Capital Market Day. Group CEO and President Kari Stadigh. May 19 th, 2009

Transcription

1 Capital Market Day Group CEO and President Kari Stadigh May 19 th, 2009

2 Sampo Group s results AFS, Profit before taxes M-to-M profit before taxes EURm 200 EURm 100 1Q/ Q/ Q/2009 1Q/ Sampo Group Insurance operations Holding 2

3 Sampo Group s profit before taxes, January March 2009 EURm P&C insurance Life insurance -21 Holding Sampo Group Q1/2008 Q1/2009 3

4 Sampo Group s net asset value per share EUR / / / /2008 3/2009 4

5 Sampo Group s fair value reserve development EURm , ,800-2,400-3,000-2,364-2,560 12/06 03/07 06/07 09/07 12/07 03/08 06/08 09/08 12/08 03/09 Sampo Group fair value reserve, after tax 5

6 Sampo Group's investment allocation, 31 March 2009 Total EUR 16.8 billion 1 % 2 % 12 % 7 % 16 % Money Market 16% Bonds 63% Nordea 12% Equities other 7% Real Estate 1% Other 2% 63 % Investments of Sampo plc, Mandatum Life and If P&C 6

7 Equity allocation Sampo Group, 31 March 2009 Total EUR 3.0 billion 2%2% 1%4% 3% 14% 10% 64% Scandinavia 14% Nordea 64% Finland 10% Western Europe 3% East Europe 1% North America 4% Japan 2% Far East 2% 7

8 Fixed Income allocation by sector, 31 March 2009 Total EUR 13.3bn Corporate 20% Money Market 22% Government 16% Banks 21% Banks Covered Bonds 21% 8

9 If P&C s combined ratio development % Q1/03 Q1/04 Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Risk ratio Cost ratio 9

10 Solvency of Mandatum Life Group EURm SOLVENCY CAPITAL Q1/ Capital and reserves Dividend payment 0 0 Subordinated capital Unrealized gains Deferred taxes from Fair Value Reserve Deferred taxes on profit brought forward Other items TOTAL TECHNICAL PROVISIONS Technical provisions on own account 6,115 6,119-75% of t/p in unit linked insurance -1,244-1,227 TOTAL 4,871 4,891 SOLVENCY RATIO % OF TECHNICAL RESERVES

11 Sampo Group s outlook for the rest of 2009 The macroeconomic situation will only have a small negative impact on premium growth in P&C insurance and the insurance technical result of If P&C is not expected to suffer in 2009 from the economic downturn. If P&C is expected to reach its long-term combined ratio target with a combined ratio of per cent. Mandatum Life s profit is to a very large extent dependent on investment markets and it is impossible to reliably estimate the results for Sampo plc may increase its holding in Nordea further provided that market conditions remain favourable. 11

12 Capital Market Day Group CEO and President Kari Stadigh May 19 th, 2009

13 Capital Market Day Q1/2009 in brief Group CFO, Peter Johansson May 19th, 2009

14 Sampo Group s results Profit before taxes and net profit Profit before taxes by quarters EURm 169 EURm Q/2008 1Q/ Q108 Q208 Q308 Q408 Q109 Pre-tax profit Net profit 2

15 Sampo Group s net asset value, 31 March 2009 EURm 5,000 4,000 3,000 2,715 2, ,589 1,000 1,649 0 P&C insurance Life insurance Holding Sampo Group (incl. eliminations) 3

16 Fair value reserve by segment and asset class, 31 March 2009 EURm Fixed income Equity Derivatives held for hedging Deferred taxes FVR net P&C Insurance Life Insurance Holding , ,839.5 Sampo Group* , ,560.1 *Figures after tax 4

17 Sampo Group s economic capital 12/2005-3/2009 EURm 3,000 2,000 1, ,502 1,690 1, ,173 1, / /2006*) 12/ /2008**) 3/ , ,148 2,695 3,395 1,895 1,976 P&C *)New methodology since 2008 Life Holding Sampo Group (incl. diversification effect) **) 99.5% VaR since

