Sampo Group Bank Topdanmark Jyske Bank Storebrand Alm.Brand Market cap 11.3.2013 Pref.shares...
Transcript of Sampo Group Bank Topdanmark Jyske Bank Storebrand Alm.Brand Market cap 11.3.2013 Pref.shares...
Sampo Group Debt Investor Presentation Prepared March 18, 2013 Figures December 31, 2012
www.sampo.com/debtpresentation
Disclaimer This presentation may contain forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Sampo believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors.
Important factors that may cause such a difference for Sampo include, but are not limited to: (i) the macroeconomic development, (ii) change in the competitive climate and (iii) developments in capital markets.
This presentation does not imply that Sampo has undertaken to revise these forward-looking statements, beyond what is required by applicable law or applicable stock exchange regulations if and when circumstances arise that will lead to changes compared to the date when these statements were provided.
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Sampo Group Basic Facts
Nordic Financial Group with Strong Brands
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MARKET POSITION
STRATEGY
INVESTMENT ASSETS
RETURN TARGET
21.2%
• The largest Pan-Nordic Financial Services group
• Profit oriented • Cost, Risk & Capital
~ EUR 677bn B/S
• Top league ROE • RoE 15% in a normalised economic environment
• Unit-linked products & Wealth Management
• Leading life & pension insurer in Finland with Baltic operations
~ EUR 5.5bn
• RoE 17.5%
• The largest Pan-Nordic P&C insurer
• Underwriting focus • Pan-Nordic synergies
~ EUR 11.7bn
• RoE 17.5% • CoR below 95%
> 25%
100% 100%
• Long-term Investor • Manager of Capital Structure & Liquidity • Listed Company Sampo Plc
37 115
21,734
21,041
19 712
17 995
17 412
16 384
14 663
6 366
5 619
3 904
3 122
2 644
1 906
1 521
444
0 4 000 8 000 12 000 16 000 20 000 24 000 28 000 32 000 36 000
Nordea
Swedbank
Handelsbank…
DnB
S E B
Investor
Sampo
Danske Bank
Gjensidige
Industrivärden
Tryg
Pohjola Bank
Topdanmark
Jyske Bank
Storebrand
Alm.Brand
Market cap 11.3.2013
Pref.shares 11.3.2013
Largest Nordic Financial with Insurance Focus
5
Source: ReutersEcoWin
~25%
~21%
Solidium*,14.2%
Varma Mutual Pension, 8.5%
Ilmarinen Mutual Pension, 1.0%
Björn Wahlroos, 2.1%
Kaleva Mutual Insurance, 1.0%
Other domestic owners, 18.6%
Foreign and nominee registered owners, 54.6%
Ownership structure
*100 % owned by the Republic of Finland
Market cap 11 March 2013, EURm
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• If generated EUR 858m (636) in pre-tax profits • Excellent combined ratio of 89.3% (92.0%)
– Risk ratio 65.9% (68.4%) – Cost ratio 23.3% (23.5%) – Expense ratio 17.1% (17.3%)
• Resilient business model over the cycle
If P&C ― Well-diversified and Profitable Pan-Nordic Non-life Insurer
• If P&C provides insurance solutions and services in Finland, Sweden, Denmark, Norway, Baltics (and Russia)
for corporates and private persons
• Major Lines of Business - motor - workers´ compensation - liability - accident - property - cargo
Well-established Insurance Subsidiaries
• Mandatum Life is a leading life and pension insurer in Finland • Mandatum has a strong market position in Finland
with ca. 25% of the market • Mandatum contributed with EUR 136m (137) in pre-tax profit to the Group
Mandatum Life ― Leading Finnish Life and Wealth Management Service Provider
• Provides comprehensive Wealth Management & Life insurance solutions in Finland and Baltics for corporates and private persons
• Services provided - pensions & savings - wealth management - reward commitment - risk insurance
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Nordea Profitable & The Most Diversified Nordic Bank
895
978
932
1 0
78
885
883
847
781
833
818
832
592
878
730
960
1 0
71
1 0
03
949
566
1 0
29
1 0
37
1 0
99
922
1 0
59
21
36
89
320 35
6
425
358
347
261
245
207 16
6
242
118
112
263
218 21
7
254 24
4
-13 -28 -13 -6
171
-300
0
300
600
900
1 200
1 500
1Q07
2Q
07
3Q07
4Q
07
1Q08
2Q
08
3Q08
4Q
08
1Q09
2Q
09
3Q09
4Q
09
1Q10
2Q
10
3Q10
4Q
10
1Q11
2Q
11
3Q11
4Q
11
1Q12
2Q
12
3Q12
4Q
12
EURm Restructuring provision Write backs Loan losses Operating profit
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Group Strategy: Value Creation in Nordic Financials
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LONG TERM VALUE CREATION
Value creation through investments in Nordic financials based on knowledge of Nordic markets, Nordic financial institutions & Nordic people. Commitment to the long-term development of affiliated companies.
