Group 4 Group CEO's Review 6 2013 in Figures 8 Strategy 11 Group Structure 12 Organization 13 Businesses 14 If P&C Insurance 15 Nordea 16 Mandatum Life 17 Personnel 18 If P&C Insurance 20 Mandatum Life 21 Corporate Responsibility 21 If P&C Insurance 26 Mandatum Life
The operating environment for the financial sector in 2013 was similar to that of 2012. It was characterized by slow economic growth, low interest rates, a continual and substantial increase in regulation, controversial new taxes, as well as other obstacles. In short, it meant we faced challenging conditions.
Sampo Group’s risk-adjusted investment result was also good: investment return mark-to-market was 5.0 per cent from P&C insurance and 7.1 per cent from life insurance. However, while equity and fixed-income investments performed well, the investments in emerging markets and the foreign exchange result fell short of their respective targets.
The slow growth environment calls for careful focus on cash flows and proper capital allocation. To this end and thanks to our strong results, Sampo’s Board of Directors proposes that a dividend of EUR 1.65 per share be paid for 2013.
Sampo is a dividend stock and increasing shareholder value is our main task. And whilst as I’m sure you can understand we are unable to predict levels of future dividends, we are striving for a steadily increasing distribution.
Strategy Sampo Group aims to create value for its shareholders. Value is created through efficient and highly profitable operating units and by investments in situations offering significant upside potential with manageable downside risk. Shareholders benefit from the value creation through a high and stable dividend yield.
If's long-term priorities to ensure a strong and stable profitability development are based on a sound operating platform, leading cost position, most satisfied customers, leading edge insurance expertise and an investment strategy based on balanced risk. The following four areas constitute the key elements in If's strategic direction: • CusCusttomer vomer valuealue – If will exceed customer expectations through superior insurance solutions, fast and accurate claims management and sympathetic behavior.
• NorNordic Businesdic Business Plas Platftformorm – If will create competitive advantage through economies of scale and know-how transfer through an integrated Nordic and Baltic platform.
• InInvvesestment Stment Strtraattegy with Balancegy with Balanced Risked Risk – If has adopted a low risk strategy in investments by maintaining a balance between insurance commitments and investment assets in terms of currency and duration. Surplus capital is invested to enhance total returns.
Mandatum Life is the leading provider of cover against life and health risks and a well-respected manager of customer assets in Finland and the Baltic countries. In new business, Mandatum Life’s core product areas consist of unit-linked savings contracts and group pensions as well as risk insurance. As a result of the existing balance sheet, unit-linked individual pension policies and the with-profit portfolio in general play a significant role in the company, even though they are not being sold actively.
Mandatum Life began offering its own wealth management services in 2008. The services offered by Mandatum Life’s Wealth Management are mainly intended for private individuals with a high net worth. Institutions are also an important customer group, and the weight given to institutional wealth management is expected to grow in future.
In Mandatum Life’s services for private customers, the main service channel is Danske Bank’s network. Cooperation with Danske Bank has been successful. Mandatum Life’s offering has expanded Danske Bank’s services in Finland and in the Baltic countries to include the life insurance needs of customers.
Sampo plc, the listed parent company of Sampo Group, is a good dividend payer. Sampo aims to pay at least 50 per cent of Group’s net profit as dividend. Share buy-backs can be used to complement the dividend. The Board proposes to the AGM a dividend of EUR 1.65 per share for the year 2013. The proposed dividend corresponds to a payout ratio of 64 per cent.
Sampo plc, the parent company, is listed in the Nasdaq OMX Helsinki since January 1988. It has no business activities of its own but administers the subsidiaries and is responsible for certain centralized functions in Sampo Group.
Nordea, the largest bank in the Nordic region, has around 11 million customers and is one of the largest universal banks in Europe in terms of total market capitalization. The Nordea share is listed in the NASDAQ OMX Nordic Exchanges in Stockholm, Helsinki and Copenhagen. In Sampo Group’s reporting Nordea is included in the segment Holding.
Mandatum Life, with operations in Finland and the Baltic countries, is responsible for Sampo Group's life insurance operations and, in addition, offers wealth management services under an insurance wrapper. In Finland, the company has 250,000 private customers and 25,000 corporate customers.
 2013 was again a good year for If. The company has now exceeded its long-term profitability targets 37 times during the last 38 quarters. The only exception was the harsh winter of 2010, during which snow, ice and cold resulted in far more insurance claims than in a normal year. If’s combined ratio for 2013 was 88.1 per cent, which is the best ever for the company. The technical result increased to EUR 601 million and pre-tax profits to EUR 929 million. The premium growth was a strong 2.9 per cent.
One of If’s primary goals is to deliver the best customer experience for everyone, despite the customer service channel chosen. This is particularly the case, when a customer has suffered a loss. Every claim case is followed up and the customer has the opportunity to rate and comment on the service. Surveys show that those customers, who have had an insurance claim, are even more pleased with If than those who have never had a claim.
During the year, customer reviews of If’s claims handling process have improved further from an already high level. Nine out of ten private customers give If the highest or the second highest rating.
Towards the end of 2012, If acquired Tryg's Finnish business, with a premium volume of approximately EUR 80 million and a market share of about two per cent. The business has now been successfully integrated into the operations of If. In 2013, If entered into a partnership agreement with Nordea in Finland, Sweden and the Baltic countries, where Nordea now sells If products at its branches and via the Internet.
2013 was another year of low growth and interest rates declined to record-low levels. In this environment, Nordea delivered a stable income level and saw a continued inflow of relationship customers. Costs have been kept flat now for 13th consecutive quarters, net loan losses decreased and the operating profit increased, thus giving a continued strong and stable capital generation. The core tier 1 capital ratio increased to 14.9 per cent, up by 1.8 percentage points, and the dividend proposal increased to
With loan demand foreseen to be lower in the coming years, customer activity lower and interest rates lower than previously expected, Nordea will increase its focus on cost efficiency and will accelerate and expand its cost efficiency program. This will enable Nordea to adjust its capacity to the lower activity level and to maintain its position as a strong bank. It will strengthen the foundation which is fundamental for meeting customer needs and for the relationship strategy.
Nordea is less vulnerable to market turbulence than other banks due to its well-diversified business model. Nordea strives towards safeguarding its high credit rating, which further enables strong liquidity and funding position. This is vital in the process where you want to offer the right products and services at the right price to each customer.
The regulatory requirements on capital, liquidity and funding, following the global financial and sovereign debt crises, imply a cost and new demands for all banks. These will be reflected in business models and in other changes in the global banking market for years to come.
For the third year in a row, British financial magazine World Finance named Nordea the “Best banking Group in the Nordics”. Prospera survey showed that large companies in the Nordics rank Nordea the best bank in the Nordics, which was confirmed by the Euromoney awards “Best Bank” and “Best Investment Bank” in the Nordics and Baltics.
Nordea’s AA rating was confirmed by Fitch, Moody’s and Standard & Poor’s, providing further proof of Nordea’s strong financial position and solid earnings. Few banks in Europe have as high a rating as Nordea, which enables Nordea to have strong access to funding at competitive prices. AA rating level reflects that Nordea’s repayment ability is perceived to be very good.
Mandatum Life’s investment returns, boosted in particular by the excellent yield on equity investments, rose to a good level. Low-risk, long-term interest rates remained low, which means that, as in previous years, maturing fixed-income investments present a considerable re-investment risk. In response to the low interest rate levels, the company continued to supplement the reserve for decreased discount rates, and has consequently lowered the return requirement on technical provisions for 2014 and 2015.
Premium income continued to grow in the company’s core businesses, and the company’s unit-linked premiums reached a record-high level. The growth can be attributed to the increase in the premium income of Danske Bank’s and the company’s own networks. Despite the positive trend, the company lost market shares, since the premium income in the sector grew substantially.
A new operating model for corporate sales was cascaded within the Finnish organization in the course of 2013. The goal of the new sales and service model is to improve sales efficiency and enhance the customer experience. Due to the launch of the new operating model, particular emphasis was placed on developing sales competence. In addition, efforts focusing on supervisory work and well-being at work were continued.
• PPerferformancormance culture culture:e: Development of the performance management process continued. An employeeship model clarifying the individual’s responsibility for his/her performance through ongoing competence development was launched.
• Right person in the right placRight person in the right place:e: The If employer brand has been strengthened by carrying out specific initiatives throughout the year. One such initiative was LinkedIn, where the If career page has seen a 200 per cent increase in followers since its launch in the autumn of 2012. Targeted recruiting actions toward analysts and IT professionals has led to greater external interest in vacancies in these areas.
Personnel turnover increased slightly from 8.7 per cent in 2012 to 9.3 per cent in 2013. The increase is
Employee satisfaction remains high. 9 out of 10 If employees gave a positive response when asked whether they enjoy working at If.
Sickness Absences If P&C, 2012–2013 31 Dec31 December 2013ember 2013 31 Dec31 December 2012ember 2012
Personnel Turnover If P&C, 2012–2013 31 Dec31 December 2013ember 2013 31 Dec31 December 2012ember 2012
A new operating model for corporate sales and service was initiated in 2013. The goal is to enhance the customer experience, improve management of sales per unit time and set clear, targeted objectives for sales operations. Face-to-face meetings will be conducted for larger customer accounts and for accounts with significant customer potential. Smaller customer accounts will mainly be managed electronically and over the phone. Particular emphasis has been placed on strengthening sales skills. By the end of 2013, nearly 90 per cent of sales personnel who previously only specialized in life insurance had completed the Investment Advisor Exam (APV).
An efficiency improvement program was launched in 2013. Employee participation was high and the company successfully met its targets. In addition to fixed cost savings, Mandatum Life also achieved savings in process development by centralizing operations and introducing more efficient operating methods.
Corporate Responsibility Corporate responsibility is an inherent component of insurance activities and it is high on the agenda both in If P&C, the largest P&C insurer in the Nordic and Baltic countries, and Mandatum Life, the leading life insurer in Finland and the Baltic countries. It is also demonstrated by the fact that Sampo Group companies are significant taxpayers in their main markets.
Responsible business conduct requires ensuring the profitability and development of the company’s operations. As one of the largest corporate taxpayers in Finland, Mandatum Life contributes directly to the well-being of Finnish society through the taxes paid on its business profits.
If endeavors to take its social responsibility beyond its business operations. Its principal objective is to constantly act in a manner that satisfies or exceeds the ethical, legal and commercial requirements placed upon the business.
EnEnvirvironmental impact of claims handling:onmental impact of claims handling: In 2013, If handled around 800,000 claims for damaged cars and properties. The correct handling of damaged materials is a key environmental issue. If’s goal is to reuse undamaged parts and increase recycling. As a step towards achieving this, If has implemented stringent environmental standards for its suppliers.
Online filing of claims is becoming more common and represents a more environmentally responsible choice than traditional filing methods. More than 60 per cent of all private insurance claims to If in Finland are now filed over the Internet.
Share of Online Claim Reports from Business Area Private on a Nordic Level If P&C, 2010–2013
TTrraavvel and meetings:el and meetings: If has reduced the number of business flights taken by its employees by one third since 2007. Many of its meetings are now conducted online or as video conferences instead of face-to-face.
Yearly Development of Flight Travel and Video Meetings If P&C, 2007–2013
If is developing products and processes to help customers to act in a more environmentally-friendly manner. By giving customers advice on how to prevent accidents and damage, If is helping them to save money and take action to protect the environment.
If provides its more than 6,000 employees with environmental training courses, gives them guidelines to help them make sound environmental decisions and conducts internal environmental campaigns aimed at developing the employees as environmental ambassadors.
◦ Energy declarations and action plans are in place at If’s 28 largest offices.
◦ If launches an environmental insurance product in Finland and Sweden, based on an EU directive.
◦ If’s office in Espoo, Finland, is certified as a WWF Green Office.
◦ If’s office in Gothenburg, Sweden, is certified as a Green Building. Green Building is an EU initiative.
◦ If in Denmark launches an emissions-based car insurance. The premium is determined by the level of CO? emissions.
◦ Green Tenant Award first prize is awarded to If’s office in Gothenburg, Sweden.
◦ If joins UN’s Clean Development Mechanism, compensation CO? emission arising from If’s operations through a project in Gayatri Agro India.
◦ If launches Europe’s first eCustomer center in Lysaker in Norway.
