Mandatum Oyj · OMXHEX:MANTA
Mandatum Oyj — Investor Day (September 2023)
59 slides from Mandatum Oyj's investor day presentation, Sep 14, 2023
Slide 1: Investor event
Investor event 14 September 2023
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) IMPORTANT: You must read the following before continuing. You are advised to read this disclaimer carefully before reading, accessing or making any other use of this confidential presentation relating to Mandatum plc. You agree to be bound by the following terms and conditions, incl
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) The content of this presentation has a merely informative and provisional nature and is not to be construed as providing investment advice (in Finnish sijoitusneuvonta) as defined in the Finnish Investment Services Act. The statements contained herein have not been independently ver
Slide 4: Agenda
Agenda TOPIC PRESENTER Introduction Patrick Lapveteläinen (Chair of the Board of Directors) Market opportunity and positioning Petri Niemisvirta (CEO Mandatum Group) Growth opportunities in capital-light offering Lauri Vaittinen (Chief Executive Officer Mandatum Asset Management ) Q&A / break With-p
Slide 5: Introduction
Introduction
Slide 6: Mandatum to separate from Sampo through demerger
Mandatum to separate from Sampo through demerger Opportunity to leverage leading market position1 and execute growth strategy as an independent Mandatum TRANSACTION OVERVIEW Capital-light Institutional & With-profit Wealth Corporate Retail Management Largest pure-play P&C insurer in the Nordics2 One
Slide 7: One of the leading financial services providers in Finland
One of the leading financial services providers in Finland1 PROVEN FOUNDATION CLEAR GROWTH PATH Leading market position1, heritage & customer relationships Leveraging bespoke distribution capabilities to fuel growth Multi-disciplinary asset management capabilities Targeted strategy focussed on capit
Slide 8: Experienced management team with deep industry knowledge
Experienced management team with deep industry knowledge Presenting today >30 >25 >25 >20 Patrick Lapveteläinen Petri Niemisvirta Jukka Kurki Lauri Vaittinen Chair of the Board of Directors CEO Mandatum Group Chief Financial Officer Chief Executive Officer Mandatum Asset Management >20 >15 >30 >25 J
Slide 9: Market opportunity and positioning
Market opportunity and positioning
Slide 10: Mandatum at a glance
Mandatum at a glance €11.2bn €1.4bn One of the leading financial services providers in Finland1 with 32% market share in the Finnish life insurance market4 Client AuM2 Cumulative client net flows2 (H1 2023) (2021-H1 2023) Strong foothold in Corporate segment with 48% market share in unit-linked
Slide 11: Transformation towards capital-light business
Transformation towards capital-light business Strategic focus on growing capital-light business and stable capital generation from with-profit portfolio in run off Capital-light AUM (H1 2023; €BN)1 11.2 With-profit Institutional & Corporate Retail Wealth Management Unit-linked liabilities (€bn)2 Ret
Slide 12: Market position built on strong heritage and customer relationships
Market position built on strong heritage and customer relationships Significant market share gains in Finnish market offering attractive fundamentals and further growth opportunities Market overview Market characteristics Insurance savings CAGR (2008 - 2022)1 AuM CAGR (2008 - 2022)2 • Robust growth
Slide 13: Strategy focused on driving growth and stable capital distributions
Strategy focused on driving growth and stable capital distributions Broad distribution capabilities targeting all market segments paired with fit-for-purpose customer offering Capital-light With-profit Institutional & Wealth Management Corporate Retail ~70% of Wealth Management customers with Corpor
Slide 14: Value proposition makes Mandatum go-to partner for corporates
Value proposition makes Mandatum go-to partner for corporates Extensive value proposition for Corporate customers reflected in high customer satisfaction and sticky asset base Product and service offering - Medium & large companies Corporate net promoter score >50 employees ~5,000 companies in focus
Slide 15: Corporate segment driving customer flow across segments
Corporate segment driving customer flow across segments Close relationship with key decision-makers providing opportunity for origination of Wealth Management business Corporate Institutional & Wealth Management Corporate sales personnel and private wealth Wealth management services for entrepreneur
Slide 16: Example of customer flow from Corporate to Wealth Management
