Sampo Group...Sampo Group Debt Investor Presentation Prepared May 21, 2015 Figures March 31, 2015
Transcript of Sampo Group...Sampo Group Debt Investor Presentation Prepared May 21, 2015 Figures March 31, 2015
Sampo Group Debt Investor Presentation Prepared May 21, 2015 Figures March 31, 2015
www.sampo.com/archive/presentations/
DEBT INVESTOR CONTACTS Markku Pehkonen, CRO tel. +358 10 516 0014 [email protected] Peter Johansson, CFO tel. +358 10 516 0010 [email protected] Jarmo Salonen, Head of IR Relations and Group Communications tel. +358 10 516 0030 [email protected]
FINANCIAL CALENDAR 07/05/2015 Interim Report Q1/2015 Silent period 09/04/2015-07/05/2015 12/08/2015 Interim Report Q2/2015 Silent period 15/07/2015-12/08/2015 05/11/2015 Interim Report Q3/2015 Silent period 08/10/2015-05/11/2015
Rated Company Moody's Standard and Poor's
Rating Outlook Rating Outlook
Sampo plc Baa2 Stable Not rated -
If P&C Insurance (Sweden) A2 Stable A Stable
If P&C Insurance Co. (Finland) A2 Stable A Stable
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 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56
3
46,7
26,7
26,3
25,5
24,6
23,4
16,5
7,5
5,9
5,0
3,1
1,5
1,0
0,8
0,5
0 10 20 30 40 50
Nordea
DnB
Danske Bank
Handelsbanken
Sampo
Swedbank
Investor
Gjensidige
Tryg
Industrivärden
Topdanmark
Storebrand
Alm.Brand
Protector
Aktia
Solidium*,11.9%
Varma Mutual Pension, 6.35%
Ilmarinen Mutual Pension, 0.94%
Björn Wahlroos, 2.1%
Kaleva Mutual Insurance, 0.82%
Other domestic owners, 17.71%
Foreign and nominee registeredowners, 60.18%
Sampo has created Value
Source: Datastream
>30%
>21%
Sampo ownership structure
*100 % owned by the Republic of Finland; 31.3.2015
Market cap May 8, 2015, EURbn
Strong relative performance
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Sampo Group ― Basic Facts
10Y Total Shareholder Return
A Mixed Financial Conglomerate
Bank Insurance Inv.company
MARKET POSITION
STRATEGY
INVESTMENT ASSETS
RETURN / PROFIT TARGET
21.2%
• Wealth management • Unit-linked products • Risk insurance
• TOP3 company in life & pension in Finland with Baltic operations
~ EUR 6.7bn*+ 5.7bn (U-L)
• RoE above 17.5%
• The leading P&C insurer in the Nordic region
• Underwriting focus • Cost efficiency • Pan-Nordic synergies
~ EUR 11.8bn
• RoE above 17.5% • CR% below 95%
> 30%
100% 100%
• Listed company Sampo plc • Long-term investor
• Manager of capital structure and liquidity • Pay-out ratio ≥ 50%
• The largest financial group in Northern Europe
• Strong profit generation • Low volatility • Strong capital generation
~ EUR 669bn B/S
• ROE of 13% at the required CET1
• The second largest P&C insurer in Denmark
• Growth in GPE • Expenses • Profit
~ EUR 2.5bn
• Profit margin of 10% • CR% 91%
Nordic Financial Group with Strong Brands
Sampo Group ― Basic Facts
5 * Old W-P and NovaS
Sampo Group Steering Model and Principles
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• Non-complex structures and no contagion risks – straightforward and transparent legal structure – limited amount of intercompany exposures
• Principles of Business activities – clear responsibilities – simple and flat operational structures
• Parent company steers the subsidiaries by – setting targets for capitalization and ROE – group wide principles for Risk Management,
Remuneration, Compliance, Code of Conduct • Subsidiaries organize underwriting activities
independently taking into account – the specific characteristics of their operations – the guidance from parent company – the stakeholders´ expectations – external regulation
Sampo Group ― Basic Facts
• If generated EUR 200m (194) in pre-tax profits • Excellent combined ratio of 89.2% (90.3)
– Risk ratio 66.6% (67.5) – Cost ratio 22.6% (22.8) – Expense ratio 16.8% (16.8)
• Resilient business model over the cycle • Topdanmark - Danish non-life, life insurance and pension funds – as an associate company
If P&C ― Well-diversified and Profitable Pan-Nordic
Non-life Insurer
• If P&C provides insurance solutions and services in the Nordic and Baltic regions as well as to Nordic customers with international operations
• Business activities are operated with a pan-Nordic perspective
• The business is conducted by client segments Private, Commercial and Industrial, the Baltic countries forming a separate business area
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. 18% of the market • Mandatum contributed with EUR 39m (37) in pre-tax profit to the Group
Mandatum Life ― Respected Finnish Expert in Wealth Management, Rewards
and Risk Insurance
• Provides a comprehensive range of services in Finland and Baltics for corporate and private customers
• Services provided - tailored unit-linked insurance - wealth management - personal risk insurance - pension and reward services
Sampo Group ― Basic Facts
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Sampo Group ― Basic Facts
8
Well-diversified Leading Nordic bank
• Strong profit generating capacity - Improved income mix and growth - Continued cost efficiency
• Low volatility
• Strong capital generation
- Disciplined capital management - Stringent risk management
Danish Insurer with a Robust Business Modell
9
Sampo Group ― Basic Facts
Group Strategy: Value Creation in Nordic Financials
10
Sampo Group ― Basic Facts
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
• Subsidiaries have focus on continuous development of services. • Economies 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 subsidiaries through Boards by approving (in Nordea and
Topdanmark by contributing to) strategies, guiding principles and ROE-targets.
