Contents 4 Sampo Highlights 1999 5 Sampo Group Key Information 6 Chief Executive Officer's Review 8 Sampo-Leonia
January • Sampo Industrial was accepted as a mem­ ber of the Finnish Forest Cluster Project. The project aims to raise the profile of Finland's forest cluster companies, especially in Europe, and to enhance sector recognition and oper­ ating prerequisites. The luster is made up of Finnish paper, board, pulp and mechanical forestry industry companies, the Finnish For­ est Industries Federation, the Fore t and Park ervice and the entral Union of Agricultural Producers and Forest Owners (MTK). • The FIM 50,000 Export Partner Network Award established together by the Finnish Foreign Trade Association (FINPRO) and ampo was presented for the first rime. The award went to a network that supplies ma­ chinery and equipment for the North Ameri­ can wood-processing industry. Member com­ panies are Akamex Oy of Jyvaskyla, Avatron Oy of Vantaa, Hyxo Oy of Kerava and Raahen Tevo Oy of Raahe.
March • Sampo published its 1998 resulr. Group operating profit totalled EUR 211 million and earnings per share improved by more than 70% to EUR 2.42.
May • Sampo Industrial conferred the ampo ln­ dusrrial Safety Award on Rauraruukki reel's Raahe steel mill for its highly versatile and succc sful training activities in several areas of i ndusrrial safety.
ampo Kindlustuse A and A Polaris Vara agreed on the voluntary tran fer of Po­ laris Vara's non-life insurance portfolio, ex­ cluding credit insurance, to ampo Kind­ lusrus.
ampo Enterprise purcha ed rhe share capital of A Ec ri Kindlu rus, Estonia's lead­ ing non-life insurance company, from AS Han apank. The deal included Eesri Kind­ lusrus non-life insurance operations and its loss survey company.
June • Sampo Industrial Insurance signed an agreement to buy two German insurance op­ erations from French insurance group Assur­ ances Generales de France. The transaction strengthens Sampo's position in the German industrial in urance market.
October • Sampo and Finland's second largest bank­ ing group Leonia signed an agreement stipu­ lating that the companies will merge as equal parrners in the new Sampo-Leonia Group. Sampo-Leonia will be the first Finnish full­ service financial services group, a leading in­ surer and a strong domestic bank. ampo­ Leonia's core operations arc in banking, asset management, and non-life and life insurance. • Sampo, lndustriallnsurance, an1po Life, Kaleva and ampo Finance together pur­ chased Skandia Group's holdings in Pohjola roup Insurance orporarion for EUR 577 million (FIM 3.4 billion). The e amounted to 23.6 per cent of Pohjola's share capital and 32.7 per cent of the voting rights. ampo sold 3.4 million Pohjola hare to Leonia for EUR
• The supplementary pensions element of Outokumpu Oyj's pension funds was tran ferred to ampo Life by agreement.
ampo lndu trial Insurance expanded its operations in the UK by buying the renewal rights for a part of olonia Baltica Insurance Limited's in urance policie .
December • The first Finnish life insurance company Kaleva opened for business on December 1 sr, 1874. In celebration of its !25th anniversary, the company marked the event by donating FIM I million to medical research. As a re­ sult, FIM 500,000 scholarships were awarded to Docenr Leena Ala-Kokko of the University of Oulu and Professor Tomi Makela of the University of Helsinki. Kaleva began co-op­ eration as Sampo's life insurance company in 1977. • UAB ampo Draudimas commenced in­ surance operations in Lithuania.
ampo Enterprise and A/ Bastions Z , Vista Capital Corporation LCC and the De­ velopment apical Corporation (Larvia) signed a letter of intent, stipulating that ampo Enterprise will negotiate the purchase of a 72.4% stake in AA Balra, Larvia's lead­ ing insurance company. ampo Entcrpri e already owns 14.78% of the shares. The tran action includes Balra's life and non-life insurance operations. • Two internal merger rook place within the ampo roup when both rso and the Insurance ompany of Finland merged with the ampo parent company on December 31st, 1999.
The merger agreement between Sampo and Leonia in Autumn 1999 drew a line under one chapter of development in Sampo's strategy and marked the beginning of another, more intensive phase. The structure of Sampo­ Leonia Group and its areas of expertise are a good fit to general trends in the financial services sector for the new millennium.
Former non-life insurer Sampo has now grown into a fi­ nancial services group entirely in line with its strategy. The first step in this process was the e tablishment of
Sampo-Leonia is the first full-service financial group eo operate in the Finnish market. Various forms of long-term saving together with the need for a set management in par­ ticular are expanding wifely in line with the growth in private households' financial a ecs.
New Distribution Channels Through New Technologies Pre sures for hange ar trongly affecting di triburion patterns and service network . New e-service are developing rapidly
SAMPO ANNUAL REPORT 1999 and ampo-Leonia i well placed in the change process. Leonia's online bank is already at the technical forefront of Internet banking in Europe and boa ts one of the highe t uti­ lisation rate .
work ideally complements the supply ofLeonia services. Cor­ respondingly, ampo and especially its life insurance business will benefit from the bank's customer contacts.
Distribution solutions utili ing the new technologies alongside an appropriately sized and effective traditional net­ work enable the new Group to react quickly to market changes. When we supplement this platform with a product development policy in line with the new technologies, I be­ lieve ampo-Leonia i more than well prepared for even the most abrupt hifts in the financial markets.
Solid Performance and Strong Solvency The present Sampo Group doubled its earnings per share in 1999 and operating profit developed even better.
Sampo Group investments include the Pohjola shares bought during the year. These were acquired in connection with the creation ofSampo-Leonia, in order to build a nego­ tiation platform that would realise a group structure encom­ passing Pohjola's life insurance business. Though the future of Pohjola is yet to be resolved, the share acquisitions were nev­ ertheless justified as a solid financial investment.
Fundamental changes in group structure will occur in connection with the formation of ampo-Leonia. First, the holding company tructure will clarifY the role of the bank and the in urance companie in the Group, enabling them to concentrate on the efficient management of their operation supp reed by prudent capicali ation. econdly, the new roup structure will make it easier to monitor profitability in differ­ ent bu ines units.
Sampo·leonia Market Areas Sampo-Leonia's vision is to be the leading full-service financial group in Finland and to grow in core businesses along the Baltic Rim. We aim to be among the three largest operators in the Baltic countries.
In fact, we have already started to meet Sampo's goals in the Baltic countries. We hold approximately 40 per cent of the non-life insurance market in Estonia and are now achieving growth in Latvia. We also initiated life insurance operations in the Baltic countries during the review year. The Baltic mar­ ket is so small at this point that sufficient mass and thus op­ erational profitability can only be achieved by acquiring large market shares.
A ccording to the plan, Leonia plc will merge with ampo Insurance ompany plc on December 31st, 2000 to form ampo-Leonia, the parent company of the new financial group.
ampo-Leonia will be Finland's first full-service financial group, being both the leading insurer and a trong bank.
ampo-Leonia's main bu ine operations are banking, asset management, and non-life and life insurance. The roup' pro forma balance sheer at December 31st, 1999 stood at EUR 35 billion, with a pro forma operating profit of EUR 769 million for the year under review.
ampo-Leonia's main management principle i to increa e hareholder value. Minimum target for solvency and return on equity will be defined for each bu ines sector by applying the appropriate benchmark.
The merger and rhe new group' management principle will create added value for shareholders and benefit client and per onnel alike.
Clients will benefit from the new group's product and service range, which is broader than that of any of its competi­ tors. By joining forces, Sampo-Leonia can offer service pack­ ages previously unavailable in Finland.
Strong Market Position . . . Sampo-Leonia will hold a strong position 111 the market for supplying financ ial services to Finnish households, ~MEs, major corporations and the public sector. The Group :"tll con­ sequently be able to boost returns, generate cost savmgs and enhance its use of capital .
Sampo-Leonia will have two million active private clients and 100,000 corporate clients, thus serving in total nearly _half of all Finnish households and more than 80 per cent of Fmnish companies. .
Sampo-Leonia will fulfil all its clients' various financ1~g, investment and security needs. Combining the leadmg strengths of both companies will deliver better-than-ever product and service quality. . .
Sampo holds around 40 per cent of the Esto_man n~n-hfe insurance marker and a rapidly increasing share m Larv1a and Lithuania. ampo further aims to grow in selected business ecrors elsewhere in Europe; some 17 per cent of Europe s pa­
ies, town and villages in Finland. There are 91 Leonia offices and ervice points for private customers, 19 asset management unit and 55 offices for corporate clients. ampo has 86 of­ fice , 40 of which also provide corporate client services, and there are three other service points.
The roup almo t tripled its oper­ ating profit eo UR 565 million (EUR 211 million in 1998), thank in particu­ lar eo the good inve tment result. Non­ life insurance accounted for EUR 391 million (EUR 177 million) and life in­ surance for UR 175 million ( UR 34 million) of the operating profit. Earn­ ings per share improved eo EUR 4.70 (EUR 2.42). Return on a sets at current values doubled to 29 per cent.
MERGER OF SAMPO AND LEONIA Sampo Insurance Company plc and Leonia plc signed a letter of intent on October 13th, 1999 in preparation of a merger. According to the planned schedule, the merger will enter into force on December 31st, 2000.
After rhe merger, the parrie intend to form a holding company structure. The holding company ampo-Leonia, quoted on the Helsinki Scock Exchange, with its subsidiaries would encompa s all banking, asset management and in­ surance operations.
The Boards of ampo and Leonia approved the draft terms of merger on February 2nd, 2000. The plan will be m SAMPO ANNUAL REPORT 1999
!aims incurred Net operating expen es ther technical charge Balance on technical account before the change in equali ation provi ion Inve tment income and charge Other income and charge
Impact on result hare of a ociated undertakings' pr fit Operating profit 214 - 26 hange in equalisation provision
Unrealised gains and lo es on mvesrment Non-life insurance profit before extraordinary items, untaxed reserves and tax
Main contents of the draft terms of merger According t the draft terms of merger, Leonia will be merged to ampo. A merger consideration an1po will direct a share capital in r ase constituting 44 ,720,000 ampo A shares to the shareholder of Le nia, i.e. the Finni h government. The aid amount repre­ s nt 43 per ent of the aggregate of ampo' shares after the hare capital increa e. Leonia' hareholder will be­ come ampo' shareholder after the merger ha been entered in the trade register. Before the merger, Leonia will
Non-life 1999 pay its shareholder dividend at the total amount of EUR 505 million, raking into account the additional tax imposed on Leonia and its group companies. Corre pondingly, Sampo will pay its shareholders a total of EUR 202 million as dividend and by buying back own shares before the effective date of the merger.
The draft terms of merger include a proposal on the amendment of Sampo's Articles of Association, the main con­ tent of which is as follows: • the company name will be Sampo­ Leonia Insurance Company plc • ampo wdl renounce its Supervisory Board at the effective date of the merger • the owners of ampo B shares will be reserved an option to exchange B shares for A shares • an amendment will be added to the Articles of Association on the redemp­ tion obligation of a shareholder whose stake of all shares or voces of the com­ pany reaches 33 113 or 50 per cent. A shareholder who reaches these limits would be obliged to redeem the shares of other shareholders should they wish to sell them.
The personnel of Leonia will trans­ fer, and the personnel of ampo will Continue at the service of the new roup as o-called old employees. A precondition for the merger is that the Parliament approve it and re­ peal the Act on Post Office Banks. In addition, the merger is subject to the approval of the Finnish Competition Authority, Financial Supervision, Insur­ ance Supervision Authority, and Trade Register.
CHANGES IN GROUP STRUCTURE Group ub idiaries and associated un­ dertakings are listed in Notes to the Ac­ counts. These included a total of73 real estate companies at the 1999 year-end.
Intangible assets + olher items real estate companies during the finan­ cial year.
