Sampo, the leading insurance group in Finland, and leania, the second largest banking group in the country, signed a letter of intent in October 1999, according to which the companies will merge to create the new Sampo·leania Group. The press conference pictured here, that was held at the House of Estates in Helsinki, shows Sauli NiinistO, Finnish Minister of Finonce (right), Jouko K. Leskinen, President and CEO of Sampo (centre), and Harri Hollmen, President and CEO of leania (left).
Financial Statements and Notes 10 Sampo Insurance Company plc Board of Directors' Report 18 Profit and Loss Account 22 Balance Sheet 24 Working Capital Flow Statement 25 Accounting Principles 30 Calculation Methods for the Key Figures 32 Sampo Group Key Figures 34 Analyses 74 Auditors' Report 74 Statement by the Supervisory Board 75 Supervisory Board 76 Board of Directors 77 Auditors
The euro-denominated figures in this Annual Report have been calculated by using the conversion coefFicient EUR I = FIM 5.94573.
The financial statements presented on pages 10-74 are based on bookkeeping and financial statements drawn up in Finnish markka. The official financial statements can be inspected at the foUowing Sampo offices: - Aleksamerinkatu ll, Helsinki (Sampo Group's Legal Affairs} - Puolalankatu 5, Turku (Financial Adminisuation)
February • Sampo Life was the first Finnish insurance company ro develop a web service that allows clients ro subscribe to investmenr insurance via the Inrcrncr.
April • The FIM 100,000 Sampo Safety Award was conferred on youth-work consultant Jari Koponen of Jarvenpaa for a concept that ef­ fectively improves safety for school children. • Sampo was the first insurance group in Finland to launch its own mutual funds and asset management services. Clients can invest or save in the eight funds established by Sampo Fund Management, either directly or through Sampo Life unit-linked insurance policies. • The Annual General Meeting decided to issue a dividend ofF! M 4.80 (EUR 0.81) per share as proposed by the Board of Directors.
a SAMPO ANNUAl REPORT 1999 ampo Internet ervices expanded ro al­ low clients to buy travel insurance directly on the Inrcrner.
ampo -nrcrprise was the first in urance company worldwide to launch an Internet service (sampo.fi folder) allowing its clients to manage all their in urancc needs via the Net.
August • Sampo published its Interim Report for the first half. Operating profit for January­ June doubled to EUR 287 million, due to an improved underwriting result and a solid in­ vestment result.
September • Sampo Towarzystwo Ubezpieczen S.A. (Sampo Poland) commenced insurance op­ erations in Poland.
November ampo extended its Latvian operation into life insurance, when ampo Enterprise purcha ed the hare capital ofLarvian life in­ surance company AA 1-lansa Apdro ina ana from Estonian company Hansapanga Kind­ lusruse A . AA Han a Apdrosinasana was then renamed M Sampo Larvija Dziviba. • Sampo Industrial starred negotiations to purchase wed ish company Forsakring aktie­ bolager Atlanrica' marine insurance portfolio and part of its corporate portfolio. • Sampo launched an optional redemption cover to be added to the comprehensive mo­ tor insurance avai lable for cars, vans and campers, motorcycles, light trailers and cara­ vans.
T umover and gross premiums written, EUR m - Turnover Gross premiums wriHen
- Earnings/share Dividend/ share * Board's dividend proposal far the financial year 1999 ** Number of shares 60.8 million *** Number of shores 59.28 million 1998 Change% I FIM
Sampo Life in 1997, whose position was essentially strength­ ened by the merger with Nova Life In urance Company Led a year ago. ampo as the leading life and non-life insurer in Finland will presently complete its merger with Leonia, so bringing olid competence in banking and a set management to the new organisation.
Sampo-Leonia's multichannel ervice model embraces the most efficient forms of distribution provided for by new te h­ nologies such as the Internet, mobile communications, other tele ervices and WAP. All offer a viable alternative for many ervices traditionally offered through conventional office et­
ups. Banks till tend to operate through a burden ome office network whose downsizing in lin with decrea ing demand can result in ignifi ant do ure expenses. amp -Leonia doe not have thi problem. The ffi e truccure utili ed by Leonia will hrink to a fraction of its pre enc size a the agreement with the Finnish Po t ffi e expires at the end of the year, wh n amp -Leonia commences peracions. In addition to th n w ele tronic ervi hannels, ampo's distribution n t·
ampo Group moves into a new phase financially strong and operationally competitive. The focus placed on life insur­ ance in the past few years has yielded tangible results as the Group's life insurance balance sheet has grown from zero to over EUR 4 billion in just three years. Furthermore, Sampo Life solvency has strengthened considerably and is even re­ flected in the net asset value of Sampo shares. Whilst the non­ life insurance technical result cannot be said to be satisfactory, we are working determinedly to rectifY the situation. The new Group structure fully supports these efforts.
New Structure and Shareholder Focus ampo clarified its Group structure during the year under review, when Ot o Lo s of Profits Insurance Company Led and the In urance Company of Finland Led merged into their parent ompany Sampo plc.
Holding company capital will be utilised to further de­ velop and expand Group activities where needed, but part of the excess will be returned to shareholders either by the pay­ ment of dividends or through share buy-backs. According to the proposal made by the Board of Directors for the year un­ der review, Sampo will pay the largest dividend in its history. Moreover, Sampo bought back 1.5 million of its own shares in January 2000. It is our stated aim to extend and intensifY this shareholder focus yet further.
However, it is our belief the Baltic area will develop rap­ idly in the near future and so it pays to establish our position in the market now, when that can still be achieved through reasonable investment.
A New Era For Our Clients The commencement of Sampo-Leonia operations at year-end 2000 marks a step into the competitive arena of a new millen­ nium in financial services in Finland.
The ongoing structural reorganisations inevitably entail hard work for our personnel. I believe people at both Sampo and Leonia will manage this effort just as successfully as they have accomplished major changes in the past. I am delighted to take this opportunity to extend my thanks to you all for your dedicated work in 1999.
The leading Finnish insurance group Sampo and the country's second largest banking group Leonia will enter into a merger of equals to form the new Sampo­ Leonia Group. The companies signed a letter of intent on October 13th, 1999.
ynergy benefits accruing to the new group are expected to be EUR 50 million per annum within three years, around half from cost savings and half from cros selling to joint cli ­ ents.
The merger will create a strong group in terms of both size and capital in the fastest growing financial sectors. The structure of the new group will enable the flexibility required to implement a strategy of active participation in and restruc­ turing of financial markets and organisations in the Nordic countries and along the Baltic Rim.
Vision The Sampo-Leonia vision is to be the leading full-service financial group in Finland. The Group also aims to grow in certain core businesses along the Baltic Rim. The Group's principal lines of development are in asset management and life in urance operation ; both marker are expanding quickly. ombining re ources and channelling additional input will enable the new group to capture a portion of rhi growth in ex e of its current market hare.
Client Benefits ampo-Leonia will offer the mo t comprehensive range of financial products in Finland, providing banking and asset management ervices, life insurance and all types of non-l ife insurance. Group clients' current loans, in urance policies and other contracts will be unaffected by the merger.
Both Leonia's telephone bank and the Sampo Call Cen­ tre lead in their field. Leonia's online bank is already at the technical forefront of Internet banking in Europe and boasts one of the highest utilisation rates.
Sampo-Leonia's new service network will be a multi-chan­ nel solution that makes efficient use of the opportunities of­ fered by market shifts and the new technologies. These include the Internet, mobile communications, other telecommunica­ tions and WAP services, as well as partners' networks.
Synergy Benefits . . . Around half of the estimated EUR 50 m1lhon m annual synergy benefits due to materialise in three years' time is ex­ pected to accrue from cross selling. Only 18 per cent of Sampo clients currently has an account in Leonia and no more than a third ofLeonia's customers is insured with Sampo. The new Group's client structure will enable the following products to be sold to Sampo-Leonia clients as part of the total service package: • Leonia financing, deposit and transaction services for ampo clients; • Sampo non-life insurance policies for Leonia customers; • Life insurance policies, mutual funds and asset management services for all clients. The other half of rhe synergy benefits will come from cost sav­ ings, generated by service network solutions and the unifica­ tion of the two Groups' administrative functions and internal services.
The improved profit and the in­ creased valuation differences strength­ ened Group solvency. Solvency capital amounted to EUR 4,477 million (EUR 2,509 million), and net asset value per share to EUR 63.45 (EUR 32.62).
In life insurance business, compara­ bility of the accounting periods is af­ fected by the merger of Sampo Life In­ surance Company Limited and Nova Life Insurance Company Limited on December 31, 1998.
LIFE INSURANCE Premiums written Investment income and charges, and unrealised gains and losses Claims paid hange in technical provisions before cuscomer bonuses and change in equalisation provision Net operating expenses Technical result before customer bonuses and change in equalisation provision Other income and charges
Share of associated undertakings' profit Operating profit 0 140 -7 Change in equalisation provision
Bonuses and rebates Life insurance profit before extraordinary items, untaxed reserves and tax
Extraordinary income and charges Profit before untaxed reserves and tax Tax Minority interest Group profit for the accounting period presented to the Annual General Meet­ ings of ampo and Leonia for deci ion.
EURm apical and reserves after propo ed profit distribution Valuation differences on inve tmenrs Intangible as ets Deferred tax Other items Solvency margin
Acquisition of Pohjola shares In connection with the agreement on structural reorganisation between Sampo and Leonia, the Sampo Group companies and Leonia, Kaleva Mutual Insurance Company and Sampo Fi­ nance Ltd bought a number of shares of Pohjola Group Insurance Corporation. The purpose of these acquisitions was eo form the platform for negotiations on Pohjola joining the new group. The shares, bought from Skandia Group, represented 23.6 per cent of Pohjola's shares and 32.7 of the votes. The pur­ chase price of the shares totalled EUR 577 million.
With respect to new policies, the loss of profits insurance business previ­ ously handled by Ocso and the guaran­ tee insurance business handled by the Insurance Company of Finland were transferred to Sampo subsidiaries Indus­ trial Insurance Company Ltd and Sampo Enterprise Insurance Company Limited. Old liabilities relating to these lines of insurance were transferred to
Expansion of business operations in the Baltic Countries Sampo Enterprise bought the share capital of Estonia's largest non-life in­ surance company AS Eesti Kindlustus from AS Hansapank. The transaction became effective on May 31st, 1999. The acquisition included the subsidiar­ ies of AS Eesti Kindlustus, called Eesti Varakindlustuse A and Eesti Kindlus­ tusekspert. Sampo Kindlustuse AS, a
In May 1999, ampo Kindlustu igned an agreement with A Polari
Vara, on rhe ba i of which A Polari Vara's non-life insurance portfo lio ex­ cluding redit in urance wa tran ferred to ampo Kindlustu . urthermore, ampo Enterprise founded a life in ur­
Sampo roup companies in tonia amounted ro EUR 19 million for the period corresponding to the ownership in 1999. Non-life in urance marker share in Estonia was 38 per cent. At the year-end, slightly over 800 employees worked in these companies.
On December 30rh, 1999, ampo Enterprise, A/S Bastions ZS, Vista Capital Corporation LCC and Devel­ opment Capital Corporation (Latvia) signed a letter of intent, according to which Sampo Enterprise will negotiate on the acquisition of a 72.4 per cent stake in AAS Balta, which is the largest insurance company in Latvia. The transaction concerns the non-life and life insurance businesses of the com­ pany. At the end of 1999, Sampo Enter­ prise owned 14.8 per cent of the shares of AAS Balta. In 1999, the premiums written by the Balta Group amounted to approximately EUR 37 mi ll ion, rep­ resenting 24 per cent of the non-life in­ surance market and 16 per cent of the life insurance marker in Latvia.
With rhe trading agreement signed in eptember 1999 ampo Enterpri e bought the shares of rhe Latvian life in­ surance company AAS Hansa Apdrosi­ nasana from the Estonian company Hansapanga Kindlu ruse A . The com­ pany was renamed AAS ampo Latvija Dziviba. The company's operations are being initiated, and so the premiums written in 1999 totalled only EUR 0.3 million.
In Lithuania, UAB ampo Draudi­ ma , a wholly-owned sub idiary of ampo Enterprise, starred non-life in­ urance operations during the year un­
der review. The company gor a licence at the end of December.
ance, concluded an agreement in June 1999 on the acqui iti n of the two er­ man in urance busine e of the French insurance group A uran e enerales de France (A F). The transaction en­ tered into force in January 2000 when the approvals of the relevant authorities were obtained.