GROUP LEVEL PORTFOLIO BENEFITS
• Profitable companies, mostly with the 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
CENTRALIZED INVESTMENT MANAGEMENT
• Company specific liabilities and solvency driving risk profiles, supported by a Group-wide investment philosophy. Common investment infrastructure facilitates effective monitoring and fast actions, also at the Group level.
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Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56
Expense Ratios 2014, %
Leading Nordic P&C Insurer with Synergies
Norway 2014 GWP EUR 6.8bn Gjensidige 25% If 23% Tryg 14% Sparebank 1 10%
Denmark 2013 GWP EUR 6.8bn Tryg 19% Topdanmark 18% (of which If´s share 5%) Codan (RSA) 12% Alm. Brand 10% If 6%
Finland 2013 GWP EUR 4.1bn Pohjola 31% LähiTapiola 26% If 26% Fennia 10%
Sweden 2014 GWP EUR 7.7bn LF 30% If 18% RSA (T-H) 16% Folksam 16% Baltics 2014
GWP ~EUR 0.8bn RSA 22% If 14% BTA 13% Ergo 12% Gjensidige 7%
Market Shares by Country
If; 18 Topdanmark; 5
Tryg; 10
Gjensidige; 9
RSA; 9 LF; 9 Folksam; 5
Pohjola; 4 LähiTapiola; 4
Other; 27
16,7
17
27,1
30,5
26
28,3
19,8
31,7
IFNordic peer group*
GeneraliZürich
AXAAllianz
RSA ScandinaviaAviva
If P&C
12 *2012
Nordic Market shares Total GWP ~EUR 25bn
Nordic P&C Insurance Market CONSOLIDATED MARKET
LOW EXPENSE RATIOS
• In addition to traditional channels, the Internet continues to grow in importance both as a distribution and as a service channel.
• Also, distribution via partnerships with banks and car-dealers etc. is increasingly important.
GOOD PROFITABILITY
• The Nordic P&C market has generally experienced good profitability since the beginning of 2000. The low interest rate environment and hence low return on investments 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 in the rage of 15-20%. European competitors' expense ratios are usually considerably higher.
• The four largest companies account for 75-90% of the markets in Norway, Finland and Sweden. In Denmark the market is less consolidated.
