Board of Directors’ Report for 2020 . . . . . . . . . . . . . . . 3
Effects of COVID-19 on Sampo Group . . . . . . . . . . . . . . . . . . . . . 8
Holdings of the Board and Executive Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32
Solvency Position in the Subsidiaries . . . . . . . . . . . . . . .34
Calculation of the Key Figures . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Group’s Notes to the Accounts . . . . . . . . . . . . . . . . . . . . . . .48 Summary of Significant Accounting Policies . . . . . . . . 49
Notes to the Income Statement 1–40 . . . . . . . . . . . . . . . . . . 78
Sampo plc’s Notes to the Accounts . . . . . . . . . . . 190 Summary of Significant Accounting Policies . . . . . . . 190 Notes to the Income Statement 1–4 . . . . . . . . . . . . . . . . . . . . 190
Note to the Income Taxes 14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193 Notes to the Off-Balance Sheet Liabilities and Commitments 15–16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194 Notes to the Staff and Management 17–19 . . . . . . . . . 194 Note to the Shares Held 20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 195
Effects of COVID-19 on Sampo Group . . . . . . . . . 8
The Major Risks and Uncertainties for the Group in the Near-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
EUR 1,541 million for 2020 and EUR 1,696 million for 2019. The total comprehensive income for the period, taking changes in the market value of assets into account, amounted to EUR 434 million (1,565).
The earnings per share excluding the Nordea-related extra ordinary items were EUR 2.16 per share (2.31). In accordance with the dividend policy, this figure has been used as basis when calculating the dividend proposal.
The return on equity for the Group amounted to 3.1 per cent (12.0) for 2020. The net asset value per share on 31
EUR 167 million (238). The combined ratio amounted to 85.2 per cent (82.1) in 2020. The expense ratio was 16.2 per cent (16.0). The Board of Directors of Topdanmark will recommend to the AGM on 25 March 2021 that in total a dividend of DKK 20 per share will be paid. If approved,
Sampo plc’s share of the dividend payment is EUR 113 million.
Limited, which became Sampo plc’s subsidiary and forms a separate segment in the Group’s financial reporting as of 16 November 2020. The consolidated last six weeks of 2020 comprise a number of one-off expense items.
Sampo’s share of Nordea’s net profit for 2020, excluding the accounting impacts of the sale of Nordea shares in
EUR 0.39 per share for 2020. In addition, the Board will decide on 18 February to distribute EUR 0.07 per share as the first instalment of the delayed 2019 dividend of EUR
0.72 per share – after September 2021, in line with the
154 million (280). The reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 268 million to EUR 1.9 billion at the end of 2020. Mandatum
Topdanmark’s life insurance assets, on 31 December 2020 amounted to EUR 22.6 billion (21.8), of which 78 per cent was invested in fixed income instruments (76), 14 per cent in equities (16) and 8 per cent in other assets (8). If’s share of assets was 49 per cent (50), Topdanmark’s 13 per cent
Sampo Group’s equity as at 31 December 2020 amounted to EUR 11,418 million (11,908), excluding the minority share of EUR 840 million (635). The main changes in the equity were the dividend payment of EUR 885 million reducing the equity and the comprehensive income for the year of EUR 322 million increasing it.
Balance sheet (at end of period) 1.3485 1.4197 1.4813 1.4813 1.3982 1.4326
Balance sheet (at end of period) 7.4409 7.4462 7.4526 7.4674 7.4715 7.4662
Average number of staff (FTE) 13,227 9,813 3,414 *) The reported loss related to the sale of Nordea shares in November 2020 and the impairment of Nordea holding made in the consolidated Group accounts 2020, together EUR 1,161 million is included in the 2020 figure. The comparison figure includes a valuation loss of EUR 155 million related to Nordea shares.
COVID-19 pandemic. While some areas of the economy continue to be depressed, others have weathered the crisis relatively well. The sectors most negatively affected by the shock have been those dependent on in-person spending and sectors dependent on international travel and tourism. In contrast, some of the sectors that have shown resilience – or even gained from the crisis – have been areas of the economy linked to manufacturing and the digital economy, such as the technology and online retail sectors. Going forward, much will depend on the pace of the rollout of vaccines and the effectiveness of coordinated monetary and fiscal policy responses.
In Sweden, the economy is expected to have contracted by 2.9 per cent in 2020, yet grow by a solid 4.0 per cent in 2021. Similar to Finland, the first quarter of 2021 is likely to be challenging for the Swedish economy due to rising
Riksbank is likely to keep its rates unchanged at zero and continue its asset purchases to support the recovery. The low interest rate environment has kept borrowing costs down and has been one of the key factors in driving up house prices to record levels.
In Norway, the economy is expected to have contracted by 3.4 per cent in 2020 and expand by 2.7 per cent in 2021, putting the Norwegian economy on track to reach pre-crisis GDP levels in early 2022. The Norwegian economy has already regained most of the ground lost during the initial COVID-19 shock in March last year, during which mainland activity shrunk by a massive 14 per cent. The unemployment rate has already recovered back to 4 per cent from the crisis high of 10 per cent and is likely to continue to recover further in 2021. House prices are likely to retain their upward momentum in the first half of 2021 before gradually slowing down. Higher oil prices and signals from the Norges Bank of upcoming rate hikes will contribute to a stronger NOK going forward.
In Denmark, the economy is expected to have contracted by 3.7 per cent in 2020, and the growth projection of 2.5 per cent for 2021 is more modest compared to Denmark’s
Nordic peers. However, Denmark’s public finances have stayed relatively stable due to increased tax revenue from returns on pension investments and actual stimulus spending being noticeably smaller than the funds allocated to the package. In 2021, the economic upswing will be initially driven by rising private consumption supported mainly by a sharp pick-up in the housing market and accumulated savings. Later in the year,
and its effects on society, economy, businesses and the lives of ordinary people. Despite the turbulence, Sampo
A large majority of Sampo Group’s personnel has been working remotely since mid-March. After the summer, a gradual opening of offices was initiated within the limits set by social distancing recommendations by authorities but the return to the office was stopped after the pandemic surged again in Europe. As COVID-19 infection rates increased drastically in Northern Europe during
Despite the challenging situation, all the subsidiaries have been able to offer normal service level and customer satisfaction has remained at a high level, in Mandatum Life the customer satisfaction even reached a new record high.
Sampo Group personnel and none of the group companies has required any government funding support during the
Topdanmark has reported on the impacts of the COVID-19 pandemic in its announcement of 2020 annual results published on 22 January 2021. The report is available at www.topdanmark.com.
Claim severities increased due to interruptions in the repair networks and supply of parts caused by COVID-19 and increased car rental costs, with repairs typically taking longer than anticipated.
Hastings does not provide insurance for any business lines which have been negatively impacted by COVID-19, such as travel or business interruption.
Sampo Group companies have enjoyed good investment returns since the second quarter of 2020 and as the market did not expect any major shocks in the third quarter, Sampo Group achieved a positive investment return by the end of the summer.
December, good news about the COVID-19 vaccines and continued central bank stimulus sparked strong increases in equity values. While equity portfolios brought the best investment returns, fixed income investments also generated a solid return in the fourth quarter, which gave Sampo a good opportunity to cautiously repatriate investment profits. Looking at the Group’s total investment result reported for 2020, a significant portion of the very good returns came during the last few months of the year.
The solvency positions of Sampo Group and its subsidiaries were strong at the end of 2020. More information is available in the section Solvency.
(84.5) and the risk ratio to 60.7 per cent (62.7). The cost ratio was 21.5 per cent (21.8). The effect of COVID-19 on the combined ratio was approximately 3 percentage points positive in January-December 2020 and 4 percentage points in the fourth quarter.
and the insurance margin (technical result in relation to net premiums earned) was 18.2 per cent (15.9).
The claims related to the landslide in Gjerdrum, Norway, at the end of December 2020 amounted to EUR 18 million.
Industrial, at 10.4 per cent, followed by BA Commercial at 4.2 per cent. In BA Private, the growth was 3.7 per cent.
Geographically, premiums grew 10.6 per cent in Denmark, 5.0 per cent in Norway, 4.4 per cent in Sweden and 2.5 per cent in Finland.
On 31 December 2020, the total investment assets of If amounted to EUR 11.0 billion (10.8), of which fixed income investments constituted 85 per cent (86), money market 3 per cent (2) and equity 12 per cent (12). Net income from investments amounted to EUR 126 million (229). Investment return marked-to-market for the full-year 2020 was 2.3 per cent (5.0). Duration for interest bearing assets was 1.4 years (1.3) and average maturity 2.8 years (2.8). Fixed income running yield without taking into account the FX
At the end of 2020 Sampo plc held 41,997,070 Topdanmark shares, corresponding to 46.7 per cent of all shares and 48.0 per cent of related voting rights in the company.
The Board of Directors of Topdanmark will recommend to the AGM on 25 March 2021 that a dividend of DKK 1,035 million will be distributed for 2020, representing DKK 11.5 per share. In addition, the Board of Directors will recommend to the AGM that the remaining dividend of DKK 8.5 per share (DKK 765 million) for 2019 will be distributed as an extraordinary dividend. Given the AGM approval, the total dividend distributed in connection with the AGM
(82.1) in 2020. The expense ratio was 16.2 per cent (16.0).
The profit after tax was better than assumed in the latest model profit forecast in the third quarter report.
The profit improvement was mainly due to a higher investment return, run-off profits and a lower level of weather-related claims in the fourth quarter of 2020 than assumed.
Topdanmark’s premiums increased by 3.6 per cent in non-life insurance and decreased by 1.1 per cent in life insurance in 2020. The private segment accounted for a 1.3 per cent increase, and the SME segment accounted for a 6.2 per cent increase. Adjusted for a change in segmentation, premium growth was 2.1 per cent and 5.3 per cent in the private segment and SME segment respectively.
Topdanmark has good momentum in new sales and low churn rates, the terminated distribution agreement with
During the next seven and half years the annual amortization of intangibles will amount to approximately EUR 40 million, i.e. EUR 10 million per quarter. The short period consolidated in 2020 also contains items which are not recurring.
The full year 2020 loss ratio reduced compared to 2019 due to a reduction of claims frequencies resulting from the lockdown restrictions, partially offset by inflation in the cost of claims. The reserving position as at 31 December 2020 reflects the increased claims uncertainties caused by the pandemic.