OPERATIONAL EXCELLENCE IN SUBSIDIARIES
Subsidiary companies have focus on continuous development of services. Economics of scale Pan-Nordic diversification & operational excellence facilitate low volatility.
CONSERVATIVE PARENT WITH PROFIT FOCUS
Conservative capital structure, low leverage and strong liquidity. Parent company steers affiliated companies through Boards by setting (in Nordea by contributing to) strategies, guiding principles and ROE-targets.
GROUP LEVEL PORTFOLIO BENEFITS
Profitable companies, mostly with lowest volatility in the peer group. Profits of affiliated companies have low correlation creating diversification benefits at the group level.
LONG-TERM VALUE FOR SHAREHOLDERS & BONDHOLDERS
If P&C A/A2 Stable
Expense Ratios 2011 (2012)
Largest Nordic P&C Insurer with Synergies
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Norway 2012 GWP EUR 6.7bn Gjensidige 25% If 25% Tryg 15% Sparebank 1 10%
Denmark 2011 GWP EUR 5.9bn Tryg 21% Topdanmark 18% Codan (RSA) 13% Alm. Brand 10% If 6%
Finland Q3/2012 GWP EUR 3.6bn Pohjola 29% If 24% Tapiola 18% Lähivakuutus 10% Fennia 10% Tryg 2%
Sweden 2012 GWP EUR 7.5bn LF 30% If 19% RSA (T-H) 16% Folksam 15% Baltics 2011
GWP ~EUR 1bn RSA 21% If 15% BTA 13% Ergo 14% Gjensidige 7%
Nordic Market shares Total GWP EUR 22bn (-11) Market Shares by Country
* Peer group excl. If 2012, other 2011
If 18 %
Topdanmark 5 %
Tryg 12 %
Gjensidige 9 % RSA
10 %
LF 9 %
Pohjola 5 %
Other 32 %
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17
28
28
28
28
28
32
IF Nordic peer group*
Zürich Generali
AXA RSA
Allianz Aviva
Nordic P&C Insurance Market
11
CONSOLIDATED MARKET
LOW EXPENSE RATIOS
The Internet continues to grow in importance as both a distribution and a service channel in the Nordic insurance market. Also, distribution via partnerships with banks and car-dealers etc. are increasingly important channels, in addition to traditional distribution.
GOOD PROFITABILITY
Good profitability since the beginning of 2000. After the last year(s) intense competition and a few years of weather related claims and decreasing profitability for some competitors, profitability has improved again in 2012. Low interest rate environment has made the Industry focus on profitability in the insurance operations.
Renewal rates are around 80-90%.
LOYAL CLIENTS
DISTRIBUTION
The market is characterized by low expense ratios of less than 20% in average compared to the European companies with expense ratios approx 10%-points higher.
The four largest companies account for 77-81% of the markets in Norway, Finland and Sweden. In Denmark the market is less consolidated.
