Sampo Group. Debt Investor Presentation. Prepared November 17, 2015 Figures September 30, 2015

Transcription

1 Sampo Group Debt Investor Presentation Prepared November 17, 2015 Figures September 30, 2015

2 DEBT INVESTOR CONTACTS Markku Pehkonen, CRO tel Peter Johansson, CFO tel Jarmo Salonen, Head of IR Relations and Group Communications tel FINANCIAL CALENDAR 07/05/2015 Interim Report Q1/2015 Silent period 09/04/ /05/ /08/2015 Interim Report Q2/2015 Silent period 15/07/ /08/ /11/2015 Interim Report Q3/2015 Silent period 08/10/ /11/ /02/2016 Financial Statement Release for 2015 Silent period 13/01/ /02/2016 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. 2

3 Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer Mandatum Life A Finish Financial Services Company Sampo Group A Productive Value Creator Sampo plc The Listed Parent Company A Stable Dividend Payer Appendix

4 Sampo Group Basic Facts Sampo has created Value A Mixed Financial Conglomerate Market cap November 4, 2015, EURbn Strong relative performance 10Y Total Shareholder Return Nordea 42.2 Sampo Danske Bank >21% Swedbank 23.7 SHB 23.6 DnB 19.6 Investor Gjensidige Industrivärden Tryg Topdanmark >30% Sampo ownership structure Foreign and nominee registered owners 60.61% Solidium 11.90%* Varma Mutual Pension 6.35% Storebrand 1.5 Björn Wahlroos 2.10% Alm.Brand Protector Aktia Source: Datastream Bank Insurance Inv.company Ilmarinen Mutual Pension 0.9% Kaleva Mutual Insurance 0.82% Other domestic owners 17.32% *100 % owned by the Republic of Finland;

5 Sampo Group Basic Facts Nordic Financial Group with Strong Brands Listed company Sampo plc Long-term investor Manager of capital structure and liquidity Pay-out ratio 50% 100% 21.2% 100% > 30% MARKET POSITION The leading P&C insurer in the Nordic region The second largest P&C insurer in Denmark The largest financial group in Northern Europe Market leader in corporate life & pension in Finland Danske bank distribution STRATEGY Underwriting focus Cost efficiency Pan-Nordic synergies Underwriting focus Cost efficiency Share buy-back Strong profit generation Low volatility Strong capital generation Wealth management Unit-linked products Risk insurance INVESTMENT ASSETS ~ EUR 11.5bn ~ EUR 2.4bn P&C ~ EUR 3.8bn Life ~ B/S EUR 680bn ~ AuM EUR 273bn ~ EUR 5.3bn+1.2bn* ~ EUR 5.6bn U-L AUM RETURN / PROFIT TARGET RoE above 17.5% CR% below 95% Profit margin of 10% CR% 91% ROE of 13% at the required CET1 RoE above 17.5% * Segregated assets 5

6 Sampo Group Basic Facts Sampo Group Steering Model and Principles Non-complex structures and only minor contagion risks three separate and independent business areas straightforward and transparent legal structure combined with limited intragroup exposures General Principles of Business activities clear responsibilities simple and flat operational structures Parent company gives guidance to the subsidiaries by setting targets for capitalization and ROE group 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 parent company the stakeholders expectations and external regulation 6

7 Sampo Group Basic Facts Well-established Insurance Subsidiaries If P&C Well-diversified and Profitable Pan-Nordic Non-life Insurer If generated EUR 756m (711) in pre-tax profits Excellent combined ratio of 84.6% (87.8) Risk ratio 67.1% (65.4) Cost ratio 17.6% (22.5) Expense ratio 11.8% (16.6) 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 Resilient business model over the cycle Topdanmark - Danish non-life, life insurance and pension funds as an associate company 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 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 132m (112) in pre-tax profit to the Group 7

8 Sampo Group Basic Facts Diversified and most stable Nordic bank Pan-Nordic platform with scalability Simplification Digitalisation Superior Nordic distribution power Cost efficiency Capital efficiency Efficiency initiatives Quarterly net profit volatility Nordea and peers ,% Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Strong capital generation Stable returns Low risk profile Actively managed business portfolios Lowest volatility of quarterly net profits 8

