This chapter presents the capitalization of Sampo Group in 2011 and the changes that took place during the year. Risks and the respective capital requirements in Sampo Group are assessed internally, as well as according to the methods defined by the regulators and rating agencies. The amount of adjusted solvency capital is compared to economic capital and regulatory solvency capital is compared to the regulatory capital requirement. Furthermore, rating agency capital targets for different ratings are compared to the respective rating agency measures of available capital.
The adjusted solvency capital of Sampo Group’s insurance subsidiaries decreased during the year due to lower interest rates and respective changes in liability side adjustment and in addition paid dividends and a decrease in fair value reserves. The changes in Economic Capital were modest. The development of capitalization in Sampo Group within the internal and regulatory perspectives during the year 2011 is shown in the figures 'Development of capitalization, If P&C, Mandatum Life and Sampo Group, 31 December 2010 – 31 December 2011'.
Updates and refinements are frequently done to the models and assumptions used for calculating the economic capital. Thus, the economic capital figures may not be fully comparable between years.
In early 2011, If P&C entered into a so-called pre-application process with the aim of having a partial internal model approved for calculating the capital requirements under the new Solvency II regulation. As a result of the continuous work with risk management issues If P&C was graded 'strong' in ERM (Enterprise Risk Management) rating by Standard & Poor’s in February 2011.