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By Business Area
Private; 2 557
Commercial; 1 358
Industrial; 645
Baltic; 115
Norway; 1 709
Sweden; 1 486
Finland ; 948
Denmark; 418
Baltic; 115
By Country
Private; 349
Commercial; 168
Industrial; 28
Baltic; 17
Technical Results, EUR 560m
Norway; 348
Sweden; 108
Finland ; 80
Denmark; 8 Baltic; 17
Gross Written Premiums, EUR 4,698m
By Business Area By Country
Sound Underwriting is Basis for Strong Result
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If - Total If Sweden If Norway If Finland If Denmark
Well-diversified Nordic P&C Insurer
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Geographical Diversification in CR
Combined Ratio - If P&C and Nordic Peers
Combined Ratio Development
60.0%65.0%70.0%75.0%80.0%85.0%90.0%95.0%
100.0%
2009 MA -09 2010 MA -10 2011 MA -11
IF,CR% Nordic Market Average,CR%
2.5%
5.4%
5.4%
5.8%
5.3%
Standard deviation
74,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9
26,6 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,3
100,9 92,6 90,5 89,9 90,6 91,8 92,1 92,8 92,0 89,3
0
20
40
60
80
100
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
%
Risk ratio Cost ratio
Target CR < 95%
Strong & Stable Annual Profit Development
800 730
534 549 644
707 636
858
-267
1 127
943
308
945
-400
-200
0
200
400
600
800
1 000
1 200
2005 2006 2007 2008 2009 2010 2011 2012
Profit before tax Comprehensive income
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EURm
Seasonality in Quarterly Results and C/R
Average Quarterly C/R Q4 Q3 Q2 Q1 2005-2012 ,% 90.4 89.7 89.9 94.5
Profit and loss account, EURm Q4/12 Q3/12 Q2/12 Q1/12 Q4/11 Q3/11 Q2/11 Q1/11 Q4/10 Q3/10 Q2/10 Q1/10
Premiums earned 1,121 1,121 1,054 1,066 1,045 1,029 1,017 1,003 992 916 904 892 Claims incurred -800 -811 -730 -805 -759 -771 -752 -777 -740 -675 -663 -687
Operating expenses -196 -191 -180 -181 -184 -178 -174 -170 -176 -157 -158 -153 Other technical income and expenses 0 -1 1 2 0 1 1 2 0 0 1 0 Allocated investment return transferred from the non-technical account
14 21 25 29 21 26 36 42 32 51 52 53
Technical result 139 139 170 112 124 106 128 100 109 133 136 105
Investment result 84 93 107 113 78 -23 119 178 153 100 97 109 Allocated investment return transferred to the non-technical account
-27 -35 -40 -44 -35 -39 -50 -57 -46 -65 -67 -68
Other income and expenses 13 9 14 11 4 0 3 0 -27 -2 -1 -2
Operating result 210 206 251 191 171 43 200 221 188 168 164 144
Risk ratio, % 65.5 66.2 63.0 69.0 66.2 68.9 67.8 71.0 67.7 67.2 66.5 74.8
Combined ratio, % 88.8 89.3 86.4 92.4 90.2 92.3 91.1 94.4 92.3 90.6 89.9 98.2
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Conservative Investment Portfolio
• Duration 1.1 years • Average Maturity 2.3 years • Fixed Income Running Yield 3.6 %
Mark-to-Market Investment Return Investment Allocation of Total EUR 11.7bn
4,3% 5,8%
4,4% 2,6%
-3,1%
12,4%
7,4%
1,8%
6,1%
-4 %
-2 %
1 %
4 %
6 %
9 %
11 %
14 %
2004 2005 2006 2007 2008 2009 2010 2011 2012
Money Market
7%
Long-term fixed
income 81%
Equities 11%
Real Estate 1%
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If ’s Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland)
The Sampo Group’s P&C insurance companies became part of If January 2002.
