Sampo Group

Annual Report 2011
Business Areas in 2011
Associated Company Nordea Bank Ab

P&C Insurance in 2011

If P&C is the leading property and casualty insurance company in the Nordic region, with insurance operations that also encompass the Baltic countries and Russia. The P&C insurance group’s parent company, If P&C Insurance Holding Ltd, is located in Sweden, and the If subsidiaries provide insurance solutions and services in Finland, Sweden, Norway, Denmark, the Baltic countries and Russia. If’s operations are divided into four business areas: Private, Commercial, Industrial and Baltic & Russia.

Results, P&C Insurance, 2011
EURm 2011 2010 Change, %
Premiums, net

4,201

3,985

5
Net income from investments

298

487

-39

Other operating income 31 25 25
Claims incurred

-2,801

-2,689

4
Change in insurance liabilities

-107

-91

17
Staff costs

-494

-479

3
Other expenses expenses

-497

-501

-1
Finance costs -2

-29

-95
Share of associates' profit/loss

7

0

-
Profit before taxes

636

707

-10
  2011 2010 Change

Combined ratio, %

92.0

92.8

-0.8

Risk ratio, %

68.4

69.1

-0.7

Cost ratio, %

23.5

23.7

-0.2

Expense ratio, %

17.3

17.2

0.1

Return on equity, %

12.4

39.8

-27.4

Average number of staff (FTE)

6,299

6,392

-93

Profit before taxes for P&C insurance decreased to EUR 636 million (707) in 2011. The decrease was mainly explained by financial markets’ uncertainty during the year, which led to lower investment returns. Year 2011 was also characterized by demanding weather conditions throughout the year. However, despite the higher than normalized weather-related claims, both risk ratio and combined ratio improved to 68.4 per cent (69.1) and 92.0 per cent (92.8), respectively. EUR 135 million (113) was released from technical reserves relating to prior year gains, out of which EUR 85 in business area Industrial.

If P&C’s holding in the Danish insurance company Topdanmark exceeded 20 per cent on 16 May 2011. With the holding exceeding 20 per cent Topdanmark became an associated company to If. Topdanmark’s profit contribution for 2011 was EUR 7 million. The book value for Topdanmark in the Group balance sheet was EUR 329 million on 31 December 2011. At the end of 2011 If held altogether 3,147,692 Topdanmark shares, corresponding to 23.6 per cent of the votes.

Technical result increased to EUR 457 million (449). Technical result for Private business area increased to EUR 256 million (236). For business area Commercial technical result amounted to EUR 124 million (127), Industrial EUR 53 million (65) and Baltic & Russia EUR 22 million (15).

Return on equity (RoE) decreased to 12.4 per cent (39.8) mainly due to lower investment result mark-to-market and the change in the accounting treatment of Topdanmark holding in the second quarter of 2011. Insurance margin (technical result in relation to net premiums earned) was 11.1 per cent (11.5). Fair value reserve decreased during the year to EUR 139 million (315) at the end of December 2011.

  Combined ratio,%     Risk ratio,%    
  2011 2010 Change 2011 2010 Change
Private 91.9 93.0 -1.1 68.5 68.9 -0.4
Commercial 92.8 93.5 -0.7 69.1 69.8 -0.7
Industrial 91.8 90.6 1.2 71.5 71.9 -0.4
Baltic & Russia 84.5 93.4 -8.9 48.0 56.4 -8.4
             
Sweden 95.6 93.3 2.3 73.1 70.2 2.9
Norway 88.0 92.1 -4.1 65.9 69.6 -3.7
Finland 94.0 90.4 3.6 70.7 67.0 3.7
Denmark 93.4 101.4 -8.0 63.9 72.8  -8.9

In business area Industrial large claims were EUR 53 million above normalized level as especially Norway and Sweden were affected by several major property claims. Despite this, risk ratio improved in Industrial mainly supported by higher prior year gains. In Finland risk ratio deteriorated compared to previous year mainly due to changed mortality model affecting the results negatively by EUR 53 million in the last quarter of the year. In Baltic & Russia risk ratio improved significantly in 2011 due to lower claims frequency and improved claims outcome.

Gross written premiums increased 5 per cent to EUR 4,414 million (4,189). Adjusted for currency, premiums increased a record 4.0 per cent. All business areas and countries had positive growth. In Private gross written premiums adjusted for currency increased by 4.5 per cent. In Commercial the growth was 3.4 per cent, in Industrial 2.6 per cent and in Baltic & Russia 1.5 per cent.

Cost ratio improved to 23.5 per cent (23.7). Adjusted for currency the nominal costs increased 2.1 per cent.

At the end of December 2011 the total investment assets of If P&C amounted to EUR 11.2 billion (11.7).

Net income from investments decreased to EUR 298 million (487).

Investment return mark-to-market for the year 2011 was 1.8 per cent (7.4).

Duration for interest bearing assets was 1.2 years (1.7) and average maturity 2.5 years. Fixed income running yield was 4.1 per cent (3.9).

If P&C’s solvency ratio as at 31 December 2011 (solvency capital in relation to net written premiums) was 72 per cent (79). Solvency capital amounted to EUR 3,080 million (3,373). Reserve ratios were stable at 167 per cent (173) of net written premiums and 229 per cent (237) of claims paid.

Business Areas in 2011
Associated Company Nordea Bank Ab