Sampo subsidiaries Ocso Loss of Profits Insurance Company Led and the Insurance Company of Finland Ltd were merged with their parent company Sampo plc at the end of 1999. The pur­ pose of the mergers was to further de­ velop and simplifY Sampo Group struc­ ture.
subsidiary of ampo Enterprise, and Eesri Varakindlu tu were merged with Ee ri Kindlusrus ar the beginning of the year 2000. The name of rhe new com­ pany is A ampo Ee ti Varakindlu tus.
ance company in Estonia, called ampo lukindlu ruse A . The company started operation in Autumn 1999. The premiums written by the
Expansion of business operations in Northern Europe ampo Industrial ln uran e .V., a utch ub idiary of Indu trial In ur­
Industrial Insurance bought the marine insurance portfolio and a parr of rhe commercial insurance portfolio of the Swedish company Forsikringsaktie­ bolager Arlanrica. The portfolio transfer is subject to rhe approval of rhe authori­ ties of Sweden and Finland.
Sampo Towarzy two Ubezpieczen S.A, a subsidiary established by Indus­ trial Insurance in Poland in 1999, starred non-life insurance operations in Autumn. The company will first con­ centrate on commercial properry, loss of profits, cargo and liabiliry insurance. In addition to rhe said insurance company, the risk management company ampo Risk Management p z.o.o. founded in Poland in February 1999 continue op­ erations.
CHANGES IN ACCOUNTING PRINCIPLES At the end of 1999, rhe Ministry of o­ cial Affairs and Health and the In ur­ ance upervi ion Authoriry issued new decision , instructions and regulati n on rhe compilation of final a counts. These will be applied in the most part by the ampo roup as of rhe beginning of the year 2000. In accordance wirh rhe po ibiliry included in the new instruction , the treatment of currency conversi n difference ha been changed already in these final ac ount . ur­ rency conv r ion differen e have been calculated a rhe difference of currency­ denominated reinsurance items ar changing and fixed rare . The net amount of currency onversion differ­ ence ha been entered under other in­ vestment charge .
surance remained ar rhe level of 1998 and totalled EUR 884 million (EUR 871 million). Excluding the non-recur­ ring separate charge in worker ' com­ pensation insurance in rhe previou year, premiums written increased by 7.5 per cent. Premiums written in domestic direct insurance amounted ro EUR 745 million (EUR 763 million). Foreign di­ rect insurance premiums written showed a significant increa e, thanks ro rhe expansion of international opera­ tions, and totalled EUR 108 million (EUR 65 million). Reinsurance premi­ um written amounted to EUR 31 mil­ lion (EUR 43 million), which accrued mainly from the co-operation network and clients' captive companies.
The number of large claims re­ mained at a high level. ampo Group received eighteen claims for compen a­ cion each in excess of EUR 2 million, and as many a ten of the e were in­ curred in November or December. EUR 31 mi !lion of rhese large claims re­ mained on the roup' own account as in the previous year. Thirteen of rhe large claims occurred verseas.
" J alculared ar fixed rares rhe combined ratio of 1998 was 115 .9% and rhe balance on technical account EUR 13 million weaker rhan calculated ar changing rates. The impact of exchange rates has nor been transferred to rhe figures of invesrmenrs.
The proportion of shares of the to­ tal investment portfolio went up to 67 per cent. EUR 353 million of net gains on investment rcali ations were entered as income. Value re-adjustments total led
UR 32 million, and value adju tments EUR 62 million. Nokia hares were sold throughout the year, the market value of the Nokia stake tanding at UR 1,667 mill ion at the year-end.
UR 22 milli n of private equity in­ vestments, and UR 20 milli n was in­ vested through private equity fund . Private equity fund commitments stood at EUR 59 million.
The proportion of land and bui ld­ ings of the total investment portfolio went down to rand at 10 per cent on December 31st, 1999. The structure of the real estate portfo lio was actively up­ graded through reali ations and devel­ opment and investment activities. The Group's non-life insurance compan ies sold land and buildings at the total amount of EUR 91 million, of which EUR 8 million of realised net gains were entered as income. New invest­ ments in land and build ings totalled EUR 40 million. On the basis of evalu­ ations carried out by independent ex­ pertS, EUR 5 million of value adju t­ ments were made on land and build­ ings, having an impact on result. T he number of vacant business premi es continued to fall, to as low as 2.9 per cent.
In individual pen ion insurance, comparable growth wa modest, ince the ales during the last week of 1999 did not reach the exceptional level of 1998. In life in urance, single premium policies continued to dominate. am­ parable growth in the bigge t line, capi­ tal redemption policies was 6 per cent, the premiums written amo unting to EUR 156 million.
The key objective of 1999 was to strengthen the Group's market position in the fast-growi ng unit-linked business. According to preliminary information, the market share of Sampo Life went up to 8 per cent (2%) in this field, the pre­ miums written in unit-linked life and
Income from land and buildings 30 25 55 45 ain on reali ation of investments 373 229 602 333
Exchange rate losses on insurance -26 -2 - 28 business -1 -103 -103 - 17 Other charges
The impact (EUR + 14 million) of exchange rate differences of the insurance business is not included in the figures of the year of companson.
The proportion of investments in shares went up to 47 per cent. Of the share portfolio, EUR 182 million of net sales profits, EUR 27 million of value re-adjustments, and EUR 17 million of value adjustments were entered. The market value of the largest single equity investment, Nokia, was EUR 242 mil­ lion.
In 1999, Sampo Life increased pri­ vate equity investments, which totalled EUR 94 million at the year-end. Private equity investment commitments amounted to EUR 279 million.
Sampo Life actively uses derivatives as a part of its investment operations, mainly to hedge the existing positions. Derivative contracts are used in connec­ tion with investments in shares and in­ terest-bearing instruments as well as in currency-denominated investments. As a general rule, the instruments used are standardised forward rate agreements and option contracts. During the year under review, a part of the share portfo­ lio was hedged by use of derivative con­ tracts. EUR 68 million (net) of share portfolio hedging costs and EUR 42
LIFE INSURANCE Investments in land and buildings 266 6 252 8 Shares 1,913 47 928 30 Bonds 1,323 32 1,401 46 Other debt securities 241 6 134 4 Loans 144 4 160 5 Other investments 152 4 187 6 Investments pertaining to unit-linked policies 70 2 16
Valuation differences Investments in land and bui ldings 26 9 Shares 756 267 Bonds 55 128 Other debt securities 0 0
million of currency hedging co ts are included in the net investment income.
ampo roup employed an average number of 3,924 persons over 1999
SIGNIFICANT EVENTS AFTER THE CLOSE OF THE FINANCIAL YEAR Preparation for the turn of the millen­ nium succeeded a planned. o far, d1e ampo roup ha not received signifi­ ant claims on Y2K related lo es.
No e senrial problems were discov­ ered in ampo's own information sy tems at the turn of the millennium or after it. The re t of the year is also ex­ pected to progre without problem . Real estate, securiry and telephone sys­ tems have also functioned Aawles ly. A total of 81 man-years was u ed for year 2000-related IT work over the past three year .
pany, to a holding company. After the merger, all non-life insur­
In pring 1999, the Annual Gen­ eral Meeting authorised Sampo's Board of Directors to buy back a maximum of 3,000,000 ampo A shares. These buy­ backs were carried out during the pe­ riod January 3rd - January 24th, 2000. A total f 1,520,000 w11 share at a to­ tal amount of EUR 57 million were bought on eh He! inki to k Ex­ change.
Industrial Sampo Run-off Sampo EUR m Insurance Industrial com anies Life
The Board of Directors of Sampo has passed a resolution on observing the Helsinki Stock Exchange Guidelines for Insiders as of March 1, 2000.
In life in urance, the aim is to fur­ ther increa e ampo's market share in unit-link d insurance. The focus will be al o on in reasing the proportion of regular premium-policies and individual pension insurance. ampo expects to m intain its leading position in cornmercial life insurance, although there are signs of tightening competition also in this field.
Focus on new technology will con­ tinue in client service and product de­ velopment. The future Group structure enables ilie utilisation of Leonia's know­ how in technology. Comprehensive multi-channel distribution is the core of the efficient supply of services to the extensive clientele of Sampo-Leonia.
BOARD'S DIVIDEND PROPOSAL The parent company's non-restricted capital and reserves stood at EUR 312,501,866.62, including a profit for the period ofEUR 224,679,008.60. Of the non-restricted capital, EUR 307,857,558.80 was distributable. Group non-restricted capital and re­ serves were EUR 534,192,957.58, of which EUR 500,432,221.54 was dis­ tributable.
The Board of Directors will pro­ pose that a divided of FIM 14.50 per share, equalling EUR 2.44 per share, be paid to the 59,280,000 Sampo A and B shares not owned by the company.
To be placed at the disposal of ilie Board for worthy public causes 210,234.91 To be retained on the closing account -----------::-:~--:::=-1 ;:-:1 'c:8-:::9::-4-':.5;:';:5:Parent company's profit 224,679,008.60
After the close of the financial year, EUR 56,929,023.41 of distributable non­ restri ted capital and reserves of the parent company have been used for buying back own shares.
Premiums earned 2, 8 Premiums written Premiums written 1 881,284 868,287 313,577 294,961 Premiums written 1, 4 541,203 225,181 Reinsurers' hare - 116,049 - 97,920 - 1,421 - 1,180 Reinsurers' share -4,346 320 for unearned premiums hare of net inve tment income 6 292,869 70,914 oral change - 24,959 - 9,570 - 10,485 - 5,827
Merger - - 2,278 - laim incurred Portfolio tran fer 2,629 - - -- laims paid 4 -226,522 -46,332
T oral changt: 5,250 - 1,619 ),150 8 Merger - - - 1,137 - Change in the provi ion for Portfolio tran fer - 379 - - -- outstanding claims -88,573 -11,518
Balance on techn ical account - 100,389 - 90 344 -37,847 -40,495 m SAMPO ANNUAL REPORT 1999 SAMPO ANNUAL REPORT 1999 ~~
Depreciation on goodwill -47,217 Technical underwriting result, -39,348 -47,217 life insurance 37,270 1 J ,211
Tax on extraordinary income 7,8 Investment income 6 1,132,6 18 558,461 368,448 239,348 and charges Unreali ed gain on inve tmems 6 18,380 2,305 Tax for the financial year 1,037 1,737 Investment charge 6,8 - 374,821 - 184,382 - 34,844 - 68,423 Deferred cax 10,429 10,429 Unreali ed lo ses on inve tmenrs 6 - 1,080 - 18 - 1,029 11,466 12,166
Other charges Increase/decrea e in credit loss reserve -205 -505 Depreciation on consolidation difference -4,548 -11,447 Depreciation on goodwill -2,915 - 2,464 -5,149 - 5,149 Profit for the financial year 285,957 119,030 224,679 56,635 Other -838 -179 -218 -3 - 8,301 -14,090 - 5,367 -5,152 Tax on profit on ordinary activities 7,8
Tax for the financial year -116,399 - 58,254 -77,611 -35,330 Tax from previous periods - 1,286 - 13 - 837 Deferred tax - 2,932 389 -1,433 -120,618 -57,879 -79,882 - 35,330 Share of associated undertakings ' r:ofit/loss after tax 1,480 -8,268 - r-·
Profit on ordi nary activities after tax 294,331 147,653 227,049 90,863 m SAMPO ANNUAl REPORT 1999 SAMPO ANNUAL REPORT 1999 m
Technical provisions 21 Provision for unearned premiums, 260,161 non-life insurance 229,862 140,670 130,181 Reinsurers' share -24,607 -18,937 -1,193 -42
De~osits with ceding undertakings 49,880 66,239 1,496 249 5,937,311 5,051,931 1,317,864 1,060,5sr-
Tangible a sets Equipment 9 41,291 38,903 27,363 26,078 Other tangible a set _ 4,101 3,540 3,239 3,053 ash at bank and in hand 83,291 107,364 16,139 12,304 _Qilier a sets I ,552 1,397
Claims outstanding, non-life insurance 1,802,833 1,661,783 591,858 514,355 Reinsurers ' share -184,344 -142,267 -29,431 6,268
Source of fund ash-flow financing Pr fit before intere t expen e , extra­
rdinary item , untaxed re erve and tax xrraordinary income and charges
Investments Increase in investments Increase in intangible and tangible as . .:.se.:.t::.s __ _
Change in working capital Debtors ash at bank and in hand Pre a ments and accrued income
Furthermore, provisions and rec­ ommendations concerning listed com­ panies have been taken into account. T he Finnish Accounting Standards Board has granted insurance companies whose shares are publicly traded special permission (22.12. 1997 No. 1509), for the years 1997-2000, to report key fig­ ures and other information referred to in the decision of the Ministry of Fi­ nance according to the instruction !Sued by the Ministry of Social Affairs and Health.