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If P&C
By Business Area By Country
Private; 72; 60 %
Commercial; 30; 25 %
Industrial; 13; 11 %
Baltic; 5; 4 %
Technical Results, EUR 124m
Norway; 30 ; 24 %
Sweden; 41 ; 33 %
Finland ; 45 ; 37 %
Denmark; (2); -2 %
Baltic; 5; 4 %
Gross Written Premiums, EUR 1,669m
By Business Area By Country
Private; 665; 40% Commercial;
663; 40%
Industrial; 305; 18%
Baltic; 35; 2% Norway;
515 ; 31 %
Sweden; 446 ; 27
%
Finland ; 527 ; 31
%
Denmark; 145 ; 9 %
Baltic; 35; 2 %
If P&C
14
Diversification in Sales and Results
If - Total If Sweden If Norway If Finland If Denmark
Geographical Diversification in CR
Combined Ratio ― If P&C and Nordic Peers
Combined Ratio Development
Standard deviation 2008-2014
2.1%
4.6%
4.2%
4.7%
3.8%
66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 65,4 65,1 67,5 66,6
24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22,5 22,8 22,6
90,5 89,9 90,6 91,8 92,1 92,8 92,0 88,9 88,1 87,7 90,3 89,2
0
20
40
60
80
100%
Risk ratio Cost ratio Target CR
15
If P&C
92,1 92,8 92 88,9 88,1
93 96,1 95,2
90,7 90,6
80859095
100
2009 2010 2011 2012 2013
%
If P&C Nordic Market (incl. If)
Disclipined Underwriting and Diversification works
Strong & Stable Annual Profit Development
800 730
534 549 644
707 636
864 929 931
-267
1 127
943
308
978
689
526
-400
-200
0
200
400
600
800
1 000
1 200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Profit before taxComprehensive income
EURm
16
If P&C
EURm 3M/2015 3M/2014 Profit before taxes 200 194 Comprehensive Income 265 209
0
50
100
150
200
250
300
350Technical result Investment result Operating result
Seasonality in Quarterly Results and CR%
Q4 Q3 Q2 Q1 Average Quarterly CR%, 2006-2014 90.1 89.2 86.5 93.5 Year 2014 CR% 87.1 86.9 86.5 90.3 Year 2015 CR% 89.2
If P&C
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EURm
Conservative Investment Portfolio
• Duration 0.9 years • Average Maturity 2.4 years • Fixed Income Running Yield 2.2%
Mark-to-Market Investment Return Investment Allocation of Total EUR 11.8bn
4,3% 5,8%
4,4% 2,6%
-3,1%
12,4%
7,4%
1,8%
6,1% 5,0% 4,1%
-4%
-2%
1%
4%
6%
9%
11%
14%
Money Market
9%
Public sector 17%
Other fixed income
61%
Equities 13%
Private Equity 0,2%
Real Estate 0,2%
18
If P&C
821
113
689 558
459
0200400600800
1 000
2010 2011 2012 2013 2014
Investment Return, EURm
Q1/2015 EUR 237m
Q1/2015 2.0%
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Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56
Finnish Life Insurer with Wealth management Focus
Client Segment
Underlying Market
Critical Success Factors Sales & Client Services
Corporates Employee Benefit • Expertise in Rewards and Incentives, Pension & Risk Life Solutions and Asset Management
Mandatum Life
HNWI Wealth Management
• Professional Wealth Management • Management of Client Relationships
Mandatum Life
Retail Clients Savings and Insurance Products
• Distribution Power Danske Bank
Mandatum Life
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Cros
s-sa
les
Premiums Written*, total EUR 378m Insurance Savings, total EUR 10,183m
*) Direct insurance
128
33 139
5 29
23 20
1
Unit-linked life Unit-linked pension Unit-linked capital redemptionUnit-linked Baltic Other life Other pensionOther capital redemption Other Baltic
2 039
1 856
1 833
158
212
4 043
24 18
Mandatum Life Business Volumes
U-L EUR 5,886m
With-Profit EUR 4,297
U-L EUR 305m
With-Profit EUR 73m
Focus area
4 652 4 626 4 738 4 695 4 621 4 487 4 431 4 410 4 249 4 071 3 927 3 837 3 834
1 228 1 219 607 884 1 262 1 752 2 071 1 637 2 359 3 124 3 054 3 833 4 616 5 312 5 890
02 0004 0006 0008 000
10 00012 000
Guaranteed interest rates Segregated funds Unit-linked
Technical Reserves, EUR 10,377m EURm
Mandatum Life
21
Market Position by Premiums Written, % Market Shares in Finland
Mandatum Life
22
17,9 17,9
43,8
12,6
39,5
10,7
All Products Unit-Linked Group Pension PrivateCustomers
Corporates Baltics
Finnish With-Profit Life Insurance Market 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 an average annual yield of Finnish government bonds over time.
SMOOTHENED BONUSES AND DIVIDENDS OVER TIME
• When company decides on 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.
