In 2012, Sampo’s associated company Nordea had more customers, more capital, and recorded a better result than ever before. Nordea has set an ROE target of 15 per cent under normal interest rate levels and with a Core Tier 1 capital ratio of above 13 per cent.
Directors proposes that a dividend of EUR 1.35 per share be paid for 2012.
Nordic banking franchise. On a Group level Sampo has no stated strategy but the business areas have well-defined strategies based on return on equity targets.
insurance operation, i.e. the annual combined ratio to be below 95 per cent each and every year.
Nordea, at AA rating level, and it reflects that Nordea’s repayment ability is perceived to be very good. Nordea is viewed upon as less vulnerable to market turbulence than other banks due to its well-diversified business model.
USA. In total, If has paid out more than EUR 3 billion in claims over the past year.
◦ Member of the Board of Directors of Sampo plc since 7 April
Member; Finnish Business and Policy Forum EVA, Board Member; International Chamber of Commerce Finland, Board
◦ Brunila holds 8,380 Sampo plc shares directly or through a controlled company.
Board Of Directors' Duties The operating procedures and main duties of the Board of
Compensation Committee, whose members it appoints from its midst in accordance with the charters of the respective committees.
Executive Committee, which supports the Group CEO in preparing matters to be handled by the Group Executive Committee.
President of Sampo Group is Mr. Kari Stadigh, M.Sc. (Eng.), BBA
(137). The discount rate of 2.5 per cent will be used to discount the guaranteed rate portfolios in 2013 and 3.25 per cent in 2014.
At the end of December 2012 the total investment assets of If
Net profit increased 19 per cent to EUR 3,126 million, due to higher income and stable costs. Risk-adjusted profit increased 20 per cent compared to last year to EUR 3,245 million.
Bank distribution channel largely explained the positive development. Premiums in the main focus area of unit-linked insurance increased to EUR 810 million (649). Premium income from the Baltic countries was EUR 33 million (41). Mandatum Life’s unit linked market share in Finland was 26.2 per cent (26.8) and the overall market share was 24.5 per cent (24.9). Market share in the Baltic countries decreased to 11 per cent (15).
annual compensation will be paid in Sampo A shares and the rest in cash.
Head of Business Area Private as of 1 January 2013. He has been
During 2012, approximately 91 per cent of the staff worked in P&C
• Balance between expected returns and risks in investment portfolios and the balance sheet are optimized, taking into account the features of insurance liabilities, solvency, regulatory asset coverage rules and rating requirements 5) Effective Management of Consequential Risks
CGII. Consequently, The Capital Group Companies, Inc. now reports its holdings in their entirety and its holding amounted, according to the disclosure, to 6.48 per cent of the total number of shares and to 6.42 per cent of the related votes.
If P&C paid in December 2012 a dividend of EUR 544 million (SEK
(excluding extraordinary items). In addition, share buy-backs can be used to complement the cash dividend.
Average adjusted number of shares 1,000 560,000 560,863 561,321 561,370 569,442
79 RISK MANAGEMENT PROCESS IN SAMPO GROUP COMPANIES 81 Risk Governance 86 Balance between Risks, Capital and Earnings 88 UNDERWRITING RISKS 88 P&C Underwriting Risks 94 Life Insurance Underwriting Risks 101 MARKET RISKS 101 ALM Risks 103 Investment Portfolio Risks 110 CREDIT RISKS
Parent company Sampo plc reviews the Group on both entity level and on Sampo Group level. Subsidiaries’ reporting to the governing bodies of Sampo plc concentrates particularly on the balance between risks, capitalization and profitability. In the
Various stakeholders impact or aim to impact Sampo Group’s operations. The following includes examples of Sampo Group’s stakeholders as well as a general description of the interaction between these stakeholders and Sampo Group: The Group complies with and follows carefully the laws and other regulations set by the authorities.
In addition to the authorities, at least three types of interest groups have expectations regarding Sampo Group’s operations.
Group’s Chief Investment Officer. Also the IT system architecture used in investment activities is the same throughout the Group.
(reserve risk) from the risk of claims which will happen in the future (premium and catastrophe risk). Independent of this categorization, however, the unique risk sources such as fire accidents, motor accidents, windstorms and catastrophic events are similarly causing the deviations from the expected values also in the case of P&C insurance underwriting risks. Risks such as
The most significant risk arising from the operations of the insurance subsidiaries is market risk. On the Group level, the most significant risks are market risk and credit risk. This is due to
The risk management process consists of continuous activities that are partly a responsibility of the personnel involved in business activities and partly of independent risk management specialists. Although the responsibilities of business lines and independent risk management are clear, they are co-operating closely. The tasks considered as forming parts of the risk management process can be classified, for example, as follows: • Actions, i.e., business transactions representing the actual insurance and investment operations are performed in accordance with the given authorizations, risk policies and other instructions. Activities related to capitalization and liquidity position are included in this part of the process. The actions are the responsibility of business functions and centralized functions such as the investment department.
