In addition to the economic turbulence and increased regulation, forces of nature put the foundations of our risk selection to the test: the winter at the beginning of the year was extremely harsh with heavy snow fall. In the summer, heavy rainfall caused flooding, particularly in
Denmark. At the end of the year, Norway, Sweden and Finland suffered an unusually strong winter storm.
(below 95 per cent) as the combined ratio for the whole year was at an excellent 92 per cent. In addition, the business volume improved noticeably, as the premium income rose to EUR 4.2 billion. When calculated using fixed exchange rates, the annual premium income increased more than ever during the time If P&C has been fully-owned by Sampo.
Share of the net profit from Nordea increased to EUR 534 million The management of Nordea, our associated company, responded quickly to the changes in the operational environment by initiating measures to safeguard the bank's profitability. One of the positive developments was increased revenues, as the bank's income in 2011 was greater than ever before in its history.
The operational environment for life insurance in Finland was if possible even more complicated: while there is a growing need for supplementary pensions, unfortunately the general economic situation and taxation legislation do not provide impetus for them. The difficult investment environment was also reflected in the sales of asset management services. In spite of this, Mandatum Life's profit before taxes reached EUR 137 million compared to EUR 142 million a year earlier.
EUR 849 million. Regardless of this, it still was the second largest premium income in the company's history. The sales of life insurance products through Sampo Bank's distribution channel succeeded especially well.
Sampo Group / Annual Report 2011 Sampo Group / Group CEO's Review
If P&C's largest market is in Norway. Our diversification across the
In these circumstances, I believe that Sampo’s near future rests on a solid ground. Our leading position in our main market areas and our strong capital base provide a good foundation for successful operations during 2012.
Kari Stadigh Group CEO and President 2011 in Figures Key figures, Sampo Group, 2011
Sampo Group / Annual Report 2011 Sampo Group / 2011 in Figures
Sampo Group aims to create value for its shareholders. Value is created through efficient and highly profitable operating units and by investments in situations offering significant upside potential with manageable downside risk. Shareholders benefit from the value creation through a high and stable dividend yield.
If's strategic goal is to establish better profitability and customer satisfaction in the long run than competitors, coupled with high creditworthiness. The financial targets are to achieve a combined ratio of less than 95 per cent and a return on equity (RoE) of at least 17.5 per cent.
• Focused Insurance Expertise – If will purposefully strengthen the organisation's skills in developing, pricing and distributing insurance products, as well as in the areas of liability loss prevention and claims management.
Finland and the Baltic countries. Mandatum Life’s core product areas in the coming years will consist of unit-linked policies, risk products and voluntary corporate pension schemes. In 2011, operations were expanded to cover the management of personnel fund services and corporate pension funds. Thanks to this expansion, Mandatum Life has a more comprehensive range of services for ensuring personnel commitment and motivation and for corporate pension solutions. Also during the past year, the company has continued to make investments in the development of sales and customer service.
investment result, risk result and expense result. The strategy in investment management is to maintain adequate solvency in relation to market risks in the balance sheet. This enables the company to strive for a return that is higher than the risk free return. In expense and risk result Mandatum Life seeks growth, even if in the short-term the expense result will suffer from the substantial investments in sales channels. Mandatum Life’s financial target is to produce a RoE of at least 17.5 per cent.
Dividend Policy Sampo plc, the listed parent company of Sampo Group, is a good dividend payer. Sampo aims to pay at least 50 per cent of its net profit as dividend. Share buy-backs can be used to complement the dividend.
The Board proposes to the AGM a dividend of EUR 1.20 per share for the year 2011. The proposed dividend corresponds to a pay-out ratio of 65 per cent.
The parent company, Sampo plc, is listed in the NASDAQ OMX Helsinki since 1988. It has no business activities of its own but administers the subsidiaries and is responsible for certain centralized functions in
Nordea Nordea, the largest bank in the Nordic region, has around 11 million customers and is among the ten largest universal banks in Europe in terms of total market capitalization. The Nordea share is listed in the
Nordics, winter was hard in January and February, a cloudburst struck
Globally, industry claims cost spun out of natural catastrophes are estimated to have more than doubled compared to 2010 with major catastrophes like the earthquake in Japan and flooding in Thailand.
However, extreme weather conditions are a natural element of the insurance business. Thus in moments like this If works hard to always live up to our customer promise - Claims handling the way it should be.
If reported for 2011 a combined ratio of 92.0 per cent which was an improvement of 0.8 percentage points compared to last year at the same time as the premium income grew with 5 per cent. Profit before taxes came to EUR 636 million (EUR 707 million). This is altogether a satisfactory and stable result. In the second quarter If’s holding in the
Danish insurance company Topdanmark exceeded 20 per cent. With this Topdanmark became an associated company of If, and its share of
Continuous improvements in underwriting and cost efficiency and further development of partnerships and customer relations continued to be If’s focus areas. Improvements in customer and claims service are also constantly made in all business areas and markets. Ifs goal is to increase organizational involvement in identifying business initiatives and continued in 2011 to work systematically to involve all employees in improving Ifs operations, services and customer experience.
Synergies are effectively utilized, and the system is also in use in
Risk Management approach was also acknowledged in the way that If was graded as ‘Strong’ by Standard & Poor’s on If’s Entreprise Risk
Framework. If has systematically worked for the environment and reduced its carbon dioxide emissions significantly. In 2011 If became carbon neutral. Efforts towards creating a cleaner environment will be high on If’s agenda also in 2012.
continued increase in the number of household and corporate customers, and more business with each customer, led to increased business volumes.
The response to the global financial and sovereign debt crises from regulators, the business community and most banks has been to take action to prevent it from happening again. The banks must take on an important role in the future economic structure, with an emphasised role as buffer for future disturbances and bubbles in the economy.
New regulatory requirements on capital, liquidity and funding are the key elements in ensuring that role. But they also imply a cost. The impact on the cost of operating banks will grow further, which will be reflected in business models and other changes in the global banking market for years to come.
Nordea’s vision is to be a Great European bank, acknowledged for its people, creating superior value for customers and shareholders. Nordea has around 11 million customers, approx. 1,400 branch offices and is among the largest universal banks in Europe in terms of total market capitalisation. The Nordea share is listed on the NASDAQ OMX Nordic
Mandatum Life After a record year in 2010, the year 2011 proved to be challenging in more ways than one. The low levels of confidence in the investment market resulting from the debt crisis in the eurozone made the year difficult both in terms of investment activities and reaching the premiums written targets.
One of the essential cornerstones for Mandatum Life’s sales strategy is the successful cooperation between the in-house distribution channels that focus on different customer segments and products.
During the year, Mandatum Life acquired business operations that focus on personnel fund and pension services, including the personnel, into its newly established subsidiary (Innova Personnel Fund and
An agreement was concluded with Sampo Bank to continue cooperation in distribution at least for the next five years. This enables investments in new product solutions, the first of which were launched already during the autumn of the year under review.
Best practices were propagated into common Mandatum Life practices, and several products were launched simultaneously in the two markets. Uncertainty in the investment market also affected the
Mandatum Life continued to invest strongly in the development of the personnel’s wellbeing, competence, customer orientation and supervisory work. For example, investments in occupational health services reduced the number of absences due to sickness and, as a whole, employee satisfaction in Mandatum Life as an employer rose further.
The average number of Sampo Group's employees in 2011 amounted to 6,874 (6,914). 32 per cent of the personnel worked in Finland, Sweden 27 per cent and Norway 22 per cent. The share of Baltic countries,
areas, the developments in 2011 are described separately for both of them.
The aim of this initiative is to bolster If P&C’s value creation by increasing the company’s focus on intangible assets such as customer orientation, competence creation and the ability to innovate. These intangible assets are closely linked to our employees and how they perceive their working environment. Maximizing our intangible assets will require a company culture and work environment that creates maximum employee engagement and commitment.
In 2011, several ‘Skills and Initiatives’ sub themes, launched in 2010, gained momentum. One important such theme is the launch of a structured and recurring process for idea creation and idea implementation across the whole company. This process – called the
Currently 2,400 If employees are enrolled in the process and are thus actively involved in innovation. The aim is to have 4,000–5,000 employees participating in the process by the end of 2012.
To ensure understanding of and broad support for the ‘Skills and
In 2011, most of If P&C’s top executives have attended the program, and a common language for discussing initiatives has been established.
‘Skills and Initiatives’ theme better. In all of If P&C’s management development programs an increased focus has been placed on BI
working at If P&C. Leadership abilities at If P&C remain on a high level, which is supported by high and continuously rising scores, 87 per cent positive regarding 'My Leader' in the employee survey.
Sick leave percentages remain low and stable at between 1.2 per cent to 3.5 per cent in various countries, excluding Norway. In Norway, the sick leave figure was 4.8 per cent in 2011, a significant improvement compared to 2010 when Norwegian sick leave percentage was 0.6 per cent higher.
Personnel turnover ended at a level of 8.5 per cent on annual basis excluding Russia. This is slightly lower compared to 2010 (9.1) and is the result of focused efforts to create a positive and stimulating work climate in If P&C. Number of employees has been relatively stable, with the only exception being the reduction of employees in Russia as result of the exit from the Russian private market.
The human resources (HR) function of If P&C was reorganized during 2011 to improve the ability to support the front line organization. HR
If Academy continues as a Nordic function for competence development and a new Nordic department for Compensation and
HR in Mandatum Life In 2011, Mandatum Life’s HR policies focused on the development of customer focused culture, internal cooperation and high standard personnel management processes. Understanding of the business logic was improved in Mandatum Life by organising the Sales School training program for the entire personnel.
The management development was also continued. Managerial training programs introduced in 2010 continued and, by the end of 2011, 90 per cent of company’s managers had attended the training.
The business development unit was reorganised to ensure innovations and efficient project management. The idea for the new organisation came from the training program aimed at key personnel. Customer service organisations and related career path possibilities were developed to improve customer service skills and customer satisfaction.
Personnel management also invested in the integration of the new subsidiary, Innova, and its personnel into company’s operations.
The 'Great Place to Work' survey saw Mandatum Life’s staff job satisfaction rise again in 2011 to 77 per cent (73). According to the study, 85 per cent of the respondents thought Mandatum Life was a very good company to work at.
As an example, If has taken an active interest in environmental issues over the past few years, and all the company's actions are guided by a
• If has initiated a collaborative venture with the WWF in Finland, which has included If’s office in Turku becoming a green WWF
If has an extensive program for supporting safety initiatives in a broad sense. In Sweden, for example, If supported Rädda Barnen’s (Save the
Association). In Finland If helps keep primary school children safe with high visibility yellow caps which make the children visible to traffic while on their way to school. If also supports SUL’s (The Finnish
National Athletics Federation) Athletic Schools initiative for children and teenagers aged from 7 to 14.
Naturally, If also tries to convince politicians and other decision makers to come to sensible and far-sighted decisions. One example of this is
Sweden, where If works to get zoning officials take into consideration the risks of raised water levels when taking a stand on waterfront housing wishes. Along with the other three major Nordic insurance companies, If is supporting a research project on climate adaption in the Nordic region that is being managed by the Nordforsk research funding organization, an organ of the Nordic Council of Ministers. If's researchers also analyze the company's comprehensive vehicle damage statistics on a regular basis, with the aim of ensuring that the information can be used to increase safety on the roads. At present, the focus is on improving the safety of unprotected road-users such as cyclists and pedestrians.
Mandatum Life provides protection for its corporate customers and their families as well as for the future of the company in the event that the entrepreneur falls ill, becomes disabled or is deceased.
The most important factors affecting our happiness are family, health, love and good financial security. Falling critically ill, becoming disabled, an accident or death may pose a significant financial risk. Voluntary supplemental coverage is usually necessary, and Mandatum Life’s indemnities help the insured and their loved ones to better cope in difficult situations.
20 Corporate Governance Statement 21 Board of Directors 24 Board of Directors’ Duties 24 Election and Terms of Office of Board Members 24 Board-Appointed Committees 25 Audit Committee 25 Nomination and Compensation Committee 26 Group Executive Committee 30 Group Executive Committee’s Duties 30 Group CEO and President 30 Compensation 31 Internal Audit 31 Insider Administration 32 External Auditor
Governance Statement on its website in fulfillment of the requirement referred to in the Finnish Securities Markets Act, chapter 2, section 6, subsection 3.
Sampo Group / Annual Report 2011 Corporate Governance / Corporate Governance Statement
Positions of Trust: Nordea Bank AB (publ), Chairman; UPM-Kymmene Corporation, Chairman of the Board; Hanken School of Economics, Chairman of the Board; Finnish Business and Policy Forum EVA, Board Member; The Research Institute of the Finnish Economy ETLA, Board Member; The Mannerheim Foundation, Board Member
• Wahlroos holds 11,858,555 Sampo plc shares directly or through a controlled company.