Hastings continues to build on its digital capabilities, resulting in more customers choosing to make contact through the Mobile App. This has had over 1.2 million downloads to date and customer engagement and feedback on the App continue to be positive. Hastings’
claims transformation initiatives continue to develop and progress, with initiatives spanning accidental damage, third party property damage and bodily injury.
Group’s financial reporting, Nordea is treated as an associated company and it is included in the segment entitled ‘Holding’.
8.90 per share by a decision by Sampo’s Board based on management judgement. Nordea’s closing price as at 31
General Meeting authorise it to pay out the remaining part of the 2019 dividend (EUR 0.33 per share) and the 2020 dividend (EUR 0.39 per share) – a total of EUR
The net investment income, excluding income on unit-linked contracts amounted to EUR 189 million (358).
The with-profit reserves decreased as planned during 2020 and amounted to EUR 3.5 billion (3.9) on 31 December 2020. The with-profit reserves related to the higher guarantees of 4.5 and 3.5 per cent decreased by EUR 268 million to EUR 1.9 billion at the end of 2020.
The assets covering Mandatum Life’s original with-profit liabilities at the end of 2020 amounted to EUR 4.6 billion
Segregated fund’s investment return marked-to-market was 1.5 per cent (6.4). On 31 December 2020 the duration of fixed income assets was 3.1 years (2.8) and average maturity 3.6 years (3.2). Fixed income running yield without taking into account the FX hedging cost was 2.1 per cent (1.9).
Nordea shares, Sampo’s share of profits of associated companies Nordea and Nordax Holding for January
– December 2020 amounted to, EUR -722 million. The one-off items excluded, the share of the profits of the associates was EUR 439 million (298), of which Nordea’s share was EUR 427 million (290) and Nordax’s share was
After the impairment, Sampo plc’s holding in Nordea was booked in the consolidated balance sheet on 31 December 2020 at EUR 4.8 billion, i.e. EUR 7.50 per share. The market value of the holding was EUR 4.3 billion, i.e. EUR
On 10 November 2020, Sampo sold 162 million Nordea shares, 4.0 per cent of the outstanding shares, in an accelerated bookbuild offering to institutional investors.
The transaction price was EUR 7.25 per share, resulting in gross proceeds of EUR 1,174 million.
In connection with the offering, Sampo entered into a lock-up undertaking, under which it has, subject to certain exceptions, agreed not to sell any Nordea shares for a period ending at 9 May 2021.
The offer price was GBp 250 for each Hastings share, valuing Hastings’ share capital at approximately GBP
Hastings share for the three-month period ended 28 July 2020, the last business day before Hastings announced it had received an approach from Sampo and RMI.
Sampo and RMI formed a new jointly-owned company for the purposes of acquiring Hastings. Following completion of the offer, Sampo and RMI own and control 70 per cent and 30 per cent respectively of the shares and votes in the jointly-owned company. Sampo and RMI have entered into a long-term partnership in relation to Hastings.
The acquisition of Hastings provides an attractively positioned platform in one of the most digitally advanced markets globally. The UK is characterized by its high levels of digital distribution and Hastings is one of the leading distributors of motor insurance policies in this market. Sampo believes that, under its ownership together with that of RMI, Hastings will be able to further develop its agile and digital business model to create long-term value.
Sampo and RMI intend for Hastings to continue to be operated on a standalone but unlisted basis and the current management is expected to continue in their position after the closing of the deal. Sampo believes that a private partnership with RMI provides an optimal structure for Hastings to fulfil its potential and build long-term value for its stakeholders. As a private company, Sampo believes Hastings will benefit from a more long-term approach to decision making.
Sampo and RMI believe with their experience and under private ownership there are a number of areas of Hastings’
operations that can be improved, including claims handling sophistication, expansion into home insurance, customer retention and the reinsurance strategy.
The Sampo Board expects the acquisition of Hastings to be accretive to earnings per share and RoE from the first full year following completion. Sampo estimates the transaction will have a positive impact on earnings per share in the mid-single digits (%).
Hastings’s profit and loss items were recognized line-byline in the Group’s consolidated financial statements.
Ivar Martinsen left his position as Head of BA Commercial and the membership of Sampo Group Executive
Securities Market Association on 19 September 2019, effective from 1 January 2020 (the “CG Code 2020”).
Annual General Meeting, held on 2 June 2020, decided to distribute the proposed dividend of EUR 1.50 per share for 2019. The record date for dividend payment was 4 June 2020 and the dividend was paid on 11 June 2020. The
Annual General Meeting adopted the financial accounts for 2019 and discharged the Board of Directors and the
Board. The Members of the Board were elected for a term continuing until the close of the next Annual General
Board will be paid an annual fee of EUR 180,000 and other members of the Board will be paid EUR 93,000 each. Furthermore, the members of the Board and its Committees will be paid the following annual fees: the Vice Chair of the Board EUR 26,000, the Chair of the Audit Committee
EUR 6,000. A Board member shall in accordance with the resolution of the Annual General Meeting acquire Sampo plc’s A shares at the price paid in public trading for 50 per cent of his/her annual fee excluding taxes and similar payments.
Remuneration Policy for Governing Bodies. The resolution on the Remuneration Policy was advisory.
Particularly climate risk related considerations were in focus during the year and, for example, additional screening and reporting on fossil fuels was initiated from 2021 onward. Sampo Group also reported to the UN
Principles for Responsible Investment (PRI) for the first time in 2020. The first reporting round was voluntary for the Group. In 2021, reporting continues with mandatory and public reporting according to the updated reporting framework of the PRI.
Sampo Group will issue a report on non-financial information in accordance with Chapter 3a, Section 5 of the
Board of Directors’ Report and published in May 2021 at www.sampo.com/year2020.
The parent company Sampo plc employed 0.5 per cent of the work force. Hastings is included in the personnel calculations as of 1 November 2020.
Hastings became Sampo plc’s subsidiary and formed a separate segment in the Group’s financial reporting as of
Group’s remuneration strategy determines its responsibility towards employees and shareholders. This means that the long-term financial stability and value creation of
The starting point of any compensation mechanism shall be to encourage and stimulate employees to do their best and surpass their targets. Remuneration
The relative proportions of fixed and variable compensation reflect the responsibilities of individual executives and employees. Fixed salary shall represent a sufficiently high share of the total remuneration. Variable compensation may be based on the contribution to the company’s profitability and on individual performance or linked to committing employees to Sampo Group.
After the deferral period, a retrospective risk adjustment review shall be carried out and the Board of Directors of each Sampo Group company shall decide whether the deferred variable compensation shall be paid/released in full, partly or cancelled in whole. In 2020, a total of EUR
3.3 million (10.5) of short-term and long-term incentives has been deferred.
Sampo plc to the management and other key employees of Sampo Group. On 5 August 2020, the Board of Directors decided to adopt a new long-term incentive scheme 2020 for the management (including the Group CEO)
In the long-term incentive scheme 2017, a total of 2,723,300 allocated incentive units remain and will vest during 2021–2023.
Persons subject to the deferral rule shall at payout from the schemes acquire Sampo A shares with a certain part of the installment after deducting income tax and other comparable charges. The shares are subject to disposal restrictions for three years, after which the Board of
In 2020, a total of EUR 50 million (41), including social costs, was paid as short-term incentives. During the same period, a total of EUR 6 million (18), including social costs, was paid from long-term incentive schemes. The results impact of the long-term incentive schemes in force in
The General Meeting resolved, in accordance with the voting result, to accept the Remuneration Policy. The resolution was advisory.
In Sampo Group the risks associated with business activities fall into three main categories: business risks associated with external drivers affecting the competitive environment or resulting from lack of internal operational flexibility, reputational risk associated with the company’s business practices or associations and risks inherent in business operations.
A more detailed description of Sampo Group’s risk management activities, governance, risks and capitalization is available in the Risk Management
(98) and the equity capital in total to EUR 11,418 million
General Meeting, nevertheless not more than 18 months after AGM's decision.
The number of Sampo plc’s shareholders increased during 2020 by 40,628 holders to 168,152 as at 31 December 2020.
A and B shares Number of shares % of share capital % of votes
During 2020 Sampo plc received altogether 9 notifications of change in holding pursuant to Chapter 9, Section 5 of the Securities Markets Act, according to which the total number of Sampo A shares or related voting rights owned by BlackRock, Inc. and its funds directly or through financial instruments had decreased below 5 per cent or increased above 5 per cent.
After the end of the reporting period Sampo plc had received 4 notifications of change in holding pursuant to
Shares owned by the Board of Directors and the Group Executive Committee Sampo plc, 31 December 2020 and 31 December 2019
At the end of 2020, members of Sampo plc’s Board of
Directors and their close family members owned either directly or indirectly 5,096,526 (4,969,859) Sampo
Members of the Group Executive Committee and their close family members owned either directly or indirectly 586,030 (888,544) Sampo A shares representing 0.1 per cent (0.2) of the share capital and related votes.
Mandatum Life and Nordea paid no dividends during 2020 because of the COVID-19 situation and the related regulations from the authorities. The following dividend payments were received: • Topdanmark; EUR 48 million in April 2020 and
General Meeting authorize it to pay out the remaining part of the 2019 dividend (EUR 0.33 per share) and the 2020 dividend (EUR 0.39 per share) – a total of EUR 0.72 per share – after September 2021, in line with the European Central Bank recommendation. Sampo plc’s share of the proposed dividends is EUR 508 million.
Following the Danish FSA’s recommendation, Topdanmark ’s Board of Directors decided on 23 March 2020 to postpone paying out half of the planned dividend for 2019 until the AGM on 25 March 2021. On 22 January 2021 Topdanmark’s Board of Directors recommended to the AGM that a dividend of DKK 1,035 million will be distributed for 2020, representing DKK 11.5 per share. The
Board of Directors also recommended to the AGM that the remaining dividend for 2019 of DKK 765 million will be distributed as an extraordinary dividend. Given the AGM
Relevant ratings for Sampo Group companies on 31 December 2020 are presented in the table below.
In addition, Hastings Group (Finance) plc has an outstanding senior bond of GBP 250 million for which Fitch has an
Moody's Standard & Poor’s Rated company Rating Outlook Rating Outlook Sampo plc – Issuer Credit Rating A3 Stable A Stable
Mandatum Life Insurance Company Ltd – Issuer Credit Rating - - A+ Stable
II. Topdanmark uses a partial internal model to report its stand-alone solvency position.
If Group has an A+ rating from S&P which will continue to require significantly more capital than the standard formula and therefore the use of standard formula has no practical implications on If Group’s capital position. On 31
(1,890) and own funds to EUR 3,623 million (3,592). The solvency ratio amounted to 189 per cent (196).
