Annual Report. Veritas Pension Insurance VERITAS PENSION INSURANCE COMPANY LTD. Veritas Pension Insurance in fi gures. Profi t and Loss Account

Transcription

1 Veritas Pension Insurance Annual Report VERITAS PENSION INSURANCE COMPANY LTD CONTENTS Veritas Pension Insurance in fi gures Profi t and Loss Account Balance Sheet Notes to the Profi t and Loss Account Notes to the Balance Sheet Allocation of investment Income from investment Key fi gures and analyses

2 Veritas Pension Insurance VERITAS PENSION INSURANCE IN FIGURES INVESTMENTS ( current value ) Veritas Pension Insurance Real estate Shares Money market instruments Bonds Loans M PREMIUM INCOME Veritas Pension Insurance M MARKET SHARES YEAR Employee pension company 100 Varma 37,5 % Ilmarinen 31,8 % Tapiola 15,8 % Fennia 11,0 % Veritas 3,6 % Alandia 0,3 % OPERATING EXPENSES Veritas Pension Insurance % 110 DEVELOPMENT OF SOLVENCY 100 Veritas Pension Insurance Goal zone Solvency limit Valuations differences Solvency margin entered in the balance sheet %

3 PROFIT AND LOSS ACCOUNT Parent company Group Technical account Premiums earned Premiums written Reinsurers' share Investment income Investment revaluation Claims incurred Claims paid Reinsurers' share Change in provision for outstanding claims Effect of merger on provision for outstanding claims Reinsurers' share Effect of merger on reinsurers' share Claims incurred total Change in provision for unearned premiums Change in provision for unearned premiums Effect of merger on provisions for unearned premiums Reinsurers' share Effect of merger on reinsurers' share Statutory charges Operating expenses Investment charges Other technical expenses Investment value adjustments -4 0 Technical result Non-technical account Other expenses Reduction in value of concern goodwill Share of participating interests result Direct taxes Taxes for the accounting period and from previous periods Deferred tax Result on ordinary activities after taxes Appropriations Change in accelerated depreciation Minority interest Result for the accounting period The profit and loss account for the concern is not presented according to the official presentation. In the official version the technical account is presented separately for Life insurance and Statutory Pension insurance.

4 BALANCE SHEET Assets Parent company Group Intangible assets Intangible rights Other capitalized expenditure Advanced payments Investments Investments in real estate Real estate and shares in real estate Loans to group companies Loans to participating interests Investments in group companies and participating interests Shares in group companies Debt securities issued by group companies Shares in associated undertakings Shares in participating interests Other investments Stocks and shares Debt securities Loan receivables guaranteed by mortgages Other loan receivables Investments total Investments for the benefit of life assurance policyholders who bear the investment risk Debtors Arising out of direct insurance operations Policyholders Intermediaries Reinsurance debtors Other debtors Other assets Tangible assets Furniture and fixtures Other tangible assets Cash at banks and in hand Accrued income Interests and rents Other accrued income Total assets

5 BALANCE SHEET Liabilities Parent company Group Capital and reserves Share capital Share premium fund Non-restricted funds Result for the accounting period Minority share Accumulated appropriations Depreciation difference Subordinated loans Technical provisions Provisions for unearned premiums - life insurance Reinsurers' share Provisions for unearned premiums - statutory pension insurance Provision for outstanding claims - life insurance Reinsurers' share Provision for outstanding claims - statutory pension insurance Technical provisions total Technical provisions for Unit-linked policies Technical provisions Creditors Direct insurance creditors Reinsurance creditors Other creditors Deferred tax Accrued liabilities and deferred income Total liabilities

6 NOTES TO THE PROFIT AND LOSS ACCOUNT Group Specification of premiums written and claims paid Premiums written - life insurance Direct insurance In Finland Reinsurance Premiums written before reinsurers share Items deducted from premiums written Credit losses on premiums due (-) 0-5 Premiums written before credit losses and reinsurers' share Life insurance Unit-linked insurance Other individual life insurance Capital redemption Employees' group life insurance Other group life insurance Pension insurance Unit-linked individual insurance Other individual pension insurance Group pension insurance Continuous premiums Lump-sum premiums Premiums from contracts entitled to bonuses Premiums from unit-linked insurance Benefits paid - life incurance Direct insurance Life assurance Pension insurance Reinsurance Benefits paid before reinsurers share Of which: Surrender Refund of benefits Others Benefits paid due to Unit link contracts

