Sampo Oyj · OMXHEX:SAMPO
Sampo Oyj — Investor Day (June 2006)
68 slides from Sampo Oyj's investor day presentation, Jun 5, 2006
Slide 1: Capital Markets Day 2006
Capital Markets Day 2006 Group CFO Peter Johansson London 5th June 2006
Slide 2: Group profit before taxes
Group profit before taxes EUR m 339 350 Q1/2005 300 Q1/2006 250 230 200 150 128 133 117 91 100 62 62 50 0 -12 -50 -19 Banking and Life P&C Sampo investment Other Insurance Insurance Group services 5 June, 2006 2
Slide 3: Group profit before taxes
Group profit before taxes EUR m 400 Change in FVR before taxes 1Q2005 59 Change in FVR before taxes 1Q2006 300 Operating profit before taxes 1Q2005 Operating profit before taxes 1Q2006 51 200 339 61 230 100 57 128 117 133 91 62 62 0 -12 -19 Banking& Life P&C Other Group Investment Insurance Insuranc
Slide 4: Sensitivity of group solvency capital to market risks
Sensitivity of group solvency capital to market risks Mar 31, 2006 Equities Equities Rates Rates EUR EUR EUR m -10% +10% -100bp +100bp +5% -5% Life insurance -186 186 132 -116 -14 14 P&C insurance -101 101 282 -266 -5 5 Banking and investment services 0 0 -6 -3 -1 1 Sampo plc -4 4 3 -3 -152 152 Grou
Slide 5: Banking & Investment Services
Banking& Investment Services Operating profit by quarters 2Q2004-1Q2006 EUR m 100 75 50 25 0 -25 -50 2004 -75 2005 -100 2006 -125 Net Interest Fees and Other income Operating Profit before Income commissions costs taxes 5 June, 2006 5
Slide 6: P&C Insurance
P&C Insurance Operating profit by quarters 2Q2004-1Q2006 EURm 1000 2004 750 2005 2006 500 250 0 -250 -500 Premiums Claims Operating UW result Investment Operating -750 earned incurred costs result profit 5 June, 2006 6
Slide 7: Life Insurance
Life Insurance Operating profit by quarters 2Q2004-1Q2006 EURm 300 2004 200 2005 2006 100 0 -100 -200 -300 Premiums Investment Claims incurred Operating Profit before earned result and change in costs taxes ins. liabilities 5 June, 2006 7
Slide 8: Return on Equity in Sampo Group (CV)
Return on Equity in Sampo Group (CV) 1Q2005- 1Q2006 and targets % 60 2005 2006 50 40 30 20 10 0 Banking& Life P&C Sampo Investment Insurance Insurance Group -10 Services 5 June, 2006 8
Slide 9: Economic Capital by risk type 31.3.2006
Economic Capital by risk type 31.3.2006 10 % Sampo Group 8% 37 % Market risk Credit risk 20 % Insurance risk Operational risk Business risk 25 % Life Insurance If Banking& Inv. Services 5 June, 2006 9
Slide 10: Banking and Investment Services
Banking and Investment Services Capital 2004-1Q2006, EURm 1800 31.3.2006 31.12.2005 486 488 1600 1387 31.12.2004 Tier 2 1400 475 1321 1200 1268 1255 1083 1065 1209 1108 1000 1061 1019 1012 1000 800 600 Tier 1 400 200 0 Solvency Regulatory Economic NAV Capital minimum capital 5 June, 2006 10
Slide 11: Life Insurance
Life Insurance Capital 2004-1Q2006, EURm 1500 31.12.2004 31.12.2005 1232 31.3.2006 1250 1106 1000 1077 964 788 842 750 781 723 681 500 246 250 247 224 0 Solvency capital Regulatory Economic NAV minimum capital 5 June, 2006 11
Slide 12: Life Insurance Solvency Capital and Buffers
Life Insurance Solvency Capital and Buffers 31.3.2006, EURm 2000 1687 VIF 1573 114 • 50% of regulatory Sampo Life minimum (S.Life) 1500 Group Solvency Capital*) 1232 (Sampo Life 1240) (Subsidiaries 11) 1000 788 463 Target area minim. (S.Life) 500 Regulatory 231 Minimum level (S.Life) minimum**) 235
Slide 13: NAV Buffers 31.3.2006
NAV Buffers 31.3.2006 EUR m 400 351 231 200 120 689 14 106 0 -200 -400 -338 149 -487 -600 Bonus reserves Reversible bonus Discounting GW Other Intangibles reserves Life Sampo 5 June, 2006 13
Slide 14: P&C Insurance
