Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Investor Day (September 2015)
61 slides from Sampo Oyj's investor day presentation, Sep 11, 2015
Slide 1: Solvency II and Mandatum Life
Solvency II and Mandatum Life Sampo Group, Capital Markets Day 11 September 2015
Slide 2: Solvency II in a Nutshell
Solvency II in a Nutshell • New EU-level solvency framework In force 1 January 2016 • Risks are measured in a market consistent way and set Solvency Capital Requirements (SCR) are based on 99.5% confidence level (1 year horizon) • Own Funds (Available Capital) is based on Solvency II balance sheet
Slide 3: Solvency II Own Funds (30 June 2015)
Solvency II Own Funds (30 June 2015) • Moving from IFRS Balance Sheet to SII Balance Sheet increases solvency capital • Unit Linked S2 Liability lower than book value Increases Own Funds after tax by EUR 380 million • Within with-profit liabilities Risk Policies create OF and policies with high gu
Slide 4: Transitional Measures on Technical Provisions
Transitional Measures on Technical Provisions • Transitional measures are applied to • Pension policies with 3.5% and 4.5% (excl. segregated group pension portfolio) • Book value of liabilities EUR 3,225 million (incl. discount rate reserves) • Solvency II Liability is EUR 3,915 million i.e. liabili
Slide 5: Solvency II Capital Requirement (SCR) and Own funds, June 2015
Solvency II Capital Requirement (SCR) and Own funds, 30 June 2015 With transitional measures Equity risk transitionals decrease market risk and SCR, while transitional measures on technical provisions increase own funds EURm Equity Technical transitional provisions Without transitional measures 7 ye
Slide 6: Estimated Sensitivities after January 2016
Estimated Sensitivities after 1 January 2016* 2500 155% 151% 158% 160%** 152% 175% 2000 1500 EURm 1000 500 0 Own Funds SCR Own Funds SCR Own Funds SCR Own Funds SCR Own Funds SCR Own Funds SCR 30.6.2015 Interest Rates - 25 bp Interest Rates + 25 bp Equity -10 % Credit Spread + 50 % Equity weight - 1
Slide 7: Trend of Liabilities and Own Funds
Trend of Liabilities and Own Funds • Liabilities with highest guarantees (4.5% and 3.5%) consume Own Funds without transitional rules. • Unit Linked portfolio creates Own Funds. • Liabilities with highest guarantees decrease substantially during transition period (2016-2032) and Unit Linked liabilit
Slide 8: Trend of Liabilities and SCR
Trend of Liabilities and SCR • Market Risk is the main driver behind SCR. • Most of the market risk arises from assets backing with-profit liabilities. Decreasing trend of with-profit liabilities decreases SCR. Expected positive trend in Coverage ratio based on Own funds and SCR expectations. SC
Slide 9: Appendices
Appendices @ MANDATUM LIFE
Slide 10: Mandatum Life Will Apply…
Mandatum Life Will Apply… YES/NO Comments Standard Formula YES SCR is measured by using standard formula i.e. not by internal model. Volatility Adjustment YES Discount rate (0-20 years) is increased by volatility adjustment. EIOPA sets level quarterly (xx bp per 6/2015) Transitional Measure on YES A
Slide 11: SCR Market Risk Modules
SCR Market Risk Modules Equity risk Equity Risk SCR EEA/OECD non-EEA/OECD based (Type I) based (Type II) Roughly: Symmetric Adjustment decreases basic capital charge, Basic stress 39 % 49 % if equity indexes below 3 year average and vice versa. Symmetric Adjustment +/- 10 %-point +/- 10 %-point Equi
Slide 12: Mandatum Life - Solvency II SCR (Market Risk)
Mandatum Life - Solvency II SCR (Market Risk)* Asset Allocation Market Risk SCR (diversified) EUR 6,710 million EUR 1,406 million 30 June 2015 30 June 2015 Concentration risk Real Estate 1 EURm Currency risk 297 EURm 0,1 % Property risk 50 EURm 4% 42 EURm 4% Private Equity / 3% Alternative 693 EURm
Slide 13: Transitional Measure for Standard Equity Risk
Transitional Measure for Standard Equity Risk • For type 1 equities (equities listed in regulated markets in the EEA or OECD countries) it is possible to apply transitional measure for standard equity risk calculation. • 22% risk charge can be used instead of 39% standard equity risk charge. This ap
Slide 14: Solvency II and Mandatum Life
Solvency II and Mandatum Life Sampo Group, Capital Markets Day 11 September 2015
Slide 15: IF P&C
IF P&C Sampo Capital Market Day Ricard Wennerklint, Deputy CEO of If P&C London, 11 September 2015
Slide 16: Digitalisation
DIGITALISATION Relax, we'll help you.