AA-/Aa3
A+/A1
A/A2
A-/A3
BBB+/Baa1
BBB/Baa2
Poss
ible
dow
ngra
de Ja
n 03
Moody´s S&P
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Stab
le F
eb 0
2
Neg
ativ
e Au
g 02
Stab
le A
pr 0
3
Poss
ible
upg
rade
Feb
04
Stab
le M
ay 0
4
Posi
tive M
ay 0
6
Stab
le N
ov 0
8
A- F
eb 0
2
Neg
ativ
e Ju
l 03
Stab
le A
ug 0
3
Wat
ch n
eg F
eb 0
4 St
able
Apr
04
Stab
le S
ep 0
4
Stab
le O
ct 0
5
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Mandatum Life
Finnish Life Insurer with Asset Management Focus
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Client Segment
Underlying Market
Critical Success Factors Sales & Client Services
Corporates Employee Benefit Expertise in Incentive-, Pension- and Life Risk Solutions, Expertise in Asset Management, Management of Client Relationship
Mandatum Life
HNWI Wealth Management
Professional Wealth Management, Management of Client Relationship
Mandatum Life
Retail Clients Bankassurance Distribution Power Danske Bank
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Premiums Written*, total EUR 981m Insurance Savings, total EUR 7,702m
*) Direct insurance
247
155 379
31 67
99
3
Unit-linked life Unit-linked pension Unit-linked capital redemption Unit-linked Baltic Other life Other pension Other capital redemption Other Baltic
1 296
1 258
1 140
134
252
3 597
6 19
Mandatum Life Business Volumes
U-L EUR 3,828m
With-Profit EUR 3,874m
U-L EUR 812m
With-Profit EUR 169m
Focus area
4 652 4 626 4 738 4 695 4 621 4 487 4 431 4 410 4 249 4 071
607 884 1 262 1 752 2 071 1 637 2 359 3 124 3 054 3 833
0
2 000
4 000
6 000
8 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Guaranteed interest rates Unit-linked
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Technical Reserves, EUR 7,904m
EURm
17,9 19,5 20,4 19,8 19,3
24,8 22,0
24,9 24,5
25,5
20,8
25,2 22,4 21,5
27,9 28,2 26,8 26,2
0
5
10
15
20
25
30
2004 2005 2006 2007 2008 2009 2010 2011 2012
%
All products
Unit-linked
Strong Market Position
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Market Share in Finland
43.9%
Group Pension
26.2%
Unit-Linked
44.7%
Corporates
17.8 %
Private Customers
Market Shares of Premiums Written
Finnish with-profit Life Insurance Market
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PRINCIPLE OF FAIRNESS
There is no exact rule on profit sharing (e.g. 90%/10%). In the current markets, the principle is reflected in policyholders´ reasonable expectations for total accrual, which is average annual yield of Finnish government bonds over time.
SMOOTHENED BONUSES AND DIVIDENDS OVER TIME
When company decides on yearly bonuses and dividends it takes into account (i) policy holders´ reasonable expectations, (ii) realized investment returns and current solvency and (iii) uncertainty about the future market environment => Bonuses and dividends can be smoothened over time.
BETTER POSITION FOR RISK TAKING BENEFITS STAKEHOLDERS
Finnish Profit sharing mechanism facilitates and incentives for active investment strategies and risk taking. Profit sharing mechanism have benefited both policyholders and shareholders over the years.
Profit Development
295 342
140 121 142 137 136
286
80
-378
495
332
-115
286
-500
-250
0
250
500
2006 2007 2008 2009 2010 2011 2012
EURm
Profit before taxes Comprehensive income
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Profit by Components EURm 1-12/2012 1-12/2011
Net investment income 574.3 -40.7 - Transferred to expense result -17.6 -17.1 - Return on unit-linked policies -293.4 296.4 - Return on with-profit policies* -161.3 -120.1
INVESTMENT RESULT 102.0 118.5
EXPENSE RESULT** 5.8 9.8
RISK RESULT 19.0 24.8
OTHERS*** 9.3 -15.8 PROFIT BEFORE TAXES 136.1 137.3
Change in the market value of investments 234.9 -306.2
PROFIT AT MARKET VALUES 371.0 -168.9
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24 * Includes guaranteed interest, bonuses and change in the reserves of the above items ** Result of unit-linked business EURm 4.2 *** Includes a one-off reserve release of EURm 16 and the operating expenses for Innova Pension and Personnel Fund Services