Positions of Trust: Wärtsilä Corporation, Vice Chairman of the Board; Stora Enso Oyj, Board Member; The Finnish Pension Alliance TELA, Vice Chairman of the Board; Securities Market Association, Chairman of the Association's Board; Federation of Finnish Financial Services, Board Member
• Member of the Board of Directors of Sampo plc since 7 April 2004.
• Vuoria holds 33,794 Sampo plc shares directly or through a controlled company.
Board of Directors Sampo plc's Board of Directors, elected annually by the AGM of Sampo plc, uses the highest decision making power in Sampo Group between the AGMs. Sampo's Board of Directors is responsible for the management of the company in compliance with the law, the regulations of the authorities, Sampo's Articles of Association and the decisions of Shareholders Meetings.
The following persons served on Sampo plc's Board of Directors in 2011: Sampo Group / Annual Report 2011 Corporate Governance / Board of Directors
Positions of Trust: Kone Corporation, Board Member; The Research Institute of the Finnish Economy ETLA, Board Member; Finnish Business and Policy Forum EVA, Board Member; Aalto University Foundation, Board Member; International Chamber of Commerce (ICC), Finland, Board Member; Finnish Energy Industries, Board Member
• Member of the Board of Directors of Sampo plc since 9 April 2003.
Member of the Audit Committee; Swedavia, Sweden, Board Member; AP 7, Sweden, Vice Chairman of the Board
• Member of the Board of Directors of Sampo plc since 14 April 2011.
• Grate Axén holds 957 Sampo plc shares directly or through a controlled company.
Sampo Group / Annual Report 2011 Corporate Governance / Board of Directors
Positions of Trust: Elisa Corporation, Board Member; Sigrid Juselius Foundation, Deputy Board Member and Member of
• Member of the Board of Directors of Sampo plc since 15 April 2008.
Positions of Trust: Incomes Policy Information Committee, Chairman; Advisory Board to the Government Institute for Economic Research,
• Member of the Board of Directors of Sampo plc since 5 April 2006.
• Pekkarinen holds 7,322 Sampo plc shares directly or through a controlled company.
• Taxell holds 7,879 Sampo plc shares directly or through a controlled company
Member of the Board of Directors of Sampo plc from 25 May 2000 to
The Board elects the Group CEO and President, the members of the
Group Executive Committee and the Group Chief Audit Executive, and releases them from their duties. The Board also decides on the terms and conditions of their employment and on other compensation. In addition, the Board confirms the Group's staff planning targets and monitors their fulfillment, determines the grounds for the Group's compensation system and decides on other far-reaching matters concerning the staff.
Directors has approved internal rules concerning corporate governance, risk management, internal control and reporting in Sampo Group.
Election and Terms of Office of Board Members According to Sampo's Articles of Association, the company's Board of
Meeting to be held in 2012. The term of office of the Board members ends at the close of the Annual General Meeting that first follows their election. The members of the Board elect a Chairman and Vice
Board-Appointed Committees The Board may appoint committees, executive committees and other permanent or fixed-term bodies for duties assigned by the Board. The
Audit Committee The Audit Committee is responsible for monitoring the statutory auditing and reporting process of the financial statements and consolidated financial statements, and for overseeing the veracity of
Finland, monitors the auditors' invoicing for audit and non-audit services as deemed appropriate, monitors the efficiency of the Group's internal control, internal audit and risk management systems, and monitors the Group's risks and the quality and scope of risk management. In addition, the Committee approves the internal audit action plan, monitors the internal audit's reporting, monitors the fulfillment of risk policies, the use of limits and the development of profit in various business areas, oversees the preparation of and compliance with risk management policies and other related guidelines, and reviews the description of the main features of the internal control and risk management systems pertaining to the financial reporting process, which is included in the company's
Group CFO, Group Chief Audit Executive, the member of the Group
Tom Berglund (until 14 April 2011) and Jukka Pekkarinen. Also participating in the meetings were the Auditor's representative, Group
CEO, Group CFO, Group Chief Risk Officer, Group Chief Audit Executive and Group Chief Counsel (until 31 October 2011).
Nomination and Compensation Committee The Nomination and Compensation Committee is entrusted to prepare proposals for Sampo's Annual General Meeting on the composition of the Board, the compensation of Board members and the principles on which this compensation is determined. The Committee consults the largest shareholders in these matters.
Board on the composition and chairmen of the Board's committees, on the appointment of Sampo Group CEO and President and the composition of Sampo Group's Executive Committee, the composition of the Group MD Committee, and on the principles by which the members of the Group Executive Committee are to be compensated and their compensation. As authorized by the Board of Directors, the
Committee also decides on the salaries of the members of the Group
Furthermore, the Committee prepares a proposal for the Board on the appointment, employment conditions and other compensation of
Vice Chairman of the Board and three members elected from among the members of the Board.
Björn Wahlroos, and the other members are Veli-Matti Mattila, Eira Palin-Lehtinen, Matti Vuoria and Christoffer Taxell.
Positions of Trust: Nordea Bank AB (publ), Board Member; Confederation of Finnish Industries EK, Vice Chairman of the Board; The Federation of Finnish Financial Services, Chairman of the Board; Varma Mutual Pension Insurance Company, Board Member; If P&C Insurance Holding Ltd (publ), Sweden, Chairman of the Board; Mandatum Life Insurance Company Limited, Chairman of the Board; Kaleva Mutual Insurance Company, Chairman of the Board; Nokia Corporation, Board Member; Work Group for National Capital Market Strategy, Chairman of the
• Stadigh holds 249,346 Sampo plc shares directly or through controlled companies.
• Hestvik holds 21,406 Sampo plc shares directly or through controlled companies.
Positions of Trust: If P&C Insurance Holding AB (publ), Sweden, Board Member; Mandatum Life Insurance Company Limited, Vice Chairman of the
• Johansson holds 52,112 Sampo plc shares directly or through controlled companies.
Positions of Trust: If P&C Insurance Holding Ltd, Sweden, Board Member; Mandatum Life Insurance Company Limited, Board Member
• Lapveteläinen holds 227,226 Sampo plc shares directly or through controlled companies or persons closely associated with the
• Magnusson holds 26,329 Sampo plc shares directly or through controlled companies.
• Martinsen holds 19,965 Sampo plc shares directly or through controlled companies.
Positions of Trust: Alma Media Corporation, Board Member; Federation of Finnish Financial Services, Life Insurance Executive
Committee, Board Member; BenCo Insurance Holding B.V., the Netherlands, Board Member; Silta Oy, Board Member
• Niemisvirta holds 45,215 Sampo plc shares directly or through controlled companies.
• Thorsrud holds 17,182 Sampo plc shares directly or through controlled companies.
Timo Vuorinen Head of Business Area Baltic and Russia, If P&C Insurance; Managing
• Vuorinen holds 8,953 Sampo plc shares directly or through controlled companies or persons closely associated with the
Positions of Trust: If P&C Insurance Company Ltd, Finland, Board Member; If P&C Insurance AS, Estonia, Board Member; CJSC If Insurance, Russia, Board Member; IPSC Region, Russia, Board Member
• Wennerklint holds 20,061 Sampo plc shares directly or through controlled companies.
The Group Executive Committee addresses especially the following: Sampo Group's strategy, profit development, large purchases and projects, the Group's structure and organisation, as well as key strategic issues pertaining to administration and personnel.
The Group MD Committee comprised Kari Stadigh (Chairman), Ilona Ervasti-Vaintola (until 31 October 2011), Peter Johansson, Patrick Lapveteläinen, Torbjörn Magnusson, Petri Niemisvirta and Ricard Wennerklint.
Group CEO and President The company has a Managing Director who is simultaneously Group
Director of the company and the Group CEO and President of Sampo
Under the terms of the Group CEO contract, the notice period for the
Group CEO is six months. In addition to receiving salary for the period of notice, the Group CEO is entitled to severance compensation of 18 months' full salary, provided that the service contract has been terminated by Sampo.
Meeting decides on the compensation of the members of the Board of
Directors for their Board and committee work up to the close of the
EUR 100,000 to the Vice Chairman, and EUR 80,000 to the other members of the Board, with 50 per cent of each Board member's fee being paid, after taxes and corresponding charges, in Sampo A shares and the rest in cash. Board members employed by the company will not receive separate compensation for Board work during the validity of the employment or service relationship.
Members of the Board of Directors have not received any other benefits, nor do they participate in Sampo's incentive systems.
Compensation of the Managing Director and Other Executives The Board of Directors decides on the terms of employment and compensation of the Group CEO and other executives on the Sampo
Group Executive Committee, on the basis of a proposal by the
Nomination and Compensation Committee. However, the Nomination and Compensation Committee can decide, upon authorization by the
The members of the Group Executive Committee are also participants in the long-term incentive systems 2009 I and 2011 I for Sampo's management. The terms of the incentive systems are available on
Based on his employment contract, the Group CEO will be paid a fixed monthly salary and a yearly short-term variable compensation, which may be no more than an amount corresponding to nine months' fixed salary. The Group CEO is also a participant in the long term incentive systems 2009 I and 2011 I for Sampo's management.
Mr. Kari Stadigh is the CEO of Sampo Group. For year 2011 the Group
CEO was paid EUR 782,942 in fixed salary and EUR 216,233 in short term variable compensation and EUR 566,400 in long-term variable compensation, together totalling EUR 1,565,575.
The members of the Group Executive Committee are each covered by the employment pension system of their country of residence. Under the terms of their employment contracts, the majority of them are also covered by supplementary pension schemes. The retirement age for the Committee's members as set out in their contracts is 60, 65 or the age laid down in the employment pension system of their country of residence.
More detailed information on compensation in Sampo Group during 2011 is available at the Salary and Remuneration Report published by
Internal Audit Sampo's Internal Audit is a function independent of business operations, which evaluates the sufficiency and effectiveness of the internal control system and the quality with which tasks are performed in Sampo Group. The Internal Audit reports to the Group CEO. The
Internal Audit has been organized to correspond with the business organisation.
In its auditing work, the Internal Audit complies with, in addition to the
Sampo Group / Annual Report 2011 Corporate Governance / Internal Audit
The total fees paid to the auditor for services rendered and invoiced were EUR 2,013,628. In addition, Ernst & Young Oy were paid fees for non-audit services rendered and invoiced totalling EUR 281,071.
Sampo Group / Annual Report 2011 Corporate Governance / External Auditor
April 2012 a dividend of EUR 1.20 per share (1.15) and an authorization to repurchase a maximum of 50 million Sampo A shares.
Net asset value per share on 31 December 2011 was EUR 14.05 (17.79).
Fair value reserve on the Group level amounted to EUR 355 million
Profit before taxes in the P&C insurance segment amounted to EUR
Sampo’s share of Nordea’s net profit in 2011 rose to EUR 534 million
137 million (142). Fair value reserve decreased to EUR 214 million as at 31 December 2011 (436). Return on equity was -11.7 per cent (36.2).
(707) in 2011. The decrease was mainly explained by financial markets’
Topdanmark’s profit contribution for 2011 was EUR 7 million. The book value for Topdanmark in the Group balance sheet was EUR 329 million on 31 December 2011. At the end of 2011 If held altogether 3,147,692
Technical result increased to EUR 457 million (449). Technical result for
Industrial EUR 53 million (65) and Baltic & Russia EUR 22 million (15).
Return on equity (RoE) decreased to 12.4 per cent (39.8) mainly due to lower investment result mark-to-market and the change in the accounting treatment of Topdanmark holding in the second quarter of 2011. Insurance margin (technical result in relation to net premiums earned) was 11.1 per cent (11.5). Fair value reserve decreased during the year to EUR 139 million (315) at the end of December 2011.
Sampo Group / Annual Report 2011 Board of Directors' Report / Business Areas in 2011
Industrial mainly supported by higher prior year gains. In Finland risk ratio deteriorated compared to previous year mainly due to changed mortality model affecting the results negatively by EUR 53 million in the last quarter of the year. In Baltic & Russia risk ratio improved significantly in 2011 due to lower claims frequency and improved claims outcome.
At the end of December 2011 the total investment assets of If P&C
If P&C’s solvency ratio as at 31 December 2011 (solvency capital in relation to net written premiums) was 72 per cent (79). Solvency capital amounted to EUR 3,080 million (3,373). Reserve ratios were stable at 167 per cent (173) of net written premiums and 229 per cent (237) of claims paid.
The following text is based on Nordea’s full-year 2011 result release published on 24 January 2012.
2011 showed continued high total income, up 2 per cent compared to 2010. Net interest income increased 6 per cent compared to last year.
Net fee and commission income continued to increase strongly, up 11 per cent compared to 2010. Net result from items at fair value decreased by 17 per cent compared to last year. The customer-driven capital markets operations continued to be strong, while results from
Capital Markets unallocated income decreased. Income under the equity method was EUR 42 million and other income was EUR 91 million.