Comparability of Data A subsidiary of ampo In urance Com­ pany plc, ampo Life Insurance Com­ pany Limited, and Nova Life Insurance ompany Limited, were merged on December 31, 1998. The share of No­ va' profit is included in the share of associated undertakings' profit in the Consolidated Profit and Loss Account 1998, so it is not possible to evaluate the development of life insurance profit and lo s account items directly from the profit and loss account.
Subsidiaries acquired during the fi­ nancial year are consolidated as from the day of acquisition, and the subsidi­ aries sold until the assignment day. In­ tra-group transactions, amounts due to or from group companies, internal gains and losses as well as profit distribution are eliminated. However, intra-group direct insurance is not eliminated.
Intra-group cross-shareboldings are eliminated by using the acquisition method. The difference between the ac­ quisition cost of shares in subsidiaries and their capital and reserves at the time of acquisition is entered primarily under subsidiaries' land and buildings and de­ preciated according to their deprecia­ tion plan. The unallocated part is en­ tered under consolidation difference and depreciated over its useful eco­ nomic life.
Associated Undertakings In the onsolidated Accounts, rho e companies in which the group' holding and voting right amount co 20 - 50% - with the exception of Kaleva Mutual Insurance ompany- have been inte­ grated a as iated undertakings , u ing the equity meth d. The impact of the consolidation of Kaleva Muruallnsur­ ance ompany on group re ult and non-restricted capital and r erve i in ­ essential, becau e the owner of guaran­ tee capital is entitled only to the guaran­ tee capital and the intere t paid on it. Relevant information n the c mpany is presented in the Note to the Ac­ counts.
Valuation and Matching The variable expen e arising from acquisiti n and production are in luded in acqui irion eo t .
Derivativ ntracrs are valued at rh ir urrent value on the date f cl ing the account . The difference be­ tween the curr ne value of a hedging derivative ntra t and a I wer book value/contra r rare i entered a in ome. However, the maximum amount en­ tered i that whi h corre pond ro the amount of the hedged balan e beet item nrered a an expense. If the book valuc/conrracr rare exceeds rhe current value, the lo s is entered ar it full amount. he difference between the current value of derivative contract not concluded for hedging purposes and a higher book value/contract rare is en­ tered as an expen e, and the pos ible valuation gain is not entered.
lncangible right oodwill on olidation difference and negative consolidation difference Orher long-rerm liabilities Residential and business premi es and offices Industrial premises and warehouses Building components Computer hardware, cars
Valuation differences in the current value of shares in a life insurance com­ pany which is a subsidiary, have been taken inro account in accordance with the agreed interpretation of the Princi­ ple of Fairness. Shares in other group companies are valued at net asset value. With respect to shares in associated un­ dertakings, net asset value, a value based on the equity method, or the remaining acquisition cost is used as their current value.
Expenses by Activity Operating expenses and depreciation on capitalised ADP systems and equipment are divided between activities. Part of them are allocated directly to activities, part on the basis of a study on working hours which is carried out annually. Thus the percentual share of activities varies from year to year. Expenses by activity are presented under operating expenses (policy acquisition costs, policy management expenses, and ad­ ministrative expenses), under claims paid (claims settlement expenses), under investment charges (management ex­ pen es arising from real estate investments and other investments) and un­ der other charges (expenses arising from the sale of services).
Directly allocated investment man­ agement expenses which are shown un­ der investment charges comprise man­ agement expenses and maintenance charges for real estate shares and for land and buildings, as well as fees for custodian services. Planned deprecia­ tions on buildings are presented under Investment charges.
Other Technical Charges Sampo Kindlustuse AS, the Estonian subsidiary of Sampo Enterprise Insur­ ance Company Limited, took charge of the non-life insurance portfolio of AS Polaris Vara on May 20th, 1999, ex­ cluding the credit insurance portfolio. The loss arising from the acceptance of the insurance portfolio has been pre­ sented as Other technical charges.
Other Income and Charges In addition ro depreciation on goodwill and consolidation difference and de­ crease in negative consolidation differ­ ence, chose items have been handled as Other Income and Charges which have a direct connection with the Group's ordinary activities, for example the in­ come and charges of services relating ro captive operations.
Taxes for the year have been calculated on the ba i of the taxable income cal­
tions. Avoir fl cal tax credit on dividend earned is entered in dividend , under lnvestmenr Income. Dividends, guaran­
tee capital interests and avoir fi ea! tax credit are enrercd in the accounting pe­
riod during which the decision on the distribution of profit was made. How­
ing the amount of income tax for the year will not be entered, if it is probable that the credit left unused can be used in setting off the income tax of future periods, with particular regard to the expectations for the financial year im­
ments. Be au c the re erve are entered a income, and revaluation transferred to reserve and valuation difference are reali ed partly to cover expen es, the deferred tax i not reali ed for thi pare.
lated depreciation difference are divided into the change in deferred tax and share of profit, and deferred tax and share of capital and reserves. The mi­
stricted capital and re erves. Deferred tax has been calculated in accordance with the 29 per cent tax rate. Deferred tax is not deducted from the valuation differences on inve tmencs. In the final accounts of 1998, e­
ferred tax. The depreciation made in the accounts has been periodised in the taxation ver six year , insofar a it was not tax deductible in 1998. The ampo roup will start to pre ent deferred tax in more detail along with the new regu­ lation.
ne son result ha been pre ented under inve tmenc resulr.
plied to a part of Patria Reinsurance ompa.ny Led's provision for outstand­
Patria's discounted technical provi ions are mainly in U D and are covered by assets in the same currency. The a ets are e timated as sufficient to ecure a profit exceeding the incere t rate ap­
Life Insurance The premium re erve i calculated by policy in direct in urance, and a cord­
ing item of insurance will uffi e to cover related amortisation and future operating expen es. The amorti ation period of zillmerisacioi is no longer than the in urance period.
Sampo Life aims at giving a total return before charges and taxe on poli­
ny's solvency status on such a level chat it does not limit the giving of bonuses to the policyholders nor the distribution of profit to shareholders.
stricted and non-restricted capital and reserves are considered to belong to the shareholders. Of the valuation differ­
ences which are not needed for ensuring solvency in the long run, 80 per cent are considered to belong to the sharehold­
Key figures have been calculated in accordance with the guidelines issued by the Mini try of ocial Affairs and I Iealth, which comply with the excep­ tional permis ion (December 22, 1997, No. 1509) granted to in urance companies by the Finnish Accounting tandard Board.
Turnover Non-life in urance: + premiums earned before credit losses and reinsurers' share . . + mvestment mcome + other income + revaluations entered a income, realised in connection with ale
Operating profit Non-life insurance: + premiums earned - claims incurred change in collective guarantee item - operating expenses other technical charge + investment income - investment charge + other income - other charge ± share of a sociated undertakings'
Life in uran e: + re hnical resu lt before b nu e and rebates and chang in the equali a­ cion provision + rher in ome - other harge ± hare f as o iated undertaking '
Profit before extraordinary item , untaxed reserves and tax + roup operating profit ±change in the equali ation provi 1011 + revaluations on investment , non-life in urance - revaluation adju tments on inve t­
menr , non-life insurance + bonu es and rebates, life insuril'nce
Return on equity (at current values)* + profit before extraordinary items, untaxed reserves and tax + revaluation entered into revaluation reserve - revaluation withdrawn from revalua­
±valuation difference on investments (average on Jan. 1 and Dec. 31)
+ revaluari n entered into revaluation re erve - revaluati n withdrawn from revalua­ tion re erve
Gross premium written premium written before rein urer' share and credit 1 es
Expense ratio (life insurance) + operating expenses before the change in deferred acquisition costs + claim etdement expenses x 1 OO%
Solvency margin** + capital and reserves after proposed profit distribution ±valuation differences on investments - intangible assets + deferred tax ± other items prescribed in the decree
Solvency capital** + solvency margin + equali ation provision + minority interest
Solvency capital, % of technical provision (non-life insurance) + solvenc ea ita! + technical provi ion - equali ation provision
Solvency capital, % of technical provisions (whole bu ine sand life insurance) + olvenc ea ital + technical provisions equalisation provision - 75% x technical provisions of unit-linked insurances
Earnings per share + profit before extraordinary items, untaxed reserves and tax - tax - minority interest adjusted average number of shares
Dividend per share dividend for the accounting eriod adjusted number of shares at Dec. 31
Market capitalisation number of shares at Dec. 31 x closing share price at Dec. 31
Relative share trading volume number of shares traded through th~ Helsinki Stock Exchange x 100% adJuSted average number of shares
• In calculating key figures, an interpretation of the Principle of Fairness in life insurance has been taken into account, according to which 60 per cent of the valuation differences pertaining to the year 1999 and 25 per cent of the valua­ tion differences pertaining to the year 1998 is calculated to the owners, in addition to rhe capital and reserves oflife insurance. In previ­ ous years, the valuation differences of life insur­ ance were nor included in rhe calculation of rhe said key figures.
In calculating return on equity, return on assets, solvency-related key figures and ner asset value per share, rhe same "other items prescribed in rhe decree" have been deducted from valuation differences as in calculating solvency margin.
General Key Figures Per Share Key Figures Turnover URm 992 1,027 1,320 1,651 2,540 Earnings per share EUR 0.50 0.71 1.40 2.42 4.70
FJMm 5,896 6,105 7,848 9,815 15,102 FIM 2.96 4.23 8.32 14.37 27.96 ros premium written EURm 710 756 973 1,096 1,425 apical and re erve per hare EUR 9.34 9.88 11.07 12.47 16.41
Profit before extraordinary items, FIM 1.25 1.50 3.00 4.80 14.14 untaxed reserves and tax URm 46 62 116 206 415 Dividend per share for shares not
Proflr before untaxed re erves and tax EURm 39 61 111 166 415 Dividend per earning ') % 42.2 35.5 36.1 33.4 50.6 FIM m 2 4 365 662 988 2,467 Effective dividend yield ') % 2.1 1.7 1.7 2.5 6.9
Average number of ersonnel 3,023 3,113 3.!.176 3,292 3,924 A Shares
Gro s premium wnrren URm 191 225 541 in life insurance has been taken into account, according to which 60% of the valuation differences pertaining to
FJM m 581 3,104 5,640 Life in urance capital and reserves, which includes a share of optional reserves and accumulated depreciation difference, qualisarion provision EURm 0 4 11 IS considered to belong entirely to the owners.
