Sampo Group€¦ · 11/05/2016 Interim Statement Q1/2016 Silent period 13/04/2016-11/05/2016...
Transcript of Sampo Group€¦ · 11/05/2016 Interim Statement Q1/2016 Silent period 13/04/2016-11/05/2016...
Sampo Group Debt Investor Presentation
Prepared June 16, 2016Figures March 31, 2016
DEBT INVESTOR CONTACTS
Markku Pehkonen, CROtel. +358 10 516 [email protected]
Peter Johansson, CFOtel. +358 10 516 [email protected]
Jarmo Salonen, Head of IR Relations and Group Communicationstel. +358 10 516 [email protected]
FINANCIAL CALENDAR 2016
10/02/2016 Financial Statement Release for 2015Silent period 13/01/2016-10/02/2016
Week 11 Annual Report 201521/04/2016 AGM11/05/2016 Interim Statement Q1/2016
Silent period 13/04/2016-11/05/2016
10/08/2016 Half-year report 2016Silent period 11/07/2016-10/08/2016
03/11/2016 Interim Statement Q3/2016Silent period 04/10/2016-03/11/2016
Rated Company Moody's Standard and Poor's
Rating Outlook Rating Outlook
Sampo plc Baa2 Positive A- Stable
If P&C Insurance (Sweden) A2 Positive A+ Stable
If P&C Insurance Co. (Finland) A2 Positive 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.
2
Mission Value Creation in the Nordic Financials 3-10
If P&C The Leading Nordic P&C Insurer 11-18Mandatum Life A Finnish Financial Services Company 19-25Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36Sampo plc Portfolio Manager with Capacity to Generate Funds 37-44Appendix Separate Supplementary Information 45-58
3
• Listed company Sampo plc• Long-term investor
• Manager of capital structure and liquidity• Pay-out ratio ≥ 50%
Nordic Financial Group with Strong Brands
Sampo Group ― Value creation in the Nordic financials
MARKET
POSITION
STRATEGY
INVESTMENT
ASSETS
RETURN /
PROFIT
TARGET
21.2%
• The leading P&C insurerin the Nordic region
• Focus on customer value• Most professional &
innovative people• Stable profitability• Underwriting excellence• Operational efficiency
~ EUR 11.1bn
• RoE above 17.5%• CR% below 95%
> 30%
100%
• The largest financialservices group inthe Northern Europe
• Simplification• Core Banking Platform • Group Common Data• Legal Structure
Programme• Digital strategy
~ B/S EUR 676bn~ AuM EUR 291bn
• ROE above the Nordicpeer average
• The second largest P&C insurer in Denmark
• Customer satisfaction• Pricing• Efficiency• Distribution power
• Share buy-back
~ EUR 2.5bn P&C
• Profit margin of 10%• CR% 91%
• Unit-linked products• Wealth management• Personal Risk insurance • Group pension &
Reward Services
• The leading provider ofcover against health andlife risks, well-respected manager of customer wealth
~ EUR 5.2bn+1.2bn*~ EUR 5.6bn U-L AuM
• RoE above 17.5%
* Segregated assets
100%
4
Sampo Group Steering Model and Principles
• Three separate and independent business areas, and Parent Company acting
merely as a Portfolio Manager
• General Principles of Business activities
– Straightforward and transparent legal structure combined with limited
intragroup exposures
– Clear responsibilities
– Simple and flat operational structures
• Parent company gives guidance to the subsidiaries by setting
– Targets for their capitalization and return on equity (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 above guidance from the parent company
– the stakeholders’ expectations and external regulations5
Sampo Group ― Value creation in the Nordic financials
• If generated EUR 216m (200) in pre-tax profits
• Excellent combined ratio of 83.0% (89.2)
– Risk ratio 60.7% (66.6)
– Cost ratio 22.3% (22.6)
– Expense ratio 16.9% (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
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.20% of the market
• Mandatum contributed with EUR 53m (39) in
pre-tax profit to the Group
Mandatum Life ― Respected Finnish Expert in Wealth Management,
Investments, Rewards and Risk Insurance
6
• If P&C provides insurance solutions and services in the Nordic and Baltic regionsas well as to Nordic customers with international operations
• Business activities areoperated on a pan-Nordic basis.
• The business is divided into customer segments Private, Commercial and Industrial.The Baltic countries comprisea separate business area.
• Mandatum Life Provides a comprehensive range of services in Finland and Baltics for private and corporate customers
• Services provided- wealth management- savings- personal risk insurance- pension and incentive &
reward services.
