate for 16 per cent. Foreign investments accounted for 36 per cent of the investment portfolio. Investments outside the euro area totalled EUR 305 million.
The Group held approximately 30 million Nokia shares on 31 December 2000. The major part, or some 23 million shares, were sold during the first three quarters of the year under review.
At the end of 2001, Sampo Group employed a total of 9,684 people
The Group employed an average of in banking and investment services, 34 per cent (45) in P&C insurance, 8 per cent (4) in life insurance and 7 per cent in the holding company.
An investigation aiming at making administrative and support functions more efficient was conducted during the autumn. Rationalisation measures were subsequently launched at year-end. It was estimated that the staff should be reduced by up to 750 employees. Efforts will be made to cut the staff during 2002 mainly through means other than dismissals.
Wahlroos as new members of the company ’s Board of Directors. In addition, the following five members were reelected to the Board: Tom Berglund,
After these changes the composition of the Sampo Board of Directors is as follows: Olli-Pekka Kallasvuo, Chairman,
The Board of Directors wishes to thank Jukka Härmälä for his successful 12-year term as Board member and
Extraordinary General Meeting of Shareholders approved the exchange offer pertaining to the acquisition of Mandatum Bank Plc shares and the increase in share capital needed in order to implement the exchange offer. The exchange offer period began on 1 February 2001 and expired on 16 February 2001.
Board of Directors stated that the preconditions for the combination had been met. The Board decided to implement the Mandatum exchange offer and to approve the share subscriptions made.
Articles of Association on the minimum and maximum amount of shares. The amendment was entered in the Trade
Register on 20 April 2001. After the split, the company had a total of 555,584,965 shares, 554,384,965 of which were A shares and 1,200,000 unlisted B shares.
During the period under review, 38,550 A shares were subscribed under the warrant certificates of Sampo’s 1998 option programme. As a result of the subscriptions, Sampo received EUR
Sampo’s share capital after the increase amounts to EUR 93,449,166.87. The company has 554,423,515 A shares and 1,200,000 B shares, making a total of 555,623,515. The new shares were issued for public trading on the Helsinki Exchanges Main List on 29 November 2001.
The introduction of the euro progressed according to plan. The bank’s systems were primarily converted to the euro at the end of 2001. The insurance systems were converted gradually during 2000 and 2001. Security aspects were strongly emphasised in staff training and customer information.
The Sampo/If arrangement described above came into effect on 2 January 2002. As a result, Sampo Insurance
The stable performance of banking operations will continue; credit losses are not expected to grow significantly and the interest rate margin should not drop substantially from the level at the end of the review period. As capital markets are reviving and the number of mergers and acquisitions continues to be high, the profitability of investment banking is expected to remain good.
As new investments will increasingly be targeted at other than bond funds, fee income is also expected to increase.
Directors approved new financial targets for the Group’s business areas. The significant risk concentrations relating to shareholdings have been dissolved and the performance of core business operations is expected to remain good. No one-off equity sales profit items such as those in 2000 and 2001 are likely, so the performance in the next few years is not expected to reach the level achieved in these exceptional years. Nevertheless, the return on capital invested will improve as business operations grow more efficient and the Group returns excess capital to shareholders. In its dividend proposal, the Board of Directors is following its declared policy and distributing approximately half of the profit for the financial year in the form of dividends to shareholders.
The Group’s distributable capital and reserves was EUR 1,331,814,021 and that of the parent company EUR
1,220,315,749. The Board of Directors proposes that a dividend of EUR 0.75 per share be paid on the company’s 555,623,515 shares. The total dividend proposed is EUR 416,717,636. The
Change in the provision for outstanding claims Total change –98 –137 Portfolio transfer – 74
Revaluations on investments 3 5 Investment charges 16 –594 –545 Revaluation adjustments on investments –5 –35
Income from companies accounted for by the equity method 0 62
Dividend income 8 Fees and commissions payable –1 Net income from transactions in securities and foreign exchange dealing from transactions in securities 20 401 from foreign exchange dealing –4
Depreciation and write-down of tangible and intangible assets 23 –45 Other operating expenses 21 –20 Provisions for bad and doubtful debts 22 0 Income from companies accounted for by the equity method 4 Operating profit before elimination items 372
Cash and balances at central banks 28, 35, 71, 72 1,383 841 Treasury bills and other eligible bills
Loans and advances to customers 30, 33, 71, 72 13,597 14,130
Investments in Group and associated undertakings 47 Debt securities and loans of Group undertakings 400 110 Shares and participations in associated undertakings 13 81
Arising out of reinsurance operations 116 109 Other debtors 118 207 Deferred tax 29 30
Tangible assets 58, 60 Property and shares in property companies 390 Other tangible assets 18
Other assets 61 20 Prepayments and accrued income 62 5 Deferred tax assets 94 4 Elimination items 103 –218
CAPITAL AND RESERVES 63 Subscribed capital 93 87 Premium reserve 965 902 Legal reserve 370 369 Currency conversion differences 20 14
Reserves provided for by the articles of association 384 346 Other reserves 77 82
Profit/loss brought forward 134 134 Profit for the financial year 833 923
Liabilities to credit institutions and central banks 66, 71, 72 Central banks 100 59 Credit institutions
Debt securities in issue 66, 67, 71, 72 Bonds and notes 3,027 4,753
Technical provisions 83 Provision for unearned premiums, P&C insurance 268 318 Reinsurers’ share –8 –47
Equalisation provision, P&C insurance 265 251 Collective guarantee item, P&C insurance 33 31
Arising out of direct insurance operations 2 2 Arising out of reinsurance operations 72 91 Bond with warrants – 1 Amounts owed to credit institutions 0 1 Other creditors 88 257 Deferred tax 12 40
Commitments Other than sale and option to resell transactions 3,193 3,993
Fees and commissions payable –1 Net income from transactions in securities and foreign exchange dealing from transactions in securities 20 401 from foreign exchange dealing –4
Depreciation and write-down of tangible and intangible assets 23 –5 Other operating expenses 21 –16 Provisions for bad and doubtful debts 22 0 P&C insurance operating profit (for period 1 Jan. - 31 March 2001) 423 Operating profit 986
Loans and advances to credit institutions 55, 92, 93 Repayable on demand 42 Other 198
Shares and participations 57, 58 93 Shares and participations in associated undertakings 58, 101 65 Shares and participations in Group undertakings 57, 58, 101 2,450 Intangible assets 59 20 Tangible assets 58, 60
Property and shares in property companies 78 Other tangible assets 18
Board monitors the risk management process and has established a risk control committee to control the Group’s risks.
Group focus on their activities based on their own strategies. Sampo minimises the possibility of inconsistencies in risk positions by a clear separation of duties between operating companies, i.e. the emphasis in banking and distribution is on customer lending in each country, whereas the insurance companies diversify their investment portfolios internationally. Sampo evaluates the overall risk positions regularly. The portfolio of the holding company consists mainly of investments in subsidiary and associated companies.
The Group’s guidelines lay down uniform principles for credit risk taking, with the aim of ensuring good quality in the credit process. The Board of Directors annually approves the credit risk policy, which sets the parameters for risk appetite and allocation of risks. Limits are set for risk concentrations, measured by the ratio of a customer group’s nominal exposures to the Bank’s total capital, as well as by the ratio of a customer group’s economic capital, calculated by a credit risk model, to the total economic capital.
It has delegated this authority to separate sub-committees responsible for corporate and retail customers, and to authorised credit officers in customer business units.