Total expenses increased 8 per cent compared to last year. Staff costs increased 12 per cent. In local currencies and excluding restructuring costs, total expenses increased 3 per cent and staff costs increased 5 per cent.
Operating profit decreased 3 per cent compared to last year. Net profit decreased 1 per cent from last year to EUR 2,634 million. Risk-adjusted profit increased 4 per cent compared to last year to EUR 2,714 million.
Total lending, including reversed repurchase agreements, was EUR 337 billion, up 1 per cent compared to the previous quarter. Overall, the credit quality in the loan portfolio remained solid in the fourth quarter, with positive migration in the loan portfolio. Improvements in credit quality resulted in a reduction of risk-weighted assets (RWA) of approx. EUR 4.7 billion or 2.5 per cent. The impaired loans ratio decreased to 139 basis points of total loans, due to higher total loan volumes. Total impaired loans gross increased by 5 per cent from the previous quarter. The provisioning ratio decreased compared to the end of the third quarter to 45 per cent.
impact was an increase of EUR 4.0 billion in market risk RWA. This was partly offset by continued improvement in credit quality and RWA
optimisation activities. The total impact from improved credit quality affected RWA with a reduction by 2.5 per cent.
Nordea is preparing for the new regulatory standards that will increase the capital requirements. The impact of these changes will be moderate and are carefully monitored to support our customers and shareholders in the best possible way. Nordea is well prepared to meet the new Basel capital requirements.
The average funding cost for long-term funding was largely unchanged in the fourth quarter. Nordea issued approx. EUR 4.0 billion of longterm funding in the fourth quarter, of which approx. EUR 2.7 billion represented issuance of Swedish, Norwegian and Finnish covered bonds in the domestic and international markets. The portion of longterm funding of total funding was at the end of the fourth quarter approx. 64 per cent (64 per cent at the end of the previous quarter).
Mandatum Life Group consists of Mandatum Life, a wholly-owned subsidiary of Sampo plc, operating in Finland, and its subsidiary Mandatum Life Insurance Baltic SE, which has the form of a European company and is headquartered in Estonia. It operates in the other Baltic countries through branches.
Profit before taxes in Sampo Group’s life insurance operations remained on previous year’s level despite the challenging investment markets in 2011 and amounted to EUR 137 million (142). The record high premium income of 2010 was not achieved but premiums amounted to
EUR 849 million which is the second highest level in the history of the
Net investment income, excluding income on unit-linked contracts, amounted to EUR 255 million (312). Net income from unit-linked investments was EUR -296 million (333). In 2011 fair value reserve decreased EUR 222 million amounting to EUR 214 million. Return on equity (RoE) in life insurance was -11.7 per cent (36.2).
5.4 billion (6.0) at market values as at 31 December 2011.
Return on investments in 2011 was -1.4 per cent (11.1). At the end of
Mandatum Life Group’s solvency margin amounted to EUR 1,049 million (1,339) as at 31 December 2011. Mandatum Life’s solvency ratio was 20.9 (25.8). Total technical reserves in the balance sheet of
Mandatum Life Group were EUR 7.3 billion (7.5). Unit-linked reserves accounted for 42 per cent (41) of the total technical reserves, i.e. EUR
In the Finnish operations, the total return for policyholders on withprofit technical provisions in 2011 was 2.5 – 4.5 per cent, depending on the class of insurance. In addition to the guarantee, customer bonuses varying from 0 to 2.5 per cent depending on the guaranteed interest on policies were paid. Technical reserves of the parent company
Risk result was exceptionally high at EUR 25 million (23). Expense result for the Group’s life insurance segment developed in 2011 favorably and rose to EUR 10 million (8) for 2011. The result of the unit linked business, EUR 6.2 million (2.0) is included in the expense result.
(22.1). Market share in the focus area, unit-linked business, remained high and was 26.8 per cent (28.2). Market share in the Baltic countries amounted to 15 per cent (20).
In Finland Mandatum Life expanded its operations to cover personnel fund management and pension fund management services in 2011.
This widens further the company’s services in the area of staff remuneration and pension solution.
One of the cornerstones for Mandatum Life is the co-operation with
Sampo Bank. In the summer of 2011 the two companies agreed to prolong the existing sales agreement for at least the next five years.
EUR 5.1 billion at 31 December 2011. In addition the assets on Sampo plc’s balance sheet included holdings in subsidiaries for EUR 2.4 billion
Shares are held by Sampo’s P&C insurance operation If P&C which has reported Topdanmark as an associate company as of 16 May 2011.
In connection with the change in accounting treatment the carrying value of the Topdanmark shares held by If and valued at fair value, was reinstated at acquisition cost of EUR 324 million. The ensuing reduction of the fair value reserve decreased Sampo Group’s equity by
EUR 51 million. The equity accounting of Topdanmark has, however, no effect on Sampo Group’s net asset value because in the NAV
The purchase price in excess of the carrying amount of the net assets of Topdanmark was EUR 204 million. Based on the purchase price allocation EUR 85 million was allocated to customer related intangibles. The annual amortization will be EUR 8 million during eight years.
Share of associate´s profit/loss. In segment reporting Topdanmark holding is included in the P&C insurance segment. Due to the late publication of financial reports by Topdanmark, consensus estimate for the company’s net result is used for this purpose and any deviations in relation to subsequently published amounts will be included in the next quarterly report.
Annual General Meeting The Annual General Meeting of 14 April 2011 decided to distribute a dividend of EUR 1.15 per share for 2010. The record date for dividend payment was 19 April 2011 and the dividend was paid on 28 April 2011.
The AGM decided to maintain the number of Board members at eight.
Board of Directors assessed the independence of its members and concluded that all the Board members were independent of the major shareholders and all but Anne Brunila, Björn Wahlroos and Matti
The Annual General Meeting decided to pay the following fees to the members of the Board of Directors until the close of the 2012 Annual
Management changes Ilona Ervasti-Vaintola, Sampo Group's Chief Legal Counsel and member of the Group Executive Board, retired on 30 October 2011 when she reached the pension age of 60 years stipulated in her employment contract. Mrs. Ervasti-Vaintola acted as secretary to the Board of
Governance in 2011 Sampo Group complies in full with the Finnish Corporate Governance
Code published by the Securities Market Association on 15 June 2010.
The annual Corporate Governance Statement will be published in connection to the Annual Report 2011 in March 2012 and will be available at www.sampo.com/cg. The Annual Report 2011 also contains a more detailed description of the Group’s governance system.
Sampo Group will also publish a Salary and Remuneration Report in
Corporate Responsibility in 2011 As a listed company, Sampo plc has the responsibility of acting in the best interests of its shareholders, in compliance with legislation and in accordance with sound business practices. Sampo Group's companies follow the common values of ethicality, loyalty, transparency and enterprise in their business operations and contacts with all stakeholders. Insurance is a business where responsibility and trust are inherent in daily customer contacts.
Sampo Group aims at anticipating changes in society and the capital market, and adapting its operations accordingly to these changes.
As the leading P&C insurance company in the Nordic region, If assumes a broader social responsibility than that brought on by business alone.
few years, and all the company's actions are guided by a strict environmental policy. The fundamental thought behind the policy is that If should always seek out the most environmentally viable solution for the company itself, its customers, suppliers and partners.
More detailed information on personnel in Sampo Group is available in the section Personnel in the Annual Report 2011.
Management Incentive Schemes On 14 June 2011 Sampo plc’s Board approved the Sampo Group
Compensation Principles which describe the remuneration structure and the principles used in setting up remuneration systems within the general governance framework and according to the Sampo Group’s
The core of the Compensation Principles is that all remuneration systems in Sampo Group shall safeguard the financial stability of the
Group and comply with regulatory and ethical standards. They shall also be designed to balance the interests of different stakeholder groups such as shareholders, employees, customers and supervisory authorities. Furthermore, all compensation mechanism shall be designed in parallel with the Risk Management Principles.
The starting point of any compensation mechanism is to encourage and stimulate employees at all levels to do their best and surpass their targets. Compensation packages shall be designed to reward employees on all levels, compensating them fairly for prudent and successful performance. At the same time, however, in order to safeguard the interest of other stakeholders, compensation mechanisms shall neither entice nor encourage employees to excessive or unwanted risk taking. Thus, compensation mechanisms cannot be separated from risk management practices.
According to the principles fixed compensation shall support financial stability, represent a sufficiently high share of the total compensation and be competitive but not leading in the market. Variable compensation shall be used to ensure the competitiveness of total compensation packages while still keeping fixed cost base reasonable.
Long-term incentive programs may be used as part of the total compensation package to commit executive management and key persons to the Group for a longer period of time. The programs are designed to also align the participants’ interests with those of the shareholders’ by linking the pay-out of the programs not only to certain performance criteria, but also to the development of Sampo’s share price.
The design of compensation systems should always encourage longterm financial stability and value creation of the Group. Variable compensation mechanisms shall ultimately be based on the employer’s unilateral decision and contain ‘force majeur’ clauses allowing the Board to stop payment if necessary e.g. because of the financial situation of the company.
The payment of a certain portion of the variable compensation and long-term incentives payable to senior executive management and to certain key persons shall be deferred for a defined period of time as required in the regulatory framework applicable to each Group company. After the deferral period, a retrospective risk adjustment review shall be carried out and the Board shall decide whether the deferred compensation can be paid out or not. For the year 2011, part of short-term incentives has been deferred. Payout from agreements or programs decided prior to the publishing of FSA deferral recommendations has not been deferred.
incentive scheme 2011:1. The scheme is targeted at Sampo Group's management and other key employees. Altogether approximately 115 people are participants in the scheme. The scheme includes at maximum 4.5 million incentive units and the potential payments shall be divided for the years 2014-2017. The allocation of incentive units shall be based on a combination of the assessment of the performance of the individual, of the business area and/or business unit concerned and of the overall results of the relevant Sampo Group company or of
Sampo shares, which must in turn be held for a specified period of time.
As a diverse financial institution, Sampo Group is exposed to a variety of different risks, both financial and non-financial. The major risks associated with Sampo Group’s activities during 2011 were insurance risks arising from P&C and Life insurance business areas, as well as market, credit and liquidity risks emanating from the Group's investment portfolios and the debt financing of Sampo plc.
During 2011, Sampo Group’s insurance risk profile remained relatively stable. In Mandatum Life longevity risk is still the most material biometric risk and most of it arises from the group pension portfolio. In
Shares and Share Capital As at 31 December 2011, Sampo plc had 560,000,000 shares, which were divided into 558,800,000 A shares and 1,200,000 B shares. Total number of votes attached to the shares is 564,800,000. Each A share entitles the holder to one vote and each B share entitles the holder to five votes at the General Meeting of Shareholders. According to the company’s Articles of Association, A Shares must number at least 179,000,000 and no more than 711,200,000. Meanwhile, B shares must number at least zero and no more than 4,800,000. As at 31 December 2011 Sampo plc's share capital amounted to EUR 98 million (98).
Sampo A shares have been quoted on the main list of the NASDAQ
At the end of the financial year, Sampo plc didn’t hold any of its own A
The Sampo Board decided on 10 August 2011 to start repurchasing
1.3 per cent of shares had not been transferred to the book-entry system. The holdings of nominee-registered and foreign shareholders grew to 52.4 per cent (48.5) of the shares and 52.0 per cent of the votes (48.1).
At the end of 2011, the members of Sampo plc’s Board of Directors and their close family members owned either directly or indirectly 11,924,225 (11,856,737) Sampo A shares. Their combined holdings constituted 2.1 per cent of the share capital and related votes. The members of the Group Executive Committee and their close family members owned either directly or indirectly 687,795 (960,349) Sampo
Nominee registered total 287,440,983 51.33 50.89 * 4,468,476 A shares and 1,200,000 B shares.
In addition the associated company Nordea Bank AB paid on 5 April 2011 a dividend amounting to EUR 250 million to Sampo plc.
Group solvency has in 2011 been calculated according to Chapter 3 of the Act on the Supervision of Financial and Insurance Conglomerates
Group solvency ratio (own funds in relation to minimum requirements for own funds) remained flat in the fourth quarter of 2011 and was 138.6 per cent (167.1) as at 31 December 2011. The decrease in the solvency ratio during 2011 was due to the change in accounting of
In Sampo Group solvency is assessed internally by comparing the capital required to the capital available. Capital requirement assessment is based on an economic capital framework, in which
Group companies quantify the amount of capital required for measurable risks over a one year time horizon at 99.5 per cent´s confidence level. In addition to economic capital, companies assess their capital need related to non-measurable risks like risks in business environment. Capital available or Adjusted Solvency Capital include regulatory capital and in addition other loss absorbing items like the effect of discounting technical reserves and other reserves excluded from regulatory capital.
The economic capital tied up in Group’s operations on 31 December 2011 was EUR 4,374 million (4,281) and adjusted solvency capital was EUR
Debt Financing Sampo plc´s debt financing at the end of 2011 amounted to EUR 2,329 million and interest bearing assets including bank accounts to EUR
1,121 million. During the year the net debt increased to EUR 1,208 million (1,016). Gross debt to Sampo plc’s equity was 35 per cent (26).