◦ If launches an insurance product for liabilities based on the Norwegian Nature Conservation Act.
◦ A green procurement program is implemented. If in Sweden and Norway become members of Buy Ecolabelled Network.
◦ If in Finland extends the coverage for natural phenomena in home and real estate insurances.
◦ A list of 100 activities designed to lead to a greener If is established and implementation starts.
◦ The Environmental steering group is established. ◦ If’s environmental strategy and policy are developed.
If must take substantial measures to improve the environment on a daily basis. We always endeavor to find the best possible environmental solution – for our company, our customers, our suppliers and our partners.
• Local Environmental Groups formulate local action plans and arrange activities for increasing awareness of environmental issues. These groups are present at all larger offices.
Mandatum Life’s corporate responsibility is based on the cornerstones of its operations: increasing and securing the financial welfare of its customers and the company’s business success.
Responsible business conduct requires ensuring the profitability and development of the company’s operations. As one of the largest corporate taxpayers in Finland, Mandatum Life contributes directly to the well-being of Finnish society through the taxes paid on its business profits. To secure its business success, Mandatum Life has in place, among other things, an active HR policy. The company believes that greater employee work satisfaction leads to improved customer satisfaction and thus more profitable business.
Mandatum Life provides security to its self-employed customers and their families, and safeguards the future of the company in the event of the sudden illness, disability or death of the entrepreneur. While statutory cover provides a basic level of security, supplementary insurance offers entrepreneurs better possibilities to focus on managing their company, to cope better in the face of life and health risks, and to secure their income level during retirement.
Mandatum Life helps companies in developing HR strategies and processes. Providing the right rewards is one way for companies to offer their employees an effective financial incentive that enhances their motivation and can also be used to supplement pension cover. Additionally, a responsible customer company can take care of its employees and indirectly also their families by offering supplementary cover against, for example, disability and death.
The indemnities paid by Mandatum Life help companies, and people and their families to cope better in difficult situations. In 2013, Mandatum Life paid out a total of approximately EUR 320 million in pensions to 61,000 pensioners, as well as other indemnities totaling EUR 415 million to 38,000 insured.
Nordea Bank AB (publ), Chairman of the Board; UPM-Kymmene Corporation, Chairman of the Board; Finnish Business and Policy Forum EVA, Board Member; The Research Institute of the Finnish Economy ETLA, Board Member; Hanken School of Economics, Chairman of the Board; The Mannerheim Foundation, Board Member
Wärtsilä Corporation, Vice Chairman of the Board; Stora Enso Oyj, Board Member; Securities Market Association, Chairman of the Association's Board; The Finnish Pension Alliance TELA, Vice Chairman of the Board (2011–2013); Federation of Finnish Financial Services, Board Member (2007–2013)
• Member of the Board of Directors of Sampo plc since 7 April 2004. • Vuoria holds 35,804 Sampo plc shares directly or through a controlled company.
Sampo plc, uses the highest decision making power in Sampo Group between the AGMs. Sampo's Board of Directors is responsible for the management of the company in compliance with the law, the regulations of the authorities, Sampo's Articles of Association and the decisions of Shareholders Meetings.
• Member of the Board of Directors of Sampo plc since 18 April 2013. • Fagerholm holds 679 Sampo plc shares directly or through a controlled company.
NASDAQ OMX, Sweden, Chairman of the Swedish Listing Committee; Swedish Orphan Biovitrum AB (Sobi), Board Member and Member of the Audit Committee; Swedavia AB, Board Member; 3 Scandinavia, Advisor and Executive Board Member; AP 7, Vice Chairman of the Board; Madrague Capital Partners AB, Board Member; Alhanko & Johnson AB (BASE 23), Board Member; BSkyB (British Sky Broadcasting Group plc), Board Member and Member of the Audit Committee
The Finnish Fair Association, Member of the Supervisory Board; Confederation of Finnish Industries EK, Member of the Representative Assembly; Service Sector Employers PALTA, Board Member; Finnish Foundation for Technology Promotion, Board Member
Elisa Corporation, Board Member; Sigrid Juselius Foundation, Deputy Board Member and Member of the Finance Committee; Nordea Funds (Nordea Alternative Investment, Nordea Funds of Funds, Nordea I Sicav), Luxembourg, Board Member; Föreningen Konstsamfundet, Member of the Investment Committee; The Finnish Foundation for Share Promotion (Pörssisäätiö), Chairman of the Board; Sibelius Academy Foundation, Board Member
JukkJukka Pa Pekkekkarinen, born 1947arinen, born 1947 Member of the Board of Directors of Sampo plc from 5 April 2006 to 18 April 2013.
ChrisChristtoffoffer Ter Taxaxell, born 1948ell, born 1948 Member of the Board of Directors of Sampo plc from 1 January 1998 to 18 April 2013.
When elected, all Board members were independent of company’s major shareholders and following members were also independent of the company: Anne Brunila, Jannica FAnne Brunila, Jannica Fagerholm, Aagerholm, Adine Grdine Graatte Axe Axén,én, VVeli-Maeli-Matti Matti Mattila, Eirttila, Eira Pa Palin-Lalin-Lehtinen, Pehtinen, Per Arthurer Arthur SørlieSørlie and Björn WBjörn Wahlrahlroosoos.
Information as of 31 December 2013, unless stated otherwise. The CVs of members of the Board of Directors can be viewed at www.sampo.com/board.
According to Sampo's Articles of Association, the company's Board of Directors comprises no fewer than three and no more than ten members elected by shareholders at the Annual General Meeting ("AGM").
The Board has an Audit Committee and a Nomination and Compensation Committee, whose members it appoints from its midst in accordance with the charters of the respective committees.
The Committee also oversees the actions of the auditor under the laws of Finland, monitors the auditor’s invoicing for audit and non-audit services as deemed appropriate. Furthermore, the Audit Committee is responsible for evaluating the auditor’s and auditing firm's independence and particularly their provision of related services to Sampo Group, and for preparing proposals to the Annual General Meeting concerning the auditor’s election and his fee.
The Committee also evaluates the compliance with laws and regulations in Sampo Group, monitors significant litigations of Group companies, and executes any other duties that may be bestowed upon it by the Board.
If P&C Insurance Holding Ltd, Sweden, Board Member; Mandatum Life Insurance Company Limited, Vice Chairman of the Board
Group Executive Committee The Board of Directors has appointed the Sampo Group Executive
Committee and a Group MD Committee to the Group Executive Committee, which supports the Group CEO in preparing matters to be handled by the Group Executive Committee.
The following persons served on the Group Executive Committee in 2013: Sampo Group's Annual Report 2013 Governance
• Member of Sampo Group Executive Committee since 2001. • Lapveteläinen holds 239,132 Sampo plc shares directly or through controlled companies or persons closely associated with him.
• Member of Sampo Group Executive Committee since 2005. • Martinsen holds 25,668 Sampo plc shares directly or through controlled companies or persons closely associated with him.
• Member of Sampo Group Executive Committee since 2001. • Niemisvirta holds 52,248 Sampo plc shares directly or through controlled companies or persons closely associated with him.
Urzus Group AS, Chairman of the Board; FNO – Finansnæringens hovedorganisasjon, Member of BRS – Line of Business P&C Board
• Member of Sampo Group Executive Committee since 2005. • Wennerklint holds 26,994 Sampo plc shares directly or through controlled companies or persons closely associated with him.
Board members employed by the company will not receive separate compensation for Board work during the validity of the employment or service relationship.
The Board of Directors decides on the terms of employment and remuneration of the Group CEO and other executives on the Sampo Group Executive Committee, on the basis of a proposal by the
In addition to receiving monthly salaries, executives who are members of the Group Executive Committee are participants in the Group's short-term incentive programs, which are decided upon separately each year. Short-term incentives are determined on the basis of the Group result, business area result and individual performance. The maximum amount that can be paid for 2013 to members of the Executive Committee is an amount corresponding to nine months' fixed salary.
Insider Administration Given the nature of Sampo's business areas, especially bearing in mind their extensive investment activities, Sampo's Board of Directors has approved a separate Group Guideline for Insiders. These comply, as required by the Corporate Governance Code, with NASDAQ OMX Helsinki Ltd's Guidelines for Insiders and the Standards of the Financial Supervisory Authority.
52 Life Insurance 54 Holding 54 Governance 55 Changes in Group Structure 55 Annual General Meeting 55 Group CEO and President 55 Corporate Responsibility 56 Personnel 56 Remuneration 57 Risk Management 58 Shares, Share Capital and Shareholders 58 Shares and Share Capital 60 Authorizations Granted to the Board 60 Shareholders 63 Financial Standing 63 Internal Dividends 64 Ratings 64 Group Solvency
Sampo Group Sampo Group reported a very good result for 2013. Combined ratio in P&C insurance was better than ever before, Nordea announced increased ambitions on efficiency improvement and life insurance reported strong result. Sampo Group’s profit before taxes for 2013 rose to EUR 1,668 million (1,622). Total comprehensive income for the period, taking changes in the market value of assets into account, amounted to EUR 1,425 million (1,887).
Sampo Group’s total investment assets on 31 December 2013 amounted to EUR 17.9 billion (18.2), of which 80 per cent was invested in fixed income instruments (79), 15 per cent in equities (16) and 5 per cent in other assets (5).
On 1 January 2013 the amendment to IAS 19 Employee Benefits mandated all actuarial gains and losses be recognized in other comprehensive income, thus the so-called corridor approach was eliminated and in the future the benefit cost will be determined based on the net funding. This change had an impact on the employee benefits recognized in If P&C subgroup. The net accumulated unrecognized losses EUR 126 million related to the corridor method at 31 December 2011 reduced the opening equity for the comparison year 2012. The corresponding amount at 31 December 2012 was EUR 93 million. The subsequent changes from 2013 on (including comparables for 2012) are recognized in other comprehensive income.
Sweden, Norway, Denmark and the Baltic countries. If P&C’s operations are divided into four business areas: Private, Commercial, Industrial and Baltic. The Danish insurance company Topdanmark is If
P&C insurance segment’s profit before taxes for 2013 rose to EUR 929 million (864) because of the excellent insurance technical profitability.
Combined ratio for the full year 2013 was the best ever in If P&C’s history and amounted to 88.1 per cent (88.9). EUR 79 million (133) was released from technical reserves relating to prior year claims.
Combined ratios improved in all business areas except Baltics during 2013. Business area Baltic continued to have very good profitability and combined ratio in business area Industrial improved significantly in 2013 due to lower large claims costs compared to 2012. Combined ratios decreased in all the markets with a clear improvement in Denmark, despite the high storm related claims in the fourth quarter.
Large claims development in 2013 was better than in 2012 and in total large claims ended up EUR 14 million (51) higher than normalized for the full year 2013, an improvement by EUR 37 million.
Cost ratio for 2013 improved by 0.2 percentage points and amounted to 22.8 per cent (23.0). Expense ratio decreased to 16.8 (16.9). In Finland the acquisition of Tryg’s Finnish business increased nominal costs as the number of employees increased.
Investment Allocation P&C Insurance, 31 December 2013, total EUR 11.7 billion
At the end of December 2013 the total investment assets of If P&C amounted to EUR 11.7 billion (11.7).
Net income from investments increased to EUR 368 million (359). Investment return mark-to-market for 2013 was 5.0 per cent (6.1).
If P&C’s solvency ratio as at 31 December 2013 (solvency capital in relation to net written premiums) amounted to 81 per cent (75). Solvency capital increased from the previous year to EUR 3,601 million (3,485), although a dividend of SEK 4.3 billion was paid to Sampo plc in the fourth quarter. Reserve ratios were 160 per cent (164) of net written premiums and 227 per cent (222) of claims paid.
If P&C and Nordea signed in November 2012 a partnership agreement. Nordea sells If P&C’s insurance products to its clients in Sweden, Finland, Estonia, Latvia and Lithuania. The first months of co-operation have been encouraging, particularly in Sweden.
If P&C holds 25.2 per cent of the total number of shares in Topdanmark and 28.0 per cent of all shares excluding the shares held by the company itself. Topdanmark, which is listed in the Copenhagen Stock Exchange, is a P&C insurance company with a small exposure to life insurance in Denmark. In 2012 Topdanmark’s gross written premiums amounted to approx. EUR 1.6 billion. The company has a market share of 17 per cent in P&C insurance and 3 per cent in life insurance in Denmark.