The credit risk management system for corporate customers has the following elements. Each significant customer has a customer account officer who is familiar with the customer’s business and monitors its development. In addition, the counterparties with the highest credit risks are analysed continually by a corporate analyst, who is independent of the customer business units. The Group has an internal 12-stage creditworthiness rating system, and the validity of the probability interpretations applied to the system’s creditworthiness categories is monitored regularly. The internal rating system covers more than 98 per cent of loans and other exposures to corporate and institutional customers. The Group also uses the ratings of approved rating agencies, which are converted to the
Bank’s internal rating scale. The internal rating system has existed in its current form since 1997 and the defaults discovered by the Bank’s own data systems during the years 1997 - 2001 clearly support the probabilities given to the creditworthiness categories. The probabilities refer to the probability of future counterparty defaults, i.e. that customers will be unable to pay interest and loan instalments, and will be forced into reorganisation or bankruptcy.
Collateral is divided into four quality categories according to the probability of a full recovery in the event of possible realisation. Each type of collateral, e.g.
securities by issuer, is given a valuation percentage, and this is used to place the share of the collateral pledged to the
Bank, at its fair value, in a quality category. The collateral values are regularly updated.
Since 1999, the Bank has systematically measured its credit risks by a credit risk model. The objective of the model is to
Based on the above-mentioned technique, the Bank has developed riskweighted measurements of the profitability of customer business units. Likewise, the assessment of the whole customer relationship will take account of the pricing of the credit risk.
Credit risk monitoring is based on the continuous monitoring not only of the macro-economy and individual customer business sectors, but also of customer creditworthiness, collateral values and covenants. In addition, the ratings of listed customers are monitored by a model which estimates the probabilities of default using the market prices of shares. Country, customer and product limits are monitored daily. To reduce credit risks, customer account officers draw up action plans for customers in the three lowest creditworthiness categories.
Sampo Bank Group and Sampo Credit plc. The assets of Sampo Pank in Estonia,
Mandatum Bank, which was merged into Sampo Bank on 31 December 2001, totalling EUR 0.7 billion, are not included in the tables. Exposures are categorised according to customers or counterparties, or to guarantors, if the credit decision was based on the guarantor’s creditworthiness. Credit risk reporting covers all agreements and derivative contracts, both on and offbalance sheet, with which credit risks are associated, irrespective of where they appear in the accounts, or whether losses due to the credit risk are recognised as a credit loss or another type of loss.
Latin America accounted for less than 0.5 per cent. The Group had no direct exposures in Argentina. Of the total exposures of EUR 130 million in Asian countries, Indonesia accounted for EUR
Measured by the credit risk model, the average probability of default by corporate and institutional customers, weighted by exposures, increased from 0.6 per cent to 0.8 per cent. The expected credit loss of corporate exposures increased from 0.3 per cent to 0.4 per cent and the economic capital from 4.1 per cent to 4.9 per cent. The economic
capital measured in euro remained at the same level as at the beginning of the year.
The economic capital of corporate customers grew during the year by about 4 per cent, while that of the banking sector decreased. The average decrease in creditworthiness resulted in an increase in the economic capital and, correspondingly, the decrease in the nominal value of exposures reduced the economic capital.
75 per cent of the retail loan portfolio and most of the new lending was used to finance the purchase of dwellings. 74 per cent of lending and the total of its growth was in areas with net in-migration of population. 2 per cent of lending was in areas with net out-migration.
OECD countries. Provisions made on a portfolio basis for loans to corporate and institutional customers amounted to
MARKET RISKS IN TRADING OF SAMPO GROUP’S BANKING OPERATIONS FOR 1999–2001
Value at Risk (VaR). VaR figures are calculated, with a confidence level of 99 per cent, for overnight risk. The volatility and correlation parameters required by the model are calculated daily on the basis of 60-banking day historical market observations. Risks are also monitored and limited by means of stress testing and exposure limits, thus ensuring that agreed levels of risk are also not exceeded in exceptional market conditions. Market risks in trading have been at a low level since the transfer to the euro.
Retail market demand deposits and loans for customers are the core of non-trading positions. The banking book also includes wholesale funding items, investments in money market and fixed income instruments and hedging derivatives. All of these items are used to modify the liquidity and interest rate risk exposures of the banking book. Sampo
Bank plc was demerged into three companies on 31 October 2001. However, the non-trading books of the three companies are monitored as one portfolio. The merger of Mandatum Bank into the new Sampo Bank did not have any major effect on the interest rate risk exposure, but it did strengthen the liquidity position of the bank because of the excess of the retail demand deposits compared with customer loans in
The structural risk of a euro-denominated non-trading position is a situation in which Euribor rates prevail at a low level for a long period. The major part of customer lending is tied to Euribor rates, contrary to retail demand deposits. In such an environment, the interest paid on retail demand deposits falls at a slower rate than the interest received on loans, with the result that net interest margins become slimmer. The challenge of Asset and Liability management is to maintain a hedge that has a positive effect on net interest income at times of low interest rates and that does not have a large negative effect on net interest income whenever interest rates are at higher levels. The portfolio of fixed income instruments and interest rate swaps is used to hedge the net interest income of non-trading portfolios. In 2001, the hedge worked well and the net interest income was kept at sustainable levels.
Net of items denominated in other currencies –448 305 –125 –398 –434 –1 100
for moments when interest rates were at relatively higher levels. During the year 2001 the interest rate risk exposure was kept risk neutral. At the end of the year, a hypothetical 1 percentage point increase in interest rates would have resulted in a
A liquidity risk can be defined as earnings volatility caused by changes in funding costs or as problems in availability of funding. The background for liquidity risks is general credit market turmoil or a lack of confidence in an individual borrower. Sampo Banking group did not have any liquidity problems after the September 11 incidents.
Insurance business risks comprise technical risks, investment risks and risks of various internal processes. Technical risks are limited through careful risk selection, pricing to reflect the risks and costs, and reinsurance. Reinsurance hedging is used to limit both individual compensations and the catastrophe accumulation to be paid for a single loss.
Directors determines the maximum amount of compensation for its own account.
The Boards of Directors of the insurance companies confirm the companies’
investment plans defining the target distribution of the investment portfolio, limits by instrument, the organisation of investment activities, and authorities and powers annually. The investment plan takes into account the structure of the company’s technical provisions. The investment plan also includes guidelines for the use of derivatives. The investment committee ensures compliance with the principles specified in the investment plan and reports to the Board on investment activities. The company’s
Board of Directors approves annually the risk management plan concerning the risks of the entire insurance company, the extent of which has been defined in the regulations of the Insurance Supervision
Sampo Life has been updated and approved by the company’s Board of
The management of operational risks is the responsibility of the Sampo
Group’s various business areas. The management of operational risk in internal processes is a question of continuous quality improvement. Preparations are made for unexpected external events by drawing up contingency plans, especially for the most important and vulnerable processes, such as information technology. Unexpected external events are naturally also managed through insurance.
Bank also produces an identification service for Sampo Group and third parties.
The risks related to the e&m business are managed by appropriately specified operating procedures related to portal development (definition, planning, testing and bringing into production)
The analysis of financial-service-specific risks and the assurance of their suitability for the web is an integral part of product development. Special attention has been paid to the management of business from the audit trail perspective.
TietoEnator on supervision services for the WebBank including, for example, the comprehensive measurement of the availability of the automatic service.
The new capital adequacy framework for banks contains three pillars - minimum capital requirements, supervisory review and market discipline. The pillars are connected to each other: for example, the approach that banks adopt for credit risk within minimum capital requirements affects both disclosure requirements within market discipline and risk management processes within supervisory review. The three pillars architecture of the new accord substantially differs from the current capital accord, which focused solely on the technical calculation of minimum capital requirements.