Sampo Group ― Value creation in the Nordic financials
Nordea ‒ Diversified and Stable Nordic Bank
Pan-Nordic platform with scalability• Simplification• Digitalisation
Superior Nordic distribution power• Cost efficiency• Capital efficiency• Efficiency initiatives
Strong capital generation• Stable returns• Low risk profile• Actively managed business
portfolios• Lowest volatility of quarterly
net profits17 24 37 47
79
142
Nordea Peer 4Peer 3Peer 1 Peer 5Peer 2
Qu
art
erl
y n
et
pro
fit
vo
lati
lity
Nordea and peers 2006-Q3/2015,%
AuM EUR 291 bn
7
Sampo Group ― Value creation in the Nordic financials
Topdanmark - Insurer with a Robust Business Model
8
Sampo Group ― Value creation in the Nordic financials
Value Creation in the Nordic Financials as Group Strategy
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
CENTRALIZEDINVESTMENT MANAGEMENT
• Company specific liabilities and solvency driving risk profiles, supported bya Group-wide investment philosophy. Common investment infrastructure facilitates effective monitoring and fast actions, also at the Group level.
9
Sampo Group ― Value creation in the Nordic financials
33.3
24.3
21.4
21.3
20.4
18.0
17.6
13.5
7.5
4.7
4.2
3.2
2.4
1.7
1.1
0.7
0.4
0 10 20 30 40
Nordea
Danske
Swedbank
Sampo
SHB
DnB
SEB
Investor
Gjensidige
Tryg
Industrivärden
Jyske
Topdanmark
Storebrand
Alm.Brand
Protector
Aktia
Efficient and Stable Operations as Basis for Value
Source: Datastream
>30%
Sampo ownership structure
*100% owned by the Republic of Finland; 31.3.2016
Market cap June 14, 2016, EURbn
Strong relative performance
10Y Total Shareholder Return
A Mixed Financial Conglomerate
Bank
Insurance
Inv.company
Foreign and Nominee registered 61.11%
Solidium 11.90%*
Varma Mutual Pension 6.35%
Björn Wahlroos 2.10%
Ilmarinen Mutual Pension 0.71%
Kaleva Mutual Insurance 0.78%
Other domestic owners 17.05% 10
>21%
Sampo Group ― Value creation in the Nordic financials
11
Mission Value Creation in the Nordic Financials 3-10
If P&C The Leading Nordic P&C Insurer 11-18
Mandatum Life A Finnish Financial Services Company 19-25Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36Sampo plc Portfolio Manager with Capacity to Generate Funds 37-44 Appendix Separate Supplementary Information 45-58
Expense Ratios 2015, %
Leading Nordic P&C Insurer with Synergies
Norway 2015
Gjensidige 25%
If 22%
Tryg 14%
Sparebank 1 10%
Denmark 3/2015
Tryg 18%
Topdanmark 17%
Codan (RSA) 11%
Alm. Brand 10%
If 6%
Finland 2015
Pohjola 32%
LähiTapiola 25%
If 24%
Fennia 10%Sweden 2015
LF 30%
If 18%
RSA (T-H) 14%
Folksam 16%
Baltics 2015
PZU 24%
If 14%
BTA 12%
Ergo 12%
Gjensidige 7%
Market Shares by Country
If17%
Topdanmark5%
Tryg9%
Gjensidige8%
RSA9%
LF9%
Folksam5%
Pohjola5%
LähiTapiola4%
Other29%
13
16.5
27.3
31.7
26.1
28.4
20.2
30.1
If P&C*
Nordic peer group
Generali
Zürich
AXA
Allianz
RSA Scandinavia
Aviva
If P&C
Nordic Market Shares
12
Total GWP ~EUR 25bn
(*incl. one-off)
Nordic P&C Insurance Market
CONSOLIDATED MARKET
LOW EXPENSE RATIOS
• In addition to the traditional channels, 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. The low interest rate environment and hence the low return on investments has made the industry to 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.
