Debt Investor Presentation

Transcription

1 Sampo Group Debt Investor Presentation Prepared November 13, 2012 Figures September 30,

2 11/12/ 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 forwardlooking 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.

3 Sampo Group Basic Facts

4 11/12/ Diversified Nordic Financial Group Sampo plc Parent company for the Group Market Cap ~ EUR 13bn* 100% 21.2% 100% Over 20% Nordea Mandatum Life MARKET POSITION The largest Nordic P&C insurer, second largest in the Baltics The largest pan Nordic Financial Services group Leading life & pension insurer in Finland, with Baltic operations STRATEGY Underwriting focus Pan Nordic synergies Profit oriented Cost, Risk & Capital Unit linked products & Wealth Management INVESTMENT ASSETS ~ EUR 12.2bn2bn ~ EUR 711bn B/S ~ EUR 55bn 5.5bn RETURN TARGET RoE above 17.5% CoR below 95% Generating top league ROE RoE 15% in a normalised economic macro environment RoE above 17.5% * Nov 9, 2012

5 11/12/ Nordic Business with Strong Retail Franchise Finland Sampo Insurance Mandatum Company and Bank joins Leonia merge into the Group, the Sampo Leonia and financial services the Group s group. The Group s name is business areas are shortened long term savings to Sampo. (life insurance, asset management and mutual funds), banking, investment banking, and P&C insurance Sampo s P&C insurance operations are merged with If. Following the transaction, Sampo owns 38 per cent of If If becomes fully owned by Sampo. Following the share transaction, Sampo has three core businesses: P&C insurance, banking and long term savings. Sampo Group Following the divests Sampo transaction, Sampo s Bank Group to business areas are Danske Bank A/S. P&C insurance and life insurance. In addition, Sampo plc has investment assets of approximately Eur 5 billion. Kari Stadigh succeeds Björn Wahlroos as a new Group CEO 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 Finnish business. becomes If s associated company. Group s holding of Nordea is 21.2%, 2% Sampo Group (If P&C) acquires Tryg s If P&C signs a partnership agreement with Nordea.

6 11/12/ Well established Insurance Subsidiaries If P&C Well diversified and Profitable 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 Lines of Business motor workers compensation liability accident property cargo If generated EUR 648m (4652) in pre tax profits Excellent combined ratio of 89.4% (92.6%) Risk ratio 66.1% (69.2%) Cost ratio 23.3% (23.4%) Expense ratio 17% (17.1%) Business model resilient over the cycle Provides Comprehensive Wealth Management and Life insurances solutions in Finland and Baltics for corporates and private persons Services provided pensions & savings wealth management reward commitment risk ikinsurance Mandatum Life is a leading life and pension insurer in Finland Mandatum has a strong market position in Finland with ca. 25% of the market Mandatum contributed with EUR 98m (107) in pre tax profit to the Group

7 11/12/ Diversification Benefits at Group Level* Geographical diversification Geographical diversification Wealth Management Strong Retail Banking Franchise Diversified Earnings base: Banking (Retail, Wholesale) Transaction Services Asset Management Markets Life Insurance Strong Retail P&C Insurance Franchise Several Business Lines With profit Business Unit linked Business * Correlations of quarterly Reported Profits 2005 Q3/2012

8 11/12/ Strong Group Capitalization even under S II EURm 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1, ,000 1,073 2, ,678 8, ,963 ** 4,923 Sampo plc 22 Nordea 3,796 1,676 Life 226 P&C 880 P&C Life Nordea Diversific. Group EC 312 * Group ASC Regulatory minimum Internal Treatment S II Economic Capital need (EC) is measured at 99.5% conf. 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 173% (8,075/4,678) S I = Regulatory Treatment Minimum requirement (4,923) is sum of IF, ML (SI) and Nordea (BII) with transition rules Additive figure does not include diversification effects and Nordea s requirement is calculated at 99.90% conf.level Current Ratio 162% (7,963/4,923), *) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions

9 11/12/ Sampo Group Capitalisation History / Internal Assessment EURm 9, ,432 08,000 Increase of Nordea holding 6,401 7,076 7,666 7,565 7,168 7,279 6,830 7,262 8,5 8,120 7,875 7,581 8,075 7,000 6,000 5,000 4,023 4,109 3,279 3, ,245 4,024 4,600 4,131 4,722 4,189 4,799 4,281 4,954 4,281 4,947 4,222 4,858 4,394 5,076 4,374 5,015 4,629 5,262 4,619 5,234 4,678 5,317 4,000 3,000 1,895 2,175 1,976 2,294 2,657 3,054 3, 2,000 1,000 0 EC,Diversified EC,Undiversified ASC

10 11/12/ Largest Nordic Financial Company with Insurance Focus Market cap , EURm 0 4,000 8,000 12,000 16,000 20,000 24,000 28,000 32,000 Ownership structure Solidium*,14.2% Nordea 28,142 Handelsbanken Swedbank DnB S E B 17,205 16,237 15,696 13,433 ~21% Varma Mutual Pension, 8.5% Ilmarinen Mutual Pension, 15% 1.5% Sampo Investor 13,327 12,817 Björn Wahlroos, 2.1% Danske Bank 12,599 Gjensidige 5,668 Industrivärden 4,343 Tryg 3,213 Pohjola Bank 2,572 Topdanmark 2,165 Storebrand 1,713 Jyske Bank 1,600 Alm.Brand 340 Market cap Pref.shares ~22% *100 % owned by the Republic of Finland Kaleva Mutual Insurance, 1.0% Other domestic owners, 18.9% Foreign and nominee registered owners, 53.8% Source: ReutersEcoWin

11 11/12/ Key Credit Considerations STRONG MARKET POSITION STABLE PROFITS DIVERSIFICATION STRONG FINANCIAL PROFILE VALUE CREATION MANAGEMENT Market leading positions and retail franchises in P&C insurance, life insurance and banking. Stable profits arising from If P&C s strong cash generation supported by the stable cash flow contribution of Nordea and solid investment returns. Insurance and banking operations in the Nordic region provide diversification. Conservative financial profile, strong capitalization and solvency. Proven track record in successfully developing investments and realizing value for investors in Nordic Financials. Dedicated and highly experienced management team. OWNERSHIP Strong shareholder base anchored in government and institutional holders supported by significant management ownership.

12 If P&C A/A2 Stable

13 11/12/ Largest Nordic P&C Insurer with Synergies Norway 2011 GWP ~EUR 6bn Gjensidige 27% If 25% Tryg 17% Sparebank 1 10% Market shares, % Sweden 2011 GWP ~EUR 7bn LF 29% If 19% Finland 2011 GWP ~EUR 4bn Pohjola 29% If 24% Tapiola 18% Lähivakuutus 10% Fennia 10% RSA (T H) 16% Folksam 15% Baltics 2011 GWP ~EUR 1bn Denmark 2011 RSA 21% GWP ~EUR 6bn If 15% Tryg 21% BTA 13% Topdanmark 18% Ergo 14% Codan (RSA) 13% Gjensidige 7% Alm. Brand 10% If Nordics* Zurich Generali Nordic Market shares of Total GWP EUR 20bn ( 10) Other 31% Pohjola 5% LF 9% If 19% Topdanmark 5% RSA 9% Tryg 12% Gjensidige 10% Expenseratios 2011,% Allianz 28 % If 6% Aviva 32 % AXA RSA 17 % 19 % 27 % 28 % 28 % 28 % * Weighted average of leading P&C companies in the Nordics Source: AXCO, National insurance associations, company reports

14 11/12/ Nordic P&C Insurance Market CONSOLIDATED MARKET The four largest companies account for 80 85% of the markets in Norway, Finland and Sweden. In Denmark the market is less consolidated. LOYAL CLIENTS Renewal rates are around 80 90%. DISTRIBUTION The forms of distribution vary between the Nordic countries. In the Private segment there is a trend from branches towards electronic and remote touch points (e.g. contact centres) in all countries. Distribution via partners (cardealers, banks etc.) are also important channels. In the commercial segment the trend has been towards broker distribution. LOW EXPENSE RATIOS The market is characterized by low expense ratios of around 20% in average compared to the European companies with expense ratios around 30%. GOOD PROFITABILITY Good profitability since the beginning of 2000, however the last year(s) intense competition and weather related claims have decreased profitability for some competitors.