In Sampo Group’s 2013 accounts the contribution of Topdanmark’s net profit after an amortization of EUR 8 million amounted to EUR 52 million (50). If P&C’s solvency capital on 31 December 2013 includes the proportion of Topdanmark’s solvency capital corresponding to If P&C’s holding.
On 31 December 2013 If P&C held 31,476,920 Topdanmark shares. The average acquisition price is DKK 78 and the book value in Sampo Group’s balance sheet on 31 December 2013 was EUR 363 million. The closing price at the end of trading year 2013 in the Copenhagen Stock Exchange was DKK 142.80 (approx. EUR 19) per share.
On 31 December 2013 Sampo plc held 860,440,497 Nordea shares corresponding to a holding of 21.2 per cent. The average price paid per share amounted to EUR 6.46 and the book value in the Group accounts was EUR 8.03 per share. The closing price as at 30 December 2013 was EUR 9.78.
Nordea’s Board of Directors proposes to the AGM 2014 a dividend of EUR 0.43 per share (0.34). The ambition is to increase the dividend payout ratio in 2014 and 2015, while maintaining a strong capital base. If the AGM approves the Board’s dividend proposal, Sampo plc will receive a dividend of EUR 370 million from Nordea in April 2014.
Net interest income decreased 1 per cent compared to last year. Lending volumes were unchanged excluding reversed repurchase agreements in local currencies. Corporate and household lending margins were higher, while deposit margins overall were down from 2012.
Net fee and commission income increased 7 per cent and the net result from items at fair value decreased by 13 per cent compared to last year.
Net profit for the continuing operations increased 1 per cent to EUR 3,107 million. Net profit for the total operations was largely unchanged at EUR 3,116 million. Risk-adjusted profit increased 1 per cent from last year.
The core tier 1 ratio, excluding transition rules, has improved by 1.8 percentage point to 14.9 per cent ratio. Excluding the increased dividend payout ratio, the strengthening of the core tier 1 capital ratio would have been 0.8 percentage points. The tier 1 capital ratio excluding transition rules increased 0.4 percentage point to 15.7 per cent. The total capital ratio excluding transition rules increased 0.6 percentage point to 18.1 per cent. The increase in core tier 1 capital ratio has been achieved by RWA efficiency initiatives and strong profit generation during the quarter.
For more information on Nordea Bank AB and its results for 2013, see www.nordea.com.
By all key indicators, 2013 was a successful year for life insurance operations. Unit-linked premium income was at a record-high level and investment returns were good. Positive development was also achieved in operating expenses, and unit-linked technical provisions exceeded the technical provisions related to with profit products.
Investment Allocation Life Insurance, 31 December 2013, total EUR 5.5 billion
Mark-to-market return on investments in 2013 was 7.1 per cent (9.4). At the end of December 2013 duration of fixed income assets was 1.8 years (1.8) and average maturity 2.2 years (2.1). Fixed income running yield was 3.7 per cent (4.8).
Mandatum Life Group’s solvency margin clearly exceeded Solvency I requirements and the solvency capital amounted to EUR 1,403 million (1,391) as at 31 December 2013. The solvency ratio was 27.6 per cent (27.7). Total technical reserves of Mandatum Life Group increased to EUR 8.5 billion (7.9). The unitlinked reserves reached EUR 4.6 billion (3.8) at the end of 2013, which corresponds to 54 per cent (48) of total technical reserves. With profit reserves decreased further during 2013 and amounted to EUR 3.9 billion (4.1), of which the reserves to lower the discount rate for with profit liabilities amount to EUR 146 million.
Mandatum Life Group’s premium income on own account increased 10 per cent to EUR 1,063 million (977). Increase in the sales through the Danske Bank distribution channel and own channels explained the positive development. Premiums in the main focus area of unit-linked insurance increased to a new record of EUR 909 million (810). Premium income from the Baltic countries was EUR 32 million (33).
Sampo plc owns and controls its subsidiaries engaged in P&C and life insurance. In addition Sampo plc held on 31 December 2013 approximately 21.2 per cent of the share capital of Nordea, the largest bank in the Nordic countries. Nordea is an associated company to Sampo plc.
Sampo plc’s holding in Nordea Bank was booked in the consolidated balance sheet at EUR 6.9 billion. The market value of the holding was EUR 8.4 billion at 31 December 2013. In addition the assets on Sampo plc’s balance sheet included holdings in subsidiaries for EUR 2.4 billion (2.4).
Governance Sampo Group complies in full with the Finnish Corporate Governance Code issued by the Securities Market Association, effective from 1 October 2010.
Markets Act (746/2012), chapter 7, section 7. The Corporate Governance Statement will be published in connection to the Annual Report in March 2014. The statement will be available at www.sampo.com/cg. The Governance section of the Annual Report 2013 also contains a more detailed description of the Group’s governance system.
The Annual General Meeting of Sampo plc, held on 18 April 2013, decided to distribute a dividend of EUR 1.35 per share for 2012. The record date for dividend payment was 23 April 2013 and the dividend was paid on 30 April 2013. The Annual General Meeting adopted the financial accounts for 2012 and discharged the Board of Directors and the Group CEO and President from liability for the financial year.
The Annual General Meeting elected eight members to the Board decreasing the number of the members by one. The following members were re-elected to the Board of Directors: Anne Brunila, Adine Grate Axén, Veli-Matti Mattila, Eira Palin-Lehtinen, Per Sørlie, Matti Vuoria and Björn Wahlroos. Of the old members Jukka Pekkarinen and Christoffer Taxell were not available for re-election. Jannica Fagerholm was elected as a new Board member.
Kari Stadigh will continue as Group CEO and President at the request of Sampo's Board of Directors from January 2016 until further notice. According to his earlier agreement he was entitled to retire in December 2015 when he turns 60.
If P&C endeavors to take its social responsibility beyond its business operations. Its principal objective is to constantly act in a manner that satisfies or exceeds the ethical, legal and commercial
requirements placed upon the business. One example of this is the environment.
The number of full-time equivalent staff decreased slightly during the year as the number of staff was at 6,800 employees as at 31 December 2013 compared to 6,820 employees at the end of 2012. In P&C insurance, the number of staff remained broadly unchanged. The number of P&C insurance staff increased in Finland due to integration of Tryg’s Finnish P&C insurance operations but remained stable in Sweden and decreased in other countries due to some targeted efficiency actions. In life insurance, the number of staff reduced in Finland and in Baltic countries due to efficiency improvement actions.
Remuneration in Sampo Group is based on the Remuneration Principles which Sampo plc’s Board approved on 4 November 2013. The principles are available at www.sampo.com/remuneration.
The starting point of any compensation mechanism shall be to encourage and stimulate employees at all levels to do their best and surpass their targets. Remuneration packages shall be designed to reward employees on all levels, compensating them fairly for prudent and successful performance. At the same time, however, in order to safeguard the interest of other stakeholders, compensation mechanisms shall neither entice nor encourage employees to excessive or unwanted risk taking.
Additionally, long-term incentive programs shall always, above a certain level or for certain groups of participants, include terms requiring a defined part of the payout to be used to buy Sampo shares, which shall be held for a defined period of time.
(d) Other Benefits Sampo Group’s benefit packages shall reflect the conditions in relevant labor markets.
The payment of a certain portion of the variable compensation payable to senior executive management and to certain key persons shall be deferred for a defined period of time as required in the regulatory framework applicable to each Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board shall decide whether the deferred compensation can be paid out or not. For the year 2013, part of short-term incentives has been deferred. Payout from agreements or programs decided prior to the publishing of FSA deferral recommendations has not been deferred.
Sampo Group companies operate in business areas where profit generation based on risk taking and active management of risks is a key component of earnings logic. The most important objective of risk management in Sampo Group is to ensure the adequacy of the available capital in relation to the risks arising from the business activities and operating environment, as well as to ensure that expected returns are in balance with risks taken. Core competencies when managing the balance between
In Sampo Group procedures related to above core competences are continuously developed in all parts of the organization.
During 2013, Sampo Group’s insurance risk profile remained relatively stable. In Mandatum Life longevity risk is still the most critical biometric risk and most of it arises from the with-profit group pension portfolio. In If P&C the most material insurance risk is reserve risk, which to a large extent is driven by long-tailed businesses such as workers’ compensation and motor third party liability.
A more detailed description of Sampo Group’s risk management activities, governance, risks and capitalisation is available in the Risk Management section of the 2013 Annual Report.
Meanwhile, B shares must number at least zero and no more than 4,800,000. As at 31 December 2013 Sampo plc's share capital amounted to EUR 98 million (98).
Sampo A shares have been quoted on the main list of the NASDAQ OMX Helsinki since 1988 and all of the B shares are held by Kaleva Mutual Insurance Company. B shares can be converted into A shares at the request of the holder. At the end of the financial year, Sampo plc didn’t hold any of its own A shares. Neither did the other Group companies hold any shares in the parent company.
The Annual General Meeting of 2013 authorized the Board to acquire in one or several lots a maximum of 50,000,000 Sampo A shares. Shares can be repurchased in other proportion than the shareholders’ proportional shareholdings (private repurchase). The share price will be no higher than the highest price paid for Sampo shares in public trading at the time of purchase. The authorization is valid until the close of the next Annual General Meeting, nevertheless not more than 18 months after AGM’s decision.
Shareholders by the Number of Shares Owned Sampo plc, 31 December 2013
Nominee registered total 311,683,693 55.66 55.18 *) 4,000,000 A shares and 1,200,000 B shares
The table below presents the Board’s and Group Executive Committee’s holdings of Sampo A shares. At the end of 2013, the members of Sampo plc’s Board of Directors and their close family members owned either directly or indirectly 11,920,709 (11,933,741) Sampo A shares. Their combined holdings constituted 2.1 per cent (2.1) of the share capital and related votes.
The members of the Group Executive Committee and their close family members owned either directly or indirectly 733,626 (696,511) Sampo A shares representing 0.1 per cent (0.1) of the share capital and related votes.
Shares Owned by the Board of Directors and by the Group Executive Committee Sampo plc, 31 December 2013 and 31 December 2012
Board of Directors' ownership of shares, % 2.1 % 2.1 %
Board of Directors' ownership of votes, % 2.1 % 2.1 %
Group Executive Committee's ownership of shares, % 0.1 % 0.1 %
On 29 January 2014 Nordea Bank AB’s Board of Directors proposed to the Annual General meeting to be held on 19 March 2014, a dividend of EUR 0.43 per
share. With its current holding Sampo plc’s share amounts to EUR 370 million. The dividend is proposed to be paid on 1 April 2014.
A planned dividend of EUR 100 million has already been deducted in Mandatum Life’s solvency calculation as at 31 December 2013. The dividend will be paid during the first quarter of 2014.
All the ratings for Sampo Group companies remained unchanged in 2013.
Group solvency has in 2013 been calculated according to Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates (2004/699). The Act is based on Directive 2002/87/EC of the European Parliament and of the Council on the supplementary supervision of credit institutions, insurance undertakings and investment.
EURmEURm 31 Dec 201331 Dec 2013 31 Dec 201231 Dec 2012
Group solvency ratio (own funds in relation to minimum requirements for own funds) increased during 2013 and amounted to 184.4 per cent (170.9) as at 31 December 2013. The improvement was due to
In addition to the aforementioned conglomerate solvency considerations, Sampo Group’s solvency is assessed internally by comparing the capital required to the capital available. Capital requirement assessment is based on an economic capital framework, in which Group companies quantify the amount of capital required for measurable risks over a one year time horizon at 99.5 per cent’s confidence level. In addition to economic capital, companies assess their capital need related to non-measurable risks like risks in business environment.
Sampo plc’s debt financing on 31 December 2013 amounted to EUR 2,027 million (2,162) and interest bearing assets to EUR 980 million (1,048). Interest bearing assets include bank accounts, money market instruments and EUR 350 million of hybrid capital issued by the subsidiaries and associates. During 2013 the net debt decreased EUR 65 million to EUR 1,048 million (1,113). Gross debt to Sampo plc’s equity was 29 per cent (32).