18 Group economic capital and solvency, 31 March 2009 According to Solvency II EURm 4,500 Liability side adjustments, If and Mandatum Life 4, ,000 Excess capital EUR 2,1bn 1, ,976 3, P&C Life Holding Diversif. Group Economic Capital Adj. Group Solv. Capital 6

19 Sensitivity of Group investments to market risks on 31 March 2009 EURm If P&C *Eliminations included and figures after tax Mandatum Life Sampo plc Sampo Group Equities -10% % Interest rates -100 bps bps Alternatives -10% % Currency -5% -5 (SEK) 2 (EUR) 73(EUR) - +5% 5 (SEK) -2 (EUR) -73 (EUR) - The changes of interest rates have a strong effect to the reinvestment risk of the insurance companies. The sensitivities include the effects of derivative positions, but do not capture indirect effects, like the impact of the changes of the discount rates in the value in force. All sensitivities are before taxes. The scenario definitions assume an uniform movement of the whole underlying market. 7

20 Life insurance profit by components EURm Net investment income - Transferred to expense result - Return on unit-linked policies - Return on with-profit policies* Q1/2009 Q1/ INVESTMENT RESULT EXPENSE RESULT RISK RESULT OTHERS PROFIT BEFORE TAXES Change in the market value of investments PROFIT AT MARKET VALUES *Includes guaranteed interest, bonuses and change in the reserves of the above items 8

21 Embedded value for Mandatum Life EURm Net Asset Value PVFP of Mandatum Life Cost of capital Value of in-force business (VIF) Embedded Value of Mandatum Life The impact of tax asset 62 M is included in VIF through the discounting, not in NAV as the face value. 9

22 History of embedded value results EURm *) * ) Includes EUR 21m due to the change to IFRS accounts

23 P&C developments Torbjörn Magnusson

24 2

25 Q1 in depth The Nordic P&C market Disciplined Underwriting Financial Targets Driving new business initiatives 3

26 If total - Q1 result MSEK 3M-09 3M-08 % change 2008 GWP ,0% Technical result ,0% Investment result ,0% Operating result ,6% Result for the period ,2% Risk ratio 70,7% 70,5% 68,1% Cost ratio 23,5% 23,5% 23,7% Combined ratio 94,2% 94,0% 91,8% RoE full tax 14,1% 5,7% -3,3% 4

27 Results per Country Sweden Norway 97,3% 92,0% 95,3% 95,4% 93,3% 99,6% 3M 08 12M 08 3M 09 3M 08 12M 08 3M 09 Finland Denmark 89,6% 89,4% 90,0% 92,6% 91,9% 85,6% 3M 08 12M 08 3M 09 3M 08 12M 08 3M 09 5

28 Seasonal effects Monthly snowfall in in Oslo Oslo Jan Feb Mar Apr Nov Dec 80% 70% 60% Risk ratio performance If group Q1 Q2-Q4 6

29 Other comments Q1 Large claims MSEK 90 better than normalized Largest claim: MSEK 71 Prior year gains of MSEK 214 Currency adjusted growth 0,5% Rate increases large corporates Growth pause in Baltic & Russia 7

30 Q1 in depth The Nordic P&C market Disciplined Underwriting Financial Targets Driving new business initiatives 8

31 Solid profitability performance GWP 2008, bn SEK Average CoR, Leading P&C companies Denmark Denmark (2007) (2007) 57 ~ 89 ~86 Sweden Sweden 57 ~ 93 ~ 92 Norway Norway 45 ~ 89 ~ 94 Finland 31 ~ 98 ~ 97 Note: Average exchange rates for 2008 used (DK 2007) Source: National insurance federations, annual reports 9

32 Insurers seeking Nordic synergies Nordic expansions and new entrants 2008/09 Market Entry 2009 Acquisitions in 2009 TrygVesta/Moderna Alpha Group/Nemi Market Entry 2008 Entry through acquisition 2007 Corporate market 2008 Brand change from Hansabanke 2008 Stated entry in Latvia during 2009 Acquisition 2006/2008, all Baltic countries Market Entry 2008 Market entry Lithuania and Latvia