Sovereign debt crisis, crisis of political system, potential banking crisis and slow growth may escalate in ways that can affect Group’s activities unfavorably although Sampo Group companies do not have direct exposures in sovereigns under pressure and have small exposure to banking sector outside the Nordic region.
Outlook for 2012 Sampo Group’s business areas are expected to report good operating results for 2012. However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments.
The Board proposes to the Annual General Meeting a dividend of EUR
The dividend will be paid to shareholders registered in the Register of
Shareholders held by Euroclear Finland Ltd as at the record date of 17
April 2012. The Board proposes that the dividend be paid on 24 April 2012.
No significant changes have taken place in the company’s financial position since the end of the financial year. The company’s liquidity position is good and in the view of the Board, the proposed distribution does not jeopardize the company’s ability to fulfill its obligations.
Return on equity (at fair values) % 7.7 21.8 55.7 -32.4 52.6
Return on assets (at fair values) % 3.7 10.0 18.6 -7.4 11.5
Premiums written before reinsurers' share EURm 4,414 4,189 3,888 4,057 4,085
Loss ratio excl. unwinding of discount 3) % 74.7 75.6 74.6 74.4 73.4
Return on equity (at fair values) EURm -11.7 36.2 97.6 -68.8 9.1
Sampo Group / Annual Report 2011 Board of Directors' Report / Key Figures
Earnings per share, continuing operations EUR - - - - 1.25
Earnings per share, incl. change in fair value reserve, continuing operations
Net asset value per share EUR 14.05 17.79 14.63 8.28 13.49
Adjusted number of shares at 31 Dec. 5) 1,000 560,000 561,282 561,282 561,372 574,209
Adjusted number of shares at 31 Dec. 5) 1,000 558,800 560,082 560,082 560,172 573,009
4) The Board of Director's proposal to the Annual General Meeting for the accounting period 2011.
Calculation of the Key Figures The key figures have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying regulations and instructions of the Financial Supervisory Authority. The Group solvency has been calculated according to the consolidation method defined in
Chapter 3 of the Act on the Supervision of Financial and Insurance
+ liabilities for insurance and investment contracts - reinsurers' share of insurance liabilities
60 Earnings Logic and Risks 65 The Objective, Tasks and Motivation of the Risk Management Process 67 Risk Governance Framework 71 Risk and Capital Management 73 Underwriting Risks 73 P&C Insurance Underwriting Risks 78 Life Insurance Underwriting Risks 85 Market Risks 85 ALM Risks 87 Investment Portfolio Risks 94 Credit Risks 98 Credit Risks Related to Reinsurance
Ltd and Mandatum Life Insurance Company Ltd that are wholly owned by parent company Sampo plc. In addition to the insurance subsidiaries, Group's parent company Sampo plc also held, as at 31 December 2011, an equity stake of 21.28 per cent in Nordea Bank AB
(publ), through which Sampo Group has an exposure to banking activities. Nordea is an associated company affecting Sampo Group's profits and risks substantially. However, it is an independent company whose risk management is not covered in Sampo Group's annual report.
As a pan-Nordic insurance group If P&C underwrites policies that cover various risks of individuals and corporations on a geographically diverse area. If P&C mainly underwrites insurance risks in the Nordic and Baltic countries, as well as policies for Nordic clients with operations outside the Nordic countries. In addition to geographical diversification, the business is well-diversified over lines of business. Mandatum Life operates in Finland and Baltic countries and offers savings and pension policies with life risk features, as well as, separate policies covering mortality, morbidity and disability risks.
If P&C and Mandatum Life are exposed to various risks, which are selected carefully and priced reflecting the inherent risk levels.
Sampo Group’s main risks are illustrated in figure 'Categorization of risks in Sampo Group'. The risk categorization is mostly based on sources of risks. Under P&C insurance underwriting risk the categorization is based on the practices of the administration of risk instead. This categorization distinguishes between risks of claims, which have already happened in the past (reserve risk), and the risk of claims, which will happen in the future (premium risk). Independent of this categorization the unique risk sources like fire, motor accident, windstorms and catastrophic events are similarly causing deviations from the expected values as in any other risk category. Moreover, risks such as ALM risk, concentration risk and reputation risk are by their nature linked to various risk factors simultaneously.
Catastrophe risk is the risk of low frequency, high severity events, such as natural catastrophes, that are not captured adequately by the premium risk or reserve risk. These events lead to significant deviation in actual claims from the total expected claims.
Expense risk arises from the fact that the timing and/or the amount of expenses incurred differs from those expected. As a result expense charges originally assumed may not be enough to cover the realized expenses.
Policyholder behavior risks arise from the uncertainty related to the behavior of policyholders. Policyholders have a right to cease paying
Market risk: Market risks refer to fluctuations in the financial results and capital caused by changes in market values of financial assets and liabilities as well as in insurance liabilities. Market values change together with underlying tradable market risk variables of which the following ones are currently the most important for Sampo Group: interest rates, inflation, credit spreads, foreign exchange rates, share prices and their volatilities.
Credit risk: Credit risk (default) refers to the negative impact in the financial results arising from defaults of debtors (issuer risk) or other counterparties (counterparty risk in derivatives and reinsurance contracts). Credit risk may realize when the cash flows agreed with the debtor or counterparty fail to materialize. In the case of issuer risk the final loss depends on the company’s holding in the security and the recovery rate. In the case of counterparty risk, final loss depends on potential positive mark-to-market value at the time of default together with recovery rate.
Concentration risk: Concentration risk arises when the company´s risk exposures are not diversified enough and as a result of this an individual claim or market event could threaten the solvency or the financial position of the company. Concentration risk may realize also when the profitability and capital position is reacting similarly to general economic development or to structural changes in institutional environment in different areas of business.
An illustrative picture of the most significant risks in Sampo Group is presented in figure 'Key risks in Sampo Group'. The most significant risks when Nordea's figures are included are credit risk, market risk, insurance risk and operational risk. The figure is for illustrative purposes only.
subsidiaries is market risk. On the Group level, the most significant risks are market risk and credit risk. This is due to Sampo plc's holding in Nordea whose business activities in banking result in credit risk being the key risk.
The Objectives, Tasks and Motivation of the Risk Management Process The core competences of Sampo Group's business are skillful pricing of risks, selection of risks and proper risk and capital management. A
high quality risk management process is a necessary prerequisite for successful business.
Sampo Group / Annual Report 2011 Risk Management / The Objectives, Tasks and Motivation of the Risk Management Process
• The motivation of the personnel strengthens when strategies, authorizations, limits, targeted return and reward criteria are clearly defined and communicated.
• Supervisory authorities’ confidence in company’s ability to control the risks associated with its activities further bolsters cooperation with the authorities.
The Audit Committee (AC) is responsible, on behalf of the Board of
Directors, for the preparation of Sampo Group’s risk management principles and other related guidelines. The AC shall ensure that the operations are in compliance with these, control Sampo Group’s risks and risk concentrations as well as control the quality and scope of risk management in each company. The committee shall also monitor the implementation of risk policies, capitalization and the development of risks and profit. At least three members of the AC must be elected from those members of the Board, who do not hold management positions in Sampo Group and are independent of the company. The
and the Board of Directors in fulfilling their oversight responsibilities pertaining to the risk management process. The IRCC monitors reports from the relevant committees, business areas, experts and specialist functions as well as the exposure in relation to limits given by the
The responsibilities of the various risk committees in If P&C are as follows
• The Chairman of the Investment Control Committee (ICC) in If P&C
is responsible for monitoring the investment activities and implementing the Investment Policy ensuring compliance with the principles and limits specified in the Investment Policy and for reporting deviations from the policy.
• The Chairman of the Ethics Committee (EC) is responsible for maintaining the Ethics Policy and other policies dealing with values and behavior.
Chief Compliance Officer, who is responsible for the coordination of legal compliance issues within If P&C and the adherence of operations to Sampo Group’s Compliance Policy, a group level policy applicable to all Sampo Group companies.
The Risk Management Committee (RMC) coordinates and monitors all risks in Mandatum Life. The Committee is chaired by the Managing
Director. Risks are divided into main groups, which are insurance, market, operational, legal and compliance risks, as well as, business and reputational risks. Risks related to the Baltic subsidiary are also included. Each risk area has a responsible person in the Committee.
ALCO reports to the Board and meets at a minimum on a monthly basis.
Committee is chaired by the Chief Actuary who is responsible for ensuring that the principles for pricing policies and for the calculation of technical provisions are adequate and in line with the risk selection and claims processes. The Board approves the insurance policy pricing and the central principles for the calculation of technical provisions. In addition, the Board defines the maximum amount of risk to be retained on the company’s own account and approves the reinsurance policy annually.
Managing director is responsible for business and reputation risk issues and he is also the Chairman of Risk Management Committee.
Operational Risk Committee (ORC) analyses and handles operational risks, e.g. in relation to new products and services, changes in processes and risks as well as realized operational risk incidents.
The Baltic subsidiary has its own risk management procedures. All major incidents are also reported to Mandatum Life’s Risk
Management Committee. Chairman of the Baltic Subsidiary is a member of Risk Management Committee.
The reporting lines of different governing bodies in Mandatum Life are described in figure 'Risk management governance framework in
Capital Adequacy Assessment In addition to the statutory financial statements and solvency figures,
Sampo Group considers that there is a need to assess capitalization internally because regulatory and rating agency models have to fit for all and hence cannot take the specific features of different companies accurately enough into account.
Nordea multiplied by the proportion of Sampo plc’s share in Nordea
Different stakeholders have different views when assessing the available capital. Regulators have defined which items can be included into the solvency capital and rating agencies have their own definitions for capital. As an internal measure of available capital,
Sampo Group uses adjusted solvency capital. The basis for adjusted solvency capital is capital items included in regulatory solvency capital. On top of those, other risk absorbing items such as the difference between the book value and market value (including a risk margin) of technical provisions are added.
The figure 'Illustrative figure of P&C insurance risk concepts' depicts the P&C insurance underwriting risk on a general level.
technical provisions are booked. Later, during the claims handling process, the estimate may be adjusted and technical provisions may be changed.
Expense risk is not as crucial as in life insurance, but it is also taken into account when estimating the expected liability cash flows.
Premium Risk P&C insurance undertakes the obligation to indentify the insured in case of claims, and in exchange, the insured pays a premium. A crucial factor contributing to the profitability of P&C insurance operations is the ability to accurately estimate claims and administrative costs and thereby correctly price the insurance contracts correspondingly.
The Underwriting Policy (UW Policy) is the principal document for underwriting and sets general principles, restrictions and directions for the organization of underwriting activities. The Board of Directors of each company approves the UW Policy at least once a year.
The business areas manage the premium risk on a day-to-day basis.
If P&C’s Reinsurance Policy stipulates guidelines for the purchase of reinsurance. The need and optimal choice of reinsurance is evaluated through statistical methods and models. The remaining net exposure is subject to the capital requirements (economic, regulatory and rating)
To analyze the exposure to natural disasters, the probability of major losses and the need for reinsurance, If P&C cooperates with external advisors. Two different approaches are used for these analyses
• statistical models, in which historical losses are used to estimate distributions for the frequency and size of losses; and
Reserve Risk Defining the value of insurance liabilities always includes uncertainty since the future cost of claims is based on estimates of the size, frequency and timing of future claims payments. The value of insurance liabilities changes also when interest rates used in discounting change. Whenever all insurance liabilities are discounted with market rates, the end result is called economic value of insurance liabilities.
Technical provisions are divided into provisions for unearned premiums and provisions for claims outstanding in the company’s balance sheet. Provisions for unearned premiums are recognized in the balance sheet at the time contracts are incepting. These are intended to cover anticipated claims costs and operating expenses during the remaining time of insurance contracts in force. Provisions for claims outstanding on the other hand, are intended to cover the anticipated future payments of all claims incurred, including claims not yet reported to the company.
Personal Accident, and Liability insurance, are lines of business with the latter characteristics.
If P&C’s Board of Directors approves the guidelines governing the calculation of technical provisions. If P&C’s Chief Actuary is responsible for developing and presenting guidelines on how the technical provisions are to be calculated and for assessing whether the level of the total provisions is sufficient. The Chief Actuary issues a quarterly report on the adequacy of technical provisions, which is submitted to the Board of Directors, IRCC, CEO and CFO.
The book value of technical provisions and the duration broken down by line of business and country is shown in table 'Technical provisions per line of business and country, If P&C, 31 December 2011'.
Technical provisions per line of business and country, If P&C, 31 December 2011
Inflation risk in the technical provisions is an important consideration underlying the If P&C's investment strategy. The sensitivity towards inflation differs between countries due to the different national rules.