Mandatum Life
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Profit Development
295 342
140 121 142 137 136 153 163
286
80
-378
495
332
-115
286 220
149
-500
-250
0
250
500
2006 2007 2008 2009 2010 2011 2012 2013 2014
EURm
Profit before taxesComprehensive income
Mandatum Life
24
EURm 3M/2015 3M/2014 Profit before taxes 39 37 Comprehensive Income 171 18
Mandatum Life Profit by Components
Mandatum Life Group, expense ratio
Mandatum Life
25
Total expense ratio, % 103.7 104.6 Incl. kick backs, % 84.7 84.8 * Includes guaranteed interest, bonuses and change in the reserves of the above items ** Result of unit-linked business EURm 5.4
EURm 1-3/2015 1-3/2014 Net investment income 534.2 118.6
- Transferred to expense result -6.3 -5.5 - Return on unit-linked policies -465.8 -40.4 - Return on with-profit policies* -43.9 -46.0
INVESTMENT RESULT 18.2 26.8 EXPENSE RESULT** 4.8 4.1 RISK RESULT 6.4 4.4 OTHERS 9.0 1.6 PROFIT BEFORE TAXES 38.5 36.9 Change in the market value of investments 200.0 -15.6 PROFIT AT MARKET VALUES 238.5 21.2
Absolute Return Investment Portfolio
• Duration 1.7 years • Average Maturity 2.1 years • Fixed Income Running Yield 3.4%
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% 7,1%
4,6%
-10%
-5%
0%
5%
10%
15%
20%
Mandatum Life
26
615
-59
504 391
251
-2000
200400600800
2010 2011 2012 2013 2014
ML Investment Return, EURm
Money market 17%
Public sector 3%
Other fixed income 37% Equities 31%
Private equity 4%
Real estate 4% Other 6%
Q1/2015 EUR 265m
Q1/2015 4.2%
*excluding the segregated fund
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Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company - A Stable Dividend Payer 36-43 Appendix 44-56
948 1 295 1 353
870 825
1 320 1 228 1 622 1 668 1 759
-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 2013 2014
P&C Life Banking Nordea dividends Other
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
Sampo Group ― Results, Capitalisation and Investments
28
3,833
EURm 3M/2015 3M/2014 P&C 200 194 Life 39 37 Nordea 223 170 Holding 26 -4 Group 487 396
Stable Companies & Group Level Diversification*
LOW VOLATILITY EARNINGS • Geographical diversification • Strong Retail Banking Franchise • Diversified earnings base: -Banking (Retail, Wholesale) -Wealth Management (Asset
Management, Private Banking, Life & Pensions)
• 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 • Product areas -Wealth Management -Unit-linked Business -With-profit Business -Remuneration services -Risk insurance • Dependency on Capital
Markets
1 0.30 1 0.18 0.85 1
* Correlations of quarterly Reported Profits Q1/2005–Q1/2015
PBT 2010-14 IF 45% ML 10% Nordea 45%
P/L CONTRIBUTIONS
Sampo Group ― Results, Capitalisation and Investments
29
1 899
1 324
3 500
-866
5 856
9 764
P&C 857 -886
381
-1 0000
1 0002 0003 0004 0005 0006 0007 0008 0009 000
10 000
P&C Life Nordea Diversific. Group EC Group ASC Regulatoryminimum
Strong Group Solvency
• Economic Capital (EC)need is measured at 99.5% confidence 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 158% (9,258/5,856)
EURm
Nordea 3,879
Internal Treatment ≈ S II
• Minimum requirement (5,060) is sum of IF, ML (SI) and Nordea (BII) with transition rules
• Additive figure does not include diversification effects. Nordea´s requirement is calculated at 99.90% confidence level
• Current Ratio 183% (9,258/5,060)
Regulatory Treatment = S I
Sampo plc, 46
*) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions
*
Life 279
9,258
5,060
**
Sampo Group ― Results, Capitalisation and Investments
30
Internal Capital Base above Capital Needs 1
976
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 5 38
9
5 27
6
5 38
0
5 36
1
5 49
0
5 43
0
5 64
7
5 51
0
5 85
6
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 6 22
1
6 08
8
6 20
5
6 10
7
6 24
1
6 15
7
6 40
3
6 31
1
6 72
2
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 8 87
2
9 03
9
9 39
1
9 41
7
9 69
7
9 49
9
9 58
6
9 10
0
9 25
8
0
2 000
4 000
6 000
8 000
10 000
12 000
31.3
.09
30.6
.09
30.9
.09
31.1
2.09
31.3
.10
30.6
.10
30.9
.10
31.1
2.10
31.3
.11
30.6
.11
30.9
.11
31.1
2.11
31.3
.12
30.6
.12
30.9
.12
31.1
2.12
31.3
.13
30.6
.13
30.9
.13
31.1
2.13
31.3
.14
30.6
.14
30.9
.14
31.1
2.14
31.3
.15
EC,Diversified EC,Undiversified ASC
EURm
Sampo Group ― Results, Capitalisation and Investments
31
Investment Allocation by Risk Profile
Sampo Group ― Results, Capitalisation and Investments
32
Total Group (MEUR) 17,611 18,409 19,215 20,211
06/14 09/14 12/14 03/15
Money Market 16% 20% 41% 14% 19% 66% 11% 25% 73% 9% 19% 79%Long-Term Fixed Income 73% 36% 28% 75% 36% 21% 76% 35% 19% 77% 39% 13%Equity 11% 30% 19% 11% 30% 8% 12% 26% 5% 13% 27% 7%Private Equity 0% 5% 12% 0% 5% 4% 0% 4% 3% 0% 4% 1%Other 0% 10% 1% 0% 10% 0% 0% 10% 0% 0% 10% 0%
11,925
5,405
281
12,293
5,343
774
11,513
6,644
1,058
11,827
6,716
1,667
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000If P&
C
Man
datu
mLi
fe Sam
poPl
c If P&C
Man
datu
mLi
fe Sam
poPl
c If P&C
Man
datu
mLi
fe Sam
poPl
c If P&C
Man
datu
mLi
fe Sam
poPl
c
Investments & Counterparty Exposures*
* In Exposure tables the calculation rules may differ slightly from Allocation tables in some areas.