Slide 17: Design Overhaul and Responsive Sites
DESIGN OVERHAUL AND RESPONSIVE SITES All policies available online
Slide 18: Customer Centric Webshops Increase Online Sales
CUSTOMER CENTRIC WEBSHOPS INCREASE ONLINE SALES
Slide 19: We Meet the Customer in the Channel of Their Choice
WE MEET THE CUSTOMER IN THE CHANNEL OF THEIR CHOICE NUMBER OF CONTACTS SHARE OF VISITS TO IF.SE PER CHANNEL FROM MOBILE DEVICES 16 40% 14 35% 12 30% 10 25% Millions 8 20% 6 15% 4 10% 2 5% - 0% Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2
Slide 20: Digital Customer Journey
DIGITAL CUSTOMER JOURNEY SALES 23% increase in online sales (last 6 months) SERVICE 25% eCustomers Customers with digital payment and CLAIMS digital policy letters 40% of claims are on all their policies reported online
Slide 21: Internet Is the Fastest Growing Distribution Channel
INTERNET IS THE FASTEST GROWING DISTRIBUTION CHANNEL BA Private NORDIC ONLINE SALES, PREMIUM ONLINE SALES BY COUNTRY 6M-15, PREMIUM Denmark 17% Sweden 38% Norway 19% Finland 26% TOTAL PREMIUM BY COUNTRY 6M-15 Denmark 8% Sweden Norway 38% 32% 2012 2013 2014 Finland 22%
Slide 22: Efficiency Through Online Claim Reports
EFFICIENCY THROUGH ONLINE CLAIM REPORTS NORDIC SHARE OF ONLINE CLAIMS ONLINE CLAIMS BY COUNTRY 6M-15 62% 40% 33% 34% 35% 33% 29% 28% 27% 2011 2012 2013 2014 6M 2015 Finland Denmark Norway Sweden
Slide 23: Significant Investment in Online Solutions
SIGNIFICANT INVESTMENT IN ONLINE SOLUTIONS Online investments - share of IT development cost ONLINE INVESTMENTS AS % OF TOTAL IT DEVELOPMENT COST 19% 18% 19% 13% 18% 11% 13% 11% 2012 2013 2014 6M 2015 2012 2013 2014 6M 2015
Slide 24: Solvency
SOLVENCY
Slide 25: Solvency II Deliveries
SOLVENCY II DELIVERIES 1 Jan 2016: Solvency II comes into effect 2011 - 2013 2014 2015 2016 Application Internal model pre application process process First ORSA Own Risk and Solvency Reports (ORSA-reports) Preparatory SII reporting delivered according to plan Full SII reports
Slide 26: If Capital and Capital Requirement Q2 2015
IF CAPITAL AND CAPITAL REQUIREMENT Q2 2015 196% 223% 168% 126% MEUR 3 965 3 866 4 000 3 800 3 806 3 063 3 000 2 267 1 939 2 000 1 779 Capital requirement Capital 1 000 0 Economic Capital Partial Internal Standard Rating S&P (A-rating and Adjusted Model Solvency formula Solvency level) Solvency Capit
Slide 27: Still Uncertainty Around Solvency II
STILL UNCERTAINTY AROUND SOLVENCY II Element Solvency Capital Requirement Internal model regulatory approval Increased Solvency Capital Requirement through capital add on or use of standard formula Risk reducing effect of deferred tax MEUR 160 Element Eligible Own Funds Norwegian natural perils fund
Slide 28: If Partial Internal Model SCR per Risk Q2 2015
IF PARTIAL INTERNAL MODEL SOLVENCY CAPITAL REQUIREMENT PER RISK Q2 2015 MEUR 3 965 4 000 3 000 215 220 1 416 120 1 939 2 000 1 779 607 160 1 000 575 0
Slide 29: Solvency II Stress Tests
SOLVENCY II STRESS TESTS 250% 223% 224% 222% 228% 228% 218% 218% 220% 215% 213% 200% 150% 100% 50% 0% +10% -10% +25 bps -25 bps +50 bps -50 bps
Slide 30: If Rating Capital Requirement Q2 2015