As at 31 December 2013 financial liabilities in Sampo plc’s balance sheet consisted of issued senior bonds and notes of EUR 1,720 million (1,710) and EUR 308 million (451) of outstanding CPs issued. The average interest on Sampo plc’s debt as of 31 December 2013 was 2.26 per cent (2.33).
September 2013 in connection to issuing two senior unsecured floating rate notes of SEK 2,000 million maturing on 28 May 2015 and 29 May 2018, respectively. The remaining SEK 609 million of the SEK 4,000 million senior unsecured floating rate notes matured on 16 September 2013.
On 2 April, 2013 If P&C Insurance Company Ltd., the Finnish subsidiary of If P&C Insurance Holding Ltd (publ), used its call option on the EUR 65 million capital loan issued on 29 November 2002 in accordance with the conditions of the loan.
Senior Bond 2,000 SEKm Stibor3M + 1,45% - 2.5450% 29 May 2018
To balance the risks on the Group level Sampo plc’s debt is 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. These derivatives are valued at fair value in the profit and loss account although economically they are related to the underlying bonds. As a result Sampo plc maintains the flexibility to adjust derivative position if needed but this comes at the cost of increased volatility in the Holding segment’s net finance costs.
Major risks affecting the Group’s profitability and its variation are market, credit and insurance risks that can be quantified by financial measurement techniques. Currently their quantified contributions to the Group’s Economic Capital - used as an internal basis for capital needs – represent normal levels of 34 per cent, 45 per cent and 11 per cent, respectively.
Dividend Proposal According to Sampo plc’s dividend policy, total annual dividends paid shall be at least 50 per cent of Group’s net profit for the year (excluding extraordinary items). In addition, share buy-backs can be used to complement the cash dividend.
The parent company’s distributable capital and reserves totaled EUR 6,775,182,609.93, of which profit for the financial year was EUR 829,380,952.52.
The Board proposes to the Annual General Meeting a dividend of EUR 1.65 per share to company’s 560,000,000 shares. The dividends to be paid are EUR 924,000,000.00 in total. Rest of funds are left in the equity capital.
Return on assets (at fair values) % 7.07.0 9.3 3.7 10.0 18.6
Return on equity (at fair values) % 24.424.4 36.9 12.4 39.8 53.2
Combined ratio excl. unwinding of discount % 88.188.1 88.9 92.0 92.8 92.1 *) Based on the financial statements of If Group.
Premiums written before reinsurers' share EURm 1,0681,068 983 854 1,117 809
Earnings per share, incl. Items in other comprehensive income EUR 2.542.54 3.37 1.22 3.22 5.88
Capital and reserves per share EUR 19.0119.01 17.89 15.93 15.83 13.56
Net asset value per share EUR 22.1522.15 17.38 14.05 17.79 14.63
Average adjusted number of shares 1 560,000560,000 560,000 560,863 561,321 561,370
¹) On 31 Dec. 2009 Nordea was consolidated as an associate to Sampo and Sampo became a financial and insurance conglomerate, in accordance with the Act on Supervision on Financial and Insurance Conglomerates (2004/699). The group solvency is calculated according to Chapter 3. The adjusted solvency was determined on the basis of the Group financial statements as permitted by the Financial Supervisory Authority.
± valuation differences on investments less deferred tax adjusted number of shares at balance sheet date
Dividend per share, % dividend for the accounting period adjusted number of shares at balance sheet date x 100%
Risk Management 79 Sampo Group’s Operations, Risks and Earnings Logic 80 Risks 86 Earnings Logic 87 Sampo Group Steering Model and Risk Management Process 88 Parent Company's Guidance 89 Subsidiaries’ Activities and Risk Management 93 Parent Company’s Oversight and Activities 94 Risk Governance 99 Underwriting Risks 100 Non-life Insurance Underwriting Risks 106 Life Insurance Underwriting Risks 113 Investment Portfolio Market Risks 114 Asset Allocations and Investment Returns 118 Interest Rate and Currency Risks 121 Equity and Spread Risks 131 Counterparty Credit Risks 133 ALM Risks 135 Economic Value Risks 136 Liquidity Risks 139 Operational Risks 140 Operational Risk Management in If P&C
145 Capitalization 145 Capitalization at Group Level 150 Capitalization at Subsidiary Level 153 Risk Management Process Outlook
Strategic risk is the risk of losses due to changes in the competitive environment or lack of internal operational flexibility. Unexpected changes in general business environment can cause larger than expected fluctuations in financial results and in the long run they can endanger the existence of Sampo Group’s business models. External drivers behind such changes are various, including for instance general economic development, development of the institutional environment and technological innovations. As a result of these external drivers, business models of the industry can change, new competitors may appear and customer demand and behavior can change.
Due to the predominantly external nature of the drivers of and development in the competitive environment strategic risks are the responsibility of the executive level senior management. Proactive strategic decision-making is the central tool in managing strategic risks related to competitive advantage. Also, maintenance of internal operational
In its underwriting and investment operations, Sampo Group is consciously taking certain risks in order to generate earnings. These earnings risks are selected carefully and managed actively. Underwriting risks are priced reflecting their inherent risk levels and the expected return of investments is compared to the related risks. Furthermore, risk exposures are adjusted continuously and their impact on the capital need is assessed regularly.
Underwriting risk can be defined in general as a change in value caused by ultimate costs for full contractual obligations varying from those assumed when these obligations were estimated. Hence, underwriting risk realizes as a loss or adverse change in the value of insurance liabilities due to pricing and provisioning assumptions on claims payments being different than the actual ones.
In non-life insurance underwriting risk is often divided in premium and reserve risk in order to distinguish between the risks related to unexpired and expired contracts.
Premium Risk relates to future claims and originates from claim sizes being greater than expected, differences in timing of claims payments from expected, and differences in claims frequency from those expected. As a result the claims cost for future claims exceeds the expected level and there is a loss or adverse changes in the value of insurance liabilities.
Catastrophe risk can be seen as an extreme case of premium risk. It is the risk of low frequency, high severity events, such as natural catastrophes. These events lead to significant deviations in actual claims from the total expected claims.
Market risks refer to fluctuations in the financial results and capital base caused by changes in market values of financial assets and liabilities as well as by changes in the economic value of insurance liabilities. The changes in market values and economic values are caused by movements in underlying market variables such as interest rates, inflation, foreign exchange rates, credit spreads and share prices. Furthermore, market risks include also risk of worsening market liquidity in terms of widening bid-ask spreads and the risk of unexpected changes in repayment schedules of assets. In both cases the market values of financial instruments in investment portfolios may change.
Risks and returns in different markets are considered when Sampo Group companies enter into investments or sell investments from investment portfolios. The fundamental distinction between market risks and underwriting risks is that relating to market risks Sampo Group is in most cases a price taker and not a price giver.
The sources of liquidity risk are either internal or external. If the company’s rating declines or if the company’s solvency otherwise appears jeopardised, its ability to raise funding, sign reinsurance contracts or enter into financial derivatives at a reasonable price is endangered. Moreover, policyholders may also not be willing to renew their policies. These effects may realize in a general market turmoil situation simultaneously with difficulties to sell investment assets.
Sampo Group manages the liquidity risk by maintaining both parent company’s and the subsidiaries’ creditworthiness and reputation on appropriate level. Also, diversification within business operations exposed to liquidity risks is sought. In particular the maturity diversification of expected cash flows generated from different business activities is under constant scrutiny. Since there is no unambiguous technique to quantify the capital need for liquidity risk, it is not directly taken into account in capital need estimates. Thus only the interest rate risk part of ALM risks is accounted for in the economic capital framework.
Concentration risks arise when the company’s risk exposures are not diversified enough and as a result of this for instance an individual claim or financial market event could threaten the solvency or the financial position of the company. Risk concentrations may evolve within one risk class or across the risk classes defined above, with the exception of operational risks.
Concentration can be at the single-name level or at the level of homogenous group like a geographical area or an industry sector. Within operational risks concentration risks are of different nature and realize due to for example reliance on a single IT system or a single vendor. Another risk that can be realized over any activity is the reputational risk.
Concentration risk may materialize also when profitability and capital position react similarly to general economic development or to structural changes in institutional environment in different areas of business. In that case concentration risk can be seen as part of strategic risk.
In Sampo Group corporate culture, which is based on core values ethicality, loyalty, openness and entrepreneurship, is seen as a major tool in preventing reputational risk. These core values are reflected in Sampo Group’s Corporate Governance system and how Sampo deals with core stakeholders (i.e. customers, personnel, investors, other co-operation partners, tax authorities and supervising authorities) and other parties, who may have interest in Sampo’s business.
• Diversification is sought actively. • Reinsurance is used effectively to reduce exposures.
• Balance between expected returns and risks in investment portfolios and the balance sheet are optimized, taking into account the features of insurance liabilities, internally assessed capital needs, regulatory solvency and asset coverage rules and rating requirements.
The Board of Directors of the parent company decides on the subsidiaries’ return on equity targets which are currently 17.5 per cent for both If P&C and Mandatum Life. In addition, If P&C has a long-term target of maintaining the combined ratio below 95 per cent.
The basis for capitalization is the internally estimated amount of economic capital which reflects the capital employed in the company’s measurable risks. In addition, the perceived riskiness of the company’s business environment is taken into account in assessing capitalization. Capitalization may also be affected by rating targets. Currently the only target is If P&C’s A rating.
These three aspects, together with the regulatory capital requirement, are the main aspects when parent company is assessing the adequate level of capitalization for each subsidiary and the amount of dividends distributed by the subsidiaries to the parent company. In Sampo Group, the excess capital from an operational point of view is held by the parent company Sampo plc, which capitalizes the subsidiaries, if needed.
In addition to these guidelines, the external regulatory environment and expectations of different stakeholders on Sampo Group’s operations impact Sampo plc’s Board of Directors’ decisions in general and thereby also the guidance given by the parent company. Further information on Sampo Group’s stakeholders is available at Code of Conduct at www.sampo.com/corporate-governance/code-ofconduct.
The executive management of the subsidiaries have extensive experience in the insurance industry as well as in financial and risk management. The members of the subsidiaries’ Boards of Directors, who are mainly in senior management positions in Sampo plc, have also complementary investment, financial, risk and capitalization as well as mergers and acquisitions expertise. The members of different committees and governing bodies represent expertise related to business and other functions. The subsidiaries’ operations are monitored by the different governing bodies and ultimately by the Boards of Directors.
Since only the main guidelines are prepared by the parent company, the subsidiaries’ managements have the power and responsibility to incorporate the specific characteristics of their own operations to the company specific policies and instructions. The regulatory environment and stakeholders’ expectations are naturally also directly reflected in the organization of the subsidiaries’ operations.
At operative level, the subsidiaries are focusing on effective execution of insurance operations and financial and risk management activities. Investments are managed according to the Investment Policies which are approved by the Board of Directors of the respective subsidiaries. Parent company led day-today management of investments facilitates simultaneously effective execution of subsidiaries’ investment policies and the group wide oversight of investment portfolios.
(equalization provision, discounting effects) which will be part of capital base in Solvency II framework.
The assessment of capital need includes the following phases: • The Economic capital model is used to define the capital needed for measurable risks of current activities (Economic Capital “EC”); • An additional risk buffer is added over the measured EC. General uncertainty of business environment, less quantifiable risks (e.g. strategic risks, low probability and high impact events, liquidity risks) and potential model risks affect the size of the additional buffer; • Because earnings are the first buffer against potential losses, expected profitability is also taken into account when considering the buffer needed over the EC.
Business lines and financial and risk management functions are both active in supporting the business with ccontinuous analyontinuous analysis and assis and assessessment ofsment of opportunitiesopportunities. This can be seen as a separate phase in the risk management process since a significant part of the time in insurance and investment business units is consumed on a daily basis on assessing different business opportunities and especially their risk return ratios. In financial and risk management functions, on the other hand, considerable amount of time is spent on risk assessment and capital planning.
Continuous Analysis of Opportunities - Output Examples: • Business opportunities and respective earnings potential and capital consumption are identified. • Product and service development, investment opportunities and respective earnings potential and capital need.
Actions - Output Examples: • Pricing of insurance policies and execution of investment asset transactions. • Execution of dividend payments, share buy-backs, hybrid issuances and senior debt issuances. • Execution of derivative and reinsurance transactions. • Business acquisitions and divestments.
