Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Investor Day (May 2012)
59 slides from Sampo Oyj's investor day presentation, May 23, 2012
Slide 1: Sampo Group Capital Market Day
Sampo Group Capital Market Day London, 23 May 2012
Slide 2: CMD Agenda, 23 May 2012
CMD Agenda, 23 May 2012 11.30 ‐ 12.30 Registration and Buffet lunch 12.30 ‐ 12.45 Welcome ‐ Kari Stadigh, Group CEO and President 12.45 ‐ 13.15 Casper von Koskull, Head of Wholesale Banking, Nordea Bank 13.15 ‐ 13.45 Torbjörn Magnusson, Head of P&C Insurance 13.45 ‐ 14.15 Coffee Break 14.15 ‐ 14.45
Slide 3: Building the Leading Nordic Wholesale Banking Platform
Building the Leading Nordic Wholesale Banking Platform Sampo Capital Markets Day Casper von Koskull, Head of Nordea Wholesale Banking May 23, 2012
Slide 4: Nordea overview; Building the leading Nordic Wholesale Banking platform
• Nordea overview • Building the leading Nordic Wholesale Banking platform
Slide 5: Nordea is the largest financial service group in the Nordic and Baltic Sea region
Nordea is the largest financial service group in the Nordic and Baltic Sea region 11 million customers Nordea’s home markets - 9 home markets - Approx. A 9 9.5 5 million illi active ti personall customers t - 500,000 active corporate customers, incl. Nordic Top 500 Distribution power - More than
Slide 6: The journey continues
The journey continues Execution of the relationship strategy 2007/2008 2008/2009 2010/2011 2011/2012 Profitable Middle of Prudent New organic the road growth Normal growth Generating g Balancing g Supporting pp g Focus on resources cost, risk and customers to restoring to invest in capital – acceler
Slide 7: Nordea
Nordea , Making wt possibt
Slide 8: Financial result – Q1/12
Financial result – Q1/12 EURm Q1/12 Q4/11 Change % Q1/11 Change % Net interest income 1,420 1,427 -1 1,324 7 Net fee and commission income 596 588 1 602 -1 N t ffair Net i value l resultlt 469 506 -7 7 544 -14 14 Other income 46 37 24 40 15 Total income 2,531 2,558 -1 2,510 1 Staff costs -771 -714 8
Slide 9: Return on Equity is vital in ensuring stability…
Return on Equity is vital in ensuring stability… RoE, adjusted for restructuring costs 2011, percent Avg. = 19.1 Avg. = 15.3 Avg. = 11.3 Avg. = 11.5 Avg. = 11.1 2008 2009 2010 2011 2012 CT1 = 6.8% CT1 = 11.6% 7•
Slide 10: … and it gives strong capital generation…
… and it gives strong capital generation… Core Tier 1 capital, EURm • Generated capital of EUR 6.9bn since 2006* • In addition distributed EUR 6.3bn to shareholders • Strong capital generation gives good flexibility *Adjusted j for rights g issue 8•
Slide 11: … as well as a clear increase in Core Tier 1 ratio
… as well as a clear increase in Core Tier 1 ratio Core Tier 1 capital ratio, % (excl. Hybrids) Basel 2.5 excluding transition rules 11,6 • Improved ratio by 150bps since Q1/10 due to; • Strong profit generation • Controlled RWA development • Lending growth of 17% • RWA growth of 1% 9•
Slide 12: Nordea overview; Building the leading Nordic Wholesale Banking platform
• Nordea overview • Building the leading Nordic Wholesale Banking platform
Slide 13: The leading Nordic Wholesale Bank for corporate and institutional customers
The leading Nordic Wholesale Bank for corporate and institutional customers Overview of Wholesale Banking Nordic base with selected international locations • #1 or #2 position in each of the Nordic countries • Global leader in Shipping, Offshore and Oil services • Customers ~ 2,000 2 000 • Employees
Slide 14: Wholesale Banking in Nordea
Wholesale Banking in Nordea Other Wholesale Banking Share of Group total operating income Share of Group total operating profit EUR million, FY 2011 EUR million, FY 2011 26% 43% 57% 74% Share of total FTEs Share of economic capital FY 2011 EUR million million, 2011 14% 32% 68% 86% 12 •