P&C Insurance Capital 2004-1Q2006, EURm 3500 31.12.2004 31.12.2005 2912 3000 31.3.2006 2685 2500 2766 2595 2562 2000 2040 1517 1500 1551 1502 1000 640 706 500 642 0 Solvency capital Regulatory Economic capital NAV minimum 5 June, 2006 14
Slide 15: If: Risk Adjusted Capital 2003 – 1Q2006
If: Risk Adjusted Capital 2003 – 1Q2006 EUR m % 200 4500 185 167 160 160 3500 136 290 332 325 411 411 120 384 262 2500 140 263 80 2714 1500 2523 2480 2455 2193 2188 2065 1375 1359 1872 1338 1312 40 500 -427 -330 -297 -360 -500 0 -412 -520 -637 -728 2003 2004 2005 1Q2006 -1500 -40 Equity+DTL Capital
Slide 16: Group Capital 2004-1Q2006, EURm
Group Capital 2004-1Q2006, EURm 6000 31.12.2004 31.12.2005 31.3.2006 5000 4634 4614 4333 4333 4000 3948 3252 3364 3000 3211 3148 2273 2000 2209 2130 1000 0 Adjusted solvency Regulatory Economic capital NAV capital minimum 5 June, 2006 16
Slide 17: Capital Quality by Business Area 31.3.2006
Capital Quality by Business Area 31.3.2006 as % of Economic Capital Tier 1 loans Core own funds net of intangibles % Intangibles 200 Tier 2 loans 191 Other Items 176 24 165 172 163 157 9 27 167 150 23 26 33 30 45 133 25 124 139 142 13 6 132 32 118 100 149 142 120 50 92 0 Banking & Inv. Life P&C Grou
Slide 18: Outlook in Sampo Bank
Outlook in Sampo Bank Mika Ihamuotila President London 5th June 2006
Slide 19: Sampo Banking and Investment services
Sampo Banking and Investment services Retail and private bank Corporate and SME Investment services Market position #3 Market position # 2 Asset Management # 1 Customers > 1 million Customers ca 100.000 Mutual Funds # 3 Market share ca 15 % Market share ca 20 % Investment Banking # 1 Acquisition of
Slide 20: Sampo Bank focus of development
Sampo Bank focus of development Growth Efficiency Expertise in savings and investments 2001 2004 2006 3 6/2/2006
Slide 21: Overview of 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 22: Why did we decide to seek aggressive growth?
Why did we decide to seek aggressive growth? This is what we said in 2004 Revenue growth from Less capital 1 savings products due to Basel II 2 ”emerging” banking products Very high 3 Baltics and other credit quality new markets Stable traditional banking revenues in Finland Stable costs in Finland
Slide 23: Since 2004 focus from efficiency to growth, even in lending
Since 2004 focus from efficiency to growth, even in lending 10000 + 43% + 15% 8000 2003 2005 6000 4000 + 189% 2000 milj. eur 0 Retail clients Corporate clients Baltic Banks 6 6/2/2006
Slide 24: We may have sacrificed short-term returns due to aggressive lending growth but…
We may have sacrificed short-term returns due to aggressive lending growth but… Private clients in Sampo Bank RORAC 2003 – 1Q2006 40 % 35 % 30 % 28 % 25 % 22,3 % 21 % 21 % 20 % 19 % 18 % 18,5 % 20 % 15 % 16 % 15 % 10 % 10 % 10 % 5% 0% 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06
Slide 25: …we are satisfied with the quality of new clients gained through new mortgage sales
…we are satisfied with the quality of new clients gained through new mortgage sales 50 % 43 % 40 % 34 % 32 % 30 % 24 % 20 % 17 %18 % 12 % 12 % 13 % 9% 10 % 8% 5% 0% Loan Mastercard Pension Consumer Visa Mutual Fund Insurance Insurance Credit new mortgage clients old clients 8 6/2/2006
Slide 26: Long term savings
Long term savings – fees and commissions 2002-2005 EUR m Mutual funds and asset management Unit-linked fees 50 45 40 35 30 25 20 15 10 5 0 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2002 2003 2004 2005 2006 9 6/2/2006
Slide 27: ”Emerging” Banking Products
”Emerging” Banking Products Revenues in Sampo 2001-2006 16,0 14,0 1,5 0,8 1,3 12,0 1,1 0,6 1,2 0,5 0,4 0,5 0,4 0,9 1,1 0,4 0,9 0,9 1,0 1,1 10,0 0,4 0,9 0,3 0,7 5,8 0,3 0,7 EurM 0,2 0,2 0,7 6,6 8,0 0,7 0,7 0,3 0,7 6,0 0,2 6,6 6,1 6,2 6,0 0,7 6,4 6,3 6,0 0,1 0,1 6,0 0,1 0,7 0,7 0,1 0,7 6,0 0,7 5,7 6,1
