Sampo Group Debt Investor Presentation

Transcription

1 Sampo Group Debt Investor Presentation Prepared November 7, 2014 Figures September 30,

2 DEBT INVESTOR CONTACTS Markku Pehkonen, CRO tel Peter Johansson, CFO tel FINANCIAL CALENDAR 07/05/2014 Interim Report Q1/2014 Silent period 09/04/ /05/ /08/2014 Interim Report Q2/2014 Silent period 16/07/ /08/ /11/2014 Interim Report Q3/2014 Silent period 09/10/ /11/ /02/2015 Financial Statement Release 2014 Jarmo Salonen, Head of IR Relations and Group Communications tel 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 8 If P&C Largest Nordic P&C insurer 9 16 Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed Holding company Appendix

4 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% 100% 21.2% > 25% MARKET POSITION The second largest P&C insurer in Denmark The largest Pan Nordic P&C insurer TOP3 company in life & pension in Finland with Baltic operations The largest Pan Nordic financial services group STRATEGY Economies of scale Expenses, risk management Underwriting focus Pan Nordic synergies Unit linked products and wealth management Profit oriented Cost, risk and capital INVESTMENT ASSETS ~EUR 2.4bn ~ EUR 12.3bn ~EUR 5.3bn ~ EUR 669bn B/S RETURN / PROFIT TARGET Profit margin of 10% CR% 91% RoE above 17.5% CR% below 95% RoE above 17.5% ROE of 13% at the required CET1 4

5 Sampo Group Basic Facts Sampo Group is a Mixed Financial Conglomerate Market cap November 3, 2014, EURm Strong relative performance Nordea DnB Swedbank Handelsbanken >21% Danske Bank SEB Sampo Gjensidige Sampo ownership structure Tryg Solidium*,11.9% Jyske Varma Mutual Pension, 6.35% Topdanmark Storebrand >25% Ilmarinen Mutual Pension, 1.0% Björn Wahlroos, 2.1% Alm.Brand Aktia Protector Source: Datastream Bank Insurance Kaleva Mutual Insurance, 0.93% Other domestic owners, 18.15% Foreign and nominee registered owners, 59.57% 5 *100 % owned by the Republic of Finland

6 Sampo Group Basic Facts Well established Insurance Subsidiaries If P&C Well diversified and Profitable Pan Nordic Non life Insurer Mandatum Life Leading Finnish Life and Wealth Management Service Provider If P&C provides insurance solutions and services in Finland, Sweden, Denmark, Norway, Baltics (and Russia) for corporates and private persons Major Lines of Business motor workers compensation liability accident property cargo If generated EUR 711m (700) in pre tax profits Excellent combined ratio of 87.8% (88.2) Risk ratio 65.4% (65.5) Cost ratio 22.5% (22.8) Expense ratio 16.6% (16.8) Resilient business model over the cycle Topdanmark a Danish player Focus on personal, agricultural and lower SME markets Provides comprehensive Wealth Management & Life insurance solutions in Finland and Baltics for corporates and private persons Services provided pensions & savings wealth management reward commitment riskinsurance 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 112m (103) in pre tax profit to the Group 6

7 Sampo Group Basic Facts 7

8 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 affiliated companies through Boards by setting (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 8

9 Sampo Group Basic Facts 3 8 If P&C Largest Nordic P&C insurer 9 16 Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed Holding company Appendix

10 Largest Nordic P&C Insurer with Synergies Market SharesbyCountry Nordic Market shares Total GWP ~EURbn 25 If P&C Norway 2013 GWP EUR 6.4bn Gjensidige 25% If 24% Tryg 14% Sparebank 1 10% Denmark Q3/2013 GWP EUR 6.8bn ( 12) Tryg 19% Topdanmark 17% (of which If s share 4%) Codan (RSA) 13% Alm. Brand 10% If 6% Finland 2013 GWP EUR 4.1bn Pohjola 31% LähiTapiola 26% If 26% Fennia 10% Sweden 2013 GWP EUR 7.7bn LF 30% If 18% RSA (T H) 16% Folksam 16% Baltics 2013 GWP ~EUR 0.8bn RSA 23% If 14% BTA 14% Ergo 13% Gjensidige 8% Other; 27 LähiTapiola; 4 Pohjola; 4 Folksam; 5 IF Nordic peer group* Generali Zürich AXA Allianz RSA Aviva LF; 9 If; 18 RSA; 9 Expense Ratios 2013, % *2012 Topdanmark; 5 Tryg; 10 Gjensidige; 9 16, ,1 27,2 26,5 28,4 30,1 32,8 10