Topdanmark calculates most of its non-life and health risks and their respective solvency capital requirement by applying a partial internal model approved by the
standard formula. Topdanmark’s solvency ratio under the partial internal model was 170 per cent (177) at the end of
On 28 May 2020 Sampo plc repaid SEK 3,000 million senior notes maturing on that date.
On 1 December Sampo plc redeemed EUR 655 million outstanding senior notes maturing on 18 September 2023, 16 September 2021, 23 May 2022 and 30 May 2025 in a cash tender offer.
To balance the risks on the Group level Sampo plc’s debt is mainly tied to short-term interest rates and issued in euro or Swedish krona. Interest rate swaps are used to obtain the desired characteristics for the debt portfolio.
Senior Bond 118 SEKm 0.88% Euribor 6M + 0.38% -0.14% 23 May 2022
Senior Bond 1,000 NOKm 3.100% Euribor 6M + 0.77% 0.32% 7 September 2028
Sampo Group’s insurance businesses are expected to report good insurance technical results for 2021, although the mark-to-market component of investment returns will be significantly influenced by capital markets’
If P&C is expected to reach a combined ratio of below 85 per cent in 2021.
Hastings remains well positioned and expects to further improve its loss ratio and overall results, despite some market uncertainty from COVID-19, regulatory reform and Brexit.
The identification of unforeseen events is easier than the estimation of their probabilities, timing, and potential outcomes. Currently, the COVID-19 pandemic and the measures taken to contain the virus are causing significant negative effects on economies and uncertainties on capital market development. There are also a number of widely identified macroeconomic, political and other sources of uncertainty which can, in various ways, affect the financial services industry in a negative manner.
Premiums written before reinsurers' share, life insurance EURm 1,473 1,487 1,357 294 -
Premiums written before reinsurers' share EURm 103 - - - -
Earnings per share, incl. items in other comprehensive income EUR 0.65 2.63 1.70 3.79 3.14
Net asset value per share EUR 19.82 20.71 20.60 25.37 24.86
Weighted average number of shares, incl. dilutive potential shares 1,000 555,352 555,352 555,352 559,873 560,000
Average adjusted number of shares 1,000 554,152 554,152 554,152 554,152 558,800
Weighted average number of shares, incl. dilutive potential shares 1,000 554,152 554,152 554,152 554,152 558,800
As Sampo plc is the ultimate parent of the Solvency II group, the solvency is calculated at the group level. 2) Key figures for P&C insurance are based on activity based costs and cannot, therefore, be calculated directly from the consolidated income statement. 3) Will be used as basis for setting dividends in accordance with the dividend policy. For 2020, the dividend per share and PE ratios have also been calculated on the basis of adjusted EPS. 4) The Board of Director's proposal to the Annual General Meeting for the accounting period 2020.
The key figures have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying regulations and instructions of the Financial Supervisory Authority. The Group solvency is calculated according to the consolidation method defined in the Solvency II Directive (2009/138/EC) and Insurance Companies Act (521/2008).
Profit before taxes Property & casualty insurance profit before taxes + life insurance profit before taxes + holding business profit before taxes ± Group elimination items with result impact
Change in liabilities for insurance and investment contracts 4 -1,554 -2,919
Share of associates' profit/loss 13 451 321 - Valuation loss on disposal of Nordea shares 13 -262 -155 - Impairment loss on Nordea shares 13 -899 -
Other comprehensive income for the period 37 67 217 322 0 322 1) IAS 19 Pension benefits had a net effect of EURm 2 (-90) on retained earnings. 2) The total comprehensive income includes also the share of the associate Nordea's other comprehensive income, in accordance with the Group's share holding. The retained earnings thus include EURm 38 (-30) of
Nordea's actuarial gains/losses The exchange differences include the share of Nordea's exchange differences EURm 6 (3). Respectively, available-for-sale financial assets include EURm 8 (-3) of Nordea's valuation differences on assets at fair value through p/l. Nordea adopted the new IFRS 9 Financial instruments standard from 1 January 2018 on.
Total out-going cashflows from leases -45 -34 *) Investments include investment property, financial assets and investments related to unit-linked insurance contracts.
Cash and cash equivalents include cash at bank and in hand EURm 2,520 (2,662) and short-term deposits (max 3 months) EURm 162 (15).
Partly-Owned Subsidiaries 1 Insurance premiums written .............................................. 78 2 Net income from investments ........................................... 78 4 Change in liabilities for insurance and investment contracts .................................................. 82 6 Other operating expenses .................................................. 83 7 Result analysis of If ............................................................... 83 8 Earnings per share ................................................................ 83 9 Financial assets and liabilities ........................................... 84 10 Property, plant and equipment ........................................ 85 13 Investments in associates .................................................. 89 16 Change in fair values of financial assets........................ 94 17 Determination and hierarchy of fair values .................. 95 18 Movements in level 3 financial instruments measured at fair value ......................................................... 99 19 Sensitivity analysis of level 3 financial instruments measured at fair value ..............................101 20 Investments related to unit-linked insurance contracts ............................................................101 21 Deferred tax assets and liabilities ..................................102 23 Components of other comprehensive income ..........104 24 Tax effects relating to components of other comprehensive income ....................................105 25 Other assets ..........................................................................105 26 Liabilities from insurance and investment contracts ..106 27 Liabilities from unit-linked insurance and investment contracts ................................................114 28 Financial liabilities ...............................................................115 30 Employee benefits ..............................................................118 31 Other liabilities .....................................................................121 32 Contingent liabilities and commitments .....................122 33 Equity and reserves ............................................................123 34 Related party disclosures .................................................124 35 Incentive schemes ...............................................................125 36 Auditors' fees .......................................................................128 37 Legal proceedings ...............................................................128 38 Investments in subsidiaries ..............................................128 39 Events after the balance sheet date .............................128 40 Risk Management Disclosure 2020 ...............................129
Sampo Group has prepared the consolidated financial statements for 2020 in compliance with the International
The consolidated financial statements combine the financial statements of Sampo plc and all its subsidiaries.
The acquisition method of accounting is used for the purchase of subsidiaries. The cost of an acquisition is allocated to the identifiable assets, liabilities and contingent liabilities, which are measured at the fair value of the date of the acquisition. Possible non-controlling interest of the acquired entity is measured either at fair value or at proportionate interest in the acquiree’s net assets. The acquisition-specific choice affects both the amount of recognised goodwill and non-controlling interest. The excess of the aggregate of consideration transferred, non-controlling interest and possibly previously held equity interest in the acquiree, over the Group’s share of the fair value of the identifiable net assets acquired, is recognised as goodwill.
If there is any indication that the value of the investment may be impaired, the consolidated carrying amount is tested by comparing it with its recoverable amount.
Goodwill and fair value adjustments arising from an acquisition of a foreign entity are treated as if they were assets and liabilities of the foreign entity. Exchange differences resulting from the translation of these items at the exchange rate of the balance sheet date are included in equity and their change in other comprehensive income.
The Group’s segmentation is based on business areas whose risks and performance bases as well as regulatory environment differ from each other. The control and management of business and management reporting are organised in accordance with the business segments. The
At the date of financial statements, the premiums written are adjusted by a change in the provision for unearned premiums i.e. by the proportion of the insurance premium income that, based on the period covered by the insurance contract, belongs to the following financial year.
In the life insurance business, liabilities arising from insurance and investment contracts count as long-term liabilities. Therefore, the insurance premium and related claims are usually not recognised in the same accounting period. Depending on the type of insurance, premiums are primarily recognised in premiums written when the premium has been paid. In group pension insurance, a part of the premiums is recognised already when charged.
Based on the measurement practice, financial assets and liabilities are classified in the following categories upon the initial recognition: financial assets at fair value through profit or loss, loans and receivables, available -for-sale financial assets, financial liabilities at fair value through profit or loss, and other liabilities.
On level 3, the measurement is based on other inputs rather than observable market data. The majority of
Purchases and sales of financial assets at fair value through profit or loss and available-for-sale financial assets are recognised and derecognised on the trade date, which is the date on which the Group commits to purchase or sell the asset. Loans and receivables are recognised when cash is advanced.
Financial assets are derecognised when the contractual rights to receive cash flows have expired or the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation specified in the contract is discharged or cancelled or expired.
Loans and receivables are initially recognised at their fair value, including transaction costs directly attributable to the acquisition of the asset. Loans and receivables are subsequently measured at amortised cost using the effective interest rate method.
Instruments are measured either at a bid price or at the last trade price, if there is an auction policy in the stock market of the price source. An exception are the syndicated loans which are measured at a mid-price because of the lower liquidity. The financial derivatives are also measured at the last trade price. If the financial instrument has a counter-item that will offset its market risk, the same price source is used in assets and liabilities to that extent. If a published price quotation does not exist for a financial instrument in its entirety, but active markets exist for its component parts, the fair value is determined on the basis of the relevant market prices of the component parts.
There is objective evidence of impairment, if an issuer or debtor e.g. encounters significant financial difficulties that will lead to insolvency and to estimation that the customer will probably not be able to meet the obligations
Whether there is objective evidence of an impairment of available-for-sale financial assets, is evaluated in a separate assessment, which is done if, for example, there are changes in credit rating of debt instrument issuer, the issuer is placed on a watch list, or there is a default or delinquency in payments of principal or interests. For equity instruments objective evidence may exist, if there is a significant or prolonged decline in the fair value of an equity instrument below its original acquisition cost.
As there are no quoted prices available in active markets for unquoted equities and participations, the aim is to determine their fair value with the help of generally accepted valuation techniques available in the markets.
The most significant share of unquoted equities and participations comprise the private equity and venture capital investments. They are measured in accordance with the generally accepted common practice, International Private Equity and Venture Capital Guidelines
The significance and prolongation of the impairment in the last-mentioned cases is assessed case by case, taking into consideration special factors and circumstances related to the investment. Sampo invests in private equity and venture capital in order to keep them to the end of their life cycle, so the typical lifetime is 10 – 12 years. In general, a justifiable assessment of a potential impairment may only be done towards the end of the life cycle.
In the case of debt securities, the amount of the impairment loss is assessed as the difference between the acquisition cost, adjusted with capital amortisations and accruals, and the fair value at the review time, reduced by possibly in profit or loss previously recognised impairment losses. At the same time, the cumulative loss recognised in other comprehensive income is transferred from equity and recognised in p/l as an impairment loss.