9 Sampo Group Basic Facts Danish Insurer with a Robust Business Modell 9

10 Sampo Group Basic Facts Group Strategy Value Creation in Nordic Financials LONG TERM VALUE CREATION CONSERVATIVE PARENT WITH PROFIT FOCUS OPERATIONAL EXCELLENCE IN SUBSIDIARIES CENTRALIZED INVESTMENT MANAGEMENT GROUP LEVEL PORTFOLIO BENEFITS 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. 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. Subsidiaries have focus on continuous development of services. Economies of scale. Pan-Nordic diversification & operational excellence facilitate low volatility. 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. 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 10

11 Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer Mandatum Life A Finnish Financial Services Company Sampo Group A Productive Value Creator Sampo plc The Listed Parent Company A Stable Dividend Payer Appendix

12 If P&C Leading Nordic P&C Insurer with Synergies Market Shares by Country Nordic Market shares Total GWP ~EUR 25bn Norway Q2/2015 Gjensidige 25% If 22% Tryg 14% Sparebank 1 10% Sweden Q2/2015 LF 30% If 18% RSA (T-H) 15% Folksam 16% Denmark Q3/2014 Tryg 18% Topdanmark 18% Codan (RSA) 12% Alm. Brand 10% If 6% Finland 2014 Pohjola 32% LähiTapiola 25% If 25% Fennia 10% Baltics 2014 RSA 22% If 14% BTA 13% Ergo 12% Gjensidige 7% Other, 27 LähiTapiola, 4 Pohjola, 4 Folksam, 5 LF, 9 If, 18 RSA, 9 Topdanmark, 5 Tryg, 10 Gjensidige, 9 Expense Ratios 2014, % IF Nordic peer group* Generali Zürich AXA Allianz RSA Scandinavia Aviva *

13 If P&C Nordic P&C Insurance Market CONSOLIDATED MARKET LOYAL CLIENTS The four largest companies account for 75-90% of the markets in Norway, Finland and Sweden. In Denmark the market is less consolidated. Renewal rates are around 80-90%. DISTRIBUTION 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. LOW EXPENSE RATIOS The market is characterized by low expense ratios in the rage of 15-20%. European competitors' expense ratios are usually considerably higher. GOOD PROFITABILITY The Nordic P&C market has generally experienced good profitability since the beginning of The low interest rate environment and hence low return on investments has made the industry focus on profitability in the insurance operations. 13

14 If P&C Diversification in Sales and Results Industrial, 523 By Business Area Baltic, 101 Gross Written Premiums, EUR 3,659 m Private, 2,012 Denmark, 319, 9% By Country Baltic, 101, 3% Norway, 1,139, 31% Commercial, 1,023 By Business Area Finland, 886, 24% Technical Results, EUR 480 m By Country Sweden, 1,213, 33% Industrial -11 Other, 167, 47% Industrial, 19, 4% Baltic, 14, 3% Commercial, 90, 19% Private, 139, 39% Other, 127, 26% Baltic, 14, 3% Denmark, 27, 5% Norway, 151, 31% Sweden, 175, 35% Finland,

15 Disclipined Underwriting and Diversification works If P&C 100 % Combined Ratio Development Risk ratio Cost ratio Target CR Geographical Diversification in CR If - Total If Sweden If Norway If Finland If Denmark Combined Ratio If P&C and Nordic Peers % Standard deviation % 3.8% 4.7% If P&C Nordic Market (incl. If) 4.2% 4.6% 15

16 If P&C Strong & Stable Annual Profit Development EURm 1,200 1, Profit before tax Comprehensive income , EURm 9M/2015 9M/2014 Profit before taxes Comprehensive Income

17 If P&C Seasonality in Quarterly Results and CR% EURm 350 Technical result Investment result Operating result Q4 Q3 Q2 Q1 Average Quarterly CR%, Year 2014 CR% Year 2015 CR%

18 If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 11.5bn Equities 12% Private Equity 0.2% Real Estate 0.2% Money Market 14% Public sector 13% 14% 11% 9% 6% 4% 1% -2% -4% Mark-to-Market Investment Return 4.3% 5.8% 4.4% 2.6% -3.1% 12.4% 7.4% 1.8% 9M/ % 6.1% 5.0% 4.1% Other fixed income 61% Duration 1.0 years Average Maturity 2.6 years Fixed Income Running Yield 1.8% 1, Investment Return, EURm M/2015 EUR 113m

19 If P&C If P&C Solvency Capital Requirement (SCR) Partial Internal Model (PIM), September 30, 2015 EURm 4,000 3,500 3,000 * 2,500 2,000 1,500 1, , ,676 3,830 *ASC EUR 3.820m LAC = Loss Absorbing Capacity, DT = Deferred Taxes 19

