Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Debt Investor Presentation (February 2017)
57 slides from Sampo Oyj's debt investor presentation, Feb 10, 2017
Slide 1: Sampo Group Debt Investor Presentation
Sampo Group Debt Investor Presentation Prepared February 10, 2017 Figures December 31, 2016
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: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 4: Nordic Financial Group with Strong Brands
Sampo Group ― Value creation in the Nordic financials Nordic Financial Group with Strong Brands • Listed company Sampo plc • Long-term investor • Manager of capital structure and liquidity • Pay-out ratio ≥ 50% 100% >40% 21.2% 100% • The leading provider of • The largest financial MARKET • The leadi
Slide 5: Sampo Group Steering Model and Principles
Sampo Group ― Value creation in the Nordic financials Sampo Group Steering Model and Principles • Three separate and independent business areas, and Parent Company acting merely as a Portfolio Manager • General Principles of Business activities – Straightforward and transparent legal structure combi
Slide 6: Well-established Insurance Subsidiaries
Sampo Group ― Value creation in the Nordic financials Well-established Insurance Subsidiaries If P&C Mandatum Life Well-diversified and Profitable Respected Finnish Expert in Pan-Nordic Non-life Insurer Wealth Management, Investments, Rewards and Risk Insurance • If P&C provides insurance • Mandatum
Slide 7: Nordea ‒ Diversified and Stable Nordic Bank
Sampo Group ― Value creation in the Nordic financials Nordea ‒ Diversified and Stable Nordic Bank Nordea and Peers 2006-Q3/2016 Nordea’s market position Quarterly net profit volatility,% 131 Corporates & 74 Country Retail Customers Institutions 55 Relationships, Market Market 24 36 17 million Positi
Slide 8: Topdanmark ‒ Insurer with a Robust Business Model
Sampo Group ― Value creation in the Nordic financials Topdanmark ‒ Insurer with a Robust Business Model 8 10-Feb-17
Slide 9: Value Creation in the Nordic Financials as Group Strategy
Sampo Group ― Value creation in the Nordic financials 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 the
Slide 10: Efficient and Stable Operations as Basis for Value
Sampo Group ― Value creation in the Nordic financials Efficient and Stable Operations as Basis for Value A Mixed Financial Conglomerate Strong relative performance Market cap January 30, 2017, EURbn 10Y Total Shareholder Return 0 10 20 30 40 50 Nordea 45.5 Danske 30.3 SHB 26.5 >21% Swedbank 26.5 DNB
Slide 11: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 12: Leading Nordic P&C Insurer with Synergies
If P&C Leading Nordic P&C Insurer with Synergies Market Shares by Country Nordic Market Shares Total GWP ~EUR 25bn Norway 2015 If Gjensidige 25% Other 17% 27% Topdanmark If 22% 5% Tryg 14% Finland 2015 LähiTapiola Sparebank 1 10% 4% Tryg Pohjola 32% 9% LähiTapiola 25% Pohjola Gjensidige 6% If 24% 8%
Slide 13: 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 MARKET in Norway, Finland and Sweden. In Denmark the market is less consolidated. LOYAL CLIENTS • Renewal rates are around 80-90%. DISTRIBUTION • In addition to the traditional channels, In
Slide 14: Diversified Client Base
If P&C Diversified Client Base Gross Written Premiums, EUR 4,458m By Business Area By Country Baltic, Baltic, 131, 3% Denmark, Industrial, 131, 3% 407 , 9% 528, 12% Norway, 1,334 , 30% Finland , Commercial, 987 , 22% Private, 1166, 26% 2633, 59% Sweden, 1,599 , 36% Technical Results, EUR 658m By Bus
Slide 15: Disciplined Underwriting and Diversification work
If P&C Disciplined Underwriting and Diversification work Combined Ratio Development Geographical Diversification in CR 23.7 92.8 24.1 92.1 23.5 92.0 23.7 91.8 23.7 90.6 24.3 90.5 24.0 89.9 % 23.0 88.9 22.8 88.1 22.5 87.7 18.8 85.4 22.1 84.4 100 80 60 40 69.1 68.4 68.1 68.0 66.9 66.6 66.2 65.9 65.9 6