Sampo Group ― Results, Capitalisation and Investments
33
31.3.2015 AAA AA+ - AA-
A+ - A-
BBB+ - BBB-
BB+ - C
D NonRated
Fixed Income Total
Equities OtherDerivatives
(Counterparty Risk)
Total Change from 31.12.2014
Basic Industry - - 0 105 294 - 121 520 209 - - 729 + 29
Capital Goods - - 32 51 30 - 111 224 661 - - 885 + 165
Consumer Products - 88 120 66 148 - 138 560 557 - - 1,117 + 246
Energy - 31 - 21 87 - 334 473 4 0 - 477 + 29
Financial Institutions 2 2,639 2,756 443 402 - 23 6,264 148 24 8 6,444 + 427
Governments 582 217 - 1 - - - 800 - - - 800 - 504
Government Guaranteed 106 82 - - - - - 188 - - - 188 + 3
Health Care - - 21 36 55 - 52 163 81 - - 245 + 55
Insurance - - 11 67 - - 41 119 6 40 - 165 + 3
Media - - - - 14 - 46 60 - - - 60 + 1
Public Sector, other 948 153 - - - - - 1,101 - - - 1,101 + 114
Real Estate - 9 - 1 - - 587 597 - 282 - 879 + 53
Services - - 0 9 136 - 35 180 48 0 - 228 + 20
Technology and Electronics 1 - 24 1 2 - 37 64 106 3 - 173 + 39
Telecommunications - - 102 26 53 - 44 225 88 0 - 314 + 11
Transportation - 77 79 24 23 - 193 397 13 - - 410 + 75
Utilities - - 174 271 1 - 83 528 - - - 528 + 88
Others - - - - 7 - 10 17 0 16 - 33 - 0
Asset-backed Securities - - - - - - - - - - - - -
Covered Bonds 2,657 255 13 - - - - 2,924 - - - 2,924 + 81
Funds - - 70 43 16 - 126 256 1,575 750 - 2,582 + 132
Total 4,294 3,550 3,403 1,164 1,267 - 1,981 15,660 3,498 1,116 8 20,283 + 1,064
Change from 31.3.2015 - 336 + 116 + 572 + 89 + 103 - + 75 + 618 + 393 + 74 - 21 + 1,064 EURm
Note: Category Other includes private equity, unlisted equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals.
Fixed Income Investments in the Financial Sector*
*Exposure tables vs. Allocation tables – small differences.
Sampo Group ― Results, Capitalisation and Investments
34
EURm Covered bonds
Money market
Long-term senior debt
Long-term subord.