Slide 28: Stable development in corporate and SME banking
Stable development in corporate and SME banking EURm 10 000 2,5% 8 000 2,0% 6 000 1,5% 4 000 1,0% 2 000 0,5% 0 0,0% 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2002 2003 2004 2005 2006 Lending, EURm Deposits, EURm Lending margin, % Deposit margin, % 11 6/2/2006
Slide 29: Baltic banks in different stages: Scale explains ROE
Baltic banks in different stages: Scale explains ROE mEUR Loans and deposits ROE 800 23,2% 700 Estonia 18,0% 18,6% 600 13,2% 12,7% 500 400 300 200 100 0 2001 2002 2003 2004 2005 2002 2003 2004 2005 mEUR Loans and deposits 800 700 Lithuania ROE 600 500 6,1% 400 1,4% 1,2% 300 200 100 -13,3% 0 2002 200
Slide 30: Sampo Bank Outlook 2006-07
Sampo Bank Outlook 2006-07 Positive Continuing strong housing loan demand Higher short-term rates Significant potential in the Finnish savings market Cross-selling potential in consumer credit, cards, insurance etc Growth in the Baltics and an open window in Russia Credit quality Basel II Challenges
Slide 31: Sampo Bank Net interest income and other income
Sampo Bank Net interest income and other income Other income (net) Net interest income (excl. major one-offs) 100 100 90 90 80 90 80 90 86 86 86 70 83 70 86 83 82 80 76 77 78 60 77 76 60 72 77 74 50 50 40 40 30 30 20 20 10 10 0 0 2Q 4 3Q 4 4Q 4 1Q 4 2Q 5 3Q 5 4Q 5 1Q 5 6 2Q 4 3Q 4 4Q 4 1Q 4 2Q 5 3Q
Slide 32: Mutual fund fees have become a significant source of fee income
Mutual fund fees have become a significant source of fee income Sampo Bank Asset Management and mutual fund fees 400 of total fees 350 300 EURm 250 200 150 136 100 101 50 80 48 60 60 34 0 2001 2002 2003 2004 2005 Annualised 1Q06 15 6/2/2006
Slide 33: Sampo has still large potential in unexploited client relationships (Finland)
Sampo has still large potential in unexploited client relationsships (Finland) Product penetration, thousand customers, Q1/2006 1,090 578 2006 2001 178 196 183 102 77 55 135* 65* 24* 36* Retail Regular Housing Life Mutual Credit Loan Consumer Bank salary/ loans savings funds cards insurance credit c
Slide 34: Finland has still significant potential in household mutual funds
Despite rapid growth, Finland has still significant potential in household mutual funds 45 40 38,4 35 30 mrd eur 25 20 14,6 15 10,6 10 8,5 5,5 5,9 5 0 03/2002 03/2003 03/2004 03/2005 03/2006 If Finns invested in mutual funds Eur per capita in Finland and Sweden like Swedes 17 6/2/2006
Slide 35: Housing loans growth in Finland
Housing loans growth in Finland % - change in 12 months OTHER BANKS (excl. Sampo) SAMPO 30 % 30 % 28 % 28 % 26 % 26 % 24 % 24 % 22 % 22 % 20 % 20 % 18 % 18 % 16 % 16 % 14 % 14 % 12 % 12 % 10 % 10 % 2004 2005 2006 18 6/2/2006
Slide 36: Total costs in Sampo Bank 2004-2006
Total costs in Sampo Bank 2004-2006 (moving sum of four quarters)*) 500 416 420 429 450 407 408 410 12 15 400 8 11 14 4 30 31 34 37 39 42 350 300 EURm 250 200 369 366 368 368 369 372 150 100 50 0 1Q04-4Q04 2Q04-1Q05 3Q04-2Q05 4Q04-3Q05 1Q05-4Q05 2Q05-1Q06 Finland Baltics Extraordinaries Total costs
Slide 37: Sampo Bank focus of development
Sampo Bank focus of development Service and corporate culture Growth Efficiency Expertise in investing and saving 2001 2004 2006 20 6/2/2006
Slide 38: Sources of earnings growth in Sampo Banking
Sources of earnings growth in Sampo Banking Sources of growth • Baltic banking • Long-term savings Growing emerging • ”Emerging” banking products earnings • Systematic exploitation of cross selling opportunities Sources of stability • Relatively good volume growth in traditional products compensatin
Slide 39: Banking and Investment Services Consolidated Income Statement
