Risks

Sampo Group has two business areas: P&C insurance (If P&C) and life insurance (Mandatum Life), wholly owned by the holding company (Sampo plc). In addition to the insurance subsidiaries, Sampo plc is also a major shareholder in Nordea AB (publ).

Sampo plc as a parent company does not have any own business operations. Sampo plc guides the activities of subsidiaries by setting financial and capitalisation targets for the subsidiaries and defining the group level risk management principles. The subsidiaries independently organize their operations and risk management according to these principles, taking into account the special characteristics that arise from the company specific earnings logic and risks.

Sampo plc also aims to ensure that the activities of the subsidiaries do not lead to unwanted risk concentrations. Thus, the concentrations are first pro-actively prevented by careful division of risk-taking between subsidiaries, and the rest of the concentrations are monitored and the risk profiles are changed if needed.

As a pan-Nordic insurance group If P&C underwrites policies that cover various risks of individuals and corporations on a geographically diverse area. If P&C mainly underwrites insurance risks in the Nordic and Baltic countries, as well as policies for Nordic clients with operations outside the Nordic countries. The business written is well-diversified over insurance classes, client segments and geographical areas. Mandatum Life operates in Finland and Baltic countries and offers savings insurance and pension policies as well as policies covering only insurance risks.

If P&C and Mandatum Life are exposed to various risks, which are selected carefully and priced reflecting the risks. Reinsurance is used to handle low frequency, but high impact events. A critical success factor is also the companies´ ability to maximise investment returns while taking into account all investment risks as well as the features of technical provisions, solvency, regulatory asset coverage rules and rating requirements. The core competence in Sampo Group's businesses is the pricing of risks and the proper management of the arising risk exposures.

Sampo Group's main risks are illustrated in figure "Classification of risks in Sampo Group". The risk classification is based on the major risk factors that affect Sampo Group. Moreover, risks such as ALM risk, concentration risk and reputation risk are by their nature linked to various risk factors.