Sampo Group Debt Investor Presentation Prepared May 13, 2013 Figures March 31, 2013 www.sampo.com/debtpresentation
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. 2
Sampo Group Basic Facts
Nordic Financial Group with Strong Brands Long-term Investor Manager of Capital Structure & Liquidity Listed Company Sampo Plc 100% 21.2% 100% > 26% MARKET POSITION The largest Pan-Nordic P&C insurer 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 12bn ~ EUR 663bn B/S ~ EUR 5.6bn RETURN TARGET RoE 17.5% CoR 89-92% (2013) CoR < 95% (long-term) Top league ROE RoE 15% in a normalised economic environment RoE 17.5% 4
Largest Nordic Financial with Insurance Focus Market cap May 10, 2013, EURm Ownership structure April 30, 2013 Nordea Handelsbanken Swedbank DnB Sampo SEB Investor Danske Bank Gjensidige Industrivärden Pohjola Tryg Topdanmark Jyske Storebrand Alm.Brand 0 10000 20000 30000 40000 37 841 21 940 21 855 >21% 20 699 17 987 17 901 17 728 14 125 5 942 5 563 4 240 4 084 2 682 >26% 2 242 1 598 482 *100 % owned by the Republic of Finland Solidium*,14.16% Varma Mutual Pension, 8.52% Ilmarinen Mutual Pension, 0.86% Björn Wahlroos, 2.1% Kaleva Mutual Insurance, 0.95% Other domestic owners, 18.93% Foreign and nominee registered owners, 54.48% 5 Source: ReutersEcoWin
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 204m (198) in pre-tax profits Excellent combined ratio of 90.9% (91.7%) Risk ratio 67.7% (69.0%) Cost ratio 23.2% (22.7%) Expense ratio 17.0% (16.4%) 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 36m (33) in pre-tax profit to the Group 6
Nordea Profitable & The Most Diversified Nordic Bank EURm 1 500 Restructuring provision Write backs Loan losses Operating profit 1 200 900 21 36 89 320 356 425 358 347 261 245 207 166 242 118 171 263 218 217 254 244 199 600 300 895 978 932 1 078 885 883 847 781 833 818 832 592 878 730 960 1 071 1 003 949 112 566 1 029 1 037 1 099 922 1 059 1 060 0-13 -28-13 -6-300 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 Q113 7
Group Strategy: Value Creation in Nordic Financials LONG TERM VALUE CREATION CONSERVATIVE PARENT WITH PROFIT FOCUS 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. OPERATIONAL EXCELLENCE IN SUBSIDIARIES GROUP LEVEL PORTFOLIO BENEFITS Subsidiary companies have focus on continuous development of services. Economics of scale Pan-Nordic diversification & operational excellence facilitate low volatility. 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
If P&C A/A2 Stable
Largest Nordic P&C Insurer with Synergies 14/05/2013 Market Shares by Country Nordic Market shares Total GWP EUR 22bn (-11) Norway 2012 GWP EUR 6.7bn Gjensidige 25% If 25% Tryg 15% Sparebank 1 10% Denmark 2011 GWP EUR 5.9bn Tryg 21% Topdanmark 18% Codan (RSA) 13% Alm. Brand 10% If 6% Finland 2012 GWP EUR 4.1bn Pohjola 29% LähiTapiola 27% If 26% Fennia 10% Sweden 2012 GWP EUR 7.5bn LF 30% If 19% RSA (T-H) 16% Folksam 15% Baltics Q3/2012 GWP ~EUR 1bn RSA 22% If 14% BTA 12% Ergo 14% Gjensidige 8% Other 32 % Pohjola 5 % LF 9 % If 18 % RSA 10 % Topdanmark 5 % Tryg 12 % Gjensidige 9 % Expense Ratios 2011 (2012) IF Nordic peer group* Zürich Generali AXA RSA Allianz Aviva 17 17 28 28 28 28 28 32 10 * Peer group excl. If 2012, other 2011
14/05/2013 Nordic P&C Insurance Market CONSOLIDATED MARKET LOYAL CLIENTS The four largest companies account for 77-81% of the markets in Norway, Finland and Sweden. In Denmark the market is less consolidated. Renewal rates are around 80-90%. DISTRIBUTION The Internet continues to grow in importance as both a distribution and a service channel in the Nordic insurance market. Also, distribution via partnerships with banks and car-dealers etc. are increasingly important channels, in addition to traditional distribution. LOW EXPENSE RATIOS The market is characterized by low expense ratios of less than 20% in average compared to the European companies with expense ratios approx 10%-points higher. GOOD PROFITABILITY Good profitability since the beginning of 2000. After the last year(s) intense competition and a few years of weather related claims and decreasing profitability for some competitors, profitability has improved again in 2012. Low interest rate environment has made the Industry focus on profitability in the insurance operations. 11
