Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Investor Day (May 2005)
100 slides from Sampo Oyj's investor day presentation, May 23, 2005
Slide 1: Financial Issues
Financial Issues Group CFO Peter Johansson Capital Market Day 23rd May, 2005 London
Slide 2: Earnings per share
Earnings per share EUR 0.40 0.37 0.36 0.30 0.30 0.28 0.20 0.10 0.00 1-3/2005 1-3/2004 EPS reported EPS, incl. change in the fair value reserve 2
Slide 3: Group profit before taxes
Group profit before taxes EUR m 250 230 1-3/2005 1-3/2004 190 150 117 122 62 56 62 50 12 -12 Banking and Life P&C Other Sampo -50 investment Insurance Insurance Group services 3
Slide 4: Profit before taxes – Banking and investment services
Profit before taxes Banking and investment services 1-3/2005 1-3/2004 EUR m 100 82 80 62 56 51 48 50 33 29 0 -50 -100 -105 -102 -150 Net Interest Fees and Other income Total costs Profit before Income commissions taxes 4
Slide 5: Profit before taxes – P&C Insurance
Profit before taxes P&C Insurance EUR m 1,000 906 1-3/2005 800 600 400 200 74 117 0 -200 -228 -400 -600 -634 -800 Premiums Investment Claims incurred Total costs Profit before earned income, net taxes 5
Slide 6: Profit before taxes – Life Insurance
Profit before taxes Life Insurance EUR m 1-3/2005 1-3/2004 150 131 130 124 92 100 62 50 12 0 -14 -12 -50 -100 -150 -200 -179 -198 -250 Premiums Investment Claims incurred Total costs Profit before earned income, net taxes 6
Slide 7: Return on Economic Capital in Sampo Group
Return on Economic Capital in Sampo Group Q1/2005 vs. Targets 35 RoEC Q1/2005,annualised 30 Target 25 20 19 20 17.5 17.5 15 10 5 21.5 18.3 21.4 33.3 0 Sampo Group Banking P&C Insurance Life Insurance 7
Slide 8: Sampo Group NAV 31.3.2005
Sampo Group NAV 31.3.2005 EURm 4000 3812 158 723 3654 3089 3000 2000 2191 1000 898 0 Banking & Inv. 8
Slide 9: IFRS-NAV Buffers 31.3 2005
IFRS-NAV Buffers 31.3 2005 EUR m 400 308 200 193 773 115 13 13 102 0 -200 -400 -441 165 -600 -606 -800 Bonus reserves Reversible bonus Discounting GW Other Intangibles reserves Life Sampo 9
Slide 10: Regulatory Capital, EC and NAV 2001-1Q2005
Regulatory Capital, EC and NAV 2001-1Q2005 Sampo Group *) EUR m 4000 Regulatory minimum capital Economic capital 3654 NAV 3364 3211 3150 3000 3118 3017 2911 2169 2000 2130 2110 1907 1584 1552 1445 1000 0 2001 2002 2003 2004 1Q2005 *) EC from 2002 onwards 10
Slide 11: Economic Capital 12/2002-3/2005
Economic Capital 12/2002-3/2005 EUR m 3500 3017 12/2002 3211 3000 12/2003 2828 9/2004 2500 12/2004 3/2005 2169 2000 1907 1571 1500 1551 1331 995 1209 1000 1084 1065 975 652 681 631 500 621 570 410 277 403 352 290 244 283 0 Banking& Life P&C Holding Sampo Group (incl. Investment Services diversificat
Slide 12: Adjusted ROEC by Business Area
Adjusted ROEC by Business Area % 35 ytd 3/Q2005 33.3 ytd 12/2004 30 ytd 09/2004 31.4 29.7 ytd 06/2004 28.3 28.3 27.2 25 24.524.6 24.825.0 23.5 Target 21.5 20 21.4 Target 21.5 19.9 Target Target 18.3 15 10 5 0 Banking & Life P&C Group Inv. Services Insurance Insurance 12
Slide 13: Group Economic Capital by risk type Q1/2005
Group Economic Capital by risk type Q1/2005 10% 9% 39% Market risk Credit risk Insurance risk 21% Operational risk Business risk 21% 13
Slide 14: Embedded value for Sampo Life
Embedded value for Sampo Life EURm 2004 2003 Shareholder’s equity 390 388 Unrealised gains attributable to shareholder minus tax (26%) 330 64*) Net Asset Value 720 452 Present value of future profits 437 320 Cost of capital -155 -25 Value of in-force business (VIF) 282 295 Embedded Value 1 002 747 *