Sampo launched a Basle II Compliance project in spring 2001 as a part of the preparation process. The project group is responsible for Sampo´s full compliance with the new accord.
Committee. The aim of this study was to estimate the capital impact of the proposed rules by using the true exposure data provided by banks.
Finance as well as regulations 106.1 and 106.2 of the Finnish Financial Supervision. Furthermore, the provisions of the
Act, decree (21.12.2000/1263) on an insurance company’s financial accounts and consolidated financial accounts issued by the Ministry of Social Affairs and Health as well as instructions and regulations of the Ministry of Social
Companies Act are observed in accordance with the said provisions and instructions.
Loss Account has been compiled in accordance with the decree on an insurance company’s financial accounts and consolidated financial accounts issued by the
In the Consolidated Accounts, the results of the parent company and its subsidiaries operating in other fields than banking and investment services or insurance have been presented in the insurance business’s Profit and Loss
Account up to the above-mentioned change. After the change the results have been presented in the Profit and Loss
Sheet in the Consolidated Balance Sheet under the assets and liabilities of the holding company.
The figures of the Leonia Group are included in the consolidated accounts of the reference year as if the Sampo Group and the Leonia Group had operated as one group since the beginning of 1999.
Sampo’s Consolidated Accounts include the parent company Sampo plc, and all the subsidiaries in which the parent company either directly or indirectly holds more than half of the votes, excluding the subsidiaries of the parent company and Sampo Bank plc, the
EUR 10 million and consequently have no significant impact on the Group’s financial position and non-restricted capital and reserves.
The group companies are presented in the Notes to the Accounts.
The Consolidated Accounts are drawn up as combinations of the Profit and Loss
Accounts, Balance Sheets and Notes of the parent company and the subsidiaries.
insurance and life insurance technical accounts and non-technical account of insurance operations, holding company account as well as common for all fields of business, extraordinary items, income taxes and minority interests. All investment income and charges pertaining to insurance business are shown in the nontechnical account. The share of net investment income related to life insurance, which includes intra-group eliminations of the insurance business, is transferred to the technical account of life insurance. In the Consolidated
Balance Sheet, the assets and liabilities are also presented by field of business.
The final accounts of group companies are included in the Consolidated
Sampo share on the Helsinki Exchanges was EUR 61 (before the split). Had the share issue been booked at the quoted price of the acquisition day, a positive consolidation difference of EUR 358 million would have arisen, and the impact of the resulting write-off on the results over a depreciation period of 20 years would have been EUR 18 million in the financial year.
Insurance Company plc, and the merger of Leonia Life Insurance Company Ltd and Sampo Life Insurance Company
Sampo Group, the provisions of Sections 52 a and 52 b of the Business Income
In the Consolidated Accounts, those companies in which the group’s holding and votes amount to 20-50 per cent are integrated as associated undertakings, using the equity method.
The Consolidated Accounts do not include companies the impact of which on group results, financial position and non-restricted capital and reserves is not essential, Sampo Bank plc’s associated undertakings whose Balance Sheet total is less than EUR 10 million, associated real estate undertakings of the insurance companies, and Kaleva Mutual Insurance
Company. In a mutual company the owner of guarantee capital is entitled only to the guarantee capital and the interest paid on it.
Currency conversion differences relating to insurance business are presented in the investment results. Currency conversion differences relating to insurance business are derived as the difference of foreign reinsurance figures calculated at changing and fixed rates. Currency conversion differences have been calculated from premiums and claims including changes in the provisions for unearned premiums and outstanding claims, and from reinsurance commissions and deposit interests. They are presented separately under Net investment income.
The variable expenses arising from acquisition and production are included in acquisition costs.
Loans and advances, as well as liabilities, are stated in the Balance Sheet at the value paid or received on them at the time of acquisition, adjusted for the amortisation or premiums and discounts arising on acquisition. In the Profit and
In the Profit and Loss Account, the lease rentals less depreciation according to plan is included in Interest receivable.
The additional depreciation, which is actually write-downs of lease assets, is included in Provisions for bad and doubtful debts. Other income from and expenses on lease assets are included in the item corresponding to their nature.
The premiums and discounts arising on the acquisition of debt securities, if material, have been amortised or accreted over the life of the contract and included in Interest receivable. The cost of the security is adjusted to reflect the amortisation or accretion of the premiums and discounts.
Securities held for trading purposes consist of treasury bills and other eligible bills, debt securities and equity shares which are included in the trading book, and of other securities which are held for trading.
Securities held as financial fixed assets are stated at cost less any permanent diminution in value.
The permanent diminution in value of these securities is shown separately in the
Profit and Loss Account under the heading Write-offs in respect of securities held as financial fixed assets. The item also includes the value re-adjustments of fixed assets.
Stocks and shares in the nature of investments are entered at the lower of acquisition cost or probable sales price. Stocks and shares in the nature of fixed assets are presented at the lower of acquisition price or current value, if the value adjustment is considered permanent. The shares are valued according to the average price principle.
Receivables and investments in the nature of receivables are presented at the lower of par value or current value.
Investments covering the technical provisions of unit-linked insurances are valued at their current value.
Revaluations and revaluation adjustments on investments in the nature of investment assets and on investments covering unit-linked insurances are entered with impact on the result. Revaluations on investments in the nature of fixed assets and their reversals are entered in the revaluation reserve under restricted capital and reserves. Value adjustments which have been made earlier are readjusted up to the original acquisition cost if the current value increases.
In investment operations, planned depreciation corresponding to the average useful life of buildings is made annually on the revaluations entered as income, arising from buildings in the nature of investments.
Sweden has been shortened due to the subscription policy of the new If Group in such a manner that it will be written off at the end of 2002. This change had an impact of EUR 3 million on the result.
The current values of real estate and real estate shares are reviewed quarterly as required by the Financial Supervision
If only a part is occupied for the Group’s activities, the classification is made in relation to the square metres occupied.
Shares and debt securities which are quoted on official stock exchanges or otherwise are subject to public trading, are valued at the latest available closing price or, if this is not available, at buying rate.
(policy acquisition costs, policy management expenses, and administrative expenses), under claims paid (claims settlement expenses), under investment charges (management expenses arising from real estate investments and other investments) and under other charges
Social security payments pertaining to options released in 2000 and 2001 from the bond loan with warrants offered to the staff of Sampo Insurance Company plc in 1998 are included in operating expenses.
Provisions pertaining to additional costs arising from the Sampo-Leonia integration were released from accruals and deferred income to other charges when they were exhausted. A provision was made in the final accounts for the employees’ support package arrangements. This provision was booked under other charges and accruals and deferred income. The commitment relating to the sale of Sampo Industrial Insurance N.V.
to grant the company a EUR 10.2 million subordinated loan is included in investment commitments under the offbalance sheet items insofar as no related provisions have been made under other charges and accruals and deferred income.
In banking and investment services and the holding company, provisions for bad and doubtful debts consist of specific provisions made for loans and advances to credit institutions and customers, and for contingent liabilities and commitments and amounts written off these items.
The amount also includes the unrealised losses arising from valuation of the assets acquired in settlement of unpaid loans, and the losses on the sale of such assets. Furthermore, the additional depreciation on lease assets is included in
The loans classified as bad debts are written off when the authorities have confirmed the insolvency of a customer.
Avoir fiscal tax credit on dividend earned is entered in dividends, under
In the Group companies, the difference between planned depreciation and the total depreciation made in accordance with the Business Tax Act is presented as a separate item in the Profit and Loss Account, and the accumulated depreciation difference is presented under appropriations in the Balance
Sheet. In the final accounts and key figures of the companies, deferred tax is not deducted from appropriations nor from valuation differences on investments. Revaluations from insurance operations entered as income are taxable income.