Example of customer flow from Corporate to Wealth Management PARTNERS OF CONSULTANT FIRM BECOME WEALTH MANAGEMENT CLIENTS THROUGH CORPORATE CONNECTION 1 2 3 4 Compensation and benefits Unit-linked group pension Building relationships with Successful sale of wealth as door opener structure establishe
Slide 17: Business strategy reflected in financial delivery
Business strategy reflected in financial delivery Continuous shift towards capital-light product offering driven by strong net flows and steady with-profit run-off LIABILITIES DEVELOPMENT (€BN) 1 CLIENT AUM DEVELOPMENT (€BN) Unit-linked 14% CAGR 11.2 Average net flows / With-profit (4)% CAGR2 BoP Au
Slide 18: Material growth in fee income paired with stable margins
Material growth in fee income paired with stable margins Strong growth in fee income driven by Institutional & Wealth Management segment leveraging well-invested platform FEE INCOME DEVELOPMENT (€M) FEE INCOME MARGIN1 CAGR 2020-2022 1.2% 1.2% 125 126 104 36 21% 41 28 2020 H1 2023 35 35 64 14% 27 COS
Slide 19: Structural growth opportunities in Finland and across the Nordics
Structural growth opportunities in Finland and across the Nordics 1 Attractive Finnish • Robust growth across insurance and asset & wealth management markets in Finland 15% 9% market fundamentals • Mandatum well positioned to capture growth in capital-light products CAGR (2008-2022) unit-linked CAGR
Slide 20: Growth opportunities in capital-light offering
Growth opportunities in capital-light offering • Institutional & Wealth Management
Slide 21: Top ranked asset and wealth manager among clients
Top ranked asset and wealth manager among clients Strong positive trend in market position and customer satisfaction achieved over recent years INSTITUTIONAL MARKET SHARE DEVELOPMENT1 CUSTOMER RECOGNITION % of investors citing company as one of their service providers Institutional asset management
Slide 22: Comprehensive product offering across core investment areas
Comprehensive product offering across core investment areas Industry leading expertise and state-of-the art investment platform stemming from prior own balance sheet investing Extensive expertise across alternatives built on Core focus heritage of balance sheet investing Credit Alternatives Others O
Slide 23: Extensive operational capabilities and distribution power
Extensive operational capabilities and distribution power Strong operational platform and in-house product competences supported by wide-reaching sales network OPERATIONAL CAPABILITIES GEOGRAPHICAL FOOTPRINT Well established distribution and investment infrastructure in Finland Finland • 10 location
Slide 24: Significant growth opportunity in the Nordics
Significant growth opportunity in the Nordics Potential to expand institutional client base across the Nordics by leveraging established investment platform NORDIC GROWTH TRACK RECORD POTENTIAL ADDRESSABLE MARKET Growth track record Finland • Established market presence €1.5bn 10 +57% Products in
Slide 25: Proven AuM growth track record across customer groups & products
Proven AuM growth track record across customer groups & products Strong AuM growth driven by significant net flows across customer groups and products AUM DEVELOPMENT (€BN) AUM BREAKDOWN (H1 2023; €BN) Net flows / 5.9 5.9 9.7% 8.9% 15.2%1 BoP AuM 0.4 5.9 Private Wealth Others 0.2 Management 0.5 5.3
Slide 26: Developed platform driving strong increase in fee income
Developed platform driving strong increase in fee income Proven ability to convert AuM growth into fee income while maintaining disciplined margins INSTITUTIONAL & WEALTH MANAGEMENT FEE INCOME (€M) RUN RATE FEE INCOME CAGR (2017-2022) - BY CUSTOMER BASE Fee margin1 0.8% 0.8% 0.8% Institutional, UHNW
Slide 27: With-profit portfolio in run-off
With-profit portfolio in run-off
Slide 28: With-profit portfolio overview
With-profit portfolio overview Run-off portfolio supporting organic capital generation and capital distributions OVERVIEW INVESTMENT ASSETS (H1 2023) • With-profit portfolio consists primarily of guaranteed rate group and Original portfolio Segregated portfolio individual pension policies sold to co
Slide 29: Predictable liability run-off profile
Predictable liability run-off profile Significant reduction of with-profit liabilities driven by organic run-off further accelerated via active management LIABILITIES (€M) IFRS 4 IFRS 17 (2,097)€m / (41)% 5,065 5,014 4,821 4,572 4,222 €(481m) decrease due to change from ~(50)% 3,925 IFRS 4 to IFRS 1
Slide 30: Long-term investment strategy