Banking and Investment Services Consolidated Income Statement EUR m Q1/2006 Q1/2005 Change Net interest income 86 82 4 Net income from financial transactions 17 17 0 Net fee and commission income 65 51 14 Impairment losses on loans and receivables 0 4 -4 Net income from investments 28 5 23 Other ope
Slide 40: Fee income
Fee income Banking and investment services EUR m Q1/2006 Q1/2005 2005 Lending 10 9 39 Borrowing 5 5 20 Payment services 14 13 56 Asset management 34 23 101 Guarantees 4 3 13 Investment banking 8 5 25 Other 10 7 30 Fees and commissions receivable 84 64 283 Fees and commissions payable -20 -14 -63 Fee
Slide 41: Sampo Life
Sampo Capital Market Day, June 5, 2006 Sampo Life Petri Niemisvirta, President, Head of Life Insurance
Slide 42: Finland – Premiums written
Finland – Premiums written Growth 60 % 117 EUR million 73 EUR million Q1/2005 Q1/2006
Slide 43: The Baltic States – Premiums written
The Baltic States – Premiums written Growth 200 % 12 EUR million 4 EUR million Q1/2005 Q1/2006
Slide 44: Profit excluding investment result
Profit excluding investment result Risk life & others Expense result Growth 28 % Growth 115 % 11,2 10,6 EUR EUR million million 8,3 EUR million 5,2 EUR million 2004 2005 2004 2005
Slide 45: Value of new business
Value of new business Growth 80 % 18 EUR million 10 EUR million 2004 2005
Slide 46: Summary Growth 2
Summary Growth2 = SAMPO
Slide 47: Torbjörn Magnusson, CEO of If P&C
Torbjörn Magnusson, CEO of If P&C
Slide 48: Combined Ratio, Premium Development, Solvency Ratio and RoE
Combined Ratio Premium Development 106,1% 100,9% 38904 38136 37446 36768 35958 92,6% 90,5% 90,4% 2002 2003 2004 2005 Q1-06 2002 2003 2004 2005 Q1-06 (R12) (R12) Solvency Ratio Return on Equity (RoE) after full tax (Sampo definition) 87,5% 24,1% 21,2% 78,1% 69,8% 17.5% 14,8% 11,3% 51,6% 53,8% -10,8%
Slide 49: Strong development of Combined Ratio
Strong development of Combined Ratio BA Private BA Industrial 109,7% 105,5% 102,7% 98,7% 94,5% 94,5% 91,0% 89,4% 89,1% 88,6% 2002 2003 2004 2005 Q1-06 2002 2003 2004 2005 Q1-06 (R12) (R12) BA Commercial BA Baltics 104,6% 101,9% 97,7% 95,0% 96,3% 95,8% 90,6% 90,7% 92,0% 87,9% 2002 2003 2004 2005 Q1-0
Slide 50: Premium growth continues
Premium growth continues (Q1 2006 vs. Q1 2005) If Group 2,0% Sweden 3,2% Private 0,6% Norway 3,0% Commercial 3,4% Finland 1,2% Industrial 1,0% Denmark -3,9% Baltics 11,5% Growth in local currency Growth excl. currency effect 4
Slide 51: Cost Ratio continues to decrease
Cost Ratio continues to decrease Cost Ratio and nominal costs (MSEK) 28,4% 26,6% 25,6% 24,3% 24,0% 9 302 9 133 8 383 8 363 8 366 2002 2003 2004 2005 Q1-06 (R12) 5
Slide 52: Benefits of scale 2005 - 2007
Benefits of scale 2005 - 2007 Key sourcing agreements z New IT provider: Tieto Enator z Savings in excess of 10 MEUR z Simple provider structure z Operational benefits through common Nordic structure z Sourcing opportunities through provider z Consolidation of hardware z Drives long-term Nordic IT s
Slide 53: Customer Loyalty
Customer Loyalty Private Customers Commercial Customers If Login Industrial Customers Tailor made loss prevention 7
Slide 54: Successful launch of new products 2005
Successful launch of new products 2005 New products launched in 2005 • Health insurance - Commercial and Industrial customers • Personal insurance - Private customers − Accident insurance Personal lines, BA Private − Child insurance (sickness & accident) 100 000 New product sales − Disability (light
Slide 55: Nordic and Baltic market shares