In October 1999, ampo Industrial Insurance signed an agreement on rhe renewal rights of a parr of the policies of the British company olonia Balrica In urance Limited.
Non-life insurance profitability showed a slight improvement, with the combined ratio at 111.9 per cent (115.9%).
Workers' ompensation insurance profitabiliry remained very ari fa tory. In motor third party liability in urance, premium in reases were implemented also in 1999, which clearly improved the profitability of rhi line. H wever, the proportion carried by rhe Sampo Group of the motor TPL claims re­ ported by other companies ro the aras­ trophe Pool of Finnish Motor Insurers went up considerably. This increase in claims incurred, totalling EUR 6 mil­ lion, weakened rhe combined ratio of this line by slightly over four percentage points. An increase in claim incurred weakened al o the profirabiliry of land vehicle in urance. Fire and other prop­ erry insurance profitability wa deterio­ rated by large claims and right competi­ tion in rhe commercial market.
The run-off of old reinsurance portfolios at subsidiaries Parria, ST In­ ternational and Lakewood made signifi­ cant progress during the financial year. Gro s technical provisions less the equalisation provision fell by EUR 37 million to stand at EUR 193 million at rhe year-end. Several significant agree­ ments were commuted during the year. The balance on technical account be­ fore rhe change in equalisation provi­ sion was EUR 3 million. The run-off companies' total equalisation provision was accrued by EUR 23 million.
Non-life insurance investments The marker value of non-life insurance investments stood at EUR 5,317 mil­ lion (EUR 3,576 million) on December 31st, 1999, and net investment income at EUR 482 million (EUR 305 million ). The share of foreign investments was 13 per cent. Currency-denominated investments outside the euro area con­ stituted 10 per cent of the total invest­ ments in non-life insurance.
NON-LIFE INSURANCE BALANCE ON TECHNICAL ACCOUNT BY GROUP OF INSURANCE CLASS
!aims incurred (incl . change in collective guarantee item} 2 3 4 5 6
Operating expenses . . . . . Balance on technical account before the change 1n equahsanon provlSlon Combined ratio ,%
'J taturory workers' compensation excluding non-recurring adjustments of premiu~s and technical provisions 104.6% (1998). Motor third parry liability excluding non-recurnng adJUStment of technical provisions 132. 1 o/o (1998).
The non-life insurance companie of the ampo roup held a tota l of
Derivatives have been u ed to a mi­ nor extent by the non-life group, on the one hand to hedge the investment port­ folio, on the other hand to implement investment decisions. In non-life insur­ ance investments, profit from trading in derivatives stood at EUR 3 million.
UR 3,513 million (EUR 1,975 mil­ lion) at the year-end. olvency ratio went up to 470 per cent (260%). The rating granred by tandard & Poor's re­ mained at A- representing rrong secu­ rity.
LIFE INSURANCE ro s premium written in life insurance went up by almo t 38 per cent to UR 541 mi ll ion, alculated in a com­
parable manner. A ording to prelimi­ nary information on indu try level, the market hare held by ampo Life inreased to 19.2 per cent (17.1%).
The most ignificant increase was experienced by group pen ion insur­ ance, where the premium written more than doubled t EUR 167 mill ion. The premiums written were ac rued for the m se part from liabi li ty transfers per­ taining to the di olution of nine pen­ sion funds, totalling UR 100 million.
!aims paid in life in urance in­ creased by 21 per ent to EUR 227 mil­ lion, of which EUR 106 million was at­ tributable to pen ion . The laim paid includ d EUR 88 million ( UR 39 mil­ lion) of urrender whi h compri ed ex­ ceptional non-re urring items related to capital red mption policie . In other repeer , urrenders remained at the 1998 level. Te hnical provision of amp Life totalled EUR 3,140 million ( UR 2,598 million) at the year-end, of which EUR 2,196 million wa accounted for by the premium reserve. Technical pro­ vi ion include EUR 40 million of bo­ nu es granted to with-profit insurance policies for the year 1999. For this pur­ po e, EUR 25 mi llion of bonu e re­ served earlier were used. EUR 21 mi l­ lion have been re erved for bonuses pay­ able in future years. The need to supple­ ment the technical provi ions of group pensions due to a decrease in guaran­ teed interest was approximately EUR 123 million. This was covered in full by reserving EUR 34 million. The previous supplement totall ing EUR 89 mill ion was made in the 1998 final accounts of Nova. The techn ical provis ions of indi­ vidual lines of insurance were com­ pleted by approximately EUR 60 mil-
Total EUR 541 m 1 Individual life msurance 47 2 Group life insurance 1 3 Individual pension insurance 19 4 Group pens1on insurance 31 5 life reinsurance 2
Value readjustments 31 28 60 3 39 32 71 17 Exchange rate gain on investments 3 26 29 5 ther in ome 623 509 1,133 558 Investment income - 1 -2 -3 - 6 Interest charges -12 -8 - 21 -17 Charges from land and buildings
- 11 - 5 -16 -18 Planned depreciation on bUlldmgs -16 -40 - 56 - 9 Losses on realisation of investments -65 - 19 -84 -84 Value adjustments -2 -54 -55 -26 Exchange rate losses on investments
Unrealised gains and losses - 1 on investments 18 17 2
At current values EUR 5.3 billion 1 Shares 67 2 Bonds 13 3 Money-mnrket instruments 5 4 Land and buildings 10 5 Other 5
At current values EUR 4. 1 billion 1 Shares 46 2 Bonds 32 3 Money-market instruments 6 4 land and buildings 6 5 Other 10
The amount of real estate invest­ ments remained practically unchanged, accounting for 6 per cent of total invest­ ments. The vacancy rate of business premises remained at the low level of 1998, to stand as low as 2.3 per cent.
NON-LIFE INSURANCE Investments in land and buildings 550 10 611 17 hares 3,564 67 2,020 56
Bond 676 13 615 17 Other debt ecuritie 278 5 92 3 Loans 113 2 89 2 ther investments 135 3 149 4 CURRENT VALUE IN TOTAL 5,317 100 3,576 100
Valuation differences Investment in land and building 63 74 hares 2,514 1,072
Life in urance solvency margin amounted to EUR 949 million, seven times the required minimum. Solvency capital was 31.3 per cent of technical provisions. Thanks to the pronounced strengthening of solvency, valuation dif­ ferences calculated to the shareholders of Sampo Life in accordance with the interpretation of the Principle of Fair­ ness soared to 60 per cent (25%).
PERSONNEL On December 31st, 1999, ampo Group employed 4.536 per ons (3,337). Of thee, 3,514 person worked in Fin­ land, and 1,022 abroad where the staff increase was over 900 person . In addi­ tion to the increase in international op­ erarion , the growth in staff was largely attributable to the merger of ampo Life and Nova, and ro the iniriation of own motor vehicle and yacht lo survey p­ erations.
(3,292). Sampo parent company em­ ployed an average number of2,025 per­
ance business of Sampo will be incorpo­ rated to rwo new insurance companies. At this point, Sampo would also re­ nounce its in urance company licence. According to planned chedule, the mergers will enter into force on Decem­ ber 31st, 2000, providing that the ap­ provals of relevanr authorities have been obtained.
Th' Board of Director is seeking authorisation from the A M to con-
Net operating expense -81 -36 -32 -7 1 -3 1 ombined ratio, o/o 111.3 107.2 119.5 128.9
Net investment income 333 66 280 5 16 294 Profit/la for the financial year 225 27 190 - 1 -4 21 Technical provi ions, net 813 487 568 48 201 3,140 Toral n balance sheet 1,677 629 977 108 290 3,388
'l The merger of cso and Insurance ompany of Finland with ampo has been taken into account in the technical provisions, balance sheer and solvency capital.
tinue the buy-backs, and proposes a de­ crease in share capital by nullifying the shares already bought without payment. In this way, part of the excess capital created in ilie pa t few years by ilie bull­ ish stock market could be distributed to the owners.
SAMPO GROUP OUTLOOK The moderate growth in domestic nonlife insurance premiums written is boosted by the foreign insurance busi­ ness which has experienced an upward trend ilianks to several acquisitions. Pre­ mium increases in voluntary motor and statutory motor third parry liabiliry in­ surance were continued in Finland this year in order to improve profitability. Large claims incurred in the pa t few years will strain Group result through increase in ceded reinsurance premi­ ums and decreases in the level of com­ mis ions. However, the non-life techni­ cal result of the ampo Group is ex­ pected to improve.
Preparations for the establishment of Sampo-Leonia are expected to take off in spring after the approvals of rel­ evant auiliorities and administrative or­ gans have been obtained. The distribu­ tion channel provided by the bank will create new opportunities, particularly in the field of life and pension insurance sales to private persons.
The closing price of ampo A share for the financial year 1999 was EUR 34.70, providing an effective dividend yield of 6.9 per cent.
Claims incurred 2,8 Claims paid -730,304 - 656,809 - 237,609 -222,849 Change in premium reserve Reinsurers ' share 128,693 61,718 4,430 267 Change in premium reserve -449,735 -209,545 - 601,611 - 595,091 - 233,179 - 222,581 Reinsurers' share 78 -1,143 Change in the provision for -449,657 -210,689 outstanding claims
Change in the equalisation provision 8 Total change - 9,200 17,206 - 87,021 11) 160 Merger - - 83,539 -- -
Transfer of part of net inve tmenr ~after extraordinary items income 6 -292,869 -70,914 294,331 11 9,771 227,049 55,811
Other income Minority interest in the profit for Decrease in negative consolidation the financ ial year -8,374 -741 difference 467 467 Merger profit 16,221 Increase/decrea e in depreciation difference -2,165 1,328 Other 2,193 1,104 1,348 914 2,660 1,571 17,569 914 Increase/decrease in optional reserves
Intangible right 14,665 6,340 3,603 oodwill 4,368 25,745 30,894 onsolidation difference 20,869 ther long-term ex en e 55,731 46,451 35,1 75
Investments in land and building 11 Land and buildi'] 725,916 779,814 265,616 289,999 Loans to affiliate undertaking 779,814 277,273 305,484 Inve tments in affiliated and as ociated undertaking 14 hares and parci ipation in affiliated undertakings 13 193,803 210,270 hares and participations in associated undertakings 12, 13 74,218 131 ,051 66,200 97,656 Debt ecurities and loans of associated undertakings 14 100,913 100!913 hares 12, 13 2,132,991 1,477,213 358,851 278,664 Debt securities 16 2,358,665 2,079,215 284,098 126,537 Loans fcuaranceed by mortgages 187,662 179,653 20,515 22,701 Other oan 15 69,772 69,338 8,825 15,068 Deposits with credit institution 237,294 269,408 5,890 3,952
Legal re erve 369,241 369,241 366,295 366,295 Revaluation reserve 27,659 28,345 27,659 28,345
Non-re tricted Non-restricted reserves 151,947 125,683 - ecurity reserve - - 11,722 11,722 ontin~ency reserve - - 74,515 67,283
At the isposal of the Board - - 290 77 Profit/loss brought forward 96,289 56,695 1,296 1,230 Profit for the financial year 285,957 119,030 224,679 56,635
Premium reserve, life insurance 2,130,673 1,729,790 - - ~nvestments covering unit-linked
!aim out tanding, life insurance 946,666 857,492 - Rein urers' share -2,341 -1,232 -
Equalisation provi ion, non-life insurance 234,278 224,674 97,581 10,560 Collective guarantee item, non-life insurance 30,116 28,957 13,472 12,954
55,879 Increase in minority interest Incrca c in ea ital and re erves
Repayment of capital and loans Decrease in long-term loans Decrease in minority interest Decrease in ea ita! and reserves
The financial statements have been compi led in a cordance with the Ac­ counting Act, ompanies Act and Inurance ompame Act and the deci­ ions, in rruction and regulation ts­ ued by the Mini try of ocial Affair and Health. Th Act on Insurance Su­ pervi ion Authority entered into force on April 1st, 1999. Theta ks of the In­ surance upervi ion Authority include the upervision and insp ction of the a tivitie of rho e subject to supervision, and the issuing of more detailed instruc­ tions on drawing up the final account , consolidated account and interim re­ port a well as the stock exchange bulle­ tin on final accounts, due to the charac­ teristics of the insurance business. In December 1999, the Ministry of Social Affairs and Health and the Insurance upervi ion Authority issued new deci­ stons, instructions and regulations, drawn up on the basis of the new distri­ bution of tasks and containing the changes required by the new Account­ ing Act.
