CONTENTS
REPORTS FOR THE YEAR 2020
WWW.SAMPO.COM/YEAR2020
Board of Directors’ Report for 2020 ............... 3
SampoGroup ............................................................ 4
EconomicEnvironment............................................. 7
EectsofCOVID-onSampoGroup ..................... 8
If .......................................................................... 9
Topdanmark ........................................................ 9
Hastings .............................................................. 9
Mandatum Life ..................................................10
Investment Activities ........................................10
Solvency Positions ............................................10
BusinessAreas ........................................................ 11
If ........................................................................ 11
Topdanmark ......................................................13
Hastings ............................................................14
Nordea ..............................................................14
Mandatum Life ..................................................15
Holding ..............................................................17
OtherDevelopments...............................................18
Disposal of Nordea Shares ................................ 18
Hastings Acquisition .........................................18
GovernanceandRelatedIssues .............................. 21
Changes in Group Management ....................... 21
Governance .......................................................23
Annual General Meeting ....................................23
Corporate Responsibility ..................................24
Personnel ..........................................................25
Remuneration ....................................................25
Risk Management ..............................................27
SharesShareCapitalandShareholders .................28
Shares and Share Capital ..................................28
Authorizations Granted to the Board ...............30
Shareholders .....................................................30
Holdings of the Board and
Executive Management .....................................32
FinancialStanding ..................................................33
Internal Dividends .............................................33
Ratings ..............................................................33
Solvency .................................................................34
Group Solvency .................................................34
Solvency Position in the Subsidiaries ...............34
Debt Financing ..................................................35
Outlook ..................................................................36
Outlook for 2021 ...............................................36
The Major Risks and Uncertainties for
the Group in the Near-term .............................36
Dividends ...............................................................37
Dividend Proposal .............................................37
KeyFigures .............................................................38
Calculation of the Key Figures .......................... 41
Group’s IFRS Financial Statements .............43
StatementofProfitandOtherComprehensive
IncomeIFRS .......................................................... 44
ConsolidatedBalanceSheetIFRS .........................45
StatementofChangesinEquityIFRS ....................46
StatementofCashFlowsIFRS ..............................47
Group’s Notes to the Accounts .......................48
SummaryofSignificantAccountingPolicies ........ 49
SegmentInformation ........................................ 67
MaterialPartly-OwnedSubsidiaries .................... 74
BusinessCombinations ..................................... 76
NotestotheIncomeStatement– .................. 78
Sampo plc’s Financial Statements ............. 185
Sampoplc’sIncomeStatement ........................... 186
Sampoplc’sBalanceSheet .................................. 187
Sampoplc’sStatementofCashFlows ................ 188
Sampo plc’s Notes to the Accounts ........... 190
SummaryofSignificantAccountingPolicies ....... 190
NotestotheIncomeStatement– .................... 190
NotestotheAssets– ....................................... 191
NotestotheLiabilities– .............................. 192
NotetotheIncomeTaxes ............................... 193
Notes to the O-Balance Sheet Liabilities and
Commitments 15–16 .............................................. 194
NotestotheStaandManagement– ......... 194
NotetotheSharesHeld .................................. 195
Approval of the Financial Statements
and the Board of Directors' Report ...........196
Auditor’s Report ........................................... 197
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF DIRECTORS’ REPORT AND FINANCIAL STATEMENTS 2020 2
BOARD OF DIRECTORS’ REPORT
Sampo Group .................................................... 4
Economic Environment ................................. 7
Effects of COVID-19 on Sampo Group ......... 8
If ................................................................................ 9
Topdanmark .............................................................. 9
Hastings .................................................................... 9
MandatumLife ........................................................10
InvestmentActivities ..............................................10
SolvencyPositions .................................................. 10
Business Areas ............................................... 11
If .............................................................................. 11
Topdanmark ............................................................ 13
Hastings ..................................................................14
Nordea ....................................................................14
MandatumLife ........................................................ 15
Holding ...................................................................17
Other Developments ..................................... 18
DisposalofNordeashares ...................................... 18
HastingsAcquisition ...............................................18
Governance and Related Issues .................. 21
ChangesinGroupManagement ............................21
Governance .............................................................23
AnnualGeneralMeeting .........................................23
CorporateResponsibility ........................................24
Personnel ................................................................25
Remuneration ........................................................25
RiskManagement ...................................................27
Shares, Share Capital and Shareholders ... 28
SharesandShareCapital ........................................28
AuthorizationsGrantedtotheBoard .....................30
Shareholders ...........................................................30
Holdings of the Board and Executive Management ..32
Financial Standing ......................................... 33
InternalDividends ...................................................33
Ratings ....................................................................33
Solvency ........................................................... 34
GroupSolvency ................................................ 34
Solvency Position in the Subsidiaries .....................34
DebtFinancing .......................................................35
Outlook ............................................................36
Outlookfor .....................................................36
TheMajorRisksandUncertaintiesfor
theGroupintheNear-term ....................................36
Dividends ........................................................ 37
DividendProposal ..................................................37
Key Figures ...................................................... 38
CalculationoftheKeyFigures ................................41
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
3BOARD OF DIRECTORS’ REPORT 2020
Sampo Group’s largest business area If had an extremely
strong year 2020 in all respects. The combined ratio for
the full-year 2020 was 82.1 per cent (84.5). This is the
strongest combined ratio If has ever reported. Because of
the impairment loss of EUR 899 million and the sales loss
of EUR 262 million on Nordea shares, Group’s reported
profit before taxes for 2020 decreased to EUR 380 million
(1,541). Without the extraordinary items relating to the
Nordea holding, the profit before taxes would have been
EUR 1,541 million for 2020 and EUR 1,696 million for
2019. The total comprehensive income for the period,
taking changes in the market value of assets into account,
amounted to EUR 434 million (1,565).
The earnings per share were EUR 0.07 (2.04) and marked-
to-market earnings per share were EUR 0.65 (2.63).
The earnings per share excluding the Nordea-related
extra ordinary items were EUR 2.16 per share (2.31). In
accordance with the dividend policy, this figure has been
used as basis when calculating the dividend proposal.
The return on equity for the Group amounted to 3.1 per
cent (12.0) for 2020. The net asset value per share on 31
December 2020 was EUR 19.82 (20.71).
Sampo plc’s Board of Directors has today, after applying
management judgement, decided to impair the book
value of Nordea to EUR 7.50 per share from EUR 8.90 per
share in Sampo Group’s consolidated accounts at the end
of December 2020.
Sampo plc’s Board of Directors has proposed to the
Annual General Meeting to be held on 19 May 2021 a
dividend of EUR 1.70 per share (1.50). The proposed
dividend payment amounts in total to EUR 944 million
(833).
If segment’s profit before taxes rose to EUR 901 million
(884) and insurance technical result improved to EUR
811 million (685). The return on equity remained at a
high level at 33.3 per cent (34.5). Premiums grew in all
business areas in the Nordics amounting to almost 5 per
cent with fixed currencies. If paid a dividend of SEK 6.3
billion (approximately EUR 600 million) to Sampo plc in
December 2020.
Topdanmark segment’s profit before taxes for 2020 was
EUR 167 million (238). The combined ratio amounted to
85.2 per cent (82.1) in 2020. The expense ratio was 16.2 per
cent (16.0). The Board of Directors of Topdanmark will
recommend to the AGM on 25 March 2021 that in total a
dividend of DKK 20 per share will be paid. If approved,
Sampo plc’s share of the dividend payment is EUR 113
million.
Sampo announced on 5 August 2020 that the company
and Rand Merchant Investment Holdings (RMI) had
made a recommended cash offer, through a jointly owned
company, to acquire all issued and to be issued shares
in Hastings Group Holdings Plc not already owned by
Sampo and RMI.
Sampo holds 70 per cent of Hastings Group (Consolidated)
Limited, which became Sampo plc’s subsidiary and forms
a separate segment in the Group’s financial reporting as
of 16 November 2020. The consolidated last six weeks of
2020 comprise a number of one-off expense items.
Board Of Directors’ Report For 2020
Sampo Group
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
4BOARD OF DIRECTORS’ REPORT 2020
Sampo’s share of Nordea’s net profit for 2020, excluding
the accounting impacts of the sale of Nordea shares in
November 2020 and the impairment of the holding in
Sampo Group’s consolidated accounts 2020, amounted
to EUR 429 million (290). The reported loss after these
measures was EUR -734 million (290). Nordea is progress-
ing well towards meeting its 2022 financial targets.
On 4 February, Nordea’s Board proposed a dividend of
EUR 0.39 per share for 2020. In addition, the Board will
decide on 18 February to distribute EUR 0.07 per share as
the first instalment of the delayed 2019 dividend of EUR
0.40 per share. The Board also proposes that the Annual
General Meeting authorize it to pay out the remaining
part of the 2019 dividend (EUR 0.33 per share) and the
2020 dividend (EUR 0.39 per share) – a total of EUR
0.72 per share – after September 2021, in line with the
European Central Bank recommendation. Sampo plc’s
share of the proposed dividend payments is EUR 508
million.
Profit before taxes for segment Mandatum was EUR
154 million (280). The reserves related to the higher
guarantees of 4.5 and 3.5 per cent decreased by EUR 268
million to EUR 1.9 billion at the end of 2020. Mandatum
Life has supplemented the discount rate reserve and the
rate used for 2021 - 2023 is 0.25 per cent. This had a nega-
tive impact of EUR 77 million on the result. The return on
equity amounted to 14.4 per cent (23.5). Mandatum Life’s
Board proposes a dividend of EUR 200 million to Sampo
plc in February 2021.
Sampo Group’s total investment assets, excluding
Topdanmark’s life insurance assets, on 31 December 2020
amounted to EUR 22.6 billion (21.8), of which 78 per cent
was invested in fixed income instruments (76), 14 per cent
in equities (16) and 8 per cent in other assets (8). If’s share
of assets was 49 per cent (50), Topdanmark’s 13 per cent
(13), Hastings’s 4 per cent, Mandatum Life’s 25 per cent
(26) and Sampo plc’s 9 per cent (11).
Sampo Group’s equity as at 31 December 2020 amounted
to EUR 11,418 million (11,908), excluding the minority
share of EUR 840 million (635). The main changes in the
equity were the dividend payment of EUR 885 million
reducing the equity and the comprehensive income for
the year of EUR 322 million increasing it.
Sampo Group’s Solvency II capital ratio at the end of 2020
was 176 per cent (174) and the Group solvency amounted
to EUR 4,308 million (4,513).
Sampo Group will issue a report on non-financial
information in accordance with Chapter 3a, Section
5 of the Accounting Act. A separate report, Corporate
Responsibility Report 2020, will be published in May 2021.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
5BOARD OF DIRECTORS’ REPORT 2020
Exchange Rates Used in Reporting
- - - - - -
EURSEK
Income statement
(average)
Balance sheet
(at end of period)
DKKSEK
Income statement
(average)
Balance sheet
(at end of period)
NOKSEK
Income statement
(average)
Balance sheet
(at end of period)
EURDKK
Income statement
(average)
Balance sheet
(at end of period)
EURGBP
Income statement
(average)
Balance sheet
(at end of period)
Key Figures
Sampo Group, 2020
EURm Change
Profit before taxes
*)
-
If
Topdanmark -
Hastings - - -
Associates
*)
- -
Mandatum -
Holding(exclAssociates) - - -
Profit for the period -
Earnings per share, EUR -
EPS (without eo. items) EUR -
EPS (based on OCI) EUR -
NAV per share, EUR -
Average number of sta (FTE)
Group solvency ratio, %
RoE, % -
*)
The reported loss related to the sale of Nordea shares in November 2020 and the impairment of
Nordea holding made in the consolidated Group accounts 2020, together EUR 1,161 million is included
in the 2020 figure. The comparison figure includes a valuation loss of EUR 155 million related to Nordea
shares.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
6BOARD OF DIRECTORS’ REPORT 2020
The global economy is expected to have shrunk by 3.5 per
cent in 2020, primarily due to the shock caused by the
COVID-19 pandemic. While some areas of the economy
continue to be depressed, others have weathered the
crisis relatively well. The sectors most negatively affected
by the shock have been those dependent on in-person
spending and sectors dependent on international travel
and tourism. In contrast, some of the sectors that have
shown resilience – or even gained from the crisis – have
been areas of the economy linked to manufacturing and
the digital economy, such as the technology and online
retail sectors. Going forward, much will depend on the
pace of the rollout of vaccines and the effectiveness of
coordinated monetary and fiscal policy responses.
Following the setbacks of 2020, the Nordics are on track
towards recovery. While the second wave of the pandemic
is still hindering the recovery, vaccines and the summer
are expected to bring long-awaited relief and a prospect
of a return to normal. Compared to most other European
countries, the Nordics have been among the most resilient
in withstanding the crisis. The contraction of GDP is
expected to have been much smaller than in most other
countries as a consequence of favourable export composi-
tion and smaller exposure to tourism related shocks.
In Finland, the economy is expected to have contracted
by 3.0 per cent in 2020, although the 2021 growth forecast
of 3.0 per cent will put the economy on track to pare most
of the losses towards the end of the year. As is the case
with the other Nordic countries, the developments in the
economy will largely depend on the pace of reopening
sectors affected by COVID-19 restrictions. As long as
the service sector is able to reopen, Finland’s economic
recovery this year will be robust. Private consumption,
boosted by recovering employment, will act as a driver
for growth. Exports and investments will benefit from
the global economic recovery, while the increased levels
of public debt present budgetary challenges moving
forward.
In Sweden, the economy is expected to have contracted
by 2.9 per cent in 2020, yet grow by a solid 4.0 per cent in
2021. Similar to Finland, the first quarter of 2021 is likely
to be challenging for the Swedish economy due to rising
COVID-19 infection rates and tighter restrictions. How-
ever, the growth rate is expected to pick up towards the
end of the year driven by pent-up demand, revitalisation
of export markets and positive spill over effects stemming
from fiscal policy measures taken across the globe. The
Riksbank is likely to keep its rates unchanged at zero and
continue its asset purchases to support the recovery. The
low interest rate environment has kept borrowing costs
down and has been one of the key factors in driving up
house prices to record levels.
In Norway, the economy is expected to have contracted
by 3.4 per cent in 2020 and expand by 2.7 per cent in
2021, putting the Norwegian economy on track to reach
pre-crisis GDP levels in early 2022. The Norwegian
economy has already regained most of the ground lost
during the initial COVID-19 shock in March last year,
during which mainland activity shrunk by a massive 14
per cent. The unemployment rate has already recovered
back to 4 per cent from the crisis high of 10 per cent and is
likely to continue to recover further in 2021. House prices
are likely to retain their upward momentum in the first
half of 2021 before gradually slowing down. Higher oil
prices and signals from the Norges Bank of upcoming rate
hikes will contribute to a stronger NOK going forward.
In Denmark, the economy is expected to have contracted
by 3.7 per cent in 2020, and the growth projection of 2.5
per cent for 2021 is more modest compared to Denmark’s
Nordic peers. However, Denmark’s public finances have
stayed relatively stable due to increased tax revenue from
returns on pension investments and actual stimulus
spending being noticeably smaller than the funds
allocated to the package. In 2021, the economic upswing
will be initially driven by rising private consumption
supported mainly by a sharp pick-up in the housing
market and accumulated savings. Later in the year,
Denmark’s key export markets are likely to grow, bringing
GDP back to pre-crisis levels in 2022.
Economic Environment
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
7BOARD OF DIRECTORS’ REPORT 2020
Year 2020 will be remembered for the COVID-19 pandemic
and its effects on society, economy, businesses and the
lives of ordinary people. Despite the turbulence, Sampo
Group’s insurance operations continued their good
performance.
When the COVID-19 pandemic hit the Nordic countries
in the first quarter of 2020, priority in Sampo Group was
given to maintaining service level and to supporting
customers in the best possible way in the changed
working conditions. The safety of customers and person-
nel has been ensured through following the instructions
and recommendations given by the local authorities and
by utilizing digital technology.
A large majority of Sampo Group’s personnel has been
working remotely since mid-March. After the summer, a
gradual opening of offices was initiated within the limits
set by social distancing recommendations by authorities
but the return to the office was stopped after the pan-
demic surged again in Europe. As COVID-19 infection
rates increased drastically in Northern Europe during
October and November, Sampo’s subsidiaries adapted
to the tighter restrictions and the share of employees
working from home increased further. At the end of the
fourth quarter 80–95 per cent of If employees and the vast
majority of the employees of Sampo’s other subsidiaries
worked remotely as well.
Despite the challenging situation, all the subsidiaries
have been able to offer normal service level and customer
satisfaction has remained at a high level, in Mandatum Life
the customer satisfaction even reached a new record high.
There have been no COVID-19 related lay-offs among
Sampo Group personnel and none of the group companies
has required any government funding support during the
COVID-19 pandemic.
Sick leave and personnel turnover were lower during the
COVID-19 crisis than before the crisis. During 2020 If’s
sick leave figures improved from 3.3 per cent to 3.0 per
cent and personnel turnover fell from 11.6 per cent to 10.1
per cent. In Mandatum, the turnover decreased from 11.3
per cent to 8.1 per cent.
The Group is prepared for an extended period of remote
work and an eventual return to normality will be slow and
gradual and even long term we expect the share of remote
and digital work to be substantially higher than before the
pandemic. We are working very actively to prepare for the
new situation.
Eects of COVID-19 on Sampo Group
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
8BOARD OF DIRECTORS’ REPORT 2020
If
Claims cost for 2020 was negatively impacted from travel
insurance policies primarily following imposed travel
restrictions from governments due to COVID-19. At the
end of the reporting period, the total number of reported
claims amounted to approximately 50,000 claims
corresponding to a gross claims cost of EUR 35 million,
mostly in BA Private and Norway. For this event, If had a
reinsurance cover with a net retention of approximately
EUR 10 million.
Government restrictions and in general low activity level,
especially during the second quarter, had a positive effect
on claims frequency. The situation varied somewhat
during the third and fourth quarter, but positive effects
continued throughout the year, affecting especially motor
insurance. The effect of COVID-19 on If’s risk ratio was
approximately 4 percentage points positive in the fourth
quarter and approximately 3 percentage points for the
full year. Going forward repair costs might increase due
to a lack of material, delays in transportation of material
or shortage of personnel following implemented govern-
ment travel restrictions.
During the fourth quarter premium volume was slightly
impacted by the COVID-19 situation, primarily by
travel insurance in Private business and with continued
negative impact related to decommissioning of vehicles
and lower sums insured in the Commercial segment, but
as a whole the effects were not very significant. There
is still some uncertainty with regard to possible lagging
effects to premiums through, for example, lower insurable
sums and lower turnover in the corporate segments.
Topdanmark
Topdanmark has reported on the impacts of the COVID-19
pandemic in its announcement of 2020 annual results
published on 22 January 2021. The report is available at
www.topdanmark.com.
Hastings
Overall, motor claims frequencies reduced during the
year, reflecting reduced motor vehicle usage following
national and local restrictions resulting from COVID-19.
Claim severities increased due to interruptions in the
repair networks and supply of parts caused by COVID-19
and increased car rental costs, with repairs typically
taking longer than anticipated.
Hastings does not provide insurance for any business
lines which have been negatively impacted by COVID-19,
such as travel or business interruption.
Significant actions have been taken to support customers,
colleagues and the community throughout the pandemic,
including premium reductions, the waiving of fees and
charitable donations. The Group has continued to employ
all colleagues on full salaries during the pandemic.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
9BOARD OF DIRECTORS’ REPORT 2020
Mandatum Life
The COVID-19 virus created a short-term shock in capital
markets in March 2020. The unusual situation caused
Mandatum Life to change its focus from new sales to
existing customers for several months starting from spring
and this, together with the uncertain capital market
situation, was reflected in the premium income in 2020
as premiums did not quite meet the record level of the
comparison year.
The volatility of claims costs did not differ from the
normal level. All in all, looking at the entire year of 2020,
the COVID-19 related impacts on the company’s business
remained small.
Investment Activities
A strong sell-off took place in the capital markets after the
outbreak of the pandemic crisis in March and resulted in
negative returns across asset classes. Listed equities and
high yield credit were the worst hit asset classes. However,
swift monetary responses by central banks and govern-
ments helped to stabilize the financial markets during
the second quarter. Leading equity indices rebounded
strongly and credit spreads on bonds narrowed.
Sampo Group companies have enjoyed good investment
returns since the second quarter of 2020 and as the
market did not expect any major shocks in the third
quarter, Sampo Group achieved a positive investment
return by the end of the summer.
In the fourth quarter, particularly in November and
December, good news about the COVID-19 vaccines and
continued central bank stimulus sparked strong increases
in equity values. While equity portfolios brought the
best investment returns, fixed income investments also
generated a solid return in the fourth quarter, which
gave Sampo a good opportunity to cautiously repatriate
investment profits. Looking at the Group’s total invest-
ment result reported for 2020, a significant portion of the
very good returns came during the last few months of the
year.
Solvency Positions
The solvency positions of Sampo Group and its subsidiaries
were strong at the end of 2020. More information is
available in the section Solvency.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
10BOARD OF DIRECTORS’ REPORT 2020
Business Areas
If
If is the leading property and casualty insurance company
in the Nordic region, with insurance operations that
also encompass the Baltic countries. The P&C insurance
group’s parent company, If P&C Insurance Holding Ltd, is
located in Sweden, and the If subsidiaries and branches
provide insurance solutions and services in Finland,
Sweden, Norway, Denmark and the Baltic countries. If’s
operations are divided into four business areas: Private,
Commercial, Industrial and Baltic.
The profit before taxes for 2020 for the If segment
amounted to EUR 901 million (884). The total comprehen-
sive income for the period after tax was EUR 866 million
(836).
The combined ratio for 2020 improved to 82.1 percent
(84.5) and the risk ratio to 60.7 per cent (62.7). The cost
ratio was 21.5 per cent (21.8). The effect of COVID-19 on
the combined ratio was approximately 3 percentage
points positive in January-December 2020 and 4 percent-
age points in the fourth quarter.
In 2020 EUR 186 million (190) was released from the tech-
nical reserves relating to prior year claims. The return on
equity was 33.3 per cent (33.4) and the fair value reserve
on 31 December 2020 amounted to EUR 557 million (457).
Results
If, 2020
EURm Change
Premiums, net
Net income from investments -
Other operating income
Claims incurred - - -
Change in insurance liabilities - -
Sta costs - -
Other operating expenses - -
Finance costs - -
Share of associates’ profit/loss -
Profit before taxes
Key figures Change
Combined ratio, % -
Risk ratio, % -
Cost ratio, % -
Expense ratio, % -
Return on equity, % -
Average number of sta (FTE)
The technical result amounted to EUR 811 million (685)
and the insurance margin (technical result in relation to
net premiums earned) was 18.2 per cent (15.9).
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
11BOARD OF DIRECTORS’ REPORT 2020
Combinedratio Riskratio
Change Change
Private - -
Commercial - -
Industrial
Baltic -
Sweden - -
Norway - -
Finland
Denmark - -
Large claims were EUR 88 million worse than expected in
2020. In BA Commercial, they were EUR 3 million worse
and in BA Industrial EUR 85 million worse than expected.
The claims related to the landslide in Gjerdrum, Norway,
at the end of December 2020 amounted to EUR 18 million.
The Swedish discount rate for the annuity reserves was
-0.72 per cent (-0.77) at the end of 2020 and had a positive
effect of EUR 5 million on the full-year results. The
discount rate used in Finland, was lowered to 0.75 per cent
in the third quarter and had a negative impact of EUR 51
million.
Gross written premiums amounted to EUR 4,823 million
(4,675) in 2020. Excluding the currency effects, premiums
grew 4.7 per cent (5.7) in January – December 2020.
Premiums grew in all markets and business areas.
Within business areas, the growth was highest in BA
Industrial, at 10.4 per cent, followed by BA Commercial
at 4.2 per cent. In BA Private, the growth was 3.7 per cent.
Geographically, premiums grew 10.6 per cent in Denmark,
5.0 per cent in Norway, 4.4 per cent in Sweden and 2.5 per
cent in Finland.
Customer retention continued to be high and stable
across all business areas. The number of customers
increased in all countries.
On 31 December 2020, the total investment assets of If
amounted to EUR 11.0 billion (10.8), of which fixed income
investments constituted 85 per cent (86), money market
3 per cent (2) and equity 12 per cent (12). Net income from
investments amounted to EUR 126 million (229). Invest-
ment return marked-to-market for the full-year 2020 was
2.3 per cent (5.0). Duration for interest bearing assets was
1.4 years (1.3) and average maturity 2.8 years (2.8). Fixed
income running yield without taking into account the FX
hedging cost as at 31 December 2020 was 1.5 per cent (1.8).
If’s solvency position is described in the section Solvency.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
12BOARD OF DIRECTORS’ REPORT 2020
Topdanmark
Topdanmark is Denmark’s second largest non-life
insurance company and it is also one of the country’s
major life insurance companies. Topdanmark has a 16 per
cent market share in non-life insurance and a 11 per cent
market share in life insurance in Denmark. Topdanmark
focuses on the private, agricultural, and SME markets.
The company is listed on the Nasdaq Copenhagen.
At the end of 2020 Sampo plc held 41,997,070 Topdan-
mark shares, corresponding to 46.7 per cent of all shares
and 48.0 per cent of related voting rights in the company.
The market value of the holding was EUR 1,491 million on
31 December 2020.
The Board of Directors of Topdanmark will recommend
to the AGM on 25 March 2021 that a dividend of DKK 1,035
million will be distributed for 2020, representing DKK 11.5
per share. In addition, the Board of Directors will recom-
mend to the AGM that the remaining dividend of DKK 8.5
per share (DKK 765 million) for 2019 will be distributed as
an extraordinary dividend. Given the AGM approval, the
total dividend distributed in connection with the AGM
will be DKK 1,800 million or DKK 20 per share.
Topdanmark’s profit before taxes for 2020 amounted in
Sampo Group’s profit and loss account to EUR 167 million
(238). The combined ratio amounted to 85.2 per cent
(82.1) in 2020. The expense ratio was 16.2 per cent (16.0).
The increase in expense ratio is impacted by high sales
Results
Topdanmark, 2020
EURm Change
Premiums, net
Net income from investments -
Other operating income -
Claims incurred - -
Change in insurance liabilities - - -
Sta costs - -
Other operating expenses - -
Finance costs - - -
Share of associates’ profit/loss -
Profit before taxes -
Key figures Change
Combined ratio, %
Loss ratio, %
Expense ratio, %
Average number of sta (FTE)
through new distribution partner Nordea, and COVID-19
related expenses.
The following text is based on Topdanmark’s full-year 2020
result release published on 22 January 2021.
The profit after tax was better than assumed in the
latest model profit forecast in the third quarter report.
The profit improvement was mainly due to a higher
investment return, run-off profits and a lower level of
weather-related claims in the fourth quarter of 2020 than
assumed.
On motor insurance, the claims trend, adjusted for the
COVID-19 effect, improved due to higher average premi-
ums. The development on motor improved the claims
trend by 0.8 percentage points.
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
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Topdanmark’s premiums increased by 3.6 per cent in
non-life insurance and decreased by 1.1 per cent in life
insurance in 2020. The private segment accounted for a
1.3 per cent increase, and the SME segment accounted for
a 6.2 per cent increase. Adjusted for a change in segmen-
tation, premium growth was 2.1 per cent and 5.3 per cent
in the private segment and SME segment respectively.
On 1 October, Sydbank terminated the distribution
agreement with Topdanmark. The termination of the
agreement became effective by the end of 2020. As
Topdanmark has good momentum in new sales and low
churn rates, the terminated distribution agreement with
Sydbank only has a marginal negative impact on the
premium growth in 2021.
Topdanmark’s solvency position is described in the
section Solvency.
Further information on Topdanmark A/S and its
January-December 2020 result is available at
www.topdanmark.com.
Hastings
Sampo plc owns 70 per cent of the shares of Hastings and
the Group started to consolidate the UK insurance group
as a subsidiary as of 16 November 2020. In Sampo Group’s
consolidated accounts Hastings is reported as a separate
segment. Hastings profit and loss items are recognized
line-by-line in the Group’s consolidated financial state-
ments.
During the next seven and half years the annual amortiza-
tion of intangibles will amount to approximately EUR 40
million, i.e. EUR 10 million per quarter. The short period
consolidated in 2020 also contains items which are not
recurring.
Hastings’ agility and digital capability has enabled
operations to continue with minimal interruption despite
the unprecedented disruption to UK society and the
economy as a result of COVID-19. Progress continues on
its strategic initiatives, delivering profitable growth, with
the total number of customer policies growing 8 per cent
to 3.1 million. The growth in customer policies has been
supported by continued strong retention rates throughout
2020. Home insurance customer policies also continue to
grow, up 28 per cent to 0.3 million.
The full year 2020 loss ratio reduced compared to 2019
due to a reduction of claims frequencies resulting from
the lockdown restrictions, partially offset by inflation in
the cost of claims. The reserving position as at 31 Decem-
ber 2020 reflects the increased claims uncertainties
caused by the pandemic.
Hastings continues to build on its digital capabilities,
resulting in more customers choosing to make contact
through the Mobile App. This has had over 1.2 million
downloads to date and customer engagement and
feedback on the App continue to be positive. Hastings’
claims transformation initiatives continue to develop and
progress, with initiatives spanning accidental damage,
third party property damage and bodily injury.
Nordea
Nordea is a leading Nordic universal bank. Nordea
shares are listed on the Nasdaq exchanges in Stockholm,
Helsinki, and Copenhagen. In the context of Sampo
Group’s financial reporting, Nordea is treated as an
associated company and it is included in the segment
entitled ‘Holding’.
On 31 December 2020 Sampo plc held 642,924,782 Nordea
shares corresponding to a holding of 15.87 per cent.
Sampo’s holding decreased 4 percentage points after
Sampo successfully sold 162 million Nordea shares in an
accelerated book-build offering to institutional investors
on 10 November 2020.
The average purchase price per share amounted to EUR
6.46. Nordea’s book value in the Group accounts is, after
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Sampo plc’s Notes to the Accounts
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14BOARD OF DIRECTORS’ REPORT 2020
Results
Mandatum Life, 2020
EURm Change
Premiums written -
Net income from investments -
Other operating income
Claims incurred - - -
Change in liabilities for inv. and ins. contracts - - -
Sta costs - -
Other operating expenses - -
Finance costs - -
Profit before taxes -
Keyfigures Change
Expense ratio, % -
Return on equity, % -
Average number of sta (FTE)
the impairment, EUR 7.50 per share. As disclosed on 11
February 2021, the book value was impaired from EUR
8.90 per share by a decision by Sampo’s Board based on
management judgement. Nordea’s closing price as at 31
December 2020 was EUR 6.67.
Sampo’s share of Nordea’s 2020 profit before taxes,
excluding the accounting impacts of the sale of Nordea
shares on 10 November 2020 and the impairment of the
holding in Sampo Group’s consolidated accounts 2020,
amounted to EUR 429 million (290).
On 4 February, Nordea’s Board proposed a dividend of
EUR 0.39 per share for 2020. In addition, the Board will
decide on 18 February to distribute EUR 0.07 per share as
the first instalment of the delayed 2019 dividend of EUR
0.40 per share. The Board also proposes that the Annual
General Meeting authorise it to pay out the remaining
part of the 2019 dividend (EUR 0.33 per share) and the
2020 dividend (EUR 0.39 per share) – a total of EUR
0.72 per share – after September 2021, in line with the
European Central Bank recommendation.
Further information on Nordea’s full-year results is
available at www.nordea.com.
Mandatum Life
Mandatum Life Group comprises Mandatum Life Insur-
ance Company Ltd., a wholly-owned subsidiary of Sampo
plc, operating in Finland, Estonia, Latvia and Lithuania,
and its subsidiaries. The parent company, Mandatum Life,
is responsible for sales functions and all the functions
required by the Insurance Companies Act. The operating
subsidiaries are Mandatum Life Services Ltd, Mandatum
Life Investment Services Ltd. and Mandatum Life Fund
Management S.A.
The profit before taxes for Mandatum Life in 2020
amounted to EUR 154 million (280). The total comprehen-
sive income for the period after tax reflecting the changes
in market value of assets, was EUR 213 million (308). The
return on equity amounted to 14.4 per cent (23.5).
The expense result increased to EUR 27 million (24). The
risk result increased to EUR 38 million (35).
Premium income on own account was EUR 1,051 million
(1,596), of which unit-linked premiums were EUR 960
million (1,476). In 2019 both premium income and claims
paid included around EUR 400 million one-off items
caused by changes in the tax treatment of life insurance
products.
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
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The net investment income, excluding income on
unit-linked contracts amounted to EUR 189 million (358).
The net income from unit-linked contracts was EUR 397
million (908). During 2020 the fair value reserve increased
to EUR 534 million (438).
The total technical reserves of Mandatum Life Group
increased to EUR 12.3 billion (12.0). The unit-linked
reserves increased to highest ever EUR 8.8 billion (8.1) at
the end of 2020. The unit-linked reserves corresponded to
72 per cent (67) of total technical reserves.
The with-profit reserves decreased as planned during
2020 and amounted to EUR 3.5 billion (3.9) on 31 Decem-
ber 2020. The with-profit reserves related to the higher
guarantees of 4.5 and 3.5 per cent decreased by EUR 268
million to EUR 1.9 billion at the end of 2020.
Mandatum Life has overall supplemented its technical
reserves with a total of EUR 218 million (230). The figure
does not take into account the reserves relating to the
segregated fund. The discount rate used for 2021 - 2023
is 0.25 per cent. The new discount rates for years 2022
and 2023 had a negative impact of EUR 77 million on the
result.
The discount rate of segregated liabilities is 0.0 per cent
and the discount rate reserve of the segregated liabilities
amounted to EUR 232 million (263).
The assets covering Mandatum Life’s original with-profit
liabilities at the end of 2020 amounted to EUR 4.6 billion
(4.7) at market values. 49 per cent (46) of the assets were
in fixed income instruments, 9 per cent (15) in money
market, 28 per cent (25) in equities and 14 per cent (14) in
alternative investments. The investment return marked-
to-market for 2020 was 6.5 per cent (9.2). The duration
of fixed income assets at the end of 2020 was 2.7 years
(2.8) and average maturity 2.9 years (2.9). Fixed income
running yield without taking into account the FX hedging
cost was 2.8 per cent (2.4) on 31 December 2020.
The assets covering the segregated fund amounted to
EUR 0.9 billion (1.0), of which 80 per cent (68) was in fixed
income, 9 per cent (13) in money market, 6 per cent (13)
in equities and 5 per cent (4) in alternative investments.
Segregated fund’s investment return marked-to-market
was 1.5 per cent (6.4). On 31 December 2020 the duration
of fixed income assets was 3.1 years (2.8) and average
maturity 3.6 years (3.2). Fixed income running yield
without taking into account the FX hedging cost was 2.1
per cent (1.9).
Mandatum Life’s solvency position is described in the
section Solvency.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
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16BOARD OF DIRECTORS’ REPORT 2020
Results
Holding, 2020
EURm Change
Net investment income - -
Other operating income
Sta costs - -
Other operating expenses - -
Finance costs - -
Share of associates’ profit
Valuation/Sales loss associate shares - - -
Impairment loss on Nordea shares - - -
Profit before taxes - -
Keyfigures Change
Average number of sta (FTE)
Including the impairment loss and the sales loss on
Nordea shares, Sampo’s share of profits of associated
companies Nordea and Nordax Holding for January
– December 2020 amounted to, EUR -722 million. The
one-off items excluded, the share of the profits of the
associates was EUR 439 million (298), of which Nordea’s
share was EUR 427 million (290) and Nordax’s share was
EUR 12 million (8).
Holding
Sampo plc owns and controls its subsidiaries engaged in
P&C and life insurance. In addition, Sampo plc held on 31
December 2020 approximately 15.9 per cent of the share
capital of Nordea, the largest bank in the Nordic countries.
Nordea is an associated company to Sampo plc. As of
March 2018 Sampo plc has also treated Nordax Holding AB
(formerly NDX Intressenter AB), of which Sampo plc owns
36.25 per cent, as an associate.
Holding segment’s profit before taxes for January -
December 2020 decreased to EUR -826 million (139),
including two Nordea-related one-off items of EUR
1,161 million. The comparison period includes a EUR
-155 million valuation loss incurred in connection with
distribution of Nordea shares as dividends to Sampo
shareholders in the third quarter of 2019.
After the impairment, Sampo plc’s holding in Nordea was
booked in the consolidated balance sheet on 31 December
2020 at EUR 4.8 billion, i.e. EUR 7.50 per share. The
market value of the holding was EUR 4.3 billion, i.e. EUR
6.67 per share, on 31 December 2020.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
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17BOARD OF DIRECTORS’ REPORT 2020
Other Developments
Disposal of Nordea Shares
On 10 November 2020, Sampo sold 162 million Nordea
shares, 4.0 per cent of the outstanding shares, in an
accelerated bookbuild offering to institutional investors.
The transaction price was EUR 7.25 per share, resulting in
gross proceeds of EUR 1,174 million.
After the transaction, Sampo held 642,924,782 Nordea
shares, corresponding to 15.9 per cent of all shares and
voting rights in Nordea.
Sampo incurred a reported loss of EUR 262 million from
the transaction for the last quarter of 2020. Nordea’s
status as an associated company of Sampo remained
unchanged.
In connection with the offering, Sampo entered into
a lock-up undertaking, under which it has, subject to
certain exceptions, agreed not to sell any Nordea shares
for a period ending at 9 May 2021.
Hastings Acquisition
Sampo and Rand Merchant Investment Holdings (RMI)
announced on 5 August 2020 that they had made a
recommended cash offer, through a jointly owned
company, to acquire all issued and to be issued shares
in Hastings Group Holdings Plc not already owned by
Sampo and RMI.
The offer price was GBp 250 for each Hastings share,
valuing Hastings’ share capital at approximately GBP
1.66 billion or approximately EUR 1.84 billion. The offer
price represents a premium of approximately 37.5 per
cent to the volume-weighted average price of GBp 182 per
Hastings share for the three-month period ended 28 July
2020, the last business day before Hastings announced it
had received an approach from Sampo and RMI.
Sampo and RMI formed a new jointly-owned company for
the purposes of acquiring Hastings. Following completion
of the offer, Sampo and RMI own and control 70 per cent
and 30 per cent respectively of the shares and votes in the
jointly-owned company. Sampo and RMI have entered
into a long-term partnership in relation to Hastings.
The governance of the company reflects the relative
shareholdings of Sampo and RMI, recognizing Sampo’s
controlling position, but protecting RMI’s interest with
customary minority protections. The shareholders
agreement includes customary exit arrangements for joint
investments of this type.
The size of Sampo’s investment, based on its 70 per cent
stake, was GBP 1.16 billion or EUR 1.29 billion valued
at the offer price. Sampo funded the acquisition costs
with EUR 1 billion of hybrid Tier 2 capital issued on 3
September 2020 with the residual amount coming from
existing cash resources.
Strategic Rationale for Acquisition
Sampo has a strategic ambition to expand further into
non-life insurance, a segment where it has extensive
experience and expertise. As part of this strategy, and in
the context of its leading market positions in the Nordic
markets, Sampo has been considering a geographic
expansion beyond its current footprint. Sampo believes
that the UK, as one of the largest retail P&C markets in
Europe, offers an attractive scale opportunity.
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
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18BOARD OF DIRECTORS’ REPORT 2020
In this context, the acquisition of Hastings represents an
attractive opportunity for Sampo to advance its strategy
and accelerate its repositioning towards retail P&C
insurance. Hastings is a leading motor insurer in the UK
and has recently been diversifying into other non-life
insurance products including home insurance. Both
motor and home insurance represent large markets in the
UK with growth potential for the Hastings business.
The acquisition of Hastings provides an attractively
positioned platform in one of the most digitally advanced
markets globally. The UK is characterized by its high
levels of digital distribution and Hastings is one of the
leading distributors of motor insurance policies in
this market. Sampo believes that, under its ownership
together with that of RMI, Hastings will be able to further
develop its agile and digital business model to create
long-term value.
Sampo and RMI intend for Hastings to continue to be
operated on a standalone but unlisted basis and the
current management is expected to continue in their
position after the closing of the deal. Sampo believes
that a private partnership with RMI provides an optimal
structure for Hastings to fulfil its potential and build
long-term value for its stakeholders. As a private
company, Sampo believes Hastings will benefit from a
more long-term approach to decision making.
Sampo and RMI believe with their experience and under
private ownership there are a number of areas of Hastings’
operations that can be improved, including claims
handling sophistication, expansion into home insurance,
customer retention and the reinsurance strategy.
Financial Impact of anAcquisition
on Sampo Group
The Sampo Board expects the acquisition of Hastings
to be accretive to earnings per share and RoE from the
first full year following completion. Sampo estimates the
transaction will have a positive impact on earnings per
share in the mid-single digits (%).
Both S&P and Moody’s have maintained Sampo’s credit
ratings with stable outlook. The Sampo Board does not
expect the acquisition to impact Sampo’s dividend policy
in the short-term but is expected to enhance the dividend
potential in the long-term.
Timetable for Transaction
and Consolidation
The offer was recommended by Hastings’ independent
directors. The offer was being implemented by way of a
court-sanctioned scheme of arrangement under English
law, which was approved by the requisite majorities at the
Hastings shareholder meetings on 29 September 2020.
All of the conditions relating to regulatory and antitrust
approvals were satisfied by 27 October 2020 and the
scheme was effective following completion of the Court
Hearing procedure held on 13 November 2020.
The jointly-owned company of Sampo and RMI, currently
known as Hastings Group (Consolidated) Limited, became
Sampo plc’s subsidiary and formed a separate segment in
the Group’s financial reporting as of 16 November 2020.
Hastings’s profit and loss items were recognized line-by-
line in the Group’s consolidated financial statements.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
19BOARD OF DIRECTORS’ REPORT 2020
Group Structure
31 December 2020
Sampo plc
Finland
If P&C Insurance Ltd
(publ)
Sweden
If P&C Insurance AS
Estonia
If Livförsäkring AB
Sweden
If P&C Insurance
Holding Ltd (publ)
Sweden
Nordea
Bank Abp
Finland
100%
15.9%
100%
100%
100%
100%
100%
Topdanmark
A/S
Denmark
Topdanmark
Kapitalforvaltning A/S
Denmark
Topdanmark Forsikring A/S
Denmark
Topdanmark
Liv Holding A/S
Denmark
Topdanmark
Livsforsikring A/S
Denmark
100%
100%
46.7%
Hastings Group
(Consolidated) Ltd
United Kingdom
70%
Mandatum Life
Services Ltd
Finland
Mandatum Life
Investment Services Ltd
Finland
Mandatum Life
Fund Management S.A.
Luxembourg
Mandatum Life
Insurance Company Ltd
Finland
100%
100%
100%
100%
100%
Hastings Group
Holdings Ltd
United Kingdom
100%
100%
100%
100%
Hastings Group
(Finance) plc
United Kingdom
Hastings Group
Ltd
United Kingdom
Hastings
Insurance
Services Ltd
United Kingdom
Advantage
Insurance
Company Ltd
Gibraltar
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
20BOARD OF DIRECTORS’ REPORT 2020
Changes in Group Management
Torbjörn Magnusson took over as the Group CEO and
President as of 1 January 2020, after Kari Stadigh retired.
Magnusson was previously CEO of If P&C.
On the same date Ricard Wennerklint started as Chief of
Strategy in Sampo Group. He has held various positions in
Sampo Group since 2002.
After the end of the reporting year on 20 January 2021
Ivar Martinsen left his position as Head of BA Com-
mercial and the membership of Sampo Group Executive
Committee.
Governance and Related Issues
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
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21BOARD OF DIRECTORS’ REPORT 2020
Organization
31 December 2020
Private
Ingrid Janbu Holthe
Toby van der Meer
Commercial
Ivar Martinsen
Peter Hermann
Industrial
Poul Steensen
Baltic
Andris Morozovs
Morten Thorsrud
Petri Niemisvirta
Investments
Patrick Lapveteläinen
Group Finance
Knut Arne Alsaker
Risk Management
Kai Sotamaa
Investor Relations and Group Communications
Jarmo Salonen
Human Resources
Johan Börjesson
Strategy
Ricard Wennerklint
Group CEO and President
Torbjörn Magnusson
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
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22BOARD OF DIRECTORS’ REPORT 2020
Governance
During 2020 Sampo complied in full with the Finnish
Corporate Governance Code 2020 approved by the
Securities Market Association on 19 September 2019,
effective from 1 January 2020 (the “CG Code 2020”).
