Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Debt Investor Presentation (May 2015)
56 slides from Sampo Oyj's debt investor presentation, May 21, 2015
Slide 1: Sampo Group Debt Investor Presentation
Sampo Group Debt Investor Presentation Prepared May 21, 2015 Figures March 31, 2015 www.sampo.com/archive/presentations/
Slide 2: Debt Investor Contacts and Financial Calendar
DEBT INVESTOR CONTACTS FINANCIAL CALENDAR Markku Pehkonen, CRO 07/05/2015 Interim Report Q1/2015 tel. +358 10 516 0014 Silent period 09/04/2015-07/05/2015 markku.pehkonen@sampo.fi 12/08/2015 Interim Report Q2/2015 Silent period 15/07/2015-12/08/2015 Peter Johansson, CFO 05/11/2015 Interim Report Q3/
Slide 3: Agenda
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56 3
Slide 4: Sampo has created Value
Sampo Group ― Basic Facts Sampo has created Value A Mixed Financial Conglomerate Strong relative performance Market cap May 8, 2015, EURbn 10Y Total Shareholder Return 0 10 20 30 40 50 Nordea 46,7 DnB 26,7 Danske Bank 26,3 >21% Handelsbanken 25,5 Sampo 24,6 Swedbank 23,4 Investor 16,5 Gjensidige 7,5
Slide 5: Nordic Financial Group with Strong Brands
Sampo Group ― Basic Facts Nordic Financial Group with Strong Brands • Listed company Sampo plc • Long-term investor • Manager of capital structure and liquidity • Pay-out ratio ≥ 50% 100% 100% 21.2% > 30% • TOP3 company in life & MARKET • The second largest • The leading P&C insurer • The largest fi
Slide 6: Sampo Group Steering Model and Principles
Sampo Group ― Basic Facts Sampo Group Steering Model and Principles • Non-complex structures and no contagion risks – straightforward and transparent legal structure – limited amount of intercompany exposures • Principles of Business activities – clear responsibilities – simple and flat operational
Slide 7: Well-established Insurance Subsidiaries
Sampo Group ― Basic Facts Well-established Insurance Subsidiaries If P&C ― Well-diversified and Mandatum Life ― Respected Finnish Expert Profitable Pan-Nordic in Wealth Management, Rewards Non-life Insurer and Risk Insurance • If P&C provides insurance • Provides a comprehensive range solutions and
Slide 8: Well-diversified Leading Nordic bank
Sampo Group ― Basic Facts Well-diversified Leading Nordic bank • Strong profit generating capacity - Improved income mix and growth - Continued cost efficiency • Low volatility • Strong capital generation - Disciplined capital management - Stringent risk management 8
Slide 9: Danish Insurer with a Robust Business Model
Sampo Group ― Basic Facts Danish Insurer with a Robust Business Modell 9
Slide 10: Group Strategy: Value Creation in Nordic Financials
Sampo Group ― Basic Facts Group Strategy: Value Creation in Nordic Financials LONG TERM • Value creation through investments in Nordic financials based on knowledge of VALUE CREATION Nordic markets, Nordic financial institutions & Nordic people. • Commitment to the long-term development of affiliate
Slide 11: Agenda: If P&C
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56 11
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 2014 Other; 27 GWP EUR 6.8bn If; 18 Topdanmark; Gjensidige 25% Finland 2013 5 If 23% GWP EUR 4.1bn LähiTapiola; 4 Tryg 14% Pohjola 31% Tryg; 10 Pohjola; 4 Sparebank 1 10% LähiTap