33 Increased reinsurance premiums Reinsurers wresting back initiative in 2009 Thursday 26th February 2009: 14:52 Post Magazine Reinsurance rates lift about 5% in new year renewals Insurance Times News Issue Reinsurance rates up on hurricanes, credit crisis Mon. January 05, 2009; Tradingmarkets.com 11

34 Industry has reacted to claims inflation 12

35 Effects from the recession Volumes Slowdown of corporate market Cargo Business interruption Workers compensation Property & Liability Reduced demand in some private segments New car products Travel Claims costs Mixed developments in cost inflation Reduced cost of domestic building materials Adverse currency effects for car components in Sweden and Norway Some reduction in claims frequency Decreased travelling Reductions in Cargo Marginally less driving Fraud? To date no significant impact Pressure on cost ratio No immediate risk ratio effect 13

36 Motor insurance resilient to decline in new car sales New car registrations* 2008, YoY change New car registrations* Q1 09, YoY change Sweden -17% -29% Norway -14% -36% New car sales representing 6-7%** of national car pools Finland 11% -36% Denmark -8% -39% * Passenger cars ** Sweden Source: ACEA 14

37 Insurance industry historically stable Example Sweden XX % Yearly growth GWP*, MSEK 3 % 1 % 3 % -1 % Risk ratio**, percent 71% 67% 61% 60% 61% * Market GWP for Motor, home and property insurance ** Claims paid for motor, home and property insurance policies (total market) Source: Försäkringsförbundet 15

38 Q1 in depth The Nordic P&C market Disciplined Underwriting Financial Targets Driving new business initiatives 16

39 10 year history of UW and operational excellence in a ~35 million people home market Customer & partner focused distribution Claims organization with cross Nordic synergies Nordic UW excellence Centralized IT and support functions Private Commercial Industrial Baltic & Russia Financial steering and control 17

40 Continued strong performance Gross written premiums SEK bn Technical result SEK bn 36,8 37,2 37,8 39,0 40,1 4,8 5,1 5,2 5,3 5, R12 Q R12 Q

41 Focus on operational efficiency If Market* excl If If vs market expense ratio development 0,1% -1,2% -1,8% -1,7% -1,8% 18,9% 19,0% 19,0% 17,8% 19,2% 17,4% 18,9% 17,2% 19,2% 17,4% * Average leading competitors in the Nordic region 19

42 UW excellence, e.g. geographical pricing 2 areas 1. Large Towns 2. Rest of the country 7 areas 1. Large Towns 2. Medium sized towns 3. Medium sized villages 4. Small villages 5. Northern coast 6. Rest of Northern Sweden 7. Gotland areas Micro pricing with different price in every area areas 1. Large Towns Northern Sweden 3. Rest of the country areas Depending on product and cover 20

43 Speedy (!) realization of Nordic product system platform Project description Implementation plan Scope Nordic insurance system for commercial customers Handling of policies, claims and customer information Sweden Norway Improved process efficiency and quality 2010 Denmark Benefits Better tariffs and intelligent pricing Reduced IT costs 2011 Finland New products, and time to market

44 Q1 in depth The Nordic P&C market Disciplined Underwriting Financial Targets Driving new business initiatives 22

45 If s long term financial targets Return on Equity > 17,5 % Combined ratio < 95 % 23

46 Geographical diversification Country volatility in combined ratio If combined ratio distribution Target: < 95% If - Total If Sweden If Norway If Finland If Denmark 85% 85% 90% 90% If total 95% 95% 100% 100% Note: Distribution based on quarterly figures

47 Target calculation Return on equity NPE 100 Claims and operating costs -95 Investment income 7.7 Interest cost -0.8 Profit before tax 11.9 Tax -3.1 Profit after tax 8.8 Equity 50 Return on equity 17.5% Equity as share of premiums: Combined ratio: Investment return: Tax: Assumptions 50% 95% 3,5% 26.3% Subordinated debt not included in equity (interest related to subordinated debt included in interest cost) 25