• The risks affecting profitability as well as other material risks are identified, assessed and analyzed; • Capitalization is adequate in terms of risks inherent in business activities and strategic risks, taking into account the expected profitability of the businesses; • Risk bearing capacity is allocated to different business areas in accordance with the strategy; • Underwriting risks are priced reflecting their inherent risk levels, expected returns of investment activities are in balance with their risks, and consequential risks are mitigated sufficiently.
• Client service processes and internal operative processes are cost efficient and of high quality; • Decision making is based on accurate, adequate and timely information; • Continuity of operations is ensured and in case of discontinuity events recovery is fast and comprehensive.
At group level the central focus areas are potential concentrations arising from the Group companies’
• The Underwriting Committee (UWC) 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. The Chairman is responsible for the reporting of policy deviations and other issues dealt with by the committee.
• The Actuarial Committee (AC) is a preparatory and advisory body for If P&C’s Chief Actuary. The committee shall secure a comprehensive view over reserve risk, discuss and give recommendations on policies and guidelines for technical provisions, as well as consider and propose changes to the Risk Data Policy.
• The Compliance Committee (CC) is an advisory body for the Chief Compliance Officer regarding compliance issues. The task of the committee is to secure a comprehensive view of compliance risk and activities in If P&C.
The Managing Director of Mandatum Life has the overall responsibility for the risk management according to Board of Directors’ instructions. The reporting lines of different governing bodies in Mandatum Life are described in the figure Risk Governance in Mandatum Life.
• The Risk Management Committee (RMC) coordinates and monitors all risks in Mandatum Life. The Committee is chaired by the Managing Director. Risks are divided into main groups which are insurance, market, operational, legal and compliance risks as well as business and reputation risks. Risks related to the Baltic subsidiary are also included. Each risk area has a responsible person in the Committee.
• Mandatum Life’s Asset and Liability Committee (ALCO) controls that the investment activities are conducted within the limits defined in the Investment Policy approved by the Board and monitors the adequacy of liquidity, profitability and solvency capital in relation to the risks in the balance sheet. ALCO prepares a proposal of Investment Policy to the Board of Directors. ALCO reports to the Board and meets at a minimum on a monthly basis.
• The Operational Risk Committee (ORC) analyzes and handles operational risks, e.g. in relation to new products and services, changes in processes and risks as well as realized operational risk incidents. Significant observations are reported to the Risk Management Committee and to the Board of Directors quarterly. ORC is also responsible for maintaining and updating the continuity and preparedness plans as well as the Internal Control Policy.
• The Legal and Compliance Unit is taking care of compliance matters and Head of the Unit is a member of the Risk Management Committee.
• Managing director is responsible for business and reputational risk issues and he is also the Chairman of the Risk Management Committee.
In addition to the above mentioned committees and units, the Internal Audit with its audit recommendations has a role to ensure that adequate internal controls are in place and provides Internal Audit’s annual review to the Board of Directors.
The Board of Directors of Sampo plc is responsible for ensuring that the Group’s risks are properly managed and controlled. The Board of Directors of the parent company defines financial and capitalization targets for the subsidiaries and approves group level principles steering the subsidiaries’ activities as described in section Sampo Group Steering Model and
The Boards of Directors of If P&C and Mandatum Life are the ultimate decision making bodies of the respective companies and have the overall responsibility for the risk management process in If P&C and Mandatum Life respectively. The Boards of Directors appoint the If P&C Risk Committee and the Mandatum Life Risk Management Committee and are responsible for identifying needs to change the policies, principles and instructions related to risk management.
Underwriting Risks The book value (technical provisions) and economic value of insurance liabilities are dependent on (i) the size and timing of future claims payments including expenses and (ii) the interest rates used to discount these claims payments to current date. In this section the focus is mainly on the first component and hence on the underwriting risk. Discount rate risk and its effect on technical provisions are also described in this section. The interest rate risk affecting the economic value of liabilities is covered later in ALM risk section.
Underwriting risk is the risk of loss or of adverse changes in the value of insurance liabilities, due to inadequate pricing and provisioning assumptions.
Premium risk is the risk of loss or of adverse changes in the value of insurance liabilities, resulting from fluctuations in the timing, frequency and severity of insured events which have not occurred by the balance sheet date.
Catastrophe risk is the risk of loss or of adverse changes in the value of insurance liabilities, resulting from significant uncertainty of pricing and provisioning assumptions related to extreme or exceptional events.
The UW Policy is supplemented with guidelines outlining in greater detail how to conduct underwriting within each business area. These guidelines cover areas such as tariff and rating models for pricing, guidelines in respect of standard conditions and manuscript wordings, as well as authorities and limits. In accordance with the Instructions for the Underwriting Committee, the Committee is responsible for monitoring compliance with the established underwriting principles.
The business areas manage the underwriting risk on a day-to-day basis. A crucial factor affecting the profitability and risk of non-life insurance operations is the ability to accurately estimate future claims and expenses and thereby correctly price insurance contracts. The premiums within the Private business area and the premiums for smaller risks within the Commercial business area are set through tariffs. The underwriting of risks in the Industrial business area and of more complex risks within Commercial is based to a greater extent on principles and individual underwriting than on strict tariffs. In general, pricing is based on statistical analyses of historical claims data and assessments of the future development of claims frequency and claims inflation.
The insurance portfolio is well diversified, given the fact that If P&C has a large customer base and the business is underwritten in different geographical areas and across several lines of businesses. The degree of diversification is shown in the figure Breakdown of Gross Written Premiums by Business Area, Country and Line of Business, If P&C, 2013.
Combined ratio, business area Private 87.8% +/- 1 percentage point +/- 26 +/- 25
Reserve risk is the risk of loss, or of adverse change in the value of insurance liabilities, resulting from fluctuations in the timing and amount of claim settlements for events which have occurred at or prior to the balance sheet date.
The technical provisions for unearned premiums is intended to cover anticipated claims costs and operating expenses during the remaining term of insurance contracts in force. Since claims are paid after they have occurred, it is necessary to set provisions for claims outstanding. The technical provisions are the sum of provisions for unearned premiums and provisions for claims outstanding.
The Board of Directors of If P&C decides on the guidelines governing the calculation of technical provisions. If P&C’s 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 the total provisions is sufficient. At group level the Chief Actuary issues a quarterly report on the adequacy of technical provisions, which is submitted to the Boards of Directors, CEO, CFO and IRC of If P&C.
The actuarial estimates are based on historical claims data and existing exposures that are available at the balance sheet date. Factors that are monitored include loss development trends, the level of unpaid claims, changes in legislation, case law and economic conditions. When setting provisions, the Chain Ladder and Bornhuetter-Fergusson methods are generally used, combined with projections of the number of claims and the average claim costs.
Finnish, Swedish and Danish technical provisions for these lines include annuities that are sensitive to changes in mortality assumptions and discount rates. The proportion of technical provisions that are related to MTPL and WC is 68 per cent.
Technical provisions and the economic durations broken down by line of business and major geographical area is shown in the table Technical Provisions by Line of Business and Major Geographical Area, If P&C, 31 December 2013.
Technical Provisions by Line of Business and Major Geographical Area If P&C, 31 December 2013
The sensitivity of If P&C’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, If P&C, 2013.
Biometric risks in life insurance refer mainly to the risk that the company has to pay more mortality, disability or morbidity benefits than expected or the company has to keep paying pension payments to the pension policyholders for a longer time (longevity risk) than expected when pricing the policies. The specific case in which a single event or series of single events of major magnitude lead to a significant deviation in actual benefits and payments from the total expected payments is called catastrophe risk.
Long duration of policies and restriction of Mandatum Life’s right to increase tariffs increases biometric risks.
Longevity risk is the most critical biometric risk in Mandatum Life. Most of the longevity risk arises from the with profit group pension portfolio. With profit group pension policies have mostly been closed for new members for years and due to this the average age of members is relatively high, i.e. around 69 years. In the unit-linked group pension and individual pension portfolio the longevity risk is less significant because most of these policies are fixed term annuities including death cover compensating the longevity risk.
The annual longevity risk result and longevity trend is analyzed regularly. The assumed life expectancy related to the technical provisions for group pensions was revised in 2002 and additional changes were made in 2007. The cumulative longevity risk result has been positive since these revisions. The longevity risk result of group pension for the year 2013 was EUR 0.6 million (EUR -0.7 million in 2012).
Uncertainty related to the behavior of the policyholders is a major risk as well. The policyholders have the right to cease paying premiums (lapse risk) and the possibility to interrupt their policies (surrender risk). Ability to keep lapse and surrender rates in a low level is a crucial success factor especially for the expense result of unit-linked business.
The company is also exposed to expense risk, which is a risk that the future operating expenses exceed the level that was anticipated when pricing the insurances. Policy terms and tariffs cannot usually be changed materially during the lifetime of the insurance, which increases the expense risk. The main challenge is to keep the expenses related to insurance administrative processes and complex IT infrastructure at an efficient level. In year 2013, expense result was EUR 14.2 million (EUR 5.8 million in 2012). Mandatum Life does not defer insurance acquisition costs.
WWith-prith-profit and others tofit and others totalotal 4,0524,052 156156 -394-394 -36-36 139139 33 -11-11 3,9103,910 4646
Capital rCapital redemption operedemption operaationstions 66 00 -1-1 00 00 00 -1-1 44 00
Subsidiary MandaSubsidiary Mandatum Liftum Lifee InsurInsurancance Baltic SEe Baltic SE 153153 3232 -25-25 -3-3 11 00 22 159159 22
MandaMandatum Liftum Life gre group toup totalotal 7,9047,904 1,0681,068 -741-741 -91-91 139139 33 262262 8,5448,544 100100
Unit-linked technical provisions exceeded with profit technical provisions during year 2013.
The development of the structure and amount of Mandatum Life’s technical provisions is shown in the
The table Expected Maturity of Insurance and Investment Contracts before Reinsurance, Mandatum Life, 31 December 2013 shows the expected maturity and duration of insurance and investment contracts of Mandatum Life. The sensitivity of technical provisions to changes in discount rates can be assessed on the basis of the durations shown in the table.
Expected Maturity of Insurance and Investment Contracts before Reinsurance Mandatum Life, 31 December 2013
Individual lifIndividual life insure insurancancee 9.9 49 52 73 50 38 32 67
FuturFuture bonus re bonus reserveserveses 1.0 0 0 0 0 0 0 0
RReserveserve fe for decror decreased disceased discount rount raattee 3.3 89 13 21 11 5 3 3
MandaMandatum Liftum Life gre group toup totalotal 1,6441,644 1,4031,403 2,5722,572 1,7671,767 1,4011,401 761761 1,0701,070 *) Investment contracts
Risk selection is part of the day-to-day business routines in Mandatum Life. Mandatum Life’s Underwriting Policy sets principles for risk selection and limits for sums insured. Compliance with the
principles and limits set in the Underwriting Policy are monitored continuously.
In Sampo Group, market risks related to investment portfolios are mostly straightforward to analyze. The realization of risks is transparently reflected in the financial statements, because Sampo Group is applying mark-to-market procedures to most of its investments and only seldom there are instruments that require mark-to-model procedures.
In addition to investment portfolio market risks, also the companies’ balance sheets are exposed to market and liquidity risks. These balance sheet level risks are defined as ALM risks and they are covered later in the section ALM risks. The ALM risks at balance sheet level are taken carefully into account when investment portfolio structures are designed and related limits and restrictions are defined.
Sampo Group’s Chief Investment Officer is responsible for managing investments within the limitations of the Investment Policies prepared by the Group companies and approved by the Group companies’ Boards of Directors. The insurance subsidiaries and the parent company have a common Group wide infrastructure for investment management as well as for performance and risk reporting which facilitates simultaneous company level and group level reporting.
The total amount of Sampo Group’s investment assets as at 31 December 2013 was EUR 17,878 million (EUR 18,164 million in 2012).The compositions of the investment portfolios by asset classes in If P&C,
Mandatum Life and Sampo plc at year end 2013 and at year end 2012 are shown in the figure Development of Investment Portfolios, If P&C, Mandatum Life and Sampo plc, 31 December 2013 and 31 December 2012.
Development of Investment Portfolios If P&C, Mandatum Life and Sampo plc, 31 December 2013 and 31 December 2012
Life has had on average higher returns and higher volatility. The figure Annual Investment Returns at Fair Values, If P&C and Mandatum Life, 2004–2013 presents the historical development of investment returns.