The sensitivity of If P&C's technical provisions to an increase in inflation, an increase in life expectancy and a decrease in the discount
Annuities Decrease in mortality Life expectancy increase by 1 year Sweden 12.8
Premium level 4,094 +/- 1 per cent +/- 41 +/- 39
Ceded reinsurance premium 214 +/- 10 per cent +/- 21 +/- 20
Life Insurance Underwriting Risks Life insurance risks encompass underwriting risk and discount rate risk in technical provisions. Underwriting risk includes biometric, policyholder behavior and expense risks. This chapter presents the development of these life insurance risks during 2011 and the management principles of these risks.
The figure 'Illustrative figure of life insurance risk concepts' depicts the life insurance underwriting risk on a general level.
EURm Risk income Claim expense Claim ratio Risk income Claim expense Claim ratio
Most of the longevity risk arises from the with-profit group pension portfolio. The main uncertainty of longevity risk is related to the mortality trend among relatively old and socio-economically selected insureds. In the unit-linked group pension and individual pension portfolio the longevity risk is less significant because most of these policies are fixed term annuities including death cover compensating the longevity risk.
Mortality risk result in life insurance is positive and the mortality trend has been favorable to the company. A possible pandemic is seen as the most significant risk that could adversely affect the mortality risk result.
(lapse risk) and the possibility to interrupt their policies (surrender risk). Being able to keep lapse and surrender rates at a low level are crucial success factors especially for the expense result of unit-linked business. From ALM point of view surrender and lapse risks are less significant because in Mandatum Life, approximately 90 per cent of with-profit policies are pension policies in which surrender is possible only in exceptional cases. For ALM risk, surrender risk is therefore only relevant in individual life and capital redemption policies. In these policies, the risk is reduced by the relatively short maturity of the contracts. Furthermore, the supplements to technical provisions are not paid out at surrender which also reduces the surrender risk related to the with-profit policies.
In most with-profit policies, the guaranteed interest rate is 3.5 per cent. In individual policies sold in Finland before 1999, the guaranteed interest rate is 4.5 per cent, which is also the statutory maximum discount rate of these policies. With respect to these policies, the maximum discount rate used when discounting technical provisions has been decreased to 3.5 per cent. As a result, technical provisions have been supplemented with EUR 79 million
The provisions related to each product type and guaranteed interest rates are shown in table 'Analysis of the change in provisions before reinsurance, Mandatum Life, 2011'. The table also shows the change in each category during 2011.
Mandatum Life parent company total 7,369 813 -761 -77 153 6 -336 7,166 98%
The development of the structure and amount of Mandatum Life’s technical provisions is shown in the figure 'Development of with-profit and unit-linked technical provisions, Mandatum Life, 2003-2011'.
Mandatum Life. The sensitivity of technical provisions to changes in discount rates can be assessed on the basis of the durations shown in the table.
Expected maturity of insurance and investment contracts before reinsurance, Mandatum Life, 31 December 2011
Reserve for decreased discount rate 4.7 45 15 23 12 6 3 3
Mandatum Life parent company total 9.1 1,490 1,261 2,374 1,618 1,158 789 1,201
The basis for risk taking within If P&C is the overall risk appetite. For
Investment Policy purposes the risk appetite is expressed in terms of 1 year 99.5% Value at Risk (VaR). Allocation and risk limits shall be derived such that the overall risk appetite is fulfilled both from an accounting and economic perspective and also when taking insurance risk and other risks into consideration. The chosen approach shall enable follow-up on both total market risk as well as for the separate risk types.
Within the limits set in the Investment Policy, investments are managed actively by utilizing market views and in order to enhance returns the portfolio may also contain equities in addition to fixed income investments.
Asset and Liability Management in Mandatum Life In Mandatum Life, the approach to ALM risk management is also based on an analysis of technical provisions and current solvency position. A common feature for all with-profit technical provisions is the guaranteed rate and bonuses based on principle of fairness. The cash flows of Mandatum Life's technical provisions are relatively wellpredictable because in most of the company’s with-profit products, surrenders or extra investments are restricted. The company’s estimates for claims costs do not contain any significant element of inflation risk and thus the inflation risk in Mandatum Life is mainly related to administrative expenses.
The long-term target for investments is to provide sufficient return to cover the guaranteed interest rate plus bonuses based on principle of fairness as well as the shareholder’s return requirement with acceptable level of risk. The company manages its investment portfolio actively and also interest rate derivatives are used.
The Board of Mandatum Life approves the Investment Policy annually, which sets principles and limits for investment activities. The
requirement using a VaR analysis of the investment assets. In the
Solvency II type of approach, limits are set based on different confidence levels in addition to the 99.5 per cent level used in Sampo
Investment Policy. However, the most significant investment decisions are made by the Board. The ALCO regularly controls that limits and principles defined in the Investment Policy are followed.
Asset Allocations and Investment Returns The total amount of Sampo Group's investment assets as at 31 December 2011 was EUR 17,590 million (EUR 18,301 million in 2010).
Mandatum Life and Sampo plc, 31 December 2011 and 31 December 2010'.
of fair values of investments. These fair values are determined either on the basis of direct market quotes or by using various valuation models. More information on the valuation methods of the investment assets is presented in note 17 in the Sampo Group financial statements.
Sampo plc’s own market risks are limited. Interest rate risk arising from the company’s gross debt and the liquidity reserve invested into short-term money market securities is the company’s most significant market risk together with the refinancing risk related to gross debt.
Mandatum Life and If P&C have somewhat differing investment policies, because Mandatum Life is able to aim for higher returns than
The average maturity of fixed income investments that affects the size of credit risk and reinvestment risk was 2.5 years in If P&C and 2.3 years in Mandatum Life. When it comes to interest rate sensitivity, the average duration of fixed income investments including derivatives in If P&C was 1.2 years and in Mandatum Life 1.8 years. The duration figure for Mandatum Life does not give a full picture of interest rate sensitivity at the end of the year 2011. This is due to the interest rate derivatives that are currently mitigating the effect of decreasing interest rates.
Equity Investments The equity investments of Sampo Group totaled EUR 2,620 million at the end of year 2011 (EUR 3,353 million in 2010). During 2011, the decrease in the weight of equity investments in the investment portfolio was mainly due to the decline in equity prices.
If P&C’s ownership in Topdanmark has increased and since May 2011 it has been treated as an associated company, and hence, it is no longer included in the equity portfolio. At the end of 2010 the investment amounted to EUR 198 million. In Mandatum Life the equity exposure was EUR 1,453 million at the end of year 2011 (EUR 1,686 million in
2010) and the proportion of equities was 26.9 per cent of the investment portfolio. The equity portfolio consists of shares of Nordic companies as well as portfolios in funds and ETFs investing outside
The breakdown of the equity exposures of Sampo Group by geographical regions are shown in figures 'Breakdown of equity investments by geographical regions, Sampo Group, If P&C and
Nordic companies. The proportion of Nordic companies’ equities corresponds to 55 per cent of the total equity portfolio. This is in line with Sampo Group’s Nordic focus and the fact that insurance liabilities are in Nordic currencies.
The sector allocation of direct equity investments in Sampo Group is shown in tables 'Credit exposures by sectors, asset classes and rating,
If P&C, Mandatum Life and Sampo Group, 31 December 2011'. The largest sectors are capital goods, consumer products, and basic industry. Equity investments made through investment funds accounted for 45 per cent of the entire equity portfolio.
Currency Risks Currency risk in general can be divided into transaction risk and translation risk. Transaction risk refers to the currency risk arising from contractual cash flows related to the insurance or investment operations or from hedges related to these cash flows. Translation risk refers to the currency risk that arises when consolidating the financial statements of subsidiaries that have a different base currency than the parent company.
The currency transaction risk positions of If P&C and Mandatum Life against their home currency are shown in table 'Transaction risk position, If P&C and Mandatum Life, 31 December 2011'. The table shows the net transaction risk exposures and the changes in the value of positions given a 10 per cent decrease in the value of the home currency.
Transaction risk position, If P&C and Mandatum Life, 31 Dec 2011
Other Investments If P&C and especially Mandatum Life have real estate, private equity funds, hedge funds and commodity investments. The Investment
Private equity and hedge funds are managed by external asset managers. The private equity fund portfolio is diversified both according to fund type and geographical areas. Hedge fund investments are diversified between underlying asset classes, fund types and investment styles. The Group’s real estate portfolio is managed by Sampo Group’s real estate management unit. The portfolio includes direct investments in properties as well as indirect investments in real estate funds and shares and debt instruments in real estate companies. The main risks related to property investments are limited by diversifying holdings both geographically and by type of property.
In addition, credit risk arises from receivables from policyholders and other receivables related to commercial transactions. Credit risk exposure towards policyholders is very limited, because non-payment of premiums generally results in cancellation of the insurance policies.
Figure 'Illustrative figure of the components of credit risk' illustrates the components of credit risk on a general level.
P&C, Mandatum Life and Sampo Group, 31 December 2011`. Due to differences in the treatment of derivatives, the figures in these tables are not fully comparable with other tables in this annual report.
Credit exposures by sectors, asset classes and rating, Sampo Group, 31 December 2011
Sampo Group / Annual Report 2011 Risk Management / Credit Risks
Credit Risks Related to Reinsurance Counterparties The distribution of reinsurance receivables and reinsurers’ portion of outstanding claims in If P&C on 31 December 2011 per rating category is presented in table 'Reinsurance receivables and reinsurers’ portion of outstanding claims per rating category, If P&C, 31 December 2011 and 31 December 2010'. In the table, EUR 139 million (EUR 120 million in 2010) are excluded, which mainly relates to captives and statutory pool solutions.
The proportion of reinsurance recoverables related to the ten largest individual reinsurance counterparties amounts to EUR 355 million, which is 66.2 per cent of total recoverables. The largest individual reinsurance counterparty is Munich Re (AA-), which accounts for 27.0 per cent of total recoverables.
EUR 60.7 million. Of this amount 100 per cent was related to reinsurance counterparties with a credit rating of A- or higher.
In Mandatum Life, the importance of reinsurance agreements is limited and thus credit risk related to reinsurance counterparties in
Mandatum Life is immaterial. At the inception of the reinsurance, the accepted credit risk of the reinsurer is considered and the credit risks of reinsurance assets are monitored.
Policies of If P&C and Mandatum Life. Limits and restrictions are assigned to maximum exposures towards single issuers and derivative counterparties that are mainly based on rating class and an internal assessment.
Credit risks are monitored at business area level and reported to the
agreements are used. This is the case especially in Sampo plc and
Mandatum Life. In order to limit and control credit risk associated with reinsurance, If P&C has a Reinsurance Security Policy, which sets requirements for the reinsurers’ minimum credit ratings and the maximum exposure to individual reinsurers. Similar to credit risk in investment assets, credit ratings from rating agencies are used to support the assessment of the creditworthiness of reinsurance companies.
In P&C insurance, liquidity risk is limited, because premiums are collected in advance and large claims payments are usually known a long time before they fall due. Liquidity risks are managed by cash management functions that are responsible for liquidity planning.
Liquidity risk is reduced by having investments that are readily marketable in liquid markets. The available liquidity of financial assets, i.e. the portion of the assets that can be converted into cash at a specific point in time, is analyzed and reported to IRCC on a quarterly basis. At year end, the liquidity position in each legal entity was favorable.
In life insurance, a large change in surrender rates could influence the liquidity situation. However, only a relatively small part of insurance policies can be surrendered and it is therefore possible to forecast short-term cash flows related to claims payments with a very high accuracy.
Sampo Group companies have business relationships with several creditworthy counterparties which mitigate the risk that Sampo Group will not be able to enter into reinsurance or derivative transactions when needed.
The maturities of technical provisions and financial assets and liabilities are presented in table 'Cash flows according to contractual maturity, If P&C, Mandatum Life and Sampo plc, 31 December 2011'.
Mandatum Life of which interest rate swaps of which interest rate swaps
Operational Risks Operational risk refers to the risk of loss resulting from inadequate or failed processes or systems, from personnel and systems or from external events. This definition includes legal risk but excludes risks resulting from strategic decisions. The risks may materialize as a consequence of
Operational Risk Management in Sampo Group The goals of Operational Risk Management are: • to ensure simultaneously the efficiency and quality of operations; • to ensure that operations are compliant with laws and regulations; and
The central tools in Operational Risk Management are (i) the identification of risks and (ii) proper preventive actions at all levels of operations. To ensure the use of these tools, responsibilities in the following areas are set clearly: • drafting and enforcement of adequate Operational Risk policies and continuity plans; • legal and financial compliance of operations; • continuous development of human resources (knowledge and skills) and work processes; • day to day management; and
Operational Risk Committee (ORC), which coordinates the operational risk process. The committee’s task is to give opinions, advice and recommendations to the If P&C Risk and Control Committee as well as report the current operational risk status. The status assessment is based on the assessments in the organization, reported incidents and other additional risk information.
