Sampo Group Debt Investor Presentation Prepared May 16, 2014 Figures March 31, 2014 www.sampo.com/debtpresentation
DEBT INVESTOR CONTACTS Markku Pehkonen, CRO tel. +358 10 516 0014 markku.pehkonen@sampo.fi Peter Johansson, CFO tel. +358 10 516 0010 peter.johansson@sampo.fi FINANCIAL CALENDAR 07/05/2014 Interim Report Q1/2014 Silent period 09/04/2014-07/05/2014 13/08/2014 Interim Report Q2/2014 Silent period 16/07/2014-13/08/2014 06/11/2014 Interim Report Q3/2014 Silent period 09/10/2014-06/11/2014 Jarmo Salonen, Head of IR Relations and Group Communications tel. +358 10 516 0030 jarmo.salonen@sampo.fi 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
Sampo Group If P&C Mandatum Life Sampo Group Sampo plc Basic Facts Largest Nordic P&C insurer Finnish Life Insurer with Asset Management Focus Results, Capitalisation and Investments The listed holding company 3
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 Leading life & pension insurer 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 11.7bn ~ EUR 5.5bn ~ EUR 636bn B/S RETURN / PROFIT TARGET Profit margin of 10% CR% 91% RoE above 17.5% CR% below 95% RoE above 17.5% Maintain a CT1 ratio of 14-14.5% RoE medium-term 13% 4
Sampo Group Basic Facts Largest Nordic Financial with Insurance Focus Market cap May 15, 2014, EURm Sampo and EuroSTOXX indices 0 10 000 20 000 30 000 40 000 50 000 Nordea 42 486 Handelsbanken 22 841 DnB Swedbank 21 855 21 576 >21% SEB 21 210 Danske Sampo 20 174 20 150 Ownership structure Gjensidige Tryg Jyske Topdanmark 6 917 4 132 3 731 2 637 >25% Solidium*,11.9% Varma Mutual Pension, 7.82% Ilmarinen Mutual Pension, 0.88% Björn Wahlroos, 2.1% Kaleva Mutual Insurance, 0.93% Storebrand 1 915 Other domestic owners, 17.87% Alm.Brand Source: ReutersEcoWin 607 Foreign and nominee registered owners, 58.5% *100 % owned by the Republic of Finland 5
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 generated EUR 194m (204) in pre-tax profits Excellent combined ratio of 90.3% (90.9%) Risk ratio 67.5% (67.6%) Cost ratio 22.8% (23.3%) Expense ratio 16.8% (17.0%) 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 Resilient business model over the cycle Provides comprehensive Wealth Management & Life insurance solutions in Finland and Baltics for corporates and private persons Services provided - pensions & savings - wealth management - reward commitment - risk insurance 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 37m (36) in pre-tax profit to the Group 6
Sampo Group Basic Facts Nordea Profitable & The Most Diversified Nordic Bank EURm 1 500 Restructuring provision Write backs Loan losses Operating profit 1 200 900 21 36 89 320 356 425 358 347 261 245 207 166 242 118 263 218 217 254 244 198 186 171 180 158 600 300 885 883 847 781 833 818 832 592 878 730 960 1 071 1 003 949 112 566 1 029 1 037 1 099 922 1 059 1 041 1 048 1 021 1 006 1 106 0 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Q113 Q213 Q313 Q413 Q114 7
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 by contributing to) strategies, guiding principles and ROE-targets. Subsidiary companies have focus on continuous development of services. Economics of scale. Pan-Nordic diversification & operational excellence facilitate low volatility. Company specific liabilities and solvencies driving risk profiles, supported by a Group-wide investment philosophy. Common investment infrastructure facilitates effective monitoring and fast actions, even at the Group level. Profitable companies, mostly with 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