The weighted average investment return of the Group’s investment portfolios (including Sampo plc) in 2013 was 7.8 per cent (7.3 per cent in 2012).
Mandatum Life, Sampo plc and Sampo Group as of year-end 2013 are presented in the table Investment Allocation, If P&C, Mandatum Life, Sampo plc and Sampo Group, 31 December 2013.
Both If P&C and Mandatum Life are exposed mainly to interest rate and currency risks (general market risks) as well as to equity and spread risks.
Additionally, If P&C and Mandatum Life have real estate investments, unlisted equity instruments (mainly private equity funds) and alternative investments. The Investment Policies set limits for maximum allocations into these asset classes and products. On 31 December 2013, the combined share of the above mentioned investments was 5.0 per cent of the total investment portfolio of Sampo Group. In If P&C the proportion was 1.0 per cent and in Mandatum Life it was 13.9 per cent.These asset classes are managed in most cases by external asset managers with the exception of the Group’s real estate portfolio that is managed by Sampo Group’s 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 and debt instruments in real estate companies.
The factors behind interest rate and currency movements are diverse. Market participants are continuously reacting to reported macro-economic data and information regarding financial market and commercial cash flows. Hence, risk factors affecting interest rates and foreign exchange rates are many.
Interest rate sensitivity in terms of the average duration of fixed income investments was in If P&C 1.1 years and in Mandatum Life 1.8 years. These duration figures include the effect of hedging derivatives.
operations and foreign exchange transactions. Hence, transaction risk includes various balance sheet items and it can be seen as balance sheet risk. In Sampo Group the net foreign currency exposure is considered as a separate asset class and it is managed within investment portfolio activities. Open transaction risk positions are identified and measured separately for each subsidiary. The net position in each currency consists of the assets, liabilities and foreign exchange transactions denominated in the particular currency.
The transaction risk positions of If P&C and Mandatum Life against their base currencies are shown in the table Transaction Risk Position, If P&C and Mandatum Life, 31 December 2013. The table shows the net transaction risk exposures and the changes in the value of positions given a 10 per cent decrease in the value of the base currency.
Transaction Risk Position If P&C and Mandatum Life, 31 December 2013
BaseBase CurrCurrencencyy EUREUR USDUSD JPJPYY GBPGBP SEKSEK NOKNOK CHFCHF DKKDKK LLTLTL LLVLVL OtherOther
Sampo plc’s transaction risk position is related to SEK denominated dividends paid by If P&C and to debt instruments issued in other currencies than euro.
In addition to transaction risk, Sampo Group and its insurance subsidiaries are also exposed to translation risk. Translation risk refers to currency risk that arises when consolidating the financial statements of subsidiaries that have a different base currency than the parent company into the Group financial statements. Sampo Group’s consolidated financial statements are denominated in euro. Changes in foreign exchange rates result in translation differences which are recognized in the consolidated other comprehensive income. Translation risks arise also within If P&C from its subsidiaries whose base currencies are different from that of the parent company.
Sampo Group is exposed to price risk dependent on changes in equity prices and spreads arising from its fixed income and equity investments. Equity price and spread movements are affected by general market trends and by risk factors that are related specifically to a certain issuer or a specific issue.
The values of investment assets decrease when credit spreads of tradable debt instruments are changing unfavourably or equity prices are decreasing. Most Sampo Group’s investments are tradable and hence subject to daily mark-to-market valuation. Moreover, the fair values of non-tradable instruments change adversely when the financial strength or future prospects of the issuer deteriorates or value of collaterals decreases. Ultimately the issuer may fail to meet its financial obligations and the risk realizes as credit losses.
Credit Exposures by Sectors, Asset Classes and Rating If P&C, 31 December 2013
Credit Exposures by Sectors, Asset Classes and Rating Mandatum Life, 31 December 2013
Credit Exposures by Sectors, Asset Classes and Rating Sampo Group, 31 December 2013
The largest holdings are in financial institutions and covered bonds. Most of these investments are in Nordic countries as can be seen in the table Fixed Income Investments in Financial Sector, Sampo Group, 31 December 2013. These exposures decreased by EUR 1.4 billion during 2013.
Fixed Income Investments in Financial Sector Sampo Group, 31 December 2013
However, public sector investments increased by EUR 1.9 billion during 2013. The exposure increased especially in the Netherlands and in France.
Ten Largest Direct High Yield and Non-rated Fixed Income Investments Sampo Group, 31 December 2013
% of t% of total dirotal direct fixect fixed inced incomeome ininvvesestmentstments
Breakdown of the equity exposures of Sampo Group by geographical regions is shown in the figure Breakdown of Equity Investments by Geographical Regions, Sampo Group, If P&C and Mandatum Life, 31 December 2013.
The geographical emphasis of Sampo Group’s equity investments is in Nordic companies. The proportion of Nordic companies’ equities corresponds to 58 per cent of the total equity portfolio. This is in line with Sampo Group’s investment strategy to focus on Nordic companies. Moreover, the Group’s insurance liabilities are mostly denominated in the euro and in the Nordic currencies. In the long run the proportion of investments outside of the Nordic countries has gradually increased, because the amount of companies issuing securities in the Nordic countries is limited and from a tactical point of view other geographical areas have recently provided interesting investment opportunities.
Furthermore, the largest direct equity exposures are presented in the table Ten Largest Direct Equity Investments, Sampo Group, 31 December 2013.
In addition, Sampo Group’s largest equity holdings are disclosed in the (Note 40) to the Financial Statements.
Individual Exposures by Issuer and by Asset Class, Sampo Group, 31 December 2013.
Credit risk related to reinsurance counterparties arises from reinsurance receivables and the reinsurers’ portion of the outstanding claims. This risk mainly concerns If P&C, as the use of reinsurance in Mandatum Life is relatively limited.
In addition, counterparty credit risk arises from receivables from policyholders and other receivables related to commercial transactions. Risk exposure towards policyholders is very limited, because nonpayment of premiums generally results in cancellation of the insurance policies. Also the risk exposures arising from other receivables related to commercial transactions are minor in Sampo Group.
The amount of ceded treaty and facultative premiums was EUR 78.5 million. Of this amount, 100 per cent was related to reinsurance counterparties with a credit rating of A- or higher.
In Sampo Group, credit risk of derivative counterparties is a by-product of managing market risks. The risk is mitigated currently by bilateral ISDA and CSA agreements. This is the case especially in Sampo plc and Mandatum Life which are frequent users of long-term derivatives.
ALM Risks When changes in different market risk variables (e.g. interest rates, inflation, foreign exchange rates) cause a change in the fair value of investment assets that is of different size than the respective change in the economic value of insurance liabilities, the company’s balance sheet is exposed to market risk.
Another risk class to be considered at the balance sheet level is liquidity risk. Additionally, single name concentration risks over assets, liabilities and other agreements are to be monitored at the balance sheet level. A balance sheet level concentration may arise for example when a company is insured by Sampo Group companies, Sampo Group has holdings in debt and equity instruments issued by the company and the company is a tenant in a property owned by Sampo Group.
When above mentioned control levels are breached, ALCO reports to the Board which then takes the responsibility on the decisions related to the capitalization and the market risks in the balance sheet.
Sensitivity Analysis of Capitalization to Market Risks If P&C, Mandatum Life and Sampo plc, 31 December 2013
The effects represent the instantaneous effects of a one-off change in the underlying market variable on the fair values as of 31 December, 2013. The sensitivity analysis includes the effects of derivative positions. All sensitivities are calculated before taxes. The debt issued by
Because the durations of liabilities in Sampo Group companies are much longer than the duration of assets, the effect of decreasing interest rates is negative for Sampo Group. In the opposite case, a rise in interest rates would reduce the values of financial instruments causing a decline in the amount of Sampo
Cash Flows According to Contractual Maturity If P&C, Mandatum Life and Sampo plc, 31 December 2013
Only the carrying amount is shown for the other contracts. In addition, the table shows expected cash flows for net technical provisions, which by nature, are associated with a certain degree of uncertainty. In the investment assets of Mandatum Life, the investments of the
Baltic subsidiary are included in the carrying amount but excluded from the cash flows.
Operational risks can realize as an immediate negative impact on financial results arising from additional costs or loss of earnings. In a longer term, operational risks can materialize for instance as a loss of reputation and customers which endangers the company’s ability to conduct business activities in accordance with the strategy. These immediate and longer term effects of operational risk have their general causes in external and internal drivers. The Group companies have their own specific risk sources which are causes of events that may have negative impacts on different processes, personnel or fixed assets.
Operational risks are identified in Mandatum Life through several different sources and methods: • Self-asSelf-assessessmentsment process is used to map and evaluate the major operational risks and their probabilities and significance, including an
evaluation of internal controls and sufficiency of instructions. Self-assessment is conducted annually.
• FFolloolloww-up of the e-up of the extxternal enernal envirvironmentonment is included in the annual strategy process, where the key trends of Mandatum Life’s business environment are identified. External events are also monitored continuously and the company reacts to these as soon as possible (e.g. changes in taxation or laws).
The most significant operational risks for Mandatum Life identified in the operational risk self-assessment process include, among others, the following: changes in the external operating environment, IT, especially aging IT systems, manual phases in processes, loss of key personnel, miss-selling and false information to customers.
Group Level Risks As a general principle, the subsidiaries are managed independently from each other in Sampo Group. However, it has been deemed pertinent to assess certain risk and capitalization issues also at group level, i.e. concentration risks arising from liability and investment exposures, correlations of Group companies’ profitability and their effects on Sampo Group’s capitalization and liquidity management. Additionally, the possible risks related to the Group structure are a group level issue.
With respect to the underwriting businesses carried out in the subsidiary companies, it has been established that If P&C and Mandatum Life are operating mostly in different lines of business and hence their underwriting risks are different. There are no material risk concentrations under normal course of business and, consequently, business lines as such are contributing diversification benefits rather than concentration of risks. The most material common risk factor is life expectancy in Finland that is affecting both companies’ technical provisions. On the other hand, both subsidiaries have significant investment portfolios and, thus, are potentially threatened with investment related concentration risks (for example large combined exposures).
• Concentration risk is proactively managed through effective differentiation in asset selection. Mandatum Life’s direct investments are mainly denominated in euro and in companies geographically located in Finland and selectively in other countries, whereas, If P&C has the major part of its direct investments denominated in the Scandinavian currencies and in the respective countries.
On company level, investment risk concentrations are monitored and controlled by the ICC in If P&C and the ALCO in Mandatum Life, which have been established as independent parties from investment operations. Total group exposures are monitored and controlled at group level by Sampo Group’s Chief Investment Officer, Sampo Group’s Chief Risk Officer and Sampo Group’s Audit Committee.
Direct concentration risks may arise in Sampo Group due to large exposures in investment assets. A more general group level concentration risk arises when the Group companies’ profitability or capital positions react similarly to general economic development, i.e. the correlation between general economic development and the profitability of different subsidiaries is more or less analogous. This type of concentration risk can be analyzed indirectly based on profits. From that perspective Sampo plc’s associated company Nordea’s result has created clear diversification benefits, in particular when analyzed vis
The historical correlations of quarterly profits between If P&C, Mandatum Life and Nordea are depicted in the figure Correlations of Quarterly Reported Profits, If P&C, Mandatum Life and Nordea, 1 January 2005 - 31 December 2013.
Because of favorable profit correlations between the companies and relatively low volatilities of If P&C’s and Nordea’s profits, the profit development has been quite stable at group level which decreases pressure to maintain large additional capital buffers over group level economic capital. However, the Board of
Capitalization In Sampo Group, risks and the respective capital requirements are assessed internally as well as according to the methods defined by the regulators. Capitalization is a central subject of discussion also in Sampo Group’s continuous dialogue with the rating agencies. Capitalization assessments are conducted both at company level and at group level to ensure the balance between risks and capital.
• EC is used as an internal measure of capital required for measurable risks the Group is exposed to. EC is defined as the amount of capital required to protect the solvency over a one year time horizon with a probability of 99.5 per cent that is the calculation basis in Solvency II as well.
• When assessing the EC need arising from Nordea, Sampo plc uses the EC calculated and publicly reported by Nordea multiplied by the proportion of Sampo plc’s share in Nordea (21.25 per cent at the end of 2013). This figure is converted from confidence level 99.97 per cent used by Nordea to 99.5 per cent.
