Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Investor Day (June 2014)
78 slides from Sampo Oyj's investor day presentation, Jun 2, 2014
Slide 1: Sampo Group Capital Market Day 2014
Sampo Group Capital Market Day 2014 Peter Johansson, Group CFO 2 June 2014
Slide 2: Q1/2014 results
Q1/2014 results Profit before taxes, EURm EPS and M-to-M EPS, EUR 500 EPS (reported) EPS (comp. result) 1-3/2013 1-3/2014 396 1.00 0.88 400 370 0.80 0.66 300 0.63 0.57 204 194 0.60 200 162 170 0.40 100 36 37 0.20 0 -30 -4 0.00 -100 1-3/2013 1-3/2014 If P&C Mandatum Nordea Holding Sampo Life Group Ne
Slide 3: Sampo Group P&C, life and banking market shares by country
Sampo Group P&C, life and banking ― Market shares by country, % P&C insurance Life insurance Nordea lending Finland/If 28 Finland/ML 19 35 Finland 30 Finland/ 13 41 Norway Norway/If 24 Nordea 11 Norway/ 14 8 Sweden Nordea 15 Sweden/If 18 24 Sweden/ Denmark 7 17 Nordea Denmark/If 6 22 Denmark/ Estoni
Slide 4: Nordea Purchases 24.8.2005–20.5.2014
Nordea Purchases 24.8.2005–20.5.2014 Number of Average Total dividends Total shares % of shares purchase price Unrealized profit* 2006-2014 return, % Sampo Plc 860 440 497 21,25 % 6,46 € 3 433 180 360 € 1 585 055 896 € 90,30 % 4 *Share price 10,45 €
Slide 5: Nordea Q1/2014, EURm
Nordea Q1/2014, EURm Nordea in Sampo Group’s B/S Nordea Q1/2014 Q1/2014 (21.25%) Income statement 1,106 Operating Profit Acquisition price 5,557.3 -266 Income tax expense 840 Net profit from Retained earnings 1,428.3 continuing operations Accumulated other changes in Nordea’s equity -79.5 -9 Net pro
Slide 6: Topdanmark has been a great investment
Topdanmark has been a great investment Sampo’s Topdanmark purchases 16.11.2007-20.5.2014 Topdanmark • Acquisition price in Sampo Group’s accounts EURm 330 (in If’s accounts EURm 310) • Book value in Sampo Group’s accounts EURm 369 • Market value EURm 703 (DKK 166.7/share, 21 May 2014) Sampo Group’s
Slide 7: Suomi Mutual and group pension portfolio
Suomi Mutual and group pension portfolio • Suomi Mutual operates as a run-off life insurance company, no new policies sold since 1.1.2005. Total technical provisions EUR 5.2 billion, number of policies 200,000. • Suomi Mutual expressed interest to transfer its group pension portfolio to Mandatum Lif
Slide 8: Balance sheet of segregated fund after transfer
Balance sheet of segregated fund after transfer Expense Reserve: Expected future expenses 22 EURm Future Bonus Reserve Distributed to p/h in normal circumstances (FBR): 133 EURm Buffers shareholder losses in stress scenarios Longevity Reserve: Supplementary reserve for longevity risk 85 EURm
Slide 9: 10Y government bond yield; Group Pension insurance savings
10Y government bond yield Group Pension insurance savings 3.5 3.5 12/2013, EUR 5,654m Mandatum Life U-L, 3.0 3.0 442, 8% Norway Other, 2.5 2.5 2074, 37% Mandatum % 2.0 Sweden 2.0 Life W-P, 2311, 41% Finland 1.5 1.5 Denmark Suomi Mutual, 1.0 1.0 826, 14% 2013 2014 Source: Reuters EcoWin 9
Slide 10: Mandatum Life unit-linked and with-profit liabilities
Mandatum Life Unit-linked and with-profit liabilities EURm 5,000 4,749 4,500 4,000 3,500 3,885 3,000 2,500 2,000 1,500 1,000 500 0 10 Unit-linked liabilities With-profit liabilities
Slide 11: Mandatum Life with-profit technical reserves
Mandatum Life with-profit technical reserves EURm Reserve for decreased discount rate 4,300 4,229 4,200 2011 Q1/2014 108 4,100 Long term 79 75 4,000 Short term 29 83 3,867 Total 108 158 3,900 3,800 158 Δ +50 4,121 3,700 3,600 Δ -412 3,709 3,500 3,400 2011 Q1/2014 11
