Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Debt Investor Presentation (November 2014)
55 slides from Sampo Oyj's debt investor presentation, Nov 7, 2014
Slide 1: Sampo Group Debt Investor Presentation
Sampo Group Debt Investor Presentation Prepared November 7, 2014 Figures September 30, 2014 www.sampo.com/debtpresentation
Slide 2: Debt Investor Contacts and Financial Calendar
DEBT INVESTOR CONTACTS FINANCIAL CALENDAR Markku Pehkonen, CRO 07/05/2014 Interim Report Q1/2014 tel. +358 10 516 0014 Silent period 09/04/2014‐07/05/2014 [email protected] 13/08/2014 Interim Report Q2/2014 Silent period 16/07/2014‐13/08/2014 Peter Johansson, CFO 06/11/2014 Interim Report Q3/
Slide 3: Agenda
Sampo Group Basic Facts 3‐8 If P&C Largest Nordic P&C insurer 9‐16 Mandatum Life Finnish Life Insurer with Asset Management Focus 17‐24 Sampo Group Results, Capitalisation and Investments 25‐33 Sampo plc The listed Holding company 34‐41 Appendix 42‐55 3
Slide 4: Nordic Financial Group with Strong Brands
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% • TOP3 company in life & MARKET • The second largest • The largest Pan‐Nordic • The largest Pan
Slide 5: Sampo Group is a Mixed Financial Conglomerate
Sampo Group ― Basic Facts Sampo Group is a Mixed Financial Conglomerate Market cap November 3, 2014, EURm Strong relative performance 0 10 000 20 000 30 000 40 000 50 000 Nordea 40 448 DnB 23 649 Swedbank 23 591 Handelsbanken 23 576 >21% Danske Bank 22 005 SEB 21 978 Sampo 21 195 Sampo ownership str
Slide 6: Well-established Insurance Subsidiaries
Sampo Group ― Basic Facts Well‐established Insurance Subsidiaries If P&C ― Well‐diversified and Mandatum Life ― Leading Finnish Life and Profitable Pan‐Nordic Non‐life Insurer Wealth Management Service Provider • If P&C provides insurance • Provides comprehensive solutions and services in Wealth Man
Slide 7: Nordea has a unique position in the Nordics
SAMPO = GROUP Sampo Group — Basic Facts Nordea has a unique position in the Nordics... s : t f hi Global capabilities on par with uperior customer franchise antornationallpeors’ Retail Customers Corporates & Institutions Relationships Market Market (m) position position Sweden (— > (— > + 41 #2-3 #1
Slide 8: Group Strategy: Value Creation in Nordic Financials
Sampo Group ― Basic Facts Group Strategy: Value Creation in Nordic Financials LONG TERM • Value creation through investments in Nordic financials based on knowledge of VALUE CREATION Nordic markets, Nordic financial institutions & Nordic people. • Commitment to the long‐term development of affiliate
Slide 9: Agenda
Sampo Group Basic Facts 3‐8 If P&C Largest Nordic P&C insurer 9‐16 Mandatum Life Finnish Life Insurer with Asset Management Focus 17‐24 Sampo Group Results, Capitalisation and Investments 25‐33 Sampo plc The listed Holding company 34‐41 Appendix 42‐55 9
Slide 10: Largest Nordic P&C Insurer with Synergies
If P&C Largest Nordic P&C Insurer with Synergies Market Shares by Country Nordic Market shares Total GWP ~EURbn 25 Norway 2013 Other; 27 GWP EUR 6.4bn If; 18 Topdanmark; Gjensidige 25% Finland 2013 5 If 24% GWP EUR 4.1bn LähiTapiola; 4 Tryg 14% Pohjola 31% Tryg; 10 Pohjola; 4 Sparebank 1 10% LähiTap
Slide 11: Nordic P&C Insurance Market