If P&C
13
By Business Area By Country
Private, 139, 75%Commercial,
36, 19%
Industrial, 3, 2%
Baltic, 3, 2% Other, 4, 2%
Technical Results, EUR 184m
Norway, 8 , 4%
Sweden, 138 , 75%
Finland , 28 , 15%
Denmark, 4 , 2%
Baltic, 3, 2% Other, 4 , 2%
Gross Written Premiums, EUR 1,616
By Business Area By Country
Private, 657, 41%
Commercial, 640, 40%
Industrial, 282, 17%
Baltic, 36, 2%
Norway, 461 , 29%
Sweden, 466 , 29%
Finland , 503 , 31%
Denmark, 150 , 9%
Baltic, 36, 2%
If P&C
Diversified Client Base
14
If- Total If Sweden If NorwayIf Finland If Denmark
Geographical Diversification in CR
Combined Ratio ― If P&C and Nordic Peers
Combined Ratio Development
Standard deviation 2008-2015
2.7%
4.4%
4.7%
3.7%
3.5%
66.2
65.9
66.9
68.1
68.0
69.1
68.4
65.9
65.4
65.1
66.6
60.7
24.3
24.0
23.7
23.7
24.1
23.7
23.5
23.0
22.8
22.5
18.8
22.3
90.5 89.990.6 91.8 92.192.8 92.088.988.1 87.7 85.4
83.0
0
20
40
60
80
100%
Risk ratio Cost ratio Target CR
If P&C
92.1 92.8 92
88.9 88.1 87.785.4
93
96.1 95.2
90.7 90.688.3 88.2
80
85
90
95
100
2009 2010 2011 2012 2013 2014 2015If P&C Nordic Market (incl.If)
Disciplined Underwriting and Diversification works
15
%
Conservative Investment Portfolio
• Duration 1.5 years• Average Maturity 2.8 years• Fixed Income Running Yield 1.8%
Mark-to-Market Investment ReturnInvestment Allocation
4.3%5.8%
4.4%2.6%
-3.1%
12.4%
7.4%
1.8%
6.1%5.0%
4.1%
1.5%
-4%
-2%
1%
4%
6%
9%
11%
14%
Money Market
6% Public sector13%
Other fixed income
68%
Equities13%
Private Equity0.2%
Real Estate0.2%
Investment Return, EURm
821
113
689558
459
190
0
200
400
600
800
1,000
2010 2011 2012 2013 2014 201516
Total EUR 11.1bn
If P&C
1-3/2016 EUR -17m
1-3/2016 -0.2%
Strong & Stable Annual Profit Development
800730
534 549
644707
636
864929 931 960
-267
1,127
943
308
978
689
526
624
-400
-200
0
200
400
600
800
1,000
1,200
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Profit before tax
Comprehensive income
EURm
If P&C
17
EURm 3M/16 3M/15Profit before taxes 216 200Comprehensive Income 114 265
0
50
100
150
200
250
300
350Technical result Investment result Operating result
Seasonality in Quarterly Results and CR%
Q4 Q3 Q2 Q1Average Quarterly CR%, 2006-2015 89.9 88.6 88.2 93.1Year 2015 CR% 87.7 83.8 80.9 89.2
Year 2016 CR% 83.0*
If P&C
EURm
18
* incl.one-off
19
Mission Value Creation in the Nordic Financials 3-10
If P&C The Leading Nordic P&C Insurer 11-18Mandatum Life A Finnish Financial Services Company 19-25
Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36Sampo plc Portfolio Manager with Capacity to Generate Funds 37-44 Appendix Separate Supplementary Information 45-58
Finnish Life Insurer with Wealth Management Focus
Client
Segment
Underlying
Market
Critical Success Factors Sales &
Client
Services
CorporateCustomers
EmployeeBenefit
• Expertise in Rewards and Incentives, Pension & Risk Life Solutions and Asset Management
Mandatum Life
HNWI WealthManagement
• Professional Wealth Management• Management of Client Relationships
Mandatum Life
PrivateCustomers
Savings and Insurance Products
• Distribution Power Danske Bank
Mandatum Life
Cro
ss-s
elli
ng
20
Premiums Written, total EUR 245m Insurance Savings, total EUR 9,837m
103
28
78
431 20
1
Unit-linked life Unit-linked pension Unit-linked capital redemptionUnit-linked Baltic Other life Other pensionOther capital redemption Other Baltic
2,124
1,772
1,691
146
194
3,865
2617
Mandatum Life Business Volumes
U-LEUR 5,734m
With-ProfitEUR 4,103
U-L EUR 211m
With-ProfitEUR 34m
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 3,818 3,755
1,228 1,196 1,184607 884 1,262 1,752 2,071 1,637 2,359 3,124 3,054 3,833 4,6165,312 5,858 5,737
0
2,000
4,000
6,000
8,000
10,000
12,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 3/2016
Guaranteed interest rates Segregated funds Unit-linked
Technical Provisions, EUR 10,676m
EU
Rm
Mandatum Life
21
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 in ML is reflected in policyholdersʼ
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) policyholdersʼ reasonable expectations, (ii) realized investment returns and current solvency and (iii) uncertainty aboutthe future market environment => Bonuses and dividends can be smoothened over time.
BETTER POSITION FOR RISK TAKING BENEFITS STAKEHOLDERS
• Finnish Profit sharing mechanism facilitates and encourages for active investment strategies and risk taking.
• Profit sharing mechanism has benefited both policyholders and shareholders over the years.
