Risk Management 43 Accounting Policies 48 Calculation Methods for the Key Figures 56 Key Figures 60 Other Notes on the Accounts 62
The financial statements presented on pages 18-112 are based on bookkeeping and financial statements drawn up in Finnish markka. The official financial statements can be inspected at the following Sampo offices: – Eteläesplanadi 8, Helsinki (Sampo Group’s Legal Affairs) – Puolalankatu 5, Turku (Financial Administration)
Contents www.sampo.fi The Board of Directors of Sampo-Leonia proposes to the Annual General Meeting convening on 5 April 2001, that the Group’s parent company be renamed Sampo plc.
January • Sampo’s subsidiary Industrial Insurance bought the marine insurance portfolio and part of the commercial insurance portfolio of the Swedish company Försäkringsaktiebolaget
April • Sampo’s Annual General Meeting approved plans to merge Sampo and
May • The Insurance Supervision Authority gave its consent to the merger of
Group to earnings-related pension insurance company Ilmarinen and life insurance company Suomi.
July • Sampo Finance increased its holding in Optiva Bank by acquiring a total of 23.3 per cent of Optiva Bank from the
November • The asset and fund management companies of Sampo and Leonia decided to combine their operations as part of the formation of the new
• Leonia plc decided to combine two subsidiaries by merging Leonia
Sampo Highlights 2000 merger is part of the re-structuring of Sampo-Leonia’s banking business.
• Sampo bought the whole capital stock of the Polish pensions company
Development Bank) signed deeds of sale by which the share capital and voting rights of LDB were transferred in full to Sampo. The purchase price was approximately EUR 11 million.
Net asset value ** 41.99 43.71 –3.9 *) Proposed dividend for 2000, number of shares 111,116,993. The dividend for 1999 has been paid by Sampo to its shareholders, number of shares 59,280,000.
Earnings/share pro forma incl. Mandatum * Board of Directors’ proposal: ordinary dividend EUR 4, extra dividend EUR 4
The key areas of Sampo’s business operations are the fastest growing areas, i.e. long-term savings (life insurance, asset management and mutual funds), retail and private banking, and investment banking. Non-life insurance is not a key growth area for the Group but will remain a part of the domestic service supply. The Group’s non-life insurance operations in central Europe will be relinquished.
Net income from financial operations 432 1 – 11 Cost to income ratio, % 61.3 **) 128.1 – 52.1 Operating profit 219 –5 – 29
* Varma-Sampo’s holding in Sampo Life is 20.1% ** Part of the ownership is channelled through the holding companies situated in the Netherlands *** Shareholdings of the sub-group Sampo Holdings (UK)
Baltic insurance companies: Sampo Eesti Varakindlustus Sampo Eesti Elukindlustus Sampo Latvija (99.99%) Sampo Latvija Dziviba
At the end of the review year and the beginning of 2001, the Group made several decisions that will have far-reaching consequences for the future. The first of these was the decision to acquire Mandatum Bank Plc through an exchange offer. By the end of February this year more than 99 per cent of the shares had been exchanged. With the acquisition of Mandatum, changes were made in the top management. In this context the management’s commitment to the Sampo Group was strengthened by increasing their share ownership.
Sampo as the parent company’s “new” name, which will also be the corporate brand. The aim of the change is to clarify and sharpen the Group’s corporate image. The double-barrelled name Sampo-Leonia tends to emphasise the separateness of the banking and insurance operations, in addition to which it has proved difficult to use. Mandatum ’s name will, however, remain in use for the Group’s investment and private banking services.
As a first step towards improving the situation, a decision was made to stop writing new insurance.
Greater Integration The above-mentioned strategic changes and the need to improve efficiency brought pressures to reorganise operations. The matrix-based organisation was replaced by a line organisation, with clearly-defined personal responsibilities.
The new Sampo is well placed to succeed in its chosen growth areas. Long-term saving started to gain popularity later in Finland than in the other EU countries, and the starting point was also exceptionally low in Finland, since financial wealth had traditionally been held almost entirely in the form of bank deposits. Nevertheless, Finland now has the same reasons and resources for long-term saving as other western countries, where growth in long-term saving is already well established.
Group started to operate, most of the non-life customers were still customers of competing banks.
An Exceptional Year The year 2000 was exceptional in terms of the Group’s performance. Operating profit doubled to EUR 1.6 billion.
The operating environment on the investment market has deteriorated markedly since the beginning of the review year. In these conditions it is particularly important to keep the Group’s portfolio balanced, and we decided to accelerate the process by realising one third of our remaining Nokia shares in the early part of this year.
I should like to take this opportunity of extending my sincere thanks to all our stakeholders. We have set our service quality goals higher than ever, and I am confident in our ability to achieve them. I should also like to thank our personnel who have met the challenge of working in an environment of continuous change.
Consumer confidence in the economy remained firm, employment improved and incomes increased. Household demand for loans was strong. Housing loans grew at an annual rate of approximately 10 per cent. Despite the rapid growth in lending, household indebtedness remained moderate.
Though housing prices began to fall toward the end of last year, the prices of dwellings in old blocks of flats were on average 6 per cent higher in 2000 than in 1999. There was a slowdown in the pace of construction of new dwellings. Construction was increasingly financed privately.
Export and import growth picked up considerably from the previous year. The terms of trade continued to weaken.
Industrial construction investment activity remained rather slack, though investment in machinery and equipment increased substantially. Investment in other sectors, especially the service sector, increased quite rapidly. Bank lending to the corporate sector was down approximately one per cent from the previous year.
The year 2000 was one of rapid and broad-based economic growth in Finland. Finnish GDP grew by nearly 6 per cent. The high global oil prices and their second-round effects put pressure on consumer prices. Finland’s inflation averaged 3.4 per cent for the year. Inflation also gathered momentum in the euro area, but less so than in Finland.
Private pension funds are expected to grow rapidly. At the moment there are 21 licensed funds and new licences are no longer being granted. The three largest funds together have a market share of 56 per cent.
Polish life insurance is still trailing far behind the western European level. The market is expected to grow by 30 per cent in both 2001 and 2002.
The general price level of corporate property and loss of profits insurance in particular remained low. However, a noticeable upward trend could be observed especially in
England and Holland towards the end of 2000. Owing to large claims and the floods in England, France, and Italy in the autumn, the overall profitability of non-life insurance remained low.
“An increased interest in investing directs assets to, for instance, life insurance savings and funds”
The birth of Sampo-Leonia and the subsequent combination with Mandatum have resulted in a strong entity capable of offering high-quality services to its customers in response to changes in Finnish savings behaviour. As households become wealthier, assets will increasingly be used for other investment purposes than traditional saving for housing. This new interest in investment means that assets are re-directed from traditional bank deposits to more versatile forms of saving, such as funds and life insurance.
Life Insurance The life insurance market continued to grow strongly in 2000 and preliminary information indicates that aggregate premiums written by the industry rose by almost 40 per cent to more than EUR 3.8 billion. This development was partly due to the end of the tax exemption for interest on deposits and partly due to campaigns by bank-owned life insurance companies persuading customers to transfer deposits to insurance savings policies.
Leonia Life Insurance merged with Sampo Life at the end of 2000. Life insurance premiums written by Sampo-
Leonia rose to EUR 769 million in the financial year, which is an increase of approximately 12 per cent from the previous year. Market share fell by four percentage points to approximately 20 per cent, according to preliminary information on aggregate premiums written by the industry.
Sampo aims to increase its market share in future, especially in unit-linked insurance and insurance taken out by retail customers. The new organisation creates a good basis for reaching this goal. Retail customers and life insurance are high-priority areas for the Group.
7 Verdandi, Liv-Alandia 2% 8 Fennia Life 2% 9 Overseas companies in total 5%
The strong growth of the mutual fund market, which started in Finland in 1996, continued. At year-end, assets placed in Finnish funds totalled more than EUR 13.5 billion compared to slightly over EUR 10 billion at the beginning of the year.
Sampo-Leonia’s total funds under management increased from EUR 1.2 billion to EUR 1.5 billion and the number of unit-holders more than doubled to 100,180.
The Group’s resources pertaining to fund operations will increase in 2001 due to the combination of the operations of Mandatum Fund Management Company and Sampo-
As a result of increased interest in investing, assets are directed to, for instance, life insurance savings and funds. The new Sampo Group’s expertise guarantees that customers will be offered high-quality services in response to the change in Finnish savings behaviour.
Service Network Sampo-Leonia’s service network covering more than two million retail customers consists of comprehensive electronic and mobile services as well as telephone services.
After completion of the integration of Sampo and Leonia branches, there will also be approximately 150 offices providing customers with personal service. The Mandatum
Post became unprofitable as a result of the rapid change in the way customers do their banking. Co-operation ended in 2000 and almost 500 post offices ceased offering banking services. Simultaneously the bank strengthened its own service network considerably. The emphasis was on upgrading electronic and mobile services, but, in addition, new offices were opened in those areas where the supply of services otherwise would have deteriorated following the ending of the agreement with the post office. In addition to the new branches, travelling banking specialists now provide banking services in sparsely populated areas.
Integration of the branch network started in the autumn of 2000 when the Group began to offer banking services in insurance branches as well as insurance services in banking branches. The telephone services of Sampo and
Leonia’s banking customers using the WebBank was as high as about 35 per cent. This figure is a record high in
At the beginning of 2001 almost half a million customers were using the service keys that enable them to access
Sampo-Leonia’s WAP banking services won first prize at the international conference arranged by the World Information Technology and Services Alliance (WITSA). At the beginning of 2000 Sampo-Leonia was the first Finnish bank to offer its customers the opportunity to make direct stock exchange transactions on the Internet. Four out of five purchase or sell orders of shares and one third of mutual fund orders are already being made online.
Leonia Bank and Finland Post came to an end after more than a hundred years and the integration of the Sampo and
There were also changes in customers’ savings and investment behaviour. Funds and life insurance increased in popularity.