debt Total % Sweden 1,522 1,178 814 277 3,791 41% Finland 224 2,335 168 11 2,738 30% Norway 813 544 89 1,446 16% Denmark 259 265 22 546 6% Switzerland 133 12 145 2% France 36 63 15 113 1% the Netherlands 2 107 110 1% Germany 19 58 0 77 1% the United States 0 65 1 66 1% Iceland 58 58 1% Austria 32 32 0.4% Others 17 23 4 9 54 1% Total 2,924 3,537 2,279 437 9,176 100%
Sampo Group Public Sector Fixed Income Investments ― no Periphery*
* Exposure tables vs. Allocation tables – small differences 35
Sampo Group ― Results, Capitalisation and Investments
EURm
Government
Government guaranteed
Public sector, other
Total
Sweden 260 809 1,069
Norway 272 272
France 210 4 214
the Netherlands 191 191 Germany 109 71 180 Finland 22 77 20 119 Denmark 35 35 Belgium 5 5 Austria 3 3 Slovenia 1 1 Total 800 188 1,101 2,089
36
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56
Straightforward Cash Flows & Strong Balance Sheet
Dividends • If P&C • Mandatum Life • Nordea
• Internal Administration Costs • Discretionary Dividends for Shareholders • Interest Expenses for Bondholders
Income • Interest on Liquidity • Income from other
investments
Sampo plc
Assets EURm 9,960 Liabilities EURm 9,960
Liquidity 1,315 CPs Issued 298
Investment assets 157 LT Senior Debt 1,873
-Real Estate 2 -Private Placements 149
-Fixed Income 21 -Bonds Issued 1,724
-Equity & Private Eq. 134 -Pension Insurance Loans 0
Subordinated Loans 501 Subordinated Debt 0
Equity Holdings 7,928 Capital 7,686
-Subsidiaries 2,370 -Undistributable 98
-Associated 5,557 -Distributable 7,588
Other Assets 60 Other Liabilities 103
Flow of Funds Balance Sheet
Key Credit Metrics well in Single A -range
Sampo plc 31.3.2015 Gross Debt, EURm 2,171 Gross Debt to Equity 28% Financial Leverage* 22%
Sampo Group, EURm Q4/2014 Q1/2015 Shareholders' Equity 10,924 11,617 Hybrid Bonds 111 109.8 Senior Debt 2,192 2,027 Financial leverage 17.4% 15.5%
Sampo plc
37 *= Debt/(Debt+Equity)
Dividends & Reported Profits
* Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments
747
-8 -37
702 762
-10 -70
683
773
-17 -20
737
879
-20 -26
832
1 069
-18 -1
1 050
-100
100
300
500
700
900
1100
Dividend income Operating expenses Net financialexpenses
Profit before taxes
2010 2011 2012 2013 2014*
EURm
Sampo plc
38
EURm 3M/2015 3M/2014 Profit before taxes -4 -4 Comprehensive Income 659 466
Dividends Received by Payment Year
*) Sampo Bank 2005-2006, Nordea 2007->
EURm
**
249
1 031
519
181
488 540 406
544 490 597 100
300
200
200
100 100
100
100
141
75
35
130 80
204 250 224 293
370
533
490
1 406
754
511 568
744 756 768 883
1 067
633
0
200
400
600
800
1 000
1 200
1 400
1 600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015If Mandatum Life Banking*
Sampo plc
39
Low Net Debt vs. stable Dividend Inflows
Sampo Group ― Conservative Leverage
-4 000
-2 000
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
Q1/0
5Q3
/05
Q1/0
6Q3
/06
Q1/0
7Q3
/07
Q1/0
8Q3
/08
Q1/0
9Q3
/09
Q1/1
0Q3
/10
Q1/1
1Q3
/11
Q1/1
2Q3
/12
Q1/1
3Q3
/13
Q1/1
4Q3
/14
Q1/1
5
Sampo plc Net debt
Group NAV
Group Equity
40
Sampo plc
EURm
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q1/0
5Q3
/05
Q1/0
6Q3
/06
Q1/0
7Q3
/07
Q1/0
8Q3
/08
Q1/0
9Q3
/09
Q1/1
0Q3
/10
Q1/1
1Q3
/11
Q1/1
2Q3
/12
Q1/1
3Q3
/13
Q1/1
4Q3
/14
Q1/1
5
Net Debt/NAV
Sampo plc Investments and Debt Instruments Instrument & Principal Coupon Swap Effective
Rate Maturity
Senior Bond 2,000 SEKm SEK3M+ 0.75% --- 0.7190% 28.05.2015
Senior Bond 300 EURm 4.2500% EUR3M+1,4727% 1.5207% 22.02.2016
Senior Bond 500 EURm 4.2500% EUR3M+2,7910% 2.8330% 27.02.2017
Senior Bond 2,000 SEKm SEK3M + 1.45% --- 1.4190% 29.05.2018
Senior Bond 500 EURm 1.50% --- 1.5920% 16.9.2021
CP’s issued 298 EURm EUR + Margin 0.5350% Average 3M
Public debt 2,022 EURm 1.6204%
Private placements 149 EURm 2.0063%
Total 2,171 EURm 1.6470%
41
Sampo plc
0
100
200
300
400
500
600
2015 2016 2017 2018 2019 2020 2021
CP´s Senior under EMTN Senior Retail Private
Instrument & Principal Coupon Call/ Maturity
Mandatum Capital Loan 100 m€ 4.828% Every year
IF PerpNC1029,65m€ 4.943% 16.06.2015