20 If P&C If P&C Solvency Capital Requirement (SCR) Standard Formula (SF), September 30, 2015 EURm 4,000 3,500 * 3,000 2, ,000 1,500 1, , ,136 3, ,135 0 *ASC EUR 3.820m LAC = Loss Absorbing Capacity, DT = Deferred Taxes 20

21 Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer Mandatum Life A Finnish Financial Services Company Sampo Group A Productive Value Creator Sampo plc The Listed Parent Company A Stable Dividend Payer Appendix

22 Mandatum Life Finnish Life Insurer with Wealth management Focus Client Segment Underlying Market Critical Success Factors Sales & Client Services Cross-sales Corporates Employee Benefit Expertise in Rewards and Incentives, Pension & Risk Life Solutions and Asset Management HNWI Retail Clients Wealth Management Savings and Insurance Products Professional Wealth Management Management of Client Relationships Distribution Power Mandatum Life Mandatum Life Danske Bank 22

23 Mandatum Life Business Volumes With-Profit EUR 132m *) Direct insurance EURm 12,000 10,000 8,000 6,000 4,000 2,000 0 Premiums Written*, total EUR 840m Insurance Savings, total EUR 9,756m U-L EUR 708m With-Profit EUR 4,190 3,943 1,726 1,966 1, Unit-linked life Unit-linked pension Unit-linked capital redemption Unit-linked Baltic Other life Other pension Other capital redemption Other Baltic Technical Reserves, EUR 10,590 m ,262 1,752 2,071 1,637 2,359 3,124 3,054 3,833 4,616 5,312 5,570 1,228 1,198 4,652 4,626 4,738 4,695 4,621 4,487 4,431 4,410 4,249 4,071 3,927 3,837 3,822 Guaranteed interest rates Segregated funds Unit-linked Mandatum Life U-L EUR 5,566m Focus area 23

24 Mandatum Life Market Position by Premiums Written 6/2015, % Market Shares in Finland All Products Unit-Linked With-profit Group Pension Private Customers Corporates Baltics 24

25 Mandatum Life 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. 25

26 Mandatum Life Profit Development EURm EURm 9M/2015 9M/2014 Profit before taxes Comprehensive Income Profit before taxes Comprehensive income

27 Mandatum Life Mandatum Life Profit by Components EURm 1-9/ /2014 Net investment income Transferred to expense result Return on unit-linked policies Return on with-profit policies* INVESTMENT RESULT EXPENSE RESULT** RISK RESULT OTHERS PROFIT BEFORE TAXES Change in the market value of investments PROFIT AT MARKET VALUES Mandatum Life Group, expense ratio Total expense ratio, % Incl. kick backs, % * Includes guaranteed interest, bonuses and change in the reserves of the above items ** Result of unit-linked business EUR 17.6 million 27

28 Mandatum Life Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.3bn* Mark-to-Market Investment Return Real estate 4% Private equity 4% Other 8% Money market 10% Public sector 1% 20% 15% 10% 5% 12.0% 9.7% 8.3% 5.0% 16.8% 11.1% 9M/ % 9.4% 7.1% 4.6% 0% -5% -1.4% Equities 29% Other fixed income 44% -10% -7.8% Investment Return, EURm** Duration 2.0 years Average Maturity 2.7 years Fixed Income Running Yield 3.2% *excluding the Segregated Fund, ** Including the Segregated Fund portfolio M/2015 EUR 239m

29 Mandatum Life Conservative portfolio of Segregated Fund Mark-to-Market Investment Return Investment allocation of Total EUR 1.2bn Private Equity 3% Equities 10% Real Estate 6% Other 0% Money Market 11% Public Sector 4% Other Fixed Income 65% Duration 2.1 years Average maturity 3.6 years Fixed income running yield 1.3% 29

30 Mandatum Life Solvency II Capital Requirement (SCR) With transitional measures, September 30, 2015 EURm 2,000 Mandatum Life 1,800 * , , ,200 1,000 1, , , * Own Funds without transitional measures EUR 1,274m LAC = Loss Absorbing Capacity, TP = Technical Provision, DT = Deferred Taxes 30

31 Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer Mandatum Life A Finnish Financial Services Company Sampo Group A Productive Value Creator Sampo plc The Listed Parent Company - A Stable Dividend Payer Appendix