Acting in compliance with the Corporate Governance
Code, Sampo publishes a separate Corporate Governance
Statement on its website in fulfillment of the requirement
referred to in the Finnish Securities Markets Act
(746/2012), chapter 7, section 7.
The statement will be available at
www.sampo.com/statement and
www.sampo.com/year2020.
Annual General Meeting
The Board of Directors of Sampo plc decided on 25 March
2020 to postpone the Annual General Meeting that was
scheduled to be held on 23 April 2020. The postponement
was made in order to ensure the safety and well-being
of Sampo’s shareholders, Sampo’s employees, and other
stakeholders, in light of the COVID-19 outbreak and the
related health threat.
On 6 May 2020 Sampo Board decided to cancel the
previous dividend proposal of EUR 2.20 per share and
announce a new proposal of EUR 1.50 per share. The
Annual General Meeting, held on 2 June 2020, decided to
distribute the proposed dividend of EUR 1.50 per share for
2019. The record date for dividend payment was 4 June
2020 and the dividend was paid on 11 June 2020. The
Annual General Meeting adopted the financial accounts
for 2019 and discharged the Board of Directors and the
CEO from liability for the financial year.
The Annual General Meeting elected eight members
to the Board of Directors. The following members were
re-elected to the Board: Christian Clausen, Fiona
Clutterbuck, Jannica Fagerholm, Johanna Lamminen,
Risto Murto, Antti Mäkinen and Björn Wahlroos.
Georg Ehrnrooth was elected as a new member of the
Board. The Members of the Board were elected for a term
continuing until the close of the next Annual General
Meeting.
At its organizational meeting, the Board elected Björn
Wahlroos as Chair of the Board and Jannica Fagerholm as
Vice Chair. Christian Clausen, Risto Murto, Antti Mäkinen
and Björn Wahlroos (Chair) were elected to the Nomina-
tion and Remuneration Committee. Fiona Clutterbuck,
Georg Ehrnrooth, Jannica Fagerholm (Chair) and Johanna
Lamminen were elected to the Audit Committee.
All the proposed Board members have been determined to
be independent of the company and its major sharehold-
ers under the rules of the Finnish Corporate Governance
Code 2020. The curriculum vitaes of the Board Members
are available at www.sampo.com/board.
The Annual General Meeting decided to pay the following
fees to the members of the Board of Directors until the
close of the 2021 Annual General Meeting: the Chair of the
Board will be paid an annual fee of EUR 180,000 and other
members of the Board will be paid EUR 93,000 each. Fur-
thermore, the members of the Board and its Committees
will be paid the following annual fees: the Vice Chair of
the Board EUR 26,000, the Chair of the Audit Committee
EUR 26,000 and the member of the Audit Committee
EUR 6,000. A Board member shall in accordance with the
resolution of the Annual General Meeting acquire Sampo
plc’s A shares at the price paid in public trading for 50
per cent of his/her annual fee excluding taxes and similar
payments.
The Annual General Meeting accepted Sampo plc’s
Remuneration Policy for Governing Bodies. The resolu-
tion on the Remuneration Policy was advisory.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
23BOARD OF DIRECTORS’ REPORT 2020
Ernst & Young Oy was elected as Auditor. The Auditor
will be paid a fee determined by an invoice approved by
Sampo. Kristina Sandin, APA, will act as the principally
responsible auditor.
At the general meeting 320,359,477 shares (57.7 per cent
of shares) and 325,159,477 votes (58.0 per cent of all votes)
were represented, including advance voting and a proxy
representation.
The minutes of the Annual General Meeting are available
for viewing at www.sampo.com and at Sampo plc's head
office at Fabianinkatu 27, Helsinki, Finland.
Corporate Responsibility
Sampo plc and its subsidiaries are committed to integrat-
ing corporate responsibility into Group’s governance and
business operations. Simultaneously, the aim is to develop
related performance measurement and reporting. This is
in the interests of, and expected, by the Group’s various
internal and external stakeholders.
During 2020, Sampo continued to work on corporate
responsibility in line with the Group’s corporate respon-
sibility themes: Responsible Business Management and
Practices, Responsible Corporate Culture, Responsible
Investment Management and Operations, and Responsi-
bility in Communities.
Business Management and Practices:
During 2020, a
group-wide project regarding further integration of envi-
ronmental, social, and governance (ESG) considerations
in insurance underwriting and product development was
initiated. Individual Group companies work towards a
common group-level goal of establishing more systematic
processes and improved disclosure in terms of sustainable
products and services. The work continues in 2021.
In addition, a group-wide climate risk project was
started during the year. The project aims to analyze how
climate-related risks are incorporated in Sampo Group
companies’ governance structures, strategy, risk man-
agement, and overall business operations. The aim is to
understand the current state of climate risk management,
identify gaps and development areas, create an action
plan based on the findings, and improve the disclosure
and prepare to report according to possible future
regulatory requirements and the recommendations of
the Task Force on Climate Related Financial Disclosures
(TCFD). The current state analysis and gap analysis were
conducted during 2020. The work will continue during
2021 according to plan.
Corporate Culture:
In 2020, Sampo focused on developing
group-level key performance indicators to improve group-
level reporting, for example, in terms of employment,
diversity and equality, and competence development.
This is to better measure and report group-level perfor-
mance in these areas. The results of this work will be
available later in the Sampo Group Corporate Responsibil-
ity Report, where a number of new group-level indicators
are reported.
Investment Management and Operations:
During 2020,
Sampo Group companies strengthened their investment
policies by adding further instructions on how to take the
ESG issues into account in their investment processes.
Particularly climate risk related considerations were
in focus during the year and, for example, additional
screening and reporting on fossil fuels was initiated
from 2021 onward. Sampo Group also reported to the UN
Principles for Responsible Investment (PRI) for the first
time in 2020. The first reporting round was voluntary for
the Group. In 2021, reporting continues with mandatory
and public reporting according to the updated reporting
framework of the PRI.
Communities:
In 2020, Sampo continued to integrate the
UN Sustainable Development Goals (SDGs) further into
the Group companies’ operations and improve the report-
ing on the underlying targets. In addition, Sampo Group
developed its community engagement work by creating
a group-level community engagement framework. The
framework has three themes: Climate and Environment,
Health and Well-being, and Safety and Education. The
themes guide the Group’s stakeholder engagement and
dialogue, donations and other humanitarian efforts, and
the related reporting. Benefits of the framework include,
among other things, better allocation of efforts to the
most important themes from the Group’s perspective, and
better measurement and reporting on a group-level.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
24BOARD OF DIRECTORS’ REPORT 2020
Towards the end of the year, Sampo started the integra-
tion of Hastings into the Group’s corporate responsibility
work. The integration continues during 2021.
Sampo Group will issue a report on non-financial infor-
mation in accordance with Chapter 3a, Section 5 of the
Accounting Act. The report, Sampo Group Corporate
Responsibility Report 2020, will be separate from the
Board of Directors’ Report and published in May 2021 at
www.sampo.com/year2020.
In addition to the group-level report, further information
on If, Topdanmark, Hastings, and Mandatum Life’s
corporate responsibility activities can be found in their
respective reports. All the reports are available at
www.sampo.com/year2020.
Personnel
The average number of Sampo Group’s employees (FTE)
in 2020 amounted to 13,227 (9,813).
If is Sampo Group’s largest business area and employed
on average 54 per cent of the personnel. Topdanmark
employed 18 per cent, Hastings employed 22 and Man-
datum Life approximately 4 per cent of the personnel.
The parent company Sampo plc employed 0.5 per cent
of the work force. Hastings is included in the personnel
calculations as of 1 November 2020.
In geographical terms Denmark had 23 per cent of the
personnel, United Kingdom 22 per cent, Finland 17 per
cent, Sweden 17 per cent and Norway 12 per cent. The
share of other countries was 8 per cent.
The total number of staff in If increased 4 per cent. As of
31 December 2020, If employed 7,120 persons.
Topdanmark employed 2,456 persons at the end of the
year and the total number of staff increased 4 per cent.
Hastings employed 2,965 persons as of 31 December 2020.
Hastings became Sampo plc’s subsidiary and formed a
separate segment in the Group’s financial reporting as of
16 November 2020.
The total number of staff in Mandatum Life decreased
1 per cent. As of 31 December 2020 Mandatum Life
employed 568 persons.
The total number of staff in Sampo plc increased 8 per
cent and it employed 69 persons at the end of 2020.
At the end of the year, the total number of staff in Sampo
Group totaled 13,178 persons.
More detailed information on personnel in Sampo Group
is available in Sampo Group Corporate Responsibility
Report 2020 to be published in May 2021 at
www.sampo.com/year2020.
Remuneration
Sampo plc’s Board of Directors has established the Sampo
Group Remuneration Principles, which apply to all Sampo
Group companies. The Remuneration Principles are
available at www.sampo.com/remuneration. Sampo
Group’s remuneration strategy determines its responsi-
bility towards employees and shareholders. This means
that the long-term financial stability and value creation of
Sampo Group shall guide the remuneration design.
The different forms of remuneration used in Sampo
Group are the following:
(a) Fixed Compensation
(b) Variable Compensation
(c) Pension
(d) Other Benefits
The starting point of any compensation mechanism
shall be to encourage and stimulate employees to do
their best and surpass their targets. Remuneration
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
25BOARD OF DIRECTORS’ REPORT 2020
packages shall be designed to reward fairly for prudent
and successful performance. At the same time, however,
in order to safeguard the interest of other stakeholders,
compensation mechanisms shall not generate conflicts of
interest and shall not entice or encourage employees to
excessive or unwanted risk taking. Thus, compensation
mechanisms cannot be separated from risk management
objectives and practices.
The relative proportions of fixed and variable compensa-
tion reflect the responsibilities of individual executives
and employees. Fixed salary shall represent a sufficiently
high share of the total remuneration. Variable compensa-
tion may be based on the contribution to the company’s
profitability and on individual performance or linked to
committing employees to Sampo Group.
The decision on payout of variable compensation shall
be based on the assessment of the incurred risk exposure
and the fulfillment of solvency capital requirements.
Furthermore, the payment of a certain portion of the
variable compensation payable to the Senior Executive
Management and to certain key persons shall be deferred
for a defined period of time as required in the regulatory
framework applicable to each Sampo Group company.
After the deferral period, a retrospective risk adjustment
review shall be carried out and the Board of Directors of
each Sampo Group company shall decide whether the
deferred variable compensation shall be paid/released in
full, partly or cancelled in whole. In 2020, a total of EUR
3.3 million (10.5) of short-term and long-term incentives
has been deferred.
The Board of Directors decides on the launch of long-term
incentive schemes based on financial instruments of
Sampo plc to the management and other key employees
of Sampo Group. On 5 August 2020, the Board of Directors
decided to adopt a new long-term incentive scheme
2020 for the management (including the Group CEO)
and other key employees of Sampo Group. The Sampo
Board members are not included in the scheme. The total
number of participants in the long-term incentive scheme
is 113 and a total of 3,876,500 units out of a maximum of
4,500,00 were allocated in August to September 2020.
Remaining incentive units may be allocated in 2021 and
2022 and may be allocated to new recruits or current
employees with materially changed circumstances or
holding a position of increased strategic importance. The
scheme will vest in three instalments starting from three
years from the allocation of the units.
In the long-term incentive scheme 2017, a total of
2,723,300 allocated incentive units remain and will vest
during 2021–2023.
The value of one incentive unit is calculated as the
difference between the trade-weighted average price
of the Sampo A share at the time of payment and the
dividend-adjusted starting price. In addition to the share
price development, the calculation of the value of one
incentive unit takes into account the performance of the
insurance margin of If P&C and/or the return on capital
at risk as further specified in the terms of the respective
incentive scheme. Both incentive schemes contain a cap
for maximum payout. The terms and conditions of the
incentive schemes are available at www.sampo.com/
incentiveterms.
A deferral rule applies to incentive rewards paid to the
Senior Executive Management and to certain key persons.
Persons subject to the deferral rule shall at payout from
the schemes acquire Sampo A shares with a certain part
of the installment after deducting income tax and other
comparable charges. The shares are subject to disposal
restrictions for three years, after which the Board of
Directors shall decide on the possible release.
In 2020, a total of EUR 50 million (41), including social
costs, was paid as short-term incentives. During the same
period, a total of EUR 6 million (18), including social costs,
was paid from long-term incentive schemes. The results
impact of the long-term incentive schemes in force in
2020 was EUR 2 million (12).
The General Meeting resolved, in accordance with the
voting result, to accept the Remuneration Policy. The
resolution was advisory.
Sampo Group will in March 2021 publish the
Remunera tion Report for Governing Bodies for the
financial year 2020 at www.sampo.com/year2020. The
Remuneration Report for Governing Bodies provides
information on the remuneration paid to the Board
of Directors and the Group CEO during the previous
financial period and has been prepared in accordance
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
26BOARD OF DIRECTORS’ REPORT 2020
with the Corporate Governance Code 2020 issued by the
Securities Market Association, effective as of 1 January
2020. The Corporate Governance Code 2020 can be
viewed in full on the website of the Securities Market
Association at www.cgfinland.fi/en.
Risk Management
As dividends are Sampo plc’s major source of income,
its primary target for every sub-group is to maintain
a healthy balance between profits, risks and capital to
facilitate a steady stream of dividend payments in the
long term.
In addition to monitoring capitalization in the sub-
groups, Sampo manages key financial strength metrics
for the consolidated group and the parent company.
Sampo prefers low leverage and adequate liquidity buffers
to be able to generate liquidity as needed. Group level
capitalization is managed by setting targets for Group
solvency. To the extent possible Group level risk concen-
trations are proactively managed by strategic decisions.
Sampo Group companies operate in business areas where
specific features of value creation are the pricing of risks
and the active management of risk portfolios in addition
to sound customer services. Successful management of
underwriting risks and investment portfolio market risks is
the main source of earnings for Sampo Group companies.
In Sampo Group the risks associated with business
activities fall into three main categories: business risks
associated with external drivers affecting the competitive
environment or resulting from lack of internal opera-
tional flexibility, reputational risk associated with the
company’s business practices or associations and risks
inherent in business operations.
A more detailed description of Sampo Group’s
risk management activities, governance, risks and
capitalization is available in the Risk Management
Report 2020 at www.sampo.com/year2020.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
27BOARD OF DIRECTORS’ REPORT 2020
Shares, Share Capital and Shareholders
Shares and Share Capital
As at 31 December 2020, Sampo plc had 555,351,850
shares, which were divided into 554,151,850 A shares and
1,200,000 B shares. The total number of votes attached to
the shares is 560,151,850. Each A share entitles the holder
to one vote and each B share entitles the holder to five
votes at the General Meeting of Shareholders. According
to the company’s Articles of Association, A shares
must number at least 179,000,000 and no more than
711,200,000. Meanwhile, B shares must number at least
zero and no more than 4,800,000. As at 31 December 2020
Sampo plc's share capital amounted to EUR 98 million
(98) and the equity capital in total to EUR 11,418 million
(12,542).
Sampo plc’s Articles of association contain a redemption
obligation (16§) according to which a shareholder whose
holding of all shares or of all votes relating to the shares
reaches or exceeds 33 1/3 per cent or 50 per cent, is
obliged to redeem, at the presentation of claims by other
shareholders, their shares and the documents giving
entitlement to the shares, as stipulated in the Finnish
Companies Act, in the manner prescribed in the Article.
The Article contains further provisions on calculating the
shareholder’s holding and redemption price.
Shareholders by the Number of Shares Held
Sampo plc, 31 December 2020
Numberofshares
Shareholders
number
Share-
holders
Shares
number Shares
Votingrights
number
Voting
rights
1–100
101–500
501–1,000
1,001–5,000
5,001–10,000
10,001–50,000
50,001–100,000
100,001–500,000
500,001–
Total
of which nominee registered
On waiting list, total - - - - -
Total number of shares issued
Sampo A shares have been quoted on the main list of the
Nasdaq Helsinki since 1988 and all of the B shares are held
by Kaleva Mutual Insurance Company. B shares can be
converted into A shares at the request of the holder. At the
end of the financial year, neither Sampo plc nor its Group
companies held any Sampo A shares.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
28BOARD OF DIRECTORS’ REPORT 2020
2016 2017 2018 2019 2020 2021
Share Price Performance
Sampo plc, 2016–2020
€
2016 2017 2018 2019 2020 2021
Monthly Trading Volume
Sampo plc, 2016–2020
Shares
● Volume, Nasdaq Helsinki ● Volume, other market places
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
29BOARD OF DIRECTORS’ REPORT 2020
Authorizations Granted
to the Board
The Annual General Meeting authorized the Board to
repurchase a maximum of 50,000,000 Sampo A shares.
The price paid for the shares repurchased under the
authorization shall be based on the current market price
of Sampo A shares on the securities market. The author-
ization will be valid until the close of the next Annual
General Meeting, nevertheless not more than 18 months
after AGM's decision.
Sampo plc made no repurchases during 2020 and has not
purchased its own shares after the end of the reporting
period.
Shareholders
The number of Sampo plc’s shareholders increased during
2020 by 40,628 holders to 168,152 as at 31 December 2020.
The holdings of nominee-registered and foreign share-
holders decreased to 63.0 per cent (64.6) of the shares and
62.5 per cent of the votes (64.1).
Shareholders
Sampo plc, 31 December 2020
AandBshares Numberofshares ofsharecapital ofvotes
Solidium Oy
Varma Mutual Pension Insurance Company
Ilmarinen Mutual Pension Insurance Company
Elo Mutual Pension Insurance Company
State Pension Fund
Kaleva Mutual Insurance Company
*)
Oy Lival Ab
OP-Finland Fund
Schweizerische Nationalbank
Nordea Alfa
Svenska Litteratursällskapet I Finland r.f.
OP Life Assurance Company Ltd.
Danske Invest Finnish Equity Fund
Nordea Nordic Fund
Nordea Swedish Stars
Nordea Pro Finland Fund
Nordea Life Assurance Finland Ltd.
Seligson & Co OMX Helsinki 25 UCITS ETF
Åbo Akademi University Foundation
Sigrid Jusélius Foundation
Foreign and nominee registered total
Other
Total
*)
1,472,719 A shares and 1,200,000 B shares.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
30BOARD OF DIRECTORS’ REPORT 2020
Shareholders by Sector
Sampo plc (A and B shares), 31 December 2020
Sector Numberofshares
Corporations
Financial institutions and insurance corporations
Public institutions
Non-profit institutions
Households
Foreign ownership and nominee registered
Total
On 31 December 2020, the total number of Sampo A
shares owned directly, indirectly or through financial
instruments by BlackRock Inc. (tax ID 32-0174421) and its
funds was over 5 per cent of Sampo’s total stock. The total
number of voting rights attached to Sampo A shares was
below 5 per cent of Sampo’s total voting rights.
During 2020 Sampo plc received altogether 9 notifications
of change in holding pursuant to Chapter 9, Section 5 of
the Securities Markets Act, according to which the total
number of Sampo A shares or related voting rights owned
by BlackRock, Inc. and its funds directly or through
financial instruments had decreased below 5 per cent or
increased above 5 per cent.
After the end of the reporting period Sampo plc had
received 4 notifications of change in holding pursuant to
Chapter 9, Section 5 of the Securities Markets Act, from
BlackRock, Inc.
The details of the notifications are available at
www.sampo.com/flaggings.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
31BOARD OF DIRECTORS’ REPORT 2020
Shares owned by the Board of Directors and the Group Executive Committee
Sampo plc, 31 December 2020 and 31 December 2019
BoardofDirectors Dec Dec
Wahlroos
Fagerholm
Clausen
Clutterbuck
Ehrnrooth
*)
Lamminen
Mattila
**)
Murto
Mäkinen
Total
Board of Directors ownership of shares, %
Board of Directors share of votes, %
GroupExecutiveCommittee Dec Dec
Stadigh
***)
Magnusson
Alsaker
Janbu Holthe
Lapveteläinen
Martinsen
Niemisvirta
Thorsrud
Wennerklint
Total
Group Executive Committee's ownership of shares, %
Group Executive Committee's share of votes, %
*)
Member of the Board of Directors of Sampo plc since 2 June 2020.
**)
Member of the Board of Directors of Sampo plc from 7 April 2009 to 2 June 2020.
***)
Group CEO and President until 31 December 2019.
Holdings of the Board and
Executive Management
The following table presents the Board’s and Group
Executive Committee’s holdings of Sampo A shares.
At the end of 2020, members of Sampo plc’s Board of
Directors and their close family members owned either
directly or indirectly 5,096,526 (4,969,859) Sampo
A shares. Their combined holdings constituted 0.9 per
cent (1.2) of the share capital and related votes.
Members of the Group Executive Committee and their
close family members owned either directly or indirectly
586,030 (888,544) Sampo A shares representing 0.1 per
cent (0.2) of the share capital and related votes.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
32BOARD OF DIRECTORS’ REPORT 2020
Financial Standing
Internal Dividends
Sampo plc, Sampo Group’s parent company, received
EUR 648 million in dividends from its subsidiaries during
2020.
Mandatum Life and Nordea paid no dividends during
2020 because of the COVID-19 situation and the related
regulations from the authorities. The following dividend
payments were received:
• Topdanmark; EUR 48 million in April 2020 and
• If; SEK 6.3 billion (EUR 600 million) in December 2020.
On 4 February 2021, Nordea’s Board proposed a dividend
of EUR 0.39 per share for 2020. In addition, the Board will
decide on 18 February to distribute EUR 0.07 per share as
the first instalment of the delayed 2019 dividend of EUR
0.40 per share. The Board also proposes that the Annual
General Meeting authorize it to pay out the remaining
part of the 2019 dividend (EUR 0.33 per share) and the
2020 dividend (EUR 0.39 per share) – a total of EUR 0.72
per share – after September 2021, in line with the Euro-
pean Central Bank recommendation. Sampo plc’s share of
the proposed dividends is EUR 508 million.
Following the Danish FSA’s recommendation, Topdan-
mark’s Board of Directors decided on 23 March 2020 to
postpone paying out half of the planned dividend for
2019 until the AGM on 25 March 2021. On 22 January
2021 Topdanmark’s Board of Directors recommended
to the AGM that a dividend of DKK 1,035 million will be
distributed for 2020, representing DKK 11.5 per share. The
Board of Directors also recommended to the AGM that the
remaining dividend for 2019 of DKK 765 million will be
distributed as an extraordinary dividend. Given the AGM
approval, the total dividend distributed in connection
with the AGM will be DKK 1,800 million or DKK 20 per
share. If the AGM approves the proposals, Sampo plc’s
share of the dividends amounts to EUR 113 million.
Mandatum Life’s Board proposes a dividend of EUR 200
million to Sampo plc in February 2021.
If normally pays its dividend towards the end of the
calendar year.
Ratings
Relevant ratings for Sampo Group companies on
31 December 2020 are presented in the table below.
In addition, Hastings Group (Finance) plc has an outstand-
ing senior bond of GBP 250 million for which Fitch has an
Issuer Default Rating (IDR) of A- and a stable outlook.
Moodys Standard&Poor’s
Ratedcompany Rating Outlook Rating Outlook
Sampo plc – Issuer Credit Rating A Stable A Stable
If P&C Insurance Ltd – Insurance Financial Strength Rating A Stable A+ Stable
If P&C Insurance Holding Ltd (publ) – Issuer Credit Rating - - A Stable
Mandatum Life Insurance Company Ltd – Issuer Credit Rating - - A+ Stable
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
33BOARD OF DIRECTORS’ REPORT 2020
Solvency
Group Solvency
Sampo Group calculates its group solvency under the
Solvency II rules. In this calculation Nordea is treated as an
equity investment. According to the Solvency II directive,
Sampo Group’s solvency ratio amounted to 176 per cent
(174) at the end of December 2020.
Solvency Position
in the Subsidiaries
The insurance subsidiaries apply Solvency II rules in their
regulatory solvency calculations. If Group companies
use either partial internal models or standard model for
calculation of their solo solvency position. Mandatum Life
reports in accordance with standard formula for Solvency
II. Topdanmark uses a partial internal model to report its
stand-alone solvency position.
Hastings is fully consolidated into the Sampo Group’s own
funds and SCR. As a stand-alone entity AICL, Hastings'
underwriting company, calculates its solo solvency
position according to Solvency II rules.
If Group has an A+ rating from S&P which will continue
to require significantly more capital than the standard
formula and therefore the use of standard formula has no
practical implications on If Group’s capital position. On 31
December 2020 If Group’s Solvency II capital requirement
under standard formula amounted to EUR 1,916 million
(1,890) and own funds to EUR 3,623 million (3,592). The
solvency ratio amounted to 189 per cent (196).
The S&P A+ rating capital requirement for If Group
amounted to EUR 3,083 million (3,083) on 31 December
2020 and the capital base was EUR 3,234 million (3,151).
Topdanmark calculates most of its non-life and health
risks and their respective solvency capital requirement
by applying a partial internal model approved by the
DFSA. Other risks are calculated by the Solvency II SCR
standard formula. Topdanmark’s solvency ratio under the
partial internal model was 170 per cent (177) at the end of
December 2020.
Mandatum Life’s solvency ratio after transitional measures
amounted to 188 per cent (194) on 31 December 2020. Own
funds were EUR 2,308 million (2,290) and the Solvency
Capital Requirement (SCR) was EUR 1,230 million (1,182).
Without transitional measures, own funds would have
amounted to EUR 1,977 million (1,929) and the solvency
capital requirement would have amounted to EUR 1,245
million (1,212), leading to a solvency ratio of 159 per cent
(159).
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
34BOARD OF DIRECTORS’ REPORT 2020
Debt Financing
Sampo plc’s debt financing on 31 December 2020
amounted to EUR 3,934 million (3,908) and interest bear-
ing assets to EUR 1,529 million (1,725). Interest bearing
assets include bank accounts, fixed income instruments
and EUR 324 million (359) of hybrid capital and subor-
dinated debt instruments issued by the subsidiaries and
associated companies.
At the end of 2020 the interest bearing net debt of Sampo
plc amounted to EUR 2,405 million (2,183). The net debt
calculation takes into account interest bearing assets and
liabilities. Gross debt to Sampo plc’s equity was 53 per
cent (51) and financial leverage 34 per cent (34).
On 28 May 2020 Sampo plc repaid SEK 3,000 million
senior notes maturing on that date.
On 3 September 2020 Sampo plc issued 32-nc-12 Tier 2
notes of EUR 1,000 million maturing on 3 September 2032.
On 1 December Sampo plc redeemed EUR 655 million
outstanding senior notes maturing on 18 September 2023,
16 September 2021, 23 May 2022 and 30 May 2025 in a cash
tender offer.
On 31 December 2020 financial liabilities in Sampo plc’s
balance sheet consisted of issued senior bonds and notes
of EUR 2,448 million (3,414). In addition, Sampo plc has
issued subordinated notes of EUR 1,486 million (494).
The amount of subordinated notes increased due to the
financing of the acquisition of Hastings. No CPs were
outstanding (0). The average interest, net of interest rate
swaps, on Sampo plc’s debt as of 31 December 2020 was
1.6 per cent (1.2).
More information on Sampo Group’s outstanding debt
issues is available at www.sampo.com/debtfinancing.
To balance the risks on the Group level Sampo plc’s debt
is mainly tied to short-term interest rates and issued in
euro or Swedish krona. Interest rate swaps are used to
obtain the desired characteristics for the debt portfolio.
These derivatives are valued at fair value in the profit and
loss account although economically they are related to
the underlying bonds. As a result Sampo plc maintains
the flexibility to adjust the derivative position if needed
but this comes at the cost of increased volatility in the
Holding segment’s net finance costs.
The underlying objective of Sampo plc is to maintain a
well-diversified debt structure, relatively low leverage
and strong liquidity in order for the company to be able to
arrange financing for strategic projects if needed. Strong
liquidity and the ability to acquire financing are essential
factors in maintaining Sampo Group’s strategic flexibility.
Outstanding Debt Instruments
Sampo plc, 31 December 2020
Instrument&Nominal Coupon Swap EectiveRate Maturity
Senior Bond 360 EURm --- September
Senior Bond 118 SEKm EuriborM - May
Senior Bond 250 SEKm StiborM EuriborM - May
Senior Bond 522 EURm --- September
Senior Bond 373 EURm EuriborM May
Senior Bond 500 EURm --- February
Senior Bond 1,000 NOKm EuriborM September
Hybrid Tier2 Bond under separate
documentation 500 EURm --- May
Senior Bond 500 EURm --- September
Hybrid Tier2 Bond 1,000 EURm --- September
Public debt instruments
3,887EURm
Private placements 73 EURm
Total debt 3,960 EURm
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
35BOARD OF DIRECTORS’ REPORT 2020
Outlook
Outlook for 2021
Sampo Group’s insurance businesses are expected to
report good insurance technical results for 2021, although
the mark-to-market component of investment returns
will be significantly influenced by capital markets’
developments, particularly in life insurance.
If P&C is expected to reach a combined ratio of below 85
per cent in 2021.
With regard to Topdanmark, reference is made to the
profit forecast model that the company publishes on a
quarterly basis.
Hastings remains well positioned and expects to further
improve its loss ratio and overall results, despite some
market uncertainty from COVID-19, regulatory reform
and Brexit.
Nordea continues to focus on creating great customer
experiences, growing income and improving operational
efficiency. The results are progressing well towards 2022
targets.
The Major Risks and
Uncertainties for the Group
in the Near-term
In its current day-to-day business activities Sampo Group
is exposed to various risks and uncertainties, mainly
through its separately managed major business units.
Major risks affecting the Group companies’ profitability
and its variation are market, credit, insurance and
operational risks that are quantified independently by the
major business units. At the group level, sources of risks
are the same, although they are not directly additive due
to the effects of diversification.
Uncertainties in the form of major unforeseen events may
have an immediate impact on the Group’s profitability.
The identification of unforeseen events is easier than the
estimation of their probabilities, timing, and potential
outcomes. Currently, the COVID-19 pandemic and the
measures taken to contain the virus are causing signifi-
cant negative effects on economies and uncertainties on
capital market development. There are also a number
of widely identified macroeconomic, political and other
sources of uncertainty which can, in various ways, affect
the financial services industry in a negative manner.
Other sources of uncertainty are unforeseen structural
changes in the business environment and already
identified trends and potential wide-impact events. These
external drivers may have a long-term impact on how
Sampo Group’s business will be conducted. Examples
of identified trends are technological developments in
areas such as artificial intelligence and digitalization,
demographic changes, and sustainability issues that
may also have profound effects on companies within the
financial sector.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
36BOARD OF DIRECTORS’ REPORT 2020
Dividends
Dividend Proposal
The parent company’s distributable capital and reserves
totaled EUR 7,250,153,463.79 of which profit for the
financial year 2020 was EUR 699,633,592.61.
The Board proposes to the Annual General Meeting a div-
idend of EUR 1.70 per share to the company’s 555,351,850
shares. The dividends to be paid are EUR 944,098,145.00
in total. The remainder of the funds are left in the equity.
The dividend will be paid to the shareholders registered
in the Register of Shareholders held by Euroclear Finland
Ltd as the record date of 21 May 2021. The Board proposes
that the dividend be paid on 28 May 2021.
No significant changes have taken place in the company's
financial position since the end of the financial year. The
impairment of Nordea shares had no impact on Sampo
plc’s distributable capital and reserves. The company's
liquidity position is good and in the view of the Board, the
proposed distribution does not jeopardize the company's
ability to fulfill its obligations.
SAMPO PLC
Board of Directors
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
37BOARD OF DIRECTORS’ REPORT 2020
Key Figures
Groupkeyfigures
Profit before taxes EURm
Return on equity (at fair values)
Return on assets (at fair values)
Equity/assets ratio
Group solvency
1)
EURm
Group solvency ratio
1)
Average number of sta
If
Premiums written before reinsurers' share EURm
Premiums earned EURm
Profit before taxes EURm
Return on equity (at fair values)
Risk ratio
2)
Cost ratio
2)
Claims ratio
2)
Expense ratio
2)
Combined ratio
Average number of sta
Topdanmark
*)
Premiums written before reinsurers' share, life insurance EURm -
Premiums written before reinsurers' share, P&C insurance EURm -
Premiums earned, P&C insurance EURm -
Profit before taxes EURm -
Claims ratio
2)
-
Expense ratio
2)
-
Combined ratio -
Average number of sta -
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
38BOARD OF DIRECTORS’ REPORT 2020
Hastings Nov–Dec
Premiums written before reinsurers' share EURm - - - -
Premiums earned EURm - - - -
Profit before taxes EURm - - - - -
Average number of sta - - - -
Mandatum
Premiums written before reinsurers' share EURm
Profit before taxes EURm
Return on equity (at fair values)
Expense ratio
Average number of sta
Holding
Profit before taxes EURm -
Average number of sta
Persharekeyfigures
Earnings per share EUR
Earnings per share without extraordinary items
related to associate Nordea
3)
EUR - - -
Earnings per share, incl. items in other comprehensive income EUR
Equity per share EUR
Net asset value per share EUR
Dividend per share
4)
EUR
Dividend per earnings
3)
Eective dividend yield
Price/earnings ratio
3)
Adjusted number of shares at 31 Dec.
Average adjusted number of shares
Weighted average number of shares,
incl. dilutive potential shares
Market capitalisation EURm
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
39BOARD OF DIRECTORS’ REPORT 2020
Ashares
Adjusted number of shares at 31 Dec.
Average adjusted number of shares
Weighted average number of shares,
incl. dilutive potential shares
Weighted average share price EUR
Adjusted share price, high EUR
Adjusted share price, low EUR
Adjusted closing price EUR
Share trading volume during the financial year
Relative share trading volume
Bshares
Adjusted number of shares at 31 Dec.
Average adjusted number of shares
*)
In the comparison year 2017 Topdanmark was consolidated as an associate between January - September 2017. The key figures are from October - December 2017 when the company was first consolidated as a
subsidiary.
1)
From 2016 on, the group solvency for Sampo has been calculated according to the consolidation method defined in the Solvency II Directive (2009/138/EC) and the Finnish Insurance Companies Act (521/2008).
As Sampo plc is the ultimate parent of the Solvency II group, the solvency is calculated at the group level.
2)
Key figures for P&C insurance are based on activity based costs and cannot, therefore, be calculated directly from the consolidated income statement.
3)
Will be used as basis for setting dividends in accordance with the dividend policy. For 2020, the dividend per share and PE ratios have also been calculated on the basis of adjusted EPS.
4)
The Board of Director's proposal to the Annual General Meeting for the accounting period 2020.
In calculating the key figures the tax corresponding to the result for the accounting period has been taken into account. The valuation dierences, adjusted with the deferred tax liability, on the
investment property have been taken into account in return on assets, return on equity, equity/assets ratio and net asset value per share. Additionally, the items in the other comprehensive income
have been taken into account in return on assets and return on equity. In the net asset value per share, the Group valuation dierence on associate Nordea and listed subsidiary Topdanmark have also
been taken into account.
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
40BOARD OF DIRECTORS’ REPORT 2020
Calculation of the Key Figures
The key figures have been calculated in accordance with the decree issued by the Ministry of Finance and the specifying
regulations and instructions of the Financial Supervisory Authority. The Group solvency is calculated according to the
consolidation method defined in the Solvency II Directive (2009/138/EC) and Insurance Companies Act (521/2008).
Additional information on the Group’s alternative performance measures on the Group’s website.
Group Key Figures
Profit before taxes
Property & casualty insurance profit before taxes
+ life insurance profit before taxes
+ holding business profit before taxes
± Group elimination items with result impact
Property & Casualty and Life Insurance
+ insurance premiums written
+ net income from investments
+ other operating income
- claims incurred
- change in liabilities for investment and
insurance contracts
- sta costs
- other operating expenses
- finance costs
+/- share of associates’ profit/loss
Holding
+ net income from investments
+ other operating income
- sta costs
- other operating expenses
- finance costs
+/- share of associates’ profit/loss
Return on equity (at fair values), %
+ total comprehensive income attributable to
parent company equity holders
± change in valuation dierences on
investments less deferred tax
X 100%
+ total equity attributable to parent
company equity holders
(average of values on 1 Jan. and 31 Dec.)
± valuation dierences on investments
less deferred tax
(average of values on 1 Jan. and 31 Dec.)
Return on assets (at fair values), %
+ operating profit
± other comprehensive income before taxes
- profit attributable to non-controlling interests
+ interest and other financial expense
+ calculated interest on technical provisions
± change in valuation dierences on investments
X 100%
+ total balance sheet
(average of values on 1 Jan. and 31 Dec.)
- technical provisions relating to
unit-linked insurance
(average of values on 1 Jan. and 31 Dec.)
± valuation dierences on investments
(average of values on 1 Jan. and 31 Dec.)
Equity/assets ratio (at fair values), %
+ total equity (attributable to parent company’s
equity holders)
± valuation dierences on investments less
deferred tax
X 100%
+ balance sheet total
± valuation dierences on investments
Average number of staff
Average of month-end figures, adjusted for part-time sta
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
41BOARD OF DIRECTORS’ REPORT 2020
Property & Casualty Insurance
Key Figures
Life Insurance Key Figures
Per Share Key Figures
Risk ratio, %
+ claims incurred
- claims settlement expenses
X 100%
premiums earned
Expense ratio, %
+ operating expenses before change in deferred
acquisition costs
+ claims settlement expenses
X 100%
expense charges
Earnings per share
profit for the financial period attributable to the parent
company’s equity holders
adjusted average number of shares
Equity per share
equity attributable to the parent company ‘s equity holders
adjusted number of shares at balance sheet date
Earnings per share,
incl. change in fair value reserve
total comprehensive income for the financial period
attributable to the parent company’s equity holders
adjusted average number of shares
Relative share trading volume, %
number of shares traded through
the stock exchange
X 100%
adjusted average number of shares
Dividend per share, %
dividend for the accounting period
X 100%
adjusted number of shares at balance sheet date
Dividend per earnings, %
dividend per share
X 100%
earnings per share
Effective dividend yield, %
dividend per share
X 100%
adjusted closing share price at balance sheet date
Price/earnings ratio
adjusted closing share price at balance sheet date
earnings per share
Net asset value per share
+ equity attributable to the parent company’s
equity holders
± valuation dierences on listed associate in the Group
± valuation dierences on investments less deferred tax
adjusted number of shares at balance sheet date
Loss ratio, %
claims incurred
X 100%
premiums earned
Expense ratio, %
operating expenses
X 100%
premiums earned
Cost ratio, %
+ operating expenses
+ claims settlement expenses
X 100%
premiums earned
Combined ratio, %
Loss ratio + expense ratio
Market capitalisation
number of shares at balance sheet date
x closing share price at balance sheet date
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
42BOARD OF DIRECTORS’ REPORT 2020
GROUP’S IFRS FINANCIAL STATEMENTS
44
Statement of Profit
and Other
Comprehensive
Income, IFRS
45
Consolidated
Balance Sheet, IFRS
47
Statement of
Cash Flows, IFRS
46
Statement of
Changes in Equity,
IFRS
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
Group’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
43FINANCIAL STATEMENTS 2020
Group’s IFRS Financial Statements
Statement of Profit and Other Comprehensive Income, IFRS
EURm Note - -
Other comprehensive income for the period
Items reclassifiable to profit or loss
Exchange dierences 74 -39
Available-for-sale financial assets 259 566
Share of associate's other comprehensive income
Taxes -50 -123
Total items reclassifiable to profit or loss, net of tax 322 373
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans 0 -58
Taxes 0 13
Total items not reclassifiable to profit or loss, net of tax 0 -45
TOTAL COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR 434 1,565
Profit attributable to
Owners of the parent 37 1,130
Non-controlling interests 75 107
Total comprehensive income attributable to
Owners of the parent 359 1,458
Non-controlling interests 75 107
Earnings per share (EUR)
0.07 2.04
EURm Note - -
Insurance premiums written
8,375 8,749
Net income from investments
1,383 2,515
Other operating income 155 60
Claims incurred
3 -5,443 -5,466
Change in liabilities for insurance and investment contracts
-1,554 -2,919
Sta costs
-960 -897
Other operating expenses
-754 -653
Finance costs
-112 -13
Share of associates' profit/loss
451 321
- Valuation loss on disposal of Nordea shares
-262 -155
- Impairment loss on Nordea shares
-899 -
Profit before taxes 380 1,541
Taxes
-267 -304
Profit for the period 112 1,237
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
Group’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
44FINANCIAL STATEMENTS 2020
EURm Note
Equity
Share capital 98 98
Reserves 1,530 1,530
Retained earnings 9,282 10,062
Other components of equity 508 217
Equity attributable to owners of the parent 11,418 11,908
Non-controlling interests 840 635
Total equity 12,258 12,542
Total equity and liabilities 56,529 51,939
Consolidated Balance Sheet, IFRS
EURm Note
Assets
Property, plant and equipment
371 302
Investment property
666 679
Intangible assets
3,761 2,151
Investments in associates
5,370 7,217
Financial assets
Investments related to unit-linked
insurance contracts
14,837 12,975
Tax assets
49 19
Reinsurers' share of insurance liabilities
1,821 289
Other assets
2,714 2,185
Cash and cash equivalents 2,520 2,677
Total assets 56,529 51,939
Liabilities
Liabilities for insurance and investment
contracts
19,956 18,041
Liabilities for unit-linked insurance and
investment contracts
16,285 14,368
Subordinated debt
2,158 1,202
Other financial liabilities
2,935 3,592
Tax liabilities
717 587
Provisions
20 20
Employee benefits
98 99
Other liabilities
2,102 1,489
Total liabilities 44,271 39,396
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
Group’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
45FINANCIAL STATEMENTS 2020
Statement of Changes in Equity, IFRS
EURm
Share
capital
Legal
reserve
Invested
unrestricted
equity
Retained
earnings
)
Translation
offoreign
operations
)
Available
forsale
financial
assets
)
Total
Non-
controlling
interests Total
Equity at 1 January 2019 98 4 1,527 10,944 -780 594 12,386 628 13,014
Changes in equity
Dividends -1,583
)
-1,583 -90 -1,672
Extra dividend in Nordea shares -319 -319 -319
Share-based payments 1 1 1
Share of associate's other changes in equity -43 -43 -43
Other changes in equity 8 8 -10 -2
Profit for the period 1,130 1,130 107 1,237
Other comprehensive income for the period -75 -37 440 328 328
Equity at 31 December 2019 98 4 1,527 10,062 -817 1,034 11,908 635 12,542
Changes in equity
Business acquisitions -5 6 1 188 189
Dividends -833
)
-833 -52 -885
Share-based payments -3 -3 -3
Share of associate's other changes in equity -19 -19 -19
Other changes in equity 6 6 -6 0
Profit for the period 37 37 75 112
Other comprehensive income for the period 37 67 217 322 0 322
Equity at 31 December 2020 98 4 1,527 9,282 -749 1,257 11,418 840 12,258
1)
IAS 19 Pension benefits had a net eect of EURm 2 (-90 ) on retained earnings.
2)
The total comprehensive income includes also the share of the associate Nordea's other comprehensive income, in accordance with the Group's share holding. The retained earnings thus include EURm 38 (-30 ) of
Nordea's actuarial gains/losses The exchange dierences include the share of Nordea's exchange dierences EURm 6 (3 ). Respectively, available-for-sale financial assets include EURm 8 (-3 ) of Nordea's valuation
dierences on assets at fair value through p/l. Nordea adopted the new IFRS 9 Financial instruments standard from 1 January 2018 on.
3)
The amount recognised in equity from available-for-sale financial assets for the period totalled EURm 263 (718 ). The amount transferred to p/l amounted to EURm -49 (-255 ). EURm 1 (-21 ) was transferred to the
Segregated Suomi portfolio. EURm 6 from business acquisitions has been recognised directly in the opening balance of the fair value reserve.
4)
Dividend per share 1.50 (2.85 ) euro.
