5 2011 in Figures 7 Strategy 9 Group Structure 10 Organization 11 Businesses 11 P&C Insurance 12 Nordea 13 Life Insurance 14 Personnel 16 Corporate Responsibility
Mandatum Life – the leading expert in money and life in Finland and the Baltics Mandatum Life aims to be the leading provider of personal risk insurances and the most respected manager of customer assets in
The company believes in the increased role of voluntary corporate pension schemes in complementing the statutory pension scheme. In addition, it is seen that companies create significant value by covering their employees’ personal risks through voluntary insurance cover.
Mandatum Life started its own wealth management and investment solutions activities in 2008. The focus is on wealthy private individuals and institutions.
In both distribution and service If has focused on digitalization and development of better electronic interfaces both externally and within the company. In the private market internet sales increased
HR in If P&C Insurance During 2011, If P&C’s personnel strategy continued to be influenced by the theme of the corporate strategy ‘Skills and Initiatives’ launched in 2010.
Life is developing strategies and processes regarding well-being at work – and is thus participating in the improvement of responsible personnel practices. Corporate customers look after their personnel, and indirectly their families, by offering, among other things, supplemental coverage against disability or death and by rewarding their personnel in a longsighted and motivating manner.
Directors comprises no fewer than three and no more than ten members elected by shareholders at the Annual General Meeting.
34 Sampo Group in 2011 35 Business Areas in 2011 35 P&C Insurance in 2011 37 Associated Company Nordea Bank Ab 38 Life Insurance in 2011 40 Holding in 2011 40 Changes in Group Structure 41 Administration 41 Annual General Meeting 41 Management Changes 41 Governance in 2011 41 Corporate Responsibility in 2011 42 Personnel in 2011 42 Management Incentive Schemes 43 Risk Management in 2011 44 Shares, Share Capital and Shareholders 44 Shares and Share Capital 45 Authorizations Granted to the Board 45 Shareholders 47 Financial Standing 47 Internal Dividends 48 Ratings 48 Group Solvency 49 Debt Financing 49 Outlook 49 Dividend Proposal 50 Key Figures 53 Calculation of the Key Figures 53 Group Key Figures 55 P&C Insurance Key Figures 56 Life Insurance Key Figures 57 Per Share Key Figures
The Board of Directors proposes to the AGM a dividend of EUR 0.26 per share (EUR 0.29). This corresponds to a payout ratio of 40 per cent of net profit, which is in line with the dividend policy. Total proposed dividend amounts to EUR 1,048 million.
For more information on Nordea Bank Ab and its result release for 2011, see www.nordea.com.
Changes in Group Structure On 16 May 2011 Sampo Group's ownership in the Danish insurance company Topdanmark A/S exceeded 20 per cent of the total shares and voting rights of the company. On 31 December 2011 the total number of Topdanmark shares owned by Sampo Group was 3,147,692.
Sampo Group also aims at providing a non-discriminative, pleasant and open work environment. Sampo Group is aware of its corporate responsibility and is committed to developing its operations to further economic, social and environmental sustainability.
Mandatum Life’s corporate responsibility is based on the cornerstones of its operations: increasing and securing its customers’ economic welfare and safeguarding them against risks.
Finland, 27 per cent in Sweden, 22 per cent in Norway and 20 per cent in the Baltic countries, Russia, Denmark and other countries. The average number of employees during 2011 was 6,874, which compares to an average of 6,914 during 2010.
The terms of all incentive schemes are available on Sampo’s website at www.sampo.com/compensation.
If P&C the most material insurance risk is reserve risk, which to a large extent is driven by long-tailed business such as workers’ compensation and motor third party liability.
Sampo A shares. The maximum amount to be repurchased was 10,000,000 shares corresponding to approximately 1.8 per cent of the total number of shares. Weighty financial reasons for repurchases existed as they were carried out in order to follow the company’s distribution policy.
The average interest on Sampo plc’s debt as of 31 December 2011 was 3.73 per cent.
Property & casualty insurance profit before taxes + life insurance profit before taxes
Counterparties 98 Credit Risk Management 100 Liquidity Risks 102 Operational Risks 102 Operational Risk Management in Sampo Group 102 Operational Risk Management in If P&C
Risk and Capital Planning When assessing the future capital requirement, the views of the management and different stakeholders – regulators and supervisors, rating agencies, debt investors, policyholders and shareholders – are considered. Management's views and plans regarding the future development of the business and investment activities are used when analyzing the future capital requirement. Within the planning process it is considered how changes either in business volumes and business mix or changes in existing risk factors may affect profitability, risks and capital needs. The results of these considerations are reflected in risk management and capitalization recommendations to the business management and the Board of Directors. The recommendations are also affected by the external stakeholders’ views on the capitalization of Sampo Group.