IF 30NC6.5 90 m€ 4.6970% 26.11.2018
IF 30NC10 98,935 m€ 6.000% 29.05.2018
Nordea AT1 PerpNC5 148.5 m$ 5.5000% 23.9.2019
Topdanmark Tier1 33.5 m€ EUR3m+1.9% 15.9.2017
Subordinated Loans 501 m€ 5.04%
Other Fixed Income 21 m€ 5.20%
Equity, P.E., Real Estate 136m€ 3.50%
• Total Debt at running cost of 1.6470% • Fixed Income Assets at running yield of 5.05% • Running yield of other investments also
higher than cost of debt • In case subordinated loans are sold to markets
group wide capital base would increase
EURm
Sampo plc Key Credit Considerations
Diversification through Insurance & Banking in the Nordic Region
Management with a proven Track Record in long-term Value Creation
Conservative Financial Profile, strong Capitalization and Liquidity
Stable Dividend Flows from Affiliated Companies with strong Brands
Bondholder Value Created
Sampo plc
42
43
Appendix
Sampo Group’s outlook for 2015
• Sampo Group’s business areas are expected to report good operating results for 2015.
• However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The very
low interest rate level also creates a challenging environment for reinvestment in fixed income instruments.
• The P&C insurance operations are expected to reach their long-term combined ratio target of below 95 per cent in 2015 and achieve a combined ratio of 88-91 per cent excluding the effect of the Norwegian pension reform and the change in discount rate for Finnish annuities.
• Nordea’s contribution to the Group’s profit is expected to be significant.
44
Appendix 44-56
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.
45
Appendix
Risk Management Principles • Scope
– Sampo´s Board of Directors requires that all activities involving the exposure of any Sampo Group company to risks, as well as activities controlling those risks, are arranged to comply with these general guidelines and related instructions as well as with applicable legislation and regulations
– The Board of Directors will supervise the risk taking and risk control activities – The Principles apply to all Sampo Group companies
• The Key Objectives – Balance between risks, capital and earning – Cost efficient and high quality processes – Strategic and operational flexibility
• The Central Tasks – Identification of risks – Assessment of required capital – Pricing of risks – Managing risk exposures, capital positions and operative processes – Measuring and reporting risks 46
Appendix
For more detailed description of Sampo Group´s Risk Management Principles, see http://www.sampo.com/governance/internal-control/risk-management/
Principles of Capital Management
• Risk Capital Available > Risk Capital needed – Risk Capital Available = Solvency I (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 1Y 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 SI.
Appendix
47
48
Appendix
Sampo FiCo Coordination duties as of 31.12.2014
48
Sampo’s P&C insurance operations are merged with If (2002). Following the transaction, Sampo owns 38 per cent of If. If becomes fully owned by Sampo (2004). Business areas: - P&C insurance - Long-term savings - Banking
Sampo Insurance Company and Leonia Bank merge into Sampo-Leonia Financial Group. Business areas: - P&C insurance - Long-term savings -life insurance -asset management -mutual funds - Banking - Investment banking
Mandatum Bank is merged into Sampo-Leonia, and the Group’s name is shortened to Sampo.
Sampo divests Sampo Bank to Danske Bank. Business areas: - P&C insurance - Life insurance &
wealth management
Sampo’s Nordea holding exceeds 20%. Nordea becomes an associated company.
2007 2004 2002 2001 2000 2010 2011
Sampo Group’s (If P&C´s) Topdanmark holding exceeds 23%. 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.
Sampo Group Through Structural Changes
to the Leading Nordic Financial Group
2013 2014
Sampo Group (Mandatum Life) acquires Suomi Mutual´s with-profit group pension portfolio.
49
Appendix
Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland), Sampo plc
The Sampo Group’s P&C insurance companies became part of If in January 2002.