Sampo Group If P&C Mandatum Life Sampo Group Sampo plc Basic Facts Largest Nordic P&C insurer Finnish Life Insurer with Asset Management Focus Results, Capitalisation and Investments The listed holding company 9
Largest Nordic P&C Insurer with Synergies Market Shares by Country Nordic Market shares Total GWP ~EUR 25bn If P&C Norway 2013 GWP EUR 6.4bn Gjensidige 25% If 24% Tryg 14% Sparebank 1 10% Denmark Q3/2013 GWP EUR 6.4bn (-12) Tryg 21% Topdanmark 17% (of which If s share 4%) Codan (RSA) 13% Alm. Brand 10% If 6% Finland 2013 GWP EUR 4.3bn 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 30% Folksam 5 % Pohjola 5 % LF 9 % If 19% Expense Ratios 2013, % IF Nordic peer group* Generali Zürich AXA Allianz RSA Aviva *2012 Topdanmark 5 % Tryg 11% Gjensidige 10 % RSA 9 % 16,8 17 27,1 27,2 26,5 28,4 30,1 32,8 10
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 2000. The low interest rate environment and hence low return on investments has made the industry focus on profitability in the insurance operations. 11
If P&C Sound Underwriting is Basis for Strong Result Industrial; 302 Gross Written Premiums, EUR 1,706m By Business Area Baltic; 35 Denmark; 151 By Country Baltic; 35 Norway; 542 Commercial; 702 Commercial; 33 Industrial; 7 By Business Area Baltic; 5 Private; 667 Finland ; 529 Technical Results, EUR 124m Denmark; 18 Finland ; 33 Sweden; 449 By Country Baltic; 5 Norway; 47 Private; 76 Sweden; 19 12
If P&C Well-diversified Nordic P&C Insurer Combined Ratio Development Geographical Diversification in CR 100,9 100 % 92,6 90,5 89,9 90,6 91,8 92,192,8 92,0 88,9 88,1 90,3 80 26,6 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22,8 60 40 20 74,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 65,4 67,5 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 98.0 96.0 94.0 92.0 90.0 88.0 86.0 84.0 2009 2010 2011 2012 If Nordic market (incl If) Standard deviation 2008-2013 1.9% 3.9% 3.0% 3.9% 4.2% 13
If P&C Strong & Stable Annual Profit Development EURm 1 200 1 000 800 600 800 730 Profit before tax Comprehensive income 534 549 644 1 127 707 943 636 Q1/2014 Q1/2013 Profit before taxes 194 204 Compr.hensive Income 209 279 978 864 929 689 400 308 200 0-200 -400-267 2005 2006 2007 2008 2009 2010 2011 2012 2013 14
If P&C Seasonality in Quarterly Results and CR% EURm 350 Technical result Investment result Operating result 300 250 200 150 100 50 0-50 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q4 Q3 Q2 Q1 Average Quarterly CR%, 2006-2013 90.5 89.5 89.3 93.9 Year 2013 CR% 87.9 87.2 86.7 90.9 Year 2014 CR% 90.3 15
If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 11.9bn Equities 11% Private Equity 0,2% Real Estate 0,5% Money Market 9% Public sector 17% 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% 6,1% 5,0% 1,7% Other fixed income 62% Duration 1.2 years Average Maturity 2.2 years Fixed Income Running Yield 2.8 % 1 000 800 600 400 200 0 Investment Return, EURm 821 689 558 194 113 2010 2011 2012 2013 1-3/2014 16
Sampo Group If P&C Mandatum Life Sampo Group Sampo plc Basic Facts Largest Nordic P&C insurer Finnish Life Insurer with Asset Management Focus Results, Capitalisation and Investments The listed holding company 17
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 Wealth Management Professional Wealth Management Management of Client Relationships Mandatum Life Mandatum Life Retail Clients Bankassurance Distribution Power Danske Bank 18
