Sampo Group

26 Cash and cash equivalents
28 Liabilities from unit-linked insurance and investment contracts

Notes to the Group's Financial Statements

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27 LIABILITIES FROM INSURANCE AND INVESTMENT CONTRACTS
                           
P&C insurance
                           
Change in insurance liabilities
                           
                  2011     2010  
EURm   Gross Ceded Net Gross Ceded Net
Provision for unearned premiums                      
  At 1 Jan           1,845 53 1,792 1,668 49 1,619
  Exchange differences           20 1 21 83 2 81
  Change in provision           106 -1 105 94 2 91
  At 31 Dec           1,972 53 1,919 1,845 53 1,792
                           
                  2011     2010  
EURm Gross Ceded Net Gross Ceded Net
Provision for claims outstanding                      
  At 1 Jan           7,494 457 7,037 6,915 428 6,486
  Unwinding of discount           - - - 61 - 61
  Exchange differences           34 5 29 457 38 418
  Change in provision           48 14 34 62 -9 71
  At 31 Dec           7,576 476 7,100 7,494 457 7,037
                           
                           
Liabilities from insurance contracts
                           
EURm               2011 2010
  Provision for unearned premiums       1,972 1,845
  Provision for claims outstanding       7,576 7,494
    Incurred and reported losses     2,037 2,026
    Incurred but not reported losses (IBNR)       3,485 3,555
    Provisions for claims-adjustment costs       269 271
    Provisions for annuities and sickness benefits     1,785 1,535
P&C insurance total   9,547 9,340
                           
Reinsurers' share                      
  Provision for unearned premiums     53 53
  Provision for claims outstanding   476 457
    Incurred and reported losses       328 303
    Incurred but not reported losses (IBNR)       148 154
Total reinsurers' share                   528 510
                           
As the P&C insurance is exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading. During the financial year, however, the exchange rate effects were minor on the insurance liabilities.
                           
Claims cost trend of P&C insurance
                           
The tables below show the cost trend for the claims for different years. The upper part of the tables shows how an estimate of the total claims costs per claims year evolves annually. The lower section shows how large a share of this is presented in the balance sheet.
                           
More information on P&C insurance's insurance liabilities in the Risk Management section of the Annual accounts.
                           
Claims costs before reinsurance
                           
Estimated claims cost                    
EURm < 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total
  At the close of the claims year 5,046 2,583 2,526 2,689 2,703 2,768 2,920 2,929 3,049 3,131  
  One year later 5,273 2,542 2,490 2,632 2,687 2,765 2,873 2,877 3,090    
  Two years later 5,369 2,461 2,425 2,578 2,658 2,729 2,812 2,847      
  Three years later 5,450 2,452 2,420 2,549 2,654 2,695 2,784        
  Four years later 5,545 2,432 2,403 2,515 2,612 2,648          
  Five years later 5,584 2,414 2,375 2,479 2,562            
  Six years later 5,585 2,400 2,334 2,424              
  Seven years later 5,672 2,413 2,299                
  Eight years later 5,746 2,389                  
  Nine years later 5,798                    
                           
Current estimate of total claims costs 5,798 2,389 2,299 2,424 2,562 2,648 2,784 2,847 3,090 3,131 29,970
Total disbursed 3,377 2,123 1,997 2,113 2,210 2,243 2,292 2,267 2,361 1,684 22,668
                           
Provision reported in the balance sheet 2,421 266 302 311 351 405 491 580 729 1,446 7,302
                           
of which established vested annuities 1,313 64 51 66 69 67 64 50 33 7 1,785
                           
Other provision                 5
                           
Provision for claims-adjustment costs 269
                           
Total provision reported in the BS             7,576
                           
                           
Claims costs after reinsurance
                           
Estimated claims cost                    
EURm < 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total
  At the close of the claims year 4,435 2,462 2,453 2,542 2,592 2,667 2,796 2,808 2,897 2,958  
  One year later 4,650 2,412 2,416 2,478 2,566 2,658 2,763 2,774 2,945    
  Two years later 4,753 2,336 2,354 2,423 2,536 2,631 2,705 2,741      
  Three years later 4,813 2,326 2,347 2,402 2,539 2,597 2,678        
  Four years later 4,892 2,305 2,333 2,370 2,500 2,552          
  Five years later 4,923 2,288 2,306 2,334 2,459            
  Six years later 4,922 2,276 2,264 2,300              
  Seven years later 4,958 2,289 2,230                
  Eight years later 5,050 2,269                  
  Nine years later 5,110                    
                           