The amounts included in the translation and available-for-sale reserves represent other comprehensive income for each component, net of tax.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
Group’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
46FINANCIAL STATEMENTS 2020
Statement of Cash Flows, IFRS
EURm
Operating activities
Profitbeforetaxes 380 1,541
Adjustments
Depreciation and amortisation 122 78
Unrealised gains and losses arising from valuation -129 -637
Realised gains and losses on investments -241 -500
Change in liabilities for insurance and investment contracts 1,127 2,775
Other adjustments 730 66
Adjustmentstotal 1,608 1,783
Change(-)inassetsofoperatingactivities
Investments *) -998 -1,526
Other assets 44 37
Total -954 -1,489
Change(-)inliabilitiesofoperatingactivities
Financial liabilities 8 -2
Other liabilities 155 88
Paid taxes -440 -390
Total -277 -305
Netcashfromoperatingactivities 757 1,530
Investing activities
Investments in Group and associated undertakings 72 594
Net investment in equipment and intangible assets -160 -64
Netcashusedininvestingactivities -88 530
EURm
Financing activities
Dividends paid -833 -1,588
Issue of debt securities 1,191 496
Repayments of debt securities in issue -1,199 -647
Netcashusedinfinancingactivities -841 -1,739
Total cash flows -172 322
Cash and cash equivalents at 1 January 2,677 2,361
Eects of exchange rate changes 14 -5
Cash and cash equivalents at 31 December 2,520 2,677
Net change in cash and cash equivalents -172 322
Additionalinformationtothecashflowstatement
Interest income received 464 543
Interest expense paid -146 -189
Dividend income received 139 216
Total out-going cashflows from leases -45 -34
*)
Investments include investment property, financial assets and investments related to unit-linked
insurance contracts.
The items of the statement of cash flows cannot be directly concluded from the balance sheets due to
e.g. exchange rate dierences, and acquisitions and disposals of subsidiaries during the period.
Cash and cash equivalents include cash at bank and in hand EURm 2,520 (2,662 ) and short-term
deposits (max 3 months) EURm 162 (15 ).
Business acquisitions 2020
On 5 August 2020, Sampo and Rand Merchant Investment Holdings Limited (RMI) announced a
recommended cash oer to acquire all issued and to be issued shares in Hastings not currently
owned or controlled by Sampo and RMI. The transaction was completed in November 2020 and
Sampo became the majority share holder with 70% ownership. The net cash flow arising from
the acquisition was EUR - 1,126 million, including cash and cash equivalents EUR 193 million of
the acquired company at the acquisition date.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
Group’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
47FINANCIAL STATEMENTS 2020
GROUP’S NOTES TO THE ACCOUNTS
78
Notes to the Income Statement 1–40
49
Summary of
Significant
Accounting Policies
67
Segment
Information
76
Business
Combinations
74
Material
Partly-Owned
Subsidiaries
Insurancepremiumswritten ..............................................
Netincomefrominvestments ...........................................
Claimsincurred ......................................................................
Changeinliabilitiesforinsurance
andinvestmentcontracts ..................................................
Stacosts ................................................................................
Otheroperatingexpenses ..................................................
ResultanalysisofIf ...............................................................
Earningspershare ................................................................
Financialassetsandliabilities ...........................................
Propertyplantandequipment ........................................
Investmentproperty .............................................................
Intangibleassets ....................................................................
Investmentsinassociates ..................................................
Financialassets ......................................................................
Fairvalues ................................................................................
Changeinfairvaluesoffinancialassets........................
Determinationandhierarchyoffairvalues ..................
Movementsinlevelfinancialinstruments
measuredatfairvalue .........................................................
Sensitivityanalysisoflevelfinancial
instrumentsmeasuredatfairvalue ..............................
Investmentsrelatedtounit-linked
insurancecontracts ............................................................
Deferredtaxassetsandliabilities ..................................
Taxes ........................................................................................
Componentsofothercomprehensiveincome ..........
Taxeectsrelatingtocomponents
ofothercomprehensiveincome ....................................
Otherassets ..........................................................................
Liabilitiesfrominsuranceandinvestmentcontracts ..
Liabilitiesfromunit-linkedinsurance
andinvestmentcontracts ................................................
Financialliabilities ...............................................................
Provisions ...............................................................................
Employeebenefits ..............................................................
Otherliabilities .....................................................................
Contingentliabilitiesandcommitments .....................
Equityandreserves ............................................................
Relatedpartydisclosures .................................................
Incentiveschemes ...............................................................
Auditorsfees .......................................................................
Legalproceedings ...............................................................
Investmentsinsubsidiaries ..............................................
Eventsafterthebalancesheetdate .............................
RiskManagementDisclosure ...............................
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
48FINANCIAL STATEMENTS 2020
Group’s Notes to the Accounts
Sampo Group has prepared the consolidated financial
statements for 2020 in compliance with the International
Financial Reporting Standards (IFRSs). In preparing the
financial statements, Sampo has applied all the standards
and interpretations relating to its business, adopted by the
commission of the EU and effective at 31 December, 2020.
The annual improvements or other amendments to the
standards, adopted at the beginning of 2020, had no mate-
rial impact on the Group’s financial statements reporting.
In preparing the notes to the consolidated financial
statements, attention has also been paid to the Finnish
accounting and company legislation and applicable
regulatory requirements.
The financial statements have for the most part been
prepared under the historical cost convention. Exceptions
are i.e. financial assets and liabilities at fair value through
p/l, financial assets available-for-sale, hedged items in fair
value hedges and share-based payments settled in equity
instruments measured at fair value.
The consolidated financial statements are presented
in euro (EUR), rounded to the nearest million, unless
otherwise stated.
The Board of Directors of Sampo plc accepted the
financial statements for issue on 11 February 2021.
Consolidation
Subsidiaries
The consolidated financial statements combine the
financial statements of Sampo plc and all its subsidiaries.
Entities qualify as subsidiaries if the Group has the
controlling power. The Group exercises control if its
shareholding is more than 50 per cent of the voting rights
or it otherwise has the power to exercise control over the
financial and operating policies of the entity. Subsidiaries
are consolidated from the date on which control is trans-
ferred to the Group, and cease to be consolidated from the
date that control ceases.
The acquisition method of accounting is used for the
purchase of subsidiaries. The cost of an acquisition is
allocated to the identifiable assets, liabilities and contin-
gent liabilities, which are measured at the fair value of the
date of the acquisition. Possible non-controlling interest
of the acquired entity is measured either at fair value or
at proportionate interest in the acquiree’s net assets. The
acquisition-specific choice affects both the amount of
recognised goodwill and non-controlling interest. The
excess of the aggregate of consideration transferred,
non-controlling interest and possibly previously held
equity interest in the acquiree, over the Group’s share of
the fair value of the identifiable net assets acquired, is
recognised as goodwill.
The accounting policies used throughout the Group for
the purposes of consolidation are consistent with respect
to similar business activities and other events taking place
in similar conditions. All intra-group transactions and
balances are eliminated upon consolidation.
Associates
Associates are entities in which the Group has significant
influence, but no control over the financial management
and operating policy decisions. Unless otherwise demon-
strated, this is generally presumed when the Group holds
in excess of 20 per cent, but no more than 50 per cent, of
the voting rights of an entity. Correspondingly, even when
the Group holds less than 20 per cent of the voting power,
it can be treated as an associate, if the significant influ-
Summary of Significant Accounting Policies
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
49FINANCIAL STATEMENTS 2020
ence can be otherwise clearly demonstrated as described
in IAS 28
Investments in Associates and Joint Ventures
.
Investments in associates are treated by the equity
method of accounting, in which the investment is initially
recorded at cost and increased (or decreased) each year by
the Group’s share of the post-acquisition net income (or
loss), or other movements reflected directly in the equity
of the associate. If the Group’s share of the associate’s
loss exceeds the carrying amount of the investment, the
investment is carried at zero value, and the loss in excess
is consolidated only if the Group is committed to fulfilling
the obligations of the associate. Goodwill arising on the
acquisition is included in the cost of the investment.
Unrealised gains (losses) on transactions are eliminated to
the extent of the Group’s interest in the entity.
The share of associates’ profit or loss, equivalent to the
Group’s holding, is presented as a separate line in the
income statement. The Group’s share of associate’s
changes in other comprehensive income is presented in
the Group’s other comprehensive income items.
If there is any indication that the value of the investment
may be impaired, the consolidated carrying amount
is tested by comparing it with its recoverable amount.
The recoverable amount is the higher of its value in
use or its fair value less costs to sell. If the recoverable
amount is less than its consolidated carrying amount, the
carrying amount is reduced to its recoverable amount by
recognising an impairment loss in the profit/loss. If the
recoverable amount later increases and is greater than the
carrying amount, the impairment loss is reversed through
profit and loss.
Foreign currency translation
The consolidated financial statements are presented in
euro, which is the functional and reporting currency of
the Group and the parent company. Items included in
the financial statements of each of the Group entities
are measured using their functional currency, being the
currency of the primary economic environment in which
the entity operates. Foreign currency transactions are
translated into the appropriate functional currency using
the exchange rates prevailing at the dates of transactions
or the average rate for a month. The balance sheet items
denominated in foreign currencies are translated into the
functional currency at the rate prevailing at the balance
sheet date.
Exchange differences arising from translation of trans-
actions and monetary balance sheet items denominated
in foreign currencies into functional currency are
recognised as translation gains and losses in profit or loss.
Exchange differences arising from equities classified as
available-for-sale financial assets are included directly in
the fair value reserve in equity.
The income statements of Group entities whose
functional currency is other than euro are translated into
euro at the average rate for the period, and the balance
sheets at the rates prevailing at the balance sheet date.
The resulting exchange differences are included in equity
and their change in other comprehensive income. When a
subsidiary is divested entirely or partially, the cumulative
exchange differences are included in the income state-
ment under sales gains or losses.
Goodwill and fair value adjustments arising from an
acquisition of a foreign entity are treated as if they were
assets and liabilities of the foreign entity. Exchange
differences resulting from the translation of these items at
the exchange rate of the balance sheet date are included
in equity and their change in other comprehensive
income.
The following exchange rates were applied in the consoli-
dated financial statements:
1 euro (EUR) =
Balance sheet
date
Average
exchange rate
Swedish krona (SEK)
Danish krona (DKK)
Pound sterling (GBP)
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
50FINANCIAL STATEMENTS 2020
Segment reporting
The Group’s segmentation is based on business areas
whose risks and performance bases as well as regulatory
environment differ from each other. The control and
management of business and management reporting are
organised in accordance with the business segments. The
Group’s business segments are If, Topdanmark, Hastings,
Mandatum and Holding (including Nordea).
Geographical information has been given on income from
external customers and non-current assets. The reported
segments are Finland, Sweden, Norway, Denmark, Great
Britain and the Baltic countries.
In the inter-segment and inter-company pricing, for both
domestic and cross border transactions, market-based
prices are applied. The pricing is based on the Code of
conduct on Transfer Pricing Documentation in the EU
and OECD guidelines.
Inter-segment transactions, assets and liabilities are
eliminated in the consolidated financial statements.
Interest and dividends
Interest income and expenses are recognised in the
income statement using the effective interest rate
method. This method recognises income and expenses
on the instrument evenly in proportion to the amount
outstanding over the period to maturity. Dividends on
equity securities are recognised as revenue when the right
to receive payment is established.
Fees and commissions
The fees and transaction costs of financial instruments
measured at fair value through profit or loss are recog-
nised in profit or loss when the instrument is initially
recognised.
The costs of acquiring new and renewed insurance busi-
ness are treated as deferred acquisition costs in the P&C
insurance. In the life insurance business, the acquisition
costs are treated as fee and commission expense under
‘Other operating expenses’.
Other fees and commissions paid for investment activities
are included in ‘Net income from investments’.
Insurance premiums
Insurance premiums in the income statement consist of
premiums written for P&C insurance and life insurance.
P&C insurance contracts are primarily of short duration, so
that premiums written are recognised at the inception of
risk coverage in line with the insurance contract. When the
premium for the insurance period is divided into several
instalments, the entire premium amount is still recognised
at the beginning of the period. As an exception, Hastings
recognises insurance premiums proportionally over the
period of cover provided.
At the date of financial statements, the premiums written
are adjusted by a change in the provision for unearned
premiums i.e. by the proportion of the insurance premium
income that, based on the period covered by the insurance
contract, belongs to the following financial year.
In the life insurance business, liabilities arising from
insurance and investment contracts count as long-term
liabilities. Therefore, the insurance premium and related
claims are usually not recognised in the same accounting
period. Depending on the type of insurance, premiums
are primarily recognised in premiums written when the
premium has been paid. In group pension insurance, a part
of the premiums is recognised already when charged.
The change in the provision for unearned premiums is
presented as an expense under 'Change in insurance and
investment contract liabilities'.
Revenue from contracts
with customers
The subsidiary Hastings has revenue from broker activ-
ities in accordance with IFRS 15
Revenue from Contracts
with Customers
. The revenue consists principally of fees
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
51FINANCIAL STATEMENTS 2020
and commissions relating to the arrangement of third
party underwritten insurance contracts and ancillary
products.
Revenue from insurance brokerage activities is recognised
at the point of sale to the customer and revenue from
other retail income is recognised when the ad hoc service
has been completed. Revenue arising from insurance
broking activities is measured on an agency basis,
net of cost, at the fair value of the income receivable
after adjusting for any allowance for expected future
cancellation refunds. Hastings may also provide contracts
for the provision of other ad hoc, point in time services to
customers. Such income is recognised when the perfor-
mance obligation has been satisfied at the expected value
of consideration.
In the consolidated financial statements, the fees and
commissions from broker activities are included in ‘Other
income’ or ‘Other operating expenses’.
Financial assets and liabilities
Based on the measurement practice, financial assets
and liabilities are classified in the following categories
upon the initial recognition: financial assets at fair value
through profit or loss, loans and receivables, availa-
ble-for-sale financial assets, financial liabilities at fair
value through profit or loss, and other liabilities.
According to the Group’s risk management policy, invest-
ments are managed at fair value in order to have the most
realistic and real-time picture of investments, and they
are reported to the Group key management at fair value.
Investments comprise debt and equity securities. They
are mainly classified as financial assets available-for-sale
or at fair value through p/l.
A large majority of Sampo Group's financial assets are
valued at fair value. The valuation is based on either pub-
lished price quotations or valuation techniques based on
market observable inputs, where available. For a limited
amount of assets the value needs to be determined using
other techniques. The financial instruments measured
at fair value have been classified into three hierarchy
levels in the notes, depending on e.g. if the market for the
instrument is active, or if the inputs used in the valuation
technique are observable.
On level 1, the measurement of the instrument is based
on quoted prices in active markets for identical assets or
liabilities.
On level 2, inputs for the measurement of the instrument
include also other than quoted prices observable for the
asset or liability, either directly or indirectly by using
valuation techniques.
On level 3, the measurement is based on other inputs
rather than observable market data. The majority of
Sampo Group’s level 3 assets are private equity and
alternative funds.
For private equity funds the valuation of the underlying
investments is conducted by the fund manager who has
all the relevant information required in the valuation
process. The valuation is usually updated quarterly based
on the value of the underlying assets and the amount of
debt in the fund. There are several valuation methods,
which can be based on, for example, the acquisition value
of the investments, the value of publicly traded peer
companies, the multiple based valuation or the cashflows
of the underlying investments. Most private equity funds
follow the International Private Equity and Venture
Capital (IPEV) guidelines which give detailed instructions
on the valuation of private equity funds.
For alternative funds the valuation is also conducted
by the fund managers. Alternative funds often have
complicated structures and the valuation is dependent on
the nature of the underlying investments. There are many
different valuation methods that can be used, for exam-
ple, the method based on the cashflows of the underlying
investments. The operations and valuation of alternative
funds are regulated for example by the Alternative
Investment Fund Managers Directive (AIFMD), which
determines the principles and documentation require-
ments of the valuation process.
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
52FINANCIAL STATEMENTS 2020
In the life insurance business, IFRS 4
Insurance Contracts
provides that insurance contracts with a discretionary
participation feature are measured in accordance
with national valuation principles rather than at fair
value. These contracts and investments made to cover
shareholders’ equity are managed in their entirety and
are classified mainly as available-for-sale financial
assets. An exception to the rule are investments related
to unit-linked insurance, valued at fair value thru p/l and
shown as a separate line item in the balance sheet. The
corresponding liability is also shown as a separate line
item.
Recognition and derecognition
Purchases and sales of financial assets at fair value
through profit or loss and available-for-sale financial
assets are recognised and derecognised on the trade
date, which is the date on which the Group commits
to purchase or sell the asset. Loans and receivables are
recognised when cash is advanced.
Financial assets and liabilities are offset and the net
amount is presented in the balance sheet only when the
Group has a legally enforceable right to set off the recog-
nised amounts and it intends to settle on a net basis, or to
realise the asset and settle the liability simultaneously.
Financial assets are derecognised when the contractual
rights to receive cash flows have expired or the Group
has transferred substantially all the risks and rewards of
ownership. Financial liabilities are derecognised when
the obligation specified in the contract is discharged or
cancelled or expired.
Financial assets and financial liabilities
at fair value through profit or loss
In Sampo Group, financial assets and liabilities at fair
value through profit of loss comprise financial assets held
for trading and financial assets designated as at fair value
through profit or loss.
Financial assets held for trading
Financial asset that is held for the purpose of selling or
buying in the short term, or belongs to a portfolio that is
managed together or is repeatedly used for short-term
profit taking, is classified as an asset held for trading.
Gains and losses arising from changes in fair value, or
realised on disposal, together with related interest income
and dividend, are recognised in the income statement.
Also derivative instruments that are not designated as
hedges and do not meet the requirements for hedge
accounting are classified as financial assets for trading
purposes.
Financial derivatives held for trading are initially rec-
ognised at fair value. Derivative instruments are carried
as assets when the fair value is positive and as liabilities
when the fair value is negative. Derivative instruments are
recognised at fair value, and gains and losses arising from
changes in fair value together with realised gains and
losses are recognised in the income statement.
Financial assets designated as at fair value
through profit or loss
Financial assets designated as at fair value through profit
or loss are assets which, at inception, are irrevocably
designated as such. They are initially recognised at their
fair value. They are recognised in the income statement
and balance sheet accordingly with above-explained
assets held for trading.
Loans and receivables
Loans and receivables comprise non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market and that the Group does
not intend to sell immediately or in the short term. The
category also comprises cash and balances with banks.
Loans and receivables are initially recognised at their fair
value, including transaction costs directly attributable
to the acquisition of the asset. Loans and receivables
are subsequently measured at amortised cost using the
effective interest rate method.
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
53FINANCIAL STATEMENTS 2020
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative
financial investments that are designated as available for
sale and or are not categorised into any other category.
Available-for-sale financial assets comprise debt and
equity securities.
Available-for-sale financial assets are initially recognised
fair value, including direct and incremental transaction
costs. They are subsequently remeasured at fair value,
and the changes in fair value are recorded in other
comprehensive income and presented in the fair value
reserve, taking the tax effect into account. Interest income
and dividends are recognised in profit or loss. When the
available-for-sale assets are sold, the cumulative change
in the fair value is transferred from equity and recognised
together with realised gains or losses in profit or loss. The
cumulative change in the fair value is also transferred
to profit or loss when the assets are impaired and the
impairment loss is recognised. Exchange differences due
to available-for-sale monetary balance sheet items are
always recognised directly in profit or loss.
Other financial liabilities
Other financial liabilities comprise debt securities in issue
and other financial liabilities.
Other financial liabilities are recognised when the
consideration is received and measured to amortised cost,
using the effective interest rate method.
If debt securities issued are redeemed before maturity,
they are derecognised and the difference between the
carrying amount and the consideration paid at redemp-
tion is recognised in profit or loss.
Fair value
The fair value of financial instruments is determined
primarily by using quoted prices in active markets.
Instruments are measured either at a bid price or at
the last trade price, if there is an auction policy in the
stock market of the price source. An exception are the
syndicated loans which are measured at a mid-price
because of the lower liquidity. The financial derivatives
are also measured at the last trade price. If the financial
instrument has a counter-item that will offset its market
risk, the same price source is used in assets and liabilities
to that extent. If a published price quotation does not
exist for a financial instrument in its entirety, but active
markets exist for its component parts, the fair value is
determined on the basis of the relevant market prices of
the component parts.
If a market for a financial instrument is not active, or the
instrument is not quoted, the fair value is established by
using generally accepted valuation techniques including
recent arm’s length market transactions between
knowledgeable, willing parties, reference to the current
fair value of another instrument that is substantially the
same, discounted cash flow analysis and option pricing
models.
If the fair value of a financial asset cannot be determined,
historical cost is deemed to be a sufficient approximation
of fair value. The amount of such assets in the Group
balance sheet is immaterial.
Impairment of financial assets
Sampo assesses at the end of each reporting period
whether there is any objective evidence that a financial
asset, other than those at fair value through p/l, may be
impaired. A financial asset is impaired and impairment
losses are incurred, if there is objective evidence of
impairment as a result of one or more loss events that
occurred after the initial recognition of the asset, and if
that event has an impact, that can be reliably estimated,
on the estimated future cash flows of the financial asset.
Financial assets carried at amortised cost
There is objective evidence of impairment, if an issuer or
debtor e.g. encounters significant financial difficulties
that will lead to insolvency and to estimation that the
customer will probably not be able to meet the obligations
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
54FINANCIAL STATEMENTS 2020
to the Group. Objective evidence is first assessed for
financial assets that are individually significant, and
individually and collectively for financial assets not
individually significant.
When there is objective evidence of impairment of a
financial asset carried at amortised cost, the amount of
the loss is measured as the difference between the receiva-
ble’s carrying amount and the present value of estimated
future cash flows discounted at the receivable’s original
effective interest rate. The difference is recognised as
an impairment loss in profit or loss. The impairment is
assessed individually.
If, in a subsequent period, the amount of the impairment
loss decreases, and the decrease can objectively be related
to an event occurring after the impairment was recog-
nised (e.g. the default status is removed), the previously
recognised impairment loss shall be reversed through
profit or loss.
Available-for-sale financial assets
Whether there is objective evidence of an impairment
of available-for-sale financial assets, is evaluated in a
separate assessment, which is done if, for example, there
are changes in credit rating of debt instrument issuer,
the issuer is placed on a watch list, or there is a default
or delinquency in payments of principal or interests. For
equity instruments objective evidence may exist, if there
is a significant or prolonged decline in the fair value of an
equity instrument below its original acquisition cost.
The decision on whether the impairment is significant or
prolonged requires an assessment of the management.
The assessment is done case by case and with considera-
tion paid not only to qualitative criteria but also historical
changes in the value of an equity as well as time period
during which the fair value of an equity instrument has
been lower than the acquisition cost. In Sampo Group,
the impairment is normally assessed to be significant, if
the fair value of a listed equity or participation decreases
below the average acquisition cost by 20 per cent and
prolonged, when the fair value has been lower than the
acquisition cost for over 12 months.
As there are no quoted prices available in active markets
for unquoted equities and participations, the aim is to
determine their fair value with the help of generally
accepted valuation techniques available in the markets.
The most significant share of unquoted equities and
participations comprise the private equity and venture
capital investments. They are measured in accordance
with the generally accepted common practice, Interna-
tional Private Equity and Venture Capital Guidelines
(IPEV).
The significance and prolongation of the impairment in
the last-mentioned cases is assessed case by case, taking
into consideration special factors and circumstances
related to the investment. Sampo invests in private equity
and venture capital in order to keep them to the end of
their life cycle, so the typical lifetime is 10 – 12 years. In
general, a justifiable assessment of a potential impair-
ment may only be done towards the end of the life cycle.
However, if additionally there is a well-founded reason
to believe that an amount equivalent to the acquisition
cost will not be recovered when selling the investment, an
impairment loss is recognised.
An impairment on equity funds is recognised in line with
the principles above when the starting year of the fund
is at least 10 years old and both the carrying amount and
fair value of the fund is maximum EUR 500,000. In these
cases both the fair value and the carrying amount are
booked to zero. An impairment is only performed to those
funds for which the benchmarks are met in all Sampo
Group companies’ portfolios.
In the case of debt securities, the amount of the
impairment loss is assessed as the difference between
the acquisition cost, adjusted with capital amortisations
and accruals, and the fair value at the review time,
reduced by possibly in profit or loss previously recognised
impairment losses. At the same time, the cumulative loss
recognised in other comprehensive income is transferred
from equity and recognised in p/l as an impairment loss.
Any additional impairment losses are also recognised
thru p/l.
If, in a subsequent period, the fair value of a debt security
increases and the increase can objectively be related to an
BOARD OF
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REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
55FINANCIAL STATEMENTS 2020
event occurring after the impairment loss was recognised
in profit or loss, the impairment loss is reversed through
p/l, but only up until the carrying amount is the same
it would have been, had no impairment losses been
recognised in the first place.
Impairment losses for available-for-sale equity
instruments are recognised thru p/l, by transferring the
cumulative loss recognised in other comprehensive from
equity to p/l. If the fair value subsequently increases, the
increase is recognised in other comprehensive income.
If the value keeps decreasing below the book value, an
impairment loss is recognised through profit or loss, even
if the decline is less than 20 per cent.
Derivative financial instruments
and hedge accounting
Derivative financial instruments are classified as those
held for trading and those held for hedging, including
interest rate derivatives, credit risk derivatives, foreign
exchange derivatives, equity derivatives and commodity
derivatives. Derivative instruments are measured initially
at fair value. All derivatives are carried as assets when
fair value is positive and as liabilities when fair value is
negative.
Derivatives held for trading
Derivative instruments that are not designated as hedges
and embedded derivatives separated from a host contract
are treated as held for trading. They are measured at fair
value and the change in fair value, together with realised
gains and losses and interest income and expenses, is
recognised in profit or loss.
If derivatives are used for hedging, but they do not qualify
for hedge accounting as required by IAS 39, they are
treated as held for trading.
Hedge accounting
Sampo Group may hedge its operations against interest
rate risks, currency risks and price risks through fair value
hedging and cash flow hedging. Cash flow hedging is used
as a protection against the variability of the future cash
flows, while fair value hedging is used to protect against
changes in the fair value of recognised assets or liabilities.
During the financial year, fair value hedging has been
applied in Mandatum and cash flow hedging in Hastings.
Hedge accounting applies to hedges that are effective in
relation to the hedged risk and meet the hedge accounting
requirements of IAS 39. The hedging relationship between
the hedging instrument and the hedged item, as well as
the risk management objective and strategy for under-
taking the hedge, are documented at the inception of the
hedge. In addition, the effectiveness of a hedge is assessed
both at inception and on an ongoing basis, to ensure that
it is highly effective throughout the period for which it
was designated. Hedges are regarded as highly effective in
offsetting changes in fair value or the cash flows attributa-
ble to a hedged risk within a range of 80-125 per cent.
Cash flow hedging
Cash flow hedging is used to hedge the interest cash flows
of individual floating rate debt securities or other floating
rate assets or liabilities. The hedging instruments used
during the financial year were mainly currency forwards.
Derivative instruments which are designated as hedges
and are effective as such are measured at fair value. The
effective part of the change in fair value is recognised in
other comprehensive income. The remaining ineffective
part is recognised in profit or loss.
The cumulative change in fair value is transferred from
equity and recognised in profit or loss in the same period
that the hedged cash flows affect profit or loss.
When a hedging instrument expires, is sold, terminated,
or the hedge no longer meets the criteria for hedge
accounting, the cumulative change in fair value remains
in equity until the hedged cash flows affect profit or loss.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
56FINANCIAL STATEMENTS 2020
Fair value hedging
In accordance with the Group’s risk management
principles, fair value hedging is used to hedge changes in
fair values resulting from changes in price, interest rate
or exchange rate levels. The hedging instruments used
include foreign exchange forwards, interest rate swaps,
interest rate and cross currency swaps and options,
approved by the managements of the Group companies.
Changes in the fair value of derivative instruments that
are documented as fair value hedges and are effective in
relation to the hedged risk are recognised in profit or loss.
In addition, the hedged assets and liabilities are measured
at fair value during the period for which the hedge was
designated, with changes in fair value recognised in profit
or loss.
Leases
Group as lessee
All lease contracts are primarily recognised in the balance
sheet in accordance with IFRS 16
Leases
. The only optional
exemptions include certain short-term or low-value
contracts for which the lease payments can be recognised
as an expense on a straight-line basis over the lease term.
Right-of-use assets related to lease contracts (right to
use an underlying asset) are recognised in the asset
side as part of Property, Plant and Equipment and the
corresponding lease liabilities in the liability side as part
of Other liabilities. Right-of-use asset is recognised at
the commencement date of the lease and measured at
cost that includes the amount of the initial measurement
of the liability and potential prepaid rents to the lessor.
Lease liability is also recognised at the commencement
date, and measured at the present value of the lease
payments.
Depreciations on right-of-use assets and interests on the
lease liabilities are recognised in the p/l.
Group as lessor
Leases are included in ‘Investment property’ in the
balance sheet. They are depreciated over their expected
useful lives on a basis consistent with similar owned
property, plant and equipment, and the impairment
losses are recognised on the same basis as for these items.
Rental income is recognised on a straight-line basis over
the lease term in profit or loss.
Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisi-
tion (made after 1 January 2004) over the fair value of the
Group’s share of the net identifiable assets, liabilities and
contingent liabilities of the acquired entity at the date of
acquisition. Goodwill on acquisitions before 1 January
2004 is accounted for in accordance with the previous
accounting standards and the carrying amount is used as
the deemed cost in accordance with the IFRS.
Goodwill is measured at historical cost less accumulated
impairment losses. Goodwill is not amortised. Instead, it
is tested at least annually for impairment.
Other intangible assets
IT software and other intangible assets, whether procured
externally or internally generated, are recognised in
the balance sheet as intangible assets with finite useful
lives, if it is probable that the expected future economic
benefits that are attributable to the assets will flow to
the Group and the cost of the assets can be measured
reliably. The cost of internally generated intangible assets
is determined as the sum of all costs directly attributable
to the assets. Research costs are recognised as expenses
in profit or loss as they are incurred. Costs arising from
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
57FINANCIAL STATEMENTS 2020
development of new IT software or from significant
improvement of existing software are recognised only to
the extent they meet the above-mentioned requirements
for being recognised as assets in the balance sheet.
Intangible assets with finite useful lives are measured
at historical cost less accumulated amortisation and
impairment losses. Intangible assets are amortised on
a straight-line basis over the estimated useful life of the
asset. The estimated useful lives by asset class are as
follows:
IT software –years
Other intangible assets –years
Intangible assets with an indefinite useful life, such as
brands and trademarks acquired in business combina-
tions, are not amortised. Instead they are tested at least
annually for impairment.
Property, plant and equipment
Property, plant and equipment comprise properties
occupied for Sampo’s own activities, office equipment,
fixtures and fittings, and furniture. Classification of
properties as those occupied for own activities and those
for investment activities is based on the square metres
in use. If the proportion of a property in Sampo’s use is
no more than 10 per cent, the property is classified as an
investment property.
Property, plant and equipment are measured at historical
cost less accumulated depreciation and impairment
losses, except for Topdanmark and Hastings where the
carrying amount is based on revaluation i.e. fair value less
accumulated depreciation and impairment losses.
Improvement costs are added to the carrying amount of
a property when it is probable that the future economic
benefits that are attributable to the asset will flow to the
entity. Costs for repairs and maintenance are recognised
as expenses in the period in which they were incurred.
Items of property, plant and equipment are depreciated
on a straight-line basis over their estimated useful life. In
most cases, the residual value is estimated at zero. Land
is not depreciated. Estimates of useful life are reviewed
at financial year-ends and the useful life is adjusted if the
estimates change significantly. The estimated useful lives
by asset class are as follows:
Buildings –years
Components of buildings –years
Property and leasehold improvements –years
IT equipment and motor vehicles –years
Other equipment –years
Depreciation of property, plant or equipment will be
discontinued, if the asset in question is classified as held
for sale in accordance with IFRS 5
Non-current Assets Held
for Sale and Discontinued Operations
.
Impairment of intangible assets and
property, plant and equipment
At each reporting date the Group assesses whether there
is any indication that an intangible asset or an item
of property, plant or equipment may be impaired. If
any such indication exists, the Group will estimate the
recoverable amount of the asset. In addition, goodwill,
intangible assets not yet available for use and intangible
assets with an indefinite useful life will be tested for
impairment annually, independent of any indication
of impairment. For impairment testing the goodwill is
allocated to the cash-generating units of the Group from
the date of acquisition. In the test the carrying amount
of the cash-generating unit, including the goodwill, is
compared with its recoverable amount.
The recoverable amount is the higher of an asset’s fair
value less costs to sell and its value in use. The value
in use is calculated by estimating future net cash flows
expected to be derived from an asset or a cash-generating
unit, and by discounting them to their present value using
a pre-tax discount rate. If the carrying amount of an asset
is higher than its recoverable amount, an impairment loss
is recognised in profit or loss. In conjunction with this, the
impaired asset’s useful life will be re-determined.
If there is any indication that an impairment loss recog-
nised for an asset in prior periods may no longer exist or
may have decreased, the recoverable amount of the asset
will be estimated. If the recoverable amount of the asset
BOARD OF
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REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
58FINANCIAL STATEMENTS 2020
exceeds the carrying amount, the impairment loss is
reversed, but no more than to the carrying amount which
it would have been without recognition of the impairment
loss. Impairment losses recognised for goodwill are not
reversed.
Investment property
Investment property is held to earn rentals and for capital
appreciation. The investment property is measured the
same way as property, plant and equipment. The depreci-
ation periods and methods and the impairment principles
are also the same as those applied to corresponding
property occupied for own activities. The investment
property of the associate Nordea is measured at fair value
and included in the Holding segment’s investments in
associates.
The fair value of investment property is estimated using
a method based on estimates of future cash flows and a
comparison method based on information from actual
sales in the market. The fair value of investment property
is presented in the Notes.
The valuation takes into account the characteristics of
the property with respect to location, condition, lease
situation and comparable market information regarding
rents, yield requirements and unit prices. During the
financial year, the valuations were conducted by the
Group’s internal resources.
Provisions
A provision is recognised when the Group has a present
legal or constructive obligation as a result of a past event,
and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and the Group can reliably estimate the amount of the
obligation. If it is expected that some or all of the expend-
iture required to settle the provision will be reimbursed
by another party, the reimbursement will be treated as
a separate asset only when it is virtually certain that the
Group will receive it.
Insurance and investment contracts
Insurance contracts are treated, in accordance with IFRS
4, either as insurance or investment contracts. Under the
standard, insurance contracts are classified as insurance
contracts if significant insurance risk is transferred
between the policyholder and the insurer. If the risk trans-
ferred on the basis of the contract is essentially financial
risk rather than significant insurance risk, the contract
is classified as an investment contract. Classification of a
contract as an insurance contract or investment contract
determines the measurement principle applied to it.
Sampo treats the liabilities arising from contracts in
the first phase of the standard according to the national
accounting standards.
The risks involved in insurance and investment contracts
are widely elaborated in the Group’s note 40.
Reinsurance contracts
A reinsurance contract is a contract which meets the
IFRS 4 requirements for insurance contracts and on the
basis of which Sampo Group (the cedant) may receive
compensation from another insurer (the reinsurer), if it
becomes liable for paying compensation based on other
insurance contracts it has issued. Such compensation
received on the basis of reinsurance contracts is included
in the balance sheet under 'Reinsurers’ share of insurance
liabilities' and 'Other assets'. The former item includes the
reinsurers’ share of the provisions for unearned premiums
and claims outstanding in the Group’s reinsured
insurance contracts, while the latter includes short-term
receivables from reinsurers.
When the Group itself has to pay compensation to
another insurer on the basis of a reinsurance contract,
the liability is recognised in the item 'Other liabilities'.
Receivables and liabilities related to reinsurance are
measured uniformly with the cedant's receivables and
liabilities. Reinsurance receivables are tested annually for
impairment. Impairment losses are recognised through
profit or loss, if there is objective evidence indicating that
the Group (as the cedant) will not receive all amounts of
money it is entitled to on a contractual basis.
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Sampo plc’s Notes to the Accounts
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Group’s Notes to the Accounts
59FINANCIAL STATEMENTS 2020
In addition, the Group companies have contracts where
they share the insurance risk with a co-insurance
partner. Where the Group is the secondary co-insurer,
the Group only recognises its share of the premium as an
insurance receivable and related claims liability. Where
the Group acts as the lead co-insurer, the gross premium
is recognised as an insurance receivable, with a related
co-insurance payable to the co-insurer.
P&C insurance business
Classification of insurance contracts
In classifying insurance contracts and examining their
related risks, embedded contracts are interpreted as one
contract.
Other than insurance contracts, i.e. contracts where the
risk is not transferred, include Captive contracts in which
an insurance company underwrites a company’s direct
business and reinsures the same risk in an insurance
company in the same group as the policyholder. There are
also contracts in P&C insurance (Reverse Flow Fronting
contracts) in which the insurance company grants
insurance and then transfers the insurance risk to the
final insurer. For both the above types of contract, only
the net effect of the contract relationship is recognised
in the income statement and balance sheet (instead of
the gross treatment, as previously). The prerequisite for
net treatment is that the net retention recognised on the
contract is zero.
There are also contracts in P&C insurance in which the
insurance risk is eliminated by a retrospective insurance
premium, i.e. the difference between forecast and actual
losses is evened out by an additional premium directly or
in connection with the annual renewal of the insurance.
The net cash flow from these contracts is recognised
directly in the balance sheet, without recognising it first
in the income statement as premiums written and claims
incurred.
Insurance liabilities
Insurance liabilities are the net contractual obligations
which the insurer has on the basis of insurance contracts.
Insurance liabilities, consisting of the liability for
unearned premiums and unexpired risks and for claims
outstanding, correspond to the obligations under
insurance contracts.
The liability for unearned premiums is intended to
cover anticipated claims costs and operating expenses
during the remaining term of insurance contracts in
force. In P&C insurance and reinsurance, the liability for
unearned premiums is normally calculated on a strictly
proportional basis over time, i.e. on a pro rata temporis
basis. If premiums are judged to be insufficient to cover
anticipated claims costs and operating expenses, the
liability for unearned premiums must be augmented by a
provision for unexpired risks. Calculation of the liability
for unexpired risks must also take into account instalment
premiums not yet due.
The liability for claims outstanding is intended to cover
the anticipated future payments of all claims incurred,
including claims not yet reported to the company; i.e. the
IBNR (incurred but not reported) provision. The liability
for claims outstanding includes claims payments plus all
estimated costs of claim settlements.
The liability for claims outstanding in direct P&C insur-
ance and reinsurance may be calculated by statistical
methods or through individual assessments of individual
claims. Often a combination of the two methods is used,
meaning large claims are assessed individually while
small claims and claims incurred but not reported (the
IBNR provision) are calculated using statistical methods.
In If, the liability for claims outstanding is not discounted
to present value, with the exception of provisions for
vested annuities. Topdanmark discounts the whole
liability. In Hastings, the liability is not discounted,
except for claims that have to do with certain large bodily
injury. Mandatum does not discount anything.
Premiums written for P&C insurance and reinsurance
are recognised in the income statement when the annual
insurance premium is due for payment.
Liability adequacy test
A liability adequacy test is performed separately for both
the provision for claims outstanding and the provision for
unearned premiums. The provision for claims out-
standing is based on estimates of future cash flows. The
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60FINANCIAL STATEMENTS 2020
estimates are made by using well-established actuarial
methods.
The provision for unearned premiums is, for the most
part, calculated on a strictly proportional basis over time
(so called pro rata temporis principle). The adequacy of
the provision for unearned premiums is tested by calcu-
lating a provision for unexpired risks for each company
per business area and line of business. If the provisions
are judged to be insufficient, the provision for unearned
premiums is augmented by recognising a provision for
unexpired risks.
Deferred acquisition costs
In the P&C insurance business, acquisition costs clearly
relating to the writing of insurance contracts and extend-
ing beyond the financial year are recognised as assets in
the balance sheet. Acquisition costs include operating
expenses directly or indirectly attributable to writing
insurance contracts, fees and commissions, marketing
expenses and the salaries and overheads of sales staff.
Acquisition costs are amortised in the same way as
provisions for unearned premiums, usually in 12 months
at the maximum.
Life insurance business
Classification of insurance contracts
Policies issued by the life insurance business are classified
as either insurance contracts or investment contracts.
Insurance contracts are contracts that carry significant
insurance risk or contracts in which the policyholder has
the right to change the contract by increasing the risk. As
capital redemption contracts do not carry insurance risk,
these contracts are classified as investment contracts.
The discretionary participation feature (DPF) of a contract
is a contractual right held by a policyholder to receive
additional benefits, as a supplement to the guaranteed mini-
mum benefits. The supplements are bonuses based on the
reserves of policies credited to the policy reserve, additional
benefits in the case of death, or lowering of insurance
premiums. In Mandatum, the principle of fairness specifies
the application of this feature. In unit-linked contracts the
policyholder carries the investment risk by choosing the
investment funds linked to the contracts.
Measurement of insurance and
investment contracts
In Mandatum, national accounting standards in accordance
with IFRS 4 Insurance contracts are applied to all insurance
contracts and investment contracts with DPF.
All contracts, except unit-linked contracts and the assumed
reinsurance, include DPF. In those unit-linked contracts
which are not insurance contracts, the policyholder has
the possibility to transfer the return on savings from
unit-linked schemes to guaranteed interest with DPF.
Thus, the same standard is applied to these contracts as to
contracts with DPF.
The surrender right, guaranteed interest and the
unbundling of the insurance component from the deposit
component and similar features are not separated and
measured separately.
In Mandatum, regarding the group pension portfolio
transferred from Suomi Mutual (=segregated portfolio),
a so-called shadow accounting is applied, as permitted
in IFRS 4.30, by adjusting the equity with the amount of
unrealised gains and losses of the agreement. The equity
is adjusted with an amount that unrealised gains or losses
would have affected the Segregated Portfolio in accord-
ance with the profit distribution policy of the Segregated
Portfolio, if the gains or losses had been realised at the
balance sheet date.
In Topdanmark unit-linked contracts include both
insurance and investment contracts. Insurance contracts
are measured in accordance with IFRS 4. Investment
contracts, on the other hand, are measured in accordance
with IAS 39
Financial Instruments: Recognition and
Measurement
. Investment contracts do not include
discretionary participation feature.
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All unit-linked contracts insurance are payable on
demand at market value. In case of death, 101 per cent
of the amount is payable. This feature is considered
an insignificant insurance risk, and the contracts are
categorized and measured as investment contracts. There
are no other surrender rights and values to take into
consideration.
Insurance and investment contract
liabilities and reinsurance assets
Liabilities arising from insurance and investment
contracts consist of provisions for unearned premiums
and outstanding claims. In the life insurance business,
various methods are applied in calculating liabilities
which involve assumptions on matters such as mortality,
morbidity, the yield level of investments, future operating
expenses and the settlement of claims.
Changes in the liabilities of reinsurance have been
calculated at variable rates of exchange.
In direct insurance, the insurance liability is calculated by
policy, while in reinsurance it is calculated on the basis of
the reports of the ceding company or the company’s own
bases of calculation.
The interest rate used in discounting liabilities is, at most,
the maximum rate accepted by the authorities in each
country.
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 (the
“IBNR” provision). The provision for claims outstanding
includes claim payments plus all costs of claim settle-
ments.
The amounts of short- and long-term liabilities in
technical provisions are determined annually.
Liability adequacy test
A liability adequacy test is applied to all portfolios and the
need for augmentation is checked, company by company,
on the basis of the adequacy of the whole technical
provisions. The test includes all the expected contractual
cash flows for non-unit-linked liabilities. The expected
contractual cash flows include expected premiums,
claims, bonuses and expenses. The claims have been
estimated including surrenders and other insurance
transactions based on historical data. The amounts of
claims include the guaranteed interest and an estimation
of future bonuses. The present values of the cash flows
have been discounted to the balance sheet date.
For the unit-linked business, the present values of the
insurance risk and expense results are calculated corre-
spondingly. If the aggregate amount of the liability for the
unit-linked and other business presumes an augmenta-
tion, the liability is increased by the amount shown by the
test and recognised in profit or loss.
Principle of fairness
According to Chapter 13, Section 2 of the Finnish
Insurance Companies’ Act, the Principle of Fairness must
be observed in life insurance and investment contracts
with a discretionary participation feature. If the solvency
requirements do not prevent it, a reasonable part of the
surplus has to be returned to these policies as bonuses.
Mandatum aims at giving a total return before charges
and taxes on the original insurance portfolio’s policyhold-
ers’ savings in contracts with DPF that is at least the yield
of those long term bonds, which are considered to have
lowest risk. The total return consists of the guaranteed
interest rate and bonuses determined annually. Continu-
ity is pursued in the level of bonuses.
Employee benefits
Post-employment benefits
Post-employment benefits include pensions and life
insurance.
Sampo has defined benefit plans in Sweden and Norway,
and defined contribution plans in other countries.
The most significant defined contribution plan is that
arranged through the Employees’ Pensions Act (TyEL) in
Finland.