Sound Underwriting is Basis for Strong Result Industrial; 334 Gross Written Premiums, EUR 1,775m By Business Area Baltic; 32 Denmark; 159 By Country Baltic; 32 Norway; 620 Commercial; 729 Private; 673 Finland ; 501 Sweden; 456 Commercial; 32 Industrial; 11 By Business Area Baltic; 2 Technical Results, EUR 122m Denmark; 7 Finland ; 16 By Country Baltic; 2 Norway; 55 Private; 73 Sweden; 38 12
Well-diversified Nordic P&C Insurer Combined Ratio Development Geographical Diversification in CR % 100 100,9 92,690,5 89,9 90,691,8 92,1 92,8 92,0 88,9 91,7 90,9 80 26,6 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,7 23,2 60 40 20 74,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 69,0 67,7 0 If - Total If Sweden If Norway If Finland If Denmark 100.0% 95.0% 90.0% 85.0% 80.0% 75.0% 70.0% 65.0% 60.0% Risk ratio Cost ratio Target CR Combined Ratio - If P&C and Nordic Peers Standard deviation IF,CR% Nordic Market Average,CR% 2009 MA -09 2010 MA -10 2011 MA -11 2.5% 5.3% 5.4% 5.4% 5.8% 13
Strong & Stable Annual Profit Development EURm 1 200 1 000 800 600 800 Profit before tax Comprehensive income 730 534 549 644 1 127 707 943 Q1/2013 Q1/2012 Profit before taxes 204 198 Compr. Income 279 328 636 978 864 400 308 200 0-200 -400-267 2005 2006 2007 2008 2009 2010 2011 2012 14
Seasonality in Quarterly Results and C/R EURm Q1/13 Q4/12 Q3/12 Q2/12 Q1/12 Q4/11 Q3/11 Q2/11 Q1/11 Premiums earned 1,115 1,121 1,121 1,054 1,066 1,045 1,029 1,017 1,003 Claims incurred -824-801 -809-729 -802-759 -771-752 -777 Operating expenses -190-198 -189-177 -175-184 -178-174 -170 Other technical income and expenses 1 0-1 1 2 0 1 1 2 Allocated investment return transferred from the non-technical account 20 14 21 25 29 21 26 36 42 Technical result 122 136 143 175 120 124 106 128 100 Investment result 102 84 93 107 113 78-23 119 178 Allocated investment return transferred to the non-technical account -34-27 -35-40 -44-35 -39-50 -57 Other income and expenses 14 11 7 12 9 4 0 3 0 Operating result 204 205 208 254 198 171 43 200 221 Risk ratio, % 67.7 65.5 66.2 62.9 69.0 66.2 68.9 67.8 71.0 Combined ratio, % 90.9 89.1 89.0 85.9 91.7 90.2 92.3 91.1 94.4 Average Quarterly C/R Q4 Q3 Q2 Q1 2005-2012,% 90.4 89.7 89.9 94.5 15
Conservative Investment Portfolio Investment Allocation of Total EUR 12.0bn Mark-to-Market Investment Return Equities 11% Real Estate 1% Money Market 7% 14 % 11 % 9 % 6 % 4 % 1 % 4,3% 5,8% 4,4% 2,6% 12,4% 7,4% 1,8% 6,1% 1,4% -2 % Long-term fixed income 81% -4 % -3,1% Duration 1.1 years Average Maturity 2.3 years Fixed Income Running Yield 3.4 % 16
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 The Sampo Group s P&C insurance companies became part of If January 2002. 17
Mandatum Life
Finnish Life Insurer with Asset Management Focus Client Segment Underlying Market Critical Success Factors Sales & Client Services Corporates Employee Benefit Expertise in Incentive-, Pension- and Life Risk Solutions, Expertise in Asset Management, Management of Client Relationship Mandatum Life HNWI Wealth Management Professional Wealth Management, Management of Client Relationship Mandatum Life Retail Clients Bankassurance Distribution Power Danske Bank 19