Current estimate of total claims costs 5,050 2,289 2,264 2,334 2,500 2,597 2,705 2,774 2,897 2,958 28,368
Total disbursed 2,721 2,042 1,978 2,037 2,163 2,211 2,228 2,244 2,260 1,658 21,542
                           
Provision reported in the balance sheet 2,329 246 286 298 337 386 477 530 636 5,526 6,826
                           
of which established vested annuities 1,313 64 51 66 69 67 64 50 33 7 1,785
                           
Other provision                     5
                           
Provision for claims-adjustment costs           269
                           
Total provision reported in the BS             7,100
                           
                           
Life insurance
                           
Change in liabilities arising from other than unit-linked insurance and investment contracts
                           
EURm           Insurance
contracts
Investment
contracts
Total
At 1 Jan 2011             4,388 22 4,410
Premiums               204 1 206
Claims paid               -438 -17 -455
Expense charge               -37 0 -37
Guaranteed interest               153 0 153
Bonuses               6 0 6
Other               -34 0 -34
At 31 Dec 2011                 4,242 7 4,249
Reinsurers' share               -3 0 -3
Net liability at 31 Dec 2010   4,239 7 4,245
                           
EURm           Insurance
contracts
Investment
contracts
Total
At 1 Jan 2010             4,374 57 4,431
Premiums               273 1 274
Claims paid               -401 -37 -438
Expense charge               -37 0 -37
Guaranteed interest               158 1 159
Bonuses               1 0 1
Other               20 0 20
At 31 Dec 2010                 4,388 22 4,410
Reinsurers' share               -4 0 -4
Net liability at 31 Dec 2010   4,385 22 4,406
                           
                           
Change in liabilities arising from unit-linked insurance and investment contracts
                           
EURm           Insurance
contracts
Investment
contracts
Total
At 1 Jan 2011             2,381 743 3,124
Premiums               339 310 649
Claims paid               -196 -157 -354
Expense charge               -31 -12 -43
Other               -277 -44 -321
At 31 Dec 2011 2,216 838 3,054
                           
At 1 Jan 2010             1,961 398 2,359
Premiums               376 467 843
Claims paid               -163 -181 -344
Expense charge               -30 -9 -38
Other               236 68 304
At 31 Dec 2010 2,381 743 3,124
                           
The liabilities at 1 Jan and at 31 Dec include the future bonus reserves and the effect of the reserve for the decreased discount rate. The calculation is based on items before reinsurers' share. A more detailed specification of changes in insurance liabilities is presented in Group's Risk Management.
                           
EURm             2011 2010
Insurance contracts          
Liabilities for contracts with discretionary participation feature (DPF)    
  Provision for unearned premiums       2,219 2,465
  Provision for claims outstanding       2,020 1,907
Liabilities for contracts without discretionary participation feature (DPF)    
  Provision for unearned premiums       0 14
  Provision for claims outstanding     0 0
  Total                 4,240 4,386
                           
Assumed reinsurance        
  Provision for unearned premiums     1 1
  Provision for claims outstanding     1 2
  Total                 2 3
                           
Insurance contracts total        
  Provision for unearned premiums       2,220 2,479
  Provision for claims outstanding     2,022 1,909
  Total                 4,242 4,388
                           
Investment contracts                    
Liabilities for contracts with discretionary participation feature (DPF)    
  Provision for unearned premiums     7 22
                           
Liabilities for insurance and investment contracts total    
  Provision for unearned premiums     2,227 2,501
  Provision for claims outstanding       2,022 1,909
Life insurance total 4,249 4,410
                           
Reinsurers' share                    
  Provision for unearned premiums     0 0
  Provision for claims outstanding       -3 -4
  Total                 -3 -4
                           
Investment contracts do not include a provision for claims outstanding.
                           
Liability adequacy test does not give rise to supplementary claims.
                           
Exemption allowed in IFRS 4 Insurance contracts has been applied to investment contracts with DPF or contracts with a right to trade-off for an investment contract with DPF. These investment contracts have been valued like insurance contracts.
                           
EURm       2011 2010
Group, total                 4,558 5,058
26 Cash and cash equivalents
28 Liabilities from unit-linked insurance and investment contracts