11 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. 11

12 If P&C Good Diversification in Sales and Results Commercial; 1082; 29% Commercial; 120; 28 % By Business Area Baltic; 94; Industrial; 3% 520; 14% By Business Area Baltic; 18; 4 Industrial; % 35; 8 % Gross Written Premiums, EUR 3,724m Private; 2003; 54% Technical Results, EUR 441m Private; 264; 60 % Finland ; 875 ; 24 % Finland ; 106 ; 24 % Denmark; 323 ; 9 % Sweden; 68 ; 16 % By Country Baltic; 94; 2 % By Country Denmark; Baltic; 18; 46 ; 11 % 4 % Norway; ; 33 % Sweden; ; 32 % Norway; 198 ; 45 % 12

13 If P&C Disclipined Underwriting and Diversification works Combined Ratio Development Geographical Diversification in CR 100,9 100 % 92,6 90,5 89,9 90,6 91,8 92,1 92,8 92,0 88,9 88,1 87, ,6 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22, ,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 65,4 65,4 0 If- Total If Sweden If Norway If Finland If Denmark Risk ratio Cost ratio Target CR Combined Ratio If P&C and Nordic Peers % ,1 95,2 92, , ,7 90,6 88,9 88,1 Standard deviation % 3.9% 3.0% If P&C Nordic Market (incl. If) 3.9% 4.2% 13

14 If P&C Strong & Stable Annual Profit Development EURm Profit before tax Comprehensive income EURm 9M/2014 9M/2013 Profit before taxes Comprehensive Income

15 If P&C Seasonality in Quarterly Results and CR% EURm 350 Technical result Investment result Operating result Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Q4 Q3 Q2 Q1 Average Quarterly CR%, Year 2013 CR% Year 2014 CR%

16 If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 12.3bn Equities 11% Other fixed income 56% Private Equity 0,2% Real Estate 0,2% Duration 1.0 years Average Maturity 2.3 years Fixed Income Running Yield 2.5% Money Market 14% Public sector 19% 14% 11% 9% 6% 4% 1% 2% 4% Mark to Market Investment Return 4,3% 5,8% 4,4% 2,6% ,1% 12,4% 689 7,4% 1,8% Investment Return, EURm 558 6,1% 5,0%3,6% /

17 Sampo Group Basic Facts 3 8 If P&C Largest Nordic P&C insurer 9 16 Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed Holding company Appendix

18 Mandatum Life Finnish Life Insurer with Asset 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 18

19 Mandatum Life Mandatum Life Business Volumes With Profit EUR 118m Premiums Written*, total EUR 774m Insurance Savings, total EUR 8,763m U L EUR 656m With Profit EUR 3,550m Unit linked life Unit linked pension Unit linked capital redemption Unit linked Baltic Other life Other pension Other capital redemption Other Baltic *) Direct insurance EURm Technical Reserves, EUR 9,014m U L EUR 5,214m Focus area /2014 Guaranteed interest rates Unit linked 19

20 Mandatum Life Market Position Market Share in Finland Market Shares of Premiums Written % ,5 20,8 25,2 22,4 21,5 27,9 28,2 26,8 26,2 24,8 22,0 24,9 24,5 19,3 Group Pension 45,4 Corporates 41, ,9 19,5 20,4 19,8 19,3 19, All products Unit linked Unit Linked 17,2 Private Customers 11,8 0 9M/2014 9M/2013 All products 17.4% 19.6% Unit linked 17.2% 19.7% 20

21 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. 21

22 Mandatum Life Profit Development EURm EURm 9M/2014 9M/2013 Profit before taxes Comprehensive income Profit before taxes Comprehensive income

23 Mandatum Life Mandatum Life Profit by Components EURm 1 9/ /2013 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 EURm