Slide 15: Wholesale Banking – strong Q1 performance
Wholesale Banking – strong Q1 performance Q4/11 78 Q1/12 74 32 31 33 28 21 23 C/I ratio (%) RaRoCaR (%) RWA (EURbn) Lending to deposit gap (EURbn) (EURb ) 13 •
Slide 16: Wholesale Banking – the core relationship bank
Wholesale Banking – the core relationship bank Customer relationship strategy Product strategy • Customer and product perspective aligned • Leading Nordic position as provider of through the Relationship Management financial market solutions, advisory and Process capital markets access • Relationshi
Slide 17: Strengths of our relationship strategy
Strengths g of our relationship p strategy gy • European size and competence with local intensity and commitment • Flat and customer centric structure • Uniform and high level of customer service • Intensive cooperation between customer units and product specialists Relevance International Nordea et
Slide 18: Successful customer relationship strategy
Successful customer relationship strategy - Leading Nordic Wholesale Banking platform 100% Nordea 90% 80% 70% Peer 1 P Peer 2 60% Important 50% Peer 3 relationships* p 40% Peer 4 30% 20% 10% 0% -20 20 0 20 40 60 80 100 120 Greenwich Quality Index** * Important p relationships p are banks that are co
Slide 19: Successful customer relationship strategy – Swedish corporate customers
Successful customer relationship strategy - Swedish corporate customers as an example Lead Product Cross-sell Share Strategic Relationships (%) Effectiveness (%) Thinking (%) 47 68 59 43 64 62 56 47 44 33 33 38 2008 2009 2010 2011 2008 2009 2010 2011 2008 2009 2010 2011 The 1 or 2 most important ban
Slide 20: Successful customer relationship strategy – Danish corporate customers
Successful customer relationship strategy - Danish corporate customers as an example Use Nordea for Use Nordea for Use Nordea for Domestic Cash International CM Trade Finance Management services (%) services (%) services (%) 91 75 75 90 81 82 71 61 62 43 44 33 2008 2009 2010 2011 2008 2009 2010 2011
Slide 21: Successful product strategy
Successful product strategy - Leading Nordic capital markets franchise Customer rankings Non-standard products Debt Capital Standard products Markets #1 Foreign Exchange #1 Interest Rate 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Derivatives #1 Source: Greenwich Associates customer
Slide 22: Successful product strategy – league tables
Successful product strategy - Leading Nordic capital markets franchise #1 Advisor, M&A Nordic region, Q1/12 #1 Bookrunner Syndicated Loans Nordic, Q1/12 Bank Deal value Transactions Bank Deal value Transactions Nordea Corporate Finance 2.111 6 Nordea Markets 673 6 Barclays a c ays 1.800 800 1 SEB En
Slide 23: Successful product strategy – Top Nordic bond underwriter
Successful product strategy - Top Nordic bond underwriter All Nordic bonds 2012 YTD 1 Nordea N d M Markets k t 5 524 5.524 56 81 8,1 2 Swedbank First Securities 4.493 80 6,6 3 Danske Bank 3.769 65 5,5 4 Barclays 3 682 3.682 14 54 5,4 5 SEB 3.548 55 5,2 6 BNP Paribas 3.426 13 5,0 All Nordic bonds 200
Slide 24: Taking Wholesale Banking to the next level
Taking Wholesale Banking to the next level • Adapting to the new regulatory framework – what and how we do business with our customers ԟ Pricing g discipline p ԟ Cost management ԟ RWA and funding efficiency • Alignment of the Wholesale Banking value chain • Focus on core customer relationships, wall
Slide 25: Building the Leading Nordic Wholesale Banking Platform
Building the Leading Nordic Wholesale Banking Platform Sampo Capital Markets Day Casper von Koskull, Head of Nordea Wholesale Banking May 23, 2012
Slide 26: If P&C
If P&C Sampo Capital Market Day 23 M May 2012 Torbjörn Magnusson, CEO of If P&C
Slide 27: Performance update – Q1 2012