If, in a subsequent period, the fair value of a debt security increases and the increase can objectively be related to an
in profit or loss, the impairment loss is reversed through p/l, but only up until the carrying amount is the same it would have been, had no impairment losses been recognised in the first place.
Impairment losses for available-for-sale equity instruments are recognised thru p/l, by transferring the cumulative loss recognised in other comprehensive from equity to p/l. If the fair value subsequently increases, the increase is recognised in other comprehensive income.
During the financial year, fair value hedging has been applied in Mandatum and cash flow hedging in Hastings.
Cash flow hedging Cash flow hedging is used to hedge the interest cash flows of individual floating rate debt securities or other floating rate assets or liabilities. The hedging instruments used during the financial year were mainly currency forwards.
Lease liability is also recognised at the commencement date, and measured at the present value of the lease payments.
improvement of existing software are recognised only to the extent they meet the above-mentioned requirements for being recognised as assets in the balance sheet.
Intangible assets with an indefinite useful life, such as brands and trademarks acquired in business combinations, are not amortised. Instead they are tested at least annually for impairment.
Property, plant and equipment are measured at historical cost less accumulated depreciation and impairment losses, except for Topdanmark and Hastings where the carrying amount is based on revaluation i.e. fair value less accumulated depreciation and impairment losses.
Improvement costs are added to the carrying amount of a property when it is probable that the future economic benefits that are attributable to the asset will flow to the entity. Costs for repairs and maintenance are recognised as expenses in the period in which they were incurred.
If there is any indication that an impairment loss recognised for an asset in prior periods may no longer exist or may have decreased, the recoverable amount of the asset will be estimated. If the recoverable amount of the asset
Investment property is held to earn rentals and for capital appreciation. The investment property is measured the same way as property, plant and equipment. The depreciation periods and methods and the impairment principles are also the same as those applied to corresponding property occupied for own activities. The investment property of the associate Nordea is measured at fair value and included in the Holding segment’s investments in associates.
In addition, the Group companies have contracts where they share the insurance risk with a co-insurance partner. Where the Group is the secondary co-insurer, the Group only recognises its share of the premium as an insurance receivable and related claims liability. Where the Group acts as the lead co-insurer, the gross premium is recognised as an insurance receivable, with a related co-insurance payable to the co-insurer.
The net cash flow from these contracts is recognised directly in the balance sheet, without recognising it first in the income statement as premiums written and claims incurred.
The liability for claims outstanding in direct P&C insurance and reinsurance may be calculated by statistical methods or through individual assessments of individual claims. Often a combination of the two methods is used, meaning large claims are assessed individually while small claims and claims incurred but not reported (the
Liability adequacy test A liability adequacy test is performed separately for both the provision for claims outstanding and the provision for unearned premiums. The provision for claims outstanding is based on estimates of future cash flows. The
(so called pro rata temporis principle). The adequacy of the provision for unearned premiums is tested by calculating a provision for unexpired risks for each company per business area and line of business. If the provisions are judged to be insufficient, the provision for unearned premiums is augmented by recognising a provision for unexpired risks.
Insurance contracts are contracts that carry significant insurance risk or contracts in which the policyholder has the right to change the contract by increasing the risk. As capital redemption contracts do not carry insurance risk, these contracts are classified as investment contracts.
In Mandatum, regarding the group pension portfolio transferred from Suomi Mutual (=segregated portfolio), a so-called shadow accounting is applied, as permitted in IFRS 4.30, by adjusting the equity with the amount of unrealised gains and losses of the agreement. The equity is adjusted with an amount that unrealised gains or losses would have affected the Segregated Portfolio in accordance with the profit distribution policy of the Segregated
Portfolio, if the gains or losses had been realised at the balance sheet date.
In Topdanmark unit-linked contracts include both insurance and investment contracts. Insurance contracts are measured in accordance with IFRS 4. Investment contracts, on the other hand, are measured in accordance with IAS 39 Financial Instruments: Recognition and
The pension costs are recognised as an expense for the service period of employees.
The fair value of the plan assets covered by the plan is deducted from the present value of future pension obligations and the remaining net liability (net asset) is recognised separately in the balance sheet.
The fair value of the schemes has to a large extent been determined using the Black-Scholes-pricing model. The fair value of the market-based part of the incentive takes into consideration the model’s forecast concerning the number of incentive units to be paid as a reward. The effects of non-market based terms are not included in the
Dividends are recognised in equity in the period when they are approved by the Annual General Meeting. When the parent company or other Group companies purchase the parent company’s equity shares, the consideration paid is deducted from the equity as treasury shares until they are cancelled. If such shares are subsequently sold or reissued, any consideration received is included in equity.
European Commission had not at the balance sheet date endorsed IFRS 17 standard to be adopted in the EU.
Depreciation and amortisation by segment are disclosed in notes 10 - 12 and investments in associates in note 13.
Change in liabilities for insurance and investment contracts -105 -1,201 36 -272 - -12 -1,554
Share of associates' profit/loss 0 12 - 0 439 - 451 - Valuation loss on disposal of Nordea shares - - - - -262 - -262 - Impairment loss on Nordea shares - - - - -899 - -899
Share of associate's other comprehensive income - - - - 40 - 40
Total items reclassifiable to profit or loss, net of tax 160 5 1 96 60 - 322
Actuarial gains and losses from defined pension plans 0 - - - - - 0
Actuarial gains and losses from defined pension plans -58 - - - - -58
Reinsurers' share of insurance liabilities 283 73 1,464 1 - - 1,821
Liabilities for insurance and investment contracts 8,833 5,339 2,263 3,521 - - 19,956
Consolidated Balance Sheet by Business Segment at 31 December 2019 EURm If Topdanmark Mandatum Holding Elimination Group Assets
Liabilities for unit-linked insurance and investment contracts - 6,278 8,117 - -27 14,368
Change in liabilities for insurance and investment contracts 11 -624 -965
Profit for the year attributable to non-controlling interests -3 78 107
The revenue includes insurance premiums according to the underwriting country, consisting of premiums earned for P&C insurance and premiums written for life insurance, and net investment income and other operating income in the holding segment. For Hastings, income from broker activities has been included as well.
Rand Merchant Investment Holdings Limited (RMI), announced in August 2020, a recommended cash offer to acquire all issued and to be issued shares in Hastings
Sampo funded its part of the acquisition costs with EUR 1 billion of hybrid Tier 2 capital issued on 3 September 2020 with the residual coming from existing cash resources.
On 27 October 2020, Sampo announced that all regulatory approvals for the transaction had been received. On 16
Hearing procedure, the transaction became effective and 16 November 2020 became the acquisition date of the acquired business.
Sampo and RMI formed a new jointly-owned company for the purposes of acquiring Hastings, Hastings Group
Sampo owns and controls 70 per cent and 30 per cent respectively of the shares and votes.
In the financial statements 2020, Hastings' balance sheet has been consolidated line by line. The p/l items have been consolidated since 16 November, 2020. Hastings is presented as its own segment both in the income statement and balance sheet by segments.
If the acquisition had taken place at the beginning of 2020, revenue in the Group from Hastings for 1 January to 15 November 2020 would have been approximately
Norwegian road assistance company Viking Redningstjeneste Topco AS (from December 2020 on Viking Assistance
Acquired net assets, including assumed net debt, were negative. Recognised goodwill from the acquisition amounted to EUR 95 million. The goodwill includes the synergy effects in the form of more efficient processes and expansion opportunities.
Vertikal Helseassistanse AS. The purchase price was EURm 33 and the acquired net assets EURm 7. The acquisition had no material impact on Sampo Group's financial reporting.
Included in gains/losses from financial assets available for-sale is a net gain of EURm -14 (0) transferred from the fair value reserve.
Group change in liabilities for insurance and investment contracts total, net -1,554 -2,919 5 Staff costs
Pension costs - defined contribution plans -87 -85 - defined benefit plans (Note 30) -15 -15
Administrative expenses pertaining to other technical operations (operating expenses) -110 -45
Profit or loss attributable to the equity holders of the parent company 37 1 130
The Group leases premises mainly for its own use. The expected lease term varies from 2 to 12 years. Most contracts include an option to extend the contract at the term end. Some lease contracts have an option to terminate the contract before the term end.
Non-cancellable minimum rental - not later than one year 43 46 - later than one year and not later than five years 57 59 - later than five years 17 24
At the business acquisitions of Hastings and Topdanmark, EUR 253 million has been allocated to trademark. The useful life of trademark is deemed indefinite and it will not be amortised.
The recoverable amounts for If and Mandatum have been determined by using a discounted cash flow model. The model is based on Sampo’s management’s best estimates of both historical evidence and economic conditions such as volumes, interest rates, margins, capital structure and income and cost development. The value in use model for Mandatum is greatly influenced by the long-term development of insurance liabilities, affecting e.g. the required solvency capital and thus the recoverable amount. That is why the forecast period is longer for Mandatum, 10 years. The derived cash flows were discounted at the pre-tax rates of the cost of equity which for If was 9.2 per cent and for Mandatum Life 9.8 per cent. The cost of equity is used as the cost of capital as neither company has principal outstanding.
IAS 36 permits determing the recoverable amount by using the fair value less costs to sell. For Topdanmark, the valuation of goodwill has been tested on the balance sheet date by using that method. The fair value of Topdanmark EUR 1,491 million on the balance sheet date exceeds its carrying amount in the Group.
Komplementarselskabet Ottilia København ApS Denmark 0 50.00 *) Published price quatation 13 Investments in associates
Valuation loss on dividend distribution of associate shares *) -262 - -262 -155 - -155
Changes in the equity of associates -1 -3 -4 -17 -50 -67 *) The valuation loss for 2020 includes the difference between the consolidated carrying amount and the fair value of the shares, EUR -222 million on the sales date, and EUR -40 million from recycling of Nordea's previously recognised other comprehensive income from equity to the profit or loss. The comparison year's 2019 valuation loss on dividend distribution of associate shares comprises the valuation difference between the consolidated carrying amount and the fair value of the shares EUR -143 million, on the date of the distribution, and the recycling of Nordea-related other comprehensive income items to the profit or loss EUR -11 million.