• As an internal measure of available capital, Sampo Group uses ASC. The basis for ASC is capital items included in the regulatory solvency capital. On top of those, other risk absorbing items such as the difference between the book value and market value (including a risk margin) of technical provisions are added.
The adjusted solvency capital of Sampo Group’s insurance subsidiaries increased during the year due to positive fair value results and increase in interest rates. This growth was partly offset by paid dividends. The changes in subsidiaries’ risk exposures and hence in economic capital were modest. At Sampo Group level Nordea’s and Sampo plc’s figures are taken into account as well when adjusted solvency capital and economic capital figures are calculated. At group level the amount of adjusted solvency capital increased more than economic capital and hence capitalization can be considered stronger than year ago. The development of capitalization in Sampo Group from both internal and regulatory perspectives during the
year 2013 is shown in the figure Development of Capitalization, If P&C, Mandatum Life and Sampo
Regulatory capital requirement 31 Dec 201231 Dec 2012 31 Mar 201331 Mar 2013 30 Jun 201330 Jun 2013 30 Sep 201330 Sep 2013 31 Dec 201331 Dec 2013
Development of Capitalization Mandatum Life, 31 December 2012 – 31 December 2013
Development of Capitalization Sampo Group, 31 December 2012 – 31 December 2013
Sampo Group reports its Group solvency quarterly to the Finnish supervisory authorities monitoring the Group. The calculation of Group solvency according to the Act on the Supervision of Financial and Insurance Conglomerates (1193/2004) is broken down in the table Group Solvency, 31 December 2013 and 31 December 2012.
and to EUR 1,403 in Mandatum Life at the end of year 2013.
Subsidiaries’ solvency is reported to the local supervisory authorities. In If P&C, regulatory solvency capital was 4.0 times regulatory capital requirement and the respective figure for Mandatum Life was 6.3 at the end of year 2013. Regulatory solvency capital, which is used to assess the solvency of an insurance company, is not calculated for the parent company Sampo plc.
Regulatory solvency capital of If P&C increased to EUR 3,372 million (EUR 3,101 million in 2012) while the regulatory capital requirement was EUR 849 million (EUR 859 million in 2012). Regulatory solvency capital of Mandatum Life Group remained almost intact at EUR 1,403 million (EUR 1,402 million in 2012) while the regulatory capital requirement was EUR 222 million (EUR 222 million in 2012).
Risk Management Process Outlook Sampo Group companies continuously develop their risk management processes. This work is based on internal needs and regulatory requirements, of which Solvency II has been the most important driver during the latest years.
A separate program was introduced within If P&C in 2007 to ensure that If P&C is well prepared when the Solvency II regulation enters into force. The program has encompassed a thorough review of If P&C’s corporate governance and internal control structure, the risk management system, data capturing as well as development of the internal capital model. The program was finalized in 2012 and responsibilities were transferred to the line organization. Also Mandatum Life has developed its processes similarly over the years.
If P&C aims to have a partial internal model approved when Solvency II regulation enters into force. Mandatum Life will use most likely the regulatory standard model for external Solvency calculations although it has an internal approach for assessment of risks and capital as well.
TTotal itotal items rems reclaseclassifiable tsifiable to pro profit or losofit or loss, net of taxs, net of tax -13-13 449449
EEquity aquity attributable tttributable to oo owners of the parwners of the parentent 10,64310,643 10,02010,020
EEquity aquity at 1 Jan. 2012t 1 Jan. 2012 9898 00 44 1,5271,527 6,8446,844 9191 354354 11 8,9208,920
Net cash frNet cash from inom invvesesting activitiesting activities 360360 215215
Net cash used in financing activitiesNet cash used in financing activities -839-839 -845-845
The amendment to IAS 19 Employee Benefits (effective for annual periods beginning on 1 Jan 2013 or after) mandates all actuarial gains and losses be recognised in other comprehensive income, thus the so-called corridor approach has been eliminated and the benefit cost is determined based on the net funding. The change had an impact on the employee benefits recognised in If subgroup. In the transition phase, the accumulated unrecognised losses EURm 126 related to the corridor method at 31 Dec 2011 reduced the opening equity for the comparison year 2012. The corresponding amount at 31 Dec 2012 was EURm 93. The subsequent changes will be recognised in other comprehensive income.
IFRS 13 Fair Value Measurement (effective for annual periods beginning on 1 Jan 2013 or after) brought together in one standard the measurement of fair value and gave it a precise definition. The standard had an effect mainly on the Group’s disclosures on financial instruments and investment property.
The amendment to IFRS 7 Financial Instruments: Disclosures (effective for annual periods beginning on 1 Jan 2013 or after) clarifies the disclosure requirements for e.g. offsetting financial instruments. The amendment had no material impact on the Group’s financial statements reporting.
Improvements to IFRSs 2009 – 2011, May 2012 include various minor changes made to different standards at the same time. The changes were not material to Sampo’s financial statements reporting.
The Board of Directors of Sampo plc accepted the financial statements for issue on 12 February 2014.
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.
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 is organised in accordance with the business segments. The Group’s business segments are P&C insurance, life insurance and holding business.
Inter-segment transactions, assets and liabilities are eliminated in the consolidated financial statements on a line-by-line basis.
The costs of acquiring new and renewed insurance business are treated as deferred acquisition costs in the P&C insurance. In the life insurance business the acquisition costs are treated as fee and commission expense under ‘Other operating expenses’.
According to the Group’s risk management policy, investments are managed at fair value in order to have the most realistic and real-time picture of investments, and they are reported to the Group key management at fair value. Investments comprise debt and equity
In the P&C insurance, the fair value option permitted by IAS 39 has been applied in the earlier years. The remaining assets acquired before the year 2008 are still measured at fair value through p/l. Furthermore, the fair value option is applied in some minor P&C companies.
In Sampo Group, financial assets and liabilities at fair value through profit of loss comprise derivatives held for trading, and financial assets designated as at fair value through profit or loss.
Financial asFinancial assets designasets designatted as aed as at ft fair vair value thralue throughough prprofit or losofit or losss
Loans and receivables are initially recognised at their fair value, added by 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.
Available-for-sale financial assets are initially recognised fair value, including direct and incremental transaction costs. They are subsequently remeasured at fair value, and the changes in fair value are recorded in other comprehensive income and presented in the fair value reserve, taking the tax effect into account. Interest income and dividends are recognised in profit or loss. When the available-forsale assets are sold, the cumulative change in the fair value is transferred from equity and recognised together with realised gains or losses in profit or loss. The cumulative change in the fair value is also transferred to profit or loss when the assets are impaired and the impairment loss is recognised. Exchange differences due to available-for-sale monetary balance sheet items are always recognised directly in profit or loss.
If debt securities issued are redeemed before maturity, they are derecognised and the difference between the carrying amount and the consideration paid at redemption is recognised in profit or loss.
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.
When there is objective evidence of impairment of a financial asset carried at amortised cost, the amount of the loss is measured as the difference between the receivable’s carrying amount and the present value of estimated future cash flows discounted at the receivable’s original effective interest rate. The
difference is recognised as an impairment loss in profit or loss. The impairment is assessed individually.
Changes in the fair value of derivative instruments that are documented as fair value hedges and are effective in relation to the hedged risk are recognised in profit or loss. In addition, the hedged assets and liabilities are measured at fair value during the period for which the hedge was designated, with changes in fair value recognised in profit or loss.
Leases of assets in which substantially all the risks and rewards of ownership are transferred to the Group are classified as finance leases. Finance leases are recognised at the lease’s inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The corresponding obligation is included in ‘Other liabilities’ in the balance sheet. The assets acquired under finance leases are amortised or depreciated over the shorter of the asset’s useful life and the lease term. Each lease payment is allocated between the liability and the interest expense. The interest expense is amortised over the lease period to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
The provision for unearned premiums is intended to cover anticipated claims costs and operating expenses during the remaining term of insurance contracts in force. In P&C insurance and reinsurance, the provision for unearned premiums is normally calculated on a strictly proportional basis over time, i.e. on a pro rata temporis basis. In the event that premiums are judged to be insufficient to cover anticipated claims costs and operating expenses, the provision for unearned premiums must be augmented by a provision for unexpired risks. Calculation of the provision for unexpired risks must also take into account installment premiums not yet due.
The pay-as-you-go system related to pension index raises is not treated as an insurance activity under IFRS 4 and does not generate any risk for the insurance company. Thus, the pay-as-you-go contribution collected together with the insurance premium is not deemed to be premium income, and the pension index raise paid out is not deemed to be claims incurred. Because the collected index raise corresponds in amount to the paid out pension index raise, the said items are set-off in the Income Statement item 'Other expenses from operations'. The share of a balancing figure not yet received from, or not paid by, a central organisation is presented as current receivables or liabilities in the balance sheet items 'Other assets' or 'Other liabilities'.
MeasurMeasurement of insurement of insurancance and ine and invvesestment ctment controntractsacts
The interest rate used in discounting liabilities is, at most, the maximum rate accepted by the authorities in each country. The guaranteed interest used in the direct insurance premium basis varies on the basis of the starting date of the insurance from zero to 4.5 per cent. The interest rate used in discounting liabilities is the same or lower than that used in premium calculation. Most of the liabilities of the accrued benefits of pension business with DPF are discounted by an interest rate of 3.5 per cent, also being the highest discount rate used. In addition, Mandatum Life has for the year 2014 lowered the maximum rate to 2.25 per cent, and for the year 2015 to 2.75 per cent.
plan is that arranged through the Employees’ Pensions Act (TyEL) in Finland.
During the financial year, Sampo had two valid sharebased incentive schemes settled in cash (the longterm incentive schemes 2009 I and 2011 I for the management and key employees). The schemes have been measured at fair value at the grant date and at every reporting date thereafter.
IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on 1 Jan 2013 or after, latest application for annual period beginning on 1 Jan 2014) includes requirements for disclosures regarding different involvements in other entities, such as associates and unconsolidated entities. The new standard will have an impact on the Group’s disclosures.
Revised IAS 27 Consolidated and Separate Financial Statements (effective for annual periods beginning on 1 Jan 2013 or after, latest application for annual period beginning on 1 Jan 2014) includes the requirements for separate financial statements to the extent they have not been included in the new IFRS 10. The adoption of the revised standard will have no material impact on the Group’s financial statements reporting.
Geographical information has been disclosed about income from external customers and non-current assets. The reported areas are Finland, Sweden, Norway, Denmark and the Baltic countries.
TTotal itotal items not rems not reclaseclassifiable tsifiable to pro profit or losofit or loss,s, net of taxnet of tax -14-14 -- -- -- -14-14
TTOOTTAL CAL COMPREHENSIVE INCOMPREHENSIVE INCOME FOME FOR THE YEAROR THE YEAR 689689 220220 520520 -3-3 1,4251,425
PrProfit fofit for the yor the yearear 677677 108108 624624 -1-1 1,4081,408
TTotal itotal items rems reclaseclassifiable tsifiable to pro profit or losofit or loss, net ofs, net of
TTotal itotal items not rems not reclaseclassifiable tsifiable to pro profit or losofit or loss,s, net of taxnet of tax 3131 -- -- -- 3131
TTOOTTAL CAL COMPREHENSIVE INCOMPREHENSIVE INCOME FOME FOR THE YEAROR THE YEAR 947947 286286 631631 -7-7 1,8871,887
Non-current assets comprise of intangible assets, investments in associates, property, plant and equipment, and investment property.