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In the defined contribution plans, the Group pays fixed
contributions to a pension insurance company and has no
legal or constructive obligation to pay further contribu-
tions. The obligations arising from a defined contribution
plan are recognised as an expense in the period that the
obligation relates to.
In the defined benefit plans, the company still has
obligations after paying the contributions for the financial
period and bears their actuarial and/or investment risk.
The obligation is calculated separately for each plan
using the projected unit credit method. In calculating the
amount of the obligation, actuarial assumptions are used.
The pension costs are recognised as an expense for the
service period of employees.
Defined benefit plans are both funded and unfunded.
The amounts reported as pension costs during a financial
year consist of the actuarially calculated earnings of
old-age pensions during the year, calculated straight-line,
based on pensionable income at the time of retirement.
The calculated effects in the form of interest expense for
crediting/appreciating the preceding years’ established
pension obligations are then added. The calculation of
pension costs during the financial year starts at the begin-
ning of the year and is based on assumptions about such
factors as salary growth and price inflation throughout
the duration of the obligation and on the current market
interest rate adjusted to take into account the duration of
the pension obligations.
The current year pension cost and the net interest of the
net liability is recognised thru p/l in pension costs. The
actuarial gains and losses and the return of the plan assets
(excl. net interest) are recognised as a separate item in
other comprehensive income.
The fair value of the plan assets covered by the plan
is deducted from the present value of future pension
obligations and the remaining net liability (net asset) is
recognised separately in the balance sheet.
The Group has also certain voluntary defined benefit
plans. These are intra-Group and have no material
significance.
Termination benefits
An obligation based on termination of employment is
recognised as a liability when the Group is verifiably
committed to terminate the employment of one or more
persons before the normal retirement date or to grant
benefits payable upon termination as a result of an offer to
promote voluntary redundancy. As no economic benefit
is expected to flow to the employer from these benefits
in the future, they are recognised immediately as an
expense. Obligations maturing more than 12 months later
than the balance sheet date are discounted. The benefits
payable upon termination at Sampo are the monetary and
pension packages related to redundancy.
Share-based payments
During the financial year, Sampo had four valid share-
based incentive schemes settled in cash (the long-term
incentive schemes 2014 II, 2017 I, 2017 II and 2020 I for the
management and key employees). Topdanmark had one
mainly share-settled incentive scheme for the executive
board and senior executives during the financial year. At
the time of joining the Group, Hastings had equity-settled
share-based incentive schemes that were offered to be
replaced by cash-settled schemes upon the acquisition.
More information on the different incentive schemes of
the Group companies in note 35 Incentive schemes.
The schemes have been measured at fair value at the
grant date and at every reporting date thereafter.
In the schemes settled in cash, the valuation is recognised
as a liability and changes recognised through profit or loss.
In the schemes settled in shares, the strike amounts
received on the exercise of the options are recognised in
the shareholder’s equity.
The fair value of the schemes has to a large extent been
determined using the Black-Scholes-pricing model. The
fair value of the market-based part of the incentive takes
into consideration the model’s forecast concerning the
number of incentive units to be paid as a reward. The
effects of non-market based terms are not included in the
BOARD OF
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Group’s Notes to the Accounts
63FINANCIAL STATEMENTS 2020
fair value of the incentive; instead, they are taken into
account in the number of those incentive units that are
expected to be exercised during the vesting period. In
this respect, the Group will update the assumption on the
estimated final number of incentive units at every interim
or annual balance sheet date.
Income taxes
Item Tax expenses in the income statement comprise
current and deferred tax. Tax expenses are recognised
through profit or loss, except for items recognised directly
in equity or other comprehensive income, in which case
the tax effect will also be recognised those items. Current
tax is calculated based on the valid tax rate of each country.
Tax is adjusted by any tax related to previous periods.
Deferred tax is calculated on all temporary differences
between the carrying amount of an asset or liability in
the balance sheet and its tax base. Deferred tax is not
recognised on non-deductible goodwill impairment, and
nor is it recognised on the undistributed profits of subsidi-
aries to the extent that it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred tax is calculated by using the enacted tax rates
prior to the balance sheet date. A deferred tax asset is
recognised to the extent that it is probable that future
taxable income will be available against which a tempo-
rary difference can be utilised.
Share capital
The incremental costs directly attributable to the issue of
new shares or options or to the acquisition of a business
are included in equity as a deduction, net of tax, from the
proceeds.
Dividends are recognised in equity in the period when
they are approved by the Annual General Meeting. When
the parent company or other Group companies purchase
the parent company’s equity shares, the consideration
paid is deducted from the equity as treasury shares until
they are cancelled. If such shares are subsequently sold or
reissued, any consideration received is included in equity.
Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term
deposits (3 months).
Sampo presents cash flows from operating activities
using the indirect method in which the profit (loss) before
taxation is adjusted for the effects of transactions of a
non-cash nature, deferrals and accruals, and income and
expense associated with investing or financing cash flows.
In the cash flow statement, interest received and paid
is presented in cash flows from operating activities. In
addition, the dividends received are included in cash
flows from operating activities. Dividends paid are
presented in cash flows from financing.
Accounting policies requiring
management judgement and key
sources of estimation uncertainties
Preparation of the accounts in accordance with the
IFRS requires management estimates and assumptions
that affect the revenue, expenses, assets, liabilities
and contingent liabilities presented in the financial
statements. Judgement is needed also in the application
of accounting policies. The estimates made are based on
the best information available at the balance sheet date.
The estimation is based on historical experiences and
most probable assumptions concerning the future at the
balance sheet date. The actual outcome may deviate from
results based on estimates and assumptions. Any changes
in the estimates will be recognised in the financial year
during which the estimate is reviewed and in all subse-
quent periods.
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64FINANCIAL STATEMENTS 2020
Sampo’s main assumptions concerning the future and
the key uncertainties related to balance sheet estimates
are related, for example, to assumptions used in actuarial
calculations, determination of fair values of non-quoted
financial assets and liabilities and investment property
and determination of the impairment of financial
assets and intangible assets. From Sampo’s perspective,
accounting policies concerning these areas require most
significant use of estimates and assumptions.
Actuarial assumptions
Evaluation of insurance liabilities always involves uncer-
tainty, as technical provisions are based on estimates and
assumptions concerning future claims costs. The esti-
mates are based on statistics on historical claims available
to the Group on the balance sheet date. The uncertainty
related to the estimates is generally greater when
estimating new insurance portfolios or portfolios where
clarification of a loss takes a long time because complete
claims statistics are not yet available. In addition to the
historical data, estimates of insurance liabilities take into
consideration other matters such as claims development,
the amount of unpaid claims, legislative changes, court
rulings and the general economic situation.
A substantial part of the Group’s P&C insurance liabilities
concerns statutory accident and traffic insurance. The
most significant uncertainties related to the evaluation of
these liabilities are assumptions about inflation, mortal-
ity, discount rates and the effects of legislative revisions
and legal practices.
The actuarial assumptions applied to life insurance
liabilities are discussed in more detail under 'Insurance
and investment contract liabilities and reinsurance
assets'.
Defined benefit plans as intended in IAS 19 are also
estimated in accordance with actuarial principles. As the
calculation of a pension plan reserve is based on expected
future pensions, assumptions must be made not only
of discount rates, but also of matters such as mortality,
employee turnover, price inflation and future salaries.
Determination of fair value
The fair value of any non-quoted financial assets is
determined using valuation methods that are generally
accepted in the market. These methods are discussed in
more detail above under 'Fair value'.
Fair values of investment property have been determined
internally during the financial year on the basis of
comparative information derived from the market. They
include management assumptions concerning market
return requirements and the discount rate applied.
Impairment tests
Goodwill, intangible assets not yet available for use,
and intangible assets with an indefinite useful life are
tested for impairment at least annually. The recoverable
amounts from cash-generating units have mainly been
determined using calculations based on the value in use.
These require management estimates on matters such as
future cash flows, the discount rate, and general economic
growth and inflation.
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Sampo plc’s Notes to the Accounts
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Group’s Notes to the Accounts
65FINANCIAL STATEMENTS 2020
Application of new or revised
IFRSs and interpretations
The Group will apply the following new or amended
standards and interpretations related to the Group’s busi-
ness in later financial years when they become effective,
or if the effective date is other than the beginning of the
financial year, during the financial year following the
effective date.
The amendments to IFRS 9
Financial Instruments
(effective for annual periods beginning on 1 Jan 2018 or
after) supersede IAS 39
Financial Instruments: Recognition
and Measurement
. Sampo is going to utilise the temporary
exception option, outlined in the next chapter, and apply
the standard on the annual period beginning on 1 Jan
2023. The new standard changes the classification and
measurement of financial assets and includes a new
impairment model based on expected credit losses. The
hedge accounting will continue to have three different
hedging relationships.
IFRS 17
Insurance Contracts
(effective for annual periods
beginning on 1 Jan 2023 or after) superseding IFRS 4, will
have an impact on the insurance liabilities valuation,
and as a result, the insurance companies have been given
additional options regarding the adoption of IFRS 9. If
certain preconditions regarding the insurance liabilities
are met, the company may apply the so-called temporary
exception option and defer the implementation until
the adoption of IFRS 17 standard, at the latest on annual
period beginning on 1 Jan 2023. The temporary exemp-
tion may be applied, if the Group’s amount of insurance
liabilities is greater than 90 per cent of the total amount
of liabilities. The application is also possible, if the ratio is
greater than 80 per cent, and the Group does not engage
in a significant activity unconnected with insurance.
Another allowed option is to apply IFRS 9 from 1 Jan 2018
on, but to remove some of the accounting mismatches,
caused by the different valuation methods of assets and
liabilities, from the income statement and transfer them
to other comprehensive income.
The Group has analyzed the preconditions for applying
the temporary exemption, and stated that they are met.
Therefore, the Group will apply the exemption and apply
IFRS 9 standard at the same time with the upcoming IFRS
17 standard. The Group has started analyzing the effects
of applications in all the other areas as well, as the new
standards will have a significant impact on the Group’s
financial statements.
The Group’s associate Nordea has applied IFRS 9 standard
in its financial statements from 1 January 2018 on.
European Commission had not at the balance sheet date
endorsed IFRS 17 standard to be adopted in the EU.
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66FINANCIAL STATEMENTS 2020
Segment Information
Geographical information has been disclosed about
income from external customers and non-current assets.
The reported areas are Finland, Sweden, Norway, Den-
mark, UK and the Baltic countries.
Segment information has been produced in accordance
with the accounting policies adopted for preparing and
presenting the consolidated financial statements. The
segment revenue, expense, assets and liabilities, either
directly attributable or reasonably allocable, have been
allocated to the segments. Inter-segment pricing is based
on market prices. The transactions, assets and liabilities
between the segments are eliminated in the consolidated
financial statements on a line-by-line basis.
Depreciation and amortisation by segment are disclosed
in notes 10 - 12 and investments in associates in note 13.
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Consolidated Income Statement by Business Segment for year ended 31 December 2020
EURm If Topdanmark
Hastings
Nov–Dec Mandatum Holding Elimination Group
Insurance premiums written -
Net income from investments -
Other operating income -
Claims incurred - - - - - -
Change in liabilities for insurance and investment contracts - - - - - -
Sta costs - - - - - - -
Other operating expenses - - - - - -
Finance costs - - - - - -
Share of associates' profit/loss - -
- Valuation loss on disposal of Nordea shares - - - - - - -
- Impairment loss on Nordea shares - - - - - - -
Profit before taxes - -
Taxes - - - - -
Profit for the year - -
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68FINANCIAL STATEMENTS 2020
EURm If Topdanmark
Hastings
Nov–Dec Mandatum Holding Elimination Group
Other comprehensive income for the period
Items reclassifiable to profit or loss
Exchange dierences - - -
Available-for-sale financial assets - -
Share of associate's other comprehensive income - - - - -
Taxes - - - - - - -
Total items reclassifiable to profit or loss, net of tax -
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans - - - - -
Taxes - - - - -
Total items not reclassifiable to profit or loss, net of tax - - - - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR - - -
Profit attributable to
Owners of the parent
Non-controlling interests
Total comprehensive income attributable to
Owners of the parent
Non-controlling interests
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EURm If Topdanmark Mandatum Holding Elimination Group
Insurance premiums written - -
Net income from investments - -
Other operating income -
Claims incurred - - - - - -
Change in liabilities for insurance and investment contracts - - - - -
Sta costs - - - - - -
Other operating expenses - - - - -
Finance costs - - - -
Share of associates' profit/loss -
- Valuation loss on dividend distribution of associate shares - - - - - -
Profit before taxes
Taxes - - - - - -
Profit for the year
Consolidated Income Statement by Business Segment for year ended 31 December 2019
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
70FINANCIAL STATEMENTS 2020
EURm If Topdanmark Mandatum Holding Elimination Group
Other comprehensive income for the period
Items reclassifiable to profit or loss
Exchange dierences - - - - - -
Available-for-sale financial assets -
Share of associate's other comprehensive income - - - - - -
Taxes - - - - - -
Total items reclassifiable to profit or loss, net of tax -
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans - - - - - -
Taxes - - - -
Total items not reclassifiable to profit or loss, net of tax - - - - - -
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Profit attributable to
Owners of the parent
Non-controlling interests
Total comprehensive income attributable to
Owners of the parent
Non-controlling interests
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
71FINANCIAL STATEMENTS 2020
Consolidated Balance Sheet by Business Segment at 31 December 2020
EURm If Topdanmark Hastings Mandatum
Holding
Elimination Group
Assets
Property, plant and equipment -
Investment property - - -
Intangible assets -
Investments in associates - -
Financial assets -
Investments related to unit-linked insurance contracts - - - -
Tax assets - - -
Reinsurers' share of insurance liabilities - -
Other assets -
Cash and cash equivalents -
Total assets -
Liabilities
Liabilities for insurance and investment contracts - -
Liabilities for unit-linked insurance and investment contracts - - - -
Subordinated debt - -
Other financial liabilities -
Tax liabilities -
Provisions - - - - -
Employee benefits - - - - -
Other liabilities -
Total liabilities -
EURm Group
Equity
Share capital
Reserves
Retained earnings
Other components of equity
Equity attributable to parent company's equity holders
Non-controlling interests
Total equity
Total equity and liabilities
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
72FINANCIAL STATEMENTS 2020
Consolidated Balance Sheet by Business Segment at 31 December 2019
EURm If Topdanmark Mandatum Holding Elimination Group
Assets
Property, plant and equipment -
Investment property - -
Intangible assets -
Investments in associates -
Financial assets -
Investments related to unit-linked insurance - - -
Tax assets - -
Reinsurers' share of insurance liabilities - -
Other assets -
Cash and cash equivalents -
Total assets -
Liabilities
Liabilities for insurance and investment contracts - -
Liabilities for unit-linked insurance and investment contracts - - -
Subordinated debt -
Other financial liabilities -
Tax liabilities -
Provisions - - - -
Employee benefits - - - -
Other liabilities -
Total liabilities -
EURm Group
Equity
Share capital
Reserves
Retained earnings
Other components of equity
Equity attributable to parent company's equity holders
Non-controlling interests
Total equity
Total equity and liabilities
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
73FINANCIAL STATEMENTS 2020
Material Partly-Owned Subsidiaries
Equityinterestheld
bynon-controlling
interests
Name Country
Topdanmark A/S Denmark
Hastings Group (Consolidated) Limited UK -
Accumulated balances of material non-controlling
interests
Topdanmark A/S
Hastings Group Holdings Plc -
The summarised financial information.
Figures are before inter-company eliminations.
Summarisedstatementofprofitorloss
EURm Hastings Topdanmark Topdanmark
Insurance premiums written
Net income from investments
Other operating income
Claims incurred - - -
Change in liabilities for insurance and
investment contracts - -
Sta costs - - -
Other operating expenses - - -
Finance costs - -
Share of associates' profit/loss -
Profit before taxes -
Taxes - -
Profit for the year attributable to
non-controlling interests -
Geographical Information
EURm Finland Sweden Norway Denmark UK Baltic Total
2020
Revenue
from external
customers
Non-current
assets
2019
Revenue
from external
customers -
Non-current
assets -
The revenue includes insurance premiums according to the underwriting country, consisting of
premiums earned for P&C insurance and premiums written for life insurance, and net investment
income and other operating income in the holding segment. For Hastings, income from broker
activities has been included as well.
Non-current assets comprise of intangible assets, investments in associates, property, plant and
equipment, and investment property.
BOARD OF
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
74FINANCIAL STATEMENTS 2020
Shareofnon-controllinginterestsofthebalancesheet
EURm Hastings Topdanmark Topdanmark
Assets
Property, plant and equipment
Investment property -
Intangible assets
Investments in associates -
Financial assets
Investments related to unit-linked insurance -
Tax assets
Reinsurers' share of insurance liabilities
Other assets
Cash and cash equivalents
Total assets
Liabilities
Liabilities for insurance and investment contracts
Liabilities for unit-linked insurance and
investment contracts -
Subordinated debt -
Other financial liabilities
Tax liabilities
Other liabilities
Total liabilities
Total equity attributable to
non-controlling interests
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
75FINANCIAL STATEMENTS 2020
Business Combinations
Year 2020
Hastings Group (Consolidated) Ltd
Sampo and South-African investment holding company,
Rand Merchant Investment Holdings Limited (RMI),
announced in August 2020, a recommended cash offer
to acquire all issued and to be issued shares in Hastings
Group Holdings plc not currently owned or controlled by
Sampo and RMI.
The offer price was GBp 250 for each Hastings share, val-
uing Hastings’ entire issued and to be issued share capital
at approximately GBP 1.66 billion or approximately EUR
1.84 billion. The acquisition price for Sampo amounted to
EUR 1,299 million.
Sampo funded its part of the acquisition costs with EUR 1
billion of hybrid Tier 2 capital issued on 3 September 2020
with the residual coming from existing cash resources.
On 27 October 2020, Sampo announced that all regulatory
approvals for the transaction had been received. On 16
November 2020, following the completion of the Court
Hearing procedure, the transaction became effective and
16 November 2020 became the acquisition date of the
acquired business.
Sampo and RMI formed a new jointly-owned company
for the purposes of acquiring Hastings, Hastings Group
(Consolidated) Ltd. Following completion of the offer,
Sampo owns and controls 70 per cent and 30 per cent
respectively of the shares and votes.
In the financial statements 2020, Hastings' balance sheet
has been consolidated line by line. The p/l items have
been consolidated since 16 November, 2020. Hastings
is presented as its own segment both in the income
statement and balance sheet by segments.
If the acquisition had taken place at the beginning of
2020, revenue in the Group from Hastings for 1 January
to 15 November 2020 would have been approximately
EUR 755 million and profit (without the transaction costs)
approximately EUR 90 million.
The acquisition related costs of approximately EUR -21
million were recognised in other operating expenses, of
which EUR -13 in the Holding segment and EUR -8 million
in Hastings' segment.
EURm
Cash flow on acquisition
Acquisitionpricepaidincash -
Transactionscosts -
Cashandcashequivalentsin
acquiredcompany
Net cash flow arising on acquisition -
Hastings, founded in 1996, is one of the leading property
and casualty insurance providers to the UK market,
with approximately 3 million live customer policies and
employing over 3,500 people. Hastings provides products
and services to UK car, bike, van and home insurance
customer with around 90 percent of policies directly
underwritten by Hasting' Gibraltar-based underwriting
business, Advantage Insurance Company Limited.
Sampo has a strategic ambition to expand further into
non-life insurance, a segment where it has extensive expe-
rience and expertise. Sampo has leading market positions
in the Nordic markets and geographical expansion is a
part of the strategy. Sampo believes that the UK offers an
attractive opportunity for this. In addition, the acquisition
of Hastings offers an interesting platform in one of the
most digitally advanced markets globally.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
76FINANCIAL STATEMENTS 2020
ThepreliminaryfairvaluesofconsolidatedassetsandliabilitiesasofNovemberaredisclosedbelow
EURm
Assets
Property, plant and equipment
Intangible assets
Financial assets
Tax assets
Reinsurers' share of insurance liabilities
Other assets
Cash and cash equivalents
Total assets
Liabilities
Liabilities for insurance and investment contracts
Financial liabilities
Tax liabilities
Other liabilities
Total liabilities
Non-controlling interests
Net assets total
Acquisition cost
Goodwill
At the acquisition, total of EUR 578 million was allocated to intangible assets, of which EUR 257 million to customer relations and
EUR 163 million to software platforms. Customer relations will be amortised over a period of 8 years and software platforms 7
years. Sampo's share of annual amortisations totals about EUR 39 million. EUR 158 million was allocated to brand. The brand will
not be amortised, but instead tested for an impairment at least once a year.
Viking Assistance Group AS
In January 2020, the Group's subsidiary If P&C Insurance
Holding Ltd (publ) acquired the whole capital stock of
Norwegian road assistance company Viking Redningstje-
neste Topco AS (from December 2020 on Viking Assistance
Group AS).
The acquisition price was about EUR 30 million (MNOK
322). The acquisition related insignificant costs were
recognised in other operating expenses.
Acquired net assets, including assumed net debt, were
negative. Recognised goodwill from the acquisition
amounted to EUR 95 million. The goodwill includes the
synergy effects in the form of more efficient processes and
expansion opportunities.
The acquired company has been consolidated in the Group
as of 1 January, 2020. The company's revenue amounted to
EUR 82 million and operating profit to EUR 2 million.
Year 2019
Vertikal Helseassistanse AS
In December 2019, the Group's subsidiary If Insurance Hold-
ing Ltd (publ) acquired the whole capital stock of a Norwegian
Vertikal Helseassistanse AS. The purchase price was EURm
33 and the acquired net assets EURm 7. The acquisition had
no material impact on Sampo Group's financial reporting.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
77FINANCIAL STATEMENTS 2020
1 Insurance premiums written
EURm
P&C insurance
Life insurance
Insurancecontracts
Investmentcontracts
Insurance premiums written, gross
Reinsurers' share
P&Cinsurance - -
Lifeinsuranceinsurancecontracts - -
Reinsurers' share, total - -
Group insurance premiums written total, net
1)
1)
The change in unearned premiums is presented in note 4, The change in insurance and investment
liabilities.
2 Net income from investments
If
EURm
Financial assets
Derivativefinancialinstruments
Gains/losses
- -
Loansandreceivables
Interest income
EURm
Financialassetsavailable-for-sale
Debt securities
Interest income
Impairment losses -
Gains/losses -
Exchange dierences -
Equity securities
Gains/losses
Impairment losses - -
Dividend income
Total
Total from financial assets
Other assets
Investment properties
Gains/losses
Expense on other than financial liabilities - -
Eect of discounting annuities - -
Fee and commission expenses
Asset management - -
If insurance, total
Included in gains/losses from financial assets available-for-sale is a net gain of EURm -12 (84)
transferred from the fair value reserve.
Notes to the Income Statement 1–40
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
78FINANCIAL STATEMENTS 2020
Topdanmark
EURm
Financial assets
Derivativefinancialinstruments
Gains/losses
Financialassetsfortrading
Debt securities
Interest income
Gains/losses - -
Equity securities
Gains/losses
Dividend income
Total
Investmentsrelatedtounit-linkedcontracts
Debt securities
Interest income
Gains/losses - -
Equity securities
Gains/losses
Dividend income
Derivatives
Interest income - -
Gains/losses
Other financial assets
Gains/losses
Total
Loansandreceivables
Interest income -
Total from financial assets
EURm
Net income from investment properties
Pension tax return - -
Eect of discounting annuities, insurance liabilities - -
Other expenses related to investment activities - -
Topdanmark, total
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
79FINANCIAL STATEMENTS 2020
Hastings
EURm
Nov–Dec
Financialassetsatfairvaluethrupl
Gains/losses -
Financialassetsavailable-for-sale
Debt securities
Interest income -
Gains/losses -
Total -
Hastings, total -
Mandatum
EURm
Financial assets
Derivativefinancialinstruments
Gains/losses -
Investmentsrelatedtounit-linkedcontracts
Debt securities
Interest income
Gains/losses
Equity securities
Gains/losses
Dividend income
Loans and receivables
Interest income - -
Gains/losses -
Other financial assets
Gains/losses
Total
EURm
Loansandreceivables
Interest income
Exchange dierences -
Total -
Financialassetsavailable-for-sale
Debt securities
Interest income
Gains/losses -
Impairment losses
Exchange dierences -
Equity securities
Gains/losses
Impairment losses - -
Dividend income
Total
Total financial assets
Other assets
Investment properties
Gains/losses
Net fee income
Asset management - -
Fee income
Total
Mandatum, total
Included in gains/losses from financial assets available-for-sale is a net gain of EURm 94 (236)
transferred from the fair value reserve.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
80FINANCIAL STATEMENTS 2020
Holding
EURm
Financial assets
Derivativefinancialinstruments
Gains/losses -
Loansandreceivables - -
Financialassetsavailable-for-sale
Debt securities
Interest income
Exchange dierences -
Equity securities
Gains/losses
Impairment losses - -
Dividend income
Total
Total financial assets -
Other assets
Holding, total -
Included in gains/losses from financial assets available for-sale is a net gain of EURm -14 (0)
transferred from the fair value reserve.
EURm
Elimination items between segments - -
Group net investment income, total
Other income and expenses comprise rental income, maintenance expenses and depreciation
of investment property. All the income and expenses arising from investments are included in
Net income from investments. Gains/losses include realised gains/losses on sales and unrealised
and realised changes in fair values. Unrealised fair value changes for financial assets available-
for-sale are recorded in other comprehensive income and presented in the fair value reserve
in equity. The changes in the fair value reserve are disclosed in the Statement of changes
in equity. The eect of discounting annuities in P&C insurance is disclosed separately. The
provision for annuities is calculated in accordance with actuarial principles taking anticipated
inflation and mortality into consideration, and discounted to take the anticipated future return
on investments into account. To cover the costs for upward adjustment of annuity provisions
required for the gradual reversal of such discounting, an anticipated return on investments is
added to annuity results.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
81FINANCIAL STATEMENTS 2020
3 Claims incurred
EURm
Claims paid
P&C insurance - -
Life insurance
Insurancecontracts - -
Investmentcontracts - -
Claims paid, gross - -
Reinsurers' share
P&C insurance
Life insurance, insurance contracts
Reinsurers's share, total
Claims paid total, net - -
Change in claims provision
P&C insurance -
Life insurance, insurance contracts
Change in claims provision, gross
Reinsurers' share
P&C insurance - -
Life insurance, insurance contracts
Reinsurers's share, total - -
Change in claims provision, net -
Group claims incurred, total - -
4 Change in liabilities for insurance
and investment contracts
EURm
Change in unearned premium provision
P&C insurance - -
Life insurance
Insurancecontracts - -
Investmentcontracts - -
Total change in liabilities, gross - -
Reinsurers' share
P&C insurance
Group change in liabilities for insurance and
investment contracts total, net - -
5 Staff costs
EURm
Wagesandsalaries - -
Cash-settledshare-basedpayments - -
Share-settledshare-basedpayments - -
Pensioncosts
- defined contribution plans - -
- defined benefit plans (Note 30) - -
Othersocialsecuritycosts - -
Group sta costs, total - -
More information on share-based payments in note 35 Incentive schemes.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
82FINANCIAL STATEMENTS 2020
6 Other operating expenses
EURm
ITcosts - -
Otherstacosts - -
Marketingexpenses - -
Depreciationandamortisation - -
Depreciationonleases - -
Rentalexpenses
*)
- -
Changeindeferredacquisitioncosts -
Directinsurancecomissions - -
Comissionsofreinsuranceassumed -
Commissionsonreinsuranceceded
Other - -
Group other operating expenses, total - -
*
)
From leases not recognised in the balance sheet
Item Other includes e.g. expenses related to communication, external services and other
administrative expenses.
7 Result analysis of If
EURm
Insurance premiums earned
Claims incurred - -
Operating expenses - -
Other insurance technical income and expense - -
Allocated investment return transferred
from the non-technical account
Technical result
Net investment income account
Allocated investment return transferred to the technical account - -
Other income and expense -
Operating result
Specification of activity-based operating expenses
included in the income statement
EURm
Claims-adjustmentexpenses(claimspaid) - -
Acquisitionexpenses(operatingexpenses) - -
Jointadministrativeexpensesforinsurancebusiness
(operatingexpenses) - -
Administrativeexpensespertainingtoothertechnical
operations(operatingexpenses) - -
Assetmanagementcosts(investmentexpenses) - -
Total - -
8 Earnings per share
EURm
Earnings per share
Profitorlossattributabletotheequityholders
oftheparentcompany
Weightedaveragenumberofsharesoutstanding
duringtheperiod
Earningspershare(EURpershare)
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
83FINANCIAL STATEMENTS 2020
9 Financial assets and liabilities
Financial assets and liabilities have been categorised in accordance with IAS 39.9. In the table
are also included interest income and expenses, realised and unrealised gains and losses
recognised in P/L, impairment losses and dividend income arising from those assets and
liabilities. The financial assets in the table include balance sheet items Financial assets and Cash
and cash equivalents.
EURm
Carrying
amount
Interest
incexp
Gains
losses
Impairment
losses
Dividend
income
FINANCIAL ASSETS
Financial assets at fair value
through p/l
Derivativefinancialinstruments - -
Financialassetsfortrading - -
Loansandreceivables - - -
Financialassets
available-for-sale -
Group financial assets, total -
FINANCIAL LIABILITIES
Financial liabilities at fair value
through p/l
Derivativefinancialinstruments - -
Otherfinancialliabilities -
Group financial liabilities, total -
EURm
Carrying
amount
Interest
incexp
Gains
losses
Impairment
losses
Dividend
income
FINANCIAL ASSETS
Financial assets at fair value
through p/l
Derivativefinancialinstruments - - -
Financialassetsfortrading -
Loansandreceivables - - -
Financialassets
available-for-sale -
Group financial assets, total -
FINANCIAL LIABILITIES
Financial liabilities at fair value
through p/l
Derivativefinancialinstruments - -
Otherfinancialliabilities -
Group financial liabilities, total -
BOARD OF
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AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
84FINANCIAL STATEMENTS 2020
10 Property, plant and equipment
EURm
Right-of-
useassets
)
Landand
buildings
Plantand
equipment
)
Total
AtJanuary
Cost
Accumulateddepreciation - - - -
NetcarryingamountatJanuary
CarryingamountatJanuary
Businessacquisitions
Additions
Disposals - - -
Depreciation - - -
Exchangedierences
CarryingamountatDecember
AtDecember
Cost
Accumulateddepreciation - - - -
NetcarryingamountatDecember
EURm
Right-of-
useassets
)
Landand
buildings
Plantand
equipment
)
Total
AtJanuary
Cost -
Accumulateddepreciation - - - -
NetcarryingamountatJanuary -
NetcarryingamountatJanuary -
IFRStransition - -
Additions
Disposals - - - -
Depreciation - - -
Exchangedierences -
NetcarryingamountatDecember
AtDecember
Cost
Accumulateddepreciation - - - -
NetcarryingamountatDecember
1)
The Group acts as a lessee in various leases of oce premises, vehicles and oce equipment. Right-of-use assets relate to lease contracts for large oce premises.
The Group leases premises mainly for its own use. The expected lease term varies from 2 to 12 years. Most contracts include an option to extend the contract at the term end. Some lease contracts have an option
to terminate the contract before the term end.
Variable lease payments are generally linked to consumer price indexes.
If has signed three oce lease contracts that have not yet commenced and therefore are not recognized in the balance sheet. Lease terms vary from 7 to 14 years. The new premises will subsequently replace
currently leased premises included into the right-of-use assets.
More information on leases in note 31 Other liabilities.
2)
Equipment in dierent segments comprise IT equipment and furniture.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
85FINANCIAL STATEMENTS 2020
11 Investment property
EURm
AtJanuary
Cost
Accumulateddepreciation - -
Accumulatedimpairmentlosses - -
NetcarryingamountatJanuary
NetcarryingamountatJanuary
Additions
Disposals - -
Depreciation - -
Impairmentlosses -
Exchangedierences -
NetcarryingamountatDecember
AtDecember
Cost
Accumulateddepreciation - -
Accumulatedimpairmentlosses - -
NetcarryingamountatDecember
Rentalincomefrominvestmentproperty
Property rented out under operating lease
Non-cancellableminimumrental
-notlaterthanoneyear
-laterthanoneyearandnotlaterthanfiveyears
-laterthanfiveyears
Total
EURm
Expensesarisingfrominvestmentproperty
-directoperatingexpensesarisingfrominvestmentproperty
generatingrentalincomeduringtheperiod - -
-directoperatingexpensesarisingfrominvestmentproperty
notgeneratingrentalincomeduringtheperiod - -
Total - -
FairvalueofinvestmentpropertyatDecember
Fair values for the Group's investment property are entirely determined by the Group based
on the market evidence. The determination and hierarchy of financial assets and liabilities at
fair value are disclosed in note 17. Based on the principles of this determination, the investment
property falls under levels 2 and 3.
The premises in investment property for dierent segments are leased on market-based,
irrevocable contracts. The lengths of the contracts vary from those for the time being to those
for several years.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
86FINANCIAL STATEMENTS 2020
12 Intangible assets
EURm Goodwill
Customer
relationsand
trademark
Other
intangible
assets Total
AtJanuary
Cost
Accumulatedamortisation - - - -
Netcarryingamount
atJanuary
Netcarryingamount
atJanuary
Businessacquisitions
Additions - -
Disposals - - -
Depreciation - - - -
Exchangedierences -
Netcarryingamount
atDecember
AtDecember
Cost
Accumulatedamortisation - - - -
Netcarryingamount
atDecember
EURm Goodwill
Customer
relationsand
trademark
Other
intangible
assets Total
AtJanuary
Cost
Accumulatedamortisation - - - -
Netcarryingamount
atJanuary
Netcarryingamount
atJanuary
Businessacquisitions
Additions - -
Disposals - - -
Depreciation - - - -
Exchangedierences - -
Netcarryingamount
atDecember
AtDecember
Cost
Accumulatedamortisation - - - -
Netcarryingamount
atDecember
Goodwillissplitbetweenthesegmentsasfollows
If
Topdanmark
Hastings -
Mandatum
Total
At the business acquisitions of Hastings and Topdanmark, EUR 253 million has been allocated to
trademark. The useful life of trademark is deemed indefinite and it will not be amortised.
Other intangible assets in all segments comprise mainly IT software.
Depreciation and impairment losses are included in the income statement item Other operating
expenses.
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
87FINANCIAL STATEMENTS 2020
Testing goodwill for impairment
Goodwill is tested for impairment in accordance with IAS 36
Impairment of assets
. No
impairment losses have been recognised based on these tests.
For the purpose of testing goodwill for impairment, Sampo determines the recoverable amount
of its cash-generating units, to which goodwill has been allocated, on the basis of value in use.
Sampo has defined these cash-generating units as If Group, Topdanmark Group and Mandatum
Life Insurance Company Ltd (Mandatum hereafter).
The recoverable amounts for If and Mandatum have been determined by using a discounted
cash flow model. The model is based on Sampo’s management’s best estimates of both
historical evidence and economic conditions such as volumes, interest rates, margins, capital
structure and income and cost development. The value in use model for Mandatum is greatly
influenced by the long-term development of insurance liabilities, aecting e.g. the required
solvency capital and thus the recoverable amount. That is why the forecast period is longer for
Mandatum, 10 years. The derived cash flows were discounted at the pre-tax rates of the cost of
equity which for If was 9.2 per cent and for Mandatum Life 9.8 per cent. The cost of equity is
used as the cost of capital as neither company has principal outstanding.
Forecasts for If, approved by the management, cover years 2021–2023. The cash flows beyond
that have been extrapolated using a 2 per cent growth rate. A 2 per cent growth rate for years
beyond 2030 has been used for the for Mandatum Life as well, as it is believed to be close to the
anticipated inflation in both cases.
In Mandatum Life, the recoverable amount exceeds its carrying amount by some EUR 320
million. With the calculation method used, e.g. an increase of about 1 per cent point in the cost
of equity combined with a long term 0 per cent growth rate could lead to a situation where the
recoverable amount of the entity would equal its carrying amount.
As for the If Group, the management believes that any reasonably possible change in any
of these key assumptions would not cause the aggregate carrying amount to exceed the
aggregate recoverable amount.
IAS 36 permits determing the recoverable amount by using the fair value less costs to sell. For
Topdanmark, the valuation of goodwill has been tested on the balance sheet date by using that
method. The fair value of Topdanmark EUR 1,491 million on the balance sheet date exceeds its
carrying amount in the Group.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
88FINANCIAL STATEMENTS 2020
Associates that have been accounted for by the equity method
at 31 December 2019
EURm
Name Domicile
Carrying
amount Fairvalue
*)
Interest
held
NordeaBankAbp Finland
NordaxHoldingAB Sweden
PrecastHoldingOy Finland
CAPGroupAB Sweden
SvithunAssuranseAS Norway
DigiconseptAS Norway
BoligselskapenesServiceSenter
AS Norway
SOSInternationalAS Denmark
BornholmsBrandforsikringAS Denmark
Komplementarselskabet
MargretheholmApS Denmark
Komplementarselskabet
HavneholmenApS Denmark
MargretheholmPS Denmark
HavneholmenPS Denmark
PSEjendomsholding
Banemarksvej Denmark
Komplementarselskabet
BanemarksvejApS Denmark
CarlsbergByenPS Denmark
HeapAS Denmark
PSOttiliaKøbenhavn Denmark
KomplementarselskabetOttilia
KøbenhavnApS Denmark
*)
Published price quatation
13 Investments in associates
Associates that have been accounted for by the equity method
at 31 December 2020
EURm
Name Domicile
Carrying
amount Fairvalue
*)
Interest
held
NordeaBankAbp Finland
NordaxHoldingAB Sweden
PrecastHoldingOy Finland
CAPGroupAB Sweden
SvithunAssuranseAS Norway
DigiconseptAS Norway
BoalliansenAS Norway
SOSInternationalAS Denmark
VikingVeihjelpAS Denmark
VikingAssistanceAS Norway
BornholmsBrandforsikringAS Denmark
Komplementarselskabet
MargretheholmApS Denmark
Komplementarselskabet
HavneholmenApS Denmark
MargretheholmPS Denmark
HavneholmenPS Denmark
PSEjendomsholding
Banemarksvej Denmark
Komplementarselskabet
BanemarksvejApS Denmark
CarlsbergByenPS Denmark
CarlsbergByenPS Denmark
PSOttiliaKøbenhavn Denmark
KomplementarselskabetOttilia
KøbenhavnApS Denmark
*)
Published price quatation
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
89FINANCIAL STATEMENTS 2020
Changes in investments in associates
EURm Nordea
Other
associates Total Nordea
Other
associates Total
AtJanuary
Shareoflossprofit
Valuationlossondividenddistributionofassociateshares
*)
- - - - - -
ImpairmentlossonNordeashares - - - - - -
Additions - -
Disposals - - - -
Changesintheequityofassociates - - - - - -
Exchangedierences - - - -
AtDecember
*)
The valuation loss for 2020 includes the dierence between the consolidated carrying amount and the fair value of the shares, EUR -222 million on the sales date, and EUR -40 million from recycling of Nordea's
previously recognised other comprehensive income from equity to the profit or loss. The comparison year's 2019 valuation loss on dividend distribution of associate shares comprises the valuation dierence
between the consolidated carrying amount and the fair value of the shares EUR -143 million, on the date of the distribution, and the recycling of Nordea-related other comprehensive income items to the profit or
loss EUR -11 million.
The carrying amount of investments in associates included goodwill EUR 6 million (922), including goodwill from the Nordea acquisition EUR - million (915).
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
90FINANCIAL STATEMENTS 2020
Financial information on Nordea
EURm
Assets
Liabilities
Goodwillincludedintheassets
Revenue
Othercomprehensiveincomeitems - -
Comprehensiveincomestatement
Dividendincomefromtheassociateduringthefinancialyear -
Reconciliation of Nordea's carrying amount
to Nordea's financial information
EURm
NetassetsofNordea
Samposshareof()
Shareofimpairmentlossexceedingtheallocations - -
Remainingallocations
Goodwill -
Trademarkandcustomerrelationsnet -
Total carrying amount
In November 2020, Sampo sold 161,998,076 Nordea shares. The transaction price was EUR
7.25 per share, resulting in gross proceeds of EUR 1,174 million. After the transaction, Sampo
holds 642,924,782 Nordea shares, corresponding to 15.87 per cent of all shares and voting
rights in Nordea. In accordance with IAS 28
Investments in Associates and Joint Ventures
, a
significant influence needs to be clearly demonstrated, if the investor's ownership of the voting
power is less than 20%. Sampo’s management has made a thorough assessment of facts
and circumstances, including that Sampo is still the biggest single shareholder who has the
position of chairman in the Board of Directors of Nordea and additionally two members in the
Nomination Committee. Based on the assessment, the Board has concluded that despite the
decrease in the ownership, the significant influence continues to exist on 31 December 2020.
On 31 December 2020, Nordea’s book value per share, after consolidating Nordea’s fourth
quarter, amounted to EUR 8.90 exceeding its market value of EUR 6.67. Sampo performed an
impairment test in accordance with IAS 36
Impairment of Assets
where the recoverable amount
for Nordea was compared with its carrying amount in the Group. The recoverable amount was
defined by using a discounted cash flow model. Based on the value in use test, the recoverable
amount was EUR 7.50 per share. As a result, an impairment loss of EUR -899 million was
recognised in the income statement, bringing the carrying amount per share to EUR 7.50 at 31
December 2020. The total carrying amount of Nordea in Sampo Group at 31 December 2020
was EUR 4,822 million. Negative developments in assumptions used in impairment testing may
lead to further impairment needs.
14 Financial assets
Group's financial assets comprise investments in derivatives, financial assets designated as at
fair value through p/l, loans and receivables, available-for-sale financial assets and investments
in subsidiaries. The Holding segment includes also investments in subsidiaries.
The Group uses derivative instruments for trading and for hedging purposes. The derivatives
used are foreign exchange, interest rate and equity derivatives. During the financial year, fair
value hedging has been applied in Mandatum and cash flow hedges in Hastings.
EURm
If
Derivativefinancialinstruments
Loansandreceivables
Financialassetsavailable-for-sale
If, total
Topdanmark
Derivativefinancialinstruments
Financialassetsatfairvaluethroughpl
Loansandreceivables
Topdanmark, total
Hastings
Financialassetsatfairvaluethroughpl -
Financialassetsavailable-for-sale -
Hastings, total -
Mandatum
Derivativefinancialinstruments
Loansandreceivables -
Financialassetsavailable-for-sale
Mandatum, total
Omistusyhteisö
Derivativefinancialinstruments
Financialassetsavailable-for-sale
Investmentsinsubsidiaries
Holding, total
Elimination items between segments - -
Group financial assets, total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
91FINANCIAL STATEMENTS 2020
Derivative financial instruments
Fairvalue Fairvalue
EURm
Contract
notionalamount Assets Liabilities
Contract
notionalamount Assets Liabilities
Derivatives held for trading
Interestratederivatives
OTCderivatives
Interestrateswaps
Inflationcover -
Interestoptionsboughtandsold - - - -
Totalinterestratederivatives
Foreignexchangederivatives
OTCderivatives
Currencyforwards
Currencyoptionsboughtandsold
Totalforeignexchangederivatives
Equityderivatives
OTCderivatives
Equityfutures - - - -
Total derivatives held for trading
Derivatives held for hedging
Fairvaluehedges
Currencyforwards - -
Cashflowhedges
Currencyforwards - - - -
Total derivatives held for hedging - -
Group financial derivatives, total
Fair value hedges
In Mandatum, fair value hedging is used to hedge a proportion of foreign exchange and interest risk in available-for-sale financial assets. The interest elements of forward contracts have been
excluded from hedging relationships in foreign exchange hedges. Net result from exchange derivatives designated as fair value hedges amounted to EURm -31 (6). Net result from hedged risks in fair
value hedges of available for sale financial assets amounted to EURm 31 (-6).
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
92FINANCIAL STATEMENTS 2020
Other financial assets
EURm
Financial assets designated as at fair value through p/l
Debtsecurities
Equitysecurities
Totalfinancialassetsdesignatedasatfairvaluethroughpl
Loans and receivables
Financial assets available-for-sale
Debtsecurities
Equitysecurities
Totalfinancialassetsavailable-for-sale
Group other financial assets, total
Financial assets available-for-sale include impairment losses EURm 383 (187).