Slide 16: Conservative Investment Portfolio
If P&C Conservative Investment Portfolio Investment Allocation Mark-to-Market Investment Return, % Total EUR 12.2bn 14% 12.4% 11% 9% 7.4% 6.1% Real Estate Other 5.8% 5.0% Private 0.2 % -0.03% 6% 4.3% 4.4% 4.1% 2.9% equity 0.2 % 4% 2.6% 1.8% 1.5% Money 1% Equities market 8% -2% 13% Public -4% -3.1% 2
Slide 17: Strong & Stable Annual Profit Development
If P&C Strong & Stable Annual Profit Development EURm Profit before tax 1,200 1,127 Comprehensive income 978 960 1,000 943 929 931 864 883 800 800 730 707 689 714 644 636 624 600 534 549 526 400 308 200 0 -200 -267 -400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 17 10-Feb-17
Slide 18: 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 Q4 Q3 Q2 Q1 Average Quarterly CR%, 2006-2016 89.5 88.3 87.9 92.2 Year 2015 CR% 87.7 83.8 80.9 89.2 Year 2016 CR% 85.6 84.6 84.5 83.0* 18 10-Feb-17 * incl. positive on
Slide 19: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 20: Finnish Life Insurer with Wealth Management Focus
Mandatum Life Finnish Life Insurer with Wealth Management Focus Client Underlying Critical Success Factors Sales & Segment Market Client Services Corporate Employee • Expertise in Rewards and Incentives, Mandatum Life Customers Benefit Pension & Risk Life Solutions and Asset Management Cross-selling
Slide 21: Mandatum Life Business Volumes
Mandatum Life Mandatum Life Business Volumes Premiums Written, total EUR 1,119m Insurance Savings, total EUR 10,385m 2 28 17 With-Profit EUR 145m 76 67 2,346 27 343 With-Profit 3,721 EUR 3,945 U-L U-L EUR 974m EUR 6,439m 1,956 472 131 179 1,977 161 Unit-linked life Unit-linked pension Unit-linked ca
Slide 22: 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 in ML is reflected in policyholdersʼ reasonable expectations for total accrual, which is an average annual yield of Finnish
Slide 23: Investment Portfolio covering With-Profit liabilities
Mandatum Life Investment Portfolio covering With-Profit liabilities Investment Allocation Mark-to-Market Investment Return, % 20% 16.8% Asset Allocation 31.12.2016, 6 582 EURm Biometric Commodities Other 15% 12.0% Trading Money 11.1% 0% 0% Alternative Derivatives Market 9.7% 9.4% Unlisted 5% 10% 8.3
Slide 24: Profit Development
Mandatum Life Profit Development EURm 495 500 342 332 295 286 286 220 232 250 181 168 210 153 163 149 140 142 137 136 121 80 0 -115 -250 Profit before taxes -378 Comprehensive income -500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 24 10-Feb-17
Slide 25: Mandatum Life Profit by Components
Mandatum Life Mandatum Life Profit by Components EURm 2016 2015 Net investment income 634.4 632.0 - Transferred to expense result -24.6 -25.0 - Return on Unit-linked policies -276.0 -238.8 - Return on With-profit policies* -176.1 -260.9 INVESTMENT RESULT 157.6 107.3 EXPENSE RESULT** 24.1 25.0 RISK R
Slide 26: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 27: Diversified Companies & Diversified Portfolio
Sampo Group Diversified Companies & Diversified Portfolio* 1 0.29 1 0.14 0.85 1 P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS ON U-L & WM PBT 2010-16 • Geographical diversification • Geographical diversification • Finland & Baltics • Strong Retail Banking Franchise • Strong Reta
Slide 28: Steady Development of Profit before Taxes
Sampo Group Steady Development of Profit before Taxes • If P&C • If P&C • If P&C EURm • Mandatum Life 3,833 • Mandatum • Topdanmark / Associated 2,200 • Sampo Bank Life • Mandatum Life • Nordea / • Nordea / Associated 2,000 Investment 1,888 1,871 * 1,759 1,800 1,616 1,668 1,600 1,295 1,353 1,320 1,4
Slide 29: Different Risk Profiles of Investments
Sampo Group Different Risk Profiles of Investments 19,615 18,844 19,652 20,708 Total Group (MEUR) 14,000 12,305 12,192 12,000 11,517 11,092 10,000 8,000 6,450 6,448 6,569 6,582 6,000 4,000 2,073 1,933 2,000 879 778 0 P&C P&C P&C P&C Mandatum Mandatum Mandatum Mandatum Sampo Sampo Sampo Sampo If If I