Banking Credit granted to retail customers increased by more than 6 per cent in the year 2000. Credit granted to corporate customers remained almost the same.
Group turnover, EUR 5,536 m 1 Life insurance 30% 2 Banking and investment services 33% 3 Non-life insurance 37%
Mandatum Bank Corporate Finance operations developed favourably in 2000. Corporate mergers and acquisitions as well as capital market transactions increased throughout the review period.
Mandatum acted as an adviser and manager in 2000 are: the sale of Ahlström’s Machinery division, the merger between Länsivoima and Fortum, the exchange offer made by Talentum to the shareholders of Kauppakaari, the acquisition of Stora Enso’s hydroelectric power plants by Fortum, the merger of Outokumpu Steel and Avesta Sheffield, and the acquisition of MoDo Paper by Metsä-Serla.
Mandatum acted as the lead manager in last year’s largest IPO measured in monetary value, the Tecnomen public offering and share issue. Among other capital market transactions where Mandatum acted as the lead manager were Elcoteq Network’s share issue and private placement, the IPO of the data security company SSH, Menire’s share issue, and Seligson & Co.’s public offering. Mandatum was a lead manager in capital market transactions worth approximately EUR 350 million in total. In 2000 Mandatum introduced an Internet-based subscription system for capital market transactions which was successfully used, for instance, in the IPOs of Tecnomen and SSH.
Favourable Outlook The outlook for Corporate Finance is favourable for 2001 and corporate acquisitions are forecast to increase during the year, although the number of corporate acquisitions globally is expected to fall from 2000’s record level. Capital market transactions were at a near standstill at the beginning of the year, and e.g. IPOs were globally at their
lowest in the first few months of the year compared to the last five years. However, towards the end of the year the situation of capital markets is expected to stabilise.
The combination of Sampo-Leonia and Mandatum is expected to strengthen Corporate Finance operations further. Mandatum & Co Oy will create a solid base from which to develop operations in the new Sampo Group.
The combination of Sampo and Mandatum will strengthen investment banking further. Mandatum is expected to retain its leading position in corporate mergers and acquisitions.
Group structure. The non-life insurance business will be transferred to Sampo’s new, wholly-owned subsidiaries
The profitability of domestic insurance business improved significantly thanks to the retail customer business and the focus on insuring small and medium-sized companies. In particular, profitability improved in motor vehicle insurance.
Retail Customers The Sampo 2000 restructuring project covering retail customer service, products and systems was completed during the year under review. The purpose of the project was to build a uniform non-life insurance product and system platform.
Internet so that customers have the opportunity to carry out their insurance business regardless of time and place. Electronic transactions by retail customers multiplied in 2000.
Our aim is to introduce more new products and services in 2001, with the focus on users of electronic and mobile services.
ASKELMA product range. The ASKELMA method can now be used for assessing all a company’s main risks.
Aggregate premiums written in 2000 EUR 2.3 b 1 Sampo Group 34%
Run-off of Foreign Reinsurance The technical provisions of run-off companies handling the foreign reinsurance run-off decreased significantly (by
Investments Overall returns on investments were good, despite the significant fall in share prices. The return on securities investments was 3.4 per cent, the rental return on the completed real estate portfolio was 6.5 per cent and the return on the investment portfolio, excluding shareholdings in fixed assets, was 4.3 per cent.
The investment portfolio of the non-life consolidated company totalled EUR 4.6 billion, of which the share of foreign investment was EUR 0.9 billion, or 19 per cent. Of these investments 11 per cent were outside the euro area.
Investments in shares constituted 59 per cent of the investment portfolio, despite net sales of almost one billion euro. The share of bonds was 18 per cent and other debt securities 4 per cent. Real estate investments constituted 13 per cent of the investment portfolio.
As the age profile of the population changes, there will also be a need to supplement public services by individual funding in the field of health care and welfare.
As the use of electronic and mobile services grows, there will be an increasing need to improve the security of the web-based economy, since customers rate the reliability of electronic interaction as extremely important.
The Group more than doubled its operating profit to EUR 1,628 million (EUR 778 million in 1999). The increase in operating profit was largely attributable to the high investment income. Turnover was
EUR 5,536 million (EUR 4,102 million). Earnings per share improved to EUR 8.91 (EUR 3.24). The net asset value less full deferred tax was EUR 41.99 (EUR 43.71).
March 2001 as planned. The Board of Directors will invite the Annual General Meeting on 5 April 2001 to resolve that the parent company be renamed Sampo plc. The Group’s subsidiaries and associated undertakings have been listed by business sector in the Notes to the Accounts.
Sampo Life Insurance Company Limited during the year under review by acquiring 12.4 per cent of the Sampo Life share portfolio from Varma-Sampo Mutual Pension
The merger of Sampo Insurance Company and Leonia was implemented in 2000, as set out in the letter of intent signed between the companies on 13 October 1999. The objective of the merger is to create a full-service financial group which is a leading insurer in Finland and a strong bank.
The Finnish Parliament gave its consent on 28 March 2000 to the disposal by the Finnish government of its shares in Leonia plc by trading them into shares of Sampo
Internal Structural Reorganisations of Sampo The Extraordinary General Meeting of Sampo shareholders approved the transfer of the Group structure to a holding company structure on 29 September 2000. The amendment to the Finnish Insurance Companies Act, which constitutes a precondition for the transfer, was approved by
Shareholders resolved that the present non-life insurance business of the parent company and the non-life insurance business received through subsidiary mergers from
Sampo Industrial Insurance Company Ltd. The former will have the retail and corporate customers’ portfolio, and the latter the large corporate customers’ portfolio.
The Sale of Pohjola Shares Sampo, Industrial Insurance, Sampo Life, Leonia, Kaleva
Mutual Insurance Company, and Sampo Finance purchased shares in Pohjola Group Insurance Corporation in October 1999, at the same time as the structural reorganisation of
243 million, and Sampo Finance, 50 per cent owned by the
Sampo Finance’s results improved considerably thanks to the profit on sales and dividends mentioned above.
Optiva Pank (approximately 93.5 per cent of Optiva’s share capital) acquired in the year under review, to Sampo
Development Bank) on 28 December 2000. The purchase price was approximately EUR 10.8 million. Lithuanian
Lithuania, UAB Sampo Lietuva, which was issued a licence to establish a life insurance company. UAB Sampo Lietuva gyvybes draudimas was registered on 22 December 2000.
The market share of the pension fund company is approximately 4.7 per cent, measured in terms of the number of registered customers, and the market share of the life insurance company approximately 3.5 per cent of new insurance contracts.
Write-offs in respect of debt securities held as financial fixed assets 0 – 0
Investment income and charges, revaluations and revaluation adjustments on investments 526 337 189
Change in technical provisions before customer bonuses and change in equalisation provision –530 –560 30
Dividend income 222 Dividends and avoir fiscal tax credit from Pohjola shares
Net income from securities transactions 21 Sales profit from Pohjola shares
Provisions for bad and doubtful debts –20 Provision charged by customer group
Investment income 141 Sales profits, dividends and avoir fiscal tax credit from Pohjola shares
Operating profits from banking and investment services more than doubled, totalling EUR 430 million, of which the share of investment services was EUR 9 million. In addition to dividends and a profit of EUR 243 million from the sale of Pohjola shares the results were improved by the growth in net income from financial operations and in securities transactions and foreign exchange dealing.
Without one-off items affecting comparison the cost to income ratio was 64.6 per cent (73.7%).
149 million (EUR 162 million). Fees and commissions from asset management services grew by
Administrative expenses, depreciation and other operating expenses increased by a total of 6 per cent to EUR 457 million but, excluding one-off cost items affecting comparison, expenses remained more or less unchanged from 1999. The total amount paid to Finland Post for the use of their service network and systems fell by EUR 17 million and amounted to EUR 38 million. Depreciation and writedown of tangible and intangible assets decreased owing to one-off write-downs of properties totalling EUR 14 million in the previous year.
In 2000, new provisions for bad and doubtful debts totalled EUR 41 million, while releases and recoveries were
In 2000 the capital adequacy calculation included both the Leonia Bank Group companies and the risk-weighted assets of A.S. Sampo Pank, Sampo bankas, and PTE NU.
The goodwill arising from the acquisition of PTE NU has been accounted for by applying the principle of ownership when determining the solvency capital of Sampo-Leonia
Balance Sheet and Off-Balance Sheet Items At the end of 2000, the total assets of banking and investment services stood at EUR 24.6 billion, i.e. EUR 3.6 billion less than at the beginning of the year.
Loans to public sector customers were also less. According to the data of the Financial Supervision Authority, Sampo-
The deceleration of growth in lending and the decline in deposit balances have been influenced by the termination of banking services in Finland Post in 2000. The decline in deposits was also partly influenced by a change in the tax rules on deposits to taxation at source from June, 2000. On the other hand, assets under management of the Group’s fund management and asset management companies grew considerably. The assets of the mutual funds amounted to nearly EUR 1.5 billion and the assets under management as a whole were approximately EUR 6.2 billion. Sampo-Leonia
Operating profits from non-life insurance rose to EUR 777 million (EUR 391 million). Premiums written increased to
Sampo Group still holds 34 per cent of the Finnish market.
On a comparable basis, the results from domestic direct insurance improved. The combined ratio excluding the accelerated depreciation mentioned above was 106.3 per cent
The profitability of foreign direct insurance declined. The balance on technical account was EUR -38 million and the combined ratio 132.0 per cent. Operations in the Baltic countries have, however, proceeded as planned. The proportional share of foreign direct insurance increased, thus weakening the overall profitability of non-life insurance.
Provisions have been made under Other Charges for separate costs arising from the structural reorganisation of
The results of domestic direct insurance improved. Net investment income was record high.