FIM m 636 3,180 5,731 ' I Proposal by the Board to the Arlnual eneral Meeting concerning the financial year 1999. % of technical provisions 15.8 20.7 31.3
1 GROSS PREMIUMS WRITTEN 2 GROUP: NON-LIFE INSURANCE BALANCE ON TECHNICAL ACCOUNT BY GROUP OF INSURANCE CLASS Group Parent company olumn: I • ross premiums wriuen before credit loss and reinsurers' share 5. Reinsurance balance EUR'OOO 1999 1998 1999 1998 2· ro premiums earned before reinsurers' share 6= Balance on technical account before the change in collective 3 · ros ciJ.im~ incurred before rcinsurers' share guarantee item, other technical charges and the change in the
Life insurance Motor, orher classes 1999 113,293 108,439 -88,984 -24,7 18 -166 -5,429 105.1 Direct in urance 1998 99,320 96.998 -74,424 -22,776 -35 -238 100.2
Finland 530,640 215,682 1997 94,309 91,625 -70,093 -20,860 -105 566 99.4 Other counrries 42 ~1arine, aviarion and transport
PREMIUM TAX AND OTHER TRANSFERRED CHARGES 1997 10,937 10,709 -12,605 - 1,024 -2,920 127.3 M iscdlaneous INCLUDED IN NON-LIFE INSURANCE PREMIUMS 1999 22,355 24,648 -2 1,471 -4,944 3,941 2,174 75.3 1998 27,515 26,828 -15,588 -5,501 -5,038 701 92.4 Premium tax 101,162 96,199 54,560 1997 24,34 1 24,151 -24,374 -5,304 3,178 -2,349 129.4 59,083 D1rect insurance -in total Fire brigade charge 1,733 1,760 637 647 1999 852,974 825,460 -787,116 -170,156 44,082 -87,731 112.1 Traffic safety charge 1,550 1,488 1,185 1,131 1998 827,632 814,767 -779,878 - 156,872 -2,021 -124,003 117.1 1997 735.563 725,457 -617,668 - 137,080 -14,903 -44,194 106.9 Industrial safety charge 3,273 3,075 118 94 Rei nsurance overnment medical treatment fees 17,566 16,016 6,343 6,019 1999 31,291 33.493 -50,028 - 12,010 28,641 96 99.3 1998 43,02 1 43,949 - 14,066 - 14,019 1,703 17,567 38.4 Total 125,285 118,538 67,367 62,451 1997 46,132 45,892 -76,223 - 15,763 -887 -46,981 254.1
Other techni al charges 1999 -2,396 798,570 771,719 8,546 7,670 hange in the equali ation provi ion
•) Calcul•ted .r fixed r•te the cornb111ed r.tio of 1998 ''"' I I 5.9% and the balance .. )Calculated at fixed rate the combined ratio of 1997 was 107 8% and the balance on tcchnacal account EUR I null ion weaker than calculated at changing rates. on techntcal account FUR 39 mallion better than calwlated .r changing rates. The 1111pact of exchange rate has not been tran ferred to the figure of irwe unent . The imp.ct of exchange rates has not been transferred to the figures of investments.
PARENT COMPANY: NON-UFE INSURANCE BALANCE ON TECHNICAL ACCOUNT BY GROUP OF INSURANCE CLASS 3 IMPACT OF EXCHANGE RATE DIFFERENCES ON THE CHANGE IN THE PROVISION FOR UNEARNED PREMIUMS AND IN THE PROVISION FOR OUTSTANDING CLAIMS IN NON-LIFE AND LIFE INSURANCE OF THE GROUP olumns: )ross premiums written before credi t lo sand rein urers' share 5 Rein;urance balan e 2· Gro s premiums earned before rein s urc:r~· share 6 Balance on te hni ala count before the change in collective 3· Gro~~ claims incurred before rein~urcrs' hare guarantee item and equa lisation provision 4 ross operating cxpen~e~ be~ re reinsurance com missi n. 7· ombined ratio
Before Before reinsurers' Reinsurers' reinsurers' Reinsurers' EUR '000 2 3 4 5 6 7 EUR'OOO shore shore Net shore shore Net
Direct insurance GROUP tatutory workers co mpensation 1999 9,111 8,975 -12,206 1,285 0 ,516 151.6 1998 9.028 8,825 - 16,022 - 1,270 2 8.468 197.2 Change in the provision for unearned premiums 1997 7,424 7.258 I I ,752 - 1, 120 -2 5,6 16 I 77.4 229,862 - 18,937 210,925 1,745.447 -3,255 1,742, 191 Non \tatutory a cidenr and health Provi ion for unearned premiums, Jan. 1, 1999 1999 28,897 28,752 -22,363 10,838 -22 1 -4,670 I 16.4 ~i sion for unearned premiums, Dec. 31, 1999 260,161 -24,607 235,554 2, 199,621 -3,690 2,195,931 1998 28,906 28,989 -22,207 - 10.712 182 , I 13 I 14.3 -30,299 5,670 -24,629 -454,175 435 -453,740 1997 27,960 27,872 20,977 9,444 - 180 -2,730 109.9
IMPACT OF EXCHANGE RATE DIFFERENCES ON THE CHANGE IN THE PROVISION FOR UNEARNED Legal expenses 1999 8,326 8,062 -6,224 -963 875 89.2 PREMIUMS AND IN THE PROVISION FOR OUTSTANDING CLAIMS IN THE PARENT COMPANY 1998 7,805 8,086 -8,804 -952 - 1,670 120.7 1997 8,496 8,349 8,754 683 1,088 113.0
_ Provision for unearned premiums, Dec. 31, 1999 140,670 -1, 193 139.477 'Tot 1999 315,593 305,371 -257,658 -80,802 -759 33,848 111 .3 - 10,488 1,150 -9,338 1998 296,304 289,134 259,393 -79,709 - 1,189 -5 1,157 11 7.9 1997 276,541 270,493 -24 0,763 -7 1,208 2,338 43,817 I 16.3 4 4 hange in the collective guarantee item Im act of exchan e rare difference 1999 518 hange in the provision for unearned premiums -10,485 1' 150 - 9,334 1998 98 hange in the equalisation provision 1999 -3,48 1 Change in the provision for outstanding claims 1998 11,160 514,355 -6,268 508,087 1997 5,611 Provi ionforour tandingclaim , Jan.1, 1999 Balance on technical account
SAMPO ANNUAL REPORT I 999 SAMPO ANNUAL REPORT I 999 ~~
Directly allocated hare of fixed co ts perating expense P li y a qui ition co t
Direct in urance commi 10n ommissions on reinsurance a umed cher I icy acqui ition cost
6,937 8,030 Directly allocated ' l 12,723 15,568 hare of fixed costs ------~6:?..,0~7,..::5:,-_---=-.::..5,'.::8-75.:;.6_1-___::.!..::::..:::..:::...._--___.::.?..:::.::!..__
hange in deferred poli y a quisition co~t in luded in the hange in premium reserve
" l Include an extraordinary depreciation of EUR 47 million on go dwill, enrered under extraordinary charge .
Income from inve cment in affiliated undertakings Dividend income 219,453 99,914
Income from investment in a ociared undertakings hare of profir/lo s of associated undertakings after tax 2,057 Dividend income 756 584 2,034 2,143 Interest income 2,849 316 2,849
Value readjustments 59,767 3,311 12,884 1,171 Gains on realisation of investments 602,082 332,862 73,585 83,276
harge ari ing from inve tments in land and buildings harges arising from other inve tment interest and ther expen e on liabilitie L affiliated undertakings -474 Interest and other expense n liabilitie to other than affiliated undertakings Toral
Value adju tment and depreciations Value adjustments on inve tmcnt Planned de reciation on buildings
Exchange rate differences of insurance busines ther exchange rate gains of inve tmenrs Other exchan e rate Ios e of investment
In the .roup the impa~t was EUR + 14 million and in the parenc company EUR +0.2 million .
Income from inve tmenrs in associated undertakings hare of as ociated undertaking ' profit/loss after tax
Charges arising from investments in land and buildings Charges arising from other investments ] nterest and other expenses on liabilities Total
Value adjustments and depreciations Value adjustments on investments Planned depreciation on buildings
Tax EUR'OOO 1999 1998 ampo In urance ompany plc 78,449 33,592 Industrial Insurance ompany Ltd 74,102 32,135 ampo Enterprise In urance ompany Ltd 10,432 9,497
Otso Loss of Profit Insurance ompany Led 3,611 8,287 In urance ompany of Finland Limited 2,498 726 ampo Life Insurance ompany Limited 13,715 2,783 Other 1,658 850 Group companies in total 184,465 87,870
Life insurance 8 INCOME AND CHARGE ITEMS IMPACTING THE COMPARABILITY OF THE RESULT
Premiums earned Premiums wrirten eparate charge pertaining to statutory worker , compen ati n insurance - 48,212 - 2,012 Impact of exchange rate -435 - 0 -
Reinsurers ' share Impact of exchange rates 160 - - - -275 48,212 0 2,012 hange in the provision for unearned premiums
Equalisation of the separate charge pertaining to statutory workers' compensation insurance - -8,690 - 8,245 Extraordinary depreciations according to plan - -1,130 - -769 Impact of exchange rates 2,121 - -78 -
Reinsurers' share Impact of exchange rates -30 - - 2, 091 -9,820 -78 7,476 Change in the provision for outstanding claims
Investment charges Extraordinary depreciations according to plan I m act of exchan e rates
A cumulated depreciation a cording to plan, Jan. l hange in group tructurc epreciation a cord ing to plan
Decrease -164 -744 Accumu lat'-e....,.d-d-ep-recia cion in exces of rhe p7la_n_, -::D:-e-c.~3::-:1:---:3:-, 7~8::-4;--------:5:-=3-=-3------=-3 ,4 7-7--
Net expenditures after total depre iation , Dec. 31 m SAMPO ANNUAL REPORT 1999 10 GROUP: CURRENT VALUE AND VALUATION DIFFERENCE ON INVESTMENTS
~'000 Remaining Remaining acquisition cost Book value Current value acquisition cost Book value Current value lnve tments in land and buildings Land and buildings 548,612 639,197 719,2 17 567,597 661,527 732,192 Real e tare hare 86,7 19 86,719 96,479 118,287 118,287 131,030
Book value compri es Unrealised gains entered as income 56,92 1 59,984 Revaluarions entered in
Valuation difference i9ifference between current value and book value) 3,4 18,752 1,584,904
NON-LIFE AND LIFE INSURANCE: CURRENT VALUE AND VALUATION DIFFERENCE PARENT COMPANY: CURRENT VALUE AND VALUATION DIFFERENCE ON INVESTMENTS ON INVESTMENTS DEC. 31, 1999
Investments in land and buildings 80,196 159,536 178,061 Land and building 83,291 160,109 175.553 hare in affiliated undertakings 38,449 38,449 45,849 29,919 29,919 36,217 ther real estate shares 67,058 67,058 73,017 100,544 100,544 109,928
Other investments hare and participations 358,851 358,851 928,152 278,664 278,664 400,208
Deposits with ceding 1,496 1,496 249 249 249 undertakings 1,496 maruriry and purcha e price, which has been released to interest income(+) 1,241,046 1,317,864 4,434,302 981 ,241 1,060,581 2,472,287 or charged to intere t income(-) - 9,220 9,410
Valuation difference difference between current value and book value 2,581,421 837,331
Bo k value compri es 49,159 50,995 Unreali ed gains entered as income
