Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Debt Investor Presentation (November 2017)
47 slides from Sampo Oyj's debt investor presentation, Nov 8, 2017
Slide 1: Debt Investor Presentation
Debt Investor Presentation PREPARED November 8, 2017 FIGURES September 30, 2017
Slide 2: Debt Investor Contacts and Financial Calendar 2017
DEBT INVESTOR CONTACTS FINANCIAL CALENDAR 2017 Markku Pehkonen, CRO 08/02/2017 Financial Statement Release for 2016 tel. +358 10 516 0014 Silent period 09/01/2017-08/02/2017 [email protected] Week 12 Annual Report 2016 27/04/2017 AGM Peter Johansson, CFO 11/05/2017 Interim Statement Q1/2017 t
Slide 3: Sampo Group Nordic Financial Group with Strong Brands
Sampo Group Nordic Financial Group with Strong Brands 3-17 If P&C Diversified Nordic P&C Insurer 18-23 Mandatum Life A Finnish Financial Services Company 24-28 Sampo plc Parent Company with Capacity to Generate Funds 29-35 Appendix Separate Supplementary Information 36-47 3
Slide 4: Sampo Group structure
Sampo Group ― Nordic Financial Group with Strong Brands Sampo Group structure • Long-term investor • Manager of capital structure and liquidity • Pay-out ratio ≥ 50% 100% > 45% 100% 21.2% Subsidiary Subsidiary Subsidiary Associated Company Market position The leading P&C insurer in the The second la
Slide 5: Efficient and Stable Operations as Basis for Value
Sampo Group ― Nordic Financial Group with Strong Brands Efficient and Stable Operations as Basis for Value A Mixed Financial Conglomerate Strong relative performance Market cap October 31, 2017, EURbn 10Y Total Shareholder Return Nordea 42.0 Danske 30.3 DNB 27.2 >21% Sampo 25.2 Swedbank 24.3 SHB 23.
Slide 6: If P&C ‒ A Diversified Nordic P&C Insurer
Sampo Group ― Nordic Financial Group with Strong Brands If P&C ‒ A Diversified Nordic P&C Insurer Strong & Stable Annual Profit Development • Diversified and profitable subsidiary EURm • Provides insurance solutions and services 1,200 in the Nordic and Baltic regions as well as 1,000 to Nordic custo
Slide 7: Topdanmark – A Danish Non-life and Life Insurer
Sampo Group ― Nordic Financial Group with Strong Brands Topdanmark – A Danish Non-life and Life Insurer • A profitable subisdiary with robust business model Pre-tax Profit Quarterly, DKKm • Carries out Danish non-life insurance, DKKm life insurance and pension fund business 800 Parent • Non-life bus
Slide 8: Mandatum Life ‒ A Finnish Financial Service Company
Sampo Group ― Nordic Financial Group with Strong Brands Mandatum Life ‒ A Finnish Financial Service Company • Provides a comprehensive range of services Profit Development, EURm in Finland and Baltics for private and 500 corporate customers • Services provided 250 Profit before ‒ Wealth management t
Slide 9: Nordea – A Nordic Banking Group
Sampo Group ― Nordic Financial Group with Strong Brands Nordea – A Nordic Banking Group • The Leading Bank in the Nordics and a major Low Quarterly Result Volatility, EURm European Bank company 1,600 Restructuring/ • Diversified and stable returns 1,400 impairment • Offers a full range of banking se
Slide 10: Diversified Companies & Diversified Portfolio
Sampo Group ― Nordic Financial Group with Strong Brands Diversified Companies & Diversified Portfolio* 1 0.26 1 0.14 0.86 1 0.38 0.68 0.69 1 P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS ON U-L & WM LOW VOLATILITY C/R PBT 2010-16 • Geographical diversification • Geographical div
Slide 11: Steady Development of Profit before Taxes
Sampo Group ― Nordic Financial Group with Strong Brands EURm 9M/17 9M/16 Steady Development of Profit before Taxes If P&C 603 624 Topdanmark 796* 35 Life 180 157 Nordea 491 546 Holding -27 -19 Group 2,046* 1,343 • If P&C • If P&C • If P&C • Mandatum Life • Mandatum • Topdanmark / Associated EURm • S
Slide 12: Risk Profiles of Investments
Sampo Group ― Nordic Financial Group with Strong Brands Risk Profiles of Investments Total Group (MEUR) 20,708 20,813 20,111 19,786 * 14,000 12,192 12,337 12,319 12,367 12,000 10,000 8,000 6,582 6,547 6,507 6,331 6,000 4,000 1,933 1,929 2,000 1,285 1,088 0 P&C P&C P&C P&C Mandatum Mandatum Mandatum