Slide 15: Embedded Value Change 2004
Embedded Value Change 2004 Embedded Value 31.12.2003 (EURm) 747 - Dividend - 150 + Unwinding of PVFP + 26 +/- Change in cost of capital - 130 +/- Change in allocation of unrealised gains + 204 +/- Change in assumed profit sharing principle + 78 +/- Other changes in assumptions + 15 +/- Actual result
Slide 16: Life Insurance capital
Life Insurance Capital 31.3.2005, EURm 1000 932 800 723 600 652 400 200 221 0 Solvency Regulatory Economic NAV capital minimum capital 16
Slide 17: Banking and Investment Services capital
Banking and Investment Services Capital 31.3.2005, EURm 1600 1400 480 1200 Tier 2 1147 1000 995 800 898 600 1024 400 200 Tier 1 0 Sampo Bank Regulatory Economic NAV Group solvency minimum capital capital 17
Slide 18: P&C Insurance capital
P&C Insurance Capital 31.3.2005, EURm 2500 2445 2000 2191 1500 1571 1000 500 681 0 Solvency Regulatory Economic NAV capital minimum capital 18
Slide 19: Group Capital 31.3.2005
Group Capital 31.3.2005, EURm 4500 4000 3500 3846 3654 3000 3017 2500 2000 2110 1500 1000 500 0 Solvency capital Regulatory Economic capital NAV minimum 19
Slide 20: Sampo Banking: Focus from cost cuts to growth
Sampo Banking Focus from cost cuts to growth Mika Ihamuotila President London 23rd May 2005
Slide 21: Sampo Banking and Investment services
Sampo Banking and Investment services Retail and private bank Corporate bank Investment services Market position #3 Market position # 2 Asset Management # 1 Customers > 1 million Customers ca 100.000 Mutual Funds # 2 Market share ca 15 % Market share ca 20 % Investment Banking # 1 Rep Office Market
Slide 22: Key value drivers in Sampo Bank 2001-04
Key value drivers in Sampo Bank 2001-04 Cost cuts and improvements in operative efficiency Systematic implementation of performance and sales cultures Excellent credit risk management Release of excess capital and exit of non-core operations London, Capital Market Day 23rd May 2005 3
Slide 23: Large profitability improvement programs in Banking
Overview of large profitability improvement programs in Banking mEUR, annual, Sampo Banking excluding Baltic operations Excludes ongoing cost reductions 2001 2001 – 02 2003 2004 – 06 Distribution Administration & Distribution Administration & 13 127 support* support 15 19 24 14 22 20 Re- Personnel O
Slide 24: Significant improvement of retail banking profitability
Significant improvement of retail banking profitability PRIVATE CLIENTS IN SAMPO BANK RORAC 2003-2005 40 % 28 % 30 % 21 % 19 % 18 % 20 % 15 % 16 % 10 % 10 % 10 % -7 % 0% 1Q2003 2Q2003 3Q2003 4Q2003 1Q2004 2Q2004 3Q2004 4Q2004 1Q2005 -10 % London, Capital Market Day 23rd May 2005 5
Slide 25: Good profitability in corporate banking
Good profitability in corporate banking Rorac-% 2003-2005 (includes SME) 30,0 % 28,2 % 25,0 % 22,5 % 20,0 % 18,3 % 17,7 % 18,9 % 18,9 % 17,0 % 14,3 % 15,0 % 13,7 % 10,0 % 5,0 % 0,0 % 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 London, Capital Market Day 23rd May 2005 6
Slide 26: Nordic banks: RORAC 2004
Nordic banks: RORAC % 2004 25 % 21,5 % 21,4 % 20,3 % 20 % 18,6 % 18,3 % 17,8 % 17,6 % 15,6% 15,3 % 15,3 % 14,8% 14,6 % 15 % % 10 % 5% 0% ÅAB SHB Aktia FSB OP SEB DnB Savingsbanks Local coop Sampo Danske Bank Nordea London, Capital Market Day 23rd May 2005 7
Slide 27: Potential in improving earnings, cost cuts no longer the driver