1999 Buildings Land and waters and EUR 'OOO real estate shares
A qui ition t, Jan. 1 673,343 289,655 Portfolio transfer/merger hange in gr up stru cure - 52,641 - 2,712 lncrea e 63,015 17,394
Unreali ed gain on inve tmcnt , Jan . 1 69,576 36,854 Portfolio tran fer/merger Decrea e - 2,147 45
Accumu lated depreciation according t plan/ value adju tmenrs, Jan. 1 227,774 58,440
Book value after depreciation according to plan/ value ad"ustments, Dec. 31 494,619 231,297
Accumulated depreciation in excess of the plan, Jan. 1 16,604 Portfolio transfer/ merger Change in group tructure -117 Depreciation above/below plan 2,011 Decrease 683
Value of build in s after total de reciation , Dec. 31 475,439
GROUP: LAND AND BUILD IN S OCCUPI D FOR OWN ACTIVITI
Unreali ed ga in n inve tments, Jan. 1 54,627 30,750 56,562 32,415 e rea e - 1.!.516 -235 -1,934 -1,665
Unreali ed gains on investments, Dec. 31 53,112 30,515 54,627 30,750
Accumulated depreciation according to plan/value adj ustmenrs, Dec. 3 1 67,214 44, 113 67,656 52,603
Book value after depreciation according toplan/value adjustments, Dec. 31 122,993 142,623 11,656 123,902 166,097 15,485
Portfolio rransfer/ merger 158 Depreciation above/below plan 460 -2,787 Decrease 523 590
Remaining acqu i ition ost 39,690 35,435 B k value 66,764 60,271
Profit/loss for Capitol and Book value Current value Book value the financial year reserves
AA~ ·a mpo l.atvija [ ziviba> Apdro ina ana 1,060,000 100.00 100.00 1,806 42 1,769 Novo roup Plc 214,207 0.28 0.28 6,818 13,263
AS !>ampo Eesti Varak111dlustu 8,.328,000 I 00.00 100.00 3,009 646 5,323 Tietoen~tor 'orporadon AS Kindlmtu,ck,pert 400 100.00 100.00 72 5 26 Metal and Engineering 539,400 5.24 5.24 2,712 3.075
Patria Reinsuran e ~ornp;any Limited 50,000 100.00 100.00 14,087 ·3,8.F 10,079 Kone orporation 234,000 1.56 !.56 3,673 8,934
Lakcwood lthurance .ompany ltd 11.250,000 100.00 100.00 2, 07 109 3.462 K I Koncuant International PI 3.054.596 5.64 7.78 33,214 56,146 y Finnish aptive & Ri>k Servi cs Ltd 800 80.00 80.00 13 18 89 Metr:~ ~orporation 3,232,829 2.38 2.38 41,347 41,703
Risk Management Ltd 400 100.00 100.00 673 - 17 427 Outokumpu yj 3,404,554 6.97 6.97 29,634 45,961 ampo Elukindlu tu cAS 2,000 100.00 100.00 1,9 17 67 1,851 Partek orporadon 3,880,370 2.79 2.79 25,305 26,969
Sampo lndustriforoakring Ab 30,000 100.00 100.00 1,280 120 1,173 rora Enso Oyj 7,579.587 2.84 2.84 48,093 303,183
Sampo Kindlustuse A 1,500 100.00 100.00 1,630 1,512 1,528 UPM-Kymmene orpor:nion ampo Risk Management ompany Sp.l.O.o. 500 100.00 100.00 !54 13 13 Mulri-Busincss 637,363 14.53 14.53 3,198 5,666
Sampo Towanystwo Ubc7piec7cn Sp61ka Ak yjna 12.000 100.00 100.00 3,558 - 167 3.440 Aspo Plc 2,344,600 5.91 5.91 11,619 16,412
Sampo Life Insurance ompany Linmed " 49,758 60.00 60.00 73.646 19,860 157,037 Fortum orporation 106,787 1.63 1.63 3,750 4,805
Associated undertakings Huhtamaki Van Leer Oyj 342,400 5.31 5.31 3,499 3.499 B~neflc Oy 490 49.00 49.00 124 0 252 Uinnen Tehtaat plc Oividum Oy 1' 291 34.73 34.73 40,761 7,374 117,366 Construction 800,000 50.00 50.00 14,746 3,341 29,492 YIT Corporation Retro Lif~ In uran e ompany l1mited 16,945 24.21 24.2 1 1,387 0 3,894 Telecommunication and Electronics 1,274,726 14.53 14.53 18,073 47,165
Kiinr~istOvarma Oy 1,729 46.74 46.74 90 -4 190 Compte! Oyj 85,000 0.73 0.19 1,245 2,550
Suomen Luottovakuutus Oy 50,000 33.33 33.33 1,549 -377 4,646 Eimo Oyj 135,900 0.58 0.11 1,600 2,066
Tampercen Kiinteisto Invest Oy 915,625 25.00 25.00 9,941 625 34.734 F- ecure orporarion 656,100 1.27 1.27 19,261 54,259
Vahinkopalvelu Oy 360 20.00 20.00 211 31~ I 054 Helsinki Telephone Corporation 1,689.900 2.00 2.00 23.403 62,949
Total 74,2 18 HPY Holding yj 11 Figures at group level " hare of guarantee capital JOT Automation Group Oyj 10,600,810 0.92 0.92 37,811 1,908,145 Noki.t orporation 376.560 0.74 0.74 3,580 13,180 Perlos Corporation 172.700 0.62 0.62 644 2,015 Other shares and participarions PMJ Automec Oyj 3,340,700 0.46 0.46 57,661 227,335 Sonera orporation 415.500 1.03 1.03 2,865 3,137 Book value Current value Tampereen Puhelin Oyj 280,650 1.74 1.74 2,252 4,547
Banks and Finance Kemira yj 3,594,867 9.28 9.28 52,195 63,270 Mandatum Pankki yj 3,865,463 9.65 6.43 13,164 21,840 Uponor yj Merira Plc 2,122,687 0.25 0.25 5,940 12,396 Media and Publishing 1,062,599 6.76 4.89 30,450 33.705 O>ttuspankkien Kesku pankki Oyj 282,600 0.61 0.18 2,341 3,165 Alma Media orporation
Book value Current value Book value Current value Name of company No. of shores Holding % Votes % EUR '000 EUR '000 Name of company Country No. of shores Holding % EUR '000 EUR '000 Other compani es
Hou ehold Products/Wares Sic France 51,880 0.09 2,344 2,344 11 agemeyer NV Holland 70,700 0.07 I ,591 1,625
Pharmaceuticals Astra Zcncca Plc Great Britain 199,902 0.01 6,535 8,405 Sri tol Myers Squibb United Stares 116,000 0.01 4,527 7.412 laxo Wcllcorne Plc Great Britain 742,000 0.02 17,445 20,958 Novanis AG Switzerland 4,790 0.01 6,730 6,977 Novo-Nordisk A/S Denmark 23,000 0.04 2,299 3,028 Pharmacia & UpJohn SDB Sweden 33,500 0.06 1,510 1,510 Roche Holdtngs AG Switzerland 456 0.01 2,687 5,369 Smithkline Beech.tm Plc Great Britain 300,000 0.01 3,557 3,807 YamJnouchi PharmJ.ceuticals Japan 202,000 0.06 3,430 7,020 m SAMPO ANNUAl REPORT 1999 SAMPO ANNUAL REPORT 1999
Book value Current value Book value Current value Country No. of shares Holding % EUR '000 EUR '000
Name of company Country No. of shares Holding % EUR '000 EUR '000 Name of company
Edison 'pA ltJiy 325,000 0.05 2,513 2,649 Rohm ompany Limited Taiwan 334,900 0.00 1,416 1,776
Endcs;~ SA Spain 270,000 O.o3 5,127 5,322 Taiwan C'tni onductor Manufacturing ompany Malaysia I, 133,000 0.79 2,466 7,242 it Producers Unisem (M) Berhad BP Arnoco Plc G1c;H Britain I ,040,000 0.01 5,536 10,439 oft ware
France 10,666 0.01 1,420 2,688 Exxon Mobil orporation United Swc> 40,397 0.00 1,271 3,240 ap emini A (FR)
Singapore 1,818,000 0.18 1,633 1,900 EN1 SpA l~>ly 630,000 0.01 3,427 3,427 GE International Limircd
Unired States 20,000 0.00 970 2,324 Nor~k llydro ASA Norway 40,000 0.02 I ,491 1,659 Micros ft orp
United Stares 14,000 0.02 245 1,616 Royal Dutch Petroleum o NV llolland 40,500 0.00 1,816 2,4 >4 Phone. om Inc.
Great Brimin 1,322,150 0.05 6,200 23,360 ABN·Amro I lolding NV llolland 79,948 0.01 I ,58 1,983 Marconi Plc
United States 8,000 0.00 356 1,173 lhr lays !lank Plc rcat Britain 70,000 0.00 1,634 2,006 Mororola Inc.
wed en 367,900 0.02 6,585 23,503 Commcrtbank A , ,ermany 184,000 0.04 4,568 6,707 Tdefonakriebolager LM Ericsson Deutsche Bank A , Germany 28,500 0.00 1,987 2,390 Teleco mmun icatio ns
Great Britain 492,000 0.01 4,470 11,726 IISB Holding> Plc ' reat Brit.tin 78,654 0.00 550 1,098 British Telecommunications Plc 574,000 0.00 1,237 3,572 Hong Kong IN , Groep N.V. Holland 163,172 0.02 8,005 9,781 hina Telecom Lrd
Swirzerland 2,500 0.00 536 1,003 Societe ,cnerale Strauss Turnbull France 24,300 0.02 2,736 5,613 wisscom AG
Denmark 94,600 0.04 2,582 6,977 UB A, • wit1erland 38,400 0.02 9,983 10,287 Tele Danmark NS
Spain 493,459 0.02 6,133 12,238 Diversified Fi nancial ervices id group r ne. Uni ted rates 19,800 0.00 598 1,095 Vodafonc Airtouch Public Ltd 335,493 581,229
Federal National Mortgage Association United tares 36,000 0.00 777 2,237 Total Hong Leong Finance Ltd ingapore I 245,000 0.55 2.455 2,456 50,256 70,345
Takefuji orporation Ltd japan 10,100 0.01 1,126 1,257 ther public companies Insurance 385,749 651,574 AAS Balta Latvia 687,800 14.78 3,333 3,741 Public companies in to tal Allied Zurich Plc Great Britain 61,080 0.13 1,101 1,314 AxaSA France 75,308 0.02 4,046 10,423 Other companies
Great Britain 900,000 15.00 2,691 3,598 Forsakrings AB Skandia (publ) wed en 86,500 0.02 1,533 2,596 Nordben Life & Pension Insurance Co Ltd
Strc:amserve I ne. Investor Ab Sweden 937,000 0.83 9,609 13,133 Radn NS Denmark 11,600 0.04 1,208 I ,294 Unit trusts Luxemburg 13,289 1,734 2,084
Samsung Electronics Republic of Korea 7,810 0.01 1,201 1,826 Prosperity Cub Fund Cayman Islands 486,688 4,496 4,496
Great Britain 279,243 2,545 2,780 Venture Manuf.wuring Ltd Singapore 717,000 0.32 2,516 8,185 Baltic Investment Fund 11 L.P.
United States 189,936 1,827 1,891 Wong's ircuirs I folding; Ltd Hong Kong 3,570,000 2.14 2,516 2,896 Dolphin ommunications Parallel Fund L.P.
ABB Ltd Switlerland 47,053 0.02 3,459 5,699 I'.QT Fin land C.V. Holland 7,809,053 8,783 9,120
British Airport Authoritie Plc Jrc:at Britain 180,000 0.02 1,251 1,251 EQT candinavia 11 Great Britain 603,696 8,848 9,710
H chrief AG Germany 27,500 0.04 918 1,018 1-!ambro European Ventures 111 UK L.l'. Ireland 146,248 1,857 1,857
Hock eng Lee Berhad Malaysia 861,000 0.86 717 1,010 1-!ibcrnia Development Capital Partners I Great Britain 795,200 7,952 7,952
Mannesmann AG Germany 62,000 0.01 1,905 14,849 MediaTe! Capital Cayman Islands 327,588 3,142 3,261
United Engineer Bhd MalaySia I ,641,600 0.20 1,117 2,378 chroder A>ia Pacific Fund Great Britain 364,297 3,643 3,643
ST lnrernational lnsuran e ' mpany Limit d S;.lmpo Enter ri~e l n~urance ~om )anx.J.irnitcd 11
Food Industry hips A bp l luhtamJki Van Leer yj Td~communicil lion and l~ l ectronics
Book value Current value No. of shares Holding % Votes % EUR '000 EUR '000 Name~c~om~pa~nyL----------------------------------~~~~~--~~~~------~~----~~~~--------c_
Ahold (Kon) NV l lennes & M aurin Ab lto -Yokado o. Mark> & Spencer Plc on umer, Non-Cyclical osmetics
J>harmaceuti~ls Ama %.onec1 Plc Bristol Mym Squibb Co. .laxo Well omc Plc
Pinancia l Banks omrner?bank AC Nordbanken Holding Ab So,itte ener>le Strau>s Turnbu ll UBSAC
ABB Ltd. British Airport Authorities Plc M3nnesmann A , Mit>ubi;hi Heavy Industries Ltd.