Mandatum Life Mandatum Life Business Volumes Premiums Written*, total EUR 245m Insurance Savings, total EUR 8,381m With-Profit EUR 42m 8 31 11 1 76 U-L EUR 203m With-Profit EUR 3,638m 3 383 3 17 1 573 1 479 U-L EUR 4,743m *) Direct insurance 91 29 234 1 549 142 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 8,634m EURm 8 000 6 000 607 884 1 262 1 752 2 071 1 637 2 359 3 124 3 054 3 833 4 616 4 749 4 000 Focus area 2 000 0 4 652 4 626 4 738 4 695 4 621 4 487 4 431 4 410 4 249 4 071 3 927 3 885 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1/2014 Guaranteed interest rates Unit-linked 19
Mandatum Life Market Position Market Share in Finland Market Shares of Premiums Written % 30 25 20 25,5 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 38.6 % Corporates 38.8 % 15 17,9 19,5 20,4 19,8 19,3 19,2 10 5 All products Unit-linked Unit-Linked 15.7 % Private Customers 11.2 % 0 Q1/2014 Q1/2013 All products 15.8% 18.2% Unit-linked 15.7% 18.9% 20
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 average annual yield of Finnish 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. 21
Mandatum Life Profit Development EURm 500 495 Q1/2014 Q1/2013 Profit before taxes 37 36 Comprehensive income 18 66 295 286 342 332 286 250 220 80 140 121 142 137 136 153 0-115 -250-378 Profit before taxes Comprehensive income -500 2006 2007 2008 2009 2010 2011 2012 2013 22
Mandatum Life Mandatum Life Profit by Components EURm 1-3/2014 1-3/2013 Net investment income 118.6 188.8 - Transferred to expense result -5.5-4.8 - Return on unit-linked policies -40.4-109.2 - Return on with-profit policies* -46.0-46.1 INVESTMENT RESULT 26.8 28.7 EXPENSE RESULT** 4.1 0.2 RISK RESULT 4.4 6.7 OTHERS*** 1.6 0.0 PROFIT BEFORE TAXES 36.9 35.6 Change in the market value of investments -15.6 5.1 PROFIT AT MARKET VALUES 21.2 85.7 Mandatum Life Group, expense ratio Total expense ratio, % 104.6 105.4 (2013) Incl. kick backs, % 84.8 86.2 (2013) * Includes guaranteed interest, bonuses and change in the reserves of the above items ** Result of unit-linked business EURm 3.6 *** Includes operating expenses for Innova Pension and Personnel Fund Services 23
Mandatum Life Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.3bn Mark-to-Market Investment Returns 20% 16,8% Real Estate 4% Private Equity 5% Other 6% Money Market 8% Public sector 14% 15% 10% 5% 0% 12,0% 9,7% 8,3% 5,0% 11,1% 9,4% 7,1% 1,1% -5% -1,4% -10% -7,8% Equities 29% Duration 1.8 years Average Maturity 2.1 years Fixed Income Running Yield 3.7% Other fixed income 35% 800 600 400 200 0 ML Investment Return, EURm 615 504 391 60-200 -59 2010 2011 2012 2013 1-3/2014 24
Sampo Group If P&C Mandatum Life Sampo Group Sampo plc Basic Facts Largest Nordic P&C insurer Finnish Life Insurer with Asset Management Focus Results, Capitalisation and Investments The listed holding company 25
Sampo Group Results, Capitalisation and Investments Stable Development of Profit before Taxes EURm 4 000 3 500 3,833 * Q1/2014 Q1/2013 P&C 194 204 Life 37 36 Nordea 170 162 Holding -4-30 Group 396 370 3 000 2 500 2 000 1 500 1 000 948 If P&C Mandatum Life Sampo Bank 1 295 1 353 If P&C Mandatum Life Nordea / Investment 870 825 If P&C Mandatum Life Nordea / Associated 1 320 1 228 1 622 1 668 500 0-500 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 * One-off item sale of Sampo Bank P&C Life Banking Nordea dividends Other 26