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 in Norway, MARKET Finland and Sweden. In Denmark the market is less consolidated. LOYAL CLIENTS • Renewal rates are around 80-90%. DISTRIBUTION • In addition to traditional channels, the In
Slide 14: Diversification in Sales and Results
If P&C Diversification in Sales and Results Gross Written Premiums, EUR 1,669m By Business Area By Country Baltic; 35; Baltic; 35; Industrial; 2% Denmark; 2% 145 ; 9 % Norway; 305; 18% 515 ; 31 % Finland ; Private; 665; 527 ; 31 Commercial; 40% % Sweden; 663; 40% 446 ; 27 % Technical Results, EUR 12
Slide 15: Disciplined Underwriting and Diversification works
If P&C Disclipined Underwriting and Diversification works Combined Ratio Development Geographical Diversification in CR % 91,8 92,1 92,8 92,088,9 88,1 87,7 90,3 89,2 100 90,5 89,9 90,6 80 24,3 24,0 23,7 23,7 24,1 23,7 23,5 23,0 22,8 22,5 22,8 22,6 60 40 66,2 65,9 66,9 68,1 68,0 69,1 68,4 65,9 65,4 6
Slide 16: Strong & Stable Annual Profit Development
If P&C Strong & Stable Annual Profit Development EURm 3M/2015 3M/2014 EURm Profit before taxes 200 194 Comprehensive Income 265 209 1 200 Profit before tax 1 127 Comprehensive income 943 978 1 000 929 931 864 800 800 730 707 689 644 636 600 534 549 526 400 308 200 0 -200 -267 -400 2005 2006 2007 200
Slide 17: 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%, 2006-2014 90.1 89.2 86.5 93.5 Year 2014 CR% 87.1 86.9 86.5 90.3 17 Year 2015 CR% 89.2
Slide 18: Conservative Investment Portfolio
If P&C Conservative Investment Portfolio Investment Allocation of Total EUR 11.8bn Mark-to-Market Investment Return 14% 12,4% Q1/2015 2.0% 11% Private Real Estate 9% 7,4% Equity 0,2% 5,8% 6,1% Money 6% 4,3% 5,0% 0,2% 4,4% 4,1% Equities Market 9% 4% 2,6% 13% 1,8% Public 1% sector -2% 17% -4% -3,1% In
Slide 19: Agenda: Mandatum Life
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56 19
Slide 20: Finnish Life Insurer with Wealth management Focus
Mandatum Life Finnish Life Insurer with Wealth management Focus Client Underlying Critical Success Factors Sales & Client Segment Market Services Corporates Employee Benefit • Expertise in Rewards and Incentives, Mandatum Life Pension & Risk Life Solutions and Asset Management Cross-sales HNWI Wealt
Slide 21: Mandatum Life Business Volumes
Mandatum Life Mandatum Life Business Volumes Premiums Written*, total EUR 378m Insurance Savings, total EUR 10,183m 1 18 24 With-Profit 20 EUR 73m 23 2 039 29 128 5 U-L With-Profit 4 043 U-L EUR 305m EUR 4,297 EUR 5,886m 1 856 139 33 212 1 833 158 Unit-linked life Unit-linked pension Unit-linked cap
Slide 22: Market Position by Premiums Written
Mandatum Life Market Position by Premiums Written, % Market Shares in Finland 43,8 39,5 17,9 17,9 12,6 10,7 All Products Unit-Linked Group Pension Private Corporates Baltics Customers 22
Slide 23: 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 is reflected in policyholders´ reasonable expectations for total accrual, which is an average annual yield of Finnish gover
Slide 24: Profit Development
Mandatum Life Profit Development EURm 3M/2015 3M/2014 Profit before taxes 39 37 EURm Comprehensive Income 171 18 495 500 342 332 295 286 286 250 220 142 153 163 149 140 121 137 136 80 0 -115 -250 Profit before taxes Comprehensive income -378 -500 2006 2007 2008 2009 2010 2011 2012 2013 2014 24
