Assets and Liabilities

The consolidated balance sheet: a summary of the Group's assets and liabilities

The balance sheet of Sampo Group is presented graphically below. See complete consolidated balance sheet in Sampo Group's annual report.

In the Group financial statements, equity is reported on Group-level only. In comparison to many financial services companies, the Group has a large amount of equity in relation to its liabilities.

The eliminations item follows from the fact, that there are some assets and liabilities between one and another group company that cancel each other out when they are viewed from the consolidated Group perspective. These Group-internal assets and liabilities are eliminated in the Group consolidation. The biggest such elimination is naturally the parent's investments in Group subsidiaries.

Majority of Sampo's assets are investment assets. An insurance company needs to have sufficient assets to cover future expected insurance claims from customers. The assets are mainly invested in the financial markets (in financial instruments like equity, bonds, treasury bills etc.). Return on these investments is an important source of income for the Group.

The main liabilities on Sampo's balance sheet are liabilities for insurance and investment contracts (including unit-linked policies). These items represent future insurance claim payments. Majority of the Group's insurance liabilities relate to P&C insurance policies, but Life insurance also accounts for a significant share. Liabilities in the parent company are relatively insignificant.

 
Investment assets include financial assets (such as shares and bonds), investments in real estate properties as well as cash and cash equivalents. The majority of investments are held in debt securities. The breakdown of the investment portfolio is shown below:

 
Money market refers to debt securities with a maturity of less than one year and bonds to debt securities with a maturity of over one year.

Listed equities are shares of companies that are traded on regulated exchanges whereas private equity refers to shares of companies that are not publicly traded in regulated exchanges.

Investments related to unit-linked insurance represent the funds that cover the company's liabilities for unit-linked insurance contracts. Unit-linked insurance relates to the Life Insurance business and is described in more detail in the respective section.

Intangible assets are assets that cannot be physically measured and which are mainly created through time and/or effort. The main intangible asset in Sampo's balance sheet is goodwill that has been created as a result of mergers. The intangible assets have an indefinite life and they are recognised on the balance sheet for as long as the assets are expected to yield economic benefits to the company.

Other assets include such items as property, plant and equipment, tax assets, reinsurers' share of insurance liabilities and other items that are small in relation to the Group's total assets.

Liabilities for insurance and investment contracts represent the net contractual obligations which the insurer has on the basis of insurance contracts. Insurance liabilities, consisting of the provisions for unearned premiums and unexpired risks and for claims outstanding, correspond to the obligations under insurance contracts.

The provision for unearned premiums is intended to cover anticipated claims costs and operating expenses during the remaining term of insurance contracts in force. The provision for claims outstanding is intended to cover the anticipated future payments of all claims incurred, including claims not yet reported to the company.

In calculating the size of the liability, various actuarial methods are applied. The actual claims payments may be different from the originally expected amount

Liabilities for unit-linked insurance and investment contracts represent the amount of savings that have been generated by the policyholders of unit-linked insurances. For unit-linked contracts, all the liabilities and the assets covering the unit-linked insurance are matched and the corresponding asset is recognised on the asset side of the balance sheet.

Financial liabilities and other include any financial liabilities (e.g. debt) as well as a number of other liabilities that are small in relation to the entire balance sheet. These include such items as tax liabilities, provisions, liabilities for employee benefits and other miscellaneous liabilities.