If P&C Nordic P&C Insurance Market CONSOLIDATED • The four largest companies account for 75‐90% of the markets in Norway, MARKET Finland and Sweden. In Denmark the market is less consolidated. LOYAL CLIENTS • Renewal rates are around 80‐90%. DISTRIBUTION • In addition to traditional channels, the In
Slide 12: Good Diversification in Sales and Results
If P&C Good Diversification in Sales and Results Gross Written Premiums, EUR 3,724m By Business Area By Country Baltic; 94; Industrial; 3% Baltic; 94; 520; 14% Denmark; 2% 323 ; 9 % Norway; 1 212 ; 33 % Finland ; Commercial; 875 ; 24 1082; 29% Private; % 2003; 54% Sweden; 1 194 ; 32 % Technical Resu
Slide 13: Disciplined Underwriting and Diversification works
If P&C Disclipined Underwriting and Diversification works 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 87,8 26,6 80 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22,5 60 40 74,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4
Slide 14: Strong & Stable Annual Profit Development
If P&C Strong & Stable Annual Profit Development EURm 9M/2014 9M/2013 EURm Profit before taxes 711 700 Comprehensive Income 532 586 1 200 Profit before tax 1 127 Comprehensive income 943 978 1 000 929 864 800 800 730 707 689 644 636 600 534 549 400 308 200 0 ‐200 ‐267 ‐400 2005 2006 2007 2008 2009 2
Slide 15: Seasonality in Quarterly Results and CR%
If P&C Seasonality in Quarterly Results and CR% EURm Technical result Investment result Operating result 350 300 250 200 150 100 50 0 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/14 Q3/14 ‐50 Q4 Q3 Q2 Q1 Average Quarterly CR%, 2006‐2013 90.5 89.5 89.3 93.9 Year 2013 CR% 87.9
Slide 16: Conservative Investment Portfolio
If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 12.3bn Mark‐to‐Market Investment Return 14% 12,4% 11% 7,4% Private Real Estate 9% 5,8% 6,1% Equity 0,2% 6% 4,3% 4,4% 5,0% Money 3,6% Equities 0,2% 4% 2,6% 1,8% Market 11% 14% 1% ‐2% ‐4% ‐3,1% Public sector 19% Investment Ret
Slide 17: Agenda
Sampo Group Basic Facts 3‐8 If P&C Largest Nordic P&C insurer 9‐16 Mandatum Life Finnish Life Insurer with Asset Management Focus 17‐24 Sampo Group Results, Capitalisation and Investments 25‐33 Sampo plc The listed Holding company 34‐41 Appendix 42‐55 17
Slide 18: Mandatum Life: Finnish Life Insurer with Asset Management Focus
Mandatum Life Finnish Life Insurer with Asset Management Focus Client Underlying Critical Success Factors Sales & Client Segment Market Services Corporates Employee Benefit • Expertise in Rewards and Incentives, Mandatum Life Pension & Risk Life Solutions and Asset Management Cross‐sales HNWI Wealth
Slide 19: Mandatum Life Business Volumes
Mandatum Life Mandatum Life Business Volumes Premiums Written*, total EUR 774m Insurance Savings, total EUR 8,763m 2 17 3 With‐Profit 61 EUR 118m 56 1 709 219 28 3 305 U‐L With‐Profit U‐L EUR 656m EUR 3,550m EUR 5,214m 1 620 90 319 224 1 729 156 Unit‐linked life Unit‐linked pension Unit‐linked capit
Slide 20: Market Position
Mandatum Life Market Position Market Share in Finland Market Shares of Premiums Written % 30 27,9 28,2 26,8 26,2 Group Pension Corporates 25,5 25,2 25 22,4 21,5 45,4 41,1 20,8 24,9 24,5 24,8 19,3 20 22,0 19,5 20,4 19,8 19,3 19,2 15 17,9 10 Unit‐Linked Private Customers All products 17,2 11,8 5 Unit‐