Total goodwill and negative consolidation difference of associated undertakings included for the first time in the con olidated accounts
In urance policy Federation of municipalities, municipality and parish securities and loans thereto, and rate securirie Bank guarantee hare in housing and real estate companies rher ecuriry
Debt r Amount of loan I mere t o/o Loan peri d ebtor Am um f loan Interest% ') Loan period
Debtor Amount ofloan Interest % '> Loan period ebtor Amount of loan Interest% Loan period
., Equ.tls the dividend of 2, 109,158 Pohjol.t A ~hare~+ a voir IIK.tl tJX credit , however, .t maimum ot 20%
Original Current value Original Current value EUR'OOO oc uisi~on cost (=book value) ocquisi~on cost (=book value)
Investments acq uired in advance -468 -590 -729 -800 18 DEBTORS AND CREDITORS, AFFILIATED UNDERTAKINGS Group Parent company
Debtors Ari ing out of reinsurance operation ther debtor reditor Other creditors
Non-restricted Non-restricted re erve Pro.flt/lo s br ught forward Profit for the financial ear
Distributable profit Non-restricted capital and reserves Optional reserves and depreciation difference in non-restricted capital and re erve Other non-di tributable items
Optional reserves and depreciation difference in non-restricted capital and reserves, Dec. 31
"l Afr~r rhe do e of rh~ financial year, EUR 56,929,023.41 of rhe parent company' di rriburable non-re tricted capi tal and reserves have been u ed for buying back own share .
Shares and votes ampo Insurance ompany pl ha 60,560,000 A hares and 240,000 B hare . 'I hen mina! value of each hare is FIM 5. ach A hare ha l vote and each B share 5 votes. The A hare have been guoted at the Helsinki Exchange since 1988. All B shares are owned by Kaleva Mutual Insurance mpany.
The company's B ard f irect r i not authori ed to increa e company share capital or i sue c nvertibl b nd · or bond with warrants.
Bond with warrants amp In uran e mpany plc offered a b nd with warrant valued at FIM 6,600,000 ( UR 1.1 milli n) on May 22, 1998. No inter t will b paid n the b nd, whi h will be repaid n May 22, 2001. Personnel permanently em­ pi yed by the ampo · r up and Kalcva Mutual In urance ompany were enti­ tled to ubscribe. Approximately 72 per ent f the per onncl sub cri bed for che b nd. ach bond of a nominal value of
Merger compensation December 31, 1993 Owners oflndustrial Mutual 4,700,000 280 million A hares Insurance ompany
'I Ea, h admini;trative regiMer i; included in thi; figure a; one ;inglc ownc1.
1 Public componie$ 2 Pr1vole companies 3 Financial rn$1 ond rnsuronce comp. 4 Publtc corporation$ 5 Non·profil corporations 6 Households 7 Fore1gn own rsh1p, rncl. odm.reg1sl r 8 On 1ornl occounl
May I, 2000 t May 31, 2005, for war­ rant B from May 1, 2001 eo May 31, 2005 and f, r warrant from May J, 2002 co May 31, 2005.
Shareholders On December 31, 1999 there were 34,110 registered shareholders. 3.55 per cent of shares had not been entered inro the book-entry ecurities system. Foreign owner hip was 48.0 per cent of the share capital and 47.2 per cent of the vote . Almost all foreign owners have li red their holdings in the admin­ istrative register.
In the administrative register in total ''I 29,095,422 47.85 Others in total 9,956,208 16.38
' I 2,5 58,426 registered A shares and 240,000 registered B shares.
Oi ouming of rh pr vi i n for our tanding claim f non-life in urance lntere t rate used in rh r up and Parent mpany in cal ularing rhe re hni al pr vi i ns of annuirie (o/o) 4.00 4.00 i counting ha been efTe red in cal ularing the provi ion for outstanding !aim n rh r than annuity-form ompensarion , in onne tion with Patria Rein uran e ompany Led 's foreign rein uran e pr vi i n for urstanding !aim . A part of this provi ion ha been di ounred at four per cent intere t rate. Thee rima red average maturity of rhe di counted provision fl rout tanding !aim i eight year .
The conduion\ of the hond wath warrants ~re prc:~ ntcd in the note '>.unpo Shar ~ ~ nd Sh~rcholdc r .
Leasing liabilities To be paid during the tarring financial year 1,005
Futures and forwards, open underlying instrument current value Future and forwards, locked underlying instrument current value urrency-linked derivative Future and forwards, open underlying in trument 256,692 current value -5,487
Future and forward , lo ked underlying instrument 108,467 current value 0 ption c nrra r Bought, underlying in rrument 306,476 current value 0
The ,roup has no other liabi liti es as spe iflcd in the Insurance ompanies Act, ha[!tcr I 0, Section 8, Sub· section 3.
olvency margin apital and re erves after propo ed profit distribution 508,389 523,156 527,806 ptional provisions and accumulated depreciation differen e 13,900 13,634 13,675 Valuati n difference between current va lue and Balance heet book value of asset 501,687 7 14,980 941,836 Intangible a set - 118,363 - 117,771 117,151 olvency margin required under the Finnish Insurance ompanies Act,
Los ratio !aims in urred to premium earned (o/o) 85.6 83.3 89.9 90.3 84.7
The upervi ory Board has received the Accounts for ampo In urance ompany plc for the financial year 1999 together with the consolidated accounts of the ampo roup and the Auditor ' Report c n erning the e. The upervi ory Board has found no eau e for critici m on ace unt of the above, and therefore ubmits the A counts and the Auditor ' Report to the Annual eneral Meeting and recommends that rh Profit and Lo Account and Balance heet for ampo Jn urance ompany plc together with the on olidared Pr fir and Lo A ounr and Balance heer for the ampo roup be approved and that the propo al for the di po a! of the profit for the financial year moved by the Board of ire tor be a pted.
· h A aJ a1 Meer·1ng a rarement concerning the ompany's Accounts ror t e ~ear, - su m1t to r e nnu ener . . , h l
.d d A c h ve r The Auditors' Report for the ompany and the onsoltdared Aud1tors Report; r e on o 1 are ccoums ror t e 1• a , d
· h · · d the ba i upon which travelling expenses will be calculated for the hairman, - er rmm r e comm1 ton an the Vice hairman and the other members of the Board of Directors; - determine the number of, and elects, the member of the Board of Directors; - ele rs rhe hairman and Vi e hairman of the Board of Directors; . .
I • 1 · ·fi ant contraction or expansion of the operanons of the Company or subsrannve - re ve matter concernmg t 1e 1gnt 1 change in the organi ation of the ompany.
Kalevi Aro, born 1947 (2001) Vice hairman Pre idem, Aro-Yhryma Oy
Heimo Karinen, born 1939 (2000) , Kemira yj ino Keinanen, born 19 9 (2000) hairman of the Board, Leonia pi
Heikki Pentti, born 1946 (200 1) hair man of the Board,
Jarmo Rytilahti, born 1944 (2001) Pre idem and , Uponor yj
Matti Sundberg, born 1942 (2001) Member of the Board, Metso Corporation
For additional information on the Members of the Supervisory Board, please contact: ampo In urance Company plc
Vice hairman Kari . oh lberg, born 1940 (2000), Managing irecror, y .W hlberg Ab. Vice hairman f the Board, Perlo orporarion. Member of the B ard, Varma- ampo Mutual Pen­ ion In uran e ompany.
hairman of the Board, Finni h Fair orporation. He tran ferred to the Board of ampo In urance om­ pany Limited from the upervisory Board on ctober 20th, 1993.
eorg Ehrnroorh, born 1940 (2002), Pre idenr, Metra orp ra­ ll n. hairm n of rhe B ard, A a Abloy AB, and anitec orporation. Member of rh Board, Karl Fazer y Ab, ABB y, and andvik AB. hairman f the Board, Varma- amp Mutual Pension In uran e ompany. He was appointed Member of rhe Board of amp In uran e ompany Limited on June 26th, 1992. Period of offi e tarred on Augu r 1st,
on firm the maximum urn in ured, which the ompany may with ut re ourse ro rein urance retain n it~ own account; re olves the rai ing of loans for the ompany and the urery bligati n~ entered into by the mpany; - resolves the urrender of real properry belonging t the ompany and grant p rmi sion for the m rrgaging of su h property; - appoints the Managing Dire tor, Deputy Managing Dire t rs, Managers and Assi tant Manager , a ept their re ignation and determines rheir emoluments; derermin s the general prin iple governing rh emoluments and other benefit of oth r mpany employe c nflrm the general regulari ns con erning the retiring ag of and pen ions due to employee of th ompany; determine the prin iple and order in a ordan c with whi h the Deputy Managing Dire tor may exer isc the authority and power of the Managing Dir • tor.
Chri coffer Taxell, born 1948 (2002), Pre ident, EO, Parrek orporation. Member of the Board, KCI Konecranes International Plc, Metra orporation, tockmann plc, ABB Oy. hairman of the Board of Directors, Kalmar Industries AB. He rran ferred to the Board of ampo Insurance Company
Paavo Pitkli.nen, born 1942 (2001), Managing Director, Varma-Sampo Mutual Pen­ sion Insurance Company. Member of the Board, Metra Corporation, Partek Corporation, tora Enso Oyj. Vice Chairman of the upervisory Board of Alma Media Corporation. Member of the Supervisory Board of Kesko Corpora­ tion. Member of rhe Board of Sampo Insurance Com­ pany plc since January 22nd, 1999.
Client demand for self- ervi ce acce s continues to grow and travel insurance ale were added ro our Internet service channel in May, 1999, followed in December by bodily injury claims handling. Tailored ervice pack­ ages now meet the particular needs of farms and some 30 co-operation organisation .
urer to add redemption cover eo motor vehi­ cle in urance, another move welcomed by cli­ ents and con umer authoriti e alike.
Technical provi ion , net 813.0 66 1.7 Balance heet total 1,676.7 1,345.9 Balance hect total at current values 4,793. 1 2,757.6 olvency margin 3,610.4 I ,885.4
Equali ation provision 97.6 10.6 olvency capi tal 3,708.0 1,895.9 ombined ra tio, % 111 .3 117.9 olvency ratio, % 1,2 19.9 658.4
Total premiums received in voluntary motor and motor third party liability insur­ ance rose by over 10 per cent, due to pre­ mium increases implemented in 1999 and increased motor vehicle sales. Motor TPL profitability improved slightly while that on voluntary motor insurance deteriorated as claims expenditure experienced a clear up­ ward trend.
In the field of property losses, fire claims rose more than expected. A growing number of uch losses is caused by human neglect or simple carelessness. Making lo prevention an essential element of all services is rhus a key challenge in promoting safety.
The growing number of older people in the population creates fresh opportunities to develop new sickness and health service insurances. Cuts in public sector social secu­ rity payments maintain households' interest in saving rhrough voluntary pension schemes, despite the fact that the increased taxation of voluntary pension arrangements has created uncertainty in the market. The growth in the wealth of private households also promotes rapid growth in mutual fund and insurance savmgs. The new technologies in service distribu­
Statutory workers compensation 42 2 Motor third party liability 11 3 Motor, other dosses 10 4 Fire and other damage to property 19 5 Third party liability 9 6 Other 9
£-business took a giant leap forward when the electronic sampo.fi folder was in­ troduced on the Internet, enabling fully paper-free handling of insuran e i ue f, r orporare clienr~. More than 350 ompanie had ad pted ampo.fi folder sy rem by the year-end, a ounting for over 10 per cent of rh premium written by ampo Enterprise. 11 the b t four kn wledge, there i no u h imilar ervice available for corporate client anywhere el e in the w rid ar rhi point.