15 11/12/ Gross Written Premiums, EUR 3,739m By Business Area By Country Baltic and Russia, 88 Denmark, 333 Baltic and Russia, 88 Industrial, Norway, 576 1,332 Private, 1,940 Commercial, 1,121 Finland, 811 Sweden, 1,161

16 % /12/ Well diversified Nordic P&C Insurer Combined Ratio Development Geographical Diversification in CR Target CR If- Total If Sweden If Norway If Finland If Denmark Risk ratio Cost ratio Combined Ratio If P&C and Nordic Average & Standard Deviation 100.0% 95.0% IF,CR% Nordic Market Average,CR% Standard deviation 90.0% 85.0% 2.5% 80.0% 75.0% 70.0% 5.3% 54% 5.4% 65.0% 5.4% 60.0% MA MA MA %

17 11/12/ Strong & Stable Annual Profit Development EURm 1,200 Profit before tax 1,127 9M/2012 9M/2011 Profit before taxes Compr. Income , Comprehensive income

18 11/12/ Seasonality in Quarterly Results and C/R s Profit and dloss account, EURm Q3/12 Q2/12 Q1/12 Q4/11 Q3/11 Q2/11 Q1/11 Q4/10 Q3/10 Q2/10 Q1/10 Premiums earned 1,121 1,054 1,066 1,045 1,029 1,017 1, Claims incurred Operating expenses Other technical income and expenses Allocated investment return transferred from the nontechnical account Technical result Investment tresult Allocated investment return transferred to the non technical account Other income and expenses Operating result Average Quarterly C/R Q4 Q3 Q2 Q ,%

19 11/12/ Conservative Investment portfolio Investment Allocation of Total EUR 11.6bn Mark to Market Investment Return Equities 10% Real Estate 1% Money Market 11% 14 % 11 % 9 % 6% 4 % 1 % 2 % 4% 43% 4.3% 5.8% 44% 4.4% 12.4% 7.4% 2.6% 3.1% 1.8% 50% 5.0% Bonds 77% Duration 1.0 years Average maturity years Fixed income running yield 3.6 %

20 11/12/ If s Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland) 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 AA /Aa3 A+/A1 A/A2 A /A3 BBB+/Baa1 Moody s S&P A Feb 02 Negative Jul 03 Stable Aug 03 Watch neg Feb 04 Stable Apr 04 Stable Sep 04 Stable Oct 05 BBB/Baa The Sampo Group s P&C insurance companies became part of If January 2002.

21 Mandatum Life

22 11/12/ Finnish Life insurer with asset management focus Cr ross sales s Customer segment Corporates Market Success factors Sales and customer service Employee benefit In depth expertise of incentive, pension and risk life solutions and asset management Active management of customer relationship Mandatum Life HNWI Wealth Professional wealth Mandatum Management management Life Superior management of customer relationship Retail customers Bankassurance Distribution power Danske Bank

23 11/12/ Mandatum Life Business Volumes Premiums Written*, total EUR 675m Insurance Savings, total EUR 7,529m With Profit EUR 136m UL EUR 539m With Profit EUR 3,949m 3, , Unit linked life Unit linked pension Unit linked capital redemption Unit linked Baltic Other life Other pension Other capital redemption Other Baltic *) differs from P/L due to eliminations within Life group ,224 1,185 UL EUR 3,580m 8,000 Technical Reserves, EURm 6,000 4, ,262 1,752 2,071 1,637 2,359 3,124 3,054 3,585 Focus area 2, ,652 4,626 4,738 4,695 4,621 4,487 4,431 4,410 4,249 4, M/2012 Guaranteed interest rates Unit linked

24 11/12/ Strong Market Position Market Share in Finland Market Shares of Premiums Written % Group Pension 48.9 % Corporates 43.0 % All products 5 Unit linked 9M/ Unit Linked 26.8 % Private Customers 17.6 %

25 11/12/ 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 principle is reflected in policyholders reasonable expectations for total accrual that are average annual yield of government bonds over time. SMOOTHENED BONUSES AND DIVIDENDS OVER TIME When company decides on yearly 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.

