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Strategy and Objectives

Sampo Group creates value for its shareholders through efficient and highly profitable operating units and by investments in situations offering significant upside potential with manageable downside risk

Shareholders benefit from the value creation through a high and stable dividend yield as Sampo plc upstreams the dividends it receives from its subsidiaries and associates to its shareholders.

Sampo Group's business areas are P&C insurance and life insurance. P&C insurance under If brand and Mandatum Life brand, respectively. The Group is also the largest shareholder in Nordea Bank, the leading Nordic banking franchise. On a Group level Sampo has no stated strategy but the business areas have well-defined strategies based on return on equity targets.

The parent company Sampo plc's A shares are listed on the Nasdaq Helsinki. The parent company sets financial targets for the subsidiaries. For both P&C and life insurance operations the return on equity target is to exceed 17.5 per cent. In addition a separate target has been set for the combined ratio in the P&C insurance operation, i.e. the annual combined ratio to be below 95 per cent each and every year.

Financial targets

If P&C Insurance – Security and Stability

If's vision is to offer insurance solutions that provide customers with security and stability in their daily lives and business operations with such excellence that If is the preferred insurance provider in the Nordic and Baltic markets. This vision is expressed through the customer promise "Relax, we'll help you".

If is the leading property and casualty insurer in the Nordic region, with over 3.7 million customers in the Nordic and Baltic countries. If offers a full range of P&C insurance solutions and services to a broad customer base, from private individuals to large corporate customers.

If operates on a pan-Nordic basis leveraging both scale and capabilities across all areas in If. If's key success factor is continuous improvement of its operations. Underwriting focus by understanding risk better than competitors, setting the right prices, and offer the best products and services, has been the strategic theme for more than a decade.

If's operations are divided into Nordic Business areas by customer segments. The Baltic countries constitute a separate business area and operates on one business platform across all three Baltic countries.

  • The Private business area is If's largest business area and If is the Nordic market leader with more than three million private individuals as customers.
  • The Commercial business area is the largest commercial insurer in the Nordic countries and accounts for nearly one third of If's insurance premiums. This business area insures companies with up to 500 employees and has about 350,000 companies as customers.
  • The Industrial business area is the leading insurer for large corporate customers in the Nordic region with approximately 1,300 customers. Customers are companies with a turnover of more than EUR 50 million and more than 500 employees.
  • The Baltic business area offers property and casualty insurances for both private individuals and corporate customers. If is the second largest P&C insurer in the Baltic region and market leader in Estonia, with approximately 350,000 customers.

In order to fulfil the vision of being the preferred insurance partner, If has adopted a strategy based on three goals:

  • Most satisfied customers through strong focus on customer value
    To achieve this If must have the best in-depth understanding of the customers' insurance needs and, correspondingly, the best underwriting skills. If strives to be the most service-oriented company in the industry and continues to develop its digital communication.
  • Europe's most professional and innovative P&C insurance people
    If continues to strengthen its underwriting competences within the "Best in Risk" concept. The concept focuses on understanding all aspects of risk management, including product, pricing and risk quality, throughout the organisation.
  • Stable profitability through underwriting excellence and operational efficiency
    Profitability in the core business by accurate pricing of risk. Continuous focus on cost efficiency, an investment strategy based on balanced risk and creditworthiness also contribute to a strong and stable profitability.

If's financial targets are to achieve a return on equity (RoE) of at least 17.5 per cent and a combined ratio of less than 95 per cent.

Mandatum Life – an Expert in Money and Life

Mandatum Life is the leading provider of cover against health and life risks, and a well-respected manager of customer wealth in Finland and the Baltic countries. Mandatum Life offers its customers comprehensive services that include tailored unit-linked investments and wealth management, personal risk insurance for private customers, pension and reward services for companies and the related consultation services. The parent company of the Mandatum Life Group is Mandatum Life Insurance Company Limited, the subsidiaries of which are Mandatum Life Services Ltd., Mandatum Life Investment Services Ltd., Mandatum Life Fund Management S.A., Innova Services Ltd. and Mandatum Life Insurance SE Baltic.

The focal point of Mandatum Life's new sales business is unit-linked insurance, capital redemption contracts and group pension insurance and risk insurance covering personal risks. For these, Mandatum Life has three of its own sales channels in Finland: sales groups specialized in corporate sales, wealth managers focused on wealth management, and Customer Service that focuses on additional services offered to existing clientele. In addition to these sales channels, Mandatum Life and Danske Bank have had a distribution agreement in effect since 2007. In the same year, it was also agreed that Mandatum Life would have the right to sell the insurance portfolio to Danske Bank. In October 2016, Mandatum Life announced that it would exercise that right, as a result of which, it is estimated that the insurance portfolio acquired through Danske Bank will transfer to Danske Bank at the end of 2017. Mandatum Life began offering its own wealth management services related to insurance and capital redemption contracts in 2008. These services are primarily focused on high-net-worth individuals, but the comprehensive range of investment baskets and funds is also available to a broad spectrum of private, corporate and institutional customers.

Insurance for Corporate Customers and Entrepreneurs a Strong Strategic Focal Area

Mandatum Life's goal is to maintain its position as Finland's largest life and supplementary pension insurer in the corporate customer segment. The company estimates that the need for Finns to secure their income during retirement will increase further with the pension reform that entered into force at the start of 2017. The reform aims at extending careers, which has an impact on employers: they must maintain their employees' work capacity, competence and enthusiasm for even longer. Companies can complement the statutory pension cover of their employees through group pension insurance. By planning the retirement of personnel in time, companies can make sure that their employees retire at a time that is right for both them and their employer.

In Mandatum Life's view, investing in personnel has a major impact on the company's earnings power. Mandatum Life offers its corporate customers expert services and solutions for rewarding their entire personnel. For example, personnel funds are a key component of the services Mandatum Life provides companies.

Management of the With-Profit Insurance Portfolio

In terms of the existing insurance portfolio with guarantees, the company's strategy is to maintain a sufficiently strong solvency position, which makes it possible to seek a higher long-term investment return than that offered by low-risk fixed income instruments. The goal will be to actively accelerate the downward trend of the with profit portfolio. The transitional provisions of the Solvency II framework, together with the downward trend of this insurance portfolio, will enable the company to carry out effective capital management in future. The company also seeks growth in the area of new with profit contracts, provided that this takes place on favourable terms, taking into account profitability, risk management and Solvency II, and brings added value to both customers and the company.

Mandatum Life's result consists of three components: investment result, risk result and expense result. In the expense and risk results, Mandatum Life seeks growth through both higher operational efficiency and volume growth. The company's financial target is to produce a Return on Equity of at least 17.5 per cent.

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Updated 03/21/2017