In November 2020, Sampo sold 161,998,076 Nordea shares. The transaction price was EUR 7.25 per share, resulting in gross proceeds of EUR 1,174 million. After the transaction, Sampo holds 642,924,782 Nordea shares, corresponding to 15.87 per cent of all shares and voting rights in Nordea. In accordance with IAS 28 Investments in Associates and Joint Ventures, a significant influence needs to be clearly demonstrated, if the investor's ownership of the voting power is less than 20%. Sampo’s management has made a thorough assessment of facts and circumstances, including that Sampo is still the biggest single shareholder who has the position of chairman in the Board of Directors of Nordea and additionally two members in the Nomination Committee. Based on the assessment, the Board has concluded that despite the decrease in the ownership, the significant influence continues to exist on 31 December 2020.
On 31 December 2020, Nordea’s book value per share, after consolidating Nordea’s fourth quarter, amounted to EUR 8.90 exceeding its market value of EUR 6.67. Sampo performed an impairment test in accordance with IAS 36 Impairment of Assets where the recoverable amount for Nordea was compared with its carrying amount in the Group. The recoverable amount was defined by using a discounted cash flow model. Based on the value in use test, the recoverable amount was EUR 7.50 per share. As a result, an impairment loss of EUR -899 million was recognised in the income statement, bringing the carrying amount per share to EUR 7.50 at 31 December 2020. The total carrying amount of Nordea in Sampo Group at 31 December 2020 was EUR 4,822 million. Negative developments in assumptions used in impairment testing may lead to further impairment needs.
Interest options, bought and sold - - - 503 - 68
Total derivatives held for trading 15,822 243 184 11,004 79 168
Total financial assets designated as at fair value through p/l 6,306 6,522
Financial assets at fair value through p/l related to unit-linked insurance
Financial assets measured at amortised cost, meeting the SPPI test, by credit risk rating grade: BB+ - BB- B+ - B- Total
17 Determination and hierarchy of fair values A large majority of Sampo Group's financial assets are valued at fair value. The valuation is based on either published price quotations or valuation techniques based on market observable inputs, where available. For a limited amount of assets the value needs to be determined using other techniques. The financial instruments measured at fair value have been classified into three hierarchy levels in the notes, depending on e.g. if the market for the instrument is active, or if the inputs used in the valuation technique are observable.
EURm Level 1 Level 2 Level 3 Total Other financial assets
Transfers from level 1 to level 2 Financial assets related to unit-linked insurance
Transfers are based mainly on the changes in trading volume information provided by an external service provider.
The sensitivity of financial assets and liabilities to changes in exchange rates is assessed on business area level due to different base currencies. In If, 10 percentage point depreciation of all other currencies against SEK would result in an increase recognised in profit/loss of EUR 21 million (12) and in a decrease recognised directly in equity of EUR -18 million (-10). In Topdanmark, 10 percentage depreciation of all other currencies against DKK would result in an increase recognised in profit/loss of EUR 3 million (-5), but would not have an impact on equity. In Mandatum, 10 percentage point depreciation of all other currencies against EUR would result in an increase recognised in profit/loss of EUR 55 million (48) and in a decrease recognised directly in equity of EUR -66 million (-68). In Holding, 10 percentage point depreciation of all other currencies against EUR would have no impact on profit/loss, but a decrease recognised in equity of EUR -31 million (-156). In Hastings, the changes in exchange rates would not have an impact either in p/l or equity.
The sensitivity analysis of the Group's fair values of financial assets and liabilities in different market risk scenarios is presented below. The effects represent the instantaneous effects of a one-off change in the underlying market variable on the fair values on 31 December 2020.
Total financial assets measured at fair value 2,508 -69 40 903 -501 884 3,766 -13
EURm Realised gains/losses Fair value gains and losses Total Total gains or losses included in profit or loss for the financial year -80 61 -19
Total financial assets measured at fair value 2,109 17 -34 846 -430 2,508 -18
In Mandatum, EUR 2 million of deferred tax asset has not been recognised on unused tax losses.
Tax losses for which no deferred tax asset has been recognised -19 0
Tax from previous years -6 -2 23 Components of other comprehensive income
Incurred but not reported losses (IBNR) 2,447 44 2,403 2,602 48 2,554
As the P&C companies, especially If, are exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading.
The lower section shows how large a share of this is presented in the balance sheet. More information on insurance liabilities in the risk management note 40.
At the close of the claims year 23,665 2,718 2,767 2,669 2,650 2,673 2,717 2,756 29,097 30,296 31,861
Provision reported in the balance sheet 2,571 147 159 208 206 228 256 310 395 520 1,377 6,377 of which established vested annuities 1,660 74 79 82 81 74 63 61 77 31 6 2,287
At the close of the claims year 22,277 2,572 2,580 2,622 2,612 2,628 2,660 2,697 2,846 2,957 2,987
Current estimate of total claims costs 944 835 1,000 848 864 828 826 894 901 916 8,855
Provision reported in the balance sheet 49 60 60 63 84 89 126 165 234 471 1,403
Provision reported in the balance sheet 49 59 60 62 79 83 126 158 220 445 1,344
At the close of the claims year 817 116 140 193 233 293 326 368 386 381 3,253
Group liabilities from insurance and investment contracts, total 6,648 1 6,647 7,097 2 7,095
Preferred capital note, 2016 (nominal value 500 MSEK) 30 years 2.42% 50 48
The loan 2011 was issued with fixed interest rates for the first ten years, after which it becomes subject to variable interest rates. At the point of change, there is the possibility of redemption for all the loans. The loan is utilised for solvency purposes and is approved by the supervisory authorities.
The loan of 1,500 MSEK issued in 2016 is issued with variable interest rate terms. After ten years the margin is increased by one percentage point. It includes terms stating the right of redemption after five years and at any interest payment date thereafter.
Preferred capital note, 2020 (nominal value 500 MDKK) 12/2030 3 month Cibor +160 bp 67 -
Subordinated loan, 2020 (nominal value EURm 1,000) 32 years 2.50% 991 -
The subordinated loan of 2019 has a fixed interest rate for the first ten years, the 2020 loan for the first 12 years. After that, the loans become subject to variable interest rate but they also includes terms stating the right of redemption at this point in time or at any interest payment date thereafter. The loans are listed on the London Stock Exchange.
The determination and hierarchy of fair values of financial assets and liabilities measured at acquisition cost is disclosed in note 17. According to this determination the subordinated debt securities and bonds are categorised either on level 1 or 2.
EURm 1 January 2020 Cash flows Exchange differences Other 31 December 2019
Total liabilities from financing activities 4,067 -151 -8 0 3,908 29 Provisions EURm 2020
The anticipated retirement age in connection with life-long pension is 65 years for Sweden and 67 years for Norway. In Sweden, life-long old-age pension following a complete service period is payable at a rate of 10% of the pensionable salary between 0 and 7.5 income base amounts, 65% of salary between 7.5 and 20 income base amounts and 32.5% between 20 and 30 income base amounts. In Norway, life-long old-age pension following a complete service period is payable at a rate of 70% of the pensionable salary up to 12 National Insurance base amounts, together with the estimated statutory old-age pension. Paid-up policies and pension payments from the Swedish plans are normally indexed upwards in an amount corresponding to the change in the consumer price index. However, there is no agreement guaranteeing the value and future supplements in addition to the contractual pension benefit could either rise or fall. If is not responsible for indexation of paid-up policies and/or pension payments from the Norwegian insured plans.
When applying IAS 19, the pension obligation and the pension cost attributed to the fiscal period are calculated annually using the Projected Unit Credit method. The calculation of the defined benefit obligation is based on future expected pension payments and includes yearly updated actuarial assumptions such as salary growth, inflation, mortality and employee turnover. The expected pension payments are then discounted to a present value using a discount rate set with reference to AAA and AA corporate bonds issued in local currency, including mortgage-backed bonds, as at mid December. The discount rates chosen in Sweden and Norway take into account the duration of the company’s pension obligations in each respective country. After a deduction for the plan assets, a net asset or a net liability is recognized in the balance sheet.
Sweden Norway Total Sweden Norway Total Recognised in income statement and other comprehensive income
Fair value of plan assets 217 22 239 202 28 231
Net liability recognised in balance sheet 66 32 98 72 27 99
Sensitivity analysis of effect of reasonably possible changes Sweden Norway Total Sweden Norway Total
Present value of estimated pension liability, including social costs 308 29 337 302 28 330
There are other short-term staff incentive programmes in the Group, the terms of which vary according to country, business area or company. Benefits are recognised in the profit or loss for the year they arise from. An estimated amount of these short-term incentives, social security costs included, for 2020 is EUR 45 million.
The ROU asset is depreciated on straight-line basis over the lease period.
The Group does not apply IFRS 16 to short-term under 12 months leases, or to leases for which the underlying asset is of low-value.
In accordance with the shareholders’ agreement concerning Hastings Group (Consolidated) Ltd, RMI has an option within 18 months from the completion of the acquisition of Hastings to acquire further 10% of shares from Sampo at a price per share equal to the original offer price. Any dividends or other distributions in respect of the shares in question payable before RMI’s possible notice to use the option belong to Sampo. Sampo has an option to acquire the shares RMI holds at the price specified in the agreement, in case the holding of RMI in Hastings Group (Consolidated) Ltd falls below 10%. The price is based either on recent third party transactions made by RMI or derived from a valuation model described in the agreement. Until the potential notice by Sampo to use the option, any dividends or other distributions in respect of the shares in question belong to RMI.
Other long-term benefits consist of the benefits under long-term incentive schemes accounted for the year (see Note 35).
The Group's receivables from Nordea comprise mainly long-term investments in bonds and deposits. In addition, the Group has several on-going derivative contracts related to the Group's risk management of investments and liabilities.
At 31 December 2020, there were 331,000 options (106,000) which could be exercised.
The total charge for the share based payments recognised in the profit and loss during 2020 was EUR 4 million with a share based payment liability of EUR 12 million held at 31 December 2020.
The table excludes dormant companies in the United Kingdom as well as property and housing companies accounted for in the consolidated accounts.
stakeholders and, as a result, the operating and competitive environment is evolving. The Group companies operate mainly in countries, which are characterized by an inherent respect for human rights, high transparency, and low levels of corruption and bribery. There is high compliance with labor rights, health and environmental legislation and freedom of speech and association. These themes are also inherent in the operations of all Sampo
Sampo Group can be divided into four main areas: Responsible business management and practices are fundamental to Sampo Group companies’ operations. Good governance in Sampo Group means effective policies, management practices, and training, which provide assurance that the Group companies and their personnel, suppliers and other business partners comply with laws,
Business Risks Business risk is the risk of losses due to changes in the competitive environment and/or lack of internal operational flexibility. Unexpected abrupt changes or already identified, but internally neglected trends can cause larger than expected fluctuations in profitability when volumes, margins, costs and capital charges change and in the long run they may also endanger the existence of Sampo Group’s business models.
rights, labor rights, environment, anti-money laundering, counter-terrorism financing and anti-corruption and bribery. Further, it comprises comprehensive information security and cybersecurity governance systems, and data protection activities. Additionally, responsible business practices require being attentive to the risks relating to inappropriate customer advice and product sales, lack of clarity on conditions, prices and fees, and errors in claims handling and complaint processes. Sales and marketing practices’ focus is on meeting the demands and needs of the customer and providing the customer with the information necessary for them to make well-informed decisions on their insurance coverage.