Mandatum Life Business Volumes Premiums Written*, total EUR 264m Insurance Savings, total EUR 7,876m With-Profit EUR 42m 29 6 12 1 92 U-L EUR 222m With-Profit EUR 3,831m 3 560 5 18 1 375 1 321 U-L EUR 4,045m *) Direct insurance EURm 8 000 96 28 248 1 213 137 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 8,094m 6 000 4 000 607 884 1 262 1 752 2 071 1 637 2 359 3 124 3 054 3 833 4 050 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 4 044 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Q1/2013 Guaranteed interest rates Unit-linked 20
Strong 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 18,9 Group Pension 30.4 % Corporates 33.7 % 15 17,9 19,5 20,4 19,8 19,3 18,2 10 5 All products Unit-linked Unit-Linked 18.9 % Private Customers 15.3 % 0 21
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. 22
Profit Development EURm 500 495 Q1/2013 Q1/2012 Profit before taxes 36 33 Compr. Income 66 172 295 286 342 332 286 250 80 140 121 142 137 136 0-115 -250-500 -378 Profit before taxes Comprehensive income 2006 2007 2008 2009 2010 2011 2012 23
Profit by Components EURm 1-3/2013 1-3/2012 Net investment income 188.8 271.3 - Transferred to expense result -4.8-4.4 - Return on unit-linked policies -109.2-185.0 - Return on with-profit policies* -46.1-48.3 INVESTMENT RESULT 28.7 33.7 EXPENSE RESULT** 0.2-0.2 RISK RESULT 6.7 4.5 OTHERS*** 0-4.9 PROFIT BEFORE TAXES 35.6 33.0 Change in the market value of investments 50.1 192.6 PROFIT AT MARKET VALUES 85.7 225.6 Mandatum Life, Group Life expense ratio Total expense ratio, % 119.1 112.7(2012) Incl. kick backs, % 98.0 93.4 (2012) * Includes guaranteed interest, bonuses and change in the reserves of the above items ** Result of unit-linked business EURm 1.6 *** Includes operating expenses for Innova Pension and Personnel Fund Services 24
Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.6bn Mark-to-Market Investment Returns Private Equity 4% Real Estate 3% Other 6% Money Market 14% 20 % 15 % 10 % 5 % 12,0% 9,7% 8,3% 5,0% 16,8% 11,1% 9,4% 2,3% 0 % Equities 28% Long-term fixed income 44% -5 % -10 % -7,8% -1,4% Duration 1.7 years Average Maturity 2.0 years Fixed Income Running Yield 4.4% 25
Sampo Group Results, Capitalisation and Investments
Stable Development of Profit before Taxes EURm 4 000 3 500 3 000 2 500 If P&C Mandatum Life Sampo Bank 3 833 * If P&C Mandatum Life Nordea / Investment Q1/2013 Q1/2012 P&C 204 198 Life 36 33 Nordea 162 158 Holding -30-19 Group 370 370 If P&C Mandatum Life Nordea / Associated 2 000 1 500 1 000 948 1 295 1 353 870 825 1 320 1 228 1 616 500 0-500 2004 2005 2006 2007 2008 2009 2010 2011 2012 * One-off item sale of Sampo Bank P&C Life Banking Nordea dividends Other 27
Stable Companies & Group Level Diversification* 1 0.23 1 0.16 0.87 1 P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS IN U-L & WM Geographical diversification Geographical diversification Finland & Baltics PBT 2010-12 Strong Retail Banking Franchise Diversified earnings base: Strong Retail P&C Franchise Several Lines of Businesses Strong Finnish Position Focus changed 2005 IF 50% ML 10% Nordea 40% -Banking (Retail, Wholesale) -Transaction Services -Asset Management -Markets Operations -Life Insurance -Motor, Cargo -Workers compensation -Liability -Accident -Property -Wealth Management -Unit-linked Business -With-profit Business Dependency on Capital Markets Low earnings volatility & stable ROE over the cycle Low C/R volatility and Conservative Investments * Correlations of quarterly Reported Profits 2005 Q1/2013 28
EURm 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0-1 000 Strong Group Capitalization 1 126 3 450-832 5 389 8,872 398 ** 8 511 4,841 Sampo plc 41 Nordea 3,698 Life 226 1 645 876-37 * P&C Life Nordea Diversific. Group EC 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 164% (8,872/5,389) Regulatory Treatment = S I Minimum requirement (4,841) 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 176% (8,511/4,841) *) Liability side adjustments which equal discount effect less risk margin **) Finnish equalisation provisions 29