Consolidation Principles Sampo's Consolidated Accounts include the parent company Sampo Insurance Company plc, and all the subsidiaries in which the parent company either di­ rectly or indirectly holds more than half of the voting rights. The group compa­ nies are presented in the Notes on the Accounts, and changes in group struc­ ture in the Board of Directors' Report.
The final accounts of group com­ panies are included in the consolidated accounts according to uniform account­ ing principles.
The consolidated accounts are drawn up as combinations of the profit and loss accounts, balance sheets and notes of the parent company and the ubsidiaries. The consolidated accounts compri e non-life and life insurance technical accounts, and a non-technical account. All investment income and charges are shown in the non-technical account. That part relating to life insur­ ance which includes intra-group eliminations is transferred to life insur­ ance technical account.
The closing figures for subsidiaries are converted into Finnish markka at the average rate quoted by the European Central Bank on the date of closing the companies' accounts. Currency conver­ sion differences resulting from changes in exchange rates, which have arisen from the elimination of cross-share­ holdings, are shown under restricted capital and reserves due to their origin.
Minority interests in subsidiaries' result for the financial year and capital and reserves are presented as separate items in the Profit and Loss Account and the Balance Sheet.
Foreign Currency Items urrency-denominated receivables, investments in the nature of receivables, and liabilitie have been converted at the average rate quoted by the European Central Bank. Other investments have been valued at the lower of the rate valid on the date of acquisition or the rate on the date of closing the accounts, with the exception of holdings in other com­ panies in the nature of investments, in the valuation of which the impact of exchange rate and market difference have not been separated. Currency con­ version differences on receivables and investments are presented under invest­ ments, under the items Other income and Charges arising from other invest­ ments.
~~ SAMPO ANNUAL REPORT 1999 unearned premium , and from re­ insurance comm1 10n and depo it in­ terest . The net amount of currency conver ion difference i presented un­ der investments, under the items ther in ome and barge ari ing from other inve tment . The impa t of currency ex­ change rates n the hange in technical pr visions i presented in the Note co the A c unrs.
1 nrangiblc a ers and equipment are entered in the Balance beet at acquisi­ tion cost less planned depreciation. Item capitali ed under other long-term liabilitie include computer system de­ veloped by the insurance company itself and refurbishing of rented apartments.
Real estate shares are entered in the Balance beet at the lower of acquisi­ tion cost or current value. Buildings and structures are presented at the lower of acquisition cost less planned deprecia­ tion or current value. Certain book val­ ues of real estate and real estate shares include revaluations made in the previ­
Receivables and investments in th nature of receivable are presented at the lower of par value or current value.
Inve rments covering the technical provisions of unit-linked insurances are valued at their current value.
Value adju rment which have been made earlier are re-adjusted up to the original acqui irion cost if the current value in rea es.
The difference between the book value and the remaining acqui ition o t of investments shown in the analyses consist of unrealised gains and associ­ ated undertakings' value adjustments made by using rhe equity method.
Depreciation Planned craigh c-line depreciations ba ed on thee cimaced useful lives are made on intangible a et , building , truccure and their components, and equipment. If rhe e timace diverges from the earlier e timate on the dare of clo ing rhe account , the depreciation peri d is adjusted accordingly.
Planned depreciation corresponding to the average useful life of buildings is made annually on the unrealised gains entered as income, arising from build­ ings in the nature of investments. No depreciations are made on rhe revaluarions of property in the nature of fixed assets.
Current Values The current values of investments in land and buildings are fixed annually, as required by rhe Minisrry of Social Af­ fair and Health. ach ire is assessed separately, allowing for the net income earned, location and market situation. Both in-house and outside experts have as i red in the assessment.
Shares and debt securities which are quoted on official stock exchanges or valued ar the latest available closing price or, if this is not available, at buy­ ing rate. The probable sales price of other shares and debt securities, e.g. based on net asset value or the undepreciated portion of acquisition cost, is taken as their current value.
Claims settlement expenses directly allocated to claims paid are also pre­ sented under expenses by activity. These expenses include external loss adjust­ ment expenses, such as external loss as­ sessors' remunerations and legal ex­ penses, and internal loss adjustment ex­ penses which are allocated directly to claims.
In the final accounts of Sampo In­ surance ompany plc for 1999, the merger results of the mergers of t o
Loss of Profits lnsuran e ompany td and the In urance ompany of Finland
Taxes Taxes on ordinary activities and on extraordinary items are prc cnced epa­
mediately following. The avoir fiscal tax credit relating to dividends received from subsidiaries and associated undertakings is trans­
Loss Account as a deduction from the taxes for the year.
Untaxed Reserves and Treatment of Deferred Tax The regulations concerning Finnish ac­
counting and taxation practice allow certain optional untaxed reserves, and depreciation above plan having an im­
pact on the result and taxation, to be made in the final accounts.
In the roup companies, the differ­ ence between planned depre iation and the total d preciation made in accord­
der untaxed reserve the Balance beer. In the final ace unt and key fig­
ures of the companies, deferred tax is not deducted from the re crve , from revaluacions tran ferred to re erves, nor from valuation cliff, ren cs n invest­
Unreali ed gain entered as income are taxable income. In the onsolidated accounts and key figures, excluding the solvency mar­
Act, the share entered under capital and reserves is not distributable non-re­
ring depreciation on Kan a eneral's goodwill ha been entered under de­
Technical Provisions ln calculating technical pr vtst n , variu mcth d are applied whi h involve a umpti n n uch matter a the et­
clement f claim , mortality, and yield on inve tment . Te hnical provi ions are annually revi ed n the basi of a sump­ cion and new data received.
Non-life Insurance The provision for unearned premiums is calculated by use of the pro rata rule or by insurance conuacr.
In addition to the calculation of the provision for out tanding claims per­
pany or the company' own calculation ba i in rein urance.
The zillmerisation of individual life and pension insurance, capital redemp­ tion insurance and foreign life reinsurance, which has been deducted from the premium re erve, has been planned in such a manner d1ar the load­
Acquisition costs have not been ac­ tivated in balance sheet assets. Unpaid sale ommt ton or corresponding commi ion have been entered in bal­ ance heet liabi lities.
In di counting the technical provi­ sion , the interest applied ha been the same as or lower than the interest ap­
A major pare of the business has been discounted by use of an interest of 3.5 per cent. The highest interest used has been 4.5 per cent.
sions of direct insurance, discounting is applied only in connection with the technical provisions of pensions the payment of which has commenced. The technical provisions of assumed reinsurance are based on the di closure of the ceding company and on an esti­
Principle of Fairness in Life Insurance According eo the Insurance Companies'
ance contract, entitle to bonuses and rebates granted on the ba is of any sur­
cyholder ' with-profit insurance savings, which is at least the yield of a Finnish treasury bond. The total return consists of the guaranteed interest and bonuses determined annually on the basis of the company's performance. As for the level of the total return, continuity is purued. The aim is to maintain the compa­
quence of the principle and the bonus policy, a prominent part of the compa­
Life's final accounts, 60 per cent of the valuation differences is calculated to the company's shareholders. This calcula­
Pension Schemes For chose employed by the Finnish group companies, statutory pension cover has been arranged in compliance with the Employees' Pensions Act, TEL.
ance companies. In foreign subsidiaries, pension schemes have been arranged in accordance with local practice.
Life insurance: + premiums written before credit losses and rein urers' hare + inve tmem income and revaluations + other income
proflt and lo r up perating proflt: + non-life insuran e operating profit + life insurance operating profit
Profit before untaxed reserves and tax + profit before extraordinary item untaxed reserves and tax + extraordinary income - extraordinary charges
Return on assets (at current values) + operating profit + interest and expen es on liabilitie + calculated interest on re hnical provisions + revaluation n inve tment
(non-life insurance) - revaluation adju tmenr on inve tment (n n-life in uran e)
± change in valuation difference on 1nve tme.:,:n..::r=----,---­ + balance sheet total
± valuation differences on inve tments (average on Jan. 1 and Dec. 31)
Equity/a ets ratio (at current values) + capital and reserves + minority interest ± valuation differences on
Average number of personnel average of the number of per on ne! at the end of each month, adjusted for part-timers
Capital and reserves per share capital and reserves adjusted number of shares at Dec. 31
Net asset value per share* + capital and reserves ±valuation differences on investments adjusted number of shares at Dec. 31
Effective dividend yield dividend per share ___ x 1 OO% adjusted closing share price at Dec. 31
Price/ earnings ratio adjusted closing share price at Dec. 31 earnings per share
FIM m 4,219 4,495 5,784 6,516 8,475 FIM 55.51 58.73 65.84 74.15 97.54 perating profit Rm 54 104 155 211 565 Net a er value per hare EUR 16.48 19.45 24.48 32.62 63.45
FIMm 319 619 921 1,254 3,362 FIM 98.01 115.64 145.54 193.93 377.23 % of turnover 5.4 10.1 11.7 12.8 22. ividend per share ') EUR 0.21 0.25 0.50 0.81 2.38
!Mm 271 367 688 1,222 2,467 owned by the roup') EUR 2.44 %of turnover 4.6 6.0 8.8 12.5 16.3 FIM 14.50
% of wrnover 4.0 6.0 8.4 10.1 16.3 Price/earnings ratio 19.7 21.5 21.3 13.5 7.4 Return on equity at current value % - 3.2 17.3 23.5 33.1 67.1 Adjusted average number of shares '000 60,800 60,800 60,800 60,800 60,800 Return on asset at current values % l.l 9.6 11.6 13.8 29.0 Number of shares at Dec. 31 '000 15,200 15,200 60,800 60,800 60,800 Equity/assets ratio % 33.5 35.9 35.6 28.6 40.8 Adjusted number of hare at Dec. 31 '000 60,800 60,800 60,800 60,800 60,800 olvency capital EURm 1,073 1,294 1,682 2,509 4,477 Par value at Dec. 31 FIM 20 20 5 5 5
Non-Life Insurance Key Figures Adjusted average number of shares '000 60,560 60,560 60,560 60,560 60,560 urnover EURm 992 1,027 1,055 1,311 1,489 Number of shares at Dec. 31 '000 15,140 15,140 60,560 60,560 60,560
FIMm 4,219 4,495 4,648 5,177 5,258 FIM 56.84 70.11 130.19 218.23 184.15 Loss ratio % 91.7 88.4 88.3 95.9 90.1 Adjusted share price, high EUR 11.52 15.35 34.14 52.31 41.00 Expense ratio % 20.0 21.9 19.5 20.1 21.8 FIM 68.50 91.25 203.00 311.00 243.77 Combined ratio % 111.7 110.3 107.8 115.9 111.9 Adju red share price, low EUR 6.94 9.67 14.93 19.34 25.70 olvency margin EURm 886 1,065 1,333 1,749 3,279 FIM 41.25 57.50 88.75 115.00 152.81 FIMm 5,266 6,332 7,926 10,401 19,495 Adjusted do ing price EUR 9.80 15.26 29.77 32.54 34.70
Equalisation provision URm 187 229 242 225 234 FIM 58.25 90.75 177.00 193.50 206.32 FIMm 1,110 1,362 1,438 1,336 1.393 hare trading volume during the olvency capital EURm 1,073 1,294 1,576 1,975 3,513 accounting period '000 7,792 26,330 30,191 47,902 36,499 FIMm 6,379 7,696 9,368 11,741 20,890 Relative hare trading volume % 12.9 43.5 49.9 79.1 60.3
% of technical provisions 72.0 82.8 96.7 112.2 186.5 olvency ratio % 171.8 199.3 233.2 260.1 469.9 B Shares
Avera e number of er onnel 3,023 3,113 3,059 3,170 3,692 Adjusted average number of shares '000 240 240 240 240 240 Number of hares at Dec. 31 '000 60 60 240 240 240
Life Insurance Key Figures 6_dju red number of shares at Dec. 31 '000 240 240 240 240 240 Turnover EURm 265 340 1 051
FIMm 1,575 2,021 6,248 In calculating the net as et value per hare and the return on equity, an interpretation of the Principle of Fairness
FIM m 3 2 6 olvency capital EURm 107 535 964 Other items of the solvency margin has been deducted from the valuation difference when calculating the key figures .