Slide 12: Capitalization
Capitalization 5044 EXPECTED RISK SAMPO GROUP EUR m REGULATORY BASED INTERNAL CAPITAL 10,000 FRAMEWORK ASSESSMENTS 9 697 Liability side adj. 346 9,000 Fair value reserve Vol a tile 8 794 pa rt 1026 Mandatum, EC 8,000 Equalization prov. 120 % * ∑ EC 401 1 121 7,000 6 241 ∑ EC If 6,000 5 555 Mandatum
Slide 13: Sampo Group Capital Market Day 2014
Sampo Group Capital Market Day 2014 Peter Johansson, Group CFO 2 June 2014
Slide 14: If P&C
If P&C Sampo Capital Market Day Torbjörn Magnusson, CEO 2 June, 2014
Slide 15: If P&C at a glance
If P&C at a glance • GWP of EUR 4,768m Nordic (excl. Baltics) #1 – If 18% #2 – Tryg 10% • Solvency ratio 87% / S&P A rating #3 – RSA Scandinavia 9% • 6,200 employees • If holds 28% of Topdanmark Finland #3 Norway #2 Market share: 26% • Long-term financial targets: Market share: 24% Sweden #2 • Combi
Slide 16: Breakdown of GWP by country and business area
Breakdown of GWP by country and business area Total GWP 2013: EUR 4,768m By country By business area 9% 2% 2% 13% 32% 21% 29% 56% 36% Sweden Norway Finland Private Commercial Denmark Baltics Industrial Baltics 3
Slide 17: Underwriting excellence
65% 70% 75% 80% 85% 90% 95% Q2 04 100% Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Quarterly combined ratios Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Underwriting excellence Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q
Slide 18: Continuous efficiency improvement
Continuous efficiency improvement Combined ratio development (%) 90.5 89.9 90.6 91.8 92.1 92.8 92.0 88.9 88.1 90.3 90.5 89.9 90.6 91.8 92.1 92.8 92.0 88.9 88.1 90.3 69.1 68.0 68.1 68.4 66.2 66.9 65.9 67.5 65.9 65.4 75.6 74.6 74.7 74.4 72.7 73.4 72.5 73.5 72.0 71.4 24.3 24.1 24.0 23.7 23.7 23.7 23.5
Slide 19: Scale benefits
Scale benefits Pan-Nordic product and underwriting system Commercial Industrial Commercial Industrial Commercial Industrial Commercial Industrial 6
Slide 20: Shareholder perspective
Shareholder perspective Return on equity (%) Dividend paid (EURm) 53.2% 1,031 39.8% 36.9% 27.5% 24.4% 25.7% 519 540 544 24.1% 488 485 494 22.0% 19.2% 406 12.4% 249 181 -0.8% 7
Slide 21: Key figures Q1 2014
Key figures Q1 2014 EURm Q1 Q1 Change 2014 2013 GWP 1,714 1,775 1.7%* Technical result 124 122 1.6% Investment result 88 102 -13.7% Operating result 194 204 -4.9% Result for the period 155 161 -3.7% Risk ratio 67.5% 67.6% -0.1-pp Cost ratio 22.8% 23.3% -0.5-pp Combined ratio 90.3% 90.9% -0.6-pp Retu
Slide 22: Combined ratio and premium growth by business area
Combined ratio and premium growth by business area 110% Private 110% Commercial 32.0% 32.0% 100% 100% 90.6% 22.0% 92.0% 91.0% 22.0% 87.8% 89.5% 88.6% 90% 90% 12.0% 12.0% 80% 2.7% 5.0% 5.1% 80% 3.2% 2.6% 2.0% 2.0% 1.7% 70% -8.0% 70% -8.0% Q1-13 2013 Q1-14 Q1-13 2013 Q1-14 110% Industrial 110% Baltic
Slide 23: Nordic P&C market size development
Nordic P&C market size development GWP (EURbn) 24.9 22.4 4.1 Finland 3.4 6.4 5.5 Norway 6.5 6.8 Denmark* 7.0 7.7 Sweden 2010 2013 *Note: 2012 figure, 2013 figures available for Sweden, Norway and Finland 10
Slide 24: Overview Nordic P&C market shares
Overview Nordic P&C market shares Nordic P&C market: EUR 25bn Other 24% 25% 28% LähiTapiola 4% Pohjola 4% 4% 4% 4% 5% 5% 4% Folksam 6% 5% 5% 5% Topdanmark 8% 9% 9% 10% 9% Gjensidige 8% 10% 10% LF 9% 11% 11% 10% RSA Scandinavia Tryg 18% 18% 18% If 2008 2010 2013 11
Slide 25: Our focus on online operations continues
