Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Debt Investor Presentation (May 2014)
51 slides from Sampo Oyj's debt investor presentation, May 16, 2014
Slide 1: Sampo Group Debt Investor Presentation
Sampo Group Debt Investor Presentation Prepared May 16, 2014 Figures March 31, 2014 www.sampo.com/debtpresentation
Slide 2: Debt Investor Contacts, Financial Calendar and Ratings
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: Sampo Group Basic Facts
Sampo Group Basic Facts If P&C Largest Nordic P&C insurer Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed holding company 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% • Leading life & pension MARKET • The second largest • The largest Pan-Nordic • The largest Pan
Slide 5: Largest Nordic Financial with Insurance Focus
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 21 855 >21% Swedbank 21 576 SEB 21 210 Danske 20 174 Ownership structure Sampo 20 150 Solidium
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 Profitable & The Most Diversified Nordic Bank
1 200 1 500 300 600 900 0 EURm Nordea 1Q08 885 21 2Q08 883 36 3Q08 847 89 4Q08 781 320 1Q09 833 356 2Q09 818 425 3Q09 832 358 Restructuring provision 4Q09 592 347 1Q10 878 261 2Q10 730 245 3Q10 960 207 4Q10 1 071 166 Write backs 1Q11 1 003 242 2Q11 949 118 3Q11 566 112 4Q11 1 029 263 1 037 218 Loan
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 VALUE CREATION of Nordic markets, Nordic financial institutions & Nordic people. Commitment to the long-term development of affiliated co
Slide 9: If P&C
Sampo Group Basic Facts If P&C Largest Nordic P&C insurer Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed holding company 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 ~EUR 25bn Norway 2013 Other If GWP EUR 6.4bn 30% Topdanmark 19% Gjensidige 25% Finland 2013 5% If 24% GWP EUR 4.3bn Folksam Tryg Tryg 14% Pohjola 31% 5% 11% Sparebank 1 10% LähiTapiola 26% Pohjol
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 Internet
Slide 12: Sound Underwriting is Basis for Strong Result
If P&C Sound Underwriting is Basis for Strong Result Gross Written Premiums, EUR 1,706m By Business Area By Country Baltic; 35 Industrial; Denmark; Baltic; 35 302 151 Norway; 542 Private; 667 Finland ; Commercial; 529 702 Sweden; 449 Technical Results, EUR 124m By Business Area By Country Baltic; 5
Slide 13: Well-diversified Nordic P&C Insurer
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 26,6 80 25,6 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22,8 60 40 74,3 67,0 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 65,4 67,5
Slide 14: Strong & Stable Annual Profit Development
If P&C Strong & Stable Annual Profit Development Q1/2014 Q1/2013 EURm Profit before taxes 194 204 Compr.hensive Income 209 279 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 2010 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 -50 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
Slide 16: Conservative Investment Portfolio
If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 11.9bn Mark-to-Market Investment Return 14% 12,4% 11% 7,4% Private Real Estate 9% 5,8% 6,1% Equity 0,5% 6% 4,3% 4,4% 5,0% Money Equities 0,2% Market 4% 2,6% 1,8% 1,7% 11% 9% 1% Public -2% sector -4% 17% -3,1% Investment Retu
Slide 17: Mandatum Life
Sampo Group Basic Facts If P&C Largest Nordic P&C insurer Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed holding company 17
Slide 18: 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 245m Insurance Savings, total EUR 8,381m 1 17 3 With-Profit 11 EUR 42m 31 1 573 76 8 U-L With-Profit 3 383 U-L EUR 203m EUR 3,638m EUR 4,743m 1 479 91 29 234 1 549 142 Unit-linked life Unit-linked pension Unit-linked capital r
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 38.8 38.6 25 22,4 21,5 % % 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 15.7 5 % 11.2
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 average annual yield of Finnish government b
Slide 22: Profit Development
Mandatum Life Profit Development Q1/2014 Profit before taxes 37 Q1/2013 36 Comprehensive income 18 66 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 1-3/2014 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 RE
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 15% 12,0% Real Estate 6% 11,1% Money Market 9,7% 9,4% 4% 10% 8,3% 7,1% 8% 5,0% Private Equity 5% 5% Public sector 1,1% 14% 0% -5% -1,4% -10% -7,8% Equities ML
Slide 25: Sampo Group Results, Capitalisation and Investments
Sampo Group Basic Facts If P&C Largest Nordic P&C insurer Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed holding company 25
Slide 26: Stable Development of Profit before Taxes
Sampo Group ― Results, Capitalisation and Investments Stable Development of Profit before Taxes Q1/2014 Q1/2013 EURm P&C 194 204 Life 37 36 4 000 3,833 Nordea 170 162 Holding -4 -30 3 500 * Group 396 370 3 000 •If P&C •If P&C •If P&C •Mandatum Life •Mandatum Life •Mandatum Life 2 500 •Sampo Bank •No
Slide 27: Stable Companies & Group Level Diversification