Norway Finland Gjensidige 33% If 29% If 31% Pohjola 26% Vesta 18% Tapiola 18% Sparebank 1 10% Fennia 10% GWP 2005, SEK bn If 36,8 Tryg 19,2 Vesta Denmark Codan 18,7 Tryg 21% Topdanmark 19% Baltics Codan 13% Codan 21% Alm. Brand 10% If 18% If 6% Sweden Ergo 16% Länsförsäkringar 31% BTA 9% If 20% Tryg
Slide 56: Capital Market Day
Capital Market Day 5th June, 2006 Group CEO and President Björn Wahlroos
Slide 57: A good start for 2006
A good start for 2006 Good profitability…. Profit before taxes: breakdown… 400 400 128 -19 350 339 350 339 300 300 250 230 250 133 258 200 200 150 172 150 91 100 100 50 50 0 0 Q1/2005 Q1/2006 Banking P&C Banking Life Other Group andand Insurance Insurance Pre-tax profit Net profit Investment investm
Slide 58: In Banking and investment services … operating profitability will improve further
In Banking and investment services … operating profitability will improve further. 3 5th June, 2006
Slide 59: Sampo Bank Group no longer aims to significantly outpace housing loan market growth
Sampo Bank Group no longer aims to significantly outpace housing loan market growth Housing loan growth in Finland %-change in 12 months 28% 26% 24% Sampo 22% 20% 18% 16% 14% Other banks 12% 10% 2004 2005 2006 Instead the bank focuses on servicing its existing client base in their various financial
Slide 60: Banking has many growth businesses
Banking has many growth businesses Assets under Management 2001- Mutual Fund Assets 2001 – 2005 2005 30 10,000 EUR m EUR bn 25 8,000 20 6,000 15 4,000 10 2,000 5 0 0 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 Consumer credit stock 2003-2005 Sampo Life unit linked savings 2001- 2005 300 1,250
Slide 61: P&C Insurance … on track to achieve its combined ratio target
P&C Insurance … is once again well on track to achieve its combined ratio target of better than 95 per cent, despite a long winter and marginal increase in price competition. 6 5th June, 2006
Slide 62: If continues to focus on realising gains from its pan-Nordic structure
If continues to focus on realising gains from its pan-Nordic structure MSEK 7,000 23% 22% 6,800 21% 6,600 20% 6,400 19% 6,200 18% 6,000 17% 5,800 16% 2001 2002 2003 2004 2005 Operating expenses Expense ratio 7 5th June, 2006
Slide 63: Nordic P&C insurance market has changed for good
Nordic P&C insurance market has changed for good: profitability prioritized over growth % 110 Nordic insurance companies Combined ratio % in Q1/2006 105 103.2 100 98.2 98.3 96.1 94.3 94.3 95 93.6 90 88.8 85 80 If la k ta nd 1 e n ar nk ig a o s ra od hj id Ve m a B Po ns eb C an yg lm je r pd Tr pa
Slide 64: In Life Insurance … profitability is expected to remain good
In Life Insurance … profitability is expected to remain good in the coming quarters. Marked-to-market results are highly dependent on capital market development. 9 5th June, 2006
Slide 65: Sampo Life can withstand adverse development of capital markets
Sampo Life can withstand adverse development of capital markets EURm Fair Value Reserve before taxes 600 500 400 300 200 100 0 31 Dec 04 31 Dec 05 31 Mar 06 10 5th June, 2006
Slide 66: Room for further consolidation in the Nordic financials market
Room for further consolidation in the Nordic financials market Market capitalization of Nordic financial groups Nordea Danske SHB DnBNOR SEB FSB Sampo Kaupthing TrygVesta Jyske Bank Glitnir Banki Landsbanki C odan Topdanmark Storebrand OKO C arnegie EURm 0 2,500 5,000 7,500 10,000 12,500 15,000 17,5
Slide 67: Sampo Group’s result for 2006 is expected to remain good
Sampo Group’s result for 2006 is expected to remain good Development of 2006 EPS consensus estimates 1.6 € 1.46 1.4 1.36 1.38 1.2 1.15 1.01 1 0.8 1.5y ago 1y ago 6mo ago 3mo ago current Data: Reuters 12 5th June, 2006
Slide 68: Capital Market Day
Capital Market Day 5th June, 2006 Group CEO and President Björn Wahlroos