Our focus on online operations continues Website visits • Approx. 20% more Private visits to If website compared to last year Internet sales • Private internet sales increased by 27% in the first quarter 2014 Online claims reporting • 36% of Private claims are reported online 12
Slide 26: Continued value creation through underwriting excellence
Continued value creation through underwriting excellence • Stable returns through underwriting excellence and scale advantages • Financial discipline and best-in-risk • Management commitment to continuous improvement • Financial incentives focussed on underwriting result 13
Slide 27: Relax, we'll help you.
Relax, we'll help you.
Slide 28: Appendix
Appendix Relax, we'll help you. 15
Slide 29: Combined ratio and premium growth by country
Combined ratio and premium growth by country 110% Sweden 110% Norway 97.7% 32.0% 32.0% 100% 100% 92.5% 93.5% 22.0% 89.1% 89.5% 22.0% 90% 90% 12.0% 83.3% 12.0% 80% 2.6% 2.0% 80% 3.4% 2.3% 2.0% 1.5% -0.9% -1.5% 70% -8.0% 70% -8.0% Q1-13 2013 Q1-14 Q1-13 2013 Q1-14 110% Finland 110% Denmark 32.0% 32.0%
Slide 30: Presentation of Topdanmark
SAMPO CMD 2014 Presentation of Topdanmark by Christian Sagild, CEO 2 June, 2014 1 1
Slide 31: Agenda
Agenda • The Danish non-life market • Value creation within insurance • Topdanmark has a strong business model • Highlights in Q1 2014 • What’s the trigger on the Topdanmark share? 2 2 Sampo CMD 2 June 2014
Slide 32: The Danish non-life market
The Danish non-life market • All of the 6 largest players, representing a market share of 71%, are quoted on the stock exchange • Efficient players • Operating with an expense ratio of ~ 17% • Expense ratio for EU peers around 25-30% • Low interest rates increase focus on technical result • Provisio
Slide 33: Trend in combined ratio in the Danish market
Trend in combined ratio in the Danish market 100 Market 95 90 85 80 2008 2009 2010 2011 2012 2013 4 4 Sampo CMD 2 June 2014
Slide 34: New players in personal lines
New players in personal lines Danish players behind International players behind AIG Willis ETU og Gjensidige Nem forsikring Lloyds Himmerlandsforsikring AIG Semi-aggregators Aggregators 5 5 Sampo CMD 2 June 2014
Slide 35: Effect of new aggregators
Effect of new aggregators Aggregators will become more important • A cost-adding factor • Therefore development of low price, stripped-down products such as entry products for cross-selling The industry has established an insurance portal − Forsikringsguiden.dk − via the Danish Insurance Association
Slide 36: Agenda
Agenda • The Danish non-life market • Value creation within insurance • Topdanmark has a strong business model • Highlights in Q1 2014 • What’s the trigger on the Topdanmark share? 7 7 Sampo CMD 2 June 2014
Slide 37: Value creation in insurance depends not only on distribution costs
Value creation in insurance depends not only on distribution costs Distribution power Customer satisfaction Pricing Efficiency 8 8
Slide 38: Distribution power
Distribution power Distribution power Customer satisfaction Internet-based companies are influenced by Pricing Efficiency • Insurance is a low interest product • Customers want advisory services • The Danish market is already a direct market • Dependent on attracting potential customers • Expensive
Slide 39: Distribution power
Distribution power Distribution power Customer satisfaction The Topdanmark way in the personal market Pricing Efficiency • Own sales channels • Use of risk-based prices • Strict acceptance criteria • Exact knowledge of those customer segments where we are competitive • Extensive outbound telephone s