Absolute Return Investment Portfolio
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• Duration 1.8 years • Average Maturity 2.1 years • Fixed Income Running Yield 4.8%
Mark-to-Market Investment Returns Investment Allocation of Total EUR 5.5bn
8,3%
12,0% 9,7%
5,0%
-7,8%
16,8%
11,1%
-1,4%
9,4%
-10 %
-5 %
0 %
5 %
10 %
15 %
20 %
2004 2005 2006 2007 2008 2009 2010 2011 2012
Money Market 10%
Long-term fixed income
48%
Equities 29%
Private Equity 5%
Real Estate 3%
Other 6%
Sampo Group Results, Capitalisation and Investments
948
1 295 1 353
3 833
870 825
1 320 1 228 1 616
-500
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
2004 2005 2006 2007 2008 2009 2010 2011 2012
P&C Life Banking Nordea dividends Other
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Stable Development of Profit before Taxes
* One-off item – sale of Sampo Bank
EURm *
•If P&C •Mandatum Life •Sampo Bank
•If P&C •Mandatum Life •Nordea / Investment
•If P&C •Mandatum Life •Nordea / Associated
Stable Companies & Group Level Diversification*
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LOW VOLATILITY EARNINGS • Geographical diversification • Strong Retail Banking Franchise • Diversified earnings base: -Banking (Retail, Wholesale) -Transaction Services -Asset Management -Markets Operations -Life Insurance • Low earnings volatility & stable
ROE over the cycle
LOW VOLATILITY C/R • Geographical diversification • Strong Retail P&C Franchise • Several Lines of Businesses -Motor, Cargo -Workers´ compensation -Liability -Accident -Property • Low C/R volatility and
Conservative Investments
FOCUS IN U-L & WM • Finland & Baltics • Strong Finnish Position • Focus changed 2005 -Wealth Management -Unit-linked Business -With-profit Business • Dependency on Capital
Markets
1 0.21 1 0.15 0.87 1
* Correlations of quarterly Reported Profits 2005–2012
PBT 2010-12
IF 50% ML 10% Nordea 40%
P/L CONTRIBUTIONS
1 613
1 110
2 456
-639
4 560
8 125
P&C 859 -337
409
-1 000
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
P&C Life Nordea Diversific. Group EC Group ASC Regulatory minimum
Strong Group Capitalization
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• Economic Capital need (EC) is measured at 99.5% conf. level
• By nature SII framework is similar to EC techniques used by Sampo
• EC models are developed to be in line with regulatory requirements for Internal models
• Current Ratio of Adjusted Solvency Capital and EC is 180% (8,197/4,560)
EURm
Nordea 3,646
Internal Treatment ≈ S II
• Minimum requirement (4,767) is sum of IF, ML (SI) and Nordea (BII) with transition rules
• Additive figure does not include diversification effects and Nordea´s requirement is calculated at 99.90% conf.level
• Current Ratio 170% (8,125/4,767)
Regulatory Treatment = S I
Sampo plc 37
*) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions
*
**
Life 225
8,197
4,767
Sampo Group Capital Base above Capital Needs
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1 89
5
1 97
6 2 65
7 3 27
9
3 78
3
4 02
4
4 13
1
4 18
9
4 28
1
4 28
1
4 22
2
4 39
4
4 37
4
4 62
9
4 61
9
4 67
8
4 56
0
2 17
5
2 29
4 3 05
4 3 73
8
4 24
5
4 60
0
4 72
2
4 79
9
4 95
4
4 94
7
4 85
8
5 07
6
5 01
5
5 26
2
5 23
4
5 31
7
5 17
9
4 02
3
4 10
9
6 40
1
7 66
6
7 07
6
7 56
5
7 16
8
7 27
9
8 52
1
8 43
2
8 12
0
6 83
0
7 26
2 7 87
5
7 58
1 8 07
5
8 19
7
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
8 000
9 000
EC,Diversified EC,Undiversified ASC
Increase of Nordea holding
EURm
Investment Allocations by Risk Profile
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Total Group (MEUR) 18 679 17 523 18 237 18 164
03/12 06/12 09/12 12/12
Money Market 9 % 8 % 93 % 10 % 9 % 82 % 11 % 9 % 81 % 7 % 10 % 89 %Bonds 78 % 51 % 4 % 78 % 52 % 8 % 77 % 51 % 12 % 81 % 48 % 8 %Equity 11 % 28 % 1 % 10 % 26 % 4 % 10 % 27 % 4 % 11 % 29 % 2 %Private Equity 0 % 5 % 1 % 0 % 5 % 4 % 0 % 5 % 2 % 0 % 5 % 1 %Other 1 % 8 % 0 % 1 % 9 % 1 % 1 % 8 % 1 % 1 % 9 % 1 %
11 751