26 11/12/ Profit Development 9M/2012 9M/2011 Profit before taxes EURm Comprehensive income Profit before taxes Comprehensive income

27 11/12/ Profit by Components EURm 1 9/ /2011 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 fair value reserve PROFIT AT MARKET VALUES *Includes guaranteed interest, bonuses and change in the reserves of the above items **Result of unit linked business EUR 2.8 million ***Includes operating expenses for Innova Pension and Personnel Fund Services

28 11/12/ Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.5bn Mark to Market Investment Returns Real Estate 3% Private Equity 5% Other 5% Money Market 9% 20 % 15 % 10 % 5 % 8.3% 12.0% 9.7% 50% 5.0% 16.8% 11.1% 7.5% 0 % Equities 27% Bonds 51% 5 % 10 % 7.8% 1.4% Duration 1.9 years Average maturity 2.2 years Fixed income running yield 5.2%

29 Nordea AA /Aa2 Stable

30 11/12/ Nordea Ownership From reported as an associate company 18.2% 8% 20.1% 20.3% 20.5% 21.3% 21.2%* million shares 1, % 11.1%.2% 15.5% % 3.1% 3.7% % % % * Diluted as a result of Nordea s conversion of C shares

31 11/12/ Nordea The Nordic Champion Quarterly Operating Profit & Loan Losses EURm Restructuring provision Write backs Loan losses Operating profit 1, , ,071 1, ,029 1,037 1, , Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

32 11/12/ Book Value on Consolidated Balance Sheet Nordea in Sampo Group s B/S EURm Acquisition price 5,557.3 Retained earnings Accumulated other changes in Nordea s equity 4.2 Share of Nordea snetprofit Amortisation 26.5 Deferred tax 7.0 Dividends Share of Nordea s other comprehensive income 43.4 Share of Nordea s other changes in equity 8.3 Share of Nordea s goodwill change 17.4 Total 6,513.0 EUR 7.57/share

33 Sampo Group Results and Investments

34 11/12/ Profit before Taxes EURm ,833* 9M/2012 9M/2011 P&C Life Nordea Holding Group 1, ,295 1, ,320 1, * One off item sale of Sampo Bank P&C Life Banking Nordea dividends Other

35 11/12/ Sampo Group Investment Allocation Total Group (MEUR) 17,590 18,679 17,523 18,237 14,000 12,000 11,194 11,751 11,638 12, ,000 8,000 6,000 5,403 5,532 5,421 5,519 4,000 2, , 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 12/11 03/12 06/12 09/12 Money Market 9% 8% 91% 9% 8% 93% 10% 9% 82% 11% 9% 81% Bonds 80% 52% 5% 78% 51% 4% 78% 52% 8% 77% 51% 12% Equity 10% 27% 2% 11% 28% 1% 10% 26% 4% 10% 27% 4% Private Equity 0% 5% 1% 0% 5% 1% 0% 5% 4% 0% 5% 2% Other 1% 8% 1% 1% 8% 0% 1% 9% 1% 1% 8% 1%

36 11/12/ Investment and Counterparty Exposures * AAA AA+ - A+ - BBB+ - BB+ - Non Fixed Income Derivatives Change from D Equities Other Total AA- A- BBB- C Rated Total (Counterparty Risk) Asset-Backed Securities Basic Industry Capital Goods Consumer Products Covered Bonds 3, , , Energy Financial Institutions 29 1,949 2, , , Governments Government Guaranteed Insurance Media Public Sector, other Real Estate Services Technology and Electronics Telecommunications Transportation Utilities Others Funds , ,143-4 Total 4,502 2,197 3,356 1,457 1,428-1,641 14,581 2, , Change from EURm Note: Category Other includes private equity and non-listed real estate. Category Derivatives includes only OTC derivatives and corresponding collaterals. * In Exposure tables the calculation rules may differ in some areas compared with Allocation tables

37 11/12/ Mainly Nordic Covered Bonds and FI Bonds* Covered bonds Money market Long term senior debt Long term subord. debt Total % Sweden 3,057 1,094 1, ,666 59% Finland 208 1, ,511 16% Norway ,303 14% Denmark % France % United States % Netherlands % Switzerland % Germany % United Kingdom % Austria % Estonia % Jersey % Luxembourg % Belgium % Total 3,948 2,274 2, , % * Exposure tables vs. Allocation tables small differences