Slide 40: Pricing
Pricing Distribution power Customer satisfaction • Risk-based pricing − micro rating Pricing Efficiency • An ongoing process • Positive risk selection Risk premium Basis for pricing 0 0 A B C D E F G H A B C D E F G H Company without price differentiation Company with price differentiation 11 11
Slide 41: Efficiency
Efficiency Distribution power Customer satisfaction • Process automatisation Pricing Efficiency • Online self-servicing • Digitalisation • Lean • Using procurement power • Supplier agreements • Scalepoint • Time and material 12 12 Sampo CMD 2 June 2014
Slide 42: Customer satisfaction
Customer satisfaction Distribution power Customer satisfaction Improved customer satisfaction Pricing Efficiency 10% 45% 43% 44% Improved customer loyalty 9% 8.1% 40% 8% 39% 7.7% 37% Lower churn 7% 6.8% 35% 34% 6.3% 6.0% 6% 5% 30% Higher top-line growth 2010 2011 2012 2013 1. 1maj May2014 2014 Unsat
Slide 43: Customer satisfaction
Customer satisfaction Trend in retention percentage in personal segment Index 102 101.1 100 100.7 100 99.7 98 2010 2011 2012 2013 14 14 Sampo CMD 2 June 2014
Slide 44: Earnings depend only to a limited extent on distribution costs
Earnings depend only to a limited extent on distribution costs Distribution power Customer satisfaction Pricing Efficiency Possible that online players may reduce expense ratio But Loss ratio could deteriorate more than the effect of any cost advantage 15 15 Sampo CMD 2 June 2014
Slide 45: Agenda
Agenda • The Danish non-life market • Value creation within insurance • Topdanmark has a strong business model • Highlights in Q1 2014 • What’s the trigger on the Topdanmark share? 16 16 Sampo CMD 2 June 2014
Slide 46: Share profile
Share profile Focused strategy • Danish player • Stable insurance risks • Low expense ratio • Limited financial risk • Synergy between life and non-life The Topdanmark • Efficient capital management share is a value case – not a growth case • Limited top line growth • Profitable growth - in that ord
Slide 47: Trend in technical result (2001-Q1 2014)
Trend in technical result (2001-Q1 2014) 660 560 460 360 260 160 60 (40) Q1 2010 Q4 2013 Q1 2001 Q1 2003 Q1 2005 Q1 2007 Q1 2011 Snow loading 3rd and 4th claims largest storms in Denmark 18 18
Slide 48: Trend in CR incl. and excl. run-off
Trend in CR incl. and excl. run-off (white) 95.7 95,0 93.6 92.0 90.3 90-91 2009 2010 2011 2012 2013 2014E 19 19
Slide 49: Maintained high quality of insurance portfolio
Maintained high quality of insurance portfolio • Focus on personal, agricultural and lower SME markets • Non-professional buyers • High frequency− low average claim • Risk-based pricing • Micro rating Low volatility in earnings • Improving claims trend for non-profitable customers / segments • Distr
Slide 50: Reinsurance cover
Reinsurance cover Topdanmark has a comprehensive reinsurance programme • Proportional fire contracts • XL protection against cats Is it disadvantageous that Topdanmark is only represented in Denmark? Not significantly • As reinsurers’ diversification benefit is returned to the customers via competit
Slide 51: Investment policy matches profitability of insurance business
Investment policy matches profitability of insurance business Very low probability of loss on primary business Investment risk aligned with expected profitability of primary business E (CR) ~ 90 Some investment risk E (CR) ~ 95 Significantly lower investment risk New 2008 Low, but positive bottom li
