Sampo Group


This glossary includes the most essential property and casualty insurance and life insurance terminology as well as financial statements terms used in Sampo Group. Because of different meanings in some cases in property and casualty insurance vs. life insurance, there are two different explations for some of the insurance terms.


Acquisition costs

In operating expenses the acquisition costs for insurance and investment contracts (direct insurance commmissions, commissions on insurance assumed and other acquisions costs). Life insurance terminology.

Allocated investment return transferred to the technical account

Return on average technical provisions, after deducting the capital employed in insurance operations in the form of, for example, premium receivables, less reinsurance deposits and other assets plus half of the technical result before allocated interest for the year. The allocated investment return is based on risk-free interest.

Asset management under an insurance wrapper

Asset management inside insurance contract.

Assumed reinsurance

Reinsurance business received by company itself from another insurance company.

Available-for-sale financial assets (AFS)

Financial assets that are designated as available for sale or are not classified as loans and receivables, held-to-maturity investments or financial assets at fair value through profit or loss (definition of life insurance business).



Beneficiary is named by policyholder, and beneficiary is entitled to a benefit from insurance contract.


Bonuses are possibly granted to with profit-policies (life insurance policies) according to the principle of fairness. See also principle of fairness.


Capital base

Reported shareholders’ equity after proposed dividend less intangible assets plus untaxed reserves, subordinated loans, deferred tax liabilities and unrealized gains/losses from interest-bearing securities at accrued acquisition value. The capital base must satisfy the solvency requirement. See solvency requirement.

Calculation formula:

Capital redemption policy

Life policy without any insurable risk, and policy consists purely of savings.

Ceded reinsurance

Part of insurance risk is transferred to reinsurer by means of reinsurance.


Direct insurance company that reinsures a part of its direct business with a reinsurer.

Change in fair value reserve

Change in the fair value reserve in property and casualty insurance includes unrealised profit and loss (change in value) of the investment assets. Change in the fair value of financial instruments is an important element in analyzing the financial development of the life insurance business. It includes the unrealized gains or losses due to changes in the fair value of financial instruments that are classified as available-for-sale. These gains or losses are recognized on the income statement at the time they realize, i.e. when the investments are sold.

Change in liabilities for investment and insurance contracts

Change in liabilities for investment and insurance contracts.


If insured event happens, the beneficiaries named in insurance contract are paid benefits.

Claims frequency

The observed relationship during a specific period between the number of claims arising within a certain category of insurance (a certain insurance portfolio) and the number of insurance policies within the same category (the portfolio). Does not include major claims.

Claims incurred

The sum of paid claims and change in claims reserve. Includes all the claims during the year regardless if there's been payments during the same year or not.

Claims paid

Claims paid to beneficiaries.

Claims reserve/claims outstanding

Claims reserve consists of unpaid claims due to insurance events that have already happened, the claim handling costs and statutory reserves.

Combined ratio

Claims incurred and operating expenses in relation to premiums earned, expressed as a percentage.

Calculation formula:

Concentration risk

If any single risk forms a considerable part of the sum of all the same kind of risks, insurance company has an increased risk for this one single risk concentration.

Cost ratio

Claims handling cost and operating expenses.

Calculation formula:

Credit risk

Risk that debtor doesn't pay coupons or principle and/or the market value of loans fluctuate.

Currency risk

Risk that currencies fluctuate.



Part of cost of insured event is not covered by insurance company, and policyholder has to cover this part him/herself.

Defined benefit scheme

Life insurance policy, where premiums are calculated based on agreed benefits (for example salary).

Defined contribution scheme

Policy, where benefits are calculated based on premiums (life insurance terminology). See also defined benefit scheme.

Direct insurance

Insurance business that relates to contracts concluded between insurers and insured. The insurance company is directly responsible in relation to the insured.

Direct insurance

Insurance contract between insurance company and non-reinsurer.

Direct investment return

Operating surplus from buildings and land, dividends on shares and participations and interest income.

Discount rate

Future outflows and inflows of for example life insurance contracts are changed to present value of money by using discont rate. This present value is used to calculate the liability for insurance company from its insurance contracts.

Dividend per earnings

Dividend per earnings hows the amount of dividends distributed in relation to the earnings. This gives a picture of how much of the earnings are used for direct return to shareholders versus investments in future activities and naturally, the profitability of the company.