32 Sampo Group Results, Capitalisation and Investments Stable Development of Profit before Taxes EURm 4,000 3,500 3,833 * EURm 9M/2015 9M/2014 P&C Life Nordea Holding Group 1,475 1,313 3,000 2,500 2,000 1,500 1,000 If P&C Mandatum Life Sampo Bank 948 1,295 1,353 If P&C Mandatum Life Nordea / Investment If P&C Mandatum Life Nordea / Associated 1,320 1,228 1,622 1,668 1, * One-off item sale of Sampo Bank P&C Life Banking Nordea dividends Other 32

33 Sampo Group Results, Capitalisation and Investments Stable Companies & Group Level Diversification* P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS IN U-L & WM Geographical diversification Geographical diversification Finland & Baltics PBT Strong Retail Banking Franchise Diversified earnings base: Strong Retail P&C Franchise Several Lines of Businesses Strong Finnish Position Product areas IF 45% ML 10% Nordea 45% -Banking (Retail, Wholesale) -Wealth Management (Asset Management, Private Banking, Life & Pensions) Low earnings volatility & stable ROE over the cycle -Motor, Cargo -Workers compensation -Liability -Accident -Property Low C/R volatility and Conservative Investments -Wealth Management -Unit-linked Business -With-profit Business -Remuneration services -Risk insurance Dependency on Capital Markets * Correlations of quarterly Reported Profits Q1/2005 Q3/

34 Sampo Group Results, Capitalisation and Investments Group Solvency by Financial Conglomerate Rules (1 EURm 12,000 Group solvency ratio 143% Business Area Capitalization 10,000 8,000 6,000 4,000 2, ,136 If P&C (SCR*) 1,189 Mandatum Life (SCR**) 3,777 Sampo plc's share of Nordea*** 60 Sampo plc *) Standard Formula SCR **) Standard Formula SCR with transition rules ***) Minimum capital requirement, transition rules 7,162 Total capital requirement 10,223 Group Solvency Capital Focus in Business areas capitalization IF and Nordea are strongly capitalized ML is adequately capitalized Low correlations between profits Sisters do not capitalize each others => Group is strongly Capitalized Parent Company Parent Company leverage is 26% Loan-To-Values are low Financial Assets of EUR 900 m => Parent Company is able to generate Liquidity if needed 1) The Finnish Act has been amended and becomes effective from 01/01/

35 Sampo Group Results, Capitalisation and Investments Investment Allocation by Risk Profile Total Group (MEUR) 19,215 20,211 19,226 18,688 14,000 12,000 11,513 11,827 11,778 11,516 10,000 8,000 6,644 6,716 6,705 6,503 6,000 4,000 2,000 1,058 1, If P&C Mandatum Life Sampo Plc If P&C Mandatum Life Sampo Plc If P&C Mandatum Life Sampo Plc If P&C Mandatum Life Sampo Plc 12/14 03/15 06/15 09/15 Money Market 11% 25% 73% 9% 19% 79% 12% 19% 22% 14% 10% 15% Long-Term Fixed Income 76% 35% 19% 77% 39% 13% 75% 40% 29% 74% 50% 39% Equity 12% 26% 5% 13% 27% 6% 13% 26% 46% 12% 25% 43% Private Equity 0% 4% 3% 0% 4% 1% 0% 4% 1% 0% 4% 1% Other 0% 10% 0% 0% 10% 1% 0% 11% 3% 0% 11% 3% 35

36 Sampo Group Results, Capitalisation and Investments Investments & Counterparty Exposures* AAA AA+ - AA- A+ - A- BBB+ - BBB- BB+ - C D Non Rated Fixed Income Total Equities Other Derivatives (Counterparty Risk) Total Change from Basic Industry Capital Goods Consumer Products , Energy Financial Institutions 2 2,400 2, , , Governments Government Guaranteed Health Care Insurance Media Public Sector, other , , Real Estate Services Technology and Electronics Telecommunications Transportation Utilities Others Asset-backed Securities Covered Bonds 2, , , Funds , , Total 3,804 3,220 3,014 1,445 1,070-1,736 14,288 3,320 1, , Change from EURm Note: Category Other includes private equity, unlisted equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals. * In Exposure tables the calculation rules may differ slightly from Allocation tables in some areas. 36