In the Consolidated Accounts and key figures, optional reserves and depreciation difference are divided into the change in deferred tax and share of profit, and deferred tax and share of capital and reserves. The minority interest is deducted from the share of capital and reserves. According to the
In calculating technical provisions, various methods are applied which involve assumptions on such matters as the settlement of claims, mortality, and yield on investments. Technical provisions are annually revised on the basis of assumptions and new data received.
The change in the technical provisions of reinsurance has been calculated at fixed exchange rates, so the impact of the exchange rates of the insurance business on result has been presented under investment result.
In addition to the calculation of the provision for outstanding claims pertaining to annuities, discounting is applied to a part of Patria Reinsurance Company
and are covered by assets in the same currency. The assets are estimated as sufficient to secure a profit exceeding the interest rate applied. The claims settlement period used in discounting is based on Group company statistics.
In discounting the technical provisions, the interest applied has been the same as or lower than the interest applied in the calculation of the premium. A major part of the business has been discounted by use of an interest of 3.5 per cent. The highest interest used has been 4.0 per cent.
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 will be increased in the future by additional premiums paid to individual agreements commenced prior to
The Board of Directors of Sampo Life has made a decision on the interpretation of the Principle of Fairness in life insurance, and thus of the part of the company ’s assets allocated to the owners. As a consequence of the principle and the bonus policy, a prominent part of the company’s solvency capital is required for ensuring the benefits insured. The restricted and non-restricted capital and
reserves are considered to belong to the shareholders. Of the valuation differences which are not needed for ensuring solvency in the long run, 80 per cent are considered to belong to the shareholders.
Contingent liabilities are recorded to the extent that the obligation in respect of a guarantee or an asset pledged is met on the Balance Sheet date. The commitments are stated at the maximum amount that can be required to be paid on the basis of the commitment.
Sheet item. However, both valuation differences are taken into account in their full amount in the solvency margin calculation.
The key figures of property & casualty insurance and life insurance have been calculated in accordance with the decision of the Ministry of Finance and the guidelines issued by the Ministry of
– tax (incl. change in deferred tax of valuation differences on investments)
± valuation differences on investments after deduction of deferred tax x 100%
Average number of staff at the end of each month, adjusted for part-timers
Return on equity (at current values) % –15.3 3.5 37.5 67.1 33.1 23.5 Return on assets (at current values) % –1.0 2.1 7.2 29.0 13.8 11.6
Net income from financial operations EURm 469 426 392 Operating profit EURm 296 430 202
Options diluted earnings per share ***) EUR 1.49 1.78 Capital and reserves per share EUR 5.18 5.52 4.91 3.28 2.49 2.21 Net asset value per share less full deferred tax from holding company’s valuation differences EUR 5.87 8.81 9.31
Net asset value per share less full deferred tax from the Group’s valuation differences EUR 5.67 8.40 8.74
Adjusted average number of shares ‘000 555,588 522,535 – 304,000 304,000 304,000 Number of shares at 31 Dec. ‘000 555,623 520,000 – 304,000 304,000 304,000 Adjusted number of shares at 31 Dec. ‘000 555,623 520,000 – 304,000 304,000 304,000 Counter-value of shares at 31 Dec. approx. EUR 0.17 0.17 – 0.17 0.17 0.17
Adjusted average number of shares ‘000 554,388 521,335 – 302,800 302,800 302,800 Number of shares at 31 Dec. ‘000 554,423 518,800 – 302,800 302,800 302,800 Adjusted number of shares at 31 Dec. ‘000 554,423 518,800 – 302,800 302,800 302,800 Weighted average share price EUR 10.11 8.96 – 6.19 7.34 4.38 Adjusted share price, high EUR 12.70 12.20 – 8.20 10.46 6.83 Adjusted share price, low EUR 7.70 5.87 – 5.14 3.87 2.99
**) The solvency ratio group per 31 December 2001 was created on 31 March 2001 as the parent company became a holding company. In order to preserve the comparability, the figure for the reference year has been calculated from this date. The solvency ratio of 1999 does not include the holding company.
****) The Board of Director’s proposal to the Annual General Meeting for the accounting period 2001. The ordinary dividend for 2000 was EUR 0.80 and the extra dividend EUR 0.80.
In calculating the key figures the tax corresponding to the results for the accounting period has been taken into account. In calculating the net asset value per share, return on equity and equity/assets ratio as per 31 Dec. 2001, the deferred tax liability of 29%, which is estimated to be realised during the next three years, has been deducted from the holding company’s valuation differences. A deferred tax liability of 18.6% has been deducted from the valuation differences of P&C insurance in the reference periods. The net asset value per share has furthermore been presented per 29%, i.e. less full deferred tax in all reference periods. As valuation differences are not included in the Balance Sheet, their deferred tax and the change in deferred tax are not entered in the Profit and Loss Account or in the Balance Sheet.
In calculating the net asset value per share and the return on equity, an interpretation of the Principle of Fairness in life insurance has been taken into account. According to the calculation rule specified at the beginning of 2001, the owners are not entitled to a share of the valuation differences of life insurance pertaining to 31 December 2001 in addition to that of capital and reserves. The equivalent share at the end of 2000 was 51%. Using the old calculation method, the equivalent share at the end of 2000 was 35%. The capital and reserves of life insurance, including a share of optional reserves and accumulated depreciation difference, is considered to belong entirely to the owners.