Columns: 1 = Gross premiums written before reinsurers’ share 5 = Balance on technical account before the change in collective 2 = Premiums earned guarantee item, other technical charges and the change in 3 = Claims incurred equalisation provision 4 = Operating expenses 6 = Combined ratio, %
Non-Life Insurance Investments Overall investment profits were fairly good despite the plunge in stock exchange prices. Net investment income rose to EUR 892 million (EUR 482 million), including a total of EUR 141 million of dividends (incl. avoir fiscal tax credit) and profit from the sale of Pohjola shares. A gain of
Operating profits from life insurance increased to EUR 421 million (EUR 185 million). Leonia Life Insurance Company
Life insurance premiums written rose by 12.1 per cent and totalled EUR 769 million. However, preliminary information indicates that growth in the total market was faster,
The premiums written for group pension insurance, the largest insurance line, increased to EUR 287 million (EUR
167 million), of which EUR 244 million came from the dissolution of pension funds. The most rapid growth was experienced in unit-linked insurance, where premiums written rose to EUR 168 million (EUR 106 million). The premiums of with-profit life insurance fell back heavily. In line with the chosen product strategy, capital redemption policies premiums written decreased by nearly 50 per cent.
The expense ratio of life insurance improved to 106.1 per cent (118.3%). EUR 3 million has been reserved for separate costs arising from the structural reorganisation of
In 2000 insurance savings were credited with a return of 6.3-6.6 per cent, depending on the insurance line. Technical provisions include EUR 88 million in client bonuses granted for the year 2000. EUR 40 million in bonuses reserved earlier were used for the funding of client bonuses.
EUR 93 million was reserved for bonuses payable in future years. In addition, technical provisions for individual lines were supplemented by EUR 51 million owing to the reduction in guaranteed interest.
This level of solvency meant that the proportion of valuation differences allocated to the shareholders of Sampo Life was 35 per cent, in accordance with the interpretation of the
Investments outside the euro area amounted to EUR 1.2 billion, totalling 23 per cent of the investments. The share of equity investments fell to 31 per cent (44%) as a result of sales and the share of investments in interest-bearing instruments rose to 57 per cent (46%). The share of real estate investments was unchanged.
Risk management is used to limit the risk of loss by ensuring that the return to risk ratio by sector is reasonable and that every process is efficiently and consistently carried out, in the case of both internal and external events that were unpredicted.
As a general rule Sampo-Leonia manages the risks of the business sectors separately from each other. Concentrations of risk do, however, form at the Group level when business operations are to a large degree exposed to the same risks, or when fluctuations in profits correlate in a strong and positive manner. The development of the management of risk concentrations at Group level constitutes one of the most important tasks for 2001.
The credit risk from Sampo-Leonia’s banking operations is illustrated by the expected annual credit loss from corporate exposure, which is approximately 0.32 per cent measured by CreditVaR, and the amount of risk capital reserved through credit loss risk, which is more than 4 per cent of total corporate exposure.
(8,630), of which 51 per cent worked in banking and investment services, 45 per cent in non-life insurance and 4 per cent in life insurance.
Eino Keinänen, and Tom Berglund as new members of the company’s Board of Directors. At the same time, Jyrki
In line with the amendment to its Articles of Association, the Sampo Supervisory Board was abolished when the merger between Sampo and Leonia came into force.
CEO Jouko K. Leskinen submitted a request on 4 December 2000 to resign from his position as CEO as of 1 January 2001. The company’s Board of Directors accepted the request and appointed Björn Wahlroos, the Chairman of the Board of Directors of Mandatum, as the CEO of Sampo-
In order to develop its capital structure Sampo bought back 1,520,000 of its own shares on the Helsinki Exchanges between 3 and 24 January 2000 for a total of EUR 57 million.
(FIM 6,000,000) to FIM 296.4 million, i.e. EUR 49.85 million, in compliance with the implementation provisions of the amendments to the Finnish Insurance Companies Act, which came into effect on 1 September 1997. This reduction in the share capital was recorded in the trade register on 3 July 2000. The number of shares was unchanged.
Leonia’s shareholders, i.e. the Finnish government, received 44,720,000 Sampo class A shares as consideration for the merger on 31 December 2000. The share capital increased by EUR 37.6 million (FIM 223.6 million) to EUR
Retail customers will be offered full euro services from the beginning of 2002. Insurance products will become eurodenominated in stages during 2001.
Acquisition of Mandatum Bank The Boards of Directors of Sampo Insurance Company plc and Mandatum Bank Plc approved on 3 December 2000 the agreement to combine the companies’ business operations.
President (Head of Non-life Insurance), Kurt Lundmark Executive Vice President (Head of Investment Banking) and
Maarit Näkyvä Executive Vice President (Head of Retail Distribution and Private Banking).
Sampo-Leonia follows the Helsinki Exchanges’ guidelines on insider trading. Stricter guidelines for insiders will come into force in March for some of the Group’s employees.
February 2001. The new name has been entered in the trade register and it was taken into use immediately.
The key areas for the new Sampo Group’s business operations are the fastest growing areas, i.e. long-term savings
growth in mutual fund and discretionary asset management business is expected to continue. The range of asset management products could be expanded by utilising the benefits of the mergers. The investment banking outlook is strong for the beginning of the year and the number of mergers and acquisitions will continue to be high.
Unit-linked insurance is a key growth area for life insurance. The aim in corporate life insurance is to maintain its strong market position. The profitability of domestic nonlife insurance is expected to improve. Decisions on the relinquishing of non-life insurance operations in central Europe will be made during the spring.
The proposed distribution of dividends will channel a significant part of the overcapitalisation to Sampo-Leonia shareholders. According to the adjusted dividend policy
Meeting. The proposed split of shares is likely to improve the liquidity of the shares further.
EUR 888,935,944. The Mandatum shareholders who accepted the Sampo-Leonia exchange offer are also entitled to full dividend. It is proposed to reserve EUR 0.2 million for charitable causes. The remaining distributable funds will be transferred to the contingency fund.
Dividend income 224 2 Fees and commissions receivable 179 186 Fees and commissions payable –30 –24 Net income from transactions in securities and foreign exchange dealing from transactions in securities 2 47 –18 from foreign exchange dealing 24 14 71 –4
Depreciation and write-down of tangible and intangible assets 4 –42 –48 Other operating expenses 3 –37 –36 Provisions for bad and doubtful debts 5 –17 4 Write-offs in respect of debt securities held as financial fixed assets 5 0 – Income from companies accounted for by the equity method 1 1 Operating profit before elimination items 430 202
Change in the provision for outstanding claims –157 –89 Reinsurers’ share 1 1
Revaluations on investments 5 45 Investment charges 18 –545 –376 Revaluation adjustments on investments –35 –1
Share of associated undertakings’ profit/loss 62 1 Profit before elimination items and extraordinary items 989 418
Shares and participations in associated undertakings 31, 42 13 11 Shares and participations in Group undertakings 31, 42 2 1 Intangible assets 32
Prepayments and accrued income 35 723 705 Deferred tax assets 63 29 13 Elimination items 78 –70 –208
Debt securities and loans of Group undertakings 110 114 Shares and participations in associated undertakings 81 74 Debt securities and loans of associated undertakings – 101
Cash at bank and in hand 96 111 Other assets 1 2
Reserves provided for by the articles of association 346 323 Other reserves 82 82
Profit/loss brought forward 134 402 Profit for the financial year 923 371
Liabilities to credit institutions and central banks 55, 61, 62 Central banks 59 489 Credit institutions
Accruals and deferred income 58 625 899 Provisions for liabilities and charges 59 – 1
Equalisation provision, non-life insurance 251 234 Collective guarantee item, non-life insurance 31 30
Contingent liabilities Guarantees and assets pledged as collateral security 1,873 2,275
Change in the gross provision for unearned premiums –7 –8 Reinsurers’ share –1 0
Change in the provision for outstanding claims 24 –20 Reinsurers’ share –19 –4 5 –24
Balance on technical account before the change in equalisation provision –25 –34
Investments in group and associated undertakings 46 Shares and participations in Group undertakings 2,008 194 Shares and participations in associated undertakings 67 66 Debt securities and loans of associated undertakings – 101
Profit/loss brought forward 1 1 Profit for the financial year 651 225
Profit (loss) on ordinary activities / profit (loss) before extraordinary items 912 307 Adjustments
Change in technical provisions 40 36 Value adjustments and revaluations on investments 53 –1 Unrealised exchange rate gains / losses 1 –1 Depreciation according to plan 38 27 Other income and charges excluding payment 1) – –16 Other 2) –157 –68
Change in net working capital Increase (–)/decrease (+) in non-interest-earning receivables –255 –39 Increase (–)/decrease (+) in non-interest-earning payables 5 4
Interest paid for other financial expenses from operations –1 0 Taxes –285 –69
Capital expenditure on investments (excl. funds) –408 –555 Capital gain from investments (excl. funds) 331 471 Investments and income from the sale of tangible and intangible assets and other assets (net) –22 –32
Change in funds 53 –20 53 –20 1) Merger profit from the merger of Otso Loss of Profits Insurance Company Ltd and Insurance Company of Finland Ltd into Sampo 2) Cash flow from capital expenditures include gains and losses on realisation of investments, and interest expenses 3) Funds include cash at bank and in hand and debt securities excluding subordinated debt securities less unrealised exchange rate differences entered in the items mentioned above 4) In addition, the Balance Sheet at 31 December includes funds transferred in connection with the merger 8 62
Business Risks The most significant risks for the Sampo Group are market risks for the investment portfolios, insurance risks, credit risk, interest rate and funding risks in non-trading positions, and the operational risks inherent in every kind of activity. Market risk in trading activities has been reduced to a low level.
Credit risk monitoring is based on the continuous follow-up of customer creditworthiness, collateral values and covenants and the monitoring of country, customer and product limits. At portfolio level the risks are monitored using the
CreditVaR technique. For customers in the lowest creditworthiness category, action plans are drawn up to reduce credit risk.
Sampo Pank in Estonia and Sampo bankas in Lithuania amount to EUR 321 million. These figures are not included in the tables. Exposure is categorised according to the customer, to a counterparty, or to a guarantor where the credit decision is based on the creditworthiness of a guarantor. Credit risk reporting covers all agreements and derivative contracts, both on and off the balance sheet, with which a credit risk is associated, irrespective of where they appear in the accounts, or whether losses due to the credit risk are recognised as a credit loss or another type of loss.