• The Actuarial Committee (AC) is a coordination forum for the
Security Policy to the IRCC. The committee shall monitor and evaluate estimated reinsurance credit risk exposure in the portfolio, and suggest possible actions.
Actuary who is responsible for ensuring that the principles for pricing policies and for the calculation of technical provisions are adequate and in line with the risk selection and claims processes. The Board approves the insurance policy pricing and the central principles for the calculation of technical provisions. In addition, the Board defines the maximum amount of risk to be retained on the company’s own account and approves the reinsurance policy annually.
In Sampo Group, economic capital is considered to be a good estimate of the capital required to cover risks that can be measured in a reliable way and within a normal business environment. In the assessment of the adequacy of capital the effects of potential changes in the business environment as well as the effects of low probability risks are taken into account.
During 2012, with-profit liabilities decreased by EUR 178 million, and the decline is expected to be at the same level for several years. Average guaranteed rate for policyholder’s savings, excluding the effect of discount rate reserve, is 3.7 per cent, which is gradually decreasing because policies with 4.5 per cent guarantees mature sooner than policies with lower guarantees.
Sampo Group companies If P&C and Mandatum Life are following the above mentioned approach, but they apply it by taking into account the specific characteristics of their own businesses.
December 2012 was EUR 18,164 million (EUR 17,590 million in 2011). The compositions of the investment portfolios in If P&C,
The structures of technical provisions as well as risk appetites of
Mandatum Life and If P&C differ from each other and as a result, the structures of the investment portfolios of the two companies may be different.
Breakdown of Equity Investments by Geographical Regions Mandatum Life, 31 December 2012
In Sampo Group, the open transaction risk positions are considered and measured separately by subsidiary companies.
68.9 million. Of this amount, 100 per cent was related to reinsurance counterparties with a credit rating of A- or higher.
Group’s own internal assessment is always the most important factor in decision making.
In order to manage operational risks, If P&C has issued a number of different steering documents: Operational Risk Policy,
Ten Largest Direct High Yield and Non-rated Fixed Income Investments Sampo Group, 31 December 2012
CAPITALIZATION This chapter presents the capitalization of Sampo Group at Group level and at subsidiary level at the end of 2012 as well as the changes that took place during the year 2012.
capital and other items absorbing losses. In internal assessments, adjusted solvency capital is compared to economic capital, and
Group level increased during the year to EUR 8,197 million (EUR
The amount of adjusted solvency capital exceeded the economic capital in If P&C, whereas in Mandatum Life, the adjusted solvency capital was slightly below the economic capital. During the year, the amount of adjusted solvency capital in If P&C increased to
Other financial liabilities Other financial liabilities comprise debt securities in issue and other financial liabilities.
Cash flow hedging is used to hedge the interest cash flows of individual floating rate debt securities or other floating rate assets or liabilities. The hedging instruments used include interest rate swaps, interest rate and cross currency swaps. Derivative instruments which are designated as hedges and are effective as such are measured at fair value. The effective part of the change in fair value is recognised in other comprehensive income. The remaining ineffective part is recognised in profit or loss.
Impairment of intangible assets and property, plant and equipment At each reporting date the Group assesses whether there is any indication that an intangible asset or an item of property, plant or equipment may be impaired. If any such indication exists, the
The effects of non-market based terms are not included in the fair value of the incentive; instead, they are taken into account in the number of those incentive units that are expected to be exercised during the vesting period. In this respect, the Group will update the assumption on the estimated final number of incentive units at every interim or annual balance sheet date.
July 2012 or after) requires the grouping of items presented in other comprehensive income based on whether they are potentially reclassifiable to profit or loss subsequently. The amendment will have an impact on the Group’s disclosures.
Liabilities for unit-linked insurance and investment contracts - 3,054 - - 3,054
Contracts with discretionary participation feature (DPF) -77 -84 -3 1 -80 -83
Contracts with discretionary participation feature (DPF) -1 -17 - - -1 -17
Profit or loss attributable to the equity holders of the parent company 1,404 1,038
Total derivatives held for trading 2,556 37 5 3,248 35 25
18 Movements in level 3 financial instruments measured at fair value
Tax losses for which no deferred tax asset has been recognised -6 -17
Share of associate's other comprehensive income 9 - 9 23 - 23
Pension obligations: At the beginning of the year 406 390 424 458 577
We support that the financial statements should be adopted. The proposal by the Board of Directors regarding the use of the profit shown in the balance sheet is in compliance with the Limited
• By mail to the address Sampo plc, Shareholder services, Fabianinkatu 27, 00100 Helsinki, Finland.