Average number of pcr~onnel 117 122 232 m SAMPO ANNUAL REPORT 1999 SAMPO ANNUAL REPORT 1999 m
Non-life insurance 4. ross operating expenses before reinsurance com missions and equalisation provision profit participation 7· Combined ratio
Direct insuran e Finland 744,787 762,535 312,739 295,482 EUR'OOO 2 3 4 5 6 7 E ·A countrie 88,878 61,955 ther countrie 19,308 3,142 Direct insura.J'Ict
Non-lift reinsurance 26,091 38,220 4,033 2,541 1997 159,461 158.588 -156,896 - 11 ,220 -69 -9,598 106.1 Non statutory accident and health
The following in urance premiums have been collected as a ce sories of 1997 .. ) 781,694 771,349 --693,891 -152,843 -15,790 -91,175 113.5 tatutoty Workers ompensarion Insurance, and rendered to rh Unemployment hange in the coUective guarantee item 1999 -1,158 Insurance Fund and Employees' roup Life Assuran e Pool. 1998 -1, 114
Balan c:: on tc hnical account 1999 -100,389 1998 -90,344 1997 - 115,520
Motor third party liabiliry 1997 78.973 72,7 15 -89,851 - 16,227 -77 -33.440 146.0 Impact of exchang_e rare differences Motor, o<her classes Change in the provision for unearned premiums -22,330 4,872 - 17,458 -449,735 78 -449,657 1999 76,765 7 ,457 58.520 -18,827 - 101 -3,99 1 I 05.4 1998 69,903 68,294 9.851 - 18,608 -54 -2 19 100.3 1997 66,587 64,476 -46,702 - 16,691 -65 1,018 98.4 Change in the provision for outstanding claims Marine, aviation and transport
Provision for outstanding claims, Jan. 1, 1999 1,664,964 -143,466 1,521,499 857,492 -1,232 856,260 1999 4,841 4,68 1 -3,137 -963 -9 1 489 89.1 1998 4,499 4,435 -2,842 -952 - 124 516 88.0 Provision for outstanding claims, Dec. 31, 1999 1,802,833 - 184,344 1,6 18,490 946,666 -2,341 944,325 1997 4,347 4,335 168 -727 -2,592 849 79.8 -137,869 40,878 96,991 89,174 1,109 -88,065 Fire and O<hcr damage ro propcrry 1999 83, 149 82,576 -56,050 -28, 180 -646 -2,299 102.8 1998 83,218 81,811 -50,937 27,852 -586 2,435 97.0
Third party liability Impact of exchange rate differences 1999 1,875 1,742 - 1,563 -602 - I -424 124.4 Change in the provision for outstanding claims -106,839 36,004 70,836 88,573 1,036 -87,537 1998 1,548 1,524 - 1,663 -595 -734 148.2 1997 1,509 1,421 -2,606 -443 - 1,627 214.5
Miscel laneous 1999 178 160 122 161 - 123 176.8 Before 1998 139 130 -53 - 159 - 82 162.6 reinsurers' Reinsurers' 1997 12 1 115 - 143 - 116 -143 224.1 EUR'OOO shore share Net Direct insurance m tot 1999 312,739 302,258 -254,879 -80,284 1,039 -33,944 11 1.5 1998 295,482 286,578 -26 1,556 -79,35 1 - 1,25 1 -55,580 119.6 PARENT COMPANY 1997 275,954 268,213 -23 1,498 -70,680 -3,867 37,832 114.2
Change in the provision for unearned premiums 1999 2,854 3, 11 3 -2,779 518 280 96 96.9 1998 823 2,556 2,163 -358 63 4,423 Provision for unearned premiwns, Jan. 1, 1999 130,181 -42 130,139 1997 587 2,280 -9,266 528 1,528 5.985 363.1
Pr~isi n for outstandi n claim , Dec. 31, 1999 591,858 - 29,431 562,427 1999 37,847 - 77,504 23,163 -54,340 1998 40.495 1997 ;)8,206 l1~a r of exchan~ rate differen es 565 565 The impJ<t of exchange we dtfTcrcn<e• h• not been tramfctrcd w the figure of invc uncnt> in the yen• of eo m pari on 1998 .,,d 1997 hange in the provision for outstanding claims -76,939 23,163 -53,775
Life in urance Individual life in urance mpl yees' group life insuran e ther group life in urance
Policy management expen e Administrative expense ommis ions on reinsurance ceded
Direct in urance commis ions ommis ions on reinsurance as umcd
Monetary value of fringe benefit Pen ion expenses ther social ex enses hare of profit paid ro executive
Ir has been agreed char rhe parent company' Managing Director' retiremenr age is 60 and chat of other manager 60-65.
Income from investments in land and buildings Interest income from affi liated undertakings 837 1,449 Other income from affiliated undertakings 2,184 1,825 Other income from other than affiliated undertakings 55,316 45,356 14,116 15,780
Dividend income 128,330 69,820 23,163 16,696 Interest income from affiliated undertakings 180 170 Interest income from other than affiliated undertakings 184,180 84,053 13,974 9,850 Other income from other than affiliated undertakings 97,283 17,519 3,190 2,434
The impact of exchange rate difference of the in~urance bu~iness is not in luded in the figure~ of the year of comparison I 998 .
GROUP NET INVESTMENT INCOME, JANUARY 1 - DECEMBER 31, 1999 cont.
EUR'OOO ---hare of unit-linked in urance f n t inve cment income
~er ex han e rate lo e of investment 7 GROUP TAX, ACCRUED TAX SURPLUS AND UNUSED CREDIT
Avoir fiscal tax credit on sub idiaries' and associated undertakings' dividends -66,780 - 30,639 hange in deferred tax 2,932 10,818 Tax in the Profit and Loss Account 120,618 46,413 m SAMPO ANNUAL REPORT 1999
Change in the calculation bases Change in the rate of interest - -43,216 - -21,100 Impact of exchange rates 27,748 - 565 -
Net operating expense Extraordinary depreciations according to plan - -3,824 - -2,620 Impact of exhange races on reinsurance commissions -34 - 3 -
Balance on technical account before the change in the equalisation provision 26,423 -43,196 493 -21,074 hange in equali ation provision ounter items for changes in bas, of technical provisions - 39,371 - 18,455 alculation bases of equalisation provision - 4,512 --
INCOME AND CHARGE ITEMS IMPACTING THE COMPARABILITY OF THE RESULT cont.
Premiums written Premium written lmpa t of ex hange rates Rein urer ' share
Im act of excha1~ rare hare of net investment income Impact of exchange rare
Reinsurers ' share I m act of exchan e rates -----hange in rhe provision for outstanding claim Impact of exchange rate
Rein urers ' share I m act of exchan e rates
Investment income l m pact of exchange rate on interest from reinsurance deposits
Transfer of share of net investment income Impact of exchange rates
Tax on profit from ordinary activities Tax for the financial year
Extraordinary income and charges Depreciation on consolidation difference Depreciation on goodwill Tax on extraordinary income and charges
Acqui irion cost, Jan. 1 hange in group rrucrurc ln rea e ecrea e
Accumulated depreciation according to plan, Jan. 1 Depreciation according to plan Decrea e
Accumulated depre iation in x e of the plan, Dec. 31
Associated undertaking hare and participari n 82,195 74,218 83,929 130,693 131,05 1 146,350 the r debt securirie 100,913 100,913 100,913 - - -
The remaining acquisition cost of debt securitie comprise that difference between rhe amount repayable at maturity and purchase price, which has been re! ea ed to interest income ( +) or charged to inrere t income(-) 190 2,357
EUR'OOO ac uisirion cost Book value Current value acquisirion cost Book value Current value Investments in land and buildings
Land and buildings 323,412 405,665 461,760 225 ,200 23 ,532 257,457 Real e lale shares 80,937 80,937 88,328 5,782 5,782 8,151 ---
As ociated undertaking hares and participati ns 71,036 62,875 71,538 11,159 11,342 12,391 200,455 277,273 306,076 226,144 305,484 339,691 Other debt ecuritie 100,913 100,913 100,913 171,949 163,788 172,451 11,159 11,342 12,391 Affiliated undertakings 2,710,413 210,270 210,270 1,449,098 hares and participation 193,803 193,803 Other investments hares and participations 987,329 987,329 3.492,556 1 '145,662 1,145,662 1,900,515
Associated undertakings 66,200 68,657 97,656 97,656 109,959 hares and participation 66,200 167,113 167,113 169,570 97,656 97,656 109,959 ther loans 62,867 62,867 62,867 6,906 6,906 6,906 De osics with credit in tirution 124,586 124,586 124,586 112,708 112,708 112,708 2,074,667 2,074,667 4,583,939 2,911,718 2,911,718 3,721,706
The remaining acqui ition cost of debt securities comprises that difference between the amount repayable at maturiry and purcha e price, which ha been relea ed to interest income ( +)
Revaluation entered in 28,345 revaluation reserve 27,659 -- 79,340 76,818 -
Valuation difference ~difference between current value and book value) 3,116,437 1,411,706 m SAMPO ANNUAL REPORT 1999 SAMPO ANNUAL REPORT 1999 m
Unreali ed gains n inve tmenr , Dec. 31 67,428 36,409
Depreciation according ro plan/value adjustment and value readjustments 21,717 3,233 Decrease - 27,091 - 9,335
Accumulated depreciation according to plan/ value adju tmenrs, ec. 31 204,966 52,338
Remaining acquisiti n eo t Book value urrent value Management expenses (dire dy allocated)
1999 1998 Buildings Land and Loans to Buildings Land and Loans to waters and affiliated waters and affiliated EUR'OOO real estate shares undertokings real estate shares undertokings
A qu i ition eo t, Jan. I 136,931 187,950 15,485 140,484 196,286 16,618 Porcfo li tran fer/ merger 1,294 7,861 766 lncrea e 8,377 11,792 3,597 2,198 10,817 1,009
_ Decrea e - 9,506 -51,381 -8,192 -5,752 - 19,153 -2,142 A qui ition cost, Dec. 31 137,095 156,222 11,656 136,931 187,950 15,485
Accumulated depreciation according to plan/value adjustments, Jan. 1 67,656 52,603 60,449 48,337
Accumulated depreciation in excess of the plan, Dec. 31 8,894 7,754
AAS S.unpo L.uvij.t 49, 96 99.99 99.99 1,171 191 949 J aakko Poyry roup Oyj 80,600 1.22 1.22 1,897 3,869
Capsam Con uiling Ltd 1,600 40.00 60.00 135 911 1,327 on1pone:nta orporation 1,714,642 3.10 4.59 5,186 22,290 l·.c"i Kindlu tu>t AS 8,228,0 0 100.00 100.00 10,4~2 973 3,965 Fi~k•1r orporation 168,900 0.84 0.33 4,634 8.259
Oy If a veri Ab 20 100.00 100.00 2 0 0 Mcrso orporation 2,658.756 2.14 2.14 32.972 37.356