Slide 25: Mandatum Life Profit by Components
Mandatum Life Mandatum Life Profit by Components EURm 1-3/2015 1-3/2014 Net investment income 534.2 118.6 - Transferred to expense result -6.3 -5.5 - Return on unit-linked policies -465.8 -40.4 - Return on with-profit policies* -43.9 -46.0 INVESTMENT RESULT 18.2 26.8 EXPENSE RESULT** 4.8 4.1 RISK RE
Slide 26: Absolute Return Investment Portfolio
Mandatum Life Absolute Return Investment Portfolio Investment Allocation of Total EUR 5.5bn* Mark-to-Market Investment Returns 20% Q1/2015 4.2% 16,8% Other 6% Real estate 4% 15% 12,0% 11,1% Money market 9,7% 9,4% Private equity 17% 10% 8,3% 7,1% 4% 5,0% 4,6% 5% Public sector 3% 0% -1,4% -5% -10% -7,
Slide 27: Agenda: Sampo Group
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company - A Stable Dividend Payer 36-43 Appendix 44-56 27
Slide 28: Stable Development of Profit before Taxes
Sampo Group ― Results, Capitalisation and Investments Stable Development of Profit before Taxes EURm 3M/2015 3M/2014 P&C 200 194 EURm Life 39 37 4 000 3,833 Nordea 223 170 Holding 26 -4 3 500 * Group 487 396 3 000 •If P&C •If P&C •If P&C •Mandatum Life •Mandatum Life •Mandatum Life 2 500 •Sampo Bank
Slide 29: Stable Companies & Group Level Diversification
Sampo Group ― Results, Capitalisation and Investments Stable Companies & Group Level Diversification* 1 0.30 1 0.18 0.85 1 P/L CONTRIBUTIONS LOW VOLATILITY EARNINGS LOW VOLATILITY C/R FOCUS IN U-L & WM • Geographical diversification • Geographical diversification • Finland & Baltics • Strong Retail
Slide 30: Strong Group Solvency
Sampo Group ― Results, Capitalisation and Investments Strong Group Solvency EURm 9,258 10 000 381 ** Internal Treatment ≈ S II 9 000 • Economic Capital (EC)need is measured at 99.5% confidence level 8 000 • By nature, SII framework is similar to 7 000 EC techniques used by Sampo -866 • EC models are
Slide 31: Internal Capital Base above Capital Needs
EURm 0 2 000 4 000 6 000 8 000 10 000 12 000 1 976 2 294 4 109 31.3.09 2 657 3 054 6 401 30.6.09 3 279 3 738 7 666 30.9.09 3 783 4 245 7 076 31.12.09 4 024 4 600 7 565 31.3.10 4 131 4 722 7 168 30.6.10 4 189 4 799 7 279 30.9.10 4 281 4 954 EC,Diversified 8 521 31.12.10 4 281 4 947 8 432 31.3.11 4 22
Slide 32: Investment Allocation by Risk Profile
Sampo Group ― Results, Capitalisation and Investments Investment Allocation by Risk Profile Total Group (MEUR) 17,611 18,409 19,215 20,211 14,000 11,925 12,293 11,513 11,827 12,000 10,000 8,000 6,644 6,716 6,000 5,405 5,343 4,000 1,667 2,000 1,058 774 281 0 Mandatum Mandatum Mandatum Mandatum Sampo
Slide 33: Investments & Counterparty Exposures
Sampo Group ― Results, Capitalisation and Investments Investments & Counterparty Exposures* Derivatives AA+ - A+ - BBB+ - BB+ - Non Fixed Income Change from 31.3.2015 AAA AA- A- BBB- C D Rated Total Equities Other (Counterparty Total 31.12.2014 Risk) Basic Industry - - 0 105 294 - 121 520 209 - - 72
Slide 34: Fixed Income Investments in the Financial Sector
Sampo Group ― Results, Capitalisation and Investments Fixed Income Investments in the Financial Sector* Long-term EURm Covered Money Long-term subord. bonds market senior debt debt Total % Sweden 1,522 1,178 814 277 3,791 41% Finland 224 2,335 168 11 2,738 30% Norway 813 544 89 1,446 16% Denmark 259