Outstanding exposure to customers decreased by about 12 per cent in the period, and totalled EUR 25.3 billion at the end of the year. Exposure to corporate, public sector and retail customers increased, but decreased to the banking sector. In regional terms, 90 per cent of credit risks applied to EU countries and elsewhere in western Europe. Latin
An analysis of exposure by the sector within which customers operate shows that the share of exposure to the manufacturing and trade sectors decreased while the share to other sectors increased. Exposure to customers in the IT
and telecommunications sector fell and the share of these customers was a good 2 per cent of total exposure. Abroad, the Bank participated in financing deals for several GSM
The expected credit loss from corporate exposure, using the CreditVaR technique, is approximately 0.32 per cent and the risk capital required for credit risk represents 4 per cent of total corporate exposure. In terms of the risk capital, corporate customers’ credit risk increased by a fifth. The increase was greatest in forest and metal industries and in the energy sector.
Market risk arises from earnings volatility caused by changes in market values. Market values are affected by movements in risk factors such as interest rates, exchange rates, equity prices and their respective volatilities.
Market risk in trading is measured and limited using a technique called Value at Risk (VaR). VaR figures are calculated, with a confidence level of 99 per cent, for overnight risk. The volatility and correlation parameters required by the model are calculated daily on the basis of 60-banking day historical market observations. Risks are also monitored and limited by means of stress testing and exposure limits, thus ensuring that agreed levels of risk are also not exceeded in exceptional market conditions. Market risks in trading have been at a low level since the transfer into the euro.
The main market risk in banking operations is the interest rate risk related to asset and liability activities. This manifests itself as a deterioration in the value of the non-trading positions in the balance sheet and/or a reduction in net interest income as interest rates become less favourable.
At the end of year, a hypothetical reduction of 1 percentage point in interest rates would have resulted in a deterioration of EUR 21 million in the value of balance sheet items denominated in euro.
Liquidity risk arises from earnings volatility caused by changes in funding costs or from the danger of the Bank’s activities funding no longer being available. This would be against a background of overall changes in the credit markets or of a lack of confidence in an individual borrower.
Portfolio effect –89 –205 –409 –642 –620 –938 0 –22 –41
Once a year, the Board of Directors of each insurance company in the Sampo-Leonia Group determines the maxi-
AA, A, or comparable. Operations reinsured to extent of less than 2 per cent were allocated to companies with a lower rating than BBB. In addition, it is important for risk management that there is sufficient decentralisation of reinsurance.
Group reinsurance represents no more than 5 per cent of the total capital and reserves of any company with which it places reinsurance.
Security and good returns are the aim of insurance company investments. The biggest risks threatening investment results are changes in the value of investments and low yields on interest-bearing instruments. The intention is to limit these risks by decentralising investment portfolios as
Liabilities denominated in other currencies 2,127 2,126 746 352 1,247 6,597
The figures of liquidity position consist only of balance sheet items. E.g. the undrawn loans or overdraft facilities are not included.
far as possible by instrument, sector, country etc. Currency risks are managed by keeping assets and liabilities sufficiently balanced across currencies. If necessary, derivatives are also used to hedge investment portfolios against unexpected change.
The companies’ investment committees ensure compliance with the principles specified in the investment plans and report to the Boards on investment activities.
Operational Risk Operational risk is defined as earnings volatility attributable to the failure of internal processes or to unexpected external events.
The Sampo Group will have a strong focus on electronic and mobile business (e&m business). E&m business will bring new kinds of customers, partners and service suppliers, and will make new types of services possible. It is expected to improve productivity and cost efficiency and to provide better service in this way. At the same time the e&m operations will mean changes in value chains and operating methods, and new ways of weighing operational risks will be introduced.
Electronic transactions in Sampo’s web services are based on absolutely reliable customer identification and the integrity of the logging in chain. Sampo Bank uses ‘service keys’ as a means of identification throughout the Sampo
E&m business may involve legal risks because legislation and official regulations related to it are still under development.
The annual accounts of the new financial group have been compiled in accordance with the provisions of Article 10 of the Insurance Companies Act, decree (21.12.2000/
1259) on annual accounts and group accounts of financial institutions and investment services companies by the Ministry of Finance as well as the regulations of the Finnish
Financial Supervision on annual accounts and group annual accounts of financial institutions. Furthermore, the provisions of the Accounting Act and Companies Act are followed, with the exceptions mentioned in the Act on Credit
The consolidated accounts of 31 December 2000 do not comprise a cash flow statement in accordance with the exceptional permit 10.1.2001 83/401/2000 of the Insurance
Ministry of Social Affairs and Health so that the profit of the banking and investment services and the insurance operations before extraordinary items as well as assets and liabilities are presented by line of business. The figures of the Leonia Group are included in the consolidated accounts as if the Sampo-Leonia Group had operated as one group since the beginning of 1999. The key figures of 1999 have been adjusted when possible.
Sampo-Leonia’s Consolidated Accounts include the parent company Sampo-Leonia Insurance Company plc, and all the subsidiaries in which the parent company either directly or indirectly holds more than half of the voting rights, excluding the subsidiaries of Leonia Bank plc, the balance sheet total of which are less than EUR 10 million and consequently have no significant impact on the Group’s financial position and non-restricted capital and reserves.
The consolidated accounts are drawn up as combinations of the profit and loss accounts, balance sheets and notes of the parent company and the subsidiaries. The consolidated accounts comprise the banking and investment services account, non-life and life insurance technical accounts and non-technical account of insurance operations, as well as common for all fields of business extraordinary items, income taxes and minority interests. All investment income and charges pertaining to insurance operations are shown in the non-technical account. The part of net return on investment related to life insurance, which includes intra-group eliminations, is transferred to the technical account of life insurance.
The final accounts of group companies are included in the consolidated accounts according to uniform accounting policies when possible. Divergences arise in particular due to the different valuation provisions applied in banking and insurance business. The assets and liabilities pertaining to the same field of business are valued on the basis of the same principles. The going concern principle has been applied in the valuation.
Intra-group direct insurance is not eliminated on the basis of the stipulations of the Insurance Supervision Authority as it is not required in order to give a true and fair view.
Leonia Life Insurance Company Ltd into Sampo Life Insurance Company Limited on 31 December 2000. In the consolidated accounts, Leonia plc’s profit and loss account is included in the banking and investment services account and the balance sheet in the assets and liabilities of insurance operations, as in accordance with the merger consolidation.
Companies which belonged to the Leonia plc Group are consolidated in the consolidated accounts on the basis of the going concern principle observing the policies of the Leonia plc Group. Those of Leonia Bank’s subsidiaries which are not engaged in banking and investment services have been dealt with by using the equity method of accounting.
Otherwise intra-group cross-shareholdings are eliminated by using the acquisition method. The difference between the acquisition cost of shares in subsidiaries and their capital and reserves at the time of acquisition is entered under the concerned balance sheet items, primarily under subsidiaries’ land and buildings and depreciated according to their depreciation plan. The unallocated part is entered under consolidation difference and depreciated over its useful economic life.
Minority interests in subsidiaries’ results for the financial year and in capital and reserves are presented as separate items in the Profit and Loss Account and the Balance
In the consolidated accounts, those companies in which the group’s holding and voting rights amount to 20-50 per cent are integrated as associated undertakings, using the equity method.
EUR 10 million, associated real estate undertakings of the insurance companies, and Kaleva Mutual Insurance Company. In a mutual company the owner of guarantee capital is entitled only to the guarantee capital and the interest paid on it.
Finnish markkas as follows: Items denominated in currencies of the euro area have been converted into the euro and the euro into the Finnish markkas using fixed conversion rates. Items in the currencies of other countries have been translated into the Finnish markkas using the European Central Bank’s middle rate between the euro and the respective currency ruling at the balance sheet date and then the conversion rate between the euro and the Finnish markka.
Other investments of insurance operations have been valued at the lower of the rate valid on the date of acquisition or the rate on the date of closing the accounts, with the exception of holdings in other companies in the nature of investments, in the valuation of which the impact of exchange rate and market difference has not been separated.
Currency conversion differences relating to insurance business are presented in the investment results, whereupon the currency conversions of both insurance business and investments are presented under the same items in the
Items capitalised under other long-term liabilities include computer systems developed by the company itself or made to order and refurbishing of rented apartments.
Profit and Loss Account, the amortisation of premiums and discounts is accrued as interest receivable or interest payable over the life of the contract. If the probable value of a loan or advance is estimated at lower than the book value, the loan or advance is stated in the Balance Sheet at this estimated value.
The unrealised profits and losses arising from valuation of the securities held for trading purposes is included in Net income from transactions in securities.
Securities held as financial fixed assets Securities held as financial fixed assets consist of treasury bills and other eligible bills and debt securities acquired with the intention of holding them until maturity. In addition, shares and participations in companies needed in order to acquire services ancillary to banking, and in subsidiary and associated undertakings, are treated as securities held as financial fixed assets.
Agreement for sale and repurchase of securities Securities which are sold or purchased under commitments to resell or repurchase them, or lent securities, are included in the original balance sheet item irrespective of the contract. The purchase price is treated as a loan and the selling price as a liability in the balance sheet item which is relevant to each counterparty. The difference between the resell price and the purchase price of a purchased security is treated as interest receivable and accrued income over the life of the contract. Conversely, the difference between the repurchase price and the sale price is treated as interest payable and accruals over the life of the contract.
Investments Stocks and shares in the nature of investments are entered at the lower of acquisition cost or probable sales price.
Debts securities are considered to include bonds and money-market instruments. They are generally entered in the Balance Sheet at acquisition cost. The difference between par value and acquisition cost of debt securities is accrued under interest income and as increase or decrease of their acquisition cost.
Investments covering the technical provisions of unitlinked insurances are valued at their current value.