NOTES TO THE PROFIT AND LOSS ACCOUNT Banking and investment services 1 Interest receivable and payable 2 Net income from transactions in securities 3 Other operating income and expenses 4 Depreciation and write-downs of tangible and intangible assets 5 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets 6 Segmental information
Insurance business 7 Premiums written 8 Items deducted from premiums written 9 P&C insurance balance on technical account by group of insurance class 10 Life insurance premiums written and claims paid 11 Total operating expenses by activity 12 Staff expenses 13 Executives’ salaries and commissions 14 Average staff numbers 15 Net investment income (P&C and life insurance) 16 Net investment income 17 Other income 18 Other charges
Holding company 19 Interest receivable and payable 20 Net income from transactions in securities 21 Other operating income and expenses 22 Provisions for bad and doubtful debts plus write-offs in respect of debt securities held as financial fixed assets 23 Depreciation and write-downs of tangible and intangible assets 24 Segmental information
Capital and reserves 63 Consolidated statement of changes in capital and reserves and statement of distributable profit 64 Preferred capital notes 65 Parent company statement of changes in capital and reserves and statement of distributable profit Banking and investment services liabilities 66 Unamortised discounts and premiums on liabilities 67 Debt securities in issue 68 Other liabilities 69 Accruals and deferred income 70 Subordinated liabilities 71 Maturity analysis of assets and liabilities, by remaining maturity 72 Assets and liabilities denominated in domestic and foreign currencies 73 Deferred tax 74 Assets pledged as collateral security and secured liabilities as well as other assets pledged on behalf of the company and other Group undertakings 75 Pension liability 76 Lease commitments 77 Off-balance sheet items 78 Derivative contracts 79 Staff numbers 80 Emoluments of members of administrative and supervisory bodies 81 Loans and advances to and guarantees on behalf of members of administrative and supervisory bodies 82 Asset management services
Interest receivable Loans and advances to credit institutions 75 153 Loans and advances to customers 827 808 Debt securities 259 301 Net leasing income 30 20 Other interest receivable 4 12
Interest payable Liabilities to credit institutions and central banks 126 190 Liabilities to customers 250 206 Debt securities in issue 294 385 Subordinated liabilities 28 39 Preferred capital notes 0 1 Other interest payable 28 48 2 INCOME FROM TRANSACTIONS IN SECURITIES
Debt securities and interest rate derivatives 10 –6 Equity and equity derivatives 16 53 3 OTHER OPERATING INCOME AND EXPENSES
Other operating income Rental and dividend income from properties and property companies 20 19 Profit on disposal of properties and property companies 5 0 Other income 13 13
Depreciation according to plan on tangible assets 16 16 on intangible assets 19 27
Provisions for bad and doubtful debts Loans and advances to credit institutions – – 0 1 Loans and advances to customers 32 20 40 22
Total amount written off during the year 14 6 Specific provisions written off during the year –9 –3 Recoveries of loans and guarantees written off in previous years –11 –9 New specific provisions for the year 31 37 Releases of provisions for the year –9 –14 Charge to profit and loss account 16 17
Amount of write-offs in respect of debt securities held as financial fixed assets – 0
United Kingdom – – 1 2 United States – – 1 5
Credit loss on outstanding premiums 3 2 Premium tax 112 108 Fire brigade charge 2 2 Traffic safety charge 2 2 Industrial safety charge 4 3 Government medical treatment fees 15 15
9 P&C INSURANCE BALANCE ON TECHNICAL ACCOUNT BY GROUP OF INSURANCE CLASS
Change in the equalisation provision 2001 –14 2000 –17 1999 –9
Life insurance Unit-linked individual life insurance 45 142 Other individual life insurance 214 133 Unit-linked capital redemption policy 8 10 Other capital redemption policy 116 70 Employees’ group life insurance 2 2 Other group life insurance 2 2
Pension insurance Unit-linked individual pension insurance 26 21 Other individual pension insurance 93 94 Unit-linked group pension insurance 7 5 Other group pension insurance 232 281
Premiums from non-profit policies 6 5 Premiums from with-profit policies 653 586 Premiums from unit-linked insurance 86 168
Direct insurance commissions 5 5 Commissions on reinsurance assumed and profit participations 3 1 Other policy acquisition costs 33 17
Policy management expenses 19 10 Administrative expenses 9 9 Commissions on reinsurance ceded and profit participations (–) –1 0
Salaries and commissions 136 143 Pension expenses 23 24 Other social expenses 15 18 13 EXECUTIVES’ SALARIES AND COMMISSIONS
Income from other investments Dividend income 48 45 Interest income from Group undertakings 3 2 Interest income from other than Group undertakings 81 173 Other income from Group undertakings 0 2 Other income from other than Group undertakings 65 231
Charges arising from investments in land and buildings –10 –9 Charges arising from other investments –48 –199 Interest and other expenses on liabilities to Group undertakings –1 0 Interest and other expenses on liabilities to other than Group undertakings –1 –2 Total –60 –210
Income from investments in associated undertakings Share of profit of associated undertakings 1 4 Dividend income 1 1 Interest income – 10
Income from other investments Dividend income 93 485 Interest income from Group undertakings 4 7 Interest income from other than Group undertakings 253 235 Other income from Group undertakings 2 0 Other income from other than Group undertakings 297 182
Charges arising from investments in land and buildings –19 –21 Charges arising from other investments –247 –217 Interest and other expenses on liabilities to Group undertakings –1 0 Interest and other expenses on liabilities to other than Group undertakings –3 –4 Total –270 –242
Net investment income before revaluations and revaluation adjustments 957 1,447 Revaluations on investments 3 5 Revaluation adjustments on investments –5 –35
Investment income and charges include Exchange rate differences of insurance business –6 –8 Exchange rate differences of investments 54 31
Depreciation on consolidation difference –12 –41 Depreciation on goodwill –5 –11 Other –25 –17
Interest receivable Loans and advances to credit institutions 11 10 Loans and advances to customers 2 2 Debt securities 1 1 Other interest receivable 2 1
Interest payable Liabilities to credit institutions and central banks 7 5 Liabilities to customers 0 – Debt securities in issue 7 7 Other interest payable 1 1 20 NET INCOME FROM TRANSACTIONS IN SECURITIES
Other operating income Rental and dividend income from properties and property companies 15 6 Profit on disposal of properties and property companies 18 18 Other income 88 86
Other operating expenses Rental expenses 9 9 Expenses on properties and property companies 4 1 Loss on disposal of properties and property companies 2 1 Other expenses 5 6
Gross Releases and Gross Releases and EURm amount recoveries amount recoveries
Provisions for bad and doubtful debts Loans and advances to customers – 0 – 0
Recoveries of loans and guarantees written off in previous years 0 0 Charge to profit and loss account 0 0 23 DEPRECIATION AND WRITE-DOWNS OF TANGIBLE AND INTANGIBLE ASSETS
Depreciation according to plan on tangible assets 5 3 on intangible assets 33 2
Income includes net income from financial operations, dividend income, fees and commissions receivable, net income from transactions in securities and foreign exchange dealing and other operating income. Intra-group items have not been eliminated.
Interest receivable –6 0 Interest payable 26 8 Net income from financial operations 20 8
Claims paid 14 0 Operating expenses 35 0 Balance on technical account 50 0
Investment income –39 –8 Investment charges 5 1 Profit before extraordinary items 31 –4
Treasury bills 5 7 Government bonds 1,978 2,890 Certificates of deposit issued by the Bank of Finland _ – Certificates of deposit issued by other banks 466 728 Other 3 –
29 LOANS AND ADVANCES TO CENTRAL BANKS INCLUDED IN LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Loans and advances to credit institutions 999 2,321 of which to central banks 200 –
Other EU countries 725 886 Other Western Europe 199 247 North America 75 135 The Far East 762 902 Other countries 726 869 Bad and doubtful debt provisions based on credit rating –31 –27
Financial and insurance institutions 54 225 Public sector entities 193 261 Non-profit institutions 128 131
Non- Other Non- Other performing non-interest performing non-interest EURm loans earning loans Total loans earning loans Total
Financial and insurance institutions 0 – 0 0 – 0 *) Sampo Bank plc’s non-performing loans to households include loans which are subject to debt restructuring programmes, in which customers follow confirmed repayment schedules. (Under Finnish regulations, loans which are subject to debt restructuring programmes, in which customers follow confirmed schedules, should not be classified as non-performing loans.)
32 ASSETS ACQUIRED IN SETTLEMENT OF UNPAID LOANS AND THOSE ACQUIRED IN CONNECTION WITH THE REORGANISATION OF A CUSTOMER’S BUSINESS OPERATIONS
Book value of assets which had been pledged as collateral security and acquired by the bank in settlement of unpaid loans
Properties and shares and participations in property companies 3 2 Other shares and participations 3 1
Listed securities: Difference between the market value and the lower book value of securities
Held for trading purposes 1 1 Held as financial fixed assets – 3
37 MOVEMENTS IN SHARES AND PARTICIPATIONS HELD AS FINANCIAL FIXED ASSETS AND IN TANGIBLE ASSETS
Disposals – –2 –11 –2 Transfers between items +/– – – – Depreciation according to plan for the year – – 0 –5 Write-downs / write-backs for the year +/– – 0 – Accumulated depreciation at beginning of year – – –1 –8 Accumulated write-downs at beginning of year – – – –
Other intangible assets *) 61 51 *) Incl. intra-group items arising from IT systems
Other expenses 3 2 39 PROPERTIES AND SHARES IN PROPERTY COMPANIES
Goodwill Intangible Consolidation Other Equipment Total rights difference long-term Negative consoli- expenses
The remaining acquisition cost of debt securities comprises: That difference between the amount repayable at maturity and purchase price, which has been released to interest income (+) or charged to interest income (–) 15 8
45 CHANGES IN INVESTMENTS IN LAND AND BUILDINGS 2001 Land and Loans to buildings and associated EURm real estate shares undertakings
Accumulated depreciation, 1 Jan. –155 – Change in Group structure 26 – Accumulated depreciation on decreases and appropriations 5 – Depreciation for the financial period –14 –
SHARES AND PARTICIPATIONS IN OTHER THAN SUBSIDIARIES AND ASSOCIATED COMPANIES cont.