Slide 35: Sampo Group Public Sector Fixed Income Investments
Sampo Group ― Results, Capitalisation and Investments Sampo Group Public Sector Fixed Income Investments ― no Periphery* Government Public sector, EURm Government guaranteed other Total Sweden 260 809 1,069 Norway 272 272 France 210 4 214 the Netherlands 191 191 Germany 109 71 180 Finland 22 77 20 1
Slide 36: Agenda: Sampo plc
Sampo Group Basic Facts 3-10 If P&C The Leading Nordic P&C Insurer 11-18 Mandatum Life A Finnish Financial Services Company 19-26 Sampo Group A Productive Value Creator 27-35 Sampo plc The Listed Parent Company – A Stable Dividend Payer 36-43 Appendix 44-56 36
Slide 37: Straightforward Cash Flows & Strong Balance Sheet
Sampo plc Straightforward Cash Flows & Strong Balance Sheet Flow of Funds Balance Sheet Dividends Income Assets EURm 9,960 Liabilities EURm 9,960 • If P&C • Interest on Liquidity Liquidity 1,315 CPs Issued 298 • Mandatum Life • Income from other • Nordea investments Investment assets 157 LT Senior D
Slide 38: Dividends & Reported Profits
Sampo plc Dividends & Reported Profits EURm 3M/2015 3M/2014 Profit before taxes -4 -4 Comprehensive Income 659 466 EURm 1100 1 069 * 1 050 2010 2011 2012 2013 2014 879 900 832 773 747 762 737 702 683 700 500 300 100 -8 -10 -17 -20 -18 -37 -20 -26 -1 -100 -70 Dividend income Operating expenses Net fi
Slide 39: Dividends Received by Payment Year
Sampo plc Dividends Received by Payment Year EURm 1 600 Low Net Debt vs. stable Dividend Inflows 1 406 1 400 75 1 200 300 1 067 1 000 883 756 768 370 800 754 744 35 293 633 600 200 568 204 250 224 100 490 511 1 031 80 100 400 141 130 100 ** 533 100 200 597 519 488 540 544 490 200 406 249 181 100 0 2
Slide 40: Sampo Group Conservative Leverage
EURm -4 000 -2 000 2 000 4 000 6 000 8 000 0 10 000 12 000 14 000 16 000 Q1/05 Q3/05 Q1/06 Q3/06 Q1/07 Q3/07 Group NAV Q1/08 Group Equity Q3/08 Q1/09 Q3/09 Sampo plc Net debt Q1/10 Q3/10 Q1/11 Q3/11 Q1/12 Q3/12 Q1/13 Q3/13 Q1/14 Q3/14 Q1/15 0% 5% 10% 15% 20% 25% 30% 35% 40% Q1/05 Q3/05 Q1/06 Q3/06 Q
Slide 41: Sampo plc Investments and Debt Instruments
Sampo plc Sampo plc Investments and Debt Instruments Call/ Effective Instrument & Principal Coupon Instrument & Principal Coupon Swap Maturity Maturity Rate Mandatum Capital Loan 100 m€ 4.828% Every year Senior Bond 2,000 SEKm SEK3M+ 0.75% --- 0.7190% 28.05.2015 IF PerpNC1029,65m€ 4.943% 16.06.2015
Slide 42: Sampo plc Key Credit Considerations
Sampo plc Sampo plc Key Credit Considerations Stable Dividend Flows from Affiliated Companies with strong Brands Diversification through Insurance & Banking in the Nordic Region Conservative Financial Profile, strong Capitalization and Liquidity Management with a proven Track Record in long-term Val
Slide 43: Sampo Group's outlook for 2015
Appendix Sampo Group’s outlook for 2015 • Sampo Group’s business areas are expected to report good operating results for 2015. • However, the mark-to-market results are, particularly in life insurance, highly dependent on capital market developments. The very low interest rate level also creates a c
Slide 44: Appendix
SAMPO = GROUP Appendix 44-56
Slide 45: Principles of Investment Management
Appendix 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 business targets. – Direct Investm
