Combined ratio was 90.6 per cent, clearly stronger than the long-term goal of being below 95 per cent. Cost effi ciency continued to improve. The number of policies sold increased.
Industrial Business area Industrial is the biggest actor within industrial insurance in the Nordic countries and the fi fth largest supplier of industrial risk solutions in Europe. Its customers are primarily Nordic companies with sales of more than sek 500 million and more than 500 employees. Business area Industrial has approximately 1,500 customers.
Nordic subsidiary providing term life insurance, totaled eur 5.7 million. By a transaction made late in the year, the company was transferred under If ’s ownership in the beginning of 2008.
On 17 December, Sampo plc submitted an application to the Swedish Financial
The composition of the Board of Directors of Sampo plc is as follows: Georg Ehrnrooth, Chairman
sampo group’s executive committee The Board of Directors has appointed Sampo Group’s Executive Committee and a Group md Committee to the Executive
Group’s internal audit and the actions of the auditors under the laws of Finland, the authenticity of the Group’s fi nancial accounts and the auditors’ professional competence and independence, and for assessing compliance with laws and regulations within Sampo Group. The Audit Committee prepares the proposal to be made to the Annual General Meeting on the election of the auditor and the auditing fees, and monitors the auditors’ invoicing in the way it sees fi t. The Audit Committee is also responsible for overseeing the preparation of and compliance with Sampo Group’s risk management policies and other related guidelines, monitoring Sampo Group’s risks and the quality and scope of risk management, monitoring the fulfi lment of risk policies, the use of limits and the development of risks and profi t in the various business areas, and carrying out any tasks that may be bestowed upon it by the Board. The
Group Executive Committee, other corporate executives and other specifi cally-named persons, as these persons must ask for separate written permission in advance for each share-related securities transaction they make.
Ricard WennerklintIvar Martinsen 22 sampo group annual report 2007 | Group Executive Committee
–Wahlroos holds 11,839,890 Sampo plc shares directly or through controlled company.
Positions of Trust: If Livförsäkring AB (Sweden), Board Member, If P&C Insurance Company Ltd
Norwegian Parliament Transport and Communications Committee was given a demonstration of risks involving in car fi res in tunnels. The Committee’s visit to the Centre took place in collaboration with the Norwegian Truck Owners Association.
Approval of the Financial Statements and the Board of Directors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . .138
Denmark, the Baltic countries and Russia. If ’s operations are divided into four business areas: Private, Commercial, Industrial and Baltic & Russia.
Sampo Life Group’s profi t before taxes for 2007 was eur 342 million (295). The reduction in the fair value reserve from the beginning of the year was eur 174 million.
Sampo Bank’s managing director Mika Ihamuotila resigned from his position on 1 February 2007. He continued as a member of Sampo Group’s Executive Committee until he left the service of the Sampo Group as of 15 April 2007. Ihamuotila resigned from Sampo Life’s Board of Directors on 16 March 2007.
corporate responsibility As a listed company, Sampo plc has the responsibility to act in the best interests of its shareholders, in compliance with legislation and in accordance with sound business practices. Sampo’s core values; ethicality, loyalty, transparency and enterprise, relate to the entire Group. Sampo
staff The number of full-time equivalent staff decreased in 2007 to 6,965 employees on 31 December 2007 from 11,763 employees a year earlier. The comparison fi gure includes the staff of Sampo
Events After the End of the Reporting Period After the reporting period, on 1 January 2008 the ownership of If Livförsäkring AB was transferred from Sampo Life to If P&C Insurance Holding Ltd. If Livförsäkring AB off ers life insurance products in Sweden, Norway and Denmark to complement If P&C’s other services.
The dividend will be paid to shareholders registered in the Register of Shareholders held by Finnish Central Securities Depository Ltd on the record date 18 April 2008. The Board proposes that the dividend be paid on or about 25 April 2008.
+ economic capital (average of values on 1 Jan. and 31 Dec.)
expense ratio, % + operating expenses before change in deferred acquisition costs + claims settlement expenses expense charges solvency capital (ifrs) + equity after proposed profi t distribution ± valuation diff erences on investment – intangible assets + capital securities – deferred tax liability probably realised in near future (incl. deferred tax from fair value reserve and profi t) ± other required items (Ministry of Finance decree)
Liabilities directly associated with assets classifi ed as held for sale 30 - 24,520
Total income and expenses recognised for the period - - - 92 1,049 -2 1,138 15 1,153
Net income recognised in equity - - - -169 -78 - -246 -22 -268
each year by the Group’s share of the post-acquisition net income (or loss), or other movements refl ected 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 fulfi lling the obligations of the associate. Goodwill arising on the acquisition is included in the cost of the investment. Unrealised gains (losses) on transactions are eliminated to the extent of the Group’s interest in the entity.
Financial assets are derecognised when the contractual rights to receive cash fl ows have expired or the Group has transferred substantially all the risks and rewards of ownership. Financial liabilities are derecognised when the obligation specifi ed in the contract is discharged or cancelled or expires.