IF RATING CAPITAL REQUIREMENT Q2 2015 High liability risk charges and low diversification benefits in S&P model MEUR 4 000 3 866 1 882 3 314 3 063 3 000 257 198 2 382 2 000 1 636 1 000 0 Asset risks Liability Diversification M-factor Total A Total BBB Total AA S&P capital risks adjustment capital ca
Slide 31: If S&P Rating – Detailed View
IF S&P RATING – DETAILED VIEW Assessment Overall rating A with stable outlook Business Risk Strong Financial Risk Strong Anchor a Enterprise Risk Management and a+ Management and Governance Group support a
Slide 32: Thanks for Listening
THANKS FOR LISTENING . ‘ —— Jum Z “My, Relax, welll help you.
Slide 33: Nordea Life & Pensions and Solvency II
Nordea Life & Pensions and Solvency II Snorre Storset Head of Nordea Life & Pensions
Slide 34: Largest Life & Pension provider in the Nordic countries
Largest Life & Pension provider in the Nordic countries - a business within Wealth Management MAIN FOCUS AREAS FINANCIALS, H115 VS H114 Finland & Sweden: Individual life savings and Total income EUR 291m, up 13% risk-related products. Nordea Bank distribution Operating expenses EUR 99m, down 4%
Slide 35: Responding to market development
Responding to market development Trends Strategic response Profitability (RoE) over Cost efficiency volume (GWP) Regulatory transformation Capital efficiency Low yield environment Product portfolio optimised Demographics and customer behaviour Bancassurance 3
Slide 36: Delivered a turnaround – Strong starting point
Delivered a turnaround – Strong starting point GWP DEVELOPMENT, EURbn COST DEVELOPMENT, EURm 10 000 90% 100% 87% 82% 90% 230 53% 60% 72% 80% 8 000 70% 220 43% 43% 50% 56% 60% 37% 40% 6 000 50% 210 8.5 40% 30% 7.6 200 220 6.7 30% 4 000 5.9 214 20% 5.7 20% 209 206 190 <200 10% 10% 2 000 0% 180 0% 2011
Slide 37: Low cost growth through bancassurance
Low cost growth through bancassurance BANK SOLD MARKET RETURN PROUCTS, COMMENTS GWP, EURbn +97% Simplified product options Automated processes 6.1 3.1 3.2 4.2 5.1 Deep integration with the Bank 2011 2012 2013 2014 H1-15 R12 Looking around the corner 5•
Slide 38: Attractiveness of endowment products plays to our strengths
Attractiveness of endowment products plays to our strengths PREMIUM DEVELOPMENT ENDOWMENTS, COMMENTS GWP, EURbn Tax advantages reduced on private pension savings +314% Tax effective savings need from increased longevity 3.9 4.6 1.5 1.5 3.0 Low yield environment 2011 2012 2013 2014 H1-15 R12m
Slide 39: Market Return Company also in terms of AuM
Market Return Company also in terms of AuM AuM SPLIT BY PRODUCT CATEGORY, EURbn NET INFLOW SPLIT BY PRODUCT CATEGORY, EURbn 61 57 51 53 46 3.8 4.4 2.8 3.5 30 35 +136% 2.2 15 22 27 -1.0 -1.5 -1.8 -2.6 -2.8 31 30 26 27 26 -15% -15% 2011 2012 2013 2014 H1-15 2011 2012 2013 2014 H1-15 R12m MRP Trad 7•
Slide 40: Strong growth in market return and risk profits
Strong growth in market return and risk profits PRODUCT PROFITS, MARKET RETURN AND RISK, EURm +62% 275 237 199 Risk 170 MRP 2012 2013 2014 H1-15 R12m 8•
Slide 41: Market position: Clear market leader in market return products
Market position: Clear market leader in market return products LIFE & PENSIONS MRP MARKET SHARE 12 MONTHS ROLLING EST, Q1/15 1 Finland 25% Sweden 1 Norway 1 Denmark 3 11% 9% 6% 5% 4% 16% 4% -5% -3% 16% 24% Nordea Peer1 Peer2 Peer3 Peer4 Peer5 Growth in GWP vs Q1/14 Nordea estimates based on local in