Revaluations and revaluation adjustments on investments in the nature of investment assets and on investments covering unit-linked insurances are entered with impact on the result. Revaluations on investments in the nature of fixed assets and their reversals are entered in the revaluation reserve under restricted capital and reserves.
The difference between the book value and the remaining acquisition cost of investments shown in the analyses consists of revaluations and associated undertakings’ value adjustments made by using the equity method.
Net expenditures of those information systems of investment operations which have not been subject to additional capitalisation in 2000, have been written off to their full amount in the final accounts. At the same time the capitalisation practice has been altered so that only 50 per cent of internal system development work is capitalised. The remaining acquisition cost of internal system development work for the Sampo 2000 project related to retail customer service, which was capitalised during previous years was also written off to 50 per cent. The depreciation time of PC
A consolidation difference of EUR 97.4 million arose from acquisitions of Sampo Life’s shares during 2000. It will be written off over a period of 10 years on the basis of the strategic nature of investments and the long-term nature of life insurance.
The goodwill arising from the acquisition of the shares in A.S. Optiva Pank and Lietuvos Vystymo bankas amounting to EUR 2.5 million and EUR 0.3 million will be written off over a period of five years.
In insurance operations the organisation’s own operating expenses and depreciation on capitalised ADP systems and equipment are divided between activities. Part of them are allocated directly to activities, part on the basis of a study on working hours which is carried out annually. Thus the percentual share of activities varies from year to year.
(policy acquisition costs, policy management expenses, and administrative expenses), under claims paid (claims settlement expenses), under investment charges (management expenses arising from real estate investments and other investments) and under other charges (expenses arising from the sale of services).
Sampo-Leonia integration are entered in the banking accounts as other administrative expenses and in the accounts of insurance operations as other charges and in the Balance Sheet as accruals and deferred income.
PROVISIONS FOR BAD AND DOUBTFUL DEBTS, NON-PERFORMING AND OTHER NON-INTEREST EARNING LOANS
cannot yet be made against a specific individual loan. A specific provision is made when it is considered that recovery is doubtful and the estimated sales value of the asset pledged as collateral security does not cover the principal of the loan.
The deferred tax entered in the Profit and Loss Account and Balance Sheet is calculated with respect to the temporary differences between the taxation and the accounting more comprehensively than is required by the Accounting
Act, taking into consideration also other items than those affecting the Profit and Loss Account in accordance with the main principles laid down in IAS 12. During the transition year the deferred taxes for previous accounting periods, the changes of which are stated in the Profit and Loss Account, are entered as extraordinary items. The change in the deferred taxes of the accounting period is entered in connection with income taxes. Deferred taxes calculated on the basis of the revaluation reserve and allocated positive or negative consolidation difference are entered directly in the
Items pertaining to the valuation of balance sheet items are entered as a deduction from the concerned balance sheet item.
In calculating technical provisions, various methods are applied which involve assumptions on such matters as the settlement of claims, mortality, and yield on investments.
The change in the technical provisions of reinsurance has been calculated at fixed exchange rates, so the impact of the exchange rates of the insurance business on results has been presented under investment results.
Life insurance The premium reserve is calculated by policy in direct insurance, and according to the disclosure of the ceding company or the company’s own calculation basis in reinsurance.
The zillmerisation of individual life and pension insurance, capital redemption insurance and foreign life reinsurance, which has been deducted from the premium reserve, has been planned in such a manner that the future expense loading will suffice to cover related amortisations and future operating expenses. The amortisation period of zillmerisation is no longer than the insurance period.
The Board of Directors of Sampo Life has made a deci-
The legislation of Estonia, Latvia and Poland do not contain regulations corresponding to the Principle of Fairness.
Commitments consist of irrevocable commitments such as sale and option-to-resell transactions, underwriting commitments, undrawn formal standby facilities, credit lines and other commitments to lend.
Positive valuation differences of derivatives are taken into account in the solvency margin calculation.
Leonia Pension Fund has been arranged for the staff of the companies belonging to the Leonia Bank Group on the basis of majority holdings. For those employed by other Finnish group companies, statutory pension cover has been arranged in compliance with the Employees’ Pensions Act, TEL.
Some group companies have additional pension arrangements handled by insurance companies. In foreign subsidiaries, pension schemes have been arranged in accordance with local practice.
The key figures of non-life and life insurance have been calculated in accordance with the decision of the Ministry of
GROUP KEY FIGURES: Turnover Banking and investment services turnover + non-life insurance turnover + life insurance turnover
Operating profit Banking and investment services operating profit + non-life insurance operating profit + life insurance operating profit
– write-offs in respect of debt securities held as financial fixed assets
Life insurance: + technical result before bonuses and rebates and change in the equalisation provision
± change in the equalisation provision, insurance business + revaluations on investments, non-life insurance
Return on equity (at current values) * + profit before extraordinary items and tax
± change in valuation differences on investments – tax (incl. change in deferred tax of valuation differences on investments) x 100%
Equity/assets ratio (at current values) + capital and reserves (excl. preferred capital notes of banking)
Average number of staff Average of the number of staff at the end of each month, adjusted for part-timers
Operating profit The formula has been presented above in connection with the calculation of the Group key figures.
Expense ratio (life insurance) + operating expenses before the change in deferred acquisition costs
Solvency margin ** + capital and reserves after proposed profit distribution
Solvency capital, % of technical provisions (whole insurance business and life insurance) + solvency capital x 100% + technical provisions
Solvency ratio, % (non-life insurance) + solvency capital x 100% + premiums earned from 12 months
Dividend per share dividend for the accounting period adjusted number of shares at 31 Dec.
Dividend per earnings, % dividend per share x 100% earnings per share
Effective dividend yield dividend per share x 100% adjusted closing share price at 31 Dec.
adjusted average number of shares * In calculating the key figures with respect to insurance business, an interpretation of the Principle of Fairness in life insurance has been taken into account, according to which 35 per cent of the valuation differences pertaining to the year 2000 is calculated to the owners, in addition to the capital and reserves of life insurance. The share in accordance with the Principle of Fairness of the valuation differences was 60 per cent in 1999 and 25 per cent in 1998. In previous years, the valuation differences of life insurance were not included in the calculation of the said key figures.
Profit before appropriations and tax EUR m 1,411 633 415 166 111 61
Turnover EUR m 1,801 1,357 Net income from financial operations EUR m 426 392 Operating profit EUR m 430 202
Premiums written before reinsurers’ share EUR m 769 686 541 225 191
Options diluted earnings per share *) EUR 8.89 Capital and reserves per share EUR 27.58 24.53 16.41 12.47 11.07 9.88 Net asset value per share deferred tax liability deducted per 18.6% EUR 44.03 46.55 Net asset value per share deferred tax liability deducted per 29% EUR 41.99 43.71 Net asset value per share no deferred tax liability deduction 63.45 32.62 24.48 19.45
Dividend per share for shares not owned by the Group EUR 2.44
Adjusted average number of shares ‘000 104,267 – 60,560 60,560 60,560 60,560 Number of shares at 31 Dec. ‘000 103,760 – 60,560 60,560 60,560 15,140 Adjusted number of shares at 31 Dec. ‘000 103,760 – 60,560 60,560 60,560 60,560 Weighted average share price EUR 44.80 – 30.97 36.70 21.90 11.79 Adjusted share price, high EUR 61.00 – 41.00 52.31 34.14 15.35 Adjusted share price, low EUR 29.35 – 25.70 19.34 14.93 9.67
Adjusted average number of shares ‘000 240 – 240 240 240 240 Number of shares at 31 Dec. ‘000 240 – 240 240 240 60 Adjusted number of shares at 31 Dec. ‘000 240 – 240 240 240 240 *) The dilution effect has been calculated as if all those subscriptions (3,300,000) entitled to would have been realised.
In calculating net asset value, return on equity, equity/assets ratio, solvency capital, and solvency ratio, the deferred tax liability which is estimated to be realised during the next three years, has been deducted from the valuation differences of non-life insurance. This deferred tax liability is 18.6% of the valuation differences of non-life insurance. The net asset value per share has furthermore been calculated per 29%, i.e. less full deferred tax. As valuation differences are not included in the Balance Sheet, their deferred tax and the change in deferred tax are not entered in the Profit and Loss Account or in the Balance Sheet.
Insurance business 7 Premiums written 8 Items deducted from premiums written 9 Non-life insurance balance on technical account by group of insurance class 10 Parent company: Non-life insurance balance on technical account by group of insurance class 11 Impact of exchange rate differences and change in group structure on the change in the provision for unearned premiums and the provision for outstanding claims in non-life and life insurance 12 Life insurance premiums written and claims paid 13 Total operating expenses by activity 14 Staff expenses 15 Executives’ salaries and commissions 16 Average staff numbers 17 Net investment income (non-life and life insurance) 18 Net investment income
Group 19 Extraordinary items 20 Change in deferred tax 21 Elimination items of the Consolidated Profit and Loss Account
BALANCE SHEET NOTES Banking and investment services assets 22 Treasury bills and other eligible bills 23 Loans and advances to central banks included in loans and advances to credit institutions 24 Loans and advances to customers 25 Non-performing and other non-interest earning loans 26 Assets acquired in settlement of unpaid loans and those acquired in connection with the reorganisation of a customer’s business operations 27 Subordinated assets 28 Lease assets 29 Debt securities 30 Shares and participations 31 Movements in shares and participations held as financial fixed assets and in tangible assets 32 Intangible assets 33 Properties and shares in property companies 34 Other assets 35 Prepayments and accrued income
Group 78 Elimination items of the Consolidated Balance Sheet 79 Parent company key figures
Loans and advances to credit institutions 153 116 Loans and advances to customers 808 647 Debt securities 301 327 Net leasing income 20 14 Other interest receivable 12 –10
Rental and dividend income from properties and property companies 19 22 Profit on disposal of properties and property companies 0 44 Other income 13 11
Depreciation according to plan on tangible assets 16 21 on intangible assets 27 14
Total amount written off for the year 6 26 Specific provisions written off during the year –3 –21 Recoveries of loans and guarantees written off in previous years –9 –10 New specific provisions for the year 37 7 Releases of provisions for the year –14 –6 Charge to profit and loss account 17 –4
Provisions pooled by customer group included in the specific provisions for the year 27 –
EEA countries 173 89 – – Other countries 37 19 – –
The impact of exchange rates has not been transferred to the figures of investments in the year of comparison 1998.