Slide 21: Finnish With-Profit Life Insurance Market
Mandatum Life Finnish With‐Profit Life Insurance Market PRINCIPLE • There is no exact rule on profit sharing (e.g. 90%/10%). OF FAIRNESS • In the current markets, the principle is reflected in policyholders´ reasonable expectations for total accrual, which is an average annual yield of Finnish gover
Slide 22: Profit Development
Mandatum Life Profit Development EURm Profit before taxes 9M/2014 9M/2013 112 103 Comprehensive income 103 137 EURm 495 500 342 332 295 286 286 250 220 140 142 137 136 153 121 80 0 ‐115 ‐250 Profit before taxes Comprehensive income ‐378 ‐500 2006 2007 2008 2009 2010 2011 2012 2013 22
Slide 23: Mandatum Life Profit by Components
Mandatum Life Mandatum Life Profit by Components EURm 1‐9/2014 1‐9/2013 Net investment income 469.7 387.8 ‐ Transferred to expense result ‐16.3 ‐14.8 ‐ Return on unit‐linked policies ‐257.5 ‐168.8 ‐ Return on with‐profit policies* ‐111.1 ‐123.2 INVESTMENT RESULT 84.8 81.0 EXPENSE RESULT** 14.6 7.3 R
Slide 24: Absolute Return Investment Portfolio
Mandatum Life Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.3bn Mark‐to‐Market Investment Returns 20% 16,8% Other 6% Real estate 4% 15% 12,0% 11,1% Money market 9,7% 9,4% 10% 8,3% 7,1% Private equity 19% 5,0% 5% 5% 3,9% 0% Public sector ‐1,4% ‐5% 4% ‐10% ‐7,8% Other fixed
Slide 25: Agenda
Sampo Group Basic Facts 3‐8 If P&C Largest Nordic P&C insurer 9‐16 Mandatum Life Finnish Life Insurer with Asset Management Focus 17‐24 Sampo Group Results, Capitalisation and Investments 25‐33 Sampo plc The listed Holding company 34‐41 Appendix 42‐55 25
Slide 26: Stable Development of Profit before Taxes
Sampo Group ― Results, Capitalisation and Investments Stable Development of Profit before Taxes EURm 9M/2014 9M/2013 EURm P&C 711 700 Life 112 103 4 000 3,833 Nordea 501 477 Holding ‐10 ‐49 3 500 * Group 1,313 1,228 3 000 •If P&C •If P&C •If P&C •Mandatum Life •Mandatum Life •Mandatum Life 2 500 •Sa
Slide 27: Stable Companies & Group Level Diversification
Sampo Group ― Results, Capitalisation and Investments Stable Companies & Group Level Diversification* 1 0.26 1 0.10 0.85 1 P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS IN U‐L & WM • Geographical diversification • Geographical diversification • Finland & Baltics • Strong Retail
Slide 28: Fixed Income Investments in the Financial Sector
Sampo Group ― Results, Capitalisation and Investments Fixed Income Investments in the Financial Sector* Long‐term EURm Covered Money Long‐term subord. bonds market senior debt debt Total % Sweden 1,923 875 759 210 3,767 46% Finland 209 1,894 116 2,220 27% Norway 707 109 490 78 1,385 17% Denmark 146
Slide 29: Strong Group Solvency
Sampo Group ― Results, Capitalisation and Investments Strong Group Solvency EURm 9,586 Internal Treatment ≈ S II 10 000 407 ** 9 000 • Economic Capital (EC)need is measured at 99.5% confidence level 8 000 • By nature, SII framework is similar to 7 000 EC techniques used by Sampo • EC models are deve
Slide 30: Internal Capital Base above Capital Needs
EURm 10 000 12 000 0 2 000 4 000 6 000 8 000 1 976 2 294 4 109 2 657 3 054 6 401 3 279 3 738 7 666 3 783 4 245 7 076 4 024 4 600 7 565 4 131 4 722 7 168 4 189 4 799 7 279 4 281 4 954 8 521 EC,Diversified 4 281 4 947 8 432 4 222 4 858 8 120 4 394 5 076 6 830 4 374 5 015 7 262 4 629 5 262 7 875 4 619