We see potential in further improving earnings… ...but cost cuts are no more the driver in banking London, Capital Market Day 23rd May 2005 8
Slide 28: Drivers of value in Sampo Bank 2005-07
Drivers of value in Sampo Bank 2005-07 Revenue growth from Less capital 1 savings products due to Basel II 2 new banking products Very high 3 Baltics and other credit quality new markets Stable traditional banking revenues in Finland Stable costs in Finland Growth of traditional banking volumes comp
Slide 29: Drivers of value in Sampo Bank 2005-07
Drivers of value in Sampo Bank 2005-07 Stable traditional banking revenues in Finland Growth of traditional banking volumes compensates margin erosion London, Capital Market Day 23rd May 2005 10
Slide 30: Private clients – deposits and lending
Private clients – deposits and lending EURm 8 000 2,80 % 7 000 2,40 % 6 000 2,00 % 5 000 1,60 % 4 000 1,20 % 3 000 2 000 0,80 % 1 000 0,40 % 0 0,00 % 02 02 02 02 03 03 03 03 04 04 04 04 05 20 20 20 20 20 20 20 20 20 20 20 20 20 1Q 2Q 3Q 4Q 1Q 2Q 4Q 3Q 1Q 2Q 3Q 4Q 1Q Lending, EURm Deposits, EURm Lend
Slide 31: Several new client acquisition efforts in retail banking
Several new client acquisition efforts in retail banking Example: Housing loan decision in one hour 7 000 6 000 5 000 4 000 MEUR 3 000 2 000 1 000 0 31.3.01 30.6.01 30.9.01 31.12.01 31.3.02 30.6.02 30.9.02 31.12.02 31.3.03 30.6.03 30.9.03 31.12.03 31.3.04 30.6.04 30.9.04 31.12.04 31.3.05 2001 2002 2
Slide 32: Corporate clients deposits and lending
Corporate clients (includes SME) deposits and lending EURm 10 000 2,40 % 9 000 8 000 2,00 % 7 000 1,60 % 6 000 5 000 1,20 % 4 000 3 000 0,80 % 2 000 0,40 % 1 000 0 0,00 % 02 02 02 02 03 03 03 03 04 04 04 04 05 20 20 20 20 20 20 20 20 20 20 20 20 20 1Q 4Q 1Q 1Q 2Q 1Q 2Q 3Q 2Q 3Q 4Q 3Q 4Q Lending, EUR
Slide 33: Traditional banking fees
Traditional banking fees (excl. Baltics and New Banking Products) 32 28 1,8 2,8 24 2 1,7 1,7 2,2 2,7 3,0 2,9 1,5 1,7 1,8 1,6 1,7 2,1 2,9 4,9 2,2 20 4,7 5,0 4,6 5,7 4,8 5,8 5,8 5,6 5,4 5,6 5,5 6,3 5,8 6,4 6,0 4,5 4,4 16 3,8 3,8 3,6 3,4 3,4 3,4 3,6 3,5 3,3 3,2 3,2 3,2 3,4 3,4 2,9 3,3 12 8 13,6 13,2 12
Slide 34: Drivers of value in Sampo Bank 2005-07
Drivers of value in Sampo Bank 2005-07 Revenue growth 1 savings products 2 new banking products 3 Baltics and other new markets London, Capital Market Day 23rd May 2005 15
Slide 35: Long-term savings fees and commissions
Long-term savings – fees and commissions 2001–Q1/2005 EUR m 40 35 30 25 20 15 10 5 0 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 Q105 Mutual funds and asset management With-profit fees Unit-linked fees London, Capital Market Day 23rd May 2005 16
Slide 36: Increasing share of high-margin mutual funds
Increasing share of high-margin mutual funds Billion € 8 Emerging Markets Equity Funds 7 Other Equity, Balanced etc. Funds Bond Funds 6 Money Market Funds 5 4 3 2 1 0 2001 2002 2003 2004 London, Capital Market Day 23rd May 2005 17
Slide 37: Finnish leader in investment products and capital markets
Finnish leader in investment products and capital markets ASSET MANAGEMENT Asset Management No1 (source SFR) Global Investor: Best Fixed income house in Europe 2004 Global Investor: Best Nordic Equity house 2004 Mutual Funds No2 (source OM-HEX) Hedge Funds (3C) No1 (source OM-HEX) Private Banking No
Slide 38: Rapidly increasing revenues from new banking products