5 532
1 397
11 638
5 421
464
12 245
5 519
473
11 717
5 519
928
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
If P&C
Man
datu
m
Life Sam
po
Plc If P&
C
Man
datu
m
Life Sam
po
Plc If P&
C
Man
datu
m
Life Sam
po
Plc If P&
C
Man
datu
m
Life Sam
po
Plc
Investment & Counterpart Exposures*
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31.12.2012 AAA AA+ - AA-
A+ - A-
BBB+ - BBB-
BB+ - C
D NonRated
Fixed Income Total
Equities Other Derivatives (Counterparty Risk)
Total Change from 30.9.2012
Asset-Backed Securities - - - - - - - - - - - - -
Basic Industry - - 4 124 345 - 215 688 261 - - 950 - 10
Capital Goods - 3 91 57 15 - 108 275 501 - - 776 + 40
Consumer Products - - 32 308 58 - 210 608 366 - - 974 + 63
Covered Bonds 3,703 214 11 10 - - - 3,939 - - - 3,939 - 9
Energy - 7 62 19 95 - 454 636 47 - - 684 + 24
Financial Institutions 29 1,762 2,702 579 486 - 6 5,563 93 20 24 5,700 - 127
Governments 45 - - 3 - - - 48 - - - 48 - 102
Government Guaranteed 173 - - - - - 56 229 - - - 229 + 47
Insurance - - 28 20 - - 22 70 34 - - 104 + 3
Media - - - - - - 55 55 12 - - 66 - 0
Public Sector, other 449 - 1 - 0 - - 451 - - - 451 - 8
Real Estate - 10 - - - - 105 115 - 262 - 377 + 87
Services - - - 18 59 - 22 100 36 11 - 147 - 2
Technology and Electronics - - - - 4 - 16 20 52 4 - 76 + 8
Telecommunications - - 201 121 51 - 22 395 78 - - 474 - 51
Transportation - 29 7 - 0 - 294 331 14 - - 345 + 32
Utilities - - 342 175 - - 40 557 73 - - 630 - 26
Others - - - - - - 16 16 27 0 - 43 - 54
Funds - - - - - - 294 294 1,249 601 - 2,144 + 1
Total 4,399 2,025 3,482 1,435 1,114 - 1,934 14,388 2,844 899 24 18,155 - 87
Change from 30.9.2012 - 103 - 172 + 127 - 22 - 315 - + 293 - 193 + 69 + 54 - 16 - 87 EURm
Note: Category Other includes private equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals.
* In Exposure tables the calculation rules may differ in some areas from Allocation tables
Fixed Income Investments in the Financial Sector*
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*Exposure tables vs. Allocation tables – small differences
Covered bonds
Money market
Long-term senior debt
Long-term subord. debt
Total %
Sweden 2,988 850 1,286 215 5,339 56 % Finland 243 1,232 190 28 1,693 18 % Norway 491 0 648 117 1,256 13 % Denmark 88 13 165 139 405 4 % United States 74 119 8 201 2 % France 72 0 95 17 184 2 % Switzerland 99 11 110 1 % Netherlands 0 102 102 1 % Germany 10 0 66 76 1 % United Kingdom 40 2 42 0 % Austria 34 1 35 0 % Estonia 23 0 23 0 % Luxembourg 11 11 0 % Belgium 5 5 10 0 % Russia 6 6 0 % Jersey 5 5 0 % Italy 2 2 0 % Latvia 0 0 0 %
Total 3,939 2,201 2,815 548 9,502 100 %
Fixed Income Investments in the Public Sector - no Periphery*
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34 * Exposure tables vs. Allocation tables – small differences
EURm Governments Government guaranteed
Public sector, other
Total
Sweden 16 54 239 309 Finland 12 56 82 150 Norway 27 102 129 Germany 78 78 Denmark 14 28 41 Netherlands 17 17 Russia 3 0 3 Total 48 229 451 727
Sampo plc Baa2 Stable
Straightforward Cash Flows & Strong Balance Sheet
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Dividends • If P&C • Mandatum Life • Nordea
• Internal Administration Costs • Discretionary Dividends for Shareholders • Interest Expenses for Bondholders
Income • Interest on Liquidity • Income on other
investments
Sampo Plc
Assets EURm 9,126 Liabilities EURm 9,126
Liquidity 823 CPs Issued 451
Investment assets 28 LT Senior Debt 1,710
-Real Estate 4 -Private Placements 149
-Private Equity 6 -Bonds Issued 1,562
-Other investm. 18 -Pension Ins. Loans 0
Subordinated Loans 225 Subordinated Debt 0
Equity Holdings 7,928 Capital 6,793
-Subsidiaries 2,370 - Undistributable 98
-Associated 5,557 - Distributable 6,695
Other Assets 122 Other Liabilities
171
Flow of Funds Balance Sheet
Key Credit Metrics well in Single A -range
Sampo plc Gross Debt 2,162 Gross Debt to Equity 31.8% Financial Leverage 24%