Mandatum Life
22
Absolute Return Investment Portfolio
Mark-to-Market Investment ReturnInvestment Allocation
8.3%
12.0%9.7%
5.0%
-7.8%
16.8%
11.1%
-1.4%
9.4%7.1%
4.6%6.9%
-10%
-5%
0%
5%
10%
15%
20%
Mandatum Life
615
-59
504391
251
427
-200
0
200
400
600
800
2010 2011 2012 2013 2014 2015
Investment Return, EURm
23
Total EUR 6.4bn
• Duration 2.4 years• Average Maturity 3.2 years• Fixed Income Running Yield 3.1%
1-3/2016 EUR 5m
1-3/2016 -0.1%
Money Market
Securities and Cash
5 %Government
Bonds1 %
Credit Bonds, Funds and
Loans53%
Policy Loans0 %
Listed Equity26%
Real Estate4 %
Private Equity4 %
Unlisted Equity
0%
Biometric0 %
Commodities0 %
Other Alternative
6 %
Trading Derivatives
0 %
Profit Development
295342
140 121 142 137 136 153 163 181
286
80
-378
495
332
-115
286
220
149 168
-500
-250
0
250
500
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
EURm
Profit before taxes
Comprehensive income
Mandatum Life
24
EURm 3M/16 3M/15Profit before taxes 53 39Comprehensive Income -14 171
Mandatum Life Profit by Components
Total expense ratio, % 110.6 103.7
Incl. kick backs, % 90.1 84.7
EURm 1-3/2016 1-3/2015
Net investment income -65.0 534.2
- Transferred to expense result -6.1 -6.3
- Return on Unit-linked policies 143.3 -465.8
- Return on With-profit policies* -27.6 -43.9
INVESTMENT RESULT 44.6 18.2
EXPENSE RESULT** 2.8 5.1
RISK RESULT 4.9 6.7
OTHERS 0.4 9.0
PROFIT BEFORE TAXES 52.7 38.9
Change in the market value of investments -71.6 200.0
PROFIT AT MARKET VALUES -18.9 239.0
Mandatum Life Group, expense ratio
Mandatum Life
* Includes guaranteed interest, bonuses and change in the reserves of the above items** Result of Unit-linked business EUR 3.6 million
25
26
Mission Value Creation in the Nordic Financials 3-10
If P&C The Leading Nordic P&C Insurer 11-18Mandatum Life A Finnish Financial Services Company 19-25Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36
Sampo plc Portfolio Manager with Funds Generating Capacity 37-44 Appendix Separate Supplementary Information 45-58
• Geographical diversification
• Strong Retail P&C Franchise
• Several Lines of Businesses
-Motor, Cargo
-Workersʼ compensation
-Liability
-Accident
-Property
• Low C/R volatility and Conservative Investments
Diversified Companies & Diversified Portfolio*
• Geographical diversification
• Strong Retail Banking Franchise
• Diversified earnings base:
-Banking (Retail, Wholesale)
-Wealth Management (AssetManagement, Private Banking, Life & Pensions)
• Low earnings volatility & stableROE over the cycle
• Finland & Baltics
• Strong Finnish Position
• Product areas
-Wealth Management
-Unit-linked Business
-With-profit Business
-Remuneration services
-Risk insurance
• Dependency on Capital Markets
* Correlations of quarterly Reported Profits Q1/2005–Q1/2016
PBT 2010-15
IF 45%ML 10%Nordea 45%
P/L CONTRIBUTIONS
27
LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS ON U-L & WM
0.26
0.12
1
0.85 1
1
Sampo Group
948
1,295 1,353
870 825
1,320 1,228
1,622 1,668 1,759 1,888
-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 2015
P&C Life Banking Nordea dividends Other
Steady 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
• Topdanmark / Associated
• Mandatum Life
• Nordea / Associated
Sampo Group
3,833
28
EURm 3M/16 3M/15
P&C 216 200Life 53 39 Nordea 159 223Holding -12 26Group 416 487
Different Risk Profiles of Investments
Sampo Group
29
Sampo Group Asset allocation (consolidated)
Total Group (MEUR) 19 226 18 688 19 373 19 615
06/15 09/15 12/15 03/16
Money Market 12% 19% 22% 14% 10% 15% 12% 8% 56% 6% 5% 72%
Long-Term Fixed Income 75% 40% 29% 74% 50% 39% 74% 52% 27% 80% 54% 17%
Equity 13% 26% 46% 12% 25% 43% 13% 26% 15% 13% 26% 10%
Private Equity 0% 4% 1% 0% 4% 1% 0% 4% 0% 0% 4% 0%
Other 0% 11% 3% 0% 11% 3% 0% 11% 1% 0% 11% 1%
11 778
6 705
743
11 516
6 503
669
11 395
6 667
1 311
11 092
6 450
2 073
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
IfP
&C
Ma
nd
atu
mL
ife
Sa
mp
oP
lc IfP
&C
Ma
nd
atu
mL
ife
Sa
mp
oP
lc IfP
&C
Ma
nd
atu
mL
ife
Sa
mp
oP
lc IfP
&C
Ma
nd
atu
mL
ife
Sa
mp
oP
lc
Investments & Counterparty Exposures*
* In Exposure tables the calculation rules may differ slightly from Allocation tables in some areas.