Slide 13: Investments & Counterparty Exposures
Sampo Group ― Nordic Financial Group with Strong Brands Investments & Counterparty Exposures* 30.9.2017 Derivatives Change AA+ - A+ - BBB+ - BB+ - Non Fixed Income AAA D Equities Other (Counterparty Total from AA- A- BBB- C Rated Total Risk) 30.6.2017 Basic Industry - - 45 43 34 18 116 256 95 - - 35
Slide 14: Mandatum Life – Solvency II Capital Requirement (SCR)
Sampo Group ― Nordic Financial Group with Strong Brands Mandatum Life – Solvency II Capital Requirement (SCR) With transitional measures, September 30, 2017 EURm SF with transitional measures Solvency ratio 193% 2,500 * 2,000 1,500 391 282 36 72 60 272 1,000 2,100 1,229 1,089 500 272 0 14 * Own Fund
Slide 15: If P&C Solvency Capital Requirement September 30, 2017
Sampo Group ― Nordic Financial Group with Strong Brands If P&C Solvency Capital Requirement September 30, 2017 Standard Formula Solvency Ratio 193% Internally assessed Solvency ratio 245% EURm EURm 4,000 4,000 3,500 S&P TTC for A rating 3,184 EURm 3,500 S&P TTC for A rating 3,184 EURm 3,000 3,000 11
Slide 16: Group Solvency Capital by Financial Conglomerate Rules
Sampo Group ― Nordic Financial Group with Strong Brands Group Solvency Capital by Financial Conglomerate Rules September 30, 2017 Group solvency ratio 156% / SII Standard Formula applied for Insurance Subsidiaries EURm 12,000 10,000 8,000 105 6,000 3,508 11,236 4,000 509 7,215 1,089 2,000 2,004 0 If
Slide 17: Value Creation in the Nordic Financials as Group Strategy
Sampo Group ― Nordic Financial Group with Strong Brands Value Creation in the Nordic Financials as Group Strategy LONG-TERM • Value creation through investments in Nordic financials based on knowledge VALUE of Nordic markets, Nordic financial institutions & Nordic people. CREATION • Commitment to th
Slide 18: Sampo Group Nordic Financial Group with Strong Brands
Sampo Group Nordic Financial Group with Strong Brands 3-17 If P&C Diversified Nordic P&C Insurer 18-23 Mandatum Life A Finnish Financial Services Company 24-28 Sampo plc Parent Company with Capacity to Generate Funds 29-35 Appendix Separate Supplementary Information 36-47 18
Slide 19: Diversified Client Base
If P&C – Diversified Nordic P&C Insurer Diversified Client Base 9M/2017 By Business Area By Country 13% 3% 9% 3% Norway Gross Written Private 30% Sweden Premiums, Commercial 23% Finland EURm 3,621 56% Industrial 28% Denmark Baltic Baltic 35% 2% 2% 2% 1% 2% Norway 6% 11% Private Sweden Technical Resu
Slide 20: Disciplined Underwriting and Diversification work
If P&C – Diversified Nordic P&C Insurer Disciplined Underwriting and Diversification work If P&C and BA Combined Ratios and deviation Expense ratio 2016, % 14 Topdanmark 16.4 CR % Standard deviation Denmark 12 If P&C 16.6 Q1/2007-Q3/2017 10 Finland Nordic market excl. If 17.2 Norway Industrial RSA S
Slide 21: Conservative Investment Portfolio
If P&C – Diversified Nordic P&C Insurer Conservative Investment Portfolio Investment Allocation Mark-to-Market Investment Return, % 14% 12.4% Total EUR 12.4bn 1-9/2017 2.8% 11% Real Estate 9% 7.4% 6.1% Private Equity 0.2 % 5.8% 5.0% 0.2 % 6% 4.3% 4.4% 4.1% 2.9% Other 0.0 % 4% 2.6% 1.8% 1.5% Equities
Slide 22: Seasonality in Quarterly Results and CR%
If P&C – Diversified Nordic P&C Insurer Seasonality in Quarterly Results and CR% EURm 350 300 250 200 Investment result 150 Technical result 100 Operating result 50 0 Q4 Q3 Q2 Q1 Average Quarterly CR%, 2006-2016 89.5 88.3 87.9 92.2 Year 2016 CR% 85.6 84.6 84.5 83.0* Year 2017 CR% 84.8 85.7 87.4 22 *
Slide 23: Nordic P&C Insurance Market
If P&C – Diversified Nordic P&C Insurer Nordic P&C Insurance Market Nordic Market Shares, % If P&C Market Shares by Country, % If + Finland 23 Other Topdanmark 23% 25% If Norway 21 18% Topdanmark Sweden 18 LähiTapiola 5% 4% Tryg Denmark/ If P&C + 6 17 OP 9% Topdanmark 6% LF Folksam Baltics 12 10% 6%
Slide 24: Sampo Group Nordic Financial Group with Strong Brands