Sampo Group Capital Base above Capital Needs EURm 10 000 9 000 8 000 7 000 6 000 5 000 4 000 3 000 2 000 1 000 0 Increase of Nordea holding 1 895 2 175 4 023 4 109 1 976 2 294 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 5 389 6 221 EC,Diversified EC,Undiversified ASC 30
Investment Allocations by Risk Profile Total Group (MEUR) 17,523 18,237 18,164 18,623 14,000 12,000 11,638 12,245 11,717 11,986 10,000 8,000 6,000 5,421 5,519 5,519 5,577 4,000 2,000 464 473 928 1,060 0 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 06/12 09/12 12/12 03/13 Money Market 10% 9% 82% 11% 9% 81% 7% 10% 89% 7% 14% 94% Bonds 78% 52% 8% 77% 51% 12% 81% 48% 8% 81% 44% 4% Equity 10% 26% 4% 10% 27% 4% 11% 29% 2% 11% 28% 2% Private Equity 0% 5% 4% 0% 5% 2% 0% 5% 1% 0% 4% 1% Other 1% 9% 1% 1% 8% 1% 1% 9% 1% 1% 9% 1% 31
Investment & Counterpart Exposures* 31.3.2013 AAA AA+ - AA- A+ - A- BBB+ - BBB- BB+ - C D Non Rated Fixed Income Total Equities Other Derivatives (Counterparty Risk) Total Change from 31.12.2012 Basic Industry - - 4 127 336-195 662 250 - - 911-38 Capital Goods - 3 91 56 20-117 287 513 - - 800 + 25 Consumer Products - - 32 312 31-172 547 397 - - 944-30 Energy - 6 80 19 101-438 645 43 - - 687 + 4 Financial Institutions 28 1,915 2,725 476 492-16 5,652 54 21 21 5,747 + 47 Governments 45 - - - - - - 45 - - - 45-3 Government Guaranteed 228 - - - - - - 228 - - 3 231 + 2 Health Care - - - - 43-43 86 37 - - 123 + 123 Insurance - - 27 21 - - 21 69 34 - - 103-1 Media - - - - 12-42 54 10 - - 64-3 Public Sector, Other 555 32 - - - - - 587 - - - 587 + 136 Real Estate - 10 - - - - 205 216-262 - 478 + 100 Services - - - 18 36-23 78 42 12-131 - 16 Technology and Electronics - - - - 34-16 50 54 - - 104 + 29 Telecommunications - - 192 116 46-22 376 86 - - 462-12 Transportation - 28 6 - - - 294 328 12 - - 340-4 Utilities - - 329 151 - - 62 541 81 - - 622-9 Others - - - - - - 16 16 12 0-28 - 15 Asset-backed Securities - - - - - - - - - - - - - Covered Bonds 3,871 187 11 10 - - - 4,080 - - - 4,080 + 141 Funds - - - - - - 282 282 1,265 591-2,137-6 Total 4,728 2,182 3,498 1,307 1,150-1,963 14,828 2,888 885 23 18,625 + 470 Change from 31.12.2012 + 329 + 157 + 16-128 + 36 - + 30 + 440 + 45-14 - 0 + 470 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 32
Fixed Income Investments in the Financial Sector* EURm Covered bonds Money market Long-term senior debt Long-term subord. debt Total % Sweden 3,104 805 1,127 220 5,256 54% Finland 250 1,597 157 18 2,022 21% Norway 515 120 648 111 1,394 14% Denmark 94 164 141 399 4% France 61 73 17 151 2% United States 24 103 9 136 1% Netherlands 102 102 1% Switzerland 82 11 94 1% Germany 10 41 51 1% Austria 34 1 35 0% United Kingdom 30 2 32 0% Estonia 23 0 24 0% Luxembourg 11 11 0% Belgium 5 5 10 0% Iceland 10 10 0% Jersey 5 5 0% Grand Total 4,080 2,570 2,543 540 9,732 100 % *Exposure tables vs. Allocation tables small differences 33
Fixed Income Investments in the Public Sector - no Periphery* EURm Governments Government guaranteed Public sector, other Total Sweden 16 56 335 407 Norway 27 141 168 Finland 12 55 83 150 Germany 79 79 Denmark 12 27 40 Netherlands 17 17 Total 45 228 587 860 * Exposure tables vs. Allocation tables small differences 34
Sampo plc Baa2 Stable
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 9,268 Liabilities EURm 9,268 Liquidity 984 CPs Issued 385 Investment assets 28 LT Senior Debt 1,723 -Real Estate 4 -Private Placements 148 -Private Equity 7 -Bonds Issued 1,575 -Other investm. 18 -Pension Ins. Loans 0 Subordinated Loans 231 Subordinated Debt 0 Equity Holdings 7,928 Capital 7,061 -Subsidiaries 2,370 - Undistributable 98 -Associated 5,557 - Distributable 6,962 Other Assets 97 Other Liabilities 100 Key Credit Metrics well in Single A -range Sampo plc Q1/2013 Gross Debt EUR 2,108 m Gross Debt to Equity 29.9% Financial Leverage 23.0% Sampo Group 2011 2012 Shareholders' Equity 8,920 10,113 Hybrid Bonds 202 200 Senior Debt 2,329 2,162 Financial leverage 22.1% 18.9% Allianz Group / FL* 28.5% 26.0% * Company s own information 36