Slide 46: Risk Management Principles
Appendix 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 and related instructions as well as wi
Slide 47: Principles of Capital Management
Appendix Principles of Capital Management • Risk Capital Available > Risk Capital needed – Risk Capital Available = Solvency I (SI) Capital + Other items absorbing economic losses. – Risk Capital Need = Measured Economic Capital + ”Non-measurable” risks. – Buffer between measures under constant cons
Slide 48: Sampo FiCo Coordination duties as of 31.12.2014
Appendix Sampo FiCo Coordination duties as of 31.12.2014 48 48
Slide 49: Through Structural Changes to the Leading Nordic Financial Group
Appendix Sampo Group Through Structural Changes to the Leading Nordic Financial Group 2000 2001 2002 2004 2007 2010 2011 2012 2013 2014 Sampo Insurance Mandatum Bank Sampo’s P&C insurance Sampo divests Sampo’s Nordea Sampo Group’s Sampo Group Sampo Group Company and is merged into operations are mer
Slide 50: Financial Strength Rating History
Appendix Financial Strength Rating History If P&C Insurance Ltd (Sweden), If P&C Insurance Company Ltd (Finland), Sampo plc Possible downgrade Jan 03 AA-/ Moody´s If P&C Possible upgrade Feb 04 Aa3 S&P If P&C Moody´s Sampo plc Negative Aug 02 Positive May 06 Stable May 04 Stable Nov 08 Stable Apr 03
Slide 51: IF P&C Quarterly Results and C/R
Appendix IF P&C Quarterly Results and C/R EURm Q1/15 Q4/14 Q3/14 Q2/14 Q1/14 Q4/13 Q3/13 Q2/13 Q1/13 Q4/12 Premiums earned 1,076 1,108 1,124 1,122 1,104 1,112 1,139 1,140 1,115 1,121 Claims incurred -780 -776 -793 -783 -811 -791 -802 -800 -824 -801 Operating expenses -180 -189 -183 -187 -186 -186 -1
Slide 52: IF Regulatory Solvency Capital & Ratio
Appendix IF Regulatory Solvency Capital & Ratio* EURm % 4 500 100% 88% 87% 81% 4 000 79% 75% 82% 77% 72% 3 500 74% 71% 80% 70% 66% 3 000 54% 60% 2 500 2 000 40% 1 500 1 000 20% 500 0 0% Solvency capital (lhs) Solvency ratio (rhs) + solvency capital 52 * Solvency ratio, (IFRS) % = x 100% + premiums e
Slide 53: IF P&C Reinsurance Programmes
Appendix 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 Reinsurance Programmes in place Catastrophe per
Slide 54: Mandatum Life Regulatory Solvency Ratio
Appendix Mandatum Life Regulatory Solvency Ratio* 30% 27,7% 27,6% 25,8% 26,3% 25% 22,9% 21,3% 20,9% 20,1% 20% 17,7% 18,5% 16,5% 15% 10% 7,9% 5% 0% * Solvency ratio, % of technical provision, (IFRS) = + solvency capital x 100% + liabilities for insurance and investment contracts - reinsurers’ share o
Slide 55: Nordea Profitable & The Most Diversified Nordic Bank
1 000 1 200 1 400 1 600 200 400 600 800 0 EURm Nordea 1Q08 885 21 2Q08 883 36 3Q08 847 89 4Q08 781 320 1Q09 833 356 2Q09 818 425 3Q09 832 358 4Q09 592 347 1Q10 878 261 2Q10 730 245 Restructuring provision 3Q10 960 207 4Q10 1 071 166 1Q11 1 003 242 2Q11 949 118 3Q11 566 112 4Q11 1 029 263 1 037 218 L
Slide 56: Nordea BV on Consolidated Balance Sheet
Appendix Nordea BV on Consolidated Balance Sheet Nordea in Sampo Group’s B/S EURm Acquisition price 5,557.3 Retained earnings 1,570.7 Figures Per Share EUR Accumulated other changes in Nordea’s equity -62.7 Share of Nordea’s net profit 230.0 Acquisition price 6.46 Book value 7.85 Amortisation -8.8 M