Long-term investment strategy Investment strategy aligned with predictable liability profile and built on investment heritage and strong track record INVESTMENT RETURNS (ORIGINAL PORTFOLIO) 16.8% 12.0% 11.1% 10.2% 9.4% 9.2% 8.6% 7.1% 6.9% 7.2% 6.5% 6.5% 5.8% 5.1% Average: 5.6% 4.6% (1.4%) (2.4%) Eur
Slide 31: Active portfolio de-risking measures
Active portfolio de-risking measures Significant reduction of equity exposure with lower risk strategic asset allocation focused on capital efficiency ASSET ALLOCATION SHIFT (ORIGINAL PORTFOLIO) MANAGEMENT ACTIONS 16% 17% ~10-20% 9% ~5-10% Elevated interest rate environment has enabled significant
Slide 32: De-risked Solvency II capital position
De-risked Solvency II capital position Material reduction in with-profit SCR associated with lower market risk and reduced volatility in Group Own Funds WITH-PROFIT MARKET RISK SCR (€M) GROUP OWN FUNDS SENSITIVITY (€M) (569) / (46)% Group Own Funds 2,604 2,378 1,230 44 / 4% Equity markets (20)% (54)
Slide 33: Financial performance
@ MANDATUM Financial performance
Slide 34: Understanding Mandatum's key value drivers
Understanding Mandatum’s key value drivers Value drivers of growing fee result focused on AuM growth, disciplined fee margin and improving cost / income ratio KEY VALUE DRIVERS OF FINANCIAL RESULT (H1 2023; €M) 3 (5) Other • CSM release • New Business CSM 57 • AuM • Fee margin 80 • Cost / income rat
Slide 35: Significant capital-light net flows
Significant capital-light net flows Net flows driving AuM growth particularly in Institutional & Wealth Management segment CLIENT AUM (€BN) NET FLOWS (€M) 11.2 Net flows / 9.7% 8.9% 15.2%1 BoP AuM Institutional & Wealth Significant net flows driven by strong Management 454 growth and market share
Slide 36: Disciplined fee margins
Disciplined fee margins Growing fee income driven by significant net flows and AuM growth paired with disciplined fee margin development FEE INCOME DEVELOPMENT (€M) FEE MARGIN DEVELOPMENT1 CAGR 2020-2022 1.2% 1.2% 125 126 104 36 21% 41 28 35 35 64 14% 27 2020 H1 2023 23 Stability of fee margin in
Slide 37: Understanding Mandatum's fee margins
Understanding Mandatum’s fee margins Fee income split between pension services and growing investment & asset management offering FEE RECOGNITION CLIENT AUM (€BN) AND FEE INCOME (€M) FEE RESULT CALCULATION (H1 2023) Fee margin1,2 11.2 64 1.2% • Mandatum earns fees on providing IFRS 17 investment & a
Slide 38: Improving cost / income ratio
Improving cost / income ratio Cost base reflects significant platform investments made over past years leading to cost / income ratio improvement COST DEVELOPMENT (€M) COST / INCOME RATIO DEVELOPMENT 87 Investment & asset management 75% 81 66% 67% 69 43 2020 H1 2023 Significant investment into exp
Slide 39: Financial targets supporting Mandatum's capital-light growth path
Financial targets supporting Mandatum’s capital-light growth path 5% of AuM Compound growth of capital-light business and fee result Annual net flows1,2 replacing net investment result over time (medium-term) Institutional & Wealth Management segment key driver; Disciplined Corporate segment in
Slide 40: Understanding Mandatum's drivers of capital generation
Understanding Mandatum’s drivers of capital generation Organic capital generation and with-profit investment portfolio de-risking driving Solvency II ratio development DEVELOPMENT OF SOLVENCY II RATIO, OWN FUNDS AND SCR (H1 2023) KEY DRIVERS 37% (25%) Organic capital generation 19% • Stable growth o
Slide 41: Focus on organic capital generation
Focus on organic capital generation Organic capital generation comfortably in excess of dividend target supported primarily by With-profit portfolio COMPONENTS (H1 2023; €M) SEGMENTAL CONTRIBUTION (H1 2023; €M) KEY HIGHLIGHTS 44 140 140 28 Total capital generation of €388m 112 over last 1.5 years
Slide 42: Focus on capital generation from With-profit portfolio
Focus on capital generation from With-profit portfolio Significant capital generation driven by both investment return and SCR reduction with associated capital release WITH-PROFIT ORGANIC CAPITAL GENERATION (H1 2023; €M) Own funds generation driven by investment return (in excess of SCR reducti
Slide 43: Development of Solvency II capital position
Development of Solvency II capital position Steady increase in Solvency II ratio despite significant capital distributions reflecting strong organic capital generation +108%-points 296%2 266% 182% 194% 188% 192% 176% 158% 160% 2,604 2,532 2,290 2,308 2,378 Solvency II ratio, own funds 1,913 1,893 1,
Slide 44: Capital management priorities