Sampo Holding (UK) Ltd 10,0 0 100.00 100.00 28,863 1,962 44,672 R3utaruukki orporation Sampo lndustrialllolding B.V. 45,000 100.00 100.0 19.659 I 20,958 Fore t J ndu try 2,236,930 1.61 4.62 9,497 24,981
Sampo lndumi.tlln~ur;HlC~ N.V. 1,050.000 100.00 100.00 27,110 1,187 43.396 Metsii· erb orporation 10,289,932 1.35 3.90 74,533 181 ,054
Tcva Holding B. V. 45.000 100.00 100.00 25 ,970 - 915 20,983 Lassil• & Tikanoja Plc UAB Sampo Oraudimas 4,000 100.00 100.00 2,490 - 122 2,366 Energy 7,984,298 1.02 1.02 25,183 35.929
T 1nternationalln uran c ompany Limited 9.000.000 100.00 100.00 17,061 -248 15,416 Uin ivoima Oyj ~ampo Enterprise lnsur~mpany Limited " 500,000 100.00 ___!QQ,QQ __ 50,440 27,923 §.7.665 Food Industry 470,140 3.51 0.37 4,863 9,779
Kaleva Mutual Insura nce Company 1'" 25,000 50.00 25.00 4,339 16,478 48,313 Aspocomp Group Plc 95,000 0.44 0.44 1,805 6,635
• uomen Oikeuspalvelu Oy 3,400 20.00 20.00 45 0 395 Elcoteq Network orporarion 72,000 0.27 0.27 554 2,088
Ca.ltrum Yl 8,394,450 10.91 10.91 7.1.~5 7, 135 Nokian Tyre> plc 1,067,080 1.72 1.72 12,215 13,872
Kiintci>tosijoitu> Oyj itycon 14,678,071 13.88 13.88 17,090 17,173 Sanitec Corporation 990,736 11.18 12.82 7.730 22,512
Neprun Mm time Abp 1,288,403 2.05 2.05 2,737 2.770 Stonc>oft orp. 395 000 8.31 8.31 710 849
4,12G.4o9 1,27 1,726 Kcsko C:orporauon 2,959,8.i0 3.28 0.79 }2,987 37.294 Total Rauukirja Oyj 151,050 2.33 2 . .34 7,426 7,426 15,639 18,916 Sto<kmann pk 2.159,550 4.20 3.25 20.48~ :12.1 (>5 Other publt con1panie TJmro orpor.ation 5.7.}0,742 4 76 4.7(1 17,.}89 17.421 1.287,365 4,145,326 Public comp.tnie~ m tot.a.l m SAMPO ANNUAl REPORT 1999 SAMPO ANNUAl REPORT 1999 m
Public companies A. Ahhtrilm sakcyhtio 3.750 0.88 0.09 5,126 5,126 Sa ic M atcr ial l'ingrid Oyj 79 2.38 1.06 2,657 2,657 hemicals I !elsinki Exchanges .roup Ltd y 499,031 3.70 3.70 2,955 2.955 Air l.iquide France 6,525 0.01 828 1,084 Varma-S•mpo Mutuall'cn;ion Insurance ompany '1 71 100.00 20,841 20,890 Akzo N bel NV Holland 38,400 0.01 1,121 1,912 Okmeri y 2,664 10.93 10.93 3, 118 3, 118 Bayer A ermany 159.600 0.02 4,495 7,501 OyG.W. ohlbergAb 202,380 7.50 2.98 6,748 8.671 Namccl Broadway Lrd !-long Kong I ,897.500 0.94 1,386 2,949 Oy Real invest Ab 800,000 2.33 2 .. B 3,391 3.391 mni lndumi<s Ltd Singapore 882,000 0.23 1,149 1,592 Sa to Yhtymii Oyj 227,419 10.35 10.35 8,852 10,37 1 tee! Setc y 3,620 9.05 9.05 2,010 2,0 10 S AB vcnskt tll Ab wed en 89,000 0.08 720 1,372 w -yhtyma Oy 17 1,960 7.24 7.24 3,294 3,294 onsurncrt Cyclical Unit trust Airlines arhay Pacific Airways Lrd Hong Kong 679.000 0.02 828 1,204 Alfred Berg Euro Korko A 3,902,453 6,728 6,907 Auto Manufacturers Alfred llerg Small ap B 6,124,516 17,130 27,340 Vol k>wagen A Germany 88,220 0.02 3,042 3,294 Alfred Berg Small ap n Europe 17.057,684 17 ,076 25.921 Volvo Ab Sweden 88,700 0.02 2,112 2,279 BilL Baltic Statt ap. Fund 7 ,008 2,009 2,290 llorne Furni hings Erikoissijoirusrahasto Phalanx A 1,900,025 3,204 4,427 ony orp Japan 70,000 0.02 4,589 20,646 Evli European maller .ompanics B 374,533 6,388 8,723 Leisure Time Evli Nordic Smaller ompanies B 219,280 3,833 5,951 Magnum orporarion Bhd Malaysia 1,803,000 0.12 781 1,327 Fides New Media B 30,000 3.000 6.283 Lodging Fides Telecom B 99,443 10,000 20,524 Metroplex Bhd Malaysia 8,314,000 0.91 1,621 2,167 yllenberg European Equity B 43,053 3,700 5,0 19 Media Gyllenberg International B 11 ,913 1,196 2,008 Elsevier NV 1-lolland 695,600 0.10 8,250 8,250 yllenberg Momentum B 21,788 2,377 10,6 12 Reed 1nterenational Plc Great Britain 150,000 0.01 1,046 1,122 .yllenberg Money Manager B 39,824 3.364 3.785 Wait Disney Corp. United States 131,600 0.01 2,855 3,832 Gyllenberg mall Firm B 22,840 2,542 7.962 Wolters Kluwer NV !-loll and 62,548 0.02 2,074 2,102 Leonia Kasvu sake 90.500 1,522 5,550 Retai l Mandatum Aasia 434,674 9.002 12,088 Adidas- alomon AG Germany 15,000 0.03 1,117 1,118 Mandatum Eurooppa 509.658 8,747 11,804 Ahold (Kon) NV Holland 209,842 0.03 4,449 6,167 Mandarurn Global 533,249 9,601 18,488 Carrefour SA France 20,200 0.01 1,704 3,699 Mandatum Vi pu 175.728 4,137 11,551 Hennes & Maurin Ab Sweden 224,350 0.03 1,930 7,467 Sampo Euro Bond Fund B 36.523,393 35.358 35,358 !to-Yokado Co Japan 98,000 0.02 4,437 10,589 Sampo Sectorsfund (Europe) B 8,409,396 8,409 11 ,014 Mark> & pencer Plc Great Britain 752,000 0.03 3,580 3,580 Sarnpo Sccrorsfund (Global) B 3.363.759 3,364 4,300 Wal-Mart Stores Inc. United States 17,400 0.00 200 1,197 Sarnpo 2020 B Fund 3,454,070 3.454 4,275 Textiles Sampo 2030 B Fund 7,842,775 7,842 10,261 Shanghai Marsuoka Co Ltd Japan 2,853,000 2.59 694 1,193 eligson Euro Obligaatioindek>irallasto A 5,430,000 9,133 9,177 Tcxwinca Holdings Ltd Hong Kong 6,585,000 0.51 1,012 1,012 Seligson Global Top 25 Brands 8.009,435 13,474 19,623 onsu mer, Non-Cyclical
Capital trusts Commercial Services Great Britain Granada Group Plc 101,284 0.01 767 1,025 Fennorahasto 5,364,697 9.023 9,023 Renrokil Initial Great Britain 530,000 0.02 1,926 1,926 Finnventurc: rahasto Ill 1,200,000 2,018 2,018 Vivendi France 35,190 0.01 2,030 3,155 Finnventure rahasro JV 2,080,000 3,498 3,498 Cosmetics/Personal Care Nordic Mezzanine Fund I Ltd 709,470 7.095 7,095 Gillerre Co Un ired Srares 54,400 0.01 2,139 2,230 eonsor Fund 5.270,535 8,864 8.864 L'Oreal France 5,000 0.01 1,505 3,983 Total 286,081 384,221 Food arlsberg NS Denmark 35,000 0.06 1,317 1,317 Oth<r shares and participations 38,618 41,620 DaniscoNS Denmark 432,240 0.75 16,724 16,724 Diageo PI Great Britain 368,400 0.01 2,312 2,963 Domestic shares and ~artici~ations in total 1,612,064 4,57 1 ' 166 Heineken NV Holland 25,000 0.01 641 1,211 L.V.M.H. Louis Vuitton Moet 1-lennessy France 19,334 0.02 2,842 8,598 ., Share of guarantee capital Nestle Swinerland 2,425 0.01 2,583 4,407 rkla A/S Norway 196,571 0.13 2,352 3,359 Holdings exceeding EUR 2 million (cu rrent value) and holdings in public companies exceeding five per cenr specified. Uni lever NV Holland 48,285 0.01 2,452 2,648 Health are
Nycomcd Amersharn Plc Great Britain 381,360 0.06 1,415 2,392 uality Hcalthcare Asia Lrd Hong Kong 4 094,000 0.60 755 1,573
Germany 7,800 0.01 3,465 4,076 Total Fina SA Fr;1nce 77,281 0.01 4,084 10,240 apAG Financial
Sweden 43,800 0.04 827 3,059 J.P. Morgan & o Inc. United rate 8,473 0.00 908 1,068 Net orn ysrems Ab japan 160 0.00 1,239 2,726 Nordbanken Holding Ab wed en 546,700 0.04 2,365 3,192 NTT Data orp.
Italy 360,000 0.01 1,926 3,982 Unidanmark A/S Oc:nm:lTk 15,000 0.03 999 I ,048 Telecom lralia Mobtle pA
Sweden 841,98 1 12.55 9,474 9,833 AB l.ieruvos Draudimas Lithuania 34,118 6.12 1,569 2,30 I nvesteringssallskapet 1999 Ab
Austria 120,926 1.72 1,683 1,782 Topdanmark A Denmark 70,000 0.18 1,124 1,373 Steiner 1 ndusrrics AG
Lindereves-jakobcrg Ltd ingapore 954,000 0.56 620 1,460 New Providence Fund Cayman Islands 300,000 2,678 4,423
Great Britain 250,000 560 1,281 Canon Inc. japan 70,000 0.01 1,296 2,766 Schrodc:r Yemures lnternationallnvesrmtnt Trust Fanuc Ltd japan 10,000 0.00 253 1,266 JOT Holdings Singapore Ltd Hong Kong 2,924,375 1.70 1,725 6,467 Capital trusts
Great Britain 605,000 6,050 6,050 Kyocera Corp japan 64,000 0,03 3,420 16,509 Acces apital L. P.
Kva~rner A a orway 74,820 0.16 1,306 1,306 I ndumi Kapital 1997 L.P. Luxemburg 287,154 2,872 2,872
Mit ubishi !!cavy lndumie Ltd japan I ,457,000 0.04 4,836 4,836 Preferential Equity Investors LLS Sweden 4,647,231 5,276 5,427
Skanska Ab wed en 46,900 0.04 1,467 1,736 Procurita apital Partners Jl. L. P. Cayman Islands 325,500 3,240 3,240
M is ellaneous Manu factu ring Schrodcr Venture> Eur21>ean l'und 129,336 164,355 Brtltlh Aero;pace Plc Grc.t Bri~Jin 734,099 0.02 1,464 4,.149 Total ,eneral Eleuric .o (US) Un11ed State> 29,800 0.00 I ,441 4,590 5,842 5,975 Siemen; AG ,crnuny 10,000 0.00 42.~ 1,263 ther hare and panicipations V eh• AG CermJny 136,450 0.0.3 5,445 6,584 hares and participations in total 520 ,927 821,905 Transportation
Foreign llergc•en D Y A~A Norway 150,500 0.20 2,715 2,715 Technology Biotechnology
Risk Management l.td Sampo l lolding (UK) l.1d lndu triallmurancc mpany l.td " ampo l.ifc In urance ,ompany Limited"
'ampo Finance Ltd 11 Kaleva Murual lnsuran e onlpany 1121 Kiinc~i tOvarma Oy Suomen Luouovakuutus Oy uomen Oikeuspalvelu y Vahink.2Palvelu Qr._ Total
" Figure. at group level 2' hare of guarantee a pi tal
A,pocomp Croup Plc Comptcl Oyj Hcl,inki rclcphonc .orporation lnMrumcntarium CorporJuon Nokia Corpora !Ion l'erlo' Corpo1auon Soncra (:orporation hemicals Kcmira Oyj Or ion ( orpm d. troll ponor Oyj m SAMPO ANNUAL REPORT 1999
Other companies l lelsinki Exchanges roup Ltd Oy Varma· ampo Murual Pension Insurance ompany " J
Unit trusts E.vli Eur ptan maller ompanies B Evli Nordic maller ompanies B
yllenberg European Equity B Mandatum Global ampo Euro Bond Fund B digson Global Top 25 Brands
Holdings exceeding EUR 2 million (current value) and holdings in public companies exceeding five per cent specified.
Telecommunications Briti5h Telecommunications Plc N·n Data .orp. Sw!Sscom AG Tdecom ltalia Mobile 'pA Telc Danmark NS T~efonica ~A
Shares in affiliated undertakings riginal acquisition o t, Jan. 1 Portfolio transfer/merger ln rease
Accumulated value adjustmems/depreciation on consolidation difference /decrease in negative consolidation difference, Dec. 31 Remaining acquisition cost, Dec. 31
Debt securities issued by, and loans to, associated undertakings Original acqu isition cost, Jan.