The volume of bu iness mediated by broker ontinued irs marginal growth, accounting for over 7 per cent of the total premium written by ampo Enterprise.
Turnover 303.9 334.6 Premiums earned 209.0 230.0 Claim incurred ') - 187.8 -219.5 Net operating ex pen es -36.2 -31.6 hange in the equalisation provision -12.6 - 7.8 Balance on technical account - 27.5 -28.8 Net investment income 65.6 62.8 Profit/loss for the financial year 26.7 24.1
ire t non-life insurance premiums writ­ ten by ampo Enterprise totalled EUR 222 mill ion and gro s premiums written EUR 226 million. Direct .in urance premiums written increa ed by 4.8 per cent over 1998 ex luding the dome tic, non-recurring epa­ rate charge on tatutory worker compensa­ tion in urance. redit losses on unpaid pre­ miums totalled around EUR 1 million.
Technical provisions, net') 11.4 1.2 Balance heet total ' l 27.6 3.6 Balance heet total at current values ') 27.6 3.6 olvency margin ') 12.0 1.9
Outlook As a part of the structural development of the Sampo Group, Sampo subsidiaries Sampo Enterprise and Industrial Insurance will be merged into their parent company. Insurance business will be transferred to two new insur­ ance companies after the mergers, one of which wi ll concentrate on major clients and the second on other non-life insurance. Sampo would at the same time renounce its insurance company licence to become a hold­ ing company. The schedule as planned means the mergers will come into effect on Decem­ ber 31st, 2000, providing they have been ap­ proved by rhe relevant authorities.
1 Statutory insurance lines 23 2 Other domestic business 43 3 Foreign business 34
Finnish industry. Industrial Insurance is the undisputed market leader in its segment in Finland, with a clientele of approximately 500 large- cale indu trial groups. Elsewhere in Northern Europe, Sampo Industrial fo ­ cuses on industries and types of risk in which it has proven experri e. Core area of know­ how are the forestry industry, power genera­ tion, the construction, metal, information, chemical and food industries, financial erv­ ices, and logistics and transportation.
The importance of the roles of knowl­ edge, technical innovation, product develop­ ment and expertise in industrial risk manage­ ment ha become increasingly pronounced. This shift in key aspects of risk management work has affected all business enterpr.ises, re­ gardless of their field of activity. The change in risk profiles i particularly emphasised in the information industry. Consequently, ampo Industrial devoted special attention ro the implications of this challenge during 1999, by focusing its product development work on the information indu uy.
Growth in Europe and A Large Number of Year-End Losses ampo Industrial premium income ro e, due in particular to ub idiary amp lndu trial In urance N.V. re ording 18 per cent growm on me year. Around half of ampo Industrial In uran e N.V. bu ine s was rein urecl by In­ dustrial Insurance and tso . The degree of comparability of Industrial Insurance pre­ mium income is affected. by the non-recur­ ring separate charge on statutoty w rkers compensation in urance in 1998; premium income increa ed by 6 per cent excluding this charge.
Industrial Insurance recorded an excep­ tionally large profit for the financial year, thanks to a good investment result. This fa­ vourable development plus rising stock mar­ kers push d olvency to an appreciably higher level. ampo Industrial Insurance N.V.'s un­ satisfactory result was mainly attributable to large claims.
As a result of the acquisitions, pro forma premiums written by Industrial Insurance Group will exceed EUR 400 million; the busine s is being handled by around 650 staff. The new operating scenario means that some 40 per cent of premiums written and 30 per cent of the personnel are now foreign.
As a part of the structural development of the Sampo Group, Sampo subsidiaries In­ dustrial Insurance and Sampo Enterprise will be merged into their parent company. Insur­ ance business will be rransferred to two new insurance companies after the mergers, one of which will concentrate on major clients and the second on other non-life insurance. Sampo would at the same time renounce its insurance company licence to become a hold­ ing company. The schedule as planned means the mergers will come into effect on Decem­ ber 31st, 2000, providing they have been ap­ proved by the relevant authorities .
Net operating expenses -32.3 -28.9 Change in the equalisation provision 24.0 29.9
Balance Sheer rotal 977.5 790.4 Balance Sheet total at current values 2,791.2 1,563.6
Otso Loss Sampo of Profits Industrial Insurance Insurance N.V. Company Ltd * Otso was merged with Sampo on December 31st, 1999.
The ampo run-off companies, Patria Reinsurance Company Ltd, ST International Insurance Company Ltd and Lakewood Insurance Company Ltd, are in charge of running off ampo Group's foreign reinsurance portfolio.
Foreign and domestic rein uran e run-offs continued su ce fully in 1999. Patria com­ pl red c mmuration neg riati n with everal companic p raring in the L nd n market, in luding the di po al f asbe t and envi­ r nmenralliabilitie a c rding t target. Tw l ng-term di putes were al br ught to a clo e in the year under review. The ourr f Arbitration in weden approved Patria's avoidance claim in one, and turned d wn rwo-rhirds of rhe adversary's claim for pay­ ment in the other.
called EUR 9.0 million. Patria's investment are stil l mainly in currency-denominated bond and money-market instrument .
ST International was granted an interim award on a long-term dispute when the ourt of Arbitration in Finland rejected the company's right of avoidance. A etdement agreement in this dispute has since been reached.
According to a resolution passed by the T International and Parria Board in De­
cember 1998, ST International's remaining reinsurance treaty portfolio will be adminis­ trated by Pacria by Autumn 2000.
International cla ims paid developed a expected and the gro s provision for ouc­ tanding claim decrea ed by UR 14.5 mil­
lion using fixed foreign currency exchange rates. All real e tare investment hav n w be n reali d and the final accounts for the financial year how UR 1.2 million of rea1i ed gain.
The in urance portfolio run -off wa rea­ onably ucce ful in Lakew d, operating ut of nd n. The gro pr v.i i n f, r uc­ tanding claim decrea ed by EUR 3.6 mil li n eo ta.nd at UR 23.9 milli n at the year­ end.
The rein urance y tem of all the run­ off companies are now euro-ready.
Run-offs and commutation are becom­ ing an increa ingly common and approved way for insurance companies eo el iminate their market liabilitie . Thi gradual change of attitude facilitat and expedites the task of run-off companies, although insurance com­ panies' continuing structural reorganisation tend to slow the process.
T International i around 20 per cent. The run-off companie ' equalisation pro­
Number of ST International's active contracts managed by the company itself
Foreign reinsurance claims paid by ST International, EUR m - Claims paid on passive contracts - Claims paid on active contracts
ST International's technical provisions and capital and reserves, EUR m r:- f- - Technical provisions, gross T echnicol provisions, net Capitol and reserves
Prem iums earned - 10.5 0.0 Claims incurred 12.6 10.2 Net operating expenses 0.6 - 1.3 Change in the equalisation provision -22.7 - 14.3 Balance on technical account -19.9 -5.5 Net investment income 15.6 11.3 Profit/loss for the financial year -4.2 6.4
Finnish life insurance operations celebrated 125 years of business handled by domestic companies in 1999. This watershed also marked the new ampo Life's first year of operations, resulting from the merger of Nova Life Insurance ompany Limited and ampo Life Insurance Company Limited on December 31st, 1998. This was best character­ ised by the merged company moving into its new Head Office in the inebrychojf buildings in March 1999.
mation by 23 per em to UR 2.8 billion. M reover, their inve rment in ome and ol­
vency were trengthened by rhe rising stock market, a trend which accelerated towards the end of the year under review.
Foreign in urance c mpanies continue to h w increasing intere t in the Finni h mar­
Approximately 270 life insurance professionals work at the renovated premises in the historical Sinebrychaff buildings.
pen ion in urance premiums in Finland. The re ult ing un ercainty affected ales, which a a whole remained b low the record levels of 1998. lient eemed to accept the intent of the tax reform to rai e the retirement age, but th re tri cion of the right eo deduct premi­
um paid on behalf of a pouse met with le under tanding. However, the reform as im­
It is estimated that during the next few years, insurance saving will make up a larger proport ion of households' financial as et than ever before in Finland - approaching the 20 per cent level common in Europe.
ten accounted for by unit-linked insurance ro e in the review year to more than 20 per cent in Finland, from 15 per cent in 1998.
T hi increa e is in line with international trend . The growth of thi in urance class was further accelerated when the maximum guar­
tional individual pen ion in urance, it wa c n iderably more modest than for unit­
linked in urance. Premium wri tten rood at around UR 390 million or around 5 per cent more than in 1998.
cc f 13 p r cent to more than EUR 290 million. Mo t of the premium written re­
hted to liability tran fer by pen ion fund . Premiums written n traditional life in­
Sampo Life Gained Market Share ampo Life gross premiums written ro e eo
view, almost 38 per cent up on 1998. Early figure on premiums written for the entire life indu try indicate ampo Life' market share increa ed by 2.1 percentage points to 19.2 per cent. The principal goa l for 1999 wa to strengthen the company' market position in unit-linked insurances. According to prel imi­
EUR 167 mill ion. Growth was particularly strong in voluntary TEL-related (TEL = Em­
ployees' Pensio ns Act) pension business, where premiums written resulted mainly from transfers of liability on the dissolution of a number of pension fund . Sampo Life is the clear market leader in the group pension insurance segment with a market share of nearly 60 per cent. As in 1998, the major part of life insur­
ance premiums writte n was single premium endowment policies. Premiums written on capital redemption policies amounted to
Group pension insurance 2 T roditional individual pension insurance 3 Unit-linked individual pension insurance 4 Unit~inked life insurance 5 Capitol redemption policies 6 Other life insurance
(private persons) 13.9 5 Other life insurance 6 Capital redemption policies 29.4
Group pension insurance 31.4 2 Traditional individual pension insurance 18.3 3 Unit-linked individual pension insurance 1.6 4 Unit-linked life insurance 6.2 5 Capital redemption policies 29.4 6 Other life insurance 13.1
The internationali ati n of Finnish om­ panies require ampo Lifi to be able to pr vide ervice for the management flife, di ­ ability and pen ion in uran e need around the world. The ompany i therefore parti i­ pating in tw I ading eo- perati n network in rder t meet the e requirement , rh Jn­ rernati nal roup Program (I P) and In ur pe. This enable ampo Life to provide ervice for it clients in ver 50 countrie .
A positive yield was returned on invest­ ments in 1999 as net inve tment income in­ creased to EUR 298 million. The strong rise in stock exchange prices raised total invest­ ment income and increased the solvency mar­ gin. er against this, the increase in intere t races during the financial year strained the result and income from interest-bearing in­ struments wa barely positive.
The market value of the company' in­ vestment portfolio was EUR 4.1 billi n at the year-end and this marks an increa e of 34 per cent on the previous year. The proportion of inve tment in hare was exceptionally high at 47 per cent. The proportion of interest­ bearing in truments fell to 38 per cent. In­ vestments in real estate accounted for 6 per cent of the investment portfolio.
ampo Life continued diver ification of its inve tment in 1999 uch that the quantity of foreign inve tment at market value increa ed to EUR 1.2 billion or 31 per cent of the in­ ve rment portfolio.
Good Profits for Clients and Shareholders The amp if< re ult for 1999 was EUR 21 milli n after tax, untaxed r erv and. clienc b nu , ompared to EUR 13 million for 1998.
ampo Life aims to maintain olvency status at a level that does not limit the grant­ ing of bonuses ro policyholders and disrribu­ tion of profits ro shareholders.
ampo Life's Board of Directors decided on it interpretation of the Principle of Fair­ ness, in conjunction with the 1998 final ac­ counts, and thu on the proportion of a sets t be attributed to the owner .
n c n equence of the Princip le of airne and ampo Life' bonus policy i that a part of the company's solvency capital i re­ quired to afeguard the benefits insured. Re­ tricted and non-rest ri cted capital and re­ erve are con idered to belong to the hare­
ampo Life's total market share is nor ex­ pected to increase significantly th1s year. The roup's objective is instead to increa e its hare of the unit-linked market. ampo Life will a! o target an increase in the ales of regu­ lar premium policies this year. The harpesr focus will fall on individual pension insur­ ances.