In P&C insurance the insurer promises to compensate a certain loss caused by a certain incident. When incidents like motor accidents, windstorms and fires occur the insurer establishes a preliminary estimate of loss at the moment when the claim is reported and
shows the insurance risk result in Mandatum Life’s Finnish life insurance policies. The ratio of the actual claims costs to the assumed was 77 per cent in 2011 (78 per cent in 2010). Sensitivity of the insurance risk result can also be assessed on the basis of the information in the table. For instance the increase of mortality by
In addition to the biometric risks, Mandatum Life is exposed to other risks such as policyholder behavior, expense and discount rate risks.
Subsidiary Mandatum Life Insurance Baltic SE 17 12 30 21 18 11 27
Asset and Liability Management in If P&C If P&C's approach in asset and liability management is defined in accordance with the above described group wide principles. In addition, the composition of If P&C’s investment assets must at all times comply with supervisory authorities’ regulations and ensure an adequate solvency ratio.
Credit Risk Management Credit risk is managed by specific limits given in the Investment
Since credit risk is taken mainly as a part of investment operations where most of the investments are in tradable instruments, credit risk is by nature primarily spread risk and it is managed and monitored as part of market risk.
Concentrations are illustrated in tables 'Credit exposures by sectors, asset classes and rating, If P&C, Mandatum Life and Sampo Group, 31 December 2011' which are shown in Credit Risk section. Nordic financial sector is the largest concentration at Sampo Group level.
decreased to EUR 2,854 million (EUR 3,670 million in the end of 2010), and in Mandatum Life, adjusted solvency capital decreased to
Sensitivity Analysis of the Capital Position The total sensitivity of equity is shown in table 'Sensitivity analysis of capitalization to market risks, If P&C, Mandatum Life and Sampo plc, 31 December 2011' separately for the insurance subsidiaries together with the corresponding effect on the discounted value of liabilities and adjusted solvency capital. For example, a rise in interest rates would reduce the values of financial instruments causing a fall in the Sampo
(EUR 2,956 million in 2010) while the regulatory capital requirement was EUR 841 million (EUR 735 million in 2010). Regulatory solvency capital of Mandatum Life Group decreased to EUR 1,041 million
***) The amount recognised in equity from cash flow hedges for the period totalled EURm -2 (-6).
each year by the Group’s share of the post-acquisition net income (or loss), or other movements reflected directly in the equity of the associate. If the Group’s share of the associate’s loss exceeds the carrying amount of the investment, the investment is carried at zero value, and the loss in excess is consolidated only if the Group is committed to fulfilling the obligations of the associate. Goodwill arising on the acquisition is included in the cost of the investment.
The share of associates’ profit or loss, equivalent to the Group’s holding, is presented as a separate line in the income statement.
Hedge accounting applies to hedges that are effective in relation to the hedged risk and meet the hedge accounting requirements of IAS
Items of property, plant and equipment are depreciated on a straightline basis over their estimated useful life. In most cases, the residual value is estimated at zero. Land is not depreciated. Estimates of useful life are reviewed at financial year-ends and the useful life is adjusted if the estimates change significantly. The estimated useful lives by asset class are as follows: • Residential, business premises and offices 20 - 60 years
Investment property Investment property is held to earn rentals and for capital appreciation. The Group applies the cost model to investment property in the same way as it applies to property, plant and equipment. The depreciation periods and methods and the impairment principles are also the same as those applied to corresponding property occupied for own activities. In the Holding segment, the investment property of the associate Nordea is measured at fair value in item Investments in associates.
Accounting policies requiring management judgement and key sources of estimation uncertainties Preparation of the accounts in accordance with the IFRS requires management estimates and assumptions that affect the revenue, expenses, assets, liabilities and contingent liabilities presented in the financial statements. Judgement is needed also in the application of accounting policies. The estimates made are based on the best information available at the balance sheet date. The estimation is based on historical experiences and most probable assumptions concerning the future at the balance sheet date. The actual outcome may deviate from results based on estimates and assumptions. Any changes in the estimates will be recognised in the financial year during which the estimate is reviewed and in all subsequent periods.
Income tax relating to components of other comprehensive income -75 -80 -1 0 -156
Financial assets available-for-sale for life insurance include impairment losses EURm 173 (131).
Current estimate of total claims costs 5,798 2,389 2,299 2,424 2,562 2,648 2,784 2,847 3,090 3,131 29,970
Financial liabilities in the segments include liabilities from derivates, dept securities in issue and other financial liabilities.
Accumulated depreciation at beginning of year - -1 -1 -1 of which related to disposals - 0 - 0
PENSION LIABILITY The retirement age of the Managing Director is 60 years, when the pension benefit is 60% of the pensionable salary.
Sampo will publish three Interim Reports in 2012. The Interim Reports and related Supplementary Materials are published on Sampo’s website at www.sampo.com. Press and stock exchange releases, the monthly updated list of shareholders and other investor information published by Sampo are available on the site as well.
03/29/12 The record date for the Annual General Meeting 04/03/12 The registration for the Annual General Meeting will finish at 4 pm 04/12/12 Annual General Meeting