7 NOTES TO THE PROFIT AND LOSS ACCOUNT Group Premiums written - statutory employment pension insurance Direct insurance Basic insurance under the Employees' Pension Act Employer contribution Employee contribution Additional pension insurancee under the Empoyees' Pension Act Minimum cover under the Self-employed Persons' Pensions Act Additional pension insurance under the Self-employed Persons' Pensions Act Premiums written Credit loss on premiums due (-) Basic insurance under the Employees' Pension Act Additional pension insurancee under the Empoyees' Pension Act Claims paid - statutory pension insurance Direct insurance Paid to pensioners Basic insurance under the Employys' Pension Act Additional pension insurancee under the Empoyees' Pension Act Minimum cover under the Self-employed Persons' Pensions Act Additional pension insurance under the Self-employed Persons' Pensions Act Remuneration paid / received for liability distribution Pensions paid under the Empoyees' Pension Act Pensions paid under the Self-employed Persons' Pension Act Share of the unemployment insurance fund insurance contribution Self-employed Persons' Pension Act state share Direct insurance total Paid/received refunds for payments toward joint liability 0-80 Payout management expenses Working capacity maintenance expenses Total claims paid

8 NOTES TO THE BALANCE SHEET 2005 Investments Parent company Group Residual Book Current Residual Book Current acquisition value value acquisition value value cost cost Current value of investments and valuation difference Real estate investments Real estate Shares in group companies Shares in participating interests Other shares in real estate Acquisition costs of leasehold on real estate Loans to group companies Loans to participating interests Group companies Shares and holdings Loans Investments in participating interests Shares and holdings Other investments Shares and holdings Debt securities Loans guaranteed by mortgage Other loan receivables The remaining acquisition cost of debt securities includes the difference (+/-) between the nominal value and acquisition price which is allocated to interest income (+) or deducted from it (-) Return on the index-linked loans 0 0 The book value consists of Revaluations entered as income Other revaluations Difference between the current and book values

9 Parent company Group Changes in equity Share capital Share capital Total shares Share premium account Share premium account Profit of own shares sold 2005: pcs Other equity Contingency fund Acquisition of own shares 2005: 0 shares / 2004: 82 share Sale of redeemed own shares, 2005: pcs Transferred from profits from previous years Non-restricted reserve to be used by the Board of Directors Transferred from profits from previous years Used for generally beneficial purposes Profit for the previous year Transferred to the contingency fund Dividends to shareholders Transferred to the Board's non-restricted reserve Result for the year Total other equity Total equity The company has no redeemed own shares on Profit available for distribution Non-restricted equity, total Voluntary provisions and accelerated depreciations included in equity Distributable earnings, total Key figures pertaining to solvency Solvency margin Capital and reserves after profit distribution Voluntary provisions and accelerated depreciations Valuation difference between current asset value and book values on the balance sheet Unallocated additional benefits provision Intangible assets and insurance acquisition costs not entered as expenses (-) Other items Solvency margin required under the Insurance Companies Act, Chapter 11,

10 ALLOCATION OF INVESTMENT M % M % M % M % M % Loan receivables 1) 24,0 1,6 % 31,9 2,4 % 43,5 3,7 % 43,9 4,1 % 46,3 4,6 % Bonds 1) 2) 632,4 41,8 % 625,2 46,9 % 589,1 50,4 % 505,5 47,1 % 455,4 45,0 % *incl. fixed-income funds 38,4 43,1 31,9 17,1 8,3 Other money market instruments and deposits 1) 2) 94,0 6,2 % 84,0 6,3 % 49,9 4,3 % 64,3 6,0 % 94,4 9,3 % *incl. fixed-income funds 8,3 9,6 2,0 Equities 482,6 31,9 % 332,3 24,9 % 249,8 21,4 % 225,3 21,0 % 224,7 22,2 % Real estate 278,5 18,4 % 258,8 19,4 % 236,1 20,2 % 234,8 21,9 % 192,0 19,0 % Investment, total 1 511,6 100 % 1 332,2 100 % 1 168,5 100 % 1 073,8 100 % 1 012,8 100,0 % Modified duration for bond portfolio (D mod = D/ 1+r) 3,2