48 Q1 in depth The Nordic P&C market Disciplined Underwriting Financial Targets Driving new business initiatives 26

49 Business initiatives Distribution power Customer value proposition Selective growth Personal risk If Plus Youth concept Senior concept Car brand agreements Customer retention 92% Russia 85% 86% 85% Sweden Norway Finland Denmark 27

50 New internet sales solution Sweden Demark Finland First release launched in Finland 2008 Second release launched in Finland and Sweden in January 2009 Third release launched in Finland, Sweden and Denmark in May

51 Car-branded insurance in Denmark Peugeot dealers ~60% ~60% ~50% 25% 4% 7% 10% 13% Q1 Market share, new cars sold Insurance penetration of new cars sold 29

52 Coverage of used car market Car insurance offer with exact quote to logged-in members Used car warranty and Try-On offer for car insurance Used car warranty and Try-On offer for car insurance Discounted car insurance offer 30

53 Relax, we'll help you. 31

54 Discounting in If P&C Torbjörn Magnusson, CEO of If P&C

55 Discounting of technical reserves Trend towards current value reportings Changed definition and regulatory capital requirements of each company Insurers writing the same business should be treated identically, regardless of domicile within EU Strong fit with Asset Liability Management perspective, traditional mismatch between economic value vs accounting definition Different accounting practices make combined ratio and other comparisons difficult 2

56 Total technical reserves in If Net technical reserves Dec SEK 81bn Discounted reserves, SEK 19bn Unearned premium reserve, SEK 16bn Undiscounted claims reserve, SEK 46bn 3

57 Tail data Average duration of claims reserves Years, Dec Weighted average duration: 6.0 years Motor Workers' Compensation Liability Accident Property Cargo Sweden Norway Finland Denmark 4

58 Calculated discounting effect - If result Q MSEK Reported 3M - 09 Discounting effect Adjusted 3M - 09 NPE Claims incurred Total Costs Total discount effect on all c/y reserves. Based on payment patterns and interest rate curves for each currency U/W Result Other technical result items incl allocated interest Technical Result Investment result Investment return transferred to techn accounts Interest expense, subord. notes Operating result Risk ratio 70,7% -3,3% 67,4% Combined ratio 94,2% -3,3% 91,0% Discount effect & allocated interest - Unwinding effect - Interest rate - Allocated interest (premium reserve undiscounted) 5

59 Discounting effects on balance sheet Balance sheet Balance sheet with discounted technical reserves Assets Liabilities Assets Liabilities Equity Equity 6

60 Interest rate sensitivity Discount rate Percent Discounting effect on C/R Percentage points 4,4 4,9 3,0 3,3 Q Q Q Q

61 Summary Today, If P&C does not use discounted reserves except for annuities However when discounting all claims reserves, the calculated effect on the combined ratio for Q1/09 is 3,3%-points (Q1/08, 4,9%-points) A 1% change in the discount rate changes the discounted combined ratio by about 1%-point 8

62 Capital Market Day Sampo s holding in Nordea Accounting issues Group CFO, Peter Johansson May 19th, 2009

63 Disclaimer This presentation, which does not purport to be all-inclusive, includes certain statements, estimates, projections, figures and approximations with respect to the matter addressed. Sampo plc or its officers, employees, affiliates, representatives or advisors do not make any representations, warranties or undertakings, whether express or implied, as to the accuracy, completeness or correctness of such statements, estimates, projections, figures or approximations or any other information contained herein. This presentation contains forward looking statements. All statements other than statements of historical facts included in this presentation, including, without limitation, those regarding Sampo Group s financial position, accounting, business strategy, plans and objectives, are forward-looking statements. Such forwardlooking statements involve known and unknown risks, uncertainties and other factors which may cause the actual performance or achievements to be materially different from any future performance or achievements expressed or implied by such forward-looking statement. Such forward-looking statements are based on numerous assumptions regarding Sampo Group s present and future business strategies and the environment in which Sampo Group will operate in the future. Further, certain forward-looking statements are based upon assumptions of future events which may not prove to be accurate. 2