Performance update – Q1 2012 (EURm) Q1 - 12 Q1 - 11 Change (%) GWP 1,701 1,618 5.0% Technical result 112 100 12.3% Investment result 113 178 -36.5% Operating result 191 221 -13.6% Result for the period 151 162 -6.9% Risk ratio 69.0% 71.0% -2.0%-p Cost ratio 23.4% 23.4% 0.0%-p Combined ratio 92.4% 94
Slide 28: Results Q1 2012 by Business Area
Results Q1 2012 by Business Area Combined ratio and GWP growth Private Commercial 96.7% 94 8% 94.8% 94.0% 92.8% 91.9% 91.5% 4.3% 4.5% 4.1% 3.4% 4.1% 2.4% Q1-11 2011 Q1-12 Q1-11 2011 Q1-12 Industrial 94.6% Baltic 89.0% 92.4% 81.5% 91.8% 91.5% 3.2% 5 8% 5.8% 5 7% 5.7% 1 5% 1.5% 1 3% 1.3% 2.6% Q1-11 20
Slide 29: Return on equity and dividend paid
Return on equity and dividend paid Return on equity Dividend paid (EURm) 4
Slide 30: Nordic P&C market
Nordic P&C market Market GWP 2011 (EURbn) Sweden 6.4 Denmark* 6.2 Norway 5.4 Fi l d Finland 3.4 • 2010 figures • Source: National insurance associations, company reports 5
Slide 31: Nordic P&C market profitability
Nordic P&C market profitability Combined ratio • Weighted average represented by insurers with a market share above 10% in any of the Nordic countries • Mix of reporting principles (i.e. discounting practices) • Represents approximately 90% of Nordic P&C market Source: Company reports 6
Slide 32: Period of low interest rate environment
Period of low interest rate environment 5Y government bonds Average period 2003-2011 vs. 2009-2011 6% 4.0% 3.5% 5% 3.0% 4% 2.5% 3% 2.0% 1.5% 2% 1.0% 1% 0 5% 0.5% 0% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 5Y SEK GB 5Y NOK GB 5Y EUR GB 5Y DKK GB 5Y SEK GB 5Y NOK GB 5Y EUR GB 5Y DKK GB 2003-
Slide 33: Underwriting result being the key value driver
Underwriting result being the key value driver 14 000 14% 12 000 12.4% 12% 10 000 10% 8 000 8% 7 4% 7.4% 6 000 5.8% 6% 4 000 4.4% 4% 2 000 1.8% 2% 0.2% 0% 2005 2006 2007 2008 2009 2010 2011 -2 000 -2% -3.1% -4 000 -4% UW Result Mark-to-market investment returns RoI 8
Slide 34: Target setting fundamentals
Target setting fundamentals Illustrative correlation RoI and CR 6% 17.5% post-tax RoE 5% Sensitivity IInvestment rreturn 4% 1%-p RoI ~3%-p CR 3% 2% 1% 0% 84% 86% 88% 90% 92% 94% 96% 98% 100% Combined ratio 9
Slide 35: Best in Risk strategy
Best in Risk strategy Underwriting excellence and continuous efficiency improvement 90.6% 91.8% 92.1% 92.8% 92.0% Price Costs Volume 10
Slide 36: Scale and diversification benefits
Scale and diversification benefits %-points Standard deviation 20% 15% 2.5% 10% 5.3% 5.4% 5% 5.4% 0% 5.8% -5% -10% -15% -20% Q Q2 Q1 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q Q1 Q Q2 Q Q3 Q Q4 Q 2005 2006 2007 2008 2009 2010 2011
Slide 37: Financial discipline
Financial discipline Provisions for claims%, Dec 2011 Management of reserving risk Marine & Motor Other, 3.5% Transport, 1% 2% Workers' 3.0% comp, 24% comp Property, 10% Property 2 5% 2.5% Accident & Health, 8% 2.0% 1.5% 3.3% 2.9% Liability, 9% 2.4% 2.4% 2.4% 1.0% 2.0% 0.5% 0.0% 2007 2008 2009 2010
Slide 38: Claims reserving
Claims reserving Average claims reserving pattern, Industrial Property claims 2008-2011 140% Incurred ost settlement% 120% 100% 80% Claims co P id Paid 60% 40% 20% 0% 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Number of quarters from claim being registered 13
Slide 39: Governance and control
Governance and control Business Area (BA) Head of BA Business Unit (BU) Product & Price Sales & Service Claims Country/ Li off b Line business i & channels • Incentivized organization • Efficient structure and control • Focus on continuous improvement efforts 14
Slide 40: Creating shareholder value
Creating shareholder value – Stable return through g underwriting g excellence and scale advantage – Financial discipline – Continuity in organization and outstanding t t di managementt commitmentit t to t continuous improvement 15
Slide 41: Relax, we'll help you.