Rapidly increasing revenues from ”new” banking products” 14,0 12,0 0,5 0,5 0,4 0,4 0,4 0,9 1,0 0,9 10,0 0,4 0,9 0,3 0,9 0,7 0,3 0,2 0,2 0,3 0,7 Structured products 8,0 0,7 0,7 0,7 Loan insurance load income EurM 0,1 0,7 6,4 6,6 6,1 6,2 Card products 0,7 6,0 0,1 0,1 0,1 0,1 6,3 Balanssi consumer cred
Slide 39: Large potential in unexploited client relationships
Sampo has still large potential in unexploited client relationsships (Finland) Product penetration, thousand customers, 03/ 2005 1,067 576 2004 2001 176 180 168 67 46 53 135* 65* 24* 36* Retail Regular Housing Life Mutual Credit Loan Consumer Bank salary/ loans savings funds cards insurance credit c
Slide 40: Sampo Bank's position in the Baltics
Sampo Bank’s position in the Baltics Swedbank SEB Market share of assets, Q4 2004 Nordea Estonia Latvia Lithuania Hansapank 57,6% Parex 17,8% Vilnausbankas 32,7% Uhispank 25,6% Hansabanka 16,4% Hansabankas 22,6% Nordea 7,5% Unibanka 14,8% Nord L/B 12,4% Sampo (4) 7,1% Rietumu 7,7% Snoras 6,6% Kredii
Slide 41: Very strong growth in Sampo's Baltic banks
Very strong growth in Sampo’s Batic banks EURm 1 000 900 800 700 600 500 400 300 200 100 0 02 02 02 02 03 03 03 03 04 04 04 04 05 20 20 20 20 20 20 20 20 20 20 20 20 20 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q Lending Deposits London, Capital Market Day 23rd May 2005 22
Slide 42: Baltic banks: strong growth with cost discipline
Baltic banks: strong growth with cost discipline Estonia, Latvia and Lithuania combined, indexed 400 % Customers 350 % 146 048 CAGR 55% 300 % 250 % 200 % Employees 775 150 % CAGR 19% 100 % 50 % Q102 Q402 Q403 Q105 London, Capital Market Day 23rd May 2005 23
Slide 43: New products and new markets: share of revenues rises
New products and new markets: Share of total revenues goes rapidly up Traditional banking 2001 2004 2007 in Finland 21 21 39 Long term savings 66 45 products New banking products 89 Target 1/3 Baltic Banking Total of growth segments 641 474** *) New banking products: Card products, Balanssi consumer
Slide 44: Banking and Investment Services income statement
Banking and Investment Services Consolidated Income Statement EUR m 1-3/2005 1-3/2004 Change Net interest income 82 80 2 Net income from financial transactions 20 13 7 Net fee and commission income 51 48 3 Impairment losses on loans and receivables 4 7 -3 Net income from investments 2 4 -2 Other ope
Slide 45: Fee income
Fee income Banking and investment services EUR m 1-3/2005 1-3/2004 2004 Payment services 13,4 14,4 57,3 Securities transactions 4,2 5,0 15,1 Asset management 23,7 18,2 79,7 Lending 9,0 8,0 34,7 Borrowing 4,7 5,0 19,5 Guarantees 2,9 2,7 11,7 Other 9,2 9,1 38,3 Fees and commissions receivable 67,2 62,
Slide 46: Performance by Business Area Q1 2005 and 2004
Banking and Investment Services Performance by Business Area Q12005 and 2004 Business areas SME, Asset Corporate Private Baltic Management Other and and TOTAL clients banking & Funds in eliminations Institutiona Finland EURm l clients Net interest income 46 35 7 0 -7 82 Other income (net) 19 25 5 10
Slide 47: Life business potential
May 23, 2005 Life business potential Petri Niemisvirta, President, Head of Life Insurance 1 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 48: Life business potential
Life business potential • Sampo’s life operations • Operational results and potential – Growth of premiums as planned – Market share – Number of new policies sold growing – Growth of unit linked savings – Opportunities on corporate market and risk life insurance exploited – Strong growth in the Balt