Slide 52: Agenda
Agenda • The Danish non-life market • Value creation within insurance • Topdanmark has a strong business model • Highlights in Q1 2014 • What’s the trigger on the Topdanmark share? 23 23 Sampo CMD 2 June 2014
Slide 53: Highlights – Q1 2014
Highlights – Q1 2014 • Q1 2014: Profit of DKK 418m (Q1 2013: 505m) • Underlying improvement in results as Q1 2013 benefitted from a DKK 136m transfer from shadow account • EPS: DKK 3.8 (Q1 2013: DKK 4.1) • CR improved marginally from 89.6 in Q1 2013 to 89.5 in Q1 2014 • Excl. run-off CR improved fro
Slide 54: Buy-back of DKK 1.9bn in 2014
Buy-back of DKK 1.9bn in 2014 • Increased from DKK 1.7bn to DKK 1.9bn • Buy-back yield of 10.9% • To date in 2014 shares of DKK 593m bought back • Leaving a balance of DKK 1,307m of buy-back for 2014 • Since 1998 Topdanmark has cancelled 72.1% of outstanding shares • From 2000 to 2013 average buy-ba
Slide 55: Average yield of 9.5% (2000-2013)
Average yield of 9.5% (2000-2013) 20 19 18 16 Yield 14 14 13 12 11.1 10.9 10 10 10 10 9 Average 9 9.5 8 8 7 7 6 4 3 2 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 E 26 26
Slide 56: Agenda
Agenda • The Danish non-life market • Value creation within insurance • Topdanmark has a strong business model • Highlights in Q1 2014 • What’s the trigger on the Topdanmark share? 27 27 Sampo CMD 2 June 2014
Slide 57: What's the trigger on the Topdanmark share? None!
What’s the trigger on the Topdanmark share? None! Index-linked share price movements in Topdanmark (Basis: Year-end 2000 = 100) 1200 1100 1000 900 800 700 600 500 400 300 200 100 0 28 28 Sampo CMD 2 June 2014
Slide 58: Any questions?
&*' Any questions? a — Topdanmark P24 ow
Slide 59: Disclaimer
Disclaimer This presentation includes statements relating to the future. Such statements are uncertain and involve both general and specific risks. Many factors may cause a significant deviation from the forecasts and assumptions set out in the presentation. Such factors could be, for example, cycli
Slide 60: Strengthening the foundation
Strengthening the foundation Sampo Capital Markets Day 2 June 2014 Torsten Hagen Jørgensen, Group CFO
Slide 61: Disclaimer
Disclaimer This presentation contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Nordea believes that the expectations reflected in such forward-looking statements are reasonable, no assurance
Slide 62: Nordic ideas
Nordic ideas Nordea was created with the vision Today, Nordea is the that the Nordic region was one market largest financial services group and to establish a pan-Nordic platform in the Nordic and Baltic Sea region 11 million customers in 8 home markets Distribution power through 800 locations and
Slide 63: The relationship bank business model has delivered
The relationship bank business model has delivered 14
Slide 64: Nordea has a unique position in the Nordics
Nordea has a unique position in the Nordics… Global capabilities on par with Superior customer franchise international peers1 Retail Customers Corporates & Institutions Relationships Market Relationships Market (m) position (‘000s) position Sweden 4.1 #2-3 238 #1-2 Asset Capital Markets Management N
Slide 65: A resilient relationship bank business model
…with a resiliant relationship bank business model Nordea is the most …with low-volatility …and low funding costs diversified Nordic bank… earnings growth… Largest market contribution Earnings volatility1 Funding cost2 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer 5 Nordea Peer 1 Peer 2 Peer 3 Peer 4 Peer