37 Sampo Group Results, Capitalisation and Investments Fixed Income Investments in the Financial Sector* Covered bonds Money market Long-term senior debt Long-term subord. debt Total % Sweden 1, ,627 44% Finland 163 1, ,640 20% Norway ,467 18% Denmark % Switzerland % the Netherlands % the United States % France % Germany % Iceland % Canada % Other % Total 2,694 2,179 2, , % *Exposure tables vs. Allocation tables small differences. 37

38 Sampo Group Results, Capitalisation and Investments Sampo Group Public Sector Fixed Income Investments no Periphery* EURm Government Government guaranteed Public sector, other Total Sweden ,011 Norway Finland Germany Denmark Japan France 4 4 Total ,162 1,540 * Exposure tables vs. Allocation tables small differences 38

39 Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer Mandatum Life A Finnish Financial Services Company Sampo Group A Productive Value Creator Sampo plc The Listed Parent Company A Stable Dividend Payer Appendix

40 Sampo plc Straightforward Cash Flows & Strong Balance Sheet Flow of Funds Balance Sheet Dividends If P&C Mandatum Life Nordea Income Interest on Liquidity Income from other investments Assets EURm 8,971 Liabilities EURm 8,971 Liquidity 106 CPs Issued 300 Investment assets 355 LT Senior Debt 1,984 -Real Estate 2 -Private Placements 159 Sampo plc Internal Administration Costs Discretionary Dividends for Shareholders Interest Expenses for Bondholders -Fixed Income 21 -Bonds Issued 1,825 -Equity & Private Eq Pension Insurance Loans 0 Subordinated Loans 503 Subordinated Debt 0 Equity Holdings 7,928 Capital 6,558 -Subsidiaries 2,370 -Undistributable 98 -Associated 5,557 -Distributable 6,460 Other Assets 79 Other Liabilities 129 Key Credit Metrics well in Single A -range Sampo plc Gross Debt, EURm 2,284 Gross Debt to Equity 35% Financial Leverage* 26% *= Debt/(Debt+Equity) Sampo Group, EURm Q3/2015 Q2/2015 Shareholders' Equity 10,876 10,990 Hybrid Bonds Senior Debt 2,121 2,173 Financial leverage 19.5% 19.8% 40

41 Sampo plc Dividends & Reported Profits EURm ,069 * EURm 9M/2015 9M/2014 Dividends Operating expenses Net financial expenses/income Profit before taxes , Dividend income Operating expenses Net financial expenses Profit before taxes * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments 41

42 Sampo plc Dividends Received by Payment Year EURm 1,600 1,400 1,200 1, Low Net Debt vs. stable Dividend Inflows 1, , ,233 1, ~600 ** If Mandatum Life Banking* ** *) Sampo Bank , Nordea 2007-> **) SEK 5.5. bn (~ EUR 600 m) will be paid in Dec

43 Sampo plc Sampo Group Conservative Leverage EURm 16,000 14,000 12,000 10,000 Sampo plc Net debt Group NAV Group Equity 40% 35% 30% Net debt/nav 8,000 25% 6,000 20% 4,000 2,000 15% 0 10% -2,000-4,000 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Q1/14 Q3/14 Q1/15 Q3/15 5% 0% Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Q1/08 Q3/08 Q1/09 Q3/09 Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Q1/14 Q3/14 Q1/15 Q3/15 43

44 Sampo plc Sampo plc Investments and Debt Instruments Instrument & Principal Coupon Swap Effective Rate Maturity Senior Bond 300 EURm (EMTN) % Euribor3M % % Senior Bond 500 EURm (EMTN) % Euribor3M % % Senior Bond 2,000 SEKm (EMTN) Stibor3M % % Senior Bond 2,000 SEKm (EMTN) Stibor3M % % Senior Bond 1,000 SEKm (EMTN) % % Senior Bond 500 EURm (EMTN) % % CP s issued 300 EURm Euribor + Margin % Average 3M Public debt 2,125 EURm % Private placements 159 EURm % Total 2,284 EURm EURm % CP s Senior under EMTN Senior Retail Private 44

45 Sampo plc Sampo plc Key Credit Considerations Stable Dividend Flows from Affiliated Companies with strong Brands Diversification through Insurance & Banking in the Nordic Region Conservative Financial Profile, strong Capitalization and Liquidity Management with a proven Track Record in long-term Value Creation Bondholder Value Created 45

46 Appendix

47 Appendix Sampo Group s outlook for 2015 Sampo Group s business areas are expected to report good operating results for However, the marked-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 assets. 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 full year combined ratio of per cent excluding the positive total 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. 47