Slide 42: Significantly improved cost efficiency
Significantly improved cost efficiency COST DEVELOPMENT, EURm COST/AuM, BPS 230 53% 60% 43% 43% 50% 220 37% 40% 210 48 40 38 35 30% 30 200 220 214 20% 2011 2012 2013 2014 2015 209 206 190 H1 <200 10% 180 0% 2011 2012 2013 2014 2015F Total costs C/I COST/GWP, % 4.0 4.1 3.2 2.7 2.5 2011 2012 2013 2014
Slide 43: Solvency II considerations
Solvency II considerations Business driven Regulatory driven Attractive new market return and risk business Volatility adjustment in DK, NO No use of matching adjustment Disciplined risk management of legacy traditional business – Liability Driven Investments Transitional on technical provisio
Slide 44: Meet Solvency II requirements without equity capital injection
Meet Solvency II requirements without equity capital injection EXPECTED CAPITAL POSITION ENTERING KEY SENSITIVITIES* SOLVENCY II +7% 15 15 4 12 15 8 12 Planned business 12 actions 12 Transitional IR EQ measures ±50 - 25% Volatility bps 149 133 adjustment 114 Base incl target level of sub-debt -10% -
Slide 45: Room to optimise investment strategy further
Room to optimise investment strategy further CURRENT SCR COMPOSITION COMMENTS 1% 1% 2% ~3/4 of SCR comes from market risks 22% Gives room to optimize further through re-allocation and hedging 74% ~15% improvement by year-end possible with current plans Reduces balance sheet volatility Market
Slide 46: Business model supporting future dividend capacity
Business model supporting future dividend capacity CAPITAL REQUIREMENT VS CONTRIBUTION, COMMENTS EURm Dividends paid: EUR 300m in 2013, EUR 220m 2014 Self-financing growth in market return and risk products Trad MRP Capital release from run-off Solvency capital requirement traditional book Rec
Slide 47: Continue to improve quality of Life
Continue to improve quality of Life Strong platform RoE 18% in 2018 by Next generation product offering Market return company fuel growth Low cost growth through Life business platform efficiency bancassurance improve further Solvency II optimised business Competitive product offering model/strategy
Slide 48: Nordea Life & Pensions and Solvency II
Nordea Life & Pensions and Solvency II Snorre Storset Head of Nordea Life & Pensions
Slide 49: Framework for solvency in Sampo Group
Framework for solvency in Sampo Group Capital Markets Day, September 11th 2015 CFO Peter Johansson
Slide 50: 1. Present framework for solvency in Sampo Group
03/09/2015 1. Present framework for solvency in Sampo Group 2
Slide 51: Present Regulatory Framework for solvency in Sampo Group, 30 June 2015
03/09/2015 Present Regulatory Framework for solvency in Sampo Group, 30 June 2015 EURm Solvency I and Nordea with adjustment to Basel I floor 14,000 Group solvency ratio 194% 12,000 1,622 2,825 10,000 8,000 6,000 5,047 Sampo plc 10,991 9,788 68 Nordea 4,000 3,826 Life 2,000 P&C 280 873 0 3
Slide 52: Present Internal framework for solvency in Sampo Group
03/09/2015 Present Internal framework for solvency in Sampo Group Group economic capital and solvency, 30 June 2015 EURm 11,000 10,373 *) 313 10,000 **) 273 9,000 8,000 7,000 6,000 853 5,000 3,469 9,788 4,000 3,000 5,876 1,320 2,000 1,000 1,939 0 If P&C Mandatum Sampo plc's Diversific. Group EC Adj.