Calculation formula:


Earnings per share (EPS)

The Earnings per share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock. The EPS is thus profitability measure. It is especially useful when comparing subsequent years' EPS figures and their development. If the amount of shares changes from year to year (e.g. due to a split), this change has to be taken into account when EPS comparison is made.

Calculation formula:

Economic capital (EC)

Estimate for required capital, estimated by Sampo Group.

Effective dividend yield

Effective dividend yield shows how much the dividend was in relation to the value of the share at the end of the year. This figure added to the share value development show the direct monetary return on the share investment in the company.

Calculation formula:

Embedded value

Value of life insurance company, which consists of the future profit from in-force policies from their whole life cycle (value of in-force) and company's own assets (NAV).

EPS including change in the fair value reserve

This figure shows what EPS would be if market value changes in available-for sale investment portfolios would be recorder.

Calculation formula:

Equalisation reserve

Buffer against fluctuations of risk results.

Equity per share

Equity per share indicates how much capital there is per share.

Calculation formula:

Equity risk

Risk that market values of equities fluctuate.

Equity/assets ratio

Equity/assets ratio tells how much the company has equity in relation to its total assets.

Calculation formula:

Expense ratio

Ratio between operating expenses and premiums earned expressed as a percentage.

Calculation formula:

Expense ratio

Expenses divided by loading income. Expense ratio measures the effectiviness of life insurance activities.

Expense result

Loading income minus expenses (life insurance terminology).


Fair value reserce

Fair value reserve in equity include valuation difference and change in fair value of available for sale investments and after deferred tax.

Financial assets designated as at fair value through profit or loss

Financial assets that are classified as held for trading and upon initial recognition it is designated by the entity as at fair value through profit or loss.

Fixed income assets

Assets that generate fixed or variable interest.


Gross premiums written (P&C Insurance)

Total premiums received during the financial year or taken up as a receivable at the end of the year. In contrast to net premiums earned, premiums written are not capitalized; i.e. they are unaffected by opening and closing provisions for unearned premiums.

Group pension

Pension insurance, there the policyholder is company and insureds are a named group of company's employees.

Group solvency ratio

Group solvency ratio tells us how much the company has eligible own funds in relation to the minimum requirement for the own funds set by the supervising regulators. Supervisors define what items can be included in the eligible own funds. The minimum requirement for the own funds is the supervisor's view on how much capital is needed to cover the risks taken by the business operations of the Group.

Guaranteed interest

With-profit policies are promised guaranteed fixed interest rates (life insurance terminology).


Health insurance

Policy covering medical costs.

Held to maturity investments (HTM)

Financial assets with fixed maturity that an entity has the positive intention and ability to hold to maturity.


Individual life insurance (with-profit/unit linked)

Life policy, in which a person is insured.

Individual pension insurance (with-profit/unit-linked)

Pension policy, in which a person is insured.

Insurance margin

Technical result less other technical income and expense in relation to net premiums earned, expressed as a percentage. Compare with Technical result.

Insurance policy

IFRS-categorisation for policy, where considerable insured risk is transferred from policyholder into insurance company.

Insurance premiums written (life insurance)

Represents the gross premiums written (i.e. the money received from insurance and investment contracts during the financial year) before the part of premiums that is attributable to reinsured policies deducted (policies refer to policies, whose risk is transferred to other insurers).

Insurance technical result

Company’s result before extraordinary items, finance costs and taxes (life insurance company) or company's result before return on investment (P&C insurance company).


Person or company, who is insured against event described in insurance contract.

Interest rate risk

Then interest rates fluctuate, so do also the market values of assets and liabilies. With-profit policies are promised interest rate guarantees, and company has to earn these guarantees from its investments.

Investment assets

Assets that resemble a capital investment, including real estate and securities, as well as all investments in group and associated companies.

Investment assets

Company's investment assets. Company invests the premius received and own equity into financial markets for example into stocks, bonds, properties etc.

Investment policy

IFRS-categorisation for life policy, which has no risk cover (for example capital redemption policy).

Investment result

Net income from investments deducted by paid guaranteed interest rates and possible bonuses.

Investment return

Amount of investment returns from company's investments or this amount divided by investments.