Slide 30: Investments & Counterparty Exposures
Sampo Group Investments & Counterparty Exposures* 31.12.2016 Derivatives Change AA+ - A+ - BBB+ - BB+ - Non Fixed Income AAA D Equities Other (Counter- Total from AA- A- BBB- C Rated Total party Risk) 30.9.2016 Basic Industry - - 20 40 107 - 72 239 191 - - 429 - 20 Capital Goods - 32 103 55 5 - 90 2
Slide 31: Principles of Capital Management
Sampo Group Principles of Capital Management 1. Sub-Groups are adequately capitalized to ensure normal business operations 2. At Group level the following issues are managed/monitored – Direct risk concentrations – Correlations of the sub-groupsʼ profits – Sub-groups do not cross-capitalize each oth
Slide 32: If P&C Solvency Capital Requirement, December 31, 2016
Sampo Group If P&C Solvency Capital Requirement, December 31, 2016 Standard Formula Solvency Ratio 197% Internally assessed Solvency ratio 244% EURm EURm 4,000 4,000 3,500 3,500 S&P TTC for A rating 2,967 S&P TTC for A rating 2,967 3,000 3,000 2,500 91 2,500 250 477 949 1,029 179 312 3,855 3,822 2,0
Slide 33: Mandatum Life – Solvency II Capital Requirement
Sampo Group Mandatum Life – Solvency II Capital Requirement (SCR) With Transitional Measures, December 31, 2016 EURm SF with Transitional Measures Solvency ratio 160% 2,000 1,800 1,600 285 * 392 38 51 1,400 59 295 1,200 1,000 1,893 800 1,324 600 1,182 400 200 295 0 33 * Own Funds without transitiona
Slide 34: Mandatum Life Technical Provisions Forecast
Sampo Group Mandatum Life Technical Provisions Forecast EURm 6,000 • Liabilities with highest guarantees (3.5 and 4.5%) decreasing and expected to be EUR 2.0 bn in 2022 (Equity transitional) and EUR 1.0 bn in 2031 (Liability transitional) 5,000 SCR trend expected to be decreasing and Own Funds trend
Slide 35: Calculation of Sampo Group Solvency
Sampo Group Calculation 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 – referred to as Own funds (OF) – consists mainly
Slide 36: Group Solvency Capital by Financial Conglomerates Rules
Sampo Group Group Solvency Capital by Financial Conglomerates Rules December 31, 2016 Group solvency ratio 154% / SII Standard Formula applied for Insurance Subsidiaries EURm 12,000 10,000 8,000 50 6,000 3,668 10,937 4,000 247 7,088 1,182 2,000 1,942 0 If P&C (SF*) Mandatum Topdanmark Sampo plc's Sa
Slide 37: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 38: Simple Cash Flows, low leverage and adequate liquidity
Sampo plc Simple Cash Flows, low leverage and adequate liquidity Flow of Funds Balance Sheet, EURm Assets 11,196 Liabilities 11,196 Dividends Income • If P&C • Interest on Liquidity Liquidity 1,439 CPs Issued 671 • Mandatum Life • Income from other Investment assets 179 LT Senior Debt 2,877 • Nordea
Slide 39: Liquid Investments as Buffer
Sampo plc Liquid Investments as Buffer Instrument & Principal Running Yield Call/ Maturity Mandatum Capital Loan 100m€ 4.57% Every year IF PerpNC5.5 90m€ 4.71% 26.11.2018 IF 30NC10 99m€ 6.07% 08.12.2021 Nordea AT1 PerpNC5 171m$ 5.95% 23.9.2019 Nordea AT1 PerpNC5 98m$ 6.48% 13.9.2021 Topdanmark Tier1
Slide 40: Sampo Group ― Conservative Leverage
Sampo plc 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 Q1/12 Q1/13 Q1/14 Q1/15 Q1/16 Q1/17 Q1/05 Q1/06 Q1
Slide 41: Dividends Received by Payment Year
Sampo plc Dividends Received by Payment Year EURm If P&C 1,600 1,555 If P&C Extra Dividend 1,406 1,400 75 Mandatum Life 1,220 551 1,200 300 Nordea 1,067 1,000 883 533 125 756 768 370 800 754 744 35 293 * 293 684 200 568 204 250 224 100 100 600 490 511 1,031 80 100 141 130 100 400 559 100 200 597 587
Slide 42: Reported Profits facilitates Debt Servicing