Slide 66: Q1 2014 financial results highlights
Q1 2014 financial results highlights 14
Slide 67: Q1 2014 financial result – an overview
Q1 2014 financial result – an overview Stable income and improving cost efficiency • Stable but low lending demand, strong underlying income growth • Strong activity in the savings area • Cost trend follows ambitious agenda, cost/income ratio improving to 49% • Continued decrease of loan losses • Op
Slide 68: Improved return
Improved return RETURN DEVELOPMENT, GROUP AND BUSINESS AREAS GROUP RETAIL BANKING WHOLESALE BANKING WEALTH MANAGEMENT RaRoCaR RaRoCaR RaRoCaR RaRoCaR 15% 14% 15% 29% 14% 13% 13% 24% Q1/13 Q1/14 Q1/13 Q1/14 Q1/13 Q1/14 Q1/13 Q1/14 INCOME 0% INCOME -2% INCOME 4% INCOME 8% COSTS -2% COSTS -4% COSTS -7%
Slide 69: 2015 plan update
2015 plan update 14
Slide 70: The 2015 plan – an overview
The 2015 plan – an overview Nordea market commitments Key initiatives and levers Strong capital generation and Capital initiative to improve the CET1 ratio increased payout ratio in 2014 and 2015 while maintaining a strong capital base Initiatives for income generation To reach a ROE of 13% at the r
Slide 71: Progress on 2015 plan in Q1/14
Progress on 2015 plan in Q1/14 PROGRESS ON NORDEA FINANCIAL PLAN 2015 IN Q1/14 CET1 capital ratio • Fully loaded Basel III CET1 capital ratio up 70 bps to 14.6% P • Risk Exposure Amount Total efficiencies of EUR 18bn of which 10bn in the quarter P Income growth • Income holding up (P) Costs • Improv
Slide 72: Capital models are being continuously refined
Capital models are being continuously refined CAPITAL RATIO REQUIREMENTS, % 18.7-24.5 4.2-5.0* 18.7 18.4 4.2 3.8 Additional local capital requirements 4.0-9.0* Local CET 1 requirements 8 8 2.5 Capital conservation buffer 2 14.5 14.6 T1/T2 4 4 1.5 2 2 CET 1 4.5 2 2 Basel I Basel II Basel III Nordea N
Slide 73: Capital considerations
Capital considerations >18-20 >0.5 3.5 >14-16 Combined buffer requirement >1.0 0.7 2.0 0-2.5 2.5 Pillar 2 buffers 4.5 3.0 Management SRB Swedish Min req SRB CCoB CCyB Other Tot Min req P2 Tot buffer (P2) mortgages P2 risks CET1 (P1) req subdebt buffers req (25% RW) CET 1 capital 14 •
Slide 74: The accelerated cost efficiency programme on track
The accelerated cost efficiency programme on track Total deliveries amounting to EUR 255m* of which EUR 45m in Q1/14 Reducing activity-related Adjusting the distribution to expenses meet changed customer P P (e.g. travelling and consultants) behaviour Increasing efficiency within IT, Reducing intern
Slide 75: Longer-term strategic opportunities
Longer-term strategic opportunities 14
Slide 76: Longer-term strategic opportunities
Longer-term strategic opportunities Structurally • From physical to digital relationships 1. improving cost • Reworking all tools and frameworks and capital • Instilling a cost conscious mind-set efficiency Expanding • Driving product capabilities 2. on core • Developing new means of financing stren
Slide 77: Simplification ongoing to increase agility and responsiveness
Simplification ongoing to increase agility and responsiveness Complexity Simplification examples • Reduce low value adding products Products • Reduce number of variations of existing products • Reduce number of processes Processes • CentralizeEliminateSimplifyAutomateMove • Re-use of processes a
Slide 78: Strengthening the foundation
Strengthening the foundation Sampo Capital Markets Day 2 June 2014 Torsten Hagen Jørgensen, Group CFO