Sampo Group
30
31.3.2016 AAAAA+ -
AA-
A+ -
A-
BBB+ -
BBB-
BB+ -
CD
Non
Rated
Fixed
Income
Total
Equities Other
Derivatives
(Counterparty
Risk)Total
Change
from
31.12.2015
Basic Industry - 33 0 39 147 - 76 295 170 - - 465 + 4
Capital Goods - - 144 55 37 - 111 347 616 - - 963 + 51
Consumer Products - 163 260 175 94 - 101 791 617 - - 1 408 + 70
Energy - 52 47 - 37 - 230 367 12 0 - 379 - 71
Financial Institutions - 1 965 3 126 693 278 - 16 6 077 230 1 50 6 358 - 51
Governments 207 - - - - - - 207 - - - 207 + 35
Government Guaranteed 102 54 - - - - - 156 - - - 156 - 2
Health Care - - 51 40 51 - 32 174 94 - - 268 - 31
Insurance - - 11 110 4 - 100 226 3 38 - 267 + 24
Media - - 19 - 13 - 58 89 - - - 89 + 10
Packaging - - - - 62 - 23 84 1 - - 85 - 5
Public Sector, other 877 226 41 - - - - 1 144 - - - 1 144 - 2
Real Estate - - - 56 - - 438 494 - 229 - 723 - 100
Services - - 0 66 147 - 66 279 90 0 - 369 + 1
Technology and Electronics 4 41 40 11 28 - 36 160 130 - - 290 + 42
Telecommunications - - 88 41 47 - 42 218 86 0 - 304 + 17
Transportation - 108 7 47 22 - 182 366 28 - - 394 + 42
Utilities - - 24 453 0 - 78 556 - - - 556 + 37
Others - 15 - - 12 - 7 34 0 60 - 94 + 9
Asset-backed Securities - - - - - - - - - - - - + 0
Covered Bonds 2 987 80 - 11 - - - 3 078 - - - 3 078 + 228
Funds - - - - - - 104 104 1 244 671 - 2 019 - 45
Total 4 176 2 737 3 860 1 797 978 - 1 699 15 248 3 321 999 50 19 617 + 262
Change from 31.12.2015 + 260 - 562 + 596 + 268 - 104 - - 60 + 399 - 110 - 61 + 34 + 262 EURm
Note: Category Other includes private equity, unlisted equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals.
Principles of Capital Management
1. Sub-Groups are adequately capitalized to ensure normal business
operations
2. At Group level the following issues are managed/monitored
– non-manageable direct risk concentrations
– correlations of the sub-groupsʼ profits
– sub-groups do not cross-capitalize each other, parent is the source of capital
– the funds generating capacity of the parent company is maintained by having low leverage and adequate liquidity buffers in normal situations
1 +2 => Sampo Group is well-capitalized
31
Sampo Group
769
1,4
06
295
904
186 201 141
1,6
93
3,3
50
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Internally assessed Solvency Ratio 198%
EURm
If P&C Solvency, 31.3.20161,4
46
951
100
463
186 304 1412,0
58
3,1
69
0
500
1,000
1,500
2,000
2,500
3,000
3,500
Standard Formula Solvency Ratio 154%
LAC = Loss Absorbing Capacity, DT = Deferred Taxes, SCR= Solvency Capital Requirement
EURm
32
S&P TTC (A rating) EUR 2,999m S&P TTC (A rating) EUR 2,999m
Sampo Group
1,259
41
385268
40 61
279
1,117
279
1,702
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Mandatum Life Solvency with Transitional Measures, 31.3. 2016
LAC = Loss Absorbing Capacity, TP = Technical Provision, DT = Deferred Taxes
*
* Own Funds without transitional measures EUR 1,227m
EURm Solvency Ratio 152%
33
Sampo Group
Mandatum Life Technical Provisions Forecast
34
EURm
0
1,000
2,000
3,000
4,000
5,000
6,000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
WP-liabilities (4.5% guarantee) WP-liabilities (3.5% guarantee)
Segregated Group Pension Other WP-liabilities
Expected Changes in Insurance Liabilities- Growth of Unit-Linked AuM will create own funds- Capital consuming High Guarantee Liabilities will
decrease to EUR 1 bn and their portion of all WP-liabilities will decrease
⇒ Own Funds decrease slower than the SCR ⇒ Solvency stays at adequate level although the effect
of Transitional Measures decreases over time
Sampo Group
Calculation of Sampo Group Solvency
Group Solvency Capital:
–Under FiCo rules, capital is Group equity with some additional items added or deducted (subordinated loans, deferred tax assets, planned dividends,…)
–Under SII capital – referred to as Own funds (OF) – consists mainly of excess of assets over liabilities
–Under normal circumstances Group OF by Solvency II and FiCo rules are close to each other.