Kiintei t .. ij irus yj ityc n 9, 25 ampo Finance Led 100,913
Interests are entered on accrual basis in accordance with the original payment plan.
hare in investment funds 50,688 62,609 10,325 10,340 Debt ecuriti 4,495 6,929 4,495 5,948
Prepayment and accrued income Interest and rents Other prepayments and accrued income
Deferred tax on optional reserves and depreciation difference Minority interest in optional reserves and depreciation difference Acquisition cost eliminations
The roup companies did not own share in the parenc company on De­ cember 31, 1999, but T International had a bond with warrants is ued by
Authority of the Board of Directors he Annual eneral Meeting auth r­
Subscription Term of subscription Price/ share No. of new Share capital Mode period or subscriber (FIM) shares after the issue
New i sue April 11 to 1:1 plu ubscription right 250 3,000,000 126 million A and B shares May 20, 1988 280
New issue October 17 to 2:1 plus ub criprion right 325 3,000,000 186 million A and B shares November 18, 1988 400
Directed issue June30, 1994 Kansallis-Osake-Pankki 380 1,500,000 310 million A shares
' 1 Prices per share and numbers of shares at a nominal value of FIM 20. The nominal value was changed to FIM 5 in ctober 1997.
Shareholdings No. of No. of A and B shares shareholders shares n joint account 2,160,247
FIM 500 (EUR 84.09) includes 250 warrant , f which 75 are marked with the letter A, 75 with the letter B and I 00 with the letter . With each war­ ram ne ampo A hare can be sub­ cribed in such a manner that the ub­ cripcion p riod for warrants A i from
The hare capital can increa e by 3,300,000 A hares at most as a re ult of the subscriptions, or FIM 16,500,000 (EUR 2.8 million), which equals co 5.3 per cent of the company's hare capital.
Unsa Led 9,442,492 15.53 Varma- ampo Mutual Pension Insurance Company 4, 192,828 6.90 Kaleva Mutual Insurance Company 'I 2,798,426 4.60 Scora Enso Oyj 1,649,324 2.71 Oucokumpu Oyj 703, 132 1.16 Local Governmenr Pension Institution 507,472 0.83 Metra Corporation 380,200 0.63 Pension fund oflmatran Voima 276,308 0.45 Mutual Insurance Company Pension-Fennia 249,500 0.41 Pension fund ofNeste 234,308 0.39 Mecso Corporation 200,000 0.33 The Finnish National Fund for Research and Development 163,400 0.27 Oy RettigAb 156,188 0.26 Trust fund Leonia Osake 132,400 0.22 Teollisuuden Voima Oy 122,052 0.20 Vapo Oy 11 7,796 0.19 Steveco Oy 109,160 0.18 Alfred Berg Finland Sijoitusrahasto 106,540 0.18 Elakes1Hitio Neliapila 103,544 0.17 LEL Employment Pension Fund 103,300 0.17
") ampo received notice on January I 2, 2000 that General Electric Company owns 3,047,287 shares, i.e. 5.01 o/o of the share capital and 4.93% of votes.
Monthly share price development (share price, high and low), EUR Monthly trading volume, '000
ef< rred insuran e p li y a quisiti n om dcdu tcd from rh lif< insuran e premium res rvc
Rein urer ' hare Before discounting After di counti~ Amount of discouming 22 OBLIGATORY PROVISIONS
Amount owed to credit institutions P n ion loans ,;,;_:_ __
Pledge again r own liabilirie 8,783 Amount of the above liabilitie 4,034
Pledge again t trading in derivatives 19,721 ollareral again t own foreign rein urance liabilities 56,506 ounrer ecuritie 13,237
Id, underlying in rrument 611,60 l urrenr value 1,322 ked, underlying in trument urrenr value
Group EUR'OOO 1999 1998 hare d rivatives Futures and f. rwards, pen underlying in rrument 101, 19 87,8 4 urrent value 7, 75 - 6,113 ption n tra lS
Bought, underlying instrument Ill ,467 5, 62 urrent value 0 - 2,748
Equali ation provision for years with large numbers of lo scs included in technical provi ions 26,098 37,03 21,720 quali ation provision w it full value (%) 10.7 14 .0 7.7 olvcncy capita l olvcn y margin and qu.tlisarion m SAMPO ANNUAl ~lPORT 1999 olven y ratio earned (o/o) 525.2 464.5 515.6 658.4 1,219.9 olven y capital to premium apical to re hni al provi ion lven y 147.9 191.8 228.3 291.2 518.3 le equali ation provi ion (o/o)
Expen e ratio peraring expense to premium ombined ratio Lo ratio and expense ratio (o/o) 114.4 111.9 116.3 117.9 111.3
We have audited rhe ac ounting re ord and rh financial ratement , a well a the admini trarion by the u­ pcrvisory Board, the Board of irector and the Managing Dire t r f ampo In urance ompany plc f, r the financial year 1999. The flnan ial tatement, which include the rep rt frhe B ard ofDire tor, con lidared and parent company in me rarement , balan e heer and note to the finan ial rarement , have been pre­ pared by rh Board f Director and the Managing irecr r. Ba ed on our audit we expr an opini n on the e flnan ial tatemcnt and n the mpany' admini rrari n.
The under igned Jaakko Nyman has crutini cd rh a ount fi r the flnan ial year and ubmitted a eparate report there n.
We have condu red the audit in accordan e with Finni h enerally Accepted Auditing randard . Tho e standard requir that we plan and perform the audit in order to obtain rea onable a urance about whether the financial statement are free of material mi tatement. An audit includes examining, on a test ba i , evidence supporting the amount and dis lo ures in the financial tatement , a es ing the accounting principle u ed and ignifl ante rimate made by the management, a well a valuating the overall financial tatement pre entarion. The purpo e of ur audit of admini rrarion has been to examine that the upervi ry Board, the Board of irector and the Managing Director have legally omplied with the rule of the Insurance ompanie Act and the Finnish ompanie Act.
In our opinion, the final accounts have been prepared in accordance with the Finnish Accounting Act and other rule and regulation governing the preparation of financial statements in Finland. The financial state­ ments give a true and fair view, as defined in the Accounting Act, of both the con olidated and parent com­ pany re ulr of operations, as well as of the financial position. The financial statements can be adopted and the member of the upervisory Board, the Board of Director and the Managing Director of the parent company can be di charged from liability for the period audited by us. The propo a! made by the Board of Director on the distribution of profit is in compliance with the Finni h ompanies Act.
E a Swanljung, born 1949 (2000) Vice hairman Managing Director, Federation of Employment Pension Institutions
Heikki J. Pedi.la, born 1958 (2002) Managing Director, Hel inki hamber of ommerce
Seppo Saynajakangas, born 1942 (2002) Chairman of the Board, Polar Electro Oy
Legal Affairs Aleksanterinkaru 11, Helsinki, Finland Postal addre : FI -00025 AMPO, Finland Telephone +358 10 515 311
hairman Jukka 1-Jarmala, b rn 1946 (2000), Managing Dire tor, tora n o yj. Vi e hairman of the Board, onfedera­ tion ofFinni h Industry and Employer . Vice hair­ man of the Board, Finnline Plc and PV roup. Vice hairman of the upervi­ sory Board, Varma- ampo Mutual Pension Insurance ompany. Member of the upervisory Board, Merira
Bank Plc. He was ap­ pointed Member of rhe Board of ampo In urance ompany Limited on June 26th, I 992. Period of office tarred on August I sr, 1992. He was appointed hairman of the Board on ctober 20rh, 1993.
The Board of Director i respon ible for the administration of the ompany and the proper management of its operation . The Board of Director is furthermore respon ible for the proper arrangement fa counting and financial admini trarion.
M reover the Board of Dire tor : Ari Heinio, born 1945 (2001), Managing Director, rockmann plc. hairman of the Board, ommer ial ampo Mutual Pen ion Insurance ompany, and Finni h Fair orporation. He tran ferred to the Board of ampo In uran e om­ pany Limited from the upervi ory Board on tober 20th, 1993.
Jouko K. Leslcinen, b rn 1943 (2001), Pre ident and E , arnpo ln urance ompany plc. Vice hairman of the Board, UPM-Kymmene orporation. Member of the Board, Finnlines Plc, Varma- arnpo Mutual Pen ion Insurance Com­ pany, Nokia orporation. Member of the Board of ampo Insurance Company Limited since January 1st, 1993 (appointed on Octo­ ber 22nd, 1992).
Statutory workers compensation 3 2 Non-statutory accident and health 9 3 Motor third party liability 32 4 Motor, other classes 25 5 Fire and other damage m SAMPO ANNUAL REPORT 1999
Within the Sampo Group, private households are served by Private Sampo, a unit that is part of the parent company ampo plc. The forms and self-employed clients that Private Sampo formerly handled were transferred to ampo Enterprise at the turn of the millennium. Private Sampo has retained responsibility for the car dealership distribution channel that serves the whole Group.
pera ri nal c ntr 1 is achi ved via the bal­ anced se re ard ystem char plays such a viral role in en uring a high level f li enr at i fac­ tion , afeguarding profi tabili ty, devel ping increa ingly cu romer-orienred and eo r-effi­ cienr ervice pr c , monitOring per onnel know-how and well-b ing, and making cer­ tain that the prerequi ire for continu u in­ novation are available.
Four regional organi ations admini ter Private ampo's client ervi ce net via 86 of­ fi ces throughout Finland, suppl emented by the arnpo aJI entre tel ephone service. A network of agents and car dealers provides another significant distribution channel. The potential to integrate Priva te ampo's service network with that of arnpo Enterprise dur­ ing the year 2000 was fir t examined in the Spring of the year now under review.
Priva te arnpo office began to offer mo­ tor vehicle regi trarion a a form of public ervice at rhe beginning of ebruary, 1999.
T hi proved p pular with morori t , who can now get their vehicles regi cered and insured in a ingle rran a cion. As a result, Pr.ivare ampo dealt with more than 80,000 registra­
Private ampo conrinued to upgrade it operations and information ystems accord­ ing to plan through the Sampo 2000 pro­ gramme and will complete the process this
Turnover 695.2 534.7 Premiums earned 304.0 288.0 Cla ims incurred ') -257.6 -260.0 Nee operating expenses -80.7 -79.6 hange in the equalisation provision -3.5 11.2 Balance on technical account -37.8 -40.5 Net inve tment income 332.6 170.9 Profltllo for the fi nancial year 224.7 56.6
year. The company's current product and ervice solutions will also be improved rhrough gradual tran fer to a single, modular y rem that will allow individual clients to elect the ervices they require through the mosr sui table ervice channel. lienr docu­ mentation will be completely remodelled.
Upgraded product and ervice supply along with an improved operating model are built on new I technologies. A key objective here is to strengthen Private Sampo's flexibil­ ity considerably, so that the company can re­ act effectively to hifts in client need .
Claims Expenditure on the Increase Private Sampo's operating margin improved by more than 10 per cent over 1998.
laim ervice development focused on improving Sampo office taff know-how. Ef­ forts to streamline the claims-handling proc­ es included the abandonment of needless documentation and upgrading filing system ; telephone claims service provlSlon was tested. The goal i to create a cusromer-ori­ emed, straightforward and efficient claims­ handling model for minor damages. The re­ organisation of loss survey a tivirie and es­ tablishment of a properry claim centre will ·n ure improved targ ring and efficien y for Private ampo survey operations.
Outlook The outlook for household insurances continues to be favourable. Economic growth and household purchasing power have been strong for several years now and households' own expectations about their economic situ­ ation continue to be highly positive. Unem­ ploymenr is expected to decrease still further, although regional variations will probably re­ main substantial. Motor vehicle sales have grown for several years now and this positive trend is expected to conrinue. Residential real estate sales have also been lively.
tion will continue their brisk development into the near future. Competition will change the way clients act in their choice of prod­ ucts, services and service channels. The utili­ sation of telephone services and Internee­ based self-service is constantly on the in­
crease. International competition will intensify in insurance markets, but the convergence of insurance companies and banks will change rhe competitive arena both in the Nordic countries and throughout Europe.
Small and medium-sized enterprises, their key personnel, the public sector, and housing and real estate companies are all well served by ampo Group company Sampo Enterprise.