Slide 49: Sampo's life operations (2004 figures)
Sampo’s life operations (2004 figures) Finland – growth in core ares Premiums written (EUR m) 519 Market share (%) 18 % N:o of policies 273 000 The Baltic States – strong growth Estonia Latvia Lithuania Premiums written (EUR m) 5 2 5 Market share (%) 11 % 16 % 7% N:o of policies 12 000 3 000 9 000 T
Slide 50: Life business potential
Life business potential • Sampo’s life operations • Operational results and potential • The company in excellent shape • Embedded value • Summary 4 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 51: Growth of premiums as planned
Growth of premiums as planned Premiums written Q1/2003 - Q1/2005 (Finland) 140 126 124 125 120 Premium income (€ million) 100 83 82 80 73 Q1/2003 71 Q1/2004 60 Q1/2005 49 40 34 35 27 29 20 0 Total premiums Unit linked Private customers, core Commercial customers, core 5 23.5.2005 Sampo Life - Capita
Slide 52: Market shares of premium income
Market shares of premium income Market share Q1/2003 - Q1/2005 (Finland) 40 35,8 35 30 28,2 27,8 25,3 26 25,1 Market share (%) 25 23,5 22,2 21 Q1/2003 20 Q1/2004 16,2 16,9 16,4 Q1/2005 15 10 5 0 Total premiums Unit linked Private customers, core Commercial customers, core 6 23.5.2005 Sampo Life - Ca
Slide 53: Number of new policies sold growing
Number of new policies sold growing across all product lines Number of new policies sold Q1/2004 - Q1/2005 6000 5749 5000 4357 New policies (pcs) 4000 2791 Q1/2004 3000 2580 Q1/2005 2335 1956 2000 1000 0 Endowment Risk life Individual pension 7 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 20
Slide 54: Unit linked savings breaking through first billion
Unit linked savings breaking through first billion Unit linked savings Q1/2003 - Q1/2005 Market share Q1/2003 - Q1/2005 (Finland) (Finland) 25 1000 951 900 20,2 20 19 800 16,9 700 672 Savings (EUR million) Market share (%) 15 600 Q1/2003 500 Q1/2004 Q1/2005 10 400 378 300 200 5 100 0 0 Unit linked s
Slide 55: Untapped potential in small enterprises
Untapped potential especially in the segment of small enterprises Illustrative 200 000 100 % 180 000 90 % 160 000 80 % Life insurance penetration level, estimate (% 140 000 70 % Number of companies 120 000 60 % 100 000 50 % 80 000 40 % 60 000 30 % 40 000 20 % 20 000 10 % 0 0% 0-4 5-9 10 - 19 20 - 49
Slide 56: Potential on corporate market exploited
Potential on corporate market exploited Unit linked individual pension (corporates) - Unit linked group pension - Market share Market share Q1/2003 - Q1/2005 Q1/2003 - Q1/2005 (Finland) (Finland) 70 20 19 62 18 18 60 53 53 16 16 50 14 Market share (%) Market share (%) 40 12 Q1/2003 Q1/2004 10 30 Q1/
Slide 57: Level of risk life cover still low
Level of risk life cover still low among customers Premiums written Q1/2003 - Q1/2005 Market share Q1/2003 - Q1/2005 (Finland) (Finland) 18 10 16 9 16 9 14,5 14,1 8 14 Premiums written (EUR million) 8 7 12 Market share (%) 7 6 10 Q1/2003 5 Q1/2004 8 Q1/2005 4 6 3 4 2 2 1 0 0 Risk life Risk life 11 2
Slide 58: Strong growth in the Baltic states
Strong growth in the Baltic states 30 30000 26600 25 25000 Savings (EUR m) 20 20000 18900 11 15 15000 10 10000 7,3 11,7 5 5000 4,9 0 0 Q1/2004 Q1/2005 Other savings Unit linked savings N:o of policies 12 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 59: Life business potential