If P&C identifies operational risks through different processes. A trend analysis is being performed annually, where the most important trends affecting the insurance industry are identified and the effects on If
The line organization and corporate functions have the responsibility to identify, assess, monitor and manage their operational risks. Risk identification assessments are performed quarterly. Identified risks are assessed from a severity perspective, encompassing probability and impact. The control status for each risk is assessed using a traffic light system: green – good control of risk, yellow – attention required, red –
In order to manage operational risks If P&C has issued a number of different steering documents; Operational Risk Policy, Contingency
In addition to this If P&C has detailed processes and guidelines in order to manage possible external and internal frauds. Internal training on ethical rules and guidelines is a prioritized area.
Operational Risk Management in Mandatum Life The objective of operational risk management in Mandatum Life is to enhance the efficiency of internal processes and decrease negative impact on Mandatum Life. The aim is to minimize operational risks subject to cost-benefit considerations.
Business units are responsible for the identification, assessment and management of own operational risks, including organizing adequate internal control. Operational Risk Committee (ORC) monitors and coordinates risk management issues regarding operational risks within
Identification and Management Operational risks are identified through several different sources and methods
• Macro analysis is conducted prior to the annual strategy process where the key trends in Mandatum Life’s business environment are identified, including a macro level business analysis of operational risks. External events are monitored continuously and the company reacts to those as soon as possible.
• Analysis of incidents. Realized operational risks and near misses reported by the business units are collected and analyzed by ORC.
Preparedness Plans, Outsourcing Policy, Complaints Handling Policy and a number of other policies related to ongoing operative activities.
However, would there be an operational risk event or near misses, this must be reported to ORC.
Concentration Risks With respect to the underwriting businesses carried out in the subsidiary companies, it has been established that If P&C and
Consequently, the risk of unidentified or unwanted concentrations is relatively easy to negotiate by appropriate limit setting and by applying sufficient level of control over the activity itself. Secondly, concentrations are actively monitored and, if deemed necessary, further managed by deploying Group level exposure restrictions for instance by industries or individual issuers.
Group does not have investments in government bonds of the PIIGS
Fixed income investments in financial and public sector are shown, respectively, in tables 'Fixed income investments in financial sector,
Fixed income investments in financial sector, Sampo Group, 31 December 2011
Covered bonds Money market securities Long-term senior debt Long-term subordinated debt Total, EURm %
Furthermore, largest exposures of direct equity as well as high-yield and non-rated fixed income investments are broken down in tables
Ten largest direct high-yield and non-rated fixed income investments, Sampo Group, 31 December 2011
Largest direct high-yield and non-rated fixed income investments Rating Total fair value, EURm
Correlations of Profitability and Capital Positions As discussed above, direct concentration risks may arise in Sampo
Group due to large exposures in investment assets. A more general
profitability and/or capital positions react similarly to general economic development, i.e. the correlation between general economic development and the profitability of different subsidiaries is more or less analogous. This type of concentration risk can be analyzed indirectly based on reported profits. From that perspective, especially
Nordea’s, which is Sampo plc’s associate company, result is creating clear diversification benefits, in particular when analyzed vis à vis with
Mandatum Life and Nordea are depicted in the figure 'Correlations of quarterly reported profits, If P&C, Mandatum Life and Nordea,
Correlations of quarterly reported profits, If P&C, Mandatum Life and Nordea, 1 January 2005 - 31 December 2011
Liquidity Liquidity risk is managed at company level, and in normal course of business, subsidiary companies do not invest in Sampo plc's debt instruments. However, a general prohibition to intra-group asset transactions has not been deemed necessary and, thus, subsidiaries are allowed to invest in the parent company’s debt instruments and sell assets to each other at market prices, especially when this is justified by business opportunities. Thus, during possible market stresses these options are available to certain extent as well.
Corporate Structure Related Risks The structure of Sampo Group, both legal and reporting structure –
parent company, two subsidiaries and two associated companies – is simple, straightforward and transparent. The structure as such effectively mitigates any risks related to complex structures. Structural simplicity and transparency together with a limited amount of exposures within Sampo Group (i.e. direct and/or indirect claims between different companies excluding normal course of business transactions with Nordea) and diligently managed capitalization of subsidiaries also effectively protects Group companies from contagion risks.
Sampo Group / Annual Report 2011 Risk Management / Group Level Risk Considerations
The adjusted solvency capital of Sampo Group’s insurance subsidiaries decreased during the year due to lower interest rates and respective changes in liability side adjustment and in addition paid dividends and a decrease in fair value reserves. The changes in Economic Capital were modest. The development of capitalization in Sampo Group within the internal and regulatory perspectives during the year 2011 is shown in the figures 'Development of capitalization, If P&C, Mandatum Life and
Internal Capitalization Assessment Figure 'Breakdown of economic capital by business areas and adjusted solvency capital, Sampo Group, 31 December 2011' shows the contributions of the different business areas to Sampo Group's total economic capital as well as the diversification effect included in the calculation of Group´s economic capital. The figure also shows the amount of adjusted solvency capital on Group level.
Nordea is included in the calculation of Sampo Group's economic capital by adding Sampo Group’s share of the economic capital reported by Nordea, converted into the 99.5 % confidence level. At year end, the risks arising from Nordea constitute the largest single component in Sampo Group's economic capital. The correlations between risk types and business areas, and thereby indirectly the amount of diversification, are defined by Sampo plc on a Sampo Group level.
The amount of adjusted solvency capital on the Group level decreased during the year to EUR 7,262 million (EUR 8,521 million in 2010) due to a decrease in the liability side adjustment and fair value reserve before taxes. Thus, the adjusted solvency capital exceeded the economic capital by EUR 2,888 million (EUR 4,240 million in 2010).
Figure 'Breakdown of economic capital by risk type, Sampo Group, 31 December 2011' presents the split of economic capital by the different risks.
'Breakdown of economic capital by risk type and adjusted solvency capital, If P&C and Mandatum Life, 31 December 2011'.
During 2011 If P&C’s holding in Topdanmark has increased and the
Danish insurance company is now an associated company. Therefore it is no longer treated as an equity exposure. Instead If P&C’s share of
Market risk is still the most significant risk for both If P&C and
Mandatum Life to EUR 345 million (EUR 305 million at the end of 2010).
Adjusted solvency capital is calculated by making an adjustment to the regulatory solvency capital. The adjustment is the difference between carrying amount and market value of technical provisions, where the market value of technical provisions is the discounted value of future cash flows plus a risk margin.
At Sampo Group level the amount of adjusted solvency capital exceeded the economic capital. The amount of adjusted solvency capital exceeded the economic capital in If P&C whereas in Mandatum
During the year, the amount of adjusted solvency capital in If P&C
Sensitivity analysis of capitalization to market risks, If P&C, Mandatum Life and Sampo plc, 31 December 2011
The effects represent the instantaneous effects of a one-off change in the underlying market variable on the fair values as of 31 December, 2011. The sensitivity analysis includes the effects of derivative positions. All sensitivities are calculated before taxes. The debt issued by Sampo Group companies is not included.
The regulatory capital requirements and the regulatory solvency capital of If P&C and Mandatum Life are presented in figures 'Regulatory capital measures, If P&C and Mandatum Life, 31 December 2011 and 31 December 2010'. In If P&C regulatory solvency capital was 3.25 times regulatory capital requirement and the respective figure for Mandatum
Life was 4.61 at the end of year 2011. Regulatory solvency capital, which is used to assess the solvency of an insurance company, is not calculated for the parent company Sampo plc.
Regulatory solvency capital of If P&C decreased to EUR 2,698 million
Share of Nordea's capital not included in Group capital 653 915
Ltd. (Finland) are rated by Moody’s and Standard & Poor’s and Sampo plc by Moody’s. The Group’s main rating objective is to retain at least a single A rating for If P&C. The S&P rating model in If P&C is updated regularly. Sampo Group has a continuous dialogue with the rating agencies and hence good understanding of the opinions of the agencies.
for the anticipated changes. The program has encompassed involvement in the Solvency II debate and a thorough review of If
P&C’s corporate governance and internal control structure, the risk management framework as well as the internal capital model.
Authorities. The process will continue during 2012 with the goal of having a partial internal model approved when the Solvency II legal framework enters into force. Also Mandatum Life further develops its corresponding models.
Based on a judgment by Court of Justice of the European Union, gender of the insured person cannot be used in the future as a basis in the pricing of insurance contracts. Gender neutral pricing has to be followed in the contracts coming into force at 21 December 2012 or after. This is a crucial change especially in the life insurance business because in pension insurances and life insurances the gender has been one of the key pricing factors. According to the actuarial statistics, males and females have different risk levels in different insurance products. Thus gender-neutral pricing is not in line with the risk-based principles of Solvency II and best actuarial practices.
119 Group’s IFRS Financial Statements 119 Consolidated Comprehensive Income Statement, IFRS
124 Notes to the Accounts 125 Summary of Significant Accounting Policies 138 Segment Information 144 Notes to the Group’s Financial Statements 217 Sampo plc Financial Statements 217 Parent Company Income Statement 218 Parent Company Balance Sheet 220 Parent Company Statement of Cash Flows 221 Summary of Significant Accounting Policies 222 Notes to the Parent Company Financial Statements 233 Approval 234 Auditor’s Report
Total comprehensive income for the year *) The total comprehensive income includes also the share of the associate Nordea's other comprehensive income, in accordance with the Group's share holding. As Nordea's other comprehensive income comprise mainly the currency hedging of net investments and exchange differences, the Group's share of Nordea's other comprehensive income EURm 23 (48) is also included in the Group's exchange differences in the statement of changes in equity.
**) The amount recognised in equity from available-for-sale financial assets for the period totalled EURm -409 (615). The amount transferred to p/l amounted to EURm 30 (-168).
125 Summary of Significant Accounting Policies 138 Segment Information 144 Notes to the Group’s Financial Statements 144 1 Insurance premiums written 146 2 Net income from investments 153 4 Change in liabilities for insurance and investment contracts 155 6 Other operating expenses 157 7 Result analysis of P&C insurance 158 8 Performance analysis per class of P&C insurance 159 9 Earnings per share 160 10 Financial assets and liabilities 162 11 Property, plant and equipment 169 14 Investments in associates 179 17 Determination and hierarchy of fair values 182 18 Movements in level 3 financial instruments measured at fair value 184 19 Sensitivity analysis of level 3 financial instruments measured at fair value 185 20 Investments related to unit-linked insurance contracts 186 21 Deferred tax assets and liabilities 188 23 Components of other comprehensive income 189 24 Tax effects relating to components of other comprehensive income 189 25 Other assets 1 91 26 Cash and cash equivalents 192 27 Liabilities from insurance and investment contracts 197 28 Liabilities from unit-linked insurance and investment contracts 203 33 Contingent liabilities and commitments 206 34 Equity and reserves 207 35 Related party disclosures 21 1 40 Investments in shares and participations other than subsidiaries and associates 21 6 41 Events after the balance sheet date
The revised IAS 24 Related Party Disclosure clarified the concept of related parties.
IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments clarified the accounting by the entity that, after renegotiations, issues equity instruments to its creditor in order to settle all or part of its financial liability.
In preparing the notes to the consolidated financial statements, attention has also been paid to the Finnish accounting and company legislation and applicable regulatory requirements. Some of the risk management disclosures are presented in the Group’s financial statements’ Risk Management section.
The financial statements have been prepared under the historical cost convention, with the exception of financial assets and liabilities at fair value through p/l, financial assets available-for-sale, hedged items in fair value hedges and share-based payments settled in equity instruments measured at fair value.
loss. If the recoverable amount later increases and is greater than the carrying amount, the impairment loss is reversed through profit and loss.
Group entities are measured using their functional currency, being the currency of the primary economic environment in which the entity operates. Foreign currency transactions are translated into the appropriate functional currency using the exchange rates prevailing at the dates of transactions or the average rate for a month. The balance sheet items denominated in foreign currencies are translated into the functional currency at the rate prevailing at the balance sheet date.
The income statements of Group entities whose functional currency is other than euro are translated into euro at the average rate for the period, and the balance sheets at the rates prevailing at the balance sheet date. The resulting exchange differences are included in equity and their change in other comprehensive income. When a subsidiary is divested entirely or partially, the cumulative exchange differences are included in the income statement under sales gains or losses.
Segment reporting The Group’s segmentation is based on business areas whose risks and performance bases as well as regulatory environment differ from each other. The control and management of business and management reporting is organised in accordance with the business segments. The
Geographical information has been given on income from external customers and non-current assets.. The reported segments are
In the inter-segment and inter-company pricing, for both domestic and cross border transactions, market-based prices are applied. The pricing is based on the Code of conduct on Transfer Pricing Documentation in the EU and OECD guidelines.
Interest and dividends Interest income and expenses are recognised in the income statement using the effective interest rate method. This method recognises income and expenses on the instrument evenly in proportion to the amount outstanding over the period to maturity.