Sampo Group Nordic Financial Group with Strong Brands 3-17 If P&C Diversified Nordic P&C Insurer 18-23 Mandatum Life A Finnish Financial Services Company 24-28 Sampo plc Parent Company with Capacity to Generate Funds 29-35 Appendix Separate Supplementary Information 36-47 24
Slide 25: Mandatum Life Business Volumes
Mandatum Life - A Finnish Financial Services Company Mandatum Life Business Volumes 9M/2017 Technical Provisions, EURm 11,538 1 With-Profit EURm 71 55 15 EURm 13 169 12,000 Guaranteed interest rates Unit-linked Premiums Written, U-L EURm 563 10,000 EURm 634 84 6,909 6,440 5,858 5,312 297 8,000 4,616
Slide 26: Investment Portfolio covering With-Profit liabilities
Mandatum Life - A Finnish Financial Services Company Investment Portfolio covering With-Profit liabilities Investment Allocation Mark-to-Market Investment Return, % Asset Allocation 30.9.2017, 6 331 EURm 20% 16.8% Trading 1-9/2017 5.0% Commodities Other 15% Biometric 0% Alternative Derivatives 12.0%
Slide 27: Mandatum Life Profit by Components
Mandatum Life - A Finnish Financial Services Company Mandatum Life Profit by Components EURm 1-9/2017 1-9/2016 Net investment income 645.2 359.4 - Transferred to expense result -20.0 -18.2 - Return on Unit-linked policies -334.7 -135.3 - Return on With-profit policies* -140.4 -79.6 INVESTMENT RESULT
Slide 28: Life insurance Market
Mandatum Life - A Finnish Financial Services Company Life insurance Market Finland ‒ Market Shares, % Market Shares by Country, % Aktia Other Sp- 2% Baltics/ 4% 7 Henkivakuutus OP Life Mandatum Life 3% 22% Fennia 5% LähiTapiola Danmark/ 9% Topdanmark 8 Mandatum Life 24% Nordea 31% • Various distribu
Slide 29: Sampo Group Nordic Financial Group with Strong Brands
Sampo Group Nordic Financial Group with Strong Brands 3-17 If P&C Diversified Nordic P&C Insurer 18-23 Mandatum Life A Finnish Financial Services Company 24-28 Sampo plc Parent Company with Capacity to Generate Funds 29-35 Appendix Separate Supplementary Information 36-47 29
Slide 30: Simple Cash Flows, low leverage and adequate liquidity
Sampo plc - Parent Company with Capacity to Generate Funds Simple Cash Flows, low leverage and adequate liquidity Flow of Funds Balance Sheet, EURm Dividends Income Assets 10,354 Liabilities 10,354 • If P&C • Interest on Liquidity • Mandatum Life • Income from other Liquidity 624 CPs Issued 293 • No
Slide 31: Cash and tradable financial investments 30.9.2017
Sampo plc - Parent Company with Capacity to Generate Funds Cash and tradable financial investments 30.9.2017 Instrument Running Yield Call/ Maturity Cash EURm 624 Investment Assets EURm 210 Subordinated loans (MV) EURm 500 ≈ 5.00% - Mandatum Capital Loan EURm 100 4.42% Every year - IF 30NC10 EURm 99
Slide 32: Sampo Group ― Conservative Leverage
Sampo plc - Parent Company with Capacity to Generate Funds Sampo Group ― Conservative Leverage EURm 16,000 40% Sampo plc Net debt Net debt/NAV 14,000 35% Group NAV 12,000 Group Equity 30% 10,000 8,000 25% 6,000 20% 4,000 15% 2,000 10% 0 -2,000 5% -4,000 0% Q1/05 Q1/06 Q1/07 Q1/08 Q1/09 Q1/10 Q1/11 Q
Slide 33: Dividends Received by Payment Year
Sampo plc - Parent Company with Capacity to Generate Funds Dividends Received by Payment Year EURm Nordea 1,600 Mandatum Life Extra Dividend 1,555 ~ 1,456 1,406 Mandatum Life 1,400 75 If P&C Extra Dividend 1,220 551 1,200 If P&C 300 1,067 559 1,000 883 533 125 756 768 370 * 800 754 744 150 35 293 *
Slide 34: Reported Profits facilitates Debt Servicing
Sampo plc - Parent Company with Capacity to Generate Funds Reported Profits facilitates Debt Servicing EURm 9M/2017 9M/2016 EURm Dividends 838.1 980.3 1,700 Operating expenses -10.6 -8.3 1,567 * Net financial expenses/income -20.0 -23.3 1,567 1,500 Profit before taxes 807.5 948.7 1,300 1,226 1,229 1
Slide 35: Issued Debt Instruments
Sampo plc - Parent Company with Capacity to Generate Funds Issued Debt Instruments Effective Instrument & Principal Coupon Swap Maturity Rate CPs issued EURm 293 Euribor + Margin 0.2500% Average 3M Senior Bond SEKm 2,000 (EMTN) Stibor3M + 1.45% Euribor3M+1.375% 1.0460% 29.05.2018 Senior Bond EURm 50