Life business potential • Sampo’s life operations • Operational results and potential • The company in excellent shape • Embedded value • Summary 13 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 60: Solvency ratio
Solvency ratio 25 20 19,4 17,8 17,5 15 12,4 % 10 5 0 2002 2003 2004 Q1/2005 14 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 61: Operational efficiency improving
Operational efficiency improving Cost ratio of Sampo Life Sales costs (Finland, costs/fee income, no deferred acquisition costs) Administration costs 140 123 120 103 102 104 100 58 80 41 43 51 % 60 40 65 62 59 53 20 0 Q1/2002 Q1/2003 Q1/2004 Q1/2005 15 23.5.2005 Sampo Life - Capital Market Day, May
Slide 62: Life business potential
Life business potential • Sampo’s life operations • Operational results and potential • The company in excellent shape • Embedded value • Summary 16 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 63: Breakdown of new business value
Breakdown of new business value Full report of Sampo Life’s embedded value 2004 can be found at www.sampo.com VIF, before New Value of cost of Cost of business new New sales Profit EURm capital capital result 2004*) business premiums** margin Individual pension 10.3 -0.7 -3.8 5.9 13.8 42.7% With-pro
Slide 64: Life business potential
Life business potential • Sampo’s life operations • Operational results and potential • The company in excellent shape • Embedded value • Summary 18 23.5.2005 Sampo Life - Capital Market Day, May 23rd, 2005.ppt
Slide 65: Summary
Summary • Demographics and changes in pension regulations create demand for voluntary pension saving • Untapped potential especially in the segment of small enterprises • Awareness of personal risks increasing among customers – demand for additional coverage growing • The Baltic states offer excelle
Slide 66: CMD London, May 2005 – Torbjörn Magnusson, CEO
CMD London, 23 May 2005 Torbjörn Magnusson, CEO 1
Slide 67: Successful insurance operations
Successful insurance operations Technical result Combined ratio 5 000 102 % 4 500 100 % 4 000 98 % 3 500 96 % 3 000 2 500 94 % 2 000 92 % 1 500 90 % 1 000 88 % 500 0 86 % Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Rolling 12 months 2
Slide 68: Profitability focus remains in Nordic market
Profitability focus remains in Nordic market Average solvency ratio*, % 160% 140% 120% 100% 80% 60% 40% 1999 2000 2001 2002 2003 2004 * According to companies’ own reports and definitions. 3
Slide 69: Premium levels in the Nordic market
Premium levels in the Nordic market Premium income in relation to GDP 3,0% 2,5% Nordic average 2,0% 1,5% 1,0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 4 Sources: Eurothesys, Norwegian, Swedish, Finnish, Danish and European insurance associations
Slide 70: Interest rates reflected in combined ratio targets
Interest rates reflected in combined ratio targets Return on Investments 0% 1% 2% 3% 4% 5% 6% 5% 94% 97% 99% 101% 103% 106% 108% 10% 91% 94% 96% 98% 100% 103% 105% RoE 15% 88% 90% 93% 95% 97% 99% 102% 20% 85% 87% 89% 92% 94% 96% 98% 5
Slide 71: Profitability discipline reflected in targets
Profitability discipline reflected in targets Stated long term combined ratio targets: Länsförsäkringar 95 % TrygVesta Group 95 % Codan Group 95 % Topdanmark 95 % Pohjola Long term 95-100 % Below 95 % 6
Slide 72: Cost advantage in relation to peers
7 C od a * Gross n 0 5 10 15 20 25 G % ro Tr up yg Ve st Lä Gje a ns n si fö di rs ge äk rin ga Fo r Tr lk sa yg m g- To H an pd sa an m ar Expense ratio k* Po hj ol a Ta pi ol a Fe nn Cost advantage in relation to peers ia