In Estonia, rh ong ing pr vision and develpm nt of insurance ervices i the re pon i­
bility f n n-life insuran e company ampo Eesti Varakindlustus and life insurance com­ pany ampo esri lukindlu rus. In Larvia, clienr are catered for by n n-life insurer amp Larvija and life company ampo Larvija Dziviba, and in Lithuania by then n­ life in urance company ampo Draudima that wa founded during the review year.
amp Enterpri e has over 90,000 clients and preliminary information indicate that dome tic marker share rood at 10 per cent.
ampo Eesri Kindlusrus ha approximately 200,000 clients and hold around 38 per cent of the Estonian market. ampo Latvija has over 200 client and a market share of some 0.5 per cent. ampo Draudimas operating in Lithuania received its operating licence just before the end of rhe year.
The ampo Enterpri e ervice Network is responsible for client relation hip manage­ ment and the Non-Life Insurance Unit en­ sures a sharper focus on non-life business. The other profit centres are the Baltic Profit Group and Sampo Enterprise Investment Operation , while Corporate Development and Administration provide operation sup­ port for the whole company.
The ervice Network compri e the re­ gional organisation and Technical hannels that in turn comprise the ampo all entre and Electronic hannel. An analysis was be­ gun in pring, 1999 with the aim of uniting the service networks of ampo nterprise and Private ampo during the year 2000.
27 mill ion for the financial year. The non-life insurance balance n technical account before the change in equali ation provision was EUR -16 million, and net investment income stood at EUR 66 million. ampo Enterprise
Technical provi ions, net 487.4 439.0 Balance heet total 629.1 573.6 Balance heet total at current values 915.7 701.8 Solvency margin 337.9 208.4 Equali ation provision 48.4 35.8 olvency capital 386.3 244.2
group profit totalled EUR 28 million for the year, and profitability and solvency continued to improve both in the parent company and in ampo nterprise roup.
The focu of new investments lay on equities. Investments in bond were mainly in
Baltic subsidiaries laims incurred -6.9 -0.6 Net operating expenses -5.8 -0.5 Other technical charges -2.4 Change in the equali ation provision Balance on technical accoum -1.6 -0.1 Net investment income 0.8 0.0 Profit!lo for the financial year ') -1.0 -0.1
In the Baltic countries, Sampo Enterprise acquired and established new companies dur­ ing the year under review. The total result from these Baltic enterprises was approxi­ mately EUR -1 million, accounting for around 8 per cent of non-life insurance pre­ miums written by Sampo Enterprise Group.
The non-life insurance channel strategy has been determined and resources will be al­ located to the development of the appropri­ ate channels. There will be a clear foc us on the development of e-business, both in Fin­ land and abroad, which represents a growth area for which the merger of Sampo and Leonia provides an excellent starting point. Success in the rapidly growing and develop­ ing electronic communications and e-com­ merce markets requires the sufficient quanti­ tative and qualitative allocation of resources.
Sampo Enterprise will continue to be responsible for the control of Bal tic subsidi­ aries in the year 2000, at the beginning of which a decision was made to bring Poland inro the CEE (Central East European) busi­ ness area that shall compri e Poland and rhe Baltic countrie .
Sampo Group in total EUR 853 m 1 Private clients 37 2 Corporate clients 28 3 Major clients 35
After Ot Lo s f Profits In urance m­ pany Ltd and the Insurance ompany of Fin­ land Ltd merged into their parent company ampo plc at the end of 1999, the ervice they had formerly supplied to large enter­ prises were transferred to Industrial In ur­ ance. As a result of acquisitions and the estab­ lishment of a service entity in Poland during the review year, ampo's own office network now covers almost the whole of Northern Europe, an area it sees as its dome tic market. Elsewhere in the world , Sampo clients are erved by a global net of co-operation part­
pecialisation enables in-depth under­ standing of the client's business and the oper­ ating model has yielded positive result . Mar­ ket share in the forestry indu try continued to grow during the year under review. ampo Industrial now insures approximately 20 per cent of all the paper, pulp and cardboard pro­ duction capacity in urope.
ampo Indu trial works in do e co-op­ eration with the I ading experts in its core areas of business. ubstantial progress in lo­ gistics and transportation insurance, together with signifi ant experti e in dealing with loss of profit risks, adds further value that enables ampo lndu trial to provide comprehensive risk management service and insurance cover for it client companies. Thi take in the en­ tire I gi tic chain, from raw materials sup­ plies, through subcontractor and ervice pro­ viders, right up to client deliverie .
The importance for Sampo Indu trial of tl1e new e-channels lies more in client services than ales. The Electronic Client Files project launched in Finland in 1999 will increasingly enable all client information flows to be han­ dled via the Internet. We believe that the use of uch electronic client files will streamline co-operation not only with the clients them­ selves, but also with the brokers that in fact repre ent almost half of ampo Industrial's entire clientele.
No claim were recorded on Y2K risks at the turn of the millennium, and neither did the storm that caused extensive damage in variou part of Europe have a significant im­ pact on amp Industrial 's portfolio. Loss ex­ perience was al o favourable in other respects during the fir t half of me year. The la t quar­ ter of 1999, however, saw almost a many large claims exceeding EUR 2 million re­ corded as in the whole of 1998. The insur­ ance business result cannot therefore be de­ scribed a satisfactory. There were 17 large claims in total, five in Finland and twelve abroad. This was reflected in the loss ratios of all ampo Industrial companies.
The higher level of recruitment at Indus­ trial Insurance, combined with IT expenses ari ing from the transfer eo the euro, were tl1e primary causes of increased operating ex­ penses. Those of Sampo Industrial Insurance N .V. were further weighted by the growth in broker commissions attributable ro increased trading volumes.
Outlook Two successive years involving a large number of losses places rising emphasis on the importance of loss prevention. Most of these large claims resulted from rather tradi­ tional circumstances. The focus of loss pre­ vention measures in the year 2000 will there­ fore lie increa ingly on better control of the eau es of major losses.
ampo lndu trial expanded it opera­ tions in ermany, the UK and Sweden, through acquisitions that have strengthened the organisation's distribution network and raised its status as an acknowledged insurer of industrial enterprises in Europe.
T he companie ' balance on technical ac­ count before the change in equali acion pro­ vi ion cood at EUR 2.8 million, but howed a Ios after the change.
ome 30 per cent of Patria' provision for out tanding claim i reserved for asbe cos and environmental damages; the figure for
Number of Patria Re's active contracts managed by the company itself
Foreign reinsurance claims paid by Patrio Re, EURm - Claims paid on passive contracts - Claims paid on active contracts
Patria Re's technical provisions and capital and reserves, EUR m f-
Technical provisions, net 200.9 182.5 Balance Sheet total 290.0 290.7 Balance Sheet total at current values 292.3 295.6 Average no. of eersonnel 32 34
Growing Markets, Stronger Companies Finni h life ompanie ' ombined premium written grew according eo preliminary infor­
ket, but in the review year were unable to challeng the dome tic operator ' trong po­ ition. The foreign in urer ' market hare in
A discu ion aro e in pring, 1999 con­ cerning the tax deductib il ity of individual
The 125th anniversary of Finnish life insurance operations fell in 1999. The jubilee also marked the first year of the new Sampa life. In April 1999, the head office operations of Sampa life moved to their new site in Hietalohti, Helsinki.
tal level of their pens ion cover after the age of 60.
anteed interest on traditional insurances fell to 3.5 per cent. ale of unit-linked life in urances brought in premium amounting to nearly EUR 0.5 billion in 1999, and rho e of pen ion in urance drew EUR lOO mil­ lion.
roup pen ion in urance premium written by Finni h life companie ro e in ex­
·uran e grew by m re than 6 per cent to ap­
nary informatio n, ampo Life increased its market share by 6 percentage points eo around 8 per cent in this segment, which is the fastest growing in the insurance industry. The longer-term goal is to achieve a level cor­
responding to the company's total market share. Growth in individual pension insurances rema ined modest, with premiums written amo unting to EUR I 05 mill ion. Premiums written duri ng the last few weeks of the year
Individual pension insurance is one of the key areas of development in the company's operations in the year 2000. Premiums written on group pension in­
EUR 156 million, or 6 per cent more than in 1998. T he most rapid growth was een in unit-l inked life insurance, where premiums written increased a much a tenfold on the previou year to almost EUR 34 million. ampo Life i the fi r t Finnish life com­
pany to have launched insurance product the lient can ub cribe to and pay for via the
amp net products- ingle-premium endow­ ment policy and individual pen i n p !icy got off to a promi ing tart.
urrhermore, ampo Lifi i a hare­ holder in Nordben Life & Pen ion In urance ompany Led located on uern ey in the hannel I land . Nordben offers pen ion, life and disability cover to employees and their families who go to work abroad in countrie where local insurance cover fail to meet Finni h standard .
An Excellent Investment Result ampo Life's level of investment risk is set to meet solvency requirement for the long-term operation of a life in urance company. In practice this means the goal has been to maintain the solvency level at an average 20 - 25 per cent on technical provision .
he valuati n differen e between the marker and b k value f inve tment aim t d ubled t UR 840 million.
ampo Lif< aim for a t tal return on policyholder ' with-profit aving chat at least matches Finni h trea ury bond yield . The total return compri es the guaranteed. intere t and bonu e determined annually on the bai of ampo Life performance. The company a! o pur ue future continuity in the level of total returns.
A client bonus of 1.1 - 2.7 per cem was granted. on insurance savings, in addition to rhe guaranteed intere t rate, depending on wh ich in urance line was involved. Total yield was thus 5.0 - 6.2 per cent.
ampo Life' solvency margin stood at EUR 949 million or seven times the required minimum, while solvency capital - solvency margin plus equali ation provision - rood at EUR 960 million. At the end of 1999, ol­ vency capital was 31.1 per cent of own-ac­ count technical provision (21.2 per cent).
Principle of Fairness The Finnish Insurance ompanie Act, hapter 13, ection 3, rate that a o-called Principle of Fairn mu t be appli d to with­ profit policie . A reasonable p rrion of the urplu must therefore be returned to the e policie in the form of b nu es, in s far a solvency requirement p rmit.
holder , as i eighty per cent of val uation differences not needed ro ensure long-run sol­ vency. Thi calculated distribution of valua­ tion difference does not entitle individual hareholders or po licyholders to these valuation differences.
Looking to the Future Life insurance companies are important to the Finnish economy, inasmuch as their com­ bined balance sheet total exceeded EUR 16 billion at current value during the year un­ der review.
The life market yet has the potential for con iderable growth, particularly in the in­ creasingly popular individual and group pen­ sion insurance that supplement statutory pension cover. Households will invest a sub­ stantially larger proportion of their assets in insurance avings than the present 10 per cent.
The proportion of unit-linked policies in new sales will continue to grow and may reach nearly 30 per cent of gross premiums written in the year 2000.
The company began to promote Inter­ ner-bas d pr duct and channel in 1999 and will continue to do o. The next development hift following on from the provision of cur­ rent Samponet products will be to bring unit­ linked insurances into the online environ­ ment. For Sampo Life in the next few years, the Internet will evolve as an important chan­ nel to sell and manage these products.
Joining forces with Leonia Life Insurance Company will considerably strengthen ampo Life's service capacity and market po­ sition, most especially in the household and small-business segments. Using the bank as a distribution channel will open up new oppor­ tunities for selling life and pension insurances to clients and. potential clients shared by the two companies. Anticipating the formation of the
Sampo life's solvency margin, EUR m - Minimum amount - Capital and reserves - Valuation dill. (shares)
The investment market was fairly inconsistent in 1999. Interest rates rose considerably and the 1 0-year Euro rate that stood at 3.93 per cent at the beginning of the year was 5.36 per cent at the year-end.
tional market ntinu d, du co w rldwid corp rate re trucruring, fi rce growth in eh IT and celecommuni acion ector and gr ady improved investment yield . The t I ommunications and ele troni indu try al­
apical value and rental level of domes­ tic real e rates continu d eo ri ea a re ult of the trong economic growth .
orporate financing markets in 1999 were characterised by the ongoing crengrh of growth in Private Equity market , and the greater willingne of M to eek ri k capi­ tal through JP . Thi intense development i expected co continue in the year 2000.