24 Mandatum Life Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.3bn Mark to Market Investment Returns Real estate 4% Private equity 5% Other 6% Money market 19% 20% 15% 10% 5% 12,0% 9,7% 8,3% 5,0% 16,8% 11,1% 9,4% 7,1% 3,9% Public sector 4% 0% 5% 10% 7,8% 1,4% Equities 30% Duration 1.7 years Average Maturity 2.1 years Fixed Income Running Yield 3.5% Other fixed income 32% ML Investment Return, EURm /

25 Sampo Group Basic Facts 3 8 If P&C Largest Nordic P&C insurer 9 16 Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed Holding company Appendix

26 Sampo Group Results, Capitalisation and Investments Stable Development of Profit before Taxes EURm ,833 * EURm 9M/2014 9M/2013 P&C Life Nordea Holding Group 1,313 1, If P&C Mandatum Life Sampo Bank If P&C Mandatum Life Nordea / Investment If P&C Mandatum Life Nordea / Associated * One off item sale of Sampo Bank P&C Life Banking Nordea dividends Other 26

27 Sampo Group Results, Capitalisation and Investments Stable Companies & Group Level Diversification* P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS Geographical diversification Strong Retail Banking Franchise PBT Diversified earnings base: IF 45% Banking (Retail, Wholesale) ML 10% Transaction Services Nordea 45% Asset Management Markets Operations Life Insurance Low earnings volatility & stable ROE over the cycle * Correlations of quarterly Reported Profits 2005 Q3/2014 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 Dependency on Capital Markets 27

28 Sampo Group Results, Capitalisation and Investments Fixed Income Investments in the Financial Sector* EURm Covered bonds Money market Long term senior debt Long term subord. debt Total % Sweden 1, ,767 46% Finland 209 1, ,220 27% Norway ,385 17% Denmark % the United States % France % Switzerland % the Netherlands % Austria % Iceland % Germany % Others % Total 3,064 2,982 1, , % *Exposure tables vs. Allocation tables small differences. 28

29 Sampo Group Results, Capitalisation and Investments Strong Group Solvency EURm , ** ,928 Sampo plc, 36 Nordea 3, Life 223 P&C * P&C Life Nordea Diversific. Group EC Group ASC Regulatory minimum *) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions Internal Treatment S II 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 167% (9,413/5,647) Regulatory Treatment = S I Minimum requirement (4,928) 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 191% (9,413/4,928) 29

30 Sampo Group Results, Capitalisation and Investments Internal Capital Base above Capital Needs EURm EC,Diversified EC,Undiversified ASC 30

31 Sampo Group Results, Capitalisation and Investments Investment Allocation by Risk Profile Total Group (MEUR) 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 12/13 03/14 06/14 09/14 Money Market 6 % 10 % 84 % 9 % 8 % 90 % 16 % 20 % 41 % 14 % 19 % 66 % Long Term Fixed Income 82 % 49 % 12 % 79 % 48 % 6 % 73 % 36 % 28 % 75 % 36 % 21 % Equity 11 % 27 % 2 % 11 % 29 % 3 % 11 % 30 % 19 % 11 % 30 % 8 % Private Equity 0 % 4 % 1 % 0 % 5 % 1 % 0 % 5 % 12 % 0 % 5 % 4 % Other 1 % 10 % 0 % 0 % 9 % 0 % 0 % 10 % 1 % 0 % 10 % 0 % 31

32 Sampo Group Results, Capitalisation and Investments Investment & 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 - 2,301 1, , , 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 4,524 3,455 2,292 1,134 1,283-1,829 14,516 2, , Change from EURm Note: Category Other includes private equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals. 32 * In Exposure tables the calculation rules may differ from Allocation tables in some areas.

33 Sampo Group Results, Capitalisation and Investments Sampo Group Public Sector Fixed Income Investments no Periphery* EURm Government Government guaranteed Public sector, other Total Sweden ,144 the Netherlands Germany France Norway Finland Denmark Total 1, ,046 2,502 * Exposure tables vs. Allocation tables small differences 33

34 Sampo Group Basic Facts 3 8 If P&C Largest Nordic P&C insurer 9 16 Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed Holding company Appendix