SCR by Financial Conglomerate Rule:
–The Group’s SCR is the sum of the separate sub-group’s requirements (sectoral rules)
–Banking rules are applied for parent company
–No diversification effect between the companies
SCR by Solvency II rules:
–One capital requirement is calculated for the insurance group including the parent company Sampo plc, If P&C and Mandatum Life. This includes diversification effects and also capital requirement for the translation risk related to SEK denominated equity of If P&C
–Nordea’s and Topdanmark´s capital requirements are added to the requirement
–The SII SCR takes into account diversification only within the insurance group
=> Sampo Group Solvency Ratios are not comparable with most Insurance Groupsʼ solvency ratios
35
Sampo Group
2,058
1,117
3,744
69
6,988
10,024
0
2,000
4,000
6,000
8,000
10,000
12,000
Group Solvency Ratios
36
*) incl. Topdanmark
2,900
141
3,744
6,786
9,948
0
2,000
4,000
6,000
8,000
10,000
12,000143% by FiCoD method 147% by S II methodEURm EURm
Sampo Group
37
Mission Value Creation in the Nordic Financials 3-10
If P&C The Leading Nordic P&C Insurer 11-18Mandatum Life A Finnish Financial Services Company 19-25Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36Sampo plc Portfolio Manager with Capacity to Generate Funds 37-44
Appendix Separate Supplementary Information 45-58
Straightforward Cash Flows, low leverage and liquidity
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 10,384 Liabilities EURm 10,384
Liquidity 1,494 CPs Issued 300
Investment assets 297 LT Senior Debt 2,183
-Real Estate 2 -Private Placements 148
-Fixed Income 34 -Bonds Issued 2,035
-Equity & Private Equity
261 -Pension Insurance Loans
Subordinated Loans 609 Subordinated Debt 0
Equity Holdings 7,928 Capital 7,810
-Subsidiaries 2,370 -Undistributable 98
-Associated 5,557 -Distributable 7,712
Other Assets 56 Other Liabilities 91
Flow of Funds Balance Sheet
Key Credit Metrics well in Single A range
Sampo plc 31.3.2016Gross Debt, EURm 2,483Gross Debt to Equity 31.8%Financial Leverage 24.1% (= Debt/(Debt+Equity)
Sampo Group, EURm Q1/2016 Q4/2015
Shareholders' Equity 11,620 11,411
Hybrid Bonds 12 10 Senior Debt 2,335 2,143Financial leverage 20.1% 18.8%
38
Sampo plc
Liquid Investments as Buffer
39
Sampo plc
Instrument & Principal Running Yield Call/ Maturity
Mandatum Capital Loan 100 m€ 4.57% Every year
IF 30NC6.5 90 m€ 4.71% 26.11.2018
IF 30NC10 99 m€ 6.07% 08.12.2021
Nordea AT1 PerpNC5 171 m$ 5.95% 23.9.2019
Nordea AT1 PerpNC5 98 m$ 6.48% 13.9.2021
Topdanmark Tier1 33 m€ 6.01% 15.9.2017
Topdanmark 10NC5 135 mDKK 2.92% 11.12.2020
Topdanmark 10NC5.5 270 mDKK 2.60% 11.6.2021
Subordinated Loans 609 m€ ≈ 5.30%
Cash / Other FI 1528 m€
Other Investments 246 m€
TOTAL * 2,383 m€
• In case subordinated loans are sold, both liquidity and Own Funds are generated• This buffer of liquidity and Own Funds comes with positive interest margin
* Before dividend payment
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
/05
Q1
/06
Q1
/07
Q1
/08
Q1
/09
Q1
/10
Q1
/11
Q1
/12
Q1
/13
Q1
/14
Q1
/15
Q1
/16
Sampo plc Net debt
Group NAV
Group Equity
EURm
0%
5%
10%
15%
20%
25%
30%
35%
40%
Q1/0
5
Q1/0
6
Q1/0
7
Q1/0
8
Q1/0
9
Q1/1
0
Q1/1
1
Q1/1
2
Q1/1
3
Q1/1
4
Q1/1
5
Q1/1
6
Net debt/NAV
40
• ”Loan-To-Values” based on above figures is low• Parent Companyʼs Financial Leverage is 24%
=> Sampoʼs position to refinance its debt is strong
Sampo plc
Dividends Received by Payment Year
EURm
249
1,031
519
181
488 540406
544 490597 600100
300
200
200
100100
100 100
125
141
75
35
13080
204 250 224293
370533
551
490
1,406
754
511568
744 756 768
883
1,067
1,220
0
200
400
600
800
1,000
1,200
1,400
1,600
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
If Mandatum Life Banking*
Sampo plc
*) Sampo Bank 2005-2006, Nordea 2007->
676
41
Reported Profits facilitates Debt Servicing
* Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments
747
-8 -37
702762
-10-70
683
773
-17 -20
737
879
-20 -26
832
1,069
-18 -1