11 INCOME FROM INVESTMENT Income from Capital investment employed ROCE % ROCE % ROCE % ROCE % ROCE % M M ) 2) 4) Loan receivables 1,3 26,5 4,8 % 5,0 % 4,9 % 4,7 % 5,5 % Bonds 3) 18,3 629,0 2,9 % 7,6 % 6,8 % 7,7 % 4,7 % *incl. fixed-income funds 1,4 37,2 3,8 % 8,5 % 9,2 % 3,8 % -0,5 % Other money market instrument and deposits 3) 1,5 70,0 2,1 % 2,1 % 2,5 % 3,3 % 4,2 % *incl. fixed-income funds 0,0 2,4 1,5 % 1,9 % 3,8 % 3,1 % Equities 99,5 359,3 27,7 % 13,8 % 17,0 % -24,5 % 1,7 % Real estate 23,5 259,2 9,1 % 7,0 % 6,8 % 8,8 % 7,4 % Investment total 144, ,1 10,7 % 8,4 % 8,6 % -0,7 % 4,5 % Sundry charges and operating costs -0, ,1 0,0 % 0,0 % 0,0 % -0,2 % -0,1 % Income, total 143, ,1 10,7 % 8,4 % 8,6 % -0,9 % 4,4 % 1) Net income from investment, current value = Change in market value between the end and the beginning of the accounting period - cash flow during the period Cash flow = difference between purchases/ costs and sales/ income 2) Capital employed = Market value in the beginning of the accounting period + monthly time weighted cash flow. 3) Including income from fixed-income funds 4) A one-time adjustment, amounting to 34 MEUR, on the fair value of group shares (Veritas Life Insurance Company Ltd) has been excluded from the net income from equities 2004 This adjustment included the ROCE on equities would have been 23,9 % and the total ROCE would have been 11,4 %

12 KEY FIGURES AND ANALYSES M Key figures in brief Premiums written 266,5 252,2 255,0 271,9 257,4 Pension payments made 1) 218,8 208,8 213,5 221,2 192,3 Net investment income at current value 143,7 98,3 90,6-5,2 44,7 ROCE, % 10,7 % 8,4 % 8,6 % -0,9 % 4,4 % Turnover 342,5 317,4 332,3 286,4 305,3 Total operating expenses 13,5 12,9 13,4 12,6 11,7 % of turnover 3,9 % 4,1 % 4,0 % 4,4 % 3,8 % Total operating expenses less investment management charges and work capacity maintenance costs, % from Employees Pension Act and Self-Employed Persons Pensions Act payroll 1,0 % 1,0 % 1,0 % 0,9 % 0,9 % Total profit 89,5 56,2 55,2-40,9 9,1 Technical provisions 1 305, , , ,1 959,4 Solvency capital 347,6 258,2 175,0 126,3 181,6 % of technical provisions 3) 28,6 % 23,0 % 16,8 % 13,0 % 20,4 % in relation to solvency limit 2,4 2,2 2,1 1,7 2,2 Equalisation provision 114,8 116,7 113,9 110,5 103,0 Pension assets 4) 1 543, , , , ,7 Transfer to bonuses and rebates 3,5 2,4 1,5 0,8 2,4 % of Employees Pensions Act payroll 0,4 % 0,3 % 0,2 % 0,1 % 0,3 % Employees Pensions Act payroll 936,4 883,7 883,7 941,6 894,6 Self-Employed Persons Pensions Act payroll 219,4 214,1 224,3 254,6 245,4 Employees Pensions Act policies Insured under Employees Pensions Act Self-Employed Persons Pensions Act policies Pension recipients ) Payments made and recorded in the income statement, without management charges and work capacity maintenance expenses 2) Includes the share of coassurance 3) The ratio was computed as a percentage of the technical provisions used in calculating the solvency limit 4) Technical provisions + differences between current and book value