AA-/
A+/
A/
A-/
BBB+/
BBB/
Moody´s If P&C S&P If P&C
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Poss
ible
dow
ngra
de Ja
n 03
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
May
06
Stab
le N
ov 0
8
50
Moody´s Sampo plc
Apr 04 First-time issuer rating
Appendix
Aa3
A1
A2
A3
Baa1
Baa2
IF P&C Quarterly Results and C/R EURm Q1/15 Q4/14 Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12
Premiums earned 1,076 1,108 1,124 1,122 1,104 1,112 1,139 1,140 1,115 1,121
Claims incurred -780 -776 -793 -783 -811 -791 -802 -800 -824 -801
Operating expenses -180 -189 -183 -187 -186 -186 -191 -188 -190 -198
Other technical income and expenses -1 -1 0 1 1 1 0 0 1 0
Allocated investment return transferred from the non-technical account
9 5 7 10 15 12 16 17 20 14
Technical result 124 147 155 162 124 148 161 170 122 136
Investment result 84 81 75 139 88 104 89 115 102 84
Allocated investment return transferred to the technical account
-18 -16 -18 -21 -27 -25 -30 -31 -34 -27
Other income and expenses 10 8 16 9 9 3 6 15 14 11
Operating result 200 219 228 289 194 230 227 269 204 205
Risk ratio, % 66.6 64.4 64.7 64.0 67.5 65.1 64.7 64.2 67.7 65.5
Combined ratio, % 89.2 87.1 86.9 86.5 90.3 87.9 87.2 86.7 90.9 89.1
Appendix
51
IF Regulatory Solvency Capital & Ratio*
54%
70%
88%
74% 71% 66%
77% 79%
72%
75% 81% 82% 87%
0%
20%
40%
60%
80%
100%
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500% EURm
Solvency capital (lhs) Solvency ratio (rhs)* Solvency ratio, (IFRS) % = + solvency capital
+ premiums earned from 12 months x 100% 52
Appendix
IF P&C Reinsurance Programmes
53
IF is using reinsurance to: - Utilize its own capital base efficiently and reduce cost of capital - Limit large fluctuations of underwriting results - Get access to reinsurers´ competence base
IF has the following Reinsurance Programmes in place
• Largest & most diversified portfolio in the Nordics
• Focus purely on underwriting • Specialised Reinsurance Unit
• Reinsurance partners having
reinsurance as core business • Relatively high retentions
• Stable reinsurance program • Efficient pricing and terms
Appendix
In Millions Marine Hull
Reporter Small Vessels Clash Cover
Marine Hull I.V. Reporter
Marine Hull War Risk Reporter
Energy Offshore Per Event
US Terrorism Per risk
Capacity SEK 400 SEK 250 SEK 310 USD 60 USD 40 USD 150
Retention SEK 100 SEK 100 SEK 100 USD 0,25 USD 25 USD 25
In Millions Catastrophe per
Event Property per
Risk Casualty Personal Accident Motor TPL Cargo Reporter
Capacity SEK 6,300 SEK 2,000 / 3,500 SEK 500/€50/$50 SEK 1,100 Unlimited SEK 850
Retention SEK 250 SEK 250 SEK 100/€10/$15 SEK 100 SEK 100 SEK 100
Mandatum Life Regulatory Solvency Ratio*
* 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% 27,6%
22,9%
26,3%
0%
5%
10%
15%
20%
25%
30%
54
Appendix
Nordea Profitable & The Most Diversified Nordic Bank
885
8
83
847
7
81
833
8
18
832
5
92 8
78
730
960
1
071
1
003
9
49
566
1
029
1
037
1
099
9
22
1 0
59
1 0
41
1 0
48
1 0
21
1 0
06
1 1
06
935
1
126
1
157
1
408
21
36
89 32
0 356
425
358
347
261
245
207 16
6 24
2 11
8 11
2 26
3 21
8 217
254
244
198
186
171
180 15
8 13
5 11
2 129
122
0
200
400
600
800
1 000
1 200
1 400
1 600
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
EURm Restructuring provision Loan losses Operating profit
55
Appendix
Nordea BV on Consolidated Balance Sheet
Figures Per Share EUR Acquisition price 6.46 Book value 7.85 Market Value* 11.93 No. of shares 860,440,497
* As of 27/4/2015
Nordea in Sampo Group’s B/S EURm
Acquisition price 5,557.3
Retained earnings 1,570.7
Accumulated other changes in Nordea’s equity -62.7
Share of Nordea’s net profit 230.0
Amortisation -8.8
Deferred tax 1.9
Dividends -533.5
Share of Nordea’s other comprehensive income -20.8
Share of Nordea’s other changes in equity -7.3
Share of Nordea’s goodwill change -13.0
Total 6,755.4
Appendix
56