Responsible corporate culture includes factors relating to the work environment, diversity, equality, employee well-being, employee engagement, professional development, and talent attraction and retention. Skilled and motivated employees are an essential success factor in
Therefore, Sampo Group companies take environmental, social and governance (“ESG”) issues into account when assessing the security, quality, liquidity, and profitability of investments. Investment opportunities are carefully analyzed before any investments are made and ESG issues are considered along with other factors that might affect the risk-return ratio of individual investments. Depending on the asset class, Sampo Group companies use different
The strategies include, for example, ESG integration, sector-based screening, norms-based screening, and active ownership.
Group’s businesses. Climate-related risks can be categorized into physical risks and transition risks. Physical risks can be further classified into long-term weather changes
Natural catastrophes and extreme weather conditions are risk factors affecting the financial position and results of non-life insurers. The increasing likelihood of extreme weather conditions is included in internal risk models.
Climate-related risks are managed effectively with reinsurance programs and price assessments.
Reputational Risk Managing stakeholder relationships means satisfied customers, professional staff, good co-operation with authorities and the trust and approval of the environment. These contribute to a key success factor of the company, its reputation.
Reputational risk is related to all activities shown in the graph Classification of Risks in Sampo Group. As the roots KAAVIO N.O 3
of reputational risk are varied, the tools to prevent it must be diverse and embedded within the corporate culture.
Some risks, such as counterparty default risks and operational risks presented in the graph Classification of Risks in Sampo Group are indirect repercussions of
Sampo’s normal business activities. They are one-sided risks, which in principle have no related earnings potential. Accordingly, the risk management objective is to mitigate these risks efficiently rather than actively manage them. Mitigation of consequential risks is the responsibility of the business areas and the investment unit. The capital need for these risks is measured by independent risk management functions. It has to be noted that the categorization of risks between earnings and consequential risks varies depending on the industry.
For Sampo Group’s clients, for instance, the events that are subject to insurance policies are consequential risks and for Sampo Group these same risks are earnings risks.
Core Risk Management Activities To create value for all stakeholders in the long run, Sampo
Group level capitalization and liquidity buffers as well as on the Group level management actions.
Lines of Business. The six Lines of Business are segmented in accordance with insurance class segmentation used in
The following adjustments from IFRS Lines of Business to Solvency II Lines of Business are made: • IFRS Line of Business Motor other and Motor third party liability (1,941) include Solvency II Line of Business Motor vehicle liability insurance (530) and Other motor insurance (1,411). • IFRS Line of Business Accident (647) includes Solvency II Line of Businesses Income protection insurance (328), Other Life (48), Medical expense insurance (272) and Assistance (0).
underwriting risk is presented by changes in certain key figures in the table Sensitivity Test of Underwriting Result,
The Underwriting Committee shall give its opinion on and propose actions in respect of various issues related to underwriting risk. The committee shall also consider and propose changes to the Underwriting Policy, which is the principal policy for underwriting, and sets general principles, restrictions and directions for the underwriting activities. This document shall be reviewed and approved at least yearly by the Boards of Directors.
Combined ratio, business area Commercial 85.8% +/- 1 percentage point +/- 12 +/- 12
Combined ratio, business area Industrial 109.0% +/- 1 percentage point +/- 5 +/- 4
Reserve Risk and Its Management and Control The main reserve risks for If are stemming from uncertainty in the claim amounts caused by higher than expected claims inflation, change in discount rates or an increased retirement age with the consequences that both annuities and lump sum payments would increase.
The Boards of Directors of If decides on the guidelines governing the calculation of technical provisions.
The Chief Actuary is responsible for developing and presenting guidelines on how the technical provisions are to be calculated and for assessing whether the level of total provisions is sufficient. The Chief Actuary issues a quarterly report on the adequacy of If’s technical provisions.
Line of Business and major geographical area. Finland’s and Sweden’s share of technical provisions is larger than the share of gross written premiums, which is mainly due to Sweden and Finland having a long duration of Motor other and Motor third party liability (“MTPL”) and Finland also having a long duration of Workers’ compensation.
Reserves are mainly exposed to inflation and discount rates and to some extent to life expectancy. The sensitivity of If’s technical provisions to an increase in inflation, an increase in life expectancy and a decrease in the discount rate is presented in the table Sensitivities of Technical Provisions,
compensation, legislation differs significantly between countries. Some of the technical provisions for these lines include annuities which are sensitive to changes in mortality assumptions and discount rates. The proportion of technical provisions related to Motor other and MTPL as well as Workers’ compensation was 62 per cent.
Credit bonds, funds and loans 8,401 75% 2.6 8,692 78% 2.8
Investment grade bonds and loans 3,431 30% 2.7 3,582 32% 2.8
Market Risks Fixed income investments and listed equity instruments form the major part of the investment portfolio of EUR
The composition of the investment portfolios by asset classes in If at year end 2020 and at year end 2019 and average maturities of fixed income investments are shown in the table Investment Allocation, If, 31 December 2020 and 31 December 2019.
equity instruments are presented by sector, asset class and rating in the following table, which also includes counterparty risk exposures relating to derivative transactions. Counterparty default risks are described in more detail in section Counterparty Default Risks. Due to differences in the reporting treatment of derivatives, the figures in the table are not fully comparable with other tables in Sampo Group’s Financial Statements.
Both investment performance and market risk are actively monitored and controlled by the Investment Control
quarterly. In addition, the allocation limits, issuer and counterparty limits, the sensitivity limits for interest rates and credit spreads as well as the regulatory capital requirements are regularly monitored.
If has over the years gradually decreased its combined ratio level to counteract falling interest rates. Interest rate sensitivity in terms of the average duration of fixed income investments was 1.4 years. The respective duration of insurance liabilities was 6.5 years. The overall interest rate risk is managed by sensitivity limits for instruments sensitive to interest rate changes.
From an economic perspective, in which the cash flows of insurance liabilities are discounted with prevailing interest rates, If is exposed to changes both in inflation and nominal interest rates. For more information see the table Sensitivities of Technical Provisions, If, 31 December 2020 in the section Underwriting Risks.
● Eastern Europe 0 ● North America 82 ● Latin America 40 ● Asia 156
December 2020. The average maturity of fixed income investments was 2.7 years in If. The table shows the financing requirements resulting from expected cash inflows and outflows arising from financial assets and liabilities as well as technical provisions.
Reinsurance Counterparty Risk Reinsurance is used regularly to utilize If’s own funds efficiently and reduce the cost of capital, limit large fluctuations of underwriting results and have access to the reinsurers’ competence base. The Reinsurance Committee is a collaboration forum for reinsurance related issues in general and shall give its opinion on and propose actions in respect of such issues. The Committee shall consider and propose changes to the Reinsurance Policy and the
In the table EUR 155 million (136) of reinsurance recoverables are excluded, which mainly relates to captives and statutory pooled solutions.
The total ceded premium related to treaty and facultative reinsurance amounted to EUR 58.3 million.
In If, the default risk of derivative counterparties is a by-product of managing market risks. The role of long-term interest rate derivatives has been immaterial and counterparty risk mainly stems from short-term FX
Annexes. If settles interest rate swaps in central clearing houses, which mitigates bilateral counterparty risk but also results in a systemic risk exposure related to centralised clearing parties.
The Reinsurance Security Committee in If shall give input and suggestions to decisions in respect of various issues regarding reinsurance default risk and risk exposure, as well as proposed deviations from the Reinsurance Policy.
● Norway 0 ● Sweden 0 ● Finland 0 ● Denmark 1,315 ● Baltic 0 ● United Kingdom 0
Topdanmark Forsikring has a very comprehensive reinsurance program in place contributing to the low level of underwriting risk. The largest retention level of DKK
With certain restrictions, acts of terrorism are covered by the reinsurance contracts. Starting 1 July 2019, the
NBCR (nuclear, biological, chemical, radiological) acts of terrorism are covered by a public organization. This is based on a new Act on NBCR acts of terrorism. Under the new scheme the costs from a NBCR attack in Denmark will initially be borne by the State, but those costs will subsequently be recovered from policyholders.
• Ongoing follow-up on risk developments as well as quarterly forecasts for future risk development
In addition to the analysis described above, Topdanmark continuously improves its administration systems to
Non-Life Insurance Risk Scenarios Topdanmark, 31 December 2020 and 31 December 2019
(2020) Change in current level 2020 2019 Combined ratio, business area Private 89.8% +/- 1 percentage point +/- 5.4 +/-5.4
Net premiums earned (EURm) 1,227 +/- 1 per cent +/- 9.5 +/-9.2
the first year. Long-tail lines relate to personal injury and liability and consist of the lines Workers' compensation,
During such a long period of settlement, the levels of compensation could be significantly affected by changes in legislation, case-law or practice in the compensation of claim incidents adopted by the Danish Labour Market
Labour Market Insurance also has some impact on the levels of compensation for accident and personal injury within motor liability and commercial liability insurance. Supreme court decisions can also influence the provisions for former years especially for Workers’
Life Underwriting Performance and Risks The split of premiums between products during the last two years is presented in the table Sources of
Sources of Gross Premiums Topdanmark Life Insurance, 31 December 2020 and 31 December 2019
The main risks of Topdanmark Livsforsikring can be summarized as follows: • Limited loss-absorbing buffers (bonus potentials)
When deemed necessary, due to market developments, the frequency of calculation is increased and, if necessary, the number and type of scenarios are increased.
All policies have been split into contribution groups according to the guaranteed benefit scheme. For all contribution groups, there are separate loss absorbing buffers and hence in each contribution group, the separate investment policy must be in line with risk taking capacity to ensure the ability to meet the guaranteed benefits.
Extraordinary expenses as a result of a pandemic affecting age groups insured in the company’s group life portfolio are financed by equity.