13 KEY FIGURES AND ANALYSES M Performance analysis Sources of profit Underwriting result -1,3 3,6 3,5 8,6 8,0 Investment result at current value 89,9 51,8 51,7-50,1 0,9 + Net investment income at current value 1) 2) 146,0 100,3 91,6-4,5 45,3 - Yield requirement on technical provisions -56,1-48,5-39,9-45,6-44,4 Loading profit 0,9 0,8 0,0 0,6 0,2 Profits, total 89,5 56,2 55,2-40,9 9,1 Disposal of profits Increase/ decrease solvency (+/ -) Equalisation provision (+/ -) -2,1 2,6 3,5 7,5 5,8 Solvency capital (+/ -) 87,0 50,1 50,0-52,7-1,3 Change in provision for future bonuses 13,8 11,2 34,1-38,7-0,8 Change in difference between current and book value 72,3 37,6 17,6-15,5 0,8 Change in accumulated appropriations -0,4 0,1-2,7 0,2-2,6 Profit for the financial year 1,3 1,2 1,0 1,3 1,3 Transfer to bonuses an rebates 3,5 2,4 1,5 0,8 2,4 Transfer to bonuses an rebates (coassurance) 1,1 1,1 0,0 1,5 2,2 To augment the provision for current bonuses 3) 2,0 Total 89,5 56,2 55,0-40,9 9,1 1) Includes interest items in the profit and loss account which are not entered as income from investment 2) From net investment income has a one-time adjustment, amounting to 34 MEUR, on the fair value of group shares (Veritas Life Insurance Company Ltd) been excluded 3) On Dec. 31, 2005, EUR of the transfer to augment the provision for current bonuses remained unamortised Solvency Solvency capital and limits (% of the technical provisions used in calculating the solvency border) Solvency border 12,2 % 10,7 % 8,2 % 7,7 % 9,4 % Target zone lower limit 24,4 % 21,4 % 16,3 % 15,3 % 18,8 % Target zone upper limit 48,7 % 42,7 % 32,7 % 30,6 % 37,6 % Solvency capital 28,6 % 23,0 % 16,8 % 13,0 % 20,4 %

14 KEY FIGURES AND ANALYSES M Breakdown of investment income and investment result Cash income 49,2 49,1 47,9 50,8 49,5 Loan receivables 1,3 1,8 2,1 2,3 2,6 Bonds 26,2 25,9 26,8 26,2 25,4 Other debt securities and deposits 1,4 1,4 1,3 2,9 2,8 Equities 7,9 7,8 4,7 6,9 7,0 Real estate 12,8 12,3 13,1 12,2 11,1 Other 0,0 0,0 0,0 0,0 0,0 Unallocated income, charges and operating expenses -0,4-0,1-0,1 0,3 0,6 Changes in book value 1) 22,2 11,6 25,1-40,5-5,6 Equities 21,0 13,1 16,8-40,4-3,3 Bonds 1,6 1,2 0,7 1,5-1,5 Real estate -0,4-2,7 7,6-1,6-0,8 Other 0,0 0,0 0,0 0,0 0,0 Net investment income at book value 71,4 60,7 73,0 10,3 43,9 Change in difference between current and book value 72,3 37,6 17,6-15,5 0,8 Equities 71,9 15,4 14,4-29,3 0,5 Bonds -10,4 14,9 7,6 6,8-2,2 Real estate 11,1 7,2-4,5 7,0 2,5 Other -0,3 0,1 0,1 0,0 0,0 Net investment income at current value 143,7 98,3 90,6-5,2 44,7 Other interest items 2) 2,3 2,0 1,0 0,7 0,6 Yield requirement on technical provisions -56,1-48,5-39,9-45,6-44,4 Investment result at book value 17,6 14,2 34,1-34,6 0,1 Investment result at current value 89,9 51,8 51,7-50,1 0,9 The proportion of derivatives in the net income investments -3,4 1) Capital gains and losses plus other changes in book value 2) Includes interest items in the profit and loss account which are not entered as income from investment

15 KEY FIGURES AND ANALYSES M Loading profit Expense loading components 12,4 12,0 11,4 11,0 10,1 Function-specific operating expenses 1) -11,7-11,5-11,9-11,0-10,4 Other income 0,2 0,3 0,5 0,6 0,5 Other expenses 0,0 0,0 0,0 0,0 0,0 Loading profit 0,9 0,8 0,0 0,6 0,2 Operating expenses of loaded income, % 2) 92,9 % 93,5 % 100,0 % 94,8 % 98,1 % 1) Excluding investment charges and working capacity maintenance costs 2) (operating expenses + other expenses) / (expense loading components + other income)