Sampo Group 2011 2012 Shareholders' Equity 8 ,920 10,113 Hybrid Bonds 202 200 Senior Debt 2,329 2,162 Financial leverage 22.1% 18.9% Allianz Group / FL* 28.5% 26.0% * Company´s own information
Dividends & Reported Profits
18/03/2013
37 * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments
514
-15
65
564 569
-16 -31
522
747
-8 -37
702 762
-10 -70
683
773
-17 -20
737
-100
0
100
200
300
400
500
600
700
800
Dividend income Operating expenses Net financial expenses
Profit before taxes
2008
2009
2010
2011
2012
* EURm
Dividends Received by Payment Year
*) Sampo Bank 2005-2006, Nordea 2007->
EURm
**
249
1 031
519
181
488 540 406
544 100
300
200
200
100 141
75
35
130 80
204 250 224 490
1 406
754
511 568
744 756 768
0
200
400
600
800
1 000
1 200
1 400
1 600
2005 2006 2007 2008 2009 2010 2011 2012 If Mandatum Life Banking*
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38
Sampo Plc Debt Instruments
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39
Comments on Debt
• Most of the debt tied to short-term indices - mitigation of group level interest rate risk - use of swaps
• Diversification is actively sought over
- maturities - investor base
• Private Placements
- targeted for a Finnish retail investors - related to Mandatum Life´s services
Instrument & Principal Coupon Swap Effective Rate Maturity
Senior Bond 4,000 mSEK (EMTN) Stibor3M + 1,5000% ---- 2,8680% 16.09.2013
Senior Bond under EMTN 300 m€ (EMTN) 3,2500 % ---- 3,0377% 03.10.2014
Senior Bond under EMTN 300 m€ (EMTN) 4,2500 % Euribor3M + 1,4727% 1,6627% 22.02.2016
Senior Bond 500 m€ (EMTN) 4,2500% Euribor3M + 2,7910% 2,9810% 27.02.2017
CP´s issued 451 m€ Euribor + Margin ---- 0,9112% 3M Public Debt 2,013 m€ 2,3039%
Private Placements 149 m€ 2,6412%
Total 2,162 m€ ≈2,3271%
Maturity Structure
0
200
400
600
800
1 000
2013 2014 2015 2016 2017
CP´s Senior under EMTN Senior Retail Private
EURm
Sampo plc Key Credit Considerations
40
Diversification through Insurance & Banking in the Nordic Region
Management has a proven Track Record in long-term Value Creation
Conservative Financial Profile, strong Capitalization and Liquidity
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Stable Dividend Flow from Affiliated Companies with strong Brands
Bondholder Value Created
Appendix
Nordea BV on Consolidated Balance Sheet
Nordea in Sampo Group’s B/S EURm
Acquisition price 5,557.3
Retained earnings 700.1
Accumulated other changes in Nordea’s equity -4.2
Share of Nordea’s net profit 664,3
Amortisation -35.4
Deferred tax 24.6
Dividends -223.7
Share of Nordea’s other comprehensive income 26.1
Share of Nordea’s other changes in equity -4.5
Share of Nordea’s goodwill change -17.2
Total 6,687.5
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Figures Per Share EUR Acquisition price 6.41 Book value 7.77 Market Value* 8.87 No. of shares 860,440,497
42
* As of 18/03/2013
Principles of Capital Management • Risk Capital Available > Risk Capital needed
– Risk Capital Available = SI Capital + Other items absorbing economic losses – Risk Capital Need = Measured Economic Capital + ”Non-measurable” risks – Buffer between measures under constant considerations – Pro-Active management of Risks/Capitalisation
• Economic Capital at 99.5% as a basis for Risk Capital Need
– Economic capital is an estimate of Risk Capital needed to keep the Group solvent – EC is calculated at 99.5% confidence level and 1 year risk horizon – ”Non-measurable” risks include liquidity, market , illiquidity and business environment risks
• Adjusted Solvency Capital is a measure of Risk Capital Available – Solvency I capital items included as such – The difference between Undiscounted technical provisions in balance sheet and their
discounted value (so called Liability Side adjustment) – Capital instruments excluded from regulatory capital in Solvency I
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43
Economic Capital Reporting Principles • Definitions
– Economic capital (EC) is used as an internal measure of capital required for measurable risks the Group is exposed to.