The following risk reduction measures and methods are used in Topdanmark Livsforsikring: • All with profit contracts are divided according to the granted benefit guarantee and the investment policy is designed to ensure the ability to meet the guarantees
• Market risk is freely adjustable in relation to the individual customer groups’ risk capacity
CLOs (collateralized loan obligations) in order to improve the average investment return.
To reach the aforementioned general goals, the investment policy sets the company's objectives, strategies, organization and reporting practices on investments. The investment strategy is more precisely determined in terms of market risk limits and specific requirements for certain types of positions and sub-portfolios (risk appetite). The investment strategy is determined by the Board and revised at least once a year. Appropriate financial risk mitigation techniques are used.
When selecting the investment assets, a portfolio composition that matches the risk features of the corresponding liabilities is sought. The purpose of the investment policy is also to ensure that the company has effectively implemented the organization, systems and processes necessary to identify, measure, monitor, manage and report on investment risks to which it is exposed.
When market risks are measured and managed, all exposures are included, regardless of whether they arise from active portfolio management of investments or from annuities, which are considered as market risk.
Unlisted equities and hedge funds 52 2% 50 2% 390 7% 349 7%
Credit bonds are composed of a minor share of a well-diversified portfolio, primarily exposed to businesses in
Index-linked bonds comprise bonds – primarily Danish mortgage bonds – for which the coupon and principal are index-linked.
The class CLO (collateralized loan obligation) primarily comprises positions in CLO equity tranches. The underlying assets of CLOs are mostly senior secured loans, while the remainder are primarily investment grade investments. The real estate portfolio comprises mainly owner-occupied real estate.
Interest rate risk is calculated for assets, liabilities and derivative instruments, for which the carrying amount is dependent on the interest rate level. Regarding insurance liabilities Topdanmark is exposed to interest rate risk due to provisions for outstanding claims in non-life insurance and guaranteed benefits in life insurance.
Shifting the market yield curve upwards and downwards or changing its shape leads to changed market values of assets and derivatives and thus to unrealized gains or losses.
VA component was 19 bps at the end of 2019 and 22 bps at the end of 2020.
The holding is covering life insurance provisions and it is diversified over office buildings and residential buildings.
● Denmark 106 ● Norway 3 ● Sweden 3 ● Finland 0 ● Western Europe 106
● Eastern Europe 0 ● North America 226 ● Latin America 0 ● Far East 1
The investment policy stipulates that the portfolio must be well-diversified by the number of counterparties and by the amount of exposure to individual counterparties.
The main source of spread risk is the mortgage bonds. Due to high allocation of these investments in the portfolios, spread risk is the most material source of market risk SCR
Topdanmark’s fixed income investments by rating classes are presented in the table Interest-bearing Assets by
Interest-bearing Assets by Rating Topdanmark, 31 December 2020 and 31 December 2019
The maturity structure of technical provisions and the bond portfolio is presented in the following table.
EURm after tax Risk scenario 2020 2019 Effective interest rate 1 percentage point increase 0.1 -1.3
Currency Annual loss with up to a 2.5% probability -0.1 -0.7
Expected Cash Flows for Provisions and the Bond Portfolio Topdanmark, 31 December 2020 and 31 December 2019
The expected cash flows of the bond portfolio are calculated based on option adjusted durations that are used to measure the duration of the bond portfolio. The option adjustment relates primarily to Danish mortgage bonds and reflects the expected duration capturing the shortening effect of the borrower´s option to have the bond to be redeemed through the mortgage institution at any point in time.
Investments Topdanmark may suffer losses due to their counterparties ’ inability to meet their obligations on bonds, loans and other contracts including derivatives. The majority of
Pricing Risk Advantage’s risk appetite statements require management to maintain rates that are projected to achieve loss ratios within the target loss ratio range. As a response to market conditions significantly driven by COVID-19, strategic segmental rates were adjusted, after review by management, to remain competitive and provide customer- focused benefits to policyholders. The rate changes were regularly reviewed and amended in keeping with an agile approach to pricing and appropriately factoring in ongoing claims inflation risk. The market is expected to remain volatile in line with COVID-19 developments as they arise.
Weekly governance arrangements approve changes to rate plan and review account performance. Rating Analysis
Committee (“RAC”) approves decisions for segment level rate changes and book level rate changes. The goal is to ensure that the business being written will be profitable.
Advantage maintains a control log to identify, report, and take action on errors made by the outsourced service provider.
● Liability 0 ● Accident 0 ● Property 2 ● Marine, aviation, transport 0
Advantage maintained a disciplined approach to pricing despite continued market competition which intensified in H2. New business volumes grew as a result of the ability to make timely price cuts to reflect lower claims frequencies. This disciplined but agile underwriting and pricing approach led to over 200 selective rate adjustments within footprint during 2020. Renewal pricing was a significant focus for management, in line with seeking to eliminate the risk of dual pricing for customers through an overall
Discounted provisions Decrease in discount rate Decrease by 1 percentage point 1.8 approach aimed to deliver fair treatment of Hastings’
The global pandemic inevitably impacted the risk profile for 2020. Lower than planned claims frequencies have resulted in stronger profits and capital solvency with the solvency ratio being towards the top of Advantage’s target range of 140% to 160% throughout the period.
Performance for 2021 is expected to be close to planned expectations.
Hastings’ investment portfolio has been designed to generate a targeted return whilst operating within the conservative risk appetite parameters set by the Board.
The core investment portfolio of debt securities, supplemented by a diversified portfolio of holdings in collective investment schemes, is held by Advantage. The
Cash and cash equivalent balances are held in current accounts or short-term money market instruments. These are generally less than 60 days in duration, with low sensitivity to movements in interest rates compared to longer duration assets.
Advantage made no direct use of derivatives during the period. Derivatives are, however, utilized within
Counterparty Default Risks Counterparty risk is the risk that a counterparty will be unable to pay amounts in full as they fall due. Hastings is exposed to counterparty risk through reinsurance assets, financial assets and cash and cash equivalents.
Reinsurance Counterparty Risk A key component of risk mitigation is reinsurance.
Advantage’s reinsurance program includes both Excess of Loss (“XoL”) and Quota Share (“QS”) protection. Under the 2020 arrangements, the Motor exposure risk to
Advantage is capped at GBP 1 million per loss, net of XoL
To mitigate the inherent counterparty and credit risk posed by the reinsurance program to Advantage’s balance sheet, Advantage has set criteria for the minimum credit quality of the reinsurance counterparties and for concentration limits.
With profit and others, excl. Baltic 3,913 97 -402 -32 101 3 -171 3,510 29% Group pension insurance, segregated portfolio 964 3 -54 -1 21 3 -61 875 7%
Reserve for decreased discount rate (3.5% -> 0.50%) 263 0 0 0 0 0 -31 232 2%
Reserve for decreased discount rate 230 0 0 0 0 0 -12 218 2%
The longevity risk result of group pension for the year 2020 was EUR 11.6 million (8.9) after a EUR 7.8 million release from the longevity reserve.
The insurance risk result of other biometric risks has been profitable overall, although the different risk results vary considerably. In the longer term, disability and morbidity risks are mitigated by the company’s right to raise insurance premiums for existing policies in case there is an unfavourable change in the claims development.
The risk result is actively followed and thoroughly analyzed on an annual basis. Mandatum Life measures the efficiency of risk selection and the adequacy of tariffs by collecting information about the actual claims expenditure for each product line and each type of risk and comparing it to the claims expenditure assumed in insurance premiums of every risk cover.
Technical provisions are analyzed and the possible supplemental needs are assessed regularly. Assumptions related to technical provisions are reviewed annually. The adequacy of the technical provisions is tested quarterly.
Policy and assumptions used in calculating technical provisions are updated based on adequacy tests and risk result analysis.
Policyholder Behavior and Expense Risks From an Asset and Liability Management point of view, surrender risk is not material because in Mandatum Life around 90 per cent of with profit technical provisions consists of pension policies in which surrender is possible only in exceptional cases. Surrender risk is therefore only relevant in individual life and capital redemption policies of which the related technical provisions amount to less than 5 per cent (around EUR 160 million) of the total with profit technical provisions. Furthermore, the supplements to technical provisions are not paid out at surrender which also reduces the surrender risk related to the with profit policies. Due to the limited surrender risk, the future cash flows of Mandatum Life’s insurance liabilities are quite predictable.
Life, 31 December 2020 and 31 December 2019 shows the insurance risk result in Mandatum Life’s insurance policies. The ratio of the actual to expected claims costs was 73 per cent in 2020 (75). The sensitivity of the insurance risk result can also be assessed based on the information in the table. For instance, an increase of mortality by 100 per cent would increase the amount of benefit payments from EUR 15 million to EUR 30 million.
Policy, pricing guidelines and the central principles for the calculation of technical provisions.
materially during the lifetime of the insurance, which increases the expense risk. The behavior of financial markets has also an influence on expense risk since normally the company’s fee income is linked to policy reserves in unit-linked policies. The main challenge is to keep the expenses related to insurance administrative processes and complex IT infrastructure at an effective and competitive level.
Money market securities and cash 512 9% 0.0 819 14% 0.0
Credit bonds, funds and loans 2,997 54% 3.6 2,848 50% 3.8
Change from risk exposures relating to derivative transactions in the table Exposures by Sector, Asset Class and Rating,
Counterparty Default Risks. Due to differences in the reporting treatment of derivatives, the figures in the table may not be fully comparable with other tables in this annual report.
Mandatum Life’s portfolio. A part of the money market securities issued by Nordic banks and cash in Nordic banks form a liquidity buffer within the fixed income investments. At the moment, the total amount of these investments is higher than what is needed for liquidity purposes.
Nordic equity exposure includes almost only direct investments to Finnish equities and they account for almost one third of equity exposure. Two thirds of equity investments are allocated globally consisting of both fund investments and direct investments. The breakdown of
Mandatum Life’s listed equity investments by geographical regions is presented in the following graph.
The amount of private equity and alternative investments has remained at the same level as in 2019. The real estate portfolio is managed by Sampo Group’s own real estate management unit. The real estate portfolio includes both direct investments in properties and indirect investments in real estate funds as well as in shares of real estate companies. The activity in the portfolio has been quite low.
Market Risks of Balance Sheet The Board of Directors of Mandatum Life approves annually the Investment Policy, which covers both the segregated assets and the company’s other assets that carry investment risk. This policy sets principles and limits for investment portfolio activities and they are based on the features of insurance liabilities, risk taking capacity and shareholders’ return requirements.