Slide 53: 2. Solvency II in Sampo Group as of 1.1.2016
03/09/2015 2. Solvency II in Sampo Group as of 1.1.2016 5
Slide 54: Solvency II developments
03/09/2015 Solvency II developments Mandatum Life • The Finnish FSA issued its decision to approve the use of transitional measures on August 11, 2015 If P&C Group • If Group aims to use a Partial Internal Model (PIM) for Solvency II Solvency II rules will replace EC models both in Mandatum Life and
Slide 55: Mandatum Life
Mandatum Life 03/09/2015 Solvency II Capital Requirement (SCR) and Own Funds 30.6.2015 With transitional measures. Equity risk transitionals decrease market risk and SCR, while transitional measures of technical provisions increase own funds Equity Technical transitional provisions Without transitio
Slide 56: Solvency II and S&P Capital Model Q2/2015 If P&C Insurance
03/09/2015 Solvency II and S&P Capital Model Q2/2015 If P&C Insurance EURm Solvency II S&P 4,500 A BBB 4,000 3,500 3,000 2,500 2,000 3,965 3,866 3,866 1,500 3,063 2,342 1,000 1,779 500 0 Solvency II SCR Total Target Total Target capital available capital avalable capital capital capital 8
Slide 57: Group capital and solvency June 2015
03/09/2015 Group capital and solvency 30 June 2015 Solvency ratio 148% EURm 11,000 10,373 *) 313 10,000 **) 273 9,000 8,000 7,027 7,000 72 6,000 5,000 3,826 9,788 4,000 3,000 1,350 2,000 1,000 1,779 0 If P&C Mandatum Life Sampo plc's Other Total capital Adjusted (PIM****) (SCR***) share of requireme
Slide 58: Sampo Group capital and solvency sensitivities under Solvency II
03/09/2015 Sampo Group capital and solvency Sensitivities under Solvency II, 30 June 2015 Interest Rates Interest Rates Equity Spread EURm -25bp +25bp -10% +50bp Group 12,000 148% 146% 149% 147% 146% Solvency Ratio 10,000 8,000 6,000 10,373 10,202 10,530 10,034 10,241 4,000 7,027 7,003 7,053 6,809 7
Slide 59: 3. Solvency II and Basel III
03/09/2015 3. Solvency II and Basel III 11
Slide 60: Solvency II and Basel III Group Solvency, Q2/2015
03/09/2015 Solvency II and Basel III Group Solvency, Q2/2015 Basel IV? EURm EURbn ASC / SCR & B III floor 148% 12,000 REA 150 ASC / SCR & B III EU/Finnish 158% Basel I floor 75 ASC / SCR & Basel III 132% 10,373 225 10,000 * 273 ** 313 Min. 8% 18 21.25% 3,826 7,940 8,000 7,024 68 68 6,540 Sampo plc 6
Slide 61: Framework for solvency in Sampo Group
Framework for solvency in Sampo Group Capital Markets Day, September 11th 2015 CFO Peter Johansson