Sampo Group Results, Capitalisation and Investments Stable Companies & Group Level Diversification* 1 0.27 1 0.13 0.85 1 P/L CONTRIBUTIONS PBT 2010-13 IF 45% ML 10% Nordea 45% LOW VOLATILITY EARNINGS Geographical diversification Strong Retail Banking Franchise Diversified earnings base: -Banking (Retail, Wholesale) -Transaction Services -Asset Management -Markets Operations -Life Insurance Low earnings volatility & stable ROE over the cycle * Correlations of quarterly Reported Profits 2005 Q1/2014 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 Focus changed 2005 -Wealth Management -Unit-linked Business -With-profit Business Dependency on Capital Markets 27
Sampo Group Results, Capitalisation and Investments Strong Group Solvency EURm 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0-1 000 1 669 1 121 3 451-751 5 490 8 950 Sampo plc, 64 Nordea 3,764 Life 224 P&C 841 P&C Life Nordea Diversific. Group EC Group ASC Regulatory minimum *) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions 9,697 401 ** 346 * 4,892 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 177% (9,697/5490) Regulatory Treatment = S I Minimum requirement (4,892) 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 183% (8,950/4.892) 28
Sampo Group Results, Capitalisation and Investments Internal Capital Base above Capital Needs EURm 12 000 10 000 8 000 6 000 4 000 2 000 0 1 976 2 294 4 109 2 657 3 054 6 401 7 666 7 076 7 565 7 168 7 279 8 521 8 432 8 120 6 830 7 262 7 875 7 581 8 075 3 279 3 738 3 783 4 245 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 4 560 5 179 8 197 8 872 9 039 9 391 9 417 9 697 5 389 6 221 5 276 6 088 5 380 6 205 5 361 6 107 5 490 6 241 EC,Diversified EC,Undiversified ASC 29
Sampo Group Results, Capitalisation and Investments Investment Allocations by Risk Profile Total Group (MEUR) 17 344 17 715 17 878 18 353 14 000 12 000 11 688 12 029 11 666 11 851 10 000 8 000 6 000 5 336 5 443 5 452 5 339 4 000 2 000 0 320 243 760 1 162 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 06/13 09/13 12/13 03/14 Money Market 9 % 13 % 66 % 7 % 14 % 52 % 6 % 10 % 84 % 9 % 8 % 90 % Long-Term Fixed Income 80 % 44 % 12 % 81 % 43 % 35 % 82 % 49 % 12 % 79 % 48 % 6 % Equity 10 % 29 % 18 % 11 % 29 % 7 % 11 % 27 % 2 % 11 % 29 % 3 % Private Equity 0 % 5 % 2 % 0 % 4 % 3 % 0 % 4 % 1 % 0 % 5 % 1 % Other 1 % 9 % 2 % 1 % 10 % 3 % 1 % 10 % 0 % 0 % 9 % 0 % 30
Sampo Group Results, Capitalisation and Investments Investment & Counterparty Exposures* 31.3.2014 AAA AA+ - AA- A+ - A- BBB+ - BBB- BB+ - C D Non Rated Fixed Income Total Equities Other Derivatives (Counterparty Risk) Total Change from 31.12.2013 Basic Industry - - - 109 302-128 539 226 - - 765 + 9 Capital Goods - - 8 26 12-78 124 526 - - 650-12 Consumer Products - - 22 238 64-153 477 486 - - 963 + 36 Energy - 6-20 92-407 526 39 - - 565-18 Financial Institutions 25 2,015 1,782 538 399-16 4,775 62 21 31 4,890 + 381 Governments 598 1,173 - - - - - 1,771 - - - 1,771 + 81 Government Guaranteed 214 - - - - - - 214 - - - 214-1 Health Care - - - - 29-90 119 52 - - 171 + 51 Insurance - - - 22 - - 47 69 40 - - 109 + 5 Media - - - - 12-45 57 - - - 57-1 Public Sector, other 708 64 - - - - - 772 - - - 772 + 91 Real Estate - 9 - - - - 396 405-229 - 634-25 Services - - - 5 51-36 92 45 - - 137-5 Technology and Electronics - - - - 36-18 54 86 - - 141 + 7 Telecommunications - - 141 65 30-34 270 79 0-349 - 73 Transportation - 25 7 88 24-240 384 10 - - 395 + 22 Utilities - - 210 154 - - 83 447 77 3-526 - 28 Others - - - - - - 14 14 3 22-39 - 24 Asset-backed Securities - - - - - - - - - - - - - Covered Bonds 3,025 213 11 - - - - 3,250 - - - 3,250-113 Funds - - - - - - 142 142 1,249 556-1,948 + 111 Total 4,570 3,507 2,180 1,262 1,053-1,928 14,500 2,981 831 31 18,344 + 495 Change from 31.12.2013 + 59 + 359-99 - 36 + 2 - + 16 + 301 + 233-55 + 17 + 495 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 from Allocation tables 31