1,050
1,226
-14
17
1,229
-100
100
300
500
700
900
1,100
1,300
Dividend income Operatingexpenses
Net financialexpenses
Profit before taxes
2010 2011 2012 2013 2014 2015
*
EURm
Sampo plc
42
Q1/2016 Q1/2015Dividends 676.3 636.2Operating expenses -4.4 -6.6Net financial expenses/income -8.6 2.07Profit before taxes 664.1 659.1
Issued Debt Instruments
Sampo plc
EURm
Instrument & Principal Coupon SwapEffective
RateMaturity
Senior Bond 500 EURm (EMTN) 4.2500% Euribor3M + 2.7910% 2.5900% 27.02.2017
Senior Bond 2,000 SEKm (EMTN) Stibor3M + 1.45% --- 1.0330% 29.05.2018
Senior Bond 500 EURm (EMTN) 1,1250% --- 1,1640% 24.05.2019
Senior Bond 2,000 SEKm (EMTN) Stibor3M + 0.77% --- 0.2560% 28.05.2020
Senior Bond 1,000 SEKm (EMTN) 1.2500% --- 1.2950% 28.05.2020
Senior Bond 500 EURm (EMTN) 1.5000% --- 1.5920% 16.09.2021
CPs issued 300 EURm Euribor + Margin 0.2800% Average 3M
Public debt 2,335 EURm 1.3509%
Private placements 148 EURm 1.5971%
Total 2,483 EURm 1.3656%
43
0
200
400
600
2016 2017 2018 2019 2020 2021CP´s Senior under EMTN Senior Retail Private
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
44
45
Appendix Separate Supplementary Information 45-58
Sampo Group’s Outlook for 2016
• Sampo Group’s business areas are expected to report good operating results for 2016.
• However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The continuing low interest rate level also creates a challenging environment for
reinvestment in fixed income instruments.
• The P&C insurance operations are expected to reach a combined ratio of 88-91 per cent excluding the release from the Swedish MTPL reserves.
• Nordea’s contribution to the Group’s profit is expected to be significant.
Appendix
46
Fixed Income Investments in the Financial Sector
Exposure tables vs. Allocation tables – small differences.
Covered bonds
Money market
Long-term senior debt
Long-term subordinated
debt Total %
Sweden 1,849 88 874 387 3,198 35%
Finland 162 1,882 216 6 2,267 25%
Norway 694 580 213 1,488 16%
Denmark 218 306 22 546 6%
United Kingdom 482 13 2 498 5%
Switzerland 205 11 217 2%
the United States 6 195 1 202 2%
Canada 53 145 199 2%
the Netherlands 198 198 2%
France 23 61 14 98 1%
Iceland 75 75 1%
Other 78 12 78 0 168 2%
Total 3,078 2,470 2,949 658 9,155 100%
47
Appendix
Public Sector Fixed Income Investments
EURm Government
Government
guaranteed
Public sector,
other Total
Sweden 196 810 1,006
Norway 243 243
Finland 54 74 128
Germany 11 69 80
Denmark 33 33
Japan 18 18
Total 207 156 1,144 1,507
Exposure tables vs. Allocation tables – small differences
48
Appendix
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 mainly Funds.
– No diversification for the sake of diversification.
• Centrally Managed
– Sampo plc Chief Investment Officer is 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.
Appendix
49
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 earnings
– Cost efficiency 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
Appendix
For more detailed description of Sampo Group´s Risk Management Principles, see http://www.sampo.com/governance/internal-control/risk-management/
50
Sampo’s P&C insurance operations are merged with If 2002). Following the transaction, Sampoowns 38 per cent of If. If becomes fully owned by Sampo (2004).• Business areas:P&C insurance, Long-term savings,Banking
Sampo Insurance Companyand 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 shortenedto 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.
20072004200220012000 2010 2011
Sampo Group’s(If P&Cʼs) • Topdanmark holding exceeds 23%. Topdanmark becomes If´s associated company.
2012
Sampo Group (If P&C)acquires Tryg’s FinnishBusiness.• 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 Mutualʼs With-ProfitGroup Pension portfolio.
2015
Appendix
2016
51
Financial Strength Rating HistoryIf P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland),Sampo plc
The Sampo Groupʼs P&C insurance companies became part of If in January 2002.