Slide 73: Diversification of risks
Diversification of risks Sweden 91.1% Norway 92.7% Finland 107.0% If Group: 94.9 % Baltic countries 95.8% Denmark 88.8% 8
Slide 74: New ownership structure opens for extended product offering
New ownership structure opens for extended product offering Products launched in 2005: – Children's insurance – New personal risk products – Health insurance 9
Slide 75: Several product opportunities
Several product opportunities Business mix of the European non-life market Rehabilitation 5% 6% Motor Health insurance 35% Accident & Health Workers' Comp Sweden 21% Liability Group/Affinity market Legal expenses Property Personal risk market 1% MAT Loyalty concepts 8% 24% Other 10
Slide 76: Product & service offering developments
Product & service offering developments If Login If PLUS "Super products" Service guarantee, commercial claims Monthly payments Instant claims handling 11
Slide 77: Focus going forward - Best in risk
Focus going forward - "Best in risk" – Value creation by underwriting and pricing focus – Professional competence development – Consistent incentives for all employees – Claims prevention concepts for mass markets – Active portfolio management 12
Slide 78: Creating Shareholder Value
Creating Shareholder Value Group CEO and President Björn Wahlroos Capital Market Day 23rd May, 2005 London
Slide 79: Good performance in all business areas
Good performance in all business areas Group profit before taxes EUR m 250 230 1-3/2005 1-3/2004 190 150 117 122 62 56 62 50 12 -12 Banking and Life P&C Other Sampo -50 investment Insurance Insurance Group services 23rd May, 2005 2
Slide 80: A balanced business portfolio
A balanced business portfolio Sampo plc • Business portfolio mgmt Group investments & funding • Benefits of coordinated activities • Capital optimization and Group leverage Banking and Long-term Nordic P&C Insurance savings in Finland • Cash flow generation • Growth market in long-term savings • Eco
Slide 81: How do we create value in Sampo Group?
How do we create value in Sampo Group? Business portfolio management • Balanced business portfolio • Earnings stability through diversification • Shareholder value focus Sampo plc Group investments & funding Banking and P&C Long-term Insurance savings Baltic area 23rd May, 2005 4
Slide 82: Contribution by divisions 1Q2005
Contribution by divisions 1Q2005 Operating profit by BA Net Asset Value Group total 230 EUR m Group NAV total 3654 EUR m (excl. Others -12 EURm) (excl. group net leverage 158 EURm) P&C Life Life 57% Insurance P&C Insurance 19% 48% 26% Banking and Inv. Services 24% Banking and Inv. Services 26% 23rd
Slide 83: Contribution by geographic area 2004
Contribution by geographic area 2004 Operating profit by geographic area Personnel by geographic area Total 1,014 EUR m Total 11.972 persons Norway Norway Denmark 24% 15% 3% Sweden Denmark 16% Baltics and 3% Sweden other Baltics 15% 13% 2% Finland Finland 55% 54% 23rd May, 2005 6
Slide 84: Strong overall market position
Strong overall market position 31.12. 2004 Position P&C P&C Nordic countries 1 Insurance Life insurance premiums Finland 2 Life insurance savings Finland * 2 Long-term Unit-link life savings Finland savings 2 MF assets Finland 2 Credits Finland 3 Deposits Finland 3 Banking Payment services Finland 2
Slide 85: How do we create value in Sampo Group?