Available-for-sale fi nancial assets are initially recognised at cost, which is the fair value of the consideration given, including direct and incremental transaction costs. They are subsequently remeasured at fair value, and the changes in fair value are included as a separate component of equity, taking the tax eff ect into account. Interest income and dividends are recognised in profit or loss. When the available-for-sale assets are sold, the cumulative change in the fair value is transferred from equity and recognised together with realised gains or losses in profi t or loss.
The pay-as-you-go system related to pension index raises is not treated as an insurance activity under ifrs 4 and does not generate any risk for the insurance company. Thus, the pay-as-yougo contribution collected together with the insurance premium is not deemed to be premium income, and the pension index raise paid out is not deemed to be claims incurred. Because the collected index raise corresponds in amount to the paid out pension index raise, the said items are set-off in the Income Statement item ’Other expenses from operations’. The share of a balancing fi gure not yet received from, or not paid by, a central organisation is presented as current receivables or liabilities in the balance sheet items ’Other assets’ or ’Other liabilities’.
According to Chapter 13, Section 3 of the Finnish Insurance Companies’ Act, the Principle of
62 sampo group annual report 2007 | IFRS Financial Statements: Summary of Significant Accounting Policies
Underwriting Risk Management and Control in P&C Insurance. . . . 79
The Audit Committee is responsible, on behalf of the Board of Directors, for the preparation of Sampo Group’s risk management principles and other related guidelines. The Audit Committee shall ensure that the operations are in compliance with these, control Sampo Group’s risks and risk accumulations as well as control the quality and scope of risk management. The committee shall also monitor the implementation of risk policies, the use of limits and the development of risks and profi t. At least three members of the Audit committee should be elected from those members of the Board, who do not hold management positions in Sampo and are independent of the company. The Audit Committee meets on a quarterly basis.
The Group’s economic capital decreased during the year by eur 24 million or 0.7 per cent.
Table 2 financial assets and financial liabilities by segment on 31 december 2007 financial assets and financial liabilities
Investments related to unit-linked contracts - 2,071 - - 2,071 2,071
market risks in p&c insurance If ’s investment operations achieved a return of 2.6 per cent in 2007. The investment assets amounted to eur 9,944 million. The split between asset classes on 31 December 2007 was 10 per cent equity, 89 per cent fi xed income and 1 per cent other investment assets and the major market risks are thus equity risk and interest rate risk. The duration of fi xed income investments decreased during the year from 3.0 years to 2.2 years.
76 sampo group annual report 2007 | IFRS Financial Statements: Risk Management
Sampo Life’s alternative investments include real estate, private equity, investments in hedge funds and commodities. The investment policy sets limits for maximum allocation. On 31 December, 2007 the share of alternative investments was 9.0 per cent of the total investment portfolio.
Sampo Life participates in the catastrophe pool of Finnish life insurance companies. Possible pandemics are not covered by the reinsurance. At this stage, no reliable predictions of mortality in the case of a pandemic can be made. As an indication of the risk, the eff ect of doubling normal mortality in the insurance portfolio would mean around eur 15 million in additional cost for Sampo Life.
SAMPO LIFE PARENT COMPANY TOTAL 6,371 555 -547 -62 164 36 39 6,556 98 *) Before reinsurers’ share **) Investment contracts ***) Operating expenses not included
The administration and acquisition expenses of every product are followed annually and possible changes in tariff s and processes are made.
Finnish solvency rules for life insurers will change during year 2008. New rules will be based on similar framework as the Solvency ii draft, but at a lower confi dence level. One aim is to ensure that Finnish life companies will be well prepared for Solvency ii before 2012. As part of
IFRS Financial Statements: Other Notes | sampo group annual report 2007 91 life insurance claims paid change in provision for claims outstanding claims incurred
94 sampo group annual report 2007 | IFRS Financial Statements: Other Notes 7 Other Operating Expenses p&c insurance
Technical result before investment return 1) Includes other technical income EURm 29 (23) and other technical expenses EURm 25 (23).
Total rental recognised as income during the fi nancial period 0 0
Interest options, bought and sold 50 1 0 247 8 9
Expected rate of return on plan assets at the begninning of the year -12 -12 -10 -9
Minimum lease payments not later than one year 35 33 later than one year and not later than fi ve years 101 92 later than fi ve years 99 75
Assets pledged as collateral for liabilities or contingent liabilities assets liabilities/ assets liabilities/ EURm pledged commitments pledged commitments
The interest on loans to the key management personnel is at least as high as on the staff loans referred to in the Income and Capital Tax Act, section 67. Also other terms of the loans equal to the terms of the staff loans confi rmed in the Group. The loans are secured. The terms of the loans to the entities controlled or signifi cantly infl uenced by the above mentioned persons equal to those granted to other corporate customers.
IFRS Financial Statements: Other Notes | sampo group annual report 2007 125 p&c insurance carrying Listed companies amount/ EURm country no. of shares holding % fair value
11 Other Shares and Participations fair value changes fair value changes recognised recognised recognised in fair value recognised in fair value EURm fair value in p/l reserve fair value in p/l reserve