AA-/
A+/
A/
A-/
BBB+/
BBB/
2002 2003 2004 2005 2006 2007 2008 2009 2010 -11 -12 -13 -14 -15 -16
Possib
le d
ow
ng
rade J
an 0
3
Sta
ble
Feb 0
2
Neg
ative
Aug
02
Sta
ble
Apr
03
Possib
le u
pg
rade F
eb 0
4
Sta
ble
May
04
Positiv
e M
ay
06
Sta
ble
Nov
08
Apr 04 First-time issuer rating
Appendix
Aa3
A1
A2
A3
Baa1
Baa252
Positiv
e D
ec 1
5
Moodyʼs If P&CS&P If P&CMoodyʼs Sampo plc
S&P Sampo plc
If P&C Quarterly Results and C/R
EURm Q1/16 Q4/15 Q3/15 Q2/15 Q1/15 Q4/14 Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13
Premiums earned 1,059 1,077 1,087 1,103 1,076 1,108 1,124 1,122 1,104 1,112 1,139 1,140 1,115
Claims incurred -700 -764 -735 -864 -780 -776 -793 -783 -811 -791 -802 -800 -824
Operating expenses -179 -180 -176 -29 -180 -189 -183 -187 -186 -186 -191 -188 -190
Other technical income and expenses
-1 0 0 0 -1 -1 0 1 1 1 0 0 1
Allocated investment return transferred from the non-technical account
5 2 5 7 9 5 7 10 15 12 16 17 20
Technical result 184 135 180 217 124 147 155 162 124 148 161 170 122
Investment result 40 75 68 99 84 81 75 139 88 104 89 115 102
Allocated investment return transferred tothe technical account
-13 -11 -14 -17 -18 -16 -18 -21 -27 -25 -30 -31 -34
Other income and expenses
4 5 11 11 10 8 16 9 9 3 6 15 14
Operating result 216 204 245 310 200 219 228 289 194 230 227 269 204
Risk ratio, % 60.7 65.2 61.9 72.7 66.6 64.4 64.7 64.0 67.5 65.1 64.7 64.2 67.7
Combined ratio, % 83.0 87.7 83.8 80.9 89.2 87.1 86.9 86.5 90.3 87.9 87.2 86.7 90.9
Appendix
53
If Solvency Capital & Ratio*
54%
70%
88%
74%71%
66%
77%79%
72%
75% 81%82%75%
79%
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%
Appendix
54
If P&C Reinsurance ProgrammesIf 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 diversifiedportfolio 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
broad terms
Appendix
In Millions
Catastrophe/
Event
Property/
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
55
In Millions
Marine Hull
Reporter
Small Vessels
Clash CoverMarine Hull I.V. Reporter
Marine Hull WarRisk Reporter
US TerrorismRisk
Capacity SEK 400 SEK 250 SEK 310 USD 60 USD 200
Retention SEK 100 SEK 100 SEK 100 USD 0,25 USD 25
Casualty/CyberEvent
SEK 400/€40/$50
SEK 200/€20/$25
17.7%
21.3%20.1%
16.5%
7.9%
18.5%
25.8%
20.9%
27.7%27.6%
22.9%23.6%
19.5%
0%
5%
10%
15%
20%
25%
30%
Mandatum Life 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%
Appendix
56
NordeaProfitable & The Most Diversified Nordic Bank
88
5
88
3
84
7
78
1
83
3
81
8
83
2
59
2
87
8
73
0 96
0
1,0
71
1,0
03
94
9
56
6
1,0
29
1,0
37
1,0
99
92
2
1,0
59
1,0
41
1,0
48
1,0
21
1,0
06
1,1
06
93
5 1,1
26
1,1
57 1,4
08
1,2
35
1,0
33
1,0
27
1,0
06
21 36
89 32
0 35
6
42
5
35
8
34
7
26
1
24
5
20
7 16
6
24
2
118
112
26
3
21
8 21
7
25
4
24
4
19
8
18
6
17
1
18
0 15
8
13
5
112
12
9
12
2
10
3
112
14
2
111
0
200
400
600
800
1,000
1,200
1,400
1,600
1Q
08
2Q
08
3Q
08
4Q
08
1Q
09
2Q
09
3Q
09
4Q
09
1Q
10
2Q
10
3Q
10
4Q
10
1Q
11
2Q
11
3Q
11
4Q
11
1Q
12
2Q
12
3Q
12
4Q
12
Q113
Q213
Q313
Q413
Q114
Q214
Q314
Q414
Q115
Q215
Q315
Q415
Q116
EURm Restructuring/impairment charges Loan losses Operating profit
Appendix
57
Nordea BV on Consolidated Balance Sheet
Nordea in Sampo Group’s B/S EURm
Acquisition price 5,557.3
Retained earnings 1,804.2
Accumulated other changes in Nordea’s equity -56.0
Share of Nordea’s net profit 166.2
Amortisation -8.8
Deferred tax 1.9
Dividends -550.7
Share of Nordea’s other comprehensive income -24.4
Share of Nordea’s other changes in equity 4.3
Share of Nordea’s goodwill change -5.1
Total 6,888.8
Figures Per ShareEUR
Acquisition price 6.46Book value 8.01Market Value* 8.45
No. of shares860,440,497
* As of 31/03/2016
Appendix
58