According to the Group’s risk management policy, investments are managed at fair value in order to have the most realistic and real-time picture of investments, and they are reported to the Group key management at fair value. Investments comprise debt and equity securities. They are mainly classified as financial assets available-forsale.
In the P&C insurance, the fair value option permitted by IAS 39 has been applied in the earlier years. The remaining assets acquired before the year 2008 are still measured at fair value through p/l.
Financial assets and Financial liabilities at fair value through profit or loss
Available-for-sale financial assets are non-derivative financial investments that are designated as available for sale and or are not
Sampo Group / Annual Report 2011 Financial Statements / Group's IFRS Financial Statements
categorised into any other category. Available-for-sale financial assets comprise debt and equity securities.
Impairment of Financial assets Sampo assesses at the end of each reporting period whether there is any objective evidence that a financial asset, other than those at fair value through p/l, may be impaired. A financial asset is impaired and impairment losses are incurred, if there is objective evidence of impairment as a result of one or more loss events that occurred after the initial recognition of the asset, and if that event has an impact, that can be reliably estimated, on the estimated future cash flows of the financial asset.
encounters significant financial difficulties that will lead to insolvency and to estimation that the customer will probably not be able to meet the obligations to the Group. Objective evidence is first assessed for financial assets that are individually significant, and individually and collectively for financial assets not individually significant.
Whether there is objective evidence of an impairment of available-forsale financial assets, is evaluated in a separate assessment, which is done if the credit rating of an issuer has declined or the entity is placed on watchlist, or there is a significant or prolonged decline in the fair value of an equity instrument below its original acquisition cost.
As there are no quoted prices available in active markets for unquoted equities and participations, the aim is to determine their fair value with the help of generally accepted valuation techniques available in the markets. The most significant share of unquoted equities and
Derivative Financial instruments and hedge accounting Derivative financial instruments are classified as those held for trading and those held for hedging, including interest rate derivatives, foreign exchange derivatives, equity derivatives and commodity derivatives.
Derivative instruments that are not designated as hedges and embedded derivatives separated from a host contract are treated as held for trading. They are measured at fair value and the change in fair value, together with realised gains and losses and interest income and expenses, is recognised in profit or loss. If derivatives are used for hedging, but they do not qualify for hedge accounting as required by
39. The hedging relationship between the hedging instrument and the hedged item, as well as the risk management objective and strategy for undertaking the hedge, are documented at the inception of the hedge. In addition, the effectiveness of a hedge is assessed both at inception and on an ongoing basis, to ensure that it is highly effective throughout the period for which it was designated. Hedges are regarded as highly effective in offsetting changes in fair value or the cash flows attributable to a hedged risk within a range of 80-125 per cent.
During the financial year, fair value hedges have been used in P&C
documented as fair value hedges and are effective in relation to the hedged risk are recognised in profit or loss. In addition, the hedged assets and liabilities are measured at fair value during the period for which the hedge was designated, with changes in fair value recognised in profit or loss.
Conversely, securities borrowed are not recognised in the balance sheet, unless these are sold to third parties, in which case the purchase is recorded as a trading asset and the obligation to return the securities as a trading liability at fair value through profit or loss.
Finance leases are recognised at the lease’s inception at the lower of the fair value of the leased asset and the present value of the minimum lease payments. The corresponding obligation is included in
IT software and other intangible assets, whether procured externally or internally generated, are recognised in the balance sheet as intangible assets with finite useful lives, if it is probable that the expected future economic benefits that are attributable to the assets will flow to the
Group and the cost of the assets can be measured reliably. The cost of internally generated intangible assets is determined as the sum of all costs directly attributable to the assets. Research costs are recognised as expenses in profit or loss as they are incurred. Costs arising from development of new IT software or from significant improvement of existing software are recognised only to the extent they meet the above-mentioned requirements for being recognised as assets in the balance sheet.
Customer relationships based on insurance contracts and identifiable in conjunction with the merger of the P&C insurance business are also recognised as other intangible assets. Customer relationships were measured at fair value at the acquisition. Measurement of the present value of all future cash flows from an asset takes into consideration insurance premium revisions, cross-sales and general economic forecasts. The average validity period of insurance contracts, 6 years, is deemed as the asset’s useful life, during which time it is amortised on a straight-line basis. When necessary, customer relationships are tested for impairment.
Sampo Group (the cedant) may receive compensation from another insurer (the reinsurer), if it becomes liable for paying compensation based on other insurance contracts it has issued. Such compensation received on the basis of reinsurance contracts is included in the balance sheet under 'Reinsurers’ share of insurance liabilities' and
The provision for unearned premiums is intended to cover anticipated claims costs and operating expenses during the remaining term of insurance contracts in force. In P&C insurance and reinsurance, the provision for unearned premiums is normally calculated on a strictly proportional basis over time, i.e. on a pro rata temporis basis. In the event that premiums are judged to be insufficient to cover anticipated claims costs and operating expenses, the provision for unearned premiums must be augmented by a provision for unexpired risks.
The provision for claims outstanding in direct P&C insurance and reinsurance may be calculated by statistical methods or through individual assessments of individual claims. Often a combination of the two methods is used, meaning large claims are assessed individually while small claims and claims incurred but not reported
insurance companies collect a so-called expense loading along with their premiums written, which is then forwarded to the central organisation for the particular insurance line. The central organisation distributes the pay-as-you-go contributions collected so that the company undertaking the type of insurance in question receives an amount equal to the compensation falling under the pay-as-you-go system it has paid that year. The insurer’s participation in the payment is proportional to the insurer’s market share in the insurance line in question.
In the P&C insurance business, acquisition costs clearly relating to the writing of insurance contracts and extending beyond the financial year are recognised as assets in the balance sheet. Acquisition costs include operating expenses directly or indirectly attributable to writing insurance contracts, fees and commissions, marketing expenses and the salaries and overheads of sales staff. Acquisition costs are amortised in the same way as provisions for unearned premiums, usually in 12 months at the maximum.
Policies issued by the life insurance business are classified as either insurance contracts or investment contracts. Insurance contracts are contracts that carry significant insurance risk or contracts in which the policyholder has the right to change the contract by increasing the risk.
As capital redemption contracts do not carry insurance risk, these contracts are classified as investment contracts.
Changes in the liabilities of reinsurance have been calculated at variable rates of exchange. In direct insurance, the insurance liability is calculated by policy, while in reinsurance it is calculated on the basis of the reports of the ceding company or the company’s own bases of calculation.
Mortality assumptions have an essential effect on the amount of liability, particularly in group pension insurance, the liability of which accounts for about 39 per cent of the technical provisions of the
Finnish life company. A so-called cohort mortality model is used in calculating the group pension insurance liability since 2002, incorporating the insured person’s birth year in addition to his or her age and sex. The cohort mortality model assumes that life expectancy increases by one year over a ten-year period.
For unit-linked contracts, all the liabilities and the assets covering the unit-linked insurance are matched. Both the liabilities and the assets have been presented in the Notes to the financial statements. In calculating the provision for claims outstanding of direct insurance, discounting is applied only in connection with the liabilities of pensions whose payment has commenced. The liabilities of assumed reinsurance are based on the reports of the ceding company and on an estimate of claims which have not yet been settled. The assets covering the unit-linked liabilities include debt securities issued by the
Group companies. These have not been eliminated. Elimination would lead to misleading information, as the policy holders carry the investment risk related to these investments, and to a mismatch between the unit-linked liabilities and assets covering them.
The amounts of short- and long-term liabilities in technical provisions are determined annually. The Group’s financial statements’ Risk
Management section elaborates on the change of technical provisions and their forecast annual maturities.
According to Chapter 13, Section 2 of the Finnish Insurance Companies’
Defined benefit plans are both funded and unfunded. The amounts reported as pension costs during a financial year consist of 1) the actuarially calculated earnings of old-age pensions during the year, calculated straight-line, based on pensionable income at the time of retirement, and 2) calculated effects in the form of interest expense for crediting/appreciating the preceding years’ established pension obligations less 3) revenues from the assets covered by the plan. The calculation of pension costs during the financial year starts at the beginning of the year and is based on assumptions about such factors as salary growth and price inflation throughout the duration of the
and the market interest rate on the obligation during the financial year.
The Group also has certain voluntary defined benefit plans. These are intra-Group, included in the insurance liabilities of Mandatum Life and have no material significance.
The fair value of schemes has been determined using the Black-
Scholes-pricing model. The fair value of the market-based part of the incentive takes into consideration the model’s forecast concerning the number of bonus units to be paid as an incentive. The effects of nonmarket based terms are not included in the fair value of the incentive; instead, they are taken into account in the number of those share options that are expected to be exercised during the vesting period. In this respect, the Group will update the assumption on the estimated final number of bonus units at every interim or annual balance sheet date.
Deferred tax is calculated by using the enacted tax rates prior to the balance sheet date. The new tax rate 24.5 % from 2012 on, ratified by the Finnish parliament, has been used in the calculation of deferred taxes. The taxable income for the financial year is based on the current tax rate 26 %.
Share capital The incremental costs directly attributable to the issue of new shares or options or to the acquisition of a business are included in equity as a deduction, net of tax, from the proceeds.
The uncertainty related to the estimates is generally greater when estimating new insurance portfolios or portfolios where clarification of a loss takes a long time because complete claims statistics are not yet available. In addition to the historical data, estimates of insurance liabilities take into consideration other matters such as claims development, the amount of unpaid claims, legislative changes, court rulings and the general economic situation.
Fair values of investment property have been determined internally during the financial year on the basis of comparative information derived from the market. They include management assumptions concerning market return requirements and the discount rate applied.
Goodwill, intangible assets not yet available for use, and intangible assets with an indefinite useful life are tested for impairment at least annually. The recoverable amounts from cash-generating units have mainly been determined using calculations based on value in use.
Application of new or revised IFRSs and interpretations The Group will apply the following new or amended standards and interpretations related to the Group’s business, if approved by the EU.
If not stated otherwise, the following standards or interpretations or their amendments have already been approved by the EU at the balance sheet date.
Applications in 2013 (the changes were not approved by the EU at the balance sheet date)
determined based on the net funding. The change will have an impact on the employee benefits recognised in the If subgroup where the accumulated unrecognised losses at the balance sheet date were
IFRS 10 Consolidated Financial Statements (effective for annual periods beginning on 1 Jan 2013 or after) defines closer the concept of control as the crucial factor for consolidation.
IFRS 12 Disclosure of Interests in Other Entities (effective for annual periods beginning on 1 Jan 2013 or after) includes requirements for disclosures regarding different involvements in other entities, such as associates and unconsolidated entities.
IFRS 13 Fair Value Measurement (effective for annual periods beginning on 1 Jan 2013 or after) combines in one standard the determination of fair value and defines the concept of fair value more precisely.
(effective for annual periods beginning on 1 Jan 2013 or after) includes the requirements for separate financial statements to the extent they have not been included in the new IFRS 10.
Revised IAS 28 Investments in Associates (effective for annual periods beginning on 1 Jan 2013 or after) includes the requirements for using the equity method accounting for investments in associates and joint ventures.
Depreciation and amortisation by segment are disclosed in notes 11 - 13 and investments in associates in Note 14.
CONSOLIDATED INCOME STATEMENT BY BUSINESS SEGMENT FOR YEAR ENDED 31 DECEMBER 2011
Change in liabilities for insurance and investment contracts -107 348 - - 241
Share of associate's other comprehensive income - - 48 - 48
Other comprehensive income for the year, net of tax 425 226 51 1 703
TOTAL COMPREHENSIVE INCOME FOR THE YEAR 943 332 534 -2 1,807
Investments related to unit-linked insurance contracts - 3,053 - - 3,053
Investments related to unit-linked insurance contracts - 3,127 - - 3,127
Liabilities for insurance and investment contracts 9,340 4,410 - - 13,749
The revenue includes insurance premiums according to the underwriting country, consisting of premiums earned for P&C insurance and premiums written for Life insurance, and net investment income and other operating income in the Holding segment.
¹) The change in unearned premiums is presented in Note 4 " The change in insurance and investment liabilities".
Included in gains/losses from financial assets available-for-sale is a net gain of EURm 25 (86) transferred from the fair value reserve.
Total claims cost attributable to current-year operations -3,107 171 -2,936 -2,950 147 -2,803
Interest rate used in calculating the technical provisions of annuities (%) 2011 2010
Contracts with discretionary participation feature (DPF) -84 -68 1 1 -83 -67
Pension costs - defined contribution plans -46 -41 - defined benefit plans (Note 31) -19 -22
Item Other for P&C and Life Insurance includes e.g. expenses related to communication, external services and other administrative expenses. In 2010, item Other for P&C Insurance includes also the effect of dissolvement of the collective guarantee item EURm 25.
2) Includes other technical income EURm 31 (25) and other technical expenses EURm 27 (24).