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 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. 48

49 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 profits 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 49 For more detailed description of Sampo Group s Risk Management Principles, see

50 Appendix Capital Management Framework at Group Level Transaction risks affecting companies profits IF P&C SCR in SEK Mandatum Life SCR in EUR Sampo PLC SCR in EUR Nordea SCR in EUR EURSEK Translation risks affecting Group NAV Group SCR in EUR Profit diversification Issuance capacity of business areas Buffer Strategic risks & arrangements Leverage Liquidity portfolio Sampo plc s capacity to generate liquidity Shareholders dividend expectations Group solvency capital in EUR EURSEK Nordea s share Consolidated Group equity Sectoral items added Intangibles & other deductables IF P&C s Equity in SEK EURSEK 50

51 Appendix Capital Management Framework at Operating Company Level Risks Capital needs by risks Expected profits Total diversified capital need by regulatory rules Potential selfdefined higher capital need Measurement uncertainty Buffer Issuance capacity Total actual capital & capital structure Realized profits Dividends Issued capital instruments Other capital components Strategic risks 51

52 Appendix Sampo Group Through Structural Changes to the Leading Nordic Financial Group 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 Group s(if P&C s) Topdanmark holding exceeds 23%. Topdanmark becomes If s associated company. Sampo Group (Mandatum Life) acquires Suomi Mutual s With-Profit Group Pension portfolio 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 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 s Nordea holding exceeds 20%. Nordea becomes an associated company. Sampo Group (If P&C) acquires Tryg s Finnish Business. If P&C signs a partnership agreement with Nordea. 52

53 Appendix AA-/ Aa3 A+/ A1 A/ A2 Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland), Sampo plc Stable Feb 02 Negative Aug 02 Possible downgrade Jan 03 Stable Apr 03 Possible upgrade Feb 04 Stable May 04 Positive May 06 Stable Nov 08 Moody s If P&C S&P If P&C Moody s Sampo plc A-/ A3 BBB+/ Baa1 BBB/ Baa2 Apr 04 First-time issuer rating The Sampo Group s P&C insurance companies became part of If in January

54 Appendix IF P&C Quarterly Results and C/R EURm Q3/15 Q2/15 Q1/15 Q4/14 Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Premiums earned 1,087 1,103 1,076 1,108 1,124 1,122 1,104 1,112 1,139 1,140 1,115 Claims incurred Operating expenses Other technical income and expenses Allocated investment return transferred from the non-technical account Technical result Investment result Allocated investment return transferred to the technical account Other income and expenses Operating result Risk ratio, % Combined ratio, %

55 Appendix IF Regulatory Solvency Capital & Ratio* EURm 4,500 4,000 3,500 3,000 2,500 54% 70% 88% 74% 71% 66% 77% 79% 72% 75% 81% 82% 87% % 100% 80% 60% 2,000 1,500 40% 1, % 0 0% Solvency capital (lhs) * Solvency ratio, (IFRS) % = + solvency capital + premiums earned from 12 months Solvency ratio (rhs) x 100% 55

56 Appendix IF P&C Reinsurance Programmes 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 In Millions In Millions Catastrophe per Event Marine Hull Reporter Property per Risk Small Vessels Clash Cover Casualty Marine Hull I.V. Reporter 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 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 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 56

57 Appendix Mandatum Life Regulatory Solvency Ratio* 30% 25% 20% 17.7% 21.3% 20.1% 16.5% 18.5% 25.8% 20.9% 27.7% 27.6% 22.9% 23.6% 15% 10% 7.9% 5% 0% * 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% 57

58 Appendix Nordea Profitable & The Most Diversified Nordic Bank EURm 1,600 Restructuring provision Loan losses Operating profit 1,400 1,200 1, ,071 1, ,029 1,037 1, ,059 1,041 1,048 1,021 1,006 1, ,126 1,157 1, , , Q08 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 Q215 Q315 58

59 Appendix Nordea BV on Consolidated Balance Sheet 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 Share of Nordea s net profit Amortisation Deferred tax 5.8 Dividends Share of Nordea s other comprehensive income Share of Nordea s other changes in equity 5.6 Share of Nordea s goodwill change 10.0 Total 7,086.1 * As of 30/9/2015 Figures Per Share EUR Acquisition price 6.46 Book value 8.24 Market Value* 9.94 No. of shares 860,440,497 59