Sampo plc Reported Profits facilitates Debt Servicing EURm 1,700 1,567 1,567 2010 2011 2012 2013 1,500 * 2014 2015 2016 1,300 1,226 1,229 1,069 1,050 1,100 879 900 773 832 747 762 702683737 700 500 300 100 17 17 -100 -8 -10 -17 -20 -18 -14 -17 -37 -20 -26 -1 -70 Dividend income Operating Net financi
Slide 43: Issued Debt Instruments
Sampo plc Issued Debt Instruments Effective Instrument & Principal Coupon Swap Maturity Rate Senior Bond 500 EURm (EMTN) 4.2500% --- 4.2500% 27.02.2017 Senior Bond 2,000 SEKm (EMTN) Stibor3M + 1.45% Euribor3M+1.375% 0.9990% 29.05.2018 Senior Bond 500 EURm (EMTN) 1.1250% --- 1.1640% 24.05.2019 Senior
Slide 44: Agenda
Mission Value Creation in the Nordic Financials 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-25 Sampo Group A Diversified Business Portfolio with Strong Capitalization 26-36 Sampo plc Parent Company with Capacity to Generate Funds 37-43 Outlo
Slide 45: Sampo Group's Outlook for 2017
Sampo Group Outlook 2017 Sampo Group’s Outlook for 2017 Sampo Group’s business areas are expected to report good operating results for 2017. However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The continuing low interest rate leve
Slide 46: Appendix Separate Supplementary Information
Appendix Separate Supplementary Information 46-57 46 10-Feb-17
Slide 47: Fixed Income Investments in the Financial Sector
Appendix - Separate Supplementary Information Fixed Income Investments in the Financial Sector Long-term Covered Money Long-term subordinated EURm bonds market senior debt debt Total % Sweden 1,998 352 798 458 3,606 36% Finland 132 2,207 251 6 2,596 26% Norway 651 396 224 1,272 13% Denmark 207 7 312
Slide 48: Public Sector Fixed Income Investments
Appendix - Separate Supplementary Information Public Sector Fixed Income Investments Government Public sector, EURm Government guaranteed other Total Sweden 100 679 779 Norway 250 250 Finland 78 75 153 Germany 67 67 United States 41 41 Japan 19 19 Denmark 11 11 Total 141 156 1,022 1,319 Exposure tab
Slide 49: If P&C Quarterly Results and C/R
Appendix - Separate Supplementary Information If P&C Quarterly Results and C/R Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ Q4/ Q3/ Q2/ Q1/ EURm 16 16 16 16 15 15 15 15 14 14 14 14 Premiums earned 1,074 1,080 1,073 1,059 1,077 1,087 1,103 1,076 1,108 1,124 1,122 1,104 Claims incurred -740 -738 -727 -700 -764 -73
Slide 50: 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 Reinsuranc
Slide 51: Nordea: Profitable & Diversified Nordic Bank
10-Feb-17 200 400 600 800 -200 0 1,000 1,200 1,400 1,600 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 2Q10 730 245 3Q10 960 207 4Q10 1,071 166 1Q11 1,003 242 2Q11 949 118 3Q11 566 112 4Q11 1,029 263 1Q12 1,037 218 2Q12
Slide 52: Nordea BV on Consolidated Balance Sheet
Appendix - Separate Supplementary Information Nordea BV on Consolidated Balance Sheet Nordea in Sampo Group’s B/S EURm Acquisition price 5,557.3 Retained earnings 1,804.2 Figures Per Share Accumulated other changes in Nordea’s equity -56.0 EUR Acquisition price 6.46 Share of Nordea’s net profit 800.
Slide 53: Principles of Investment Management
Appendix - Separate Supplementary Information 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
Slide 54: 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 a
Slide 55: Through Structural Changes to the Leading Nordic Financial Group
Appendix - Separate Supplementary Information Sampo Group ― Through Structural Changes to the Leading Nordic Financial Group Mandatum Bank is merged Sampo divests Sampo Bank Sampo Group’s(If P&Cʼs) Sampo Group Mandatum Life into Sampo-Leonia, and the to Danske Bank. • Topdanmark holding exceeds (Man
Slide 56: 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 Possible upgrade Feb 04 Moodyʼs Sampo plc Stable Dec 16 AA-/ Aa3 S&P Sampo plc Negative
Slide 57: 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 Holding Ltd (SE) INSURANCE INSURANCE (DK) >41% BANKING Ltd (FI)