38 11/12/ No PIIGS Bonds in Public Sector Portfolio* EURm Governments Government guaranteed Public sector, other Total Sweden Finland Germany Norway Denmark Netherlands Total * Exposure tables vs. Allocation tables small differences

39 Sampo plc Baa2 Stable

40 11/12/ Straightforward Flow of Funds & Balance Sheet Flow of Funds Balance Sheet Dividends If P&C Mandatum Life Nordea Sampo Plc Income Interest on Liquidity Income on other investments Assets EURm 8,683 Liabilities EURm 8,683 Liquidity 371 CPs Issued 593 Investment assets 29 LT Senior Debt 1,713 Real Estate 4 Private Placements 143 Private Equity 7 Bonds Issued 1,570 Other investm. 18 Pension Insurance Loans 0 Subordinated Loans 216 Subordinated Debt 0 Equity Holdings 7,928 Capital 6,238 Subsidiaries (If,ML) 2,370 Undistributable 98 Internal Administration Costs Discretionary Dividends for Shareholders Interest Expenses for Bondholders Associated (Nordea) 5,557 Distributable 6,139 Other Assets 138 Other Liabilities 140

41 11/12/ Parent Company Reported Profits 9M/2012 Dividends 229 EURm * Operating expenses 14 Net financial exp. 31 Profit before taxes Dividend income Operating Net financial Profit before taxes expenses expenses * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments

42 11/12/ Dividends Received EURm 1,600 1,400 1,200 1, , , ** ~540** If Mandatum Life Banking* *) Sampo Bank , Nordea 2007 > **) Planned dividends, 4,700 SEKm

43 11/12/ Sampo plc Debt Instruments Instrument t & Principal i Coupon Swap Effective Rate Maturity Senior Bond 4,000 msek (EMTN) Stibor3M + 1,5000% 3,1900 % Senior Bond under EMTN 300 m (EMTN) 3,2500 % 3,0377% Senior Bond under EMTN 300 m (EMTN) 4,2500 % Euribor3M + 1,4727% 1,7977 % Senior Bond 500 m (EMTN) 4,2500% Euribor3M + 2,7910% 3,0940% CP s issued 593 m (Domestic CP program) Euribor + 0,4500% 1,1437 % Public Debt 2,162 m 2,3932% Private Placements 143 m 2,7802% Total 2,306 m 2,42 % Key credit metrics Near term options Double Leverage (Equity Holdings / Capital) 127% Equity m 6,237 Gross Debt to Equity 37.0% Potentially Refining the Maturity structure Decrease in outstanding CP s

44 11/12/ Maturity profile, 30 September 2012 EURm CP s Senior under EMTN Senior Retail Private

45 11/12/ Value Creation in Nordic Financials GOAL CONSERVATIVE LONG TERM INVESTOR OPERATIONAL EXCELLENCE STRONG CREDIT METRICS BONDHOLDER VALUE Sampo s goal is to create value for its investors through investments in Nordic financial institutions. Sampo is a conservative long term investor that aims to flexibly utilise opportunities that arise in the market Knowledge of Nordic markets, Nordic financial institutions and Nordic people Proven track record in successfully developing investments and realizing value for investors in Nordic Financials. Sampo is committed to the long term development of its operating subsidiaries and affiliated companies The business areas have clear strategies, based on ROE targets Profitability before market share. Diversification benefits of operative companies Sampo has a conservative capital structure, high profitability, low leverage and a diversified business portfolio. Conservative business and investment approach supports and protects bondholder value.

46 Appendix

47 11/12/ 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

48 11/12/ 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

49 11/12/ Source: FSA

50 11/12/ IF Regulatory Solvency Capital & Ratio* EURm 4,000 % 100% 3,000 88% 85% 80% 2,000 54% 70% 74% 77% 79% 71% 72% 66% 60% 40% 1,000 20% Sept % * Solvency ratio, (IFRS) % = Solvency capital (lhs) + solvency capital + premiums earned from 12 months Solvency ratio (rhs) x 100%

51 11/12/ Mandatum Life Regulatory Solvency Ratio* 30 % 25 % 20 % 17.7% 21.3% 20.1% 16.5% 18.5% 25.8% 26.0% 20.9% 15 % 10 % 79% 7.9% 5 % 0 % Sept 2012 * 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%