184 1 Insurance premiums written 186 2 Net income from investments 190 3 Claims incurred 193 4 Change in liabilities for insurance and investment contracts 194 5 Staff costs 195 6 Other operating expenses 196 7 Result analysis of P&C insurance 197 8 Performance analysis per class of P&C insurance 198 9 Earnings per share 198 10 Financial assets and liabilities 199 11 Property, plant and equipment 201 12 Investment property 204 13 Intangible assets 206 14 Investments in associates 207 15 Financial assets 214 16 Fair values 215 17 Determination and hierarchy of fair values 218 18 Movements in level 3 financial instruments measured at fair value 220 19 Sensitivity analysis of level 3 financial instruments measured at fair value 220 20 Investments related to unit-linked insurance contracts 221 21 Deferred tax assets and liabilities 223 23 Components of other comprehensive income 224 24 Tax effects relating to components of other comprehensive income 224 25 Other assets 226 26 Cash and cash equivalents 227 27 Liabilities from insurance and investment contracts 232 28 Liabilities from unit-linked insurance and investment contracts 232 29 Financial liabilities 234 31 Employee benefits 238 32 Other liabilities 239 33 Contingent liabilities and commitments 241 34 Equity and reserves 242 35 Related party disclosures 243 36 Incentive schemes 244 37 Auditors' fees 244 38 Legal proceedings 244 39 Investments in subsidiaries 245 40 Investments in shares and participations other than subsidiaries and associates 250 41 Events after the balance sheet date
Sampo Group's Annual Report 2013 Notes to the Group’s Financial Statements
Change in unearned prChange in unearned premium premium proovision, netvision, net -55-55 -78-78
InsurInsurancance and ine and invvesestment ctment controntracts, tacts, totalotal 1,0681,068 983983
Included in gains/losses from financial assets available-for-sale is a net gain of EURm -63 (28) transferred from the fair value reserve.
Change in claims provision for annuities 45 0 45 13 -0 13
TTotal change in protal change in proovision fvision for claims outsor claims outstandingtanding 114114 -126-126 -12-12 8484 3535 119119
Life insurance Claims paidClaims paid Change in prChange in proovisionvision ffor claims outsor claims outstandingtanding Claims incurrClaims incurreded
InInvvesestment ctment controntracts, tacts, totalotal -173-173 -124-124 -- -- -173-173 -124-124
GrGroupoup, t, totalotal -3,677-3,677 -3,541-3,541 4 Change in liabilities for insurance and investment contracts
Change in liabilities fChange in liabilities for insuror insurancance and ine and invvesestment ctment controntracts in tacts in total, netotal, net -648-648 -642-642
GrGroupoup, t, totalotal -543-543 -576-576 7 Result analysis of P&C insurance
TTechnical rechnical result befesult beforore ine invvesestment rtment returneturn 1) Activity-based operating costs EURm 269 (271) have been allocated to claims incurred.
Earnings per share (EUR per share) 2.59 2.51 10 Financial assets and liabilities
Financial assets designated as at fair value through p/l 50 1 7 - 0
Financial asFinancial assets, grsets, group toup totalotal 17,60917,609 453453 220220 -38-38 125125
Financial assets designated as at fair value through p/l 70 6 3 - 0
Financial asFinancial assets, grsets, group toup totalotal 17,89117,891 554554 111111 -62-62 112112
Financial liabilities, grFinancial liabilities, group toup totalotal 2,3782,378 -85-85 1010 11 Property, plant and equipment
Net carrying amountNet carrying amount 44 22 55 44 22 66
Closing net carrying amountClosing net carrying amount 44 22 55 44 22 55
FFair vair value of inalue of invvesestment prtment property aoperty at 31 Dec.t 31 Dec. 2323 2323
Expenses arising frExpenses arising from inom invvesestment prtment propertyoperty - direct operating expenses arising from investment property generating rental income during the period - direct operating expenses arising from investment property not generating rental income during the period
Net carrying amountNet carrying amount 153153 1111 164164 153153 00 153153
The recoverable amounts for If 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 Life is greatly influenced by the longterm 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 Life, 10 years. The derived cash flows were discounted at the pre-tax rates of the weighted average cost of capital which for If was 9.4 per cent and for Mandatum Life 9.7 per cent. These are somewhat higher than last year due to the increase in Nordic government bonds.
Forecasts for If, approved by the management, cover years 2014 – 2016. The cash flows beyond that have been extrapolated using a 2 per cent growth rate. A 2 per cent growth rate for years beyond 2023 has been used for the for Mandatum Life as well, as it is believed to be close to the anticipated inflation.
Associates that have been accounted for by the equity method at 31 Dec.
At 31 Dec. 2013, the carrying amount of investments in associates included goodwill EURm 1,102 (1,100), including goodwill from the Nordea acquisition EURm 978 (978).
SharShare of the lose of the loss/prs/profit of an asofit of an associasociattee 635635 15 Financial assets
TTotal derivotal derivaativtives held fes held for tror tradingading 3,4393,439 55 2525 2,3862,386 4040 3737
TTotal financial asotal financial assets designasets designatted as aed as at ft fair vair valuealue thrthrough p/lough p/l 22 2222
Financial assets available-for-sale for P&C insurance include impairment losses EURm 242 (323).
PP&C insur&C insurancancee, t, total financial asotal financial assetssets 11,26511,265 11,20011,200
Currency options, bought and sold 0 0 0 99 1 0
EEquity and equity indequity and equity index optionsx options 11 00 00 -- -- --
TTotal derivotal derivaativtives held fes held for hedgingor hedging 501501 11 -- 584584 2323 00
Fair value hedging is used to hedge a proportion of foreign exchange and interest risk in available-for-sale financial assets. The interest elements of forward contracts have been excluded from hedging relationships in foreign exchange hedges.
LifLife insure insurancancee, t, total financial asotal financial assetssets 5,1225,122 5,2695,269
In the table above are presented fair values and carrying amounts of financial assets and liabilities. The detailed measurement bases of financial assets and liabilities are disclosed in Group Accounting policies.
Total gains or losses included in profir or loss for the financial year
TTotal financial asotal financial assets designasets designatted aed at ft fair vair value thralue through p/lough p/l 183 281
InInvvesestment rtment relaelatted ted to unit-linko unit-linked ced controntracts, tacts, totalotal 4,6234,623 3,8343,834
The historical cost of the equity securities related to unit-linked contracts was EURm 2,646 (2,460) and that of the debt securities 21 Deferred tax assets and liabilities
DefDeferrerred tax ased tax assets in the balancsets in the balance sheete sheet 68
DefDeferrerred tax ased tax assets in the balancsets in the balance sheete sheet 78
TTotal defotal deferrerred tax liabilities in the balanced tax liabilities in the balance sheete sheet 542542
Share of associate's other comprehensiv income -70 - -70 9 - 9 25 Other assets
1) See table Change in deferred acquisition costs in the period
At the close of the claims year 7,715 2,468 2,629 2,639 2,703 2,847 2,853 2,968 3,051 3,085 2,979
Current estimate of total claims costs 8,096 2,194 2,327 2,456 2,547 2,674 2,709 2,952 3,168 3,071 2,979 35,174
PrProovision rvision reporteported in the balanced in the balancee of which established vested annuities 1,316 53 70 74 70 66 55 63 48 34 7 1,856
At the close of the claims year 6,994 2,398 2,482 2,530 2,602 2,723 2,733 2,821 2,884 2,880 2,927
PrProovision rvision reporteported in the balanced in the balancee of which established vested annuities 1,315 53 70 74 70 66 55 63 48 34 7 1,856
Net liability aNet liability at 31 Dec. 2013t 31 Dec. 2013 3,9213,921 44 3,9253,925
Net liability aNet liability at 31 Dec. 2012t 31 Dec. 2012 4,0624,062 66 4,0674,067
Preferred capital note, 2005 (nominal value EURm 150) perpetual 4.94% 150 149
Preferred capital note, 2013 (nominal value EURm 90) perpetual 4.70% 90 -
PP&C insur&C insurancancee, t, total financial liabilitiesotal financial liabilities 373373 253253
The subordinated loan issued in 2002 was repaid in April 2013.
The loans issued in 2011 and 2013 are wholly subscribed by Sampo Plc.
EURm 22 of the provision consist of assets reserved for the development of efficient administrative and claims-adjustment processes and structural changes in distribution channels result in organisational changes that affect all business areas. In addition, the item includes a provision of about EURm 33 for law suits and other uncertain liabilities.
To cover the insured pension benefits, the related capital is managed as part of the insurers’ management portfolios. In such management, the characteristics of the investment assets are analysed in relation to the characteristics of the obligations, in a process known as Asset Liability Management. New and existing asset categories are evaluated continuously in order to diversify the asset portfolios with a view to optimising the anticipated risk-adjusted return. Any surplus that arises from management of the assets normally accrues to If and/or the insured and there is no form of transfer of the asset value to other members of the insurance collective.
The following tables contain a number of material assumptions, specifications of pension costs, assets and liabilities and a sensitivity analysis showing the potential effect on the obligations of reasonable changes in those assumptions as at the end of the fiscal year. The carrying amounts have been stated including special payroll tax in Sweden (24.26 per cent) and a corresponding fee in Norway (14.1 per cent).
TTotal in incotal in income some statattementement -7-7 -15-15 -22-22 -9-9 11 -7-7
Remeasurement of the net pension liability 19 -40 -21 -18 63 45
Fair value of plan assets 124 261 385 119 273 392
PPension liabilities:ension liabilities: At the beginning of the year 612 595
Defined benefit plans aDefined benefit plans at 31 Dec.t 31 Dec. 595595 580580
RRececonciliaonciliation of plan astion of plan assets:sets: At the beginning of the year 347 392
Plan asPlan assets asets at 31 Dec.t 31 Dec. 392392 385385
Minimum lease paMinimum lease paymentsyments not later than one year 32 37 later than one year and not later than five years 99 110 later than five years 78 101
Total of sublease payments expected to be received under non-cancellable operating sub-leases at 31 Dec.
Minimum lease paMinimum lease paymentsyments not later than one year 1 1 later than one year and not later than five years 2 3
The longe-term incentive scheme 2009 I ended in September 2013, when the last reward was paid out.
DomesDomestic shartic shares and participaes and participations in ttions in totalotal 786786
Goldman Sachs Loan Partners I Offshore Investment Fund L.P. Cayman islands 32
Holdings exceeding EURm 5 and holdings in listed companies exceeding five per cent specified.
In the meeting of 12 Feb. 2014, the Board of Directors decided to propose at the Annual General Meeting on 24 April 2014 a dividend distribution of EUR 1.65 per share, or total EUR 924,000,000, for 2013. The dividends to be paid will be accounted for in the equity in 2014 as a deduction of retained earnings.
Net cash frNet cash from operom operaating activitiesting activities 354354 1,0061,006
The presentation of Sampo Plc's financial statements together with the notes has been prepared in accordance with the Finnish Accounting Act and Ordinance. The accounting principles applied to the separate financial statements of Sampo plc do not materially differ from those of the Group, prepared in accordance with the International Financial Reporting Standards (IFRSs). The financial assets are measured at fair value derived from the markets. The accounting principles for the Group are described in the section Summary of significant accounting policies.
Sampo Group's Annual Report 2013 Notes to Sampo plc’s Financial Statements
Other fees -0 -0 4 Financial inc4 Financial income and eome and expensexpense
CCosost at at beginning of yt beginning of yearear 1 4 1 4
7 Other shar7 Other shares and participaes and participationstions 20132013 FFair vair value changesalue changes 20122012 FFair vair value changesalue changes
Carrying amount aCarrying amount at end of yt end of yearear 00 44
20132013 FFair vair value changesalue changes 20122012 FFair vair value changesalue changes
11 Mo11 Movvements in the parements in the parent cent companompany's equityy's equity
Carrying amount aCarrying amount at 31 Dec. 2012t 31 Dec. 2012 9898 00 1,5271,527 273273 4,8954,895 6,7936,793
Over one year but not more than five years 2 3 18 Off-balanc18 Off-balance sheet ite sheet itemsems
NotNotes tes to the so the staff and managementtaff and management 19 S19 Staff numberstaff numbers
21 P21 Pension cension contributions tontributions to the CEOo the CEO, deputy CEO and the members of the, deputy CEO and the members of the boarboardd
22 Shar22 Shares held as of 31 Dec, 2013es held as of 31 Dec, 2013
We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Sampo plc for the financial period 1.1. - 31.12.2013. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.
Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report ofthe Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
Calendar and Contacts 269 Financial Information and AGM 2014 270 Contacts
Shareholder who is registered on the record date for the Annual General Meeting in the company's Shareholder Register kept by Euroclear Finland Ltd has the right to participate in the General Meeting. Shareholders whose shares are registered on their personal Finnish book-entry accounts are registered in the company's Shareholder Register.
Read more about the AGM on the Internet at www.sampo.com/ agm.
Please note that you can find the latest information regarding events and dates at www.sampo.com/ calendar.