Dividends & Reported Profits EURm 800 700 600 500 514 569 747 762 773 * EURm 1-3/2013 1-3/2012 Dividends 293 224 Operating expenses -5.4-4.0 Net financial expenses -24.8-16.0 Profit before taxes 262.8 205.0 564 522 702 683 737 400 2008 2009 2010 2011 2012 300 200 100 65 0-100 -15-16 -8-17 -31-37 -20-70 * Parent Company is not equal to Holding Segment; Dividend Income includes also dividends from Private Equity investments -10 Dividend income Operating expenses Net financial expenses Profit before taxes 37
Dividends Received by Payment Year EURm 1 600 1 400 1 200 1 000 800 600 400 200 0 490 141 100 249 1 406 75 300 1 031 754 35 200 519 511 130 200 181 568 80 744 488 540 756 768 204 250 224 2005 2006 2007 2008 2009 2010 2011 2012 2013 If Mandatum Life Banking* 100 406 544 293 100 ** *) Sampo Bank 2005-2006, Nordea 2007-> 38
Sampo Plc Debt Instruments Instrument & Principal Coupon Swap Effective Rate Maturity Senior Bond 4,000 SEKm (EMTN) Stibor3M + 1,5000% ---- 2,7360% 16.09.2013 Senior Bond under EMTN 300 EURm (EMTN) 3,2500 % ---- 3,0377% 03.10.2014 Senior Bond under EMTN 300 EURm (EMTN) 4,2500 % Euribor3M + 1,4727% 1,6937% 22.02.2016 Senior Bond 500 EURm (EMTN) 4,2500% Euribor3M + 2,7910% 3,0040% 27.02.2017 CP s issued 385 EURm Euribor + Margin 0,7900% 3M Public debt 1,959 EURm 2,3095% Private placements 148 EURm 2,5655% Total 2,108 EURm 2,3275% EURm 1 000 Maturity Structure 800 600 400 200 0 2013 2014 2015 2016 2017 CP s Senior under EMTN Senior Retail Private 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 Private Placements - targeted for a Finnish retail investors - related to Mandatum Life s services 39
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 40
Appendix
Nordea BV on Consolidated Balance Sheet Nordea in Sampo Group s B/S EURm Acquisition price 5,557.3 Retained earnings 1,156.0 Accumulated other changes in Nordea s equity -25.9 Share of Nordea s net profit 169.2 Amortisation -8.8 Deferred tax 1.9 Dividends -292.5 Share of Nordea s other comprehensive income 8.9 Share of Nordea s other changes in equity -57.2 Share of Nordea s goodwill change 3.2 Total 6,512.1 Figures Per Share EUR Acquisition price 6.46 Book value 7.57 Market Value* 9.34 No. of shares 860,440,497 * As of 7/05/2013 42
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 43
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. 44
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 45
Source: FSA 46
IF Regulatory Solvency Capital & Ratio* EURm 4 000 3 000 70% 88% 74% 71% 66% 77% 79% 72% 75% 79% % 100% 80% 2 000 1 000 54% 60% 40% 20% 0 0% Solvency capital (lhs) * Solvency ratio, (IFRS) % = + solvency capital + premiums earned from 12 months Solvency ratio (rhs) x 100% 47
Mandatum Life Regulatory Solvency Ratio* 30 % 25 % 20 % 17,7% 21,3% 20,1% 16,5% 18,5% 25,8% 20.9% 27,7% 27,3% 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% 48
Average C/R & Standard Deviation 2007-E2014 7 Sub-group 2 Sub-group 3 Standard deviation, % 6 5 4 3 2 1 0 Gjensidige Topdanmark Sub-group 1 Sampo Swiss Re Tryg SCOR Hannover Re Generali Munich Re AXA Aviva 90 91 92 93 94 95 96 97 98 99 100 Source: Macquarie, European Insurance, 22.01. 2013 AVERAGE Allianz Zig Combined ratio, % Sub-group 4 49
Latest History of Sampo Group 2000 2001 2002 2004 2007 2010 2011 2012 Finland Sampo Insurance Company and Leonia merge into the Sampo-Leonia financial services group. Mandatum Bank joins the Group, and the Group s name is shortened to Sampo. 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. Sampo has three core businesses: P&C insurance, banking and long-term savings. Sampo Group divests Sampo Bank Group to Danske Bank A/S. 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. If P&C signs a partnership agreement with Nordea. 50