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 2,292 865 913 125 4,195 52% Finland 242 1,481 154 13 1,889 24% Norway 503 453 107 1,063 13% Denmark 118 123 113 355 4% the United States 147 56 203 3% France 50 25 20 94 1% the Netherlands 53 53 1% Switzerland 31 12 43 1% Austria 33 1 34 0% Estonia 27 27 0% Germany 25 25 0% Others 11 20 10 41 0% Total 3,250 2,521 1,854 401 8,024 100% *Exposure tables vs. Allocation tables small differences 32
Sampo Group If P&C Mandatum Life Sampo Group Sampo plc Basic Facts Largest Nordic P&C insurer Finnish Life Insurer with Asset Management Focus Results, Capitalisation and Investments The listed holding company 33
Sampo plc Straightforward Cash Flows & Strong Balance Sheet Dividends If P&C Mandatum Life Nordea Flow of Funds Sampo Plc Income Interest on Liquidity Income on other investments Internal Administration Costs Discretionary Dividends for Shareholders Interest Expenses for Bondholders Balance Sheet Assets EURm 9,605 Liabilities EURm 9,605 Liquidity 825 CPs Issued 298 Investment assets 59 LT Senior Debt 1,711 -Real Estate 2 -Private Placements 166 -Private Equity 12 -Bonds Issued 1,545 -Other investm. 42 -Pension Ins. Loans 0 Subordinated Loans 352 Subordinated Debt 0 Equity Holdings 7,928 Capital 7,346 -Subsidiaries 2,370 - Undistributable 98 -Associated 5,557 - Distributable 7,248 Other Assets 442 Other Liabilities 251 Key Credit Metrics well in Single A -range Sampo plc 31.3.2014 Gross Debt, EURm 2,009 Gross Debt to Equity 27.3% Financial Leverage 21.5% Sampo Group, EURm 2013 2014 Shareholders' Equity 10,643 11,027 Hybrid Bonds 119 119 Senior Debt 2,027 2,009 Financial leverage 16.8% 16.2% 34
Dividends & Reported Profits EURm 900 800 700 600 500 400 300 200 100 0-100 569 514 747 762 773 879 * 2008 2009 2010 2011 2012 2013-15 -16-8 -10-17 -20-31 -37-20 -26-70 Dividend income Operating expenses Net financial expenses * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments 65 564 522 737 702 683 Sampo plc EURm 1-3/2013 1-3/2014 Dividends 293 470.5 Operating expenses -5.4-3.8 Net financial expenses -24.8-0.6 Profit before taxes 262.8 466.0 832 Profit before taxes 35
Sampo plc Dividends Received by Payment Year EURm 1 600 1 400 1 200 1 406 75 300 Net Debt Q1/2014 EUR 833m vs. Dividend Inflows 1 000 800 600 400 200 0 878 754 756 744 768 35 293 200 568 204 250 224 490 511 1 031 80 100 470 141 130 100 100 519 200 488 540 544 370 406 485 249 181 100 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 If Mandatum Life Banking* ** *) Sampo Bank 2005-2006, Nordea 2007-> 36
Sampo plc Sampo Plc Debt Instruments Instrument & Principal Coupon Swap Effective Rate Maturity Senior Bond 300 EURm (EMTN) 3.2500% ---- 3.0377% 03.10.2014 Senior Bond 2,000 SEKm (EMTN) Stibor3M+ 0.75% --- 1.6820% 28.05.2015 Senior Bond 300 EURm (EMTN) 4.2500% Euribor3M + 1.4727% 1.7587% 22.02.2016 Senior Bond 500 EURm (EMTN) 4.2500% Euribor3M + 2.7910% 3.0800% 27.02.2017 Senior Bond 2,000 SEKm (EMTN) Stibor3M + 1.45% --- 2.3820% 29.05.2018 CP s issued 298 EURm Euribor + Margin 0.8300% Average 3M Public debt 1,841 EURm 2.2405% Private placements 168 EURm 2.3685% Total 2,009 EURm 2.2449% EURm 700 600 500 400 300 200 100 Maturity Structure Comments on Debt 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 - investor base 0 2014 2015 2016 2017 2018 CP s Senior under EMTN Senior Retail Private Private Placements - targeted for a Finnish retail investors - related to Mandatum Life s services 37