How do we create value in Sampo Group? Business portfolio management • Balanced business portfolio •Earnings stability through diversification • Shareholder value focus Operational synergy •Joint distribution for banking & long-term Sampo plc savings Group investments & funding •Synergies in IT Bank
Slide 86: Customer-oriented service channels
Customer-oriented service channels Sales Banking transactions & insurance claims handling Sampo Bank Private & ATMs Corporate branches and Mandatum branches Brokers& agents (only Life) Banking and Long-term Contact Center savings Internet Internet If offices & own sales force P&C Insurance Customer
Slide 87: Cost efficiency – established practice
Cost efficiency – established practice 1200 -110 EURm Banking&inv.services total (-11% ) costs (excl. Baltics) 1000 If total costs 800 600 -110 EURm (-23% ) 400 200 0 2000 2001 2002 2003 2004 23rd May, 2005 10
Slide 88: Value creation in Sampo Group
Value creation in Sampo Group Business portfolio management • Balanced business portfolio Asset and Capital •Earnings stability through Management diversification •Coordinated Group •Shareholder value focus investments •Optimal management Operational synergy of capital •Joint distribution for bankin
Slide 89: Group Investments on 31 March 2005
Group Investments on 31 March 2005 Total 14.9 EUR bn 2% 1% 3% 17% Bonds 43% Money market Equities Real estate Private equity Other 34% Investments of Sampo Life and If P&C 23rd May, 2005 12
Slide 90: Value creation through diversification
Value creation through diversification Optimal management of capital Economic Capital,EUR m Group RoEC Group RoEC Enhanched 19.0% 21.5% risk/return 4000 relationship Holding Diversification effect 478 EUR m 3000 P&C Insurance Group EC Group EC 2000 without including Life diversificaton diversificato
Slide 91: How we measure value creation?
How we measure value creation? Total Shareholder return • Total Shareholder Return takes share price development and dividend issued into account. • TSR can be easily benchmarked. • The TSR Benchmark is defined as the combination of: • 50% Eurostoxx Banks and • 50% Eurostoxx Insurance Total Return I
Slide 92: Sampo has created cumulative TSR over 50%
Sampo has created cumulative TSR over 50 % (or 76 % vs benchmark index between 31.12.2000 – 31.3.2005) 60 % Sampo TSR p.a. Benchmark TSR p.a. 40 % Sampo cum. TSR Benchmark cum. TSR 20 % 0% -20 % -40 % -60 % 2001 2002 2003 2004 3 / 2005 (Q1 TSR) 23rd May, 2005 15
Slide 93: All this is in place, how about growth?
All this is in place, how about growth? • All divisions report top RoECs for their respective industries. • Cost efficiency has improved significantly and synergies between banking and long-term savings are exploited • Capital structure is close to optimal and enhances returns CAPITAL BALANCED EFFIC
Slide 94: Is there growth in Sampo's home markets?
Is there growth in Sampo’s home markets? We operate in two kinds of markets 23rd May, 2005 17
Slide 95: Two tiers of home markets
Two tiers of home markets GDP per capita and growth GDP per capita, GDP growth, average EU25 = 100 (PPP) 2000-2004, % 160 8 Mature markets 140 7 120 6 100 New markets 5 80 4 60 3 40 2 20 1 0 0 Norway Denmark Sweden Finland Estonia Lithuania Latvia Source: Eurostat 1995 2003 GDP growth 23rd May, 2005
Slide 96: Is there growth in Sampo's home markets?
Is there growth in Sampo’s home markets? We operate in two kinds of markets There are growth opportunities in both of them 23rd May, 2005 19
Slide 97: Sampo has a strong presence in the Baltics
Sampo has a strong presence in the Baltics Market shares in the Baltic region Banking Life P&C (mortgage) insurance insurance Estonia Latvia Lithuania 23rd May, 2005 20
Slide 98: Financial assets per household in 2002
Financial assets per household in 2002 1 000 euros 80 70 60 50 40 30 20 10 0 Portugal Finland Norway Sweden Denmark Netherlands UK Source: Eurostat 23rd May, 2005 21
Slide 99: Sampo creates value for shareholders
Sampo creates value for shareholders EUR/share DISTRIBUTION 4,5 POLICY 3,5 Sampo plc aims to distribute 50 per cent 2,5 of Group net profits to shareholders through 1,5 share buy-backs 0,5 and/or dividends. 2001 2002 2003 2004 2005 Dividend for the previous year Cumulative dividend 23rd May, 2005 22
Slide 100: Change in the shareholder base
Change in the shareholder base December 31, 2000 April 30, 2005 Ministry of Finance 14.0 % Foreign Foreign Ministry of 44.6 % 28.1 % Finance Varma 43.0 % 15.3 % Kaleva Other 1.2 % domestics 13.1 % Björn Wahlroos 2.1% Kaleva Varma Other 2.7 % 13.1 % domestics 22.8 % 23rd May, 2005 23