Liabilities for insurance and investment policies

Liabilities for insurance and investment policies.

Liability adequacy test

Test required by IFRS, that the technical reserves are adequate to cover future insured events.

Life insurance

Insurance, which usually consists of two different components 1) savings part (endowment) and 2) risk life cover. In addition other supplementary covers can also be included like cover for temporary disability or disability, medical cover etc.

Life risk

Life insurance company bears the risk that insurance premius or liabilities are inadequate.

Loading income

To cover its expenses, life insurance company deducts loading from its policies. The sum of deducted loadings is loading income.

Longevity risk

Life insurance company bears the risk of insureds living in those policies, there the possible death cover is lower than savings. Company makes loss, if people live older than company has priced this risk.

Loss ratio (or claims ratio)

Claims incurred and premiums earned expressed as a percentage.

Calculation formula:


Market risk

Risk that market values of assets and liabilities fluctuate.

Market value of liabilities

Sum of liabilities calculated in market-consistent way. There is no active trading between insurance companies liabilities, so market value of liabilities is estimated using pricing methods used and accepted in financial markets.

Minimum solvency margin

Regulator has given instructions to calculate minimum solvency margin, which insurance company has to exceed.

Mortality risk

Life insurance company bears the risk of insureds dying in those policies, there the possible death cover is higher than savings. Company makes loss, if people die sooner than company has priced this risk.


Net asset value per share

The NAV per share figure is similar to the 'equity per share' figure but in NAV per share all investments are valued at market prices. If a company has a NAV per share larger than its share price it means that the markets think that the company is not able to create value to its assets. If the NAV per share is smaller than the share price, the markets think that the company will create additional value on its assets in the future and this can be seen in the share price.

Calculation formula:

Net business

That part of the insurance business for which the insurance company assumes the risk and which is thus not reinsured with other companies.

Net income from investments

Income from investments decucted by costs of these investments.

Net premiums written

Gross premiums written less ceded reinsurance premiums.


Operating expenses

Operating expenses include expenses for the acquisition, management, administrative and investment management of insurance conracts and also commissions on reinsurance ceded.

Operating expenses in insurance operations

Expenses related to the acquisition or renewal of insurance contracts plus corporate administration costs.

Operational risk

Operational risk is the risk of loss arising from inadequate or failed processes or from external events (life insurance terminology).


P&C Insurance

Collective term for property insurance, liability insurance and reinsurance. Property insurance involves the type of insurance that covers the economic value of one or several objects (such as movable property in a home, car, boat, factory building or warehouse). Other types of property and casualty insurance mainly cover various interests (such as, business interruption insurance or liability insurance), where only a specific economic interest is covered, not the economic value of one or several objects.

Paid-up policy

Policy changes into paid-up status, if it agreed, that policyholder stops paying premiums.

Pension insurance

Insurance for pension cover.


Person or company, who pays insurance cover from insurance company.

Premium income

Premiums paid by policyholders.

Premium income on own account

Premium income deducted by reinsurer's share of premiums.

Premiums earned

That portion of gross premiums written that pertains to the fiscal year, meaning premiums written adjusted for changes in the provision for unearned premiums.

Premiums in pure risk insurance

Premium income from those life insurance policies, that only have death cover and no savings.

Price/earnings ratio (P/E)

A company's P/E shows how high its shares are priced on the markets in relation to its earnings. A high P/E usually indicates that the markets expect that the company's earnings will grow in the future.

Calculation formula:

Principle of fairness

Life insurance company gives possibly a part of its profit as bonuses to its policyholders according to its interpretation of principle of fairness, if company and policyholder have agreed on this and if company's solvency is not endangered by these bonuses. If bonuses are paid, the source of profit is recognized and bonuses are paid according to the source of profit and between different interest rate guarantees.


Difference between income and expenses from insurance contracts.

Profit at market values

Profit before taxes plus the change in market values of assets before deferred taxes.

Property risk

Risk that property prices fluctuate.

Provision for unearned premiums

Part of companys technical reserves, which consists of difference between future insured benefits and future premiums.


Regular premium

Several regural premiums are paid in regular premium insurance.


Insurance company doesn't bear all the insurance risks by itself and therefore company buys insurance cover for part of its risk from another insurance company.

Reinsurer's share

Insurer buys reinsurance cover from reinsurer, and reinsurer is liable respectively of insurers liabilities and claims.