Group financial assets, total
15 Fair values
EURm Fairvalue
Carrying
ammount Fairvalue
Carrying
amount
Group financial assets
Financialassets
Investmentsrelatedtounit-linked
contracts
Otherassets
Cashandcashequivalents
Totalfinancialassets
Group financial liablities
Financialliabilities
Otherliabilities
Totalfinancialliabilities
In the table above are presented fair values and carrying amounts of financial assets and
liabilities. The detailed measurement bases of financial assets and liabilities are disclosed in the
Group Accounting policies.
The fair value of investment securities is assessed using quoted prices in active markets.
If published price quotations are not available, the fair value is assessed using discounting
method. Values for the discount rates are taken from the market’s yield curve.
The fair value of the derivative instruments is assessed using quoted market prices in active
markets, discounting method or option pricing models.
The fair value of loans and other financial instruments which have no quoted price in active
markets is based on discounted cash flows, using quoted market rates. The market’s yield curve
is adjusted by other components of the instrument, e.g. by credit risk.
The fair value for short-term non-interest-bearing receivables and payables is their carrying
amount.
Disclosed fair values are "clean" fair values, i.e. less interest accruals.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
93FINANCIAL STATEMENTS 2020
16 Change in fair values of financial assets
Fairvalue Fairvalue
EURm Change
Financial assets
Financial assets measured at amortised cost
Loansandreceivables -
Deposits
Total -
Financial assets at fair value through p/l
Equitysecurities -
Debtsecurities
Funds
Derivatives
Loansguaranteedbymortgagesandotherloans
Deposits
Total
Financial assets at fair value through p/l
related to unit-linked insurance
Equitysecurities -
Debtsecurities
Funds
Other -
Total
Group financial assets, total
Financial assets measured at amortized cost
There are no significant credit risk concentrations related to financial instruments that meet the
SPPI test.
Financial assets measured at amortised cost, meeting the SPPI test, by credit risk rating grade:
BB-BB- B-B- Total
Loans and receivables
Deposits -
AA-AA- A-A- Total
Loans and receivables
Deposits -
There are no financial instruments that meet the SPPI test, on which the credit risk is not low.
The associated company Nordea Bank Abp is applying IFRS 9. More information is available in
the Financial Statements of Nordea Bank Abp.
The table has been prepared based on current preliminary analysis on business models. The
final classification may change before the implementation on 1 January 2023, when the Group
finanalises its more detailed analysis.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
94FINANCIAL STATEMENTS 2020
17 Determination and hierarchy of fair values
A large majority of Sampo Group's financial assets are valued at fair value. The valuation is
based on either published price quotations or valuation techniques based on market observable
inputs, where available. For a limited amount of assets the value needs to be determined using
other techniques. The financial instruments measured at fair value have been classified into
three hierarchy levels in the notes, depending on e.g. if the market for the instrument is active,
or if the inputs used in the valuation technique are observable.
On level 1, the measurement of the instrument is based on quoted prices in active markets for
identical assets or liabilities.
On level 2, inputs for the measurement of the instrument include also other than quoted prices
observable for the asset or liability, either directly or indirectly by using valuation techniques.
In level 3, the measurement is based on other inputs rather than observable market data. The
majority of Sampo Group’s level 3 assets are private equity and alternative funds.
For private equity funds the valuation of the underlying investments is conducted by the fund
manager who has all the relevant information required in the valuation process. The valuation
is usually updated quarterly based on the value of the underlying assets and the amount of
debt in the fund. There are several valuation methods, which can be based on, for example, the
acquisition value of the investments, the value of publicly traded peer companies, the multiple
based valuation or the cashflows of the underlying investments. Most private equity funds
follow the International Private Equity and Venture Capital (IPEV) guidelines which give detailed
instructions on the valuation of private equity funds.
For alternative funds the valuation is also conducted by the fund managers. Alternative
funds often have complicated structures and the valuation is dependent on the nature of the
underlying investments. There are many dierent valuation methods that can be used, for
example, the method based on the cashflows of the underlying investments. The operations
and valuation of alternative funds are regulated for example by the Alternative Investment Fund
Managers Directive (AIFMD), which determines the principles and documentation requirements
of the valuation process.
EURm Level Level Level Total
FINANCIAL ASSETS
AT 31 DECEMBER 2020
Financial assets at fair value
Derivative financial instruments
Interestrateswaps - -
Foreignexchangederivatives - -
Total - -
Assets held for trading
Equitysecurities -
Debtsecurities
Total
Financial assets designated at fair
value through profit or loss
Deposits - -
Financial assets related to unit-linked
insurance
Equitysecurities
Debtsecurities
Funds
Derivativefinancialinstruments - -
Otherassets - -
Total
Financial assets available-for-sale
Equitysecurities -
Debtsecurities
Otherassets
Total
Total financial assets measured
at fair value
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
95FINANCIAL STATEMENTS 2020
EURm Level Level Level Total
Other financial assets
Financial assets at amortised cost
Loansandreceivables -
Group financial assets, total
EURm Level Level Level Total
FINANCIAL LIABILITIES
AT 31 DECEMBER 2020
Financial liabilities at fair value
Derivative financial instruments
Interestratederivatives - -
Foreignexchangederivatives - -
Total - -
Financial liabilities designated as at
fair value through p/l
Deposits - -
Total financial liabilities at fair value -
Other financial liabilities
Subordinated debt securities
Subordinatedloans -
Debt securities in issue
Bonds -
Total other liabilities -
Group financial liabilities, total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
96FINANCIAL STATEMENTS 2020
EURm Level Level Level Total
FINANCIAL ASSETS
AT 31 DECEMBER 2019
Financial assets at fair value
Derivative financial instruments
Interestrateswaps - -
Foreignexchangederivatives - -
Equityderivatives - -
Total - -
Financial assets designated at fair
value through profit or loss
Equitysecurities -
Debtsecurities
Total
Financial assets designated at fair
value through profit or loss
Deposits - -
Financial assets related to unit-linked
insurance
Equitysecurities
Debtsecurities
Funds
Derivativefinancialinstruments - -
Otherassets - -
Total
Financial assets available-for-sale
Equitysecurities -
Debtsecurities
Otherassets
Total
Total financial assets measured
at fair value
EURm Level Level Level Total
Other financial assets
Financial assets at amortised cost
Loansandreceivables -
Group financial assets, total
EURm Level Level Level Total
FINANCIAL LIABILITIES
AT 31 DECEMBER 2019
Financial liabilities at fair value
Derivative financial instruments
Interestratederivatives - -
Foreignexchangederivatives - -
Total - -
Financial liabilities designated as at
fair value through p/l
Deposits - -
Total financial liabilities measured at
fair value -
Other financial liabilities
Subordinated debt securities
Subordinatedloans -
Debt securities in issue
Bonds -
Total other liabilities -
Group financial liabilities, total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
97FINANCIAL STATEMENTS 2020
Transfers between levels 1 and 2
EURm
Transfers
fromlevel
tolevel
Transfers
fromlevel
tolevel
Transfers
fromlevel
tolevel
Transfers
fromlevel
tolevel
Financial assets related to
unit-linked insurance
Equitysecurities
Funds - - -
Total
Financial assets available-for-sale
Debtsecurities
Transfers are based mainly on the changes in trading volume information provided by an
external service provider.
Sensitivity analysis of fair values
The sensitivity of financial assets and liabilities to changes in exchange rates is assessed on
business area level due to dierent base currencies. In If, 10 percentage point depreciation
of all other currencies against SEK would result in an increase recognised in profit/loss of
EUR 21 million (12) and in a decrease recognised directly in equity of EUR -18 million (-10). In
Topdanmark, 10 percentage depreciation of all other currencies against DKK would result in an
increase recognised in profit/loss of EUR 3 million (-5), but would not have an impact on equity.
In Mandatum, 10 percentage point depreciation of all other currencies against EUR would result
in an increase recognised in profit/loss of EUR 55 million (48) and in a decrease recognised
directly in equity of EUR -66 million (-68). In Holding, 10 percentage point depreciation of all
other currencies against EUR would have no impact on profit/loss, but a decrease recognised in
equity of EUR -31 million (-156). In Hastings, the changes in exchange rates would not have an
impact either in p/l or equity.
The sensitivity analysis of the Group's fair values of financial assets and liabilities in dierent
market risk scenarios is presented below. The eects represent the instantaneous eects of a
one-o change in the underlying market variable on the fair values on 31 December 2020.
The sensitivity analysis includes the eects of derivative positions. All sensitivities are calculated
before taxes.
The debt issued by Sampo plc is not included.
Interestrate Equity
Other
financial
investments
parallel
shiftdown
parallel
shiftup
fall
inprices
fall
inprices
Eectrecognisedinprofitloss - - -
Eectrecogniseddirectlyin
equity - - -
Totaleect - - -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
98FINANCIAL STATEMENTS 2020
18 Movements in level 3 financial instruments measured at fair value
EURm Jan
Totalgains
lossesinincome
statement
Totalgainslosses
recordedinother
comprehensive
income Purchases Sales
Transfersfrom
tolevelsand Dec
Gainslosses
includedinpl
forfinancial
assetsat
Dec
FINANCIAL ASSETS 2020
Financial assets held for trading
Debtsecurities - -
Financial assets related to unit-linked insurance
Equitysecurities - - - -
Debtsecurities - -
Funds - - - - -
- - - -
Financial assets available-for-sale
Equitysecurities - - -
Debtsecurities - - -
Funds - - -
- - -
Total financial assets measured at fair value - - -
EURm Realisedgainslosses Fairvaluegainsandlosses Total
Total gains or losses included in profit or loss for the financial year - -
Total gains or losses included in profit and loss for assets held at the end of the financial year
- -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
99FINANCIAL STATEMENTS 2020
EURm Jan
Totalgains
lossesinincome
statement
Totalgainslosses
recordedinother
comprehensive
income Purchases Sales Dec
Gainslosses
includedinplfor
financialassetsat
Dec
FINANCIAL ASSETS 2019
Financial assets held for trading
Debtsecurities - -
Financial assets related to unit-linked insurance
Equitysecurities -
Debtsecurities - - -
Funds - -
- -
Financial assets available-for-sale
Equitysecurities - - -
Debtsecurities -
Funds - - -
- - -
Total financial assets measured at fair value - - -
EURm Realisedgainslosses Fairvaluegainsandlosses Total
Total gains or losses included in profit or loss for the financial year - -
Total gains or losses included in profit and loss for assets held at the end of the financial year
- -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
100FINANCIAL STATEMENTS 2020
19 Sensitivity analysis of level 3 financial
instruments measured at fair value
EURm
Carrying
amount
Eectof
reasonably
possible
alternative
assumptions
(-)
Carrying
amount
Eectof
reasonably
possible
alternative
assumptions
(-)
Financial assets
Financial assets available-for-sale
Equitysecurities - -
Debtsecurities - -
Funds - -
Total - -
The value of financial assets regarding the debt security instruments has been tested by
assuming a rise of 1 per cent unit in interest rate level in all maturities. For other financial assets,
the prices were assumed to go down by 20 per cent. Sampo Group bears no investment risks
related to unit-linked insurance, so a change in assumptions regarding these assets does not
aect profit or loss. On the basis of the these alternative assumptions, a possible change in
interest levels would cause a descend of EUR -3 million (-4) for the debt instruments, and EUR
-259 million (-252) valuation loss for other instruments in the Group's other comprehensive
income. The reasonably possible eect, proportionate to the Group's equity, would thus be 2.3
per cent (2.1).
20 Investments related to unit-linked insurance contracts
EURm
Financial assets designated at fair value through p/l
Debtsecurities
Equitysecurities
Loansandreceivables
Financialderivativeinstruments
Other
Group investments related to unit-linked contracts, total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
101FINANCIAL STATEMENTS 2020
21 Deferred tax assets and liabilities
Changes in deferred tax during the financial period 2020
EURm Jan
Business
acquisitions
Recognisedin
comprehensive
incomestatement
Recognisedin
equity
Exchange
dierences Dec
Deferred tax assets
Taxlossescarriedforward -
Changesinfairvalues -
Pensionliabilities - -
Otherdeductibletemporarydierences -
Total -
Nettingofdeferredtaxes -
Deferred tax assets in the balance sheet
Deferred tax liabilities
Depreciationdierencesanduntaxedreserves - -
Changesinfairvalues -
Othertaxabletemporarydierences -
Total -
Nettingofdeferredtaxes -
Total deferred tax liabilities in the balance sheet
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
102FINANCIAL STATEMENTS 2020
Changes in deferred tax during the financial period 2019
EURm Jan
Recognisedin
comprehensive
incomestatement
Recognisedin
equity
Exchange
dierences Dec
Deferred tax assets
Taxlossescarriedforward - - -
Pensionliabilities -
Otherdeductibletemporarydierences -
Total -
Nettingofdeferredtaxes -
Deferred tax assets in the balance sheet
Deferred tax liabilities
Depreciationdierencesanduntaxedreserves - -
Changesinfairvalues -
Othertaxabletemporarydierences -
Total -
Nettingofdeferredtaxes -
Total deferred tax liabilities in the balance sheet
In Sampo plc, EUR 43 million of deferred tax asset has not been recognised on unused tax losses. The first losses will expire at the end of fiscal year 2020.
In Mandatum, EUR 2 million of deferred tax asset has not been recognised on unused tax losses.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
103FINANCIAL STATEMENTS 2020
22 Taxes
EURm
Profit before tax
Tax calculated at parent company's tax rate - -
Dierent tax rates on overseas earnings - -
Income not subject to tax
Expenses not allowable for tax purposes - -
Consolidation procedures and eliminations -
Tax losses for which no deferred tax asset has been recognised -
Changes in tax rates -
Tax from previous years - -
Total - -
23 Components of other comprehensive income
EURm
Other comprehensive income:
Items reclassifiable to profit or loss
Exchange dierences -
Available-for-sale financial assets
Gainslossesarisingduringtheyear
Reclassificationadjustments(IAS) - -
TheshareofthesegretatedSuomiportfolio -
Businessacquisitions - -
Share of associate's other comprehensive income -
Taxes - -
Total items reclassifiable to profit or loss, net of tax
Items not reclassifiable to profit or loss
Actuarial gains and losses from defined pension plans -
Taxes
Total items not reclassifiable to profit or loss, net of tax -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
104FINANCIAL STATEMENTS 2020
25 Other assets
EURm
Interests
Assetsarisingfromdirectinsuranceoperations
Assetsarisingfromreinsuranceoperations
Settlementreceivables
Deferredacquisitioncosts
)
AssetsrelatedtoPatientInsurancePool
Other
Group other assets, total
Item Other comprise rental deposits, salary and travel advancements and assets held for resale.
Other assets include non-current assets EUR 58 million (66).
*
)
Change in deferred acquisition costs in the period
EURm
AtJanuary
Businessacquisitions -
Netchangeintheperiod -
Exchangedierences -
AtDecember
24 Tax effects relating to components
of other comprehensive income
EURm
Before-
tax
amount Tax
Net-
of-tax
amount
Before-
tax
amount Tax
Net-
of-tax
amount
Items reclassifiable to
profit or loss
Exchange dierences - - - -
Available-for-sale
financial assets - -
Share of associate's other
comprehensive income - - - -
Total - -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
105FINANCIAL STATEMENTS 2020
26 Liabilities from insurance and investment contracts
P&C liabilities from insurance contracts
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums
Provision for claims outstanding
Incurredandreportedlosses
Incurredbutnotreportedlosses(IBNR)
Provisionsforclaims-adjustmentcosts - -
Provisionsforannuitiesandsicknessbenefits
P&C insurance total
As the P&C companies, especially If, are exposed to various exchange rates, comparing the balance sheet data from year to year can be misleading.
Change in P&C insurance liabilities
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums
At 1 January
Business acquisitions - - -
Change in provision - - -
Exchange dierences -
At 31 December
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for claims outstanding
At 1 January
Business acquisitions -
Unwiding of discounted annuities - - - -
Change in provision - - - - -
Exchange dierences - - -
At 31 December
BOARD OF
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AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
106FINANCIAL STATEMENTS 2020
The tables below show the cost trend for the claims for dierent years. The upper part of the
tables shows how an estimate of the total claims costs per claims year evolves annually.
The lower section shows how large a share of this is presented in the balance sheet. More
information on insurance liabilities in the risk management note 40.
If
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Tenyearslater
Current estimate of total claims costs
Total disbursed
Provision reported in the balance sheet
of which established vested annuities
Provision for claims-adjustment costs
Total provision reported in the BS of If
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
107FINANCIAL STATEMENTS 2020
If
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Tenyearslater
Current estimate of total claims costs
Total disbursed
Provision reported in the balance sheet
of which established vested annuities
Provision for claims-adjustment costs
Total provision reported in the BS of If
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
108FINANCIAL STATEMENTS 2020
Topdanmark
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Current estimate of total claims costs
Total disbursed
Discounting
Provision reported in the balance sheet
Discounting of previous years
Total provision reported in the BS of Topdanmark
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
109FINANCIAL STATEMENTS 2020
Topdanmark
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Current estimate of total claims costs
Total disbursed
Discounting
Provision reported in the balance sheet
Discounting of previous years
Total provision reported in the BS of Topdanmark
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
110FINANCIAL STATEMENTS 2020
Hastings
Claims cost trend of P&C insurance
Claims costs before reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Payments to date
Gross outstanding claims liabilities, net of salvage
and subrogation recoveries
Reconciliation to net outstanding claims liabilities
Anticipated salvage and subrogation recoveries
IFRS 3 fair value acquisition adjustment -
Total provision reported in the BS of Hastings
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
111FINANCIAL STATEMENTS 2020
Hastings
Claims cost trend of P&C insurance
Claims costs after reinsurance
Estimated claims cost
EURm Total
Atthecloseoftheclaimsyear
Oneyearlater
Twoyearslater
Threeyearslater
Fouryearslater
Fiveyearslater
Sixyearslater
Sevenyearslater
Eightyearslater
Nineyearslater
Payments to date
Net outstanding claims liabilities, net of salvage
and subrogation recoveries -
Reconciliation to net outstanding claims liabilities
Anticipated salvage and subrogation recoveries
Reinsurers' share of salvage and subrogation recoveries -
IFRS 3 fair value acquisition adjustment -
Net outstanding claims liability
Reinsurers' share of outstanding claims liabilities
Total provision reported in the BS of Hastings
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
112FINANCIAL STATEMENTS 2020
Liabilities from insurance and investment contracts
EURm Gross Reinsurance Net Gross Reinsurance Net
Provision for unearned premiums
Insurancecontracts
Investmentcontracts - -
Provision for claims outstanding -
Group liabilities from insurance and investment contracts, total
Change in liabilities from insurance contracts
Gross
EURm
Contractswithdiscretionary
participationfeatures
At 1 January 2020
Premiums
Claims paid -
Expense charge -
Guaranteed interest
Bonuses -
Other -
Total life insurance liabilities at 31 December 2020
Gross
EURm
Contractswithdiscretionary
participationfeatures
At 1 January 2019
Premiums
Claims paid -
Expense charge -
Guaranteed interest
Bonuses
Exchange dierences
Total life insurance liabilities at 31 December 2019
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
113FINANCIAL STATEMENTS 2020
Life insurance liabilities from investment contracts
EURm
Investment contracts with discretionary
participation feature
The change between financial years is mainly due to the claims paid.
Change in liabilities from life insurance
investment contracts
EURm
Contractswith
discretionary
participation
features
At 1 January 2020
Other
Life insurance liabilities from investment contracts
at 31 December 2020, total
EURm
Contractswith
discretionary
participation
features
At 1 January 2019
Other (includes i.e. conversions between dierent insurance classes)
Life insurance liabilities from investment contracts
at 31 December 2019, total
The liabilities at 1 January and at 31 December include the future bonus reserves and the
eect of the reserve for the decreased discount rate. The calculation is based on items before
reinsurers' share. More details on the insurance liabilities are presented in the risk management
note 40.
Investment contracts do not include a provision for claims outstanding.
Liability adequacy test does not give rise to supplementary claims.
Exemption allowed in IFRS 4
Insurance contracts
has been applied to investment contracts with
DPF or contracts with a right to trade-o for an investment contract with DPF. These investment
contracts have been valued like insurance contracts.
Reconciliation to the consolidated insurance
and investment contracts
EURm
P&C insurance
Life insurance
Group consolidated insurance and
investment contracts, total
27 Liabilities from unit-linked insurance
and investment contracts
EURm
Unit-linkedinsurancecontracts
Unit-linkedinvestmentcontracts
Lifeinsuranceliabilities
Group liabilities from unit-linked insurance and
investment contracts, total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
114FINANCIAL STATEMENTS 2020
28 Financial liabilities
The segment financial liabilities include subordinated debts, derivatives, debt securities in issue
and other financial liabilities.
If
EURm
Derivative financial instruments (note 14)
Subordinated debt securities
Subordinated loans Maturity Interest
Preferredcapitalnote
(nominalvalueMSEK) perpetual
monthStibor
Preferredcapitalnote
(nominalvalueMSEK) years
monthStibor
Preferredcapitalnote
(nominalvalueMSEK) years
Preferredcapitalnote
(nominalvalueEURm) years
Total subordinated debt securities
If, total financial liabilities
The loan 2011 was issued with fixed interest rates for the first ten years, after which it becomes
subject to variable interest rates. At the point of change, there is the possibility of redemption
for all the loans. The loan is utilised for solvency purposes and is approved by the supervisory
authorities.
The loan of 1,500 MSEK issued in 2016 is issued with variable interest rate terms. After ten
years the margin is increased by one percentage point. It includes terms stating the right of
redemption after five years and at any interest payment date thereafter.
The loan of 500 MSEK issued in 2016 is issued with fixed interest rate terms for the first five
years. After that period, the loan becomes subject to variable interest rate but it also includes
terms stating the right of redemption at this point in time or at any interest payment date
thereafter.
The loan issued in 2018 is issued with variable interest rate terms. The loan includes terms stating
the right of redemption after five years and at any interest payment date thereafter.
All the loans are listed on the Luxembourg Exchange.
Topdanmark
EURm
Derivative financial instruments (note 14)
Subordinated debt securities
Subordinated loans Maturity Interest
Preferredcapitalnote
(nominalvalueMDKK)
monthCibor
bp -
Preferredcapitalnote
(nominalvalueMDKK) bullet
monthCibor
Preferredcapitalnote
(nominalvalueMDKK)
until
-
Preferredcapitalnote
(nominalvalueMDKK)
monthCibor
bp
Total subordinated debt securities
Other financial liabilities
Topdanmark, total financial liabilities
Subordinated loans are wholly included in Topdanmark's own funds.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
115FINANCIAL STATEMENTS 2020
Hastings
EURm
Debt securities in issue
Bonds -
Hastings, total financial liabilities -
Mandatum
EURm
Derivative financial instruments (note 14)
Subordinated debt securities
Subordinatedloan
Subordinatedloan
Total subordinated debt securities
Mandatum, total financial liabilities
Mandatum Life issued in 2002 EURm 100 Capital Notes. The loan is perpetual and pays floating
rate interest. The interest is payable only from distributable capital. The loan is repayable only
with the consent of the Insurance Supervisory Authority and at the earliest on 2012 or any
interest payment date after that. The loan is wholly subscribed by Sampo Plc.
In 2019 Mandatum Life issued Solvency II Tier 2 loan of EURm 250. The loan matures on
4 October, 2049. The loan has a fixed interest rate until the first possible redemption date on
4 October, 2024, whereafter it becomes subject to variable interest rates.
Holding
EURm
Derivative financial instruments (note 14)
Debt securities in issue
Bonds
Subordinated debt securities Maturity Interest
Subordinated loan, 2020
(nominal value EURm 1,000) years -
Subordinated loan, 2019
(nominal value EURm 500) years
Total subordinated debt securities
Holding, total financial liabilities
The subordinated loan of 2019 has a fixed interest rate for the first ten years, the 2020 loan for
the first 12 years. After that, the loans become subject to variable interest rate but they also
includes terms stating the right of redemption at this point in time or at any interest payment
date thereafter. The loans are listed on the London Stock Exchange.
The determination and hierarchy of fair values of financial assets and liabilities measured at
acquisition cost is disclosed in note 17. According to this determination the subordinated debt
securities and bonds are categorised either on level 1 or 2.
EURm
Elimination items between segments - -
Group, total financial liabilities
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
116FINANCIAL STATEMENTS 2020
Change in liabilities from financing activities
EURm January Cashflows Exchangedierences Other December
Bonds -
EURm January Cashflows Exchangedierences Other December
Commercial papers - -
Bonds - -
Total liabilities from financing activities - -
29 Provisions
EURm
AtJanuary
Additions
Amountsusedduringtheperiod -
Unusedamountsreversedduringtheperiod
AtDecember
Current(lessthanyear)
Non-current(morethanyear)
Total
EURm 7 (8) of the provision consist of assets reserved for the already implemented or planned
development of ecient administrative and claims-adjustment processes and structural
changes in distribution channels, resulting in organisational changes that aect all business
areas. In addition, the item includes a provision of about EURm 12 (11) for law suits and other
uncertain liabilities.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
117FINANCIAL STATEMENTS 2020
30 Employee benefits
Employee benefits
Sampo has defined benefit plans in P&C insurance business in Sweden and Norway.
In addition to statutory retirement pension insurance, the Group has certain voluntary defined
benefit plans. The voluntary defined benefit plans are intra-Group and included in the insurance
liabilities of Mandatum Life. The amount is negligible and they have no material impact on the
Group profit or loss or equity.
For the defined-contribution pension plans, If pays fixed contributions and has no further
payment obligations once the contributions have been paid. The pension expense for the
defined-contribution plans is equal to the premiums paid by If for the fiscal year.
Employee benefit obligations of If
EURm
Presentvalueofestimatedpensionobligation
includingsocialcosts
Fairvalueofplanassets
Netpensionobligationrecognisedinthebalancesheet
The main Swedish defined-benefit pension plan is closed to new employees born in 1972 or later.
The corresponding Norwegian pension plan consists solely of active people employed prior to
2006 and born 1957 and earlier.
For both countries, the pension benefits referred to are old-age pension and survivors’
pension. A common feature of the defined-benefit plans is that the employees and survivors
encompassed by the plans are entitled to a guaranteed pension that depends on the employees’
service period and pensionable salary at the time of retirement. The dominating benefit is the
old-age pension, which refers in part to temporary pension before the anticipated retirement
age and in part to a life-long pension after the anticipated retirement age.
The retirement age for receiving premature pension is normally 62 years in Sweden and
normally 65 years in Norway. In Sweden, premature old-age pension following a complete
service period is payable at a rate of approximately 65% of the pensionable salary and applies to
all employees born in 1955 or earlier and who were covered by the insurance sector’s collective
bargaining agreement of 2006. In Norway, premature old-age pension following a complete
service period is payable at a rate of approximately 70% of the pensionable salary and applies to
all employees born in 1957 or earlier and who were employed by If in 2013.
The anticipated retirement age in connection with life-long pension is 65 years for Sweden and
67 years for Norway. In Sweden, life-long old-age pension following a complete service period is
payable at a rate of 10% of the pensionable salary between 0 and 7.5 income base amounts, 65%
of salary between 7.5 and 20 income base amounts and 32.5% between 20 and 30 income base
amounts. In Norway, life-long old-age pension following a complete service period is payable
at a rate of 70% of the pensionable salary up to 12 National Insurance base amounts, together
with the estimated statutory old-age pension. Paid-up policies and pension payments from
the Swedish plans are normally indexed upwards in an amount corresponding to the change in
the consumer price index. However, there is no agreement guaranteeing the value and future
supplements in addition to the contractual pension benefit could either rise or fall. If is not
responsible for indexation of paid-up policies and/or pension payments from the Norwegian
insured plans.
The pensions are primarily funded through insurance whereby the insurers establish the
premiums and disburse the benefits. If’s obligation is primarily fulfilled through payment of
the premiums. Should the assets that are attributable to the pension benefits not be sucient
to enable the insurers to cover the guaranteed pension benefits, If could be forced to pay
supplementary insurance premiums or secure the pension obligations in some other way. In
addition to insured pension plans, there are also unfunded pension benefits in Norway for which
If is responsible for ongoing payment.
To cover the insured pension benefits, the related capital is managed as part of the insurers’
management portfolios. In such management, the characteristics of the investment assets
are analyzed in relation to the characteristics of the obligations, in a process known as Asset
Liability Management. New and existing asset categories are evaluated continuously in order to
diversify the asset portfolios with a view to optimizing the anticipated risk-adjusted return. Any
surplus that arises from management of the assets normally accrues to If and/or the insured and
there is no form of transfer of the asset value to other members of the insurance collective.
The insurers and If are jointly responsible for monitoring the pension plans, including investment
decisions and contributions. The pension plans are essentially exposed to similar material risks
regarding the final amount of the benefits, the investment risk associated with the plan assets
and the fact that the choice of discount interest rate aects their valuation in the financial
statements.
When applying IAS 19, the pension obligation and the pension cost attributed to the fiscal
period are calculated annually using the Projected Unit Credit method. The calculation of
the defined benefit obligation is based on future expected pension payments and includes
yearly updated actuarial assumptions such as salary growth, inflation, mortality and employee
turnover. The expected pension payments are then discounted to a present value using a
discount rate set with reference to AAA and AA corporate bonds issued in local currency,
including mortgage-backed bonds, as at mid December. The discount rates chosen in
Sweden and Norway take into account the duration of the company’s pension obligations in
each respective country. After a deduction for the plan assets, a net asset or a net liability is
recognized in the balance sheet.
The following tables contain a number of material assumptions, specifications of pension costs,
assets and liabilities and a sensitivity analysis showing the potential eect on the obligations of
reasonable changes in those assumptions as at the end of the fiscal year.
The carrying amounts have been stated including special payroll tax in Sweden (24.26%)
and a corresponding fee in Norway (14.1%–19.1%).
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
118FINANCIAL STATEMENTS 2020
Specification of employee benefit obligations by country
Sweden Norway Total Sweden Norway Total
Recognised in income statement and other comprehensive income
Currentservicecost
Interestexpenseonnetpensionliability
Totalinincomestatement
Remeasurementofthenetpensionliability -
Totalincomprehensiveincomestatement
Recognised in balance sheet
Presentvalueofestimatedpensionliabilityincludingsocialcosts
Fairvalueofplanassets
Net liability recognised in balance sheet
Distributionbyassetclass
Debtinstrumentslevel
Debtinstrumentslevel
Equityinstrumentslevel
Equityinstrumentslevel
Propertylevel
Otherlevel
Otherlevel
Otherlevel
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
119FINANCIAL STATEMENTS 2020
The following actuarial assumptions have been used for the calculation of defined benefit pension plans in Norway and Sweden:
Sweden Sweden Norway Norway
Dec Dec Dec Dec
Discountrate
Futuresalaryincreases
Priceinflation
Mortalitytable FFFSyear FFFSyear K K
Averagedurationofpensionliabilities years years years years
Expectedcontributionstothedefinedbenefitplansduringand
Sensitivityanalysisofeectofreasonablypossiblechanges Sweden Norway Total Sweden Norway Total
Discountrate - - - - - -
Discountrate-
Futuresalaryincreases
Futuresalaryincreases- - - - -
Expectedlongevityyear
EURm Fundedplans Unfundedplans Total Fundedplans Unfundedplans Total
Analysis of the employee benefit obligation
Presentvalueofestimatedpensionliability
includingsocialcosts
Fairvalueofplanassets - -
Netpensionliabilityrecognisedinthebalancesheet
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
120FINANCIAL STATEMENTS 2020
Analysis of the change in net liability recognised in the balance sheet
EURm
Pensionliabilities
Atthebeginningoftheyear
Currentcost
Interestcost
Actuarialgains(-)losses()onfinancialassumptions
Actuarialgains(-)losses()ondemographicassumptions -
Actuarialgains(-)losses()experienceadjustments -
Exchangedierencesonforeignplans -
Benefitsandsocialcostspaid - -
Businessacquisitions -
DefinedbenefitplansatDecember
Reconciliationofplanassets
Atthebeginningoftheyear
Interestincome
Dierencebetweenactualreturnandcalculatedinterestincome -
Contributionspaid
Exchangedierencesonforeignplans -
Benefitspaid - -
Businessacquisitions -
PlanassetsatDecember
Other short-term employee benefits
There are other short-term sta incentive programmes in the Group, the terms of which vary
according to country, business area or company. Benefits are recognised in the profit or loss for
the year they arise from. An estimated amount of these short-term incentives, social security
costs included, for 2020 is EUR 45 million.
31 Other liabilities
EURm
Liabilitiesarisingoutofdirectinsuranceoperations
Liabilitiesarisingoutofreinsuranceoperations
LiabilitiesrelatedtoPatientInsurancePool
Taxliabilities
Premiumtaxes
Settlementliabilities
Interests
Leases*)
Prepaymentsandaccruedincome
Other
Group other liabilities, total
Item Other includes e.g. withholding taxes, social expenses related to Workers Compensation
insurance policies and employee benefits and unpaid premium taxes.
The non-current share of other liabilities is EUR 219 million (172).
*
)
The total eect of leases on the statement of cashflows was EUR -39 million (-25).
Non-cash flow additions from IFRS 16 leases to the balance sheet items were EUR 42 million (27).
Reconciliation of transition to IFRS 16 Leases
The Group as a lessee
The Group applied the modified retrospective approach allowed by the standard from 1 January
2019. The comparison year is not disclosed and the right-of-use asset equals the lease liability at
the time of the transition.
The ROU asset is depreciated on straight-line basis over the lease period.
The Group does not apply IFRS 16 to short-term under 12 months leases, or to leases for which
the underlying asset is of low-value.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
121FINANCIAL STATEMENTS 2020
The specification of IFRS 16 lease liabilities at the time of transition
EURm
O-balancesheetliabilitiesatDecember
O-balancesheetleases -
Prepaidrents -
Eectfromdiscounting -
LeaseliabilitiesatJanuary
The lease liabilities are discounted at a company level. The applied discount rates vary between
-0.04 - 2.2%.
EURm
Items recogised in the p/l from lease liabilities
Interestexpenses - -
Expensesfromshort-termandlow-valueleaseliabilities - -
32 Contingent liabilities and commitments
EURm
O-balance sheet items
Guarantees
Investmentcommitments
ITacquisitions
Other
Total
Assets pledged as collateral for liabilities or contingent liabilities
EURm
Assets
pledged
Liabilities
commitments
Assets
pledged
Liabilities
commitments
Assets pledged as collateral
Investments
Subsidiaryshares - -
Cashandcashequivalents
Total
EURm
Assets pledged as security for derivative contracts,
carrying value
Investmentsecurities
Cashandcashequivalents
Total
The subsidiary If P&C Insurance Ltd provides insurance with mutual undertakings within the
Nordic Nuclear Insurance Pool, Norwegian Natural Perils’ Pool and the Dutch Terror Pool.
In connection with the transfer of property and casualty insurance business from the
Skandia group to the If Group as of March 1, 1999, If P&C Holding Ltd and If P&C Insurance
Ltd issued a guarantee for the benefit of Försäkringsaktiebolaget Skandia (publ.) whereby
the aforementioned companies in the If Group mutually guarantee that companies in the
Skandia group will be indemnified against any claims or actions due to guarantees or similar
commitments made by companies in the Skandia group within the property and casualty
insurance business transferred to the If Group.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
122FINANCIAL STATEMENTS 2020
33 Equity and reserves
Equity (1,000 shares)
Equity (1,000 shares)
At the end of the financial year, the mother company or other Group companies held no shares
in the parent company.
Reserves and retained earnings
Legal reserve
The legal reserve comprises the amounts to be transferred from the distributable equity
according to the articles of association or on the basis of the decision of the AGM.
Invested unrestricted equity
The reserve includes other investments of equity nature, as well as issue price of shares to an
extent it is not recorded in share capital by an express decision.
Other components of equity
Other components of equity include fair value changes of financial assets available for sale and
derivatives used in cash flow hedges, and exchange dierences.
Changes in the reserves and retained earnings are presented in the Group's statement of
changes in equity.
If P&C Insurance Holding Ltd and If P&C Insurance Ltd have separately entered into contracts
with Försäkringsaktiebolaget Skandia (publ.) and Tryg-Baltica Forsikrings AS whereby Skandia
and Tryg-Baltica will be indemnified against any claims attributable to guarantees issued by
Försäkringsaktiebolaget Skandia (publ.) and Vesta Forsikring AS, on behalf of Skandia Marine
Insurance Company (U.K.) Ltd. (now Marlon Insurance Company Ltd.) in favor of the Institute
of London Underwriters. Marlon Insurance Company Ltd. was disposed during 2007, and the
purchaser issued a guarantee in favour of If for the full amount that If may be required to pay
under these guarantees.
If P&C Insurance Company Ltd has outstanding commitments to private equity funds totalling
EURm 5, which is the maximum amount that the company has committed to invest in the
funds. Capital will be called to these funds over several years as the funds make investments.
In addition, If P&C Insurance Ltd has outstanding commitments to borrowers totalling
approximately EURm 4.
With respect to certain IT systems If and Sampo use jointly, If P&C Insurance Holding Ltd has
undertaken to indemnify Sampo for any costs caused by It that Sampo may incur in relation to
the owners of the systems.
Sampo Group's Danish companies and Topdanmark Group's companies are jointly taxed, with
Topdanmark A/S being the management company. Pursuant to the specific rules on corporation
taxes etc. in the Danish Companies Act, the companies are liable for the jointly taxed companies
and for any obligations to withhold tax from interests, royalties and dividend for companies
concerned.
In connection with implementation of a new customer and core system, Topdanmark Forsikring
A/S has undertaken to give support towards specific suppliers to fulfill Topdanmark EDB IV
ApS' obligations in accordance with the contracts.
Entities within Hastings Group are subject to review by tax authorities in the UK and Gibraltar.
In 2016, HMRC commenced an on-going discussions regarding aspects of Hastings' business
model and the allocation of certain elements of its profit between dierent group entities. If
the authorities do not accept the filed tax position, it is possible that the group will have an
additional tax liability. The ongoing nature of the enquiry means that it is dicult to predict
the potential outcome. Based on the information received from HMRC to date, management
does not believe that it is probable that any additional amount will ultimately become payable.
Further quantification has therefore not been considered practicable in accordance with IAS 37
Provisions, contingent liabilities and contingent assets
.
In accordance with the shareholders’ agreement concerning Hastings Group (Consolidated)
Ltd, RMI has an option within 18 months from the completion of the acquisition of Hastings to
acquire further 10% of shares from Sampo at a price per share equal to the original oer price.
Any dividends or other distributions in respect of the shares in question payable before RMI’s
possible notice to use the option belong to Sampo. Sampo has an option to acquire the shares
RMI holds at the price specified in the agreement, in case the holding of RMI in Hastings Group
(Consolidated) Ltd falls below 10%. The price is based either on recent third party transactions
made by RMI or derived from a valuation model described in the agreement. Until the potential
notice by Sampo to use the option, any dividends or other distributions in respect of the shares
in question belong to RMI.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
123FINANCIAL STATEMENTS 2020
34 Related party disclosures
Key management personnel
The key management personnel in Sampo Group consists of the members of the Board of
Directors of Sampo plc and Sampo Group’s Executive Committee, and the entities over which
the members of the key management personnel have a control.
Key management compensation
EURm
Short-term employee benefits - -
Post employment benefits - -
Other long-term benefits - -
Total - -
Short-term employee benefits comprise salaries and other short-terms benefits, including profit-
sharing bonuses accounted for for the year, and social security costs.
Post employment benefits include pension benefits under the Employees’ Pensions Act (TyEL)
in Finland and voluntary supplementary pension benefits.
Other long-term benefits consist of the benefits under long-term incentive schemes accounted
for the year (see Note 35).
Related party transactions of the key management
The key management does not have any loans from the Group companies.
Associates
Outstanding balances with related parties/Associate Nordea
EURm
Assets
Liabilities
The Group's receivables from Nordea comprise mainly long-term investments in bonds and
deposits. In addition, the Group has several on-going derivative contracts related to the Group's
risk management of investments and liabilities.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
124FINANCIAL STATEMENTS 2020
35 Incentive schemes
Long-term incentive schemes 2014 I - 2020 I
The Board of Directors of Sampo plc has decided on the long-term incentive schemes 2014 I -
2020 I for the management and key employees of Sampo Group. The Board has authorised the
CEO to decide who will be included in the scheme, as well as the number of calculated incentive
units granted for each individual used in determining the amount of the incentive reward. In
the schemes, the number of calculated incentive units granted for the members of the Group
Executive Committee is decided by the Board of Directors. Some 140 persons were included in
the schemes at the end of year 2020.
The amount of the performance-related bonus is, in all schemes, based on the value
performance of Sampo's A share. In addition, in schemes 2004 and 2017, the bonus is based also
on both the insurance margin (IM) and Sampo's return on the risk adjusted capital (RORAC). In
2020 scheme, the bonus depends on the risk-adjusted return on capital (RORAC). The value of
one calculated incentive unit is the trade-weighted average price of Sampo's A-share at the time
period specified in the terms of the scheme, and reduced by the starting price adjusted with the
dividends per share distributed up to the payment date. The pre-dividend starting prices vary
between eur 32.94–44.10. The maximum value of one incentive unit varies between eur 56.94–
63.10, reduced by the dividend-adjusted starting price. In 2014 and 2017 schemes, the incentive
reward depends on two benchmarks. If the IM is 6 per cent or more, the IM-based reward is
paid in full. If the IM is between 4–5.99 per cent, half of the incentive reward is paid. No IM-
related reward will be paid out, if the IM stays below these. In addition, the return on the risk
adjusted capital is taken into account. If the return is at least risk free return + 4 per cent, the
RORAC-based incentive reward is paid out in full. If the return is risk free return + 2 per cent, but
less than risk free return + 4 percent, the payout is 50 per cent. If the return stays below these
benchmarks, no RORAC-based reward will be paid out. In 2020 scheme, the incentive reward is
based on the risk-adjusted return on capital so that if the return is at least risk free return + 5 per
cent, the reward is paid out in full. If the return is at least risk free return + 3 per cent, but less
than risk free return + 5 per cent, the payout is 50 per cent. If the return is below this, no reward
will be paid out.
Each plan has three performance periods and incentive rewards are settled in cash in three
installments. The employee shall authorise Sampo plc to buy Sampo's A-shares with 50 per
cent (scheme 2017 I and 2020 I) or 60 percent (scheme 2014 I) of the amount of the reward
after taxes and other comparable charges. The shares are subject to transfer restrictions for
three years from the day of payout. A premature payment of the reward may occur in the event
of changes in the group structure or in the case of employment termination on specifically
determined bases. The fair value of the incentive schemes is estimated by using the Black-
Scholes pricing model.
I I I I
Terms approved
*)
Sep
Sep
Sep
Aug
Granted (1,000) 31 Dec 2016 - - -
Granted (1,000) 31 Dec 2017 - -
Granted (1,000) 31 Dec 2018 -
Granted (1,000) 31 Dec 2019 -
Granted (1,000) 31 Dec 2020 -
End of performance period I 30% Q- Q- Q- Q-
End of performance period II 35% Q- Q- Q- Q-
End of performance period III 35% Q- Q- Q- Q-
Payment I 30% - - - -
Payment II 35% - - - -
Payment III 35% - - - -
Price of Sampo A at terms approval
date *
)
Starting price **
)
Dividend-adjusted starting price at
31 December 2020
Sampo A closing price at
31 December 2020
Total intrinsic value, EURm
Total debt
Total cost for the financial period,
EURm (incl. social costs)
*)
Grant dates vary
**)
Trade-weighted average for ten trading days from the approval of terms
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
125FINANCIAL STATEMENTS 2020
Long-term incentive scheme of Topdanmark
Topdanmark's share option scheme is for its Executive Board and senior executives. The strike
price has been fixed at 110% of the market price on the last trading date in the prior financial
year (average of all trades). The options may be exercised 3-5 years subsequent to the granting.
The scheme is settled by shares.
Strikeprice Executiveboard Seniorexecutives Resigned Total
Total number of options (1,000)
At 1 January 2020
Granted
Transferred -
Exercised - - - -
Forfeited - -
At 31 December 2020
At 1 January 2019
Granted
Transferred -
Exercised - - - -
Forfeited - -
At 31 December 2019
Per granting
2016, exercise period January 2019–2021
2017, exercise period January 2020–2022
2018, exercise period January 2021–2023
2019, exercise period January 2022–2024
2019, exercise period January 2023–2025
The option scheme requires employment during the whole year of the allocation. Options are
allocated at beginning of year and in connection with resignation in the year of allocation a
proportional deduction in the number of allocated options is made.