10 PARENT COMPANY: NON-LIFE INSURANCE BALANCE ON TECHNICAL ACCOUNT BY GROUP OF INSURANCE CLASS
Columns: 1 = Premiums written before reinsurers’ share 5 = Reinsurance balance 2 = Gross premiums earned before reinsurers’ share 6 = Balance on technical account before the change in 3 = Gross claims incurred before reinsurers’ share collective guarantee item, other technical charges 4 = Gross operating expenses before reinsurance commissions and the change in the equalisation provision and profit participation 7 = Combined ratio
Financial statements 11 IMPACT OF EXCHANGE RATE DIFFERENCES AND CHANGE IN GROUP STRUCTURE ON THE CHANGE IN THE PROVISION FOR UNEARNED PREMIUMS AND IN THE PROVISION FOR OUTSTANDING CLAIMS IN NON-LIFE AND LIFE INSURANCE
Non-life insurance Life insurance Before Before reinsurers’ Reinsurers’ reinsurers’ Reinsurers’ EUR million share share Net share share Net
Impact of exchange rate differences 9 –2 7 0 0 0 Change in the provision for outstanding claims –63 42 –22 –157 1 –157
Provision for unearned premiums, 1 Jan. 2000 141 –1 139 Provision for unearned premiums, 31 Dec. 2000 148 0 148
Impact of exchange rate differences 0 0 0 Change in the provision for unearned premiums –7 –1 –8
Impact of exchange rate differences 0 0 0 Change in the provision for outstanding claims 24 –19 5
Commissions on reinsurance ceded and profit participations (–) –29 –19 –1 0
14 STAFF EXPENSES Group Parent Company 15 EXECUTIVES’ SALARIES AND COMMISSIONS
Managing Directors and Deputy Managing Directors 1.8 1.8 Members and deputy members of the Board of Directors 0.4 0.4 Members and deputy members of the Supervisory Board 0.1 0.1
Managing Director, members and deputy members of the Board of Directors 0.9 0.5 Members and deputy members of the Supervisory Board 0.1 0.0
It has been agreed that the parent company’s Managing Director’s retirement age is 60 and that of other insurance business Managing Directors and Directors 60-65.
Share of profit of associated undertakings 4 0 Dividend income 1 – Interest income 10 –
Interest income from associated undertakings 0 0 Other income from other than Group undertakings 29 29
Dividend income 229 255 Interest income from Group undertakings 3 5 Interest income from other than Group undertakings 76 159 Other income from Group undertakings – 0 Other income from other than Group undertakings 31 150
INVESTMENT CHARGES Charges arising from investments in land and buildings –13 –8 Charges arising from other investments –28 –189 Interest and other expenses on liabilities to Group undertakings – 0 Interest and other expenses on liabilities to other than Group undertakings –1 –3 Total –42 –200
Revaluations on investments 0 5 Revaluation adjustments on investments –1 –34
Investment income and charges include Exchange rate differences of insurance business –7 –1 Exchange rate differences of investments 14 –59
Income from investments in associated undertakings Share of profit of associated undertakings 4 2 – –
Interest income from Group undertakings 7 2 1 0 Interest income from other than Group undertakings 235 193 23 14 Other income from Group undertakings 0 – – – Other income from other than Group undertakings 182 97 6 3
Value adjustments and depreciations Value adjustments on investments –245 –85 –55 –11 Planned depreciation on buildings –15 –16 –4 –5
Net investment income before revaluations and revaluation adjustments 1,447 775 991 334 Revaluations on investments 5 45 – – Revaluation adjustments on investments –35 –1 –1 –1
Investment income and charges include Exchange rate differences of insurance business –8 –28 0 0 Exchange rate differences of investments –44 15 1 6
Share of unit-linked insurance of net investment income –35 41 – –
Fees and commissions receivable –3 –2 Fees and commissions payable 0 – Net income from transactions in securities and foreign exchange dealing from transactions in securities 0 – Operating profit 4 1
Investment income –8 –2 Investment charges 1 0 Profit before extraordinary items –4 –1
Treasury bills 7 1 Government bonds 2,890 2,527 Certificates of deposit issued by the Bank of Finland – – Certificates of deposit issued by other banks 728 583 Other – 0 23 LOANS AND ADVANCES TO CENTRAL BANKS INCLUDED IN LOANS AND ADVANCES TO CREDIT INSTITUTIONS
Loans and advances to credit institutions 2,321 4,336 of which to central banks – 3 24 LOANS AND ADVANCES TO CUSTOMERS
Other EU Countries 886 1,169 Other Western Europe 247 178 North America 135 198 The Far East 902 1,082 Other countries 869 506 Bad and doubtful debt provisions pooled by customer group –27 –7
Financial and insurance institutions 225 353 Public sector entities 261 300 Non-profit institutions 739 607
26 ASSETS ACQUIRED IN SETTLEMENT OF UNPAID LOANS AND THOSE ACQUIRED IN CONNECTION WITH THE REORGANISATION OF A CUSTOMER’S BUSINESS OPERATIONS
Properties and shares and participations in property companies 2 5 Other shares and participations 1 1
Assets acquired in connection with the reorganisation of a customer’s business operations – –
Difference between the market value and the lower book value of the securities 5 –
Land and buildings, Shares and shares and participations Equipment and other
Transfers between items +/– – 9 – Depreciation according to plan for the year – – 9 8 Write-downs / write-backs for the year +/– 0 – 0 Accumulated depreciation at beginning of year – – 91 65 Accumulated write-downs at beginning of year – – 38 3
Properties and shares in property companies occupied for other than own activities 31 December 2000
2) The net income% is a proportion of the net income to the capital employed and has been calculated by property. 3) The unlet space% is a proportion of the unlet spaces to all spaces which can be let out. Unlet spaces are spaces which can be let out, but which yield no rental income on the balance sheet date based on a lease.
The negative consolidation difference was EUR 0.5 million in 2000 and EUR 0.9 million in 1999.
Real estate shares in associated undertakings 49 49 52 3 3 4
Financial statements 39 PARENT COMPANY: CURRENT VALUE AND VALUATION DIFFERENCE ON INVESTMENTS
Book value comprises Unrealised gains entered as income 48 49 Other revaluations – 28
Acquisition cost, 1 Jan. 882 2 Change in Group structure 5 –
Accumulated depreciation, 1 Jan. –141 Change in Group structure 0 Accumulated depreciation on decreases and appropriations 1 Depreciation for the financial period –15
Insurance business 41 PARENT COMPANY: CHANGES IN INVESTMENTS IN LAND AND BUILDINGS 2000
Remaining acquisition cost 44 40 Book value 56 67 Current value 75 76
Sampo-Leonia group 42 GROUP SUBSIDIARIES Profit/loss Parent Book value Capital for the
Leonia Card Ltd Helsinki Finland 100.00 – 22 16 2 Leonia MB Group Oy Helsinki Finland 100.00 – 8 15 2 Leonia Bank plc Helsinki Finland 100.00 100.00 1,397 1,301 122 Leonia Finance Ltd Helsinki Finland 100.00 – 25 59 6 Housing Loan Bank of Finland plc Helsinki Finland 100.00 – 6 6 0 AS Sampo Pank Tallinn Estonia 93.51 93.51 22 15 0 UAB Lietuvos Vystymo bankas Vilnius Lithuania 99.99 99.99 11 11 0
Capsam Consulting Ltd Helsinki Finland (60.00) 40.00 (60.00) 40.00 0 2 1 Oy Finnish Captive & Risk Services Ltd Helsinki Finland 80.00 – 0 0 0 Oy Haveri Ab Helsinki Finland 100.00 – 0 0 0 PSW Realty World Ltd 3) Helsinki Finland 100.00 – 0 2 0 Risk Management Ltd Helsinki Finland 100.00 100.00 1 0 0
Name of company country % 1) % 1) EUR m EUR m 2) EUR m
In addition, a total of 92 property and housing companies have been accounted for in the consolidated accounts. By virtue of regulations for credit institutions one property company has been excluded from consolidation, the balance sheet total of which is less than EUR 10 million.
1) Share of votes has been announced in brackets if different from the holding 2) Appropriations less deferred tax have been included in the capital 3) Accounted for by the equity method 4) The company is in liquidation 43 ASSOCIATED UNDERTAKINGS OF THE GROUP Profit/loss
Retro Life Insurance Company Limited Helsinki Finland 24.21 – 1 3 0 Kaleva Mutual Insurance Company 3). 4) Helsinki Finland 50.00 30.00 4 154 107 Finnish Credit Insurance Company Ltd Helsinki Finland 33.33 33.33 2 5 0
Sampo Finance Ltd 4) Helsinki Finland 50.00 50.00 17 33 124 Kiinteistövarma Oy Helsinki Finland 46.74 18.52 0 0 0
AJM Industry Ltd 2) Inchon South Korea 81.00 – 1 0 1
UNIT TRUSTS Alfred Berg Small Cap B 6,175,939 – 17 24 Alfred Berg Small Cap B Europe 17,170,407 – 17 30 Evli European Smaller Companies B 360,983 – 6 8 Evli Nordic Smaller Companies B 201,457 – 4 5
Gyllenberg European Equity Value B 43,123 – 4 6 Gyllenberg Small Firm B 22,174 – 2 7
Sampo Uudet Yhtiöt (Eurooppa) B 10,069,954 – 6 6 Seligson Euro Obligaatioindeksirahasto A 5,430,000 – 9 10 Seligson Global Top 25 Brands 8,014,190 – 13 21 Seligson Global Top 25 Pharmaceuticals A 493,289 – 5 7
Domestic shares and participations in total 1,460 3,480 *) Share of guarantee capital
Holdings exceeding EUR 5 million (current value) and holdings in public companies exceeding five per cent specified.