Sampo Group ― Results, Capitalisation and Investments Stable Companies & Group Level Diversification* 1 0.27 1 0.13 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: Strong Group Solvency
Sampo Group ― Results, Capitalisation and Investments Strong Group Solvency EURm 9,697 Internal Treatment ≈ S II 10 000 401 ** 9 000 346 * • Economic Capital need (EC) is measured at 99.5% conf. level 8 000 • By nature SII framework is similar to 7 000 EC techniques used by Sampo • EC models are dev
Slide 29: Internal Capital Base above Capital Needs
EURm 0 2 000 4 000 6 000 8 000 10 000 12 000 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 EC,Diversified 4 799 7 279 4 281 4 954 8 521 4 281 4 947 8 432 4 222 4 858 8 120 4 394 5 076 6 830 4 374 5 015 7 262 EC,Undiversified 4 629 5
Slide 30: Investment Allocations by Risk Profile
Sampo Group ― Results, Capitalisation and Investments Investment Allocations by Risk Profile Total Group (MEUR) 17 344 17 715 17 878 18 353 14 000 11 688 12 029 11 666 11 851 12 000 10 000 8 000 6 000 5 336 5 443 5 452 5 339 4 000 2 000 1 162 760 320 243 0 Mandatum Mandatum Mandatum Mandatum P&C P&C
Slide 31: Investment & Counterparty Exposures
Sampo Group ― Results, Capitalisation and Investments Investment & Counterparty Exposures* AA+ - A+ - BBB+ - BB+ - Non Fixed Income Derivatives Change from 31.3.2014 AAA AA- A- BBB- C D Rated Total Equities Other (Counterparty Risk) Total 31.12.2013 Basic Industry - - - 109 302 - 128 539 226 - - 765
Slide 32: Fixed Income Investments in the Financial Sector
Sampo Group ― Results, Capitalisation and Investments Fixed Income Investments in the Financial Sector* Covered Money Long-term Long-term bonds market senior debt 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 1
Slide 33: Sampo plc
Sampo Group Basic Facts If P&C Largest Nordic P&C insurer Mandatum Life Finnish Life Insurer with Asset Management Focus Sampo Group Results, Capitalisation and Investments Sampo plc The listed holding company 33
Slide 34: Straightforward Cash Flows & Strong Balance Sheet
Sampo plc Straightforward Cash Flows & Strong Balance Sheet Flow of Funds Balance Sheet Dividends Income Assets EURm 9,605 Liabilities EURm 9,605 • If P&C • Interest on Liquidity Liquidity 825 CPs Issued 298 • Mandatum Life • Income on other • Nordea investments Investment assets 59 LT Senior Debt 1
Slide 35: Dividends & Reported Profits
Sampo plc Dividends & Reported Profits 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 EURm 900 879 * 832 800 773 747 762 2008 2009 2010 2011 2012 2013 737 702 683 700 600 569 564 514 522 500 400 300 200 100 65
Slide 36: Dividends Received by Payment Year
Sampo plc Dividends Received by Payment Year EURm 1 600 Net Debt Q1/2014 EUR 833m vs. Dividend Inflows 1 406 1 400 75 1 200 300 1 000 878 754 756 768 800 744 35 293 600 200 568 204 250 224 490 511 470 1 031 80 100 400 141 130 100 ** 100 519 200 540 544 370 488 485 200 406 249 181 100 0 2005 2006 200
Slide 37: 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% --- 1.6820% 28.05.2015 Senior Bond 300 EURm (EMTN) 4.2500% Euribor3M + 1.4727% 1.7587% 22.02.2016
Slide 38: 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 has a proven Track Record in long-term Value
Slide 39: Appendix Separate Slides
SAMPO = GROUP Appendix Separate Slides
Slide 40: 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
Slide 41: IF P&C Quarterly Results and C/R
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 Othe
Slide 42: IF Regulatory Solvency Capital & Ratio
Appendix IF Regulatory Solvency Capital & Ratio* EURm % 4 500 100% 88% 87% 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 42 * Solvency ratio, (IFRS) % = x 100% + premiums earne
Slide 43: If's Financial Strength Rating History
Appendix If’s Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland) AA-/Aa3 Possible downgrade Jan 03 Possible upgrade Feb 04 Negative Aug 02 Positive May 06 Stable May 04 Stable Nov 08 Stable Apr 03 A+/A1 Stable Feb 02 A/A2 A-/A3 Moody´s S&P Watch n
Slide 44: Mandatum Life Regulatory Solvency Ratio
Appendix Mandatum Life Regulatory Solvency Ratio* 30% 27,7% 27,6% 28,0% 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 insu
Slide 45: 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 176.6 Acquisition price 6.46 Book value 7.78 Amortisation -8.8 M
Slide 46: Sampo Group Public Sector Fixed Income Investments
Appendix Sampo Group Public Sector Fixed Income Investments ― no Periphery* Government Public sector, EURm Governments Total guaranteed other 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 * Exposu
Slide 47: Structural Changes of Sampo 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 48: 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 49: 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 50: 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 51: Appendix: Financial Conglomerate Structure and Supervision
Sampo FiCo Coordination Duties 21.3% * Parent Companyof the Financial Conglomerate * Holding company - . rrtconpanlcoup | If P&C * Holding company - Holding Ltd 100% (SE) af Parent Company Regulated entity * Parent Company * Holding Company * Regulated entities * Subsidiaries * Regulated entity * Su