The tabels below show option holder's standing at the year end.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
126FINANCIAL STATEMENTS 2020
Executiveboard Seniorexecutives Resigned Total
Average market price on date of exercise 2020
Average market price on date of exercise 2019
Fair value of granting 2020
Fair value of granting 2019
Fair value at 31 December 2020
Fair value at 31 December 2019
The fair value of the granting for the year has been calculated using the Black and Scholes
model assuming a share price of EUR 42 (41) . The interest rate corresponds to the zero coupon
rate based on the swap curve on 31 December of the previous year. Future volatility is assumed
to be 22 per cent and the average life of the options approximately 4 years. The volatility based
on previous years' volatility is still the best estimate of the future volatility. The strike prices are
adjusted by dividend distribution for outstanding options.
At 31 December 2020, there were 331,000 options (106,000) which could be exercised.
Long-term incentive scheme of Hastings
The total charge for the share based payments recognised in the profit and loss during 2020 was
EUR 4 million with a share based payment liability of EUR 12 million held at 31 December 2020.
Long Term Incentive Plan
Prior to the acquisition of Hastings Group Holdings Limited (‘HGH’), formerly known as
Hastings Group Holdings plc certain management personnel were participating in the Group’s
Long Term Incentive Plan (‘LTIP’) giving them an option to acquire shares in the Group at an
exercise price of £nil. Vesting was subject to a three year service period and the achievement
of certain performance conditions in respect of total shareholder return and adjusted
earnings per share over a three year period. For awards to certain individuals, considered key
management personnel, there was an additional holding period of two years (‘Executive grant’).
Upon acquisition of HGH, Hastings Group (Consolidated) Limited (‘HGC’) administered cash
replacement awards were oered in lieu of the equity settled awards. No options or awards
were granted during the period. The expected life is the contractual life of the award adjusted to
reflect management’s best estimate of holder behaviour. There were cash awards with a value of
EUR 26 million outstanding at 31 December 2020.
Restricted Stock Awards
Upon acquisition of HGH, certain key management personnel were granted HGC administered
replacement cash awards conditional upon continued employment with the Group. No awards
were granted during the period. The expected life is the contractual life of the award adjusted to
reflect management’s best estimate of holder behaviour. There were cash awards with a value of
EUR 4 million outstanding at 31 December 2020.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
127FINANCIAL STATEMENTS 2020
36 Auditors' fees
EURm
Auditing fees - -
Ernst&Young - -
Other - -
Other fees - -
Ernst&Young -
Other
Total - -
37 Legal proceedings
There are a number of legal proceedings against the Group companies outstanding on 31
December 2020, arising in the ordinary course of business. The companies estimate it unlikely
that any significant loss will arise from these proceedings.
38 Investments in subsidiaries
Name
Group
holding Carryingamount
If P&C Insurance Holding Ltd
If P&C Insurance Ltd
If P&C Insurance AS
Support Services AS
If Livförsäkring Ab
Nordisk Hälsoassistans AB
Vertikal Helseassistanse AS
Viking Assistance Group AS
If Services AB
Topdanmark A/S
*)
Topdanmark Kapitalforvaltning A/S
Topdanmark Forsikring A/S
Topdanmark Liv Holding A/S
Name
Group
holding Carryingamount
Topdanmark Livsforsikring A/S
Topdanmark Ejendom A/S
Hastings Group (Consolidated) Ltd
Hastings Group Holdings Limited
Hastings Group (Finance) plc
Hastings Group Limited
Advantage Global Holdings Limited
Advantage Insurance Company Limited
Hastings (Holdings) Limited
Hastings (UK) Limited
Mandatum Life Insurance Company Ltd
Mandatum Life Services Ltd
Mandatum Life Investment Services Ltd
Saka Hallikiinteistöt GP Oy
Mandatum Life Vuokratontit I GP Oy
Mandatum Life Fund Management S.A.
Mandatum Life Private Equity GP Oy
If IT Services A/S
Sampo Capital Oy
*)
The Group's ownership of votes.
The table excludes dormant companies in the United Kingdom as well as property and housing
companies accounted for in the consolidated accounts.
39 Events after the balance sheet date
In the meeting of 11 Feb 2021, the Board of Directors decided to propose at the Annual
General Meeting on 19 May 2021 a dividend distribution of EUR 1.70 per share, or total EUR
944,098,145.00, for 2020. The dividends to be paid will be accounted for in the equity in 2021
as a deduction of retained earnings.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
128FINANCIAL STATEMENTS 2020
40 Risk Management Disclosure 2020
External drivers behind such changes are varied,
including for instance general economic development,
changes in commonly shared values, developments
in the institutional and physical environment and
technological innovations. Because external drivers are
inter-connected, the customer preferences and demand
can change unpredictably and there may be a need to
change regulations as well. In case the company’s inter-
nal understanding of needed changes or willingness and
ability to act accordingly is inadequate and competitors
are more able to meet clients’ and regulation’s altered
expectations, the company is highly exposed to business
risk.
Due to the predominantly external nature of the drivers
and development in the competitive environment,
managing business risks is the responsibility of the
executive level senior management. Proactive strategic
decision making is the central tool in managing business
risks, which relate to the competitive advantage. The
maintenance of internal operational flexibility – i.e. the
ability to adjust the business model and cost structure
when needed – is also an efficient tool in managing
business risks.
Business risks do not have the regulatory capital charge,
although they may be a material source of earnings vol-
atility. Because of this, business risks may have an effect
on the amount and structure of the actual capital base, if
deemed prudent in the existing business environment.
Corporate Responsibility as a Business Risk Driver
The issues related to corporate responsibility are changing
the preferences and values of Sampo Group companies’
stakeholders and, as a result, the operating and com-
petitive environment is evolving. The Group companies
operate mainly in countries, which are characterized by
an inherent respect for human rights, high transparency,
and low levels of corruption and bribery. There is high
compliance with labor rights, health and environmental
legislation and freedom of speech and association. These
themes are also inherent in the operations of all Sampo
Group companies. Investors and authorities are increasing
their focus on corporate responsibility, but also consumers
and employees are emphasizing these topics when
choosing a brand or an employer.
The key corporate responsibility related risk drivers for
Sampo Group can be divided into four main areas:
Responsible business management and practices
are fun-
damental to Sampo Group companies’ operations. Good
governance in Sampo Group means effective policies,
management practices, and training, which provide
assurance that the Group companies and their personnel,
suppliers and other business partners comply with laws,
Sampo Group’s Risks and Core
Risk Management Activities
Sampo Group companies operate in business areas where
specific features of value creation are the pricing of risks
and the active management of risk portfolios in addition
to sound client services. Hence common risk definitions
are needed as a basis for business activities.
Group’s Risks
In Sampo Group, the risks associated with business
activities fall into three main categories as shown in
the picture Classification of Risks in Sampo Group:
business risks, reputational risk and risks inherent in the
business operations. The first two risk classes are only
briefly described in this Risk Management Disclosure as
the focus is on the third risk class.
Business Risks
Business risk is the risk of losses due to changes in
the competitive environment and/or lack of internal
operational flexibility. Unexpected abrupt changes or
already identified, but internally neglected trends can
cause larger than expected fluctuations in profitability
when volumes, margins, costs and capital charges change
and in the long run they may also endanger the existence
of Sampo Group’s business models.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
129FINANCIAL STATEMENTS 2020
regulations and generally accepted principles on human
rights, labor rights, environment, anti-money laundering,
counter-terrorism financing and anti-corruption and
bribery. Further, it comprises comprehensive information
security and cybersecurity governance systems, and data
protection activities. Additionally, responsible business
practices require being attentive to the risks relating to
inappropriate customer advice and product sales, lack of
clarity on conditions, prices and fees, and errors in claims
handling and complaint processes. Sales and marketing
practices’ focus is on meeting the demands and needs
of the customer and providing the customer with the
information necessary for them to make well-informed
decisions on their insurance coverage.
Responsible corporate culture
includes factors relating
to the work environment, diversity, equality, employee
well-being, employee engagement, professional devel-
opment, and talent attraction and retention. Skilled and
motivated employees are an essential success factor in
Sampo Group’s aim to provide customers with the best
service in all situations. Losing talent or being perceived
as an unattractive employer would pose large risks for
the businesses. Therefore, Sampo Group companies
strive to ensure a sound work environment, not only
because it is stipulated by law, but also because it lays
the foundation for sustainable business performance.
Diversity and equality are key focus areas for the Sampo
Group companies, which are committed to providing a
diverse, non-discriminatory, open and agreeable working
environment where everyone is treated fairly and equally.
Risks related to these themes are managed, for example,
by having strong internal policies, conducting organiza-
tional development programs, and offering employees
training, interesting career opportunities and attractive
remuneration packages.
Responsible investment management and operations
are
important in managing investment risks and in mitigating
potential adverse impacts on the Group’s reputation.
Therefore, Sampo Group companies take environmental,
social and governance (“ESG”) issues into account when
assessing the security, quality, liquidity, and profitability
of investments. Investment opportunities are carefully
analyzed before any investments are made and ESG issues
are considered along with other factors that might affect
the risk-return ratio of individual investments. Depending
on the asset class, Sampo Group companies use different
ESG strategies to ensure the effective consideration and
management of investment risks arising from ESG issues.
The strategies include, for example, ESG integration,
sector-based screening, norms-based screening, and
active ownership.
Environmental issues and climate change
are factors that
are expected to have a mid and long-term effect on Sampo
Group’s businesses. Climate-related risks can be catego-
rized into physical risks and transition risks. Physical risks
can be further classified into long-term weather changes
(chronic risks) and extreme weather events such as storms,
floods, wildfires, or droughts (acute risks). Transition
risks refer to risks arising from the shift to a low carbon
economy, for example changes in technology, legislation,
and consumer sentiment. The strength of the risks
depends on the trajectory of global warming. A scenario
in line with the Paris Agreement limiting the temperature
rise to 1.5°C would have moderate consequences, whereas
>3°C and 5°C scenarios would have severe consequences
for industry, infrastructure and public health. Especially
in geographically vulnerable regions, abandonment of
low-lying coastal areas due to rising sea levels and food
and water shortages, can lead to large-scale migration and
outbreaks of diseases.
Investments are particularly exposed to climate-related
risks in the form of losses incurred from extreme weather
events and possible revaluation of assets as operating
models in carbon intense sectors change. Sampo Group
companies analyze the carbon footprint of their invest-
ments and their alignment with international climate
goals annually.
Natural catastrophes and extreme weather conditions are
risk factors affecting the financial position and results of
non-life insurers. The increasing likelihood of extreme
weather conditions is included in internal risk models.
Climate-related risks are managed effectively with
reinsurance programs and price assessments.
The Sampo Group companies also help their customers to
manage climate-related risks. Extreme weather conditions
can, for example, damage properties, lead to crop failure
and business interruption. Loss prevention is an essential
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
130FINANCIAL STATEMENTS 2020
part of insurance services as it helps customers to reduce
economic losses and mitigates the impacts of climate
change.
Further information on corporate responsibility in Sampo
Group is available in the Corporate Responsibility
Report 2020 published in May 2021 www.sampo.com/
year2020.
Reputational Risk
Managing stakeholder relationships means satisfied
customers, professional staff, good co-operation with
authorities and the trust and approval of the environ-
ment. These contribute to a key success factor of the
company, its reputation.
Reputational risk refers to the risk that adverse publicity
regarding the company’s business practices or associa-
tions, whether accurate or not, causes a loss of confidence
in the integrity of the institution. Reputational risk is
often a consequence of a materialized operational or
compliance risk and often manifests as a deterioration of
reputation amongst customers and other stakeholders.
Reputational risk is related to all activities shown in the
graph Classification of Risks in Sampo Group. As the roots
Classification of Risks in Sampo Group
External drivers
Negative impact on financial results, capitalization and long-term profitability
Non-life insurance
underwriting risks
Premium and
Catastrophe risks
Reserve risks
Reputational risk
Life insurance
underwriting risks
Biometric risks
Policyholder
behavior risks
Expense risk
Investment
portfolio market
risks
Interest rate risk
Currency risk
Spread risk
Equity risk
Other risks
Counterparty
default risks
Derivative
counterparty
Reinsurance
counterparty
Operational
risks
Processes
Personnel
Systems
External events
Legal risk
Compliance risk
Business
risks
Volumes
Margins
Number of Clients
Concentration risk Concentration risk Concentration risk Concentration risk Concentration risk Concentration risk
ALM risks
Earnings risks /
capital charge
Earnings risks /
no capital charge
Consequential risks /
capital charge
Consequential risks /
no capital charge
BOARD OF
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AUDITOR’S
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
131FINANCIAL STATEMENTS 2020
of reputational risk are varied, the tools to prevent it must
be diverse and embedded within the corporate culture.
These are reflected in how Sampo deals with environ-
mental issues and its core stakeholders (i.e. customers,
personnel, investors, other co-operation partners, tax
authorities and supervisory authorities) and how Sampo
Group has organized its Corporate Governance system.
Risks Inherent in Business Operations
In its underwriting and investment operations, Sampo
Group is consciously taking certain risks in order to gen-
erate earnings. These earnings risks are carefully selected
and actively managed. Underwriting risks are priced to
reflect their inherent risk levels and the expected return of
investments is compared to the related risks. Furthermore,
earnings related risk exposures are adjusted continuously
and their impact on the capital need is assessed regularly.
Successful management of underwriting risks and invest-
ment portfolio market risks is the main source of earnings
for Sampo Group companies. Day-to-day management of
these risks, i.e. maintaining them within given limits and
authorizations is the responsibility of the business areas
and the investment unit.
Some risks, such as counterparty default risks and
operational risks presented in the graph Classification
of Risks in Sampo Group are indirect repercussions of
Sampo’s normal business activities. They are one-sided
risks, which in principle have no related earnings
potential. Accordingly, the risk management objective
is to mitigate these risks efficiently rather than actively
manage them. Mitigation of consequential risks is the
responsibility of the business areas and the investment
unit. The capital need for these risks is measured by
independent risk management functions. It has to be
noted that the categorization of risks between earnings
and consequential risks varies depending on the industry.
For Sampo Group’s clients, for instance, the events that
are subject to insurance policies are consequential risks
and for Sampo Group these same risks are earnings risks.
Some risks such as interest rate, currency and liquidity
risks are by their nature simultaneously linked to various
activities. In order to manage these risks efficiently,
Sampo Group companies have to have a detailed
understanding of expected cash flows and their variance
within each of the company’s activities. In addition, a
thorough understanding of how the market values of
assets and liabilities may fluctuate at the total balance
sheet level under different scenarios is needed. These
balance sheet level risks are commonly defined as Asset
and Liability Management (“ALM”) risks. In addition to
interest rate, currency and liquidity risk, inflation risk and
risks relating to GDP growth rates are central ALM risks
in Sampo Group. The ALM risks are one of the focus areas
of senior management because of their relevance to risks
and earnings in the long run.
In general, concentration risk arises when the company’s
risk exposures are not diversified enough. When this is
the case, an individual extremely unfavourable claim or
financial market event, for instance, could threaten the
solvency of the company.
Concentrations can evolve within separate activities
– large single name or industry specific insurance or
investment exposures – or across activities when a single
name or an industry is contributing widely to the profit-
ability and risks of the company through both insurance
and investment activities.
Concentration risk may also materialize indirectly when
profitability and the capital position react similarly to
general economic developments or to structural changes
in the institutional environment in different areas of
business.
BOARD OF
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AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
132FINANCIAL STATEMENTS 2020
Core Risk Management Activities
To create value for all stakeholders in the long run, Sampo
Group companies must have the following forms of capital in
place:
• Financial flexibility in the form of adequate capital and
liquidity.
• Good technological infrastructure.
• Intellectual capital in the form of comprehensive
proprietary actuarial data and analytical tools to convert
this data into information.
• Human capital in the form of skilful and motivated
employees.
• Social and relationship capital in the form of good
relationships with society and clients to understand the
changing needs of different stakeholders.
At the company level, these resources are continuously
developed. They are in use when the following core
activities related to risk pricing, risk taking, and active
management of risk portfolios are conducted.
Appropriate selection and pricing of underwriting risks
• Underwriting risks are carefully selected and are priced
to reflect their inherent risk levels.
• Insurance products are developed proactively to meet
clients’ changing needs and preferences.
Effective management of underwriting exposures
• Diversification is actively sought.
• Reinsurance is used effectively to reduce largest
exposures.
Careful selection and execution of investment transactions
• Risk return ratios and sustainability issues of separate
investments opportunities are carefully analyzed.
• Transactions are executed effectively.
Effective mitigation of consequential risks
• Counterparty default risks are mitigated by carefully
selecting counterparties, applying collateral agree-
ments and assuring adequate diversification.
• High quality and cost-efficient business processes are
maintained.
• Continuity and recovery plans are continuously
developed to secure business continuity.
Effective management of investment portfolios and
the balance sheet
• Balance between expected returns and risks in invest-
ment portfolios and the balance sheet is optimized,
considering the features of insurance liabilities,
internally assessed capital needs, regulatory solvency
rules and rating requirements.
• Liquidity risks are managed by having an adequate
portion of investments in liquid instruments. The
portion is mainly dependent on the features of the
liabilities.
At the Group level, the risk management focus is on
the Group-wide capitalization and liquidity. It is also
essential to identify potential risk concentrations and to
have a thorough understanding of how reported profits of
companies would develop under different scenarios. These
concentrations and correlations may have an effect on the
Group level capitalization and liquidity buffers as well as on
the Group level management actions.
When the above-mentioned core activities are successfully
implemented, a balance between profits, risks and capital-
ization can be achieved both at company and the Group
level and shareholder value can be created.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
133FINANCIAL STATEMENTS 2020
If Group
Underwriting Risks
As shown in the following graph Breakdown of Gross
Written Premiums by Business Area, Country and Line of
Business, If, 31 December 2020, the If insurance portfolio
is well diversified across Business Areas, Countries and
Lines of Business. The six Lines of Business are segmented
in accordance with insurance class segmentation used in
IFRS.
Premium and Catastrophe Risk and
Their Management and Control
Despite the diversified portfolio, risk concentrations
and consequently severe claims may arise through, for
example, exposures to natural catastrophes such as
storms and floods. The geographical areas most exposed
to such events are Denmark, Norway and Sweden. In
addition to natural catastrophes, single large claims could
have an impact on the result of insurance operations. The
negative economic impact of natural catastrophes and
single large claims is effectively mitigated by having a
well-diversified portfolio and a group-wide reinsurance
program in place.
Breakdown of Gross Written Premiums
If, 31 December 2020, total EUR 4,823 million
● Private 2,750
● Commercial 1,220
● Industrial 700
● Baltic 152
The following adjustments from IFRS Lines of Business to Solvency II Lines of Business are made:
•
IFRS Line of Business Motor other and Motor third party liability (1,941) include Solvency II Line of Business Motor vehicle liability insurance (530) and Other motor insurance (1,411).
•
IFRS Line of Business Accident (647) includes Solvency II Line of Businesses Income protection insurance (328), Other Life (48), Medical expense insurance (272) and Assistance (0).
By Business Area By Country By Line of Business
● Norway 1,453
● Sweden 1,727
● Finland 999
● Denmark 492
● Baltic 152
● United Kingdom 0
● Motor other and motor
third party liability 1,941
● Workers'
compensation 194
● Liability 308
● Accident 647
● Property 1,606
● Marine, aviation,
transport 128
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
134FINANCIAL STATEMENTS 2020
The sensitivity of the underwriting result and hence the
underwriting risk is presented by changes in certain key
figures in the table Sensitivity Test of Underwriting Result,
If, 31 December 2020 and 31 December 2019.
The Underwriting Committee shall give its opinion on
and propose actions in respect of various issues related
to underwriting risk. The committee shall also consider
and propose changes to the Underwriting Policy, which
is the principal policy for underwriting, and sets general
principles, restrictions and directions for the underwriting
activities. This document shall be reviewed and approved
at least yearly by the Boards of Directors.
The Chairman of the Underwriting Committee is respon-
sible for the approval of underwriting deviations defined
in the Underwriting Policy and other issues dealt with by
the committee.
The Underwriting Policy is supplemented with guidelines
outlining in greater detail how to conduct underwriting
within each Business Area. These guidelines cover areas
such as tariff and rating models for pricing, guidelines in
respect of standard conditions and manuscript wordings,
as well as authorities and limits. In accordance with
the instructions for the Underwriting Committee, the
Committee monitors compliance with the established
underwriting principles.
The Business Areas manage the underwriting risk on a
day-to-day basis. A crucial factor affecting the profitabil-
ity and risk of non-life insurance operations is the ability
to accurately estimate future claims and expenses and
thereby correctly price insurance contracts. The premi-
ums within the Business Area Private and the premiums
for smaller risks within the Business Area Commercial
are set through tariffs. The underwriting of risks in the
Business Area Industrial and of more complex risks
within the Business Area Commercial is to a greater extent
based on principles and individual underwriting than on
tariffs. In general, pricing is based on statistical analyses
of historical claims data and assessments of the future
development of claims frequency and claims inflation.
If’s Reinsurance Policy stipulates guidelines for the
purchase of reinsurance. The need and optimal choice
of reinsurance is evaluated by considering the expected
cost versus the benefit of the reinsurance, the impact
on result volatility and capital requirements. The main
tool for this evaluation is If’s internal model in which
frequency claims, large claims and natural catastrophes
are modelled.
A group-wide reinsurance program has been in place in
If since 2003. In 2020, retention levels were between SEK
100 million (approximately EUR 9.5 million) and SEK 250
million (approximately EUR 23.8 million) per risk and SEK
250 million (approximately EUR 23.8 million) per event.
Sensitivity Test of Underwriting Result
If, 31 December 2020 and 31 December 2019
Eectonpretaxprofit
EURm
Keyfigure
Currentlevel
()
Changein
currentlevel
Combined ratio, business area Private -percentagepoint - -
Combined ratio, business area Commercial -percentagepoint - -
Combined ratio, business area Industrial -percentagepoint - -
Combined ratio, business area Baltics -percentagepoint - -
Net premiums earned (EURm) -percent - -
Net claims incurred (EURm) -percent - -
Ceded written premiums (EURm) -percent - -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
135FINANCIAL STATEMENTS 2020
Reserve Risk and Its Management and Control
The main reserve risks for If are stemming from
uncertainty in the claim amounts caused by higher than
expected claims inflation, change in discount rates or an
increased retirement age with the consequences that both
annuities and lump sum payments would increase.
The Boards of Directors of If decides on the guidelines
governing the calculation of technical provisions.
The Chief Actuary is responsible for developing and
presenting guidelines on how the technical provisions
are to be calculated and for assessing whether the level
of total provisions is sufficient. The Chief Actuary issues
a quarterly report on the adequacy of If’s technical
provisions.
The Actuarial Committee is a preparatory and advisory
board for If Chief Actuary. The Committee secures a
comprehensive view over reserve risk, discusses and
gives recommendations on policies and guidelines for
calculating technical provisions.
The actuaries continuously monitor the level of provi-
sions to ensure that they comply with the established
guidelines. The actuaries also develop methods and
systems to support these processes.
In the table Technical Provisions by Line of Business and
Major Geographical Area, If, 31 December 2020, the size
and duration of If’s technical provisions are presented by
Line of Business and major geographical area. Finland’s
and Sweden’s share of technical provisions is larger than
the share of gross written premiums, which is mainly due
to Sweden and Finland having a long duration of Motor
other and Motor third party liability (“MTPL”) and Finland
also having a long duration of Workers’ compensation.
The long duration is mainly due to annuities in these
Lines of Business, which increases the amount of techni-
cal provisions. The duration of the provisions, and thus
the sensitivity to changes in interest rates, varies with
each product portfolio. The weighted average duration for
2020 across the product portfolios was 6.5 years.
Technical Provisions by Line of Business and Major Geographical Area
If, 31 December 2020
Sweden Norway Finland Denmark Baltics Total
EURm Duration EURm Duration EURm Duration EURm Duration EURm Duration EURm Duration
Motor other and MTPL
Workers' compensation
Liability
Accident
Property
Marine, aviation, transport
Total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
136FINANCIAL STATEMENTS 2020
Retirement age and life expectancy are two factors that
affect the annual amount and duration of annuities. An
increased retirement age, through for instance a political
decision, will increase the present value of annuities as
those decrease or expire at retirement. An increase in life
expectancy will increase the duration and present value of
annuities. The present value of annuities is also sensitive
to changes in the discount rates used to discount the
nominal cash flows. The most material annuity balances
in If with significant sensitivity to discount rates refer to
the business in Finland and Sweden.
Reserves are mainly exposed to inflation and discount rates
and to some extent to life expectancy. The sensitivity of If’s
technical provisions to an increase in inflation, an increase
in life expectancy and a decrease in the discount rate is
presented in the table Sensitivities of Technical Provisions,
If, 31 December 2020.
The technical provisions are further analyzed by claims
years. The output from this analysis is illustrated both
before and after reinsurance in the claims cost trend
tables. These are disclosed in the Note 26 in the
Financial Statements.
The anticipated inflation trend is considered when
calculating all provisions and is of the utmost importance
for claims settled over a long period of time, such as Motor
other and MTPL, as well as Workers’ compensation. The
anticipated inflation is based on external assessments of
the inflation trend in various areas, such as the consumer
price index and payroll index, combined with If’s own
estimation of costs for various types of claims. For Lines of
Business such as Motor other and MTPL as well as Workers’
compensation, legislation differs significantly between
countries. Some of the technical provisions for these
lines include annuities which are sensitive to changes in
mortality assumptions and discount rates. The proportion
of technical provisions related to Motor other and MTPL as
well as Workers’ compensation was 62 per cent.
Sensitivities of Technical Provisions
If, 31 December 2020
Technicalprovisionitem Riskfactor Changeinriskparameter Country
Eect
EURm
Nominal provisions Inflationincrease
Increaseby
percentagepoint
Sweden
Denmark
Norway
Finland
Annuities and estimated share of
claims provisions to future annuities
Decreaseinmortality
Lifeexpectancy
increasebyyear
Sweden
Denmark
Finland
Discounted provisions
(annuities and part of
Finnish IBNR)
Decreaseindiscountrate
Decreaseby
percentagepoint
Sweden
Denmark
Finland
The actuarial estimates are based on historical claims and
existing exposures that are available at the balance sheet
date. Factors that are monitored include loss development
trends, the level of unpaid claims, changes in legislation,
case-law and economic conditions. When setting the
non-life and life provisions, established actuarial and
statistical methods are used.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
137FINANCIAL STATEMENTS 2020
Investment Allocation
If, 31 December 2020 and 31 December 2019
Dec Dec
AssetClass
Marketvalue
EURm Weight
Averagematurity
years
Marketvalue
EURm Weight
Averagematurity
years
Fixed income total
Moneymarketsecuritiesandcash
Governmentbonds
Creditbondsfundsandloans
Covered bonds
Investment grade bonds and loans
High-yield bonds and loans
Subordinated / Tier 2
Subordinated / Tier 1
Hedging swaps - -
Listed equity total - -
Finland - -
Scandinavia - -
Global - -
Alternative investments total - -
Realestate - -
Privateequity - -
Biometric - -
Commodities - -
Otheralternative - -
Trading derivatives - - -
Asset classes total - -
FX Exposure, gross position - - - -
Market Risks
Fixed income investments and listed equity instruments
form the major part of the investment portfolio of EUR
11,251 million (11,109). A large part of the fixed income
investments was at 31 December 2020 concentrated to
financial institutions. The role of real estate, private
equity, and other alternative investments is immaterial.
The composition of the investment portfolios by asset
classes in If at year end 2020 and at year end 2019 and
average maturities of fixed income investments are shown
in the table Investment Allocation, If, 31 December 2020
and 31 December 2019.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
138FINANCIAL STATEMENTS 2020
equity instruments are presented by sector, asset class
and rating in the following table, which also includes
counterparty risk exposures relating to derivative
transactions. Counterparty default risks are described in
more detail in section Counterparty Default Risks. Due
to differences in the reporting treatment of derivatives,
the figures in the table are not fully comparable with other
tables in Sampo Group’s Financial Statements.
If’s investment management strategy is conservative,
with a low equity share and low fixed-income duration.
Both investment performance and market risk are actively
monitored and controlled by the Investment Control
Committee monthly and reported to the Own Risk and
Solvency Assessment Committee (“ORSA Committee”)
quarterly. In addition, the allocation limits, issuer and
counterparty limits, the sensitivity limits for interest
rates and credit spreads as well as the regulatory capital
requirements are regularly monitored.
Market Risks of Fixed Income and Equity
Instruments
Spread Risk and Equity Risk
Spread risk and equity risk are derived only from the asset
side of the balance sheet. Exposures in fixed income and
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
139FINANCIAL STATEMENTS 2020
Exposures by Sector, Asset Class and Rating
If, 31 December 2020
EURm AAA
AA
-
AA-
A
-
A-
BBB
-
BBB-
BB
-
C D Non-rated
Fixed
income
total
Listed
equities Other
Counter-
partyrisk Total
Change
from
Dec
Basic industry
Capital goods
Consumer products
Energy -
Financial institutions -
Governments
Government guaranteed -
Health care -
Insurance
Media
Packaging -
Public sector, other
Real estate
Services
Technology and electronics -
Telecommunications
Transportation -
Utilities -
Others -
Asset-backed securities
Covered bonds -
Funds -
Clearing house
Total
Change from 31 Dec 2019 - - - - -
The figures include bank account balances related to insurance activities.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
140FINANCIAL STATEMENTS 2020
Most of the fixed income exposures are in investment
grade issues and currently the role of Nordic covered
bonds and Nordic banks as issuers is central. Within fixed
income investments part of the money market securities,
cash and investment grade government bonds form a
liquidity buffer.
In the equity portfolio, most of the equity investments
are selectively chosen direct investments in the Nordic
markets. When investing in non-Nordic equities, funds
or other assets, third party managed investments are
mainly used. The changes in equity positions during the
year can be seen in the graph Breakdown of Listed Equity
Investments by Geographical Regions, If, 31 December
2020 and 31 December 2019.
Market Risks of Balance Sheet
Asset and Liability Management Risk
The ALM risk is considered through the risk appetite
framework and its management and governance are
based on If’s Investment Policies. In general, to maintain
the ALM risk within the overall risk appetite, the cash
flows of insurance liabilities are matched by investing
in fixed income instruments denominated in the same
currencies as the liabilities. Derivatives can be used to
manage the ALM risk.
Interest Rate Risk
In general, If is negatively affected when interest rates
are decreasing or remaining at low levels, as the duration
of liabilities in If is longer than the duration of assets.
If has over the years gradually decreased its combined
ratio level to counteract falling interest rates. Interest
rate sensitivity in terms of the average duration of
fixed income investments was 1.4 years. The respective
duration of insurance liabilities was 6.5 years. The overall
interest rate risk is managed by sensitivity limits for
instruments sensitive to interest rate changes.
In the financial accounts, most of the technical
provisions are nominal, while the annuity and annuity
IBNR reserves, are discounted using interest rates in
accordance with the regulatory rules. Accordingly,
from an accounting perspective, If is mainly exposed
to changes in inflation and regulatory discount rates.
From an economic perspective, in which the cash flows
of insurance liabilities are discounted with prevailing
interest rates, If is exposed to changes both in inflation
and nominal interest rates. For more information see
the table Sensitivities of Technical Provisions, If,
31December 2020 in the section Underwriting Risks.
Breakdown of Listed Equity Investments by Geographical Regions
If
● Denmark 0
● Norway 117
● Sweden 748
● Finland 0
● Western Europe 139
● Eastern Europe 0
● North America 83
● Latin America 48
● Asia 146
31 December 2020
Total EUR 1,301 million
31 December 2019
Total EUR 1,281 million
●
Denmark 0
●
Norway 98
●
Sweden 690
●
Finland 0
●
Western Europe 236
● Eastern Europe 0
● North America 82
● Latin America 40
● Asia 156
11%
7%
9%
4%
58%
11%
8%
3%
12%
6%
18%
53%
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
141FINANCIAL STATEMENTS 2020
Currency Risk
If writes insurance policies that are mostly denominated
in the Scandinavian currencies and in the euro. The
currency risk is to a large extent reduced by matching
technical provisions with investment assets denominated
in the corresponding currencies or by using currency
derivatives. The currency exposure in insurance opera-
tions is hedged to the base currency on a regular basis.
The currency exposure in investment assets is controlled
weekly and hedged when the exposure has reached a
specific level, set with respect to cost efficiency and
minimum transaction size. An active currency manage-
ment can be performed within set limits. The transaction
risk positions against the Swedish krona are shown in the
table Transaction Risk Position, If, 31 December 2020.
The table shows the net transaction risk exposures and
the changes in the value of positions given a 10 per cent
decrease in the value of the base currency.
In addition to transaction risk, If is also exposed to
translation risk which at the Group level stems from
foreign operations with other base currencies than SEK.
Transaction Risk Position
If, 31 December 2020
BasecurrencySEKm EUR USD JPY GBP SEK NOK CHF DKK Other Totalnet
Insurance operations - - - - - - - - -
Investments
Derivatives - -
Transaction risk, net position - - - - - -
Sensitivity: SEK -10% - - - -
If's transaction risk position in SEK represents exposure in foreign subsidiaries /branches within If with base currency other than SEK.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
142FINANCIAL STATEMENTS 2020
Liquidity Risk
In If, liquidity risk is limited, since premiums are
collected in advance and large claims payments are
usually known a long time before they fall due. Liquidity
risks are managed by cash management functions which
are responsible for liquidity planning. Liquidity risk is
reduced by having investments that are readily tradable
in liquid markets. The liquidity of financial assets is
analyzed and reported to the ORSA Committee.
The maturities of technical provisions and financial
assets and liabilities are presented in the table Cash
Flows According to Contractual Maturity, If, 31
December 2020. The average maturity of fixed income
investments was 2.7 years in If. The table shows the
financing requirements resulting from expected cash
inflows and outflows arising from financial assets and
liabilities as well as technical provisions.
If has a relatively low amount of financial liabilities and
thus the refinancing risk is small.
Counterparty Default Risks
In If, the three major sources of counterparty risk are
reinsurance, financial derivatives and other receivables.
Counterparty default risk arising from receivables from
policyholders and other receivables related to commercial
transactions is very limited, because non-payment of
premiums generally results in cancellation of the insur-
ance policies.
Cash Flows According to Contractual Maturity
If, 31 December 2020
EURm
Carrying
amount
total
Carrying
amountwithout
contractual
maturity
Carrying
amountwith
contractual
maturity
Cashflows
– –
Financial assets
ofwhichinterestrateswaps
Financial liabilities - - -
ofwhichinterestrateswaps -
Lease liabilities - - - - - -
Net technical provisions - - - - - - -
In the table, financial assets and liabilities are divided into contracts that have an exact contractual maturity profile, and other contracts. Only the carrying amount is shown for the other contracts.
In addition, the table shows expected cash flows for net technical provisions, which by their nature, are associated with a certain degree of uncertainty.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
143FINANCIAL STATEMENTS 2020
Reinsurance Counterparty Risk
Reinsurance is used regularly to utilize If’s own funds
efficiently and reduce the cost of capital, limit large
fluctuations of underwriting results and have access to the
reinsurers’ competence base. The Reinsurance Committee
is a collaboration forum for reinsurance related issues in
general and shall give its opinion on and propose actions
in respect of such issues. The Committee shall consider
and propose changes to the Reinsurance Policy and the
Internal Reinsurance Policy. The Chairman shall decide
on the contents of reporting from the Committee. At least
three times per year, and as needed in case of adverse
development, the reinsurance credit risk exposure
(estimated and materialized) as well as deviations from
the Reinsurance Policy, shall be reported.
The distribution of reinsurance receivables and reinsur-
ers’ portion of outstanding claims on 31 December 2020
per rating category is presented in the table Reinsurance
Recoverables, If, 31 December 2020 and 31 December 2019.
In the table EUR 155 million (136) of reinsurance recover-
ables are excluded, which mainly relates to captives and
statutory pooled solutions.
As for the Reinsurance Committee, the Chairman of the
Reinsurance Security Committee shall decide on the
contents of reporting from the Committee. At least three
times per year, and as needed in case of adverse develop-
ment, the reinsurance credit risk exposure (estimated and
materialized) as well as deviations from the Reinsurance
Policy, shall be reported.
Most of the reinsurers have ratings between AA+ and
A-. The ten largest individual reinsurance recoverables
amounted to EUR 171 million, representing 54 per cent of
the total reinsurance recoverables including captives and
statutory pooled solutions.
The total ceded premium related to treaty and facultative
reinsurance amounted to EUR 58.3 million.
Counterparty Risk Related to
Financial Derivatives
In If, the default risk of derivative counterparties is
a by-product of managing market risks. The role of
long-term interest rate derivatives has been immaterial
and counterparty risk mainly stems from short-term FX
derivatives. The counterparty risk of bilaterally settled
derivatives is mitigated by a careful selection of counter-
parties, by diversification of counterparties to prevent
risk concentrations and by using collateral techniques,
e.g. ISDA Master Agreements backed by Credit Support
Annexes. If settles interest rate swaps in central clearing
houses, which mitigates bilateral counterparty risk but
also results in a systemic risk exposure related to central-
ised clearing parties.
Reinsurance Recoverables
If, 31 December 2020 and 31 December 2019
Dec Dec
Rating TotalEURm oftotal TotalEURm oftotal
AAA
AA+ - A-
BBB+ - BBB-
BB+ - C
D
Non-rated
Total
Because the recoverables reported above are typically not
covered by collaterals the whole amount is exposed to
counterparty risk.
If’s Reinsurance Policy sets requirements for the reinsur-
ers’ minimum credit ratings and the maximum exposure
to individual reinsurers. Also, the own credit-analysis
plays a central role when counterparties are selected.
The Reinsurance Security Committee in If shall give input
and suggestions to decisions in respect of various issues
regarding reinsurance default risk and risk exposure, as
well as proposed deviations from the Reinsurance Policy.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
144FINANCIAL STATEMENTS 2020
Topdanmark Group
Underwriting Risks
Non-Life Underwriting Risks
As shown in the graph Breakdown of Gross Written Pre-
miums by Business Area, Country and Line of Business,
Topdanmark Non-Life, 2020, Topdanmark’s insurance
portfolio is diversified across Business Areas and Lines of
Business.
Breakdown of Gross Written Premiums
Topdanmark Non-Life, 2020, total EUR 1,315 million
● Norway 0
● Sweden 0
● Finland 0
● Denmark 1,315
● Baltic 0
● United Kingdom 0
By Business Area By Country By Line of Business
● Motor other and motor
third party liability 306
● Workers'
compensation 98
● Liability 77
● Accident 264
● Property 564
● Marine, aviation,
transport 8
● Private 698
● Commercial 617
● Industrial 0
Premium and Catastrophe Risk and
Their Management and Control
The main underwriting risk that influences the
performance is the risk of catastrophe events. However,
Topdanmark Forsikring has a very comprehensive
reinsurance program in place contributing to the low level
of underwriting risk. The largest retention level of DKK
100 million plus reinstatement for each event is on storm
events. The maximum retention on fire events is DKK 25
million and in workers' compensation risks are covered up
to DKK 1 billion with a retention of DKK 50 million.
With certain restrictions, acts of terrorism are covered
by the reinsurance contracts. Starting 1 July 2019, the
NBCR (nuclear, biological, chemical, radiological) acts
of terrorism are covered by a public organization. This is
based on a new Act on NBCR acts of terrorism. Under the
new scheme the costs from a NBCR attack in Denmark
will initially be borne by the State, but those costs will
subsequently be recovered from policyholders.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
145FINANCIAL STATEMENTS 2020
Premium risk reduction measures taken at different levels
of operations are as follows:
• Collection of data on risk and claims history
• Use of collected and processed data in profitability
reporting, risk analyses and in the internal model
• Ongoing follow-up on risk developments as well as
quarterly forecasts for future risk development
• Pricing using a statistical model tool including cus-
tomer scoring tools
• Reinsurance cover that reduces the risk especially for
catastrophe events
• Ongoing follow-up on the risk picture and reinsurance
coverage in the Risk Committee.
To maintain product and customer profitability,
Topdanmark monitors changes in its customer portfolios.
Provisions are recalculated, and the profitability reports
are updated in the same context on a monthly basis.
Based on this reporting, trends in claim levels are
carefully assessed and price levels may be adjusted if
considered necessary.
In the private market segment, customer scoring is used,
and customers are divided into groups according to their
expected profitability levels. The customer scoring has
two roles. First it helps to maintain the balance between
the individual customer's price and risk. Secondly it
facilitates the fairness between individual customers
by ensuring that no customers are paying too large
premiums to cover losses from customers who pay too
small premiums.
The historical profitability of major SME customers
with individual insurance schemes is monitored using
customer assessment systems. These assessment systems
enable Topdanmark to achieve accurate information
about income, claims expenses, combined ratio etc. for
each customer.
In addition to the analysis described above, Topdanmark
continuously improves its administration systems to
Reserve Risk and Its Management and Control
The insurance lines of business are divided into short-tail
i.e. those lines where the period from notification until
settlement is short and long-tail i.e. those lines where
the period from notification until settlement is long. The
main short-tail lines in Topdanmark are buildings and
other property and comprehensive motor insurance. For
the short-tail lines the claims are mainly settled within
Non-Life Insurance Risk Scenarios
Topdanmark, 31 December 2020 and 31 December 2019
EURmaftertax
Keyfigure
Currentlevel
() Changeincurrentlevel
Combined ratio, business area Private -percentagepoint - -
Combined ratio, business area Commercial -percentagepoint - -
Net premiums earned (EURm) -percent - -
Net claims incurred (EURm) -percent - -
Ceded written premiums (EURm) -percent - -
achieve more detailed data, which in turn enables the
company to identify the claims trends at an earlier point
in time and compile information on the constituent
parts of the various types of claims.
The non-life risk scenarios are presented in the table
Non-Life Insurance Risk Scenarios, Topdanmark, 31
December 2020 and 31 December 2019.
the first year. Long-tail lines relate to personal injury and
liability and consist of the lines Workers' compensation,
Accident, Motor third party insurance and Commercial
liability. Composition of non-life provisions for outstand-
ing claims is presented in the following table.
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Composition of Non-Life Provisions for Outstanding Claims
Topdanmark, 31 December 2020 and 31 December 2019
Provisionsforoutstandingclaims % Duration % Duration
Short-tail
Annuity provisions in workers' compensation
Other claims provisions in workers' compensation
Accident
Motor personal liability
Commercial liability
Due to the longer period of claims settlement, the risk
profile of the long-tail lines of business are generally more
uncertain than the short-tail lines. It is not unusual that
claims in long-tail lines are settled three to five years after
notification and in rare cases up to ten to fifteen years.
The reserve risk is calculated using Topdanmark’s partial
internal model for insurance risk. Workers’ compensation
claims provision has by far the biggest risk, followed by
the other long-tail claims provisions.
During such a long period of settlement, the levels of
compensation could be significantly affected by changes
in legislation, case-law or practice in the compensation
of claim incidents adopted by the Danish Labour Market
Insurance which decides on compensation for injury
and loss of earnings potential in all cases of serious
industrial injuries. The practice adopted by the Danish
Labour Market Insurance also has some impact on
the levels of compensation for accident and personal
injury within motor liability and commercial liability
insurance. Supreme court decisions can also influence
the provisions for former years especially for Workers’
compensation.
The reserve risk represents mostly the ordinary uncer-
tainty of calculation and claims inflation, i.e. an increase
in the level of compensation due to the annual increase
in compensation per policy being higher than the general
development in prices or due to a change in judicial
practice or legislation. The sufficiency of the provisions
is tested in key lines by calculating the provisions using
alternative models as well, and then comparing the
compensation with information from external sources,
primarily statistical material from the Danish Labour
Market Insurance and the Danish Road Sector/Road
Directorate.
The actuarial team has a continuous dialogue with the
claims departments on any changes in the practices
regarding new legislation, case-law or compensation
practices as well as on the impact of such changes on the
routines used to calculate individual provisions.