Industri Kapital 2000 Fund UK 682,419 – 7 7 MediaTel Capital Luxembourg 593,461 – 6 6 Permira Europe I UK 501,574 – 5 5 Permira Europe II L.P.2 UK 615,000 – 6 6 Preferential Equity Investors LLC Cayman Islands 697,231 – 7 8 Procuritas Capital Partners II - B, L.P. Sweden 5,140,148 – 6 6 Schroder Ventures Asia Pacific Fund CLP 2 Cayman Islands 495,000 – 5 6
Debt securities issued Shares by and loans to Group in associated
Accumulated depreciation, 1 Jan. – 0 Change in Group structure – –1 Depreciation for the financial period – –1
Value adjustments on investments, 1 Jan. – – Value adjustments on investments for the financial period – 0
Positive consolidation difference pertaining to associated undertakings Positive consolidation difference 31 Dec. 1 2 48 OTHER LOANS BY SECURITY
Members and deputy members of the Supervisory Board Loans (EURm) – 0.0
52 LOANS AND ADVANCES TO CENTRAL BANKS INCLUDED IN LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Loans and advances to customers by category of borrower 54 ASSETS ACQUIRED IN SETTLEMENT OF UNPAID LOANS AND THOSE ACQUIRED IN CONNECTION WITH THE REORGANISATION OF A CUSTOMER’S BUSINESS OPERATIONS
Loans and advances to customers 5 5 Debt securities 2 2
Shares and participations in Group undertakings Credit institutions – 1,505 Other – 945
Cost at beginning of year 77 342 72 2,044 319 72
Depreciation according to plan for the year – – 2 3 – 0 3 Write-downs/write-backs for the year +/– – – – – – – Accumulated deductions of depreciation – – 53 32 – 53 32 Accumulated depreciation at beginning of year – – 58 45 – 58 45 Deductions of accumulated write-downs – – 13 – – 13 – Accumulated write-downs at beginning of year – 1 30 – 1 30 –
Land and buildings Occupied for own activities 124 124 – 4 4
Area employed 1) income 2) space 3) Area employed 1) income 2) space 3)
Property for letting under finance leases – – – – – – – –
Capital employed in properties occupied for other than own activity by net income % Group Parent Company
Total 260 Total 80 1) The capital employed is the depreciated cost of an asset which, in case of shares in property companies, is added by Group’s share of liabilities relating to equity shares in these companies and/or share of debts of these companies.
At the disposal of the Board, 1 Jan. 0 From profit brought forward 0 Decrease 0
Profit for the financial year 824 + Reserves provided for by the articles of association 384 + Other reserves 1 + Profit brought forward 0 Total distributable profit 1,209
Information on Sampo shares and shareholders is presented on pages 130–133.
Book value at end of year Certificates of deposit 2,146 2,284 Bonds and notes 3,027 4,753 68 OTHER LIABILITIES
Subordinated liabilities with a book value more than 10% of the total amount of such liabilities 413 395 Other subordinated liabilities 68 67 of which amount of perpetuals 119 113
Sampo Bank plc 1) 67 FIM 8.50 29.3.2008 Sampo Bank plc 2) 113 USD 2.15 23.6.2007 Sampo Bank plc 3) 119 USD 4.48 Perpetual Leonia Corporate Bank plc 3) 113 USD 5.13 7.10.2002 1) Repayable on any interest payment date after year 2002. 2) Repayable on any interest payment date after 23 June 2002. 3) Repayable on any interest payment date.
Assets Less than 3 months 3,512 5,268 Treasury bills and other eligible bills 511 712 Loans and advances to credit institutions 554 1,983 Loans and advances to customers
Treasury bills and other eligible bills 138 836 Loans and advances to credit institutions 72 123 Loans and advances to customers 1,877 1,811 Debt securities 128 456
Treasury bills and other eligible bills 1,132 910 Loans and advances to credit institutions 294 175 Loans and advances to customers 5,155 5,409 Debt securities 334 862
Liabilities Less than 3 months 12,138 15,190 Liabilities to credit institutions and central banks 963 2,209 Liabilities to customers 9,037 10,088 Debt securities in issue 2,138 2,893
Liabilities to credit institutions and central banks 684 1,090 Liabilities to customers 693 424 Debt securities in issue 1,042 1,434
Liabilities to credit institutions and central banks 31 80 Liabilities to customers 661 152 Debt securities in issue 1,834 2,298
Liabilties Liabilities to credit institutions and central banks 171 1,686 1,629 1,854
Income taxes On ordinary activities 94 143 On extraordinary items – –
74 ASSETS PLEDGED AS COLLATERAL SECURITY AND SECURED LIABILITIES AS WELL AS OTHER ASSETS PLEDGED ON BEHALF OF THE COMPANY AND OTHER GROUP UNDERTAKINGS
Secured liabilities and commitments Debt securities in issue – – Other liabilities 20 – Off-balance sheet items 584 383 Other commitments
Intra-day overdraft limit of the Bank of Finland’s settlement account 1,045 1,100
The basic and supplementary pensions of the staff of Group companies have been arranged with Varma-Sampo Mutual Pension Insurance Company.
The rental payments fall due as follows: 77 OFF-BALANCE SHEET ITEMS
Guarantees and assets pledged as collateral security 1,970 1,873 on behalf of Group undertakings – – on behalf of associated undertakings 0 0
Interest rate contracts Futures and forward rate agreements – 441 473 850 Options
Credit Risk Credit Risk equivalent weighted equivalent weighted amount of amount of amount of amount of contracts contracts contracts contracts *) Options for hedging purposes are embedded options attached to funding and derivatives hedging funding. The values of underlying instruments are included both in purchased and written options and in items interest rate swaps, interest rate and cross currency swaps and other equity contracts. No separate credit equivalent amounts have been calculated for embedded options attached to derivative contracts, but the market values of the embedded options are included in the credit equivalent amounts of those contracts.
The segmental and geographical distribution of the staff is presented in note 6.
81 LOANS AND ADVANCES TO AND GUARANTEES ON BEHALF OF MEMBERS OF ADMINISTRATIVE AND SUPERVISORY BODIES
Members and deputy members of the Supervisory Board – – 0.1 – Members and deputy members of the Board of Directors/ Management and President, Executive Vice President 8.0 – 3.3 – Auditors – – – –
Life insurance Deferred insurance policy acquisition costs deducted from the life insurance premium reserve
Discounting of the provision for outstanding claims of P&C insurance Interest rate used in the Group in calculating the technical provisions of annuities (%) 4.00 4.00
Discounting has been effected in calculating the provision for outstanding claims on other than annuity-form compensations, in connection with Patria Reinsurance Company Ltd’s foreign reinsurance provision for outstanding claims. A part of this provision has been discounted at four per cent interest rate. The estimated average maturity of the discounted provision for outstanding claims is 7 years in 2001 and 7 years in the year of comparison.