Relax, we'll help you. if
Slide 42: Sampo Group Dividends and capitalization
Sampo Group Dividends and capitalization 23 May 2012 Group CFO Peter Johansson
Slide 43: Results; Sampo as a dividend stock; Capitalization; Mandatum Life
22/05/2012 2 1. Results 2 Sampo as a dividend stock 2. 3. Capitalization 4. Mandatum Life
Slide 44: Profit before taxes and comprehensive income
22/05/2012 3 Profit before taxes and comprehensive income Sampo plc excl. Nordea 2012/Q1 2011/Q1 EURm Expenses ‐8 ‐7 800 Profit before taxes Comprehensive income Net finance costs ‐11 ‐23 ‐19 ‐30 Pretax Pre tax AFS: 2012/Q1 213 654 600 2011/Q1 ‐99 Pre tax AFS: Pretax 2012/Q1 193 400 2011/Q1 ‐26 38
Slide 45: Results; Sampo as a dividend stock; Capitalization; Mandatum Life
22/05/2012 4 1. Results 2 Sampo as a dividend 2. di idend stock 3. Capitalization 4. Mandatum Life
Slide 46: Dividend yield
22/05/2012 5 Dividend yield 2001‐2011 • Average dividend yield 6.75% • Cumulative C l i dividends di id d EUR 9 9.95/share 95/ h % 7 6.6 6.3 6.0 6.0 6 5.7 5 4 3 2 1 0 2007 2008 2009 2010 2011 Annual dividend yield calculated using the year‐end share price
Slide 47: If NAV and cumulative dividend
22/05/2012 6 If NAV and cumulative dividend • Average dividends EURm 488/year • NAV contribution from Q4/2004 to Q1/2012 EURm EURm 3,963 4,000 • Payout ratio 86% • Solvency and Payout ratio: 3,414 3 500 3,500 ‐A‐rating A rating target ‐Solvency II 3,008 3,000 ‐> rating target more limiting 2,813 2,5
Slide 48: Mandatum Life NAV and cumulative dividend
22/05/2012 7 Mandatum Life NAV and cumulative dividend • Average dividends EURm 120/year • NAV contribution from EURm Q4/2001 to Q1/2012 EURm 2,042 1,400 1,325 • Payout ratio 65% 1,225 1,225 1,225 • Solvency II and Payout ratio ‐ no rating target 1 200 1,200 ‐ internal model (EC) vs. Solvency II 1,0
Slide 49: Sampo plc debt 31 March, 2012
22/05/2012 8 Sampo plc debt 31 March, 2012 O t t di iissues Outstanding C Coupon S Swap C Current t rate t Maturity M t it Senior Bond 750 EURm / Euribor3M + Outstanding 355 EURm 6.3390 % 4.0565% 5.3445 % 10 Apr 2012 • • • Public debt 2,402 EURm 3.3692% Private placements 127 EURm 3.1134% Total 2,52
Slide 50: Potential cash flow to Sampo plc
22/05/2012 9 Potential cash flow to Sampo plc Nordea as a dividend stock for Sampo (assuming shareholding of 21.3% from 2006) EURm 300 276 270 248 Internal cash flow generation 250 223 205 EURm Average dividend/year 200 If (2005‐2011) 488 Nordea (2006‐2011), 21.3% 228 143 150 Mandatum Life (2001‐201