Capital management priorities Track record of predictable ordinary dividend payments supplemented by distributions of additional excess capital Strong Solvency II position Attractive dividends with potential excess capital return and capital generation ~€1.4bn capital distributions 2015 - 2022 ~€550
Slide 45: Attractive financial targets supporting Mandatum's investment case
Attractive financial targets supporting Mandatum’s investment case Focus on strong and profitable Managing with-profit Prudent balance sheet management growth of capital-light offering1 portfolio for capital release enabling strong shareholder returns 5% of AuM €500m Annual net flows2 (medium-term)
Slide 46: Closing remarks
Closing remarks
Slide 47: One of the leading financial services providers in Finland
One of the leading financial services providers in Finland1 PROVEN FOUNDATION CLEAR GROWTH PATH Leading market position1, heritage & customer relationships Leveraging bespoke distribution capabilities to fuel growth Multi-disciplinary asset management capabilities Targeted strategy focussed on capit
Slide 48: Appendix
Appendix
Slide 49: Assets under management - H1 2023
Assets under management - H1 2023 Client AuM (€bn) Total AuM (€bn) 20.1 4.6 4.3 Large Mandates comprised of AuM managed within Institutional & Wealth Management segment on 11.2 behalf of related parties 3.1 2.2 5.9 Institutional & Corporate Retail Client AuM With-profit Large Mandates Total AuM Weal
Slide 50: Development of client assets under management
Development of client assets under management DEVELOPMENT OF CLIENT AUM 1 (€M) €1,418m cumulative client net flows 11,155 499 11,163 64 (2) (1,345) 464 1,368 10,253 448 (56) 9,252 472 2020 Netflows Market Other 2021 Netflows Market Other 2022 Netflows Market Other H1 2023 movement movement movement
Slide 51: Financial performance - H1 2023
Financial performance - H1 2023 Capital-light Result by segment2 Institutional & With-profit Other Group 29% capital-light business Wealth Corporate Retail 12% 5% Management 12% Institutional & Wealth Management Fee result 10 7 9 (0) - 26 Corporate Insurance service result1 - 7 8 - - 15 Retail With-
Slide 52: Solvency II position - H1 2023
Solvency II position - H1 2023 SOLVENCY II RATIO SENSITIVITY (H1 2023 INCL. PLANNED BREAKDOWN OF OWN FUNDS (H1 2023; €M) RELATED PARTY TRANSACTIONS2) Solvency II ratio 296% 232% Actual 232% 250 (84) 0 2,378 2,294 Equity markets (10)% 242% 2,128 Unrestricted tier 1 Restricted tier 1¹ Tier 2 Own funds
Slide 53: IFRS 9 / 17 - Overview
IFRS 9 / 17 - Overview IFRS 9 / 17 OVERVIEW LIABILITIES BREAKDOWN (H1 2023; €BN) • From 01 January 2023 onwards IFRS 17 has been applied to policy portfolios with significant insurance risk • Risk insurance and with-profit policies measured under GMM 2.5 • Unit-linked pension policies sold before 01
Slide 54: IFRS 9 / 17 - Policy types and measurement models
IFRS 9 / 17 - Policy types and measurement models Policy type Liabilities (H1 2023; €bn) New sales Measurement model Institutional & Wealth Management Unit-linked 5.6 IFRS 9 Unit-linked - Pension 1.4 IFRS 17 (VFA) From January 2023 onwards Corporate Unit-linked - Other 0.7 unit-linked corporate
Slide 55: With-profit - Investment return and unwinding & discounting
With-profit - Investment return and unwinding & discounting INVESTMENT ASSETS (H1 2023) UNWINDING & DISCOUNTING PRINCIPLES Original portfolio Segregated portfolio IFRS 4 IFRS 17 €3,636m 9% €701m 1% • Market consistent discount 4% 17% Unwinding • Guaranteed rate of policies rate (including illiquidit
Slide 56: Contractual Service Margin (CSM) - H1 2023
Contractual Service Margin (CSM) - H1 2023 CSM BY SEGMENT (H1 2023; €M) NEW BUSINESS CSM (H1 2023; €M) 450 0.0 Corporate 1.0 46 Unit-linked Risk 264 5.5 105 4.5 140 160 Corporate Retail With-profit Total H1 2023 CSM RELEASE (H1 2023; €M) Retail 2.4 264 Unit-linked 1.7 Risk Risk 140 4.9 Unit-linked 2
Slide 57: Glossary (1/2)
Glossary (1/2) AuM Assets under management Planned related party transactions €430m transfer of stakes in Saxo, Enento and other equity investments and debt instruments from Sampo. Value of asset transfers estimated as of December 2022 Institutional & Wealth Management, Corporate and Retail segments
Slide 58: Glossary (2/2)
Glossary (2/2) OCI Other comprehensive income Original portfolio Portfolio of with-profit policies sold actively by Mandatum until 2001 Own Funds Measure of capital held by an insurer under Solvency II regulation Pension policy Insurance policy providing policyholder with payment after retirement Pe
Slide 59: Mandatum contact details
Mandatum Bulevardi 56, 00120 Helsinki www.mandatum.fi