Reinsurers’ share Before discounting 2 7 After discounting –2 –6 Amount of discounting 1 1 84 OBLIGATORY PROVISIONS
Provision for rents – 1 85 LONG-TERM LIABILITIES (5 years or longer)
Deferred tax liabilities Arising from appropriations 12 12 Arising from mergers 1 29
Deferred tax assets Arising from mergers 7 8 Included in the Group undertakings’ balance sheets 22 22
Arising from timing differences 29 30 87 CONTINGENT LIABILITIES, PLEDGED ASSETS AND DERIVATIVES
Mortgages for own loans 1 2 Amount of the above loans 0 1
Pledges against own liabilities 10 18 Amount of the above liabilities 1 9
Own leasing liabilities To be paid during the starting financial year 0 3 To be paid during following years 0 6
Futures and forwards, open underlying instruments 815 56 current value – 1
Option contracts Bought underlying instruments – 367 current value – 3 Sold underlying instruments – 548 current value – – Currency-linked derivatives
Futures and forwards, locked underlying instruments 61 27 current value – –
Option contracts Bought underlying instruments 373 54 current value –9 1 Sold underlying instruments 742 107 current value –6 3 Commodity index underlying instruments 10 –
Discounts Debt securities in issue 1 1 89 DEBT SECURITIES IN ISSUE
Less than 3 months 269 250 Loans and advances to credit institutions
Loans and advances to customers 0 0 Debt securities 1 1
Loans and advances to customers 9 9 Debt securities 5 5
Liabilities to customers 12 12 93 ASSETS AND LIABILITIES DENOMINATED IN DOMESTIC AND FOREIGN CURRENCIES
Assets Loans and advances to credit institutions 246 14 240 – Loans and advances to customers 21 2 21 2
Secured liabilities and commitments Underwriting commitments 1 1 96 PENSION LIABILITY
The basic and supplementary pensions of the staff in the domestic Group companies have been arranged through insurance with Varma-Sampo Mutual Pension Insurance Company and Sampo Life Insurance Company, while those in foreign subsidiary companies have been arranged according to local practice.
Average Change Average Change For the year Full-time staff 764 –16 764 –16 Part-time staff 45 –4 45 –4 99 EMOLUMENTS OF MEMBERS OF ADMINISTRATIVE AND SUPERVISORY BODIES
100 LOANS AND ADVANCES TO AND GUARANTEES ON BEHALF OF MEMBERS OF ADMINISTRATIVE AND SUPERVISORY BODIES
Members and deputy members of the Supervisory Board – – – – Members and deputy members of the Board of Directors/ Management and President and Executive Vice President 0.3 – 0.3 – Auditors – – – –
The interest on loans to members of administrative and supervisory bodies is at least as high as on the staff loans referred to in the Income and Capital Tax Act, section 67, so that the interest benefit will not be liable for taxation.
Name of company country holding % 1) holding % 1) EURm EURm 2) EURm
Financing Mandatum Holding Ltd Helsinki Finland 100.00 100.00 58 33 –1 MB Equity Partners Oy Helsinki Finland (60.00) 40.00 – 0 2 2 MB Mezzanine Fund Ky Helsinki Finland 100.00 – 0 7 7 MB Mezzanine Fund II Ky Helsinki Finland 62.50 – 29 51 3
Sampo Holdings (UK) Ltd London UK 100.00 100.00 29 44 –1 Sampo Industrial Holding B.V. 4) Rotterdam Holland 100.00 – 0 0 –7 Sampo Business Properties Ltd Helsinki Finland 100.00 100.00 41 39 –4*) Teva Holding B.V. 4) Rotterdam Holland 100.00 – 0 0 –7 Sampo Industriförsäkring AB Stockholm Sweden 100.00 – 1 1 0 AS Kindlustusekspert 4) Tallinn Estonia 100.00 – – – –
*) Profit/Loss for the financial year for two months. The profit of the old Sampo Bank plc for the period 1 Jan. - 31 Oct. 2001 was EUR 160 million.
**) Previously named Tietoleonia Oy, change of name registered on 4 Jan. 2002.
Insurance business Retro Life Insurance Company Limited Helsinki Finland 24.21 – 1 3 0 Kaleva Mutual Insurance Company 3), 4) Helsinki Finland 50.00 30.00 5 154 107 Finnish Credit Insurance Company Ltd Helsinki Finland 33.33 33.33 2 5 0
Other shares and participations held as financial fixed assets Telephone shares 0 1) Appropriations less deferred tax have been included in the capital. 2) Excluded from consolidation, balance sheet total less than EUR 10 million. 3) Share of guarantee capital.
Banking and investment services assets Loans and advances to customers –22 –67 Prepayments and accrued income –1 –3
Assets Other assets –4 –119 Cash at bank and in hand –20 –2
From others –168 Prepayments and accrued income 0 Other assets –6
Debt securities in issue –2 Other liabilities –16 Accruals and deferred income 0
In our opinion, the final accounts have been prepared in accordance with the Finnish
Board of Directors regarding the disposition of distributable profit is in compliance with the Finnish Companies Act.
Sampo observes the recommendation on administration of public companies given by the Central Chamber of Commerce and the Confederation of Finnish
Furthermore, the Board of Directors has confirmed internal regulations concerning the administration, internal control and reporting of the Sampo Group.
Sampo Group which are stricter than the official norms and which concern the
Management Committee and certain other persons specifically named. The persons coming under the scope of these guidelines must ask for a separate permission in advance for each stock purchase and sale. The Sampo Group
The operating principles and the key duties of the Board of Directors have been defined in the Board’s rules of procedure.
Corporate Governance operating plan of the Sampo Group, and is responsible for the proper management of the Group’s operations. The Board also decides, within the limits of the company ’s field of activities, on exceptional and far-reaching matters with respect to the scope and quality of the Sampo Group.
Association the company’s Board comprises no fewer than three and no more than ten members elected at the
The Annual General Meeting of 2001 decided that the number of Board members is seven until the closing of the
Directors elect annually from among the members a Chairman and a Vice
The Board of Directors of Sampo plc convened 26 times in 2001.
Executive Committee and the guidelines and powers of other organs appointed by the Board. The Board has appointed
Committee is to prepare proposals made to the General Meeting of Shareholders of Sampo on the composition of the
Group’s risk management principles and other related general guidelines as well as the supervision of Sampo Group’s risks
Chairman and 1-2 members elected by the Board among the members, the
Committee in charge of risk control, and possible other members appointed by the
Control Committee is the Chairman of the Board of Directors. The Risk Control
Group, in the handling of significant operative issues of a principle nature and in the ensuring of the internal information flow.
Petri Niemisvirta, Head of Life Insurance, Managing Director of Sampo Life
The Board of Directors has appointed the Asset and Liability Committee to control balance sheet risks of the Sampo
The company has a Managing Director who at the same time is the CEO of the
Sampo Group. The Board of Directors elects and releases the CEO and decides on the terms of his employment and other compensation. The Managing
(FIM 15,000). In addition, all members of the Board of Directors will be paid
Members of the Board are paid travel allowance for travel days to an amount corresponding to the maximum amount of tax-exempt travel allowance in accordance with the decision of the tax authorities currently valid as well as accommodation and travel expenses.
Board members employed by the company do not receive separate remuneration for Board work.
General Meeting. The present members of the Board were elected by the Annual General Meeting on 5 April 2001.
Sandvik AB. He was appointed member of the Board of Sampo plc on 26 June 1992. Holds 2,725 Sampo plc shares.
Board, Wärtsilä Corporation and Stockmann plc. Member of the Supervisory Board, Varma-Sampo Mutual Pension Insurance
Board of Sampo plc on 5 April 2001. Holds 11,839,890 Sampo plc shares.