Return on assets (RoA)

Return on assets (RoA) indicates how much return the company generates to assets invested in the company, i.e. both equity and liabilities. RoA can vary substantially depending on the industry and the amount of assets that it ties up. Therefore RoA comparisations between different industries are not necessarily relevant.

Calculation formula:

Return on Equity

Return on Equity (RoE) indicates how much return the company is able to generate for the money shareholders have invested in (simplified formula: profit after tax/average equity during the year). The more liabilities the company has relative to equity, the more volatile RoE is to variations in profit. The RoE is also useful for comparing profitability of different firms in the same industry.

Calculation formula:

Risk life policy

Policy for insured's death cover.

Risk policy

Policy covering different risks (for example death, permanent disability, medical cover, accident etc.).

Risk ratio

Ratio between insurance claims, excluding claims adjustment costs, and premiums earned, expressed as a percentage. Risk ratio shows how well the insurance company has succeeded in pricing the insurance risk. The lower the ratio the better.

Calculation formula:

Risk result

Risk premiums deducted by life insurance company minus the risk benefits paid/to be paid to beneficiaries.

Risk selection

The insurer’s selection of the type of risks to be included in his portfolio. Risk selection is of major importance to an insurance company, in part because it facilitates, to the extent possible, a balanced business, which normally has a favorable impact on operating results.

Run-off business

The liquidation of an insurance company or portfolio of insurance business which has been transferred to a separate administrative unit.


Single premium

Premiums for this type of policy are paid by one single premium.


Insurance company has to have a certain level of assets over liabilties, so that the company could be liable for its liabilities.

Solvency capital

Solvency margin plus equalisation reserve.

Calculation formula:

Solvency I

Currently used solvency system for insurance companies in EU-region.

Solvency II

The future solvency system for insurance companies in EU-region, which will replace Solvency I.

Solvency margin

Figure calculated by rules given by regulator, which reflects the difference between insurance company's assets and liabilities.

Calculation formula:

Solvency ratio

Solvency of company divided by minimum solvency margin required by regulator.

Solvency ratio

Solvency capital divided by technical reserves without equalisation reserve and 75 % of unit-linked reserves (life insurance terminology).

Solvency ratio of technical provisions

Solvency capital divided by technical reserves without equalisation reserve and 75 % of unit-linked reserves (life insurance).

Calculation formula:


Policyholder ends his/hers policy, which has savings, before maturity date and the company pays the surrender value of policy to the policyholder.

Surrender value

Value for policy, which is savings deducted by fee, because policyholder ends his/hers policy before maturity date.


Technical provisions

Provisions for unearned premiums, unexpired risks and claims outstanding.

Technical provisions

Provisions for unearned premiums, unexpired risks and claims outstanding.

Technical result before investment return

Item in the technical accounts comprising premiums earned less claims and operating costs.

Total investment return

Sum total of direct return and realized and unrealized changes in value expressed as a percentage of the fair value of investment assets. The daily time weighted method has been used to calculate the return on active investments. The monthly time weighted method has been used to calculate return on properties and other investments. The return has been calculated using the calculation methods used internally by If for the evaluation of asset management.

Total technical reserves

Amount of liability, that covers the insured risk the company has.

Total technical reserves on own account

Technical reserves after reinsurer's share.

Transfer of liability

Insurance portfolios can be transferred from insurance company/pension fund into another insurance company.



Includes the risk assessment and pricing conducted when insurance contracts are drawn up. In accounting contexts, the term is also used more broadly to designate the operations of an insurance company that do not have the character of asset management.

Unit-linked insurance

Life insurance policy, which savings are linked into some outer index, typically into mutual fund. Policyholder bears the risk of fluctuation of savings.

Unit-linked reserves of total technical reserves

Liabilities from unit-linked contracts (life insurance terminology).


Valuation differences

Difference between fair value and book value of investments.

Value of in-force business (VIF)

Value of existing policies, and this value is calculated by considering all the income and expenses from these policies until they end up (life insurance terminology).


With-profit policy / traditional policy

Life policy, in which guaranteed interest rates and possible bonuses are paid to savings.

With-profit policy / traditional policy

Life policy, in which guaranteed interest rates and possible bonuses are paid to savings.