Slide 51: Results; Sampo as a dividend stock; Capitalization; Mandatum Life
22/05/2012 10 1. Results 2 Sampo as a dividend stock 2. 3. Capitalization 4. Mandatum Life
Slide 52: Group capitalization: Solvency I and Economic Capital
22/05/2012 11 Group capitalization Solvency y I and Economic Capital p (EC) ( ) EURm 7,875 8,000 Internal Treatment ≈ S II 413 ** 47* • Economic Capital need (EC) is 7,000 measured at 99.5% conf. level • By nature SII framework is similar to 6,000 EC techniques used by Sampo 4,927 • EC models are de
Slide 53: Nordea and Sampo Minimum regulatory capital requirements
22/05/2012 12 Nordea and Sampo Minimum regulatory g y capital p requirements q Basel III Minimum Sampo´s Nordea ownership Total Capital Ratio EURm remains at 8% 20.1% 20.3% 20.5% 21.3% 4,000 3,806 3,804 3,500 Total Capital Ratio 14.2% 3,748 3,641 3,620 3,529 3,404 3,384 3,000 3,,212 Total Tier 1, 12
Slide 54: Group capital and minimum requirement 31 March 2012
22/05/2012 13 Group capital and minimum requirement 31 March,, 2012 Assumptions: • MCR 50% of SCR or at least minimum Solvency I • Nordea New Normal and AIRB EURm Present Rules Basel III & Solvency II Rules • Life QIS 5 ”worst case” 9 000 9,000 • No diversification benefit 7,884 8,000 7,415 469 7,00
Slide 55: Results; Sampo as a dividend stock; Capitalization; Mandatum Life
22/05/2012 14 1. Results 2 Sampo as a dividend 2. di idend stock 3. Capitalization 4. Mandatum Life
Slide 56: Mandatum Life technical reserves traditional vs. unit-linked
22/05/2012 15 Mandatum Life technical reserves traditional vs. unit‐linked Guaranteed EURm Rate EURm 8,000 EURm Decrease 4.5% 1,138 , discount rate 3.5% 2,691 78 4.5% ‐> 3.5% 6,000 3,350 Total maturity 1,262 0‐2.5% 207 28 All liabilities 4,037 to 2.5% for 2012 4,000 Reserve for decreased 117 10 All
Slide 57: Mandatum Life mark-to-market investment return and 10Y govt bond yield
22/05/2012 16 Mandatum Life mark‐to‐market investment return and 10Y ggvmt bond y yield % 18 16 16.8 14 12 12 10 11.1 9.7 8 6 4 5.3 5.2 3.25% 3.5% 2.5% 2 3.3 3.8 4.3 4.3 3.7 3.0 3.0 2.3 0 1.4 ‐2 ‐4 4 ‐6 7.8 ‐8 ML m‐t‐m investment return 10Y average bond yield Guaranteed rate,3.5%
Slide 58: Life insurance in Finland investment return
22/05/2012 17 Life insurance in Finland Investment return,, % % Annual average 2007‐2011 Q1/2012 6 5.6 5.2 5 4.4 4.3 4.0 4 37 3.7 37 3.7 3 3.1 3 2.5 2 1.5 1.2 1 0 Mandatum Kaleva Fennia Life Tapiola Life Aktia Nordea Life OP Life Life f Finland l d
Slide 59: Sampo Group Capital Market Day
Sampo Group Capital Market Day London, 23 May 2012