The long-term target for investments is to provide sufficient return to cover the guaranteed interest rate plus bonuses based on the principle of fairness as well as the shareholder’s return requirement with an acceptable level of risk. In the long run, the most significant risk is that fixed income investments will not generate an adequate return compared to the applied discount rate.
Mandatum Life is negatively affected when rates are decreasing or staying at low levels, because the duration of liabilities is longer than the duration of assets. A growing part of Mandatum Life’s business, i.e. unit-linked and life and health business, is not interest rate sensitive, which mitigates the whole company’s interest rate risk.
However, in Mandatum Life, only a relatively small part of the insurance policies can be surrendered, and it is therefore possible to forecast short-term cash flows related to claims payments with a very high accuracy.
Life, 31 December 2020. The average maturity of fixed income investments was 3.1 years in Mandatum Life. The table shows the financing requirements resulting from expected cash inflows and outflows arising from financial assets and liabilities as well as technical provisions.
Mandatum Life has a relatively low amount of financial liabilities and thus the refinancing risk is relatively small.
Agreements backed by Credit Support Annexes. Mandatum Life settles interest rate swaps in central counterparty clearing houses, which, while further mitigating bilateral counterparty risk, also exposes to the systemic risk related to central counterparty clearing houses.
The amount of intragroup exposures between the Group companies is small and the parent company is the only source of internal liquidity and the main source of capital within the Group. This effectively prevents the contagion risk, and hence potential problems of one company will not affect directly the other Group companies.
in Finland. Also, in Denmark If and Topdanmark have some overlapping areas. However, there are no material underwriting risk concentrations in the normal course of business. Hastings operates solely in the United Kingdom, and hence its underwriting risks are geographically distinct from the Nordics. Consequently, business lines as such are contributing diversification benefits rather than a concentration of risks.
Market Risks at Sampo Group Level For all subsidiaries, their insurance liabilities and the company specific risk appetite are the starting points for their investment activities. The insurance liabilities including loss absorbing buffers as well as the risk appetite of Mandatum Life, If, Hastings and Topdanmark differ, and as a result the structures and risks of the investment portfolios and balance sheets of the four companies differ respectively. Sampo Group’s investment assets presented in the tables and graphs in this section do not include investments in the shares of subsidiaries or the associated companies (e.g. Nordea).
Topdanmark’s interest rate scenario figures show the net of financial assets and technical provisions. The company figures do not sum up to the Sampo Group figures due to eliminations and the exclusion of Topdanmark's technical provisions from the Sampo Group figures.
Sampo Group’s other insurance companies’ portfolios the weight of Danish investments has been immaterial.
Hastings brought along some diversification in this respect. Most corporate issuers, although being based in the Nordic countries, are operating at global markets and hence their performance is not that dependent on the Nordic markets. Exposures by sector, asset class and rating are presented in the following table.
Sampo Group’s market risk sensitivities are presented in the following table.
in the Nordic countries, even though Hastings brought along some diversification into the investments from this perspective. This can be seen in the table Fixed Income
Topdanmark, 31 December 2020. The public sector has had a relatively minor role in Sampo Group’s portfolios and these exposures have been mainly in the Nordic countries. Investments in the public sector do not have a material role in Topdanmark’s portfolio which consists largely of AAA rated mortgage bonds.
Fixed Income Investments in the Public Sector Sampo Group Excluding Topdanmark, 31 December 2020
breakdown of the listed equity exposures of Sampo Group is shown in the graph Breakdown of Listed Equity Investments by Geographical Regions, Sampo Group Excluding
● Denmark 284 ● Norway 180 ● Sweden 690 ● Finland 629 ● Western Europe 594
Largest Exposures by Issuer and Asset Class Sampo Group Excluding Topdanmark, 31 December 2020
investment single-name exposures are presented in the table Ten Largest Direct High Yield and Non-rated Fixed
Income Investments, Sampo Group Excluding Topdanmark, 31 December 2020. Furthermore, the largest direct listed equity exposures are presented in the table Ten
Further, many of the Nordic rated companies have a high yield rating.
Ten largest direct high yield and non-rated fixed income investments Rating Total, EURm
Balance Sheet Concentrations In general Sampo Group is structurally dependent on the performance of the Nordic economies as already described earlier. Sampo Group is also economically exposed to a fall in interest rates. The lower the rates and the flatter the yield curve, the more challenging the environment is for the current business models especially when the duration of insurance liabilities is longer than fixed income asset duration in If and Mandatum Life. In
360 million was 0.8 years. Funding structure of strategic holdings and other holdings can be considered strong.
EURm 31 Dec 2020 31 Dec 2019* Liabilities total 11,515 11,625
• Sampo’s net debt of EUR 2,405 (2,183) million is moderate when compared to Sampo’s equity holdings and financial assets.
In regard to liquidity, the liquid funds of Sampo plc were
EUR 1,170 (1,320) million. Liquidity is mainly affected by received and paid dividends as well as changes in issued debt instruments and changes in investments. Sampo’s dividend payment takes place in the second quarter and it will significantly lower the liquidity position of Sampo.
Sampo’s decisions on the issuance of debt instruments and the composition of the liquidity portfolio.
Capitalization at the Group Level The sub-group level balance of profits, risks and capital is the primary focus of Sampo Group. In addition, capitalization is managed via the Group level buffer. Changes in the Solvency Capital Requirements of the subsidiaries and
The Group’s capital requirement is dependent mainly on the capital requirements of the business areas.
Sampo plc does not have any business activities of its own other than the management of its capital structure and liquidity portfolio. In addition, investments in the Nordic financial service companies increase Sampo plc’s capital requirement.
At the Group level, the capital requirement and own funds are both exposed to foreign currency translation risk. The actual capital and the capital needs of If, Topdanmark and Hastings are converted from their reporting currencies to the euro. When the reporting currencies of If, Topdanmark and Hastings depreciate, the actual amount of the Group’s capital in the euros decreases and the capital requirements of If, Topdanmark and Hastings will be lower in the euro terms. Translation currency risk is monitored internally and its effect on Sampo Group’s solvency on a going concern basis is analyzed regularly.
amount of the Group’s own funds and the Group capital requirement. In addition to the sub-group level factors
Additional information to the statement of cash flows: Interest income received 36 65
Notes to the Assets 5–9 5 Receivables from Group companies ............................... 191 6 Other shares and participations ....................................... 191 7 Other investment receivables ........................................... 191 9 Prepayments and accrued income ................................. 191
Notes to the Off-Balance Sheet Liabilities and Commitments 15–16 16 Future rental commitments ............................................... 194
Notes to the Staff and Management 17–19 18 Board fees and management remuneration................ 194 19 Pension contributions to the CEO, deputy CEO and the members of the Board ........................................ 195
Group’s Notes to the Accounts Sampo plc’s Notes to the Accounts 190FINANCIAL STATEMENTS 2020
Group’s Notes to the Accounts Sampo plc’s Notes to the Accounts 191FINANCIAL STATEMENTS 2020
10 Movements in the parent company's equity Restricted equity Unrestricted equity
Group’s Notes to the Accounts Sampo plc’s Notes to the Accounts 192FINANCIAL STATEMENTS 2020
In accordance with the decision of the Annual General Meeting in 2020, the company has compensated the transfer tax related to the acquisition of the company shares, in total EUR 6,626.27 (EUR 1,436.29 pertaining to the Chairman, EUR 1,156.68 EUR to the Vice Chairman and EUR 4,033.30 to the other Finnish members of the Board).
Group’s Notes to the Accounts Sampo plc’s Notes to the Accounts 194FINANCIAL STATEMENTS 2020
(EURk) Supplementary pension costs Statutory pension costs Total Pension contributions paid during the year
Former Presidents/CEO:s 1) The Group CEO is entitled to a supplementary defined contribution pension in accordance with the present pension contract. The pension expense includes also related taxes and social security cost. 2) Group pension agreement with a retirement age of 60 years and a pension benefit of 66 per cent of the pensionable TyEL-salary (TyEL: Employee's Pension Act). The payment for 2020 is based on a TyEL index adjustment.
Group’s Notes to the Accounts Sampo plc’s Notes to the Accounts 196FINANCIAL STATEMENTS 2020
(business identity code 0142213-3) for the year ended 31 December 2020. The financial statements comprise the consolidated balance sheet, income statement, statement of comprehensive income, statement of changes in equity, statement of cash flows and notes, including a summary of significant accounting policies, as well as the parent company’s balance sheet, income statement, statement of cash flows and notes
• the consolidated financial statements give a true and fair view of the group’s financial position as well as its financial performance and its cash flows in accordance with International Financial Reporting Standards (IFRS)
Our opinion is consistent with the additional report submitted to the Audit Committee.
We conducted our audit in accordance with good auditing practice in Finland. Our responsibilities under good auditing practice are further described in the Auditor’s
We are independent of the parent company and of the group companies in accordance with the ethical requirements that are applicable in Finland and are relevant to our audit, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
The non-audit services that we have provided have been disclosed in note 36 to the consolidated financial statements and note 3 to the parent company financial statements.
Our audit procedures included, among other, evaluation of the governance around the overall Group reserving process and included testing the operating effectiveness of key controls over the completeness, measurement and management of the Group’s calculation of insurance liabilities.
To address the risk of material misstatement in respect of valuation of financial assets our audit procedures included testing the effectiveness of controls in place over recording fair values of assets using unobservable input.
(31.12.2019: mEUR 6,712). The holding in Nordea Bank Abp represents 9% of the Group’s total assets.
Nordea Bank Abp is an associated company of the Group and is accounted for based on equity accounting. At 31.12.2020 the Group’s ownership in Nordea Bank Abp is 15.87%
The book value of the Nordea holding exceeded the market value of the Group’s ownership at the reporting date, due to which an impairment test has been prepared at 31.12.2020. An impairment amounting to mEUR 899 has been recognized based on the impairment test.
The Group acquired the Hastings business during the financial year. The acquisition date was determined to be November 16, 2020. The purchase consideration of mEUR 1,299 was paid in cash.
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
As part of an audit in accordance with good auditing practice, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Meeting on 10.4.2002, and our appointment represents a total period of uninterrupted engagement of 19 years.
Board of Directors is consistent with the information in the financial statements and the report of the Board of Directors has been prepared in accordance with the applicable laws and regulations.
The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited Liability Companies Act. We support that the members of the Board of Directors of the parent company and the Managing Director should be discharged from liability for the financial period audited by us.