35 Sampo plc Straightforward Cash Flows & Strong Balance Sheet Flow of Funds Balance Sheet Dividends If P&C Mandatum Life Nordea Sampo plc Income Interest on Liquidity Income from other investments Assets EURm 9,077 Liabilities EURm 9,077 Liquidity 520 CPs Issued 298 Investment assets 101 LT Senior Debt 2,206 Real Estate 2 Private Placements 175 Private Equity 33 Bonds Issued 2,031 Other investments 66 Pension Insurance Loans 0 Subordinated Loans 438 Subordinated Debt 0 Internal Administration Costs Discretionary Dividends for Shareholders Interest Expenses for Bondholders Equity Holdings 7,928 Capital 6,426 Subsidiaries 2,370 Undistributable 98 Associated 5,557 Distributable 6,328 Other Assets 90 Other Liabilities 147 Key Credit Metrics well in Single A range Sampo plc Gross Debt, EURm 2,503 Gross Debt to Equity 39% Financial Leverage* 28% *= Debt/(Debt+Equity) Sampo Group, EURm Q4/2013 Q3/2014 Shareholders' Equity 10,643 10,845 Hybrid Bonds Senior Debt 2,027 2,503 Financial leverage 16.8% 19.4% 35

36 Sampo plc Dividends & Reported Profits EURm * Dividend income Operating expenses Net financial expenses EURm 1 9/ /2013 Dividends Operating expenses Net financial expenses/income Profit before taxes * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments Profit before taxes 36

37 Sampo plc Dividends Received by Payment Year EURm Net Debt Q3/2014 EUR 1,545m vs. stable Dividend Inflows If Mandatum Life Banking* 600 **) ** *) Sampo Bank , Nordea 2007 > **) estimated value in euros 37

38 Sampo plc Sampo plc Debt Instruments* Instrument & Principal Coupon Swap Effective Rate Maturity Senior Bond 300 EURm (EMTN) % % Senior Bond 2,000 SEKm (EMTN) Stibor3M+ 0.75% % Senior Bond 300 EURm (EMTN) % Euribor3M % % Senior Bond 500 EURm (EMTN) % Euribor3M % % Senior Bond 2,000 SEKm (EMTN) Stibor3M % % Senior Bond 500 EURm (EMTN) 1.50% % CP s issued 298 EURm Euribor + Margin % Average 3M Public debt 2,329 (2,029) EURm % (1.8175%) Private placements 175 EURm % Total 2,503 (2,203) EURm % (1.8507%) EURm Maturity Structure Comments on Debt CP s Senior under EMTN Senior Retail Private *numbers in brackets are after repayment of EUR 300m bond Most of the debt tied to short-term indices - mitigation of group level interest rate risk - use of swaps Diversification is actively sought over - maturities -investorbase Private Placements - targeted at Finnish retail investors - related to Mandatum Life s WM services 38

39 Sampo plc Sampo Group Conservative leverage EURm Sampo plc Net debt Group NAV Group Equity Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 39

40 0% 5% 10% 15% 20% 25% 30% 35% 40% Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 Net debt/nav 40 Sampo Group Loan to Value Sampo plc

41 Sampo plc Sampo plc Key Credit Considerations Stable Dividend Flow 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 41

42 Appendix

43 Appendix Structural changes of Sampo Group to the position as the leading Nordic financial group Sampo Insurance Company and Leonia merge into the Sampo Leonia financial services group. The Group s business areas are long term savings (life insurance, asset management and mutual funds), banking, investment banking, and P&C insurance. Mandatum Bank joins the Group, and the Group s name is shortened to Sampo. 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). Following the transaction, Sampo has three core businesses: P&C insurance, banking and long term savings. Sampo Group divests Sampo Bank Group to Danske Bank A/S. Following the transaction, Sampo s business areas are: P&C insurance and life insurance. Sampo s Nordea holding exceeds 20% and Nordea becomes an associated company. Sampo Group s (If P&C s) Topdanmark holding exceeds 23% and Topdanmark becomes If s associated company. Sampo Group (If P&C) acquires Tryg s Finnish Business and the acquisition was closed in May If P&C signs a partnership agreement with Nordea. Sampo Group (Mandatum Life) acquires Suomi Mutual s with profit group pension portfolio. The portfolio transfer will take place on 30 Dec