UNIT TRUSTS APS Japan Growth Fund Singapore 150,000 – 12 12 Key International Trust Fund Cayman Islands 520 – 30 51 Nektar Hedge Fund Sweden 64,595 – 8 11 New Providence Fund Bahaman Islands 48,552 – 10 12 Prosperity Cub Fund Cayman Islands 350,000 – 4 6 Schroder Japanese Euro Denominated Equity Fund Denmark 1,621,552 – 12 12 Swiss Life Relative Value Strategies Class C Cayman Islands 12,051 – 16 16
CAPITAL TRUSTS Access Capital L.P. UK 1,762,500 – 18 18 Duke Street Capital IV UK L.P. UK 1 211,619 – 12 12 EQT Scandinavia II Holland 15,438,082 – 17 17 Hambro European Ventures III UK L.P. UK 387,789 – 6 6
Industri Kapital 2000 Fund LP UK 531,983 – 5 5 MediaTel Capital Luxembourg 588,914 – 6 6 Preferential Equity Investors LLS Cayman Islands 665,166 – 7 7
Huhtamäki Van Leer Oyj 215,500 0.68 6 6 Telecommunication and Electronics
UNIT TRUSTS Gyllenberg European Equity Value B 40,360 – 3 5
Sampo Euro Bond Fund B 16,907,133 – 17 17 Sampo Uudet Yhtiöt (Eurooppa) B 10,069,953 – 6 6
Bristol Myers Squibb Co United States 94,800 0.00 4 8 Energy
Insurance business 46 INVESTMENTS IN GROUP UNDERTAKINGS AND ASSOCIATED UNDERTAKINGS 2000
Federation of municipalities, municipality and parish securities and loans thereto, and State securities 4 6 1 1
Shares in housing and real estate companies 9 11 4 6 Guarantee insurance 4 0 – – Insurance policy 0 1 – –
Members and deputy members of the Board of Directors Loans (EUR m) 0.7 0.8
Members and deputy members of the Board of Directors Loans (EUR m) 0.7 0.3
Investments pertaining to unit-linked insurances, corresponding to 50 DEBTORS AND CREDITORS, GROUP UNDERTAKINGS AND ASSOCIATED UNDERTAKINGS
Other reserves Reserves provided for by the articles of association, 1 Jan. 323 From profit brought forward 80 Buy-back of shares/transfer to reserve for own shares –57
Profit for the financial year 923 + Reserves provided for by articles of association 346 + Other non-restricted reserves 82 + Profit brought forward 134 – Amount of appropriations of the Group’s corporations which have been entered in the capital and reserves in the consolidated accounts –91 Distributable profit in total 1,393 52 REVALUATION RESERVE
In March 1998, Leonia Bank plc issued preferred capital notes totalling FIM 560 million (EUR 94 million). The notes bear interest at the Helibor 12-month rate plus 100 basis points for 5 years, and thereafter the Helibor 12-month rate plus 225 basis points. The interest on the loan can be paid only from the distributable capital. The interest rate will be paid annually in arrears, the first time being in March 1999. The loan is undated and is repayable, with the consent of the Finnish Financial Supervision Authority, 5 years after the date of issue. The preferred capital notes are included in the Tier 1 capital of the Bank. Leonia Corporate Bank plc subscribed for FIM 500 million (EUR 84 million) worth of the notes.
After the merger of Leonia Corporate Bank into Leonia Bank on 31 December 2000, FIM 60 million (EUR 10 million) of Leonia Bank’s preferred capital notes remained in issue.
Sampo-Leonia group 54 PARENT COMPANY STATEMENT OF CHANGES IN CAPITAL AND RESERVES 1 JAN. - 31 DEC. 2000
Subscribed capital, 1 Jan. 52 Cancellation of own shares/transfer to premium reserve –1 Lowering of subscribed capital/transfer to premium reserve –1 Increase in subscribed capital/Leonia plc merger 38
Liabilities to credit institutions and central banks – – Liabilities to customers – – Debt securities in issue 148 158 Subordinated liabilities 0 –
Liabilities to credit institutions and central banks – – Liabilities to customers – – Debt securities in issue 11 31 Subordinated liabilities – –
Items in transit 358 307 Derivative contracts 137 115 58 ACCRUALS AND DEFERRED INCOME
Subordinated liabilities with a book value more than 10% of the total amount of such liabilities 395 462 Other subordinated liabilities 67 102 of which amount of perpetuals 113 105
Treasury bills and other eligible bills 910 912 Loans and advances to credit institutions 175 208 Loans and advances to customers 5,409 5,564 Debt securities 862 1,281
Treasury bills and other eligible bills 1,168 1,219 Loans and advances to credit institutions 41 27 Loans and advances to customers 4,636 4,007 Debt securities 299 416
Liabilities to credit institutions and central banks 1,090 599 Liabilities to customers 424 63 Debt securities in issue 1,434 2,099
Liabilities to credit institutions and central banks 80 1 Liabilities to customers 152 20 Debt securities in issue 2,298 2,327
Liabilities to credit institutions and central banks 1,629 1,854 1,779 1,426
On ordinary activities 143 77 On extraordinary items 1) – –12 1) Income taxes on extraordinary items for 1999 include changes in deferred tax assets for previous years.
64 ASSETS PLEDGED AS COLLATERAL SECURITY AND SECURED LIABILITIES AS WELL AS OTHER ASSETS PLEDGED ON BEHALF OF THE COMPANY AND OTHER GROUP UNDERTAKINGS
Liabilities to credit institutions and central banks – – Liabilities to customers – – Debt securities in issue – 40 Off-balance sheet items 383 362 Other commitments
The basic and supplementary pensions of the staff in the majority-owned Group undertakings have been arranged in the Leonia Pension Fund, while those of the staff in other Group undertakings have been arranged through insurance.
The Leonia Pension Fund’s pension liability of EUR 381.6 million is fully covered. The employers’ contributions to the Leonia Pension Fund totalled EUR 20.1 million in 2000. The direct pension liability of Leonia Bank plc amounted to EUR 0.1 million.
Guarantees and assets pledged as collateral security 1,873 2,275 on behalf of Group undertakings – – on behalf of associated undertakings 0 –
Undrawn loans, overdraft facilities and commitments to lend 3,990 3,715 to Group undertakings – – to associated undertakings 0 16
Other commitments 3 0 of which to or on behalf of Group undertakings – – associated undertakings 2 –
of which to or on behalf of Group undertakings – – associated undertakings 2 16
Interest rate contracts Futures and forward rate agreements 473 850 40 734 Options
Credit Risk Credit Risk equivalent weighted equivalent weighted amount of amount of amount of amount of contracts contracts contracts contracts
*) Options for hedging purposes are embedded options attached to funding and derivatives hedging funding. The values of underlying instruments are included both in purchased and written options and in items interest rate swaps, interest rate and cross currency swaps and other equity contracts. No separate credit equivalent amounts have been calculated for embedded options attached to derivative contracts, but the market values of the embedded options are included in the credit equivalent amounts of those contracts.
Members and deputy members of the Supervisory Board 0.1 0.1 Members and deputy members of the Board of Directors/Management and President and Executive Vice Presidents 5.3 4.2 of which performance-related bonuses 0.7 0.8
Members and deputy members of the Supervisory Board 0.1 – 0.6 – Members and deputy members of the Board of Directors/ Management and President and Executive Vice Presidents 3.3 – 2.9 – Auditors – – – –
Discounting has been effected in calculating the provision for outstanding claims on other than annuity-form compensations, in connection with Patria Reinsurance Company Ltd’s foreign reinsurance provision for outstanding claims. A part of this provision has been discounted at four per cent interest rate. The estimated average maturity of the discounted provision for outstanding claims is 7 years in 2000 and 8 years in the year of comparison.
Provision for rents 1 2 75 LONG-TERM LIABILITIES (5 years or longer)
The conditions of the bond with warrants are presented in the note Sampo Shares and Shareholders (pages 122-124).
Insurance business 77 CONTINGENT LIABILITIES, PLEDGED ASSETS AND DERIVATIVES Group Parent Company
Futures and forwards, open underlying instrument 56 – – – current value 1 – – –
current value 3 – – – Sold underlying instrument 548 – – –
current value 10 0 – – Sold underlying instrument 785 615 – –
current value 1 –2 – – Option contracts Bought underlying instrument 54 111 1 –
Solvency margin Capital and reserves after proposed profit distribution 523 528 535 557 1,752 Optional provisions and accumulated depreciation difference 14 14 13 16 11 Valuation difference between current value and Balance Sheet book value of assets 715 942 1,412 3,116 2,251 Intangible assets –118 –117 –70 –79 –69
Solvency capital Solvency margin and equalisation provision 1,171 1,388 1,896 3,708 4,079
Expense ratio Operating expenses to premiums earned (%) 28.6 26.4 27.7 26.6 31.6
Combined ratio Loss ratio and expense ratio (%) 111.9 116.3 117.9 111.3 107.4
We have audited the accounting records and the financial statements, as well as the administration by the Supervisory Board, the Board of Directors and the Managing
We have conducted the audit in accordance with Finnish Generally Accepted
Directors and the Managing Director have legally complied with the rules of the
In our opinion, the final accounts have been prepared in accordance with the
Finnish Accounting Act and other rules and regulations governing the preparation of financial statements in Finland. The financial statements give a true and fair view, as defined in the Accounting Act, of both the consolidated and parent company result of operations, as well as of the financial position. The financial statements can be adopted and the members of the Supervisory Board, the Board of Directors and the Managing Director of the parent company can be discharged from liability for the period audited by us. The proposal made by the Board of Directors regarding the disposition of distributable profit is in compliance with the Finnish Companies Act.
Annual General Meeting. The Board comprises no fewer than three and no more than ten members.