Slide 31: Investment Allocation by Risk Profile
Sampo Group ― Results, Capitalisation and Investments Investment Allocation by Risk Profile Total Group (MEUR) 17 878 18 353 17 611 18 409 14 000 11 925 12 293 11 666 11 851 12 000 10 000 8 000 6 000 5 452 5 339 5 405 5 343 4 000 2 000 1 162 774 760 281 0 Mandatum Mandatum Mandatum Mandatum Sampo Sa
Slide 32: Investment & Counterparty Exposures
Sampo Group ― Results, Capitalisation and Investments Investment & Counterparty Exposures* AA+ - A+ - BBB+ - BB+ - Non Fixed Income Derivatives Change from 30.9.2014 AAA AA- A- BBB- C D Rated Total Equities Other (Counterparty Risk) Total 30.6.2014 Basic Industry - - - 109 354 - 125 588 216 - - 804
Slide 33: Sampo Group Public Sector Fixed Income Investments
Sampo Group ― Results, Capitalisation and Investments Sampo Group Public Sector Fixed Income Investments ― no Periphery* Government Public sector, EURm Government guaranteed other Total Sweden 288 856 1,144 the Netherlands 551 551 Germany 210 73 283 France 206 206 Norway 170 170 Finland 11 80 21 112
Slide 34: Agenda
Sampo Group Basic Facts 3‐8 If P&C Largest Nordic P&C insurer 9‐16 Mandatum Life Finnish Life Insurer with Asset Management Focus 17‐24 Sampo Group Results, Capitalisation and Investments 25‐33 Sampo plc The listed Holding company 34‐41 Appendix 42‐55 34
Slide 35: Straightforward Cash Flows & Strong Balance Sheet
Sampo plc Straightforward Cash Flows & Strong Balance Sheet Flow of Funds Balance Sheet Dividends Income Assets EURm 9,077 Liabilities EURm 9,077 • If P&C • Interest on Liquidity Liquidity 520 CPs Issued 298 • Mandatum Life • Income from other Investment assets 101 LT Senior Debt 2,206 • Nordea inve
Slide 36: Dividends & Reported Profits
Sampo plc EURm 1‐9/2014 1‐9/2013 Dividends & Reported Profits Dividends Operating expenses 471.6 ‐11.8 393.4 ‐16.7 Net financial expenses/income 0 ‐33.6 Profit before taxes 459.8 343.1 EURm 900 879 * 832 800 773 747 762 2009 2010 2011 2012 2013 737 702 683 700 600 569 522 500 400 300 200 100 0 ‐16 ‐
Slide 37: Dividends Received by Payment Year
Sampo plc Dividends Received by Payment Year EURm 1 600 Net Debt Q3/2014 EUR 1,545m vs. stable Dividend Inflows 1 406 1 400 75 1 200 300 1 070 1 000 878 756 768 370 800 754 744 35 293 600 200 568 204 250 224 100 490 511 1 031 80 100 400 141 130 100 ** 100 200 600 519 488 540 544 485 **) 200 406 249
Slide 38: Sampo plc Debt Instruments
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% ‐‐‐ 1.2640% 28.05.2015 Senior Bond 300 EURm (EMTN) 4.2500% Euribor3M + 1.4727% 1.6597% 22.02.2016
Slide 39: Sampo Group Conservative Leverage
EURm ‐4 000 ‐2 000 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Sampo plc Net debt Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Group NAV Q3/10 Q4/10 Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Sampo Group ― Conse
Slide 40: Sampo Group Loan-to-Value
0% 5% 10% 15% 20% 25% 30% 35% Q1/05 40% Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Q2/10 Net debt/NAV Q3/10 Q4/10 Sampo Group ― Loan‐to‐Value Q1/11 Q2/11 Q3/11 Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/14 Q2/
Slide 41: Sampo plc Key Credit Considerations