64 Sampo Group s results January-March 2009, EURm Profit before taxes Reported Nordea 16.43% Equity method P&C Life Holding Eliminations Group profit before taxes Taxes Equity method 103 Profit for the period EPS

65 Sampo Group s investment in associates Illustrative Examples ( 16.43% of Nordea consolidated by equity method) 16.43% Nordea's Q1/2009 after tax result Opening balance sheet BV % Nordea's Q2/2009 after tax result 80 - Value in use at transition equals fair value or - value in use at transition equals NAV Nordea's dividend Q1 Q2 4

66 Sampo Group s solvency capital Consolidation method, Nordea pro forma 16.43% EURm (1) Equity 4,573 (2) Sectoral items 1,829 Insurance 549 Nordea 1,200 Nordea s dividend 80 (1)+(2) Group capital 6,402 (3) Intangibles and other deductibles -1,570 Goodwill -657 Equalisation reserves -370 Other -94 Dividend proposal -449 (1)+(2)-(3) Solvency capital after deductions 4,832 (4) Capital requirement 3,264 If 577 Mandatum 211 Nordea 2,472 Other 4 Nordea 16.43% EURm Equity 3,453 Goodwill & Other deductions -641 Tier 1 hybrid 238 Tier 1 3,050 Tier Other -286 Total capital 3,604 Value in Sampo s B/S -2,404 Consolidated capital 1,200 Capital requirement 2,247 Transition rules 225 Total 2,472 Group solvency 1,568 After transition rules 225 1,793

67 Sampo Group s solvency capital Consolidation method, Nordea pro forma 16.43% Q1/2009 April 2009 Nordea s share price EURm Equity 4,573 (4,573+1,340)=5,913 Sectoral items 1, Insurance Nordea 1, Nordea dividend Nordea 16.43% Tier 1 3,050 Total capital 3,604 Value in Sampo s B/S -3,744 Consolidated capital -140 Group capital 6,402 6,402 Solvency capital neutral to Nordea s share price 6

68 Group economic capital and solvency 31 March 2009 According to Solvency II (Nordea 16.43% consolidated) EURm 6,000 4,000 Liability side adjustments, If and Mandatum Life Equalisation reserves Excess capital EUR 2.3bn 2, ,234 3,599 4, P&C Life Nordea Diversif. Group Economic Capital Adj. Group Solv. Capital 7

69 Nordea Q1/2009 Shares 4, million EUR/share Equity (pro forma) 5.21 Tier Total capital 5.44 Capital requirement Buffer 2.05 After transition 0.06 Total buffer 2.11 Sampo Group million %/shares Nordea shares % % % Potential additional investment in Nordea Purchase Cons.buffer New shares Total new Capital price/share EUR/share million Investment employed EUR EURm EURm ,

70 Capital Market Day Chairman of the Board Björn Wahlroos May 19 th, 2009

71 World indices Index =100 World GDP, Growth %, rhs Index Freight index, Baltic Dry, lhs % World MSCI, Total return, lhs Source: Reuters EcoWin,IMF 2

72 Nordic financial groups share price development Share price development 1 January May

73 Sampo is one of the largest financial groups in the Nordic area measured by market cap EURm Nordea Handelsbanken Investor Sampo Danske SEB DnBNOR Swedbank Industrivärden TrygVesta Pohjola Bank Topdanmark Storebrand Jyske Bank Alm.Brand 3,969 2,829 2,803 1,585 1,421 1,197 1, ,676 8,505 8,179 8,092 7,686 6, ,480 Source: Reuters Ecowin

74 Sampo Group s holding in Nordea and Nordea share price development Nordea holding, % Flaggings: : 5% : 10% : 15% 7.56 Average Price 6.42 EUR in the end of April % Nordea share, EUR % %

75 Capital Market Day Chairman of the Board Björn Wahlroos May 19 th, 2009