Profit or loss attributable to the equity holders of the parent company 1,038 1,104
Financial assets and liabilities have been categorised in accordance with IAS 39.9. In the table are also included interest income and expenses, realised and unrealised gains and losses recognised in P/L, impairment losses and dividend income arising from those assets and liabilities. The financial assets in the table include balance sheet items Financial assets, Investments related to unit-linked contracts and Cash and cash equivalents.
Non-cancellable minimum rental - not later than one year 1 1 - later than one year and not later than five years 1 1
Non-cancellable minimum rental - not later than one year 7 8 - later than one year and not later than five years 10 9 - later than five years 5 7
Forecasts for If, approved by the management, cover years 2012–2014. The cash flows beyond that have been extrapolated using a 2 % growth rate. A 2 % growth rate for years beyond 2011 has been used for the markets where Mandatum Life operates.
Associates not accounted for by the equity method at 31 Dec 2011 **)
At 31 Dec 2011, the carrying amount of investments in associates included goodwill EURm 1,094 (909), including goodwill from the Nordea acquisition EURm 976 (905).
Nordea was first conslidated as an associate company from 31 Dec. 2009 with Sampo's holding of 20,05 %. In the financial year 2011, Sampo's holding in Nordea was 21.26 % with the goodwill related to the acquisitions of EURm 976.
Sampo´s share of Nordea's loss/profit consists of the following as of 31 Dec 2011: EURm 2011
Financial assets designated as at fair value through p/l 155 90
Currency options, bought and sold 211 2 2 - - -
Total derivatives held for trading 12,516 114 202 4,935 63 75
Total financial assets designated as at fair value through p/l 155 90
Interest options, bought and sold - - - 300 1 1
Currency options, bought and sold 203 1 1 120 1 1
Equity and equity index options 29 0 0 - - -
Net gains from exchange derivatives designated as fair value hedges amounted to EURm -11 (4). Net losses from hedged risks in fair value hedges of available for sale financial assets amounted to EURm 11 (3).
Cash flow hedges Cash flow hedges have been used to hedge future interest payments resulting from floating rate interest-bearing assets. The hedged items designated are interest payments from EUR denominated bonds.The effectiveness of the hedging relationships is assessed prospectively using the critical terms match method. An effectiveness test is carried out retrospectively using the hypothetical swap method.
At 31 Dec. 2011 he total amount of gains recognised in equity from the changes in the fair values of hedging instruments was EURm 2 (4). These gains are recognised in the income statement at the time when the hedged items affect profit or loss. The table below represents the periods when the cash flows are expected to occur and when they are expected to affect profit or loss. Any ineffectiveness is recognised in the income statement.
Most of the cash flows are forecast to occur during 2012.
Financial assets available for sale / debt securities: Debt securities available for sale include EURm 2,494 (2,709) investments in bonds and EURm 338 (533) investments in money market instruments.
The fair value of investment securities is assessed using quoted prices in active markets. If published price quotations are not available, the fair value is assessed using discounting method. Values for the discount rates are taken from the market’s yield curve
Total financial liabilities measured at fair value 0 282 - 283
Total financial assests measured at fair value 5,557 13,839 1,005 20,402
The sensitivity of financial assets and liabilites to changes in exchange rates is assessed on business area level due to differenct base currencies. In P&C insurance, 10 percentage point depreciation of all other currencies against SEK would result in an effect recognised in profit/loss of EURm 9 and in an effect recognised directly in equity of EURm -1. In Life insurance, 10 percentage point depreciation of all other currencies against EUR would result in an effect recognised in profit/loss of EURm 20 and in an effect recognised directly in equity of EURm -60. In Holding, 10 percentage point depreciation of all other currencies against EUR would have no impact in profit/loss, but an effect recognised in equity of EURm 2.
Other financial investments parallel shift down parallel shift up in prices in prices
18 MOVEMENTS IN LEVEL 3 FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE
Total gains or losses included in profit and loss for assets held at the end of the financial year 25 8 32
Total gains or losses included in profir or loss for the financial year -24 14 -9
Total gains or losses included in profit and loss for assets held at the end of the financial year -4 13 9
Total financial assests measured at fair value 1,074 -185 948 -144
Total financial assets designated at fair value through p/l 291 131
The historical cost of the equity securities related to unit-linked contracts was EURm 2,157 (2,096) and that of the debt securities EURm 556 (530).
In Sampo plc, EURm 16 of deferred tax asset has not been recognised on unsed tax losses.
In P&C insurance, EURm 3 of deferred tax asset has not been recognised on unused tax losses and temporary differences.
As the P&C insurance is exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading. During the financial year, however, the exchange rate effects were minor on the insurance liabilities.
Current estimate of total claims costs 5,050 2,289 2,264 2,334 2,500 2,597 2,705 2,774 2,897 2,958 28,368
The liabilities at 1 Jan and at 31 Dec include the future bonus reserves and the effect of the reserve for the decreased discount rate. The calculation is based on items before reinsurers' share. A more detailed specification of changes in insurance liabilities is presented in Group's Risk Management.
Preferred capital note, 2001(nominal value EURm 200) 20 years - 217
Preferred capital note, 2002 (nominal value EURm 65) 20 years 68 71
Preferred capital note, 2011 (nominal value EURm 110) 30 years 109 -
The loans are issued with fixed interest rates for the first ten years, after which they become subject to variable interest rates. At that point, there is the possibility of redemption. All loans and their terms are approved by supervisory authorities. The loans are utilised for solvency purposes.
IAS 19 Employee benefits is applied in the accounting for the defined benefit plans from the beginning of the financial year 2005.
EURm Funded plans Unfunded plans Total Funded plans Unfunded plans Total
Fair value of plan assets 347 - 347 326 - 326
Net cumulative unrecognised actuarial gains/losses -138 -13 -151 -41 -5 -46
Net pension obligation recognised in the balance sheet 21 58 79 27 58 85
Losses (+) or gains (-) on curtailments and settlements 1 0
Minimum lease payments not later than one year 41 32 later than one year and not later than five years 105 78 later than five years 120 101
If P&C Holding Ltd has issued a guarantee to the benefit of Svenska Handelsbanken Ab (publ) whereby If Holdings guarantees the commitments incurred by the If P&C Insurance Ltd deriving from short term credits up to an amount of EURm 56 and for commitments deriving from derivates transaction and - on behalf of - If P&C Insurance Ltd, If P&C Insurance Company Ltd and Capital Assurance Company for those companies commitments relating to Letters of Credits issued on behalf of their insurance operations. Capital Assurance Company Inc was sold during 2008, and the purchaser issued a guarantee in favor of If for the amount that If may be required to pay under the standby letters of credit pertaining to Capital Assurance Company Inc.
If P&C Insurance Ltd has according to a shareholders’ agreement between the shareholders in Hemfosa Fastigheter AB committed to up until 30 June 2014 supply the company with a subordinated loan (shareholders’ loan) up to a maximum amount of EURm 56. The whole amount was used as of December 2011.
Lease and sublease payments recognised as an expense in the period - minimum lease payments -3 -3
The key management personnel in Sampo Group consists of the members of the Board of Directors of Sampo plc and Sampo Group’s Executive Committee.
The Board of Directors for Sampo plc has decided on the long-term incentive schemes 2008 II - 2011 I for the management and experts of the Sampo Group. The Board has authorised the CEO to decide who will be included in the scheme, as well as the number of calculated bonus units granted for each individual used in determining the amount of the performance-related bonus. In the schemes, the number of calculated bonus units granted for the members of the Group's Executive Committee is decided by the Board of Directors. Over 100 persons were included in the schemes at the end of year 2011.
The amount of the performance-related bonus is based on the value performance of Sampo's A share and on the insurance margin (IM) and, regarding the 2011 I scheme, also on Sampo's return on the risk adjusted capital (RORAC). The value of one calculated bonus unit is the tradeweighted average price of Sampo's A-share at the time period specified in the terms of the scheme, and reduced by the starting price adjusted with the dividends per share distributed up to the payment date. The pre-dividend starting prices vary between eur 16.69 - 18.44. The maximum value of one bonus unit varies between eur 28.49 - 33.37, reduced by the dividend-adjusted starting price. The IM criteria in the schemes 2008 II and 2009 I has three levels. If the IM reaches 4 per cent or more, the bonus is paid in its entirety. If the IM is between 2 - 3.99 per cent, the payout is 50 per cent. In the case of IM staying below these benchmarks, no bonus will be paid out. In the 2011 I scheme, the bonus depends on two benchmarks. The payout is 70 per cent, if the IM is 6 per cent or more, and 35 per cent, if the IM is between 4 - 5.99 per cent. No IM-related bonus will be paid out, if the IM stays below these. In addition, the return on the risk adjusted capital is taken into account so that a bonus of 30 per cent is paid out, if the return is, in the minimum, a riskless return + 4 per cent. If the return is a riskless return + 2 percent, but less than a riskless return + 4 percent, the payout is 15 per cent. If the return stays below these benchmarks, no RORAC-based bonus will be paid out.
Each plan has three performance periods and bonuses are settled in cash in three installments. In the schemes 2008 II and 2009 I when the bonus is paid, the employee shall buy Sampo's A-shares at the first possible opportunity, taking into account the provisions on insiders, with 30 per cent of the amount of the bonus after taxes and other comparable charges, and in the scheme 2008 II to keep the shares in his/her possession for one year and in the scheme 2009 I for 2 years. In the 2011 I scheme, the employee shall authorise Sampo plc to acquire the Sampo A shares for him/ her, with 60 per cent of the amount of bonus received. The shares are subject to transfer restrictions for three years from the day of payout. A premature payment of the bonuses may occur in the event of changes in the group structure or in the case of employment termination on specifically determined bases. The fair value of the incentive schemes is estimated by using the Black-Scholes princing model.
There are a number of legal proceedings against the Group companies outstanding on 31 Dec 2011, arising in the ordinary course of business. The companies estimate it unlikely that any significant loss will arise from these proceedings.
40 INVESTMENTS IN SHARES AND PARTICIPATIONS OTHER THAN SUBSIDIARIES AND ASSOCIATES
Mand europe enhanced index Finland 34,833,513 50 db x-trackers DAX Luxemburg 160,000 9
Danske Invest Europe High Dividend I Luxemburg 4,193,065 35 db x-trackers DAX ETF Luxemburg 931,200 54
Net change in cash and cash equivalents 33 -356 *) Investments include both investment property and financial assets.
Sampo Group / Annual Report 2011 Financial Statements / Sampo plc Financial Statements
Amortisation according to plan during the financial year - 0 0 0
Carrying amount at end of year 0 1 0 1 7 PROPERTY, PLANT AND EQUIPMENT
Carrying amount at end of year 1 3 1 3 8 RECEIVABLES FROM GROUP COMPANIES
Carrying amount at end of year 5,557 5,304 10 OTHER SHARES AND PARTICIPATIONS
Information on share capital is disclosed in Note 29 in the consolidated financial statements.
Guarantees for derivate contracts 43 36 17 ACCRUALS AND DEFERRED INCOME
Approval of the Financial Statements and the Board of Directors' Report Helsinki, 9 February 2012
Auditor's report To the Annual General Meeting of Sampo plc We have audited the accounting records, the financial statements, the report of the Board of Directors, and the administration of Sampo plc for the financial period 1.1. - 31.12.2011. The financial statements comprise the consolidated statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows, and notes to the consolidated financial statements, as well as the parent company’s balance sheet, income statement, cash flow statement and notes to the financial statements.
Auditor’s Responsibility Our responsibility is to express an opinion on the financial statements, on the consolidated financial statements and on the report of the
Board of Directors based on our audit. The Auditing Act requires that we comply with the requirements of professional ethics. We conducted our audit in accordance with good auditing practice in Finland. Good auditing practice requires that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and the report of the Board of Directors are free from material misstatement, and whether the members of the Board of Directors of the parent company or the Managing Director are guilty of an act or negligence which may result in liability in damages towards the company or have violated the Limited Liability Companies Act or the articles of association of the company.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements and the report of the Board of Directors. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of financial statements and report of the Board of
Opinion on the company’s financial statements and the report of the Board of Directors In our opinion, the financial statements and the report of the Board of
Finland. The information in the report of the Board of Directors is consistent with the information in the financial statements.
Companies Act. We support that the members of the Board of
Sampo Group / Annual Report 2011Financial information and Annual General Meeting 2012 Financial Information and Annual General Meeting in 2012
Register kept by Euroclear Finland Ltd has the right to participate in the General
Sampo plc's Annual General Meeting will be held on 12 April, 2012 at 2 pm (Finnish time), at the Helsinki Exhibition and
Helsinki. The listing of persons who have registered for the meeting will commence at 12.30 pm.
The right to the dividend is held by the shareholder who is marked in the
05/08/12 Interim Report for the period January - March 2012 08/08/12 Interim Report for the period January - June 2012 11/06/12 Interim Report for the period January - September 2012