The term of office of a member of the Board of Directors is one year, commencing immediately after the Shareholders ’ General Meeting at which the member was elected and expires at the end of the Annual General Meeting following the election. A person who before the commencement of the term of office has reached the age of 65 may not be elected as member of the Board of Directors.
Chairman for a term of office which expires at the elections held after the following Annual General Meeting.
The Board of Directors’ resolution will be the view which receives a simple majority of the votes of those members present. In the event that the votes are cast equally, the
Sampo-Leonia observes the recommendation on administration of public companies given by the Central Chamber of
The company follows the Guidelines for Insiders of the Helsinki Exchanges. Furthermore, the Board of Directors decided in its meeting on 28 February 2001, that the Guidelines for Insiders applied in the Group will be more strict than the official norms. The new guidelines will enter into force in March 2001 and will cover the Executive Committee, the
Directors will be paid EUR 420 (FIM 2,500) for each meeting or possible Board Committee meeting. Members of the
Board of Directors are entitled to daily allowance and accommodation and travel expenses for travel days.
Chairman of the Board, Finnlines Plc. Vice Chairman of the Supervisory Board, Varma-Sampo Mutual Pension
Board of Directors of Sampo Insurance Company Limited on 26 June 1992. Period of office started on 1 August 1992.
He was appointed Chairman of the Board on 20 October 1993.
Business Administration. Member of the Board of Directors of the European Finance Association. Member of the
Chairman of the Board, Assa Abloy AB and Sanitec Corporation. Member of the Board, Nokia Corporation, Wärtsilä
Board of Sampo Insurance Company Limited on 26 June 1992. Period of office started on 1 August 1992.
AvestaPolarit Oyj Abp. Member of the Board, Federation of Finnish Metal, Engineering and Electrotechnical Industries, Association of Finnish Steel and Metal Producers.
Pension Insurance Company. He was appointed member of the Board of Directors of Sampo Insurance Company plc on 25 May 2000. Period of office started on 26 May 2000.
Board, Finpro ry (Finland’s foreign trade promotion organisation ). He was appointed member of the Board of Sampo
Insurance Company plc on 25 May 2000. Period of office started on 26 May 2000.
Minister. President, CEO, Partek Corporation. Member of the Board, Wärtsilä Corporation, Stockmann plc and ABB
Staff Structure The new Sampo-Leonia Group employed a total of 10,207 people (9,135 at the end of 1999), of whom 8,162 in Finland
A total of 314 new permanent employees were recruited in 2000. The merger of Sampo and Leonia has no significant impact on the age structure or average standard of education and 57 per cent of all employees hold a higher education qualification.
Professional Skills and Development Confidence in professional skills remained strong even though the formation of the new group makes increased demands on staff, especially in customer service situations.
Professional skills required by the new financial services concept are supported by self-tuition using the information network and a large number of information events.
The impact of change on the staff was taken into account in the extensive merger planning and subsequent operations.
Preparations for the new electronic business operations were made by, for example, developing the network learning environment and by arranging training such as e-business seminars.
Building a Common Corporate Culture A survey of the corporate culture was carried out in the spring of 2000 and covered both Sampo and Leonia staff.
The main aim of our environmental activities is to ensure sustainable development. Environmental issues are an important part of risk management, both for the Group and for its customers. Environmental activities lead to new financial services and reduce the environmental impact of our own operations.
Loans are granted to small and medium-sized Finnish companies for new environmental investments. The guarantee reduces loan costs for corporate customers. In the year under review four loans were granted totalling EUR 0.7 million.
Sustainable Development Fund The mutual fund Sampo-Leonia Arvo, established in October 1999, was the first fund to apply the Dow Jones Sustainability Group Index (DJSGI). The Swiss SAM Sustainability Group selects from the Dow Jones World Index companies that lead their industry in terms of sustainable development on the basis of the DJSGI.
20.7 million during the year and at year-end the number of unit holders was 1,425. Even though the fund’s annual return was negative as a result of the general decline in share prices, it performed considerably better than the reference index in respect of risk or volatility over a 12-month period.
Sampo was notified of 44 environmental losses. The largest single amount of compensation was paid out for the cleaning of land contaminated as a result of a tanker truck swerving off the road.
Leonia Arvo, as of 31 October 1999 75 % DJ World + 25 % JP Morgan
Electricity (MWh) 18,575 20,024 20,706 42,103 7,666 8,070 8,759 9,965 kWh/employee/year
– white and coloured copying paper, laser and printout paper, bank statements.
* The water consumption of single buildings has been proportioned to the share of Group employees working in all buildings. ** Paper consumption covers the Group’s 8,162 employees in Finland.
The consumption figures of Sampo and Leonia have been combined in the figures of 2000. These figures cover 77 per cent of the square area of the buildings in the Group’s own use and 52 per cent of the staff in Finland. The comparison figures are 893,705 m3 and 4,225 employees. The figures for 1997-1999 are based on Sampo’s data only. On the basis of the results, it is aimed to reduce the consumption of electricity and paper in particular.
A comparison with the relative figures of the swiss UBS bank from 1999 shows that Sampo's – consumption of electricity is higher (UBS 6,900 kWh/employee) – consumption of heat is lower (UBS 109 kWh/m2, Sampo-Leonia 94 kWh/m2 in year 2000) – consumption of water is lower (UBS 69 l/employee/day) – consumption of paper is higher (UBS 52 sheets/employee/day).
During the year we started using the results of energy audits. Appraisals of the condition of four buildings were undertaken plus examinations of the condition of a further three. The focus of the management of Leonia’s buildings was on minimising waste energy by monitoring energy consumption. We supported the production of electricity from a by-product of district heating through a centralised contract with Helsinki Energy.
In May Sampo’s purchasing department concluded an agreement with Kuusakoski Oy to use the Elrec recycling service. By the end of the year 5.8 tons electrical and electronic waste was submitted for recycling and re-use. The operation complies with the requirements of an EU directive in progress. ICL Invia handles the recycling of Leonia’s surplus computers.
Shares and Votes The share capital of Sampo-Leonia Insurance Company plc is at least EUR 30,105,639.84 and at the most EUR
September 2000 on converting the share capital to euro and renouncing the nominal value of the share. These changes came into force on 3 January 2001 when entered into the Trade Register.
B shares can be converted into A shares upon the demand of the holder of B shares.
The Group companies did not own shares in the parent company on 31 December 2000, but Sampo’s wholly-owned subsidiary ST International had a bond loan with warrants issued by Sampo, totalling EUR 13,876 or 29,025 option rights.
New issue 17 October to 2:1 plus subscription right 81.25 12,000,000 186 31.28 A and B shares 18 November 1988 100.00
Merger consideration 31 December 1993 Owners of Industrial Mutual 18,800,000 280 47.09 A shares Insurance Company
Directed issue 30 June 1994 Kansallis-Osake-Pankki 95.00 6,000,000 310 52.14 A shares
Merger consideration 31 December 2000 Leonia shareholders, i.e. 44,720,000 520 87.46 A shares the Finnish government *) Prices per share and numbers of shares have been changed to correspond to a nominal value of FIM 5 (EUR 0.84 countervalue).
To each bond of a nominal value of FIM 500 (EUR
The subscription price of one share was EUR 42.33 on 31 December 2000. The share subscription price is reduced by the amount of dividends.
The share capital can increase by 3,300,000 A shares at most as a result of the subscriptions, or FIM 16,500,000
(EUR 2.8 million), which equals 3.17 per cent of the company ’s share capital as per 31 December 2000.
Exchanges during the period 15 - 28 September 2000, with an addition of 10 per cent and rounded up to the nearest 10 cents. The subscription price became thus EUR 55.70. The share subscription price shall be lowered by the amount of dividends distributed before the share subscription, on the matching day of each distribution of dividends.
Leonia shares can increase by a maximum of 5,200,000 new shares and the share capital by a maximum of EUR
4,372,886.09, which equals 5 per cent of the share capital at the end of the year.
The total holdings constituted 0.002 per cent of the share capital and votes. When Mandatum became a Sampo-
Leonia subsidiary in February 2001, the Chief Executive Officer ’s ownership of the shares and votes increased to 2.1 per cent.
Shareholdings A and B shares No. of shareholders No. of shares %
Local Government Pension Institution 286,000 0.28 0.27 Pension fund of Imatran Voima 282,908 0.27 0.27 Pension fund of Neste 236,308 0.23 0.23 Mutual Insurance Company
**) Fidelity International Limited has announced that it holds a total of 3,123,708 Sampo-Leonia A shares at 31 December 2000, i.e. 3% of Sampo-Leonia’s share capital and 2.98% of the votes of all Sampo-Leonia shareholders.
Shareholders 28 February 2001 1 Finnish Government 40.2% 2 Varma-Sampo Group + Kaleva 14.9% 3 Other domestic 13.0% 4 Foreign investors 28.2% 5 Björn Wahlroos 2.1% 6 Not yet entered in the book-entry securities system 1.6%
Company plc will be held on 5 April 2001 at 2 p.m. in Helsinki Fair Centre, in the Round Hall on the second floor, at the address Rautatieläisenkatu 3 (the entrance of Hotel
To be entitled to attend the Annual General Meeting, a shareholder must be registered in the shareholders’ register held by the Finnish Central Securities Depository Ltd
(Suomen Arvopaperikeskus Oy) not later than 26 March 2001. Trustees shall report nominee shareholders to the shareholders’ register of Sampo-Leonia held by the Finnish
According to the proposal, only a shareholder who is registered as shareholder in the register held by the Finnish Central Securities Depository Ltd (Suomen Arvopaperikeskus Oy) on the matching day of the payment of dividend, 10 April 2001, is entitled to dividend. The dividends are proposed to be paid on 19 April 2001.
C A I Cheuvreux Nordic Mats Anderson +46 8 723 5171
AGM convening on 5 April 2001 that the name be changed to Sampo plc)
Visiting address: Malaya Konjushennaya 1/3 office B 42 191186 St. Petersburg