Sampo-Leonia financial group, Sampo Life has already established an asset management network that operates as a new sales channel for Sampo Life products.
1 Shares 58 2 Bonds 21 3 Money-market investments 6 4 Land and buildings 9 5 Other 6
The t k market ntinued it tr ng r than average gr wth ft r th fifth y ar running. Th FT W, rid Index r by 26 per ent, the l lex All- har Index by 162 per ent and the w ighc-limited P rtf< li Index by 66 p r enc. trong d mand (, r equitie on interna­
ready a count for more than 79 per cent of the market va lue of the Hel inki cock x­ change.
Life and non-l ife in uran e ompani ' operational characteri ti and t hni al pr vi ions mean different working requirement and re tricti n , pecially in e uriti inv t­ ment . amp Lift trategi and way of working rh refore differ from rho e f non­ life mpanie .
Non-Life Insurance Securities Investments e uritie investment ntinued t b onemrated str ngly n equitie , alth ugh th v lue of tho e sold in 1999 wa · R 774 million and · R 59 milli n w
The yield on equity inv tment was 110 per cent. he ben hmark yield, weighted on 93 per cent Hex Portf< lio Index and 7 per cent FT World Index, to d at 63 p r cent.
The yield on equity tnve tm nt amount d to 2 per ent. The ben hmark yield was 57 per ent weight d n 70 per nt Hex P nf< li Index and 0 per ent M W, rid Index. The yield on inve tments in intere t-bearing in truments was 0. p r ·nr and th dur.1ti n 3 .. The ben hmark yield wa -2. 1 per nt and the durati n .1.
Bu ine premi es Offices and retail premises 357.4 533.6 lndu trial buildings and warehou es 78.1 54.0
UR 76 milli n. Reali ed gains on real e rate sale totalled UR 18.4 million, of which non-life in urance companic accounted for EUR 8.4 million and ampo Life UR 10.0 million. The mo t ignificant tran action were the ale of 14 warehou ing and logisti
ampo Fund Management introduced eight new mutual fund on to the market in April, 1999: ampo ector fund (Finland), ampo ector fund (Europe), Sampo ectors­ fund ( lobal), ampo 2010 Fund, ampo 2020 Fund, ampo 2030 Fund, ampo Euro Liquidity Fund and ampo Euro Bond Fund. The starting point for the planning of the e new fund wa to develop new type of in­ ve tment and aving product , uited to both direct fund inve tment and compatible with ampo Life unit-linked in urance.
Th n w fund increa ed the total a et value of funds administered by the company to ar und R I 00 milli n. Fund saving are expe red t ntinue their po itive development during th year 2000 and it i anti ipared that the number of new fund unit holders will increase considerably. ampo Fund Management develops its operations by introducing new products on to the market.
ampo A et Management employed new portfolio managers and analy ts in 1999, in order to devote real attention to increasing inve tment re ource . Furthermore, the com­ pany developed portfolio management mod­ el and system to offer asset management services based on a clearly defined investment philo ophy.
New employee re ruirmenr al o impa t n the age tru rure of ampo roup pers n­
Working Climate and Job Satisfaction The climate urvey in 1999 indi ateci im­ proved job arisfacrion in almo r all ecror evaluated. A roral of 84.5 per cent of the repondent wa happy with ampo as an em­
The sy tematic implementation of man­ agement and supervision training pro­ grammes ontinu d during the review year. Management training h· al o been initiated in the form of appr nriceship tuition, a method that has already been implemented ucce sfully in taff training in rhe field of bu ine admin i rrarion and entrepreneurhip.
tion. amp i a ignar ry to the UN P tatement of • nvi r nmencal mmitmen by the In urance Indu try. The primary tar­ get of envir nmental w rk are to redu e rh environmental impact of our wn op rations and premises and to integrate environm nral i sue into claims handling operati ns.
nvironmental actions al o carry finan­ cial impact . ampo's large t expen e item is compensation , a very small portion f which was attributable to environmental damage.
osr savings have been achieved in operating costs and a set management, through the en­ vironmental work done in connection with internal operations and real estate mainte­ nance.
Progress in Environmental Work Further progress is being made in Sampo's internal environmental operations through the ongoing introduction of the reen Office Environmental System in all Sampo offices in Finland. The Green Office system opera­ tional in rhe Lauttasaari office in Helsinki since 1998 carries detailed targets and was audited last autumn. The pie chart show the extent and depth of environmental systems as applied in ampo.
External environmental operations relate to insurance, loss prevention, claims handling and asset management.
ber, lients were invited to participate in a theme day on environmental ri k .
ampo developed an expert y rem to­ gether with the Technical Research entre of Finland, designed to standardise reporting of moisture analy es conducted in buildings to improve the fairne s of compensa tions and prevent damages due to leakage.
Sampo's motor vehicle lo in pection system requires its subconrra tor to abide by the automobile sector' general environmen­ tal programme. Vehicle con idered t be be­ yond repair are taken to the Espoo or Pirk­ kala ection of th vehicle dama inspection centre (Aurovahinkokeskus Oy) owned by the Finnish in uran e companie . The centre has a valid environmental management pro­ gramme and will build new reception lines in 2000 to further reduce environmental im­
Participation Promoted All new personnel are introduced to Sarnpo's environmental work.
A competition was organised last sum­ mer to gather ideas on saving paper; these were then summarised and posted on the Sampo intranet for everyone's information.
Special energy passports were distributed to all Sarnpo staff during the Finnish national energy-saving week in October. Tho;e who performed at least five environmental acts participated in a prize draw. More than 40 per cent of staff returned their completed passports.
Certified Green Office, lauttasaari, Helsinki 18 2 Environmental system draking under progress in T urku and Solo 30 3 System draking beginning in the year 2000 52
Percentages are based on the number of personnel in Sampo offices and other business premises.
These figures cover 76 per cent of premises owned and occupied by Sampo operations in Finland, taking in 70 per cent of Finnish Sampo Group personnel. lncrea:;ed electricity usage was largely due to the extensive need for cooling during the hot swnmer of 1999. The rise in water consumption wa:; attributable to extensive renovation work carried out at Sampo's Aleksanterinkatu premises in Hdsinki. and on the cooling system at the Niittykumpu premises in Espoo. The growth in paper consumption appears to have been halted. Guiddines wablished in Germany for environmental m.lllagcmcnt in banks and insurance companies have been applied in calculating relative: consumption figure , ba:;ed on 250 working day5 per annum.
Juha Toivola, Pr idcnt B rn 1947, Managing Dire t r f Indu trial Insurance, cpury Managing Dire t r f amp Area f re ponsibiliry: maj r licnt , internal ri k management.
Martti Porkka, enior Vice Pre idenr Born 1951 , hieflnve tment ffi cr.
Juhani Kanga , enior Vice President Born 1944, eneral Manager. Areas of responsibility: group tratcgy and rratcgic busine development.
Ecro Holma, Pre idenr Born 1951, Managing Dire tor of ampo Indu rriaJ Insurance, eneral Manager f International pcrations.
BALTIC SUBSIDIARIES Sampo Eesti Varakindlustus Sampo Eesti Elukindlustus Sampo Latvija (99.99%) Sampo Latvija Dziviba
The Annual eneral Meeting f ampo In ur­ ance ompany plc will be held at the Hel inki Fair entre, 2nd fl r, R und Hall, at Rauta­ rielaisenkatu 3 (entrance f Hotel Holiday Inn), Ita-Pasila, Hel inki , on Wednesday April 12th, 2000 at 3 p.m . The li ring f the person regi cered will be tarred at 2 p.m.
o be entitled to attend the Annual eneral Meeting, a shareholder mu t be r gi ter d in the shareholder ' register held by the Finni h enrral ecurities epo icory Ltd ( uomen Arvopaperi­ keskus y) n t later than April 7th, 2000.
Also a shareholder who e hare have not been transferred eo the bo k-enrry ecuritie y rem is entitled eo auend the Annual eneral Meeting if he/she was regi cered in the ompa­ ny's shareholder register before epcember 12th , 1997. In rhis case, the shareholder mu t pre ent a share cerrificare or other account at the Annual eneral Meeting, bowing chat the ownership of the share has nor been transferred to the book­ entry securities account.
The Board of Directors will propose to the Annual General Meeting chat a dividend ofFIM 14.50, i.e. EUR 2.44, per share be paid for the year 1999.
According to the proposal, only a share­ holder who is registered as hareholder in the register of owners held by the Finnish entral Securities Depository Led (Suomen Arvopaperi­ keskus Oy) on the matching day of the payment of dividend, April 17th, 2000 is entitled to divi­ dend. The dividend is payable on April 26th, 2000.
To those shareho.lder who have not tran ferred their hare to the book-entry ecuririe ystem by the matching day of dividend pay­
ment, dividend will be paid after their share have been tran ferred to the b ok-entry ecuricies system.
ST In ternational In urance Company Limited • available in nglish
Annual Reports and Interim Report can be ordered from the Information Department: For ampo Annual Report, Interim Report and other finan ial information, plea e vi it www.sampo.fi.
Th se stockbrokers and inve rment analy rs asses ed ampo as an exciting investment opportunity in 1999. an1po doe not an wer for the a se smenrs presented in the analyses.
Sampa Insurance Company plc Sampo Enterprise Insurance Company limited Po tal addre s: FIN-20025 AMP , Finland Vi iting add re : Yli pi t nkaru 27, Turku Tel. +358 10 515 300 Fax +358 10 51 1811
Patria Reinsurance Company limited Po tal address: P.O. Box 12, Fl -0021 I Hel inki, Finland Visiting address: Metkonkatu 22 A, Helsinki Tel. +358 10 51 512 Fax +358 I 0 514 5195
Sampa life Insurance Company limited Kaleva Mutuallnsuran e Company Po tal add re : H -00025 AMPO, Finland Vi iting add re ~= Bulevardi 56, I let inki Tel. +35810515225 Fax +358 I 0 514 7449 e SAMPO ANNUAL REPORT 1999
L- 009 AM Rotterdam Netherland Visiting addres : K.P. van der Mandeletaan 90 3062MB Ron rdam Netherland Tel. +3 1 10 452 7299 Fax +31 I 0 452 4403
Branch ffice in the et.herland Postal address: P. . Box 8524
I nsuran e Bourse Am terdam trawi n kylaan I 0 L-1 077 XZ Amsterdam etherlands
Bran h ffi e in England 2 e thing Lane London 3N 4 A United Kingdom Tel. +44 171 208 8400 Fax +44 I 71 208 8402
Arkwright Hou e Par onage ardens Manche rer M3 2LE United Kingd m Tel. +44 161 837 2000 Fax +44 161 837 2019 ampo lndustrif<lr akring AB Postal addre : Box 16136 E-1 03 23 tockholm wed en
Fabriksvagen 32 E-851 7 I undsvall wed en ampo Towany two ba piec:un .A.
AS ampo csti Varakindlustus A ampo ti lulcindlustus Pronksi 19 EE-10 124 Tallinn
Repre cntative ffice, c/o Lconia Bank, P. . Box 310, Fl -5350 I Lappeenranta, Finland Vi icing add re : Mol hnyj pereulok 9/ J Building , I st Aoor R -11 034 M w Ru ia Tel. +7 095 7 4375 Fax +7 095 9 7 4376
Sompo Insurance Compony plc Registered domicile and address Turku, Yliopistonkatu 27, FIN-20025 SAMPO, FINLAND