The current value of ampo roup in­ ve tments at December 31st, 1999 totalled
UR 9.4 bi ll ion. Inve tments in intere t­ bearing in truments accounted for 33 per cent of roup inve tment a et , equitie for 58 per cent and real estate inve tment 9 per cent. The valuation difference between the current and book value of investment amounted to EUR 3.4 billion. International investment accounted for 21 per cent of the total inve tment portfolio.
The total yield of the e urltle p rtft li in­ luding valuati n difTeren es w 85 per ent.
0 mesti equity inv tment a ount d (, r 93 per ent f rh t tal qui tie p rcf, li .
he g al n w is to in rea e the proportion of f, r ign equirie to 20 per ent. The ompany ha f, r long n ntrated its global invest­ ment in ix I in f bu ines that omple­ ment ea h rh r in an primal way from a ri k manag ment per p rive.
The d me ti market for intere t-bearing in trument i con idered to compri e the entire euro ar a, and the e accounted for 69 per cent of the interest portfolio. Trea ury bond make up the greater part of inve t­ ment in intere t-bearing instruments. The aim now i to rai e the proportion of corp rate bond in that total. The yield on intere t­ bearing in truments was 3.6 per cent and the intere t portfolio duration wa 2.7. The benchmark yield was 1.6 per cent at a dura­ tion of 3.8.
Derivative have been mainly u ed for portfolio management, and their yield amounted to UR 3 million.
Sampo life Securities Investments The level of ri k attach d to ampo Life' ecuricies portfolio i lower than that for non­ life in urance. The aim i to maintain the proporti n of the total inve tment p rtf< li at 35 per ent ft r equitie and in ex e of 50 per ne ft r inter t-b aring inve tm nts. Th yield n the uriti p rtfolio wa 24 per cent.
Completed property portfolio 552.7 683.8 ite and development project 1.2 53.9
Vacancy rate et yield compn e EUR 0.8 million of mrere t ub idie paid on rare- ubsidi ed re idential properties. An independent authon ed real estate urveyor has valued the rents for the retail premise and offices occupied by ~mp , ~t ~n ~verage of I:.UR 11 . per m' per month (gro s). fhe potenu~l ne\ y1eld mio compn e the e timJted rental income for vaant premi es, at an average of E R 6.5 per m per month (gro ). rurthermore, group companie own ~pproximatdy 8,100 m' of m.unly owner occupied real estate abroad, at a current v~lue of Jround 1'. R 30.7 mill10n.
Du t the ub tantial increa e in sto k market pri e , ampo Life ha hedged ri k n its quity portf, li thr ugh d rivatives. Hedging t of UR 68 milli n have been taken into a unt in cal ulating th yield n quity inve tment .
Client Financing lient finan ing wa plit int tw eparate fun ti n in April I 9, namely Private q­ uity and lient Finan ing. Th latter retained re p n ibility [, r inv tment guarantee in urance perati n . Re p n ibil ­ ity f, r the guarantee in uran e liabilitie f both amp and ampo nterpri e wa tran ferred to the lient Financing fun ti n when th Insurance ompany of Finland Ltd merged into its parent company ampo.
Private Equity and Project Financing The Private Equity function i re pon ible for ampo roup's private equity fund inve t­ ments, private equity investments in unlisted companies, and investments in the nature of project financing. The volume of investments using the e in rrument ro e considerably
ampo r up mmitment in pri\ate equity fund w re valued at EUR 74 milli n at the year- nd , f whi h EUR 116 milli n was inve red . Dire t private equity inve r­ m nt in unli red mpanies totalled EUR 67 million at rh year-end.
Offices and retail premises Residential buildings Industrial buildings and warehouses Undeveloped sites and development proJects Hotels Other
Total investments in land and buildings EUR 816 m bui ldings to a trum yj and three shopping centre pr pertie to Kiinteisrosijoitu yj itycon. ew inve tm nt were concentrated on larger unit , mainly ffi premi e in reater Hel inki. Their value growth potential i con­ idered favourabl and demand for premi e to rent ontinue to grow. The m r igniftant new real e tare inve tment were the head offt e premi es of kanska y on Pa iuk enkatu in Helsinki, the 3rd rage of the cella Busines Park in Leppavaara (Espoo, near He! inki), and the deci ion to build office for K ne orporation in Keila­ niemi, Esp o and Haaga, He! inki, a well as to inve t in the further development of the inebrychoff building , again in the Finni h capital.
Funds and Asset Management Services ampo A et Management Ltd and ampo
Fund Management Lrd are wholly owned sub idiarie of ampo Finance Ltd, which is in turn owned in equal parts by ampo and Kaleva.
It fir t became po ible for ampo diem to ub ribe to fund on the Internet in April 199 ; to make additional ub criprion , ar­ range monthly avings ontract and even witch fund . Fund owners can al o redeem unit dire dy into their own bank account via the Internet and track unit development.
ampo roup empl yed a permanent staff numbering 3,514 in Finland a at cember 31 r, 1999, f whi h slightly more than one third is male. A total f 246 new per onnel was taken on in rhe y ar under re­ view. ome 138 sta ff lefr ampo roup's Finni h employ in 1999, a net turnover of 4 per cent compared ro 6.3 per cent in 1998.
Parr-rime employee accounted for 6.6 per cent of the total personnel and 38 per cent of those were on a parr-rime pen ion. There were altogether 87 part-time pension retiree working at the year-end, representing almost one half of those who have rea hed the age at which they are enrirled ro a parr­ rime pension. A total of 188 person. had reached that age by rhe beginning of the year 2000, and that number is increasing ar a rare of nearly on hundred per year.
Standard of Education The annual in rea e in rh av rage tandard f edu arion among r ur p r nnel i mainly attributable to empl yee re ruitment. f rho e who were hired in 19 9, a high 78 p r cent had at least a c !leg training. In fa t, a many a 60.5 per nt f permanent per n­ nel had had a minimum fa college educa­ tion at the year-end.
Professional Skills and Development ampo rafT know ho i a good fir with the requirement f rh ir ork. The climate ur­ vey dem n trated that 88.5 per cent of repondent find their kills at lea r ufficient for rhe ra ks at hand, nd rafT faith in their own ability to mec frc h challenges i even great r than befor .
Per onnel dev lopmcnt has continued to fo u on the planning of new learning envi­ ronment . We built and piloted a new net­ based learning environmem in 1999, which will be implement d on a wider scale during the year 2000.
Jadion with Sompo Sci~$foction w' superVISor Sotisfoct,on wi ark Flow of mformolion
ampo' environmental policy wa updated in November to meet the goal of our environ­ mental activirie . The policy will be reviewed no later than 2001. The • nvironmental Poli y reering roup, compnsmg environ­ mental representative from the bu ines and ervice units , monit rs policy implementa­
A total of 374 obligatory environmental damage insurance policies was written m 1999, premiums for whi h amounted to EUR 1.7 million. These poli ies are designed to cover damage caused by unkn wn or inlvent parti ' . A lo s of profits policy wa de­ vel ped to ver bu ine interruption to manufa curing perarions, du ro a de ision made by the relevant authorities in conne cion with sudden and unexpected cnviron­ memal damage. New Juri ns wer ughr in c - perari n with lienr t d al with 1 ng-term pr gres ive envir nmencal damage.
L ss pr venti n w rk ~ use n prop­ erty, pr fir, per nal, liabi li ty and tran porta­ cion l se . Envir nmenrall s es are, for in­ tan e, di us ed in chemical accident control eminars organi ed rwi e a year. In Novem­
ampo paid • UR 0.4 million in com­ pensa tion for environmental damage in 1999, for incidents such as an oil tank leak. There were 23 in rances of environmental damage reported to ampo during the yea r.
ampo roup's purcha ing department introduced a et of environmental criteria for tl1e 20 main product categories bought in. All new suppliers must comply with the criteria.
In May, ampo signed a co-operation agreement (KRE ) concluded by real estate and building sector repre ematives together with the Finni h Mini try ofTrade and In­ dustry. KRE aim at compliance with na­ tional goal stipulated by the Kyoto onven­ rion. ampo has al o joined the real estate and building ector environmental pro­ gramme (ProGre ). ampo offices in Vanraa were selected a a pilot site for a ProGresS project studying the environmental a pects and impacts of real e tare maintenance.
Environmental Performance Indicators The figures published in the table below are used in guiding our environmental work and in benchmarking. They will be comple­ mented by data on waste and travel, once the Green Office system has been extended to cover all ampo offices. A decision on whether to analyse carbon dioxide emissions eau ed by arnpo operations is under investi­ gation.
Hannu Kokkoncn, Prc idcnt Born 1947, Managing ire t r f Private ampo, cputy Managing Dire t r f amp . Areas of re p n ibility: private hou eh lds, inf< rmati n tc hn logy, per nncl.
Juhani Vcstcrincn, President Born I 953, Managing ircctor of ampo ntcrpri c.
Kari tadigh, President Born 1955, Managing Dire tor of ampo Life.
Matri Rantancn, Executive Vice Prc idcnt Born 1949, Managing Director of Kaleva, Dcpury Managing Director f amp Life.
Matti Ruohoncn, enior Vice Pre ident Born 1947, hief Financial fficer. Areas of respon ibiliry: group finance, logi tic crvi c , IR-operati n , internal auditing, rein urancc run-off.
m SAMPO ANNUAl REPORT 1999 jouko K Leskinen Hrmntt Kokkonm juhani Vesterinm
• Part of the ownership is channelled through the holding companies situated in the Netherlands
The official financial t::ttemenr can be in peered at the f, 11 wmg ampo ffice : - Aleksan terinkatu I 1, Hel in ki ( amp roup' Legal Affair ) - Pu lalankatu 5, Turku (Financial Admini trati n)
ampo r up Annual R p rt : ampo In urance ompany plc • avai lable in Finni h, wedish and ngli h
Industrial In urance Company Ltd • availab le in Finni h, wedi h and • ngli h
Sampo Life Insurance Company Limited • available in Finnish, wedi h and English ampo will publi h three interim report in 2000. The reports will be published on May 17th, 2000, Augu t 22nd, 2000, and November 21 t, 2000.
AB ecurities rdi arnegie onventum Deur che Morgan renfell nskilda ecuritie Evli ecuricie Fox - Piu, Kelton
Ronny Ruohomaa Jesper kriver Frandsen Mats Ander on Martin ott!ob Kim Nummelin Bengt Dal1 lstri:im Mark Carhcart M ika Koskinen hrisrian Kock Bob Yares William Hawkins Srephen Diaz Per Gronberg Karita Meling Osmo Junkkarinen Espen Nordhus Ari Lampinen Andreas Ossmark Richard Urwick Roberto Cervesi Joy Ferneyhough Frank Sroffel Kevin Ryan
, Finland Vi iting addr : Aleksa nterinkam 11, Het inki Tel. +358 10 515 311 Fax •358 10 514 4028
Industrial Insurance Company Ltd Postal address: FI -00035 Het inki, Finland Vi iting addrc s: Vanuniemenkuja 8 A, Het inki Tel. +358 10 51 512 Fax +358 10 5I4 5232
ST International Insurance Company limited Po tal add re s: Puolalankatu 5, FIN-20 I 00 Turku, Fin land Vi iting addre : Puutarhakatu I , Turku Tel. +358 10 515 300 Fax +358 10 514 1940
Varma-Sampo Mutual Pension Insurance Company Postal addre : FIN-00098 VARMA- AMP , in land Visiting add re : Annankacu 18, I let inki Tel. •358 IO 51 513 Fax +358 10 514 4752
Vi icing addres : K. P. van der Mandelelaan 90 3062 M B Rotterdam
Bran h ffi ccs in ermany Rennbahnstras e 72 D-605 28 rankfurt a. M.
Atrium oun ity P l a1~1 annon treet Birmingham B2 5 F United Kingd m Tel. +44 12I 634 2000 Fax +44 121 634 2001
AAS ampo Larvija AA ampo Latvija D:.:iviba Merketa treet I (3rd Ao r) Riga, LV-1050 Latvia Tel. +37 1 750 3333 Fax +37 1 750 3555
Po tal addre : P .. Box 16, FIN-5350 I Lappeenrama, Finland Visiting addre : Malaja Konju hennaja 1/3, offi eA I 1 RU-19 1 I 86 t Peter burg Russia Tel. +7 812 329 2540 Fax +7 812 329 254 1 antpo roup Moscow Representative fFi e Po tal addres : ampo roup, Mo c w