Slide 36: Sampo Group Nordic Financial Group with Strong Brands
Sampo Group Nordic Financial Group with Strong Brands 3-17 If P&C Diversified P&C Insurer 18-23 Mandatum Life A Finnish Financial Services Company 24-28 Sampo plc Parent Company with Capacity to Generate Funds 29-35 Appendix Separate Supplementary Information 36-47 36
Slide 37: Sampo Group’s Outlook for the rest of 2017
Appendix – Separate Supplementary Information Sampo Group’s Outlook for the rest of 2017 Sampo Group’s business areas are expected to report good operating results for 2017. However, the mark-to-market results are, particularly in Mandatum Life, highly dependent on capital market developments. The c
Slide 38: Structural changes of Sampo Group to the position as the leading Nordic financial group
Appendix – Separate Supplementary Information Structural changes of Sampo Group to the position as the leading Nordic financial group 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Sampo Group’s (If P&C’s) Mandatum Life Sampo Group divests Sampo Topdanmark
Slide 39: Sampo Group ‒ Legal Supervision Structure
Appendix – Separate Supplementary Information Sampo Group ‒ Legal Supervision Structure SAMPO FICO GROUP SAMPO SII GROUP Sampo plc (FI) IF If P&C Insurance MANDATUM Mandatum Life TOPDANMARK Topdanmark A/S NORDEA Nordea Bank AB INSURANCE INSURANCE INSURANCE BANKING Holding Ltd (SE) Ltd (FI) (DK) >41%
Slide 40: Fixed Income Investment Segementation excl. Topdanmark
Appendix – Separate Supplementary Information Fixed Income Investment Segementation excl. Topdanmark Fixed Income Investments in the Financial Sector Fixed Income Investments in the Public Sector Long-term Long-term Covered Money senior subordinated Government Public sector, EURm bonds market debt d
Slide 41: Sampo Group Steering Model and Principles
Appendix – Separate Supplementary Information Sampo Group Steering Model and Principles • Four separate and independent business areas and Sampo plc an active owner • General Principles of Business activities • Straightforward and transparent legal structure combined with limited intragroup exposure
Slide 42: Principles of Investment Management excl. Topdanmark
Appendix – Separate Supplementary Information Principles of Investment Management excl. Topdanmark • Company specific needs form the basis for all investments • Liabilities intensively analysed and modelled • Regulatory requirements • Strategy • Absolute Return targets taking into account the liabil
Slide 43: Principles of Capital Management
Appendix – Separate Supplementary Information Principles of Capital Management • Subgroups are adequately capitalized to ensure normal business operations • At Group level the following issues are managed/monitored • Direct risk concentrations • Correlations of the subgroups' profits • Sub-groups do
Slide 44: Calculation Principles of Sampo Group Solvency
Appendix – Separate Supplementary Information Calculation Principles of Sampo Group Solvency • Group Solvency Capital • Under FICOD rules, capital is Group equity with some additional items added or deducted (subordinated loans, deferred tax assets, planned dividends…) • Under SII rules capital – re
Slide 45: Risk Management Principles
Appendix – Separate Supplementary Information Risk Management Principles* • Scope • Sampo’s Board of Directors requires that all activities involving the exposure of any Sampo Group company to risks, as well as activities controlling those risks, are arranged to comply with these general guidelines
Slide 46: Financial Strength Rating History
Appendix – Separate Supplementary Information Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland), Sampo plc Moodyʼs If P&C Possible downgrade Jan 03 S&P If P&C Moodyʼs Sampo plc Possible upgrade Feb 04 Stable Dec 16 AA-/ Aa3 S&P Sampo plc Negative
Slide 47: If P&C Reinsurance Programmes
Appendix – Separate Supplementary Information 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