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Life Underwriting Performance and Risks
The split of premiums between products during the
last two years is presented in the table Sources of
Sources of Gross Premiums
Topdanmark Life Insurance, 31 December 2020 and 31 December 2019
EURm
Withprofitschemes
Unit-linkedschemes
Grouplife
Regular premiums
Withprofitschemes
Unit-linkedschemes
Single premiums
Gross premiums
The main risks of Topdanmark Livsforsikring can be
summarized as follows:
• Limited loss-absorbing buffers (bonus potentials)
combined with low interest rates environment
• Disability risk
• Longevity risk
• Pandemic risk
A low interest rate level with material elements of nega-
tive interest rates and, in particular, sustained low interest
rates along with prolonged lives represent a significant
risk scenario for insurers with guaranteed benefits as
there will be a reduction of the collective and individual
bonus potentials used for loss absorption by interest and
risk groups. When a risk event occurs, the effect on the
profit will depend on the size of bonus potentials which
are a loss absorbing capacity (“LAC”) within the insurance
liabilities. When the loss absorbing capacity is higher than
the losses, losses on the insurance liabilities are covered
by the bonus potentials. For risk groups where the bonus
potentials are fully used, the equity will cover the risk.
The focus of sales is on unit-linked schemes and the
premiums received are mostly of unit-linked schemes.
The regular premiums are growing steadily while the
single premiums are fluctuating more from year to year.
The risk inherent in the life business is firstly related to
the with profit technical provisions. As the majority of
new contracts are written as unit-linked contracts, the
risk will not increase as much as the volume of premiums
and total provisions.
Group life insurance is a collective life insurance without
savings – that is, a risk insurance – where the sum insured
is paid only to the beneficiaries in case of the insured’s
death during the insurance period. It is irrelevant whether
the death is due to accident or illness.
Gross Premiums, Topdanmark Life Insurance,
31 December 2020 and 31 December 2019.
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Life Insurance Underwriting Risk Control
The loss-absorbing buffers are a crucial part of the with
profit concept in leveling of yields and claims over time.
Therefore, Topdanmark Livsforsikring has continuous
focus on the solvency position, the changes in the
individual risks and the development of the loss-absorb-
ing buffers. The latter is important because over time it
can level out the market and insurance risks within the
individual risk groups.
The Solvency Capital Requirement is calculated quarterly.
When deemed necessary, due to market developments,
the frequency of calculation is increased and, if neces-
sary, the number and type of scenarios are increased.
Trends in product claim levels are assessed on top of
the calculation of the insurance provisions. Profitability
models are applied systematically as a follow-up on
customer and portfolio levels. This assessment is used to
identify price adjustment needs.
Loss Absorbing Buers in the Event
of Low Interest Rates
Customers’ individual and collective bonus potential
together creates the loss absorbing buffers in Danish life
insurance against any losses incurred by customers on
investment activities and insurance covers.
Low interest rates mean that the market value of the
guarantees granted is high, and hence the related
individual bonus potential is low. The lower the individual
bonus potential is, the higher is the risk of any losses to
be absorbed wholly or partially by shareholder's equity.
In case interest rates are high, the same losses could, to a
larger degree, be absorbed by the bonus potential.
Declines in the collective bonus potential are most
frequent, due to the investment return being lower than
the annual addition of interest to deposits.
In order to protect shareholders' equity, it will, in general,
be relevant to reduce market risks in the event of lower
interest rates.
All policies have been split into contribution groups
according to the guaranteed benefit scheme. For all
contribution groups, there are separate loss absorbing
buffers and hence in each contribution group, the separate
investment policy must be in line with risk taking capacity
to ensure the ability to meet the guaranteed benefits.
Market risk is adjusted continuously in accordance with
the risk capacity of the contribution groups, and the
movements in interest rates are monitored so that risk
reducing actions can be taken when needed.
Disability
Disability risk is the risk of increased disability intensity
or declines in the rates of resumption of work. Losses may
incur due to an increase in disability frequency or due to
inadequate health evaluation when the policy is written.
Extra costs, due to a permanent change in disability risk,
will be partially covered by individual and collective
bonus potential. The remainder affects the result for the
year and consequently shareholders' equity.
Longevity
Longevity risk is the risk that customers with life
dependent policies, primarily annuities, live longer
than expected. That will increase provisions for lifetime
products.
Extra costs, due to longer lifetimes, will be partially
covered by individual and collective bonus potential. The
remainder affects the result for the year and consequently
shareholders' equity.
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Group’s Notes to the Accounts
149FINANCIAL STATEMENTS 2020
Pandemic
Extraordinary expenses as a result of a pandemic affecting
age groups insured in the company’s group life portfolio
are financed by equity.
The following risk reduction measures and methods are
used in Topdanmark Livsforsikring:
• All with profit contracts are divided according to the
granted benefit guarantee and the investment policy is
designed to ensure the ability to meet the guarantees
• Market risk is freely adjustable in relation to the
individual customer groups’ risk capacity
• Normal fluctuations in ROI and risk results in the
average interest rate environment are captured by
bonus potentials per contribution group
• Reinsurance
• Prices for death and disability covers are adjusted
continuously in relation to the market situation and the
observed claims history
• The basis of new subscription is changed as needed
• Establishing business procedures that ensure that the
products are sold at the right price/risk mix
• Changes in insurance contract conditions that contrib-
ute to risk mitigation for similar claims in the future
The life insurance risk scenarios can be found in the
following table.
The monitoring of whether the risk reduction methods
are still effective is i.a. via continuous follow-up of the
Risk Scenarios in Life Insurance
Topdanmark, 31 December 2020 and 31 December 2019
EURmaftertax
Disability intensity - 35% increase* - -
Mortality intensity - 20% decline - -
*
35% increase first year, subsequently 25%, coincident with 20% decline in reactivation rates.
Market Risks
In general, the long-term value creation shall be based
mainly on the acceptance of insurance risks. To supple-
ment the Group’s profit from its insurance activities,
Topdanmark accepts a certain level of financial market
risks as well, given its strong liquidity position and stable,
high earnings from insurance operations. Hence, in
addition to fixed income instruments, Topdanmark has
invested, among other things, in equities, properties and
CLOs (collateralized loan obligations) in order to improve
the average investment return.
company’s risk profile and reinsurance cover in the Risk
Committee and via the on-going follow-up of forecasts. If
the forecasts are not met, the risk reduction methods may
need to be corrected.
Market risks are limited to the extent that is considered
appropriate, so that it is highly probable that the
company gains a profit even in the very unfavourable
financial market scenarios. Large risk exposures or highly
correlated risks are covered to prevent unnecessary losses
and market risks originating from insurance operations.
The investment portfolio shall be managed in a way
that market risk taking shall not endanger the normal
operations or implementation of planned actions in
unfavourable market conditions.
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150FINANCIAL STATEMENTS 2020
To reach the aforementioned general goals, the invest-
ment policy sets the company's objectives, strategies,
organization and reporting practices on investments. The
investment strategy is more precisely determined in terms
of market risk limits and specific requirements for certain
types of positions and sub-portfolios (risk appetite). The
investment strategy is determined by the Board and
revised at least once a year. Appropriate financial risk
mitigation techniques are used.
When selecting the investment assets, a portfolio compo-
sition that matches the risk features of the corresponding
liabilities is sought. The purpose of the investment policy
is also to ensure that the company has effectively imple-
mented the organization, systems and processes necessary
to identify, measure, monitor, manage and report on
investment risks to which it is exposed.
At the same time, the policy sets the framework for
investment of customers' savings, bonus schemes and
unit-linked savings (customer funds) in Topdanmark
Livsforsikring, so that the company can continue to offer
attractive savings products to its clients with competitive
returns in relation to the investment risks accepted by
the clients.
In addition to the investment policies, the companies
have a capital plan and a capital emergency plan if
sudden changes occur on the asset or liability side.
When market risks are measured and managed, all
exposures are included, regardless of whether they arise
from active portfolio management of investments or
from annuities, which are considered as market risk.
Asset Allocations and Investment Performance:
Topdanmark Excluding Unit-Linked
As described earlier, in life insurance different contribution
groups have their own investment strategies and their
loss absorbing buffers and hence it is relevant to assess
allocations and returns of these assets only in relation
to their respective contribution groups. However, the
company bears some market risk and thus the non-life and
life investment allocations are shown in the table Invest-
ment Allocations Excluding Unit-Linked, Topdanmark,
31 December 2020 and 31 December 2019 without assets
covering unit-linked liabilities.
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151FINANCIAL STATEMENTS 2020
Investment Allocations Excluding Unit-Linked
Topdanmark, 31 December 2020 and 31 December 2019
TopdanmarkNon-Life TopdanmarkLife
Dec Dec Dec Dec
Assetclass
Marketvalue
EURm Weight
Marketvalue
EURm Weight
Marketvalue
EURm Weight
Marketvalue
EURm Weight
Fixed income total
Moneymarketsecuritiesandcash
Governmentandmortgagebonds
Creditbonds
Index-linkedbonds
CLOs
Listed equity total
Denmark
Scandinavia
Global
Alternative investments total
Realestate
Unlistedequitiesandhedgefunds
Asset classes total
The exposure in equities outside Denmark and credit bonds has been adjusted by the use of derivatives. Unlisted equities and hedge funds include also private equity and direct holdings in non-listed equities.
The equity portfolios are well diversified and without
major single positions, when associated companies are
disregarded.
The main investment assets are government and
mortgage bonds, which comprise primarily Danish
mortgage bonds. The assets in this asset class are interest
rate sensitive and to a significant extent equivalent to the
total interest rate sensitivity of the non-life insurance
provisions. Consequently, the return on government and
mortgage bonds should be assessed in connection with
return and revaluation of non-life insurance provisions.
Credit bonds are composed of a minor share of a well-di-
versified portfolio, primarily exposed to businesses in
Europe.
Index-linked bonds comprise bonds – primarily Danish
mortgage bonds – for which the coupon and principal are
index-linked.
The class CLO (collateralized loan obligation) primarily
comprises positions in CLO equity tranches. The under-
lying assets of CLOs are mostly senior secured loans,
while the remainder are primarily investment grade
investments. The real estate portfolio comprises mainly
owner-occupied real estate.
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152FINANCIAL STATEMENTS 2020
Market Risks of Balance Sheet
Interest Rate Risk
Interest rate risk is calculated for assets, liabilities and
derivative instruments, for which the carrying amount is
dependent on the interest rate level. Regarding insurance
liabilities Topdanmark is exposed to interest rate risk due
to provisions for outstanding claims in non-life insurance
and guaranteed benefits in life insurance.
Shifting the market yield curve upwards and downwards or
changing its shape leads to changed market values of assets
and derivatives and thus to unrealized gains or losses.
When assessing the value and sensitivity of insurance
provisions Topdanmark uses the Solvency II discount
curve that has its basis on market yield curve with volatility
adjustment (“VA”). The VA component of DKK yield curve
comprises a corrective element based on the spreads of
Danish mortgage bonds and European credit bonds. The
VA component was 19 bps at the end of 2019 and 22 bps at
the end of 2020.
Generally, the interest rate risk is limited and controlled by
investing in interest-bearing assets in order to reduce the
overall interest rate exposure of the assets and liabilities to
the desired level. Therefore, the Danish mortgage bonds
and government bonds have a central role in the asset
portfolios. To further reduce the interest rate sensitivity of
the balance sheet, interest rate swaps have been used for
hedging purposes.
Equity Risk
The Danish part of the equity portfolio is composed
based on the OMXCCAP index. The rest of the equity
holdings are in the foreign equity portfolio that is based
on the MSCI World DC in its original currency. As a result,
Topdanmark’s equity holdings are well-diversified. A
breakdown of Topdanmark’s listed equity investments by
geographical regions is presented in the following graph.
Real Estate Risk
The real estates are all located in Denmark, with the
material part in the areas of Copenhagen and Aarhus.
The holding is covering life insurance provisions and it is
diversified over office buildings and residential buildings.
The majority of the holding related to Topdanmark’s
property within equity is Topdanmark’s own offices. The
properties are valued in accordance with the rules of the
Danish FSA i.e. at market value taking the level of rent and
the terms of the tenancy agreements into consideration.
Graph 13
Breakdown of Listed Equity Investments by Geographical Regions
Topdanmark
●
Denmark 106
●
Norway 3
●
Sweden 3
●
Finland 0
●
Western Europe 106
● Eastern Europe 0
● North America 226
● Latin America 0
● Far East 1
● Denmark 111
● Norway 6
● Sweden 4
● Finland 0
● Western Europe 129
● Eastern Europe 0
● North America 232
● Latin America 0
● Far East 2
31 December 2020
Total EUR 445 million
31 December 2019
Total EUR 483 million
23%
48%
1%
27%
1%
Equities held by unit-linked customers in Topdanmark Livsforsikring are excluded.
24%
51%
1%
24%
1%
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153FINANCIAL STATEMENTS 2020
Spread Risk
Most of Topdanmark's interest-bearing assets comprise
of AAA rated Danish mortgage bonds and debt issued
or guaranteed by top-rated European states. The risk of
losses is considered to be minor due to the high credit
quality of the issuers and because investments have been
made at spreads which are in balance with Topdanmark’s
desired risk ratio levels. The portfolio is well diversified
both geographically and by issuer type and, therefore, the
exposure to concentration risk is insignificant.
The investment policy stipulates that the portfolio must
be well-diversified by the number of counterparties and
by the amount of exposure to individual counterparties.
The main source of spread risk is the mortgage bonds. Due
to high allocation of these investments in the portfolios,
spread risk is the most material source of market risk SCR
and it was DKK 2,169.4 million (in EUR 291.6 million) on 31
December 2020.
Concentration Risk
Topdanmark’s fixed income investments by rating classes
are presented in the table Interest-bearing Assets by
Rating, Topdanmark, 31 December 2020 and 31 December
2019.
Topdanmark has no significant concentrations on the
investment side, except for the category treasury and
mortgage bonds that consists primarily of AAA rated
Danish mortgage bonds.
As earlier described, these assets have an interest rate
sensitivity that significantly corresponds to the interest
rate sensitivity of the technical provisions.
Currency Risk
In practice, the investment assets are the only source of
currency risk while the insurance liabilities are in Danish
kroner. The currency risk is mitigated by derivatives and
net exposures in different currencies are minor except in
the euro.
The currency risk is assessed based on SCR. The value of
the base currency is shocked by 25 per cent against most
of the currencies except against the euro where the largest
exposure exists, and the shock is 0.39 per cent, because
the Danish krone is pegged to the euro.
Inflation Risk
Future inflation is implicitly included in the models
Topdanmark uses to calculate its provisions. The general
principles regarding the inclusion of an allowance for
inflation differs when you look at the Workers' compen-
sation and Illness and Accident insurance. In the former
the provisions are calculated based on the expected future
indexation of wages and salaries, and in the latter based
on the expected development in the net price index.
An expected higher future inflation rate would generally
be included in the provisions with a certain time delay,
while at the same time the result would be impacted by
higher future indexation of premiums. To reduce the risk
of inflation within Workers' compensation and Illness
and Accident insurance, Topdanmark uses index-linked
bonds and derivatives to hedge a significant proportion of
the expected cash flows sensitive to future inflation.
Interest-bearing Assets by Rating
Topdanmark, 31 December 2020 and 31 December 2019
Ratingclass
>A+
A+, A, A-
BBB+, BBB, BBB-
<BBB-
Money market deposits
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154FINANCIAL STATEMENTS 2020
Market Risk Sensitivities
The following table is a summary of selected market risk
sensitivities. For example, it can be seen from the table
that the net effect of 1 percentage point parallel change
in interest rates would be a less than 10 per cent drop in
equity or property prices.
Liquidity Risk
Topdanmark Group has a strong liquidity position. Firstly,
as premiums are paid in the beginning of the coverage
period the liquidity risk related to customers’ payments
is very limited. Secondly, the combination of insurance
businesses is of a character in which it is highly unlikely
that a liquidity shock could occur, because insurance
liabilities are by their nature stable liabilities and in asset
portfolios money market investments are complemented
by a large portfolio of liquid listed Danish government
and mortgage bonds.
Experience from quite significant and sudden movements
in long-term interest rates have confirmed that the
liquidity of these assets is not significantly affected by
market shocks.
The maturity structure of technical provisions and the
bond portfolio is presented in the following table.
Market Risk Sensitivities
Topdanmark, 31 December 2020 and 31 December 2019
EURmaftertax Riskscenario
Eective interest rate 1 percentage point increase -
Interest-bearingassets - -
Provisionsforclaimsandbenefitsetc
Index-linked bonds 5% decrease in value - -
Equities 10% decrease in value - -
CLOs < AA 10% decrease in value - -
Properties 10% decrease in value - -
Currency Annual loss with up to a 2.5%
probability - -
Expected Cash Flows for Provisions and the Bond Portfolio
Topdanmark, 31 December 2020 and 31 December 2019
Cashflowyears
EURm
Carrying
amount - – – –
Provisions for claims
2019 - - - - - -
2020 - - - - - -
Life insurance provisions guarantees
and profitsharing
2019 - - - - - -
2020 - - - - - -
Bond portfolio including interest rate
derivatives
2019
2020
Life insurance provisions for unit-linked products are covered by corresponding investment assets and therefore are not stated in the table.
The expected cash flows of the bond portfolio are calculated based on option adjusted durations that are used to measure the duration of
the bond portfolio. The option adjustment relates primarily to Danish mortgage bonds and reflects the expected duration capturing the
shortening eect of the borrower´s option to have the bond to be redeemed through the mortgage institution at any point in time.
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Because of the aforementioned reasons Topdanmark's
liquidity risk is primarily related to the parent company
Topdanmark A/S. Topdanmark A/S finances its activities
and dividend program by receiving dividends from its
subsidiaries. Further financing requirements are covered
by short-term money market loans, typically with a
maturity of one month or less.
Counterparty Default Risks
Topdanmark is exposed to counterparty risk in both its
insurance and investment activities. The default risk
related to fixed income and equity investments is covered
by spread-risk and equity-risk models in SCR calculations
and hence they are not discussed in this context.
The main sources of counterparty risk are deposits made
to individual banks, derivative contracts with banks and
current receivables from reinsurance companies with the
addition of potential receivables that will arise in case of a
1-in-200-year catastrophe event. Topdanmark's counter-
party risk is assessed by the SCR standard formula.
Reinsurance
Within insurance activities the reinsurance companies'
ability to pay is the most important counterparty risk
factor. Topdanmark minimises this risk by primarily
buying reinsurance cover from reinsurance companies
with a minimum rating of A- and by spreading reinsur-
ance cover over many reinsurers.
For reinsurance counterparties, the Board approves
security guidelines which determine the maximum size of
reinsurance contract cover per a separate reinsurer. This
portion is dependent on the reinsurer's rating as well as
on Topdanmark’s own assessment of the reinsurer. The
largest risk concentrations may occur in case of major
catastrophe events, including storms and cloudbursts.
Investments
Topdanmark may suffer losses due to their counterpar-
ties’ inability to meet their obligations on bonds, loans
and other contracts including derivatives. The majority of
Topdanmark’s interest bearing assets comprise of Danish
mortgage bonds. In order to minimize the risk to a single
debtor, Topdanmark strives to always have a well-diversi-
fied portfolio of bonds not only in regard to a debtor but
also geographically.
To limit the counterparty risk of financial contracts,
including derivative contracts, the choice of counterpar-
ties is restrictive, and collateral is required when the value
of the financial contracts exceeds the predetermined
limits. The size of the limits depends on the counterpar-
ty's credit rating and the terms of the contract.
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Hastings Group
Underwriting Risks
Advantage is Hastings’ Gibraltar-based general insurance
underwriting company providing motor and home
insurance products to the United Kingdom (UK) market.
For Solvency II reporting purposes the lines of business are:
• Motor vehicle liability insurance (Motor liability)
• Other motor insurance (Motor other)
• Fire and other damage to property insurance
Technical Provisions by Line of Business
Hastings, 31 December 2020
EURm Duration
Motor vehicle liability insurance
Other motor insurance
Fire and other damage to property insurance
Total
Pricing Risk
Advantage’s risk appetite statements require management
to maintain rates that are projected to achieve loss
ratios within the target loss ratio range. As a response
to market conditions significantly driven by COVID-19,
strategic segmental rates were adjusted, after review
by management, to remain competitive and provide
customer- focused benefits to policyholders. The rate
changes were regularly reviewed and amended in keeping
with an agile approach to pricing and appropriately
factoring in ongoing claims inflation risk. The market
is expected to remain volatile in line with COVID-19
developments as they arise.
Weekly governance arrangements approve changes to rate
plan and review account performance. Rating Analysis
Committee (“RAC”) approves decisions for segment level
rate changes and book level rate changes. The goal is to
ensure that the business being written will be profitable.
Audits are conducted on a regular basis to ensure that all
underwriting and rating rules are being applied correctly.
Advantage maintains a control log to identify, report,
and take action on errors made by the outsourced service
provider.
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Breakdown of Gross Written Premiums
Hastings, 31 December 2020, total EUR 103 million
● Private 103
● Commercial 0
● Industrial 0
By Business Area By Country By Line of Business
● Norway 0
● Sweden 0
● Finland 0
● Denmark 0
● Baltic 0
● United Kingdom 103
● Motor other and motor
third party liability 101
● Workers'
compensation 0
● Liability 0
● Accident 0
● Property 2
● Marine, aviation,
transport 0
Advantage maintained a disciplined approach to pricing
despite continued market competition which intensified
in H2. New business volumes grew as a result of the ability
to make timely price cuts to reflect lower claims frequen-
cies. This disciplined but agile underwriting and pricing
approach led to over 200 selective rate adjustments within
footprint during 2020. Renewal pricing was a significant
focus for management, in line with seeking to eliminate
the risk of dual pricing for customers through an overall
Reserve Risk
Advantage does not take significant reserve risk and holds
an internal risk margin to a 75% confidence level versus
internal best estimate. Since reserving is subject to expert
judgment the Chief Actuary calculates the best estimate,
the Senior Actuary verifies the data, appropriateness of
techniques utilized and assumptions used to create the
best estimate and an additional best estimate is created
by a fully independent third party. Advantage has a series
of monthly, quarterly and semi-annual controls to ensure
reserve adequacy.
The Gross Written Premiums (GWP) for the last 6 weeks of
2020 amounted to EUR 103 million.
Sensitivities of Technical Provisions
Hastings, 31 December 2020
Technicalprovisionitem Riskfactor Changeinriskparameter
Eect
EURm
Nominal provisions Inflationincrease Increasebypercentagepoint
Periodic Payment Orders (PPOs) Decreaseinmortality Lifeexpectancyincreasebyyear
Discounted provisions Decreaseindiscountrate Decreasebypercentagepoint
approach aimed to deliver fair treatment of Hastings’
customers.
The global pandemic inevitably impacted the risk profile
for 2020. Lower than planned claims frequencies have
resulted in stronger profits and capital solvency with the
solvency ratio being towards the top of Advantage’s target
range of 140% to 160% throughout the period.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
158FINANCIAL STATEMENTS 2020
Market Risks
Investment performance in late Q1 and Q2 2020 was
impacted only modestly as a result of the pandemic,
reflecting the very low risk portfolio structure.
Performance for 2021 is expected to be close to planned
expectations.
Hastings’ investment portfolio has been designed to
generate a targeted return whilst operating within the
conservative risk appetite parameters set by the Board.
Management aims to prudently operate within its risk
appetite.
The core investment portfolio of debt securities,
supplemented by a diversified portfolio of holdings in
collective investment schemes, is held by Advantage. The
Advantage Board works with the investment managers
and investment consultants to maximize return whilst
minimizing risk and preserving capital. The criteria for
the portfolio structure, classes of holdings and individual
limits are consistent with a very low risk appetite. These
investment rules are monitored on a quarterly basis inter-
nally and using an external consultancy. The monitoring
outputs are provided to the Investment Committee and
Risk & Compliance Committee quarterly.
Cash and cash equivalent balances are held in current
accounts or short-term money market instruments. These
are generally less than 60 days in duration, with low
sensitivity to movements in interest rates compared to
longer duration assets.
Investment Allocation
Hastings, 31 December 2020
AssetClass
Marketvalue
EURm Weight
Average
maturity
years
Fixed income total
Moneymarketsecuritiesandcash
Governmentbonds
Creditbondsfundsandloans
Covered bonds
Investment grade bonds and loans
High-yield bonds and loans
Subordinated / Tier 2
Subordinated / Tier 1
Hedging swaps
Listed equity total
UK
Global
Alternative investments total
Realestate
Privateequity
Biometric
Commodities
Otheralternative
Trading derivatives
Asset classes total
FX Exposure, gross position -
Advantage made no direct use of derivatives during
the period. Derivatives are, however, utilized within
Investment Funds in which Advantage has a share, both
for hedging purposes and to generate additional return.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
159FINANCIAL STATEMENTS 2020
Exposures by Sector, Asset Class and Rating
Hastings, 31 December 2020
EURm AAA
AA
-
AA-
A
-
A-
BBB
-
BBB-
BB
-
C D Non-rated
Fixed
income
total
Listed
equities Other
Counter-
partyrisk Total
Change
from
Dec
Basic industry
Capital goods
Consumer products
Energy
Financial institutions
Governments -
Government guaranteed
Health care
Insurance
Media
Packaging
Public sector, other
Real estate
Services
Technology and electronics
Telecommunications -
Transportation -
Utilities
Others
Asset-backed securities
Covered bonds
Funds
Clearing house
Total
Change from 31 Dec 2019 - -
Foreign currency risk is insignificant in Hastings.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
160FINANCIAL STATEMENTS 2020
Mandatum Life Group
Underwriting Risks
The development of insurance liabilities during 2020 is
shown in the table Analysis of the Change in Provisions
Before Reinsurance, Mandatum Life, 31 December 2020.
Counterparty Default Risks
Counterparty risk is the risk that a counterparty will be
unable to pay amounts in full as they fall due. Hastings is
exposed to counterparty risk through reinsurance assets,
financial assets and cash and cash equivalents.
Reinsurance Counterparty Risk
A key component of risk mitigation is reinsurance.
Advantage’s reinsurance program includes both Excess
of Loss (“XoL”) and Quota Share (“QS”) protection. Under
the 2020 arrangements, the Motor exposure risk to
Advantage is capped at GBP 1 million per loss, net of XoL
reinsurance, and Household exposure is capped at GBP
2.5 million per event loss.
To mitigate the inherent counterparty and credit risk
posed by the reinsurance program to Advantage’s balance
sheet, Advantage has set criteria for the minimum
credit quality of the reinsurance counterparties and for
concentration limits.
To better protect itself, and where possible, Advantage
aims to:
• place with parent entities within reinsurance groups
to mitigate counterparty risk in accepting reinsurance
from small regional branches;
• introduce collateralization or cut through terms and/or
parental guarantees to mitigate counterparty risk;
• ensure special termination clauses are in place in
the event of rating downgrade or reorganization of
reinsurance groups to which Advantage is exposed.
Cash Flows According to Contractual Maturity
Hastings, 31 December 2020
EURm
Carrying
amount
total
Carrying
amountwithout
contractual
maturity
Carrying
amountwith
contractual
maturity
Cashflows
– –
Financial assets
ofwhichinterestrateswaps
Financial liabilities - - - - -
ofwhichinterestrateswaps
Lease liabilities - - - - -
Net technical provisions
Reinsurance Recoverables
Hastings, 31 December 2020
Rating TotalEURm oftotal
AAA
AA
A
BBB
Less than BBB
Unrated
Total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
161FINANCIAL STATEMENTS 2020
Analysis of the Change in Provisions Before Reinsurance
Mandatum Life, 31 December 2020
EURm
Liability
Premiums Claimspaid
Expense
charges
Guaranteed
interest Bonuses Other
Liability
Share
Unit-linked, excl. Baltic - -
Individualpensioninsurance - -
Individuallife - -
Capitalredemptionoperations - -
Grouppension - -
With profit and others, excl. Baltic - - -
Group pension insurance, segregated portfolio - - -
Basicliabilitiesguaranteedrate - - -
Reservefordecreaseddiscountrate(-) -
Futurebonusreserves
Group pension - - -
Guaranteedrate - - - -
Guaranteedrateor - - -
Individual pension insurance - -
Guaranteedrate - - -
Guaranteedrate - -
Guaranteedrateor -
Individual life insurance - - -
Guaranteedrate - -
Guaranteedrate - - -
Guaranteedrateor - - -
Capital redemption operations
Guaranteedrate
Guaranteedrateor
Future bonus reserves
Reserve for decreased discount rate -
Longevity reserve -
Assumed reinsurance - -
Other liabilities - - -
Total, excl. Baltic - -
Baltic - -
Unit-linkedliabilities - -
Otherliabilities - - -
Mandatum Life Group total - -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
162FINANCIAL STATEMENTS 2020
Biometric Risks
Mandatum Life’s main biometric risks are longevity,
mortality and disability. In general, the long duration of
policies and Mandatum Life’s restricted right to change
policy terms and conditions and tariffs increase biometric
risks. If the premiums turn out to be inadequate and
cannot be increased, technical provisions have to be
supplemented by an amount corresponding to the increase
in expected losses.
Longevity risk is the most critical biometric risk in
Mandatum Life. The Solvency Capital Requirement of
longevity risk is also highly dependent on the interest rate
level, which in practice means that the lower the applied
discount rate is, the higher the longevity SCR would be.
Most of the longevity risk arises from the with profit group
pension portfolio. With profit group pension policies have
mostly been closed for new members for years and due to
this the average age of members is relatively high, almost
70 years. In the unit-linked group pension and individual
pension portfolio the longevity risk is less significant
because most of these policies are fixed term annuities
including death cover compensating the longevity risk.
The annual longevity risk result and longevity trend is
analyzed regularly. For the segregated group pension
portfolio, the assumed life expectancy related to the
technical provisions was revised in 2014 and for the other
group pension portfolios in 2002 and 2007. In total, these
changes increased the 2020 technical provision by EUR 78
million (86) including a EUR 65 million longevity reserve
for the segregated group pension portfolio. The cumulative
longevity risk result has been positive since these revisions.
The longevity risk result of group pension for the year 2020
was EUR 11.6 million (8.9) after a EUR 7.8 million release
from the longevity reserve.
The mortality risk result in life insurance is positive. A
possible pandemic is seen as the most significant risk that
could adversely affect the mortality risk result. However,
during the year 2020 COVID-19 did not have any significant
effect on mortality risk result. The reason for this is that
COVID-19 has the most significant incremental effect of
mortality for elder people and in general, persons who have
insured their life are younger.
The insurance risk result of other biometric risks has been
profitable overall, although the different risk results vary
considerably. In the longer term, disability and morbidity
risks are mitigated by the company’s right to raise
insurance premiums for existing policies in case there is an
unfavourable change in the claims development.
Claims Ratios After Reinsurance
Mandatum Life, 31 December 2020 and 31 December 2019
EURm Riskincome Claimsexpense Claimsratio Riskincome Claimsexpense Claimsratio
Life insurance
Mortality
Morbidityanddisability
Pension
Individualpension
Grouppension
Mortality (longevity)
Disability
Total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
163FINANCIAL STATEMENTS 2020
The Insurance Risk Committee is responsible for
maintaining the Underwriting Policy and monitoring the
functioning of the risk selection and claims processes.
The Committee also reports all deviations from the
Underwriting Policy to the RMC. The Insurance Risk Com-
mittee is chaired by the Chief Actuary who is responsible
for ensuring that the principles for pricing policies and for
the calculation of technical provisions are adequate and
in line with the underwriting and claims management
processes.
Reinsurance is used to limit the amount of individual
mortality and disability risks. The Board of Directors
annually approves the Reinsurance Policy and determines
the maximum amount of risk to be retained on the com-
pany’s own account. The highest retention of Mandatum
Life is EUR 1.5 million per insured.
The risk result is actively followed and thoroughly
analyzed on an annual basis. Mandatum Life measures
the efficiency of risk selection and the adequacy of
tariffs by collecting information about the actual claims
expenditure for each product line and each type of risk
and comparing it to the claims expenditure assumed in
insurance premiums of every risk cover.
Technical provisions are analyzed and the possible
supplemental needs are assessed regularly. Assumptions
related to technical provisions are reviewed annually. The
adequacy of the technical provisions is tested quarterly.
Tariffs for new policies are set and the Underwriting
Policy and assumptions used in calculating technical
provisions are updated based on adequacy tests and risk
result analysis.
Policyholder Behavior and Expense Risks
From an Asset and Liability Management point of view,
surrender risk is not material because in Mandatum Life
around 90 per cent of with profit technical provisions
consists of pension policies in which surrender is possible
only in exceptional cases. Surrender risk is therefore only
relevant in individual life and capital redemption policies
of which the related technical provisions amount to less
than 5 per cent (around EUR 160 million) of the total with
profit technical provisions. Furthermore, the supplements
to technical provisions are not paid out at surrender
which also reduces the surrender risk related to the with
profit policies. Due to the limited surrender risk, the
future cash flows of Mandatum Life’s insurance liabilities
are quite predictable.
The table Claims Ratios After Reinsurance, Mandatum
Life, 31 December 2020 and 31 December 2019 shows the
insurance risk result in Mandatum Life’s insurance poli-
cies. The ratio of the actual to expected claims costs was
73 per cent in 2020 (75). The sensitivity of the insurance
risk result can also be assessed based on the information
in the table. For instance, an increase of mortality by 100
per cent would increase the amount of benefit payments
from EUR 15 million to EUR 30 million.
The underwriting portfolio of Mandatum Life is
relatively well diversified and does not include any major
concentration of biometric risks. To further mitigate the
effects of possible risk concentrations, Mandatum Life has
catastrophe reinsurance in place.
In general, biometric risks are managed by careful risk
selection, by setting prices to reflect the risks and costs, by
setting upper limits for the protection granted and by use
of reinsurance. Mandatum Life’s Underwriting Policy sets
principles for risk selection and limits for sums insured.
The Reinsurance Policy governs the use of Reinsurance.
The Board approves the Underwriting policy, Reinsurance
Policy, pricing guidelines and the central principles for
the calculation of technical provisions.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
164FINANCIAL STATEMENTS 2020
Policy terms and tariffs cannot usually be changed
materially during the lifetime of the insurance, which
increases the expense risk. The behavior of financial
markets has also an influence on expense risk since
normally the company’s fee income is linked to policy
reserves in unit-linked policies. The main challenge is
to keep the expenses related to insurance administrative
processes and complex IT infrastructure at an effective
and competitive level.
20 255 3010 15 35
Expense Result
Mandatum Life Group, 2011–2020
EURm
34.5
33.2
26.1
26.8
19.6
15.3
6.8
9.8
24.4
26.6
Market Risks
This section covers market risk related to Mandatum
Life’s with profit business i.e. that part of the business
where Mandatum Life carries the investment risk. As
mentioned earlier, the behavior of financial markets has
also an influence on unit-linked business since normally
the company’s fee income is linked to policy reserves in
unit-linked policies. This risk is taken into account as part
of expense risk.
In Mandatum Life, the approach to market risk
management is based on an analysis of technical
provisions’ expected cash flows, interest rate level and
current solvency position, i.e. active Asset and Liability
Management. A common feature for all with profit
technical provisions is the guaranteed rate and bonuses.
The cash flows of Mandatum Life’s technical provisions
are relatively well predictable because in most of the
company’s with profit policies, surrenders and additional
investments are not possible.
Mandatum Life’s market risks arise mainly from equity
investments and interest rate risk related to fixed income
assets and insurance liabilities with a guaranteed interest
rate. The most significant interest rate risk in the life
insurance business is that fixed income investments will
not, over a long period of time, generate a return at least
equal to the guaranteed interest rate of technical provi-
sions. The probability of this risk increases when market
interest rates fall and stay at a low level. The duration
gap between the balance sheet’s technical provisions and
fixed income investments is constantly monitored and
managed. Control levels based on an internal risk capacity
model are used to manage and ensure adequate capital in
different market situations.
Mandatum Life has prepared for low interest rates on
the liability side by for example reducing the minimum
guaranteed interest rate in new contracts and by
supplementing the technical provisions with reserve for
decreased discount rate. In addition, existing contracts
have been changed to accommodate improved manage-
ment of reinvestment risk.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
165FINANCIAL STATEMENTS 2020
Fixed income investments and listed equity instruments
form a major part of the investment portfolio, but the role
of alternative investments – real estate, private equity,
biometric and other alternative investments – is also
material being 12.4 per cent of total investments.
Investment allocations and average maturities of fixed
income investments as at year end 2020 and 2019 are
presented in the table Investment Allocation, Mandatum
Life, 31 December 2020 and 31 December 2019.
Investment Allocation
Mandatum Life, 31 December 2020 and 31 December 2019
Dec Dec
Asset class
Marketvalue
EURm Weight
Averagematurity
years
Marketvalue
EURm Weight
Averagematurity
years
Fixed income total
Moneymarketsecuritiesandcash
Governmentbonds
Creditbondsfundsandloans
Covered bonds
Investment grade bonds and loans
High-yield bonds and loans
Subordinated / Tier 2
Subordinated / Tier 1
Hedging swaps - -
Listed equity total - -
Finland - -
Scandinavia - -
Global - -
Alternative investments total - -
Realestate - -
Privateequity* - -
Biometric - -
Commodities - -
Otheralternative - -
Trading derivatives - -
Asset classes total - -
FX Exposure, gross position - - - -
*
Private equity also includes direct holdings in non-listed equities.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
166FINANCIAL STATEMENTS 2020
Market Risks of Fixed Income and
Equity Exposures
Fixed income and equity exposures are presented by
sector, asset class and rating together with counterparty
Exposures by Sector, Asset Class and Rating
Mandatum Life, 31 December 2020
EURm AAA
AA
-
AA-
A
-
A-
BBB
-
BBB-
BB
-
C D Non-rated
Fixed
income
total
Listed
equities Other
Counter-
partyrisk Total
Change
from
Dec
Basic industry
Capital goods -
Consumer products
Energy
Financial institutions -
Governments
Government guaranteed
Health care
Insurance -
Media
Packaging -
Public sector, other -
Real estate
Services
Technology and electronics -
Telecommunications
Transportation
Utilities
Others
Asset-backed securities
Covered bonds -
Funds -
Clearing house -
Total -
Change from 31 Dec 2019 - - - - - - -
risk exposures relating to derivative transactions in
the table Exposures by Sector, Asset Class and Rating,
Mandatum Life, 31 December 2020. Counterparty
default risks are described in more detail in the section
Counterparty Default Risks. Due to differences in the
reporting treatment of derivatives, the figures in the table
may not be fully comparable with other tables in this
annual report.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
167FINANCIAL STATEMENTS 2020
The role of non-investment grade bonds is material in
Mandatum Life’s portfolio. A part of the money market
securities issued by Nordic banks and cash in Nordic
banks form a liquidity buffer within the fixed income
investments. At the moment, the total amount of these
investments is higher than what is needed for liquidity
purposes.
Nordic equity exposure includes almost only direct
investments to Finnish equities and they account for
almost one third of equity exposure. Two thirds of equity
investments are allocated globally consisting of both fund
investments and direct investments. The breakdown of
Mandatum Life’s listed equity investments by geographi-
cal regions is presented in the following graph.
Alternative Investments
The role of alternative investments has been significant
in Mandatum Life over the years. The current allocation
weight is 12 per cent.
The amount of private equity and alternative investments
has remained at the same level as in 2019. The real estate
portfolio is managed by Sampo Group’s own real estate
management unit. The real estate portfolio includes both
direct investments in properties and indirect investments
in real estate funds as well as in shares of real estate
companies. The activity in the portfolio has been quite low.
Market Risks of Balance Sheet
The Board of Directors of Mandatum Life approves
annually the Investment Policy, which covers both the
segregated assets and the company’s other assets that
carry investment risk. This policy sets principles and
limits for investment portfolio activities and they are
based on the features of insurance liabilities, risk taking
capacity and shareholders’ return requirements.
The Investment Policy for segregated assets defines the
risk bearing capacity and the corresponding control
levels for the respective portfolio. Since the future bonus
reserves of the segregated group pension portfolio is the
first buffer against possible investment losses, the risk
bearing capacity is also based on the amount of the future
bonus reserve. Different control levels are based on the
fixed stress scenarios of assets.
Breakdown of Listed Equity Investments by Geographical Regions
Mandatum Life
●
Denmark 0
●
Norway 0
●
Sweden 0
●
Finland 517
● Western Europe 358
● Eastern Europe 21
● North America 192
● Latin America 0
● Far East 246
● Denmark 0
● Norway 0
● Sweden 1
● Finland 387
●
Western Europe 430
● Eastern Europe 24
● North America 251
● Latin America 0
● Far East 215
31 December 2020
Total EUR 1,335 million
31 December 2019
Total EUR 1,308 million
19%
2%
16%
33%
30%
14%
2%
18%
27%
39%
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
168FINANCIAL STATEMENTS 2020
The Investment Policy for other investment assets defines
the company level risk bearing capacity, the control levels
for the maximum acceptable risk and respective measures
to manage the risk. The control levels are set above the
Solvency II SCR and are based on predetermined market
stress tests. The general objective of these control levels
and respective guidelines is to maintain the required
solvency. When the above-mentioned control levels are
crossed, the Asset and Liability Committee reports to the
Board which then takes responsibility for the decisions
related to the capitalization and the market risks in the
balance sheet.
The cash flows of Mandatum Life’s with profit technical
provisions are relatively predictable, because in most of the
company’s with profit products, surrenders and premiums
are restricted. In addition, the company’s claims costs do
not contain a significant inflation risk element.
The long-term target for investments is to provide
sufficient return to cover the guaranteed interest rate plus
bonuses based on the principle of fairness as well as the
shareholder’s return requirement with an acceptable level
of risk. In the long run, the most significant risk is that
fixed income investments will not generate an adequate
return compared to the applied discount rate.
In addition to investment and capitalization decisions,
Mandatum Life has implemented active measures on the
liability side to manage the balance sheet level interest
rate risk. The company has reduced the minimum
guaranteed interest rate in new contracts, supplemented
the technical provisions with discount rate reserves and
adjusted policy terms and conditions as well as policy
administration processes to enable more efficient interest
rate risk management.
Interest Rate Risk
Mandatum Life is negatively affected when rates are
decreasing or staying at low levels, because the duration of
liabilities is longer than the duration of assets. A growing
part of Mandatum Life’s business, i.e. unit-linked and life
and health business, is not interest rate sensitive, which
mitigates the whole company’s interest rate risk.
The average duration of fixed income investments was 2.8
years. The respective duration of the insurance liabilities
was around 11 years. Interest rate risk is managed at the
balance sheet level by changing the duration of assets and
by using interest rate derivatives.
Currency Risk
Currency risk can be divided into transaction and trans-
lation risk. Mandatum Life is exposed to transaction risk,
which refers to currency risk arising from contractual cash
flows in foreign currencies.
In Mandatum Life, transaction risk arises mainly from
investments in other currencies than the euro as the
company’s technical provisions are denominated in the
euro. Open FX exposures are managed within given limits.
The transaction risk positions of Mandatum Life against
the euro are shown in the table Transaction Risk Position,
Mandatum Life, 31 December 2020. The table shows the
net transaction risk exposures and the changes in the
value of positions given a 10 per cent decrease in the value
of the base currency.
Transaction Risk Position
Mandatum Life, 31 December 2020
BasecurrencyEURm EUR USD JPY GBP SEK NOK CHF DKK Other Totalnet
Technical provisions - -
Investments
Derivatives - - - - - - - - -
Transaction risk, net position - - -
Sensitivity: EUR -10% -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
169FINANCIAL STATEMENTS 2020
Liquidity Risks
Liquidity risk is relatively immaterial for Mandatum Life
because liability cash flows in most lines of business are
fairly stable and predictable and an adequate share of the
investment assets is in cash or short-term money market
instruments.
In life insurance companies in general, a large change
in surrender rates could influence the liquidity position.
Cash Flows According to Contractual Maturity
Mandatum Life, 31 December 2020
EURm
Carryingamount
total
Carrying
amountwithout
contractual
maturity
Carryingamount
withcontractual
maturity
Cashflows
– –
Financial assets
ofwhichinterestrateswaps
Financial liabilities - - - - - - -
ofwhichinterestrateswaps
Lease liabilities - - - - - -
Net technical provisions - - - - - - -
In the table, financial assets and liabilities are divided into contracts that have an exact contractual maturity profile, and other contracts. Only the carrying amount is shown for the other contracts.
In addition, the table shows expected cash flows for net technical provisions, which by their nature, are associated with a certain degree of uncertainty.
However, in Mandatum Life, only a relatively small
part of the insurance policies can be surrendered, and
it is therefore possible to forecast short-term cash flows
related to claims payments with a very high accuracy.