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 has a proven Track Record in long-term Value Creation Bondholder Value Created 38
Appendix Separate Slides 39
Appendix Sampo Group s outlook for 2014 Sampo Group s business areas are expected to report good operating results for 2014. 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 89-92 per cent. Nordea s contribution to the Group s profit is expected to be significant. 40
Appendix IF P&C Quarterly Results and C/R EURm Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12 Q3/12 Q2/12 Q1/12 Premiums earned 1,104 1,112 1,139 1,140 1,115 1,121 1,121 1,054 1,066 Claims incurred -811-791 -802-800 -824-801 -809-729 -802 Operating expenses -186-186 -191-188 -190-198 -189-177 -175 Other technical income and expenses Allocated investment return transferred from the nontechnical account 1 1 0 0 1 0-1 1 2 15 12 16 17 20 14 21 25 29 Technical result 124 148 161 170 122 136 143 175 120 Investment result 88 104 89 115 102 84 93 107 113 Allocated investment return transferred to the non-technical account -27-25 -30-31 -34-27 -35-40 -44 Other income and expenses 9 3 6 15 14 11 7 12 9 Operating result 194 230 227 269 204 205 208 254 198 Risk ratio, % 67.5 65.1 64.7 64.2 67.7 65.5 66.2 62.9 69.0 Combined ratio, % 90.3 87.9 87.2 86.7 90.9 89.1 89.0 85.9 91.7 41
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% 87% % 100% 80% 60% 2 000 1 500 40% 1 000 500 20% 0 0% Solvency capital (lhs) * Solvency ratio, (IFRS) % = + solvency capital + premiums earned from 12 months Solvency ratio (rhs) x 100% 42
Appendix AA-/Aa3 A+/A1 A/A2 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 A-/A3 BBB+/Baa1 BBB/Baa2 A- Feb 02 Negative Jul 03 Stable Aug 03 Watch neg Feb 04 Stable Apr 04 Stable Sep 04 Stable Oct 05 Moody s S&P 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 The Sampo Group s P&C insurance companies became part of If January 2002. 43
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% 28,0% 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% 44
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 176.6 Amortisation -8.8 Deferred tax 1.9 Dividends -370.0 Share of Nordea s other comprehensive income -22.1 Share of Nordea s other changes in equity 9.0 Share of Nordea s goodwill change 1.7 Total 6,694.4 * As of 6/5/2014 Figures Per Share EUR Acquisition price 6.46 Book value 7.78 Market Value* 10.16 No. of shares 860,440,497 45
Appendix Sampo Group Public Sector Fixed Income Investments no Periphery* EURm Governments Government guaranteed Public sector, other Total Netherlands 848 848 Sweden 137 589 726 Germany 449 72 521 France 325 325 Norway 162 162 Finland 11 106 21 138 Denmark 36 36 Total 1,771 214 772 2,757 * Exposure tables vs. Allocation tables small differences 46
Appendix Structural changes of Sampo Group to the position as the leading Nordic financial group 2000 2001 2002 2004 2007 2010 2011 2012 2013 2014 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 2013. 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 2014. 47
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. 48
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. 49
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. 50
Appendix 51