– EC is defined as the amount of capital to protect the solvency over a one year time horizon with a probability of 99.5 per cent.
• EC at company level – EC is calculated in If P&C and Mandatum Life using a set of calculation methods, which have been
developed for the specific needs of each company. – In If P&C and Mandatum Life EC accounts for market, credit, insurance and
operational risks, as well as the diversification effect between these risks. – EC figure calculated and reported by Nordea is used in Sampo Group reporting.
Because Nordea’s reported figures are expressed at 99.97% confidence level they are converted by Sampo into 99.5% confidence level.
• EC at Group Level – Correlations between companies’ risks are assessed and diversification effect is calculated. – Group wide EC is a sum of Companies’ EC and the diversification effects.
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44
Principles of Investment Management • Company specific needs form the basis for all investments
– Liabilities intensively analysed and modelled – Regulatory requirements
• Strategy
– Absolute Return targets taking into account the liabilities and general business targets – Direct Investments into Nordic countries mainly, Outside Nordics Funds mainly – No diversification for the sake of diversification
• Centrally Managed
– Sampo plc Chief Investment Officer responsible for all investments, all portfolio managers have a direct reporting line to him
– Common infrastructure for investment administration and reporting – Investment strategies coordinated and streamlined, no overlapping activities to
prevent Group Wide concentrations
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45
Source: FSA
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46
IF Regulatory Solvency Capital & Ratio*
54%
70%
88%
74% 71%
66%
77% 79%
72%
77%
0%
20%
40%
60%
80%
100%
0
1 000
2 000
3 000
4 000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
% EURm
Solvency capital (lhs) Solvency ratio (rhs)
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47 * Solvency ratio, (IFRS) % = + solvency capital + premiums earned from 12 months
x 100%
Mandatum Life Regulatory Solvency Ratio*
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48
* Solvency ratio, % of technical provision, (IFRS) = + solvency capital + liabilities for insurance and investment contracts - reinsurers’ share of insurance liabilities - 75% x technical provisions relating to unit-linked insurance
x 100%
17,7%
21,3% 20,1%
16,5%
7,9%
18,5%
25,8%
20.9%
27,7%
0 %
5 %
10 %
15 %
20 %
25 %
30 %
2004 2005 2006 2007 2008 2009 2010 2011 2012
Average C/R & Standard Deviation 2007-E2014
49
0
1
2
3
4
5
6
7
90 91 92 93 94 95 96 97 98 99 100
Gjensidige
Topdanmark
Swiss Re
Tryg
Sampo
Munich Re
Generali AXA
Aviva Zig
SCOR Hannover Re
Stan
dar
d d
evia
tion
, %
Combined ratio, %
Sub-group 1
Sub-group 2 Sub-group 3
Sub-group 4
AVERAGE
Allianz
Source: Macquarie, European Insurance, 22.01. 2013
18/03/2013
Latest History of Sampo Group
Sampo’s P&C insurance operations are merged with If. Following the transaction, Sampo owns 38 per cent of If’.
Sampo Insurance Company and Leonia merge into the Sampo-Leonia financial services group.
Mandatum Bank joins the Group, and the Group’s name is shortened to Sampo.
Sampo Group divests Sampo Bank Group to Danske Bank A/S. Sampo´s business areas are P&C insurance and life insurance.
Sampo´s Nordea holding exceeds 20% and Nordea becomes an associated company.
2007 2004 2002 2001 2000 2010 2011
Sampo Group´s (If P&C´s) Topdanmark holding exceeds 23% and Topdanmark becomes If´s associated company.
2012
Sampo Group (If P&C) acquires Tryg´s Finnish business. If P&C signs a partnership agreement with Nordea.
Finland If becomes fully owned by Sampo. Sampo has three core businesses: P&C insurance, banking and long-term savings.
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50