2001 was a period of even faster change than hitherto. Group structure and operations were particularly profoundly affected by P&C insurance development projects and arrangements and by a development project for administration and support functions.
Foreign operations employed a total of 1,541 (2045), of which 1,223 in the
Due to the comprehensive changes foreseen last year, no major staff development projects were started, but ongoing projects continued. The development project for administration and support functions, combined with changes in the Group structure, will ultimately lead to a re-assessment of staff development principles and resources.
Use of a network environment for staff development continued. One of the key projects here was that planning started on a network programme related to savings and investment. The programme, which was ready around the end of the year, helps staff to learn about service models based on the new strategy. The focus of development as a whole was on investment and saving services in compliance with the business strategy, and training on this subject was arranged in cooperation with Helsinki School of
Group was promoted through measures such as uniform staff participation systems and terms of employment within the Group.
In December, it was decided that the personnel fund would be used as part of the performance-related pay system. The
According to this decision, elected staff representatives have the right to be present and the right to express opinions at meetings of the Boards of Directors of
Debate on the Kyoto Climate Protocol and the events of September 11 have brought issues of social responsibility and environmental concerns into sharper focus than ever. In Finland, there are solid foundations for developing these issues: according to the World Economic
Sampo strives to offer its customers optimum solutions to meet their needs.
Sampo offers its customers products and services which support sensible financial planning and sustainable development.
Examples include: • The Sampo Golden Piggy Bank Club for children under 13, which was founded in 1958 and encourages saving.
The club arranges local events and competitions and has its own website.
• The Sampo Sustainability Fund was the first fund to use the Dow Jones
European Investment Fund. These loans have proved particularly popular among service station owners, as environmental requirements grow stricter.
• The number of statutory environmental insurance policies at year-end was 400 and income from premiums stood at
0.23 million was paid out under voluntary insurance policies and motor third party liability insurance. Claims were made in 61 cases of damage. An environmental insurance policy for service station owners was designed with the help of the Finnish Petrol Retailers
• Insurance customers are offered an extensive range of risk management and loss prevention services.
group, a CR plan for personnel development was drawn up and is to be implemented during 2002.
Team, made up of five disabled skiers aiming for top placements in the Paralympic Games in Torino 2006.
• Sampo Fund Management Ltd gives out grants for biotechnical research.
• The Sampo youth foundation gives out grants for work with young people and culture.
• Sampo employees also took part in various grassroots projects with social responsibility, for instance a working group which drew up a guidebook on an obstacle-free working environment for disabled people, and a jumble sale arranged on Sampo’s Lauttasaari premises in Helsinki, proceeds from which went to
Award was the coordination of work and family life. The award sum of EUR
Helsinki Public Works Department, and an association sponsoring a sheltered housing project for the mentally disabled in Helsinki.
The Group companies did not own shares in the parent company on 31
December 2001, but Sampo’s wholly owned subsidiary Satura Oy had 14,875 warrants issued by Sampo.
On 18 January 2001, Sampo’s Extraordinary General Meeting of Shareholders approved the exchange offer pertaining to the acquisition of Mandatum Bank shares as well as the increase of the share capital necessary for implementing the exchange offer. The exchange offer was launched on 1 February 2001 at 9.30 a.m., and it expired on 16 February 2001 at 4.30 p.m.
On 6 February 2001, Sampo’s Board of Directors announced that the preconditions for the combination were met.
Sampo Shares and Shareholders the share subscriptions made so far. This resulted in an increase in Sampo’s share capital by EUR 3,998,041.45 to EUR
Mandatum Bank shareholders who accepted the exchange offer. The increase was entered in the Trade Register on 23 February 2001, and the new
A shares were issued for public trading on the Helsinki Exchanges Main List on
The increase in share capital as a result of the subscriptions, to a total value of EUR
Register on 28 November 2001. Sampo’s share capital after the in-crease amounts to EUR 93,449,166.87, with a total of 554,423,515 A shares. The company’s total number of shares after the increase, including the 1,200,000 B shares, is 555,623,515. The new shares were issued for public trading on the Helsinki
October 2001, the Board of Directors decided not to extend the offer. The authority to increase the share capital was thus never used.
Board of Directors was not authorised to issue shares, convertible bonds or bonds with warrants.
On 22 May 1998, Sampo issued a bond loan with warrants of approx. EUR 1.1 million. No interest was paid on the bond and it was repaid on 22 May 2001.
Sampo Group and Kaleva Mutual Insurance Company was entitled to subscribe.
The subscription price is EUR 6.87 per share. The subscription price is reduced by the amount of dividends.
If the Annual General Meeting of Shareholders accepts the Board’s proposal concerning the dividend distribution for 2001, the subscription price will be reduced to EUR 6.12.
As a result of the subscriptions, the share capital can increase by a maximum of 16,500,000 A shares, i.e. by no more than EUR 2.8 million, which equals 3.0 per cent of the company’s share capital as per 31 December 2001.
share is as good as or better than the average price in the control group specified in the terms and conditions.
Sampo A shares. The share subscription period for option right A starts on
Decrease in 4 May 2000 Cancellation of shares bought –1,520,000 50.86 share capital back (1,520,000 A shares)
Decrease in 3 July 2000 Technical lowering – 49.85 share capital
Others in total 55,172,090 9.93 9.84 *) Varma-Sampo Mutual Pension Insurance Company announced that it had sold 20 million Sampo A shares on 21 January 2002. Therefore Varma-Sampo’s share of Sampo’s share capital and votes decreased to less than one tenth.
***) GE Asset Management Incorporated announced that it no longer owned Sampo shares on 19 April 2001.
On joint account 8,752,080 1.58 *) Each nominee register is included in this figure as one single owner.
7 Foreign ownership, own account 0.07% 8 Foreign ownership, incl. nominee register 27.29% 9 On joint account 1.58%
9.54. If the Shareholders’ Meeting approves the Board’s proposed dividend distribution for 2001, the subscription price will be reduced to EUR 8.79.
As a result of the subscriptions, the number of Sampo shares can increase by a maximum of 26,000,000 new shares and the share capital by no more than
EUR 4,372,886.09, which equals approximately 4.7 per cent of the share capital at the end of year 2001.
Chief Executive Officer and the members of the Board of Directors of Sampo amounted to 11,853,520 Sampo shares.
January 2002 that it had sold a total of 20 million Sampo A shares. Therefore,
Shareholders will be held on Wednesday 10 April 2002 at 2 p.m. at the Marina
General Meeting, a shareholder must be registered in the shareholders’ register held by the Finnish Central Securities
A shareholder whose shares have not been transferred to the book-entry securities system is also entitled to attend the Annual General Meeting providing that he was registered in the Company’s shareholders’ register before 12 September 1997. In this case, the shareholder must present a share certificate or other account at the Annual General Meeting, showing that the ownership of the shares has not been transferred to the bookentry securities account.
According to the policy on the payment of dividends confirmed by Sampo’s
Board of Directors, the company aims at paying half of its annual results in dividends.
According to the proposal, only a shareholder who is registered as shareholder in the register held by the Finnish
Shareholders who have not transferred their shares to the book-entry securities system by the matching day of dividend payment will be paid dividend after the shares have been transferred to the bookentry securities system.
Copies of the financial statement documents can be inspected at Sampo Group’s
A printed Annual Report can be ordered by e-mail at the above-mentioned Internet address, by post at the address Sampo Communications, P.O.
Reports in 2002. The reports will be published on 21 May 2002, 13 August 2002 and 14 November 2002. The
Press and stock exchange releases, the monthly updated list of shareholders and other investor information published by