44 Appendix IF P&C Quarterly Results and C/R EURm Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12 Q3/12 Premiums earned 1,124 1,122 1,104 1,112 1,139 1,140 1,115 1,121 1,121 Claims incurred Operating expenses Other technical income and expenses Allocated investment return transferred from the nontechnical account Technical result Investment result Allocated investment return transferred to the technical account Other income and expenses Operating result Risk ratio, % Combined ratio, %

45 Appendix IF Regulatory Solvency Capital & Ratio* EURm % 88% 74% 71% 66% 77% 79% 72% 75% 81% 94% % 100% 80% % 60% % % 0 0% Solvency capital (lhs) * Solvency ratio, (IFRS) % = + solvency capital + premiums earned from 12 months Solvency ratio (rhs) x 100% 45

46 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 Catastrophe per Event Property per Risk Casualty Personal Accident Motor TPL Cargo Reporter Capacity SEK 6,300 SEK 2,000 / 3,500 SEK 500 SEK 1,100 Unlimited SEK 850 Retention SEK 250 SEK 250 SEK 100/ 10/$15 SEK 100 SEK 100 SEK 100 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 Capacity SEK 300 SEK 200 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 Long term reinsurance partners having reinsurance as core business Relatively high retentions Stable reinsurance program Efficient pricing and terms 46

47 Appendix Mandatum Life Regulatory Solvency Ratio* 35% 30% 25% 20% 15% 17,7% 21,3% 20,1% 16,5% 18,5% 25,8% 20,9% 27,7% 27,6% 29,8% 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% 47

48 Appendix Nordea Profitable & The Most Diversified Nordic Bank EURm Restructuring provision Write backs Loan losses Operating profit 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 48

49 Appendix Nordea BV on Consolidated Balance Sheet Nordea in Sampo Group s B/S EURm Acquisition price 5,557.3 Retained earnings 1,428.3 Accumulated other changes in Nordea s equity 79.5 Share of Nordea s net profit Amortisation 26.5 Deferred tax 5.8 Dividends Share of Nordea s other comprehensive income 47.0 Share of Nordea s other changes in equity 17.9 Share of Nordea s goodwill change 15.7 Total 7,023.8 * As of 27/10/2014 Figures Per Share EUR Acquisition price 6.46 Book value 8.16 Market Value* 9.89 No. of shares 860,440,497 49

50 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

51 Appendix Principles of Capital Management Risk Capital Available > Risk Capital needed Risk Capital Available = SI Capital + Other items absorbing economic losses. Risk Capital Need = Measured Economic Capital + Non measurable risks. Buffer between measures under constant considerations. Pro Active management of Risks/Capitalisation. Economic Capital at 99.5% as a basis for Risk Capital Need Economic capital is an estimate of Risk Capital needed to keep the Group solvent. EC is calculated at 99.5% confidence level and 1 year risk horizon. Non measurable risks include liquidity, market, illiquidity and business environment risks. Adjusted Solvency Capital is a measure of Risk Capital Available Solvency I capital items included as such. The difference between Undiscounted technical provisions in balance sheet and their discounted value (so called Liability Side adjustment). Capital instruments excluded from regulatory capital in Solvency I. 51

52 Appendix Economic Capital Reporting Principles Definitions Economic capital (EC) is used as an internal measure of capital required for measurable risks the Group is exposed to. EC is defined as the amount of capital to protect the solvency over a one year time horizon with a probability of 99.5 per cent. EC at company level EC is calculated in If P&C and Mandatum Life using a set of calculation methods, which have been developed for the specific needs of each company. In If P&C and Mandatum Life EC accounts for market, credit, insurance and operational risks, as well as the diversification effect between these risks. EC figure calculated and reported by Nordea is used in Sampo Group reporting. Because Nordea s reported figures are expressed at 99.97% confidence level they are converted by Sampo into 99.5% confidence level. EC at Group Level Correlations between companies risks are assessed and diversification effect is calculated. Group wide EC is a sum of Companies EC and the diversification effects. 52

53 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. 53

54 Appendix Sampo FiCo Coordination duties 54 54

55 Appendix Sampo Group s outlook for 2014 Sampo Group s business areas are expected to report good operating results for However, the mark to market results are, particularly in life insurance, highly dependent on capital market developments. The 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 2014 and achieve a combined ratio of per cent. Nordea s contribution to the Group s profit is expected to be significant. 55