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 with a proven Track Record in long‐term Valu
Slide 42: Appendix
SAMPO S GROUP Appendix 42-55
Slide 43: Structural changes of Sampo Group to the leading Nordic financial group
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 Mandatum Sampo’s P&C insurance Sampo Group divests Sampo’s Nordea Sampo Group’s Sampo Group Sampo Group Company and Bank joins operations
Slide 44: IF P&C Quarterly Results and C/R
Appendix IF P&C Quarterly Results and C/R EURm Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12 Q3/12 Premiums earned 1,124 1,122 1,104 1,112 1,139 1,140 1,115 1,121 1,121 Claims incurred ‐793 ‐783 ‐811 ‐791 ‐802 ‐800 ‐824 ‐801 ‐809 Operating expenses ‐187 ‐187 ‐186 ‐186 ‐191 ‐188 ‐190 ‐198 ‐189 Othe
Slide 45: IF Regulatory Solvency Capital & Ratio
Appendix IF Regulatory Solvency Capital & Ratio* EURm % 4 500 94% 100% 88% 81% 4 000 79% 75% 77% 72% 3 500 74% 71% 80% 70% 66% 3 000 54% 60% 2 500 2 000 40% 1 500 1 000 20% 500 0 0% Solvency capital (lhs) Solvency ratio (rhs) + solvency capital 45 * Solvency ratio, (IFRS) % = x 100% + premiums earne
Slide 46: IF P&C Reinsurance Programmes
Appendix IF P&C Reinsurance Programmes IF is using reinsurance to: ‐ Utilize its own capital base efficiently and reduce cost of capital ‐ Limit large fluctuations of underwriting results ‐ Get access to reinsurers´ competence base IF has the following Reinsurance Programmes in place Catastrophe per
Slide 47: Mandatum Life Regulatory Solvency Ratio
Appendix Mandatum Life Regulatory Solvency Ratio* 35% 29,8% 30% 27,7% 27,6% 25,8% 25% 21,3% 20,9% 20,1% 20% 17,7% 18,5% 16,5% 15% 10% 7,9% 5% 0% * Solvency ratio, % of technical provision, (IFRS) = + solvency capital x 100% + liabilities for insurance and investment contracts ‐ reinsurers’ share of
Slide 48: Nordea: Profitable & Most Diversified Nordic Bank
0 300 600 900 1 200 1 500 EURm 1Q08 885 21 2Q08 883 36 Nordea 3Q08 847 89 4Q08 781 320 1Q09 833 356 2Q09 818 425 3Q09 832 358 4Q09 592 347 1Q10 878 261 Restructuring provision 2Q10 730 245 3Q10 960 207 4Q10 1 071 166 1Q11 1 003 242 2Q11 949 118 Write backs 3Q11 566 112 4Q11 1 029 263 1Q12 1 037 218
Slide 49: Nordea BV on Consolidated Balance Sheet
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 Figures Per Share EUR Accumulated other changes in Nordea’s equity ‐79.5 Share of Nordea’s net profit 521.7 Acquisition price 6.46 Book value 8.16 Amortisation ‐26.5
Slide 50: Financial Strength Rating History
Appendix Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland), Sampo plc Possible downgrade Jan 03 AA‐/Aa3 Moody´s If P&C Possible upgrade Feb 04 S&P If P&C Moody´s Sampo plc Negative Aug 02 Positive May 06 Stable May 04 Stable Nov 08 A+/A1 Stable A
Slide 51: Principles of Capital Management
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. –
Slide 52: Economic Capital Reporting Principles
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
Slide 53: Principles of Investment Management
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 Investm
Slide 54: Sampo FiCo Coordination duties
Appendix Sampo FiCo Coordination duties 54 54
Slide 55: Sampo Group's outlook for 2014
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 challe
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