The maturities of technical provisions and financial
assets and liabilities are presented in the table Cash
Flows According to Contractual Maturity, Mandatum
Life, 31 December 2020. The average maturity of fixed
income investments was 3.1 years in Mandatum Life. The
table shows the financing requirements resulting from
expected cash inflows and outflows arising from financial
assets and liabilities as well as technical provisions.
Mandatum Life has a relatively low amount of financial
liabilities and thus the refinancing risk is relatively small.
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
170FINANCIAL STATEMENTS 2020
Counterparty Default Risks
In Mandatum Life, the three major sources of counter-
party risk are financial derivatives, reinsurance, and
other receivables. Counterparty default risk arising
from reinsurance or receivables from policyholders and
other receivables related to commercial transactions is,
however, very limited.
Counterparty Risk Related to
Financial Derivatives
In Mandatum Life, the default risk of derivative
counterparties is a by-product of managing market risks.
Mandatum Life uses interest rate derivatives and FX
forwards and options to manage market risks.
The counterparty risk of bilaterally settled derivatives is
mitigated by careful selection of counterparties, by diver-
sification of counterparties to prevent risk concentrations
and by using collateral arrangements, e.g. ISDA Master
Agreements backed by Credit Support Annexes. Manda-
tum Life settles interest rate swaps in central counterparty
clearing houses, which, while further mitigating bilateral
counterparty risk, also exposes to the systemic risk related
to central counterparty clearing houses.
Risk Considerations at Sampo
Group Level and Sampo plc
Sampo Group is first and foremost exposed to general
performance of the Nordic economies. However, the
Nordic economies typically are at any given time in
somewhat different stages of their economic cycles,
because of reasons such as different economic structures
and separate currencies. Also, geographically the Nordics
as a large area is more a source of underwriting diversifi-
cation than a concentration. Hence, inherently the Nordic
area is a good basis for diversified business. Geographic
diversification was extended into the United Kingdom in
late 2020, when Sampo acquired a 70% majority stake in
Hastings.
To further maintain diversification of businesses Sampo
Group proactively prevents concentrations to the extent
possible by segregating the duties of separate business
areas. As a result, separate companies have very few
overlapping areas in their underwriting and investments
activities. Despite proactive strategic decisions on
segregation of duties, concentrations in underwriting and
investments may appear and hence liabilities and assets
are monitored at the Group level to identify potential
concentrations at a single company or risk factor level.
It is regarded that the current business model where all
companies have their own processes and agreements with
counterparties is preventing accumulation of counter-
party default risks and operational risks. Hence, these
risks are mainly managed at company level.
The amount of intragroup exposures between the Group
companies is small and the parent company is the only
source of internal liquidity and the main source of capital
within the Group. This effectively prevents the contagion
risk, and hence potential problems of one company will
not affect directly the other Group companies.
Underwriting and market risk concentrations and their
management are described in the next sections as well
as the parent company’s role as a risk manager of group-
wide risks and as a source of liquidity.
Underwriting Risks at Sampo Group
With respect to the underwriting businesses carried out
in the subsidiary companies, it has been established that
If, Topdanmark and Mandatum Life all operate within
the Nordic countries, but mostly in different geographical
areas and in different lines of business and hence their
underwriting risks are different by nature. There are, how-
ever, some common risk factors such as the life expectancy
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
171FINANCIAL STATEMENTS 2020
in Finland. Also, in Denmark If and Topdanmark have
some overlapping areas. However, there are no material
underwriting risk concentrations in the normal course of
business. Hastings operates solely in the United Kingdom,
and hence its underwriting risks are geographically
distinct from the Nordics. Consequently, business lines as
such are contributing diversification benefits rather than a
concentration of risks.
Market Risks at Sampo Group Level
For all subsidiaries, their insurance liabilities and the
company specific risk appetite are the starting points
for their investment activities. The insurance liabilities
including loss absorbing buffers as well as the risk appetite
of Mandatum Life, If, Hastings and Topdanmark differ,
and as a result the structures and risks of the investment
portfolios and balance sheets of the four companies differ
respectively. Sampo Group’s investment assets presented
in the tables and graphs in this section do not include
investments in the shares of subsidiaries or the associated
companies (e.g. Nordea).
The total amount of Sampo Group’s investment assets as
at 31 December 2020 was EUR 27,531 million (26,820) as
presented in the following graph. Mandatum Life’s and
Topdanmark’s investment assets presented here do not
include assets which cover unit-linked contracts.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
172FINANCIAL STATEMENTS 2020
● Fixed income 88% 63% 97% 63% 82% 88% 65% 60% 81%
● Listed equity 12% 24% 0% 23% 6% 12% 23% 29% 6%
● Private equity
*
0% 5% 0% 14% 4% 0% 4% 11% 3%
● Real estate 0% 3% 0% 0% 7% 0% 3% 0% 8%
● Other alternative investments 0% 5% 3% 0% 2% 0% 5% 0% 2%
Sampo plc's figures do not include debt instruments issued by the insurance subsidiaries.
*
Private Equity also includes direct holdings in non-listed equities.
If Mandatum Life Sampo plcHastings Topdanmark
Development of Investments
If, Mandatum Life, Hastings, Sampo plc and Topdanmark
EURm
7,653
2,378
5,680
11,109
If Mandatum Life Sampo plc Topdanmark
31 December 2020
Total EUR 27,531 million
31 December 2019
Total EUR 26,820 million
7,687
2,084
976
5,533
11,251
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
173FINANCIAL STATEMENTS 2020
Market Risk Sensitivities
Sampo Group, 31 December 2020
EURm Scenario If Topdanmark Hastings MandatumLife Sampoplc SampoGroup
Equities
- - - - - - -
Interest
rates
-bps
bps - - - - - -
Other
- - - - - -
Local
currency
- - -
- - - -
Topdanmark’s interest rate scenario figures show the net of financial assets and technical provisions. The company figures do not sum up to
the Sampo Group figures due to eliminations and the exclusion of Topdanmark's technical provisions from the Sampo Group figures.
The figures in this table do not completely reconcile with the table Market Risk Sensitivities, Topdanmark, 31 December 2020 and
31 December 2019 due to dierences in calculation methods.
Investment activities and market risk taking are arranged
pro-actively in such a way that there is no significant
overlap between the whollyowned subsidiaries’ single-
name risks except with regards to Nordic banks where
companies have their extra funds in short-term money
market assets and cash. From the asset side’s diversifica-
tion perspective Topdanmark is a positive factor because
the role of Danish assets is dominant in portfolios and
especially the role of Danish covered bonds is central. In
Sampo Group’s other insurance companies’ portfolios
the weight of Danish investments has been immaterial.
In the next paragraphs concentrations by homogenous
risk groups and by single names are presented first and
after that balance sheet level risks are discussed shortly.
Holdings by Sector, Geographical Area and
Asset Class
Regarding fixed income and equity exposures financial
institutions and covered bonds have a material weight
in the group-wide portfolios whereas the role of public
sector investments is quite limited. Most of these assets
are issued by Nordic corporates and institutions, although
Hastings brought along some diversification in this
respect. Most corporate issuers, although being based
in the Nordic countries, are operating at global markets
and hence their performance is not that dependent on
the Nordic markets. Exposures by sector, asset class and
rating are presented in the following table.
Even though Hastings’ investment portfolio is smaller
than other Group companies’ portfolios, it has had a
positive impact on the diversification of Sampo Group’s
investments. The majority of Hastings’ assets are British
investments denominated in pound sterling, which is
a market that other Sampo Group companies have very
limited exposure to. Moreover, Hastings’ investment
portfolio consists mainly of investment grade fixed
income investments.
Sampo Group’s market risk sensitivities are presented in
the following table.
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
174FINANCIAL STATEMENTS 2020
Exposures by Sector, Asset Class and Rating
Sampo Group, 31 December 2020
EURm AAA
AA
-
AA-
A
-
A-
BBB
-
BBB-
BB
-
C D Non-rated
Fixed
income
total
Listed
equities Other
Counter-
partyrisk Total
Change
from
Dec
Basic industry
Capital goods
Consumer products
Energy -
Financial institutions -
Governments
Government guaranteed
Health care -
Insurance
Media
Packaging -
Public sector, other
Real estate
Services -
Technology and electronics -
Telecommunications
Transportation -
Utilities
Others -
Asset-backed securities
Covered bonds -
Funds
Clearing house -
Total excluding Topdanmark -
Change from 31 Dec 2019 - - - - - - -
Topdanmark Total
Change
from
Dec
Group excluding life insurance -
Life insurance
Total Topdanmark
Change from 31 Dec 2019 - - - - - -
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
175FINANCIAL STATEMENTS 2020
Most of the financial institutions and covered bonds are
in the Nordic countries, even though Hastings brought
along some diversification into the investments from this
perspective. This can be seen in the table Fixed Income
Investments in the Financial Sector, Sampo Group
Excluding Topdanmark, 31 December 2020.
Fixed Income Investments in the Financial Sector
Sampo Group Excluding Topdanmark, 31 December 2020
EURm Coveredbonds
Cashand
moneymarket
securities
Long-term
seniordebt
Long-term
subordinated
debt Total
Sweden
Finland
Norway
Denmark
France
United States
United Kingdom
Netherlands
Canada
Ireland
Iceland
Germany
Switzerland
Australia
New Zealand
Spain
Gibraltar
Estonia
Bermuda
Austria
Luxembourg
Belgium
Guernsey
Italy
Cayman Islands
Jersey
Total
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
176FINANCIAL STATEMENTS 2020
The public-sector exposure includes government bonds,
government guaranteed bonds and other public-sector
investments as shown in the table Fixed Income
Investments in the Public Sector, Sampo Group Excluding
Topdanmark, 31 December 2020. The public sector has
had a relatively minor role in Sampo Group’s portfolios
and these exposures have been mainly in the Nordic
countries. Investments in the public sector do not have
a material role in Topdanmark’s portfolio which consists
largely of AAA rated mortgage bonds.
Fixed Income Investments in the Public Sector
Sampo Group Excluding Topdanmark, 31 December 2020
EURm Governments
Government
guaranteed
Publicsector
other Total
Sweden
Norway
Finland
Germany
Supranationals
France
United Kingdom
Total
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
177FINANCIAL STATEMENTS 2020
The listed equity investments of Sampo Group excluding
Topdanmark totaled EUR 3,115 million at the end of year
2020 (3,281). At the end of year 2020, the listed equity
exposure of If was EUR 1,301 million (1,281). The propor-
tion of listed equities in If’s investment portfolio was 12
per cent. In Mandatum Life, the listed equity exposure
was EUR 1,335 million at the end of year 2020 (1,308) and
the proportion of listed equities was 24 per cent of the
investment portfolio. In Topdanmark Group, the listed
equity exposure was EUR 445 million at the end of year
2020 (483). Within Topdanmark Group, the allocation to
listed equity is higher in the life company. At the end of
year 2020 Hastings didn’t have listed equity investments.
The geographical core of Sampo Group’s equity invest-
ments is in the Nordic companies. The proportion of
Nordic companies’ equities corresponds to 57 per cent
of the total equity portfolio. This is in line with Sampo
Group’s investment strategy of focusing on Nordic
companies. However, these Nordic companies are mainly
competing in global markets, only a few are operationally
purely domestic companies. Hence, the ultimate risk
is not highly dependent on the Nordic economies. A
breakdown of the listed equity exposures of Sampo Group
is shown in the graph Breakdown of Listed Equity Invest-
ments by Geographical Regions, Sampo Group Excluding
Topdanmark, 31 December 2020 and 31 December 2019.
Breakdown of Listed Equity Investments by Geographical Regions
Sampo Group Excluding Topdanmark
●
Denmark 284
●
Norway 180
●
Sweden 690
●
Finland 629
●
Western Europe 594
● Eastern Europe 21
● North America 275
● Latin America 40
● Far East 402
● Denmark 284
● Norway 231
● Sweden 932
● Finland 484
● Western Europe 582
● Eastern Europe 24
● North America 334
● Latin America 48
● Far East 362
31 December 2020
Total EUR 3,115 million
31 December 2019
Total EUR 3,281 million
28%
1%
1%
9%
11%
10%
7%
18%
15%
22%
1%
1%
9%
13%
9%
6%
19%
20%
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
178FINANCIAL STATEMENTS 2020
Largest Exposures by Issuer and Asset Class
Sampo Group Excluding Topdanmark, 31 December 2020
IssuerEURm Total
oftotal
investment
assets
Cash&short-
termfixed
income
Long-
termfixed
income
total
Long-term
fixed
income
Government
guaranteed
Long-
termfixed
income
Covered
bonds
Long-
termfixed
income
Senior
bonds
Long-
termfixed
income
Tierand
Tier Equities
Uncolla-
teralized
partof
derivatives
Nordea Bank
Danske Bank
BNP Paribas
Sweden
Skandinaviska Enskilda Banken
DnB
Swedbank
Svenska Handelsbanken
Norway
Saxo Bank
Total top 10 exposures
Other
Total investment assets
Largest Holdings by Single Name
The largest exposures by individual issuers and coun-
terparties are presented in the table Largest Exposures
by Issuer and Asset Class, Sampo Group Exluding
Topdanmark, 31 December 2020. The largest single name
investments in Topdanmark’s portfolios are in AAA rated
Danish covered bonds.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
179FINANCIAL STATEMENTS 2020
The largest high-yield and non-rated fixed income
investment single-name exposures are presented in the
table Ten Largest Direct High Yield and Non-rated Fixed
Income Investments, Sampo Group Excluding Topdan-
mark, 31 December 2020. Furthermore, the largest direct
listed equity exposures are presented in the table Ten
Largest Direct Listed Equity Investments, Sampo Group
Excluding Topdanmark, 31 December 2020.
The exposures in fixed income instruments issued by
non-investment grade issuers are significant, because a
relatively small number of Nordic companies are rated.
Further, many of the Nordic rated companies have a high
yield rating.
Ten Largest Direct High Yield and Non-rated Fixed Income Investments
and Direct Listed Equity Investments
Sampo Group Excluding Topdanmark, 31 December 2020
Tenlargestdirecthighyieldandnon-rated
fixedincomeinvestments Rating TotalEURm
oftotaldirect
fixedincome
investments
High Street Shopping NR
TDC B
Evergood 4 ApS B
Sponda NR
Trevian Finland Properties I NR
Saab NR
Ellevio Holding NR
Pohjolan Voima NR
Teollisuuden Voima BB
Grönlandet Södra NR
Total top 10 exposures
Other direct fixed income investments
Total direct fixed income investments
Tenlargestdirectlistedequityinvestments TotalEURm
oftotaldirect
equityinvestments
Saxo Bank *
Volvo
Nobia
Enento Group
ABB
Husqvarna
Norwegian Finans Holding
Vaisala
Telia Company
Veidekke
Total top 10 exposures
Other direct equity investments
Total direct equity investments
* Although Saxo Bank is not a listed company, it is a major equity investment in Sampo plc’s portfolio and is therefore included in the table.
BOARD OF
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
180FINANCIAL STATEMENTS 2020
Balance Sheet Concentrations
In general Sampo Group is structurally dependent on
the performance of the Nordic economies as already
described earlier. Sampo Group is also economically
exposed to a fall in interest rates. The lower the rates
and the flatter the yield curve, the more challenging the
environment is for the current business models especially
when the duration of insurance liabilities is longer than
fixed income asset duration in If and Mandatum Life. In
Topdanmark and Hastings interest rate risk of the balance
sheet is being actively hedged and hence Topdanmark or
Hastings are not increasing interest rate risk materially at
the Group level.
Sampo Group would benefit materially in case interest
rates would rise, because economic value of insurance
liabilities would decrease more than value of assets
backing them. At the same time the net interest income of
Nordea should increase as well.
The Role of Sampo plc
Sampo plc is a long-term investor in Nordic financials and
a source of liquidity within the Group. Hence, the healthy
funding structure and the capacity to generate funds if
needed are on continuous focus.
As at 31 December 2020 Sampo had long-term strategic
holdings of EUR 9,106 million and they were funded
mainly by capital of EUR 7,472 million and senior debt
of EUR 2,448 million. Average remaining maturity of
senior debt was 5.2 years and EUR 1,100 million of it had
a maturity longer than 5 years. Senior debt is used to fund
other financial assets as well. The average maturity of
subordinated loans and fixed income instruments of EUR
360 million was 0.8 years. Funding structure of strategic
holdings and other holdings can be considered strong.
The capacity to generate funds is dependent on leverage
and liquidity buffers which can be inferred from the table
Balance Sheet Structure, Sampo plc, 31 December 2020
and 31 December 2019.
Balance Sheet Structure
Sampo plc, 31 December 2020 and 31 December 2019
EURm Dec Dec*
Assets total
Liquidity
Investment assets
Realestate
Fixedincome
Equity&privateequity
Subordinated loans
Equity holdings
Subsidiaries
Associated
Other assets
EURm Dec Dec*
Liabilities total
CPs issued
Long-term senior debt
Privateplacements
Bondsissued
Subordinated debt
Capital
Undistributablecapital
Distributablecapital
Other liabilities
* Hastings is not included in the 2019 figures.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
181FINANCIAL STATEMENTS 2020
The leverage of Sampo plc was moderate at year end
according to for example these measures:
• The financial leverage measured as the portion of debt
within all liabilities was 34 (34) per cent.
• Sampo’s net debt of EUR 2,405 (2,183) million is
moderate when compared to Sampo’s equity holdings
and financial assets.
In regard to liquidity, the liquid funds of Sampo plc were
EUR 1,170 (1,320) million. Liquidity is mainly affected by
received and paid dividends as well as changes in issued
debt instruments and changes in investments. Sampo’s
dividend payment takes place in the second quarter and
it will significantly lower the liquidity position of Sampo.
A significant portion of subordinated loans issued by the
Group companies (324) and a part of other investment
assets (824) can be sold in case liquidity is needed. Short-
term liquidity can be considered to be adequate.
All in all, Sampo plc is in a good position to refinance
its current debt and even issue more debt. This capacity
together with the tradable financial assets, means that
Sampo plc is able to generate liquid funds.
Currently Sampo Group has a capital buffer in excess of
the Solvency Capital Requirement. The subordinated
loans presented in the table Balance Sheet Structure,
Sampo plc, 31 December 2020 and 31 December 2019 are
all issued by If, Mandatum Life, Nordea and Topdanmark.
Apart from Nordea, they are eliminated from Group’s own
funds. In case these assets would be sold, in addition to
liquidity in Sampo plc, also own funds and Sampo Group
solvency ratio would increase.
Sampo plc is able to balance risks within Sampo Group.
When Sampo plc is managing its funding, capital
structure and liquidity, it takes into account that some
of its operative companies have other base currencies
(the Swedish krona, the Danish krone, pound sterling)
than the euro, and that all its operative business areas
are exposed to low interest rates. These risks may affect
Sampo’s decisions on the issuance of debt instruments
and the composition of the liquidity portfolio.
Sampo Group Capitalization
Capitalization at the Group Level
The sub-group level balance of profits, risks and capital is
the primary focus of Sampo Group. In addition, capitali-
zation is managed via the Group level buffer. Changes in
the Solvency Capital Requirements of the subsidiaries and
Nordea’s market value effect the level of capitalization
in Sampo Group, and investment in subordinated loans
issued by the Group companies are eliminated from own
funds, decreasing solvency.
However, at Sampo Group level there are more factors
affecting capitalization than at the sub-group level.
These factors are illustrated in the graph Sampo Group’s
Capitalization Framework.
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
182FINANCIAL STATEMENTS 2020
Capital requirements
Group’s own funds
NDX and other related
undertakings
Group level
buer
Factors aecting the size of group
level buer:
• Profit diversification
• Sampo plc’s liquidity capacity
• Issuance capacity
• Shareholders’ dividend
expectations
• Business risks & arrangements
• Balance sheet volatility
Other items
Consolidated
Group equity / Excess of
assets over liabilities
Sampo Group’s Capitalization Framework
Sampo plc
Mandatum Life
If
Topdanmark
Hastings
The Group’s capital requirement is dependent mainly
on the capital requirements of the business areas.
The market risk stemming from Nordea holding is a
significant part of Sampo plc’s capital requirement, but
apart from that the parent company’s contribution to the
Group capital need is minor most of the time, because
Sampo plc does not have any business activities of its own
other than the management of its capital structure and
liquidity portfolio. In addition, investments in the Nordic
financial service companies increase Sampo plc’s capital
requirement.
Diversification benefit exists at two levels, within the
companies and between the companies. The former is
included in the companies’ SCRs.
Conceptually, the Group’s own funds is the difference
between the market value of assets and liabilities plus
the subordinated liabilities. This difference has accrued
during the lifetime of the Group and it includes the
following main components:
• Accrued profits that have not been paid as dividends
over the years.
• Market value adjustment to the book values of assets
and liabilities.
• Issued capital and subordinated liabilities meeting
Solvency II requirements.
At the Group level, the capital requirement and own funds
are both exposed to foreign currency translation risk. The
actual capital and the capital needs of If, Topdanmark
and Hastings are converted from their reporting
currencies to the euro. When the reporting currencies
of If, Topdanmark and Hastings depreciate, the actual
amount of the Group’s capital in the euros decreases and
the capital requirements of If, Topdanmark and Hastings
will be lower in the euro terms. Translation currency risk
is monitored internally and its effect on Sampo Group’s
solvency on a going concern basis is analyzed regularly.
However, internally no capital need is set for translation
risk, because it is realized only when a sub-group is
divested.
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
183FINANCIAL STATEMENTS 2020
The Group level buffer is the difference between the
amount of the Group’s own funds and the Group capital
requirement. In addition to the sub-group level factors
– expected profits and their volatility, business growth
prospects and ability to issue Solvency II compliant
capital instruments – there are Group level factors that are
also relevant when considering the size of the Group level
buffer. The most material Group level factors affecting the
size of the buffer are correlation of sub-groups’ reported
profits, volatility of the balance sheet due to fluctuations
in the market value of the equity portfolio and the insur-
ance liabilities, parent company’s capacity to generate
liquidity, probability of business risks and arrangements
and shareholders’ dividend expectations.
BOARD OF
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SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
184FINANCIAL STATEMENTS 2020
SAMPO PLC’S FINANCIAL STATEMENTS
186
Sampo plc’s
Income Statement
188
Sampo plc’s
Statement
of Cash Flows
187
Sampo plc’s
Balance Sheet
BOARD OF
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
SAMPO PLC’S FINANCIAL STATEMENTS
185FINANCIAL STATEMENTS 2020
EURm Note
Other operating income
Sta expenses
Salaries and remunerations - -
Social security costs
Pension costs - -
Other -
Other operating expenses
- -
Operating profit - -
Financial income and expense
IncomefromsharesinGroupcompanies
Incomefromothershares
Otherinterestandfinancialincome
Group companies
Other
Otherinvestmentincomeandexpense
Otherinterestincome
Interestandotherfinancialexpense - -
Exchange result
Proft before appropriations and taxes
Group contribution -
Income taxes -
Profit for the financial year
Sampo plc’s Financial Statements
Sampo plc's Income Statement
BOARD OF
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GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
SAMPO PLC’S FINANCIAL STATEMENTS
186FINANCIAL STATEMENTS 2020
EURm Note
ASSETS
Intangible assets
Property, plant and equipment
Buildings
Other
Investments
SharesinGroupcompanies
ReceivablesfromGroupcompanies
Participatinginterests
Receivablesfromparticipatinginterests
Othersharesandparticipations
Otherreceivables
Short-term receivables
Otherreceivables
Prepaymentsandaccruedincome
Cash and cash equivalents
TOTAL ASSETS
EURm Note
LIABILITIES
Equity
Sharecapital
Fairvaluereserve
Investedunrestrictedequity
Otherreserves
Retainedearnings
Profitforthefinancialyear
Liabilities
Long-term liabilities
Bonds
Subordinateddebtsecurities
Short-term liabilities
Deferredtaxliability
Otherliabilities
Accrualsanddeferredincome
TOTAL LIABILITIES
Sampo plc's Balance Sheet
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Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
SAMPO PLC’S FINANCIAL STATEMENTS
187FINANCIAL STATEMENTS 2020
EURm
Operating activities
Profitbeforetaxes
Adjustments
Realised gains and losses on investments -
Other adjustments - -
Adjustmentstotal -
Change(-)inassetsofoperatingactivities
Investments *)
Other assets -
Total
Change(-)inliabilitiesofoperatingactivities
Financial liabilities -
Other liabilities -
Paid interests -
Paid taxes -
Total - -
Netcashfromoperatingactivities
EURm
Investing activities
InvestmentsinGroupandassociatedundertakings -
Financing activities
Dividends paid - -
Issue of debt securities
Repayments of debt securities in issue - -
Netcashusedinfinancingactivities - -
Total cash flows - -
Cash and cash equivalents at 1 January
Cash and cash equivalents at 31 December
Net change in cash and cash equivalents - -
*
)
Investments include both investment property and financial assets.
Additional information to the statement of cash flows:
EURm
Interest income received
Interest expense paid - -
Dividend income received
Sampo plc's Statement of Cash Flows
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
SAMPO PLC’S FINANCIAL STATEMENTS
188FINANCIAL STATEMENTS 2020
SAMPO PLC’S NOTES TO THE ACCOUNTS
Summary of Significant
Accounting Policies ..........................................................190
Notes to the Income Statement 1–4
Otheroperatingincome ......................................................
Otheroperatingexpenses ..................................................
Auditorsfees ..........................................................................
Financialincomeandexpense ..........................................
Notes to the Assets 5–9
ReceivablesfromGroupcompanies ...............................
Othersharesandparticipations .......................................
Otherinvestmentreceivables ...........................................
Otherreceivables ...................................................................
Prepaymentsandaccruedincome .................................
Notes to the Liabilities 10–13
Movementsintheparentcompanysequity ...............
Sharecapital ............................................................................
Otherliabilities ........................................................................
Accrualsanddeferredincome ..........................................
Note to the Income Taxes 14
Deferredtaxassetsandliabilities ....................................
Notes to the Off-Balance Sheet Liabilities
and Commitments 15–16
Pensionliabilities ....................................................................
Futurerentalcommitments ...............................................
Notes to the Staff and Management 17–19
Stanumbers ..........................................................................
Boardfeesandmanagementremuneration................
PensioncontributionstotheCEOdeputyCEO
andthemembersoftheBoard ........................................
Note to the Shares Held 20
SharesheldasofDec ........................................
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
189FINANCIAL STATEMENTS 2020
Summary of Significant Accounting Policies
The presentation of Sampo Plc's financial statements together with the notes has been prepared
in accordance with the Finnish Accounting Act and Ordinance. The accounting policies applied
to the separate financial statements of Sampo plc do not materially dier from those of the
Group, prepared in accordance with the International Financial Reporting Standards (IFRSs).
The financial assets are measured at fair value derived from the markets.
Notes to the Income Statement 1–4
1 Other operating income
EURm
Income from investment operations
Other
Total
2 Other operating expenses
EURm
Rental expenses - -
IT expenses - -
External services - -
Other sta costs - -
Loss from extra dividend - -
Other - -
Total - -
Item Other includes e.g. administration fees.
3 Auditors' fees
EURm
Authorised Public Accountants Ernst & Young Oy
Auditing fees - -
Tax consultancy
Other fees - -
Total - -
4 Financial income and expense
EURm
Dividend income in total
Interest income in total
Interest expense in total - -
Gains on disposal in total
Exchange result
Other -
Total
Sampo plc’s Notes to the Accounts
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
190FINANCIAL STATEMENTS 2020
Notes to the Assets 5–9
5 Receivables from Group companies
EURm
Cost at beginning of year
Additions
Disposals -
Carrying amount at end of year
Receivables are subordinated loans issued by subsidiaries. More information in the consolidated
note 28 Financial liabilities.
6 Other shares and participations
Fairvaluechanges Fairvaluechanges
EURm Fairvalue
Recognised
inpl
Recognised
infairvalue
reserve Fairvalue
Recognised
inpl
Recognised
infairvalue
reserve
Avalaible-for-sale
equity securities - - -
7 Other investment receivables
Fairvaluechanges Fairvaluechanges
EURm Fairvalue
Recognised
inpl
Recognised
infairvalue
reserve Fairvalue
Recognised
inpl
Recognised
infairvalue
reserve
Bonds - -
Market money - - -
Total -
8 Other receivables
EURm
Trading receivables
Derivatives
Other
Total
9 Prepayments and accrued income
EURm
Accrued interest
Derivatives
Other
Total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
191FINANCIAL STATEMENTS 2020
Notes to the Liabilities 10–13
10 Movements in the parent company's equity
Restrictedequity Unrestrictedequity
EURm Sharecapital Fairvaluereserve
Invested
unrestrictedcapital Otherreserves Retainedearnings Total
Carrying amoun at 1 January 2019 -
Dividends - -
Financial assets available-for-sale
-recognisedinequity
-recognisedinpl
Profit for the year
Carrying amount at 31 December 2019
Restrictedequity Unrestrictedequity
EURm Sharecapital
Fairvalue
reserve
Invested
unrestrictedcapital Otherreserves Retainedearnings Total
Carrying amount at 1 January 2020
Dividends - -
Financial assets available-for-sale
-recognisedinequity - -
-recognisedinpl
Profit for the year
Carrying amount at 31 December 2020
Distributable assets
EURm
Parent company
Profit for the year
Retained earnings
Invested unrestricted capital
Other reserves
Total
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
192FINANCIAL STATEMENTS 2020
11 Share capital
Information on share capital is disclosed in Note 33 in the consolidated financial statements.
12 Other liabilities
EURm
Derivatives
Guarantees for derivate contracts
Other
Total
13 Accruals and deferred income
EURm
Deferred interest
Derivatives
Other
Total
Note to the Income Taxes 14
14 Deferred tax assets and liabilities
EURm
Deferred tax assets
Losses
Deferred tax liabilities
Fair value reserve - -
Total, net - -
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
193FINANCIAL STATEMENTS 2020
Notes to the Off-Balance Sheet Liabilities and
Commitments 15–16
15 Pension liabilities
The basic and suplementary pension insurance of Sampo plc's sta is handled through
insurance policies in pension insurance companies in Finland and Sweden.
16 Future rental commitments
EURm
Not more than one year
Over one year but not more than five years
Total
Notes to the Staff and Management 17–19
17 Staff numbers
Average
duringthe
year
Average
duringthe
year
Full-time sta
Part-time sta
Temporary sta
Total
18 Board fees and management remuneration
(EURthousand)
Group Executive
Director Torbjörn Magnusson
Members of the Board of Directors
Björn Wahlroos
Fiona Clutterbuck
Christian Clausen
Georg Ehrnrooth -
Jannica Fagerholm
Johanna Lamminen
Veli-Matti Mattila -
Risto Murto
Antti Mäkinen
In accordance with the decision of the Annual General Meeting in 2020, the company has
compensated the transfer tax related to the acquisition of the company shares, in total
EUR 6,626.27 (EUR 1,436.29 pertaining to the Chairman, EUR 1,156.68 EUR to the Vice
Chairman and EUR 4,033.30 to the other Finnish members of the Board).
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
194FINANCIAL STATEMENTS 2020
19 Pension contributions to the CEO, deputy CEO and the
members of the Board
(EURk)
Supplementary
pensioncosts
Statutory
pensioncosts Total
Pension contributions paid
during the year
President/CEO
1)
Former Chairmen of the Board
KaleviKeinänen
)
-
Former Presidents/CEO:s
HarriHollmen
)
-
1)
The Group CEO is entitled to a supplementary defined contribution pension in accordance with the
present pension contract. The pension expense includes also related taxes and social security cost.
2)
Group pension agreement with a retirement age of 60 years and a pension benefit of 66 per cent of
the pensionable TyEL-salary (TyEL: Employee's Pension Act). The payment for 2020 is based on a TyEL
index adjustment.
Note to the Shares Held 20
20 Shares held as of 31 Dec, 2020
Companyname
Percentageof
sharecapital
held
Carrying
amountEURm
Group undertakings
P&C insurance
If P&C Insurance Holding Ltd, Stockholm Sweden
P&C and life insurance
Topdanmark A/S, Copenhague Denmark
P&C insurance
Hastings Group (Consolidated) Plc,
London United Kingdom
Life insurance
Mandatum Life Ltd, Helsinki Finland
Other
Sampo Capital Oy, Helsinki Finland
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
195FINANCIAL STATEMENTS 2020
Approval of the Financial Statements
and the Board of Directors' Report
Helsinki, 11 February 2021
Sampo plc
Board of Directors
Christian Clausen Fiona Clutterbuck Georg Ehrnrooth
Jannica Fagerholm Johanna Lamminen Risto Murto
Antti Mäkinen
Björn Wahlroos
Chairman
Torbjörn Magnusson
Group CEO
BOARD OF
DIRECTORS’ REPORT
AUDITOR’S
REPORT
SAMPO PLC’S FINANCIAL STATEMENTSGROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
Sampo plc’s Notes to the Accounts
196FINANCIAL STATEMENTS 2020
Auditor’s Report
To the Annual General Meeting of Sampo plc
Report on the Audit of
Financial Statements
Opinion
We have audited the financial statements of Sampo plc
(business identity code 0142213-3) for the year ended
31 December 2020. The financial statements comprise the
consolidated balance sheet, income statement, statement
of comprehensive income, statement of changes in equity,
statement of cash flows and notes, including a summary
of significant accounting policies, as well as the parent
company’s balance sheet, income statement, statement of
cash flows and notes
In our opinion
• the consolidated financial statements give a true and
fair view of the group’s financial position as well as its
financial performance and its cash flows in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the EU.
• the financial statements give a true and fair view of the
parent company’s financial performance and financial
position in accordance with the laws and regulations
governing the preparation of financial statements in
Finland and comply with statutory requirements.
Our opinion is consistent with the additional report
submitted to the Audit Committee.
Basis for Opinion
We conducted our audit in accordance with good auditing
practice in Finland. Our responsibilities under good
auditing practice are further described in the Auditor’s
Responsibilities for the
Audit of Financial Statements
section of our report.
We are independent of the parent company and of the
group companies in accordance with the ethical require-
ments that are applicable in Finland and are relevant to
our audit, and we have fulfilled our other ethical responsi-
bilities in accordance with these requirements.
In our best knowledge and understanding, the non-audit
services that we have provided to the parent company
and group companies are in compliance with laws and
regulations applicable in Finland regarding these services,
and we have not provided any prohibited non-audit services
referred to in Article 5(1) of regulation (EU) 537/2014.
The non-audit services that we have provided have been
disclosed in note 36 to the consolidated financial statements
and note 3 to the parent company financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
financial statements of the current period. These matters
were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these matters.
We have fulfilled the responsibilities described in the
Auditor’s responsibilities for the audit of the financial
statements section of our report, including in relation
to these matters. Accordingly, our audit included the
performance of procedures designed to respond to our
assessment of the risks of material misstatement of the
financial statements. The results of our audit procedures,
including the procedures performed to address the matters
below, provide the basis for our audit opinion on the
accompanying financial statements.
We have also addressed the risk of management override of
internal controls. This includes consideration of whether
there was evidence of management bias that represented a
risk of material misstatement due to fraud.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
197FINANCIAL STATEMENTS 2020
Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of insurance contract liabilities
We refer to the Summary of significant accounting policies, Accounting policies regarding
management judgment and key sources of estimation uncertainties and Notes 26 and 27.
At 31.12.2020 the Group has insurance contract liabilities amounting to mEUR 36,241
(31.12.2019: mEUR 32,409) which represents 82% of the Group’s total liabilities and it is
thus the single largest liability of the Group. The insurance contract liabilities comprise
life and non-life insurance contract liabilities.
The life insurance contract liabilities are based on estimate of future claims payments.
The estimate is based on assumptions which include uncertainty. Changes in assumptions
can result in material impacts to the valuation of the liabilities. Key assumption areas
include interest rate and life expectancy of policy holders.
The estimation of non-life insurance contract liabilities involves significant assumptions
to be made in provisions for claims outstanding. Key assumption areas include inflation
rate and life expectancy of beneficiaries. The liabilities are based on a best estimate of
ultimate cost of all claims incurred but not settled, whether reported or not, together with
claims handling costs.
Our audit procedures included, among other, evaluation of the governance around the
overall Group reserving process and included testing the operating effectiveness of key
controls over the completeness, measurement and management of the Group’s calculation
of insurance liabilities.
We evaluated the appropriateness of methodologies and assumptions used, and inde-
pendently re-projected the reserve balances for certain classes of business.
We involved our internal actuarial specialists to assist us in assessing the appropriateness
of assumptions used.
We assessed the adequacy of disclosures relating to insurance contracts liabilities.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
198FINANCIAL STATEMENTS 2020
Key Audit Matter How our audit addressed the Key Audit Matter
Valuation of financial assets
We refer to the Summary of significant accounting policies, Accounting policies regarding
management judgment and key sources of estimation uncertainties and Notes 9 and 14-20.
The Group’s investment portfolio excluding investments in associates amounts to
mEUR 39,257 (2019: mEUR 36,418 which represents 69% of the Group’s total assets. Fair
value measurement can be subjective, specifically in areas where fair value is based on a
model-based valuation. Valuation techniques for private equity funds, non-listed bonds
and non-listed equities involve setting various assumptions regarding pricing factors. The
use of different valuation techniques and assumptions could lead to different estimates
of fair value. Specific areas of audit focus include the valuation of level 2 and 3 assets
according to IFRS where valuation techniques use unobservable inputs. The investment
portfolio includes level 2 assets amounting to mEUR 7,342 and level 3 assets amounting to
mEUR 4,113 (refer to note 17).
This matter is a significant risk of material misstatement referred to in EU Regulation No
537/2014, point (c) of Article 10(2).
To address the risk of material misstatement in respect of valuation of financial assets our
audit procedures included testing the effectiveness of controls in place over recording fair
values of assets using unobservable input.
We performed additional procedures for areas of higher risk and estimation, involving our
valuation specialists.
In respect of the investments in private equity funds, we evaluated and tested the
procedures of the Group to determine the fair value of these investments. The procedures
include assessment of fund net asset value based on the fair value of underlying invest-
ment, independent broker valuations and evidence of underlying financial data.
We assessed the adequacy of disclosures relating to the financial assets.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
199FINANCIAL STATEMENTS 2020
Key Audit Matter How our audit addressed the Key Audit Matter
Associated company Nordea
We refer to the Summary of significant accounting policies and note 13.
The value of the Nordea shares in the consolidated balance sheet amounts to mEUR 4,822
(31.12.2019: mEUR 6,712). The holding in Nordea Bank Abp represents 9% of the Group’s total assets.
Nordea Bank Abp is an associated company of the Group and is accounted for based on
equity accounting. At 31.12.2020 the Group’s ownership in Nordea Bank Abp is 15.87%
(31.12.2019: 19.87%).
The book value of the Nordea holding exceeded the market value of the Group’s ownership
at the reporting date, due to which an impairment test has been prepared at 31.12.2020. An
impairment amounting to mEUR 899 has been recognized based on the impairment test.
Our audit procedures included identifying controls that verify that the Group’s share of
Nordea has been booked appropriately based on the Group’s share of Nordea’s financial
information and testing the consolidation procedures performed by the Group.
Our audit procedures included, among others, involving our valuation specialists
to assist us in evaluating the assumptions and methodologies used by the Group in
preparing the impairment test and evaluating the analysis prepared by the Group,
which concludes that the Group still exercises significant influence, as defined in IAS
28, over Nordea Bank Abp.
We assessed the adequacy of disclosures relating to associated companies.
Hastings Group Holdings Plc (Hastings) business combination
We refer to the Summary of significant accounting policies and note Business Combinations.
The Group acquired the Hastings business during the financial year. The acquisition date was
determined to be November 16, 2020. The purchase consideration of mEUR 1,299 was paid in cash.
Assets acquired and liabilities and contingent liabilities assumed in a business combination are
measured at acquisition date fair value. Management judgement relates specifically to determin-
ing the fair value of acquired assets and liabilities, in particular determining the fair values of
separately identifiable intangible assets such as customer contracts, technology and trademarks.
The significant business combination is a key audit matter as it involves valuation processes
and methods, and judgments made by management.
Our audit procedures included, among others, assessing together with our valuation
specialists the valuation processes and methodologies to identify acquired assets and
liabilities and to determine the fair value of these.
We assessed the adequacy of disclosures relating to business combination.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
200FINANCIAL STATEMENTS 2020
Responsibilities of the Board of
Directors and the Managing Director
for the Financial Statements
The Board of Directors and the Managing Director are
responsible for the preparation of consolidated financial
statements that give a true and fair view in accordance
with International Financial Reporting Standards (IFRS)
as adopted by the EU, and of financial statements that
give a true and fair view in accordance with the laws
and regulations governing the preparation of financial
statements in Finland and comply with statutory
requirements. The Board of Directors and the Managing
Director are also responsible for such internal control as
they determine is necessary to enable the preparation of
financial statements that are free from material misstate-
ment, whether due to fraud or error.
In preparing the financial statements, the Board of
Directors and the Managing Director are responsible for
assessing the parent company’s and the group’s ability
to continue as going concern, disclosing, as applicable,
matters relating to going concern and using the going
concern basis of accounting. The financial statements
are prepared using the going concern basis of accounting
unless there is an intention to liquidate the parent
company or the group or cease operations, or there is no
realistic alternative but to do so.
Auditor’s Responsibilities for the
Audit of Financial Statements
Our objectives are to obtain reasonable assurance on
whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with good auditing practice will always detect a material
misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if,
individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users
taken on the basis of the financial statements.
As part of an audit in accordance with good auditing
practice, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of
the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant
to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of
the parent company’s or the group’s internal control.
• Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by management.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
201FINANCIAL STATEMENTS 2020
• Conclude on the appropriateness of the Board of
Directors’ and the Managing Director’s use of the going
concern basis of accounting and based on the audit evi-
dence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant
doubt on the parent company’s or the group’s ability
to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw
attention in our auditor’s report to the related disclo-
sures in the financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our auditor’s report. However, future events or
conditions may cause the parent company or the group
to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures,
and whether the financial statements represent the
underlying transactions and events so that the financial
statements give a true and fair view.
• Obtain sufficient appropriate audit evidence regarding
the financial information of the entities or business
activities within the group to express an opinion on the
consolidated financial statements. We are responsible
for the direction, supervision and performance of the
group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and communicate
with them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of most
significance in the audit of the financial statements of the
current period and are therefore the key audit matters. We
describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter
or when, in extremely rare circumstances, we determine
that a matter should not be communicated in our report
because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest
benefits of such communication.
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
202FINANCIAL STATEMENTS 2020
Other Reporting Requirements
Information on our audit engagement
We were first appointed as auditors by the Annual General
Meeting on 10.4.2002, and our appointment represents a
total period of uninterrupted engagement of 19 years.
Other information
The Board of Directors and the Managing Director are
responsible for the other information. The other infor-
mation comprises the report of the Board of Directors
with referred statements and the Corporate Governance
Statement, Remuneration Report for Governing Bodies
and the Group CEO’s review, but does not include the
financial statements and our auditor’s report thereon. We
have obtained the report of the Board of Directors prior
to the date of this auditor’s report, and the other reports
and statements mentioned above are expected to be made
available to us after that date.
Our opinion on the financial statements does not cover
the other information.
In connection with our audit of the financial statements,
our responsibility is to read the other information
identified above and, in doing so, consider whether the
other information is materially inconsistent with the
financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
With respect to report of the Board of Directors, our
responsibility also includes considering whether the
report of the Board of Directors has been prepared in
accordance with the applicable laws and regulations.
In our opinion, the information in the report of the
Board of Directors is consistent with the information
in the financial statements and the report of the Board
of Directors has been prepared in accordance with the
applicable laws and regulations.
If, based on the work we have performed on the other
information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material
misstatement of this other information, we are required to
report that fact. We have nothing to report in this regard.
Opinions based on the assignment
of the Audit Committee
We support that the financial statements should be adopted.
The proposal by the Board of Directors regarding the use of
the profit shown in the balance sheet is in compliance with
the Limited Liability Companies Act. We support that the
members of the Board of Directors of the parent company
and the Managing Director should be discharged from
liability for the financial period audited by us.
Helsinki 2 March 2021
Ernst & Young Oy
Authorized Public Accountant Firm
Kristina Sandin
Authorized Public Accountant
BOARD OF
DIRECTORS’ REPORT
SAMPO PLC’S FINANCIAL STATEMENTS
Sampo plc’s Notes to the Accounts
GROUP’S IFRS FINANCIAL STATEMENTS
Group’s Notes to the Accounts
AUDITOR’S
REPORT
203FINANCIAL STATEMENTS 2020
